Lords Sitting of 24 July 1973

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

LORD ALLAN OF KILMAHEW
Robert Alexander Allan, Esquire, D.S.O., O.B.E., having been created Baron Allan of Kilmahew, of Cardross in the county of Dunbarton, for life—Was, in his robes, introduced between the Lord Sinclair of Cleeve and the Lord Aldington.
The Viscount Astor—Sat first in Parliament after the death of his father.

CONCORDE, CHANNEL TUNNEL AND MAPLIN PROJECT COSTS
2.47 p.m.
LORD SHINWELL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the total sum expended to date on research, development and production by Her Majesty's Government on the Concorde aircraft, and the estimated cost of the Channel Tunnel and Maplin airport.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, by June 30, 1973, the United Kingdom Government expenditure on Concorde research, development and production since the Anglo-French Treaty was signed in 1962 has been £504 million, at the economic conditions prevailing when the costs were incurred. The latest estimated cost of the Channel Tunnel is £468 million, divided between the United Kingdom and France. The railway link from London to Folkestone is estimated to cost an additional £120 million. The latest estimated cost of a fully-developed two-runway airport at Maplin is £480 million.
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In addition, the costs for Phase I of the Maplin project on reclamation and surface access are estimated to be £140 million and £160 million respectively.
LORD SHINWELL: My Lords, I am obliged for the information the noble Lord has conveyed, but he is probably aware that these estimates are usually falsified. May I ask him three short questions? First of all, would he not agree that the expenditure that is likely to be entailed, particularly in view of the potential deficit in the balance of payments over the next few years, would make such expenditure prohibitive and impose very serious financial burdens on the country? Secondly, have the Government considered the possibility, indeed the probability, of a huge diversion of labour and materials from the export trade because of the need for deploying materials and labour on Maplin and on the Channel Tunnel? Thirdly, would the noble Lord also say whether the Government have decided fully to consult the persons involved over the Maplin project?
LORD DRUMALBYN: My Lords, on the first point, it is unlikely that the estimates for the Tunnel and Maplin will be falsified except to the extent that there is a change in the value of money, because, unlike the Concorde project, which was going into new realms of technology, the techniques for these two projects are very well understood. On the second point, the Government would not have contemplated continuing with these projects had they thought it would be outside the power of the nation to meet them. I think it is worth while bearing in mind, for example, that the expenditure on Maplin, if that project goes forward, will average about £48 million per annum to 1990.
As to the diversion of labour and materials, these are not labour-intensive industries and it is not thought that the amount of labour and material diversion will be a serious drag on the resources of the nation. On the fourth point, as to whether the Government have consulted, the answer is, Yes: the Government have been consulting and, as the noble Lord will be aware, it is intended to consult further before any funds are committed to the reclamation project at Maplin.
LORD SHINWELL: My Lords, on the final point in reply to my supplementary question, does the noble Lord agree that Mr. Ripon only gave a promise that people involved in South Essex and elsewhere would be consulted about the roads and the direction of the signposts, but not on the principle involved; and ought they not to be consulted on the principle before the project is proceeded with?
LORD DRUMALBYN: My Lords, we shall of course be discussing this point to-morrow, but the British Airports Authority has given an undertaking that it will discuss with the authorities concerned any matters that affect them in any way.
LORD BALOGH: My Lords, does the noble Lord consider that the Maplin project and the Channel Tunnel, inasmuch as they are competitive, ought to reduce each other's value for the nation? Secondly, has any cost/benefit study been made, and will it be published, to show whether the further development of Southampton and Liverpool—both of which are very much better situated so far as overseas trade is concerned—would be better than the development of a port which is almost as badly situated as Rotterdam?
LORD DRUMALBYN: My Lords, on the first point. Her Majesty's Government do not accept that the Maplin project and the Channel Tunnel will be competitive; they believe that they will be complementary. On the second point, this is a matter which will be examined by the National Ports Council before there is any question of the seaport being established at Maplin.
LORD BALOGH: My Lords, will the noble Lord not admit that the Maplin seaport and the Channel Tunnel are competitive? After all, the building of the Maplin seaport at that point can only be for traffic with Europe, because in every other way there is no question that a number of ports in England are much better situated.
LORD DRUMALBYN: My Lords, this really is a matter for the National Ports Council to consider; and of course there will not be a seaport at Maplin unless it is shown to be in the national interest and to be viable in itself.
THE EARL OF LAUDERDALE: My Lords, can the noble Lord tell us whether, if the Channel Tunnel goes forward, its financing will be a charge on the taxpayer only to the extent that the Government give a guarantee of funds raised on the world market? Can he also tell us whether the manpower employed on the Channel Tunnel will be no more than the manpower now employed in building Dungeness Power Station?
LORD DRUMALBYN: My Lords, on the second point, I cannot make that particular comparison; but on the' first point, I certainly confirm what my noble friend has said. The fact is that these three projects are not really comparable in the way in which they affect the public purse.
LORD BESWICK: My Lords, can the noble Lord say whether the figures he has given for Maplin are still in 1972 terms; and, if so, may we have them in present-day terms? Further, can he confirm that the figures he gave include the cost of the access routes? If they do, how is it that those can be estimated when it has not yet been decided which routes should be taken?
LORD DRUMALBYN: My Lords, the answer to the first question is "Yes"; they are still in 1972 terms.
LORD BESWICK: My Lords, the second question was whether we might have them in present-day terms.
LORD DRUMALBYN: My Lords, I am afraid I cannot work that out in my head, and I have not got it down on paper. I am afraid I have forgotten what the other point was because the noble Lord has now driven it out of my head.
LORD BESWICK: My Lords, the noble Lord has not told us why these figures are not expressed in current terms; and my other point was whether he will confirm that the cost includes the cost of the access routes. If he can confirm that, can he say how the Government arrive at the cost if they have not decided which routes to take?
LORD DRUMALBYN: My Lords, the fact is that we have been working on the 1972 estimates all along and it has not been felt necessary to up-date them. On the point about the access routes, I

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do not think there is any wide difference between the costs of the access routes. Incidentally, this figure not only covers the cost of the access routes; it also covers access in general, including the construction of a terminal at King's Cross and also the rolling stock for access to Maplin.
LORD AVEBURY: My Lords, is not the consultation being offered by the Department of the Environment to the people of Essex entirely bogus in that it is the equivalent to offering a condemned man the choice between hanging, execution and poisoning?
LORD DRUMALBYN: My Lords, whenever a project of this kind is put forward always the people within the area are affected. The question is, how far can we balance the extent to which they are affected with the national interest. I do not accept that the consultation is in any way bogus, because the consultation is designed to ensure that whatever plans are made are adapted as closely as possible to the needs of the area.
LORD ORR-EWING: My Lords, has my noble friend noticed that the French are bearing half the cost of Concorde, that they are going to bear half the cost of the Channel Tunnel, that they are building at Roissy an international airport of comparable size and that they are not squealing that they cannot afford these things: they are going right ahead with them?
LORD DRUMALBYN: Yes, my Lords, I have noticed that, and I think it would be well for us all to take note of it.
LORD MAYBRAY-KING: My Lords, on the question of Maplin, can the noble Lord give us any estimate of the increase in the wealth of the nation as a result of the land reclamation feature of the Maplin project?
LORD DRUMALBYN: My Lords, I think it was estimated at £10,000 per acre, and there will be 14,000 acres; so probably the noble Lord is better at making calculations than I am.
LORD BESWICK: My Lords, will the noble Lord tell his noble friend Lord Orr-Ewing, that although the French are building at Roissy they are closing down Le Bourget, and that we shall be Com-
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pelled to keep open both Heathrow and Gatwick? Will he also tell his noble friend that Roissy is quite near to Paris while Maplin is way out?
LORD DRUMALBYN: My Lords, the noble Lord has told my noble friend, so I need not comment.

BETTING OFFICES AND LAW OBSERVANCE
2.59 p.m.
VISCOUNT MASSEREENE AND FERRARD: 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 are satisfied that the law relating to betting shops is being adhered to, particularly in regard to loitering and running commentaries.
THE MINISTER OF STATE, HOME OFFICE (VISCOUNT COLVILLE OF CULROSS): My Lords, to our knowledge the practices adopted in licensed betting offices are not directly contrary to the law. Loitering is not expressly forbidden, but the intention was that it should be discouraged by prohibiting, for example, the provision of television and broadcasting facilities and of entertainment or refreshments. However, commentaries on horse races are provided lawfully in betting offices by means of direct lines, and this does undoubtedly conduce to loitering.
VISCOUNT MASSEREENE AND FERRARD: My Lords, while thanking the Minister for that reply, I should like to ask him whether he is aware that my information is that many customers loiter on the premises the whole afternoon, and this must surely be a cause of considerable absenteeism. Would not my noble friend agree that the chief reason for this is the running commentary which is put out by both T.V. and sound radio? My opinion is that it is not always as my noble friend has said. My reading of the Betting, Gaming and Lotteries Act 1963 is that you cannot have commentaries in betting shops if it is by television or sound radio as used by the general public.
VISCOUNT COLVILLE OF CULROSS: My Lords, my noble friend has read it

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absolutely correctly. He is referring to paragraph 5(b)(ii) of Schedule 4 to the Betting, Gaining and Lotteries Act 1963. He is absolutely correct. It is not a broadcast, but a direct line, whether it relates to the sound commentary or the television. As to loitering, I do not think anyone would be particularly happy about this. One has to bear in mind that the object of the legislation was to strike a balance between providing people with legitimate facilities for betting, and preventing such facilities from being so disagreeable that people went back to the illegal forms of betting which prevailed before. We may not have got the balance right, but that was the intention of the legislation.
LORD BLYTON: My Lords, could the Minister say why it is wrong for men to be in a betting shop and listening to the commentary, while anyone can go to Ascot to watch the racing? Why should he say that there is absenteeism by people in betting shops, and yet not mention those people who are at Ascot?
VISCOUNT COLVILLE OF CULROSS: My Lords, I appreciate that there may be occasions in your Lordships' House where this element is a little obvious, but I hope that does not count as absenteeism. As I have said before, the intention of the legislation was to try to strike a correct balance.
VISCOUNT MASSEREENE AND FERRARD: My Lords, the noble Lord would be a hero to many thousands of wives in this country if he would prod his Department into producing legislation to tighten up generally on betting shops.
VISCOUNT COLVILLE OF CULROSS: My Lords, I should be very glad to have positive proposals, but the difficulty is to find something which does not strike at one or other half of the balance I have mentioned. If my noble friend could make positive suggestions, I should not be averse to looking at them.
LORD DERWENT: My Lords, is my noble friend aware that wives also bet?
VISCOUNT COLVILLE OF CULROSS: My Lords, I believe that is the case.

LAUNDRY SERVICES AND N.H.S. REORGANISATION
LORD AMULREE: 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 people in those areas where the local authority supplies a free laundry service for incontinence, et cetera, will continue to receive such a service after the reorganisation in 1974.
THE MINISTER OF STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (LORD ABERDARE): My Lords, my right honourable friend the Secretary of State for Social Services is considering what regulations, if any, to propose for the making and recovery of charges in respect of services to be provided under Section 2 of the National Health Service Reorganisation Act 1973. Laundry services currently being provided by social service departments of local authorities will continue to be subject to charges or not at the discretion of the local authority.
LORD AMULREE: My Lords, I thank the noble Lord for that reply, which goes a long way to calm the anxiety that I have felt.

LONDON INTERNATIONAL EXHIBITION CENTRE
3.3 p.m.
LORD SWAYTHLING: 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 why the Secretary of State for the Environment refused planning permission for the London International Exhibition Centre at Northolt, in view of the overwhelming evidence at the public inquiry and the urgent national need for modern exhibition facilities in the London area, and his written confirmation that this need was accepted by him and by the Secretary of State for Trade and Industry.
LORD MOWBRAY AND STOURTON: My Lords, I believe that is the case.

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than read part of the decision letter in which the Secretary of State for the Environment gave his reasons for accepting the Inspector's recommendation to refuse permission for the proposed centre. After detailed comment on the Inspector's conclusions regarding the Northolt site the letter says this:
"The Secretary of State accepts the opinion of the Secretary of State for Trade and Industry that there is indeed a need for better exhibition facilities in London. He does not however consider that it has been established that the need must be satisfied by the erection of an exhibition centre in this particular location and he has reached the conclusion that the need for better exhibition facilities is not such as to justify overriding the very great Green Belt, highway and general environmental objections which obtain in connection with the application site".
Copies of the decision letter and the Inspector's report have been placed in the Library.
LORD SWAYTHLING: My Lords, I thank the noble Lord for his reply. Does he not agree that this need, as recognised by the two Ministers, is so urgent as to overrule all the objections to the Northolt site, especially in view of the fact that no other site of the necessary size, location and road and rail access appears to be available? Following the extensive study made by the Greater London Council of 47 alternative sites, the Council selected this site as being the best by far for the purpose.
LORD MOWBRAY AND STOURTON: My Lords, my right honourable friend is not aware that there are no other possible sites. As other sites are found, he will consider them. There are other sites which might become available. The present Greater London Council does not agree with the last Greater London Council on this matter, as the noble Lord knows. Further, the London Borough of Hilling-don and all the three Parliamentary candidates of the three Parties at the Uxbridge by-election supported the Secretary of State's view in this.
LORD DAVIES OF LEEK: My Lords, without much knowledge on this subject, may I ask the noble Lord why we must always take London as a centre? Why not Birmingham and Manchester, with Inter-City trains?
LORD MOWBRAY AND STOURTON: My Lords, it so happens that a very great
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exhibition site is being built at Birmingham at the moment for which the Government are providing funds towards its construction.
LORD SWAYTHLING: My Lords, would not the noble Lord agree that the majority of the proposed users of this exhibition site has said that it must be in London? London is the only important capital that has no exhibition site.
LORD MOWBRAY AND STOURTON: My Lords, I repeat that we completely accept that it would be a good thing to, have an exhibition site in London.

THE CHANNEL TUNNEL
LORD DENHAM: My Lords, with the leave of the House my noble friend Lady Young will be making a Statement on the Channel Tunnel at a convenient moment after 3.30 p.m.
GREATER LONDON COUNCIL (GENERAL POWERS) BILL
Read 3a, with the Amendments, and passed, and returned to the Commons.

TYNESIDE METROPOLITAN RAILWAY BILL
3.9 p.m.
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3ª, —(The Earl of Listowel.)
LORD SOMERS: My Lords, I do not wish to protest against the Third Reading, but I want to make a few remarks In fact, I had hoped to put down an Amendment, but I was informed about this matter too late to do so. I want to ask the noble Earl the Lord Chairman whether it would be possible to put some pressure on the Executive to provide lifts, not less than one, at each access to the railway so that disabled persons will be able to have easy access. Of course, this is a matter which applies to all public transport, but there is no doubt that it a new railway is to be built it might be a good plan to say that not less than one

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lift at each station shall be provided for those who, for instance, are in wheelchairs and cannot use escalators or go down the stairs Therefore, I am asking the Lord Chairman whether it would be possible to put some pressure on the executive to see that that is done
LORD MOYNE: My Lords, I should like to support my noble friend's remarks. I would, however, suggest that there should also be considered the possibility of installing lifts at selected stations. It may be too expensive to put them in all stations. I think the second alternative should be looked at of putting them at key points for the benefit of the elderly and infirm.
THE EARL OF LISTOWEL: My Lords, I will certainly draw the attention of the Promoters to the remarks of both noble Lords, and I am sure they will give them careful consideration.
On Question, Bill read 3a, with the Amendments, and passed, and returned to the Commons.

NATURE CONSERVANCY COUNCIL BILL [H.L.]

  PRESCRIPTION AND LIMITATION (SCOTLAND) BILL [H.L.]
  Returned from the Commons, agreed to, with Amendments; the said Amendments printed (pursuant to Standing Order No. 48).
  LORD DENHAM: My Lords, it may be for the convenience of the House if I say that your Lordships will be asked to consider the Commons Amendments to these two Bills immediately after the proceedings on the Badgers Bill.

MAPLIN DEVELOPMENT BILL
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (BARONESS YOUNG): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an instruction to the Committee of the Whole House to whom the Bill has been committed (on
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Recommitment), that they go through the Bill in the following order, vizt.:—

Clause 1,

Schedule 1,

Clauses 2–5,

Schedules 2 and 3,

Clause 6,

Schedule 4,

Clauses 7–27.—(Baroness Young.)

On Question, Motion agreed to.

NATIONAL TRUST FOR SCOTLAND ORDER CONFIRMATION BILL
Considered on Report.
Then, Standing Order No. 44 having been suspended (pursuant to the Resolution of July 12), Bill read 3a and passed.

CONSOLIDATED FUND (APPROPRIATION) BILL
THE LORD PRIVY SEAL (LORD WINDLESHAM): My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read a second time—(Lord Windlesham.)
On Question, Bill read 2a: Committee negatived.
Then, Standing Order No. 44 having been suspended (pursuant to the Resolution of July 12), Bill read 3a, and passed.

FINANCE BILL
LORD WINDLESHAM: My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read a second time.—(Lord Windlesham.)
On Question. Bill read 2a: Committee negatived.
Then, Standing Order No. 44 having been suspended (pursuant to the Resolution of July 12), Bill read 3a, and passed.

ECONOMIC AFFAIRS
3.14 p.m.
LORD BESWICK LORD BESWICK rose to move, That this House notes with increasing concern the fall in the purchasing power of the pound sterling at home and in the exchange value abroad, calls for more positive and effective policies both to halt

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the depreciation of our currency and to mitigate its consequences upon those least able to bear them. The noble Lord said: My Lords, the terms of our Motion are deliberately moderate. None can deny the fall in the value of our currency or the fact that inflation hits the poorest most. The Conservative Party Manifesto of 1970 was only too convincingly true when it said:
"Inflation is not only damaging to the economy, it is a major cause of social injustice, always hitting hardest at the weakest."
But the rate of 5 per cent. of inflation of that year we would regard now as virtual stability if we could achieve it this year or next. Since that time the value of the pound abroad has slumped by 15 per cent., 16 per cent., and, I read this morning, 17½ per cent.
But while the fall in the purchasing power of the pound is bad in itself and the injustice it creates is worse, what is really alarming to-day is the sense, unless there is more positive effective action, that other values will depreciate too—moral values, using the term in its widest sense. We know already of the action taken by those who are better off to protect their own individual position, regardless of social consequences. If that attitude spreads, then the Government can say goodbye to the chances of a constructive Phase 3. So far this year the Government have been saved by the extraordinary patience of the working man, but, said one trade union leader, "If there is going to be a free-for-all, then we are part of the all". No one can blame those who hedge against inflation, but hedges only benefit when there are suckers. By the autumn, if living costs still rise, organised workers may well decide that they have been suckers for too long. And if selfishness as now practised by some becomes widespread, then a highly integrated modern society will break down.
My Lords, in this House we try to be reasonably fair and at any rate listen to the opposite arguments, and I would agree at once that some of the aggravating factors in to-day's situation are not of the present Government's making. For example, I now think that Peers opposite were right and we were wrong—I personally was wrong—when we accepted the advice of the pound as against the 10s. decimal unit. The Price Commission claim to have saved £40 million
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this year by rejecting price increases, but it is fair to say that the housewife will have been cheated by more than that each year since decimalisation by the 'use of our present new bizarre coinage. We all know of cases where the retailer would not dare ask for a shilling more, but we pay 5p almost with apologies. But that is now becoming more of a fringe factor.
The present Government cannot be blamed either for some of our other commitments. For example, the £300 million per year poured into Ulster is mostly inflationary. Every million pounds to restore property which has been destroyed is distributing money but creating no more wealth. Every thousand pounds for personal compensation —and I see that one award recently was £80,000—adds so much more to the volume of money unbacked by goods. The unique burden of Ulster, however, we have accepted as a common all-Party responsibility. But it is there, corroding our currency as well as other human values; it is there all the same.
Then, if we are considering inflationary factors for which the Government cannot be blamed, there is the rise in world commodity prices. We know there has been this phenomenon, and, of course, it was not caused by the Government. But the question we should be discussing to-day is, what have they done about it? How have they related policies to meet it? The fact is that they regard this phenomenon not as a challenge but as an alibi. They complain of world prices as once they complained of wage increases. Why is it that other countries also import commodities but have currencies which are rising while ours is falling?
The Prime Minister the other day gave three particular examples of commodity increases. One very important one was copper. He said that copper had gone up 64 per cent.—some would in fact say rather more than that. But in Swiss francs the increase was only of 19 per cent., and in Japanese yen 15 per cent. It just is not true to say that world prices are a cause of our troubles, any more than it was true to say that it was wages. Of course they are part of the cause, but they are not the whole cause. It is equally, if not more, true to say that the Government's failure to recognise and take positive action to deal with other

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parts of the problem makes us more vulnerable than our competitors to increased commodity prices, and that, in turn, helps to create the wage demands which they deplore. It is their complete inability, as I see it, to understand the interaction, the integration indeed of the whole economic and social complex, that has led to the abysmal failure of their policy.
Probably the two most important other factors in the complex, neither of which the Prime Minister dealt with last week, are the extraordinary and calamitous balance-of-payments deficit and the volume of paper money which the Government are printing and distributing. On the overseas payments deficit, when challenged—and, almost unbelievably, it would seem that the Prime Minister would not have raised this subject unless he had been challenged—he said, on July 18, at column 533 of the Commons OFFICIAL REPORT, concerning the balance of payments:
…if the Labour Party is supporting a policy of expanding the economy, it must be prepared to accept the consequences of the import of raw materials and, in many cases, plant …"
Here again we see this strange, blinkered approach; the inability to distinguish between partial and whole truth. If the noble Lord, Lord Stokes, were here I would ask him whether it is foreign cars that we are importing or whether it is indeed, as the Prime Minister says, "plant". Of course it is to a large extent completed motor cars. The Economic Community was to have been a great market, but it has turned out to be an even greater supplier. Imports from them—and not of raw materials—have gone up far more than exports.
This is my view, but the House may accept more readily the judgment of Professor Neild in the London and Cambridge Economic Bulletin. Professor Neill says:
"It is a mistake to think that the deficit in the balance of payments has been caused mainly by the deterioration in the terms of trade".
And again:
"Whatever happens to import prices and the terms of trade, the balance of payments will not recover on an enduring basis so long as the public sector's deficit is not reduced to the point where it ceases to be a source of excess demand."
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Who will disagree with what is stated there?
This question of excess domestic demand brings us to one of the most sacred of Seisdon's sacred cows—the boast that the Conservatives, and they alone, are the Party of reduced taxation. They can no longer boast that they do not devalue the pound; they can no longer say that they will not tolerate "lame ducks"; they cannot say that they are against statutory wage and price control, but they still do boast that they are the Party who have reduced taxation. By £3,000 million, they say. But in honesty, should they not also emphasise the £4,000 million Budget deficit? The bookkeeping of Lonrho, Slater Walker, and Sir Denys Lowson, has been criticised recently, but it is open and pure compared with that of the Government. Cutting taxation as part of a plan to transfer wealth to their supporters is, in our view, unfair, but it is politically understandable. But to pay the bills with paper money on the scale practised by this Government is in another category of behaviour altogether. I beg the Minister not to repeat here that claim about the increase in the standard of living, or the figures of net disposable income. Of course figures can be quoted to show an average of more money in each pocket, but it has been made possible by two factors: first, by deficit financing, and secondly, by turning a balance-of-payments surplus of probably the largest on record (a £1,000 million surplus in 1971), to a deficit running at the rate of £900 million in the second quarter of 1973. Never, ever, in peace time has there been such a turn-round in our economic affairs. Of course in these circumstances one can distribute more purchasing power for a time: the question is, for how long a time? It became fashionable to say that we should be saved by the famous "J" curve. It is remarkable how supposedly clever commentators become hypnotised for a time by fashionable jargon. Once upon a time it was the "pegged pound", then the "crawling peg", and then it was said that with the "floating", or the "dirty float", the "J" curve would work and all would come right. But we have already passed Mach I on the downward stroke of the "J" and it rather looks as though some one has removed the curve at the bottom.
The London and Cambridge Economic Bulletin said that somehow the public sector deficit should be cut by £500 million a year, and since this Motion was tabled the Bank of England has increased the demand for special deposits which, I gather, in one way or another, is expected to help by some £260 million. The idea, we are told, is not to squeeze the economy but to force up interest rates and thus encourage more hot money to come to London. Higher interest rates, I suggest, are no solution for a productive economy. Hot money has not helped us yet. There must be a more straightforward way of reducing excess demand. Much can be done. The question is whether this Government have the will, or are we to wait for a still further worsening of the situation before they take further action?
Let me indicate some of the things which undoubtedly could be done if the will were there. First, on excess demand: if this needs to be abated—by £500 million, says the London and Cambridge Bulletin—could not the Government reverse the £300 million tax handout to the wealthier taxpayers? That £300 million is really inflationary money. It is not spent on essentials: it is extra money for hedging, speculation, or luxuries. Would it not be better to raise taxes than to encourage hot money to come to this country to buy time? If a higher interest rate is essential, why do the Government insist, by tax allowances, in effectively halving the interest rate on larger personal loans? These amounted in the last five weeks to June 20, I gather, to an additional £219 million. This was not money borrowed to import essential raw materials and plant. Loans for share dealings and second houses, I gather, are now frowned upon, but they are an indication of the purpose behind these subsidised increases in purchasing power.
I am glad to see that we have heard little about that discredited piece of poor law, the family income supplement—the infuriating poverty trap—as one way of ameliorating this burden of inflation on the poorer. If the Government wish to help the low-paid worker, why not a statutory minimum wage? Can we have an answer to that from the noble Lords who are to reply? I welcome talks on threshold agreements, but that does not meet the case of the very low paid. And
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why not increase the family allowance, and extend it to the first child? If this will be the effect of the proposed tax credit schemes, why not introduce this earlier than the five years from now?
Then there is the controversy about food subsidies. The Government have made great play of the cost of an across-the-board scheme, but if the will is there and they want to do something why not make a start, at any rate, by reintroducing free school milk and welfare milk? And if they need money, why not scrap the Intervention Board which is budgeting to spend next year £55 million gross, not to bring prices down but to put them up? If there is a world food shortage why are we going to spend £22 million on de-naturing food to make it unfit for human consumption? Even if the Government say they cannot afford subsidies, cannot they at least say that they will not clamp on a levy of £163 a ton on imported butter? Is it not really crazy to say that we cannot subsidise food here yet we subsidise it for the Russians?
My Lords, I must mention land. The cost of land, whether for residential, industrial or agricultural purposes, all finds its way eventually into the cost of living. I will not give more horrific examples of land prices. I think we are all agreed that something should be done. Last time we discussed this subject we were told that something should be done, and what came out was the land hoarding charge. I now ask the noble Lord who is to reply, can he say whether the Government believe that that land hoarding charge really works?
I return to the problem of world market forces, the current alibi of the present Government. We are part of the world, and still not an uninfluential part of that world. Could we not give a lead towards a more sane control of world market forces? In our country a Conservative Government, for national purposes, no longer believe in the doctrine of the free market. In prices, pay and company behaviour they accept now that controls. are needed. In the United States of America—the most Conservative administration in the world's stronghold of capitalism—they have been compelled to use State controls to prevent an economic breakdown. Yet in the market place of the world where the big

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things are decided now, in currency and commodities we allow the free play of the most reactionary, unproductive, capitalistic practices.
My Lords, I ask this seriously, and I beg the noble Lords who are to reply to give some answer to this. Can they really assure us that we are putting enough intellectual effort into finding alternatives to the present method of dealing in international currency and commodities? Immediately after the war we seemed to be far more ready to think imaginatively in this area. We then developed the Commonwealth Sugar Agreement; we had in the time of John Strachey, the cereals agreement with Canada; in that and other commodities we tried to establish a fair price as between producer and consumer, without excessive fluctuations and without wasteful speculation. My Lords, when we read that one company in the last two or three weeks lost £20 million in speculation with one commodity, is it not time that we did more to control these world market forces before they completely control us; or before the underdeveloped countries, from which so much of our raw materials come, begin really to use the power which freedom from colonial rule has given them?
In the eager, idealistic days of the late 1940s, when I first went into the House of Commons, I used to preach the idea of an international oil co-operative for the Middle-East. Eventually the International Petroleum Co-operative put the idea to the United Nations, but the big oil companies and the major Western countries were against it. In those days the normal split with the oil producing countries was 70–30; we took the 70. Gradually it changed: 60–40, 50–50, 40–60, 30–70, and in some cases countries in whose land the oil was took the oil over altogether. What a wonderful thing it could have been if they had said that I was not just starry-eyed but was just being a little more realistic than they and we could have come to some radical, imaginative, fair to producer and consumer deal, in those days! We ought to think about this. Those countries, as I say, that are now free will begin to learn the Western way of doing things and we shall find that we are more completely in their control than we have
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realised. In the United States, with 6 per cent. of the world's population, they consume one-third of the whole of the world's energy supply. Neither the United States nor we have a lot of time in which to settle some of these matters, for the events are moving with increasing speed.
The Bishop of Stepney, in an article in The Times the other day, quoted the following words:
"We have not merely extended the scope-and scale of changes, we have radically altered its pace. We have in our time released a totally new social force, a stream of change so accelerated that it influences … the very way we feel the world around us."
My Lords, I am asking that we recognise this, and that both at home and abroad we should do more positively to control these changes, but always acknowledging that an inflexible objective of control is fairness between man and man. My Lords, this House could accept my Motion, not in the sense of criticism but as a spur and a challenge to those who, for the time being at any rate, govern this freely democratic country of ours. My Lords, I beg to move.
Moved, That this House notes with increasing concern the fall in the purchasing power of the pound sterling at home and in the exchange value abroad, and calls for more positive and effective policies both to halt the depreciation of our currency and to mitigate its consequences upon those least able to bear them.—(Lord Beswick.)
3.38 p.m.
LORD WINDLESHAM: My Lords, the noble Lord said in opening that his Motion was moderately worded, but I do not think that the speech we have just heard is one for which the same claim could be made. He has asked a number of detailed questions and my noble friend Lord Gowrie, when he comes to reply for the Government at the end of the debate, will do what he can to help the noble Lord with the answers. I do not intend to speak defensively or apologetically in any way whatever. What I intend to do is to explain what the Government's economic policy is and to ask for your Lordships' support in pursuing this policy vigorously and thoroughly and in seeing it through, because we do believe that the counter-inflation policies on which we embarked

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last year are the ones which are most likely to lead to the result that we all want to see.
My Lords, the Government's economic strategy has two aims: the aim of expansion and the aim of countering inflation, and I hope that these aims are commonly accepted and can thus be regarded as national policies and not just as Government policies. Of course there will be differences about how they should be pursued and in what way they should be implemented: but that, after all, is only natural. But on the fundamental objectives, I believe that, despite what the noble Lord has said, there is in the country to-day a considerable measure of underlying agreement. Indeed, it is not really very difficult to say what should be done.
There is, first, the need to sustain a higher rate of economic expansion than we have been able to sustain in the past, as the prime means of improving our national prosperity. Secondly, in a situation in which inflation is an increasing problem in developed countries in many parts of the world, there is the pressing need to initiate and follow through resolute action to contain the rate of increase of domestic costs and prices in a way which is consistent with policies for expanding the economy.
These policies for expansion have already achieved substantial gains in terms of improved living standards, and we must not lose sight of that fact. Since this Government took office in June, 1970, the standard of living of the British people has increased, on average, more than twice as fast as it did in the period from 1964 to 1970. Moreover, the statistics show that the low-paid have done even better than the population taken as a whole, and that is as it should be. All the indications are that we have achieved the target of a rate of expansion of 5 per cent. per annum over the 18 months' period from the second half of 1971 to the first half of 1973 which we set ourselves in 1972. In this year's Budget, the Chancellor aimed to continue that 5 per cent. annual growth rate over the 18 months' period from the second half of 1972 until the first half of 1974; and here again the current indications encourage the hope that this target may also be achieved.
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What is, however, crucial is to lay sound foundations on which to maintain an improved economic performance in the future. It is particularly important to avoid the depressing slide back into stagnation which has so often been the lot of this country in the past. In this respect the most recent indicators are encouraging. Industrial investment is moving ahead well; the increase in productivity in the manufacturing industry—output per head—is showing one of the biggest increases on record; the volume of exports so far this year has increased almost twice as fast as the volume of imports; and unemployment is decreasing. For all these reasons, there are grounds for thinking that we are now in a stronger position to achieve a period of sustained expansion than we have been in the past. But in order to achieve that expansion, and to maintain it, there must be confidence—confidence in the future and confidence for investment. The intervention of my noble friend Lord Orr-Ewing on this point was so very trenchant and appropriate at Question Time; that we very often show a lack of confidence in large-scale projects for the future, such as Concorde, Maplin and the Channel Tunnel, which some of our partners and competitors in Europe do not show in the same way.
LORD BESWICK: My Lords, is the noble Lord really saying that the swing from a surplus of £1,000 million to a deficit of £900 million is a sign of confidence?
LORD WINDLESHAM: My Lords, the noble Lord made a critical speech. He picked out all the reasons he could find for saying why he thought that his Government could have done better than ours; why he thought his policy might be better than ours. He talked about statutory minimum wages and about food subsidies. Look at the record, my Lords! Look at what happened between 1964 and 1970! Look at what has happened since! I leave it to your Lordships to decide whose policy you prefer.
Public debate about counter-inflation policy tends to focus, perhaps inevitably, on the latest statistics or on the latest announcement of a particular price increase. But the battle against inflation will not be won in a single encounter. Indeed, it is a battle which has been

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fought many times in many parts of the world with a variety of weapons. It is a truism to say that there is no single solution. I agree with the noble Lord, Lord Beswick, if I may have his attention for a moment or two. I listened to his speech closely and I hope he will do me the courtesy of listening to mine, even though it may not be any more palatable to him than his was to me. The origins of the current counter-inflation policy go back to July of last year. In that month, against a background of rapidly rising wage settlements and in the final stages of the C.B.I.'s voluntary price restraint scheme, the Government began discussions with the T.U.C. and the C.B.I. on economic management. In those talks, agreement was reached on what the economic objectives were, and perhaps I may remind your Lordships of them: faster growth in national output and real incomes; an improvement in the relative position of the low-paid; and moderation in the rate of cost and price inflation.
These objectives remain relevant to-day, and they remain the agreed objectives in the Government's present series of talks. In September, 1972, the Government put forward firm proposals designed to achieve these three objectives. The proposals included a commitment to a 5 per cent. rate of growth to cover the next two years—and I have already referred to the indications that that figure of 5 per cent. is being attained; a limit on the rate of increase of prices attributable to domestic costs, a universal cash limit on pay increases safeguarded by a threshold agreement; and help for the lower paid and for the pensioner. Unfortunately, it did not prove possible to reach agreement to implement these proposals voluntarily, and therefore on November 6, as your Lordships will remember, a temporary standstill was introduced. This was followed by Stage 2 which began at the end of March for pay, and at the end of April for prices.
The standstill which constituted Stage 1 of the policy, and Stage 2 which came after it, have had to operate against the background of an exceptionally steep increase in world prices over the past year. The noble Lord, Lord Beswick, referred to this fact, very properly, in his speech. He mentioned that in sterling terms the price of copper has increased
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by 64 per cent. I could add that wheat has increased in sterling terms by 80 per cent. and wool by 155 per cent. While it is of course true—and this is on the point which the noble Lord, Lord Beswick, made—that the upward movement of the yen and of the Swiss franc means that Japan and Switzerland can purchase raw materials at a cheaper rate than the United Kingdom, it does not follow that an upward movement in exchange rates provides a safeguard against inflation. Indeed, the rate of inflation in Japan and in Germany, both of whom have revalued their currencies recently, has been greater than that in the United Kingdom in the recent past.
LORD BALOGH: My Lords, does the noble Lord realise that I have anticipated his speech and have tried to get some figures? I shall be very grateful to the noble Lord if he will tell me how he gets those figures, which are double what the statistical digest shows. We have depreciated by 33 per cent. against the mark, and by 21 per cent. against the yen. The import values in Germany are unchanged as compared with last year.
SEVERAL NOBLE LORDS: Speech!
LORD BALOGH: I am sorry, my Lords, but if the noble Lord makes statements which are not compatible with facts, one must correct him.
LORD WINDLESHAM: My Lords, those are points for the noble Lord's own speech. He is to speak immediately after me and he will have an opportunity to develop his thoughts then. I was referring to the impact of the increase in world commodity prices on domestic prices in the shops here, and, of course, these increases have been reflected in the costs of United Kingdom manufacturers. The increase in the price of foodstuffs, as we all know, has been particularly steep. These prices are strongly subject to seasonal influences and to world demand. The United Kingdom is a substantial importer of basic foodstuffs—in fact we import over half our total food requirements—and demand for many of these on world markets has exceeded supply. Examples are meat, fish, dried fruits and cocoa. Housewives, not only in the United Kingdom but in America and Europe, have been faced with similar increases in the price of food in the shops.

