Lords Sitting of 16 April 1975

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

LORD BARBER
The Right Honourable Anthony Perrinott Lysberg Barber, TD, having been created Baron Barber, of Wentbridge in West Yorkshire, for life—Was, in his robes, introduced between the Lord Crathorne and the Lord Chelmer.
The Lord Clwyd—Took the Oath.

ABORTIONS
2.41 p.m.
Lord HOUGHTON of SOWERBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the police inquiries into certain allegations of a criminal nature in the book entitled Babies for Burning have now been completed; whether any Report upon them has yet been received from the Director of Public Prosecutions, and whether the revelations made in the Sunday Times newspaper on 30th March 1975 about the authors and contents of this book will be inquired into.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, I understand that the police have not yet completed their inquiries and have therefore not yet sent a final report about them to the Director of Public Prosecutions. There is no doubt that the police will take into account the Sunday Times article of 30th March so far as it is relevant to their inquiries.
Lord HOUGHTON of SOWERBY: My Lords, does my noble friend recall
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that this matter was referred to the police for inquiries as long ago as October, and will he do his best to see that these are speeded up? May I ask my noble friend whether he knows why these inquiries are still going on? Also, is he aware that the contents of this book were obtained, on the admission of the authors themselves, by deceit and lying, and by evidence obtained by the most reprehensible means of concealed tapes which is condemned anywhere, except perhaps in the hands of trustworthy police? Is he aware that this book has its influence on public opinion at the time of discussion on the Abortion (Amendment) Bill in another place, and will he ask—
Several Noble Lords: Order, order!
Earl ST. ALDWYN: My Lords, may we have a straight forward question?
Lord HOUGHTON of SOWERBY: My Lords, if noble Lords will wait a moment, they will have the question.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, if I may address myself to the Leader of the House, we have been told that this is a matter for police inquiries and may, therefore, be the subject of criminal prosecution of one party or another. May I appeal to the noble Lord the Leader of the House to say that it would be more in accordance with the traditions of this House if, having been told that, we held our hands and refrained from making prejudicial statements until police inquiries were complete?
The LORD PRIVY SEAL (Lord Shepherd): My Lords, this is a very difficult matter. If I may so, it is a question not of appealing to the Leader of the House but of appealing to your Lordships' House because, at the end of the day, we are the masters of our own proceedings. If I may say so, I had an area of disquiet about the way in which the supplementary questions were being put. I hope that my noble friend will put his questions to the Minister in that area for which the Government themselves are responsible.
The Earl of LONGFORD: My Lords, may I point out—
SEVERAL NOBLE LORDS: No!
The Earl of LONGFORD: May I ask a question, then?
SEVERAL NOBLE LORDS: Order, order!
Lord HOUGHTON of SOWERBY: My Lords, I was interrupted.
Lord SHEPHERD: My Lords, supplementary questions were being put by my noble friend Lord Houghton when the noble and learned Lord, Lord Hailsham, intervened. I sought to deal with that intervention. I think it would therefore be right for my noble friend to complete his supplementaries—I hope as I have advised him—and if my noble friend Lord Longford then wishes to intervene to put a question to the Government, I hope he will do so.
Lord HOUGHTON of SOWERBY: My Lords, I was about to put this question. Would my noble friend ask his right honourable friend the Secretary of State for Social Services to ask the Select Committee which is now considering the Bill in another place to be on its guard against relying upon evidence in this squalid book? That is what I am asking my noble friend to do.
Lord HARRIS of GREENWICH: My Lords, on the last point, I will certainly draw the attention of my right honourable friend the Secretary of State for Social Services to what my noble friend has said. My noble friend will, I am sure, understand why I do not think it appropriate to answer his second question. As regards the first part of the question, where he alluded to the delay in police inquiries, I am informed that delay has been caused by the fact that the police have experienced substantial difficulty in interviewing one of the authors of the book, and in obtaining tape recordings which are alleged to support the claims under investigation.
The Earl of LONGFORD: My Lords, is the noble Lord the Minister aware— I so informed him yesterday and again today, and I also informed the noble Lord, Lord Houghton—that libel proceedings are being brought against the Sunday Times? That was not brought out in any of the questions or answers, and in the circumstances is the noble Lord prepared to agree that it would be a great mistake to accept a word that
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the noble Lord, Lord Houghton, has said about this matter?
Lord HARRIS of GREENWICH: My Lords, I really do not think it appropriate to go into the merits of this question.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, would it not be appropriate if we withheld all comments of this kind until the inquiries are complete, because the most important thing is the administration of justice?

SPECIAL ORDERS COMMITTEE
The CHAIRMAN of COMMITTEES (The Earl of Listowel): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the orders of 13th November last relating to the appointment of the Special Orders Committee be discharged.—(The Earl of Listowel.)
On Question, Motion agreed to.

HYBRID INSTRUMENTS COMMITTEE
The Earl of LISTOWEL: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the Third Report from the Committee of Selection be agreed to and accordingly that the Lords following be named of the Select Committee on Hybrid Instruments: —

E. Cork and Orrery,

E. Cowley,

B. Bacon,

L. Beaumont of Whitley,

L. Cawley,

L. Clwyd,

L. Fletcher,

L. Lee of Newton,

L. Reay,

L. Stamp,

L. Stow Hill,

L. Teviot,

L. Wise,

together with the Chairman of Committees and any one Lord of Appeal.— (The Earl of Listowel.)
On Question, Motion agreed to.

COMMITTEE OF SELECTION
The Earl of LTSTOWEL: My Lords, I beg to move the third Motion standing in my name on the Order Paper.
Moved, That the Lord Wallace of Coslany be added to the Joint Committee on Statutory Instruments in the place of the Lord Fletcher.—(The Earl of Listowel.)
On Question, Motion agreed to.

MULTINATIONAL CORPORATIONS
2.48 p.m.
Lord DAVIES of LEEK Lord DAVIES of LEEK rose to call attention to the growth of multinational corporations; to their impact on the control of key industries in host countries, on employment, and on national economies generally; and to move for Papers. The noble Lord said: My Lords, I shall endeavour not to trespass upon the time and conscience of your Lordships by making a long speech, despite the intricate nature of the topic which we are discussing. Noticing the distinguished list of those who are to speak, may I say, thank you. I shall leave much unsaid and I expect contradiction of some of the remarks I make but that is as it should be in a search for a solution to the problem of these mighty multinational companies. Consequently, during this debate I expect differences of opinion, but I am quite sure they will be honest differences in an effort to point out the way to attack this mighty transcontinental and transnational accumulation of capital.
It is not a new phenomenon. Your Lordships will be aware of Professor A. Dunning's seminar at Reading University —it was summarised completely in Lloyds' Bank Review of July, 1970— when he summarised economic and other points about the growth of the multinationals and the mightiness of these corporations. He pointed out that, historically, business has long traded across national boundaries, and so, to this extent, internationally orientated enterprise is no new phenomenon. Nevertheless, it is also obvious, because of the marked interest of the United Nations, that one
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has to watch the rogue elephants in this field—and rogue elephants they are, speaking metaphorically.
Let us look at the power of these monsters. Many of them have a turnover compared with which the national incomes of many of the countries in Europe and other parts of the world are derisory. Some of the profits declared are enormous. I shall not say that that is a sin; I am just pointing out an economic fact. In the midst of a world crisis, the oil giants have made profits which have made the consciousness of even the most wealthy individuals stir. The profits have been amazing, yet the only people who have come on radio and television are some tycoons who can explain them away by saying that everything else is short and they must have a great deal of money, and the high prices are because of other things, or are under the control of the Arabs.
For instance, this year and last year profit increases were 76 per cent. for Gulf Oil, 81 per cent. for Standard Oil, and 123 per cent. for Texaco. Some time ago the United States Tariff Commission announced the results of a study covering the penetration of the multinationals in seven countries, including Britain, West Germany, France, and Belgium. Twenty per cent. of the industrial production of these countries, and 20 per cent. of their labour force, depend directly on American companies; the host country has no economic, legal, or other control over the mode of investment or the policies of the home multinational corporations. This was a fact that gave great concern to the group of eminent persons whom the United Nations asked to investigate the problem of multinational corporations.
The report of the American Commission said that in Belgium one person in five will soon be employed by one of the companies. So one has to be very careful, when discussing this, with this specious argument that, if one eradicates the multinationals, one can create unemployment and problems in the host country. Whether or not I like it, I must recognise that there is some truth in that argument. Consequently, it increases the complexity and difficulty of the problem of controlling these mighty multinational corporations.
Let us be fair; organisations which are in their infancy, like the Foundation for Business Responsibilities, have written up a number of papers. I had the pleasure of talking the other day to one of their representatives, Mr. Kenneth Corfield, on companies and their responsibilities. Mr. Macfadzean, who was an able civil servant, has written a quite sparkling pamphlet, from his point of view, on the operation of multinational enterprises. Both of them hope that they have come to constructive conclusions. I shall look at that in a moment or two.
I want to refer to one other point about their growth. The power and nature of these multinationals is entirely different from the power and nature of our old imperial systems to which Hobson, a famous economist, referred in 1902 in his excellent book Imperialism, when he made an analysis of modern imperialism. In passing, to those who scoff at the analysis of a Marx or a Trotsky, I should like to point out that Hobson himself picked up Marxism in writing his first book on imperialism and its impact on the backward nations. I refer to this in passing, because the United Nations Committee on Trade and Development, UNCTAD—these acronyms that we use today—had their meetings at Santiago in Chile, and if your Lordships remember (I do not want to bore the House by quoting from masses of paper, but I assure you that I am accurate in this) The Times and the Financial Times of 1972, the Daily Telegraph and responsible newspapers, had long leading articles on the neglect of the developing world or, if you want me to use the other term, the underdeveloped world by the rich. One of the headings of The Times newspaper, and the implication in the Financial Times of this period, was that these underdeveloped countries could expect little from the rich.
I do not want anybody to stand up and say that the Common Market had a conference at Lomé in Togo, and discussed with the 46 ACP countries, in Africa, the Caribbean, and the Pacific, a modus vivendi. Every chairman of a company in this august assembly this afternoon will know of that conference. They will pat themselves on the back, because of the altruistic approach of the multinationals and the Common Market at that Lomé conference. But far from its being an
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altruistic approach, it was almost as crude as the analysis of Hobson in 1902 of the exploitation of raw materials. Consequently, I charge the multinationals with approaching modern developing and underdeveloped countries with a type of neocolonialism. Because of the criticism of the Common Market and the multinationals, the Lomé discussions are now going to lead in 1976, to a conference in Nigeria of the underdeveloped nations, and that is due to their fear. What was their fear? Their fear was first highlighted when President Ford, Dr. Kissinger, and other Americans suggested —and I do not want to make any Party political point; I want to make an accurate indictment of what I call an ultraneocolonialist approach to underdeveloped areas—that if they could not get the Arab oil that they wanted, or if the Arabs charged too much, force might be used. No one can deny that. I believe that the world should watch where it is going, and if there are these limited, or vast, amounts of raw materials and people say that if they cannot get it at their price—
Lord RHODES: My Lords, would the noble Lord allow me to ask him a question?
Lord DAVIES of LEEK: Of course the noble Lord may ask a question.
Lord RHODES: My Lords, does the noble Lord not agree that the Lomé Convention is one of the farsighted treaties that have come out of the Common Market in recent years, and that the 46 countries who were previously known as underdeveloped will benefit from it?
Lord DAVIES of LEEK: My Lords, that is exactly the kind of question that I expected. The noble Lord said exactly what I expected, because he has half read it. UNCTAD and the nations are divided among themselves. The African, the Pacific area and the Caribbean nations are divided about that convention. I am trying to deal with this subject in a constructive way. It is no good noble Lords behind me, if they do not like the truth, saying, "Ho, Ho, Ho!" No, "Ho, Ho, Ho's!"—I hope your Lordships get the right emphasis and expression—will change the logic of historical development. The fact is that the parts of the world with raw materials like oil, tin,

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zinc, et cetera, which have been exploited almost since the days of the merchant adventurers, will now demand higher prices for those raw materials as the only way of increasing their standard of life.
A Noble Lord: Why not?
Lord DAVIES of LEEK: Exactly: why not? That is why I am hoping that we shall have an international conference on the lines of the United Nations' suggestion to attack this problem, not with talk of applying force, but with the rich and the poor nations really facing for the first time historically a man-shortage of raw materials.
In passing, I will cite an example on commodity prices. In the 1950s tin was about £500odd a ton. Now it is about £4,000 a ton. It is not money that counts in the world. Those people who are euphoric about the Common Market and the multinationals must remember that no matter how much money one has it is useless unless one has the raw materials to turn the money into useful commodities. In some cases the Common Market depends 70 per cent. upon supplies of raw materials from the underdeveloped areas. Consequently, the problem that has to be faced is that for the success of the Common Market the UNCTAD or the 77 Group, of which, illogically, there are 96 members, must be able to get fair prices for their commodities. The multinationals have brought this fact home to them.
I hope your Lordships can stand the strain of my speech which has lasted 14 minutes—I hope to take 20 minutes. The trade union movement is aware of these facts, as are noble Lords opposite. An increasing proportion of British industry is being controlled by the multinationals. In some cases the motor car industry is controlled to the extent of 50 per cent., and in the smaller sections the proportion is higher still. This raises for the trade union movement the problem of the national economy and the power of the British Government. On 2nd July 1972 the United Nations unanimously—there was no difference of opinion—decided that they should study the role of multinational corporations and their impact on the process of development, especially
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that of the developing countries, and also their implications, and formulate conclusions which might possibly be used by Governments in making their sovereign decisions regarding national policy, and, in this respect, to submit recommendations of the United Nations.
They made many suggestions. The inquiry then suggested that they would need some kind of machinery to enforce ethical conduct. I think that is a little Utopian to expect; but some kind of machinery was asked for because they believed that unless it were provided there could once again be rogue elephants in international affairs upsetting the possibility of a peaceful world. I will quote parts from this valuable report which is one of the most difficult reports to obtain in England. I found it extremely difficult to secure but having spent much time in my search I managed to get it and read it. The summary showed the enormous size and spread of multinational corporations and their high rates of growth during the last two decades, in which the areas in which corporations can affect international relations and development have dramatically expanded. For a variety of reasons, corporations of a multinational character exist and they have a monopoly.
The inquiry then said that they believe that in a global context the free movement of funds is the bloodstream of the corporation. I will develop that argument briefly. It is a lecture in itself for anybody who is interested. That is the United Nations' phrase. It is this free movement of funds which led as much as anything to the Roche case in this place, when a profit of £25 million was produced for the host country as a profit of £3 million. I will not go into the matter in depth—that was a pharmaceutical Swiss multinational rogue elephant. Some noble Lords on both sides of the House sprang to its defence, like the noble Lord sprang to analysis of the Lomé Conference without having looked into it. The United Nations' report went on:
"Multinational corporations are resourceful and flexible. It is necessary to adjust to the new realities in the light of efforts by Governments at the national, regional and international level to prevent multinationals from exerting undue influence."
That is mild language.

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Again I quote the United Nations Third Report on Multinationals and Taxation:
"By looking for tax havens outside the host country they can affect the balance of payments problem."
Who comes to my defence? Perhaps I should have written to Lord O'Brien, the Governor of the Bank of England, who, when we were having our liquidity problems—and noble Lords opposite cannot deny this: it was a constructive report in the Guardian and the Financial Times, which I am paraphrasing to save boring the House—accused the multinationals of being factors in creating for us a liquidity problem. If they act like that pharmaceutical firm did, one can see why.
The United Nations Report on taxation, on page 18, looked at the Wall Street Journal for 30th April which described tax havens, mentioning the Channel Islands—Jersey. Noble Lords will know where that is without their telling us: it is off the coast of France, but belonging to the United Kingdom. United Kingdom income tax does not extend to Jersey. Jersey income tax is a flat 20 per cent., except that foreign-controlled corporate shareholders pay out only 450 dollars a year. There are said to be 26 banks on the waiting list to get into Jersey, with its cramped financial districts. Jersey has an area of only 45 square miles and a population of 75,000. British support, if only implicit for this tax haven, is said to be based on the fact that most of the money funnelled into the tax haven is promptly placed in British security markets. This is a fact. Therefore, these concerns need some form of control.
Lord REDESDALE: My Lords, would the noble Lord be kind and tell the House which multinational companies have put such vast sums of money into Jersey? He only mentions banks but does not now refer to the super giants which he mentioned earlier.
Lord DAVIES of LEEK: My Lords, surely the noble Lord is older than that. He must have grown up sufficiently to know that these banks are used by the multinationals as well.
The privileged position of technological man, whose economy prospers on the
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regular supply of raw materials, is now getting to a cutthroat atmosphere in the struggle for raw materials. In this context, the summary of the Second Report adds:
"Corporations become multinational for a number of reasons … they can to some degree cause jurisdictional disputes among governments."
We have had an example of that. We, as the host country, have been fighting a law case involving millions of pounds. It goes on:
"Relationships between the corporation and nation States produce tensions and less control … the impact of multinational corporations thus raises questions ranging from permanent sovereignty over resources to possible conflict."
England has suddenly discovered that sovereignty does not matter. The word "sovereignty" is now pooh-poohed, and if I talk about it I am told that we must be prepared to sacrifice some sovereignty. Of course we must, but we want to be careful to whom we sacrifice it. Should we sacrifice it to a group which has no international responsibility whatever, apart from a worship of the God Mammon?
That is the point about the trade union organisation which is trying to build up international groups to formulate a policy which will enable them to discuss with the multinationals in a constructive way how this new economic phenomenon can be introduced into a steady social way of life. If I seem hard, perhaps it is because my memory is long. I remember the Parker Tribunal on Bank Rate and I remember Mr. Keswick's advice:
"Switch more into American bonds and equities"—
that advice should go home, especially after the Budget we have just had—
"It is anti-British and derogatory to sterling, but on balance, if one is free to do so, it makes sense to me."
Of course it makes sense, if one is only out to make money; but it is not ethical and it is not the way to a peaceful and understanding world which will work for the good of the poor. The suggestion that the rich will grow rich and the poor will grow poorer is scoffed at. I have been looking up the trade figures of technological Europe with South-East Asia. It is interesting to note that this trade is only about half what it was prior to the setting up of the Common Market. The reason

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is simply because the strong look after themselves.
My Lords, if I continue to make the sort of speech I had intended to make I will speak for perhaps another half-hour. Although what I would have said would, I am sure, have been interesting to your Lordships, I propose to cut short my remarks. Suffice it to say that it is time for us to try to find an answer to these problems and secure the co-operation of these multinationals. Far be it for me to deride many of the able men and women in these organisations, but their power is undeniable. I could give names and facts to your Lordships. The noble Lord, Lord Kennet, was attacked for mentioning the influence of the multinationals in the Civil Service. A big oil firm was told by one of our inspectors that it could not build a refinery at a certain point in the East of England and the civil servant in question—many noble Lords will have read his account in the Crossman Diaries—told his Minister, "We can't thwart these mighty firms". In other words, the body politic is being influenced by people who have no responsibility to the public. Consequently, I believe that if we want to live in peace with these multinational firms, the trade union movement and the body politic must find a way of co-operating with them. I hope that some constructive answers will be given in this debate and that they will lead to that co-operation because, whether or not I like it, we have to live with these multinational firms, and I believe that, whether or not they like it, they have to accept a modicum of substantial control. My Lords, I beg to move for Papers.
3.15 p.m.
The Earl of GOWRIE: My Lords, I think that however timid any of us may be individually, we would all rather be David facing Goliath than Goliath facing David, especially when, as in this case, David appropriately comes from Wales. In being sent in to bat for the multinational companies—to take the opposing view in the context of the debate—I am very aware that it was a comparatively short time ago that I had a debate in my own name about small businesses and the self-employed. In fact, as I shall say later, I do not think
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there is anything incompatible between these two positions; if I believed there were, I would not have the face to confront your Lordships.
This is not the first occasion when multinationals have been the subject of debate in this House—we had a debate in 1971—and I very much doubt whether it will be the last. It is hardly possible to have a debate on the domestic, European or American economies without dealing in large part with the role that the multinationals play. It is quite impossible to debate the crisis in international affairs precipitated by the tensions in the Middle East without knowing something about the oil business. I would say in passing to the noble Lord, Lord Davies of Leek, that, whereas I agree that the policies in the Middle East and fiscal policies at home have swollen the profits of the oil companies, they have of course lost sovereignty or control over their initial high capital investment in the countries where the oil is located.
No less important are the needs and anxieties of the developing nations—and those whom Fanon has called "the wretched of the earth"—and we shall be debating their needs and the food crisis later this afternoon. They depend, also, on the Western contribution to their development. I believe that this contribution, with all that it involves for world peace and order, for international law and for the exploitation and conservation of natural resources, depends, also, on the continuing ability of the great multinational companies to co-operate with the parent and host Governments. Therefore, a principal theme of my brief contribution today will be the need for the multinationals and the nations to combine, to co-operate and to create the necessary checks and balances which will enable them to work in harmony. It may be an obvious theme but, as I believe human prospects and prosperity will continue to depend on this delicate balance, it is at least an important one. I need hardly say, therefore, that I am grateful to the noble Lord, Lord Davies of Leek, for putting down his Motion and giving me this chance to speak.
Noble Lords may have noticed that I used the phrase "continue to depend". I do so because I believe that for all their faults and for all the problems created by these largest and most widely

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spread commercial bodies, they have made a very major contribution to the unprecedented economic progress that has been achieved by mankind over the last quarter of a century. I acknowledge the difficulties and I shall come to the noble Lord's remarks in a moment, but it is surely no coincidence that the growth and impact of these bodies accompanies the general improvement in the lot of our our species. It is this general improvement which has helped to make our world so sharply aware of the things that are lacking—of the hunger and the despair and the cruelties and exploitation which still exist.
It has created, in short, a revolution of rising expectations; it has made us aware—no less than that wonderful photograph of the earth which the astronauts took—that our problems as a species are interdependent. They are, so to speak, multinational and their solutions must be no less so. If I thought that national sovereignty and the contribution of nation-States was dead or even dying, I would not dare to take part in a sovereign Parliament. I dare to believe, with Sgr. Agnelli, the chairman of Fiat, that in a sense
"… the network of multinational companies represents in embryonic form the central nervous system of an emerging global economic order."
If your Lordships think that those are just fine words, the House should remember the contribution to detente and to the lot of the Russian and Yugoslavian peoples which Signor Agnelli's company has made by locating plants in their countries.
While I am on the point of global independence, let me say that the present crisis in the Western economies has generated undeniable backsliding among the rich countries of the world in their commitment to aid the developing countries. Private corporation foreign investment, therefore, has assumed an immediacy and importance for them. I should be naive not to acknowledge with the noble Lord, Lord Davies of Leek, the potential of the multinationals for exploiting low wage rates and low environmental standards in developing countries to their own advantage. Yet now more than ever, it seems to me, we must harness the potential of the multinational companies for promoting
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development as well. Inevitably, because of the huge capital costs involved and the high technology associated with such projects, this means long-term development.
My Lords, we are really lumping all multinational companies together for the purposes of this debate, so that the debate will not last too long and be too complex, but they are of course different in organisation and behaviour. While, individually, multinational companies may lapse from the standards which we should like to set them, quick in-and-out exploitation of host countries is seldom one of their faults. We have only to look at the types of the multinationals' activities and the fields in which they are commanding-height companies to note the impossibility of thinking of them as world economic buccaneers. In order of the numbers of employees, the largest 150 or so companies operating in some 60 countries break down into the following broad groups: chemicals and allied products, which form the largest group; electronic and communications industries; engineering, including motor cars and other vehicles; food and drink and household products; petroleum; rubber; other agricultural activities such as tobacco and timber; metal manufacturing; mining; glass manufacturing; other manufacturing services and finance and insurance services.
If we exclude other manufacturing and finance and insurance services—all of which come low on my list in the order of millions of people employed—it will, I think, easily be apparent that the economics of the principal activities I have mentioned require very large-scale investment. They require long-term investment, high technology and, very often, immoveable plant. Above all, they carry with them the absolute necessity of co-operation with host governments. This is due to the ease with which such plant and investments and assets can be appropriated. Indeed, the oil Powers who make up the OPEC countries—most of whom cheerfully acknowledge the debt which their new position owes to the European and North American oil companies—are themselves posing, I contend, a far greater threat to international order due to the essentially financial and short-term nature of their investment programmes. I appreciate that they have

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their problems, even if they are in our sour phrase, "the problems of success". However, I would guess that not until they again start working with the multinational corporations, or forming multinational corporations of their own, will the continuity of progress I have mentioned be resumed after its recent and terrifying interruption.
My Lords, having nailed my colours firmly to the mast of the general multinational contribution—which is only to say to the mast of an international mixed economy—let me now deal briefly with the particular charges against them. There is the charge that multinationals are beyond the control of the sovereign States and that they play one sovereign State against another; and, in general, bring too much of the wrong kind of influence on host or even parent governments. It is perfectly true that all corporations investing for profits—even for profits in the long-term—have the great, if negative, power of deciding not to invest in a given country. This would be if its political stability or attitudes, especially as reflected in taxation, seemed disadvantageous. However, nature does not always distribute her gifts to the kind of liberal/conservative countries which multinationals and, indeed, we on these Benches tend to favour.
There are more instances than I could mention of the closest co-operation with regimes which are hostile—whether from Right or from Left—to the mixed economy. Yet whereas the multinational usually has only the power of refusing to invest, sovereign governments have a large number of powers. Exercising any of these can frustrate all a given company's expectations of a reasonable return. For example, tax on distributive profits is very high in the Indian subcontinent; it is 76 per cent. in Sri Lanka, and 66 per cent. in India. Permits for expatriate managers are often very tightly controlled. Sales of part of the equity of the company to local shareholders at a very low price may be made mandatory in law. At the very extreme, governments may nationalise or take over the company altogether. This may happen with full compensation or with no compensation, or full compensation may be promised but fail to materialise.
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In general, I believe that governments all over the world are well able to look after themselves, even if they often do so at the expense of the long-term interests of their citizens. Where governments have doubts about their own expertise there are always consultants available, as well as international institutions like the United Nations, the Commonwealth Secretariat and the World Bank. Noble Lords can no doubt think of others. However, I agree with the charge that multinational corporations are sometimes too secretive. As long as purely commercial security can be observed, it seems to me that the vast majority would gain from making their investment intentions, and the return on capital which they expect, clear to the governments and people of host countries. Nor should the latter be unaware of the inducements to their exporting potential and hence the savings of foreign exchange offered by the presence of the great companies which manufacture items to be re-exported and sold. Companies must also bring home to people the connection between investment and profits, and profits and jobs. On this point, where the sovereignty of this country over multinationals is concerned, surely it is our enormous international borrowing that renders us vulnerable, not the presence of Alcan or Chrysler or their subsidiaries, all of which arc creating employment in this country.
My Lords, there is the charge that prices at which goods are transferred between overseas subsidiaries and the parent company are lower than those charged to third parties or officially accounted. I have no doubt that such practices occur. Perhaps I should say I have no doubt that such practices occurred, because, once again, local legislation in the form of customs procedures and other controls ensures that, in the great majority of cases, transfer pricing is diminishing as an operating practice of most multinationals. Allied to this is the more serious charge that international monetary parities are affected by currency speculation of international companies. Lest I be considered too friendly to Goliath—a Philistine in short—I should say that I worry about this charge. It seems to me reasonable that companies should take prudent action in time of currency instability to protect their foreign exchange commitments. But there

