Sitting of 21 January 1948

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  CIVIL AVIATION

    Foreign Visitors (Conveyance Through London)
    Mr. Somerville Hastingsasked the Parliamentary Secretary to the Ministry of Civil Aviation whether he has considered the undesirable effect of showing foreign visitors to the metropolis the worst parts of London by conveying them through mean streets between the airports and airways terminal; and if he will establish for the future some more suitable route.
    The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. Lindgren): This is a matter for the corporations, in conjunction with the licensing authority and the Commissioner of Police for the Metropolitan Area.
    Mr. Piratin: Is not the short answer to the Question that London should he rebuilt and made a model for the whole world?

    Heathrow Airport
    Sir Jocelyn Lucasasked the Parliamentary Secretary to the Ministry of Civil Aviation what steps have been taken to remedy complaints made by passengers at Heathrow Airport with regard to lack of food, cigarettes, attention and general comfort and sanitary arrangements.
    Mr. Lindgren: The departure waiting room has recently been considerably enlarged. Further waiting rooms, a new restaurant and more toilet facilities will be provided as soon as possible. But shortage
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    of labour and material will not enable us to reach for some time the high standard of amenities at which we aim.
    Sir J. Lucas: Surely matters like cold tea, the lack of cigarettes and the lack of seating accommodation could be remedied now? Could not those responsible be sent to Northolt to see what happens there and to copy Northolt?
    Mr. Lindgren: The hon. Member was good enough to send me a cutting on which he based his question. I think this was an exceptional case, in which the supervisor did not arrive in the morning quite as early as he ought to have done. After all, we all miss the bus sometimes.
    Mr. John Lewis: Is it not a fact that passengers who arrive by coach at the terminus are forced to re-embark in the coach to travel 100 yards to the aircraft? Will my hon. Friend look into that?
    Mr. Lindgren: Yes, Sir. This is a Customs requirement, but I will look at it and see if it can be avoided.
    Squadron-Leader Fleming: How does it come about that facilities at Northolt are so much better?
    Mr. Lindgren: At Heathrow we started converting ground less than two years ago. Northolt has been an R.A.F. station for many years, and facilities already existed there, so that we had something in being on which to build.
    Mr. W. Shepherdasked the Parliamentary Secretary to the Ministry of Civil Aviation what consideration has been given to the servicing of Constellations at Heathrow; and what is the decision.
    Mr. Lindgren: London Airport will be the maintenance base for Constellations when permanent hangars and workshops are completed.
    Mr. Shepherd: How long are we to have an enormous number of dead miles flown by Constellations which come to this country from Canada?
    Mr. Lindgren: The only dead flying is, in fact, from Filton to London. In regard to the maintenance of aircraft, one has to take into account the workshops in which the work will be done, and the housing accommodation of the workers. The workers of Filton are housed there, and it would be an unnecessary upheaval in

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    their domestic lives if we were to bring them to London at the moment, quite apart from the non-availability of hangars.

    Aerodrome, Islay (Staff)
    Major McCallumasked the Parliamentary Secretary to the Ministry of Civil Aviation what is the number of personnel employed at the Glenegadale Aerodrome, Isle of Islay, Argyllshire, by British European Airways Corporation and his Department, respectively.
    Mr. Lindgren: As to the first part of the Question, this is a matter of management. The number of Ministry staff is 17.
    Major McCallum: Is the Minister aware that when Scottish Airways administered this service they ran this aerodrome with a staff of one? They maintained it from 1934 until the service was nationalised without an accident, with the greatest regularity, and with more services than are run today. Does not the Minister think this a shocking waste of personnel?
    Mr. Lindgren: I was not aware of the facts just quoted by the hon. and gallant Member, but, with improvements in transport, navigational aids require staff there. If there was a staff of only one, there was no crash tender crew, because in a crash tender crew at least four men are needed. If there had been a crash it would have been hard luck for those involved.
    Major McCallum: Is the hon. Gentleman aware that there were safety precautions administered in a supplementary way? The staff was run by one man, and he was able to maintain the aerodrome.
    Mr. Lindgren: He must have had a very busy time.
    Mr. Lennox-Boyd: Is the hon. Gentleman aware that the proportions now are seven air crew, 20 maintenance and 30 office staff?
    Mr. Lindgren: To which service is the hon. Gentleman referring?
    Mr. Lennox-Boyd: Throughout the Corporation.
    Mr. Lindgren: We are dealing with a single service.

    Brabazon Aircraft (Landing Facilities)
    Mr. William Teelingasked the Parliamentary Secretary to the Ministry of Civil Aviation whether he will give a list of the airports where the Brabazon will be able to land in parts of the world served by British airlines; and how many of these are within reasonable distance of each other in case of one of them being unserviceable.
    Mr. Lindgren: The Brabazon I was designed for the North Atlantic route. It is anticipated that a re-designed undercarriage, to be fitted to the operational aircraft, will allow of the use of aerodromes on the route as developed for contemporary types. Pending the outcome of a series of engineering experiments, I am unable to give more definite information.
    Mr. Teeling: While I thank the hon. Gentleman for that reply, may I ask if he will make it quite clear, because so many people seem to think that the Brabazon is going to be used elsewhere?
    Mr. Lindgren: It is designed for the North Atlantic. Whether or not it will be used on other routes will depend on the characteristics of the aircraft when it flies.
    Mr. William Shepherd: Is there any aerodrome at present capable of accommodating the Brabazon?
    Mr. Lindgren: It is not a question of aerodromes, but of the bearing strength of the runways. If we can so redesign the undercarriage to take the weight, the existing aerodromes will take the aircraft.

    Glasgow Airport Terminal (Accommodation)
    Mr. Rankinasked the Parliamentary Secretary to the Ministry of Civil Aviation if he is aware of the inadequacy of the accommodation at the Glasgow (St. Enoch) Airport Terminal of B.E.A.C.; and what steps he is taking to secure improvements.
    Mr. Lindgren: This is a matter of management, but I understand that the Corporation is taking steps to improve the accommodation.

    Air Accidents (Inquiries)
    Mr. Keelingasked the Parliamentary Secretary to the Ministry of Civil Aviation why the pilot of an aircraft operated by Atlas Aviation, Ltd., which fell into the sea on 16th April while carrying passengers from Guernsey, two of whom, with himself, were drowned, was allowed to leave Guernsey without a commercial licence and previously for many months to fly without any licence; why Atlas Aviation had been allowed to operate this aircraft without any maintenance schedule having been approved or proper inspections made; why unauthorised methods of stating time in signals, which caused the expected time of the aircraft's arrival to be misunderstood, were permitted, and whether they are still permitted; why there was no proper traffic control at Lympne; when the report of the Chief Inspector of Accidents, who held an inquiry on 11th and 12th June, will be published; and whether a judicial court of inquiry will be appointed.
    Mr. Lindgren: I would ask the hon. Member to await the Chief Inspector's Report, which will be published shortly. The answer to the last part of the Question is, "No, Sir."
    Mr. Keelingasked the Parliamentary Secretary to the Ministry of Civil Aviation whether he has received, and will now publish, the views of the National Civil Aviation Consultative Council on the procedure of inquiries into air accidents.
    Mr. Lindgren: The National Civil Aviation Consultative Council appointed a Committee to consider this matter last August. I am informed that the Committee's Report will be presented to the Council for consideration at its next meeting. I am unable at present to give any undertaking that the Report will be published.

    Aircraft Production (Consultations)
    Mr. William Shepherdasked the Parliamentary Secretary to the Ministry of Civil Aviation if he will state the Ministries and Committees which have to be consulted before a British civil aircraft is ordered into production.
    Mr. Lindgren: No Ministries or Committees have to be consulted before a private operator places an aircraft order. In
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    regard to aircraft for the corporations, orders are placed by the Ministry of Supply. The Departments consulted are the Ministry of Civil Aviation and, when necessary, the Treasury. In the case of new aircraft types such consultation takes place in the Interdepartmental Civil Aircraft Requirements Committee on which the Departments mentioned and the corporations are represented.
    Mr. Shepherd: Does not this system mean that there is unnecessary obstruction between the user and the manufacturer, and are the Government prepared to continue this system, which has had such bad effects so far in postwar civil aviation?
    Mr. Lindgren: While not admitting the inference contained in the latter part of the hon. Member's supplementary question, what he has said in the first part is alleged by certain corporations, and the Government are at the moment looking into the whole procedure about the ordering of aircraft.

  GERMANY

    Prisoners of War
    Mr. Skeffington-Lodgeasked the Secretary of State for Foreign Affairs whether he will consider adopting a scheme whereby prisoners of war who have volunteered to stay in this country on farms can spend a period of leave with their families in Germany.
    The Minister of State (Mr. McNeil): I am sorry that I am not in a position to add to the reply given on 25th November last by my right hon. Friend the Parliamentary Secretary to the Ministry of Labour and National Service to my hon. Friend the Member for Heywood and Radcliffe (Mr. Anthony Greenwood).
    Mr. Skeffington-Lodge: Will my right hon. Friend promise to look sympathetically at this matter, because the number of men involved is comparatively small, and many have been in this country and in Allied hands for many years?
    Mr. McNeil: I assure my hon. Friend that my right hon. Friend is actively considering such a scheme.
    Mr. Teeling: Does the right hon. Gentleman also realise that at the present moment there is a good deal of Communist

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    propaganda in Germany to the effect that people who are remaining here are being forced to do so, and that if they are allowed to go on leave it will make it much easier to counteract such propaganda.
    Mr. McNeil: I am not aware that such propaganda is effective.
    Mr. Sorensen: Would my right hon. Friend allow any fear of Communist contagion to prevent a Humane concession? Is he also aware that quite a number of German prisoners of war are anxious to continue working here but are equally anxious to see their families? Ought they not to go back and see them?
    Mr. McNeil: The answer to both parts of that question is that I agree with my hon. Friend.
    Mr. Skeffington-Lodgeasked the Secretary of State for Foreign Affairs whether consequent on the breakdown of the London Conference in regard to the future of Germany he will so regulate the future repatriation of prisoners of war as to ensure that none is forcibly returned against his will if there is reasonable ground to suppose he may be the victim of racial, religious, political or physical persecution.
    Mr. McNeil: Yes, Sir.

    Control Commission
    Sir William Darlingasked the Secretary of State for Foreign Affairs if leaflet, "You are Reminded," P.S.S. (H.Q.) 6616/50M./10–4, purporting to be issued by order of the Foreign Office, was issued by his authority; and why it is necessary to take a census of British personnel of C.C.G.
    Mr. McNeil: Yes, Sir. The census was a routine check on the records of postings of staff, preparatory to the institution of a new and simpler recording system.
    Sir W. Darling: Is the right hon. Gentleman aware that the idea has been created that his Department has lost a large number of its employees and is trying to check up upon them by this method?
    Mr. McNeil: I can understand the confusion in the thought of the hon. Member, but my fear is not that we might have lost personnel, but that we might have lost records.
    Sir S. Reedasked the Secretary of State for Foreign Affairs what use is being made of the retired Civil Service administrators released from India for duty with the Control Commission in Germany.
    Mr. McNeil: My Department has sought, and continues to seek, candidates from among these officers whenever appropriate vacancies occur. The main flow of former Indian Civil Servants, however, became available only at a time when recruitment for the Control Commission had been greatly reduced.
    Sir S. Reed: Will the Minister recognise that these men, many of whom are in the prime of life with wide administrative experience and the traditions of a great Civil Service behind them, are specially qualified for work of this description?
    Mr. McNeil: I completely agree. We are aware of these people, and there is machinery for making available vacancies to appropriate people of that type.
    Sir Arthur Salter: Would the Minister consider whether he could not do rather more than wait until these vacancies occur? Does he not think it an admirable opportunity, which should not be lost, of strengthening the Control Commission from a Service with long and honourable traditions?
    Mr. McNeil: I think it is quite a point, but, as the right hon. Gentleman will appreciate, we are in the process of reduction just now.
    Mr. Scollan: Would the Minister take into consideration the fact that the training and the whole attitude of the civil servants in India now being displaced would be totally out of place in Europe?
    Mr. McNeil: I think I ought to take the opportunity of saying that, while I normally find myself in agreement with my hon. Friend, in this case I hardly think the facts would substantiate the charge.
    Mr. Douglas Marshallasked the Secretary of State for Foreign Affairs how many new cars have been allocated to the Control Commission for Germany in the last six months; and what is the average cost per car.
    Mr. McNeil: Two thousand and forty-eight cars have been supplied to the Control Commission during the six months ended 17th January, 1948. Of

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    these, 1,720 were German-produced Volkswagen, which were supplied as a charge against the German budget, and 328 British cars at an average cost of £422.
    Mr. Stokes: Is the Minister satisfied that there are not sufficient supplies of the right type of car amongst the 70,000 wheeled vehicles in the various dumps?
    Mr. McNeil: I notice that my hon. Friend has been pursuing that subject with the appropriate Minister.
    Mr. J. Lewis: Are these makes of cars to replace those now in use by the Commission and, if so, what happens to the second-hand cars?
    Mr. McNeil: There is great difficulty in obtaining second - hand cars because replacements are very scarce indeed. British cars, I am assured, are only granted after the most rigorous scrutiny, but my noble Friend is engaged in looking further into this matter.
    Mrs. Middleton: Can the Minister say how many cars have been lost to the Control Commission during the same period and not subsequently found?
    Mr. McNeil: Not without notice, and I am not sure that I can with notice.
    Mr. J. Lewis: I think the Minister misunderstood my question. Is this new kind of car to replace the cars now being used by the Commission, and what has happened to the second-hand cars?
    Mr. McNeil: I did not misunderstand the question, and I think I have replied appropriately.

    Concrete Shelters, Lübeck (Demolition)
    Mr. Collinsasked the Secretary of State for Foreign Affairs if he is aware that the proposal to blow up concrete shelters now used for storage in the town of Lübeck will cause considerable damage to surrounding property; and if he will make a statement.
    Mr. McNeil: No demolition will be carried out that would be likely to cause damage to surrounding property or public services.
    Mr. Collins: Will my right hon. Friend consider whether it would not be possible to retain those buildings for some useful
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    purpose, at least temporarily, in view of the great shortage of all kinds of accommodation?
    Mr. McNeil: There is provision for the temporary retention, in certain circumstances, of such structures, and we are, of course, keeping it carefully in mind.

    Volkswagen (Cost)
    Mr. D. Marshallasked the Secretary of State for Foreign Affairs what is the cost of the German Volkswagen.
    Mr. McNeil.About 4,200 Reichsmarks at the present rate of production.
    Mr. Marshall: Is it not possible to take greater advantage of these cars instead of British cars, thereby saving the taxpayer?
    Mr. McNeil: I am not insensible to that point.

    Clinic, Buckeburg (Occupation)
    Mr. Skeffington-Lodgeasked the Secretary of State for Foreign Affairs whether in the interests of those who suffer from blindness and diseases of the eyes, he will arrange for the Sick Quarters occupied by the R.A.F., at Bad Eilsen, Buckeburg, in the British zone of Germany, to be returned to Dr. von Tippelskirch, an ophthalmic surgeon who, by reason of the seizure of his clinic by the British authorities, is unable to provide an adequate and indispensable service for his patients.
    Mr. Peter Freemanasked the Secretary of State for Foreign Affairs whether he is aware of the loss to the local inhabitants as well as British and other residents by the requisitioning of the eye clinic previously occupied by Dr. Tippelskirch, at Bad Filsen, Buckeburg, Germany; that as a result no operations can now be performed by this doctor; and, in view of the fact that it is now being used only for minor ailments of the R.A.F., whether some alternative accommodation will be found for them and the clinic made available for the purpose for which it was designed.
    Mr. McNeil: The retention of the premises formerly occupied by Dr. von Tippelskirch has been very carefully examined by my noble Friend the Chancellor of the Duchy of Lancaster and the Control Commission authorities in

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    Germany in conjunction with the R.A.F. I regret that it is not possible to de-requisition the clinic, but the Military Governor has undertaken to see that Dr. von Tippelskirch is provided with suitable accommodation.
    Mr. Edward Evans: Is my right hon. Friend aware of the acute shortage of qualified ophthalmologists in Germany today, and that when I was in Cologne last year I found that only one out of the 20 who were in practice there before the war is now working there? Should not everything be done to conserve eyesight in Germany?
    Mr. McNeil: We are not here concerned with the oculist service personnel which is available. It is a question of accommodation.

    "M" Plan (Document)
    Mr. Piratinasked the Secretary of State for Foreign Affairs whether he will make a statement on the nature of the document known as the "M" Plan; what is the wording of the document; where that document is now; and what was its source.
    Mr. McNeil: The text of the document known as the "M" Plan has now been released to the Press. I have nothing further to add except that His Majesty's Government believe this document to be genuine.
    Mr. Piratin: Would the Minister say— because this is a very important matter—whether he has authentic grounds for saying that he believes it is genuine, and whether he or some important member of his Department has actually seen the original document? Also, has he any recollection of the Zinoviev letter which brought down the Labour Government in 1924—perpetrated by the Opposition?
    Mr. McNeil: I naturally would not make any assertion to the House of Commons without making such examination as lies within my power. I doubt if I have as close a knowledge of the Zinoviev letter as my hon. Friend.

    Rations (Calorie Value)
    Mr. Stokesasked the Secretary of State for Foreign Affairs what was the daily calorie value of the called up ration in each of the six weeks ending 17th
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    January, 1948, in the Provinces of North-Rhine-Westphalia and Hamburg, respectively.
    Mr. McNeil: As the reply contains a number of figures, I will circulate it in the OFFICIAL REPORT.
    Mr. Stokes: Could my right hon. Friend give some idea of what they are? That is no answer at all.
    Mr. McNeil: My hon. Friend put down the Question, and there are a fair number of figures.
    Following is the reply:

    Normal Consumers' Ration.

    North Rhine Westphalia

    Hamburg

    Week ending:

    Calories per day.

    Calories per day.

    14th Dec. 1947

    …

    1,366

    1,456

    21st Dec. 1947

    …

    1,366

    1,369

    28th Dec. 1947

    …

    1,261

    1,317

    4th Jan, 1948

    …

    1,106

    1,317

    11th Jan. 1948

    …

    1,242

    1,438

    18th Jan. 1948

    …

    1,071

    1,276

    The ration level quoted above applies to approximately one-third of the whole non-farm population of North Rhine-Westphalia and Hamburg. Supplementary rations issued to workers of various categories, and pregnant women and nursing mothers, raise the average ration level of the non-farm population by about 300 calories. It is hoped that the ration figure for the present week in North Rhine-Westphalia and Hamburg will be somewhat higher.
    Mr. Stokesasked the Secretary of State for Foreign Affairs what is the estimate of the daily calorie value of the monthly ration to be called up in each of the four months ending 31st May, 1948, in the Provinces of North-Rhine-Westphalia and Hamburg, respectively.
    Mr. McNeil: No recommendations have yet been received from the German Administration in Frankfurt for the ration call-up after 1st February, 1948, as the quantities of indigenous and imported foodstuffs available cannot yet be assessed. Everything possible is being done to restore and maintain throughout this quarter the ration level in force before the recent food crisis.
    Mr. Stokes: Is my right hon. Friend aware that, before the recent crisis, and despite the promised 1,550 basis of

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    calories, the rations were down to 1,200, and, in some districts, are now expected to go down to 950? What is he going to do about it?
    Mr. McNeil: I must say in our defence that we and the Americans have fulfilled exactly the undertakings we gave about imported food. As the hon. Gentleman knows, the difference has been due to faults in the collection of indigenous foods, and we cannot really do more by long-term planning than we have done. My right hon. Friend and my noble Friend are in consultation at this moment.
    Mr. Stokes: But is my right hon. Friend aware that that is not correct, and that, in fact, we have not lived up to our promises, but have kept on saying that the rations would be kept up to 1,550 when they have not been for over a year?
    Mr. McNeil: I repeat that the undertakings we gave with regard to imported food we have discharged.
    Mr. Piratin: In view of the fact that the former Chancellor of the Duchy informed the House a year ago about this problem, what steps has the Minister taken to collect all the grain and other foods which are abundant in the country but which are in the hands of black marketeers?
    Mr. McNeil: We are taking some steps in regard to the German problem which I gather have not yet had the approval of the hon. Gentleman.