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My Lords, these dramatic increases in world prices—and they are dramatic—due to a whole number of very deep-seated factors, are an inescapable charge on the living standards of all of us which, as a community, we cannot avoid. Nevertheless, our policies have had a marked impact on the rate of increases in prices affected by costs within our own control. I shall try not to cite too many statistics (I shall try to follow the noble Lord, Lord Beswick, in that, if I may; he was quite sparing in the use he made of statistics) but I want to quote a few by way of illustration of my argument.
LORD HUGHES: My Lords, I wonder whether I could make an intervention of a different nature. Would the noble Lord perhaps remember that if he speaks to the microphone we shall all hear him, but that if he turns to one side we shall lose him? While we may not agree with what he is saying, we at least want to know what he is saying.
LORD WINDLESHAM: My Lords, it is very seldom that I have been regarded as inaudible, but if the Front Bench opposite could not hear me I shall make sure that I keep my voice up, and I shall direct my remarks entirely towards the noble Lord during the rest of what I have to say.
LORD SHEPHERD: The noble Lord should speak to the microphone.
LORD WINDLESHAM: My Lords, if I may just digress on that point, when Members of your Lordships' House are speaking in a debate, we are speaking to all Peers in your Lordships' House. Although it is courtesy to face the Peers opposite, we are also speaking to Members of the House on our own Benches. I think the noble Lord will find that it is the normal practice to turn to different parts of the House as well as to address one's remarks right across the Chamber. But if I was inaudible I apologise, and I shall try to do better for the rest of my speech.
LORD SHEPHERD: My Lords, perhaps the noble Lord the Leader of the House will remember that he has a microphone directly in front of him. It is that which is really the instrument by which he makes himself audible. If he turns round, he is then inaudible.
LORD WINDLESHAM: My Lords, I am most grateful for these tips on speaking performance from the Opposition Front Bench. I am sure that at no point have they ever turned their heads to their own supporters in the course of a debate of this sort. Perhaps we should have a microphone behind us as well as in front.
My Lords, continuing now with the question of food prices—because this is, of course, the most topical and the most controversial issue in the economic policy at the moment—excluding all food (which, as I have said, is the item most subject to price fluctuations through world demand and seasonal factors), between November and June the retail price index rose by 3·8 per cent., which is equivalent to an annual rate of 6·4 per cent. This compares with the annual rate—7·5 per cent.—at which this index rose in the seven-month period before the standstill. In June—the retail price index figure for all items, including food was published at the end of last week—the rise for the month was 0·5 per cent. This represents the smallest increase since the standstill began, and I think we can take some encouragement from that fact. The increase in the food index—that is, the index for food only—was also down to 0·5 per cent., although here seasonal factors played a part. In addition, the increase in cost of manufactured goods in the period November to June was only 1·1 per cent., compared with 3·7 per cent. for all other prices. It cannot be denied, therefore, that, but for the standstill in Stage 1 and Stage 2 which followed it, the present rate of price increase would be very much higher.
My Lords, of course any policy of this sort tends to focus attention on individual increases, but there is other evidence, besides the statistical evidence which I have just put before your Lordships, of the effectiveness of the counter-inflation policy. For example, in the period from the beginning of Stage 2 up until July 13, only about a third of all applications to the Price Commission were approved in full. The rest were rejected, withdrawn or reduced. Over the next weeks, as the Commission examines reports of companies' profit margins, the pressure which it exerts on prices will be intensified. The Commission's regional offices also monitor

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complaints, and this has led to price reductions in over 300 cases. As the noble Lord, Lord Beswick, reminded us, the Commission itself believes that in the first two months it has saved the consumer £44 million a year. In addition to this, there is the effect of the Code on those firms which are not obliged to pre-notify price increases.
As the Price Commission gets over the first rush of applications and the pressures of getting new machinery to work effectively, it will be able to step up its activities. The Commission is now undertaking a three-point plan for additional action. It is starting to deal with medium-sized companies which are bound to report their price increases and profit margins. Where this information reveals that price increases have been made which are not in accordance with the Code, the Commission will seek price reductions. The Commission will also give priority to its work among medium-sized and smaller companies in ensuring that the profit margin limitation rules are complied with. This, too, will involve reductions where a company's profit margin has increased above the reference level. Finally, through its regional organisation the Commission is undertaking a programme of checks of retail and service establishments.
The overall picture, therefore, as we prepare for the next steps in the policy of countering inflation, is one in which our policies are biting on the prices of those items where costs are under domestic control. Exceptionally rapid rises in world prices have meant that the overall rate of inflation is still unacceptably high. But there is no doubt that without the Stage 2 controls the rate of increase would have been even larger. Nevertheless, earnings have, on average, kept ahead of price rises. In the year up to May, 1973—the latest month for which earnings figures are available—earnings rose by 14·2 per cent., while over the same period prices increased by 9·5 per cent.
My Lords, we recognise that there is a risk that pensioners and the low-paid may not be properly protected when world prices are rising so rapidly. The T.U.C. has, quite legitimately, put this to us with great force. So far as pensioners are concerned, the October revi-
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sion—that is, the revision coming in October of this year—will mean that pensions have increased since November, 1969, by 55 per cent.—substantially more than prices. We have also introduced, to avoid fears about the future, a system of annual upratings at least sufficient to compensate in full for price rises. For wage and salary earners the £1 plus 4 per cent. limit allowed for substantial pay increases, averaging 7 per cent. to 8 per cent. but representing more for low-paid groups. In a number of settlements the negotiators distributed the total amount available in favour of the lower-paid members of the group. By the end of June, some 7 million workers had received settlements within the terms of the Stage 2 code.
My Lords, for the next stage, Stage 3, we have said that we intend to propose to our partners in the talks that a new form of income safeguard should be included as part of the machinery. The precise form and level of the safeguard will be for consideration in the autumn, in the light of the circumstances then and of the Government's discussions with the T.U.C. and the C.B.I. A safeguard of this kind, allowing pay to be increased automatically if prices rose above an agreed threshold, would be of great help in reducing anxiety about price prospects. Decisions on the arrangements for Stage 3 will not be taken until the autumn, however, when we shall be able to take account of the state of the economy at the time. We also want to look at the present code and to consider comments on it. We shall be able to consider the Pay Board's Report on anomalies which is expected in mid-September. Discussions have begun both with the T.U.C. and with the C.B.I. on the prospects for Stage 3, and my right honourable friend the Prime Minister has already announced one proposal—that is, threshold agreements, to which I have just referred —that he will be making to the other interests represented in the talks.
As to the future, it remains our stated purpose to work towards the return to voluntary machinery for countering inflation, provided of course that the policy is effective. There can be no return to a free-for-all which can only hurt the weaker sections of the community. Thus the aim of our economic policy is to combat inflation by every means that can be worked out in consultation with the

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representatives of industry and the trade unions. At the same time, we are determined to press on with the measures which have made increases in real income possible by sustaining a stable economic growth. This then, my Lords, is our economic strategy. It is a carefully considered one—
LORD DIAMOND: My Lords, before—
LORD WINDLESHAM: My Lords, I am just coming to the end of my speech. Perhaps I could just complete what I wish to say; then, if the noble Lord has something he wants inserted just as I sit down, by all means he may do so. I was saying this is our economic strategy, and it is a carefully considered one. This is the way in which it has been developed over the last period of months when we have been engaged in countering inflation. It is, I can assure the noble Lord, Lord Beswick, a most carefully and thoughtfully considered strategy. It is positive, it is effective, and I have no hesitation at all in asking your Lordships to support it in preference to the Motion on the Order Paper.
LORD DIAMOND: My Lords, before the noble Lord sits down, may I ask him this question? I did not interrupt him earlier because I was quite sure that he was going to give us the most relevant piece of information which your Lordships need—but which so far has not been given—in a debate on the value of the pound: I refer to the estimated balance-of-payments deficit for the current year. The noble Lord did not give us that information in the earlier stages of his speech and perhaps I should have interrupted him earlier. I hope that he will let us have it at the start of the debate.
LORD WINDLESHAM: My Lords, I am not in a position to let the noble Lord, Lord Diamond, have that information at the start of the debate. I will try to obtain it, however, and if I am successful the Government will give that figure in the course of the debate.

CHANNEL TUNNEL PROJECT
4.4 p.m.
BARONESS YOUNG: My Lords, with your Lordships' permission, I will repeat a Statement which is being made in another place by my right honourable friend the Minister for Transport Industries. The Statement is as follows:
"The House will recall that on June 15 I said that if the Government were to decide in favour of the Channel Tunnel I would announce the fact and publish a short Money Bill before the Recess.
"Financial negotiations between my French colleague and myself and the private interests are still continuing but they have not yet been concluded. This is necessary before the Government can take their decision on the project as a whole and I am therefore not yet able to announce one to-day.
"The Government's decision, when it is taken, will be announced in the form of a White Paper. If it is affirmative, draft clauses of a Money Bill which we would propose to introduce into the House immediately we resume in October would be included in the White Paper. There is, of course, no question of signing any Agreement or Anglo/French Treaty before this Bill is passed.
"I am sure that the House will agree that it would be wrong for the Government to decide on a matter of this importance before all aspects of the proposals, including the financing terms, have been satisfactorily resolved. Equally, once a decision is reached, it would be wrong to delay an announcement. We would wish to provide the fullest possible opportunity for it to be considered, by the public as well as by honourable Members, before we resume in October."
LORD CHAMPION: My Lords, I am sure that the House is grateful to the noble Baroness for repeating to your Lordships she Statement that has been made in the other place. The Statement is clearly very much a holding operation and there is not much to be said about it at this stage. But as the White Paper will be published during the Recess, I think the House would like to know

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whether the White Paper will answer some of the questions put by the Opposition in both Houses, for clearly Parliamentary debate on the White Paper will not be possible if the Bill is to be introduced immediately upon the resumption of the House in October. The particular questions to which we should like answers are these. In the event of the Government's deciding to go ahead, when will a decision be taken on the matter of the London railway terminal? Will the White Paper tell us what is likely to be the effect on the various regions in this country; and particularly, will the Tunnel add to the congestion in the already congested South-East of this country?
A further question which is germane, and which has some relevance to the debate we are having to-day, is: what will be the effect of the vast expenditure projected on our ever-present balance of payments problem? Then since Mr. Peyton told the other place on June 15 that November 15 is the latest date for putting off the signing of a Treaty, will this delay in announcing the decision result in any financial penalty? I ask this because when this matter was last discussed we were told that if the decision was put off after July of this year the delay in announcing a decision would be costly. I should like to know whether this will be the case.
My Lords, the Government are considering a momentous step. I very much regret that the decision will be announced during the long Parliamentary Recess. Clearly we have to accept the Government's decision on this matter, but I think we must register a protest that the Bill will have to be rushed through between the resumption in October and the end of the Session. I do not think this is paying proper regard to Parliamentary control in a matter of this sort.
LORD GLADWYN: My Lords, may I, on behalf of my colleagues, ask the noble Baroness two questions? One relates to the financial negotiations still continuing between the Minister's French colleague and himself and the private interests. Are we to assume—I think that we are—that a satisfactory conclusion of these negotiations is a precondition to actually signing an Agreement,
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or coming to an agreement with the French Government and issuing a White Paper as a result? Or is it, perhaps, largely in the nature of a formality which has to be gone through in order to allow further time for reflection; and, if the latter, is it not a case that the longer the delay, the more expensive the whole operation will be? The second question is: when and if the Government take their decision—which it seems they are likely to take—and come to an agreement with the French Government, and the Money Bill comes before the House of Commons for approval as a result of the White Paper, may we take it that the Government's intention is to leave the decision to a free vote in Parliament?
4.10 p.m.
BARONESS YOUNG: My Lords, I should like to thank both the noble Lord, Lord Champion, and the noble Lord, Lord Gladwyn, for their remarks on this Statement. First, on the question of timing, I should like to say to Lord Champion that we are very sorry that the White Paper cannot be published before the House rises, as was our hope; but the fact is that negotations have not yet been completed. I am sure he will understand that I cannot comment further on that matter. We hope that the White Paper will be published as soon as possible to give time for the public and for Members of both Houses to consider the very important matters it will contain. Among the matters to be considered will be all those that the noble Lord, Lord Champion, raised about the regions and of congestion in South-East England, and in Kent in particular.
The noble Lord asked a specific question about finance. May I say that in the intervening period of time—that is, the time between the Government's taking a decision in principle to go ahead and the passing of a Money Bill, which would be the next stage after that—discussions are to take place with the private companies as part of the total financing arrangements. It is hoped that the Government's total contingency liability for the continuation of the present phase following the signing of the documents will remain at about £4 million to £5 million, about which Parliament was informed on October 20 last year and for which provision was made in the winter Supplementary Estimates.
LORD DAVIES OF LEEK: My Lords, is the noble Baroness aware—
LORD GLADWYN: My Lords, is the noble Baroness not going to answer my supplementary question?
BARONESS YOUNG: My Lords, I intended to do so but the noble Lord, Lord Davies, stood up.
LORD DAVIES OF LEEK: My Lords, I thought the noble Baroness had sat down.
BARONESS YOUNG: My Lords, I was coming to the point raised by Lord Gladwyn. May I make it clear that the financial arrangements to which he referred are not with the French Government. The French Government and our own are at one. This is a matter of negotiations with the companies. I do not think he would expect me to comment further on that matter at this stage. On the timing, if the Government make a decision in principle to go ahead they will say so in the White Paper and, as the Statement made clear, the White Paper will include draft clauses of a Money Bill. On the question of debating the matter further, there will be an opportunity for this House to debate the Money Bill on its Second Reading. If further considerations are concluded there will be a further major Bill dealing with ail the other matters which the House will be able to debate again.
LORD GLADWYN: My Lords, what about a free vote of Parliament?
BARONESS YOUNG: My Lords, I do not think that that is a matter on which I can make a pronouncement at this stage.
LORD DAVIES OF LEEK: My Lords, some of us are very grateful that the Government have had second thoughts about this matter and are not rushing it through by July 31. We were promised by the noble Baroness that Parliament and the public would have an adequate opportunity to think about the matter, to discuss it and to get the facts. We were promised that about the Common Market, but we did not get it. Shall we have the engineering know-how? Is the noble Baroness aware that we were promised that trains would run through this tunnel at 100 miles an hour and would average one every 2·5 minutes? Is the
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noble Baroness aware that that would shift 3,500 cubic yards of air at a hurricane force of Beaufort 12 and that it would mean that at ten miles from the end of the tunnel people and trees would be either blown down or sucked in? Finally, is the noble Baroness aware that the Cabinet Paper entitled, The Future of London as an International Financial Centre and the report by the Inter-Bank Research Organisation says that the geographical location of a financial centre of London is important and that consequently, after other things, the move for a Channel Tunnel has been mentioned by us? Why was not the bridge mentioned, instead of this project for socialising the losses and "privatising" the profits?
BARONESS YOUNG: My Lords, in answer to the first point raised by the noble Lord, Lord Davies, I hope that, as I indicated, there will be adequate time for discussion and opportunity for the public to make their views known after publication of the White Paper, and for your Lordships to do so in the debate on the Second Reading of the Money Bill, if there should be one. On the question of the technical matters, I hope that a number of the answers will appear in the White Paper. This is a highly technical matter on which we have taken and listened to a great deal of advice which will be set out for further consideration.
LORD SHINWELL: My Lords, may I ask the noble Baroness a question? All along the impression has been current that this is a private affair between a company formed in this country and a company formed in France, and that all the Government are expected to do is to provide a nominal sum for the purpose of designs, blueprints and research; but nothing to do with development. If anything goes wrong, what is likely to be the financial liability of the British Government? Finally, are we satisfied that we can trust the French in a matter of this kind? We were not able to trust them in the First World War or in the Second World War, nor on many matters connected with the Common Market. Can we trust them on this question of finance?
BARONESS YOUNG: My Lords, I think the answer to the noble Lord, Lord Shinwell, is that all the matters on finance will be set out in the White

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Paper. As I indicated in the original Answer, it is on the question of financial arrangements that negotiations are going on at the moment; that is, financial negotiations between the French and British Governments and the private companies involved. On the second point about trusting the French, I should have thought that the answer is, Yes.
LORD WIGG: My Lords, would not the Minister agree that this is another example of the fact that we are moving into a pre-Election period in which the Tory Party must have a number of dummies in the shop window? Is this project not another of them?

ECONOMIC AFFAIRS
4.18 p.m.
Debate resumed.
LORD BALOGH: My Lords, if there are no more pleasantries to be exchanged, I shall begin. We are met together here to consider the stewardship of the present Government over the last year. May I first express my deeply felt personal regret that it is no longer the noble Earl, Lord Jellicoe, who is to answer for the Government on these matters, if not for the matter at any rate for the manner of his putting forward the best case he possibly could for the Government? This was always impressive and pleasant and I enjoyed his humane wit. I hope I may be allowed to have this thought at this point of time.
This is the first time the noble Lord, Lord Windlesham, has put forward the case, and I must say he displayed a case of staggering complacency. At that, I am not in the least surprised, because his master's voice was heard last week in another place, and he could not but follow the master in the pæons of the victory song, even if it is somewhat premature. I think it was a year or two ago when I said that the hen coops were full with the rotting corpses of chickens which had come back to roost. I must say that now, looking at the Government's policies, the hen coops and the hens have disappeared, have rotted; there is nothing left of the original policies of this Government but an acrid
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smell, a decay which bedevilled and still bedevils the solution of our problems, as I shall try to explain.
At first the Government tried to live up to their Election Manifesto. They applied general pressures—that is to say, increased unemployment—and at the same time, in order to give incentive to the better off, they cut direct taxes. This resulted in unemployment, unpopularity and rising wages and prices. At that point the Government really thought, to follow President Nixon, that monument of Anglo-Saxon probity, as the election was nearing, and instituted a policy of price and wage control. At the same time, they reversed the policy on general pressures, and the pressures were now applied to increase, rather than to cut, national income and production. As a result of that we had the run on the pound, and the Government's answer was to float it. This was to be the new, marvellous panacea which would enable us, so to speak, to harmonise expansion and at the same time retain the balance of payments.
Looking at the balance of payments—and I do not think Lord Diamond's question can accurately be answered at this moment—it now seems as if the trade balance will be out by about £1.400 million at least, and current balance by something like £700 million to £800 million, or perhaps £900 million. This of course is going to be carried on through enormous borrowing in terms of dollars at anything between 9 and 11 per cent., when the average revenue of our investments abroad is considerably less after tax. So what we are doing now is to borrow long, or medium term, in order to invest in less profitable enterprises. A surer way to bankruptcy has not yet been found by anybody. But, as the noble Lord, Lord Windlesham, said, the Government now think that they have solved the problem of an export-led boom. I must say when I look at these statistics that his statements without statistics look a little odd to me, and I should be grateful if the noble Earl, Lord Gowrie, when he comes to answer for the Government, would explain for what period and in what manner the increase in export volume and import volume has been arrived at, because I must say that to my untutored mind the figures look very different from those the noble

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Lord has given. I am sorry that the opposite Benches are so empty. We have not, of course, badgers and ponies under consideration, but only the balance of payments. Nevertheless, when I was asking the same question a little while ago when the Benches opposite were much fuller I was shouted down. That is the first problem.
The Government say that they have an export-led expansion. But if exports are leading, we ought to have a surplus and not a deficit; but we have a deficit and not a surplus. So where is the export-led boom that we boast of, according to Mr. Heath in the other place? Nowhere, I should say. Now we come to world prices. These world prices are intriguing things, because the Government spokesmen, be it in this House or in another place, never tell us which prices they are talking about. Are these, for instance, London commodity exchange prices?—which are of course quoted in sterling. Or are they Tokyo commodity exchange prices, or New York or Chicago stock exchange and produce exchange prices? What sort of prices are they? This is of interest, because if they quote American and London prices then they are cheating: in fact, they are bringing forward a prospectus for which in a less privileged position they would go to "jug", because of course prices in terms of pounds and dollars have risen. Who doubts this? We have depreciated, and therefore our prices have risen, because we see that people can sell at unchanged prices in Toyko, Paris and Germany.
My Lords, I am not going to be quite as bashful as the noble Lord and I shall quote some statistics. We have depreciated 33 per cent. against the deutschmark since the Government came into office, against the French franc 22·6 per cent. and against the Japanese yen 21·7 per cent. We need average import prices. We cannot have quoted at us produce prices such as that for wheat. What we are interested in are the import prices. This is what boosts or dampens the internal price. Western German prices since June, 1970, have increased by 1 per cent.—that is the February figure, which is the last that I have. French prices have increased by 11 per cent. from 120 (in 1963 of course 100)
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to 134. Japanese import prices have fallen by 6 per cent. The United States prices have increased by something like 20 per cent. and ours have increased by something like 40 per cent. The Government come here and tell us that there is no connection between the exchange rates and these mythical prices that they are quoting. I should like to know what sort of prices they are giving; whose prices; in what currency; how they compare the floating pound and so on.
I feel extremely worried, because a decrease in the value of the pound of this magnitude—this is much greater, on the average, than even the devaluation in 1967—has not brought about any adjustment in the balance of payments. When should we have smooth adjustment of the balance of payments if not after devaluation, and at the same time in a period when world trade and production all over the world are at the top record levels? So even if we did not have very much pressure applied on our economy, we ought to be able to export more smoothly and increasingly. But we have not. We have not previously had such controversy in the economic profession as we now have since these new prestidigitations of forecasting have been invented. I do not know whether I should like to endorse either the pessimists or the optimists. The optimists think that the present consumer goods boom in this country will shade over into a ceiling and that the further increases in G.N.P. will boost investment and exports. I am not saying that this is not possible—I do not say that at all. It is quite possible that they might slide over into a sustainable boom or expansion: that is quite possible. But whether or not we can achieve this is not an economic question but a political one. This is where the acrid smell, so to speak, of those hen-coops comes in—because this acrid smell bedevils the relationship between the various great Parties of the realm which have to decide about economic activity. It is not possible to expect trade unions to accept conditions which are seriously unfavourable, unless the burden is fairly distributed.
Can the Prime Minister, after what he has done in the last three or four years, secure the assent that is needed, and can he achieve the consensus which is necessary in order to escape from our present

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predicament? I must say that I dismiss solutions based on minor fiscal and monetary manipulation. I do not believe, for instance, that £500 million, more or less, from taxes will make all that much difference—£1,500 million, yes; but £1,500 million of increased taxes would be quite a lot. A Government would not wish to try that solution one and a half or two years before an Election; they might just get away with £500 million, but that is neither here nor there. Our weaponry, as it has been left by the 1951–1964 Tory Administration is not such that we can fine-tune the economy. We can rough-tune it, and we can "rough it up", but we cannot fine-tune it. An equal sacrifice would be necessary. It is no use for the noble Lord (who has now departed) to say that the standard of life has increased on the average. One of the things I should like to submit to the noble Lord—and perhaps the noble Earl, Lord Gowrie, will translate this into Scottish for me—
THE EARL OF GOWRIE: Irish!
LORD BALOGH: Irish, I beg the noble Earl's pardon—is that unfortunately one of the problems of inflationary pressure is that each of the individual great trade unions, at the point at which it negotiates a wage increase, gains, but then the gain is obviously frittered away with the price increases. But at the point when they negotiate the increase they gain substantially. With the "freeze" and the present second phase, obviously this increase in real income which arises only nominally and temporarily has to be checked. Therefore there is no doubt that trade unionists will feel, and feel justifiably, poorer, even if they are not. I could go along a little more with the statistics of the noble Lord, Lord Windlesham, on wages and prices, but I would tell him that this is not enough. He would have to investigate how, at any moment of the wage negotiation, what the real level of wages achieved actually is and how much has to be sacrificed from it; and then acceptance to this has to be achieved. Full employment, in my opinion, is quite incompatible with stability without consensus, and therefore I feel a little disturbed by the tone of the noble Lord's statements. They are a little bit too "cocky" and they have solved too many problems for my comfort.
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They are giving the impression to people that they do not have to do very much more. This is not the sort of atmosphere which I think should be encouraged, quite apart from other unacceptable faces or aspects of capitalism.
It seems to me, therefore, that we must increase the share of investment and exports in our national income. This will not be possible unless investment itself is increased. We must do that before we can reap the consequences of investment; and finally we must invest in such a way as to maximise the return from investment. From that point of view, these white elephants, flying in the air or under the sea, are not the very best that could be chosen, for my money. If anyone can show me that Maplin is going to yield 10 per cent.—which is the present cost of borrowing—or that Concorde is going to yield W per cent., or that the Channel Tunnel will yield 10 per cent., then I will accept, but it would be after closer scrutiny than the noble Lord, Lord Windlesham, has applied to his official statistics. For all our sakes, I hope that a solution will be arrived at, but I must say that after the noble Lord's speech to-day I am more depressed than I can say.
LORD REDMAYNE: My Lords, I cannot follow the noble Lord, Lord Balogh, in his economic assessments, but I shall look forward to the day when he refers to the "acrid smell of the white elephants" which I feel sure will come. I should like to comment on the opening remarks of the noble Lord, Lord Beswick, which were balm to my soul. When I first came to this House I initiated a debate on "The 10s. pound" and I congratulate the noble Lord on the fact that he now admits his Government were wrong. I do not know why they were so resistant about it. I shrewdly suspect that their then Chancellor, having once changed his mind and gone one way, could not change it back again; and it is a pity that he did not. Personally, I suffered in the matter because some of my unkind if noble friends have occasionally called me "The 10s. Peer".
I wish to speak more simply on the Prices and Incomes policy. It may be known to some of your Lordships that I have a vested interest, in that I am a

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director of two major retail companies and chairman for the time being of the Retail Consortium which represents all but a small part of the retail trade throughout the United Kingdom. However, the views I shall express are my own, though I believe that most retailers would agree with them. I want to speak first of the price element in inflation, of which one can say that the price of consumer goods accounts for about 50 per cent. The other half is accounted for by the price of services; but it is with the problem of goods that I shall deal first.
Naturally enough since the only evidence of the price of consumer goods available to the consumer is the retailer's price, it is that price which attracts critical attention, both from the public and from those who are concerned with price control. As your Lordships will readily understand, if, in an inflationary situation, the retailer's profit margin is limited, as indeed it is, and has been since last November, then the question of the effectiveness of the control must direct itself more pointedly to the manufacturer's price from which the retailer's price automatically derives. In this respect the Price Commission, as my noble friend said, has been doing its best within the somewhat limited machinery available to it. The system of application for price increases by major manufacturers on an argument of allowable costs is by no means perfect, but it has certainly achieved a steadying influence, at least to a limited degree.
The weakness of the system is that its impact on the totality of item purchases by the retail trade is small. It is so small that most trade buyers cannot observe it in the daily round of their buying. To them the rise in manufacturing prices seems at this time just as inexorable and shocking as does the rise in retail prices to the buying public who have no knowledge of manufacturers' prices. Much has been said in all the debates and discussions on this subject about the need for watchdogs of retail prices, and my noble friend referred to that. There is an elaborate machinery for using the Weights and Measures Inspectorate for this purpose. Equally, the consumer is encouraged to report prices in the shops which appear to be excessive. In present circumstances such supervision, whether professional or amateur, is accepted calmly enough by
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the retail trade, since with the controls of margin that are in force all this "watch-dogging" is superfluous, except in respect of those fools and knaves who exist in every walk of life. Of these there are no more in retailing than in any other activity, although the retailer is more in the public eye. What therefore the retailer would like to see, if control in detail is necessary—and I do not Quarrel with it at this stage—is a more critical supervision of the prices which he has to pay to his suppliers and from which his price, under control, derives.
If I may digress for a moment, in all this discussion on the relationship of prices in the shops and prices from the supplier we should not lose sight of the considerable change which has taken place in the past ten or fifteen years in the improvement in the organisation and exercise of the buying power of large retailers which has certainly had a steadying overall effect on manufacturing prices and is still exerting that influence, although at this time it is perfectly obvious that it is neutralised by the more powerful pressures to which my noble friend referred. In any case, although the big battalions of retailing exert a strong, competitive influence on retail prices generally in the High Street, they cannot influence the prices which their lesser competitors have to pay for their supplies. Indeed, it is worth noting in this respect that it is possible that the smaller retailer—I am not talking about the shop on the corner, but about the solid but small retailers—may well pay more for their merchandise as a result of the pressures of the buying power which the major retailer exerts.
The smaller man is then squeezed between the millstones of higher purchasing price on the one hand, and the competitive retail price established in the High Street. He cannot move far from that retail price. His resource therefore—and this again is a comparatively new innovation—is to join one or other of the buying associations, and thus combine his buying power with others like him. The expansion and growth of such associations over the past few years has also had a beneficial downward effect on prices (both in cost and selling) and has combined with that some preservation of the profitability of the smaller retailer which must be in the public interest if we are