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can be no doubt that investment interest rate differential or rumours of a currency revaluation can send millions of dollars and, indeed, other currencies, whizzing' from one country maintaining a low interest rate—perhaps for employment purposes—to another country maintaining high interest rates in order to try to beat inflation. We could suffer along these lines at the moment.
The short answer must, I think, be that governments more than multinational corporations create inflation, and that short-term liquid assets do not, as I have already shown, anywhere near approach the bulk of international investment. I except the OPEC oil surplus funds from that category. I do not count those among the multinationals for the purpose of this argument. That was a point which I think was made by my noble friend Lord Redesdale. The long answer must be increasing harmonisation between governments as to the rules of the game that they are inviting multinational corporations to play, because, after all, they invite them very eagerly into their territorial confines; and determination by those governments not to modify the rules of the game at very short notice.
My Lords, I have to confess amazement that the noble Lord, Lord Davies of Leek, sensitive as he is to the very real national fears generated by the sheer size of the greatest companies, can yet remain a noted opponent to the EEC. Of course there must be a countervailing political authority to the commercial authority of corporations. In Western Europe that can only mean the Community. The most severe all-over policing of multinational corporations occurs in the gigantic domestic market, the United States of America, which spawned the majority and the most powerful among them. The noble Lord mentioned the trade unions. Something of the same schizophrenia appears in the hostility of the British trade unions to the EEC. I hesitate to say that that hostility is shared by all their members— we shall see. Trade unions, no less than Governments, must seek a reciprocity of solutions to problems generated by the multinationals. May I say that that view is extremely unpopular to the multinational corporations themselves. Nevertheless, it remains my view that the great
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majority of ills associated with the multinationals are imagined rather than real, and that the ills which are real pale into insignificance beside the national and global benefits which the world's principal companies go on conferring.
My Lords, may I end by listing these as I see them? There is the initial injection of investment capital. This generates income and, through the goods and services thereby summoned up, yet more income, yet more employment and the growth of local industry. That is where —as I said at the very outset—there is no conflict between small businesses or the self-employed and the multinationals. There is the provision of technology, usually too expensive or too sophisticated for individual Governments to attempt alone. Just as important, there is the whole educative process involved in discovering how to use this technology well, and the exchange of experience of trade which enables companies to build up international standards of management and labour performance. In time, standards set by foreign companies spill over into much of local industry. I am very aware that in the last Government I, as a junior Minister, presented the safety award to Dow Chemicals in King's Lynn. At the crudest level, international pharmaceutical companies depend on the training and nurturing of doctors and dentists.
Finally, there is the whole effect upon understanding between peoples which trade and industry on a world scale foster. The employees of multinational corporations frequently move from one country to another: Costa Ricans to Brazil; Mexicans to Argentina; Americans to South Africa; South Africans to Switzerland; the Swiss to Britain; the British to Japan. Who will say, my Lords, that that is a bad thing for our world? Perhaps the suspicion of multinational corporations is generated less by real abuses—for example, the role of ITT in Chile—than by the likelihood that the world economic situation has outgrown its political forms.
My honourable friend Mr. Christopher Tugendhat, in an admirable book, by no means uncritical of the multinationals, has described them as being,
"amongst the most complex and successful examples of international co-operation known to history."

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The complexity, given a proper co-operation between States and national groupings, we can learn to handle. The co-operation and success we desperately need.
Lord PEDDIE: My Lords, before the noble Earl resumes his seat, may I ask him a question arising from his comments? He made an interesting analysis of the top 100 or so multinational companies. I am given to understand that the majority of the top multinationals are of British origin. Is the noble Earl able to confirm or deny that statement?
The Earl of GOWRIE: My Lords, I can deny that. Our imperial history is a kind of history of the multinational called Great Britain, but in fact the dominating power in multinationals today is the United States of America. I tried to show that this is because of its large homebased market.
3.35 p.m.
Lord BANKS: My Lords, I, too, am grateful to the noble Lord, Lord Davies of Leek, for initiating this debate this afternoon. He has undoubtedly raised a key issue, which impinges on so many of the great questions of today: the question of the concentration of ownership; free enterprise versus State control; the future of the nation's state; the relations between the developed and the developing world; whether we want growth, no growth or limited growth; the need for a stable world monetary system—all these are involved. It is very easy to take up a position for or against multinational corporations on the basis of inclination, or prejudice, or preconceived ideology, and then to search out from the welter of statistics a very plausible argument in support. It is less dramatic and less easy to take an objective view, weighing the evidence for and against with some care before coming to any conclusions. I want to attempt to follow that course.
We have already been presented this afternoon with considerable evidence of the extent of the growth of the multinational corporation. I hope that your Lordships will forgive me if I inflict on the House just one or two more facts. Fifty-one of the world's 100 richest entities are not nations but multinational corporations. Multinational corporations account for nearly one-sixth of total world econo-
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mic output. Foreign investment by multinational corporations has surpassed foreign trade as the largest element in international economic intercourse. It has been estimated by one expert that, by 1980, 75 per cent. of the world's manufacturing assets will be owned by some 300 multinational corporations. Many other experts think that that is too extreme a view. Nevertheless, it is a fact that the annual growth of multinational corporations is twice the growth of world gross national product and 50 per cent. greater than the annual increase in world trade.
At present there are some 25,000 subsidiaries of United States multinationals throughout the world; 15 years ago there were 8,000. That is just one indication of the tremendous development of the multinational corporation which has occurred in the past 25 years. The multinational is essentially an American phenomenon, but, as we know, there are also many European and Japanese multinational corporations, and the United Kingdom multinational corporations— despite the weakness of the United Kingdom economy—are among the strongest in the world. The total value of net assets of foreign investment in the United Kingdom at the end of 1972 was £3,800 million. The total value of overseas investment of British companies was £8,070 million—more than twice as much.
What has been the impact of this great development on the people and Governments of the world? We must first consider the benefits. The Report issued last year by the United Nations—to which the noble Lord, Lord Davies of Leek, referred—was very critical of multinationals and alluded to many disadvantages, but it also stated this:
"Their ability to tap financial, physical and human resources around the world and to combine them in economically feasible and profitable commercial activities, their capacity to develop new technology and skills, and their productive and managerial ability to translate resources into specific outputs have proved to be outstanding."
A Resolution passed by the European Parliament on 12th December last, before listing many matters of concern, observes that multinational undertakings have in the last decade developed on an extraordinary scale and noted that this development has had beneficial effects on productivity, technological progress and management methods. Multinationals

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very often bring the host country, as has already been said, much-needed investment, employment and technology. Depressed regions benefit; new management skills are required and new opportunities are provided. The efficient creation of wealth brings many problems, but it will be foolish to deny that it brings many benefits as well, however unfairly those benefits may be shared.
Against these benefits are the many anxieties to which reference has been made this afternoon, and many of those anxieties were enumerated by the noble Earl, Lord Gowrie. There is the question of taxation and the fear that by adjusting the price that one national subsidiary charges another, profits may be made to accumulate in countries with the lowest tax level or in tax havens. The noble Lord, Lord Davies of Leek, referred to the case of valium and librium, the prices of which were fixed by the Swiss company Hoffman La Roche; and £25 million made over a period of some six years actually appeared as a profit of £3 million. Then there is the question already referred to of the flows of money, the vast sums of money, which the multinationals are able to translate over the frontiers of nations and the effect this can have, for example, on the value of a currency, on currency speculation and the fear that a currency may be devalued. It is natural that a multinational corporation would want to move its money out of that currency. Nevertheless, the large flow of money involved could have serious consequences. But it is not only the multinationals who do that; they are joined by many others. It is less of a problem with floating exchange rates.
Then there are the problems of growth. It has been borne in our minds in recent years that the resources of the earth are limited and many people are now committed to the idea of controlled growth and some to the idea of no growth at all. The multinational corporations are seen—with their devotion to growth and their achievement of it—to be the principal engine of the movement in this direction, the supreme upholders of the consumer society and the spreaders of what has been called the "Coca-Cola" culture.
There are problems about unemployment and fears about it. It is argued that
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investment overseas replaces home investment, that jobs overseas are created at the expense of jobs at home. Barrett and Muller in their book, Global Reach, a formidable criticism of the multinational company, mentioned the case of General Investments who recently cut its New England labour force by 3,000 and increased its labour force in Taiwan by about 5,000. One or two comments must be made on that before accepting the conclusions which they draw. First, it is undeniable that it is good that employment should be created in Taiwan. If the labour there is underpaid, then the development itself, the investment itself, other development of a similar kind, international trade union solidarity, pressure from Governments and from public opinion in the home country—these all can help to see that wages are raised progressively to a reasonable level. The experience we have had recently of public opinion in this country and of Parliamentary opinion acting on the conduct of countries in South Africa is an example of what can be done. Also, we cannot argue from the facts given of this instance to which I referred; we cannot draw a conclusion from those facts alone. We need to take into account the foreign investment in the United States, which is increasing; we have to inquire whether the 3,000 jobs in the United States would have gone in any case because of the disappearance of a competitive position. We need to know how many jobs are created by the profits coming back to the United States from Taiwan and we also need to know the exports from the United States to Taiwan as a result of the increased prosperity there resulting from the investment. One thing is certain. The pattern of employment must change over the years; but the important point is to ease that process with redundancy payments, with retraining, with the encouragement of new industries and, also at the same time, to have the fullest consultation with the workforce involved.
In a pamphlet, The Menace of the Multinationals, published by the Labour Research Department, the lack of investment in the United Kingdom at the present time is attributed to the fact that the United Kingdom invests overseas. But the pamphlet appears to argue, if I understand it correctly, for a disengage-

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ment from the whole scene of international investment by the United Kingdom; that is to say, no investment in or out from the United Kingdom. But one is bound to ask: "Why stop at the present national frontiers? If it is good for Britain to be isolated from international investment, it would be good for Scotland and England to be cut off from each other for investment purposes in the same way and for the individual States of the USA to be similarly isolated from each other." I can understand the fears that a key industry might become entirely controlled by foreign capital and I can understand the action which might be taken by Governments to prevent that. Nevertheless, I regard international capital investment as an essential element in the economy of the Free World. Much else is required. Governmental aid is essential in creating the infrastructure which can take in the investment; the spread of intermediate technology, particularly in agricultural areas, and so on.
Another source of conflict is the question of the allocation of markets; the company can say to their subsidiaries that they will not take part in the export of a product although the host country might be anxious that they should do so. There are problems which have already been touched on this afternoon of industrial relations and of the natural feeling of the trades unionists in one country that sweated labour in other countries is being used against them. It is inevitable that the trades union international organisation will be much strengthened and increased. That will bring certain problems with it, but it will help to restore the balance. There is the fear of even greater concentration. It may be that the advance to the multinational corporation may not match the more alarming predictions that I mentioned earlier; but there could well be more concentration within nations if national competitors of the multinational corporations merge to combat them. Competition may be even more aggressive, but the competitors may be fewer.
Finally there is the problem of the threat to the nation-State which I thought that the noble Earl, Lord Gowrie, dismissed, perhaps, too easily. Mr. George Ball, the former United States Under-Secretary of State said that, as an institution, the multinational poses the
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greatest challenge to the power of the nation-State since the temporal position of the Roman Catholic Church began its decline in the 15th Century. We must not overlook, in this context, the great increase in every country of the world of the power of the State in economic affairs. That is a counter-balance; but this power is fragmented as against the international power of the multinational which can, I believe, in certain circumstances play off one country against another, if it so wishes. While the multinational corporations are subject to the rules, often stringent, of national Government and to the ultimate threat of nationalisation, nevertheless their ability to absorb within their system the effects of Government policies makes them less amenable to Government influence.
How can we deal with this situation? The Resolution from the European Parliament, to which I have already referred, called for the Commission of the European Economic Community to seek a general agreement on taxes and investment similar to GATT and for the creation of an international body responsible for its implementation and authorised to carry out investigations and make recommendations. In other words, an international code of conduct or practice—to use a phrase with which your Lordships have become familiar in another context—with an organisation to implement it. The United Nations Report, to which I have referred, called for a Commission on Multinational Corporations. This has had its first meeting. I hope it will develop into the kind of organisation which the European Parliament had in mind in passing that Resolution. Meanwhile, we should seek to establish within the European Community supervision of internal transfer prices and licence fees; research into the flows of currency and capital incidental to the operations of multinational corporations; intensified action to combat restrictive trade practices of every kind and to check monopoly; planning agreements between national Governments and multinational corporation subsidiaries within the European Economic Community guidelines; and planning agreements between the European Economic Community and subsidiaries of multinationals with the status of European Companies when that status has been established, as I believe it will.

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We should seek to establish co-operation agreements with the developing countries designed to encourage the kind of private investment best suited to their priorities; that is to say, co-operation agreements between the EEC and these countries, Community collective agreements on wages and industrial democracy, including the establishment of supervisory boards and works councils. We, on these Benches, attach tremendous importance to that proposal; it is something for which we have fought for 50 years. We should endeavour to get measures to protect workers against collective dismissal and the consequences of mergers and concentrations, restructuring, buying up of undertakings or decisions to reduce investment, and, finally, there should be plans for the proper conservation of resources and the reduction of pollution. That is a charter for the multinationals at EEC level operated by the EEC, and a code of practice supervised by the United Nations Commission at world level.
May I say, in conclusion, that as a Liberal I am essentially an internationalist; one who is as devoted to his country as anyone and anxious to see the significance of national boundaries becoming less and less. As a Liberal I am also instinctively hostile to a monopoly. Winston Churchill, in his Liberal days, said that Socialism attacks capital; Liberalism attacks monopoly. It is true that Liberals are on their guard against concentrations of political and economic power, whether in the hands of Governments, private corporations or trade unions. At one time, the free trade doctrine was both internationalist and anti-monopolistic. "Let foreign goods in and the home monopoly will disappear" was the argument. It now seems that the freer the trade the greater the degree of concentration bringing both riches and danger, as we have seen.
Yet I do not believe that we have a stark choice between domination by huge multinational corporations, producing wealth according to their own arbitrary plans in defiance of political authority and social consideration, or the concentration of all ownership initiative and direction in the hands of Governments, as we see over a large area of the world today. In either of those events, I fear that the values of liberal
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democracy—derided by the Marxists as bourgeois values, yet the only ones on which it is possible to build a tolerable civilisation—would disappear for ever. I believe there is a third way, as I have attempted to suggest this afternoon; a way of world, regional and national regulation which can harness, guide, and, where necessary, restrain the energies of the multinational corporations in the interests of the common good as democratically determined by the people.
3.56 p.m.
Lord LYONS of BRIGHTON: My Lords, despite any physical appearance to the contrary, I am not in a position to give a heavyweight contribution to this debate. What I can do is to say what it is like to be taken over by a multinational corporation. Thousands of people have been in the position I was in, of working for a subsidiary company which was taken over, almost by accident, by a multinational corporation. None of us had all the facts and figures we have heard today. When you are taken over there is an uneasy feeling that suddenly the Mafia will appear in the board room; and if not the Mafia, God knows what! You feel there are going to be tremendous changes.
In the case of a subsidiary company, where you have not been taking part in all the negotiations, normally, as a matter of courtesy, you hear about the takeover at the same time as the newspapers announce the event, and then you sit back and wait. You may get a piece of paper which says that there will be no changes, which, of course, you do not believe; and then the rumour business starts. First, the rumour is that everybody over fifty is to be sacked at once. How you regard that rumour depends whether you are over or under fifty. After a while those in my company received a note that our world president was coming to talk to us about the philosophy under which we were all then supposed to live and work. None of us knew what this meant in terms of changes in our thinking. He arrived accompanied by a small Brazilian with a heavy cold, who did not speak English. This person was a vice-president, who I think was brought along to demonstrate that from whatever peasant country we may come we could aspire to become a vice-president of the organisation.

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The President told us of his philosophy, that he believed in freedom. We felt we could live with that. He also said he believed it was the God given right of every man to disagree with his neighbour. We believed that we could live with that, too. But when it came to dealing with international budgets, the God given right of our European president to disagree with the American president was less apparent. We very soon found the phenomenon of the flying American who arrived with his book at the ready to ask about profitability. That is good in one way because it teaches you that the world does not owe you a living; on the other hand, profitability is based on forward forecasting which changes from time to time; and you have "rolling twelves" and "rolling sixes". These figures are set in a rather arbitrary fashion because the American master company expects to find a certain figure of world profits. The European president then allocates these profits among the other European companies, and you are then persuaded to aim for these figures, whether or not they are practical. This is not "highfalutin'" stuff; this is what actually happens to you. You find that management charges are added on to your books without any real management appearing for which you pay. Inter-company work is also baffling if you do not know what it is for, and one sometimes feels it is for balancing the books.
Geography takes a beating. We in the company were once told we had Europe as far as India. However, you learn to be humble about these matters and you take in India as well. But there are good things as well as bad things. For instance, working for the first time for a large international corporation, I learned how much trouble they took with young people who had potential, and it was part of the management technique to interview people to see that their ambitions could be realised if they were prepared to work in different countries. A lot more international training takes place, so it is not all bad.
On the monetary side, however, you have less and less control. After about a month we received a 360 page book of reserved rights—not a 365 page book, one for every day of the year. These were what we could not do without first
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asking our American masters. I believe that if you wanted to buy a huge desk above the permitted price you had to have it sawn in half and invoice it twice. In two years I never got beyond page 200, but there are certainly a number of things you are not allowed to do. So I would say that in working for a multinational company you learn more and there is more availability of top management—you can talk to them more easily. Your control of the financial side really goes out of your hands almost completely, and I believe also that when it comes to making up your final accounts some strange things happen. I would not say they were dishonest things, but they are just not understandable to you if you are not familiar with the way they do their accounting.
As regards the allocation of work between countries, one feels that this is done according to how much profit or loss a particular country is showing, and not necessarily according to the needs of your own country or for the benefit of your own people. Sometimes you feel you could be written off quite quickly if it suited those concerned. On the other hand, as regards agreements, you will find these are spelled out. There are no "by custom" agreements. Every "i" is dotted, every "t" is crossed, and you know exactly where you stand with management. So you have a stronger management in that sense, and I believe that many of the trade union agreements are better, for the same reason.
What happens to profits after international bookkeeping is another thing that you do not really learn about. Also, sometimes you have the feeling of being used for purposes entirely outside the immediate needs of your company. You do your work; sometimes you are asked to do things which are incomprehensible, but you have to do them. Also, there is always the fact that at any time, for any reason, you could be closed down by a decision taken by people who are many miles away. I am not suggesting they are unreasonable and would do it at the drop of a hat, but there is always the possibility of labour being cheaper or more compliant somewhere else so that they might then close down your outfit.
So it would seem to me there is a real need for some code of conduct to which

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multinationals might conform. I think we have much to learn from them, particularly in respect of management techniques; but I feel they should abide by some form of rules. Some of them are better than others—like people, they are of many sizes and shapes; and some are good and some are bad—but in general, I think there should be some code to cover the way in which multinationals carry on in the country.
4.3 p.m.
Viscount CALDECOTE: My Lords, I am glad to have the opportunity of following the noble Lord, Lord Lyons of Brighton, in his maiden speech and I know that all your Lordships will have enjoyed his interesting and sparkling speech as much as I have. His experience of multinational companies and mergers reminded me of my own experience on both sides of the merger fence on a number of occasions, and I would agree with much of what he said. I hope that we shall have the benefit of his wide experience in industry and public relations on many occasions in your Lordships' House, and I know he will always be welcome when he comes to speak here.
We are, I am sure, grateful to the noble Lord, Lord Davies of Leek, for bringing this subject before us today. I listened to his speech with great interest, but must say that I found some of his arguments rather difficult to follow, in spite of the fact that probably he has had a longer time than some of us have had to prepare for this debate and also to read the enormous number of reports and other literature available on this subject—for example, reports from the EEC Commission and from the United Nations Economic and Social Committee, and not only the reports themselves but comments made by other bodies upon them, such as those from the International Chamber of Commerce. I certainly have not had time to study them all. As I say, I found some of his arguments and indeed some of his rather emotive expressions, such as "neocolonialism", rather difficult to follow. May I take up one point about alleged threats made by multinational companies in the Middle East. Surely that was much more a matter of politics than a matter for multinational companies. Then I found his point about the price of tin difficult to understand. The noble Lord
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seemed to be saying that it was a bad thing that the price of tin had risen as much as it had; but surely that was a good thing for the underdeveloped countries where tin is produced.
Lord DAVIES of LEEK: My Lords, the noble Viscount has misunderstood me. I was pointing out that this was one of the facts that the hitherto undeveloped areas can expect, because of their changing standards of life, and how this aspect could be dealt with.
Viscount CALDECOTE: My Lords, I apologise: I thought the noble Lord was making the point that it was a bad thing and that in some way the international companies had benefited. I accept his point entirely. I agree with the main point made by the noble Lord that these international companies are big and powerful and for that reason can take a detached view of their operations in any given country. For their prosperity is not dependent on what is going on there and they can take decisions on employment and investment which may sometimes appear to be at variance with the interests of the countries where they operate. But power, like wealth, is not evil in itself; it is the use which is made of power that is sometimes evil and wrong. Power can corrupt and it can be abused, and occasionally it is; but surely we must not argue from the particular to the general. We have seen examples in the past of the power of capitalism being abused. We have seen also the power of trade unionism being abused; and we have even seen freedom itself being abused. But we should not therefore argue from the particular to the general that those institutions should be destroyed or that they are in themselves evil.
The fact is that multinational companies, because of their strength, can, and often do, make great contributions to the spread of technology and the development of resources; and, perhaps above all, they can take risks that smaller organisations could not possibly take. They make contributions also to International understanding and training through the movement of staff among different subsidiaries throughout the world. They also stimulate trade. But perhaps their most valuable contribution is in the developing countries themselves. It is here that I think their financial

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strength is particularly important, together with their ability to make big resources available quickly in order to carry out new developments, and also in their introduction of new technology and know-how.
Of course, they are not philanthropic institutions. They are in business to make money, and there is nothing wrong or evil in that. They often have to take very big risks, and it may be a long time before that risk-taking or that investment is repaid in financial returns. I think the big development costs and the big risks taken are often not fully appreciated. Those development costs have to be recovered. One or two references have been made in this debate to the pharmaceutical company which made large sums of money in this country; but nobody has mentioned, as far as I can remember, anything about the enormous development costs which that International company had incurred in developing these Pharmaceuticals for the benefit of everybody.
On balance, I have no doubt at all that these multinational companies or corporations—call them what you will—are of great value to the underdeveloped countries. I had the opportunity, by chance, of speaking last weekend with one of the senior advisers to the United Nations Industrial Development Organisation. He is in fact a distinguished Kenya citizen and I was very interested to talk to him about these problems, in the knowledge that this debate was being held today. I was particularly interested to hear him give at first hand confirmation of that view. In the view of his organisation, which is there to help this kind of work in developing countries, the multinational corporations had done a valuable job in developing countries and were still doing so.
As I have already said, I fully accept the danger of the abuse of power and influence of these multinational corporations, but I do not think that kind of abuse is confined to such companies. It is not confined to any type of organisation. We suffer in this country at the moment from the abuse of power and influence in a number of areas. Moreover, it is not difficult to control and
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monitor the activities of these multinational corporations wherever they operate—certainly that is my view.
It so happens that in the United Kingdom we have few restraints placed on international companies specifically directed to them; they are treated in the same way as any other company in Britain. But it is of interest to note that the Economist Intelligence Unit in a report in 1971, and also a Conservative Government White Paper of 1973, drew attention to the need for some surveillance of and more information about these big companies, and also to the need —and this point has been made by other speakers in the debate—for a wide measure of international agreement, at least on a regional basis, on the methods and principles of monitoring and controlling their activities.
This seems to me another very good reason for our remaining in the European Economic Community, so that we may join together in the discussions and negotiations that are taking place there in relation to the control of these large corporations. So I believe there are many reasons for our being grateful for the freedom that has been given to multinational corporations to operate in the United Kingdom. We can see the benefits we have had from them. To mention just a few, from Fords, Philips and IBM we have had major contributions to our exports, technology, and prosperity of our industry. Of course, there are also British concerns such as Imperial Chemical Industries, RTZ, British Petroleum, Shell, Unilever and many others. No one can deny that those companies have made a tremendous contribution to our prosperity.
It seems to me that the developing countries are well able to look after their own interests. In many of them, indeed in most of them, the regulations controlling international companies are much more stringent and strict than they are in Britain. I sometimes wonder whether they are not a little too strict in their own interests. In making investigations with a view to forming companies or setting up manufacture in developing countries, I have often found it difficult to make arrangements to remit money from them, to obtain reasonable payment for know-how in the shape of royalties, and to obtain a reasonable proportion of the