    POLES, GREAT BRITAIN
    Sir Stanley Reedasked the Secretary of State for Foreign Affairs what is now the number of Poles in Great Britain; the proportion enrolled in the Resettlement Corps; and the extent, to the latest ascertainable date, of their absorption into industry.
    Mr. McNeil: The number of Poles in Great Britain is about 150,000, including women and children. One hundred and eight thousand have been enrolled into the Resettlement Corps, of which 14,000 have since left the country. Fifty-six thousand have been placed in civilian employment. The strength of the Corps on 27th December was 38,000.
    Sir S. Reed: Will the right hon. Gentleman take into consideration the painful effect in many areas in which these camps are situated of these Poles being maintained in idleness while British workers are called upon for a special effort, and are even directed into special employment?
    Mr. McNeil: I cannot accept the full implication of that question. Of course, I quite understand the resentment of workpeople, but, as the figures which I have submitted show, there has been a continual and steady increase in the employment of these Poles, and, therefore, a steady and continual decrease in the number of people in those circumstances.
    Mr. Tiffany: What is happening to the thousands of Poles who have not been enrolled in the Resettlement Corps?
    Mr. McNeil: My hon. Friend had better put down a Question.
    Vice-Admiral Taylor: Will the right hon. Gentleman say whether the idleness on the part of the Poles is their fault or not?
    Mr. McNeil: I should in fairness admit that there has been a most gratifying volume of volunteering by these people.
    Mr. Hector Hughes: Will my right hon. Friend give the number of Poles in Scotland as distinct from the number in England and Wales, distinguishing the categories mentioned in the original Question—my right hon. Friend is aware that this is a very urgent question in Scotland—and how many Poles are there in Scotland who have not yet been absorbed into industry, and what steps have been taken so to absorb them?
    Mr. McNeil: I do not need to remind my hon. and learned Friend that I come from a Scottish constituency and have a Scottish name.
    Several Hon. Members rose—
    Mr. Speaker: Questions on Poles always take up such a lot of time. Mr. Bower.
    Mr. Hector Hughes: On a point of Order. Is the Minister entitled to make a reflection upon my name, and avoid answering the question I asked?
    Mr. McNeil: On reflection, I would like to take this opportunity of apologising, in case it should be thought that I was reflecting in any way on a good Celtic name. I am more than sorry.
    Mr. George Thomas: Further to that point of Order, Mr. Speaker. Is it in Order for me to point out that it is no reflection to have a Welsh name? The Minister pointed out that his hon. and learned Friend did not have a Scottish name.
    Mr. Speaker: I said Questions on Poles always led to a lot of trouble. This is an example. Mr. Bower.

    NEWSPAPER ARTICLE (TRANSMISSION TO U.S.A.)
    Mr. Norman Bowerasked the Secretary of State for Foreign Affairs why an article of approximately 1,000 words by Mr. L. F. Daniells, of the "Sheffield Daily Telegraph," which was circulated by B.I.S., New York, to American newspapers on 4th December for release on 14th December, was cabled to B.I.S. at a cost of £12 2s. 6d., instead of being sent by air mail at a cost of 1s.
    Mr. McNeil: The article to which the hon. Member refers was sent by airbag from London to New York.

    ARMED FORCES, EASTERN EUROPE
    Mr. Keelingasked the Secretary of State for Foreign Affairs whether the U.S.S.R. carried out its undertaking, under the Treaty of Peace with Bulgaria, to withdraw all troops from Bulgaria by 14th December; and under the Treaties of Peace with Roumania and Hungary, to reduce its forces in those countries by 14th December to the strength necessary to guard the Soviet lines of communication with Austria.
    Mr. McNeil: His Majesty's Government have received formal notification from the Soviet Government that, in accordance with the Peace Treaties, the withdrawal of Soviet troops from Bulgaria was completed on 14th December, and that, on that date, there remained in Roumania and Hungary only those units of the
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    Soviet forces necessary for the maintenance of lines of communication with the Soviet zone of Austria.
    Mr. Keeling: Can the Government con firm these statements from their own knowledge?
    Mr. McNeil: I would be prepared to say that I have no reason to doubt these statements.
    Major Tufton Beamishasked the Secretary of State for Foreign Affairs what is the present strength of the Roumanian Army, Navy, Air Force, labour battalions in receipt of any form of military training or under military discipline, the Siguranza Generale, and any other military or semi-military units, showing each separately; whether His Majesty's Government has full details of the training and equipment of all such units and formations; and what relation the strength of the Roumanian armed forces, both military and semi-military, bears to the strengths laid down in the Peace Treaty.
    Mr. McNeil: Our estimates of the present strength of Roumanian military and semi-military units and organisations are as follow: Army and Frontier Guards, 120,000; Navy, 4,800; Air Force and antiaircraft defence, 13,000; Gendarmerie, 30,000; Police, 15,000. There are no organised labour battalions. The Rumanian Government were asked in November and December for details of strengths, training and equipment, but have not yet furnished the required information. The sizes of the Army, Frontier Guards, Navy, Air Force and anti-aircraft artillery appear to be in the neighbourhood of the limits prescribed in Article 11 of the Peace Treaty. Under Article 12 the Roumanian Government have until 15th March in which to reduce their armed forces to the stipulated limits.
    Major Beamish: When studying these figures, would the Minister bear in mind that the Eastern European countries' police forces, and the secret police forces, are invariably better trained and equipped than the military personnel in their armies?
    Mr. McNeil: While I have no figures of the secret police—if there are such—the figures which I am offered are approximately in conformity with those agreed upon in the Treaty.
    Major Beamishasked the Secretary of State for Foreign Affairs what is the present strength of the Hungarian Army, Navy, Air Force, labour battalions in receipt of any form of military training or under military discipline, police in receipt of military training, including the secret police, and any other military or semi-military units, showing each separately; whether His Majesty's Government has full details of the training and equipment of all such units and formations; and what relation the strength of the Hungarian armed forces, both military and semi-military, bears to the strengths laid down in the Peace Treaty.
    Mr. McNeil: Our estimates of the present strength of Hungarian military and semi-military units and organisations are as follow: Army and frontier guards, 13,000; Navy, nil; Air Force, 300 (with no aircraft). There are no labour battalions and no other military or semi-military units. We have no information about the numbers of Secret Police. The Hungarian Government were asked on 20th December for details of strengths, training and equipment, but have not yet furnished the information. His Majesty's Government are satisfied that the present strength of the Hungarian armed forces is within the limits prescribed in Article 12 of the Peace Treaty, to which the Hungarian Government are obliged, by Article 13, to conform by 15th March, 1948.
    Major Beamish: May I ask how the Minister proposes to obtain this information which this ex-enemy country has not provided, as it should have done?
    Mr. McNeil: I have said no more than that, so far, the information has not yet been furnished.
    Major Beamishasked the Secretary of State for Foreign Affairs whether he is satisfied that the British representatives in Bulgaria, Roumania and Hungary have adequate powers of inspection in order to ensure that the size, training and equipment of the armed forces of these countries are in accordance with the terms of the Peace Treaties; whether these powers of inspection include the right to visit and inspect factories that may be producing war material banned by the Peace Treaties; and what advantage has been taken of these powers.
    Mr. McNeil: The adequacy of the powers of inspection conferred upon His Majesty's representatives in the countries concerned, by the military and final Clauses of the Peace Treaties will largely depend upon the degree of co-operation afforded by the signatories. The right of inspection including the particular case mentioned in the second part of the Question is covered by Articles 35 (3) of the Treaty with Bulgaria and corresponding Articles in the other two Treaties. His Majesty's Government attach great importance to the proper implementation of Treaties, and although this right of inspection has not yet been invoked, they are giving consideration to its detailed application.

    JAPAN (PEACE TREATY)
    Mr. Teelingasked the Secretary of State for Foreign Affairs what is the present position between this country and the United States as regard preparations for the signing of a peace treaty with Japan; and whether Great Britain is prepared to sign such a treaty without agreement having been reached with Russia.
    Mr. McNeil: The attitude of His Majesty's Government towards the procedure for the Japanese peace settlement was set out fully in notes addressed to the United States, the Chinese and the Soviet Governments, which were released to the Press on 14th December. The United States Government have not yet commented on these notes. With regard to the second part of the Question, it is the earnest hope of His Majesty's Government that all the countries concerned may be able to reach agreement on the procedure to be followed in drawing up the treaty of peace with Japan.

    AUSTRIA (BRITISH ZONE)
    Mr. Warbeyasked the Secretary of State for Foreign Affairs what steps he is taking to lighten the burden of the occupation in the British zone of Austria.
    Mr. McNeil: My right hon. Friend indicated to the House on 18th December last that he would do what he could to alleviate the burden imposed on Austria by the continuance of an occupation which His Majesty's Government have made it clear they wish to see terminated. Although we are not yet able to say what

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    precise steps can effectively be taken, I can assure my hon. Friend that this question is now being carefully examined.
    Mr. Warbey: While this question is under examination, will my right hon. Friend bear in mind the possibility of decontrolling broadcasting stations, hotels, theatres and other buildings and property which are in the occupation of our Forces, as a result of which great restrictions are placed on the freedom of action of the Austrian people?
    Mr. McNeil: The question of decontrol consistent with our occupational obligations is being examined.
    Professor Savory: Will the right hon. Gentleman not consider a possible reduction of the civilian staff while, of course, fully maintaining the Army for the protection of the Carinthian frontier?
    Mr. Thurtle: Does my right hon. Friend think that the burden of the British occupation of Austria presses more heavily upon the Austrians than the burden of the Russian occupation of Austria?

    SOUTH TYROL (LOCAL AUTONOMY)
    Mr. Warbeyasked the Secretary of State for Foreign Affairs whether he is satisfied that the proposals made by the Italian Government for legislative and executive organs in the Trentino-Alto Adige region give full effect to the promise of local autonomy for the South Tyrol made in the Italo-Austrian Agreement of September, 1946, which was subsequently incorporated in the Italian Peace Treaty.
    Mr. McNeil: I understand that the Committee of the Assembly which is dealing with the Draft Statute is at present hearing the views of representatives of the German-speaking population. For the present, therefore, I should prefer to reserve comment on the Italian proposals, but I can assure my hon. Friend that the matter is one which His Majesty's Government are following with sympathetic interest.
    Mr. Warbey: Would the Minister bear in mind, in any representations which it may be possible to make to the Italian Government, that this Agreement was freely and voluntarily entered into by the
    196
    Italian Government and was only subsequently incorporated in the Peace Treaty?
    Mr. McNeil: I am sure that that is in the mind of the parties concerned.

  POLAND

    R.A.F. Missing Research Units
    Mr. Turtonasked the Secretary of State for Foreign Affairs what steps he is taking and has taken to persuade the Polish Government to allow R.A.F. Missing Research Units to enter Poland.
    Mr. McNeil: The work of locating the graves of British Service personnel, who died during the last war in Poland is being carried out by two organisations, the Army Graves Service and the R.A.F. Missing Research Inquiry Service. An Army Graves Reconnaissance Party, which included a representative of the R.A.F. Research Service did a good deal of preliminary work last summer and we are asking for facilities for them to renew operations in the spring. We are also seeking for facilities for R.A.F. search personnel. It is true that there have been some delays, owing to the need for discussion with the Poles of the form which our organisation should take, but the Polish Government have never in principle shown any unwillingness to grant facilities. I have heard with satisfaction that General Grosz of the Polish Ministry of Foreign Affairs stated at a Press Conference in Warsaw on 17th December that there were no difficulties preventing the representatives of our War Graves Commission coming to Poland. This will be of great assistance when the Army Graves Service have completed their work and the Imperial War Graves Commission take over in perpetuity.
    Mr. Turton: Will my right hon. Friend make it clear that the R.A.F. Missing Research Units will be afforded the same facilities as the Army Graves Registration Units?
    Mr. McNeil: As I indicated, and as I understand it, they have been working together.

    British Embassy Employee (Sentence)
    Professor Savoryasked the Secretary of State for Foreign Affairs what

    197
    were the reasons for which Madame Marie Marynowska, who had been employed as interpreter in the British Embassy in Warsaw, was condemned to 12 years' imprisoned by a military tribunal.
    Mr. McNeil: Mrs. Marynowska was sentenced to 12 years' imprisonment on charges of acting as intermediary between His Majesty's Embassy and the United States Embassy and another defendant alleged to be a member of an illegal organisation, passing documents alleged to be of a secret nature to those Embassies, and translating a memorandum alleged to have been addressed to the United Nations organisation by a Polish underground organisation.
    Professor Savory: Are these documents really genuine?
    Mr. McNeil: I understand that probably there is an appeal pending. I have no doubt that the hon. Gentleman would agree that I should reserve any information I may have until that is disposed of.
    Major Beamish: Can the right hon. Gentleman confirm that in fact any secret documents are missing from the British Embassy or that any were given to Mrs. Marynowska to hand to someone? Is not that rather important—are there any missing?

    ANGLO-SOVIET TRADE AGREEMENT
    Mr. Piratinasked the Secretary of State for Foreign Affairs in view of Mr. Marshall's statement that he approved of the Anglo-Soviet Trade Agreement, what discussions or consultations he had before signing the Trade Agreement with Mr. Marshall.
    Mr. Platts-Millsasked the Secretary of State for Foreign Affairs in view of the statement by the American Secretary of State that when in London he had discussed the proposed Anglo-Soviet Trade Agreement with His Majesty's' Secretary of State for Foreign Affairs and had approved its conclusion, if a White Paper will be published setting out more fully the nature of these discussions and indicating what other matters then engaging the attention of His Majesty's Government were also submitted for the consideration and approval of the American Secretary of State.
    Mr. McNeil: In the course of the discussions of the whole field of European reconstruction and recovery, my right hon. Friend naturally told Mr. Marshall of the background of our trade talks with the U.S.S.R. There was nothing in the way of formal consultation on the subject. Much less was there any question of submitting our proposals for Mr. Marshall's approval as the Members suggest. My right hon. Friend, therefore, sees no reason to publish a White Paper.

    BULGARIAN PRIME MINISTER (SPEECH)
    Professor Savoryasked the Secretary of State for Foreign Affairs whether, in view of Clause 3 of the Treaty with Bulgaria, he has made any protest at Sofia against the threats made by the Prime Minister to the Leaders of the Opposition that if they continue their criticisms of the Budget, they will undergo the same treatment as that of Petkov, the late Leader of the Opposition.
    Mr. Boyd-Carpenterasked the Secretary of State for Foreign Affairs whether his attention has been drawn to the statement by the Bulgarian Prime Minister to the effect that the killing of the late M. Petkov was the direct consequence of the intervention on his behalf of His Majesty's and other democratic governments; and whether he is satisfied that any useful purpose is served by continued recognition of or relations with a Government capable of the conduct admitted to by the Bulgarian Prime Minister.
    Mr. McNeil: My right hon. Friend has studied the revealing statement of M. Dimitrov, and particularly his reference to Petkov. The tone of M. Dimitrov's speech does not lead my right hon. Friend to expect that protests under the Human Rights Clauses of the Treaty with Bulgaria would be effective at present. We consider nevertheless that on balance the advantage lies in keeping a post in Sofia, particularly since His Majesty's Minister is charged with certain supervisory duties under the Peace Treaty.
    Professor Savory: Has the right hon. Gentleman not called the attention of the. Government to the fact that they have guaranteed the right of free speech and opinion?
    Mr. McNeil: I have no reason to believe that the Bulgarian Government do not know their obligations under the Treaty which they negotiated.
    Mr. Gallacher: Are these two questions, and the report that appeared in some sections of the Press, not a gross and grotesque misrepresentation of the speech that was made by the Prime Minister of Bulgaria?
    Mr. McNeil: I must say that I was so surprised by the Press reports that, although I did not doubt them, I naturally took the normal method of getting as full a text of the speech as I could. I did not find that there was any inconsistency between the abbreviated Press reports and the text available to me.
    Mr. Gallacher: On a point of Order. I want to ask you, Sir, whether, in view of this malicious statement, it is possible to get this speech put into the Library. I will guarantee that it is a gross and grotesque misrepresentation.
    Mr. Speaker: That is not a point of Order.
    Mr. John McKay: Can the Minister say whether this new policy adopted by the Prime Minister of Bulgaria—
    Mr. Gallacher: It is a lie.
    Mr. McKay:—is the new political philosophy that the Labour Party is expected to follow abroad?
    Mr. Mott-Radclyffe: Would the right hon. Gentleman give an assurance that the supervisory duties to which he has referred, which should be exercisable by His Majesty's Government in Bulgaria, will not go by default?
    Mr. McNeil: It is scarcely a subject which I could pursue by question and answer. Opportunity might be afforded in the Debate this week to say a little more about it.
    Mr. Henry Usborne: Would it be possible to put in the Library a copy of this speech?
    Mr. Gallacher: I challenge the right hon. Gentleman to do it.
    Mr. McNeil: I will consider whether a translation of the text that is available to me might suitably be placed in the Library.
    Major Beamish: Is the Minister aware that if M. Lulchev and his half-a-dozen gallant Social Democrat followers in Bulgaria are actually liquidated, it will be the end of the last remnants of the Social Democrat Parties in Eastern Europe that have dared to oppose Communism?

    ROUMANIA (M. MANIU, TRIAL)
    Professor Savoryasked the Secretary of State for Foreign Affairs whether he has made any further protest in Bucharest against the trial and condemnation of M. Maniu, as being contrary to the terms of Article 3 of the Treaty of Peace with Roumania.
    Mr. McNeil: No, Sir. We have been studying documents relating to the case, including those recently published by the Roumanian Government. My right hon. Friend is considering what action can usefully be taken in respect of the proscription of M. Maniu's party and the suppression of the Opposition Press.

  PALESTINE

    Military Equipment (Imports)
    Mr. Niall Macphersonasked the Secretary of State for the Colonies whether he will take steps to ensure that until Great Britain lays down the Mandate for Palestine, no military arms or equipment will be imported into Palestine except for the use of the mandatory Power and its agents.
    The Under-Secretary of State for the Colonies (Mr. Rees - Williams): The authority of the Palestine Government is required for the legal importation of arms, ammunition and military equipment, and no such authority is being granted to non-Governmental bodies. All the resources of the Palestine Government are being used and will continue for the remaining period of the Mandate to be used, to prevent clandestine importation of arms, ammunition and military equipment, whether by land or sea, and whether by Jews or Arabs.
    Mr. Macpherson: Is the right hon. Gentleman aware that this clear declaration of policy will help very much towards the safety of our own troops, both now and after the Mandate is surrendered?