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to maintain an efficient distributive system.
I am well aware that the control of retailing by gross margin per cent. of turnover, which is the system now in force, is criticised because it means that rising manufacturing prices create a larger cash margin in the hands of the retailer at the same gross margin per cent. In respect of that criticism, it must be remembered that under this system the retailer has no allowable costs, as has the manufacturer, and must therefore absorb all increases of expense within his controlled margin. In to-day's conditions this is proving by no means easy, and by the year-end it may well be that as a result of the stringencies of this policy the net profit control of retailing will prove to be superfluous. The difficulty of the Price Commission in judging the effect of these controls is that the seasonal nature of the retail trade makes it impossible to find short-term proof of its effectiveness. There will be variations in the quarterly returns which will be explainable. It will not be until we get the annual returns, mostly still 9, 10 or 12 months away, that it will be seen that the result required by the Government is being achieved, and by then we shall be well into Phase 3, or so we would hope, and therefore to a certain extent the proved success of this control will be irrelevant. I am simply stating that it is succeeding.
The only proof of the success of price control generally lies in relatively stable prices in the shops, and through no fault of the retail trade we are by no means in that happy position at present. Equally, if we are to have to consider further systems of control in Phase 3 I do not believe anybody would want to impose a system in which the whole burden has to be borne by the retail trade, and which, therefore, in a time of rising costs, if those costs were unchecked, would destroy the viability of the retail operation. Therefore we must look for a revision of the present system sufficient to ensure that manufacturers' prices are sufficiently supervised throughout the whole field of finished consumer goods. It is at this point that I differ from what my noble friend said. I do not think he has a sufficiently comprehensive view of the situation.
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One must take into account, for example, that any chain of department stores may have supplying them at any one time as many as 30,000 separate manufacturers. Therefore supervision is an enormous task. It is true, as my noble friend said, that all manufacturers have a duty to abide by the Code, whether they are required to pre-notify increases or not. What is not sufficiently known, and is not sufficiently clear, is that these pre-notifying companies (category 1 in the White Paper), those with annual sales of over £50 million, are only a small minority by number of firms in the whole manufacturing scene —I would guess 100 or 200 at the outside. Equally, category 2, those with annual sales of from £5 million to £50 million, who must report price increases after the event, amount to only one or two thousand. The totality of those at present under inspection by the Price Commission are only a fraction of the whole. The many thousands of the majority who do not report, although they must keep records which will sooner or later be inspected, do their best to comply with the Code. But the application of the Code is extremely complex, as indeed the Price Commission has been finding. It may be many months before the real impact of these controls for this great body of suppliers can be assessed and by that time, although as I say I do not doubt they are doing their duty as best they can, the horse will be out of the stable.
I see two possible palliatives which may improve the effectiveness of the present control. One is—and I admit that this is almost laughable because it is so slight—that every supplier's invoice, regardless of his reporting or his record-keeping status, should bear a statement that any price increase contained in it complies with the Code. That is, if you like, a formality. It is no great solution but at least it would be a reminder that price control remains a continuing responsibility for all of us, whether we are manufacturing or retailing, all the time, regardless of the size of the enterprise. The second suggestion which I put forward, possibly with some reluctance because I know it will be by no means popular, is that all manufacturers, regardless of size, should have a duty to report

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increases in price, so that the Commission can see the complete picture and not only that small section which is now coming to its notice. In discussing all this, one has to bear in mind that the forces of competition or of example in manufacturing are by no means so strong as they are in the retail trade in the High Street, where competition sets the pace in full view of Press and public.
Of course, both my propositions, for what they are worth, suffer the disadvantages of all attempts to obtain control item by item in that comparison of prices invoice by invoice must relate to truly comparable items of merchandise. Nevertheless, they might have some uses and they would avoid a situation which will surely come, and that is (and my noble friend referred to this) that sooner or later when the Price Commission get round to checking the record-keeping companies inevitably it is going to find that some have done their sums wrong and are going to demand the lowering of prices, and there will be considerable odium attached to those orders when they come out. In my opinion, at the present stage the key to price control is at the point of supply to the retailer and not only at the point of sale to the customer. It is to this that detailed consideration of Phase 3 policy should direct itself.
On the control of net profits I have only one thing to say, briefly. I believe that for both manufacturers and retailers it is a dangerously blunt instrument which can both stunt growth and, even more importantly, promote inefficiency in the control of costs. I do not doubt that whether one was in the C.B.I. or in the Retail Consortium or any other trade body, we should all be in agreement on that.
The other half of the price element in inflation is services—rents, mortgage and other interest, rates, fuel, travel to work —although I know that travel to work is only of great importance in London and the great conurbations. I firmly believe that greater control exercised over this sector of the family budget would enable us much more easily to ride this storm of world prices and world shortages which has come upon us; and, equally, if we exercise control as firmly there as we do upon prices in the shops we should
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avoid the dangers to further growth of efficient production and distribution which excessive control of net profits continued too long will undoubtedly bring.
My Lords, on pay I have only two points to make. One is that there is no question at all, however much the Pay Board may be presently denying it, that the Pay Code has created a pressure on staffs to change employers in order to obtain a higher rate of pay for the same or very similar job. Against this, of course, the Pay Code provides no adequate defence since the requirement of the Code would not appear to be enforceable. As a result, there is now going on, certainly in the trades in which I am interested, a general post of employees between company and company of the same type, which cannot be desirable in itself and leads inevitably to anomalies and frictions if not to positive breaches of the Code when the employer seeks to replace the staff which he has lost. This is going on the whole time. It is a serious situation. I cannot pretend that I personally see any answer which is not wholly restrictive of individual freedom. Nevertheless, I believe that an answer must be found in some form if the Pay Code is to remain valid in Phase 3.
My second point on pay is this—and it applies in particular to my trade. This trade has been too low paid throughout its history. This last year, which, thanks to a Government-inspired consumer boom, has been profitable to a degree unknown for many years, seemed to offer to retailers the opportunity to put their pay scales on to a level competitive with other employments. But for the pay freeze this offer would have been readily seized, and indeed some companies, because of the way their negotiating year went, were lucky in that they were able to make considerable increases before the freeze struck. But for most others the opportunity was destroyed by the freeze. The emphasis on priority for the lower paid, given by the Government, is relevant to the retail trade as a whole, and in planning Phase 3 it must be borne in mind that retail staffs have a strong claim in this respect, and that the profits of retailing must be sufficient to meet it.
In some quarters, which shall be nameless, the profits of retailing have been

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subject to attack. As I say, through the years they have been low, too low I think for efficiency, too low to enable the industry to compete in the labour market, certainly low in comparison with other industries. During these last two years, particularly in the last year, profits have risen sharply. But that rise reflects two factors. One of course is the sharp upward trend in the level of disposable incomes generated by the Government's policy, and the other is the permanent factor that the retail trade is highly geared in the relation of turnover to fixed expense; and therefore a sharp rise in turnover at any time for any reason inevitably produces a sharp rise in profits. By past experience, that happy situation does not endure very long; but I would stress, and it is fair that I should do so, that even at to-day's figures the profits of retailing are in the main less than those of manufacturing or of other services, as indeed they have always been.
The fact is, of course, that profit is not simply the popular "acceptable face of capitalism"; it is the body and the brain and the breath of it, and if some day it becomes less acceptable, then we shall have to find some other system, and in my opinion a very bad day that will be. Therefore, I suggest it would be better that all sides of industry should get on with the job of trying to assist in moderating inflation by the united effort of every sector, rather than bicker about the profits of one sector or another. Certainly the sooner we are out of this wood, the better. Certainly in Phase 3 we should hope to see a greater freedom in terms of net profit, and if the price of that is a more precise effort to control the prices of our manufactures so that that control may be reflected in the retail price (as indeed it would be), that would be a fair bargain for us all. But it would only be half a bargain if the same pressure were not exerted equally on the service element of the household budget, and I was rather sorry that my noble friend did not refer to that sector of prices. And, if I may say so, it will be no bargain at all if in Phase 3 we cannot see the same laudable effort on all sides to restrain wage demands which have been our experience in this year so far.
5.1 p.m.
BARONESS WOOTTON OF ABINGER: My Lords, in spite of the optimism of the noble Lord, Lord Windlesham, about the future, looking back over the battle against inflation and currency fluctuations I think we have a rather sorry tale to tell. As regards currency fluctuations I have lost count of the number of times in the last forty years that we have had acute international monetary crises. Finance Ministers have met in panic-stricken conference and have returned to assure us that they have laid the foundation of a more stable system in the future. If this structure is ever built it will be blessed with remarkably solid foundations. I cannot refrain from reminding noble Lords opposite that at a late stage in the campaign for the 1970 General Election, at a high level of the Conservative Party it was forecast that if the Labour Party were re-elected there would be a second devaluation. The word has been dropped, but the phenomenon has reappeared in its starkest reality.
Then if we look back at what the Labour Government did, they too took very short-term views. The Labour Government passed a Prices and Incomes Act in each of three successive years, and each of those Acts was under sentence of death from the day it reached the Statute Book; that is to say, the date of expiry was written into the Act itself. There was only one feature of that legislation that was intended to be permanent and that was the Prices and Incomes Board. That, of course, was "washed out" by the new Government when they came into power, and since that day the Leader of the Opposition in another place, much to my personal regret, has expressed the view that a statutory incomes policy has really no future. Meanwhile the Conservative Government have staggered from phase to phase—short-term policies again—and have shown a remarkable lack of originality. The first proposal that came from the Prime Minister, which was for £2 a week all round and anything up to 5 per cent. increases, was in fact—although I think it was not noticed at the time—borrowed from the Republic of Ireland. It has since been modified to £1 a week all round and 4 per cent. for the group. Thereafter we followed somewhat slavishly the United States of

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America in establishing, not a prices and incomes board but a Pay Board and a Price Commission and in introducing some remarkably complex provisions about the regulation of profits on the basis of the average, based on two or three years within a recent period.
I would certainly agree with the noble Lord, Lord Windlesham, that our objectives, like his, are expansion and countering inflation. I regret that he omitted a third objective which weighs, I think, equally heavily with noble Lords on this side of the House, and that is the fair distribution of increasing income. All these objectives are long term and I do not think we can persuade ourselves that a succession of staggering from phase to phase and a succession of short-term legislative Acts will produce the results that we all desire, and particularly the results that we on this side of the House desire. What has been accomplished so far is that it has been demonstrated that wages and salaries can be held down pretty firmly to a prescribed formula for a short period. Heaven knows what will happen when that period is over, as we embark on Phase 3!
It has also been shown—and I think we must be fair to the Price Commission—that something can be done to control prices, but certainly not enough to convince the public that inflation is under control, or anywhere near under control. It is to the credit of the Price Commission that during May and June—their first two months of operation—55 per cent. of the applications submitted to them were either withdrawn or modified. I think the noble Lord, Lord Windlesham, gave a later figure in his speech but I am afraid I did not catch it. I myself am sceptical whether any kind of price control can really be effective if operated on the present lines. I am sceptical for two reasons: the first is the magnitude of the necessary operation. The Inland Revenue authorities recognise that there are about 22 million income receivers in this country and we do not all buy only one thing. If we all bought one thing there would still be 22 million prices to control—unless we all bought the same thing. Even the poorest of us buy scores of things and many of us buy hundreds of things.
Secondly, price control, if it is to be really comprehensive, has to cover such
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an enormous variety of products that the opportunities for cheating are too easy and too many. I would ask your Lordships to think of all the things that you have bought, or your wives have bought for you, in the past week or two, and for which you have been charged more than you were the week before, and to ask whether these could possibly have come under the eyes of the Price Commission. I would ask you to walk through any supermarket or any main shopping centre and see the variety of commodities which in this so-called affluent society are exposed for sale. When things are precisely measured by weight, capacity or size it is possible perhaps to control their prices; or when there is only a given stock of them, as with land and, to a lesser extent, houses, it may be possible to control their prices. But when things are not thus precisely measured it is extraordinarily easy to cheat, and I think one of the experiences that most of us have is that many of the commodities we buy suffer from a wasting disease—each time they come on the market they are a little thinner and a little smaller than they were before.
Equally I am sceptical about the extraordinarily complicated provisions about the control of profits. Profits are residual: you do not know what your profits are until you have either made them or not made them. Therefore any control of profits in advance of your making them seems to me to be highly impracticable. Because of absence of data—and for no other reason, I think—the Price Commission has not yet got around to grappling with this problem, and it will be interesting to see how they do grapple with it when it comes within their grasp. So I would say that we must have a new approach to some of these problems and not just copy the Americans or the Irish.
I should like here to say something about the language that we use, because language is often revealing and significant. In the heyday of classical economics it used to be thought that both prices and wages were inexorably governed by natural laws which were not susceptible to any human intervention. Therefore we spoke of wages going up and prices going up and wages and prices going down. Some people held this doctrine so strongly that they said there was no point in forming trade unions, because after all

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the negotiations and all the bargaining and all the strikes no one could hope to get any other wages than the natural laws would have given anyway. No one believes that any more, or they would not address the trade unions in the castigatory terms which are to-day fashionable. But we still say that prices go up and down as though by some power other than human intervention.
I think it is time we realised that no price ever goes up or down of its own volition; it goes up and down because someone changes the price ticket. The same is true of the values of currencies. I know people change price tickets and buy and sell currencies because they think it will be to their advantage to do so; they will make some money or will avoid money losses. They are therefore under pressures, but nevertheless there is a human action. I think it is important that we get this firmly into our heads.
My Lords, this is where it becomes of some interest to see another side of the 55 per cent. of the applications to the Price Commission which were either withdrawn or modified. If there had not been a Price Commission the increases would presumably have been brought into effect; the prices would have been put up because the people who put them up thought that they would make more money. They therefore have a vested interest in inflation. Equally it is true that when people buy and sell currencies they buy up currency when they think it will appreciate and sell when they think it will depreciate, thereby making self-fulfilling prophecies, amiably described as "hot money ". These movements of currencies are simply the result, when they are not related to the economic realities of the comparative price structures of different countries, and short-term movements are not; they are simply the result of people's estimations of how they can make some money. In some countries they shoot speculators or imprison them. These are rather extreme measures and I would not be likely to commend them, but I think we also take an extreme view when we regard these movements of "hot money" and prices as being not the results of human action but, as it were, acts of God.
Therefore, my Lords, I want to make one practical proposal; that is, that we
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should take steps to see that nobody has a vested interest in continuing the inflation, and that nobody makes money out of it. I think this can be done only by fiscal means, and though my noble friend Lord Balogh was a little scornful or cautious about fiscal means, he had in mind something rather different from what I want to propose. I want to propose that we should proceed like this. First, we should decide—and I am sure the Government will go along with me on this—what is the available product which can raise real income in the next year. How much is there to distribute in real terms? Let us say the Government continue to realise their target of 5 per cent. growth. I would rather they based this on 5 per cent. growth that has been seen in the past rather than on some future estimate, but let us say it is 5 per cent. Then I think they should say in Phase 3 that all of us can have an overall average of 5 per cent. increase in actual income, wherever our income comes from, whether it comes from business, whether it comes from dividends, whether it comes from pensions, a wage or a salary—an overall average. Then I think they should make graded percentage incomes within that average, saying that groups at the bottom of the income scale should have 5 per cent. plus x, and groups higher up should have 5 per cent. minus y, and y may, in some instances, be 5 per cent. when one gets to very high level. That is how they should try and tackle the problem of the distribution of income within the limits that are set by our increase in productivity.
My Lords, may I say in passing that I hear with great alarm that the Government are falling for the attractions of threshold increases in wages. How can anyone think that a system of threshold increase in wages, in which wages go up automatically when cost of living figures go up, can possibly be put forward as a counter-inflationary programme? It is true that wages are not the sole cost in the price of things we buy—certainly domestic wages are not the sole cost—but it is true that wages are the single largest factor in costs. Therefore if we are going perpetually to increase wages, pari passu with prices, we are committed to an inflationary circle. That is why I would rather we regulated this by keeping the level of people's

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incomes within the overall rise in productivity, and that we distributed any increase more to the lower income groups and less to the higher income groups.
We should also need a Prices and Incomes Board—or the present two married together—to look after a number of exceptions to this rather simple proposal; to look after cases, as the Pay Board has to now, where people get promotion or change their jobs and therefore are entitled to something more than £1 plus 4 per cent.; and to look after those cases in which certain groups of workers claim that their work is under-valued—that is to say, they stand on a lower rung of the wages table than they ought. I believe that precise criteria have to be laid down to determine what are reasonable grounds for saying that a group is under-valued, that its work is under-valued. These are the questions that will need to come before a reconstituted Pay Board, or even the existing Pay Board.
My Lords, having done all that, prescribed and permitted increases, I should hope on a graduated scale, tapering off and allowing for special cases (and there are some special cases), and allowing for people to change their jobs and so on, then I think we should impose a 100 per cent. tax on net income to mop up anything that anybody had got over and above what he was permitted by this policy. It is very simple: you would take a man's excess unearned income, investment income, his excess wage or salary he had managed to wangle; you would take the excess he had got out of his business profits. This is a simple proposal in some respects, and it obviates a number of current difficulties. It obviates the complications of profits control because you do not control profits before they exist, but at the moment when they get into the pocket of some known individual.
Secondly, it would even obviate the necessity for dividend control and would achieve the same object in a more fair way. Dividend control is unfair because dividends are sometimes paid to people who are well off and sometimes to people who are not so well off, to whom dividends are an important element in their incomes. If you tax any excess as an excess of personal income over what the incomes policy allows, that will eliminate
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unfairness. It will also open the door again to collective bargaining under certain restrictive conditions; that is, under conditions that no bargains get approved which actually result in people enriching themselves at levels beyond those prescribed for that section of the population by our incomes controls, our proposed income grading.
My Lords, this is a proposal which involves a good many complications. There are a good many consequential problems to be dealt with, and I am prepared in due course to try to cope with these. I shall be very interested if noble Lords can indicate some that I have not thought of, or perhaps indicate even some general sympathy with the idea. I do not suggest that the scheme I have described is a panacea, I suggest it because I think that it is very worth while, whatever else we do, that we try to establish a system in which no individual is able to enrich himself beyond the limits allowed under the incomes policy, and in which nobody will have a vested interest in the continuance of inflation. If nobody had a vested interest in the continuance of inflation, I think we may find the problem of dealing with it very greatly simplified.
5.20 p.m.
LORD DONALDSON OF KTNGSBRTDGE: My Lords, I have never actually been a pupil of my noble friend Lady Wootton of Abinger but I always feel as if I had, and I wish I had been. I shall not discuss her proposals in detail; we shall all want to read them in Hansard. In the course of my speech I am going to make proposals for more positive action, and I wish I had made hers. Mine will be a great deal vaguer, but I am prepared to change them for hers at any time. In any case, as nobody living, with perhaps the honourable exception of my noble friend Lord Balogh, seems to know how to deal with the inflation which is threatening the comfort and security of the developed world, it may not be out of place for someone like myself who is neither an economist nor a businessman, nor indeed much of a politician, to express some views.
I would begin by expressing appreciation of my noble friend Lord Beswick's wide and overspreading attack on the present situation; and here we come to

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the difficulty in the meaning of words to which my noble friend Lady Wootton referred. The noble Lord, Lord Windlesham, thought it was a harsh attack; I thought it was a particularly mild one. The noble Lord, Lord Windlesham, said he was not going to be defensive; I thought that, very ably, he was exactly that. However, this is a question of words. I am glad that my noble friend put on sackcloth over the pound and 10s. It was a terrible decision, I think. One can only assume that it was decided by the toss of a coin, because no intellectual process could ever arrive at the conclusion that it was better to have the minimum coin one-hundredth of a pound than one-hundredth of 10s. It was one of the worst things done in many years, and I was very happy when my own side admitted that they were wrong, particularly as I got into trouble over the sixpence, if I remember rightly.
This leads me straight to the problem as I see it to-day. I believe it has moved over from the purely economic to the psychological field. The economic remedies fail to work not because they are in themselves inadequate but because people no longer believe that they are going to work. This is the point my noble friend was making at the end of her speech. The Government have not the conviction of the people behind them. As my noble friend Lord Beswick pointed out in some detail—and I support him—the Government have not done what is necessary to get the people behind them. I cannot resist here quoting the famous epigram of Monseigneur Ronnie Knox:
"They have turned their backs upon the people and now they claim that the people are behind them.".
I do not think that enough attention has been paid to the extraordinary change brought about in our social fabric by the runaway rise in property values. Here I am thinking not of the speculators, whom my noble friend has sufficiently castigated and whom most of us thoroughly despise; I am thinking of you and me, and particularly, in this case, me. Anyone who has bought a house, whether on mortgage or not, before this current year—and some millions of the population have done just that—has seen his property increase in
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value from twice to 40 times, according to when he made his purchase. I bought my house, North of Regent's Park, four years ago, with the help of a building society—and I shall not disclose how much help. When I got in, it stood me at a gross figure of £21,000. Its bock value to-day is £50,000. My neighbour bought his house 20 years ago for £1,500, and his book value now is the same as mine. Neither of us has speculated or shown avarice, or even especial shrewdness; we have just lived in the ordinary way; we have bought the best house we could buy within the means of ourselves and the banks. We both paid in the normal way, yet our financial positions are transformed, mine by 150 per cent., and his by several thousand per cent. It is the most extraordinary situation.
What is interesting about this is that it is not only the rich who have gained, though, of course, as promised in the Bible, they have gained more than anybody else. The transformation is taking place across all classes and through all levels of income—except as always, the very poor, who never get a break however the economy twists and turns. The significance of this change is that there is a very large number of people, many of whom until now have never been well off, still less thought of themselves as rich, who in fact are now quite rich and getting richer as inflation goes on, simply as a result of having a share, through a mortgage corporation, in a house. They already have a perfectly satisfactory hedge against inflation, and this means—such, I fear, is human nature—that, whatever their intellecutal approach to the problem may be, they are not sufficiently frightened of the upward march of paper values because they are "all right, Jack".
We must not think that the values are no more than paper. Of course it is true that if a man sells his house for £50,000 he has to find somewhere else to live and has to buy in the same market. But he can reduce his commitment by taking a short lease of a flat for £10,000 and give £40,000 to his children. Even after capital gains and death duties, this is a real difference to his children; they are actually richer as a result of this curious development in the modern world. Or he can borrow money from the bank on the increased

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valuation and buy things like pictures, or even wine, or furniture. To live in inflationary times, as we all know, you have to owe money and own things. I have always found the former easier to do than the latter part of that proposition. But it is a pretty sound principle. Relative values have changed, probably for all time. There is at the moment hesitation in the property market, but it is only a pause for breath, though prices may not go on rocketing for ever. But in my opinion the property market will never go back to 1960 prices. There is a permanent shift in values and those who have benefited have made a lasting gain. Many have done so in all innocence, which I claim for myself and my neighbour. Many others have taken undue advantage, which we deplore, and my noble friend has already referred to that.
We find ourselves in this curious position, with an enormously increased capitalist class, drawn from all income levels and across the old class lines of society, and these people can afford to be sceptical about Government attempts to deal with inflation. On the other hand, we have a powerful trade union movement which sees the property owners, large and small, many of them in their own ranks, insulated against inflation; consequently the movement is inflexibly determined not to be the one group which bears the burden; determined, and with the power to assert this determination, as we have seen in the last few years. So we have a very large part of the nation either, like the property owners, insulated, or, like the trade unions, able to protect themselves against the evil the Government is trying to fight. This must make the Government's task in mobilising public opinion much more difficult; and, quite frankly, they have not done what they should have done to make it easier.
I should like, with all modesty—and here I would perhaps substitute Lady Wootton's proposals, if we agree with them when we see them—to suggest that there is only one way of regaining the cooperation of these two sceptical groups who constitute, in my opinion, the majority of the nation. My suggestion has been made a hundred times at least, but it remains, in my opinion, the only way. That is to do whatever is necessary--and I mean whatever is necessary
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—to hold prices down. This, of course, means the inclusion of food prices and rents, however difficult, actually or politically, this may be. Here I think there is something we can learn from the United States. As noble Lords will know, rigid application of their Phase 2 controls are pretty well confined to some 1,500 firms who are responsible for 45 per cent. of all sales, the rest of the 10 million firms being monitored much more gently. I am not competent to go into the details, but as I understand it, the price control was applied to firms rather than to commodities. In other words, it was the total rise in profit-making of the firms rather than price by price. This seems to be more flexible and effective. We have to worry less—as I think the noble Lord, Lord Redmayne, suggested —about monitoring thousands of small retailers, and more of effectively controlling the behaviour of the thousand or two firms that are responsible for most of the business.
The real headache, of course, as we on this side freely admit, is the external rise in prices. In so far as price rises are caused externally, it is necessary either to let them rip or to keep them down by subsidy. There is no other way. My suggestion, while I admit that subsidising imports cannot go on for very long, and can be only a highly temporary measure, is that at this particular moment a year, or at the most two years, of stable prices would change the atmosphere so drastically that much less fierce and damaging measures would thereafter be effective. This would mean putting back some of the tax cuts from which we have benefited in the last couple of years; but as we on this side did not approve of them in the first place I shall not waste time discussing that idea. We should regard this as a small price to pay.
There has been some criticism of the Common Agricultural Policy in the Common Market. I should like to say, on behalf of those of us who have steadily supported our entry into Europe, that none of us has any illusions as to the inflationary effect of the C.A.P. as it now stands. We have said, echoing Dr. Mansholt—who has said it much more strongly than any of us, and for many years—that food prices are too high and are leading to over-production. This year's butter mountain is not quite

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so large, I believe, as the 1969 one, but it is absurd and tragic that there should be one at all. The C.A.P. has a direct effect on world economy, and is forcing inflation on us by keeping up prices artificially. It is vitally important that the policy should change. I do not believe for a moment that we can change it from over here, but I believe that we have some chance of changing it with our two powerful representatives in Europe. I think that this fact in itself, added to the logic which is already being exercised by Dr. Mansholt and his colleagues, is a sufficient reason for supporting our entry into the E.E.C.
The last Government, when my Party was in power, sacrificed many of their most cherished aspirations on the altar of the balance of payments. But by great determination on the part of my right honourable friend Mr. Roy Jenkins the situation was eventually transformed. The Party had to disappoint many of its supporters, and actually lost many of their votes at the General Election, because it did what it believed to be the best for the country. I make no comment on the heavy price paid for this, and the lighthearted way in which it has been dissipated; but it seems to me that the reason the present Government are so reluctant fully to control prices is that such action would be so unpopular with their main body of supporters, and that is the business community. People do not like being controlled, and still less do they like their prices being controlled—and I do not blame them. But I believe that if this Government are going to do what they ought to do they must be a little fiercer, a little braver; they must be prepared to give offence, as we did, in the nation's interest. I see no other way of producing a psychological atmosphere in which less drastic measures might be effected. I hope that the Government will fix their mind on this one objective, the control of prices; for without it we shall never get out of our difficulties. I have no hesitation in supporting my noble friend's Motion.
5.35 p.m.
LORD ORR-EWING: My Lords, I must make an apology, in that they are discussing metrication in another place and, as I am Chairman of the Metrica-
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tion Board, I feel that it is my duty to go and listen to some of the speeches made there during pant of this debate. I hope your Lordships will excuse me for any discourtesy if I am not in my place for all the speeches.
I think that we do well to focus our minds on a problem which surely is the most devastating problem which this country and which democracies have ever had to face. I think that it was Marx, and Engels endorsed it, who said that "Religion is the opium of the working people".
A NOBLE LORD: Opiate.
LORD ORR-EWING: Opiate; I thank the noble Lord. He has a better knowledge than I. I think that it is true to say that to-day inflation is the opiate of democracy. Therefore, we do well, at the end of this Session before we rise for the Recess, to focus our minds on what is happening. I do not know that I differ with my noble friend when he said that the noble Lord, Lord Beswick, made a powerful speech, with its constructive points, too. I would say to his noble friends behind him that he always looks as though he is about to bite his opposition, although his words are very often more kindly, so those who face him may feel he is being more hostile than those behind him. That is my interpretation of the different views expressed on his speech. He said in the course of his speech that he did not wish to argue about the standard of living. I think that this is important because we are moving to a very important juncture, Phase 3, where we have to consider whether the Government have acted in reasonable fairness—and this arose out of the last speech from that side.
It is fair to say that the real standard of living in the six years of the Labour Government rose by 8½ per cent. in real terms, and in the three years of this Government it has risen already over 13 per cent. So it rose 8½ per cent. in six years and it has risen 13 per cent. in three years. Of course this comes largely from the fact that we have switched over to a growth economy. Industrial growth, as your Lordships know, has gone up between 5 and 6 per cent. I do not think that anyone in this House would think that that is a bad thing. I suggest that

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the greater productivity partly comes from the reduction in unemployment, partly I think it arises out of incentives, partly out of better management and better organisation, and to some extent out of higher investment, although my own view is that we have not been investing enough of our rather small profits in this country in modern machinery.
LORD SHEPHERD: My Lords, when does one expect a result from the investment which the noble Lord is applauding? Was not that investment made during the period of the Labour Government?
LORD ORR-EWING: My Lords, if the noble Lord had listened more carefully he would have heard me say that we have not been investing sufficient of our rather narrow profits. If we look at our profit margins in this country, we find that they are rather less than those of our competitors and as a result we invest less than I should like to see. There has been investment, and that investment has to some extent contributed to the productivity. Of course, I concede that a greater effort by those on the shop floor is an important point too.
LORD SOMERS: My Lords, I apologise for interrupting so early in the noble Lord's speech, but may I ask him a question before he gets too far from this point of the standard of living? Would he not agree that standard of living is really rather a relative thing, and for those who live on comparatively modest fixed incomes it has become increasingly difficult? Admittedly for those whose wages have been constantly rising it has become easier.
LORD ORR-EWING: My Lords, I would absolutely concede that, and that is why I think that it is so important that we should, as a body corporate—all Parties—be dedicated to trying to avoid the increasing inflation which has undermined those people who have been most responsible during their working lives and who have tucked away savings, which is in the interests of our country as a whole and which should be in their interests as well. It is a very important point that the noble Lord makes.
Coming back to rising prices, we have to acknowledge that the biggest contribution to them, the biggest contribution in
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the price of any of our goods, comes from wages. On average over 50 per cent. of the cost of any industrial product in this country is wages. As the noble Baroness, Lady Wootton of Abinger, said, it is easily the biggest factor. The second biggest factor is the raw materials, and in this country we are generally talking about raw materials which are imported. That is why we have been knocked sideways—by the enormous rise in commodity prices—in our fight to contain inflation.
The Economist published an article on this issue a fortnight ago which noble Lords will have seen, where it showed a graph which really rose almost exponentially to hit a 70 per cent. rise overall in commodities in the last year. As the noble Lord, Lord Beswick, said in his opening speech, a 64 per cent. increase in copper has a devastating effect, particularly in our electrical industry.
LORD BESWICK: My Lords, would the noble Lord face the point which I tried to make and which noble Lords opposite have ignored, that this increase is more to us because we have let the pound go to hang?
LORD ORR-EWING: Yes, in any equation there are many factors, and that, I concede, is one of the factors. But the pound has not drifted down by 64 per cent., which is what copper has drifted up; the pound has not drifted down by 89 per cent. which is the amount by which wheat has drifted up, nor has it drifted down by 155 per cent., which is the increase in the price of raw wool. It is a factor, I concede, but it is not the main factor by any means.
LORD BESWICK: My Lords, probably the noble Lord was listening to my noble friend Lord Balogh when he pointed out that we had depreciated by a factor of 40 per cent. as compared with the Japanese yen. That is why, with their copper costing them only a 15 per cent. increase, they are such formidable competitors.
LORD ORR-EWING: Yes, my Lords, but as far as I know very little of the copper we buy comes from Japan; it comes from other parts of the world. But I think I had better continue with my speech, because there are others who want to speak and I am not yet being very