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equity to be held by the parent company. In countries where such restrictions are not put in the way of the investing company from overseas, growth has been very rapid indeed. One instance is Brazil, where there are reasonable restrictions and reasonable laws but they are not as restrictive as in many other developing countries. This has resulted in a rapid growth in Brazil. I believe that restriction has held up the rate of development in some of the other under-developed countries.
As I indicated earlier, the United Nations take a close interest in all these problems. Through their Industrial Development Organisation, which is acting, as it were, as honest broker to help to give confidence to the under-developed countries to accept investment from big overseas companies, and through the Commission on the Multinational Corporations which comes under ECOSOC in the United Nations and is now preparing a code of conduct for multinational corporations, the United Nations are indicating their close interest and are making great efforts to help with the overall problem to which the noble Lord, Lord Davies of Leek, has drawn attention today. Also, the OECD, in a slightly more restricted area, is drawing up codes of practice and guidelines for monitoring and the control of big international companies. All this effort seems to me to be sensible and valuable progress.
So I conclude that multinational corporations are not evil organisations to be attacked, criticised, emasculated and rendered powerless by excessive regulation and control: and of course, there is no semblance of a case for suggesting that they should be destroyed and broken up. Rather we should recognise their strength and value both to the developed countries and to the under-developed countries. We should recognise at the same time that their size and power and influence can be abused. So some monitoring and supervising arrangements are needed, and I agree with the noble Lord, Lord Banks, that that should be done on an international basis.
My Lords, as I said at the beginning we are grateful to the noble Lord, Lord Davies of Leek, for bringing this subject before us because it is important. It is also important to keep it in the right perspective. We accept his plea for
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more information, and we accept—at least, I accept—that there is danger of the abuse of power. But I do not accept his implied criticism of the whole operation of these great companies. We have to find a balance and we should welcome their contribution but be watchful that they do not abuse their position. I believe that that is the attitude which we should adopt and I hope that that belief will be reflected in the outcome of this most useful debate.
4.16 p.m.
Lord SHERFIELD: My Lords, I should like to follow the noble Viscount, Lord Caldecote, in offering my felicitations to the noble Lord, Lord Lyons of Brighton, on his maiden speech, which was all the more delightful for its documentary character. I should Like also to follow noble Lords in thanking the noble Lord, Lord Davies of Leek, for introducing this Motion today. Discussion of this subject in Parliament has been minimal compared with that in the United States Congress and in the Canadian Parliament, where committees have been studying this matter for some years and a vast amount of evidence and other material has been produced. In comparison, the British contribution to the discussion has been small, although there has been some distinguished academic work both in and out of universities, particularly by the University of Reading to which Lord Davies of Leek referred and by the British North American Research Association; and there has of course been work by the Trades Union Congress. But, comparatively, such work is not extensive and it is no doubt time that your Lordships gave the subject another run.
There is one main reason for this disparity of interest and study between the United States and the United Kingdom. In the United States there has been a great deal of concern that their multinational corporations are responsible for the export both of technology and of employment to a degree considered harmful to the economy and to industry. In the United Kingdom we have been on the receiving end on both counts and have profited accordingly. Ten years ago not much was heard about multinational corporations, but from the mid-1960s interest has multiplied. I think I first attended an international meeting on the subject in

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1968, and since then discussion has been continuous in public and private International meetings and organisations culminating in the discussions in the United Nations to which reference has been made and to which I need not refer further.
In view of the vast mass of documentation and discussion on the subject, I myself approach it with considerable humility. Yet in spite of, or perhaps because of, this great mass of material a good deal of myth and folklore has already grown up around these multinational corporations. They are sometimes regarded as something between a wicked ogre and a big bad international wolf. The noble Lord, Lord Davies of Leek, compared them to a rogue elephant. I am not sure that that comparison was apt because rogue elephants are not noted for their intelligence. But perhaps because these multinational corporations are large, rather profitable and successful, are in the private sector and rather independent, they are criticised, none of these things being much in harmony with the spirit of the times. Yet whatever their potential for wickedness, for the most part they have proved to be beneficial instruments for economic growth, industrial efficiency and for the general increase of international trade. There are exceptions, of course, but they are rather scarce and one black sheep does not spoil a flock.
I will confine my remaining remarks to one aspect only of this subject, the role of multinational corporations in bringing about the transfer of technology upon which the noble Viscount, Lord Caldecote, has just touched. Even in this narrow field generalisations are dangerous, but in this regard I think it can be said that multinational corporations have almost uniformly been effective and beneficial. It is not very long since there was great concern about the technological gap between the New World and the Old World and the danger to Europe which lurked there. I am sure we all remember that best seller The American Challenge, which was long on drama but rather short on statistics! We hear very little now about technological gaps between the industrialised countries. They have been closing—not, of course, entirely through
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the operation of multinational corporations. There are other methods— royalties, licensing, exchange of people. But transfers between the headquarters, affiliates and subsidiaries of multinational corporations are the most influential and significant factor.
Typically, a foreign company—say, an American company—invests directly in a British company which becomes a subsidiary. There may be some element of patent exchange or licensing, but normally the British company has immediate access to the technological information available at the United States headquarters or in other affiliates and can take, without payment, whatever it can use effectively. Further, in applying this information the British company will have active help from the development and engineering divisions of the parent company. The flow of information is not, of course, all one way. We in Europe have information which is of interest to the United States, so in a short time a particular technological gap can be virtually closed.
I have spoken of information, but the transfer of managerial skills is often even more important. Noble Lords may remember that after a while the technological gap turned into a managerial gap. By their very nature, multinational corporations depend greatly upon skilled and experienced management, and the experience thus accumulated is available to both subsidiaries and affiliates. It is a matter of record that the United States controlled companies in Britain have had a better record for export performance and industrial efficiency than comparable British companies. It is the policy, too, of most large United States companies to move as soon as possible to wholly indigenous management in a subsidiary. Thus, over time, the general level of local management is steadily raised. Here, as elsewhere, most multinational companies are very sensitive to local and national methods, feelings and traditions.
There is another subsidiary factor. As I think has been said already, multinational corporations recruit and train large numbers of young executives to a high standard; often, especially in research and development, some of them feel that their ideas are disregarded and

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their ambitions frustrated. From this situation comes the spin-off company— small, innovative and entrepreneurial— through which many new processes are successfully launched. This is where the small businesses mentioned by the noble Earl, Lord Gowrie, come into the picture.
I have been speaking of the industrialised world. In the developing world, multinational corporations have also conferred great benefits, although these are seldom appreciated; indeed, the companies are usually regarded with suspicion and often with hostility. A large manufacturing company can arrange its affairs so as to make high technological products in the industrialised world, and intermediate or low technological products in the developing world where the appropriate skills are available; and, of course, they bring in managerial skills as well. Typically, these companies have operated largely in the extractive industries where the technology has often been more or less fully transferred over a period of years. Thus, these operations can then be nationalised with relative impunity, but not complete impunity, for the developing country may find that it does not have the resources to manage the enterprise efficiently and so has to revert to the original parent, or to some other international enterprise, for a management contract. Far from being abused, I believe that these multinational companies deserve more credit than they get for patience.
Lastly, I should perhaps say something about what the Government's attitude or, indeed, any government's attitude might be towards the operations of multinational companies. Hitherto, I think that Her Majesty's Governments have proceeded on an empirical basis and have dealt case by case with foreign investment in this country. This seems to me to be right. I hope they will not be moved by the actions of one or two black sheep, if such there be, or rushed by other less sagacious governments into becoming involved in large international schemes for regulation, legislation or even codes of conduct for multinational corporations. I suggest, at least, that they should not enter into such schemes until there is hard evidence, of the kind referred to by the noble Lord, Lord Banks, that they represent in actuality, and not just in
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supposition, a threat to organised labour, the stability of the international monetary system, or national sovereignty. I say "national sovereignty" in spite of the hyperbole from Mr. George Ball which was quoted by the noble Lord, Lord Banks. Like most well-managed industries, these large corporations understand their business better than officialdom can ever do. I suggest that a well documented balance sheet, based on factual information, needs to be established.
Up to the present, it seems probable that the balance is favourable to the companies in the sense that their operations have been beneficial to international economic growth and trade, and in particular to the field of which I have spoken, the transfer of technology. Of course this is not to deny that there are real problems, actual and potential, connected with the operations of multinational corporations, and that tensions, national and international, have been created by their existence. I suggest that these tensions have been caused less by the companies' actions in themselves than by the divergent policies of the governments in whose jurisdictions they operate, and that governments should first seek in the appropriate international organisations—it may be OECD or the United Nations—or direct through diplomatic channels, to harmonise their own policies rather than try to tie up multinational corporations in regulatory procedures and confront them with yet more conflicting obligations.
4.32 p.m.
Lord ALLEN of FALLOWFIELD: My Lords, in rising to take part in this debate I do so as a newcomer of some few months' standing in your Lordships' House and I ask for your indulgence. May I say that I welcome the opportunity to make my contribution on what to a large number of people in Britain, and indeed in the Western World, is a highly important issue. When I address my mind to the subject matter of this debate, multinational corporations, I should say what I have in mind: I mean a company which organises its operating divisions across national frontiers. This of course covers trade, finance, insurance and transport companies as well as manufacturing companies. I mention this because I think it is well to keep it clearly in mind when one is speaking about the existence and the function, in the future

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in particular, of the multinational corporation compared with the role of the member State.
In this debate we have had many figures advanced by speakers who have preceded me and I should like to add one or two more without wearying the House. I think it is clear that there are already several multinational companies which are larger in terms of turnover than the total gross national product of mediumsized nation States. That is not an insignificant statistic. I will give an example: General Motors is roughly equivalent in size to the whole of the economic authority of the Netherlands. ICI is larger than the gross national product of the Republic of Ireland. Further comparisons reveal that there are only four Governments in the Western world with national budgets greater than the turnover of General Motors. As I see it, this is the size of the problem which many, if not all, in this House may wish to describe as being as much political as it is economic. Inevitably it means to me that the balance of power between national Governments and the global corporations is shifting rapidly in favour of the international company.
The issue that should be of some great concern to this House—and I am sure it is—and indeed to the other place, points clearly to what can only be described as an area of conflict between national economic interests and the interests of the international company. I use the term "conflict" reservedly, because in this day and age I think we have too much conflict. As we all know, the national economic interest in broad terms is concerned with seeing the greatest economic and social welfare benefit for the nation as a whole, whereas I think it can be said without fear of contradiction that the objective of the international company is to obtain the greatest financial return and the growth of the global company as a whole.
I have described the broad effects, but if one looks at the narrow economic aspects of the problem I accept that there are real benefits in fringe companies setting up in business in the United Kingdom. That, if you like, is to advance the argument that the innovation of the multinational corporation has not been necessarily bad in all cases—as has been
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said by noble Lords who have preceded me. In recent years there has been considerable interest in the activities of multinational companies both at national and international levels. By some people they are regarded as dynamic forces; instruments, if you like, for securing a wider distribution of capital, of technology and, of course, of employment. Others see them as they have been described hitherto in this debate, as monsters which our present institutions, both national and International, are inadequate to control, and thus being a law unto themselves, acting solely on the principle, so the argument goes, of maximising profit without regard to the public interest or the social policy of the host country. It is probable that neither view is wholly true and it will be only by the collection and formulation of a great deal more information about the activities of multinational enterprises in the various countries in which they operate that a considered judgment will be possible in relation to each particular enterprise.
That the growth of multinational companies has been phenomenal is not in doubt. In a research report that I was looking at quite recently it was indicated that as long ago as 1970 of the 100 largest economic units in the world 50 were nation States and 50 were multinational companies. Today the probability is that the multinational companies hold a still greater domination. In view of their increasing importance in practically every country in the world I personally feel that the time is overdue for all Governments and international bodies which may be involved, such as the United Nations and the International Labour Organisation, to consider practical measures of creating a force to make international companies more accountable. It seems to me that this accountability is due in respect of two particular groups, and a different approach to the problem may be required in each case.
First, there must be accountability to the work force. Without going into detail, one is aware from one's own experience in this country alone of some of the difficulties and problems that can be created by multinational concerns taking over existing businesses, sometimes following practices formulated many thousands of miles away and, by that process, introducing rationalisation pro-

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grammes which result in redundancies and problems within our industry. I believe a great deal can be done by legislation within the countries themselves to require the companies, multinational or otherwise, to provide more information.
So in welcoming an opportunity to make my contribution to this debate I do so with a great deal of pleasure because I am concerned about the development of these concerns. I am also concerned about the use of power. In this connection I draw your Lordships' attention to the words of Burke:
" The greater the power, the more dangerous the abuse."
I am grateful to your Lordships for the indulgence extended to me, and for the opportunity of making my contribution to this debate.
4.40 p.m.
Lord ERROLL of HALE: My Lords, it falls to me, and this is a very happy task, to congratulate the noble Lord, Lord Allen of Fallowfield, on his maiden speech. Making a maiden speech is always an ordeal. We have all experienced it. Those of us who have been through the ordeal watch closely the performance of the person going through it. On behalf of your Lordships I would merely say that we very much admired the style of delivery, in particular the high intellectual content of the remarks of great substance and importance which the noble Lord compressed into a period of only nine minutes. On all three counts —quality, intellectual content and brevity —we look forward to his next intervention in our debates.
My Lords, it is customary to declare a personal interest when speaking in a general debate. I should say that I am an employee of one or two of the companies which might be considered appropriate material for the debate today. However, I do not propose to speak as a mouthpiece of these companies, although naturally my practical experience as an employee may help me to bring some points of view to the notice of your Lordships.
At a time when the free world is trying to move towards unfrontiered societies, it surprises me that there should be so much growing opposition to the concept of a company in one country setting up a manufacturing or trading
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facility in another free enterprise country, whether advanced or newly developing. After all, basically that is what a multinational company is all about. The word "multinational" may imply several nations, but basically it is one company operating in another country as well as in its own. It seems to me strange that there should be this opposition. For the roots of this anxiety, I look to a kind of fashionable new xenophobia. My noble friend Lord Sherfield referred to the technological gap, fashionable at one time, and to certain other gaps. I hope this is merely a current fashion among the busy intellectuals of the world, well-meaning and sincere, who think they are after what they call a problem, and are determined to pursue it to the end.
Several noble Lords have said that there is not enough information available and that more needs to be known. In fact, there is any amount of information. All one needs to do is to obtain a published report and accounts of the companies concerned. There will be far more information there than most of your Lordships could hope to digest. There is plenty of information there. It is the sense of suspicion of the motivation of these companies which has been brought out clearly by a number of speakers today. Indeed, in his maiden speech the noble Lord, Lord Allen of Fallowfield, made some of these points well.
Perhaps I may now congratulate another maiden speaker today, the noble Lord, Lord Lyons of Brighton, who in a charming and pleasant way put some of the problems of being absorbed by, I imagine, a multinational company. This provided him with opportunities for a rethink as well as some anxieties. I very much regret that I do not know the noble Lord personally, but I hope I will learn in future what are the pluses and minuses of his own personal experiences.
I think it is a matter of feeling, of emotion. One would naturally expect that the noble Lord, Lord Davies of Leek, who introduced the debate in his characteristic style, with his origin from one of the oppressed racial minority groups of this Island, should be particularly sensitive towards the sense of oppression and dominance by companies from alien parts of the United Kingdom or further a field. Nevertheless, we are

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grateful to the noble Lord for providing us with the opportunity of stating the case as we see it, and not just the case as the detractors see it. I would not suggest that the noble Lord who introduced the Motion is necessarily a detractor. He is seeking the truth through a welter of quotations and documents, which puzzled us sometimes as much as they seem to have puzzled him.
The background to this xenophobia, if I can give it a practical background, is that the foreign company is suspect in the host country: it has come there to exploit the local peasantry, so to speak; it has come to avoid paying taxes, although I do not see why one should need to pay more tax than is necessary. The queues outside the liquor shops last night indicate what an honourable pastime tax avoidance is when John Citizen is buying Scotch in order to beat the price increase. That is respectable tax avoidance. But when a multinational company seeks to avoid excessive taxation, that is considered a very bad thing to do. The foreign company, we are told, will manipulate the host Government for its own advantage, and so on. This is all part of the new mythology being built up, most of it entirely untrue and without foundation. Those organisations and individuals actively concerned in multinational companies are apt to push all this on one side and say, "This is idle criticism; let us not waste time on it. It is untrue; this we know". They might spend a little more time in explaining their case and taking the trouble to make their point of view understood to those honest inquirers after truth, of whom the noble Lord, Lord Davies of Leek, is undoubtedly one.
My Lords, one would rightly expect to find the xenophobic attitude of mind in a banana republic or a small community deeply suspicious of the superior financial and commercial powers of foreigners. To my mind, the tragedy is that this irrational fear of the foreign company is to be found in the most advanced Western countries as well. For example, Canada has set up the Foreign Investment Review Agency, a body designed to supervise, and in most cases in fact to prevent non-Canadian organisations from taking up investment or trading or manufacturing positions within the
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boundaries of Canada. It is surprising for a country so advanced to take that attitude. The United States of America, for all its philosophies and big and generous ideas, makes entry into the United States very difficult for foreign companies, through the Anti-Trust legislation and through the extraordinary hurdles erected by the SEC and other devices.
Across the Channel, we have always accepted that France is fiercely nationalistic. It is a brave company who tries to set up there, though some have done it with success. However, one must work at it. Japan, although not of the West, subscribes to the free enterprise system. Yet once again, try to set up a manufacturing establishment in Japan and you will know what you are up against. It can be done. I am associated with more than one organisation which has succeeded, so I can fully subscribe to the doctrine of how difficult it is of achievement.
In Britain, too, we have xenophobic manifestations, all too often shown by a form of anti-Americanism. I feel this is most unfair. I will not repeat the arguments I was going to adduce because they have been so well put forward already by the noble Lord, Lord Sherfield, on the great value which American companies, established in this country, have provided here. Nevertheless, up to now, with varying degrees of emphasis, successive British Governments have maintained a welcome degree of freedom, and have resisted the arguments of the xenophobes. If I may outline a personal example, the noble Lord, Lord Sherfield, may remember the Reynolds Aluminium case when he and I were at the Treasury together. I was reminded of that by what the noble Lord said, that each Government dealt with these matters on an ad hoc basis. I think that is still the case today, and long may it continue to be so.
There are some very good reasons why we should continue to adopt a very open-door approach. First, many of Britain's leading companies are themselves multinational, as has been said by the noble Lord, Lord Banks, earlier this afternoon in a speech which I found of particular interest and value. They operate not only in Commonwealth countries but in many foreign countries as well. They have contributed enormously to the

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economic advance of the host countries, whatever the state of their economic development. Secondly, Britain is at the receiving end of many multinational companies. We are fortunate that so many American companies have invested in Britain, brought their technology and management expertise and provided many thousands of jobs. American companies in Britain are substantial exporters from Britain and often export from Britain back into the United States itself.
Britain would be a much poorer place if American companies had shunned us during the last 70 years. I say 70 years because this is not just a postwar phenomenon. The Singer Sewing Machine Company established itself on Clydeside in the early 1900s and has been with us ever since. The Hoover Company has been in Britain since 1920 or earlier, and has indeed out-stripped its American parent in the size and profitability of its operations. This has been going on for a long time. I intended to bring with me to quote, but I did not want to weary your Lordships, the fullpage advertisement in the recent issues of The Times by the International Telegraph and Telephone Company, showing what they had invested in Britain and were currently investing in Britain. It shows how much we owe to one individual American company at the present time.
Of course, it is not only American companies. That is why I stress that some of the feeling in Britain against multinationals is really latent anti-Americanism, which, regrettably, a lot of people in Britain persist in pursuing. It is not only American companies in Britain. For example, the French Michelin Tyre Company have a large organisation in the Potteries and they also have a large factory in Ulster. So the French are multinationals and they have come to the United Kingdom to develop with us here.
Lord DAVIES of LEEK: My Lords, if I may intervene, I regret that the noble Lord is giving a tinge of anti-Americanism to this debate. I do not think I mentioned anti-Americanism at all; I was looking at the whole of the multinationals, including the British. I regret the introduction of this phrase, "anti-Americanism". I was trying to
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look at the subject in an objective manner.
Lord ERROLL of HALE: My Lords, I am most grateful to the noble Lord. I am sorry if I appear to have overemphasised that aspect. I am speaking for myself when I say that I detect, not only in this debate but in discussions on this subject generally, that to be anti-multinational is also at times to give expression to latent anti-Americanism. I should like to express my thanks to the noble Lord for correcting me on this point as regards the actual words used in this debate.
I mentioned the Michelin Company. There are also German and Swiss companies operating in Britain, and we sometimes forget the important contribution that Swedish companies have made. The SKF Company, the ballbearing company, has been part of the British scene in Luton for more than half a century. I am sure we are very glad to have them here for the contribution they make. Furthermore, I think we should remember that successive British Governments have actively encouraged foreign companies to come to Britain. The Board of Trade has maintained an office in New York for the express purpose of encouraging American companies to set up in the United Kingdom. The Scottish Development Council has sent missions to America to try to attract American industry to Scotland. Ulster has sent its own man to Sweden to say that the best place for Sweden to expand in is Northern Ireland. So we welcome foreign companies; we welcome the multinationals to this country. Therefore, we should, generally speaking. I believe, be in favour of the concept of companies operating across national frontiers, both because we have gained so much from them and because our own companies operating overseas gain so much from their ability to cross International frontiers.
I should like to say, speaking from my own experience as an employee, that foreign companies in Britain are scrupulous in observing our British laws and our taxation requirements. Equally, I believe British companies overseas are particularly careful to ensure that they maintain their initial welcome with the host country and keep on continuing and friendly relationships with the host country. Why

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should anyone want it to be otherwise? The companies concerned want their ventures to succeed. We want the host countries to prosper. We are in partnership with them over the long term. Indeed, wherever there is considerable capital investment, the company is locked in, because the investment is there and cannot be moved. So there is every incentive to make a success of investment overseas, whether it is Britain investing abroad or foreign multinationals investing in Britain. Nevertheless, the miasma of suspicion persists. I am glad that the heavyweight international bodies which have been mentioned during the course of the debate are studying the matter. I prefer to call it not a problem but rather an opportunity for further development along these lines. I hope the international studies will be free from political bias. I see in the multinationals of today one of the great forces for prosperity and for peace throughout the world.
4.57 p.m.
Lord MAIS: My Lords, may I first add my congratulations to the noble Lord, Lord Lyons of Brighton, and the noble Lord, Lord Allen of Fallowfield, on their two maiden speeches. As the noble Lord, Lord Allen, said, it is somewhat of an ordeal, but they appear to me to be completely at home in your Lordships' House already. I hope that we shall hear them on many occasions in the future.
I think it is most important that we keep a sense of proportion regarding multinational corporations. Opinions seem to fall very clearly into two categories with no grey areas; those who feel they are bad, and those who are convinced that they provide a necessary and useful service, both to the country of their origin and to the country in which they operate. There are those who say that these global operations of multinational firms have become of major consequence and are a cause of great changes in world economy, that the multinational corporations often have a substantial impact on the world scene. Those who hold these views will also say that the very existence of multinational corporations, with their ability to move substantial assets and /or currency rapidly from one country to another, aside from the possibility of speculation in currencies, is an ever-
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present potential threat to relatively stable currencies and exchange rate relations among nations.
Multinational firms come in all shapes and sizes. Together they produce, sell, licence, and finance operations of a magnitude which are sometimes greater than the entire budget of some of the nations in which they are operating. It is said that multinational companies can jump national boundaries, that they can overwhelm a country's system of trade and finance, that they may make a decision which appears to them to be rational from their point of view but which may have an adverse effect on the workers or consumers, or on the social progress, not only of the country of origin of the multinational company but also of the country overseas in which it is operating, and which may create difficulties in International monetary relations. Yet there is no national law, regulation, supervision or accountability over these multinational companies. These same voices which speak against the multinational companies will go on to say that the impact of multinational companies is much tougher and more direct on workers than on capital or management. They will say that capital is mobile and that management is also reasonably mobile, whereas the workers in the company are not; and this to a great extent is perfectly true.
So much for what is frequently said and what has been said on one or two occasions this afternoon in your Lordships' House. It is the case, if you like, reasonably briefly, against the International corporations. Some of the accusations which are made are undoubtedly justified—not universally, not constantly, but on occasion. But there is of course another side of the coin, and now, if I may, I would direct your Lordships' attention to that other side of the coin. First, let us accept the fact, as I hope your Lordships will, that the multinational company is not anything particularly new. It is a natural development of the trader exporting to foreign markets, which has developed in many cases into a company with subsidiary companies and manufacturing facilities outside the country of its origin. The trend in this direction was manifest long before the Second World War, and since the war ended there has been an immense growth in the flow of international invest-