    Security Forces (Withdrawal)
    Mr. Hector Hughesasked the Secretary of State for the Colonies, in view of the wastage of manpower in Palestine, particularly in a police force containing many youths under 21, what is being done to bring these men home, and, pending this, to protect them from injury and death; and will he now make a statement indicating the method, rate and ultimate date of their evacuation from Palestine.
    Mr. Rees-Williams: My hon. Friend's concern for the welfare of the British Section of the Palestine Police Force is shared by His Majesty's Government and by the authorities in Palestine. Until the termination of the Mandate, the British Administration will remain responsible for law and order, and it is inevitable that a large part of this burden will fall on the British Section of the Palestine Police. It is not desirable on security grounds to make any statement on plans for evacuation of the Security Forces.
    Mr. Hector Hughes: Does the Minister not agree that it would be desirable, at least, to bring home the boys under 21, who are badly needed for productive work in this country?
    Mr. Oliver Stanley: In view of the circumstances in recent weeks, is everything being done to expedite the date of the transfer of the Mandate, and to try, if possible, to complete it before 15th May?
    Mr. Rees-Williams: That is another question, and, if the right hon. Gentleman wishes to have an answer to it, perhaps he will put it on the Paper.

    AFRICAN COLONIES (CORPORAL PUNISHMENT)
    Mr. Sorensenasked the Secretary of State for the Colonies why returns for corporal punishment of civilian prisoners in West and East African prisons between 1941 and 1945 show an increase in Kenya and Gold Coast and only a smell decrease in Nigeria and Uganda despite the activities of the Treatment of Offenders Sub-Committee; generally for what offences this punishment was inflicted both in those colonies and in Northern Rhodesia, to what extent offences have fluctuated between 1941 and 1945; what consideration the sub-committee have given to the total abolition of this type of punishment;
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    and what was the average number of strokes inflicted and the highest number respectively.
    Mr. Rees-Williams: The reply is long, and I am circulating the information in the OFFICIAL REPORT. Much consideration has been and is being given to the matter, and some substantial improvements have been made as a result of my right hon. Friend's despatch to Colonial Governors in October, 1946. My right hon. Friend will continue his efforts.
    Mr. Sorensen: Does not the variation indicate that much more has to be done in order drastically to reduce the number of punishments of this medieval character?
    Mr. Rees-Williams: My right hon. Friend is giving this matter his personal attention, and, as my hon. Friend will see from the reply, we have gone into it fully. The difficulty has been a considerable decrease in the number of prison officials available during the war, many of them having been on war service, and also" the increase in the number of persons actually in prison.
    Following is the reply:
    The situation referred to in the first part of the Question must be judged in relation to the increase in the number of persons in prison and to the absence of regular prison staff on war service. The following table shows the percentage of corporal punishments to male prison population in the territories concerned.

    —

    1941

    1942

    1943

    1944

    1945

    Northern Rhodesia

    2·1

    3·4

    6·0

    3·5

    1·7

    Kenya

    0·023

    0·019

    0·023

    0·020

    0·036

    Uganda

    0·37

    0·35

    0·29

    0·12

    0·28

    Nigeria

    0·37

    0·28

    0·56

    0·50

    0·55

    Gold Coast

    0·052

    0·026

    0·09

    0·53

    0·15

    In 1945, the offences punished in this way were: assaulting a warder, fighting and using threatening language, refusing to obey a lawful order and repeated serious offences against prison discipline.
    The total prison offences in the five Territories range from 4,271 in 1941 to 5,884 in 1945. The average number of strokes was 6·7, all with the cane. The highest number of strokes was 24 (once in Uganda and once in the Gold Coast). The next highest was 12.
    In October, 1946, on the advice of the Treatment of Offenders Sub-Committee, I addressed a despatch to Colonial Governors urging them to reduce further the use of corporal punishment in their Territories with a view to its eventual abolition.

  COLONIAL EMPIRE

    Medical Students and Nurses (Training)
    Mr. Sorensenasked the Secretary of State for the Colonies, what training hospitals refuse for training colonial medical students and nurses respectively; and when this discrimination on the ground of colour or origin will be abolished.
    Mr. Rees-Williams: I am not aware that any training hospitals refuse to admit Colonial medical students and nurses on the ground of colour or racial origin at the present time.

    Medical Practitioners (Qualifications)
    Mr. Sorensenasked the Secretary of State for the Colonies, to what extent or under what circumstances colonial medical practitioners trained in the U.S.A. and Canada cannot practise in British colonies; and what action he will take to ensure that they shall be entitled to practise provided their training and qualifications are equated to British standards.
    Mr. Rees-Williams: Most Colonies follow the practice of the General Medical Council of the United Kingdom with regard to the registration of qualifications obtained in the U.S.A. and Canada. Certain Canadian qualifications are registrable by the General Medical Council, but there is no reciprocity between the U.S.A. and the United Kingdom and no U.S.A. qualifications are registrable. There is provision in the legislation of some Colonies for the registration of qualifications other than those registrable by the General Medical Council of the United Kingdom. My hon. Friend will find the details in a memorandum, of which I am sending him a copy. My right hon. Friend knows of no reason why Colonial Governments generally should not continue to follow the practice of the General Medical Council, but he is considering, in consultation with the Governments concerned, the possi-
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    bility of special temporary arrangements being made to permit the registration of doctors who, because of the war, studied in North America instead of in the United Kingdom, provided that their qualifications are satisfactory.
    Mr. Sorensen: Surely, in view of the scarcity of qualified medical men in the Colonies, it is unfair to advance the plea of no reciprocity as an excuse for not allowing some of these men who could practise in the Colonies to do so?
    Mr. Rees-Williams: It is a question of protection of the public, and we consider that it is quite as important for the public in the Colonies to be protected as it is that the public in this country should be protected. A doctor may have the same qualifications, broadly speaking, to practice in the Colonies as he has to practice here.
    Mr. Sorensen: Then it is a question of reciprocity, and not of qualifications?

    ANTI-SUBMARINE SCHOOL, LONDONDERRY
    Sir Ronald Rossasked the Minister of Defence when work will be started on the building of Area Combined Headquarters of the R.N. and R.A.F. Anti-Submarine School, Londonderry.
    The Minister of Defence (Mr. A. V. Alexander): I hope it will be possible to make a start in the near future.

  FOOD SUPPLIES

    Miners' Rations
    Mr. Raikesasked the Minister of Food if he is aware that miners of hematite ore are not accorded the same rations as coalminers; and if he can give the reason for this discrimination.
    The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summerskill): Hematite ore miners receive the same rations as coalminers, with the exception of the extra 1s. worth of meat which was given to stimulate the output of coal. Unfortunately, supplies do not permit the extension of this concession to other groups of heavy workers.
    Mr. Raikes: Do I understand from that reply that iron ore workers are to be penalised in regard to the meat they

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    receive since they have not either the numbers or the political influence of the Miners' Federation?
    Dr. Summerskill: That is not the case.
    Mr. Butcher: Are we to understand from the Minister's reply that miners do not require the meat for reasons of health?
    Mr. Raikesasked the Minister of Food what requests he has received from iron ore employers' associations for a deputation to discuss granting to underground iron ore workers the same rations as are given to underground coalminers; and what was his reply.
    Dr. Summerskill: My right hon. Friend received a request on 11th November from the Board of Conciliation for the Cumberland iron ore trade to meet a deputation to discuss extra rations. A reply was sent advising the Board that, in order that the claim could be examined, we should be grateful if they would put the suggestion first to the T.U.C., who have advised us on these matters ever since 1939.
    Mr. Raikes: Do I understand from that reply that it is the policy of the Government to discourage employers' associations from making applications on behalf of their workers for their welfare, and is that in harmony with the declared wish of His Majesty's Government to promote goodwill in industry.
    Dr. Summerskill: No, Sir. We do not discourage anybody, but, application having been made, we allow the Advisory Committee of the T.U.C. to decide the matter.

    Bananas
    Squadron Leader Flemingasked the Minister of Food how many tons of bananas were landed at United Kingdom ports in the years 1946 and 1947, respectively.
    Dr. Summerskill: One hundred and one thousand, five hundred and fifty tons in 1946, and 103,763 tons in 1947.
    Squadron-Leader Fleming: Can the Minister assure us that there will be some plan to increase the supply of bananas this year in order to give the housewife a chance to live less austerely?
    Dr. Summerskill: We are trying to do that, and we hope that about 160,000 tons will be imported next year.
    Sir R. Ross: Will the Minister consider allowing grown-up people one banana a year, as many of them have not had a banana in 10 years?
    Dr. Summerskill: Yes, certainly, an expectant mother can have one.

    Survey, Marylebone
    Sir Wavell Wakefieldasked the Minister of Food for what purpose an official from his Department has been visiting old age pensioners living in Wharncliffe Gardens, Dicksee House, Nightingale Buildings, Cooper House, Exeter Street, Christchurch Dwellings, Bell Street, Fisherton Street and Lisson Street, St. Marylebone; if he is aware that the official examines and weighs all items of food in the larder, inspects the coal box and carries out an exhaustive questioning of the old age pensioners as to how every penny of their pension has been spent; and will he stop this personal interrogation of old people about their personal affairs.
    Dr. Summerskill: I assume that these old people were visited by an investigator from the London Press Exchange, Ltd. who conduct the Family Food Survey on behalf of my Department. Larder stocks can be weighed only with the householder's permission. Any information collected is given quite voluntarily, and no questions are asked about coal, or about expenditure on anything but food.
    Sir W. Wakefield: Is the Minister aware that this inquisition has caused great distress among old people, and would it not be far better, if information is required, to get the welfare workers and voluntary helpers, who are well known to these old aged pensioners, to make such inquiries rather than have an inquisition of this type which is reminiscent of the Gestapo of Germany?
    Dr. Summerskill: I am surprised to hear the hon. Gentleman compare this with the Gestapo in Germany because it was introduced by the Coalition Government in 1941.
    Mr. Thomas Brown: Will the Minister have the results of the investigations which have been made—under whatever heading—printed and placed in the Library so that Members of this House will understand how these poor creatures live?
    Dr. Summerskill: I am quite prepared to let any hon.. Member have a copy of

    207
    the latest investigations, if they care to avail themselves of it
    Mrs. Ayrton Gould: Can my hon. Friend say whether, before the questions are asked, it is always made quite clear to old age pensioners that any information they give is voluntary?
    Dr. Summerskill: Yes. In the past these people have co-operated in a very friendly spirit, and this has been the most practical way of discovering the standard of living of what we consider to be the vulnerable groups of the population.

    Milk Bottles
    Sir S. Reedasked the Minister of Food whether in view of the large destruction of milk bottles and the loss and inconvenience involved, steps will be taken to ensure that milk suppliers demand a deposit from all customers.
    Dr. Summerskill: No, Sir. A milk bottle usually lasts for some 40 journeys, which compares favourably with other glass containers, and does not suggest that breakages are on an exceptionally large scale.
    Sir S. Reed: Will not the Parliamentary Secretary look into this matter again because the immense destruction of milk bottles causes inconvenience and hardship to those who sometimes cannot get milk delivered in bottles; and also because of the nuisance caused in the countryside by broken bottles being scattered far and wide?
    Dr. Summerskill: The hon. Gentleman has been misinformed. There is no shortage of milk bottles today, and I would tell him that the milk distributors are given an allowance in their profit margin to cover replacements. Therefore, if we asked for a deposit, we should be paying the milk distributors twice over.
    Mr. Scollan: Is my hon. Friend aware that in the case of jam jars a charge is made, with the result that the breakage and loss of jam jars is about 100 per cent. less than in the case of milk bottles, which are given free and which, in many cases, are obviously wasted?

    Canned Corned Meat (Imports)
    Mr. Spenceasked the Minister of Food what quantity of canned corned meat has been imported in 1947; from
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    what countries this meat has been imported; and how payments have been made.
    Dr. Summerskill: One hundred and seventeen thousand, eight hundred and one tons of canned corn meat were imported in 1947 from Argentina, Australia, Brazil, Kenya, New Zealand, Paraguay and Uruguay. All payments were made in sterling in this country.

    Bacon
    Mr. Basil Nieldasked the Minister of Food what quantity of bacon was exported from this country to Portugal during 1947.
    Dr. Summerskill: None, Sir.
    Mr. Wyattasked the Minister of Food why, in view of the small allowance to individual citizens, allocations of bacon are given to cafés, restaurants and canteens.
    Dr. Summerskill: Since rationing was introduced, the practice has been to provide allowances to catering establishments on the number of meals served of rationed foods, including, of course, bacon, on the basis of the domestic ration. The scale of these allowances was reduced to restaurants and cafés which do not impose a maximum charge of 2s. 3d. per meal last September. We are unwilling to go beyond this to give them no bacon at all. We should still less be prepared to take away the supplies of bacon from canteens.
    Mr. Wyatt: Is my hon. Friend aware that, in the present great shortage of bacon, it only serves as an irritant to many workers when they go into their canteen and discover that the bacon allocation has been eaten by the management side of the factory?
    Dr. Summerskill: I can assure my hon. Friend that it would cause more irritation if some of our late-shift workers went to the canteens and found that they could not get any bacon for their well deserved breakfasts.
    Hon. Members: They cannot.

    Snoek Cargo (Inspection)
    Mr. Boyd-Carpenterasked the Minister of Food if the consignment of snoek brought to this country in the s.s. "Novelist" has yet been examined by his Department.
    Dr. Summerskill: Samples from this cargo have been inspected. The detailed report is not yet available, but I am glad to say that the preliminary indications are that this consignment shows an improvement over previous shipments.
    Mr. Boyd-Carpenter: In view of the rather modified enthusiasm expressed in the Parliamentary Secretary's answer, may I take it that the full report will be available to hon. Members when it is ready?
    Dr. Summerskill: We are expecting the analyst's report in a week or two, when I shall be only too pleased to let the hon. Member know the result.
    Lieut.-Colonel Geoffrey Clifton-Brown: Can the Minister say whether it is true that the tin for the containers in which to bring over this unwanted fish is sent out from this country?
    Dr. Summerskill: I must ask the hon. and gallant Gentleman to put down that question.

    Chocolate (Export)
    Mr. De la Bèreasked the Minister of Food to what extent the export target which has been set to the chocolate manufacturing industry for 1948 is in excess of the exports of the industry in any year prior to 1939.
    Dr. Summerskill: The export target for chocolate and sugar confectionery for 1948 exceeds the exports of the industry in the year 1938 by, approximately, 4,300 tons. No separate target has been fixed for the export of chocolate alone.
    Mr. De la Bère: Is the Minister aware that chocolate is a very nourishing food, not merely for children, but for adults as well, and can she give any reason why we should export from this country, when we are short of food, something which is really needed by the whole population? It seems fantastic.
    Dr. Summerskill: The hon. Gentleman is probably not aware that the exports of chocolate and sugar confectionery correspond to a quarter of an ounce of the weekly ration of the population, and, furthermore, that, in return for this, we get foreign currency which we can translate into animal feedingstuffs, meat and dairy products.
    Mr. De la Bère: Is the Minister aware that it is really quite fantastic not to do what I am asking? Why send out of the country food which is wanted here? I shall raise the matter over and over again on the Adjournment.
    Dr. Summerskill: May I refer the hon Gentleman to the statement made on this subject to the hon. Member for Chichester (Mr. Joynson-Hicks) on 14th July?
    Mr. De la Bère: It is a thorough scandal.

    Potatoes
    Mr. Ronald Chamberlainasked the Minister of Food what effect the variation of subsidies to potato growers, as between January and February, is having in the matter of market supplies.
    Dr. Summerskill: None, Sir. There is no subsidy payable.
    Mr. Chamberlain: While I appreciate the fact that I should have put down the words "fixed prices" instead of "subsidies," may I ask if the Minister is aware that there have recently been very serious shortages of potatoes in my constituency of Norwood, and does not she think that there is some connection between these shortages and the increase in fixed prices on 1st February?
    Dr. Summerskill: The shortages in my hon. Friend's constituency can be attributed to the normal seasonal reductions in loading during Christmas.

    Dinner, Poplar Town Hall (Licence)
    Mr. Boyd-Carpenterasked the Minister of Food for what reason and by whom, was authority given for the holding of a dinner organised by the Bow and Bromley Labour Party at Poplar Town Hall on 8th January, 1948, which was attended by, approximately, 270 people.
    Dr. Summerskill: The divisional food officer authorised this dinner for the entertainment of old folk and children, in accordance with the Government's policy, which I explained at some length during the Debate in the House on Thursday 27th November.
    Mr. Boyd-Carpenter: In view of the Parliamentary Secretary's answer, will she consider—if I send her certain photographs taken at the dinner, which make

    211
    it quite clear that the vast majority of the people attending were neither particularly old nor particularly young, and if the licence was given on the grounds which she has stated—whether it was granted as the result of a false and fraudulent application?
    Dr. Summerskill: I am certainly prepared to look at the photographs, but I must remind the hon. Gentleman that it is very difficult these days to estimate people's ages.
    Mr. Keeling: As the photographs clearly show that a very large number of the ladies present were much younger than the average ex-Service man, and, possibly, have not rendered so great a service to their country, may we take it that the ban on ex-Service men's dinners will now be removed?
    Dr, Summerskill: No, Sir.