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controversial; I am terrified of what is going to happen when I get on to controversial issues. The cost of food imports has gone up by 25 per cent., and everyone knows how dependent we are in this nation on food imports. So there is the position where the cost of living in the last year has gone up by 9·5 per cent. But—and I think it should be stressed by all responsible people, and I re-quote figures from the Front Bench—earnings have gone up in the same period, not by 9·5 per cent. but by 14·2 per cent. That is a later figure than the April figure recently given by the Prime Minister. Should we not take some pride that this has been achieved without deflation? I concede that the noble Lord, Lord Donaldson of Kingsbridge, said that the Labour Government dedicated their whole effort to the balance of payments, but resulting out of that dedication came the squeeze, the deflation of our whole industrial life and a rising unemployment, amounting, I think, to 640,000 when they left office and which continued steeply upwards for a year or more thereafter. It is with some pride that we have used the balance of payments to increase our output, to reduce the unemployment and to thus make more use of all the people who wish to take up work.
I thought what was a little alarming from the noble Lord's speech—I got the message very clearly, and it was endorsed by the noble Lord, Lord Donaldson—was the indication that cutting taxation is unfair in the Labour Party's view. I would ask how you are going to increase incentive at all levels if you continue to take away from an executive or a working person far more of his earnings than any other of our competitor countries do? We are now taking 75 per cent. The noble Lord, Lord Diamond, shakes his head. Does he wish to take more than 75 per cent. away? If he does, I would say that he is unique. No other democracy takes away more than 75 per cent. of a man's earnings. They may find that lower taxation helps him to drive forward with ambition, and to make savings for his family which also help the economy of his country.
LORD DIAMOND: My Lords, the noble Lord knows that I must answer that, and I am grateful to him for giving
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way. I merely shook my head to contradict this myth, which every Conservative Front Bench speaker in the other House accepted was a myth, that we charge a higher rate of tax overall in relation to our gross national product than they do in other countries. If the noble Lord will be good enough to look at the figures of cur closest competitors all over Europe he will find that we are exactly in the middle of the league.
LORD ORR-EWING: My Lords, I cannot agree with the noble Lord—we had better meet in some private room with our two lots of tax tables and sort it out for ourselves because your Lordships would not have the patience. My view is that other nations may tax as highly as 75 per cent. but they do not tax from such a low level at 75 per cent. You hit the top rate in this country much earlier than you do in other countries, as I think the noble Lord would agree.
I think the noble Lord, Lord Beswick, was trying to be constructive in his speech—he put seven points where he thought that something might be done. He said that there must be a way of reducing demand and thus reducing inflation; secondly, he asked would it not be better to raise taxes. To him it is not only a question of not cutting taxes but he is advocating raising taxes in order to reduce inflation. I thought we had been round this particular buoy several times in the twenty years that I was in the House of Commons. We came to the conclusion that increases of tax, because of wage demands, because of the trade unions' very strong bargaining position, led to further demands and further inflation. I think that was the finding. He also mentioned food subsidies—and I am not going through all these figures again. The noble Lord, Lord Donaldson, also mentioned this subject. Of course the Government have not closed their minds to it. There is at the moment a holding subsidy on milk and there has been on butter. But it means very big money if you are to subsidise effectively. Even £500 million, which is a fairly substantial sum, means that you have to take 45p out of the wages of every married working man if you are not to do it cut of borrowing–45p every single week. That is a big increase, and I wonder whether if we

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take that away we are going to get agreement in the Phase 3 talks. Is it the sort of climate that you want to create?
Sometimes, because we see inflation happening in this country and only travel overseas perhaps in our package tour holidays once or twice a year, we do not see the day-to-day events as to what is happening to inflation in Western Europe. I have the figures here expressed in annual rates: Italy, which is much the worst, 12·5 per cent. inflationary rate; Ireland, with an estimated 10 per cent., is the second worst; Belgium, 9·2 per cent.; Denmark, 9 per cent.; Netherlands with 8·8 per cent.; United Kingdom, 8·6 per cent.; West Germany, 7 per cent.; Luxembourg, 5 per cent.; France, 5·4 per cent. Compared with our competitor countries on the Continent we are better than the majority, and I think this should be known. Those figures, by the way, are taken from the O.E.C.D. main economic indicators.
LORD BESWICK: What year?
LORD ORR-EWING: This year. I will give the noble Lord the estimates—this is the mistake of being interrupted, my Lords. I will give the whole brief to the noble Lord and he will learn a great deal from it in the end which gives the figures and the source of the figures.
I think also that this Government should take some pride in the fact that they have been able to recompense those who have been most hardest hit. The noble Lord, Lord Beswick, in his Motion did refer to this. He said it is "to mitigate the consequences of inflation on those least able to bear it." I think it is a proud fact that we now have the annual review of pensions, that pensioners will be getting in October 55 per cent. more than they were in June, 1970, against a rise in the cost of living of about two-thirds of that. So in real terms they will be getting substantially more to offset the rise in the cost of living. I think it is a matter for some pride that all National Insurance benefits now are going to be reviewed regularly once a year. I am sure that in an inflationary world this is essential, and it is just. The same applies to industrial injuries benefits, war disability benefits, supplementary benefits, and family income supplements. I think this is a correct effort to try to make things fair, and out of the increased industrial
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output to try to shelter those who are not able to help themselves.
I come now to Phase 3. This House will probably not meet again until the latter part of October, unless there is a real crisis, and we shall then be on the brink of the introduction of Phase 3. Some powerful voices are making themselves heard in the T.U.C., calling for the early re-institution of free collective bargaining. I take the view, as I believe the noble Baroness, Lady Wootton, does, that those days are gone for a very long while. However powerful and important they are, no group of men can feel that free collective bargaining within our democracy is a possibility for a long while to come. I hope that during these negotiations we shall hear the responsible voices of the T.U.C. playing their part—and there are many responsible people who see just the dangers that your Lordships see, if we continue with these inflationary difficulties—and I hope that the same will be true of the C.B.I.
If Mr. Scanlon, who predicted widespread industrial unrest, is right, then I would ask my noble friend on the Front Bench whether the Government are making contingency plans. We are deeply dependent in this country upon imported food, which has to be conveyed to our shops. We are deeply dependent upon deep freeze storage, and if the electricity supply was disrupted much of our food supplies could be at risk. We are deeply dependent upon electricity for running our sewage pumps, and for running the whole of our industry. I should like to ask whether some plans are being made, because, if they are not, any Government will be desperately vulnerable to the disruption which has been forecast. I hope that the Government will stand firm in Phase 3. It can only be in the interests of the whole country, and of every person who lives in it and who wishes it well, that they stand firm, and I hope that they will make some contingency plans.
LORD WYNNE-JONES: My Lords, before the noble Lord sits down, may I ask him whether he is basing his argument upon Marx's theory of the labour value in all production? It seemed to me that, essentially, he was contending that it is the labour content which is the important point, in which case I would acclaim him as a pure Marxist. If he

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does not mean that, will he explain how he can suggest that the labour content is not the important factor?
LORD ORR-EWING: My Lords, I thought I was at pains to say that the biggest factor in any product is the labour content. On average, it normally exceeds over 50 per cent., and therefore it is of supreme importance that we find some negotiating machinery which recognises that fact, which gives fair rewards, but which does not destroy our economy in so doing.
BARONESS WOOTTON OF ABINGER: My Lords, will the noble Lord just correct that last statement? He said that the labour content is the "biggest factor in any product". I think he will agree that it is correct to say "on average, in all products", because in some cases, such as electricity, it is a very small factor, while in other cases, such as coalmining, it is a very large one.
LORD ORR-EWING: I am sorry, my Lords. I meant to say "on average", because, as the noble Baroness rightly said, there are some products which have a very small labour content indeed.
5.54 p.m.
LORD WIGG: My Lords, I think the only connection that the noble Lord who has just spoken has with Marx, is with the Marx Brothers; and I say that in the friendliest way. His speech was a parody of what a young Conservative would have said in about the year 1925, just about the time when the Conservative Party decided to take on the trade unions after the First World War. The last part of his speech was extremely revealing. To the Front Bench he said, "Be prepared for Mr. Scanlon and his cohorts, when he and the trade union leaders are unable to accept the prescription." It is an old habit of mine, which I have brought from the House of Commons, not to read my speeches—I hope that the noble Lord the Leader of the House will note that fact—and also to reply because, essentially, this is a place of debate. The noble Lord made a great point of saying how earnings have risen and how the cost of living has risen. His argument was designed to stir the hearts of Conservatives up and down the country. The Government are great and
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friendly, and this is what they have done for the people of this country.
My noble friend Lord Brown will recollect what we inherited when we found ourselves in power in 1964. Did we inherit a favourable balance of payments of £600 million a year, which is what the present Government received from us? What we inherited was a deficit of £800 million in 1964 and, the most frightening thing of all, the deficit was running at the rate of £1,000 million a year. So if action had not been taken immediately, the situation in 1965 would have been worse than it was in 1964. If the noble Lord, Lord Orr-Ewing, does not recognise this fact, I am sure that the noble Lord the Leader of the House will recognise it. From 1964 until they went out of power in 1970 the Labour Government were living under the shadow of this enormous deficit which they inherited for political reasons. I say that because Mr. Maud-ling, as Chancellor of the Exchequer was setting the stage, as it is being set now. There was one dummy after another in the shop window, and we were left to pay the bills. During the last three years the present Administration have done people proud. But how? During this current year they are borrowing £4,400 million. Of course you can be generous with other people's money; every defaulting clerk knows that. So that the argument that things are better than they were has no substance at all.
Of course things are better in 1973 than they were in 1970. They were better in 1959. Do we remember the words of Mr. Macmillan then: "You've never had it so good"? When somebody reminded Mr. Macmillan that the terms of trade had turned in the Conservative Party's favour from 1951 onwards, what was his retort? He said, "What's wrong with a little bit of luck?" It was a little bit of luck when it was running his way. Only now, when the terms of trade have run against us, do we hear this Party of English gentlemen start to whine. Did we hear anything about the cost of living at the time of Korea? I fought an election in 1950 and in 1951. Every placard in Dudley had on it a stocking with a hole in it. It was no good getting up and saying, "We were doing fine until the outbreak of the Korean war". No one would listen. The Conservative propaganda was directed at exploiting rising

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prices. The same thing has happened again. In 1970, we were just beginning to get matters right and it is a tribute to the honesty of the Labour Administration that they did not arrange the dummies in the shop windows in order to win the Election.
LORD ORR-EWING: My Lords, will the noble Lord allow me to interrupt? Will he explain why the Labour Government went to the country one year before they needed to do so, if everything was so rosy? Should they not have stayed an extra year and reaped the wonderful reward which was coming?
LORD WIGG: My Lords, I am not in the confidence of Mr. Wilson on this point. I used what influence I had to urge him not to go, but he decided to go. If the noble Lord wants me to tell him, I think Mr. Wilson went—and I hope that the noble Lord will take note of this—because he was faced by the dilemma of entering into the Common Market.
I was always persuaded, and I still am persuaded, that basically my noble friend Lord Brown is right in the idea behind the national plan of using the resources of this country to the maximum at the expense of the City of London. It was the early dream of those who inspired our movement, and I believe it is the only way of getting out of our troubles, to have a partnership up to the point of production between the trade unions, on the one hand, and productive industry on the other. Of course, if in fact the noble Lord had read Marx, if he understood something of what Engels was saying about Marx's teaching, he would know that this is what he was preaching. The point of conflict in our society is not in the productive act; it is in the act of distribution. That is where the situation has gone wrong. This is why many of the speeches to-day are utterly and completely irrelevant: because the situation has now deteriorated to the point where we are all but powerless to put it right.
I have spent a few minutes—I hope I have not wasted them entirely—in saying to the noble Lord, Lord Orr-Ewing (I said it many times in the House of Commons and it is still true), that before he comes to this House he should, for Heaven's sake!, do some homework. What frightens me is that when he talks
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the affable nonsense he has talked to-day, not here (because not even on his own side does anyone take any notice) but when he gets outside he will be in a position to mislead his fellow countrymen, as I regret to say he has been misleading them for years. The only thing that this country wants above all, from both Front Benches, is to be told the truth. I read the speeches in the House of Commons last week with a certain amount of dismay, because it is my view that down the centuries the British people have never failed provided they have been told the truth—and they are not being told the truth to-day.
The conflict of which we get the reverberations is a world conflict: a conflict, if you like, between East and West. This conflict can be expressed in two words: the West stands for "consumption", the East stands for "conservation". In those terms, in the long run there can be no doubt who is going to win. Look at our own society. Inflation is not an abstraction; it is a matter of reality. To-day, money does not matter. Look at the profits of the banks last week. If you have a credit card or a Barclaycard, or if you go to any of the big stores in London, you do not need money. Indeed, to cash a cheque now you have to produce a credit card. This is the situation we have reached. It is true that the supporters of the Conservative Party—Hambros, Kleinworts, the shark moneylenders Rothschild—are all behind them to a man. They have made millions, untold millions. For example, I read that Lord Samuel made £1,000 million out of property. Did it come from Heaven? Did it descend on him like manna? Did it grow like mushrooms? Or did he filch it, and is he continuing to filch it, on every article that is purchased in every High Street in this country?
Property values, I suppose, could be expressed in these terms: that the property developers have in fact taken nine inches off the topsoil of Great Britain. They have done that to their very great advantage. Then there are the mergers that take place. What has Mr. Charles Clore, that prince of asset strippers, added to the wealth of this country? He has taken a hell of a lot of it! You have only to look in the field in which I was recently interested to see what happens.

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We have had the arrival of Mr. Maxwell Joseph alongside Mr. Stien, Mr. Clore and Mr. Corran. Of course, this is the biggest business in the country, with a turnover of £3,500 million a year. As long as this goes on it finds expression, and must continue to find expression, in the purchasing power, or the lack of it—it is a pre-emption of the purchasing power—of every household in the country.
In my view, this will not be put right by Governments, because although at one time it was regarded as the prerogative of Governments (this is at the heart of Mr. Powell's argument) to create credit, now the power to create credit has passed from Governments to private individuals—to banks; to the merchant bankers, particularly; to the discount houses and to everyone who issues a credit instrument which enables people to get goods. This is what it adds up to. If one has a look at what has happened in the United States—and what happens in the United States, of course, is what is going to happen in this country within a decade—one sees that the young man and the young woman marry and buy a house. They work hard to get the down payment; and when they have got the house they have both got to work, so they need a couple of cars. They have a deep freeze, they have a refrigerator, they have a power machine, and their holidays and their clothes—everything—is paid for on credit. So he gets a second job and she gets a second job. But, of course, there is a limit because there are only 168 hours in a week.
The fact is that in the West we have societies which exist for one purpose, and one purpose only—to consume. I laugh my head off when I talk about the power of investment. Where will investment go? It will go where it will make the quickest buck; that is where it will go. If you look at the advertisements in the Press or on television do you find them advertising the need for reinvestment in the shipbuilding industry or in steel? No!, it is in something to eat, something to drink, something to make you clean, something to make you smell nice, something for the cat, something for the dog. The emphasis all the time is on consume, consume and con-
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sume—and you pay for it as best you can. This is the stuff of which inflation is made. What does the trade unionist say? Every day when he turns on the television he is being exhorted to consume; if he is not being exhorted, his wife is; and if neither he nor his wife respond, then there are the children. All the emphasis is laid upon consume, consume and consume.
Of course, the Government, when they came to power, in their analysis—and I have no doubt they listened to the noble Lord, Lord Orr-Ewing—were guided by the statisticians. Mr. Heath did what Lord Orr-Ewing is advocating now: he took the trade unions on, and he created a pool of unemployment running up to a million. Then he found that he had to reverse his policy on every single issue. So now the tune has to change; you have to change the record. The record up till a few months ago was that the cause of inflation here was the grasping, greedy trade unions. So pass the Industrial Relations Act and get in a Tory stooge like Lord Donaldson—I beg his pardon; not Lord Donaldson: it ought to be, but, still, never mind—put somebody in there to do your bidding, and everything will be all right. Then they suddenly wake up and find that the trade unions are not the cause of the trouble. You can come to grips with the trade unions. After all, if Mr. Heath had been a wise man and had looked across the Atlantic, he would there have found a trade union movement which was an integral part of the capitalist system. So he changed his tune, and now the chorus is—and we have heard it to-day—world crisis. That is the new tune.
Now Heaven forbid that I should be the only person to draw attention to the Government's shortcomings! Let me go to an ultra-respectable source, the City Editor of the Daily Telegraph. That is Conservative enough; he is no crypto-Socialist. In the early part of this month he wrote:
"The Government is being less than honest in putting the price explosion down to appalling bad luck."
Of course world prices have got something to do with the Government's problem. It is hoped that world prices are going to level themselves out for our convenience. I do not believe it.

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In September there is a meeting in Algiers of the non-aligned countries. That fact has not hit the headlines yet, but it will, because the non-aligned countries, the under-developed countries, are beginning to add two and two together, and in the future they are not going to go on producing cheap food and cheap commodities because it suits the commodity market in London, Paris or anywhere else. We have entered a period when the economy of the world is being turned upside down. And it is being turned upside down, I suggest, because of the rising prosperity of the Eastern bloc. I am prepared also to believe that they frame their economic policies in order not to convenience us but to convenience themselves. In those circumstances, what we have to look at and face up to is a completely changed situation. I am one of those who are sufficiently Marxist, if you like, to believe that it is impossible to separate economics from politics; they are the heads and tails of the same penny. What one can do is to hope to have, at some time in the future, a rapprochement with the trade union movement. It is one of the tragedies of our time that we have a Prime Minister who is cordially distrusted by the trade union movement. They have had some; they are not going to trust him again. They can read, as I can. They see that the steps that Mr. Heath has taken, that his Government have taken, do not cheapen food but make it dearer.
I applauded the diligence of my noble friend Lord Beswick in commenting on the Intervention Board which the Government set up by Statutory Instrument through Clause 6 of the Economic Communities Act. On July 2, the Government published their revised Estimates. They are spending no less than £25 million—not in making food cheaper but in making it dearer. They are de-naturing food to make it unfit for human consumption, and they are also making an allocation of money in order to store food so that, for these commodities, the pressures of the market shall be relieved. This has not received much publicity. The Minister of Agriculture has found a new expression: commodities are now sold "into intervention", which means that the British taxpayer pays money to put these commodities into store or to destroy
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their nature so that they must be fed to animals and not to human beings.
There is something else about the Common Market which astonishes me. We were told that once we went into the Common Market there would be a tremendous flow of capital from the Common Market into this country. Again it does not make the headlines, but the deficit between the E.E.C. countries and ourselves is running at the rate of £80 million a month, £1,000 million a year—almost equal to the anticipated deficit. For the first time in the history of this country we have become net importers of motor cars. How the motor car industry was going to prosper! How many Conservative Members of Parliament came round my old constituency in Dudley to tell us what a wonderful time everyone was going to have because of the great Market! What has happened? The motor cars are not flowing from the West Midlands into Europe, but from Europe into this country. We have become the servants of economic forces, forces that we cannot control.
Let me be fairer than some. I readily admit that world prices are a major factor; and the Government have no control over them. I also believe that Mr. Heath has turned his back on his past and I am prepared to believe that his policy of compassion is genuine— genuine because it is also striking a note of political realism. I concede all that. But the fact is that Mr. Heath made a major error of judgment when, because of political pressures inside the Conservative Party, partly generated by the subscriptions collected by the Conservative Party, they went into the Common Market at breakneck speed, regardless of the consequences. So at the time when we went in we had to accept within a period of five years a year-by-year increase in prices. We have to do that—and the Intervention Board is composed of civil servants (which is very appropriate; Con O'Neil is the Chairman)—because the Board serve under a directive which comes from Brussels. There is no need to tell us, there is no need to tell the House of Lords or the House of Commons or the British people; they merely pay the bill. The policy is directed from Brussels.

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My Lords, there is one other point I want to make; and this accounts for my pessimism about the future. I do not think it matters much what I say to-day or, with respect, what your Lordships say; because at the end of the day this is going to be decided not by what men say but by what men do. Before many weeks are past, I forecast—and as a minor prophet I carefully keep the cuttings of what I say—that we are going to come back to a major economic problem which grows in size, in geometrical proportions, every day that passes. Here we are throwing away a chance of great magnitude. In September we start the GATT negotiations. Here was a chance for this country, with the support of the U.S.A., and with the support of many other countries who are facing the same dilemma that we face, to find a way of liberalising tariffs—even of going as far as the Labour Government tried to go in 1947, perhaps as far as the Havana Charter. But we are precluded from doing so as a result of the decision of the French that the decisions of the Common Agricultural Policy are not negotiable when we start the GATT negotiations.
My Lords, I say that no country that has not been defeated in war would accept such conditions as have been imposed on us by the French. We are for every purpose a defeated country. Britain is no longer independent; Britain is today a vassal of France. We are paying reparations to France as surely as the Germans had to pay reparations—and with the same economic consequences. The only way back, for me, is the recovery of this country's independence, plus the fact that the British people, sooner or later—either it will be the hard way or it will be because of their political genius—will face up to the consequences of the position in which they find themselves. I believe that then it will not be too late; but until then, nothing matters.
6.20 p.m.
LORD BARNBY: My Lords, it is always a pleasure to follow the noble Lord, Lord Wigg. His speeches always provide novel ideas and, not infrequently, some vigorously controversial ones. I shall not attempt to deal with them to-day, feeling that they will be so much more effectively dealt with by my noble
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friend Lord Gowrie when he comes to reply.
My Lords, in former times we used to have a long debate on the Finance Bill itself. That enabled many to challenge items of the Bill and to voice their views, even though there is no privilege of revision. To-day, we have had this Motion by the noble Lord, Lord Beswick, who moved it in his habitual persuasive and challenging manner. This, in turn, has been dealt with by my noble Leader, with his usual clarity and great vigour. To use his own words, my noble friend Lord Windlesham set out the Government's policy with vigour and effectiveness. I propose to take the opportunity which Lord Beswick's Motion has afforded us to make a few comments, because I share with others the perplexity about the Government policy of trying to pursue a policy of controls while at the same time a policy of undoubted monetary inflation. That, of course, means that the money supply has been largely increased and prices must obviously rise; and so I am perplexed by all this profusion of perplexity—nothing else about why this inflation should raise prices as it has done.
It appears that inflation is with us and has come to stay. Governments habitually have increased the money supply as a means of stimulating productive investment and as a means of containing politically inconvenient unemployment. But the increase of the National Debt is put by all authorities for 1972–73 and 1973–74 as something of the order of more than £6,000 million. That has been dealt with largely by the issue of Treasury hills. It is significant to notice that the Treasury bills in circulation to-day are £1,400 million less than they were some four years ago at the time of the previous Government. The Government have also encouraged borrowing abroad by large concerns. That must increase the total debt, but it helps to fill the gaps in the balance of payments. We must pay tribute to the success of the Chancellor in reducing taxation and also, in this position, in finding the means of persuading the public to buy long-dated securities, that is, bonds which increase the National Debt. But this is achieved only by high interest, which is loading our present difficulties on to posterity. If inflation is coming to be regarded as a matter that

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will live with us, perhaps a ten-year at 10 per cent. coupon at the end of 20 years will, in effect, come down to 4 per cent. or 5 per cent. But surely this whole idea of spending ourselves into prosperity is a big gamble. It may come off. It aims to produce higher investment and stimulate exports, and certainly must reduce unemployment; but it is going to increase the adverse balance of payments.
This is a time when, as the noble Lord, Lord Beswick, emphasised, the terms of trade are turning against us. Indeed I am surprised, looking it up, to see that it is up to a 12 per cent. increase in the adverse terms of trade. That is stimulated by the world commodity price rise, but also that must increase the buying power of the countries who get that advantage. I am among those who remember the time of similar need in this situation, which was followed by the Geddes Axe. Government spending was much reduced under all heads and greater efficiency undoubtedly resulted. At the present moment international exchange arrangements are in confusion.
We had a debate recently about the price of gold. There are many who feel that it is unlikely that we can restore any sanity into the exchanges until the American dollar is made convertible and the price of gold is increased, so that the absurdity of this two-tier system can be removed and again it will be one price. In the debate on the price of gold my then noble Leader expressed doubt as to whether there remained a place for gold in monetary policy. I am unrepentedly convinced that gold must have, and retain, its position in the monetary world because I doubt whether these special drawing rights will command the confidence of the world as a replacement for the power of gold, the one thing which must always remain scarce and for which there is an unrelenting demand. I repeat my conviction that at this time, when the energy requirements of the world are throwing so much wealth into the hands of the oil-producing countries, those countries are not going to put their faith in special drawing rights. They will demand something which is definitely linked to gold.
I think that savers must have some measure of protection. The idea is put
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forward that saving should in some way be linked to the wholesale price index or the price index figure. That involves a recognition that, as I suggested, inflation is here to stay. There are those who recommend that there should be a conversion of the outstanding National Debt and that all future debt other than Treasury certificates should be related to some common denomination, such as either of those two indices which I have mentioned. But again I am going to urge that consideration be given to national industries, in the interest of their efficiency, being obliged to go to the market for their required funds and not, regardless of their achievements, turn always to the Consolidated Fund.
Controls of any kind do not dispose of inflationary conditions in any economy; they only produce a temporary appearance of stability. There are these challenging alternatives that lie before the Government to supplement the vigorous policy which they have initiated and are following, as my noble Leader emphasised, which commit all of us to have thoughts as to whether this great gamble will come off. We on this side say it will come off, but the plans of men sometimes go astray. It is in those circumstances that we welcome the opportunity that this Motion put down by the noble Lord, Lord Beswick, gives us to express our views.
6.31 p.m.
LORD DAVIES OF LEEK: My Lords, I am sure that we have all listened with great interest to the noble Lord, Lord Barnby, and if I may, without sounding condescending, pay him a tribute, if I live as long as he does and have the ability to make such a cogent speech at that age I shall be delighted with myself. Time is an important factor and I will try not to repeat things that have been said, because much of it is already known, about the cost of living and the various increases. Let me try to take some things that have not been said. I agree with practically every word spoken by my noble friend Lord Wigg, because together more than 30 or 40-odd years ago one way or another we were studying these social problems. My study at home is strewn with pamphlets on this terrific problem of inflation going back to 1910 and 1913. I was reading only this morning a number of letters written to the

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Press by Montagu Norman, by Bradbury and others, all of whom occupied positions of status and power in that 30 or 40 years period. They spoke utterances as if they were making the laws of the Medes and Persians. But so too did President Nixon. When he was speaking of the Smithsonian Institute decision about what we were going to do, and he changed the parity of the dollar from 35 to 38 an ounce for gold, he uttered these words:
"This is one of the greatest acts in the history of the world."
How foolish some of these pompous people are. The real truth is that none of us is completely holding the open sesame to the problems of inflation. But there is one thing we demand, and that is that the weakest shall be protected from the inflationary processes that are taking place while mankind tries to unify and discover the answer to the problem. This has not been done.
As a bitter-sweet definition of inflammation—inflammation! Well, it is inflammation, as well; it is over-heated. The Gods were kind to me. That is exactly what it is: overheating of the body corporate. As a bitter-sweet definition of inflation, with an undertone of truth in it, inflation means being broke with a pocket full of money. In other words, despite the amount of money you have, you will not be able to get the basic necessities that you need. That is illustrated by the old woman, about whom such a fuss was made, that Harold Wilson's charming wife Mary saw go into a shop the other day. I have seen the same thing happen: a poor old woman going with an old-fashioned sixpence and asking for sixpennyworth of tomatoes when she did not understand the cost was lop or 2s. a tomato. She did not understand the difference between 10p and a sixpence. So part of our inflation problem is undoubtedly due to the fact that we rushed to change our monetary system. It cost us a great deal. Now we are going into the metric system. Who the hell wants to go into a pub for a litre of brown ale?
Mr. Heath, in his second year of office, almost a year ago this month—there he was with a Stock Exchange that had suffered one of the biggest falls ever, and there was a run on the pound. That
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would have been a crisis, but the support of a few five hundred pounds was found fairly easily. Trade and industry were offered, from the point of view of the Government, one of the most generous budgets in history. To try to encourage what?—and nobody has mentioned this to-day. Investment at home. But so weak is the patriotism of the pounds, shillings and pence that investment at home has been absolutely childish and poor. We have neither the tools nor the machinery to meet the rigour of competition that we are getting from the Common Market. I heard the noble Lord who is a tycoon of the motor car industry, when I was speaking against the industry going into the Common Market, saying that we were ready to move in and sell our cars, and that we had a bonanza market of 300 million people. What is the result? More foreign cars are being sold here this month than we are selling abroad. This is not due to strikes in industry, but due to the fact that there has not been the investment in modern machinery and in tooling for our industry at home.
LORD SELSDON: May I interrupt the noble Lord?
LORD DAVIES OF LEEK: With pleasure, but do not make it too long.
LORD SELSDON: Just one point on motor cars. One of the reasons why we are having foreign cars over here is due to the time for delivery of British motor cars, which unfortunately is in many cases up to three years.
LORD DAVIES OF LEEK: Yes. There has been a delivery problem with Italian cars, and with American cars, too. But whatever the excuses are, the fact is that for the first time in history we are taking more cars in than we are selling out. I am a bit upset myself. I bought an expensive car and within the first four weeks it had to go back for pretty well a new gear box. I will not name the car; it would be grossly unfair to take the opportunity of privilege in a case like that.
LORD DIAMOND: What was it?
LORD DAVIES OF LEEK: Why was not this money invested? Was it because industry and those who are at the head of it have no faith in the future of

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Britain? The Times of January 25 said:
"The Prime Minister predicted an end to stop-go economics and a prosperous Britain for all if only British companies would seize the opportunities to invest heavily in plant and machinery at home."
This was the hope of the Prime Minister; I do not blame him for it. But at the Press Conference on his return from signing away Britain's independence into the Common Market, that is what he said. What thanks did the industry give him? We all know that the giant monopolies, the multi-national companies that finance capital, are concerned with far more profitable areas than the British home market for investment than to build at home the productive economy of Britain. If somebody comes back at me and gives me the figures of the multi-national firms that have invested in Britain, my answer is (and I will explain this later on from the Midland Bank Review, and from Lord O'Brien's speech and Report the other day on multi-national companies) that these companies are moving that capital to spheres hitherto unknown and playing the markets all over the world—the dollar, the yen, the lira, the lot. It can do it, and can put Governments in their place, as this Government have been put in their place by the multinational Roche.
The Guardian on January 22 said:
"On the day that it was announced that unemployment in Britain had reached one million the stock market rose above 500 points for the first time in nearly three years."
This is absolutely the economics of bedlam. The old trick used to be to ask rhetorically a Labour speaker: "Can Labour govern?" What I say now is that capitalism had better pull up its socks, because it has not been able to govern since we have had sophisticated capitalism after the First World War. The old system before was roughly the Adam Smith laissez-faire; it was nearly true competition, but not quite.
There is no such thing any longer as true competition. If noble Lords do not believe me, I may say that there is a lot of thinking going on in City and financial quarters. I do not judge this House (as some do) as representing a crowd of fuddy-duddies. I have learned a lot since I came here. This is one of the most powerful places in Europe—it is
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loaded with tycoons—and I can prove it, because here is a list of all the donations to the Tory Party from industry for the last two years. For instance, Guest, Keen & Nettlefold gave the Conservative Party £33,000. I could mention a whole lot but I will just give a general total. The 1967 Companies Act requires every company to disclose in its annual report any donation over £50, and the amount given by these firms to the Conservative Party last year totalled £268,678. Nearly £750,000 was given by vested interests supporting the Conservative Party.
LORD ORR-EWING: My Lords, if I may interrupt the noble Lord—
LORD DAVIES OF LEEK: Wait a minute: I have not given way yet—
LORD ORR-EWING: What about the donations of the trade union movement? They give £500,000, £600,000, £700,000 a year.
LORD DAVIES OF LEEK: I knew that would come: that is a piece of cake, anybody would expect that. These people are different from the trade union movement—
SEVERAL NOBLE LORDS: Why?
LORD DAVIES OF LEEK: These people, my Lords, are non-political—all these great industrialists are nonpolitical, they tell me. The trade unions agree that they are political: that is the big difference. The noble Lord and his colleagues on the other side say they are non-political—does my noble friend want me to give way again?
LORD WIGG: My Lords, if I may interrupt for a moment, the noble Lord will recollect that he and I once had a collecting book that was sent round to all the firms in Birmingham and they were required not only to pay an amount but to sign their names, and it was made very plain to them that unless their subscription to the Conservative Party was up to scratch and their names were in the book, it might affect the placing of orders.
LORD DAVIES OF LEEK: My Lords. I agree. But let me get on because I do not want to take too long. I am tired of listening to arguments about this—for forty years I have read them inside out and upside down and I admire the

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wonderful phraseology. But the real fact is that we are still confronted with this, and inflation is an expected phenomenon of sophisticated progressive civilisation. In the reign of Edward II, for example, a sheep cost about sixpence. If anyone has studied the Industrial Revolution and what has been written about it they will see that inflation is something that we are told we must expect; it is a way of cushioning people against this by putting the creation of money into the right hands. The noble Lord opposite, my noble friend Lord Wigg and others have suggested that we must look at this. The old Encyclopaedia Brittanica tells the truth about banking: it contains this phrase:
"Banks create credit out of nothing."
Well, they do. The "nothing" of course is confidence. Multi-national firms can get credit out of banks from nothing on the basis of no investigation, whereas building societies, for example, want to investigate everything, and their top limit is £10,000. That does not happen with a multi-national firm: its name is almost good enough.
We are creating credit ad lib, and it is delightful to read a review in connection with the Midland Bank. There was an initial article in May, 1973, a paper by the General Manager of the Midland Bank. I will not quote it because the House can take the point, but it comments that in many respects the banking business of multi-national corporations may be little different from that of other large companies, but banks need some familiarity with the affairs of the group. But we can do better than that, because the Governor of the Bank of England, Lord O'Brien, came out with this—if the noble Lords below will stop muttering they will see I am throwing away masses of paper and shortening my speech. In the Guardian on May 12, in a very interesting speech, he lent his authority to the view that multi-national companies have played a big part in the recent currency upheavals. In other words, he is putting more blame on them for currency upheavals and inflation than ever you could put on the trade union movement. I know that the noble Lord, Lord Orr-Ewing, has gone out but I think, with the noble Lord, Lord Balogh, that the important fact here (which he did not
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say) was that the lower income group have 1¼ per cent. less real income now than they had two years ago because the cost of the basic foods which they must have has gone up more steeply than other costs. That is all there is to it.
Much as I would be delighted to give a little lecture on multi-national companies, in view of the fact that the Front Bench below me are straining at the leash, I will finish with this little point. It is an old English tradition—bless the English!—which is very deeply and widely held that it is not Party politics, or politics at all, to seek to retain things as they are. It is when you seek to change them that you are said to be political. So the Institute of Directors, the noble Lords opposite and all Independents and Conservatives on councils are not political. We are the only political animals. How much longer are we going to put up with this rubbish, when we see that £250,000 was pushed in by industry?
I will finish with what I think is a telling point, and refer to an erudite report, prepared for the Cabinet Office. Noble Lords will be able to get this from the Printed Paper Office. It is a report by the Inter-Bank Research Organisation entitled The Future of London as an International Financial Centre. This group of people—and whether you agree or not, they know what they are talking about—have come to conclusions very near to much that has been said on this side of the House. They say they searched for information and that:
"It was significant of the general readiness that now exists to discuss the City's problems openly that, of all Whitehall and City institutions with whom we requested consultations, only the Bank of England was reluctant to allow its officials to talk to us. Eventually we were in fact able to have useful conversations with one or two Bank officials."
And that is the Bank of England, which is nationalised! That is the Old Lady of Threadneedle Street—she has hardly got any thread but she is as pompous as my old aunt whose husband ran away from her because she was such a pompous old bitch! The Bank of England must be put in its place, like some other institutions. The object—and it is a pity that I cannot take 20 minutes instead of 17—of the terms of reference of this report was London's future as a financial centre. The report discusses the change

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in structure of the financial system; the impact of communications and computers on the technology of finance; the growth of multi-national banking; changes in the environment of banking and the harmonisation of Government policies with the E.E.C. Then comes the role of the company—and this I think is beautiful, and I will finish with this—
"The role of the company in modern society is going through a period of major reassessment. Both the C.B.I. and the Bank of England have study groups on the subject, and these are symptoms of the thinking that is going on. In due course, some argue, this reassessment could lead to the recognition in law that managements of companies should be accountable for the efficient running of their enterprises to groups other than shareholders, consumers, suppliers, local residents, etc., as well as employees. Company legislation and industrial relations legislation would be two means of implementing such changes. Developments of this kind would be of major consequence for City institutions, altering the whole concept of 'ownership' of companies. It is, however, most unlikely that within the next 10 to 15 years any such far-reaching changes will take place."
Nevertheless, it is a good piece of British thinking and along those lines I think we should do something to save our own country.
In 1906 Churchill said about the nonpolitical Conservatives that they were, and I quote:
"A Party of great vested interests, banded together in a formidable federation: corruption at home, aggression to cover it up abroad."?—
the dear old boy had an oratorical arpeggio here—
"The trickery of tariff juggles, the tyranny of a party machine; sentiment by the bucketful, patriotism by the Imperial pint; the open hand at the public exchequer, the open door at the public house; dear food for the million, cheap labour for the millionaire."
I do not believe that any longer; neither does anybody. But unless this country can get together along some of the lines of this Report our destiny could well be that of a fifth-rate nation, not a second-rate one.
6.50 p.m.
LORD SELSDON: My Lords, I am a little confused, I thought I had missed my place in the "batting", and that we may have been debating the Badgers Bill. I feel confused by what I have heard to-day. There have been many debates in your Lordships' House over the past
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two years that have been classed as economic debates. Many things have been repeated in different manner and guises, and I will try in a simple way to say the same things as I have said before. The question of our economy is not an insular one, it is an international one. There is one element which the noble Lord, Lord Windlesham, raised, the question of confidence. I ask the question: does anyone outside this country have confidence in the economic future of the United Kingdom? Does anyone inside this country have any confidence, either?
We seem to be suffering from what one might call an infestation of atropus pulsatorius—the common deathwatch beetle. There are various types of atropus pulsatorius. One might say first the tyrannicus, or the Government that nibble away at everyone else, destroying their confidence in the country; meeting a rough, tough bit of old wood and turning round and going back. There is then the operandus, or the unions, nibbling away at the Government, nibbling away at industry, bent on self destruction. There is the mercatorix, or trade and industry, which nibbles away at the Government and the unions. And now suddenly the Government are nibbling away at them and the circle is complete, and the house will fall down. Then we have another type, the senex, the elder statesman, who is bent on saying that what was in the past was good, and what is in the future will be bad, and again bent on destroying our society. I have to live in this country for another 35 years, or more. Some people would feel sorry for me if I listened to what I have heard in your Lordships' House to-day and on previous occasions. I happen to be optimistic; I happen to be fairly confident that this country has a fairly substantial future.
What is the state of the nation? Have we declined so far that we cannot recover? Is there no "J" on the bottom of the "J" curve? People seem to be confused. They produce a mass of statistics; it seems as though there is only one pot and it is not big enough. One remembers that it was Robbie Burns who was invited to a poor supper, and, not having a big enough meal, said the Grace:
"Lord, though the taties be but small,
Lord make them plenty for us all."