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ment which has contributed greatly to the development process in both industrialised and developing countries. I would emphasise that such development in these countries has only been possible, certainly in more recent years, with the agreement of, and indeed the encouragement of, the host country and the host Government.
The impetus for investment abroad has come in part from the initiative of the companies seeking to employ their resources efficiently and—let us be quite frank—profitably, and in part from the encouragement of Governments, particularly in the developing countries. They have, through tax incentives, competed one with another to attract the scarce resources of investment which they badly needed. This is not a question of exploitation, of moving into countries taking all you can get and repaying, as in the old days, with cheap brass ornaments or glass beads; we are talking about what should be, and usually is, a partnership. Sometimes there are flaws and misunderstandings—there always are in any partnership —but there have been, and still are, advantages both to the country of origin and to the host country in the activities of multinational companies.
A large part of the economic and commercial activity that now crosses frontiers is conducted by international companies or groups of companies, each of which, in carrying out its business, is subject to the laws, regulations and customs prevailing in that country. Particularly in the developing countries, the foreign investment has succeeded because it has developed resources or provided services which would not otherwise have been developed or provided at that point in time.
I think that most economists will admit that the multinational company is here to stay. The contribution it makes to world development is significant, although not without problems. The need is to isolate the substance of these problems from emotion, or there is a real danger that the contribution will be frustrated by action based on misunderstanding. In the removal of misunderstanding the multinational companies themselves have the greatest part to play through the provision of adequate information. Reference has been made to the potential conflict which may arise between a multinational
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corporation and a Government. It is probably quite natural that the problem areas of any situation will attract most attention, but considering that for many years multinational corporations have conducted business operations in various countries around the world, it seems to me that the actual conflict with Governments is very rare. But disagreements which have assumed such proportions as to result in international relations between Governments being in any way affected or strained are also rare, if not non-existent.
May I turn now to the motivation and behaviour of multinational corporations. In using their resources of capital and management to undertake new investments, these corporations are most interested in carrying on a viable business operation while earning a satisfactory return on their investment. They are not in business, either at home or abroad, for a quick gain to recover their capital and get out of a business, a project, or a country. On the contrary, plans for additional investment and further expansion are frequently already in hand when a multinational company opens up in a country. Therefore, as a rule, they follow any venture with a backup facility.
In by far the great majority of cases, investment by multinational corporations leads to mutually successful long-term relationships between the investor and the host country. Most, if not all, multinational companies, when they embark on a new venture in a foreign country, intend to remain in that country for an indefinite period. When multinational companies are accused of the alleged ability to escape control by Governments, it should be remembered that most of the wealth of multinational companies is in fixed assets which, in themselves, can hardly be used to pressurise a Government. On the contrary, it could be said that the fact that they have most of their capital in fixed assets in a country puts them far more in the position of a potential hostage than the other way round, because you cannot pick up a refinery, a large factory, or a large plant and say, "We do not like it here. We are going home." You can go home, but you are going to leave your assets behind you.
My Lords, I commenced by giving you a few details of what is said by those who disapprove of multinational com-

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panies. I have spent even longer in giving you some of the problems which I believe they face and also some of the services which they offer not only to their country of origin but to the host country in which they are operating. I recognise that there is always some risk of tension between a multinational corporation and the Government of a host country. May I presume to suggest that there are some positive actions which both corporations and Governments might take to reduce, if not to eliminate, the risk of the potential source of disagreement?
First, there is the importance that certain Governments should review their tax policy towards multinational corporations based in their country and realise that the decision whether to invest at home or abroad should be relatively neutral with respect to taxation. If income earned by foreign subsidiaries is subjected to double taxation, the burden of those two taxes could be so great that the multinational corporation would hesitate to invest abroad. With or without Government encouragement, I believe that the multinational corporations should get together with a view to establishing a voluntary code of conduct which would set out in broad principle acceptable behaviour in various areas. Undoubtedly this would contribute to a better climate of understanding for the corporations as a whole. It would also serve to discourage some of the multinational corporations from the kind of activity which can generate ill-will for the multinational corporations as a whole. It would, I fear, be impractical even to suggest that such a code can be backed by the force of law. Nevertheless, the mere fact that such a code existed, and was accepted universally, would be of great advantage to all concerned.
The chairman of one of our largest multinational concerns in this country made a statement the other day which I thought was relevant. I quote his words:
"We would have no difficulty in conforming to any reasonable code. In fact, such a code exists. It is the International Chamber of Commerce guidelines for international investment."
The chairman concerned went on:
"We, as far as we know, are not in breach on a single point regarding those rules. We wish we could say the same about certain Governments."
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Of course that code exists. It is well known to many, if not all, of the multinational companies operating out of this country. But it should be given more power and strength to its elbow and should be more universally accepted as a code of conduct which is not breached. If it is breached, whatever steps can be taken against that company should be taken.
I have one further point. Governments should in some way co-ordinate their policies towards multinational companies. For instance, multinational corporations would be far more willing and encouraged to undertake new investments if they had greater assurance that their operations would not be subjected to substantial new forms of discrimination or controls once they had established themselves in the country. I am not for one moment attempting to try to convince your Lordships that multinational companies are all knights in shining armour. If they were, they probably would not be such good business organisations. But, in any great organisation or business spread across the world, there are bound to be instances which cause both trouble and difficulties to the country in which the company is operating, and to the company itself.
Nevertheless, multinational companies contribute a great deal to the world's wealth and economy. More often than not, they put a great deal into a country in which they are operating, particularly in the case of the underdeveloped country. In addition to putting in money, they run facilities to train the inhabitants of that country in crafts and trades; they take nationals of the country and move them to subsidiary companies in other countries; and they move them gradually up the ladder and, in many cases, return them in due course to the country of their oigin to take on senior positions, even on the board of the company concerned.
I believe that a host country is entitled to know—probably more than they are told now—about the multinational company that moves in and establishes itself in that country, particularly if that multinational company is of a size that could have a serious effect on the employment and the wellbeing of the host country. But the last thing we should attempt to

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do is to discourage the multinational company or to frustrate their progress. Aid is provided to countries in many forms. Some aid is merely to get them out of immediate trouble. Other aid, such as provided by the multinational companies, is long term. There is a saying that,
"You give a man a fish and he eats for a day; you teach him how to fish and he eats for the rest of his life."
I believe that that is part of the service which is provided by multinational companies.
In conclusion, I do not think I need remind your Lordships that these islands are not self-supporting. We have to import a very considerable proportion of our raw materials. We also have to import a very considerable amount of our food. Without these, we would indeed be in dire straits. We should stop and ask ourselves where the money, or a considerable part of it, comes from to buy these raw materials and to provide that food. A considerable proportion of it comes from those companies who operate overseas and earn foreign currency, and among those are a considerable number of multinational companies. We are a trading nation. In the interests of all of us, I sincerely hope that we shall never forget it and that we shall always remain a successful one.
5.17 p.m.
Lord THOMAS: My Lords, may I first say how much I have benefited from and enjoyed the two maiden speeches which we have heard this afternoon. The noble Lord, Lord Allen of Fallowfield, was particularly well-balanced in his views and the noble Lord, Lord Lyons of Brighton, gave us an interesting inside picture of what happens to an executive of a firm when it is taken over. I must ask him some time whether he is still with the organisation that he was talking about. Let me add my sincere thanks to the noble Lord, Lord Davies of Leek, for giving us the opportunity of discussing this lively topic of multinational corporations and, also, let me express my admiration for the way in which he introduced the discussion, both in terms of dialogue and dialect. As one who was born in Wales, I always enjoy the latter. The noble Lord, Lord Davies of Leek, was good enough to say to me recently that he did not expect me to agree, let alone
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support, all the arguments which he would raise. I assured him that I would do my best to maintain a sturdy independence of attitude which, now that I have heard him, with your Lordships' permission I shall proceed briefly to express.
I do not think that such an expression of thought on my part will produce any lively sparks of acrimony or wit, because, frankly, I do not see what all the fuss is about. Surely the development of multinational corporations is the logical extension of the growth of industry worldwide in a world that is daily getting less and less wide, as the means of communication, both of thought, persons and materials, gets better and faster. After all, historically, industry has moved outwards from small local units, first from cottage and village industries into urban co-operatives, then as roads, wheels and engines improved transport, into markets which covered counties. Then, although geographically and, to some extent, politically, the four corners of the British Isles retained their individualism as England, Ireland, Scotland and Wales, there was never any bar on industries with a root in any one of them branching out, either to market or manufacture, in any one of the other three. No one has ever chided an English company for opening a plant or office in other parts of Britain.
Indeed, some of us have done much work to persuade industrialists to open factories and give work to the inhabitants —in my own case, in Wales, and in other cases, as the noble Lord, Lord Erroll of Hale, said, in Scotland and Northern Ireland. Surely a multinational corporation is only an extension of this kind of philosophy. Indeed, I cannot see that any harm has come to Britain as a whole. For example, some American companies have invested large sums in the British motor car and chemical industries and, very largely, in the pharmaceutical industry. When some of the profits made by multinational firms in the pharmaceutical industry are quoted as being a criticism of their activities, I would point out that before a pharmaceutical company can introduce a chemical—a product that makes the kind of profit that has been mentioned—that company must spend literally millions of pounds on research and development before it can put that product on the market, otherwise it can

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find itself with a sort of thalidomide case on its hands, and that would be deplored. It so happens that I have been personally connected with multinational companies in the motor car, chemical, pharmaceutical and food industries and so can speak of them particularly from firsthand experience.
But equally, I see no harm in a British company taking an interest in a manufacturing or selling activity in India, South Africa or, say, Italy. Listening to the discussion so far this afternoon, I sense a feeling of distaste or possibly alarm that British labour should have its disciplines controlled and its attitudes directed by influences from a foreign land. The idea, for instance, that a worker on Merseyside should have his working conditions, pay, benefits, pensions and so on dictated by a fleet-footed board of directors in Detroit seems to be unwelcome. In fact, that situation seldom happens. When the heads of a multinational corporation decide on a policy of investment in or expansion into what is to them a foreign country, they first of all make a careful assessment of the market potential for their products and then measure up the manufacturing facilities, labour rates, climate of taxation and other relevant factors. In other words, they do their best to make full use of the facilities and amenities that are available and do not try to impose their habits, life styles and works disciplines on to the countries into which they embark and invest. That is why one finds that there are many British managers employed by foreign corporations in this country, in the same way as when a British company that I know branched out into India one of the first things that was done was to find and train Indians with the right capabilities to look after their own nationals in the factories and offices concerned.
A multinational corporation does not seek to control key industries in host countries. They play their fair and rightful share in the counsels of the industries in which they are engaged. For example, the current head of the Society of Motor Manufacturers and Traders in Britain is the chairman of an American-owned motorcar corporation, but he is a Britisher and he takes a very British view of all topical affairs. In the same way, when some years ago one of the largest Ameri-
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can chemical corporations wanted to increase its activities in this country, I was happily seduced from the chairmanship of one of our large nationalised British industries and, without any more of the partisan pinpricks from Westminster that the chairmen of British nationalised corporations have to withstand, I not only ran this American-owned corporation—I was chosen mainly, I suspect, because in those days I knew a fair amount about the then current industrial relations—but I was also made a director on behalf of the American company of an Italian conglomerate in which it had an interest.
It will not therefore surprise your Lordships to hear that I have in principle very little against the growth of multinational corporations. I think that their impact on the key industries in this country is mainly to our benefit. They give employment when employment is deserved and they help the national economy in general. So instead of trying to put obstacles in the way of foreign multinational businesses putting productive plants into this country, we should encourage them to help our employment and balance-of-trade problems. What is more, we should encourage our own industries to be more enterprising and productive, and not discourage workers by high, almost penal taxation. And we should get the leaders of organised labour out of the habit of expecting Government assistance whenever a company get into financial trouble. Government assistance to industry can be granted only out of a charge on the taxation system, and that is a spreadover of penalisation on the whole taxpaying population.
I think it a dreadful thing that only the other day, when I wanted to buy some replacement clothes for normal wear, I was shown some goods which, if you please, were designed by London-paid staff in Copenhagen and the clothes were actually made in West Germany. The textile industry in this country is crying out loud for more assistance when all it needs is more enterprise and more dedication in its work. One thing that we in this country have simply got to get into our heads is that high wages have to be earned by effort and not by parading the streets with tatty banners and vulgar noises; and that is really the leading message in yesterday's Budget. What we want in the industrial climate

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of this country is a philosophy of greed and not snarling envy. Greed, to my mind, is a healthy motivation if it makes one work harder to get something as good as or better than the next man has got. Envy is an insidiously stultifying emotion. To down tools or to disrupt a healthy production flow line to try to achieve by the withdrawal of effort what can be rightly achieved only by the projection of better effort is a hopelessly wrong way of looking at things, and if the policy of fertilising multinational corporations or co-operating with them, which is the same thing, can enable us to learn that lesson, in depth and promptly, then this debate initiated by the noble Lord, Lord Davies of Leek, will have well served its purpose.
5.26 p.m.
Lord RITCHIE-CALDER: My Lords, I wish to start by paying tribute to the two maiden speakers, whose contributions we enjoyed, and I am sure that all noble Lords look forward to hearing them again. I also pay tribute to my noble friend Lord Davies of Leek for initiating this debate. This is the second occasion in my experience when we have discussed what we are now calling multinational corporations, but which, in 1972, we called international companies. It is a fact that we have now accepted what was, rather reluctantly accepted in that debate; that there is a difference in character and kind between what was a traditional development of the International company and what we now see as a very profound mutation of that international trading system in the shape of the multinational corporation. This is the deep concern at the heart of my noble friend's Motion and, frankly, I have not in this debate so far, having listened to noble Lords with experience of multinational corporations, felt that I am any more sensitised or prepared to accept them on their face value. I say that with no criticism of the speeches which have been made, but simply with an awareness that we seem to be quite inadequate in our realisation of the significance and the permutations and combinations of the multinational corporation which has definitely acquired a character of its own.
I speak from the other side of the international field, as it were, in terms
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of the activities of these corporations. I often wonder whether they know what they are and what they are doing in given circumstances and in given places. Only last evening in Geneva I was discussing the question of the new economic order which is now being booted around as a political and economic concern of the United Nations. Needless to say, in that picture loomed considerably the question: what can be said about the multinational corporations? We might have been talking at cross-purposes and, perhaps, we did not know what we were talking about, but most of the people there felt that they knew what they were talking about. As they were people from the developing countries, from the 77, they expressed their views of what they suspected to be a fact of political life today. It does not matter whether it is true or untrue. What matters is that, if we have a case to put to them and can remove their suspicions, the sooner we start doing it the better.
At the moment, there is a very strong reaction against the multinational corporations or what is generally called the development of technology in recent years. Here I believe we have to face a question. What is being applauded in the multinational corporation—and manifestly, in the terms in which it is expressed, it should be so appreciated—is something called the transfer of technology and managerial skills. This is the root of the suspicions with which we were concerned last night. That is why the countries which make up the 77 are, in the Permanent Commission of the United Nations on Multinational Corporations, in their dealings in the ILO in relation to multinational corporations and employees, and in UNIDO, taking up an attitude of suspicion. That attitude has been created by disenchantment with the transfer of science and technology by the multinational corporations. I do not believe that most of us here realise the extent of that disenchantment. It is generally thought that, somehow or other in their great bounty, the multinationals were giving benefits to developing countries by transferring knowledge and skills.
My Lords, I had to prepare a very extensive and, I hope, very thorough Report to the Secretary General of the United Nations on the application of science and technology in terms of

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development over the last 27 years. I must say that the picture was a very discouraging one. We can turn round and accuse the countries which are disenchanted of ingratitude, but I may tell your Lordships that the picture which emerges is not at all flattering for those of us who felt that we were being generous. This is particularly so in Latin America, and I may tell your Lordships that, in the discussions in the 77 and in the Permanent Commission on Multinational Corporations, the criticism and the demand for inquiry—and it is a demand for inquiry, not a rejection —into the nature and operation of multinational corporations are largely being generated by the Latin American countries. The reason does not stem from Allende's Chile or the quite blatant, almost boastful, admission by the United Fruit Company of their intervention in Guatemala; it is not a reaction against political intervention, which is bad enough, or against espionage, which they all believe to take place, or the subversion of their institutions which, equally, they all believe to take place. It stems from the fact that, in their direct relations, what they thought they were getting in terms of the transfer of science and technology was a cheat.
If your Lordships will examine the story of these transfers, you will realise that these countries are right. The Andean Pact countries have worked out in advance what may be the code of conduct of Governments towards the multinational corporations and, conversely, there is a demand for a code of conduct among the multinational corporations themselves. The Andean Pact countries have shown quite clearly that, during the years when they thought they were getting the benefits of the transfer of science and technology, they were getting what I have called in my United Nations Report "the Black Box". The Black Box was something that worked very efficiently. A country received the Black Box, getting with it a package deal of patents, managerial skills, and so on, and it worked. But the recipient never knew how it worked and the corporation was not training the people in the host countries either to understand the techniques or to advance in their own proper lights. Countries would find, as they certainly
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found in Latin America, that they were paying five times over for the product. They were paying, in the first instance, for the royalties; they were paying for the managerial experience and the know-how; they were paying by tax remission; they were paying by taking equity in the companies themselves; finally, they were paying—and paying very high—on cost of the product itself.
If we look objectively—and I hope that I do—at this problem of the multinational corporation and not just in relation to the developing countries we must realise that the multinational corporation is a manifestation which is here to stay. There can be no question about that. It is something which can produce very beneficial results. However, what we are looking at now is how we can authenticate what these multinational corporations are. Perhaps if we even knew the faces of the people who ran them it might help. There is no accountability. We do not know where to look for the answers. If we are now, as we are doing in the United Nations Permanent Commission, which has to report by 1976, to put the record straight, it is up to us—and by "us" I mean the British as well as the Americans, the French, the West Germans and the Japanese, who are basically the home countries of the multinationals—to come clean.
I think that this was the burden of the complaint at this hour last night from a Minister from one of the developing countries who is a very good friend of this country. He said to me that he was ashamed of how poorly the British were showing up in the discussions in the Permanent Commission. What he meant by that was that Britain was in a peculiarly advantageous position to help because, as has been explained here and at the discussions to which I have referred, Britain is both a home base and a host country. So we know it from both sides and, by golly!, we have, as my noble friend Lord Davies of Leek pointed out, a very long experience behind us in our imperial history of knowing how trading and commercial relations can sour. In the end, we were probably as much the victims as were the countries which we call our colonies.
My Lords, this is something about which I feel very strongly because it is

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national relations and particularly in United Nations work, and this is a feeling I often experience—an abdication by the British and by Her Majesty's Government. We are failing to produce or to encourage the production of the kind of information which would make it possible to make the multinational corporations a workable and beneficial instrument in the modern world.
5.40 p.m.
Lord TAYLOR of GRYFE: My Lords, I wish to add my congratulations to the noble Lord, Lord Lyons of Brighton, on his witty and interesting speech, and to the noble Lord, Lord Allen of Fallowfield, who comes to this House with a vast experience in the trade union movement which I am sure will contribute greatly to the wisdom of the House in the years ahead. I ought also to add congratulations to the noble Lord, Lord Ritchie-Calder, who has just resumed his seat, because I see that he is appearing in two debates in one afternoon in your Lordships' House, and this is probably a record. I am quite sure that the subsequent debate will have some relationship to what he has said in the speech he has just concluded. I suspect that what the noble Lord, Lord Ritchie-Calder, was discussing more than the multinational companies' impact on the developing countries was the whole nature of economic development in the developing countries, and the current debate about whether the development of large scale organisation was desirable or whether the application of the techniques of intermediate technology might be more relevant.
However, I would say that the noble Lord, Lord Ritchie-Calder, has confirmed some of the suspicions that are abroad about the multinational companies. Suspicions—and he used the word "disenchantment"—are not confined to the developing countries, but anyone who moves around in labour politics today will sense that there are deep-rooted suspicions and prejudices which are being fostered in relation to multinational companies of which we should take note. The mere title of the Labour Research Department pamplet,"The Menace of the Multinational Company" is some
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indication of current thinking in some Left-wing circles in the Labour movement.
My Lords, like some Members of your Lordships' House, I have some experience of dealing with multinational companies and my only justification for participating in this debate at this late hour is to say a little about this experience. For three years I was the chairman of a committee which was set up in Scotland and financed by the Government to attract investment. I have knocked on the doors and sat in the boardrooms of many multinational companies, pleading with them to invest in an area which suffered from under-investment and unemployment at twice the national average of the United Kingdom. I wish to say a word about the success of this committee and its impact on one of the under-developed areas of the United Kingdom. As a result of the persuasion, the propaganda and the incentives which we were able to offer to large companies a number of them set up business in Scotland.
Let us take the American impact—and I mention the American impact specifically, because it is measurable and we have statistics in this regard. In Scotland at the moment American companies are responsible for some 26 per cent. of the mechanical engineering industry and 39 per cent. of the electrical engineering industry—this before the oil boom; and very much larger investment is now taking place—and, very important, 44 per cent. of instrument engineering which is an entirely new industry. Coalminers and shipyard workers who have no experience are now trained to work in these industries which tend to be high wage industries. Therefore, the impact of the American investment is quite considerable and I hope I can say beneficial. In the engineering business in Scotland the American involvement is now reaching 50 per cent. and represents one-third of the total Scottish work force in that industry.
I hate to think what the state of the Scottish economy would be if we did not have this degree of American investment. Having said that, it is important that we should be alert to some of the dangers involved. That is why we should continually scrutinise just what this means to our country and to the national economy, and

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I am glad that this is being done. We should also acknowledge the very considerable benefits. In 1973, the Government of the day looked at this problem very seriously and published a report entitled, "The Impact of Foreign Direct investment on the United Kingdom", known as the Steuer Report. It was commissioned by the DTI and it is worth reading, because it looked at the total picture and then took one or two areas and studied in great detail the social impact of the investment of these companies.
The Report took the area of Greenock on the Clyde, which at that time had 9 per cent. unemployment and where the Joy Sullivan Engineering Company employ 900 men, Playtex the foundation garment firm employ 1,000, and IBM employ 1,700 people, 80 per cent. of them men. It measured not simply what this did in terms of profit earning for these companies, but tried to measure what this did to the community. On balance, the Report came to the conclusion that there was substantial social benefit as well as economic benefit from this intervention. Keeping in mind that Greenock was an area which used to be based on the shipbuilding industry—a declining industry—your Lordships can readily imagine what it means in employment terms to have IBM, Playtex, Joy Sullivan and others coming into the area. First, they have introduced industries of high technology. Secondly—and this must not be under-estimated—while a good deal has been said about the faceless men of the multinational companies, they introduced into their factories, not simply in Greenock but in other parts of Scotland, professional management which understood the importance of good communications between workers and management.
I take the specific case of General Motors, one of the great villains of the multinational scene. General Motors have been in Scotland for over 20 years and in that time have had only five days of strikes, because the management understood the importance of good industrial relations. Many of these incoming companies have taught traditional employers a good deal about good industrial relations and sensible communications. This must not be underestimated. In addition, they made a sub-
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stantial contribution to the balance of payments and the export situation and the stimulation of new ideas in management. It has been a lively intervention in terms of management and the whole atmosphere of industry has benefited in West Scotland. Furthermore, they have —as the Chancellor of the Exchequer sought to encourage in his Budget yesterday—been involved in very substantial investment in training new skills, and this, too, is extremely important. This is the record of General Motors in Scotland, which I know very well. Not only have they become involved with their work force, but their management has become involved in the whole social scene in the area where they operate, in the universities, in the chambers of commerce and so on.
Quite recently, I opened an extension to the Ciba-Geigy plant outside Paisley in West Scotland. Ciba-Geigy is 100 per cent. Swiss owned and is a multinational if ever there was one. It employs 1,000 workers in that plant and nearly 100 of those workers are graduates. The firm employs 22 Ph.Ds in that factory alone and around 60 other graduates. This is tremendously important, because here we have in Scotland eight universities turning out graduates who too frequently find no place to work there. With the intervention of Ciba-Geigy and some of these other companies, these graduates are now being given the opportunity of exercising the skills for which they are trained.
As has been said already in this debate, I cannot understand noble Lords on this side of the House who are opposed to the EEC and yet, at the same time, are critical of the freedom of the multinational companies. If we are going to impose certain rules in the game, then we must impose them on an international basis. I should have thought that membership of the EEC at least provided the basis of making some rules so far as Europe was concerned. I should say this, too, to noble Lords on this side of the House who are in favour of our withdrawal from the Common Market. One of the prices which will be paid if ever we leave is the withdrawal of the multinational companies from this country', because all the benefits I have tried to indicate in relation to Scotland were based on the fact that investment in Britain was the bridge to Europe. If