ROYAL NAVY (OBSOLESCENT SHIPS, DISPOSAL)
The Civil Lord of the Admiralty (Mr. Walter Edwards): I wish, Mr. Speaker, with permission, to make a statement on decisions which have been reached to dispose of certain major units of the Royal Navy.
The battleship strength of the Royal Navy has been under review in the light of the age and condition of the ships concerned and their possible value in a future emergency. The useful life of a battleship is normally reckoned to be approximately 20 years. This period is calculated on a normal peace-time usage, and is greatly reduced when the vessels are subjected to arduous war service. As a result of the review, the Admiralty have come to the conclusion that of the capital ships remaining in the Royal Navy, "Queen Elizabeth," "Valiant," "Renown," "Nelson" and "Rodney" are likely to be of the least value as fighting ships.
The possibility of maintaining the battleships in reserve was taken into consideration, but they would be costly to maintain in this state both in money and manpower. Moreover, if they were to be of any value in a future emergency they would need extensive refits and modern-
212
isation, which, in view of the heavy cost and labour involved, could not be justified during the next few years. Even if the work was done, the vessels would fall considerably short of the standard and capabilities of modern construction. In particular their speed could not be increased to such an extent as to render them capable of taking their place in a modern fleet.
In view of the above considerations, instructions have been issued that these vessels should now be scrapped. A number of cruisers and smaller ships, all obsolescent or of little fighting value, will also be disposed of in the near future. This action does not represent any new departure, but is a continuation of the process which has been going on since hostilities ceased, under which redundant and out-dated warships have been scrapped or sold if a market could be found. The Admiralty is satisfied that these reductions do not reduce the effective strength of the Navy below that required to meet any emergency which is likely to arise in the foreseeable future.
Mr. J. P. L. Thomas: May I, on behalf of hon. Members on this side of the House, pay a tribute to the magnificent service of these great ships and those who have served in them for a very long period. including in some cases two great wars? May I also have an assurance that vigorous steps are being taken to replace the loss of this potential fighting strength?
Mr. Edwards: I am very grateful to the hon. Gentleman for the tribute that he has paid to the value of these ships and the men who fought in them. I can assure the House that that feeling is shared throughout the Admiralty in particular, and in the Government as well. None of us wanted to see the passing of these ships—they have certainly proved of very great value to this nation in two serious trials in our history—but, unfortunately, they have lost their fighting efficiency for the future. With regard to the second part of the Question, the Admiralty always have under consideration the question of bringing the Fleet up to the required strength, and the hon. Gentleman can rest assured that that factor will be paramount in our minds.
Commander Noble: Would the Civil Lord give an assurance that there is an adequate programme of construction,

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research and modification, because a very large number of our other ships and equipment are also rapidly becoming out of date?
Mr. Edwards: I think I can give that assurance. This matter is under constant review, and, in the light of the financial position of the country, everything possible is being done.
Mr. Emrys Hughes: Is the hon. Gentleman aware of the serious shortage of steel which is needed in the Clyde at present for commercial shipbuilding, and will he accelerate the process of scrapping these warships?
Sir R. Ross: Will the Admiralty publish a list of the other ships, besides capital ships, which it is proposed to scrap immediately, and will they publish from time to time supplementary lists if they decide to scrap additional ships? Further, has the Admiralty borne in mind the great value, particularly for escort purposes, of obsolescent capital ships, and could the decision to scrap the "Nelson" and "Rodney" be reviewed?
Mr. Edwards: I am afraid the answer to the latter part of the question is "no," because this matter has received very careful consideration indeed. With regard to the first part of the question, I can assure the hon. Gentleman that the position is fully covered. As I have already stated, the Admiralty are alive to the necessity for maintaining the strength of the Fleet. I think the best way of meeting the hon. Gentleman's request would be to arrange for Questions to be put down periodically, when we should be only too pleased to consider the publication of further names.
Mr. Henderson Stewart: Is the hon. Gentleman aware that by the scrapping of a considerable number of these and other capital ships, a large gap is created in our fighting Services? In those circumstances, is it not proper that the Minister should indicate now to Parliament precisely what replacement programme is in mind?
Mr. Edwards: There really is no such gap. This matter has been taken very carefully into consideration. Perhaps I might repeat the last sentence of my statement:
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"The Admiralty is satisfied that these reductions do not reduce the effective strength of the Navy below that required to meet any emergency which is likely to arise in the foreseeable future."
Mr. Scollan: Is there not something inconsistent in the Government's policy of scrapping these battleships because they are out of date, while the Army is equally out of date and yet it seems to be quite satisfactory?
Mr. Edwards: This is a matter for the Admiralty, who have decided to scrap ships which they regard as being of no further use to them.
Mr. Joynson-Hicks: Can the hon. Gentleman assure the House that there are available facilities for scrapping five capital ships simultaneously, and for the absorption of the scrapped material? Would it not be better to stagger the rate of scrapping so that the industry can cope with the material ship by ship?
Mr. Edwards: I do not think there are five places where these ships can be scrapped simultaneously. I should tell the House that this scrapping will mean the saving of about 1,000 officers and men in the Navy. The longer we keep these vessels doing nothing and absorbing men, the more costly they become.
Mr. J. P. L. Thomas: May we also be assured that the scrapping of these vessels will not result in the reduction of the strength of the battleship training squadron based at Portland?
Mr. Edwards: The scrapping of these ships will have nothing at all to do with the battleship training squadron at Portland.
Vice-Admiral Taylor: Can the House be informed how many battleships will be left after these five have been scrapped?
Mr. Edwards: We have five very good modern battleships and a new aircraft carrier, and they are as good as most battleships which may be obtained by any other country in the world.
Mr. Usborne: When experts at the Admiralty examine the case for obsolescence in regard to a particular piece of equipment, does it further occur to any of them that the whole case for national Armed Forces is, in fact, obsolete?
Major Legge-Bourke: May I ask the hon. Gentleman if this scrapping will cause any alteration in the building programme and whether the existing building programme has the cuts in these vessels taken into account?
Mr. Edwards: This had nothing whatever to do with the present building programme.
Major Bruce: Will the hon. Gentleman give an assurance that all possible material will be salvaged and put to every possible purpose instead of being destroyed as in previous cases?
Mr. Edwards: Yes, Sir, I will readily give that assurance.
Dr. Segal: In view of the sentimental value attached to some of these ships, will my hon. Friend give an assurance that there is absolutely no other alternative to scrapping them—such as training or use in recruiting?
Mr. Edwards: There is no real alternative to scrapping them except a waste of manpower and money. There is a shortage of scrap in the country, and, as a result of the scrapping of these vessels, we anticipate obtaining something like 82,000 tons of scrap.
Mr. Medland rose—
Mr Speaker: I think we should proceed with the next Business.

BILL PRESENTED
  GAS BILL
  To provide for the establishment of Area Gas Boards and a Gas Council and for the exercise and performance by those Boards and that Council of functions relating to the supply of gas and coke and certain other matters; for the transfer to such Boards as aforesaid and to the said Council of property, rights, obligations and liabilities of gas undertakers and other persons; for co-ordinating the activities of Area Gas Boards and the National Coal Board relating to carbonisation; to amend the law relating to the supply of gas; to make certain consequential provision as to Income Tax; and for purposes connected with the matters aforesaid, presented by Mr. Gaitskell; supported by Mr. Herbert Morrison, the Chancellor of the Exchequer, Mr, Woodburn, the Attorney-General and Mr. Robens; to be read a Second time upon Monday next, and to be printed. [Bill 39.]
ORDERS OF THE DAY

  CINEMATOGRAPH FILMS BILL
  Order for Second Reading read.
  3.43 P.m.
  The President of the Board of Trade (Mr. Harold Wilson): I beg to move, "That the Bill be now read a Second time."
  This Bill is presented at a time of very great difficulty and uncertainty in the film world. Its main purpose is to amend, though in general to continue, the provisions of the Cinematograph Films Act of 1938, which laid down the means of protection for the British film industry by means of quotas and which, in the absence of new legislation, would he expiring this year. In a few minutes I hope to re-examine and re-state the need for some continued form of protection for the British industry in our own market and to explain why in this Bill the Government is proposing a change in the form of the quota.
  Before I do so, I feel it is right to say—and I am sure the House will agree—that the value and the effectiveness of the quota provisions will to a very large extent be determined by the somewhat fitful and so far unproductive negotiations with the American film producers about the ad valorem import duty imposed on 7th August last and the subsequent embargo by Hollywood on the further shipment of films to Britain. If the present deadlock surrounding this embargo continues, the protection of the British film industry by means of exhibitors' quotas will be quite unnecessary and academic because the absence of new American films from the stock-in-trade of the exhibitors will mean that sooner or later the quota will automatically be nearly 100 per cent. even without any special action by the Board of Trade under Clause 2 of the Bill.
  I should be out of Order if I attempted to go again into all the arguments for and against the films duty, which has been fully debated in this House, but it might assist the House if I were to indicate briefly the present position of the negotiations on the embargo as we see it so as to put the Bill in its proper setting. As the House knows, no solution to this

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  embargo problem is in sight. We ourselves stand by the import duty and I do not think I need labour the point that we cannot continue finding dollars to meet the payments due on American film earnings here. We are prepared to make any reasonable arrangement and we have stated that we are prepared to work out a scheme which would allow extra earnings for foreign films to be taken out of the country, to the extent that our British films earn more money overseas. We are not interested merely that British films be "taken" by overseas distributors: we want to see them really effectively shown, and to the extent that they are, and dollars actually earned, we are prepared to propose some modifications of the duty.
  But I want to make if quite clear that we cannot contemplate any scheme which, while based on the duty, provides for a lower rate coupled with some blocking of part of the dollars earned. This would only postpone the dollar problem. I am sorry to say that such proposals as we have received from the American industry do not seem to be founded on anything like a real understanding of the position. It is possible that Hollywood is basing its attitude in these embargo negotiations on the hope that with passage of time the needs of our cinemas for new American films will drive the Government to propose to the House that the duty should be dropped, or severely modified. I should be very loath to think that any delay on Hollywood's part in making constructive proposals, or in accepting our own latest proposition for the ending of a deadlock which is inconvenient to us, and very costly to Hollywood, could be based on so slender a foundation.
  It is true that if the embargo on the supply of further films continues indefinitely, the effect on box office earnings and on the choice of films open to the public will, of course, be considerable. So far we have barely begun to feel the effects. In general, cinema exhibitors have been able to maintain both their earnings and the choice of films open to the public by the showing of British films, or of Hollywood productions which were already in this country before the import duty was imposed, and also by the reissues of older American films which were good enough to go on attracting cinema-goers even on re-issue. The supply of American films now in the country can-
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  not, of course, be expected for long to attract the film-going public with anything like the same regularity of attendance as a constant succession of new issues would; and, of course, it will take a considerable time for home production to be expanded to anything like the rate necessary to fill the gap.
  I think it is only right to add that if no settlement of this embargo is reached and if the British film industry over a period of time answers the Government's call for a big increase in production, then our quota policy will be based on what the industry can then produce in the way of films of the right quality. If no settlement is reached it will certainly mean a serious position for many exhibitors. If this should be the position, and I am sure the House will join with me in looking forward to a quick settlement, I should regard it as my own duty to do everything I could to see that the British films available were allocated as fairly as possible as between the independent cinemas and the circuits. This would also mean—and it is no good blinking the fact—that our present cinema-going habits, with two feature films and the twice-weekly change of programme which is provided at many theatres, could not be continued.
  If the choice is between some modified austerity in the cinema and further reductions in food, I am sure that the House and the country will be solidly behind the Government in standing firm in this matter. Confident of that, I am sure I can say to Hollywood that if they believe that they can squeeze us into modifying our attitude on the duty by continuing the embargo, they are backing a loser. I am sure that they would be the first to agree that if the choice is between food and films, we must reserve our dollars for the food.
  In facing the position that will arise if the present deadlock is not removed, I should not like to give the impression that we expect the deadlock to continue. Indeed, if we did, we should not regard it as worth while to introduce a Bill which rests on the assumption that some settlement of this problem will be found in the not very distant future. The import duty is an emergency measure, dictated solely by our lack of dollars and not imposed with any thought of conferring protection on the British film industry. Within the limit

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  of our ability to pay for them, the best of Hollywood's films will always be welcome in this country. So, of course, will be the products of Continental studios which we all look forward to seeing maintained at the very high standard they set for themselves and the world in prewar days.
  Even given a settlement of the problem associated with the duty and embargo, I feel I should make it clear that the Government do not see overseas producers continuing to enjoy the same proportion of British screen time they have had in the past few years. The expansion of the British film industry which was envisaged when the former Act was passed has not taken place owing to the war and, of course, to the dislocation resulting from the war. Enemy damage to studios, the wartime interruption to both the production and the exhibition of British films, and the deployment of a large part of our industry on war work of one kind or another, have held us back for the best part of 10 years. British films today are occupying only about a fifth of our screen time, considerably less than was contemplated when the 25 per cent. quota was inserted in the previous Act.
  If it is true that the quantity of British films has been affected—seriously affected—by the war, there is no doubt that British films have gained a reputation over the whole world for quality, a reputation by no means confined to or even principally gained by the so-called prestige films. Those who, even in the very dark and uncertain days after 1940 took the courageous measures which were necessary for rebuilding the industry, and creating its new reputation for quality, have played a part in the industry out of all relation to the dollars which their products have earned—or saved—and out of all relation to box office takings. I am sure the whole country is prepared to recognise that.
  What I am perfectly certain of is this, that if the cinema-going public had the choice today of seeing additional British or additional American films, they would demand a very much larger number of British films before their taste for them was glutted. The day has quite gone when one inserted a British film into a programme with an apology for doing so. I should myself very much doubt
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  whether, under free and equal conditions, and an adequate supply of films, our own cinema going public would wish to see as much as 50 per cent. of imported films, provided our own producers had the confidence and the resources necessary to make enough films of the right quality. So in my submission this House, if it endorses this Bill, will not only be contributing to a solution of our long term balance of payments problem: it will also be making it possible for the British cinema goer to see the films he or she wants to see.
  Perhaps now I should say something about the lay-out of the Bill itself. As the House will have seen, there are only 10 Clauses; and the rest of the print, from page 8 onwards, consists of two Schedules. This is because the greater part of the ground that needs to be covered is ground which has been already dealt with by the Cinematograph Films Act, 1938. The new Clauses, therefore, deal in the main with new exhibitors' quota provisions to replace the expiring provisions of the 1938 Act, and with certain other points of substance on which a need has now emerged for amending the present Act or for adding to it. For the rest, and subject to certain changes, the Act will be continued.
  The new provisions will entail some consequential amendments to various detailed provisions surviving from 1938, and one or two other minor amendments of the 1938 Act are desirable for one reason or another. The 10 Clauses of the new Bill are, therefore, followed by a First Schedule which amends or repeals various provisions of the Act of 1938. Part I of the Schedule deals with amendments and Part II deals with repeals. The latter includes the repeal of the renters' quota provisions enacted in 1938, and the formal repeal of the whole Act of 1927. The Second Schedule sets forth the revised text of the 1938 Act as that will read when amended, and the new words now written in by the Bill are printed in this Schedule in heavy type.
  The major point in the Bill, of course, is the provision for the maintenance of quota protection. All sections of the industry were given an opportunity to give their views on the form of protection which should now be provided, and a most useful report—published as a non-Parliamentary publication last July—has been

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  received from the Cinematograph Films Council, which includes not only representatives of the trade but also independent members. From these consultations it became quite clear that, while on individual issues there were many and quite substantial differences of opinion between one section of the industry and another, there is throughout the industry general agreement that the framework of the present Act was sound, and that it should be retained with various adaptations to meet the new conditions of today.
  The main change in the quota mechanism is, of course, the abolition of the renters' quota and the remodelling of the exhibitors' quota. The renters' quota was thought to be necessary in the Act of 1938 because, in the then prevailing conditions there could otherwise have been no assurance that sufficient films would have been forthcoming to meet the quota requirements of the exhibitors, which were fixed within quite narrow limits by the First Schedule to that Act; and there could not have been any certainty that production resources would not be from time to time seriously underemployed. During the war and since the war, apart from quite recently, studio space in this country has been quite insufficient to meet the demands on it. It has, therefore, only been possible to maintain the renters' quota obligation by providing an alternative method of fulfilment under which the obligation is assessed in terms of money spent on film production instead of feet of film produced.
  So it now seems that the re-imposition of a renters' quota could not increase the supply of films unless additional studios and other facilities were provided. The principal British producers have said that they have every confidence in their ability to maintain full production in the studios, and their Association has pressed for the abolition of renters' quota as being no longer necessary or justifiable on protective grounds. On the other hand, it is only right to inform the House that the exhibitors have pressed for its retention, on the grounds that without renters' quota the supply of British films would be concentrated in the hands of only one or two renters, and that to keep in being the alternative channels of production and distribution provided by the American companies will do something, so the exhibitors say, to maintain the element of
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  free competition, and to avoid the dangers of monopoly, even if the volume of production is only small.
  After considering very carefully the arguments advanced on both sides the Government came to the conclusion that the case for abolishing renters' quota is the stronger, and. there is, therefore, no re-enactment of renters' quota proposed in the new Bill; and it is for this reason that we agreed to a proposal inserted in the draft Charter of the International Trade Organisation, under which countries undertake not to impose for the protection of their film industries any form of quota other than a quota on the exhibitor.
  It has been possible to go some way towards meeting the point raised by the exhibitors by obtaining from the American industry an undertaking with regard to future production in this country. The Motion Picture Association of the United States has given us an undertaking that, subject only to the qualification that no company will be pledged to make films here if and when it is not sending American films to the British market, the American companies who are its members will maintain film production in the United Kingdom at the rate contemplated by their original plans for production which were formulated early last year. This should result in a volume of production from this source at least as great as we could have expected from it if we had maintained the renters' quota.
  Mr. William Shepherd: Could the right hon. Gentleman say whether he has received from the American corporations any assurances about the quality of the films to be produced here?
  Mr. Wilson: No, Sir. I think they know pretty well they will have to look out for themselve in that matter, owing to the improvements going on in British films. I should, however, tell the hon. Gentleman that I have arranged very recently to meet American producers in this country, and to have a general discussion with them an their whole programme of future production in this country, especially their immediate programme, because we are very concerned to see that they make the fullest use of the studio space that we have available, because studio space is a very scarce asset, and we cannot afford not to use all of it.

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  With regard to the operation of the exhibitors' quota there are two special features to which I should like to call the attention of the House. The first is that I am proposing separate quotas for first features and for the so-called "supporting programme." In the 1938 Act a distinction was made for quota purposes between "long" and "short" films—films respectively of over and under 3,000 feet in length. There is, however, no distinction between first and second features, both of which are included in the long film quota. So, under the existing Act it is possible, at least in theory, for any exhibitor to reserve the whole of his first feature screen-time for foreign films and to fulfil his quota by showing the required footage of British films among the second features. In the usual double feature programme there is generally such a wide gap between the price and the quality of the first and the second feature films that there was always the danger that they could set off, foot for foot, films of one class against films of another class, which would almost mean just no parity in earning power at all, and we considered that wrong.
  The Bill, therefore, proposes under Clause 1 to correct this anomaly by abolishing the "long" and "short" film quotas, substituting separate quotas for the "first feature" and the "supporting programme." This phrase "supporting programme" will cover the items in programme additional to the first feature, except for the newsreels and advertisement films, which will continue to be excluded from the quota calculations. The effect of the first feature quota will be to ensure that foreign first feature films are matched by the proper quota of British films of the same type; and this quota can be calculated now on the basis of the number of films shown, because the variation in length between the different first feature films is not sufficient to make it necessary to distinguish between them. The effect of the supporting programme quota will be to enable foreign second features to be matched by British shorts and documentaries, and so on, and we hope this will lead to an increased showing of the products of this very important branch of the industry. In this case, though, because of the diversity of films involved, the supporting
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  programme quota has to be calculated by reference, not to the number of films, but to footage.
  The second new point about the exhibitors' quota is the power to fix a different quota for different classes of cinemas. Experience has shown that, because of their geographical position, or because they belong to powerful, groups, some cinemas are very much more favourably placed than others for booking a satisfactory proportion of good British films. In other words, this means that any exhibitors' quota which falls equally on all classes of cinema will be bearing too lightly on some cinemas and too heavily on others. That is why, in recent years, between a quarter and one-third of the exhibitors have been in default on their quota obligations, even though exhibitors over the country as a whole have rather more than satisfied the quota percentage on the average.
  The Bill, therefore, includes provisions permitting the obligation to be varied between three main classes of cinema. In the first class are circuits comprising more than 200 cinemas and the prerelease cinemas in the West End of London. The second class covers the main run of the cinemas; that is, all those cinemas which are not in the first class, which I have just mentioned, and all those which do not suffer the special disadvantages of those in the third group. This third group will comprise those about which the Board of Trade are satisfied that their competitive position justifies specially favourable treatment.
  The Bill also gives effect to the Films Council's suggestion that cinemas whose average weekly takings are less than £100 a week should be exempted altogether from the operation of the exhibitors' quota. It has been considered that their importance is not sufficient to justify the amount of administrative and clerical work involved. The House will have noticed the provision for the settlement of the quotas.
  Mr. Benn Levy: Is the right hon. Gentleman prepared to give the figures on which those calculations are based, with regard to cinemas below the £100 a week level?
  Mr. Wilson: Yes, I would be glad to give them, with notice. I think a figure has been quoted unofficially in many