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The question of robbing Peter to pay Paul: noble Lords opposite feel they are better at robbing Peter and that they pay Paul in a more generous way; noble Lords on this side of the House think they can rob without people noticing it and therefore everything is improving. But is our economy so great? There has been a 25 per cent. growth rate over the past ten years. France, that country we looked down on for so long, has a 65 per cent. growth rate. Look at the poor pound floating away in the international world. May I quote Aldous Huxley:
"Your maiden modesty would float face down
And men would weep upon your hinder parts".
Poor, poor pound! What has happened to it? We used to talk of currencies as relating everything to the almighty dollar. As Washington Irving said:
"… that great object of universal devotion throughout our land seems to have no genuine devotees in these peculiar villages".
What a sad, sad situation! Yet, to-day is July 24. Two years ago it was a Saturday, a nice sunny day; we were beating India at Lords; Mill Reef had won the King George VI and Queen Elizabeth Stakes; the pound against the dollar—a bit weak. Now, two years later, the pound against the dollar is 5 per cent. stronger.
If I were supporting the Government wholeheartedly I would now sit down and say that the pound is stronger. But suddenly in these intervening two years we have had the rise of the countries of continental Europe, the sudden significance of their currencies, many of which we did not know. Since that sunny Saturday there has been the fall of the pound against the Deutschmark, 30 per cent.; the Swiss franc, 27 per cent.; the French franc, 24 per cent.; the Dutch guilder, 24 per cent.; the yen, 22 per cent.; so it goes on getting steadily worse and worse—the peseta; 15 per cent. With that great currency, the one that has more noughts on the end than any of the others, the lira, the figure is 2 per cent. Looking at programmes on television, there was one with George Thompson speaking on regional development. A telling map of Europe appeared with parts hatched in strong
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lines representing the economic strength of Europe. Parts were plain white, which was most of the United Kingdom and Calabria in Southern Italy.
Are we really so weak, and are we really finished? I wonder! We have the pound and we wonder what will happen. We have it floating, but perhaps it has begun to float for too long. You take the initiative—and it was certainly creative initiative—to float the pound. Then you say, "Do we peg it now?" The mood is going round Europe that maybe it should be pegged; if not, it will only accelerate inflation, and things will get worse and worse.
But what about the United States? has the pound caught the leprosy of the dollar, or is it vice versa? Both seem to be based on confidence. In one case it is confidence in the Administration in the United States; in the other one might say it is confidence in Government and in the country as a whole. But is confidence there? It is about to be there, but one must doubt and continue to doubt when, as I do, travelling about three days a week round the Continent one talks in the financial centres and political centres and with Continental industry. They like the British; our stock as a nation is very high, but our economic stock is very low.
The Government say, "Invest in England. It is a great place; it has a great future." They ask, "How do we know? Why should we do it now? Can we get labour? Should we be directed to the regions, or is it the kiss of death?" Those who were wise enough to invest on that Saturday two years ago are regretting it very much; they could have done it cheaper to-day. They wonder: will the pound stabilise or continue to sink?
One has to take a view, and in your Lordships' House on July 5 last year, when the pound was down to 2·30 or so, I said I thought it would settle at around 2·50. I think it fair to say that the pound against the dollar is over-valued, and against the dollar it must come down. The dollar against the currencies of continental Europe is undervalued and must go up. The pound will probably improve its performance against the currencies of the Continent. But we have one overriding factor: Will industry, national and international, invest in this

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country? Will it have confidence in the future of England? I suggest that it will. I suggest that we have seen a phase of international expansion by British industry, criticised by those who attack the multi-nationals, and that we will see a corresponding inflow into this country. It is to my mind the most critical factor of all. Otherwise, little by little, the anti-Common Marketeers will be able to say: "We were right. The United Kingdom is now an offshore island, an island for the élite who live in the centre of London in houses inflating every year, like some offshore island in the Pacific."
My Lords, I worry a little about this deathwatch beetle that seems to have got into our society and every element of it. There is little co-operation between the different elements. We are faced with a problem now that the Government turned round and went for Phase 1; they went for Phase 2; they will go all out for Phase 3 and we will put our shoulders to the wheel and we will support them; and maybe, like the United States, they will move to Phase 4, Phase 5, Phase 6, and so on. Or perhaps this gamble for growth, as one might call it, will work. We cannot achieve a continuing 5 per cent. growth rate. It must inevitably come down, and if we can stabilise it at around 3 per cent., without the sudden stop that one is worried about, then we will go forward into considerable prosperity.
British industry is not doing badly at home or abroad. Order books are full; jobs are available; people are looking to expand. And yet they are still held up by that one element: Do we invest in new plant and machinery and bring our industry up to date, or do we fall behind? Your Lordships may well criticise countries such as Italy, but those of you who have seen the modern Italian industry of the South know that one would be surprised, because it can knock spots off even Western Germany. But the underprivileged countries of Europe, as one may have called them, the sick men of Europe, are now doing well because international industry decided to invest there and they encouraged investment themselves. We need not fear for our position in the world with the growing influence of this country; it has never gone ahead at a greater rate than it does now, thanks to our current foreign
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policy. We are respected; we are trusted, and people have confidence in us as individuals and as a country. That confidence in us as a nation can be transferred into confidence in our future economy, with a little bit of a push. It needs a bit of showmanship in these times in the international world.
There are problems. It is difficult. Once when a Cabinet Minister got up and said something optimistic, everyone used to feel enthusiastic; now, the stock market crashes and the world starts to say, "What's under the mat?" But we have a chance with Phase 3, which is the most critical phase in the Government's economic policy in this generation. The Government must seek support for Phase 3 privately beforehand. I believe that it is possible that all the elements that the Government need for support will support them, because, quite honestly, many of us are tired of what is going on at the moment and this niggling here and there —the little deathwatch beetle boring away. I hope that during the summer the Government will take time and think hard and realise that they have the confidence. It is certainly the best Government that this country has at the moment to do what it is seeking to do. That I have no doubt about, and I believe the world has no doubt about. But a little measure of support all round can pay considerable dividends.
I come, before I sit down, to the question of inflation—I have been dealing mainly with the pound and confidence. We have to accept, regrettably, that inflation in the Western capitalistic world is really here to stay, and we have to take this into account with all the underprivileged and those who suffer on fixed incomes and otherwise. I think it would be right to consider accepting that there will be a basic rate of inflation, as one may have a basic interest rate, and that that may be around 5 per cent. and that certain things should automatically increase by 5 per cent. every year, without the need for new charity hand-outs to make them up, so that people may not fear this erosion of their incomes and fear for their future poverty.
My Lords, I sit down with just one thought. This has been a little bit of a criss-cross, "ding-dong" debate in a way, one side of your Lordships' House tending to try to find someone to attack

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and to blame; the other side trying to defend with a barrage of figures and statistics, but not quite sure why they should have anything to defend. We are trying together to solve an economic problem which can be understood and which figures can show has actually taken place. The only way out of it is to generate internal and international confidence, and to get investment going, and (if I may be a little agricultural) to stop mucking about.
7.6 p.m.
LORD DIAMOND: My Lords, I hope I do not embarrass the noble Lord, Lord Selsdon, by saying to him that on this occasion, as on every other. I have listened to him with the greatest of pleasure and I can assure the noble Lord that I am not alone in that feeling. He combines what I might call a demureness of demeanour with an incisiveness of intellect which I find most attractive; and although, of course, I did not agree with everything he said, I certainly thought that he touched on some of the most important issues on which I will say a few words a little later on. But before coming to the main part of my speech I hope I may say to the Government that I trust that they will answer the question put by the noble Lord, Lord Orr-Ewing, clearly and to-night. I hope they will say to the noble Lord, Lord Orr-Ewing, that they are not again seeking confrontation with the unions but that they are seeking co-operation. Once the kind of question that was asked—and of course Lord Orr-Ewing is perfectly justified in making whatever statement he thinks fit—has been put, and in the context in which he put it, nothing but good will come of an immediate and clear reply explaining the Government's policy.
It would be invidious to pick on a variety of speeches. I merely say that I have had the pleasure of listening to practically every one and have enjoyed the experience. In particular, I want to say to the noble Lord, Lord Windlesham, how moderate I found the clearly argued, closely argued, and imaginative speech of my noble friend Lord Beswick. I am sorry that he did not share this view. It is just worth mentioning so that the noble Lord will realise how moderate are our expressions in relation to our feelings.
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It is always well to start with agreement and there is of course a wide area of agreement between all Members of your Lordships' House. I do not suppose there is a single Member here who does not share the view that what we should all attempt to do, whichever Government are in power, is to put into effect a policy of sustained growth. That is what we attempted in our time; that is what the Government are attempting now. And it would be stupid of anybody to deny that every Government find this a very baffling question. I imagine that all Governments share the same disappointment that I feel that somehow or other we as a country, throughout the last decade and into this one, have failed, notwithstanding the best attempts of Governments, to achieve as much as we are capable of achieving—as I am conceited enough to believe that the British man and woman is capable of achieving in relation to what has been achieved across the water and by other similarly developed nations. It is that disappointment which we must bear in mind.
I do not think that the answer lies in any black or white issues: it is a matter of emphasis. But where it is a matter of emphasis, one is entitled to look at those statistics which indicate, not that there has been a slight variation, but that there has been a record of some kind or another. That is why on a previous occasion (I think it was in February when we debated the counter-inflation measures) I started off with a list of records achieved by this record-breaking Government. Needless to say, they were records of the kind of "highest unemployment ever", and of that genre. I want to add two other records which are relevant to to-day's discussion. One is the achievement of a record devaluation in sterling, and the second is of the achievement of a record low price in Consols and War Loan. The first is the indicator of confidence abroad; the second is the indicator of confidence at home. Those two well accepted indicators are at an all-time low, and this is the question of confidence which the noble Lord, Lord Selsdon, referred to in the early part of his speech.
There are some who seem to regard devaluation as having some sort of curious benefit or advantage to the country

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which devalues. You can get under the other man's export prices and undercut him, and somehow or other this is the way to achieve prosperity. In my view, nothing could be further from the truth. I regard devaluation simply as this: that one is being forced to sell one's labour abroad at a cheaper rate. One cannot any longer get employment at the rate to which one is accustomed and therefore one has to cut the hourly rate in order to get employment, put in terms of exports of goods abroad. That is what happens in terms of exports. And, of course, in terms of imports there is a rise in the cost of food and of raw materials.
May I dwell once more for a short moment on the rise in the cost of raw materials, because I do not think the noble Lord, Lord Windlesham, fully took the point made by my noble friend Lord Beswick. With reference to copper, it is an undisputed fact that our price, compared with the price which is paid in Japan for those copper imports, the same copper coming from the same source, or the Swiss import price of that copper, is immeasurably higher. Our price, between 60 and 70 per cent, increase on what it was; the Japanese, 15 per cent., I think; the Swiss a little more than that. We are paying so much more for the import of raw materials. Why? Largely because of the devaluation of the pound. That is what this debate is about and one must not look for alibis solely in import prices: one must go behind that and see why we have to pay so much more than our competitors.
LORD WINDLESHAM: My Lords, I hesitate to interrupt the noble Lord, and of course I will study again the point made by the noble Lord, Lord Beswick, but it is still a fact (is it not?) that inflation in Germany and in Japan has been rising at a faster rate than here.
LORD DIAMOND: My Lords, it is because the noble Lord said that last time, which with the greatest possible respect I cannot see is really relevant to the argument, that I thought it necessary to repeat the argument. It may be that inflation is greater in those countries, but this is not what we are discussing. We are discussing inflation in this country in particular in relation to de-
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valuation of the pound in this country, and the point I am making is that it is no good the Government continuing to say, "What can we do about inflation? We cannot control import prices". Of course we cannot control import prices entirely but what we can do, and what the Government are doing, is to make import prices very much greater than our competitors have to pay for the same imports from the same sources because of the devaluation of the pound.
We were supposed to be having a floating pound; that is, a pound which could conceivably float upwards or downwards. If it had floated upwards as the yen has appreciated or as the Swiss franc has appreciated, for example, then our imports of copper would not cost 70 per cent. more, they would cost 15 per cent. more. That is the point I am trying to bring out. It is a simple point and it is something to bear in mind and it relates to the problem of the value of the pound abroad, which in turn is a question of confidence, as the noble Lord, Lord Selsdon, wisely said.
I therefore deal immediately with those elements which relate to confidence. The first is the balance of payments. It would have been helpful for this debate if the Government could have started off by telling us what their estimate is of how we are going. We know the figures for the first quarter and for the second quarter; what the Government are doing depends for its justification or criticism entirely on their estimate of the way the balance of payments is going. Can you buy your way—I am sorry; I should have said can you borrow your way—into prosperity, or is it the kind of gamble which the noble Lord, Lord Barnby, referred to and which he gave the impression he was not going to put his money on, anyway? The answer to that depends on what you think is happening to the balance of payments, and we have not been told. I must say to the Government that there are estimates, and one estimate is that this year our balance of payments deficit will be in the order of £1,000 million—an all-time record. The other estimate is that it will be of the order of £2,000 million—twice as much. These are estimates by independent economic sources, not invented by politicians. I have no means of putting the figures together; I can only read what others say.

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I know, as the noble Lord, Lord Selsdon, knows, what people abroad think of us. I share his view completely on the way they assess our character, our political institutions and our pound: the first two, very highly; the last one—you can have it ! The noble Lord or any one of your Lordships who has recently travelled abroad will know how many Swiss francs you get to your pound, or French francs, or German marks: astonishingly few, irritatingly few, making it almost prohibitively expensive to go abroad and do the things you want to do. I am glad to see one noble Lord opposite nodding in agreement. This is the difficulty; and if the fact is that the Government feel justified in their attempt to borrow their way to prosperity and to avoid the failure that met Mr. Maudling when he was Chancellor of the Exchequer in 1964 and was attempting the same policy—if the Government feel that they can justifiably calculate on borrowing their way into prosperity, then they must say what they think will happen to the balance of payments.
It is no use the noble Lord, Lord Windlesham, giving such a selective indicator as the fact that exports are leading imports in volume—I think he said twofold; anyway leading—and at the same time leaving us with a figure of between £1,000 million and £2,000 million deficit. The two just do not tie up, and we must put an enormous red neon question mark against the statement made by the noble Lord, Lord Windlesham, on behalf of the Government—and that is the last thing we want to do—simply because the figures do not add up.
So I want to make quite clear what our criticisms are of the Government. The first is that they have allowed the balance of payments to slide much too far into deficit. One does not say that one should necessarily keep a surplus of £1,000 million every year. If you do that you will get a reaction from other countries which are obviously suffering the deficit which is our surplus but to turn a surplus of £1,000 million a year into a deficit of whatever amount it is—. £1,000 million or £2,000 million a year— in that short period of time is a matter which I think justifies heavy criticism. I do not see how one can do that and
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still expect to have confidence abroad. It is consistent only with the reckless disregard for making ends meet at home which the Government have shown in their policy of deficit budgeting and heavy borrowing. That must be the first criticism.
The second criticism, and here again I turn to something which the noble Lord, Lord Selsdon, touched on, is for placing far too much weight on the floating pound. There is some justification for that as a temporary measure, to a limited extent and within the limits acceptable as a deviation from the expressed policy of the Government of joining with the Community in mutual support and joint action. There is some justification, I say, for that policy on a temporary basis. But I am bound to say to the Government that I feel they have carried it on far too long, and I am not one who favours wild attempts to "go it alone". It has already been suggested by many that in this way we have suffered a greater devaluation than is justified, that is to say, something of the order of 5 per cent. The actual devaluation, by allowing the pound to float downwards to the extent it has done, is held to be a figure 5 per cent. below that which could have been the pegging price of a fixed parity on a careful, well-thought-out planned policy. I believe, therefore, that the Government have turned what might have been a policy decision into one of ignoring their responsibilities and ignoring what they should have been doing, namely, to attempt to stabilise sterling, to attempt to prevent the pound falling in the way it has done.
My Lords, the third criticism we have of the Government is for the things they have done and for the things they have omitted to do, which have in the first place encouraged and added to inflationary pressures at home, and in the second place—and they could have avoided them: the things which have added to inflationary pressures, which I need only refer to shortly—rents, rates, prescription charges, dental charges, school meals, school milk, and the rest. The omissions are, and here I echo something that the noble Lord, Lord Redmayne, touched on, nothing to control the price of land, in particular nothing to control the price of agricultural land (an

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increase in the price of agricultural land is a built-in guarantee that the cost of producing food at home is going up and up); capital purchase prices have to be satisfied in turn by rents—everybody knows that—and a complete turning of their backs on any attempt to prevent either business premises, which I think was what the noble Lord, Lord Redmayne, was referring to, or agricultural properties or agricultural land being controlled in their upward rush. These omissions justify heavy criticism. So far as further omissions are concerned, while I will not say that nothing has been done, there has been insufficient done in the way of food subsidies to cushion the impact of rising food prices on the poorer section of the community. Nothing could be so inaccurate as the answer one sometimes hears, that it is not possible for a Government to do anything about food subsidies. Governments have been subsidising food in this country in one way or another for years and years and years. At present, as the noble Lord, Lord 'Orr-Ewing, pointed out, there is a subsidy on milk in particular; there is a subsidy on butter and on other things. There are many ways of doing this. The argument is not an argument of kind but of degree only.
What we are saying is that the Government have devoted resources to other purposes, in particular to tax cuts—£300 million starting this April. The Government have devoted resources to purposes which are not directed to helping the poorer section of the community on their food costs, and are not directed to inducing the kind of atmosphere which is essential for the negotiations which the Government are now undertaking in the hope of achieving some measure of agreement which would lead to greater price stability and greater prosperity all round. So it is that for which we criticise the Government.
Finally, I share with the Government the criticism of their having wasted their first two years, because there is no greater critic than the man who admits his own mistake by doing the opposite thing, as the Government have wisely, though belatedly, decided to do over so many fields of policy. Only to-day, the noble Lord, Lord Windlesham, was congratulating the Price Commission on having saved consumers money at the rate of £44 mil-
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lion a year. I think that is what he said, and he was congratulating the Price Commission on doing that. As he said that, I was wondering how much more could have been saved in the previous two years or more if the Government had been of the same frame of mind then as they are now. To summarise, we are criticising the Government for having wasted those two years, for having frittered away a very substantial balance of payments surplus, for having turned it into a substantial deficit, for having invented the policy of the sinking pound as a result of having destroyed credibility at home and damaged confidence abroad.
7.29 p.m.
THE EARL OF GOWRIE: My Lords, in the very beautiful language of the Writ of Summons, which we heard again this afternoon when Lord Allan of Kilmahew was introduced, Peers are enjoined to attend your Lordships' House and to their public duties, and I quote,
"considering the difficulty the said affairs and dangers impending".
The phrase recognises that difficulty and danger form the context of human affairs and our conduct of them. It reminds as that no Government formed from Parliament at any stage of our history, and, by implication, in future time, may be allowed, without qualification, to pat itself on the back. The difficulties and dangers are ongoing; they provide shifting patterns of exchange, as it were. This debate is very much welcomed by the Government, in spite of the fact that the broad shoulders of my noble friend the Leader of the House and my own rather narrower ones have had to sustain critical blows as well as pats on the back. We must therefore thank the noble Lord, Lord Beswick, for it, in principle, because by drawing the attention of the House to some of the undeniable problems facing the British economy at this time he has given the Government a chance to show not only what it proposes to do about them but what it has done and is doing.
My Lords, in free discussion of these problems we must remember two things. In a time of worldwide inflation and considerable international monetary difficulties, dangerous as these are to an importing economy such as ours, the living standard of our people is higher than it has ever been. That is the first

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thing to remember. The second is this: a higher standard of living breeds higher expectation, and great may be the disillusion if these are not fulfilled. So a higher standard of living must be soundly based—that is to say, on a steadily expanding economy. I do not believe it is a matter of dispute to-day that the British economy is expanding. I do not believe it is a matter of dispute that this expansion is based on increased manufacturing output—making more things—and an increase in exports—selling more things abroad. The very considerable rise in real personal disposable income, the very considerable fall in the rate of unemployment, are not the flickering of a match. They will provide a beacon to the Government so long as it is in office. My noble friend the Leader told your Lordships of his commitment and of the Government's general determination to see that this very considerable achievement is not eroded, on the one hand, by an uncontainable inflation, and, on the other hand, by a failure to restructure the British economy on the firm foundations of greater investment and greater participation by its working force, whether individually or collectively.
I am very glad to have this opportunity to play second fiddle to my noble friend and to echo the theme in a minor key. I do not believe there is enormous division between the two sides of the House, of this House at any rate, as to what sort of Britain we want. Indeed the noble Lord, Lord Diamond, went a considerable way to acknowledge this. I do believe there is division as to how to go about it. Faced with international difficulties when they were in office, noble Lords opposite deflated the economy. They argued then, and they argue now, from weakness. Our belief is that the greatest contribution which this country can make towards achieving a lower rate of inflation in the world, towards achieving greater monetary stability in the world, towards achieving more equitable standards of living for the poorer countries of the world, is by putting our own household in order and letting it be seen that that is just what we are doing.
Against this background of achievements as well as of intention, let me now turn to the debate. There were, as
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I heard it, two principal themes, and perhaps noble Lords would like me to summarise them briefly before coming to the questions which individual noble Lords have put to me. They could be called the "abroad" theme and the "home front" theme. The Motion of the noble Lord, Lord Beswick outlined them perfectly, but in order to encompass other speakers perhaps I could broaden his terms of reference a little. A small and controlled level of inflation is in the modern world perhaps inevitable, perhaps even, as I think the noble Lord, Lord Davies of Leek believes, desirable. My noble friend Lord Barnby, I recognise, does not think it desirable. People today know more, want more, and they will put up with less—why indeed should they. Will they listen to Lord Wigg, or in the light of this speech perhaps I should say, to Chairman Wigg, and become conservers rather than consumers?
But inflation must be contained within moderate limits. In the last five years or so the beast has been let out of its cage. The keepers, or the ringleaders if you like, have become jumpy and short-tempered and prone to disagree with each other, the crowd restless and hungry for stronger doses of sensation. The noble Lord, Lord Beswick, calls for more positive and effective policies. I suspect he would like to put the beast back in its cage, whereas we would wish perhaps to tame and employ it. Both he and the noble Lord, Lord Diamond, have made much of the difficulties which the Governments of the developed nations have had in establishing monetary stability. But surely the important point is that our exchange rate depends, in the end, on the strength of our economy. And surely our ability to argue the case for reform of the international monetary system must proceed from a like position of strength. It is, of course, very annoying that on occasion changes in our exchange rate do not represent the true strength of our economy. They do not represent the way that business investment is rising, the way that exports are rising by volume almost twice as much as the volume of imports.
My Lords, lest this be considered a partial view, I should like to quote the latest report by the O.E.C.D. published last Friday. The report forecasts that by the middle of next year our economy

1749
will be working at close to capacity, unemployment will still be falling and the deficit more manageable. It goes on to say that
"the past year's more flexible approach to exchange rate determination, and the present formal price and income controls, have helped to provide a better opportunity than the U.K. has had for many years to achieve full and sustained employment of productive potential."
Perhaps that will give some comfort to my noble friend Lord Selsdon, whose appeal to confidence I much enjoyed.
Indeed, as many of your Lordships have recognised, one of the principal reasons for the decision to float the pound was to enable us to adhere to the strategy of economic expansion, which is the only means of improving both our national prosperity and our bargaining position abroad. Through this expansion, the pound is fundamentally strong—even if, as my right honourable friend the Chancellor said in another place
"recent movements in rates in the foreign exchange markets, whether of sterling or of other major currencies, do not correspond with movements in relative costs and prices in the countries concerned".
And, my Lords, we all know that where the movement of currencies is concerned, particularly currencies held as reserves, other than economic considerations, may, in the short run, prevail.
Let me put the "abroad" theme in a slightly different way. Do not noble Lords believe that a continued and controlled economic expansion at home is a better contribution towards international stability than a deflated and largely nationalised economy, propped up by massive increases in taxation, and where political hostility towards profits would send investment reeling—reeling with a punishing Left hook, as it were?
LORD BALOGH: My Lords, surely the noble Lord—
THE EARL OF GOWRIE: My Lords, I am going to deal with the noble Lord, Lord Balogh, in a moment. I hope he will let me get on to the specific points. Do noble Lords believe that these are steps on the way back towards the confidence that we need, and which the noble Lord, Lord Diamond, mentioned, whether this confidence is held abroad or at home?
LORD BROWN: My Lords, if the noble Earl is going to address a number of questions to this House, surely when somebody like my noble friend Lord Balogh gets up to answer one he must listen to him.
THE EARL OF GOWRIE: My Lords, the noble Lord, Lord Balogh, has made his speech, on which I shall shortly be commenting. I am simply now trying to make mine.
LORD BROWN: My Lords, will the noble Earl desist from putting questions to the House if he is not prepared to give way when somebody rises to answer?
THE EARL OF GOWRIE: My Lords, as an ex-English teacher, may I respectfully draw the noble Lord's attention to the art of the rhetorical question?
Turning now to the home front, the Government have already recognised, and they have said it time and again, that industrial and commercial power in this country depends on Government, employers and unions agreeing on the major objectives of the economy. The noble Lord, Lord Diamond, asked for that assurance, but now that I am giving it to him I am not sure that he is attending to it. The industrial expansion which I have talked about has been in very large measure achieved because there has been agreement about objectives, about ends, even if the means have to be decided by Statute. We hear so much about confrontation that we forget the consensus that has been achieved, and whose proof is the roughly 5 per cent. annual increase in real personal disposable income since June, 1970, double the rate, in three years, of Labour's achievement in six. Of course, the Government are pleased to take credit where it is due, and they are proud of their record. But Government cannot decree such progress. They create the context in which people get on with the job of improving their own and their country's standard of living. I was very glad to hear that that point was recognised by my noble friend Lord Redmayne.
Many noble Lords have dealt with prices, whether of food, or in terms of other vital needs such as rents. Most Western Governments are very concerned

1751
about rising food costs. I met a distinguished Canadian Minister the other day. He had never been to the House of Commons, and on his last day here he attended a debate. "What was it on?", I asked him. "Food prices", he replied. He was flying home to vote on an important debate. "What is it on?", I asked. "Guess?", he said. "Food prices", I said. I was right, and so we parted. No Governments are complacent about food prices. At the crudest political level, Governments are concerned to save their own as well as other people's bacon. But I do feel that we are apt to get food prices, not out of perspective absolutely but out of proper perspective; that is to say, in relation to other forms of expenditure. Consider the latest results of the Family Expenditure Survey. While spending on food increased by 18·6 per cent. between 1970 and 1972, this was less than the increased expenditure on goods and services as a whole: that is to say, 22·7 per cent. For instance spending on alcoholic drink—I will not say because of the rise in food prices—increased by 29·9 per cent.
LORD BESWICK: By whom?
THE EARL OF GOWRIE: Expenditure on household durables such as furniture and television sets in fact rose by 40·5 per cent.
LORD DIAMOND: My Lords, the noble Earl is giving us the figures in prices and not in volume; is it not the case that consumption in volume of food fell?
THE EARL OF GOWRIE: My Lords, I am not suggesting that people consume television sets. I will answer the question. I feel that these figures show quite clearly the point I was making, that despite rising food prices there has been a significant improvement in the general standard of living of the average family in this country since this Government were returned to office.
LORD BESWICK: My Lords, is the noble Earl going to answer one of my questions; that is, if we cannot afford to subsidise across the board, is there any reason why we should not have free school milk?
THE EARL OF GOWRIE: My Lords, I am standing on a sheaf of questions which the noble Lord has put to me, and I will be answering them in a few minutes.
On the question of rents, the rent increases in May under the Housing Finance Act—not popular with noble Lords opposite—raised the retail price index by 0·1 of 1 per cent. Of course I recognise that I am dealing at this point in my speech with the quantitative picture of the majority of people in the country. Noble Lords dwelt, quite rightly, and on both sides of the House, on the not so pleasant picture of poverty within the overall and growing affluence of our society. May I just catalogue in shorthand form, since the clock is against me, some of the things that the Government have done, are doing and are proposing to do. There is the Stage 2 pay formula, the family income supplement, rent rebates and allowances, lump sum payments to pensioners last December, continuing up-rating of pension levels in real terms, increased family allowances (that is to say, proposed first child allowances) as part also of the new tax credit scheme.
LORD BESWICK: When?
THE EARL OF GOWRIE: My Lords, I said what the Government are proposing to do. This is part of the continuing policy.
LORD BESWICK: When?
TILE EARL OF GOWRIE: So far as I know, in two or three years time.
LORD BESWICK: My Lords, I put a specific question here. The proposal is to have an allowance for the first child within five years. I ask whether it is not possible to bring this date forward. Would the noble Earl answer that specific question?
THE EARL OF GOWRIE: My Lords, I will certainly find out whether it is possible to bring this forward, but at that point of my speech I made it clear that I was talking about what the Government have done, are doing, and are proposing to do, and the last must take the future into account.
I turn now to some specific points which noble Lords have put to me. Perhaps the cucial one was the question of