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you cut us off from Europe it will no longer have these advantages for American and multinational investment, which will tend to move to Europe and isolate this country with very serious consequences.
I should like to make one or two points briefly with regard to the difficulties and conflicts of the multinational companies. The trade unions, on the whole, find it difficult to become reconciled to the immense power of the multinational company, but in my experience these companies have not been antiunion as such. They have afforded opportunities for the unions to come in and speak to their workers although on some occasions, as in the case of IBM, a survey taken showed that 56 per cent. of the workers believed that they were much better off than if they were organised. I am sorry, but this is a matter for the unions to follow up and demonstrate the advantages that they can provide to the work force. There will always be this tension between national governments who are jealous of their sovereignty, and multinational companies who have this international power.
The power to allocate markets has been discussed this afternoon, and the fact that an American based company could insist on its European subsidiary boycotting China if that happened to be the current view of the American Government at home. This is an area in which the multinational company requires to be careful about running counter to the sovereignty of the country in which it operates. The freedom to move investment has already been discussed, as has the ability to move large sums of money. There is no doubt that in 1969 the flight of money to the Deutschmark, because it was believed there was likely appreciation there, was one of the things that contributed to the dislocation of the money market in 1969, and the existence of the Eurodollar money market makes this more simple and rapid.
How are we to deal with the problems? I think that the planning agreements which were announced by the Labour Government as part of the regeneration of industry offer some solution. There is no reason why large multinational companies in this country cannot sensibly discuss with the Government, with the DTI, plan-
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ning agreements which would involve some forward stability in planning so that they would not run counter to the general economic welfare and economic policies of this country. I am sure that the multinational companies will not regard this as a bore or an imposition, and this can help a good deal. The multinational companies should encourage the appointment of local management wherever they operate.
If we are to have good sensible multinational companies, they should afford opportunities for local management to emerge. This is being done in the case of IBM and a number of large companies, so that they are not regarded as foreign companies organised and directed from abroad. When Rio Tinto, one of the largest of Britain's multinational companies, go into an area for development they frequently establish a local company. This enables people to buy equity in the Rio Tinto development in the country in which they exist. I know that this is sometimes difficult, but it provides an opportunity for local finance to participate in the progress of the company. Perhaps some of the multinational companies might look at the possibility of greater involvement of the host country in its economic activities. I am quite sure that the noble Lord, Lord Davies of Leek, feels rewarded today for having introduced this subject. I hope that the debate has contributed to a more balanced assessment of the contribution of the multinational companies than exists in many quarters today.
The Earl of GOWRIE: My Lords, before the noble Lord sits down, might I ask a question? I was enormously interested in his speech, particularly his remarks about Scotland. Is the noble Lord aware that it is said that the greatest concentration of computer technology and employment outside the USA is in Scotland?
Lord TAYLOR of GRYFE: My Lords, I am aware of it. We have been fortunate in Scotland. On the whole, we have attracted something like 40 per cent. of all postwar American investment. When you consider that Scotland is only one-tenth of the United Kingdom, this is a very considerable achievement and makes a tremendous impact on the whole health and welfare of the economy.
5.66 p.m.
Lord REDESDALE: My Lords, I should like to add my thanks to the noble Lord, Lord Davies of Leek, for having introduced this debate. As always, he introduced it with that wonderful and rather flamboyant style that I am so envious of. I am grateful to him for giving way at one point while he was speaking, and I will come back to that later. I should like to add my congratulations also to the two maiden speakers, the noble Lords, Lord Lyons of Brighton and Lord Allen of Fallowfield. The noble Lord, Lord Lyons of Brighton, made a delightful speech and I was particularly fascinated by his reference to the offer he could not refuse. I should like also to welcome him here as a fellow advertising man. This leads me to say that when this debate came up I thought I knew where I should be going; because for the last ten years I have been in an American advertising agency working on two of the international companies mentioned today. Naturally, I believe in the way they have developed and in what they did.
But when I started to do my homework, I regretted that the noble Lord, Lord Davies of Leek, had put down this Motion because I was appalled at the enormous amount of research material which had built up. It has accelerated very rapidly in the last five years. One recent book on the multinationals has a bibliography of 35 pages. Going through these bibliographies one can come across such rather daunting titles as The Oligopolistic Reaction and Multinational Enterprise by Frederick T. Knickerbocker. That is almost incredible. Another difficulty when researching on this subject is the number of reports by eminent persons written in this rather difficult "United Nations English". The report which forms an important part of this debate starts off by wanting to change the name "multinational company" to "transnational enterprise" which, I think, is even worse. Even the most ardent of supporters of multinational companies and their most passionate critics have one problem. Despite the mountain of information referred to by the noble Lord, Lord Erroll of Hale, when it comes to putting down in black and white the advantages and disadvantages, it is extremely difficult to do so; because, believe it or not, there
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is not that much information. All the reports on the multinationals stress the need for further information. What they mean is that they want coordinated research of all the facts and figures that are available. At the end of the day one can draw a line and say, "This is on the credit side and that is on the debit side".
I am sorry to take up your Lordships' time, but I said when I started my speech that perhaps I had a prejudiced viewpoint. I am now saying that I have come back to square one and I am trying to look at the situation objectively. The lack of information means that it is hard for anybody to criticise the multinational companies specifically. Most of the criticisms that are made—and there have been a lot this afternoon—refer to what the multinationals could do, or the abuses that could occur. I submit that that could happen, but it has not necessarily happened. The noble Lord, Lord Davies of Leek, referred in his delightful way to the rogue elephants and I can think of a couple of those. They have tended to come from extremely vertical, autocratic managements that have become out of hand, like a country which can become out of hand. I would say that, although these companies can get out of hand, the countries involved have considerable powers to control them.
I should now like to come back to the Report by the eminent persons. If the noble Lord, Lord Davies of Leek, will forgive me for saying so, he held this Report up rather as being the law of the prophets. It is a biased document because people were drawn from various countries, some from behind the Iron Curtain. I gather—although I cannot substantiate this—that the person who did most of the writing of that Report was Nat Wineberg of the United Automobile Workers Union. He is an able and talented man; but he wrote this from a certain viewpoint. This slight bias has to be accepted and one should look at it reasonably objectively in that sense. We can see that the attitude of the trade unions comes from fears that exist; but the Trades Union Congress Report of 1970 found the difficulties encountered in dealing with the multinational or International companies were very minor.
As regards the Government's attitude, Mr. Dell in another place talked about the vast growth of the companies and their

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contribution. We heard the noble Lord, Lord Taylor of Gryfe, in his able speech, talking about the enormous contribution made by the multinationals to Scotland and we can see how important the multinationals are to us and what they have given us in the way of benefits. In another place Mr. Dell said he thought it was vitally important that the International companies should not be frightened away. Obviously it is in all our interests that they should have a degree of freedom which allows them to give the benefits; but, at the same time, one has to appreciate that they have to comply with certain codes of practice.
I should like to come on to some of the points raised about possible infringements or abuses, and one of the abuses that arose was the worry that the big multinational companies, because they had vast liquid funds, could cause runs on currency. This is an old story and it has come up time and time again. It has been disproved by W. A. P. Manser, and the Tariff Commission instituted by the US Senate. The point that came out of it was that they did not have such vast liquid funds when related to the normal flows of world trade. Another point which came up—and this is where the noble Lord, Lord Davies of Leek, kindly gave way—was regarding tax havens. I respectfully submit that this is out of date. I know the Report by eminent persons gave two pages to this subject; but it is something which was current about 10 years ago. Governments react to situations, and when this situation arose they closed loopholes so the tax haven was no longer available. So far as Jersey is concerned, I doubt whether there is a single major multinational company operating from there. It would not fit the bill at the moment. So I hope the noble Lord will accept this point.
The Report by the eminent persons glossed over tax fairly quickly. They realised that each individual country had its own tax situation, its own way of raising taxes, and this would control any areas where multinationals might push money from one side to the other. Inter-company transfers are another worry which are also taken care of. If goods are sent across the border of a country, the inland revenue people want the tax gained from the sale on one side, and on the other side the customs and excise
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people make sure that the goods do not come in at too low a rate and therefore undercut the market. There are these checks and balances all the way through. I agree that some things get through. When Roche and pharmaceuticals are considered there is a worry. The amount involved was very considerable. But I submit that this must be looked at reasonably objectively. Although vast profits were made, the amount of research which went in at the beginning was enormous. It is hard to draw a line and say that you should put "X" per cent. of the turnover or profits, or whatever base on which you work, against research. It is hard to say what is right and what is wrong on this matter.
I said earlier that the reaction to multinational came from a union attitude. But it is totally wrong to generalise. Let us take the US unions' attitude—and this has nothing to do with anti-Americanism or anything else. A lot of the American companies came over to England and the US unions obviously objected. As has been said, this worry has been going on for a very long time. In 1900 there was talk about the "American invasion" and a book was written on it. There were worries both here and in America. The US unions were worried about runaway companies going to some other areas where labour rates were cheaper. In the 'forties and 'fifties American companies moved their manufacturing capacities from the North to the South of the United States to get beneficial labour rates. But, like everything else, the rates caught up. The rates went up in the South and so there was a parity of rates right across the United States. It did a lot of good; it helped the Southern negro population considerably. Also, when manufacturing capacity is put into under-developed countries, those countries in turn benefit.
The US unions' attitude was that when this work was taken from one area to another, or capital was exported, there would be a loss of jobs at home. But this was not the case. It is still used as an argument, but there have been a number of studies which show that, for instance, around Boston the electronics industry is enormously powerful, but originally industry went from that area. However, at the same time the new industry was built up. Therefore, I submit that this is not really a worry. On this side of the

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Atlantic unions at first looked to the new investment as a welcome means of new jobs. We have heard about what happened in Scotland. Worry arose, for instance, in case rates went up or something became too complicated, and thus manufacturing capacity could move to another country and the cycle would then start all over again.
I will not weary your Lordships for too long but should like to turn to one aspect of the industrial relations side, which is extremely interesting. Professor Ben Roberts of the London School of Economics has carried out a number of surveys, one of which is particularly interesting because it is the related to one carried out by Professor Beck on American companies. He compared for the first time the difference in attiudes between the two types of multinational companies and how they operate. One or two interesting points emerged from it. For instance, first, that 63 per cent. of companies responding to the questionnaire gave industrial relations policy from their headquarters, but only 23 per cent. gave it on a frequent or regular basis. They intervened if a major problem arose, but that occurred not very frequently. On the other hand, 80 per cent. of all decisions made by the subsidiaries of United Kingdom multinational companies were made by the men on the spot. This was a difference between English and American attitudes, and it comes back to the point that American companies tend to have an industrial relations policy for the company, whereas the United Kingdom history shows a tendency to deal with it at plant level.
Much has been said about the development of international trade unions and how they will affect international companies. There has been a considerable amount of public relations activity by people like Mr. Charles Levinson of the ICF in Geneva. In fact he has achieved very little. I am not being disparaging, because the problems for international trade unions are very considerable and you cannot generalise on advantages and disadvantages. Therefore for the unions to get together in different countries is unlikely, but we seem to be getting an area where there is a move towards an international trade union operation. The multinationals have looked at this and
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have been asked about their attitude towards it. Obviously they do not welcome it, because when running a company to be confronted across frontiers by solidarity of action can be extremely embarrassing; but they do not see this happening for some nine to twelve years —or at least the majority of them do not —because of the individual interests of the unions concerned and because of all the other problems that exist.
I think that what the multinationals, as a whole, are doing internationally on industrial relations will be the one saving grace for the multinationals, which I submit have done a great deal for the world. It would be a pity if, at the end of the day, a world depression should cause national chauvinism to put a stop to this type of growth of the international trade union movement and its relationship with multinational companies.
6.14 p.m.
Lord BROCKWAY: My Lords, we have just listened to a fascinating speech by the noble Lord, Lord Redesdale, fascinating both in its subject and, if I may say so, in the spontaneity and sincerity of its development. He will find that, as I make my speech, I shall be dealing with many of the points he has raised, and particularly with the last portion of his speech referring to the relationship between the trade unions and the multinational companies.
Last week I asked the Government whether they had come to conclusions regarding the Report of the Trade Union Advisory Committee on Multinational Corporations to the Organisation for Economic Co-operation and Development. I was not surprised by the answer, which was that this Report had been received too late for the Government to reach conclusions about it. I was not surprised by the answer because I have a copy of that trade union document, and it is about the most formidable I have ever seen. I am not a graduate in economics, nor indeed a graduate in any subject. My university has been myself; but even the noble Lord, Lord Balogh, distinguished as an economist, would find it a little difficult to master all the details and the implications of this document over one weekend. I shall, I fear, find it quite impossible to convey to the House what this document suggests. I shall refer to it in detail, because it is

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the latest analysis that has been made of multinational companies and because it seems to me to be the most thorough investigation so far conducted.
Perhaps I should explain the composition of the Trade Union Advisory Committee which has prepared this document. It represents the non-Communist trade unions of the world. It is a document prepared by the International Confederation of Free Trade Unions and the World Confederation of Labour, representing the Christian democratic trade unions. Our own Trades Union Congress is, of course, associated with this document and I have to thank them for allowing me to possess one of the rare copies available. I found this document interesting because its analysis indicates in a fundamental way the effect which multinational companies must have on our political thought and action, and, indeed, on our political philosophies.
There have been references during this debate to the necessity for a code of conduct for the multinational companies. There is a code of conduct adopted by the OECD. It was prepared during the period since the Second World War, when progressive opinion was in favour of the liberalisation of economic relations between nations, the reduction of tariffs, the abolition of trade quotas and currency regulations, the freedom of capital investments, free trade, laissez-faire, which was then the philosophy particularly of the Liberal Party.
In opposition to that philosophy, in the earlier part of this century, was the Conservative proposal for tariffs and protectionism. This document presented by the trade unions of the world rejects both those views. It urges that neither of those political philosophies is adequate in a world dominated by multinational companies. I am a little proud of a phrase which I used in another place when the issue of free trade and protectionism was being debated. I said this:
"Free trade is a free fight across the frontiers. Protectionism is an organised fight across the frontiers. Socialism is controlled co-operation across the frontiers."
The present liberalisation policy of the OECD gives freedom to the strong to overcome the weak. It encourages the domination of the multinational companies. In practice, conditions have com-
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pelled a modification of the international laissez-faire. We have had the conventions of the ILO; the contributions of the Economic and Social Council of United Nations. But if we are to be equal to the present power of the multinational companies we must revise much further the freedom which is expressed in the liberalisation of the present code. That is the first conclusion of importance which comes in this trade union report.
The second conclusion is equally important from the point of view of political philosophy. The second basic submission of the International Trade Union movement is that the multinational organisations are destroying the authority of democratic institutions. Their activities are beyond the present supervision of national Governments and can defeat the purpose of such Governments. They are becoming more powerful than Governments in determining the structure and the effects of world economy. They dominate the movement of capital from country to country. They determine in which country labour shall be employed. They decide where taxation shall be imposed upon themselves. They transfer capital to production where profits can be expanded. They transfer production to countries where employment of labour is cheap. They transfer their manufactures to countries where taxation is low. They cock a snook at national Governments and national interests in their search for higher profits. They defy democracy.
To meet the manner in which multinational companies play off one country against another with a view to securing the most profitable terms for their International investments, the international Trade Union movement recommend that the OECD code of conduct be revised to force investors to respect internationally certain obligations regarding wages, employment, social benefits, housing, health, safety, working environment, trade union recognition and collective bargaining, so that a minimum standard of life should everywhere be observed. They call on Governments to adopt an international convention which would lay down strict obligations for the operation of multinational companies and the standards to which they should adhere. They give first place to the demand that these economic giants should be publicly

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accountable, providing systematic information on all economic and social data arising from their operations and practices. They ask also for inter-State co-operation to control capital investments which are not in the interest of peoples, which may be to the detriment of working conditions, and which may blatantly be used for the purpose of tax evasion. They propose that national Governments should take powers which would require authorisation of all foreign take-overs.
There is one obstacle to the adoption of an international code or convention of this character. It is the realisation that there will be a difference between standards of life demanded in the great industrialised countries and in the developing countries. In this document the trade unions recognise that it would be difficult to establish an international convention for conditions in multinational companies which would be immediately applicable to developing countries. They are realistic. They propose discussions between the trade unions in the developed and developing countries to reach an agreement by which minimum conditions in the latter would progressively be raised to those in the former.
The OECD has decided to appoint a tripartite committee on international investment and multinational companies. This is an advance. But if this 20th century development of international capitalism is to be controlled for the benefit of peoples, there must be far wider international action than that. Negotiations between trade unions and multinational companies are not enough. Indeed, the trade unions recognise this. They urge the need for inter-Governmental co-operation in the United Nations framework. They do not elaborate their proposals, because they are outside their terms of reference in making a Report to the OECD. But when we begin to think of international action, the first obvious development is through the International Labour Organisation—that it should adopt a convention, with the code of conduct establishing a minimum standard of conditions in multinational companies. Both the trade unions and our own Government can urge this within the ILO. May I remark, incidentally, that it may be necessary to readjust the membership of the ILO by including in the
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one-third representation of employers, representatives of the multinational companies.
However, long-term considerations demand something bigger and more comprehensive than merely a convention of the ILO. We must realise that in our shrinking, interdependent world, concentrated international economic power is superseding and overcoming the political power of the separate States. I have previously urged in this House that we need an economic arm of the United Nations which is as important as its political arm. Indeed, one hopes for a far more effective economic arm than the political arm has recently proved to be. It was suggested to me from the Front Bench and in correspondence with my noble colleague Lord Caradon that the Economic and Social Council of the United Nations could serve this necessary purpose. Well and good; but if it is to be equal to the need, its status must be greatly enhanced.
It is encouraging that as long ago as July 1972, the Economic and Social Council decided to appoint a group of eminent persons to examine the situation created by the extension of multinational companies and their effect particularly on developing countries. A report was submitted to the Council at its 57th Session at Geneva in June of last year. It emphasised that multinationals are a threat to national democratic sovereignty. That report should be considered in relation to the trade union report to which I have referred.
Unilevers have sent me a well argued case that it is not true that multinational companies are now endangering the democracy of sovereign territories, but their own rebuttal illustrates the overpowering international structure of modern capitalism which the multinationals represent. Unilevers handle a host of goods, from chemicals to food, and have manufacturing activities in 75 countries— more than half the territories of the world. I have respect for many of those whom I personally know who guide Unilever. I recognise that multinational companies have contributed to world development. I do not regard them as historically retrogressive. They are historically progressive in their contribution to the structure of an international order preparatory to its democratisation. But I submit that

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it cannot be accepted that the future economic pattern of the world should be dominated by a comparatively few economic corporations responsible to a limited number of shareholders whose first concern is profit on their investment. We must find a way in which those who control world economic power shall be responsible to the people of the world. That may be by international co-operative organisation. It may be by international agencies responsible to the economic arm of the United Nations. I am not thinking of distant, large bureaucracies. In either case, there would have to be very large local devolution and participation by those engaged at every stage.
The issue has been precisely indicated in the Conference on the Law of the Sea. Is the international authority which is to be set up by that Conference merely to license the exploitation of minerals on the seabed by multinational companies, or is it itself to act for the benefit of the world community? The doubt is always whether an international agency can act efficiently. It could act efficiently if it had the service of managements and technicians as skilled as private industry can command. I believe that they could be recruited if the supreme status and grandeur of service to the peoples of the world could be brought home to them. From what I know of some of the directors, managements and technicians in multinational companies, I believe that they would respond to that idea.
I realise that the task of establishing this new international order is enormous and complicated. It may be that we should have to begin in special spheres such as the seabed. But who doubts that, in the long run, the economy of the world must be run in the interests of the world's peoples? That means possession by representatives of the people. My Lords, there is a message for those of us who are Socialists. Socialism within a nation is no longer enough. We must become International Socialists if we are to meet the challenge of our time.
6.39 p.m.
Lord HIRSHFIELD: My Lords, first may I add my congratulations to those of previous speakers to the noble Lord, Lord Lyons of Brighton, and particularly to my noble friend Lord Allen of Fallow-
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field with whom I have been associated over many years. It was very interesting to me to hear both maiden speeches and to have the opportunity of being here when they were addressed to your Lordships' House. I hope that we shall have many further opportunities to hear both noble Lords. I also wish to thank the noble Lord, Lord Davies of Leek, for introducing this highly topical and interesting subject and the previous speaker for his comparatively short but interesting address, with much of which (if he will excuse me) I do not completely agree. Unfortunately I had to be absent from your Lordships' House during parts of this debate, but I hope I shall not repeat anything that has adready been said by noble Lords, although that is not always easy at this late stage of an important debate. I apologise sincerely to those of your Lordships whom I have not had the privilege of hearing, but I shall certainly study their contributions in the Official Report with interest.
This debate is the occasion, I believe, when I ought to declare a "no interest" as well as an interest. First, the "no interest": I confirm that I hold no shares, beneficially or otherwise, in any publicly quoted company, multinational or otherwise, in the United Kingdom or elsewhere, and that is partly because, being chairman of the management board of the Trades Union Unit Trust, I believe it is better that that should be the case. On the other hand, I also declare an interest, which is that I am professional adviser to the subtantial multinational oil group, the headquarters of which are in Paris, called Compagnie Française des Pétroles—the TOTAL group—and I am very proud to be associated with it.
On reflection, probably I should declare another interest. One should recognise that a multinational or International organisation is not necessarily one which only manufactures and sells its products. It may be a service group which provides advice or gives some professional or technical service. On that basis I am directly connected with one of the world's largest associations of accounting firms, called Horwath and Horwath International, with interests in over forty countries; not, I might say, as large as Unilever—only half the size. Indeed, I am chairman of the executive

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committee of its European regional division which covers almost every country in Europe.
Significantly, unless I am mistaken, one or two of the earliest of today's multinational concerns had their origins in Britain and a material part of our former economic strength in the world was due to their successful expansion into far off places. Especially in my own profession, I know what a few of my American friends sometimes overlook, or never quite realised, that most of the world's best known and biggest International or multinational accounting firms—and some of them today even are corporations—were founded here in London.
I imagine I am not alone among your Lordships in wondering about any distinction between multinational and International companies. Several dictionaries were consulted, by me and by you, including in my case one styled A Dictionary of New English, but in that and others the word "multinational" is still absent. I consulted Odham's Dictionary of English published in 1948, with which some noble Lords on this side of your Lordships' House may be more acquainted than those on the other side. It was presented to me almost thirty years ago by a friend who now sits opposite when he is here—the noble Lord, Lord Samuel of Wych Cross. Again the word "multinational" does not appear, but "International" as a noun is defined as
"a player representing his country in any sport or an international body for the propagation of socialism ".
I was so excited that I did not bother to look up the adjective!
But "multi" connotes "many", whereas "inter" means, according to an average sample of worthy dictionaries, "between—among—mutual—reciprocal— together". Perhaps that explains (or does it?) why I discovered in North America many years ago that the International Baseball Series comprises only teams of the United States and Canada, with Mexico perhaps sometimes included. Perhaps it also explains why several Labour unions with locals only in the States and Canada call themselves "International"—like the International Longshoremen and others. Maybe there is no important difference intended between multinational and international com-
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panies, although the former sounds bigger and may be deemed to operate in just a few more countries.
I am speaking in this debate because —with great respect to those noble Lords (some of my friends included) who disagree—I consider that a great deal of nonsense is written and spoken on this subject, particularly by those who see the growth of multinational corporations consistently as a threat to national economic wellbeing or to job security. Certainly a considerable amount of academic brainpower and company money has been spent in researching this subject over the last decade. Furthermore, practically every major International institution has set up working parties or special panels to gather facts and recommend action on what to do about multinationals. Like most busy people, I have not been able to keep up with the flow of prescriptions. Nor, as I just said, am I quite sure what they are talking about when the term "multinational" is used. Each researcher or policymaker seems to have a different definition. What we can say is that the multinationals are not a coherent group; they differ widely in size, structure, philosophy, organisation and practice. Some are much more centralised while others practise the maximum autonomy possible. Some have only wholly-owned subsidiaries, while others have a range of wholly and partly owned interests. Yet others have a deliberate policy of local overseas private or Government shareholdings. Some are highly labour intensive; others are capital intensive. It shows a great ignorance of the subject to suggest that there is always an identity of management organisation and behaviour.
In this country we now know something more about the effects of inward investment and capital exports—thanks to the Department of Trade and Industry Report by Max Steuer on the impact of foreign direct investment in the United Kingdom, and the Reddaway Study done for the Confederation of British Industry on United Kingdom direct investment overseas in 1968. We also have the benefit of monitoring other countries' experience with legislation which seeks to control activities of multinational companies. In particular, I would draw attention to the reactions in Canada to the operation of the Foreign Investment Review Act.