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  quarters, suggesting that there are 1,500 of them; but our own inquiries suggest that the figure is nearer 500 than 1,500.
  On the settlement of the quotas, the 1927 Act contained rigid schedules of rising quota percentages for each year without any provision for adjustments in the light of the actual volume of production The 1938 Act contained similar schedules of percentages, but gave power to the Board of Trade to vary the figures within fixed limits on three specified occasions during the currency of the Act, and subject to affirmative Resolutions of both Houses of Parliament. This change made the operation of the Act a little more flexible, but even so it has not been satisfactory. We see an illustration of that in the fact that, for example, in 1944, when even the duration of the war was still uncertain, an order had to be made in that year fixing the quota percentages for the years 1945 to 1948.
  Clause 2 of the new Bill now provides for a completely flexible quota structure, subject only to the limitation provided for in our international agreement concluded at Geneva, that the quota percentages must not be altered at intervals of less than a year. In accordance with the views expressed by all sections of the industry, the quotas will be fixed in future by Board of Trade Orders, made after consulting the Cinematograph Films Council, and requiring affirmative Resolutions of both Houses of Parliament. The first order, taking effect on 1st October next, has to be made not later than 1st July this year. In fixing the quotas we shall pay attention to the foreseeable output of British films available for exhibition during the next two six-monthly periods. The orders will aim on the one hand at ensuring that every worthwhile British film has a full opportunity of the widest possible exploitation in this country's own cinemas, but at the same time not imposing an undue burden on the exhibitors.
  On behalf of the producers it has been suggested that, in order to give them the maximum degree of security the quota percentages should be fixed as far ahead as possible. I sympathise with that proposal, but at the same time we must be sure that whatever quotas are set the British films will be there to fulfil them, otherwise this places an undue burden on exhibitors. Even in the case of first features, the future output for a long way ahead cannot always he forecast with any
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  degree of certainty. However, I do contemplate an ascending level for the quotas, and they will be fixed from year to year with the most careful attention to the for-seeable output of pictures which will be available. If the producers are giving us the increased volume of production we hope for, it is the Government's firm intention that the quotas shall be correspondingly increased, and the producers can draw up their production programmes on that basis, and with that assurance.
  Though I should like to give some indication of the quota which I might have in mind, it would be very difficult and, in fact, improper for me to do so, because I ought not in any way to prejudice the views of the Films Council, whom I must consult in this matter, and which is to be newly constituted under the Bill.
  Mr. Edgar Granville: What is the existing quota?
  Mr. Wilson: Twenty-five per cent., but as I have explained, it is on a different basis from the new one which comes on the first feature basis calculated by the number of films shown.
  Now I should like to say a word or two about shorts and documentaries. The Government are very anxious to assist and encourage the production of the high class documentary films, in which I think this country has always led the way, and to stimulate the production of other good short films for theatrical distribution. The chief problems confronting this branch of the industry are, first of all, to get a wider showing for their products on the screens of the ordinary commercial cinemas; and, secondly, to secure from their showing a return to the producer which bears some reasonable relation to the costs of production.
  I think it is not unfair to say that, so far, the public has not been prepared to accept factual or documentary films as a substitute for the second feature in a two feature programme, and in fixing the appropriate level for the supporting programme quota we shall have to bear this in mind. On the second point, the question of the rate of return received for this class of film, I hope the cost test imposed by Clause 3(6) will at least help to protect this section of the industry against the so-called "quota quicky" shorts and the cheaply produced featurettes.

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  I now come to Clause 8, dealing with the Cinematograph Films Council. Under the 1938 Act the Cinematograph Films Council—the body appointed under that Act to discharge certain special advisory functions—consists of 10 members representing different sections of the industry, and 11 independent members, including an independent chairman. A statutory body for these purposes will be needed under the new legislation, and both producers and exhibitors have suggested that any such new body should include wider representation of their own sections of the industry. In particular, the producers have argued, not unfairly, that their present allotment of only two seats on the Council is quite insufficient to allow proper representation, particularly as their interests are so diversified, covering long-film producers and producers of documentary and short films. I felt also that it was right to allot two more seats to the trade unions concerned with film production and distribution.
  On the other hand, the total membership is already inconveniently large, and I have reached the conclusion that I could reduce the total number, and at the same time provide for a fair representation of the four main sections of the industry, as well as for a sufficient nucleus of qualified independent persons. The Bill proposes, therefore, to increase the number of trade members from 10 to 14, and to reduce the independents from II to five. I wish to make it quite clear that we all envisage that the Film Council will be as strong a body and a more effective body, in which the independent members, although reduced in number, will play a very full part in influencing the future development of the industry.
  Mr. Skeffington-Lodge: Does not my right hon. Friend regard it as a retrograde step to increase the influence of the trade on this Advisory Council, and to diminish the number of independent members?
  Mr. Wilson: It is not entirely a question of the number of independent members. It is also a question of the things the Council will do and the effectiveness with which they carry out their work. I am very confident that with the new arrangement we are proposing the independent members will be no less effective
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  in the part they will play, even though they are reduced in number. I do not in any way consider it as a retrograde step.
  The old Council was really too large to do a proper job, and the, smaller Council can do a better job, although I would not detract from the very valuable work which the old Council have done under very difficult conditions. The exhibitors, however, since the Bill was published, have expressed to me the fear that the increased allocation given to two of the interests on the production side will leave their point of view inadequately represented on the new Council. If, during Committee stage, hon. Members feel that it is right, we shall be prepared to consider making some adjustment to meet this point, and I shall welcome the views of hon. Members on this matter.
  I now come to Clause 5, which puts into statutory form the undertakings given by two of my predecessors—my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), and my right hon. and learned Friend the Chancellor of the Exchequer—about the further expansion of the major circuits, and the agreement to show a number of films by independent producers. These provisions are, I think, self-explanatory, and I do not think I need elaborate on them. They were very well known as private and voluntary undertakings, and they are well understood. I ought, perhaps, to make it clear that I do not intend to control the groups, covered by the Clause, in such a way as to give one group a permanent advantage over another. This leads me to a matter of fundamental importance in the development of our film industry, whether we are thinking about the production or the exhibition sides of the industry.
  In the past few years, there have been several developments in the organisation of the exhibition side of the industry, and I do not feel it is right that we should pass from this subject without satisfying ourselves on it. I have decided, therefore, as soon as the international film position is clarified, to set up a committee to inquire into the whole question of the distribution and exhibition of films. It will deal especially with such matters as competition and monopoly, the relation of the independent exhibitor to the big circuit, and such practices as the booking

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  of films by entire circuits instead of by individual cinemas. The results of this inquiry will extend far beyond the field of the cinema exhibitor. It will have a bearing on film production—especially as it affects the independent producer—since the prospects of securing a showing often dominate the production side of the industry even more than finance.
  Earl Winterton: In view of the importance of this announcement, can the President of the Board of Trade tell us whether this committee will report to this House? Presumably it will be a Royal Commission?
  Mr. Wilson: It will, of course, be a public report. I can certainly give that assurance. I am sure that the whole House will support the noble Lord in his very natural and characteristic efforts to consider the interests of the small men in this field, which is why we are setting up this inquiry.
  Earl Winterton: I was merely concerned with the House of Commons point of view in this case, as I would be in the case of any other industry where a committee is being set up. That committee should be a committee which reports to this House.
  Mr. Wilson: I understand the noble Lord's intervention, and I can tell him that the House of Commons point of view will be fully protected. I am sure he will agree that we should have at heart the interests not only of the independent producers, but also of the independent exhibitors, who are often forgotten in these matters.
  I should like to say a word about the immediate and also the more long-term prospects of British film production, because it is impossible to discuss quota provisions which lay down the proportion of British films which exhibitors are required to show, without going into the possibilities of expanding production. In the two and a half years since the end of the war, the production side of the industry has been faced with two main difficulties. The first is the shortage of studio space mainly resulting from requisitioning and bomb damage, and the second and more recent is the danger that unsettlement arising from the imposition of the duty, and the American embargo, might make exhibitors, or those responsible for
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  finance, or even producers, chary about expanding production to the utmost.
  As far as the physical rehabilitation of the industry is concerned, I think that good progress has been made. Repair, reconstruction and modernisation of film studios have cost, for building alone, about £1 million since the end of the war. That is the cost of the building work which has actually been done. Building licences have also been granted for about a further £500,000. The completion of this programme should raise the total productive capacity of British studios to somewhere about 75 first-feature films a year. When the building position eases, we shall be prepared to consider proposals from those in the industry—or those who choose to come into the industry—for the construction of further studio space.
  In particular, I hope to be able to earmark building resources for providing British film producers with an additional first-class feature studio, capable of accommodating at least two simultaneous productions. This studio might possibly be provided by adaptations and extensions to existing buildings suitable for conversion, but used at present for other purposes. It will, however, be at least a year before a place can be found for a major studio project of this kind in the national programme of industrial building.
  There is another point. The Government have always been very mindful of the important role discharged in this industry by independent producers, and the need for assuring them of access to studio space for producing their films. Some people believe that the provision of a studio owned or owned and managed by the State could make an important contribution to solving the difficulties of the independent producers. I want to say right away that I have an open mind on this question. I can see considerable advantages in a proposal of this kind, but at the same time there are many difficulties, and we should always be very careful about our approach to such a question where such an important medium of influencing public opinion is involved. Therefore, although I would be prepared to go into this myself and make up my own mind, I am quite sure that my duty is to have this reviewed by a completely independent body which will make a report—I can assure the noble Lord that

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  it will be published and will be available to the House—
  Earl Winterton: And there will be need to have a Debate on it as well.
  Mr. Wilson:—on this question of whether the proposed new studio could be more advantageously operated by the State, or whether the ownership and/or the management of the studio could equally well be entrusted to private enterprise under safeguards which would ensure consideration for the needs of independent producers, which are not always guaranteed in the case of privately owned studio space today.
  I have referred to the unsettlement of the industry as a result of the American embargo, and the danger that this unsettlement would lead to a slackening off in film production. We have done our best to see that the maximum amount of studio space is available to the industry, and it is now more than ever necessary that this space, and the manpower which it employs, should be used to the best advantage and with the maximum efficiency. To this end I am issuing invitations to the various interested parties to nominate representatives to serve on a National Joint Production Council for the production section of the film industry under my own chairmanship. The purpose of this Council will be to keep under review by the Government and by the industry the measures being taken to promote all aspects of production efficiency. As the House knows, the two sides of the industry have also recently resolved to set up joint production machinery, leading, in the near future, to the establishment of individual production committees for each studio.
  To my mind one of the main questions which faces the industry, and which I shall want the Production Council to consider, is that of the costs of production, which appear to have reached a level at which they may well hamper the all-out effort that is needed. I know this is a difficult and intricate problem which can only be solved if all the interests concerned are really determined to work together, and if each of them will make its own contribution to the solution. Film production is traditionally an extravagant industry, and there have been many signs recently that the British film industry has
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  not altogether escaped the infection. Whatever Hollywood can or cannot afford, our own industry, which must in common prudence face the need for covering most of its costs by its proceeds in the home market, just cannot afford extravagance, or inefficiency or restrictive practices—on either side of the industry.
  Naturally, we hope that in America we shall find a wider and expanding market for at least the best of our films—but we cannot count on this, and our costs in general need to come down. This problem must be solved. We cannot allow this industry again to fall from its present high quality into the trough, after its achievements of the past few years. I believe that given a real spirit of cooperation the industry can surmount its present difficulties. I shall watch the position with close attention, and in the light of the facts when I have got them—and, so far, I have not—I shall be prepared to consider whether there is any contribution which the Government can properly make to ensure the stability of the industry in these difficult times.
  Finally, there is, in particular, one field where it is often urged that the facilities available to the industry are inadequate. This is the field of finance—finance for particular films, or even for new concerns—and the suggestion has been made that a films bank or film finance corporation is needed, especially for the independent producer. Certainly if we are to get the expansion we require in the industry, it will need the provision of additional working capital. I feel that the financial problem for a new film is to a large extent associated with its prospects of being exhibited and it may be that the committee I am proposing to set up to consider the exhibition side of the industry will have something useful to say on this.
  But it is the fact that apart from a few of the larger organisations finance for film production has been in the past and still is, very haphazard. The banks play their part in providing against guarantees a proportion of the capital required but the productions that I have in mind—the independent productions—depend ultimately on less settled sources of finance, often indeed on the backing of private individuals. Clearly, in present circumstances we cannot count on adequate support from sources of this kind for the enlarged

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  programme that we have in view. It is not satisfactory for the film industry to be going on as it has been going on recently.
  The Chancellor of the Exchequer and I are going into this question very carefully with all concerned to make sure that any deficiency that is found in the financial facilities available to the industry shall in one way or another be made good by the establishment of appropriate machinery. I would not like to leave this point without saying that in an industry of this kind, where the, criteria are so largely those of art and public taste, the problem of providing finance must be an extremely difficult one. Naturally, I shall be most interested to hear the views of hon. Members—many of whom have considerable experience in this field—this evening.
  I hope that this brief review of the background against which we see the machinery proposed in this Bill operating, will have given the House some idea of the Government's policy for the industry. I hope, even more, that it will have left in the minds of hon. Members, as well of those who live by, or enjoy the products of this industry, a realisation that we are prepared and willing to do anything that lies in a Government's powers to help the industry through the present very difficult times. Whatever may be the outcome of the discussions about foreign films and the American embargo. I am sure it is the desire of Members on all sides of the House to see the production side of the industry developed, in quantity and quality, so that the period of operation of this Bill will see not only the growth of an important economic asset, not merely the development of an industry dedicated to the entertainment and education of the public, but a veritable renaissance of film-making as an art. It is in that spirit that I commend this Bill to the House.
  4.27 p.m.
  Mr. Oliver Lyttelton: We on this side of the House are, in the main, in agreement with this Bill. I believe that this is the first Bill which the present President of the Board of Trade has introduced to the House since he assumed office, and I am glad to think that he has had the opportunity, which was denied to me when I occupied the same position, of getting his hand in with a
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  Measure which is not acutely controversial. We feel that the right hon. Gentleman has handled his subject today in a workmanlike and straightforward manner. It is possible, on the first reading of the Bill, to feel that it is rather academic at this moment, because its object is to, give a favoured market to films produced in British studios. Today, almost anything that has any pretensions to artistic merit or catching the public's fancy—and I am sorry to say these two things are not the same—would be readily snapped up by exhibitors. Nevertheless, I think such criticisms are beside the point because we are legislating for 10 years, and these conditions will change. We should have in our minds the later period of the 10 years, rather than the immediate prospect.
  Before I turn to the more particular aspects of the Bill, I would like to cover some of the ground which the President covered, concerning the future of the industry and its structure. Its future is, of course, now under a cloud of uncertainty. The complete embargo on the import of American films threatens not only the exhibitor but the support which the exhibitor can give to British productions. I believe that at one time there were as many as 450 American films imported into this country, a large number of which, I must say, speaking from my own point of view, were entirely unsuitable for this market or, indeed, for any other market. At the top of this list of 450 there were the finest examples of the art illumined by the genius of great artists like Greta Garbo and Charles Chaplin; in the middle range there were films of high technical achievement, the slick, finished comedy, the lavish spectacle, and the sustained suspense in the drama. But of the last 100 or more I think it would not be unduly rude to say that they reached the bottom of any art which has been put before the public in our century. In this bottom lot vulgarity and insipidity seemed to be engaged in a rather unfortunate competition for ascendancy.
  The exhibitors here require some American films to fill the bill of the 4,000-odd theatres which are here to beguile the public. The cutting off of American films jeopardises the very existence of the theatres. It threatens the amusement of the public, as the President of the Board of Trade has said, and the not inconsiderable number of workers who are employed

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  in the industry, and who, I think, in the main are represented by that engagingly frank and arresting, personality, the hon. Member for West Nottingham (Mr. O'Brien), who, I hope, we shall hear later on. Equally, the British market is absolutely essential to Hollywood. The President of the Board of Trade has confirmed that. I think that American producers should by now understand that we are in earnest when the Government say that we cannot afford the dollars on anything like the scale that they hope.
  So far as I can judge, the Treasury is willing to remit about £4½ million worth of sterling to be changed into dollars—I think there is a misprint in the leading article of "The Times" this morning—and that about £4½ million worth of sterling is the extent to which they would go. That amount, if spent entirely on American films, would not satisfy the American producer, nor would it fill the gap which at present exists in our own requirements. It seems to me that the need of some accommodation on both sides is so great that I hope that the deadlock can be quickly brought to an end. The President mentioned that proposals had been advanced by His Majesty's Government by which this £4½ million might be increased by the equivalent of dollar earnings on British films shown in the United States.
  I should have thought that was a basis of a solution of some part of the problem, and if the Government are unwilling to look at the blocked sterling provisions, I should have thought that there was some other chance of bridging the gap by saying that theatre receipts must be invested in film production in this country, or, in other words, unconvertible sterling might be changed into convertible celluloid, and a very great advantage, I think, would come about in that way. American films would continue to come here in large numbers. A new source of independent production would be built up and healthy competition with our own films would then ensue. I do not suggest—I want to make this very clear—that, in our opinion, His Majesty's Government should retire from the main position they have taken up. I express the hope that with certain good will and flexibility the present problem can be satisfactorily resolved.
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  I turn to the rather larger and longer aspects of the industry upon which the right hon. Gentleman has touched. I do not think that anyone can be other than somewhat apprehensive about the size to which the two groups of exhibitors have grown. The mere figures of the number of theatres that they own does not, I think, give the true picture. Although they only own or control about 1,000 out of the 4,000 odd theatres in the country, they have a very much larger hold in the Greater London area, and it is from that area that the film producer has to look for his market. If he can get into the Greater London market that ensures a wide exhibition of his films. The Bill gives the Board of Trade powers to refuse licences to a group if it gets too large, and it refers specifically to the ownership of more than 200 theatres. It puts in Statute form the gentleman's agreement which has existed with the larger of the two groups for some years past.
  I think that the description "monopolist" which is often levelled at some of the exhibitors is rather a misuse of the term, considering the very keen competition that exists, at least between the two main groups. It is often inaccurately stated that one group is American controlled. In fact, the Americans have about a 25 per cent. voting right in that particular group, and although it is true that they are in a position to exercise a strong influence in the group, that is a very different thing from control. I happen to know also that in the arrangement with their American associates, the British companies have reserved specifically the right to buy or rent films from any producer, and they are not in any way dealing only with their American associates.
  It would be idle to deny that there are grounds for wishing that these two groups did not overtop all the others. At the same time, it would be ungenerous—and I am not accusing the President of the Board of Trade of being so—not to acknowledge that the great revival in British film production and in the prestige and artistic value of these films has been mainly brought about by the powerful support of the three groups of exhibitors. It is a significant thing, which I have been at some pains to check up, that the best British pictures earn more money in this country than the best American pictures. This is most desirable, because