1753
the balance of payments forecast. I must tell the noble Lord this: we listen very carefully to noble Lords on all sides of the House, and to all noble Lords who have been senior Treasury Ministers with especial care. I believe that the noble Lord must know that the question of forecasting balance of payment deficits over the coming years is hardly a conventional thing to do. The trouble is that the margin of error here is so great. The noble Lord, Lord Balogh, who I am delighted to call to my aid at this point, himself pointed that out. The National Institute admit a margin of error of £1,500 million in their forecast of a £750 million deficit. The London and Cambridge Economic Bulletin gave us a pessimistic forecast of a £2,000 million deficit, and the noble Lord, Lord Balogh, gave us yet another estimate, though I am glad to say that it was rather less pessimistic. I hope that that deals with that principal question.
I am going on to say more about the balance of payments surplus. There was a small surplus, as the noble Lord, Lord Beswick, acknowledged, do 1970, and there was a very large one, as we acknowledge in 1971. This partly resulted, after the usual delays, from the 1967 devaluation, but was mainly at the expense of very high unemployment and very slow growth. Since then we have boosted the economy, and the immediate result is a sharp increase in the volume of imports. This, combined with the depreciation of sterling and the rise in world commodity prices, has turned this surplus into a deficit. We acknowledge this, we care about it and we are worried about it. But already exports are rising faster in volume than import, and this volume increase will eventually overtake the import price increases and turn the deficit back into surplus.
The noble Lord, Lord Beswick, said that the rise in world commodity prices was only partly a cause of the worsening in the terms of trade, yet it accounts for more than half of the rise in the prices of our imports. I believe that these figures cannot be wished away. We are not denying that the depreciation of the pound has contributed, but it must be remembered that the obverse of the depreciation is a considerable improvement in our competitiveness. We now
1754
have an expanding economy and competitive export prices. Our exports are growing in volume almost twice as fast as imports. That is to say, we are well into the "J" curve. I apologise to the noble Lord, Lord Beswick, for using a piece of the jargon that he castigated.
LORD BESWICK: My Lords, the Government have been asked on a number of occasions by myself and my noble friend Lord Balogh where we can get the figures of these doubled exports against imports. Where are they to be found?
THE EARL OF GOWRIE: My Lords, this is the third time that I have been interrupted on a point towards which I am trying to make my way. I have it in my speech here, and I hope that it will satisfy the noble Lord. If it does not satisfy him, I will try again to satisfy him on paper. He mentioned that the imports of consumer goods were going up, and we riposte that imports of raw materials and machinery rose 24 per cent. in the first half of 1973 compared with the second half of 1972, whereas consumer goods rose by only 22 per cent. He made a point, very crucial to his argument about fairness, that we lopped £3,000 million off taxes, principally towards the better-off. This is entirely untrue. Over £2,000 million of the tax cuts result from concessions on personal income tax, and the great bulk of this consists of increased personal allowances, which benefit the lower paid and the better-off equally. The cuts in the 1972 Budget in fact took nearly 3 million people out of income tax altogether. There is nothing in the record of noble Lords opposite which can match that.
The noble Lord, Lord Beswick, with the noble Lords, Lord Wigg and Lord Donaldson, criticised the Government's attitude to the review of the Common Agricultural Policy, the cost of the Intervention Board on agricultural produce, the cost of the denaturing subsidy for wheat, and they quoted the figure of £163 a ton for the import level of butter. The Commission is at present conducting a thorough review of the operation of the support system, and we shall continue to play our part in that. The Intervention Board was set up by Parliament to administer the Common Agricultural Policy in the United Kingdom. This has been,

1755
as we recognised, a difficult and complex task, but the system is settling down. To scrap the Board would be to destroy the administration that we have agreed to operate, and would be irresponsible and damaging to the interests of traders, consumers and producers. As to the denaturing premium, I think the necessity of increasing the output of animal foodstuffs at a time of inflation in food prices should be acknowledged by everybody.
The current net rate of levy on butter imported into the United Kingdom from third countries, other than New Zealand, is £165·50. But we are not importing butter from those countries; we are importing it from New Zealand under Protocol 18 of the Accession Treaty. The levy on this butter is nil. The market is also well supplied from home production and other Community countries. Thanks to the subsidy, butter is now cheaper in the shops than it was before we joined the Community.
I come now to the questions put to me about the relationship of sterling depreciation to world commodity prices. Certainly there has been an adverse effect on our prices from the sterling float, but we believe that this must be kept in proportion. Sterling's effective exchange rate dropped by about 10 per cent. in terms of other countries as a whole between June, 1972, and June, 1973, which is small compared with the overall rise in commodity prices. The noble Lord, Lord Beswick, raised the question of a national minimum wage. This is an interesting notion and we will look at it carefully. I have a speaking brief about it, but as time is short perhaps he will allow me to write to him on that point. He also mentioned the land hoarding tax. The tax is only one part of the Government's package to release more land—noble Lords on all sides of the House will know what the others are.
My Lords, I must come—as he has interrupted me twice—to the noble Lord, Lord Balogh, and I hope this will answer some of the points of the noble Lord, Lord Diamond, as well. The noble Lord said that my noble friend Lord Windlesham's speech was one of staggering complacency. I must say that the last time I made a speech on economics from this Box he used exactly the same phrase
1756
about my own speech. I do not know what that proved one way or another. He talked about the acrid smell of decay of the Government's policies. I was very glad to see that the noble Lord, who has been rather mild recently, has discovered his old vigour. It seemed to me that there was something of an "abrasion gap" developing between the noble Lord and his noble friend Lord Wigg.
Regarding the volume of exports, he questioned me on the export led boom. The volume of exports in the first five months of this year was 12 per cent. higher than the level in the second half of last year; the volume of imports rose over the same period by only 7 per cent. In case he thought that these figures might not be fair to take, I believe it is fair to take these periods of time, because the first one is the latest available. Exports always need time to get under way, and the first half of last year was in any case affected by the dock strike. However, I agree with the noble Lord, Lord Balogh, that a smooth transition to a sustainable rate and pattern of growth is possible and that this requires a higher urge towards exports and investment. This is what is happening, as I have maintained, without the need for the tax changes which the noble Lord referred to.
My Lords, I come now, not without relief, to a noble friend, Lord Redmayne, a formidable figure in the debate as deputy chairman of Harrods and a former Chief Whip. It was a broadly encouraging speech, and I will relay his particular criticisms to my right honourable friend and see what we can do. He has raised the question of the Price Commission in operation. During its first two months, the Price Commission was primarily concerned with applications for approval of price increases from category 1 firms—the noble Lord, Lord Donaldson of Kingsbridge, was also interested in this point.
In the field of manufacturing, firms in this category, where the control of the price code is tightest and is likely to be most effective, were estimated to account for about 50 per cent. of total output. In future the work of checking profit margins of category 2, as well as of category 1 firms, and the monitoring of category 3 firms, will, of course, become of increasing importance. The noble

1757
Baroness, Lady Wootton, made a characteristically interesting and original speech. I would say to her that the price code can actually reinforce competition, because large firms have been known to follow market leaders without reference to their own financial position. Now they must stop and think, and the price code allows varying increases, if any, according to data.
My Lords, I can see that I have been waved down. It has been a somewhat long debate and I am trying to deal with individual points. My noble friend Lord Orr-Ewing raised the question of contingency plans. Governments, my Lords, always have contingency plans, but it would destroy their point to outline what they are. My noble friend Lord Selsdon said that we needed a bit of showmanship in English Government. I am quite convinced that, on that principle, the noble Lord, Lord Davies of Leek, will perform an important office in my noble friend's administration.
My Lords, I must make an end. I have tried to balance the specific detail against the general picture of the debate. As for the general picture, or flight plan, as it were, of the Government's policy, your Lordships have heard this, appropriately from a Cabinet Minister, from
my noble friend. I hope that the noble Lord, Lord Beswick, will not decide to press this Motion to a Division. If he does so, I know that noble Lords will reject it. Let us make no mistake about what pressing such a Motion to a Division would in fact imply. It would imply that the noble Lord would like to see the Government defeated, not on some point of detail to which the Opposition object and which it seeks to oppose, but on the Government's whole economic platform, a platform of continued economic expansion, of continued economic consultation, of continued ground rules for the common fight against inflation. My Lords, I hope the House will reject it.
LORD BESWICK: My Lords, what is implied if we press this Motion to a Division is that the charge of complacency still sticks. We are concerned about the fall in the purchasing power of the pound even if the Government are not, and I therefore ask my friends to go into the Lobby to-night.
7.56 p.m.
On Question, Whether the said Motion shall be agreed to?
Their Lordships divided: Contents, 70; Not-Contents, 95.

CONTENTS

Arran, E.

Gardiner, L.

Rathcreedan, L.

Arwyn, L.

Garnsworthy, L. [Teller.]

Rhodes, L.

Bacon, B.

Greenwood of Rossendale, L.

Royle, L.

Balogh, L.

Hacking, L.

Rusholme, L.

Bernstein, L.

Hale, L.

Sainsbury, L.

Beswick, L.

Hall, V.

St. Davids, V.

Birk, B.

Henderson, L.

Shackleton, L.

Blackett, L.

Heycock, L.

Shepherd, L.

Blyton, L.

Hirshfield, L.

Shinwell, L.

Brayley, L.

Hoy, L.

Slater, L.

Brockway, L.

Hughes, L.

Snow, L.

Brown, L.

Jacques, L.

Somers, L.

Buckinghamshire, E.

Janner, L.

Stow Hill, L.

Burton of Coventry, B.

Kennet, L.

Strabolgi, L. [Teller.]

Campbell of Eskan, L.

Leatherland, L.

Summerskill, B.

Champion, L.

Llewelyn-Davies, L.

Taylor of Mansfield, L.

Crook, L.

Lloyd of Hampstead, L.

White, B.

Davies of Leek, L.

Longford, E.

Wigg, L.

Diamond, L.

McLeavy, L.

Wise, L.

Donaldson of Kingsbridge, L.

Maelor, L.

Wootton of Abinger, B.

Douglass of Cleveland, L.

Milner of Leeds, L.

Wright of Ashton under Lyne, L.

Evans of Hungershall, L.

Pargiter, L.

Fiske, L.

Phillips, B.

Wynne-Jones, L.

Gaitskell, B.

Raglan, L.

NOT-CONTENTS

Aberdare, L.

Amherst of Hackney, L.

Barnby, L.

Abinger, L.

Balerno, L.

Belhaven and Stenton, L.

Aldenham, L.

Balfour, E.

Berkeley, B.

Bessborough, E.

Greenway, L.

Pender, L.

Brabazon of Tara, L.

Hailes, L.

Rankeillour, L.

Brooke of Cumnor, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Redmayne, L.

Brooke of Ystradfellte, B.

Rhyl, L.

Brougham and Vaux, L.

Harvey of Tasburg, L.

Rowallan, L.

Clifford of Chudleigh, L.

Hayter, L.

Ruthven of Freeland, Ly.

Coleridge, L.

Hood, V.

St. Aldwyn, E. [Teller.]

Colville of Culross, V.

Kahn, L.

St. Just, L.

Colwyn, L.

Killearn, L.

Saint Oswald, L.

Colyton, L.

Kinloss, Ly.

Sandford, L.

Conesford, L.

Lauderdale, E.

Sandys, L.

Craigavon, V.

Limerick, E.

Savile, L.

Crathorne, L.

Lindsey and Abingdon, E.

Selkirk, E.

Cullen of Ashbourne, L.

Long, V.

Selsdon, L.

Daventry, V.

Lothian, M.

Strange of Knokin, B.

Davidson, V.

Loudoun, C.

Strathclyde, L.

Denham, L. [Teller.]

Lucas of Chilworth, L.

Strathcona and Mount Royal, L.

Digby, L.

Lyell, L.

Drumalbyn, L.

Macleod of Borve, B.

Tenby, V.

Eccles, V.

Mansfield, E.

Teviot, L.

Elles, B.

Massereene and Ferrard, V.

Tweedsmuir, L.

Emmet of Amberley, B.

Milverton, L.

Tweedsmuir of Belhelvie, B.

Exeter, M.

Monck, V.

Vernon, L.

Falmouth, V.

Mountevans, L.

Vivian, L.

Ferrers, E.

Mowbray and Stourton, L.

Wakefield of Kendal, L.

Ferrier, L.

Napier and Ettrick, L.

Wakehurst, L.

Fraser of Lonsdale, L.

Northchurch, B.

Windlesham, L. (Lord Privy Seal.)

Gage, V.

Nugent of Guildford, L.

Gainford, L.

O'Neill of the Maine, L.

Young, B.

Gowrie, E.

Orr-Ewing, L.

On Question, Motion agreed to.

GOVERNMENT TRADING FUNDS BILL
Brought from the Commons, read 1a and to be printed.

BADGERS BILL [H.L.]
8.4 p.m.
THE EARL OF ARRAN: My Lords, I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(The Earl of Arran.)

COMMONS AMENDMENTS
[References are to Bill 130 as first printed for the Commons]
[Nos. 1 to 8]
Clause 1, page 1, line 7, leave out from beginning to end of line 11 and insert "any badger, he shall be guilty of an offence.
(2) If, save as permitted by or under this Act, any person has in his possession or under his control—

(a) a recently killed badger, or

(b) a pelt from a freshly skinned badger,

he shall, subject to subsection (3) below, be guilty of an offence.
(3) A person shall not be guilty of an offence under subsection (2) above if the killing of the badger concerned was permitted by or under this Act."
Clause 3, page 1, line 23, leave out "may be authorised by licence granted under section 9 of" and insert "permitted by or under"
Clause 3, page 1, line 25, after "possession" insert "or under his control".
Clause 4, page 2, line 3, leave out from beginning to end of line 4 and insert "tag or other marking device to, any badger (other than one which is lawfully in his possession by virtue of section 8(2)(a) of this Act or of such a licence) he".
Clause 5, page 2, line 9, leave out "police".
Clause 7, page 2, line 23, leave out from "protection" to end of line 38 and insert ", an authorised person shall not be guilty of an offence under section 1(1) of this Act by reason of—

(a) the killing or taking or attempted killing or taking of any badger, or

(b) the injuring of any badger in the course of taking it, or attempting to take or kill it.

(2) Within an area of special protection, an authorised person shall not be guilty of an offence under section 1(1) of this Act by reason of—

(a) the killing or taking or attempted killing or taking of any badger, or

(b) the injuring of any badger in the course of taking it, or attempting to take or kill it,

if he satisfies the court before whom he is charged that his action was necessary for the purpose of preventing serious damage to land, crops, poultry or any other form of property

1761
or for the purpose of preventing the spread of disease."
Clause 7, page 2, Line 39, leave out "found".
Clause 8, page 3, line 7, leave out "appears" and insert "appeared".
THE EARL OF ARRAN: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 1 to 8. Although they may appear somewhat complicated, they are, in effect, either drafting Amendments or Amendments designed to improve the clarity of the Bill. Therefore I hope that this House will agree to consider these Amendments en bloc.
Moved, That this House doth agree with the Commons in the said Amendments.—(The Earl of Arran.)

COMMONS AMENDMENT
[No. 9]
Clause 8, page 3, line 10, at end insert—
"(2) It shall not be an offence under section 3 of this Act for any person to have a live badger in his possession or under his control if—

(a) it has been kept in captivity by that person for a continuous period beginning before the passing of this Act,

(b) it is in that person's possession or under his control, as the case may be, in the course of his business as a carrier,

(c) it has, within the preceding seven days, been taken by that person in circumstances in which, by virtue of section 7(1) or (2) of this Act, the taking of the badger did not constitute an offence under this Act, or

(d) it has been taken in circumstances in which, by virtue of subsection (1)(a) above, the taking of the badger did not constitute an offence under this Act and it is necessary for the purpose of tending it for it to remain in that person's possession, or under his control, as the case may be.

(3) A person shall not be guilty of an offence under this Act by reason only of something done in connection with an experiment on a living badger if what is done does not constitute a contravention of the Cruelty to Animals Act 1876."
THE EARL OF ARRAN: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 9. When the Bill left this House, there was some risk—of which I was very conscious—that people already owning badgers might find themselves contravening the law. Indeed, I have had several agonising letters from badger owners who fear that they might suddenly
1762
find themselves having to let badgers fend for themselves, in which case many might die. In short, this Amendment is designed to protect the position of those who at present keep badgers, and I heartily commend it to the House. Subsection (3) of the Amendment applies the Cruelty to Animals Act 1876 to this Bill. I think that this is desirable. Although it means that experiments may be carried out on badgers, they are not normally used as laboratory animals and the only reason why experiments would ever be conducted on one is in the interests of the badger himself and of his conservation.
Moved, That this House doth agree with the Commons in the said Amendment.—(The Earl of Arran.)
VISCOUNT COLVILLE OF CULROSS: My Lords, I am very glad indeed that the noble Earl has put in this Amendment about the 1876 Act, however sinister it may look. There are likely to be extremely few occasions when this is ever invoked, but the badger must be protected and there may be occasions when it is necessary for somebody to do some research on diseases which are transmitted by badgers, or something of that sort. I truly believe that if we did not have this Amendment it would be to the detriment of the well-being of the badger and of his preservation. I am very glad indeed that the noble Earl has commended this Amendment to the House.

COMMONS AMENDMENTS
[Nos. 10 to 12]
Clause 10, page 4, line 10, at end insert "full".
Clause 11, page 4, line 35, at end insert "" area of special protection" means an area specified, in an order made under section 6 of this Act, to be an area of special protection for badgers".
Clause 11, page 5, line 24, leave out "the town council of a".
THE EARL OF ARRAN: My Lords, Amendments Nos. 10 to 12 are drafting Amendments. I beg to move that this House doth agree with the Commons in their Amendments Nos. 10 to 12.
Moved, That this House doth agree with the Commons in the said Amendments.—(The Earl of Arran.)

NATURE CONSERVANCY COUNCIL BILL [H.L.]
8.8 p.m.
BARONESS YOUNG: My Lords, I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(Baroness Young.)

COMMONS AMENDMENTS
[References are to Bill 154 as first printed for the Commons]
[No. 1]
Clause 1, page 1, line 16, at end insert—
"( ) the provision of advice for the Secretary of State or any other Minister on the development and implementation of policies for or affecting nature conservation in Great Britain;".
BARONESS YOUNG: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 1. This Amendment was inserted at the Report stage in another place, following an undertaking which the Minister gave in Committee that he would seek to make it a function of the new Council to advise the Secretary of State upon a national policy of nature conservation. In Committee in another place, during a discussion on an Amendment which would have given the Council the function of designing and fostering a national policy for the conservation of nature, my right honourable friend made it clear that the policy must remain the responsibility of the Secretary of State. However, this Amendment also makes it possible for the new Nature Conservancy Council to give to other Ministers advice on the development and implementation of policies affecting nature conservation; for example, in the case of agricultural policy. This is specifically covered because if reference were made simply to advice to the Secretary of State on nature conservation policies this might be held to inhibit the Council from giving advice to other Ministers on their policies in so far as they affect nature conservation. The advice which the Council can give to local planning authorities and other bodies is not in any way inhibited by this Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Young.)

COMMONS AMENDMENT
[No. 2]
Clause 1, page 1, line 22, leave out "and (ii)" and insert "to (iii)".
BARONESS YOUNG: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 2, which is consequential on the first Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Young.)
LORD ZUCKERMAN: My Lords, I do not wish to detain your Lordships' House, but may I ask the noble Baroness a question which I could also ask on the next Amendment? Clause 1(1)(a)(iii) refers to "commissioning or support" of research as part of the functions of the new Council, and on the next page reference is made to the powers of the Council. My question relates to the reconciliation of "functions" and "powers", I having read the Explanatory and Financial Memorandum. There, paragraph 4 refers to the "functions" and not to the "powers". I wonder if the noble Baroness could tell us whether that is an oversight.
BARONESS YOUNG: If I have understood the question of the noble Lord, Lord Zuckerman, correctly, he is asking the difference between the expression "functions" in subsection (1) and the expression "powers" in subsection (4). Is that the right question?
LORD ZUCKERMAN: The answer to the noble Baroness's question, my Lords, is that the functions talk about "the commissioning or support"; the powers talk about initiating and carrying out, et cetera; and the Explanatory and Financial Memorandum refers not to powers but to functions. I was wondering whether this was merely an oversight. There seems to be an inconsistency here.
BARONESS YOUNG: I do not think there is any inconsistency, my Lords. My understanding is that under Clause 1(4)(b) the Council will be able to initiate and carry out research in relation to this additional function—that is, the one to

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which I have just referred—as it is appropriate that they themselves should carry it out instead of commissioning or supporting other persons. I hope this makes it clear.

COMMONS AMENDMENT
[No. 3]
Clause 1, page 2, line 23, at end insert—
"(4A) It shall be the duty of the Council, in the discharge of their functions, to take account, as appropriate, of actual or possible ecological changes."
BARONESS YOUNG: My Lords, this Amendment was also inserted in another place on Report stage, following an undertaking given by the Minister in Standing Committee. The Bill as it originally stood enabled the Council to have regard to ecological changes, but the Minister accepted the desirability of including a specific reference to the problem of ecological changes in the responsibilities of the Nature Conservancy Council, and the Amendment meets this point. I beg to move that this House doth agree with the Commons in their Amendment No. 3.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Young.)
LORD ZUCKERMAN: Again, my Lords, I do not wish to detain your Lordships, but I am still confused. I could have raised my point on this particular Amendment instead of on the one on which I chose to speak.
BARONESS YOUNG: My Lords, I am very sorry to interrupt the noble Lord, Lord Zuckerman, but I think we have agreed to Amendment No. 3, and I have not yet moved Amendment No. 4.

COMMONS AMENDMENT
[No. 4]
Clause 3, page 3, line 8, leave out "by virtue of section 1(1)(a) above".
BARONESS YOUNG: My Lords, this Amendment relates to the new power which is given to the Council to pay grants to other bodies or persons, and removes a limitation in Clause 3 on the types of project which the Council may grant-aid. Under the clause as it stood, the Council had power to pay grants
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towards the cost of projects which the Council themselves had power to carry on by virtue of Clause 1(1)(a). The types of project which the Council can carry on under that provision relate to the establishment, maintenance and management of nature reserves and the provision of advice and the dissemination of knowledge. The effect of this Amendment is to remove this limitation and to give the Council a general power to grant-aid any project of a type which the Council can themselves carry on. I beg to move that this House doth agree with the Commons in their Amendment No. 4.
Moved That this House doth agree with the Commons in the said Amendment.—(Baroness Young.)
LORD STRANGE: My Lords, I must intervene; I cannot help it. The noble Lord, Lord Zuckerman, who is the greatest expert in the world, objects to a certain number of these things. He must be allowed to speak and to make his objections. With that, I sit down.
LORD DENHAM: My Lords, I think the difficulty here was that the Question had already been put to the House when the noble Lord, Lord Zuckerman, got up. I am sure that nobody in the House would wish to do anything other than encourage the noble Lord, Lord Zuckerman, for whom we all have a very great respect.
LORD STRANGE: Then let the noble Lord make his objection to this thing. He has not been allowed to say it. We are all fair. We all want a fair debate. We all know that we have the greatest expert in the world in this House. Let Lord Zuckerman say what his objections are.

COMMONS AMENDMENT
[No. 5]
Clause 5, page 3, line 30, leave out subsection (4).
BARONESS YOUNG: My Lords, subsection (4) was the Privilege Amendment made by the House of Lords to nullify the effect of the provisions involving charges. I beg to move that this House doth agree with the Commons in their Amendment No. 5.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Young.)

COMMONS AMENDMENT
[No. 6]
Schedule 1, page 5, line 43, at end insert—
"Badgers Act 1973
12. In the following provisions of the Badgers Act 1973, namely—

(a) section 6(1) (special protection for badgers);

(b) section 9(2)(a) (licences); and

(c) paragraph (d) of the definition of "authorised person" in section 11 (interpretation);

for the words 'Natural Environment Research Council' there shall be substituted the words 'Nature Conservancy Council'.
Medway Ports Authority Act 1973
13. In section 93 of the Medway Ports Authority Act 1973 (protection of Nature Conservancy), after the words 'Nature Conservancy' there shall be added the word 'Council'."
BARONESS YOUNG: My Lords, this Amendment is a technical Amendment. The first part of it relates to the Badgers Bill, which the House has just discussed, and the other part to the Medway Ports Authority Act. I beg to move that this House doth agree with the Commons in their Amendment No. 6.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Young.)

COMMONS AMENDMENT
[No. 7]
Schedule 3, page 6, line 46, leave out from "member" to end of line 47.
BARONESS YOUNG: My Lords, I beg to move Amendment No. 7. This Amendment concerns the grounds on which the Secretary of State may remove a member of the Nature Conservancy Council from membership. In paragraph 6 of Schedule 3 are given the reasons because of which the Secretary of State may remove a member of the Nature Conservancy Council from membership. Although the words deleted by this Amendment were contained in the New Towns Act in relation to membership of the New Town Development Corporations, and in the Land Commission Act 1967 in relation to membership of
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the Land Commission, my right honourable friend accepted the view expressed in Standing Committee in another place that the other grounds on which a member could be removed were sufficiently wide to cover the kind of circumstances in which the Secretary of State should have power to remove a member. I beg to move that this House doth agree with the Commons in their Amendment No. 7.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Young.)

PRESCRIPTION AND LIMITATION (SCOTLAND) BILL [H.L.]
8.20 p.m.
THE MARQUESS OF LOTHIAN: My Lords, I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(The Marquess of Lothian.)

COMMONS AMENDMENT
[No. 1]
Clause 2, page 3, line 2, at end insert—
"(b) to any interest in allodial land;"
THE MARQUESS OF LOTHIAN: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 1. This was a Government Amendment. It was designed to classify the precise scope of the clause. I do not know whether your Lordships wish me to go into details on this. I fear that I might make it less clear if I did.
Moved, That this House doth agree with the Commons in the said Amendment.—(The Marquess of Lothian.)

COMMONS AMENDMENTS
[Nos. 2 to 4]
Clause 6, page 5, line 10, leave out "without more".
Clause 7, page 6, line 4, leave out "without more".
Clause 8, page 6, line 17, leave out "without more".
THE MARQUESS OF LOTHIAN: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 2, 3 and 4. These Amendments all deal with the same point which

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I think was one raised by the noble Lord, Lord Hughes, when the Bill was before this House. They are designed to leave out two superfluous words.
Move, That this House doth agree with the Commons in the said Amendments.—(The Marquess of Lothian.)
LORD HUGHES: My Lords, as the noble Marquess has said, when this Bill was before the House I raised objection to the rather unusual language which appeared. These were the words to which I particularly directed attention. The Bill as it stood when it left this House said "shall without more be extinguished" I think the Commons did right to extinguish "without more", which I tried unsuccessfully to do in this House. I have no objection to any of the others. My only regret is that the Commons did not carry on the good work further. They brought in the word "allodial". I was tempted to ask the noble Marquess what it meant, but I was afraid that he did not know. In another Amendment they have taken out "effluxion" and substituted '"passage" which is an improvement. In the last Amendment they might have gone further and taken out "nonnage", the meaning of which I also do not know.

COMMONS AMENDMENT
[No. 5]
Clause 16, page 10, line 38, leave out "effluxion" and insert "passage".
THE MARQUESS OF LOTHIAN: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 5.
Move, That this House doth agree with the Commons in the said Amendment.—(The Marquess of Lothian.)

COMMONS AMENDMENT
[No. 6]
Clause 17, page 11, line 29, leave out "unsoundness of mind and" and insert" if on that date the said person was or became under legal disability by reason of unsoundness of mind, and in either case that person".
THE MARQUESS OF LOTHIAN: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 6. In moving this Amendment I think I can help the noble
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Lord, Lord Hughes. I understand that the word "nonnage" is actually the word "non-age"; in other words, "under eighteen" in this context.
Moved, That this House doth agree with the Commons in the said Amendment.—(The Marquess of Lothian.)
LORD HUGHES: My Lords, if the noble Marquess had told me that previously I should not have believed it.