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This set up a screening process on all new foreign ownership of Canadian assets, and although in its early days, I believe the Act has raised some sharp controversy between Federal and Provincial Governments. It has made most foreign multinational corporations consider carefully whether Canada is the best place to locate new production facilities.
Nowhere has the debate been more intense and the subject more researched than in the United States of America. Congressional hearings on numerous Bills to curb or restrict foreign direct investment and the operation of USA and foreign multinational companies have revealed some deep-seated feelings about foreign ownership of the means of production and distribution. These have been expressed by organised labour through the AFLCIO as much as by anyone. They revolve around the issue of job security and opportunities. Although similar fears have been expressed by some elements of the trade union movement in this country and by the International Confederation of Free Trade Unions, with which organisation I happen to have had a close involvement since its very inception, on the whole we have a clear sense of what determines the prosperity of our economy. In normal trading conditions, we have always striven towards a free flow of capital as much as towards a free flow of goods and services. However, I now sense a tendency in some quarters to refute that. It comes from a similar source, as does the tendency to advocate a highly nationalistic approach to British foreign policy. For what they consider excellent reasons, the proponents of this approach preach a gospel which seems to say, "Britain for the British; we are better off if we go it alone. Keep out their companies and their ideas, and keep our companies for ourselves".
This talk is not new. It tends to arise whenever economic fortunes are at a low ebb and where economic wellbeing, particularly employment, is threatened. But this is a counsel of despair and of futility, and does not address itself to the reality of the situation; namely, that we live in an interdependent world. Isolationism brings lower living standards and a drift towards economic and political impotence. When this misguided nationalism emerges, it always needs a scapegoat. These arc usually animals not
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easily able to defend themselves, and who are not well organised, especially in the group sense. The multinational corporation fits that description. It is difficult to find among the volumes of literature on the subject a clear statement setting out the benefits which this type of company confers on both the host country and the headquarters country.
My Lords, the International Chamber of Commerce has made an attempt at presenting a defence of multinationals, and at proposing a code of behaviour. There are some succinct descriptions of their activities and limitations in the evidence given by industrialists to the group of eminent persons set up by the United Nations which reported last year, on which I shall comment in a minute. As a result, the case for multinational corporations has largely gone by default. I cannot altogether blame the corporations themselves; they are preoccupied with running their businesses efficiently and have little time to defend themselves. But I attach some blame to their representative organisations which seem reticent to speak out on the subject, at any rate in this country.
The United Nations' Report did not receive great acclaim. Its recommendations were not radical, but they are eminently sensible and worthy of close study by our Government. In my opinion, they should be the basis on which British policy might be formed. The first of the two principal conclusions was that a permanent commission be established under the United Nations to do three things: first, to keep the problems of multinational companies, with reference to developing countries, under review; secondly, to evolve a code of conduct for firms and Governments and, thirdly, to explore the possibility of some kind of general agreement on multinational enterprise, similar to the General Agreement on Tariffs and Trade. The second principal conclusion was that the United Nations' output of information and research on matters relating to the multinationals should be increased, and the technical advisory services now available should be strengthened.
A great deal of mistrust about the operation of multinational corporations would be dissipated if the Governments of the developed countries—for example, the members of the OECD—could agree to

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harmonise their corporate tax laws. I make that observation because it looms large among the factors which sometimes cause multinationals to relocate or engage in questionable transfer pricing practices. This point was well made in the evidence to the United Nations group of eminent persons by Sir Ernest Woodroofe, then chairman of Unilever. Sir Ernest pointed out that Unilever, probably the best example of a truly multinational company, has to earn 19 per cent. more profit than a series of national companies doing the same business in order to pay an equivalent gross dividend to its shareholders spread over various countries. No wonder expanding companies, who wish to locate production facilities overseas, select countries, other things being equal, which levy the lowest net corporation taxes.
I should not like noble Lords to gain the impression that I think all the activities of all multinational companies are without fault, or that their benefits to the world economy are such that any costs should be absorbed with a shrug of the shoulders. Far from it. The actions of certain international companies could and should be criticised. However, the tendency has been to take any apparent wrongdoing of one international company and to infer that all international companies act in the same way, or would do, given the opportunity. A series of myths about the attitudes and activities of these companies has therefore emerged. Most of these are built on a sole example from a single company. It has been said— in my opinion quite rightly—that the only real power of an international company is the power not to invest. This is the authority to take the initial decision that the investment is worth while or not. Once that decision is taken and the plant built, a multinational company is locked in and has little, if any, room to manœuvre, despite what some of them say sometimes, in the case of industrial action, about switching elsewhere their plants and much of their other fixed assets.
My Lords, I believe that the great majority of the multinational corporations located in this country are very satisfied with their investments. Studies have shown that they are innovators in technology, and in industrial relations techniques such as the Fawley Plant of Esso,
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produced by my late respected friend Alan Flanders. Multinational companies generally go out of their way to conform to best practice, and play a full part in local and business associations. However, perhaps they should not be so reticent in revealing their activities to a far wider audience.
Finally, may I say that the issue which this debate seeks to clarify is probably more basic than merely controlling multinationals. Since the end of World War II, production of goods and services has become internationalised on a growing scale. At the same time, Governments and organised labour, let alone the consumer, have lagged far behind in their international perceptions. As a result, they resent institutions like multinational corporations, apparently being insensitive to national control. Until trade unions and nation-States catch up, multinationals would do well to show that their activities are in the best interests of both host and headquarter nations. However, Governments, too, should beware of discouraging the geese which lay golden eggs; both may become scarce rather quickly.
7.0 p.m.
Lord LYELL: My Lords, first of all, we must express our thanks to the noble Lord, Lord Davies of Leek, for providing this opportunity to discuss these problems and anxieties caused by what I will call international companies or corporations. I think at this stage it would be right to congratulate both maiden speakers on their excellent, amusing and topical speeches. Perhaps the noble Lord, Lord Lyons, would permit me to say how much I enjoyed his comments on Europe, extending all the way to India. Prom my somewhat scanty history studies I seem to remember that another great empire builder or multinational ruler also believed in this concept; he was called Alexander the Great. Certainly he set out on a fairly large enterprise, went all the way to India and back; but that is probably a little far out from the problems of the corporations we are discussing today.
My Lords, the organisations we have been hearing about for the last four hours often bring a great feeling of fear and apprehension to entire nations, and I believe quite unjustifiably, as a result of some wild rumours, misconceived gossip

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and muddled thinking, and also grave lack of information. The size must often be a factor when a nation wants to welcome or to deplore the arrival of a worldwide conglomerate operation. Indeed, the multinational corporations in the World Development Report by the United Nations Department of Economic and Social Affairs pointed out, as I am sure noble Lords are aware, that ten of the largest international companies have sales which are greater than the total output of 80 nation-States, which are all, so far as I am aware, members of the United Nations.
But I would think it wise at this point to stress that these international corporations are no different from any other companies or corporations which at the moment operate so successfully in the commercial life of the United Kingdom and elsewhere. International companies consist, just as other companies do, of people. They are not faceless legal entities. These people are involved in working together with other people to solve certain problems, or to manufacture some special product, or to carry out certain services. Each international company is a different organisation and each one is unique and individual; therefore, I think we must in a debate of this type guard against loading every single international corporation and company into one bucket and saying they are all evil and must all be supervised under the same criteria.
We have heard much this afternoon of certain acts committed by some companies, and one possibly comes to mind, which I think can give rise to justified and justifiable criticism, both from within the country where the organisation is carrying out its operations and from outside in the world at large. Some of these actions are reprehensible, where particularly they impinge on the political life of the host nation. But I think the cases which have been so well publicised in the last two or three years are in no way typical—at least I hope they are not—and that international corporations wish to do everything possible to remain within the laws of each and every nation where they operate. The noble Lord, Lord Erroll of Hale, pointed out how scrupulous is the obedience to the laws of the host nations and indeed the obedience to the tax laws; certainly in
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all the researches I have carried out I have found this to be so.
I would seek to show that these large organisations do have a vested interest in co-operating with the Government of the host nation. First, any international corporation takes a very long-term view of its investment in the host country. I think often they take a much longer view than a company whose operations lie totally within that host nation. Often this period can be, and indeed is, up to 20 years. The mood, the amount, the type, and, I believe, the time of the investment is the ultimate decision to be taken, and once the international company has made up its corporate mind to set up some form of manufacturing, marketing or administrative operation within the foreign country, almost all the advantages from that moment onwards lie with the host nation, in that employment is provided, together with an efficient use of its other resources, be they human or mineral or vegetable; certainly very valuable use is made of the resources. I think in the huge majority of cases—I go so far as to say 95 per cent. of them—where international companies have invested in foreign countries the host nations are very grateful for the assistance and the technological innovations that they receive.
The host nation can and must refuse investment from a foreign company or Government if it believes that its vital interests are going to be adversely affected. Of course we all accept that, and any international company will accept that the host Government has the final say. Any rash unilateral or chauvinistic act will cause foreign companies to reappraise future investment plans in that country. Secondly, there is a very interesting paradox involving the employment of nationals from the host nation. Some researches into the oil companies have shown that where the bulk of the employees are host nationals the particular oil company has far less leverage than it normally would have when discussing any expropriation or nationalisation or acquisition of its assets by the host country. By and large, the international oil companies and oil corporations treat people as far more important investments than mere finance. This is certainly laudable.

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I mentioned earlier that international companies are creatures of their home country. It is interesting, and I think quite laudable, that the preponderance of technological and management skills are found in the Western World, at least in the United States; but none of us should forget that of the 25 major international companies in the Western World four come from the United Kingdom, two from Japan, one each from the Netherlands and West Germany, and the rest from the United States. That shows that of the non-United States nations in the Western World the United Kingdom has a very valuable role, and I think we have a certain amount of experience in dealing with these large companies.
The companies carry out their operations right across the world wherever they are welcome. As we heard from the noble Earl, Lord Gowrie, they are welcome even in the oddest places, the high temples of communism. In some researches that I carried out recently in other spheres I found the fascinating example of an international copper marketing corporation bringing together two copper producing nations and Governments at the same conference table on a regular basis. These two nations are Chile and Zambia. As I recall from the noble Lord, Lord Brockway, who spoke with me in the debate, while these nations have very different political systems and leaderships and vast chasms of differences, nevertheless commerce and common interests in the wealth and the livelihood of their respective peoples brings them together at the conference table. This is another example, it could be said, of an International corporation which is bringing together two widely differing nations.
Today we have heard a great deal about the warts on the faces of international corporations. Some of the worst practices carried out, for example, by United States based international companies, are carried out, I regret to say, within the United States; there have been examples of large conglomerate companies involved in a vast complex of industrial and commercial operations using their large financial and political power and muscle to persuade smaller companies or organisations to join the Goliaths. Such practices are not confind to the United States of America. There have indeed been
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some doubtful commercial dealings and takeover bids here in the United Kingdom which have given rise to considerable disquiet. But in the United States of America the politicians are very fierce indeed towards any breaches of commercial or financial ethics. Here in the United Kingdom the Stock Exchange Council, and indeed the whole City of London, have sufficient ability to control abuses of any financial or moral ethics. We should be grateful that we have institutions both in the United States and in the United Kingdom—and I think that they are increasing in Europe—to catch up with the increase in the technology of presentation of information used by the international companies.
We have heard from at least four speakers today about the great need to lay down a code of conduct for International companies. I, too, would concur with this. There should be much closer guidelines on financial reporting and on the disclosure requirements of companies within the Western World, particularly as regards international corporations. These are two aspects of commercial life which at one and the same time are a science and an art.
The laws regulating the financial, administrative and commercial operations of corporations could well differ in each and every nation of the Free World, and I believe that there is a vast number of different company laws in each country. So far as I know, there is no United Nations Corporation, or even a '" Euro-co.": companies are set up in a nation and are subject to its laws. They are of course subject to the laws of the host nation when they seek to operate abroad, but I do not know whether there are international laws that can control companies. So far as I am aware, companies are not yet answerable or subject to anybody higher than their own nation.
But some companies are international, and I think that they can be subject only to the laws of those countries where they operate. It is a matter of pride that the two countries with the most sophisticated methods of ensuring proper and reasonable disclosure of financial and other commercial facts are the United States of America and the United Kingdom. It is no coincidence that the most healthy international companies have started up

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both here and in the United States of America. I believe that where nations welcome international trade they are forced to develop effective means of monitoring such trade within their borders. Should such means of monitoring trade and commercial transactions be inadequate, then I believe we must not strike at the presumed transgressor, the company, be it national or international, straddling the world or just operating within one country; rather we should look at ourselves, to our Legislature and financial institutions to devise rules and control the companies which operate under their aegis.
If there have been abuses of power by international companies—and there probably have been one or two transgressions —and if these abuses have been seen as flagrant, then I believe that we, as politicians or even as legislators, are in no small way to blame. However, we can only use the accepted means of inquiry when looking for further information. As these means of inquiry become more complicated, so the companies or the interested organisations will adopt more and more skilled methods of presenting their information and their commercial facts. As we heard from the noble Lord, Lord Erroll of Hale, most company reports and balance sheets in the United Kingdom give so much information that any individual who happens to pick one up feels snowed under by facts. But all of us have to bear in mind that these are not just those facts which may suit one argument or another; they give us a great deal of information. I think they can be discovered only by diligent inquiry, and that is absolutely right.
Some very interesting figures from the Central Statistical Office in London came to my notice. I have heard reports that there is a great net outflow of investment and capital from the United Kingdom. Some interesting figures came out of the statistics. On the capital account, from 1960 to 1963 there was a three-year net outflow of £65 million; over the next three years, 1964 to 1967, there was a net outflow of £101 million of capital investment from this country; and from 1968 to 1970 a net outflow of £178 million. Taken in isolation these figures appear to be absolutely crazy, because it would seem that money is pouring out of Great Britain for no adequate return.
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But in the same table in the Report from the Central Statistical Office we can see that in the last period, 1968 to 1970, when I mentioned that £178 million more was invested overseas, the net inflow into the United Kingdom as a result of such investment and earlier investment was of the order of £300 million. This is income, and, if one takes it on a crude cash basis, this provides a net inflow of approximately £130 million. We tend to forget this when talking about the free movement of capital across borders. Let us not forget that this is just the United Kingdom, and sadly we are responsible for quite a small section of world trade at the moment.
Figures such as we have been mentioning are often forgotten when we think of abuses which have been committed, or which are supposed to have been committed, by international companies. I do not accept that such companies are guilty of gross malpractice here or overseas, with possibly one or two well-publicised exceptions. But, by and large, the consistent theme of this debate has been that such organisations provide much needed employment, and that they have an interest in training indigenous management. Certainly, I was very interested in the notable speech of the noble Lord, Lord Taylor of Gryfe, when he talked about my homeland, Scotland, and about how United States companies have poured large amounts of investment not just into assets, machines, but into training indigenous management.
I know that in Scotland we are all grateful, and I think that the United Kingdom should be grateful, for the time and trouble that has been spent by these international companies from the United States and elsewhere in training indigenous management so that we can reap the benefits of the technology. As we have heard, there are also the spin-off technologies where young managers, becoming a little tired of the organisation of these "rogue elephants" that we heard about from the noble Lord, Lord Davies of Leek, go off and set up their own companies, which provide additional dynamism to their own home economy. We have several examples of that in Scotland.
International companies have an interest in obeying the laws of the country where they operate. I believe that these

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companies pay their way, both in investing abroad all over the world and in bringing to some nations, among them the United Kingdom—and, after all, we are a trading nation—a standard of living which, without them, we should be hard pushed to achieve. When the scale of operations and finance increases so swiftly, any errors will have a considerable ripple effect. The companies themselves have the greatest interest in avoiding errors. Abuses are rare. However, any harmful effects on the host nation's economy must not be allowed to rest undetected. This process of examination and detection should be carried out by Parliament, and any criticism of International companies reflects on us as politicians and legislators who cannot, or will not, ensure a sufficiently high standard of behaviour by such companies. All these companies are only too keen to co-operate with the host Governments so long as they are treated in an evenhanded and fair manner, and it is important to stress that.
We are all grateful to the noble Lord, Lord Davies of Leek, for giving us this opportunity of hearing so many expert and interesting speeches. I hope the House will see these international companies in a fair and evenhanded light, because I do not think that the companies need to be categorised in any evil way as Goliaths. I hope that we can see them as friends who have something to contribute to us. They hold out the hand of friendship, and I hope that we can seize that hand, shake it, and learn from our friends, and get them to play their part with us in improving our lives and those of our children.
7.20 p.m.
The MINISTER of STATE, DEPARTMENT of ENERGY (Lord Balogh): My Lords, it is one of the more pleasant traditions of this House that the last speaker in a debate should congratulate the maiden speakers. What I have to say today is not because of tradition but because I was enormously cheered and amused by having a glimpse of real life—and not paper reports— from the speech of my noble friend Lord Lyons of Brighton. I am sure that, if we hear speeches like this, we shall crave his presence too much. I also congratulate' the noble Lord, Lord Allen of
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Fallowfield, whose speech was, of course, of a different character, but, in its own way, extremely interesting and educative. I thank him for his contribution. Finally, I must congratulate and thank my noble friend Lord Davies of Leek for introducing a theme which is of great and growing importance, as is illustrated by the length of the list of speakers today.
The problem is that of the relations of multinational corporations to Governments and, especially, to the Governments of weaker countries. It is, at one and the same time, intellectually complicated and fraught with high emotion. It is a problem which invites contention and which therefore is dangerous, especially among old gentlemen, as it is apt to raise the blood pressure. In the United States, of course, which has been quoted as a high citadel of capitalism, this theme is especially ferociously debated and I understand that one Congressman passed out. In this House, fortunately, we refrain from expending emotion in this futile way. At the same time—this is interesting because few speakers have referred to it—it is a problem which has substantially—indeed, basically—altered in the last 18 months. We have had, as usual, expert contributions from both sides of the House. We have also had, not altogether un-expectedly, some faint reverberations of the old set-piece contests which were usual before what I would call the OPEC era.
In this field, we need to accept a new system of historic dating; the first year of OPEC, the second year of OPEC, et cetera. There were on the one hand, as we have seen in recent UN occasions, in this House and elsewhere, manifestations of what I would call the "woolly goodies"—full of guilt complexes—from the fully industrialised countries. These tend suspiciously to attribute the problems of the less developed areas entirely to the machinations of the developed industrialised countries and their commercial and industrial interests—and, more especially, the multinational companies. On the other hand, they also tend to approach these problems in the spirit of a Victorian "lady bountiful" and to regard aid—politely called "contribution"—as an act of charity. The distressing pictures and advertisements of sickness, poverty and misery stimulate this, trying to mobilise both guilt and

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better feelings. They entertain acute suspicions against prosperous, large corporations. In their view, the artificial pricing of these corporations allowed them to escape tax liabilities to the countries they worked in. They could put pressure on wages by shifting investment away from countries with well-organised labour movements. The huge funds at their disposal could be swiftly moved from one country to another. These powers gave them strength to control Governments.
One of the favourite illustrations of this point is a comparison of the assets owned by the private giants and the budgets or even the natural wealth of some small and poor countries. In the new OPEC era, of course, this now seems very irrelevant. The biggest of giants have to obey the commands of the smallest sheikh. I shall return to this point. It is far more complicated than suggested by the way in which it is usually treated. On the other side, there were and are pure economists defending the rapid development of the super corporation, pointing to the advantages derived by the transfer of capital, managerial and technical know-how into less advanced countries. They point at Singapore, Hong Kong, Korea and Taiwan as examples of exceptionally quick development based on liberal industrial and investment policy. The Labour Government are determined to follow a middle road in this jungle of extremes.
I congratulate the noble Lord, Lord Lyell, on having found that city organisations are effective. After the history of the secondary banking system I must say that I cannot share his view. As a major trading country of long standing we have over many years forged close links with countries and companies overseas. After the United States we are the second largest overseas investor. On the other hand, we have always recognised the contribution which inward investment can make to our domestic economy, and many companies under overseas control have established themselves in the United Kingdom. We are, therefore, in the position of coupling the responsibilities of a home Government towards outward investment with those of a host Government to the inward investor.
We must recognise that laissez-faire nostrums were applied for at least a
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hundred years before, shall we say, 1950. The result was not harmony but divisiveness, not balanced development but lopsided "specialism", with the primary producers being under pressure. Even after the first consciously acquisitive stage of colonial exploitation had passed, there was the interaction of usually strong and large private companies and Governments (especially colonial Governments) of poor and weak territories in which an automatic, that is to say, a not consciously willed, disadvantage of the host country was inevitable. The transfer of techniques which has been alluded to is not an exception in this respect. Very often the sort of techniques which were transferred were inappropriate to the balanced development of the countries concerned.
As yet no effective solution has been found, though the development of the Third World speeded up, partly at least because of the technical and resource aid channeled bilaterally and multilaterally. Basically all these problems have been altered by the happenings of the last three years and more, but especially in the last 18 months. These, and the strict associations (dare I say, cartels?) of certain of the raw material producing countries, especially those concerned with oil, have caused a complete and revolutionary change in the problem-complex and, with it, in suitable policies.
Although strenuous efforts are made to uphold complete solidarity between the new rich and the further smitten, like India, the Third World has been rent into two parts, one improving one worsening. It seems to me that it is no longer fitting —and if I were a tutor in this subject, I would give this debate only half an alpha beta mark—to put all these problems, as has been done, under one umbrella. To talk about multinational corporations and their impact as if they were identical, irrespective of whether they are operating in an extracting or plantation industry—that is, in primary products—in contrast to manufacture, or whether they were situated in large or small countries, in powerful or weak countries, or in more or less developed ones, is surely pure nonsense. Today the existence in the UN of an inbuilt majority of less developed countries, both poor— indeed, recently more impoverished—and newly rich, and of the two-and-a-half giants, the US, the USSR, and China,

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make it impossible for the industrialised countries to obtain economic concessions of an undue character. The 19th century habits no longer work. They obtained territories and trade concessions from the less developed by the well tried methods of sending them brassware, necklaces or guns or, indeed, a couple of gunboats and a feather-hatted and uniformed consul. The new rules of the game exclude this.
We must from now on clearly differentiate between exploitation of natural resources, including climate, and manufacturers. But even in the second category we must differentiate between capital-intensive industries such as petrochemicals, refineries, steel works and heavy engineering, including possibly vehicles, and labour-intensive industries such as textiles, certain rubber and electronics industries and the generally more labour-intensive component manufacturers. These are the typical industries attracted by the, relatively speaking, low cost of labour. The first category are bound by their investments, the second hardly at all, and this has momentous consequences.
So far as the primary producing sector is concerned—plantations, mines and oil fields—until recently their internal policies were decisively influenced by these corporations. One must merely throw a glance at, say, Iraq under Nuri es Said Pasha or some of the Latin American States. Now, however, the tables have been completely overturned. It is the multinational primary corporation which is on the defensive and it is the manufacturing corporation which can exert influence through its mobility.
This fundamental difference does not seem to have been sufficiently observed either in the existing academic literature or in the policy discussions surrounding the various attempts at encouraging foreign enterprises in less developed countries. Consequently, confusion was unavoidable about the desirable ways and limits of policy and charges of political bias followed, both by the protagonists and the critics of foreign enterprise. The former wished to safeguard the existing vested interests without a serious effort at analysing the global impact—not the specific impact—of private enterprise on the present standards and prospects of the indigenous population. The latter paid
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insufficient attention to the increased constraints in the absence of foreign enterprise on progress which might have created an even worse situation for the poor countries.
Be that as it may, these long-run considerations of what might be called the OPEC revolution are not important. Part of the upheaval—indeed, the cause of it —has been the sudden rise in prices of bauxite, copper, sugar and other products, a rise which cost this country 5 per cent. to 6 per cent. of the national income. Some of my noble friends should remember that one cannot be Lady Bountiful if one is not willing to reduce one's standard of living. In most cases this phenomenon of raw material price rises can be explained by those unfortunately affected as due partly to natural causes, such as bad harvests, but mainly to unsound policies pursued between 1971–73 here, in the US, and in Italy, with France and Germany on the brink but not quite in it. There is little doubt that this situation is easing, though it is yet to be seen how far the efforts of so many Governments to energise their economies will not reproduce a pre-War type of boom with food and raw materials rising again only to fall later on. The miracle of a steady expansion, greeted with such deserved hymns of praise before 1972, seems to have faded out.
But beyond the renewed strength of the ebb and flow of capitalist economies a wholly new factor arose. This was a strong organisation of formerly weak and often dependent States, OPEC. This in its turn produced a violent and brusque change in the relationship of these giant private corporations with their host countries. This has had an explosive effect, and only the utmost skill and experience will enable us to cope with its consequences. Had it come at a slower pace, the industrial world could easily have dealt with the problem; the entire oil consumption of the industrialised (OECD) countries is 2,000 metric tonnes per annum. The increase in the cost of oil to the industrial world as a whole was some 120,000 million dollars per annum. The figure for the OECD countries is 90,000 million dollars per annum and this is less than 3 per cent. of the national income of these countries. Had the increase come over ten years, or even five years, and had the absorptive capacity

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grown pari passu, the problem would have represented a shift of wealth of less than 1 per cent. per annum from the old to the new rich, which is nothing very much. It was the abruptness of change which upset the applecart. And, as the problems which have emerged during the preparatory conference on producer-consumer relations show, strenuous efforts are now being made to extend this revolution to other products with the same abruptness.
I remind noble Lords that in the last year there has been an absolute decline in our national real income and therefore very heavy pressure on wages, profits and investment. In these circumstances it behoves us to be extremely cautious in our relations with what one might call the Fourth World—those less-developed areas which have suffered and not benefited by the OPEC revolution. Our contribution must now follow and depend on that of the unrequitable Third World oil exporters. Their contribution to the Fourth World on a scale not yet even contemplated is essential if the world economy is to regain its balance. Thus some sacro egoismo is called for by this country if we are to regain balance without real hardship. The Lady Bountiful attitude is no longer in order. It should be added that liberation from external rule sometimes brought about internal colonisation in the less developed areas, more oppressive than what went before.
In manufacturing, the situation is very different. I must remind the noble Earl, Lord Gowrie, that it is only in a restricted number of industries—refineries, petrochemicals, steel or heavy engineering (including vehicles)—where massive investment by multinational companies is involved. Typically, the less developed countries with their cheap labour attract industry such as textiles and electronics. Here the establishment of these corporations increases the wage levels or, at least, relieves the miserable primitive agricultural sector from the consequences of the population explosion. They contribute to the revenue of the country, even if not so profusely as the host usually hopes. They train labour and even managers, but then again that is also dangerous. The existence of highly paid expatriates encourages demands for equal treatment by the people of the country.
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As a Scot, the noble Earl ought to realise that.
However, equality of treatment of the few implies the perpetuation of inequality between a privileged minority—the new managerial class—and the rest, as well as the perpetuation of the dichotomy between town and country, and between the rulers and their aides and the ruled. Indeed, one must sadly acknowledge that these elites were not exclusively created by the process of decolonisation by the metropolitan countries when they voluntarily replaced their nationals with autochthonous recruits. They occurred even in countries in which the colonial tie was shattered by armed revolution and where the foreign administrators and their crassly contrasting lifestyle were forcibly overcome.
My Lords, there is a further important factor which must not be left out of account. The manufacturing giants, unlike the primary producers, are mobile. Thus, what they might consider undue impositions through government or trade union action might drive them elsewhere. As in most cases their contributions cannot immediately or even soon be replaced by an autochthonous effort, the host usually suffers the loss in cases of so-called decolonisation. This might also be the case in highly developed areas, in specific instances, though in their case it should always be possible to hire the required expertise. Policies which drive these giants abroad might well be self-defeating, because they might well encourage competition with the country's remaining industry by these corporations from centres abroad.
My Lords, all these factors must be taken into account when judging the problems. As the purposive and accelerated development of the new countries becomes more and more the accepted aim, policies must change towards the multinational companies. This implies, however, the maximum contribution by these enterprises directly to the host government, to be used for general development in order to keep a balance. It also implies a general level of wages compatible with the establishment of productive enterprises on a broad front. High royalty and tax payments or direct participation combined with relatively moderate wage levels are now

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in the best interests of the host country. It is for the Government to regulate exchange movements. It is for the Government to institute and exact taxes. It is for the companies to co-operate loyally. Joint ventures may represent, not only in the North Sea but elsewhere, the most hopeful approach to the problem. I hope that the favourable mention here of the good will of these companies will be reflected in our negotiations for participation in the North Sea. This lesson has been learned by only a few countries and by fewer companies.
I now turn to our attitude to the problem as a Government. Successive British Governments have taken the view that no discrimination should be practised in the regulation of company activities. Accordingly, our commercial and industrial policies are equally applicable to the activities of United Kingdom and foreign owned companies established here. This open policy has been consistent with the liberalisation of capital movements to which the major industrialised nations have agreed. It is recognised, however, that a policy of this kind is viable only if investors operate responsibly within existing frameworks. We consider it essential that sufficient information about the activities of multinational companies is available to the Government to enable decisions on future policy towards industry generally to be formulated in a fair, responsible and informed manner.
The Government will therefore establish through the new Industry Bill a system of planning agreements with major firms in key sectors, and will set up a National Enterprise Board to provide a means for direct public initiatives in those sectors, and to help provide the machinery by which they can satisfy themselves that their policies towards inward and outward investment and multinational corporations reflect the national interest. I am absolutely delighted that there is no difference of opinion between the noble Earl, Lord Gowrie, and my right honourable friends in another place—
The Earl of GOWRIE: On this issue, my Lords, there is a very large measure of agreement, yes.
Lord BALOGH: My Lords, I am delighted. In addition, Her Majesty's
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Government are pursuing the possibility of achieving an international consensus on solutions to the problem in various international fora. The trend of much of this work is towards the establishment of guidelines or codes of conduct for multinational companies, as the noble Lord, Lord Mais, suggested. The Government are content to allow flows in both directions in most circumstances. However, they ensure that both outward and inward investments are financed in ways which avoid undue pressure on the balance of payments through the Exchange Control Act. We all agree that inward investment benefits the economy in various ways, but it must be strictly controlled. United Kingdom law provides considerable protection against tax avoidance through transfer pricing, tax havens, et cetera. This protection was strengthened by legislation following the previous Budget and further measures were announced yesterday. The Inland Revenue is developing in co-operation with other countries its use of existing powers to prevent international avoidance of tax.
Concern has been expressed at the way in which some companies, including some multinationals, have given insufficient notice of redundancies. Her Majesty's Government have published the Employment Protection Bill, which will require all companies, including multinational companies, to consult with the appropriate trade unions before redundancies take place. I have purposely kept to general remarks on a highly contentious matter, and I have refrained from personal controversy; I thought that that would be the right approach. Once we are on the mend, a further and more generous approach to these problems will be possible, but not before.
7.49 p.m.
Lord DAVIES of LEEK: My Lords, I am grateful to my noble friend, Lord Balogh, for his constructive and helpful reply to this splendid debate. Tomorrow, I shall take the opportunity of reading carefully what he has said. I was delighted to hear him say that the Government have plenty of information at their disposal. We hope that they will publish it, despite the Steuer Report, which shows that the full employment figure by all these companies with investments in Britain is equal to 730,000

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people. I follow my noble friend Lord Balogh in his analysis of the investments, but I shall not give the figures as I intend to finish in two minutes and I do not want to dwell on this subject any longer. However, the investments in the underdeveloped areas—to use the old-fashioned term—are certainly necessary and, in the extractive industries, are one of the problems of the future.
Once again, I reiterate my gratitude to my noble friend, and to the noble Lord, Lord Lyell, who summed up for the other side. I am tempted to run down the list but I shall not. I am grateful for the standard of the debate and for the quality of the speakers. Indeed, I am rather flattered to think that we had so many speakers with so much valuable experience. I am sure that in some months, or, perhaps, in a year from now. we shall have another debate on this very vital subject. At least, we have given it an airing which was worth while. I am particularly grateful to my noble friend for his constructive reply.
Finally, I have not forgotten the maiden speakers. I was delighted that we had two brilliant maiden speeches by the noble Lord, Lord Lyons of Brighton, and the noble Lord, Lord Allen of Fallowfield. Both speeches were made constructively and from practical knowledge. The hour is so late and the debate has been so good and constructive that the wise course now is for me to say, "Thank you" to my noble friends who supported me, and to all noble Lords on the other side of the House who made this a first-class debate. Consequently, with the leave of the House, I shall withdraw my Motion.
Motion for Papers, by leave, withdrawn.