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  it is the most natural and least artificial way of getting an assured market for British films. The fact that that has been achieved is due in no small measure to the support and backing of the big circuits. No one would fail to welcome more independent producers, and those who control the circuit would, I am sure, welcome them too.
  Everyone knows that by far the most hazardous and uncertain part of the film industry is the actual production of films. It is not too much to say that in this country the very nature of the business is unprofitable. I believe that the cost of a first feature film in Hollywood "in glorious Tech." has risen to about £500,000 or £600,000, but as the successful Hollywood producer has on his doorstep about 61 per cent. of the total filmgoers of the world, he can calculate on an appreciable profit. I do not think that it would be right to put the maximum receipts in this country at above £200,000, to which might be added another £100,000 of international money if the film was a success. Therefore, the producer of British films here is starting out with the "weights"—to use a sporting term—doubled against him.
  I support what the President has said about better organisation being necessary to fill the gap. I believe that two minutes of the time of the audience is produced by one day's work in the studio. That seems to be a proportion that might be improved by better organisation. I would have said that this industry was the very last that could say that they
  "fill the unforgiving minute
  With sixty seconds' worth of distance run."
  I had a great friend, a well-known author, who was engaged by Hollywood at an astronomical salary to take the anachronisms out of historical films. He was known in America by the engaging title of a "period-hound." He told me the amount of leisure which he had so far outweighed the amount of work he had to do, that he was positively ashamed to draw his pay packet. I do not profess to be dogmatic about whether such economies could be effected, but I see some grounds when we have this handicap against the American producers, for making a great drive to try to improve our industry in this particular matter
  I do not propose to detain the House for more than a few minutes because I
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  have already said we agree with most of the Bill. It remedies some of the defects of the 1938 Act and lays down much better rules about first feature films. It is a just criticism of the 1938 Act that in the particular times through which we are passing schedules under which the quotas of British films are to be exhibited were too rigid. The cinematograph industry is in the unique position of being partly commercial and partly artistic. Whilst it will be reasonable in a commercial business to lay, down a schedule of deliveries, it would seem to be quite out of place to ask a painter or a composer to produce so many bars or so many pictures either on a time or a footage basis. Pictures and music cannot be turned out in that way. I do not think we have got to the condition—no doubt it is very regrettable to hon. Members opposite—when we can discuss State poetry or a State musical service. When I hear about a film bank and things like that, I am more aware of the dangers than the right hon. Gentleman is of the advantages.
  I agree that the old schedules were too rigid, but in the present Bill the Government have gone too far in the other direction. There is no minimum quota of British films laid down at all, but only a provision that the Board of Trade shall by order and after consultation with the Council lay down percentages which are to be prescribed. I think I am right in saying that the variation in the quota is only subject to three months' notice. I suggest that that is too short a time, because the making of a first feature film is a long business. It may take a year between the time it is started and the time it is exhibited. Those who go into this hazardous business are entitled to more security of tenure about the quota than is given in the Bill. I should like to see the amount of notice increased by three months and possibly six months, so that those who, when they start off, know the quota should also have a chance of finding it the same when they are finished.
  Mr. Wilson: I explained in my speech—and I am sure the right hon. Gentleman, agrees—that it is right that we do envisage ascending quota figures as we go forward. Therefore, whatever quota is in force at a particular moment is bound to be a minimum for the period which will follow. Though I can see the force of the point to increase the notice be-

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  yond three months, to give real security from the time when a film begins to the time when it is ended and when the producer can see it paying its way, it would require two years, which is not possible.
  Mr. Lyttelton: I am obliged to the right hon. Gentleman. I only want to increase the period of notice because it is an uncertain business and the more we can remove uncertainty the better we shall do. Although we have got a rising quota that does not quite feet my point that we should start with a minimum quota, because that is one of the things which does remove one of the financial risks very definitely. That this is a very uncertain business is seen by the extraordinary moves which film producers take to narrow down the risk. Once a film about G-men and gangsters has gone down well, we are treated to a whole series of such films until one more fatuous than the last stops the run. I am told that psychiatrists, the frontiers of the mind and psychopathic crime and punishment are now the rage. I hope at least that we shall not have a run of whimsies, but one never knows. A rather greater period of notice of the fixing of the quota and the need for a minimum quota is necessary, and this is a defect of the Bill.
  I am not quite sure reading the Bill whether the six films produced by so-called independent producers—and I do not know what that means and I think it will have to be more closely defined—are to be included in the quota or excluded from it. I urge very much that there should be a minimum quota of 25 per cent. if the six independent films are excluded and 35 per cent. if they are included. That would be a much more secure basis both for financing and for the production of British films.
  I had some criticism to make about that part of the Bill which related to the special quotas. I should like to have seen some special quotas, even if at a graduated rate, imposed upon the smaller circuits as well as upon the big ones. I am informed that in certain parts of England there are very much smaller circuits which in particular localities have a very dominant position and particularly is that so in Scotland. I do not believe that any hardship would
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  be inflicted if those circuits had also to exhibit films at a special quota rate even if it were reduced below the obligation imposed upon the big circuits. I think it would be wise to alter the 200 laid down in the Bill to about 20 and provide for a graduated obligation.
  I should like to say a word in passing about Clause 4 (4). That is a more than usually elusive piece of drafting and I do not believe that any reader who started to read it without a knowledge of what it purported to mean could understand it, not even if once in his life that person had been a Parliamentary counsel. I believe it means that an itinerant exhibitor can aggregate his showings during his itinerancy and treat them as if the showing had been in one theatre. I have reached that conclusion after consultation with one or two professors of Sanscrit and ancient hieroglyphics. I should like the hon. Gentleman who is going to reply to the Debate to confirm whether that interpretation is correct.
  I turn now to the subject of the six films produced by independent producers which the big circuits are under an obligation to accept. That means 18 films in all. [HON. MEMBERS: "No."] There are three separate circuits at the present moment so it means 18. The Clause as at present drafted is open to serious objections. It gives far too wide powers to unknown people and these films are to be chosen by a selection committee. However, we are left in the dark as to how that selection committee is to be composed and what its terms of reference are to be. The Bill framed as it is would be very valuable propaganda in the hands of the Government—I do not necessarily mean this Government but the Government of the day. It would not be so serious for the present Government, because their life at the worst is very short. Here we are legislating for 10 years. It is not the films which purport to be propaganda which are the most insidious or dangerous. It is the propaganda conveyed by the vehicle of amusement and entertainment that is the most insidious.
  The effect of this Clause might be, unless safeguards can be inserted, that a President of the Board of Trade and his colleagues could at any time insist on a large number of theatres throughout the country exhibiting a film not for its artistic but for its propaganda value. I

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  know what the answer will be, a quite candid answer that the Government have no intention whatever of using it for these purposes. That is really no answer for the House of Commons which has to make the legislation so that these evils are not possible. During the Committee stage we shall be insistent that the composition of the selection committee shall be closely defined and shall try to get some assurances that it will be a really independent body which will look on these matters solely from an artistic point of view.
  I confess, with the hon. Member for Bedford (Mr. Skeffington-Lodge), that I am apprehensive about the change in the composition of the Films Council. That will be developed by my hon. Friend the Member for Bury (Mr. W. Fletcher) when he speaks later. It is a retrograde thing in an industry of this kind to reduce the number of independents when most of us are rather apprehensive that the larger people are a bit too large. It seems to be going against the national tendency in these circumstances which would be to increase the number of independent members or their proportionate representation.
  I have only to repeat that in the main we agree with and support the Bill. It remedies a number of defects which experience shows to have existed in the 1938 Act, and I hope that the Government, having started in the right direction, no doubt an unusual and exhilarating experience for them, will continue in the right direction by giving due weight to the serious and constructive suggestions which I have advanced.
  4.52 p.m.
  Mr. O'Brien: I think the House shares my view that my right hon. Friend the President of the Board of Trade has handled his difficult case very efficiently. Not only has he given a short but adequate summary of the difficulties before the film industry at the present time, but he has done it with an attitude that cannot provoke too much controversy. The right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) was quite correct when he said that the Minister, in the short time that he has been at the Board of Trade, has adapted himself very finely to a difficult and highly complicated industry.
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  We of the trade, particularly of the trade unions, appreciate very much the fact that the Minister has brought forward a Bill which has aroused the least controversy in the film industry for many years, particularly with regard to the overriding issue of the American tax. Hon. Members will appreciate that there are 15—probably more—organisations of employers and trade unions in the film industry. These organisations are highly competitive one with the other, even among the trade unions. While there is a common interest in all the employers' organisations and all the trade unions, there are other factors which bring about natural divisions of opinions and policies When we consider that these 15 organisations have been brought together and have discussed their business with the right hon. Gentleman, we appreciate how progressive has been his way of handling the situation.
  We on the labour side particularly welcome the proposed step to establish a joint production advisory council under the right hon. Gentleman's presidency. I do not know whether he appreciates all that he is taking on, or grasps the significance of getting all the opposite numbers in the film industry round one table under his chairmanship. He indicated in his speech some of the factors and some of the things he hopes to do. God bless him and God be with him. I wish him every success. Among the qualifications he will require to possess for this very difficult job are the wisdom and judgment of Solomon, the skin of a rhinoceros, the face of a pawnbroker and the combined charm of Cary Grant and Anna Neagle. If he possesses those things, he will make a success of it.
  We have heard from the President of the Board of Trade something about the beginnings of this Bill. My mind goes back about 20 years to the campaign which the unions then initiated, with the support of my right hon. Friend the present Minister of Agriculture. The British film industry owes a great debt of gratitude to my right hon. Friend because he was about the only hon. Member at the time who knew anything about the British film industry or even cared anything for it. I, therefore, welcome the new interest which has been shown in British films by many of the newer hon. Members, because it makes up the great leeway. I notice in various weekly and

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  daily publications articles by many hon. Members who talk about the film industry as if they understood it. Some of them do, of course. I am not referring to any hon. Member specifically. If I had any charges to make, I should do so. It is a welcome sign that we now have here great protagonists for British films. Ten or 20 years ago we had hardly one. My right hon. Friend the Minister of Agriculture was a lone voice in this House, trying to battle against all the odds possible, including the right hon. Gentleman the Member for Aldershot who was one of the Ministers at the time.
  As to the American tax issue, I do not know what all the fuss is about. About 6 million or 7 million dollars are at stake. I listened carefully to my right hon. Friend when he referred to the unfortunate deadlock; but who is responsible for the deadlock? It is no use burking the issue and trying to act like an ostrich, burying one's head in the sand and talking about a great British film industry, and the production of British films, when there will very soon be no British film industry left to make films and no places left in which to show the films if they are made. The cinemas might as well be taken over for other purposes at the end of the year and the public told frankly and brutally that they have to do without films, as they have to do without many other things. Do not let us shed crocodile tears about the deadlock. The British Government, by their premature method of handling this issue a few months ago, are directly responsible for the deadlock.
  I will tell the House why. When the dollar situation broke over the country, we had, quite rightly, to conserve dollars. My personal opinion is that the Government, in a form of panic, stopped the purchase of American films, or prevented them from coming over, without taking into consideration the very difficulties which are now before us. If there had been, as was promised, consultation between the three interests—the American interests, the interests of the British film industry and the Government—I do not think these difficulties would have occurred. The position now is that before a settlement can be reached—this is very important—one of the three parties to the controversy must climb down. That is a most regrettable state of affairs. The Government are responsible for bringing
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  about this situation in which one of the three parties must climb down before progress can be made. That is not diplomacy. It is not even good business, for we have to get rid of the tax deadlock before we can get on with making films. People can say what they like, but the facts are there.
  Whatever our desires or wishes may be, it is quite impossible for the British film production industry to provide the necessary pictures for our cinemas, even for a one-feature and a small supporting programme, within from five to seven years. The Government have not indicated any priority of manpower for production; they have not indicated whether they are prepared to give priority to the building of new studios, to the training of new technicians and artisans, to the training of new stars, and all the other things which go to the making of a picture. The Bill is defective in that regard, for nothing has been said about those things.
  Therefore, we are faced with two things—on the one hand, the workers in the industry and, on the other, the people who pay their money at the box offices to see the picture, the audience. The most important factor in the entertainment industry is the audience, the people who pay to be entertained, and their voice must be heard. These 30 million people a week will be deprived soon of almost the sole remaining means of relaxation and amusement open to them in a world of gathering difficulties. On the Other hand, thousands of workers in various sections of the industry, not only in production but also in distribution and exhibition, will have their livelihood threatened. It is true that people may say they can be transferred to other more essential industries, but why is not that test applied to all other industries? Why should the bad handling of a difficulty of this character throw out of jobs people who have been trained in this class of work, and why should millions of the public be deprived of a means of entertainment which they could have continued to enjoy?
  I share the opinion of the House and of the Government—as a citizen, apart from being a trade union leader and a Member of Parliament—that we cannot continue to spend dollars on American films. There is no question about it. We cannot spend 17 million dollars a year

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  on American films, we have not got them to spare; but that is not the issue. Why say that the issue is "food or films"? I suggest that is misrepresentation. The dollars that are hypothetically saved represent roughly two-thirds of a pennyworth of imported flour per week per person in this country. If one were to ask our people whether they would do without two-thirds of a pennyworth of flour per week to have their films, I think they would say, "We will have our films." That is a bad presentation which does not help to solve the problem.
  The overwhelming majority of workers in the British film industry engaged in studios, distribution and exhibition want this tax problem to be solved in the interests of the industry, the country and British films. There is an element, as there is an element in every industry, that would resist domination. It would resist any domination of the industry from any quarter, unless it came from Moscow or from the Cominform. We are not immune in the entertainment industry from this tendency, but it is a minority, and the overwhelming majority of the workers want the Government and the American interests to assist in solving a difficult problem.
  Therefore, I appeal to my right hon. Friend to do something to break this deadlock. I have in my hand a recent speech made by Eric Johnson. He says:
  "The British Government, as a result of the discussions in London, give us no choice except to continue the policy of withholding shipments of pictures to Britain until an alternative to the confiscatory tax is worked out. On behalf of the members of the Motion Picture Export Association I now reaffirm this policy. We have offered, as evidence of our desire to aid the British people in their struggle towards recovery, to leave a substantial part of our revenue there. This has been our position from the first. It is our position now… During discussions the British stood firm on the tax and summarily rejected in principle our alternative. They declined even to receive or to consider the mutually beneficial proposals we were prepared to offer to reduce Britain's dollar expenditures on films, while, at the same time, maintaining an uninterrupted flow of pictures desired by British audiences and required by British exhibitors to keep their theatres Open.
  Even before the Dalton 75 per cent. tax was imposed, five out of every six dollars taken at the British cinema box offices for American films were being kept in Britain as British taxes, British wages and British profits… We are equally baffled by the British attitude because of our oft-repeated assurances
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  to the British Government that we are most anxious to find an accommodation that would ease Britain's dollar stringency."
  In view of that statement and the statement made by my right hon. Friend, it is difficult to know where we are getting in this matter. I stress this point at length because it is my considered view, and that of every responsible person in the British film industry, that the industry, whether on the exhibition or on the production side, cannot carry on without a certain number of American films. That is a fact which no responsible person in the industry would be prepared to contradict. In view of that situation, cannot the Government try to rescue this falling industry now, when it should be rising? As my hon. Friend the Member for Eton and Slough (Mr. Levy) said in a recent speech, at a time when the industry should be rising, the tendency is for production to fall in the midst of the greatest opportunities that have ever been presented to it. I hope sincerely that the Minister will take note of these things.
  The objects of the Bill have been explained adequately. Their endeavour is to promote British production for 10 years. I hope the deadlock will not last 10 years. If it does, then we shall go back to skating rinks, or something like that. We might be better off, but there will be no pictures in this country. It will take roughly 170 feature pictures per year to keep the main cinemas of this country at work. That is the very minimum, even with the cutting down of programmes. We shall be lucky if we make 45 feature pictures in this country in this year.
  Two or three people are trying their best to wrestle with the problem. Sir Alexander Korda is doing a magnificent job as an independent producer, as are Michael Balcon and Herbert Wilcox. Those three men are contributing to the prestige of British pictures in the world market. On the other hand, the circuits represented by the J. Arthur Rank organisation are doing a magnificent piece of work for British films. I am amazed when I hear my friends talk about the domination by Hollywood of the British film industry and yet describe as a monopolist the first person who has had the guts to spend his money and range around him a force to produce British films of a high quality character, namely, J. Arthur Rank. That discourages such

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  men. It is very difficult to know what is wanted.
  If we are to expand and to maintain a high standard in the British film industry, let us give a square deal to the independent producers, those who have initiative, whether they are circuits or whether they are not. Of course, that does not mean that we must not keep an eye upon monopolistic tendencies. The workers in the industry will fight against any attempt by a monopoly to dominate the film industry. Trade unionists are quite well aware of the evil effects of monopoly in other industries. Speaking for my own executive and for a considerable number of other workers, I say that we, who are close up to the film industry, have every regard and admiration for, and would give every encouragement to, people like Arthur Rank, Alexander Korda, Herbert Wilcox, and other men of that character who are doing a fine job of work. We are prepared to face all the critics, and the schemes that they may care to advance.
  I liked the way in which my right hon. Friend skirted round the subject of State ownership of studios. When an eminent economist is also a leading Minister and an astute politician, it is very difficult for him to commit his Government even to an elementary proposal. I hope that the day will come when the Government will be able to own film studio space. I hope, at the same time, that the day is far distant when the Government, as a Government, will be responsible for the making of films, or even for the writing of plays. That is another matter. We must preserve the artistic and creative work of the men who are possessed of those qualifications.
  The Government should facilitate film production. They should be able to provide film studio space to meet the needs of the independents, especially of independent producers of proved worth. I do not mean producers who call themselves independents, some of the cranks we read about who think they have great genius for making films, and who have complete incompetence for everything else. The Government should provide studio space, facilities, equipment, and so on, for independent producers, and I hope that the Government will reconsider their position in this respect.
  The difficulty of finance is one of the great evils of the present time, especially when seen against the background of the
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  tax situation, upon which we have already touched. Money cannot be raised now anywhere for the making of films. The difficulties which a certain circuit has recently gone through in order to have enough cash reserves to meet costs of production for themselves are well known. There could be a combination of people, for example, in this House, who thought they had a good play or a good script, but unless there were very powerful strings somewhere being pulled, and powerful reasons for supporting the group, it would not be possible for them to raise a shilling in the City to further independent production. Independent producers are in danger of going out of existence.
  I should like my right hon. Friend to put a suggestion before the Chancellor of the Exchequer. From year to year the Government take out of the entertainments industry as a whole several million pounds in Entertainments Duty. I think the figure goes into £50 million or £60 million a year from the film industry alone. That taxation is earned by the drawing power of an artist, or of a play or a film. The Entertainments Duty collected upon a bad play in the West End of London or in the Provinces is less than upon a good play. The same applies to the cinema. If a picture is good, and £1,000 per week—I am using any figure for the sake of illustration—is taken gross at the box office, £200 of that sum goes to Entertainments Duty. If the film is bad and the takings are only about £400, the Entertainments Duty will be perhaps £50 or £60. The principle is that the tax is earned by the drawing power of the film. The tax is one which the people pay and it is collected through the entertainments industry. The principles of taxation in any other sphere of industry are not involved in this case. The public's money is not taken away by other forms of taxation in exactly the same way.
  The suggestion I make is my own idea. Therefore, I can be condemned for it if it is bad. On the other hand, if it is good, there will probably be plenty of people who are prepared to say that they had thought about it before. I put it forward for the President of the Board of Trade to consider in conjunction with the Chancellor of the Exchequer. There should be some way or some means of financing films, either from the inde-