BRITISH TRANSPORT DOCKS (HULL DOCKS) BILL
8.23 p.m.
VISCOUNT SIMON: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3ª. —(Viscount Simon.)
On Question, Bill read 3a.
LORD STOW HILL LORD STOW HILL moved Amendment No. 1:
After Clause 3 insert the following new clause—
Restrictions on charges on goods loaded or unloaded overside at Hull Docks
"(1) In this section the following expressions shall have the meanings expressly assigned to them:
"the Board's merchandise dues" means the maximum charges at any time made by the Board for services and facilities which the Board provide at Hull Docks in respect of goods loaded or unloaded over the Board's quays, wharves, piers, jetties or embankments or any other charges of a similar nature;
"goods loaded or unloaded overside" shall mean goods loaded or unloaded over-side to or from ships into or from lighters, barges or rivercraft in the Port of Hull without passing over any of the Board's quays, wharves, piers, jetties, or embankments.
(2) Notwithstanding the provisions of Section 3 of this Act the Board shall make no charges in respect of goods loaded or unloaded over-side in the period expiring on 31st December 1973 and thereafter may make maximum charges in respect of goods loaded or unloaded overside no greater than the amounts following, that is to say:
For the period expiring on the 31st December 1974–25 per cent. of the comparable rate of the Board's merchandise dues;
For any period thereafter—50 per cent. of the comparable rate of the Board's merchandise dues."
The noble and learned Lord said: My Lords, I beg to move this Amendment which stands in my name and which, as your Lordships may see, puts into statutory form what in fact was an undertaking given by counsel with regard to the upper limit of charges that might be made in certain circumstances with which the Bill deals. I think that perhaps I should, in order to make the case, outline the background of the argument which I propose to adduce to your Lordships relating to this Amendment, although in a sense I would submit to the House that nothing is directly relevant to the Amendment but the fact that it is in terms of an undertaking given by counsel and which those who are affected by the undertaking now wish to see, in order to have complete certainty on the matter, recorded in the terms of the Bill itself.
The background is this. Some ships using the Hull Docks bringing merchandise to the docks are in cases unloaded on to the dockside, or the quayside, and make use of the land installations of which the docks consist, including the storage and other equipment and facilities which are provided by the docks managers; other ships when they come into the Hull Docks do not use those facilities at all, they do not unload on to the quayside but are unloaded directly into river craft, barges and lighters and other craft, sometimes by cranage and sometimes without cranage, directly from the ship's hold into barges and lighters or other craft as the case may be. That practice is called overside loading. It stands to reason, so I would submit, that if you do not use the dock facilities, if you do not unload on to the quayside, if you do not use the storage facilities and so on, but you load directly into barges or lighters which carry away the merchandise unloaded from your ship, it is obviously unreasonable that the same charge should be made as would be made if the full land facilities of the dock were made use of for the purpose of unloading the ship. I have spoken of unloading the ship. What I have said applies equally to loading the ship. Some ships are loaded directly from barges or lighters and some ships are loaded from the quayside. The difference in charges applies both, so I should submit, as a matter of
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common sense and logic, to loading and unloading.
Ever since 1774 it has been recognised that there should be such a difference in the charge. For over a century and a half loading overside, as I have described it, has been either subjected to no charge at all or to a charge very much less than the charge made for quayside loading or unloading. The difference I think I can describe in this way. If you use the quayside and the land facilities, you are charged ship dues, you are charged merchandise dues and there are other charges such as cranage charges which you have to pay if you make use, as you generally do, of the cranage facilities that are provided.
As matters stand at present, before the present Bill is enacted, the position with regard to overside loading is as follows. If the ship which is loaded overside loads into craft or barges that do not stay in the dock premises for a period in excess of seven days, the lighter or barge company, as the case may be, has to pay ship dues and also has to pay a rent; but it is not charged merchandise dues. That makes the big difference. The charges in consequence are substantially less than they would be if the quayside and dock facilities and land facilities were used. That system has gone on, as I have said, in varying forms since 1774. It does not apply in other docks which are under the control of British Transport Docks Board, except in the case of London, where there is a not wholly dissimilar arrangement into which I will not go. In Rotterdam and Amsterdam, I am told, a system very similar to that which applies in Hull Docks is at present in operation. In other words, overside loading, broadly speaking, is free. What the Bill seeks to do is to give the Docks Board power to make charges for overside loading on the same scale as in the case of quayside loading. In other words, it seeks to take away that degree—
VISCOUNT SIMON: My Lords, I am sorry to interrupt the noble and learned Lord, Lord Stow Hill, but he is telling your Lordships that the Bill makes provision for charging on the same scale as on goods loaded over the quay. With respect to the noble and learned Lord, I do not think that appears in the Bill at all.
LORD STOW HILL: My Lords, may I modify my language and say this. What the Bill seeks to do, and I think that the noble Viscount, Lord Simon, would probably agree about this, is to cancel any exemption contained in the existing legislation limiting or exempting craft from charges. I think that would be a more accurate statement, and I am sorry if I stated the position inaccurately. Those exemptions, as I have said, are contained in Statutes, beginning with one in 1774 and extending right through the 19th century and the early part of the 20th century. This Bill has come from a Select Committee and it was there spoken of as a Bill designed to cure an anomaly, to remove something which was anachronistic and out of date and not justifiable in modem circumstances. I submit that that is a wholly wrong way of looking at it, and for the following reasons.
My Lords, in 1960 there was a hearing before the Transport Tribunal which lasted for 29 days, in which this particular question of exemption or reduction of charges in the case of overloading was before the Tribunal. In that case I appeared as counsel for the Hull Chamber of Commerce which to-day is one of the Petitioners, the other Petitioner being the British Waterways Board. That was 13 years ago, in 1960, and I declare it to your Lordships. I hope that it is not necessary for me to say that today I have no sort or kind of financial interest whatever. I left the Bar in 1964 and I was asked if I would move this Amendment perhaps because it was thought that, having been engaged in that case for some 29 days, I would have some recollection of it. In fact, I have very little and I have had to re-study the whole matter rather thoroughly since. But that is my own personal connection, and I do not think that it counts as the sort of interest about which your Lordships would feel concerned. There is no question of money or any other sort of advantage.
My Lords, I say that there was that hearing in 1960. After that hearing, and I think it would perhaps not be incorrect to say as the result of the decision at that hearing, there was provision made in a Statute passed in 1962, the Transport Act of 1962, preserving these exemptions in 1962, They were deliberately
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preserved by Parliament after that long hearing in 1960 and, in those circumstances, to call them an anachronism or an anomaly is, in my submission, to use a complete misnomer. They were reenacted specifically as part of the law in 1962 by Section 43 of the Transport Act of 1962, and are still part of the law. So that in 1973 we are not setting about destroying something which is old and antiquated and serves no useful purpose at all. What we are doing by this Bill is seeking to destroy something of as recent re-enactment as 1962; re-enactment, as I shall venture to seek to show your Lordships, for a very sound reason. It is not an anchronism.
If I may continue with the background of the case, the position is this. Hull Docks has been declining in traffic for a number of years. I hope that I do not speak disrespectfully of it when I say that for various reasons it is regarded, apparently, by shipowners as uncompetitive. I do not want to burden your Lordships with figures, but in 1963 the tonnage using the dock was 9½ million—I speak in round terms. In 1972, it was just under 6 million tons, so it is going downhill. The overside loading is going downhill still more. If I may again give rough figures, in 1963, that is the first date I mentioned, out of that 9½ million, overside loading accounted for 1½ million tons, or some 14 per cent. In 1972, overside loading and unloading accounted for only half a million tons, or under 10 per cent. of the reduced tonnage as a whole. So the situation is that the Hull Docks traffic is going down and the overside loading and unloading is going down very much faster.
I read in the speech of one of the learned counsel appearing in the Select Committee that, even so, with that reduced tonnage there were a considerable number of craft lying unused in the port, say last year. So the position is bad in the case of both the tonnage generally and also the overside loading and unloading in particular. If I may complete the picture, to give your Lordships some sort of idea as to the amount of overside loading and unloading, take last year. There were some 3,000 ships that came to the Hull Docks in 1972. About 100 of that 3,000 were unloaded solely overside, about 450 were unloaded partly on to the quay and partly overside, and the remaining

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2,400 were unloaded on to the quay only. May I make this point, my Lords. It was said during the hearing that the over-side loaders and unloaders were obtaining a service for which they do not pay. It would be a wholly misconceived view to think that they do not greatly assist the port.
In point of fact what happens is that a ship's turnround is very greatly accelerated by this overside unloading. Frequently the position is that a ship may be anchored alongside the quay; it may be unloaded on to the quay, in part, by suction, cranage or by other methods, and at the same time, on the other side of the ship, there will be a lighter or a barge and there will be loading from the same ship into the lighter or the barge which is moored alongside. The turnround of the ship will thereby be greatly accelerated; and if it is the situation that Hull docks are regarded as on the whole uncompetitive and the traffic is accordingly declining, it is of great advantage to the docks to have the services of these lighters and barges which assist the process of loading, and, equally, the process of unloading. In the case of the process of loading the ship, if I may give your Lordships the figures for the same year, outgoing ships were loaded to the number of some 2,300. Of those, 85 were loaded overside and from quayside and only two were loaded from lighters or barges; so that one is not talking of a very large feature of the dock loading and unloading.
If I may complete the figures by one more set of figures (and I apologise for troubling your Lordships with figures) the position is that the total revenue of the docks and revenue from overside loading and unloading is as follows. In 1972 the total revenue at the Hull Docks was just under £9 million £8,865,000. The barges and lighters contributed, in the form which I have described, in the way of ships' dues and rental some £50,000. If they were charged the full amount that was charged for loading and unloading on the quayside and for using the full facilities of the dock, the revenue from them would be £290,000 out of £9 million. As it would be wholly unrealistic to charge them the same charge as is charged for quayside unloading, and supposing one takes a charge of, say, 50 per cent. As
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being appropriate, then the only loss to the Hull Docks from the fact that a lesser charge is made for overside loading and unloading is some £145,000 as against a total of nearly £9 million. So it is a comparatively small feature of the picture.
My Lords, I want to add this. As I have said, overside loading and unloading from barges and lighterage are declining badly. There is hope at the moment because there are new technical methods. One is called latchat and the other bacat. I will not go into the details, but that is a new technique which is now being developed and which holds out considerable hope for the future, under which the barge or lighter is loaded direct on to the outgoing steamer and transported direct from Hull Docks which means probably merchandise coming from Nottingham and Leeds—across the North Sea to Amsterdam, and it is hoped to take them even to Scandinavia. That is a new technique which is being designed and which holds out considerable hope for the future, and it would be a great pity if, owing to this extra charge being put upon overside loading, the downward process which I have described were accelerated.
One final feature in the background picture is this. There were two Petitions. One was by the Hull Chamber of Commerce and the other by the British Waterways Board. Really this is a dispute (and there have been negotiations and arguments about it for a long time) between two nationalised Boards. It is not a case in which it could be said that there was some sinister private interest which was seeking to deprive the public purse of money which rightly belonged to it. It is logical that the charge should be less, for the reasons I have given; and this is really a dispute between two nationalised Boards. Those two Boards were set up by the 1962 Transport Act, to which I have referred. Both, the Waterways Board just as much as the Docks Board, are under an obligation, under Section 17 of that Act, to carry on their undertaking in such a way that their outgoings are covered by their revenue. That is the ordinary provision in the case of nationalised undertakings. If this extra charge is to be imposed it will make little difference to the overall situation of Hull Docks. It will simply, as I have said, further

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depress overside loading and unloading and thereby deprive one of these two nationalised Boards, the Waterways Board, of the substantial toll income which they derive from the tolls paid by barges and lighters using the Trent and Humber complex of waterways. So it is simply taking from one Board and giving it to another, for no necessary reason. That is the background, and I do not think I need enlarge upon it.
My Lords, I now come to the immediate scope and purpose of the Amendment. After the case had been going on for three days, learned counsel who appeared for the Promotors of the Bill, the Dock Board, Mr. Marnham made a plain statement of intention as to what the charges were that the Board would seek to make if this Bill were brought into effect. I should like, if I may, to quote a little from learned counsel's speech. What he said was this:
"What I am instructed to say is that, so far as the intention of the Board is concerned,"—
that is, the Dock Board—
"they would not intend in the year 1974 to do more than charge 25 per cent. of the relevant goods due (merchandise due), which will be chargeable for the time being on the same traffic if landed on or loaded from the quays at Hull."
He then goes on:
"What the Board would intend would be not to charge more than 25 per cent. of those goods for overside cargo in the first year, in 1974, and not more than a maximum of 50 per cent. at any time."
Then he went on to explain this undertaking in this way:
"The answer is not more than 25 per cent. or 50 per cent., and individual items would have to be discussed with the port users in order to see whether the maximum was appropriate in each individual case or not."
That is what counsel said as being the intention of the Board. Later on, towards the end of that hearing, on the last day, he repeated that undertaking, and he added one thing which I should like to bring to the notice of your Lordships.
VISCOUNT SIMON: My Lords, if the noble Lord would give way for a moment, I think it is important that the House should have this right. At the beginning the noble Lord referred to "an undertaking". A little later on he read out "a statement of intention". He has now again referred to it as "an under-
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taking". It was in fact a statement of intention, which I think is rather different.
LORD STOW HILL: My Lords, one of the weaknesses of a lazy mind is to be inaccurate in the use of language. In using the word "undertaking" I was using inaccurate and loose language. I withdraw it, and I emphasise that the word is "intention" because that is part of my argument. The whole trouble is that what counsel has limited himself to saying is that "it is the intention". Those who run these riverside craft have to programme their operations over a period of years. These craft are expensive; they need maintaining; and these people have to formulate their budgets. Their anxiety is that the word is "intention" and is not "undertaking". What I seek to do by the Amendment is, in effect, to convert the word "intention into the word" undertaking ".
That having been raised, and counsel in effect having been asked, by implication at any rate, why he objected to it being in the Bill, he said this:
"The Board would certainly not wish to see incorporated in the Bill any restriction or definition of that amount. One of the principal reasons for that is simply that if it was included in the Bill it would not be possible to make any alteration without coming back to Parliament again."
What a reason! Here is a whole industry. These riverside craft are very expensive (I am afraid I repeat myself), and those responsible for conducting them must look ahead. These enterprises cannot be conducted on a day-to-day basis or on five-minute decisions. You have to programme what you are going to spend over a period of years; how far you are going to fit into this bacat or lashat system; and how much money you are going to expend—and it is a substantial capital expenditure. Anybody with the least sense of responsibility who wants to manage an undertaking of this sort must look ahead. It is not satisfactory to him simply to know counsel's statement of an intention, knowing also that counsel felt it necessary to use the word "intention", and was very reluctant, or his clients were, to have anything precise put in an Act of Parliament.
My Lords, why should they not come back to the House? This is a Private Bill designed to assist the interests of one of these nationalised Boards. If they

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want to disadvantage the other nationalised Boards, why should they not come back to this House to do so? That is what I am asking. Therefore, what I have sought to put down is an Amendment that proposes precisely that result. This being a Private Bill, it is not printed, and your Lordships may not have seen the Amendment. It is designed to implement in the terms of this Bill counsel's statement of intention. I say at once that I do not suggest for a second that there is any ill-faith. I am quite certain that counsel was instructed by people who really mean to honour this intention, and to honour it not only in 1974 as to the 25 per cent. limit but after 1974 as to the limit being raised from 25 per cent. to 50 per cent. I am sure they are perfectly genuine in that. I do not think there is any question of ill faith: if I did, there would not be much point in asking your Lordships to incorporate that intention in the Bill. It is a bona fide statement of intention, and those who are concerned to manage their affairs and who pay these dues to the Docks Board simply want to know whether they can in confidence look forward in the future to not having to pay the Board more than a certain amount. Therefore what the Amendment does—I will not read it to your Lordships—is simply to put into legislative language that intention, but it makes it an undertaking, not an intention. I am most grateful to my noble friend Lord Simon for reminding me of the difference.
I should like to call attention to one small feature. The merchandise dues which the Docks Board are allowed to charge are defined in the Amendment as being the maximum charges at any one time to be made by the Board. It simply means, so far as this Amendment is concerned, that they can increase their merchandise dues. If they do so, any party affected has a right of appeal under Section 31 of the Harbours Act 1964 to the National Ports Council, and can dispute the amount of the increase. But so far as this Amendment is concerned, they can increase their merchandise dues beyond the present figure and anybody affected can appeal against it. So far, so good. As the charges that may be made for overside loading and unloading are to he limited to 25 per cent. and
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50 per cent. respectively of those merchandise dues, when the merchandise dues are raised then equally and proportionately the charges for overside loading and unloading can also be raised. So it is not putting anybody in a straitjacket, but simply taking counsel's clients at their word—and counsel speaks simply for his clients—and saying, "If that is your intention; namely, that there will be nothing up to 1974, 25 per cent. during 1974 and 50 per cent. for succeeding years, put that in the Statute and if you increase those merchandise charges, correspondingly you can increase the overside charges for loading and unloading."
My Lords, I respectfully submit that this Amendment will bring some sort of business sense or logic into this situation, this ridiculous dispute between two nationalised Boards. I do not say "ridiculous" from the point of view of the Inland Waterways Board—they are trying to be as reasonable as they can: they only want to know where they stand. May I withdraw the word "ridiculous"? This dispute, which has been the subject of much discussion, should be finally resolved by being put into the terms of this Bill, which is a Private Bill. I have read in the transcript of the proceedings of the Select Committee that the Government are neutral and do not take up a stance one way or the other. It is a matter between the two Boards and the Hull Chamber of Commerce with one of the Boards. I ask for it to be finally resolved—simply to introduce certainty and to put in plain terms into this Private Bill what counsel has said, on instructions, are the intentions of his clients. I beg to move the Amendment.
8.55 p.m.
LORD CHAMPION: My Lords, we are grateful to the noble Lord, Lord Stow Hill, for giving us the benefit of his knowledge, which arises out of the background of these docks and these charges. His, of course, is a peculiar knowledge of the matters which are dealt with in this Bill; but I am bound to say that I do not believe that to-night we have to go deeply into overside loading and the method of charging. I believe the question we have to decide to-night is a relatively simple one. As the noble

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Lord, Lord Stow Hill, said, an undertaking was given during the passage of the Bill—and despite what the noble Viscount, Lord Simon, has said, I have read this as an undertaking and I am fairly sure that members of that Committee, sitting and listening to the evidence, accepted what Mr. Marnham, the learned counsel for the Promoters, said as one. He said:
"I said at the start of these proceedings this morning that the intention of the Board would be to restrict their charges to the 25 per cent. in the first year and to a maximum thereafter of 50 per cent."
That was an undertaking made in specific terms. The question is: ought we to embody those figures in the Bill? It was also said by Mr. Marnham that the Harbours Act 1964 gives a right of appeal to the National Ports Council in respect of any charge which is imposed or any charge which could be imposed on over-side cargo if the Bill were allowed to proceed.
The question that the House is being asked to decide to-night is not one as between the undertaking given by the Promoters' counsel and the Amendment now before us, but as to whether we ought to embody the undertaking in the Bill itself. If the circumstances of the Hull docks changed to such an extent that the modification of the charges set out in the Promoters' undertaking was desirable, and perhaps even acknowledged by the port users, the overside users themselves, ought this House, by embodying the undertaking in the Bill, to tie the Board to the extent that such a modification would be possible only by an Act of Parliament? I am bound to say that I do not agree with my noble friend when he said that undertakings of this size could come to both Houses, that money could be spent to get an Act of Parliament passed, and that we ought to take steps here which might indeed cause them eventually to have to do precisely that. To carry a Bill through both Houses of Parliament involves a very heavy expense indeed. I do think the safeguard of the right of appeal to the National Ports Council appears to be sufficient for the overside loaders and users. Only if a considerable change had taken place in the Board's circumstances would the Board face the National Ports Council, knowing full well that the undertaking of the Board
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is on record and that it would be quoted against them.
I believe that if such an appeal were made to the National Ports Council, that Council would take into consideration the undertaking that had been given, and I am sure they would not find for the Board if in fact the circumstances had not changed to such an extent as to justify a change in the charging set out in the undertaking given by Mr. Marnham on behalf of the Bill's Promoters. No Board would attempt an alteration of the 25 per cent, and 50 per cent. charges unless they could face the National Ports Council and support and fully justify the change which might be proposed by the Board. I am bound to say, having sat on some of these Committees and listened to all the evidence, as this Committee did over three days, and having come to the conclusion which it has now come to, to permit the Bill to pass in the form that it has reached us, that I do not think it would be right for the House to-night to alter what that Committee did, and certainly not to embody in the Bill the Amendment now before us.
9.0 p.m.
THE EARL OF LAUDERDALE: My Lords, it will be within the recollection of your Lordships that this matter was briefly alluded to on Second Reading of the Bill. I took the liberty to detain your Lordships for a moment or two then to draw attention to the conflict which had arisen between two nationalised industries each of which had been set up by Parliament with a particular purpose. I also drew attention then, as I do now, and as the noble and learned Lord, Lord Stow Hill, did so admirably, to the critical importance in the future of encouraging rather than discouraging transport on the inland waterways.
On Second Reading I ventured to say that unless an accommodation were reached between the Promoters and the Petitioners during the hearing in Committee, the Promoters must expect serious difficulties and opposition on Third Reading. I am not concerned to apportion blame as between these two nationalised industries. But since even the Department of Trade and Industry declared in Committee the most neuter of neutral stands, and since that position was reached despite the fact that there

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had been no representations from, or lobbying by, the British Waterways Board to the Department (and page 20 of the proceedings of the final day in Committee bears this out) we in Parliament have an obligation to look more closely at the matter.
Much has been made already of the point as to whether a statement of intention is or is not a binding undertaking. Also, some rather heavy weather was made just now on the costs of a Private Parliamentary Bill. I would have thought that this particular Bill must have cost its Promoters less than most Private Bills do in going through the two Houses of Parliament because it has arrived at this stage so quickly and with so little fuss. I submit the reason for that is because the Petitioners have shown the greatest restraint. Whether that be the case or not, I am not concerned to apportion praise and blame between the two, in effect, organs of the State. The simple fact is that the British Transport Docks Board have given the appearance of meeting the Petitioners' objection in that they gave their declaration of intention. But when the Chairman of the Select Committee asked whether the Promoters would put that declaration of intention into the Bill, they refused. The refused for a simple reason of which they made no secret. It was that if they wanted to change their minds they would not be able to do so. In other words, it was no more than a declaration of intention. They made it clear directly, and by inference, that they might change their minds; there might be a change of policy; there might be new situations; and for that reason they were not prepared, and refused more than once, to say that their declaration of intention was to be regarded as an undertaking.
It has been argued that the Petitioners, the British Waterways Board, still have left to them, if the Bill proceeds in its present form, the option of an appeal to the National Ports Council under Section 31 of the Harbours Act 1964. Both the Chairman and the Director of the National Ports Council will know that I personally have the utmost respect for them and admiration for the job that they do; but can it really be argued that the Inland Waterways, who have one job to do, should rely alone for their pro-
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tection in this matter on the National Ports Council, which is mainly and properly concerned in making ports pay, not in developing inland waterways or inland water transport?
As the noble and learned Lord, Lord Stow Hill, said, the matter at issue in monetary terms and in volume terms is not a large feature of either the dock traffic on the Humber, or of the Hull Docks revenue; but it is a big feature of inland waterways transport. The British Waterways Board have said frankly enough that they recognise the chance to load and unload into and out of barges in sheltered water is itself a facility for which proper payment should be made. They do not deny that. They have said that they accept the range of the British Transport Board's intention of a 25 per cent, and 50 per cent. limitation provided they could be certain that those intentions would endure. It may be said that the Hull Docks and the Humber Estuary are like a key that turns the lock on a door. The Hull Docks and the Humber Estuary can kill barge transport with little damage to themselves, or they can assist it with some advantage to themselves.
In view of what has been said—and I have strong feelings about this—particularly since the Promoters were warned on Second Reading that there might be difficulty now if they did not compose their differences with the Petitioners, I hope and believe that unless the noble Lord who replies is able to say that the Promoters will accept this Amendment, noble Lords will agree to press this matter to a Division to test the feeling and thinking of the House.
VISCOUNT SIMON: My Lords, before the noble Earl sits down I wonder whether he can help the House, and certainly help me, by telling me at what point the British Waterways Board said they would accept this proposal, provided it was put into the Bill?
THE EARL OF LAUDERDALE: My Lords, I am speaking purely from my private understanding. I do not think it is absolutely clear in the record of the Committee hearings. The noble Viscount, Lord Simon, will I think be able to infer quite readily from his reading of the Committee proceedings that when the

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Committee Chairman asked the Promoters if they were prepared to put this into the Bill, and the Promoters said they would not, he then said, in effect, "Well then, this is a disappointment. We have got to carry on without it." In so far as the proceedings of the Committee, the deliberations of the Committee, are not recorded for the public—we have only to go by the transcript of the hearing of evidence—that is my direct inference. But it is also supported by my own private understanding of the situation. I do not, I should stress, in any way represent he British Waterways Board. I have no financial interests in either party to declare; I am merely speaking from such knowledge as I have been able to gather.
9.10 p.m.
VISCOUNT ST. DAVIDS: My Lords, I think I should start by saying that I have no interest in either of the parties concerned or indeed any other parties in the area. I have no connection with Hull Docks. I have had considerable connections with the British Waterways Board in the past. On occasions I have helped them; on very many occasions, as the House has certainly in its memory. I have fought them very bitterly. The reason why I rise to-night is that I have one prejudice and two points which I think are of national interest; and for these three reasons I think that this undertaking, or whatever one sees fit to call it, ought to be in the Bill and not just a few words spoken in a Committee room upstairs.
My prejudice is simply this. In the course of the years that I have been in this House I have never liked at any time seeing a Minister or anybody else rise to his feet and say that he intends to do something, or even promise to do something. I have always wanted to see it in the Bill. This might be called a good Liberal principle. So far as I recollect, the Liberals have always supported insertion in the Bill of all such undertakings as being very much clearer, very much more certain, and very much more likely not to cause trouble later. It is the undertakings which are not in the Bill which cause disputes at a later date. Apart from that prejudice there are two points of national interest, and for these reasons I should like to see this undertaking, or whatever it may be, in the Bill.
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Overside loading and unloading of ships is enormously valuable to this country. One of the largest capital investments ever made by any body, any company, is into the building and operation of a ship. Its capital value is enormous; its continuous outgoings build up all the time whatever it is doing and especially when it is at a standstill. It is therefore important whenever a ship enters a dock that it should be got out of that dock at the earliest moment possible. The best way of doing this is to load it or unload it over both sides and not merely on to the dry land of the dock. For this reason, the loading and unloading of at least one side of a ship into barges has continued in many cases when it might appear to be uneconomic, simply because it got the ship away to sea earlier and thus saved enormous capital charges, insurance charges, crews' wages charges, demurrage and all sorts of things. The loading and unloading of a ship overside has thus for many years been regarded in this country as of supreme importance and this has appeared in Act of Parliament after Act of Parliament, including the Transport Act 1962, as has been mentioned earlier. I consider that any undertaking, any variation, any solidification of this position that overside loading should be treated specially is extremely important and should be put in a Bill which becomes an Act of Parliament and be seen by other port authorities and everybody else in the country as important.
There is a secondary point, which I know a number of your Lordships have well to heart. It is this: anything put into a barge is not taken by road. A number of your Lordships have pressed this point on me over and over again, that they support what I have always advocated; namely, the use of the inland waterways simply because a barge holds a great many more tons of cargo than does a lorry. If a heavy barge is going up a waterway it is positively pleasant and very different from the unpleasant state of affairs produced by heavy lorries on the road. Therefore, there is a national interest in preserving this barge traffic, in keeping it economic and, if possible, in building it up. I think all your Lordships have this at heart. If that is so, it is important that a point like this should be firmly in legislation where it is

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visible to everybody, whereas the proceedings of a Committee of ours upstairs are not quite so visible. For this reason in addition—a small reason but I think your Lordships may well find it important—I also wish to see this Amendment in the Bill and, if necessary, I shall support it in a Division.
9.15 p.m.
THE COUNTESS OF LOUDOUN: My Lords, I was a member of the Select Committee on this Bill and I voted against allowing it to proceed. We considered all the evidence very carefully but we never really considered whether or not the subject of a declaration of intent by the Promoters should be mentioned in the Bill. There was a slight reference to it by counsel for the Promoters but it was their opinion that it would be undesirable to have any definition or restriction of actual rate of charge put in the Bill, on the grounds that it would not be possible to make any alteration without coming back to Parliament.
But there must already be a precedent for this. It must be recognised that this legislation would take away established rights. It is right that Parliament should protect the Petitioners by requiring the Promoters to include the subject of the declaration in the Bill, which is what this Amendment seeks to do. We have 339 miles of commercial waterways in this country, of which 158 miles—that is 47 per cent.—of the national total are accessible from the Humber Estuary. Owing to its geographical situation Hull has always been a big distribution centre, particularly by water; but traffic has been slowly disappearing over the years, showing that it is very vulnerable. Despite this, on the credit side over the last year or two there has been a slight upward trend, particularly in cargoes from South Africa. There is a continuing need to attract new traffic to Hull, and new technologies have been introduced by the British Waterways Board to encourage this on their system.
The effect of a charge, whatever it may be, is something one cannot assess. Therefore, it is imperative that Parliament should still preserve some control in this matter. This clause, representing the solemn statement of intent given by the Promoters to Parliament, would achieve this. However, as I feel I have already
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had my vote in Committee I shall abstain tonight; but I hope your Lordships will support this Amendment.
LORD HAYTER: My Lords, the noble and learned Lord, Lord Stow Hill, referred, in a phrase, to "business sense and logic", and it is this that completely bewilders me to-night. Business sense and logic dictates, so far as I am concerned, that if I set up a Committee to examine a problem I accept their conclusions unless there is something quite deleterious in them. It would seem that the noble and learned Lord, Lord Stow Hill, and indeed the noble Viscount, Lord St. Davids, should have appeared before this Committee and made their expertise available to the Committee as a whole. Why should we bother with just a small section of the evidence which doubtless was given in the two and a half to three days that this Committee sat?
The noble Earl, Lord Lauderdale, said, on Second Reading of the Bill:
"My purpose now is to express the hope that under the influence of examination in the Select Committee good sense may yet prevail, whereas negotiations between the two nationalised industries concerned have hitherto been disappointingly abortive."—[OFFICIAL REPORT; 11/6/73, col. 376]
I maintain, looking at the matter as a complete outsider, that good sense has prevailed. All the points that have been made should have been brought up at the time when this Committee sat. This expression of opinion was mentioned to the Committee; it was quite clear that they did not feel that they should improve the Bill in that way by bringing in this express provision, and I feel most strongly that it would be a retrograde step to rehearse once again all that happened in the Committee, only to come out with the same answer, which is that the Bill should go forward without any amendment.
9.20 p.m.
LORD LUCAS OF CHILWORTH: My Lords, I speak also as a member of the Select Committee who considered this matter, and I feel that it may be helpful to your Lordships if some explanation were given regarding the decisions to which the Committee came. Those of your Lordships who followed the proceedings will recall the transcript of the second day and will note that the Committee were very unhappy about the

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method by which the Promoters were proposing to introduce the charges, and the Committee sought that evening to establish the intention in order that they could give some support to the Petitioners' figures. Such an intention was given the following morning. It was quite clear and quite unequivocal. It appears to me that there has been from the start of this Bill, right through almost until this stage, a marked distrust between the two parties. If counsel for the Promoters of the Bill, in the circumstances in which they find themselves at that time, gives a declaration of intent that the charges shall be 25 per cent. of the shipping and merchandise dues for the succeeding year, 1974, and not exceeding (to quote it correctly), "to a maximum of 50 per cent. thereafter", it really should be good enough for the Petitioners to accept.
Until that time I was myself very much against the Bill proceeding. I must confess also that I was not tremendously enamoured with the management of the Hull Docks, in so far as they presented their case. After all, if one looks at any kind of business and finds a diminishing amount of business and a diminishing return on capital, one looks to a suspect management. Nevertheless, when the Committee came to make their decision I failed to persuade my colleagues of my point of view. I rested with that, which appears to me to be a quite reasonable way for a Select Committee to deal with their business. It is quite wrong for anybody to suggest the Committee were not seized upon both the matter of principle and the matter of cash. The Committee were indeed seized upon those things very well, and it worried them enormously. They were equally seized upon the necessity for the Docks Board to be able to negotiate with shipping owners, with barge owners, with lighter owners, with their customers, without one hand tied behind their back, and the Committee were equally seized of the point which the Promoter and the Petitioners made in suggesting that the dock haulage business was a changing business. It is quite fair to say that very many members of the Committee were quite aware that the technological changes that may well occur within a comparatively short period of time may militate against the Docks Board, putting them in an unfavourable position with the lighter
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owners, and that they should therefore be free to negotiate. In the event of such negotiation proving to be unacceptable, barge owners, lighter owners, the customers of the Hull Docks Board, have a right of appeal.
Surely that is the right way of going about things. I find myself, speaking from these Benches, perhaps too often in agreement with the noble Lord, Lord Champion, who said quite clearly that the question before the House to-night was whether the Docks Board should have the Bill as it was promoted and get along with their business, allowing the Petitioners the right of appeal. In effect, I believe, that is what the noble Lord said. The noble Earl, Lord Lauderdale, suggested, as did the noble Viscount, Lord St. Davids, that an intention was not really good enough, because, after all, they could do anything afterwards. I must say, as a businessman, that I find it incomprehensible that any two parties should enter any kind of business undertaking with that kind of feeling. If that is the feeling, I would suggest to the Hull Docks Board that they ban the barges, and I would say to the barge owners, "Quit and go somewhere else", because this is no way to do business.
There is going to be a change in the kind of merchandise that this dock is going to handle if it is to survive as a port, and I do not believe that the managers should be hampered in any kind of way in getting on with that piece of business. I do not think a nationalised industry is going to say one thing to a Select Committee and do, unreasonably, a totally different thing. That is why I am inclined now to support the Promoters of the Bill and go against the Amendment.
There is just one other very small point which I think it would be reasonable for your Lordships to consider. In the short time I have been in your Lordships' House it has appeared to me that a midsummer madness overcomes the House just before Recess. All sorts of things get carried through the House, timetables get upset, and because of the expediency of the Recess various matters appear to get passed. We have had a number of Select Committee Reports which have been challenged. Now it occurs to me that there is little purpose in your Lordships sending a Bill to a Select Committee and not having trust in that Committee to do

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that Committee's business, and with the full intention as declared perhaps at Second Reading, that notwithstanding what a Select Committee may do, we will raise the matter again at Third Reading.
Some of these Select Committees are a little arduous. This one was not very arduous; it meant three days of close attention with an extra half-hour on the second day. If Select Committees are going to do this work on behalf of the House, I think it would be in the better interests of the House to accent their recommendation, unless there are very momentous, pressing reasons why it should not. Otherwise I can see Select Committee procedure in the future falling down for sheer lack of people willing to serve and having then to proceed over the matter again. My Lords, do not be deceived that your Select Committee did not attend to their affairs properly or pay due regard to those things said and some of those things unsaid. They deliberated tremendously hard at the end of the hearing. I think, in fact, it was for about three quarters of an hour that the Committee talked among themselves before they finally came to the decision, clearly recorded in their minutes, that the Bill should proceed. It is upon that basis that I would support the Promoters.
LORD MOYNE: My Lords, before the noble Lord sits down, may I raise a point on what he said about a certain undertaking from the Promoters, understood to have been given by their counsel? He said, as a business man, that he would accept that. Businessmen do not normally operate under Acts of Parliament. Here we are trying to lay something down in an Act of Parliament; we are making a law. The important thing about a law is that it should be unambiguous, and if this is the intention of everybody concerned I suggest that it should go into the Bill.
9.31 p.m.
BARONESS YOUNG: My Lords, I thought that it might be of help to the House if I intervened at this point in view of the very great interest that has been expressed in this Bill. It is of course a Private Bill and, as such, the attitude of the Government is one of neutrality, and I should like to confirm what my right honourable friend the Secretary of State indicated in his report—that he has
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no objection to the proposals this Bill seeks to implement. I should, however, like to say this. Port authorities are expected to operate on a commercial basis and in competition with each other, and they are, in general, free to exercise their own commercial judgment in determining port charges. The British Transport Docks Board are no exception.
A point was raised on the question of free overside trade at other United Kingdom ports. My understanding of the position is that of the major United Kingdom ports only the Port of London Authority are under statutory restrictions of the kind which is the subject of the Bill. Even so, a separate levy is made by the Port of London Authority on all goods entering and leaving the port. The noble Viscount, Lord St. Davids, raised a question as to whether traffic would be diverted on to the roads. I understand that the Board have stated that they do not seek, by their rate structure, to influence the movement of goods by road, rail or water, and that users must be free to choose their own form of transport. We cannot tell in advance how much traffic might be diverted as a result of the Bill. However, having regard to the current and prospective road improvements in the Hull area, and in particular to the schemes designed to improve road access to the docks, I am assured that there is unlikely to be any undue problem about accommodating any resultant additional road traffic.
In conclusion, I should like to make it clear, as I think other noble Lords have mentioned, that there is a right of objection to the National Ports Council under Section 31 of the Harbours Act 1964 in the case of ship, passenger and goods dues. In considering objections in a particular case, the Council can take into account the importance of the charges in question to the operations carried out by the objectors. There is, therefore, an effective safeguard in relation to any charges which the Board may impose on goods transferred overside at Hull. This being so, I should not think that there is any need to include in the Bill the restriction as proposed by the Amendment.
LORD STOW HILL: My Lords, before the noble Baroness sits down, will she allow me to ask a question as to whether there will not be a considerable