WORLD FOOD CRISIS
7.51 p.m.
The Earl of LONGFORD The Earl of LONGFORD rose to ask Her Majesty's Government what further steps they have in mind for tackling the world food crisis. The noble Earl said: My Lords, when one introduces a Motion one has the opportunity of a final word and one then thanks the speakers, as has just been done so gracefully. On this occasion I shall not have that oppor-
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tunity, so I shall thank the speakers in advance, feeling sure that their contributions will be of the very high level which one expects upon looking at the list of speakers. I wish, in particular, to wish all success to the right reverend Prelate who is to make his maiden speech. I hope I am not out of order in saying how fortunate we are to be presided over by the noble Baroness, Lady Emmet of Amberley, who dealt with kindred topics, which bear on this one, in the impressive debate which we had the other day on fish farming.
My Lords, you will all recall that in January there was an important all-round debate, touching on many matters, initiated by the noble Lord, Lord Brock-way. He touched on this subject among several others. The noble Lord has expressed his regrets at not taking part, but he has already spoken today, although we would always want to hear him on this topic. On the occasion of the previous debate I ventured to express strong criticism of Britain's poor record of attainment in falling so far below the United Nations aid target of 0·7 per cent. of our gross national product. I maintain that criticism today, and indeed I must amplify it. I am indeed sorry that the Chancellor of the Exchequer, Mr. Healey, in a Budget—which I hasten to say I much admired, taking it all round —felt it necessary to announce yesterday that our contribution to aid was to be cut by a far from negligible sum in the next two years. It was an unhappy blemish on a fine effort. It is not, however, my intention to dwell today on the general question of the proportion of income to be devoted to aid, but others may intend to do so. I shall certainly return to it on more occasions than one, but today I want to take up some of the other topics raised in the January debate.
There is certainly a great and very healthy concern—and overdue concern— about the world food situation, as evidenced in the Foodshare Campaign, which is jointly supported by all the Churches, the World Development Movement and the voluntary agencies. I am sure that all speakers in this debate, and many other Members of the House, are lending their full support to this campaign, and I hope that the Government may find it possible to say something sympathetic and constructive about the campaign and their good will towards it.
The World Food Conference in Rome last autumn was an extremely significant milestone in the effort to plan the provision of sufficient food for all the world's people. Many resolutions were passed, which, if acted upon, could provide a framework for much increased world production and food security. Certainly in this busy and forgetful world we must on no account forget those who are called "the wretched of the earth". My intention today is more one of interrogation than accusation. It is to seek information on the progress of some of the principal initiatives and resolutions begun at the World Food Conference and carried forward later at the Commonwealth Conference on Rural Development and Food Production, in March.
It may be that other speakers, certainly my noble friend Lord Ritchie-Calder, or the noble Lord, Lord Sainsbury, may well have a lot to say about the Lomé Convention between the EEC and the 46 developing countries. It has been hailed as providing much encouragement to rural development and, generally speaking, as an indication that the EEC is showing a much more sympathetic attitude to the developing countries. But it did not, for reasons I am not altogether clear about, include what I think are called the big, poor countries—certainly they are big, poor countries—like India and Bangladesh. I can only regard this as a serious omission, and I wonder whether there is any chance of setting it right. I believe there are other plans to assist India and Bangladesh and other Asiatic countries through the generalised preference scheme with the EEC. Perhaps the Government can tell us something about the effect of the Lomé Convention and, in particular, what is being done for these very poor countries that fall outside it.
It now seems to be generally agreed that the developing countries must increase their food production if they are to have any chance of keeping up with the demand for food. I am sure that all sorts of good points have been made in this connection at the various conferences. As a result, it has been agreed that British aid priorities should increasingly reflect an emphasis on rural development. That I believe is the correct formulation. I wonder whether the Minister will be able to tell us what
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it is likely to mean in practice when it comes to the distribution and administration of the aid programme. Furthermore, the World Food Conference proposed that an agricultural development fund of 1,000 million dollars be set up, jointly funded by the industrial world and OPEC. I understand that this is to be discussed in Rome on 5th May. Would my noble friend—whom I am so glad is to reply to this debate—give some indication of the Government's attitude towards this proposal for a 1,000 million dollar fund? And will he tell us what support the Government are to give it in the light of the new declared emphasis on aid policy? Might I suggest that the Government should lend their full weight to the fund, if it can be used to assist those countries which are least developed and which are most seriously affected by the rise in oil prices?
Secondly, I wish to return—and I make no apology for doing so—to the question of fertilisers, which was dealt with strongly on the last occasion. It has become clear that if there are to be greatly increased yields in the developing countries this year an abundant supply of fertilisers is essential. But now there are reports that surpluses in fertilisers are beginning to develop because farmers in developing countries cannot afford to buy them. I am glad that the Government are assisting in funding fertiliser plants in developing countries. But there is room for far more than this. Can the House be assured that the Government will raise the promised 35,000 tons of fertilisers still further to at least 50,000 tons to be provided under the aid programme this year? The noble Lord has had at least a few hours' notice of most of these questions. I personally cannot help feeling that 50,000 tons is quite insufficient, but at any rate it is a great deal better than 35,000 tons.
Thirdly, I should like to touch on the point of food security. Over the next few years, as food production is expanded, there will be a continuing need to keep stocks of grain to cushion shortfalls in supplies. So far, the countries in the greatest need—like India and Bangladesh —have been able to cover their position until the end of the crop year through the provision of some food aid and quite a lot of financial help through the OPEC countries, and through the World Bank

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and the United Nations Special Fund. This position, which is altogether precarious, could be greatly improved if the developing countries could be helped to build up storage capacity and stockpiles within their own borders. Then they will be able to deal far more quickly with a threatened shortage than if they have to wait for slow transhipment from the other side of the world. In one of the most imaginative proposals put forward by Dr. Boerma, Director-General FAO, at the World Food Conference it was agreed that these stockpiles should be Internationally co-ordinated. This proposal for the co-ordination of national stockpiles, I gather is to be discussed by the FAO later in May. May I ask my noble friend Lord Strabolgi what progress has been made on this proposal and to what extent our Government are playing a full part in implementing it?
Finally, I should like to emphasise that the world food situation is not something rather unpleasant a long way from here in a part of the world that we know little about, and which requires no change in our own agricultural and our own personal lifestyle. The fact that the affluence of our own and other industrialised societies has created a huge appetite for meat fattened on imported grain is a matter for deep moral concern, not only to the Church but also to others with no religion. Whatever may be said about the intricacies of the world trade in grain, it is quite possible, as was pointed out in an article in The Times on this issue on 4th April, to make much more use of homegrown animal feedingstuffs. I am now quoting from The Times article:
" If these alternative feedingstuffs were more widely used so as to reduce the consumption of grain by British livestock, this would enable the Government at least to eliminate our dependency on over 4 million tons of imported grain for animal feed each year. This quantity of grain, if directed towards the poorer nations of the world, could feed 20 million people for one year."
This, I am sure, has the support of us all. How are we to do it? By purchasing that grain to assist in building up grain stock piles and helping to provide storage capacity in developing countries. I hope that the Government will take steps to introduce changes along the lines I have suggested.
It is certainly true that we can all do our little bit, set our small example in
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our own circle. I was speaking at a well-known public school the other day, at the school dinner. An excellent meal, very rightly, was provided. I was giving a talk after dinner on Christianity and social questions and the word "starvation" was among the social questions. As we proceeded with this dinner, it occurred to me that I was in danger of not setting the best of all possible examples as I was to deal with starvation; so I abstained from eating meat, without thinking a great deal of it— although I am trying, with moderate success, to give up meat. I thought no more of that, but a few days ago I received a letter from a master at the school who said that my gesture in not eating meat had created such an impression that he and some other masters and a number of the boys, and some of the monks from the abbey —it was a religious school attached to a monastery—had organised themselves and sent me a list of about 400 signatures in support of the Food-Share Petition. I hope that without departing from the Christian ideas of humility, I can merely indicate what an example, quite casually given, can bring about. The influence of the Government is greater than anything that can be done by an individual. I may have misheard the previous Minister, but I thought that he said something about sacro-egoismo. I hope he was denouncing it. I hope he was not actually applauding it; for what we do not want is any egoismo—which is bound to be far from sacred. What we want is national unselfishness inspired by the Government.
8.5 p.m.
Earl COWLEY: My Lords, I should like to thank the noble Earl, Lord Longford, and I am sure that the whole House will be grateful to him, for asking this Unstarred Question on what is a very important subject. I believe that the time has come for this House to examine what the Government have achieved since the Rome Food Conference last November and since the debate initiated by the noble Lord, Lord Brockway, last January and the debate on fish farming initiated by my noble friend Lady Emmet last week, which I think has tremendous relevance, as the noble Earl has said, to the present topic under discussion. I should like also to say how pleased I am that

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the right reverend Prelate the Bishop of Winchester has decided to make his maiden speech on this subject this evening, because I heard him make his other maiden speech on this topic to the General Synod last February and I have also read his book Enough is Enough. I agree also with the noble Earl, Lord Longford, in his opinions on the Food-share campaign. I think it is of tremendous importance and benefit in making this country aware of the issues involved in the present world crisis.
This debate comes at an opportune moment since the Commonwealth Heads of State, who will be meeting together in Jamaica at the end of the month, will be discussing a Report from the Commonwealth Ministerial Conference on Food Production and Rural Development which was held in London at the beginning of March. The London meeting, which was attended by Ministers from some 33 countries, came to some important conclusions. Most important was that at long last it was recognised that priority should be given to agricultural and rural development in the Third World by the Governments of both the underdeveloped and the developed countries.
For too long there has been a relative neglect of the agricultural sector of the developing countries' economies in their development programmes. In general, they pursued industrial development and urbanisation in the belief that it was the best way to create a modern and developed country. The image of the industrialised world became the pattern for that development. Instead of questioning this general approach taken by the developing countries, the industrial countries encouraged it because it was the easy way out. It was what the developing countries seemed to want and it also maximised the capital exports from the developed States. Thus only some 3 per cent. of the bilateral aid from the donor countries was specifically directed to agricultural development. The cost of this approach has been high both in human terms, from the point of view of the levels of unemployment and poverty, and in terms of the growing disparity between the levels of development in urban and rural areas of the Third World countries. The results of this process have been the steady
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economic decline in the countryside and the massive migration of population to the cities and towns of the Third World countries. It is estimated that some 1 million people drift to the cities of Brazil from the rural areas every year. Thus the cities and towns of that country become encircled by slums and choked by the unemployed and the under-employed.
Among other things, the present world food crisis has highlighted this problem. While the immediate crisis is not as serious as at first thought at the time of the Rome Food Conference, the growing grain gap this year has only just been covered. The prospects for next year's harvest may be hopeful but the future still bodes ill. The problem is further compounded by the fact that the world's population is increasing by some 70 million people every year. What I now believe is generally recognised throughout the Western world is that the priority for the developing countries must be a massive increase in food production. However, the current escalation in the price of oil and fertilisers, especially nitrogenous fertilisers, has made the green revolution as it was originally conceived on expensive luxury for some countries, and an unobtainable dream for some others. For example, the additional cost of oil represents 24 per cent. of India's total imports.
While the noble Lord's right honourable friend the Chancellor of the Exchequer decided to cut back Government expenditure, and this necessarily meant cuts in Britain's overseas development programme, the decision to reduce Britain's aid by £20 million over the next two years means that we must be certain that our aid is used to the greatest possible effect and reaches those people for whom it is intended. It has been reported that the noble Lord's right honourable friend the Minister of Overseas Development has set up a rural development unit. Perhaps when the noble Lord, Lord Strabolgi, replies to this Unstarred Question he could tell the House when this unit will be in full operation, and what its main duties will be; and also whether it has been staffed by people brought in from outside, or officials already in the ODM who have been transferred from other Departments.
It is now questionable whether the large agricultural estates produce the greatest amount of food per acre. Further

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more, if it was true, these large estates are dependent for their success upon advanced and, consequently, expensive technology which not only demands massive energy imports but also skills which many of the peasants do not have. Because the large estates tend to be capital intensive rather than labour intensive, they also help to compound the problem of unemployment in the rural areas. What is in fact needed is land reform on a massive scale but this would of course create huge political problems in those developing countries where vested interests are involved. However, it has been shown in Taiwan and other developing countries that small estates can produce the food that is required. The increased cost of oil imports makes the use of intermediate technology even more attractive since it avoids the capital and oil intensive systems of agriculture. The idea behind intermediate technology is that it makes the best use of the resources available and, in the case of developing countries, the main resource is human labour.
I should be grateful to the noble Lord if he could say what the Government's attitude is towards the use of intermediate technology in the present situation of the current world food crisis, what support they are at present giving to it and whether they are contemplating increasing that support. Intermediate technology is not particularly economically attractive and if it is to be successful and widely used it needs official support and backing. For the technology which is supplied by the developed countries to be effective, it must be widely reproduceable from the resources that are easily available to the rural communities as a whole. If one is to have any hope of solving the long-term food crisis, increased food production must be treated within the context of rural development as a whole. I believe that the time has come for the Government to re-examine the existing priorities of Britain's overseas aid programme in favour of an all-out effort to raise agricultural production in the Third World countries. The objective must be surely to assist hungry people to help themselves. This will involve increased agricultural research, rural education and technical assistance. Much of it we shall have to provide and pay for ourselves, and because it seems politically unlikely that there will be an increase in official
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aid, it will involve transferring resources from other uses.
While the developed countries can offer advice and encouragement, it is for the developing countries to take the lead in adopting more balanced strategies of investment which give greater priority to agricultural and rural development. However attractive industrial expansion and urban growth may seem to the Governments of the Third World countries, I believe that in the long run the neglect of the rural and agricultural sectors of their economies will provide an effective break to their total development. While food aid will alleviate some of the symptoms of the immediate crisis, it will provide no cure for the long-term problems. The present necessity for continuing food aid or, for that matter, increasing it, is obvious, but it tends to weaken the agriculture industry of the recipient State if the aid is too much and over too long a period. Food aid does, however, provide an effective buffer while the agricultural economy of the countries can be developed.
Although the immediate crisis is of great concern and importance, especially for humanitarian reasons, it is essential that the long-term problems are solved, otherwise the present crisis will always be with us. I fully accept that these solutions entail changes that may be political anathema to the Governments of many developing countries; but the food problem will not just go away like some bad nightmare. Of course many of the difficulties of reorientating Britain's bilateral aid programme towards rural development are not lessened by the fact that official aid flows are from Government to Government. Although individual projects have to be approved by the present Government—as by their predecessors—the development plans of the recipient country are the responsibility solely of that country's Government, and it should be so. Thus part of the solution must lie in persuasion and negotiation.
While the Ministry of Overseas Development have some officials in the developing countries, they are not enough. Much of the work—which is not the most attractive for the budding diplomat climbing the FCO ladder—has been left to the officials of our embassies and high commissions. I really feel that there is

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room for improvement at this level, and I ask the noble Lord to consider seriously whether more aid experts could be appointed to our embassies abroad to offer advice and assistance to our officials and voluntary agencies working out there, as well as to the members of the Government concerned. I hope that, when the Report from the Commonwealth Ministers' Meeting in London is discussed in Jamaica, the Government will play an active and constructive part in helping to find the solutions to the present crisis. Before the World Food Council meets later this year, I hope the Government will show to our Commonwealth colleagues—many of whom are countries affected in the worst possible way—as well as to the world outside, that this country really cares about the present world food crisis.
8.19 p.m.
The Lord Bishop of WINCHESTER: My Lords, I am very happy to follow the noble Earl, because it was his magnetism that originally drew me, many years ago, to this House. I knew he was speaking on a subject which lay close to my heart and I was allowed into your Lordships' Chamber. I listened to the noble Earl with due awe and great admiration. This is not the easiest theme on which to obey the injunction that a maiden speech should be non-controversial; for any serious search for a practical method of distributing the global supplies of grain, protein and fertilisers, so that a half of mankind shall not be condemned to famine, cannot avoid being controversial. But I trust that in this House the humane, not to say divine, imperative it not a matter of controversy.
Thanks to television and the charitable organisations, we do not need reminding of the physical face of starvation. There is a film made by that most sensitive artist of the Indian cinema, Salvajit Ray, which I hesitated to mention at first, wondering whether there was a ban on "commercials" since one has already been given on my own book. The film, currently showing at the Academy 2 cinema in London, presents in the most delicate understatement another aspect of food shortage; namely, its erosion of community and mutual trust. The long and tragic falling-apart of Northern Ireland is not unrelated to the sociological
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effects of the potato famines of the past. So it is not simply a food crisis that we face, but a crisis of peace—peace for our children.
Any programme for redressing the appalling imbalance must contain three elements: direct food aid, fairer terms of trade and a less prodigal consumption of food resources by the richer countries. With regard to food aid, there is now the most urgent need to make good the agreement reached last November at the conference in Rome, to make available from the rich countries, and those which have stocks, 10 million tons of grain each year for the next three years, and to refuse to make use of any of the escape clauses and other ambiguities in that agreement. At the same time, in our negotiations with the OPEC countries, we must seek to bring pressure on them to invest some of their wealth to enable the poorer countries to purchase more of the food they need. Fairer trade is a more long-term and permanent requirement. I say "fairer trade" and not "hand-out" or "giveaway" trade. The poorer countries want to buy their imported food in the world markets. They do not want those markets manipulated so as to make ordinary laws of supply and demand incapable of working. They want to sell their goods in order to pay for their survival.
If we have respect for that desire, it is incumbent on the richer nations to give far more liberal access to their products, especially the products of their more labour-intensive industries. If we are to apply discrimination in our import policy, it should favour not rich European neighbours, who can fend for themselves, but the weak countries of Asia, Africa and Latin America. As we approach the referendum on our membership of the European Community, let it be seen at least that we have asked the very necessary questions about the liberality or tightfistedness of the Community's policy on trade with the under-developed countries.
More searching, but ultimately much more determinative, is the question of our disproportionate consumption of scarce supplies. This is a comparatively recent problem to raise its head, for as our affluence increases our food consumption become more unnecessarily high. The average person in Britain

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expects to eat far more protein than he needs, and protein of the most extravagant sort. As the noble Earl has already explained, the very nature of our farming needs questioning at this point. I think I understand the problems of the British farmers about beef and poultry, and their position must be considered in any equitable plan. But we cannot, with a good conscience, allow so much of the world's inadequate grain stocks to be consumed by cattle and poultry, fed intensively.
If we choose to design our own domestic food policy in terms of, "They have no bread? Then let them eat meat", that is our own funeral—and a funeral usually resulting from thrombosis. But let us limit that lunacy to our own fields and fishing grounds, and not stretch out to grasp other men's larders. Our people may need to learn to pay more for their proteins and to eat them less often, in order that other human beings may eat the grains they so desperately need. By the same token, Britain should show her concern for the most needy peoples of the world in the contribution she makes at the Conferences on the Law of the Sea. It is the people of Chile, West Africa and Bangladesh, for example, who most need a 50-mile extension of their coastal fishing rights, together with enough technical and economic aid to exploit these for themselves. One has only to make such proposals as these—a bare minimum in humane terms—to realise that no Government dare implement them unless the assumptions and expectations of the ordinary citizen, deliberately engendered by the policies of the last thirty years, have been challenged and reversed. We have to become a people who not only expect less but who also know how to be content with less or, to put it more positively, with our own fair share.
I hope your Lordships will forgive me if I end with a story from the Holy Writ which seems peculiarly appropriate at this point:
"Said the prophet to the King: "There were two men in the city, the one rich and the other poor, and there came a traveller to the rich man and he spared to take from his own flock and from his own herd to prepare for the wayfaring man, but took the poor man's one ewe lamb.
'And David's anger was greatly kindled against the man when he heard of it and Nathan said, ' Thou art the man'."
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Ultimately, we have to realise the inherent sickness of an economy based on the false stimulation of unreal wants for more and more.
8.27 p.m.
Lord SAINSBURY: My Lords, it is my great pleasure and privilege to be the first to congratulate the right reverend Prelate the Bishop of Winchester on his maiden speech. He has shown great knowledge of the subject, a sensitive approach to it and great compassion in its expression. It would indeed be sad if a Member of the Bishops' Bench had not taken part in this debate, because the Christian Churches have done so much to support the World Development Movement in its very many forms and organisations. The noble Earl, Lord Longford, has long made contributions to our debates which have been characterised by humanitarian concern. We must all be very grateful to him for raising this most fundamental of issues. I feel I must apologise to the noble Earl and to the other speakers in this debate if I cover very much the same territory as they do, because it is difficult to avoid doing so.
Six months ago, in our debate on the Queen's Speech, a number of your Lordships spoke, as I did, about the importance of the imminent World Food Conference in Rome. We were assured that Her Majesty's Government would treat the Conference seriously and not cynically. That Conference ended with the noble pledge that:
"… within a decade no child would go to bed hungry, no family would fear for its next day's bread."
These were fine words and admirable ideals, but in my opinion the tragedy of the Conference is that little has been done to alleviate the critical short-term problems caused by the world food crisis. And this at a meeting of nations which estimated that 40 million to 50 million people in under-developed countries might die of starvation by July of this year! The stark facts are that stocks of cereals are at their lowest for 22 years, and, as has already been said, the world's population is growing by 70 million a year, the most rapid rate of population growth being in undeveloped countries.
Many of us who followed the Rome Conference with acute concern felt disquiet at Britain's inadequate role there.