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  pendent producers or any other kind of production, instead of having a film bank or a film credit corporation. It should be possible, under proper conditions, to subsidise production out of the earning power of particular films. The details can be worked out later. I will just give the broad outline of the suggestion.
  If one film has been successful and its producer has been proved to be successful, the next picture, or possibly the next but one, of that producer might be subsidised according to the value of the Entertainments Duty which his successful picture has been able to attract. I will leave the idea at that, until the Committee stage. It can be developed later. It will be sufficient to say that I think the Entertainments Duty which comes from the industry should be used, in a difficult industry, such as ours, in order to give practical encouragement to production and for the entertainment of our people, as well as for the extension of world markets. This would be a way of giving practical service as well as lip service to the export drive.
  I have two further short points to put to the House. We welcome to a large extent the principle of exempting from quota the smaller exhibitor whose takings are £100 or less. When I say "we" I mean the cinema employees. In the past we have had great difficulty in extracting from the small exhibitors a decent living wage for their employees. Those exhibitors have always pleaded poverty, with a certain amount of justification. We hope that if the Measure goes through in its present form—I may he looking at this matter selfishly—it will mean that the lower-paid people in the industry will benefit.
  On the other hand, I want my right hon. Friend to appreciate that a considerable number of these smaller exhibitors would like to show British films. They do not wish to be outside the scheme for allowing their public to see British films. Possibly some way may be found in Committee of giving exemption in a modified form, so that these exhibitors may have the advantage of a small quota and yet participate in the showing of British films. I agree with the right hon. Gentleman the Member for Aldershot, and so do most of the unions in the industry, that the fixing of
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  quota percentages is desirable. The Bill, as drawn, might make the task of producers, distributors and others somewhat uncertain. A floor should be put into the building, we think. The edifice is pretty good. The Bill is far better than anything we have had before. I believe that most of the unions agree that we should commit ourselves to a figure, perhaps of 30 per cent. or 40 per cent, as the case may be, and a beginning should be made with quota percentages.
  My last appeal to my right hon. Friend is to continue his good work at the Board of Trade generally and for our industry. We believe British films can assist in the great work of the country. Not only can they do a good job of work in our own land, but in foreign countries apart from America, in remote countries where the communities' first contact with British life and civilisation has been the seeing of a British film. There are millions of people in remote parts who cannot read or write and whose first contact with the British has been to see a British film. I hope my right hon. Friend will go on with the work with the joint production advisory council. In every progressive step that he may take we shall co-operate with him to make this industry second to none in the world.
  5.21 p.m.
  Major McCallum: The hon. Member for West Nottingham (Mr. O'Brien) referred to remote areas to which he hoped the British film industry would bring education and recreation by way of films. I gather that he meant remote areas of the world, but I would remind him that there are remote areas in my own country in which large numbers of people have never seen a film, British, American, or any other. On behalf of those people, a small community compared with the total British population, I wish to say a few words.
  The Government are, I believe, sponsoring an organisation in the North of Scotland, the Highland and Agricultural Association, which sends out mobile film units of the 35 mm. type films, or smaller films, to be exhibited in the Highlands and Islands. This is a most praiseworthy activity, and I look forward to great developments of it; but in the Clauses of the Bill I find no reference to this, except that a Clause refers to those exhibitors gaining less than £100 a week.

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  There is an alarming tendency to palm off on those exhibitors old films, which are perhaps considered not worth using in the more populous areas.
  My right hon. Friend the Member for Aldershot (Mr. Lyttelton) mentioned that the cinema industry looks to the Greater Landon area for its market. I hope the Cinematograph Films Council, whose constitution is to be amended by Clause 8, will include some representation from Scotland. I am saying that in no parochial or nationalist spirit, and I am not bringing up the old question of Scottish representation, but I feel that in this film industry the tastes, not only of the Highland people of Scotland, but of Scotland, as a whole are entirely different from those of the English public. Films which go down well in England and Wales are complete "flops" in Scotland. Hon. Members who have had experience of some of the Glasgow cinemas will bear me out in that. When the hon. Gentleman replies, I hope he will give some assurance that the peculiar characteristics of Scottish culture and tastes will be borne in mind in sponsoring the production of British films.
  5.28 p.m.
  Dr. Stephen Taylor: Two and a half years ago I could honestly say I knew nothing whatever about the film industry. It may be that when I have sat down hon. Members will feel that that situation still obtains, but I have had cause in the last two and a half years to try to find out something about the industry, for two reasons. I represent in this House, Elstree and Boreham Wood, where there is the biggest concentration of the film industry in this country. At present, it is a potential concentration as I shall shortly show. The second reason is that I am one of the independent members of the Cinematograph Films Council, which was in part responsible for the origin of this Bill, and which is a statutory body set up under the previous Measure, not merely to look after the working of the quota, but also to advise on the general way in which the British film industry should be nurtured.
  The Minister of Health once referred to the British building industry as a jungle. If that metaphor be correct, I would like to refer to the cinematograph industry as a tropical jungle. It is a flamboyant,
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  vigorous industry, it is wasteful and biologically fascinating, and shows a kind of economic Darwinism, in which there is the "survival of the fittest" and "nature red in tooth and claw." In the Films Council all these delightful peculiarities become apparent. We have a collection of colourful personalities. First we have Mr. Rank himself, Sir Alexander Korda, another Sir Alexander, Sir Alex King, who represents the independent exhibitors and runs a chain of cinemas in Scotland, Sir Philip Warter of A.B.C., my hon. Friend the Member for West Nottingham (Mr. O'Brien) who represents a section of the cinematograph industry workers, particularly those employed at cinemas, and the more simple technical jobs, Mr. Elvin representing the more highly technical workers in the industry, and a number of others. We independent members are sometimes hard pressed to know on which side of the fight we should come down at any particular moment, because battle is frequently joined, and frequently vigorous.
  I should explain in regard to what the right hon. Member for Aldershot (Mr. Lyttelton) said that at present there are 11 independent members. They are not primarily concerned with the independent producer, or the independent exhibitor, but are there because they have in theory no connection whatever with the cinema industry. The people who look after the independent producer or exhibitor are trade members. We are the representatives of the public, and there is something in the idea that the Council is over-weighted on the independent side. Indeed, quite a lot of us, I am afraid, often do not turn up, particularly when the agenda is dull. There is something to be said for cutting down a little on the independent side, though I think the cut has been a bit too drastic.
  A lot of the work of the Films Council in the past has been dull work, consisting of the renewing of the quota life of British films. The quota dies after three years, and their life has then to be renewed, or they have to apply for renewal for quota purposes, and going through these lists of films is frequently rather a dull business. The question of whether "Gasbags," a film which none of us perhaps have seen, should have its quota life renewed, is not very exciting. However, the production of a report from which the Bill has, in

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  part, sprung, was very interesting indeed, and it was remarkable that the Cinematograph Films Council was able to get the degree of unanimity which it achieved, considering the conflicting interests involved. That was due largely to two things—the excellent chairmanship of Lord Drogheda and the work of Sir Arnold Plant, who is an apostle of free enterprise but remarkably skilful in devising the restriction of free enterprise when he thinks it comes to free enterprise luxuriating too freely.
  The structure of the British film industry is extremely complicated and it is very well illustrated by the situation in my constituency at Boreham Wood. Though people speak of Elstree when referring to the cinema industry, Elstree is a little village adjacent to Boreham Wood and it is there that the studios are located. First, there is an enormous block of studios which looks almost the size of St. Paul's as one approaches. It is the second largest block in the country, and the most modern. It belongs to M.G.M., and contains seven stages. It was used during the war for aircraft production, and was severely damaged by bombing. Since the war, although a large amount of building has been done on it—it has been completely reconstructed—it is not being used at all. One film has been made in it so far by an independent producer renting a stage. Another film is to be made in the near future by the Boulting Brothers, who are renting a stage.
  The other six stages are idle; most of the time all seven are idle, and that, at a time when we are short of studio space, is a ridiculous state of affairs. It is, however, quite understandable. It belongs to an American company. They have put the embargo on as a counter-measure to our decision to retain a large percentage of film earnings in this country. They do not intend to see the embargo broken by the production of films in this studio, but if the negotiations about the present position break down, we shall have to do something about this. We have let them have the building labour to complete this studio. We should make it clear to them that if the negotiations break down we do not intend to build more studios while this is standing idle. We shall have to requisition it, or take other action, and let it out to independent producers.
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  Only slightly less large than this M.G.M. palace are the big A.B.C. studios at Elstree. They belong to Associated British Pictures, who, the right hon. Member for Aldershot (Mr. Lyttelton) has said, are not controlled by American, interests financially. A.B.C. are, in fact, the agents of Warner Bros. for the showing of Warner Bros.' pictures in this country. The way it works is this, and it is perfectly reasonable: A.B.C. have a circuit of 440 cinemas; they also have their distributing firm, and, at the top, their arrangement for producing a certain number of films in this country. In normal times they give first priority to showing Warner Bros. pictures, and second priority to the showing, not of British pictures, but of M.G.M. pictures. The reason that they give this second priority to M.G.M. is because they have a reciprocal arrangement with M.G.M., as the latter control a circuit in South America, where Warner Bros. have not got a circuit, and they exchange facilities, which is an understandable arrangement.
  A.B.C. make a certain number of British pictures at their small studio at Welwyn. They also finance independent producers to make pictures, and they make very good ones. I think that "Brighton Rock," and a very good picture it is, was made with A.B.C. money. But this great studio at Elstree is standing idle. During the past two years it has been reconstructed. Its roof has been raised and its walls have been pushed out. Many of the workers in the cinematograph film industry believe that it could have been used in this period. The question of American finance enters into the matter, since A.B.C. is primarily an American exhibiting machine, and the Americans naturally do not want to make pictures here to get round, as it were, the very thing which they themselves are fighting.
  The third group of studios in my constituency is the British National studios. They are smaller studios. They were, I believe, and may still be controlled by Lady Yule. It is said, I do not know if correctly or not, that A.B.C. have now got control of these studios. Moderately priced pictures are made in them very efficiently. It is a very good and very efficient organisation. These films are of moderate quality, sometimes of poor quality, it must be confessed, which are

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  primarily shown, not in London but in the North of England and elsewhere in the Provinces. This is an efficient organisation, doing a job which is quite worthy, and which is certainly not wasting a lot of money.
  The fourth studio is the Gate Studio, a small studio belonging to Mr. Rank, and used for making documentary and religious films. The main part of Mr. Rank's organisation is at Denham and Pinewood and at other studios outside my constituency. The Rank producing companies look at first sight as though they were a number of independent concerns—one even goes by the name of Independent Producers—but I understand that this is a purely financial arrangement, and that it is sometimes a good thing to have a single company set up to produce just one picture so that if it should run at a loss it need not be set off against the profits of another picture.
  Rank films are handled by his distributing organisation. It is worth saying here that the film industry has these three tiers, the producers, the distributors and the exhibitors. Mr. Rank has his own distributing arrangements, General Film Distributors, and two chains—Odeon and Gaumont British—with 660 cinemas in them. As has been said, although they number something under a quarter of the total of British cinemas, they have a greater number of seats than that proportionately, since they are usually the biggest cinemas, and are very often in the best places. Normally, and by that I mean when the present restrictions on the transfer abroad of film earnings does not exist, Mr. Rank does not make anything like enough British films to fill the cinemas in his circuit, particularly where he has two houses in one town, and he has to rely to some extent on United States films to make up his programme. A considerable, but not the controlling interest, is held by 20th Century Fox in the Rank circuit.
  That means, again, that the American distributors and producers have a strong bargaining position, to say the least of it, with Mr. Rank as to the number of British pictures he should make. There will be about a thousand cinemas on the circuits, leaving approximately
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  3,600 independent cinemas. Some of those, although they are called independent, are in fact grouped into large groups of up to 75, and the right hon. Member for Aldershot made a very reasonable point when be suggested that there might be something to be said for putting a special quota rate on what are in fact small circuits. The only difficulty would be that it would make the quota, which is already pretty complicated, even more complicated. Do we want to make it even more complicated? When it comes to showing British pictures Mr. Rank and A.B.C. put their own pictures out to their own circuits first. As a result, the independent exhibitors get them either from Mr. Rank or A.B.C. at second hand, as it were. They have to go to the independent producers, of whom there are very few, or to the American distributors, to get their first feature films. That is why the independent cinema exhibitors are so keen on getting back their supply of American first features. They are their main source of first features which have not been shown anywhere else.
  This Bill, as I see it, is designed to do four things. It is designed to safeguard the position of British films whether first features or supporting features—including in the second category shorts, documentaries, and the rest of it—in the British cinema, on the actual screen. I think the variable quota, which will be varied from year to year, is a very good arrangement, though there is a point, and a good one, in saying that the minimum quota for any one year should be announced, not three months, but six months in advance. It is not so much that for feature films, producers want to be sure of their market. The whole idea of the variable quota is that we can raise the quota year by year to take in however many British films of reasonable quality are made. It is so that exhibitors can plan in advance. Unless they know what the quota is likely to be, it is hard to book up appropriate British films. The Bill allows the President to make that arrangement of six months. It merely says there shall be a minimum of three months. I think that is necessary because in the first period when the Bill starts to operate there will be a period of only three months.
  One point which the Bill as it stands does not answer is that of a fair return

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  from the distributor and exhibitor to the producer; it does not say that a minimum percentage of the takings shall go to the second feature. What has happened in the past is that the renter has bought up cheap British shorts to make up the quota and give them to the exhibitor to make up a programme. The result is that the maker of British shorts, particularly of good quality, may get back the bare cost of production, or he may not even get that. He may lose a lot of money. He is seldom likely to make a profit. That has been one of the difficulties of the documentary film industry. I am pleased that the President should announce the setting up of this committee to study distribution and exhibition and I am sure that that is one of the points that ought to be considered. I do not think it should be embodied in the Bill as it stands, because it is a complicated and technical business and would lengthen the Bill unduly.
  The second thing the Bill is designed to do is to safeguard the British films as regards minimum quality. It is a very difficult thing indeed to guarantee, or advise legislation to guarantee the minimum quality of an artistic product, and the best thing that can be done is the application of this cost test to both feature and supporting programmes. The cost test, so far as feature films are concerned, of 10s. per foot labour cost, or about £1 per foot total cost, is really of no significance at all because one may say it is almost completely impossible to make a feature film at anything approaching as small a cost as £1 per foot of film. So it is not likely to apply.
  The cost test could only be significant in relation to the supporting programme and that is where we want to see it operating. We are now up against the quota quicky short documentary—"A day in the life of a swan in Regents Park"—or something of that sort, which is cheap to make and is easy to complete and is made by people who exploit the potentialities of the film. It is sold for almost nothing, and is pushed out to complete the quota supporting programme. The cost test of 10s. per foot labour cost will put an end to this, and help British documentary films to get a fair crack of the whip in the cinemas. We, on the Films Council think we should help them a bit more.
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  Since the programme is divided into two sections, the feature and supporting programme, the quota has to be covered in both. There is not the slightest chance of Britain being able to make sufficient second features to cover the supporting programme with second features. This will force exhibitors to take in documentaries in the second half of the programme to make up the British quota. I personally find some documentaries incredibly boring. I do hope we are not going to have these pictures of clouds or the sea breaking on the shore or a plough going across a hill indefinitely. It is not good enough. The documentary film people have got to brace up their ideas. There are too many small units. They have got to get a good story and a vigorous script into their productions and turn out something entertaining as well as educative.
  The third purpose of this Bill is to help the independent producer to get films shown, whether features or shorts, both in the independent cinemas and in the circuits, and that is mentioned in Clause 5. This is a continuation of the voluntary arrangement entered into by the circuits with the predecessor of the present President of the Board of Trade. There was the selection committee set up to which any independent producer could send a film and get it sent round the circuits. Time and again, about once every three months, I have asked a discreet question of the President of the Board of Trade as to how many films have so far been to the selection committee. The answer has invariably been "None, Sir." I think it is still none. In other words, it has not worked, on the face of it. It may be that the mere existence of this selection committee has been a sufficient deterrent to the circuit to make them accept independently produced films, or it may be—and I suspect the truth is—that there have not been sufficient films made for the machinery to operate. I do not think that the idea has any great significance and that we need to worry about the propaganda importance of the selection committee. I do not mind what restrictions or specifications are laid down about the position of this selection committee because my guess is it will never select anything.
  The fourth purpose of this Bill is, as I see it, to restrain the growth circuits or what have been called the monopolies

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  and thus to protect the independent exhibitor and, in theory, to increase the outlets for independently produced films. This is the part of the Bill about which I am most doubtful. I believe it springs from a false conception of the economics of the cinematograph industry. Films differ from almost every other industrial product in that the whole of the production must be completed, and the money spent, before the marketing of the product can begin. If one is making a motor car, or soap, or anything else, one's traveller can take it round and show it to the retailers when only one has been made. One does not have to do the whole of the production before starting to explore the market.
  In the case of films, the whole of the production process has to precede the marketing. If the product is denied retail outlets, the producer just cannot market it direct. There is no dodging the cinematograph exhibitors. He cannot sell it through the post as the producer of an ordinary commodity can. Assuming that a producer is not linked with the circuits he is entirely dependent upon independent cinematograph exhibitors. They are a very worthy race of people, but, in my experience they are not the most imaginative section of the community. They tend to judge a film—I may be wronging them completely when I say this—upon whether there have been lots of films like it in the past which have been successful, and whether it has got some stars in it and, if so, how brightly those stars shine. Provided that those two criteria are fulfilled they will take it. If it is anything out of the ordinary, they view it with the very greatest suspicion.
  There was the case recently of "The Overlanders," a film in which there were no stars. The cinema exhibitors threw up their hands and said, "We cannot possibly book that." In fact, it was a terrific success, and incidentally, a very cheap film. This means that the producer of independent films has to keep his eye not on the public but on the cinematograph exhibitors who will be showing his productions. That is a bad thing. That means that his level of taste is below what I believe is the level of public taste. I suspect that the cinematograph exhibitors are generally a bit behind the public taste. That is a difficulty which arises.
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  Making a feature film costs anything between say, £75,000 and £500,000. For example, the film, "It Always Rains on Sunday," which I thought was an excellent film, cost about £170,000. The expenditure of £500,000 in the making of a film is pretty extravagant. We hope that there will not be £500,000 spent on making many more British pictures. It costs a great deal of money to make a feature film—perhaps a minimum of £100,000. Somebody has to put up that money in advance before the picture is made and before there is any knowledge whatever of whether it will be a success. If the producer has not a guaranteed circuit showing, that is to say if he is really an independent producer, then it is an absolute speculation. Every producer and director must have his on and off days, as it were. Sometimes he will make a first-rate film, sometimes he will make one that is not so good. For that reason, the financing of independent films is bound to be a gamble. It cannot be any other than a gamble. In my view it is bound to make for non-continuity of employment of film directors and technicians of all kinds. It is bound to prevent the building up of a team of film workers who get to know each others' techniques and are able to make good films because they work as a team.
  This is where Mr. Rank comes in. I think that he has spotted the essential fact of film economics that teams of film makers can only be got down to the job of continuous production, of improving their techniques of production, if their retail outlets are guaranteed. I believe that that is the secret of any kind of film producing. Vertical integration of the film industry, or of a large part of it at any rate, is an economic necessity if British film production is to be anything more than sporadic. Vertical integration, as hon. Members know, means linking together the whole chain of production from the point of starting, through the distributing machine, and out on to the cinematograph screen. The result of Mr. Rank's activities, the result of vertical integration, has been that the great majority of great British feature films, and in the past two years the great majority of the best British documentary films, have come out of the Rank stable. There have been some terrific flops, but that is inevitable in any organisation where art, science and industry are all mixed together in this way