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amount more traffic on the Hull roads if the overside loading continues to decrease and is transferred to ordinary quayside loading? The figure that has been given to me—and quite frankly I am not certain that I have got it right—is something like 100 extra 20-ton loads per day. I may be wrong about that, and if I am I apologise to the House, but that was the figure which I think was given to me as an estimate.
BARONESS YOUNG: My Lords, it is for the Promoters of the Bill to answer on all the general arguments that come up. On this particular matter I am afraid that I do not have the figures before me about numbers of extra lorries. My point was that, as regards extra traffic, there are to be road improvements near Hull, and it is not expected that this will create any extra difficulties.
THE EARL OF LAUDERDALE: My Lords, would the noble Baroness be so kind as to answer this further question: on the subject of her Department's neutrality, would she confirm the words that are recorded on page 20 of Day 3 of the Committee as coming from her Department's representative, Mr. Monk, who said:
"It would certainly be going too far to imply in the words 'no objection' that we actively support the Bill."
Would the noble Baroness be so kind as to confirm that those words do represent her Department's policy?
BARONESS YOUNG: My Lords, the only words which I am prepared to confirm are that we do take a neutral attitude on this matter, and on looking at this sentence I would have thought that that was exactly what was expressed.
9.35 p.m.
VISCOUNT SIMON: My Lords, we have had a long discussion on this Amendment and I must do my best to satisfy your Lordships that the Amendment is, first of all, ill-conceived and unnecessary and, secondly, objectionable. Perhaps I may deal first with the merits of the clause and the argument and then come to the procedural point; so I will not take Lord Stow Hill's first point which was that those affected now wish to see the undertaking written into the Bill—and I will not quarrel with the noble and learned Lord's reference to the undertaking, or whatever the word was.
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I corrected the noble and learned Lord only because I thought there was perhaps something a little pejorative in the suggestion that an undertaking has been given from which somebody is now trying to resile. Anyway, he said that those affected wished to see this undertaking in the Bill. I am bound to ask why they did not say so to the Committee. I do not want to trouble your Lordships with all the evidence, but when the notice of intention was given my recollection is that the representative of the Objectors—and the matter was just a little difficult to follow because the same person was representing both Objectors, so one was not quite sure which one he was speaking for—said that he did not think that did any good.
The noble and learned Lord, Lord Stow Hill, went on to recite the long history of this matter and all the figures—and of course I am sure he got his figures right. These were all presented to and rehearsed before the Select Committee, and I venture to suggest to your Lordships that the Bill has been given a Third Reading and the principle that a charge can be made on overside cargo is now accepted. Therefore I do not think it is necessary to go back into all the history. However, I should like to make just one comment on the history because it was not taken up before the Select Committee. As is so often the case, the great port of Rotterdam was thrown in the teeth of the British Docks Board; but whoever threw it in their teeth did not realise that the great port of Rotterdam has not got any enclosed docks, so the position that the port of Hull is dealing with does not arise in Rotterdam.
My Lords, the noble and learned Lord, Lord Stow Hill, went on to refer to these new concepts of "bacot" and "lash", and of course we all welcome this, the port of Hull as much as anyone, because it appears to offer possibilities for a substantial increase in cargo through Hull. That increase in cargo will be brought to and from the ships in barges. So far as I can see, the whole basis of the Amendment is the assumption that the imposition of a charge is going seriously to affect the use of barges. I went very carefully through the evidence given to the Select Committee, and I did not see any evidence to that effect. A lot of

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estimates were made, and I think the Committee finally agreed that it was not possible to tell. As one noble Lord said recently one cannot tell what the results will be. But, certainly, the British Waterways Board, through their principal witness, appeared to be quite satisfied that it would not greatly affect the traffic; he was merely concerned with the matter of principle. I cannot find evidence for the statement by the noble Lord, Lord Stow Hill, that to do this will further depress overside loading and discharge, and thus damage the interests of the British Waterways Board and of merchants.
The fact of the matter is that traffic by water is cheaper than traffic over the quay by land, where it is appropriate and useful, particularly when the cargo is going direct to premises on the water. In fact, the water has gained a certain amount of the traffic which goes some way up by water and is then transferred to the road. This is admirable. I saw it stated by the Road Haulage Association, Hull branch—admittedly a source that might be suspect—that if a full charge similar to wharfage were put on to lighters, it would still be cheaper to send goods by lighter than to send them by road. The proposers of the Amendment obviously do not think that the decline in traffic has anything to do with charges on cargo that is discharged over-side, because up till now there has not been any. The decline in overside traffic has occurred largely because the waterside mills have closed down and there is less cargo that is suitable for carriage by water.
One point which the noble and learned Lord, Lord Stow Hill, made, I should like to suggest he did not get quite right. He said that under the proposed procedure, if the dues for landing over the quay were raised, then the percentage charged to the cargo going into barges would be correspondingly raised, by perhaps 25 per cent. or 50 per cent. With great respect to the noble and learned Lord, I think that he was not right, because the appeal to the National Ports Council against an increase in charges could be limited to the cargo discharged into barges. So that the effect of the Amendment might be that the cargo discharged into barges would have its rate
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increased willy-nilly. because that is what the Act states; whereas, in fact, if they relied on their present power to appeal to the National Ports Council they could get the matter dealt with on the basis of the overside cargoes only. I am assuming that if this Amendment were put into the Bill, the receivers would not have a second shot, in that they could go to the National Ports Council as well. I should have thought that that would be asking for too much.
I was most grateful to the noble Lord, Lord Champion, who dealt with my next point about whether it is right for this House to challenge the recommendation of the Select Committee, and I think I shall come back to that a little later. The noble Earl, Lord Lauderdale, reminded us of the warning which he gave us on Second Reading, and I hope he will not take it amiss if I say that I think that that slightly weakens his argument, because it shows that he was prejudiced, in the proper sense of the word; that is to say, he prejudged the issue before hearing the arguments of the British Transport Docks Board. He referred to what happened in the Select Committee, and said that the Chairman asked counsel for the Promoters whether they would put this note of intention into the Bill, and they said that they would not do so and gave a reason.
I suggest that there are other good reasons beside the one which they gave. For one thing, it is a completely open-ended statement of intention and if it had been in the form of a contract nobody would have said that they could guarantee that the charges would not be more than 50 per cent. of the quay charge for ever and ever. If it was going to be in the form of a contract, I should have thought you would have to have some limitation on it. One can conceive conditions in which, for instance, these new methods of transport, bacat and lash, become immensely successful. Let us suppose that 50 per cent. of the cargo which goes through Hull is carried in barges. In those circumstances, I am sure the Docks Board would have to come to some agreement with the shippers and receivers, because they would otherwise lose far too much revenue. It is not very likely to happen, but it is the sort of thing which can happen if they are tied up in this way in the Bill.

1797
The noble Viscount, Lord St. Davids, told us of his prejudice against intentions not being put in the Bill, and he rather chided me with not accepting them at once, as a good Liberal. This is not a Party matter at all, and I am not going to be drawn into that. I fully agree with him, of course, that overside loading and unloading is immensely valuable, but the point I have already made is that there is no evidence that this relatively small charge is going to have the effect that some people seem to think. Of course it was natural that, in the Select Committee, people concerned who saw a charge being put on should go and object. We all do that as soon as we hear that a charge is going to be put on or increased. I would merely remind your Lordships that it is only in the last two weeks, I think, that the Price Commission has authorised quite a substantial increase in road haulage charges. That, it might be thought, again, would tip the scale a little in favour of barges. The exact relationship between barge traffic and traffic over the quay cannot remain static, and I do not think that the amounts we are talking about here will have a substantial effect.
I am reminded that the House is sitting rather late and that I must get on, so I will just say a few more words on the procedural position. I took the trouble to have a look at Erskine May this morning, and perhaps I may read a very short extract from it. I can give the reference if any noble Lord wants it. Speaking of Private Bills, it says:
"The House, although it has undoubtedly the power, should normally never reject the decision of a Select Committee unless new or special considerations arise".
I submit that there are no new or special considerations. All the considerations that have been canvassed to-day were discussed before the Select Committee, and it seems to me that the noble Lord, Lord Stow Hill has not shown us any reason indicating that there are new or special conditions which could justify our going against the normal practice of this House as set out in Erskine May. This House is a quite unsuitable body to discuss an issue of this kind. I recognise how badly I have dealt with it. The noble Lord, Lord Stow Hill, is an accomplished advocate, and to that extent the promoters of the Amendment have a great advantage. But I think it is utterly wrong, as has already been said—and I welcome what
1798
the noble Lord, Lord Lucas of Chilworth, said—that here we have a Select Committee which has recommended that this Bill should go through in its present form and we are asked to accept an Amendment. I hope that, if the noble Lord goes to a Division, noble Lords will support me in voting to reject the Amendment. But I would much rather that the noble Lord, who I am sure cannot say that there are any new or special considerations, should think fit at this stage to withdraw the Amendment.
LORD STOW HILL: My Lords, as I have not a right to speak twice may I, before the noble Lord sits down (or, rather, immediately after he has sat down), venture to answer a question which I think he put to me on the effect of the Amendment? That was whether there could in any circumstances be a case in which the 25 per cent. or 50 per cent. could be increased, as I said. I said I thought there was not the slightest doubt about that, and may I just say why? The first subsection says that the Board's merchandise dues means the maximum charges at any time made by the Board, and so on. If one looks at the second subsection one finds that the relevant wording is that thereafter, from the beginning of 1974, they may make maximum charges in respect of goods loaded or unloaded no greater than the above, that is to say, for the period expiring on December 31, 1974, 25 per cent. of the comparable rate of the Board's merchandise charge, and after that, 50 per cent. I should have thought, as a matter of construction, that there could not be the least doubt that if the merchandise charge, as defined, is increased, it follows automatically that the 25 per cent. remains 25 per cent. of the increased charge. Therefore it is self-increased.
VISCOUNT SIMON: My Lords, I am much obliged to the noble and learned Lord. I do not know what question of mine he was answering. The point I was trying to make was that, as he said, with the Amendment this would be the result. Without the Amendment, supposing the intention was to charge 25 per cent., for the sake of example, and the basic rate went up, it would still be open to the receivers of overside cargo to appeal to the National Ports Council against a proportionate increase.
On Question, Whether the said Amendment shall be agreed to?
On Question, Bill passed.
Their Lordships divided: Contents 11; Not-Contents 24.

CONTENTS

Conesford, L.

Macleod of Borve, B.

Stow Hill, L.

Kinloss, Ly.

Moyne, L.

Strange, L.

Lauderdale, E. [Teller.]

St. Davids, V. [Teller.]

Wise, L.

Loudoun, C.

Saint Oswald, L.

NOT-CONTENTS

Arran, E.

Ferrier, L.

Rankeillour, L.

Balfour, E.

Gowrie, E.

Ruthven of Freeland, Ly.

Bowden, L.

Hacking, L.

Seear, B.

Carnock, L.

Hayter, L. [Teller.]

Shepherd, L.

Champion, L.

Hood, V.

Simon, V. [Teller.]

Colville of Culross, V.

Lucas of Chilworth, L.

Strathcona and Mount Royal, L.

Denham, L.

Milner of Leeds, L.

Emmet of Amberley, B.

Mowbray and Stourton, L.

Young, B.

Ferrers, E.

Resolved in the negative, and Amendment disagreed to accordingly.

B.B.C. AND I.T.A. FRANCHISES
10 p.m.
LORD FERRIER LORD FERRIER rose to ask Her Majesty's Government.
Whether they will reconsider their decisions (as set out in Command Paper No. 5244) not to implement the main recommendations from the Second Report of the House of Commons' Select Committee on Nationalised Industries but to take steps to extend the franchises of the B.B.C. and the I.T.A. till 1981 without further inquiry.
The noble Lord said: My Lords, I beg leave to ask the Question standing in my name. It is one that is dear to my heart. I assure the House that I would have moved it to another day, if there had been another day, but I will be as brief as I can.
On Wednesday last, at 1.15, lunch-time, only a couple of hours after the delivery of a unanimous judgment by the House of Lords in its judicial capacity, the B.B.C. "World at One" broadcast an interview with the Editor of the Sunday Times, who had lost his case for the second time, in which he poured scorn upon the House of Lords judgment for millions of people to hear. Admitting that the programme in question, "The World at One", is quite often a mischievous one, I would ask: was this wise? To my mind, my Lords, it was outrageous. I am tempted to open my speech in this way, having read Mr. Wilson's letter in The Times this morning in which, inter alia, he said, quoting from what he had said at a rally:
"No one will presume to challenge the authority of the House of Lords in their interpretation of the law as it stands."
Where do we stand when the B.B.C. put someone on who does so presume?
When I put down this Question on the "No Day Named" list some weeks ago, I was reluctant to take up your Lord-debated to some extent on an Unstarred ships' time because this matter was Question of mine on February 21. In March, the White Paper to which I refer
1802
in my Question had been published announcing the Government's intention to extend the existing franchise of the B.B.C. and the I.T.A. on the same terms until 1981, contrary to the recommendations of the Select Committee. One has only to read Hansard of the debate in the other place on May 3 to realise that this decision has been viewed with some alarm. However, in the last few days events have occurred which lead me to believe that the issue raised in my Question is a very live one. In view of these more recent events, I inquire whether the Government will reconsider their decisions set out in that White Paper.
My Lords, I am not going to refer to the Payola scandal or to the continued prevalence, in my view, of violence and the like in some of the programmes on television. It is the political implications of the power of the broadcast and the dangers of its misuse which activate my mind. Take, for instance, the extraordinary case of the programme, "A Question of Confidence" on Sunday, the 15th July, under the heading "The People Talking". A long "blurb" in the Radio Times contains the following words:
"When we read reports of Parliamentary debates and watch political arguments on television, do we continue firmly to believe that politicians are the men who really rule the country?"
Further in the "blurb" these words appear:
"Do we trust M.P.s more or less as a result of television exposure?"
What happened? Perhaps millions of listeners saw and heard exchanges in which, despite the best efforts of Desmond Wilcox to control the proceedings, scorn was poured upon Members of Parliament, and through them on our whole system of Parliamentary democracy. Then the Chairman of the B.B.C.—more strength to his elbow! And I recall that the Chairman of the I.T.A. in another connection took this step previously—wrote to apologise to the Members of Parliament who had been ill-treated. Subsequently, a number of B.B.C. producers challenged the Chairman's right to do what he had done. Who was in charge?
In the debate on February 21 I expressed the belief that in an organisation like the B.B.C. there must be people who, if not dedicated to disruption, feel that their mission in life is to promote discord and unease. I was struck during the course of the debate this afternoon by the speech of my noble friend, Lord Selsdon, in which he emphasised, as other speakers had done, the importance of confidence in our national life to-day. In my view, this is impaired by much of what we see on television. Again, what about the absolute folly of the broadcasting in Scotland of a televised programme (I do not know whether it was shown in England) called "Scots on the Rocks". I will not waste your Lord-ships' time by describing it, but I can assure you that it was a most ill-judged act to put this piece on at this time when so much controversy was brewing across the Irish Channel. Again, whose idea was it that the B.B.C. should run a programme on which the Member for West Fife was to appear, attacking the Monarchy? Was it Mr. Hamilton himself, or was it some B.B.C. planner?
I feel I have said enough to satisfy at least some of your Lordships, who do not already think so, that there is something wrong here—and by "here" I mean in the B.B.C. In the light of these recent events, is it prudent to wait until 1981 before revising the conditions and structure of our broadcasting system, despite the weight of the purely technical reasons on which the Government based their decision in March? Will the Government reconsider the matter and clarify their intentions?
I have said nothing about the I.T.A.'s approach. I do not follow the Scottish Television programmes which for me represent Independent Television. I do not follow them closely, although I prefer the I.T.A. News to that of the B.B.C. I feel that they have a much more tolerant, realistic and objective approach to the whole thing. To enact Sir John Eden's proposals will require major Parliamentary debate, but when will that be? It cannot be soon. Ought not something to be done at once to remedy the present malaise? I believe that it cannot be done too soon. Accepting that the B.B.C. programmes, "Today in Parliament" and "Yesterday in Parliament" are first-
1804
class, it must also be accepted that their ratings are very small, largely because they are put on at hours when ordinary working folk cannot, and therefore do not, listen. I repeat, the ratings are very low. The "Box" if I may call it so, is now the main medium of communication with the people. Why do not the B.B.C. put an item such as "Today in Parliament" on the "Nationwide" T.V. programme at, say, 6.20 in the evening? Can anything be of greater nation-wide interest than the proceedings in Parliament?
What are they doing on the radio? What they are doing there may comply with the letter of their obligation under Section 13(2) of their Licence and Agreement (I was going to read it out, but your Lordships will know what I mean) to report the proceedings of Parliament. But television has overtaken radio and should carry effectual Parliamentary news, not processed stuff. That, my Lords, is what I believe should be done. The B.B.C. have the power to do it now: why do they not try? They themselves instigated "Today in Parliament". I do not know whether it is generally realised that "Today in Parliament" was broadcast before any Charter of the B.B.C. contained an obligation for them to include such a programme. The problem of producing a similar programme from the I.T.A. would be much more difficult, and I can leave your Lordships to consider the reasons for this.
I am not—I repeat "not"—suggesting the televising of the proceedings of Parliament. That is a hot potato which I prefer not to pick up. It may be years before televised proceedings reach the screens, as I believe they will some day. The remedy that I suggest is only a partial one, but it need not take much time to introduce. There will be more opportunities for Parliamentary discussion, as I said, when the legislation comes forward. And there are other matters which ought to be discussed: violence, moral issues, pressing problems in Scotland, both in terms of technicalities, content and so on. However, I am persuaded that, whereas there are millions of viewers who do not want to be bothered about Parliament, there are millions who are sufficiently serious minded and who want to be informed. They get little or no political information from the Press, other

1805
than from the "heavies"—and little enough in them—unless there is some scandal or sensation. As I said before, when I referred to Lord Selsdon's speech, it is the presentation of the position of Parliament in our national life that I believe is so at fault.
In closing, I should like just to add that if I have criticised almost ad nauseam the B.B.C.'s political presentation on television, I now declare my admiration for the wonderful contribution that the Corporation make to our way of life in many other directions. Their Overseas radio services, for instance, are splendid. Should they not have more financial support for these particular services? Be that as it may, while I may be alone in my view—very nearly alone in my view!—that the absence of true and adequate presentation of Parliament is a major and urgent problem of the day, I hold this view sincerely and I look forward to my noble friend's reply this evening. I hope that the Government will reconsider their decision. My Lords, I beg leave to ask my Question.
10.13 p.m.
LORD O'NEILL OF THE MAINE: My Lords, I hesitate to enter on a subject about which my noble friend Lord Ferrier is such a great expert, but I once took part in a debate on B.B.C. affairs (I do not think it had anything to do with the I.T.A.), and I said on that occasion that if ever the day arrived when the Government of the day were pleased with the B.B.C. I should be worried. I should like to repeat that, because nobody hated the B.B.C. more than the Labour Government and the Leader of the Labour Party when they were in power. I will not go into the details of that: maybe there are certain members of the present Conservative Government who to-day are equally critical of the B.B.C. It is the function of the B.B.C. to assert whatever independence they may have. Secondly, I should like to support everything that the noble Lord said about "Today in Parliament" and "Yesterday in Parliament", especially so far as your Lordships' House is concerned. While I appreciate that we get our fair rapportage in the quality Press, were it not for the programmes "Today in Parliament" and "Yesterday in Parliament"
1806
your Lordships' House would not get a fair crack of the whip.
I appreciate the suggestion which the noble Lord has made that as something like 90 per cent. (I do not know what the actual figures are) of the people watch television and only 10 per cent. listen to the radio, there is a case for going into the possibility of having some kind of television programme based on "Today in Parliament" on sound radio. There are some difficulties. If, for instance, the noble Lord, Lord Denham, were reported as having said something, we should expect to see a still photograph of him on "the box"; and that of course would have the effect that the general public would come to know exactly what the noble Lord, Lord Denham, looked like. The same would apply to the noble Lord, Lord Shepherd. The B.B.C. should go into this matter and consider it, to see whether it is not possible, despite all the difficulties involved, to conduct some kind of programme covering Parliament on television. I accept the difficulties, but I feel that the B.B.C. should give further consideration to this matter.
Having had either the good fortune or the bad fortune (I do not know which) to go to North America on many occasions, and having myself appeared on television in, I think, every major city there, I always come back from America, although I enjoy their television very much, and say to myself, "Thank God for the B.B.C.!" Maybe I ought also to say, if the noble Lord, Lord Aylestone, is not here tonight, "Thank God for I.T.A.!" So, while I am most grateful to the noble Lord, Lord Ferrier, for raising these matters, I think at the same time that we should be only too conscious of how fortunate we are in this country with the television and sound radio that we possess.
Not having intended to take part in this debate, and while supporting in part, but only in part, the noble Lord in what he has said, may I add that I hope the Government will realise that there are many people in this country who are critical but at the same time grateful for the television and sound radio programmes which they receive. I hope that the B.B.C. will give further consideration as to whether or not it would not be possible

1807
to give some kind of "Today In Parliament" programme, or "Yesterday in Parliament" programme, on the medium of television.
10.16 p.m.
LORD SHEPHERD: My Lords, I intervene for three reasons. The first is that at ten minutes to eight I telephoned my wife to the effect that at the very worst I should be home by half-past nine, so by speaking at sixteen minutes past ten I can make it quite clear that I was in your Lordships' House. The second reason is in a sense to support the noble Lord, Lord Ferrier, in the Question which he has asked Her Majesty's Government. I agree wholeheartedly with him that there ought to be a review, as was recommended most strongly by the Select Committee in another place—a full review right across the board of television and radio—before Parliament is called upon either to renew the Charter of the B.B.C. or to deal with the renewal of the Television Act, which will be due in 1976.
The noble Lord, Lord Ferrier, spoke as he always does about the B.B.C. He was perhaps a little unfair, because I think he rather misled the House since the Report of the Select Committee was really concerned with the I.T.A., which is a nationalised Board. The B.B.C. entered into the scheme of things only because the Select Committee found it necessary to take a short view of the B.B.C. I agree with Lord Ferrier that the reasons given by the Government for not having this review are extraordinarily thin—certainly that was the opinion of the Economist. To say that because a new Chairman has just been appointed that is a reason for not having a review is to me quite nonsense. Is it really conceivable that the present Chairman is likely to be in office in the 1980s? I doubt it very much. There are other aspects, too, which were very thin indeed. But this is not an occasion when we could or should go into this matter because I feel that it is something of wide-ranging importance that should perhaps be dealt with in the new Session of Parliament, at a more reasonable hour.
But I could not—and this is the third point—refrain from dissociating myself, as did the noble Lord, Lord O'Neill of the Maine, from the sort of criticisms
1808
that were made of the B.B.C. I heard the programme on the radio in which the Editor of the Sunday Times expressed a very strong view—as he was quite free to do—about the judgment given by the House of Lords in its judicial capacity. My Lords, is this not what democracy is all about—the right to dissect? There are many programmes on both I.T.A. and the B.B.C.—they are not necesarily political—which make me slightly hot under the collar. But is not this what democracy is all about? I should hate to think we have reached the stage when all that was done on the B.B.C. or the I.T.A., whether on television or sound, was completely acceptable. There would be very little democracy, I suggest, if such a situation arose. So I am not unduly worried when occasionally programmes go wrong. I would perhaps not side with the remarks of the noble Lord, Lord O'Neill of the Maine. It seems to me that, so far as human nature permits, both the B.B.C. and the I.T.A. provide a general balance—and that is what Parliament has required of them: nothing more and nothing less—across the political field.
Like the noble Lord, Lord O'Neill of the Maine, I travel a great deal, and some ten days ago I was in the United States of America. I share with him that same feeling when I return home and look at my "box". I have only one question to ask, and perhaps the noble Lord, Lord Ferrier, may object to it. There is of course a big debate taking place in America in regard to the Presidency and the previous Election. It is fascinating television viewing, hut it is part of democracy, seeking to exert power over the Executive. I wonder whether, if we ever had such a situation here—and I am not complacent enough to believe that it could not arise, though I think it very unlikely—it would be possible under the Charter of the B.B.C. and under the Act for exposure such as is now taking place in America to occur here. To that extent I think the noble Lord, Lord Ferrier, may rest assured that there is that particular guard against what he might regard as provocative political questioning.
I hope that we shall have an opportunity to come back to the whole question of television, both the I.T.A. and the B.B.C., some time next year, because

1809
I believe that we ought to have a good look at it, certainly in debate. And the noble Lord, Lord Denham, might also consider, since we have set up a number of Select Committees which have done important work, whether this is not a subject which the House of Lords could well deal with by setting up its own Select Committee in anticipation of being asked by the Government of the day for the renewal of the Charter of the B.B.C. and the continuation of the Independent Television Act.
LORD FERRIER: My Lords, before the noble Lords sits down I should like to assure him that I listened to that radio interview. I am not concerned to express any view on the matter at issue. I understood the speaker to criticise the judgment in law of the House of Lords.
LORD SHEPHERD: But, my Lords, that is still democracy, is it not?
10.25 p.m.
LORD DENHAM: My Lords, broadcasting is one of the most powerful media, if not the most powerful, of communication and it ought to be sensitive to the play of public and Parliamentary opinion. I believe that debates in both Houses are the most effective way of ensuring that broadcasting authorities are kept in touch with public opinion, and this short and interesting debate on my noble friend's Question has proved to be no exception to this. Noble Lords will not be surprised if I refrain from commenting on individual programmes. As your Lordships know, there is a long-established convention that the Government of the day do not intervene in matters of programme content. The policy of Her Majesty's present Government, as of previous governments, is that the responsibility for broadcast programmes rests with the Governors of the B.B.C. or the members of the I.B.A.
In the light of events reported in the Press during the last few days I should perhaps stress that the Governors of the B.B.C. and the members of the I.B.A. are the trustees of the public interest in broadcasting. They have a duty laid upon them by Parliament to maintain proper standards and to ensure, so far as is possible, that their programmes do
1810
not offend against good taste or decency and are not offensive to public feeling. We must leave it to them to live up to their responsibility. Some noble Lords may say, "But what if they do not live up to this responsibility?" Noble Lords may have noted what my right honourable friend the Minister of Posts and Telecommunications said in another place in the debate on May 3 when he made it clear that if there was a consensus of opinion in Parliament that the I.B.A. had failed in the observance of the duties placed on it by Parliament, it would be open to the Minister to replace the existing members of the Authority by others; and this applies equally to the Board of Governors of the B.B.C. If my right honourable friend were to intervene in programme questions, no matter how justifiable it might seem, it could set a precedent for political control of programme content. We must guard against this. This is more important than the occasional lapses which may occur in conditions of comparative freedom. Government intervention in programme content might begin relatively harmlessly, but might end by dealing a serious blow to the freedom of speech which we all value so highly and which includes the freedom to express views that many of us dislike.
My noble friend Lord Ferrier has repeated a view which he expressed in this House in February of this year, that there ought to be a short daily programme on television equivalent to the radio programme "Today in Parliament". The noble Lord, Lord O'Neill of the Maine, supported him in this view. It is obviously most important that the public should be fully informed about Parliamentary debates, but this is not primarily a matter for Her Majesty's Government. Each House could invite the broadcasting authorities to broadcast their proceedings, but so far neither your Lordships nor the Members of another place have felt inclined to take this step. As television cameras are not allowed into either House, the B.B.C. and the I.B.A., who are wholly and solely responsible for the programmes broadcast, must decide how best to inform the public of what takes place within the Palace of Westminster.
The B.B.C. take the view that unless they can televise the proceedings of

1811
Parliament, a television version of "Today in Parliament" would not offer much more than the radio programme. In general, as my noble friend has said, radio does not reach nearly as large an audience as television. But the picture is not quite so gloomy as he painted. I am told by the B.B.C. that they reckon that 30 million people listen to their radio programmes through the course of the day. This figure does of course include a fairly large audience who listen to Radio 1—not notable for its Parliamentary content. Although "Today in Parliament" may have a relatively small audience on sound radio (I believe, at its lowest, this is something like 100,000), the sister programme, put out in the morning, "Yesterday in Parliament", does have a fairly large audience of between a quarter of a million and 1½ million. I think that this total is largely made up of people who listen to this programme as they travel to work in their cars.
LORD FERRIER: My Lords, if I may intervene, I agree with the noble Lord's figures; I have had those from the B.B.C. The trouble is that the working folk cannot listen at a quarter to nine in the morning or at eleven o'clock at night.
LORD DENHAM: My Lords, that may well be so. But detailed accounts of Parliamentary proceedings are a specialisted taste. I know that the B.B.C. will consider very carefully all the views expressed this evening. But it is the view of Her Majesty's Government that it should be left to the Board of Governors to decide what is best in the interests of the viewers.
The main point made by the noble Lord this evening has been that there should be an independent Inquiry into broadcasting before the B.B.C.'s Charter and the legislation establishing the I.B.A. is extended; and I think this was the main concern of the noble Lord, Lord Shepherd. He has pointed out that this was the view of the Select Committee on Nationalised Industries, who considered that there should be a widespread and informed public debate about the past performance and future organisation and structure of broadcasting. My Lords, the Government accept the need for informed public debate, but we do not
1812
accept that it is necessary for this to take place by means of a Committee of Inquiry before 1976. My right honourable friend the Minister of Posts and Telecommunications explained why in a debate in another place on May 3. He pointed out there is nothing special about 1976; in fact, it is rather an inappropriate date. The new local commercial radio service which Parliament has entrusted to the I.B.A. will come on the air this autumn, and it would be premature to try to review its progress before it has begun.
Moreover, my right honourable friend's Television Advisory Committee, including representatives from the radio industry and independent members, who have no interest in maintaining the present arrangements, have advised him, after very careful consideration, that developments such as cable, satellites and cassettes are not likely to have a significant impact on broadcasting in the present decade, and that the completion of the present U.H.F. colour television coverage programme is the most urgent problem. So my right honourable friend has concluded that changes in the structure of broadcasting are not made necessary during the 1970s by any immediately foreseeable technical developments. He considers that changes may well be necessary in the next decade, and that it would be preferable for the whole position to be reconsidered in a few years' time when the technical outlook for the 1980s will be a good deal clearer than it is at the moment.
The noble Lord, Lord Ferrier, will no doubt consider that this decision does not take into account the performance of the broadcasting authorities in the last ten years and the standards of programmes which they broadcast. My Lords, the broadcasting authorities are human, and occasionally there are programmes which fall below the high standards which we have come to expect. It is right that noble Lords and Members of another place should draw attention to such programmes and my right honourable friend made it clear on May 3 that he would not hesitate to draw the attention of the broadcasting authorities to the views of Parliament if he considered they had underestimated the strength of feeling on any particular issue. But my right honourable friend does not

1813
accept that the present organisation of broadcasting is unsound or that occasional sub-standard programmes would be prevented by changes in the present constitutional arrangements. My Lords, my right honourable friend is confident that the B.B.C. Governors and the members of the Independent Broadcasting Authority are well aware of the high standards of programming which the public expect, and he considers they will be more usefully occupied in ensuring that good programmes are provided than in producing evidence for a Committee of Inquiry. Noble Lords may ask whether there are to be no changes at all in broadcasting until 1981. This is not the Government's intention, though it is their view that any changes can be made within the present constitutional arrangements.
My Lords, broadcasting will not be fossilised in the next eight years, and before seeking approval for the extension until 1981 of the B.B.C.'s Charter and the legislation establishing the I.B.A., the Government will bring before Parliament their proposals on the matters which have been reserved for further consideration: the allocation of the fourth channel, the representation of viewers' interests, the findings of the Committee studying the coverage of broadcasting services in Scotland, Wales, Northern Ireland and rural England, and the future of cable television. We shall have opportunities in the future to debate these matters at greater length. In the meantime, my right honourable friend will be grateful for the advice expressed in your Lordships' House this evening.

DEE AND CLWYD RIVER AUTHORITY BILL
  GREATER LONDON COUNCIL (MONEY) BILL
  Returned from the Commons, with the Amendments agreed to.
HARWICH HARBOUR BILL
Message from the Commons, That they have made certain Orders relative to the Bill enabling the Promoters thereof to suspend proceedings thereon in order to proceed with the Bill in the next Session of Parliament.
NORTH WALES HYDRO-ELECTRIC POWER BILL
Message from the Commons, That they have considered the Lords Message of yesterday and have made similar Orders relative to the Bill.