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Three major issues challenged the Conference. The first was the need to provide at least 10 million tons of grain a year in the short term to avert unparalleled famine in 20 countries. The other two issues were the provision of 1,800,000 tons of fertiliser and donations of 5 billion dollars per annum for 10 years in order to improve food production in the poor nations themselves. The only contribution this country made was 25,000 tons of fertiliser—and here I am not certain of my figure: I thought it was 25,000 tons; my noble friend Lord Longford said 35,000 tons, and perhaps my noble friend Lord Strabolgi when replying for the Government will tell us which figure is more accurate—and £3 million out of the aid budget to pay for the fertiliser. The Government were not prepared to increase that contribution, although they could have donated 50,000 tons without affecting supplies to agriculture here. They were not prepared to contribute to the agricultural development fund, arguing that our own economic difficulties precluded help to families actually starving to death.
Perhaps most unfortunate of all, and I refer to it with a certain hesitancy, was the fact that the Secretary of State for Agriculture explained that Britain could not reduce her own meat consumption thereby releasing valuable grain supplies. This, he told delegates from developing countries—and I quote his actual words as reported in The Times—
"is because I believe the people of Britain are not eating enough meat. I do not want malnutrition to appear in Britain."
We are no longer a very rich or powerful nation compared with some other advanced industrial countries, but this is no excuse for not playing our full part. The age of cheap food has passed, as I said in your Lordships' House some months ago. It passed because it depended on British buying power as the only large market for surpluses. Because of this, for years Britain benefited from cheap food to the detriment of the standards of living of the producing countries. Our responsibilities are considerable, both because of our past advantages and because of our present affluence. The fall in prices of such commodities as zinc, tin and rubber over the past year has weakened, and continues to weaken, the
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terms of trade for developing countries exporting those commodities. That weakening makes the responsibilities of the relatively strong countries all the more grave.
When a small nation such as Israel was able to donate four times as much fertiliser as Britain to developing countries; when Iran offered 150 million dollars to an agricultural development fund and is the only nation to have offered funds so far, then it may well be time to review our present commitments and see whether we can do more. We know Israel's economic difficulties. And Iran, for all her oil wealth, has a tragically low per capita income. These are magnanimous gestures and affluent Western nations ought to respond to them by increasing their own efforts to conquer starvation in the poorest countries. In the light of this, it is surely regrettable and sad, as my noble friend Lord Longford has already said, that in yesterday's Budget the Chancellor of the Exchequer announced a reduction in overseas aid over the next two years. Talking at the World Food Conference or at the coming Commonwealth Conference is not enough. Action is what is needed.
In my opinion, it has long been a regrettable mistake that some food aid organisations have sometimes confused short-term aid with the overall need to create within underdeveloped countries greater awareness of the importance of producing more domestically. Here I must support Mr. Fred Peart's statement to the Rome Conference in which he argued that, while food aid may have a very important temporary role to play in helping to meet the world food supply problem, the real and longer-term answer lies in helping to create conditions in which more food can be grown. He added:
"And just as important, to assist in providing those people who cannot for one reason or another grow food with the opportunity of producing something which will bring them money to buy it."
Unfortunately, some countries most in need are those lacking both foodstuffs and foreign exchange.
The prospects for conquering mass starvation are not entirely bleak. The opening last Tuesday of the London soya bean meal futures market draws attention to the scope for expansion in fields

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not yet fully exploited. At present, only the United States, China and Brazil produce soya in significant quantities. But other countries are becoming aware of the potential of soya beans, and the EEC is currently encouraging its production within the Community. Soya beans have a high protein content, are largely resistant to bacteria and do not require fertiliser to any extent. On a global level, we could do well to look at the potential of soya for feeding human beings in the Third World rather than livestock in the West. It is a tragic irony that although shortage of protein is the main cause of malnutrition in underdeveloped countries, these countries have been the traditional source of vegetable protein for feed for livestock in the developed world.
I cannot wholly accept the contention of Pierre Lardinois that the world food crisis is not a question of shortage but rather of maldistribution. None the less, Western Governments must ensure that essential foodstuffs are fairly and justly distributed. Her Majesty's Government would do well to assess whether present disparities of supply are justified in humanitarian terms. It takes 8 lbs. of feed grain to produce 1 lb. of beefsteak, and the disparities between livestock in the West and human beings around the globe must be a particular concern.
Food aid undoubtedly has a vital role to play in averting the continuing threat of starvation, but it must be used in conjunction with appropriate measures of agricultural reform to diversify and increase local food production. In under-developed countries, this means a shift from the barest subsistence economies to greater self-sufficiency. This introduces problems of storage, distribution and transportation. Also, it involves seeking out new sources of energy supply which are less dependent on imported fuel oil, and new ways of maintaining soil fertility. The West has done much, but it must do a great deal more before no child goes to bed hungry and no family fears for its next day's bread. This country's power and influence may have diminished over the years. We must show that our ability to speak for humanitarian ideals remains unmuted.
8.45 p.m.
Lord STANLEY of ALDERLEY: My Lords, it is a particular pleasure this evening for me to congratulate the right
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reverend Prelate the Bishop of Winchester on his maiden speech, because he happens to be my landlord. I think I am right in saying that he is the Visitor to New College. Not only do I live in a New College house but I farm a New College farm, and for many years I was churchwarden of a New College living. I must warn him that I am told I am one of the most awkward and objectionable of his tenants so no doubt in future I shall be taking him to arbitration as my landlord! However, today I have to admit that I am delighted to be able to say that I happen to agree with him, even though he is a Bishop, and that is a very strange and happy situation for a churchwarden to be in!
I think I should declare an interest in this matter. In so far as I have said I am a farmer, presumably I have a vested interest in keeping all your Lordships from starving. However, not for the first time in my life the noble Earl, Lord Longford, has made me try to think, even though I do not think that I was born to believe in quite the same things as he does. One point which I should like to make, which has already been raised by the noble Earl, by the right reverend Prelate and also by the noble Lord, Lord Sainsbury, concerns the question of imported feedstuffs. I, as a farmer, use vast quantities of imported feedstuffs at a very bad return. All this is quite right, but there is a terrible snag. To use grass, which is presumably what your Lordships are asking me to do, is a highly skilled operation. I should like to discuss this matter with them afterwards in the Lobby and tell them of the great technical difficulties involved.
At the risk of being shot at by the noble Lord, Lord Strabolgi, one of the problems is fencing. The question I should like to ask the Government relates to a problem that has been causing me the odd qualm of conscience, and it is this: Do the Government agree that at the moment the world food crisis applies basically to the Third World? Do they agree that, compared with the Third World, we in Britain and in Europe are often in surplus? Certainly, I for one live like a glutton. Will the Government therefore agree that the terms of trade, which have already been discussed tonight and, with which I agree, were weighted in the past—and still are, for that matter

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—in our favour and should, if possible, be altered to favour the Third World who are the primary producers?
If, in order to relieve the world food crisis, it is desirable to give a better price to primary producers—and I am afraid that this means a higher one—will the noble Lord, Lord Strabolgi, please tell me how a policy of unrealistically cheap, subsidised food, which is the policy which we have followed in the past, and in particular consumer food subsidies as introduced by his Government, helps primary producers, particularly in the Third World? I think that the noble Earl criticised his right honourable friend the Chancellor of the Exchequer for reducing aid to the Third World. I have to admit that I admire the Chancellor of the Exchequer for taking a first step towards reducing food subsidies. Can the noble Lord, Lord Strabolgi, assure me that I have no cause for worrying that these consumer food subsidies make the primary producers of the Third World starve more? I think that they do.
There are moments when I wonder whether we, as a generation, will be accused of pursuing a policy that has made the Third World much worse off. If primary producers received a fair price, which as I have said before means a higher one, for their primary product, compared with manufactured goods, they would be able to invest more and so get off the bread line. While we, through our selfish policies, keep primary products down, in particular by these consumer food subsidies, surely we make their position worse. I shall give an example of this which is very simple; namely, the milk subsidy. The Government subsidises milk to the consumer, more milk is therefore drunk here; no more milk is produced because the producer is not getting any more. Milk supplies get short. We have to import cheese, to start with, then butter, then milk, so taking supplies away from those who are not subsidising food, basically the poorer countries. I hate to say this because I think I really believe in it, but it may be that some modified system of intervention, coupled, of course, with no import controls—which is what the EEC have—might be worth considering.
Subsidies given to produce more—in particular, capital grants and financial
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help to primary producers to even out supplies, so ensuring a continuity of supply—to my mind are very different matters from consumer subsidies. I ask whether the Government have taken these points into consideration when formulating their long-term plan for British agriculture which I believe is about to come out? If the noble Lord were to answer all my questions in the affirmative, I am not at all sure that I should like some of the consequences.
Lord HOY: And the noble Lord would be very surprised!
Lord STANLEY of ALDERLEY: My Lords, most of the time I am like everybody else; I am selfish and I am greedy and I think only of the present time. I make the right noises when I see the starving millions on "telly"' and, occasionally, I put the odd 50p in the plate to show willing. I hope the noble Lord can assure me that I can continue to watch these horror films on "telly" in the knowledge that I, as a person and, in particular, we as a country, have pursued economic policies that have relieved rather than made worse the food crisis which at the present moment—and I emphasise "at the present moment" —really applies only to the Third World, but quite honestly it does not take much stretch of the imagination to see ourselves in that position in the future.
8.53 p.m.
Lord RITCHIE-CALDER: My Lords, I am grateful for the opportunity to thank the right reverend Prelate, because I feel this is a theme on which those of us who are trying to deal with this in a very secular way need a great deal of support from the Churches. One of the reasons is that there is now creeping into the thinking on this issue a very dangerous attitude of mind, and it was just beginning to come through in the last speech. It was: are we in a position to calculate what, in fact, we have done right or wrong and therefore to readjust and restrict what we are doing? This is expressed in the word "triage" and if your Lordships have not heard it you are very lucky, because you are going to hear it again, and again, and again and again. This is the relentless two-syllable word which has become fashionable in American academic circles and it means just this. It is a French term dredged up

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from the mud of the First World War, from the Marne, the Somme, Verdun, Passchendaele, and Chateau-Thierry. It applied to the field ambulance stations in the front line and to the battlefield conditions under which doctors and medical orderlies practised casualty surgery.
Triage defined three categories: first, minor casualties who, with a bit of stitching and bandaging, with antitetanus shots and analgesics, could be returned to active duty in the trench, the machinegun nest or the cockpit; secondly, those casualties who with emergency surgery, the tourniquet, the splint, the removal of bullets or shrapnel, amputations and drugs, could be transferred to base hospital; and, thirdly, the casualties so badly wounded that at best they would need extensive surgery, which was probably impracticable and certainly surgically hazardous under battlefield conditions and, of course, time consuming. This third category, under triage, was expendable.
This is now becoming the classification in the talking in scientific circles in America, and in Washington in particular in the kinds of discussion and public debate as to how far we can go and what attitudes we can adopt in the sharing out of what is manifestly the food in short supply. How do we do it? We do it under triage. Yesterday, almost by a coincidence, I was in the Palais des Nations in Geneva when I suddenly stumbled over a bin and it was marked "triage". I said to one of the attendants, "What does 'triage' mean?" and he said, "That is where you put in the shredding". We know what "shredding" is because we have heard all about it in the Watergate trial, when they sliced up all the evidence. That is what "triage" means. They are just shredded. So far as the world's conscience is concerned, they are totally expendable. I am talking very seriously because this is not just a casual word; it is the introduction of a concept which is now being rationalised. Crudely, in terms of food shortages it means that available food supplies should be distributed, first to those who, with first-aid supplies, would get back to work, as we did with the starving Ruhr miners after the Second World War; secondly, to those who, helped out, would rehabilitate their economies and become food-viable; and, thirdly, the rest who would be expendable.
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Of course, the arguments are much more complicated than that; first-aid would not include famine relief, which of course is deviant sentimentality, since it means keeping people alive to need more food. Rehabilitation is not simple either. It would involve a discrimination against those Governments which did not produce food for a zero population— and here my noble friend Lord Longford and I may have many arguments about population, but we have never got to the stage of insisting that there should be compulsory birth control before you can get food supply. It raises the dilemma that if people are encouraged to produce more food and acquire a taste for better food—that is, for adequate nutrition—they will destroy the ecology. That is another one of these mystical words we used to respect which has now become degraded into this kind of approach, which is quite false in our situation. It raises questions of politics and trade relations.
The Americans, for example, are still smarting over the Russian wheat deal, in which they said they were double-crossed in granting supplies to the USSR, which at that moment happened to be short of food. If a country decided to take land out of cash crops and turn it over to food crops for domestic consumption it would affect the supplies of raw materials for industrialised countries, which was in fact what I heard ringing in my ears a few moments ago when we were talking about giving people the capacity to produce the food or the capacity to produce the things to buy their food. One of the things which has been the misery of the world, and culminating now in the extended misery of the world, is that we have convinced far too many people that they should produce cash crops as the raw materials for Western industries instead of producing food. Category 2, therefore, is discriminatory and not some natural law.
Category 3, which is the final triage, is genocide. Scholars and lawyers may hassle about the meaning of "genocide" but its meaning in the context of triage is perfectly clear. In full awareness of the facts, whole races are being marked for extermination as a matter of calculated judgment. The people of Bangladesh are written-off. The Tauregs of

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Sahel are doomed as a race. The Sahel, because it will be a continuing horror, poses the question of whether we can give the people of the Sahel what is politely called "technological fixes" in the way of large-scale dams and pumps, and so on, or do we go on feeding them? Manifestly, we cannot go on feeding them indefinitely, so perhaps we should not feed them at all because if we do, they will ask for more and we cannot give them more.
This is terrible thinking. This is shifting the responsibility of this whole matter from an area in which we had some sense of responsibility for what might be the economic mistakes we have made, such as bad planning and bad distribution. I do not think all the speeches I have ever heard in this House were completely cynical about this issue. We never quite get to the stage of saying, "We will take a solemn decision, sitting round the table, the converse of Rome, and say we are going to cut off people's food". To me, this is one of the really dangerous ideas in circulation. I hope it is not to be generated here. I hope it is not to be reflected, even as a slight echo, in our thinking about our drastically reduced budget. I hope we are not to apply that kind of measurement by which one judges people's lives by this kind of triage.
My Lords, there are alternatives which we ought to be looking forward to and doing something about. The situation is not entirely hopeless. We have at this moment a new grain which we can produce here in Britain as well as worldwide. It is a grain called triticale; a cross between wheat and rye. It is drought resistant; It is cold resistant, basically; it is heat resistant; it is sturdy; and has a much higher protein content than normal wheats. This is being developed for whisky in Canada. There is something else coming up, which makes me very excited. It follows the kind of approach of the noble Baroness who is sitting on the Woolsack at the moment to acquaculture. In the Gulf of California they have discovered a water grain, an oceanic grain which is a kind of eel grass and which produces underwater a grain equivalent to ears of wheat and ears of corn. It was used by the Seri Indians; we have only just got
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around to it anthropologically and to looking at it botanically. This might be an important source of food. It does not use that other scarce commodity, fresh water. One could have, as it were, another prairie State in America, the Gulf of California.
9.4 p.m.
Lord STRABOLGI: My Lords, we must be very grateful to the noble Earl, Lord Longford, for putting down this Unstarred Question. I certainly agree with the noble Earl, Lord Cowley, who spoke for the Opposition that this very important and, indeed, tragic subject merited a separate debate. Indeed, if I may say so, I think we have had a most notable and thoughtful short debate. The Government will pay the greatest attention to all the points made by noble Lords from all sides of the House. I will do my best to answer them. To begin with, it is my pleasant duty to congratulate the right reverend Prelate the Bishop of Winchester on his maiden speech, which was a notable one. He obviously feels deeply about these matters, as, indeed, we all do. I hope we shall have the opportunity of hearing him on many other occasions.
May I say, first of all, how pleased I am that we have had this opportunity to discuss the matter. As the noble Earl, Lord Cowley, said, although the matter was raised at the beginning of January, it really merits a debate of its own rather than being one of a number of subjects in a debate on environmental problems. I am very glad that the noble Earl, Lord Longford, has given us this opportunity to discuss these issues which are really of the greatest concern to us all. There is certainly no disagreement that this country must play its part in the International struggle to banish hunger from the world. However, the debate makes it quite clear that there are honest differences of opinion, not only as to whether we in this country are doing enough to help but also as to whether what we are doing is right.
I must begin by reminding your Lordships that the aid programme is now very substantial indeed. The noble Earl, Lord Longford, and my noble friend Lord Sainsbury have mentioned the cuts made by my right honourable friend the Chancellor of the Exchequer in his Budget Statement last night. I must point out

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that these cuts were £10 million a year for two years, making a total of £20 million. We must see this in the context of the whole aid programme for the current year, which is expected to be something in excess of £450 million, against the corresponding figure of about £350 million last year. It is the firm intention of the Government that an increasing proportion of the programme should be devoted to the countries most seriously affected by the recent price rises, and to the development of the rural sector in the developing countries, as the noble Earl, Lord Cowley, suggested. May I say here how much I agreed with, what he said, and I should like to deal with some of his points a little later.
So far as the amount of our help is concerned, one of the main causes for criticism in this debate has been the fact that our official development assistance has been running only at something like half of the United Nations' target of 0·7 per cent. of gross national product. In the Queen's Speech at the beginning of this Parliament, the Government stated that they recognised the economic problems confronting developing countries and would seek to increase development aid. But the speed at which we can move towards this target will have to be determined in the light of our own economic circumstances, and we cannot give a date for its achievement.
My Lords, the limitations imposed by our present economic situation also affect our attitude to the Foodshare Manifesto, to which my noble friend Lord Longford referred. Although, of course, we are sympathetic, there is a limit to the amount of money we can spend on buying cereals for those developing countries in the worst financial situations, simply because the funds we have available are limited and there are many other pressing calls upon them. Other aid-giving countries have, of course, similar problems. My right honourable friend the Minister of Overseas Development has supported the EEC Commission's proposal to increase Community food aid this year by 25 per cent. over last year, but other EEC Governments have still to agree. Financial considerations must, of course, also be taken into account by those Governments. But, my Lords, we shall continue our efforts to encourage the maximum response by the Community.
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The right reverend Prelate the Bishop of Winchester asked about the target of 10 million tons of grain. May I say here that speaking to meetings of the FAO and of the World Food Programme in Rome in March last, the Director-General of the FAO, Dr. Boerma, said that with the food aid commitments for 1975, which were known to the FAO at that time as standing at 8·8 million tons, the world was already within striking distance of the target of 10 million tons for this year. He also said that there was no reason for complacency, but I think it is an extremely welcome sign of an increased sense of responsibility on the part of the international community.
My Lords, I think Britain's response to immediate food aid to the developing countries has, therefore, been as good as most. Last year, for example, we spent £20 million on food aid, compared with £5 million the year before. My right honourable friend has recently announced special grants to the World Food Programme of £5 million, to be spent on food for Bangladesh, and a further £3 million for other countries with serious and urgent food problems. Our spending on food aid this year will be even greater than last, and this will be a very positive response to the needs of the most seriously affected developing countries.
My noble friend Lord Longford asked about world food security. The World Food Conference endorsed the objectives, policies and guidelines of FAO's international undertaking on world food security, which envisages international co-ordination of cereal stocks as one of the measures necessary to ensure adequate availability of basic food supplies, following the discussion of various countries' proposals to establish a world food bank. The Government have advised the Director-General of the FAO that they are prepared to co-operate on the implementation of the objectives, policies and guidelines contained in the undertaking. However, I may say that there are many practical difficulties to be resolved before the stockpiling aspects of the undertaking can be implemented, and international discussions are continuing.
I may say here that the World Food Conference also adopted a resolution recommending the setting up of a World Food Council at Ministerial or plenipotentiary level to co-ordinate work on food

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matters. The Council will be supplemented by a new committee on world food security, as a standing committee of the FAO Council, to keep under constant review the demand, supply and stock position for basic foodstuffs, and also by a committee on food aid policies and programmes to be formed by the reconstitution of the intergovernmental committee of the World Food Programme to help evolve and co-ordinate food aid policies and programmes. I am glad to say that the United Kingdom has been elected to the Council and attaches great importance to its use as an instrument to co-ordinate international action to deal with world food problems. Both my right honourable friends, the Minister of Agriculture, Fisheries and Food and the Minister of Overseas Development, plan to attend the first meeting at the end of June which will discuss the major topics which arose at the Rome Conference.
I was asked by my noble friend Lord Longford about the International Fund for Agricultural Developments. He also asked why India and Bangladesh were not in the Lomé Convention. I should like now to answer those various points. The setting up of the International Fund for Agricultural Development—IFAD— was recommended by the World Food Conference to finance agricultural developments primarily for food in developing countries. The Fund will become operative when the Secretary-General is satisfied that it holds promise of generating sufficient aid resources on a continuing basis. We have said that we shall be very glad to contribute if it seems likely to be effective and useful.
Then there is the question of the Lomé Convention. The countries covered by the Lomé Convention are those listed in Protocol 22 of the Treaty of Accession to the European Community. This Protocol envisaged economic co-operation between the Community and the developing countries of the Caribbean, Africa—that is, Africa South of Sahara—and the Pacific Islands. A separate Protocol provided for trade relations with the Asian Commonwealth countries, in particular through the generalised system of preferences. Since the United Kingdom joined the EEC a number of improvements have been made which have benefited these
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countries. There has therefore never been any question, I am afraid, of applying the Lomé Convention to India or Bangladesh at present. We do, however, regret that the Community has not yet implemented its resolution in favour of providing those countries, among others, with financial aid as well as food aid. The Council of the Development Ministers is expected to discuss this subject at a meeting in June.
The noble Earl suggested, and indeed other noble Lords have suggested today, that if people in this country ate less, in particular less meat, more grain would thereby be released for the hungry of the world. However, even if meat consumption could be reduced without resorting to rationing, and livestock numbers were eventually reduced, it would take some time before any significant quantities of grain would be released. Moreover, much of the feed grain saved would be unsuitable for human consumption. Even to the extent that this is not the case, it would still have to be paid for, transported to and distributed within the developing countries.
The Government have taken the view, as indeed did all Governments represented at the World Food Conference, that our efforts should be devoted primarily to the increase of food production in developing countries themselves, and here I am at one with the noble Earl, Lord Cowley. May I say how much I agree with what the right reverend Prelate said about waste, and waste of food in the developed countries. All noble Lords in this House will join me in condemning needless waste of food. There is something really rather disgusting in the conspicuous and flagrant waste which we see in so many countries of the West, when people in other parts of the world are little more than emaciated skeletons. But I think that the current problems will at least have focused people's attention on the need to avoid waste.
Here, too, I must say that there is much that needs to be done also in developing countries, and we ought not to forget that a significant contribution towards solving the world food problem can be made by helping those countries to avoid waste in store once the food reaches them. I am glad to say that this is an area where Britain is very well qualified to

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offer advice and technical assistance. Our Tropical Products Institute makes available a wealth of relevant experience, and I hope that increased use can be made of it.
My noble friend Lord Longford also spoke about fertilisers. This subject of course was mentioned in the debate last January. Her Majesty's Government are well aware of the important contribution which fertilisers can make in increasing food production. As my noble friend Lord Shepherd pointed out in the last debate, the United Kingdom has been doing what it can. Despite having to import a large proportion of raw materials to manufacture our fertilisers, and despite difficult supply problems, we are supplying 25,000 tons of fertiliser (and here I am glad to confirm to my noble friend Lord Sainsbury that it is 25,000 tons and not 35,000 tons) at a cost of £3 million to the developing countries through the FAO fertilisers supply scheme. In addition we have paid for 10,000 tons to go directly to Bangladesh.
Commercial exports to the development countries were more than 100,000 tons greater in 1974 than in 1973. Britain has also been giving aid for the construction of fertiliser plants in the developing countries. For example, we have committed £25 million to build three plants in India, all of which should be in production during the coming months. In spite of this the Government are not complacent. We are considering what more we can do and we shall certainly consider very carefully what my noble friends and other noble Lords have said. Then there is the question of rural development. The noble Earl, Lord Cowley, referred to this subject. The Minister of Overseas Development has made it clear that the Government's aid strategy is to give priority to rural development, particularly in the poorest countries.
The Ministry has a newly created Rural Development Department. There is no question that a higher proportion of British aid will be directed in this way. The noble Earl, Lord Cowley, asked me for some more details about the Rural Development Department. It began work only this month. Its initial staff is an assistant secretary and a principal. The staff will be reinforced as and when necessary.
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The Department will be required to co-operate with those desks in the Ministry which are concerned with particular countries so that we can achieve a much more positive promotion of the many wide-ranging aspects of rural development. We will, of course, pay particular attention to what the noble Earl said about having this development staff attached to certain of the embassies in countries which need it most.
But with regard to rural development, in the final analysis successful development in the agricultural and rural sectors depends very much upon the policies of the developing countries themselves. In addition to capital aid, technical assistance has for a long time been provided under the aid programme. British experts have been provided to serve in posts relating to agriculture and the services of British consultants engaged to carry out surveys and studies in the agricultural sector. Of course research is also important to agricultural production. International agricultural research is supported by the United Kingdom by giving grants to several international research institutions whose progress is coordinated by the Consultative Group for International Agricultural Research; and the United Kingdom is a member of that group. The noble Earl, Lord Cowley, also asked about intermediate technology. I am glad to say that the Minister for Overseas Development very much favours and encourages the use of intermediate technology in the developing countries for simple, low cost, do-it-yourself technology. Its use is relevant to the current emphasis on rural development, and this is very well applicable to small scale technology in both agriculture and small industry with its emphasis on labour intensive rather than labour saving methods.
My noble friend Lord Sainsbury also referred to the speech of my right honourable friend the Minister of Agriculture, Mr. Peart. My right honourable friend's views were seriously misreported. He said that the best way to improve the food situation in the developing countries was to increase food production there. He did not think it was realistic to expect a reduction in consumption at home, particularly while there were people in this country who were still not getting enough to eat. He said that he would like to see such people eating more meat and

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he certainly did not say, as I think has been reported elsewhere, that there were schoolchildren suffering from malnutrition in this country.
Your Lordships will no doubt be aware that since we last discussed these questions Commonwealth Ministers have met here in London at the invitation of the Minister of Overseas Development to discuss food production and rural development. They agreed that national plans should emphasise the importance of these subjects and that the developing Commonwealth countries should review their policies towards institutions designed to help integrate rural development—land reform, better irrigation and other needs, incentives for farmers and towards training and research. They also agreed that priority for development aid from richer Commonwealth countries should be for agriculture and rural development. I am sure that this is the right approach to the problem.
If we fail to devote our effort and available resources to the encouragement of food production in the developing countries themselves, we shall see the world faced with a steadily worsening situation as the population continues to grow and we shall arrive at the kind of situation which my noble friend Lord Ritchie-Calder described. The groundwork must be done now if results in those countries are to be forthcoming, and forthcoming in time. Let no one think that food aid from the developed world could meet the extra needs of the developing countries beyond the 'eighties. My right honourable friend the Minister of Overseas Development has recognised the urgent need quite clearly in saying that she wishes to see a greater proportion of British aid going into the rural sector. That, I submit, must remain our chief aim and although we and the hungry areas of the world have a long way to go, I believe that we are beginning to move in the right direction.

PLYMOUTH CITY COUNCIL BILL [H.L.]
Reported with Amendments.
HOUSE OF LORDS OFFICES
Third Report from the Select Committee made, and to be printed.