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  and where we get dynamic explosive people like stars and all the rest of it.
  It is because Mr. Rank has been able to give a measure of continuity and stability to British feature film production that the standard of our British feature films has steadily risen. Many of my hon. Friends on this side of the House attack Mr. Rank as a monopolist. As a good Socialist, I have always understood that monopoly was an inevitable development in any vigorous capitalist organisation. The British film industry provides an ideal example of Marxist theories in practice. Film production on a large scale cannot be organised without vertical integration which results in monopoly. As we all know now, the only thing to do with monopoly is, in due course, to socialise it in the public interest.
  I like to speculate on what would have happened if the cinematograph industry had suddenly been discovered de novo, fully fledged like the radio. I can imagine, in, say 1923 or 1924, a Royal Commission being set up to investigate the potentialities for cultural and general entertainment of this terrific new invention. I can imagine the Royal Commission reporting and the Conservative Government of those days considering, as a result, that this great industry, with its vast potentialities for education and human welfare, could not possibly be left in private hands. I can imagine them very reluctantly setting up a British Cinematograph Corporation as a sort of visual brother to the British Broadcasting Corporation. Instead of that, we are approaching things by a different way. We are approaching things by the commercial creation of monopoly which, I think, will in due course become public enterprise.
  I look forward to the day when there are three or four vertically integrated circuits, publicly owned with public corporations with the maximum of independence from Government interference or at least the amount of independence which the B.B.C. enjoys—and that is pretty considerable when sometimes Ministers want to make statements on the radio. I look forward to three or four vertically integrated corporations with production, distribution and exhibition in each of the organisations with full facilities for the showing of any independently made picture. I think that there is a lot
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  to be said for the idea of a films bank provided that those who run it realise the risks they are taking. I look forward hopefully to seeing Mr. Rank as one of the director-generals of one of these corporations. I am sure he would make a very good director-general. I hope that the President of the Board of Trade will use his power to prevent the growth of the circuits very modestly and with great restraint.
  Finally, I hope that his committees of inquiry will start without any anti-Rank or anti-circuit bias. We owe a very great debt to Mr. Rank for the work he has done in the British film industry. I wish to pay tribute to the freedom he has given to his individual directors and producers to make what films they think fit, to display a great deal of originality and to play, as it were, above the public taste yet in fact to be on a level with public taste. I believe that without vertical integration in our film industry we shall have no worth-while British film industry at all.
  6.0 p.m.
  Mr. Edgar Granville: I am sure the House has listened with great interest to the hon. Gentleman who represents the capital city of film production in this country. He has given us a detailed exposition of a very complicated, difficult and technical problem, and I think he carried most hon. Members of the House with him. He also gave us a first-hand account of the work of the Cinematograph Films Council which we were very pleased to hear. I hope that the hon. Gentleman will continue to be one of the independent members of that body. I think, however, that he led us up the garden path a little by solving all the problems for us and telling us how the industry should work, but leaving the sting in the tail, or surprising us rather at the end of his speech, by visualising a state of affairs in the distant future of film production by Karl Marx, direction by Mr. Rank.
  Nevertheless, I agree with a great deal of what he said, and, from an impartial point of view, I join with him in welcoming the new Committee which the President of the Board of Trade envisaged to inquire into the questions to which the right hon. Gentleman referred in his speech this afternoon. I think that no harm will be done, but that only good

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  can come of it. As the right hon. Gentleman himself said, this subject will be available for the House to discuss in one of our future Debates.
  Personally, I would like to congratulate the President of the Board of Trade on his grasp of his subject this afternoon. I have listened to a number of these Debates on the film industry over a number of years, and I thought that the right hon. Gentleman's speech came like a gust of fresh air in the quarrel which is now going on between the United States, Hollywood producers and the British tax imposition. Nevertheless, we all wish him well in bringing these discussions on that dispute to a successful issue.
  We have had 20 years of these quota Bills dealing with the film industry, and I am not sure even now whether we can say that the quota has been of a lasting benefit to the film industry or not, but it would have been interesting if the right hon. Gentleman could have given us some figures to show how many cinemas and renters have been able to fulfil their quota obligations, apart, of course, from the war period, when a very difficult position arose. On the whole, I think this is a reasonable Bill, and I believe the House will give it its support without a Division. A great deal does depend on the kind of agreement we get with the United States in the negotiations over the dispute which is going on at the present time, for the successful working of this new producers quota Bill.
  I hope that some action may be taken on one point, for which I think a good case can be made out. I think there is a good case for a separate Scottish Advisory Council.
  Mr. Gallacher: Hear, hear.
  Mr. Granville: I am glad to note that the hon. Member for West Fife (Mr. Gallacher) and I are in complete agreement. It was found necessary in the case of civil aviation, and on many of these questions, and particularly on films, Scotland has a contribution to make, and films dealing with Scotland are extremely popular in the United States and other overseas cinemas. I hope the President has not closed his mind to the suggestion that there should be a separate Scottish Films Advisory Council to work under the arrangements of this Bill. I thought
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  it was a pity to reduce the independent representation on the Council, but I know what the right hon. Gentleman had to do, and I am sure he has done his best. Nevertheless, I hope that, in the light of future experience, there may be some opportunity for an amendment of the new composition which has reduced the independent membership of the Council.
  One of the things which this Bill does is to abolish the renters' quota, and it gives powers of flexibility to the Board of Trade to determine percentage of quota, and I think a warning note has been sounded that enough notice should be given to the exhibitors in order that they can, in regard to their bookings, rest assured for a certain future period of programmes. It is no good having a quota Bill, however, unless we can produce and supply the films with which to satisfy the quota. The president has said that only one-fifth of the total screen showing time is occupied by British films, and that position, at the present time, has been worsened by the American refusal to send films here and to produce here. Up to the present time, we have been able to satisfy our quota, but we cannot any longer produce enough films in this country for our cinema requirements.
  I should have thought that, if ever there was an opportunity after a long period of trial and experiment, for a boom in British film production, it would have been now. Here we have a position of unfulfilled quotas and cinemas which cannot get enough new films, when no American films are coming into the country and re-issues are being used. I should have thought that that would have been the occasion and opportunity for an unprecedented production of British films, but I am told that there is empty studio space and that there are unemployed technicians in the industry. We have to bear in mind the fact that the United States is a big film producer in Britain as well as in their own country, and I am glad that the President of the Board of Trade is going to meet the American producers in this country to try to determine more particularly what is going to be their immediate production programme.
  I think one of the reasons why there is not greater increased production of British films is that we are short of equipment. I believe that, even today, in our studios, on the production side, we

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  are seriously short of good new and replaced equipment for film production. We are also short of artists who are known internationally, and I suppose the number of such artists may be counted on the fingers of both hands. The obvious reason is that they go to Hollywood, where the remuneration is much greater. We are also lacking in arrangements for the independents to produce films here and use studio space, and I hope the right hon. Gentleman will look into the arrangements of independents in their relations with the renters. Equipment comes from the United States, or at least, it used to come from there. I hope that special measures will be taken by the right hon. Gentleman or by the Minister of Supply, to speed up the production here of the necessary equipment.
  Then there is the question of the artists who go to the United States of America. I hope that the President of the Board of Trade, in any agreement he makes on the distribution of United States films in this country, will also include the question of the exchange of artists, and whether Hollywood is to take the best artists immediately they establish a name for themselves, by offering bigger contracts. This country has got to draw a line with the Hollywood film interests and for every film produced and sent to this country over that line, there should be a corresponding British film sent to the United States. At the same time, if we send a British star to America, even upon a dollar earning project, there ought to be a corresponding American star available to this country on a reciprocal basis to ensure the future of our star values.
  We must also make more films—apart from those such as the Dickens films which have been such a great success—with an international appeal. I was glad to hear the hon. Member for Barnet (Dr. Taylor) defend Mr. Rank. I personally, am not a Rank critic. I have no interest in the film industry at all, but I think that Mr. Rank has made a serious and sincere attempt to rationalise that industry. On what I would call his "dollar experiment," which has now been going on for some time, and on which considerable sums of money had to be spent in the United States in order to establish British prestige films—it is too early yet to know whether that venture is going to succeed or not—the tendency
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  of his producers has been, of course, to put the emphasis on the production of the higher priced films. I think it would have been better if a greater proportion of his total production had been in the direction of the £100,000 film, which could have got its money back in the market of this country. As hon. Members know, the economics of film production in this country vis-à-vis the United States are very simple.
  In the United States, they have a home market of 120 million, whereas we have a home market of only 45 million. If a Hollywood producer spends £500,000 on a production, he can get that money back in his home market, and he makes his profit in this country where, because it is an English-speaking country, no "dubbing" costs are involved. If we are to recover our production costs on the home market, we cannot afford to go beyond the £100,000 limit. Our gamble comes in selling the film to the United States market, and that, frankly, has been Mr. Rank's fight with his dollar experiment. The President of the Board of Trade must stand firm on this; it is something beyond politics, beyond anything but the ordinary economics of the film industry. America must give our pictures a fair showing on the first and second distributions in that country if we are to give them reasonable dollar profits on the films which they send to this country.
  The urgent necessity in our film industry—and the President of the Board of Trade referred to this—is to cut production costs, and the overheads of the film companies, or the companies which go to make up the larger organisations. I know that the costs of production are seriously inflated. They must be limited for home market consumption. The time has now come for a stand-still arrangement on American exploitation costs. It is perfectly clear what has been happening in the past. If it was necessary for the Rank organisation to establish our prestige films in the markets of the United States, considerable dollar promotion expenditure was necessary to that end. I am not asking for a presentation of a dollar balance-sheet, but I do say that the time has come to halt those exploitation costs in order that we may see where we stand with the American market in this expenditure of dollars and the gross returns available to the Treasury.

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  Lastly, I would join with the hon. Member for Barnet in paying tribute to the production of films in this country. I wish, however, that they would make a few happier films. There seems to be a tendency to concentrate on the Soho-spiv type of crime film, whereas I am certain it would be better, from the box office point of view, if they made happier films. We on these benches welcome this Bill, and hope that it will give British industry the opportunity it deserves.
  6.16 p.m.
  Mr. Benn Levy: This has been a surprisingly uncontroversial afternoon, and I am afraid I cannot guarantee to transform the atmosphere. In fact, I have even found myself very largely in agreement with what I thought a very good speech by my hon. Friend the Member for West Nottingham (Mr. O'Brien), with, of course, the reservation that I dissent from his usual attack on the Government in respect of the 75 per cent. import duty. He asked today, as I believe he has asked before, why the Government cannot do something to break the deadlock, but he was not very specific in suggesting what should be done. It seemed to me that the President of the Board of Trade this afternoon did, in fact, do something very substantial towards breaking that deadlock. He made it crystal clear, beyond any possibility of misunderstanding, that the Government are absolutely in earnest and adamant about this duty.
  In this regard I much appreciated the public spirit of the right hon. Member for Aldershot (Mr. Lyttelton) in reinforcing that attitude, and in associating the Opposition with it. I think that was a very valuable contribution. There are two other points which the right hon. Gentleman raised upon which I wish to comment. He argued, as, indeed, have some of my hon. Friends, that it was desirable to fix the quota figure now, instead of waiting. The argument was that producers were in a state of uncertainty without a fixed figure. I thought that the answer which the Minister gave by way of interjection was sufficient. But there is a second answer It is fallacious to say that the producer is influenced in his programme, or in his plans, by the size of the quota. If a producer were to ask the right hon.
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  Member for Aldershot to finance a film—which, no doubt, has often happened, and probably often will—the first question the right hon. Gentleman would ask is not, "How big is the quota?" but, "Can you guarantee that there will be a release for your film in the cinemas?" The answer to that question is what is going to decide whether the producer gets the backing or not. Indeed, supposing that the producer declares, "Well, the quota for this year is 50 films," the question which will immediately be asked by the potential backer is, "How do we know that we shall not be the 51st?" I feel, therefore, that there is a certain confusion which suggests that a delay in fixing the quota figure really affects the producer's plans.
  The second point mentioned by the right hon. Member for Aldershot was the question of extravagance and high expenditure in film studios. This, of course, is really a very serious matter. He said, quite rightly, that production, broadly speaking, was not a profit-making matter at all. Incidentally, my hon. Friend the Member for West Nottingham suggested that there should be a Government subsidy, but a suggestion of that kind is really very wide of the mark. It is not true that the film industry as a whole makes no profit, although it is true of the producing end of the industry. In fact, the losses at the producing end have to be made good from the very big profits at the exhibition end, which is the reason for what my hon. Friend the Member for Barnet (Dr. Taylor) called vertical integration.
  Even so, if it were possible to arrange that a bigger share of the profits from film-making should be shifted over directly to the producer, by way of earnings, not merely in terms of compensating losses—which would be very difficult to work out—there would still have to be some cutting down of expenditure. I heard a very characteristic story yesterday of a film director who wanted to furnish a set, representing a small back room. Very sensibly, he sent out his assistant director to a shop in a small street and said, "Buy some junk." The fellow came back with £17 worth of junk and the bill was duly presented to the production manager. "But," said the production manager, "We cannot do that. It has got to go through the proper channels; take the stuff back. We will

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  supply it." They did supply it, similar stuff: it was charged up at a figure of £365. That is a trivial story, but it illustrates the standards and the attitude of film production.
  It is not irrelevant here to quote a few figures to show how costs have increased. It has been said that labour costs have gone up; they have gone up by 100 per cent. compared with prewar, excluding artists and actors. Actors' salaries have gone up 160 per cent., rents have increased 200 per cent. and overheads have increased 1,100 per cent. I mention that because there has been so much clamour about increased wages, but those are the least of the mounting figures. I was very glad to hear my right hon. Friend say that he would do something—though I do not know what—to curb extravagance in the industry.
  Now this, of course, is a producers' Bill. It is none the worse for that. Personally, I always tend to have a prejudice in favour of the man who makes things rather than the man who sells things, and it is usually the former who gets the thin end of the stick. So long as production remains the poor relation of exhibition, it is an unhealthy situation, because it is worth remembering that, although a poor relation can sometimes cut a dash, he cannot really flourish. It is also worth remembering that it is production and not exhibition which saves us dollars. So, although this Bill is very small and, my right hon. Friend will agree, not a radical nor a fundamental Bill, it is in the right direction.
  But the most important thing that has happened this afternoon is the announcement by the President of the Board of Trade that he is resolved to establish a commission of inquiry. That completely overshadows the importance of this Bill, and it also indicates that he appreciates that, although the prestige of British films has grown enormously in recent years, fundamentally the situation in the film industry is unhealthy. Some remedy must be found. Unlike my hon. Friend the Member for Barnet, I say quite unequivocally that I do not believe that wholesale nationalisation is the remedy. Nationalisation is not the only weapon in the Socialist armoury. It is a poor doctor who applies the same remedy for every disease. The nationalisation of the
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  coal mines may, and indeed has, helped to secure and promote freedom from want, but the nationalisation of the film industry cannot help to secure freedom of speech. Freedom, where means of expression are concerned, is the overriding consideration. I would like also to remind hon. Members opposite that freedom of this kind cannot be guaranteed by law alone. There must be the requisite economic organisation. The freedom of the novelist is guaranteed not merely by the law but by the fact that there are 200 alternative publishers.
  Mr. Osborne: That is good capitalism.
  Mr. Levy: The hon. Gentleman will not be so happy in a minute. The law could not protect the writer if there were only one publisher. So I say the condition of freedom of expression is really a multiple market. And that is precisely what we have not got in the film industry. There is a comparable situation in regard to the Press. The freedom of the journalist to say what he wants is only guaranteed by a multiplicity of newspapers, and every contraction of the market is a threat to freedom. That is why hon. Members on this side of the House clamoured, quite rightly, for a commission of inquiry into the Press, because there were undisputable signs of a contraction of the market. If the new-found devotion to liberty which has been displayed by hon. Members opposite—
  Mr. O. Lyttelton: New-found!
  Mr. Levy: I used the phrase "newfound" advisedly because if the devotion had been deep-rooted and genuine hon. Members opposite would have joined in the clamour for a commission of inquiry. But I want to be quite fair and I was very glad to note that the flavour of the speech of the right hon. Member for Aldershot showed that his mind was not closed to the dangers of the monopolistic situation which exists at present in the film industry.
  Mr. Walter Fletcher: Could the hon. Gentleman say what he means by the word "monopolistic"? Surely, the essence of that word is "mono" which means "one."
  Mr. Levy: That is a pedantic correction which I will certainly accept. What I

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  mean is that it is virtually true that you cannot produce, write, direct or act in a film without the consent of Mr. Arthur Rank or Sir Philip Warter. I submit that it is not an exaggeration to describe that as a monopolistic situation.
  Mr. Collins: Does my hon. Friend say that there would be likely to be more freedom of speech under a films corporation similar to the B.B.C. than there would be under Mr. Arthur Rank or Sir Philip Warter?
  Mr. Levy: I certainly believe that if monopoly were unavoidable the more democratic form of it is a national monopoly, because any Government is subject to some influence, whereas the private monopolist, though theoretically subject to the influence of shareholders, is in fact nothing of the kind, as we have recently noticed.
  There is a second danger. Not only is there danger to freedom in the present situation, but there is also danger to the very existence of British film production. So long as British film production depends for its finance on the will of the financial monopolist operating the exhibition end of the industry, it is in a precarious situation. If it is more profitable for the monopolist to import films than to produce films, then production is in danger. If the monopolist exhausts his resources, for example, by buying cinemas abroad at the top of the market, or by attempting to gatecrash into the American market and overspending in the process, or by too extravagant production at home, or by astronomical overheads and expense accounts, or by any other method—the production end of the industry is immediately in danger. Does anybody doubt that something of the kind has been happening now? Is there any other explanation of the fact which my hon. Friend mentioned that here, at this moment, when there is likely to be more British screen time available than at any other period in our history, nearly one-third of the studio space in this country is empty?
  Dr. Taylor: If the hon. Member will permit me, that is very largely American studio space or American-controlled studio space which is empty.
  Mr. Levy: It is only partly so. I could give the right hon. Gentleman figures, but it would be rather long and tedious. At a matter of fact, of the American-owned studios in this country only 15 per cent. are owned by companies outside the A.B.C., which for this purpose I am not regarding as American. That is a very small percentage because that American block in itself is less than 40 per cent. of the total.
  Dr. Taylor: I think the hon. Gentleman is wrong. I can name eight stages straight off.
  Mr. Levy: That is still only 15 per cent. It is very small. What I am trying to establish is that our twin problem is first how to create freedom for the film-maker and, secondly, how to make the very existence of the film industry no longer dependent on the financial prudence or imprudence of one or two men. The crux of the matter is that the key cinemas are in the hands of two organisations and without access to those cinemas no producer can get his money back. It is exactly the same situation as would exist if there were only two book publishers. You have only to state it to see how shocking the situation really is.
  Now, unfortunately, to produce a film requires about a quarter of a million pounds. To write a book requires only sufficient capital for the writer to live and to buy pencil and paper. That is the great advantage of writing a book over making films, because it is a poor artist who is not prepared to gamble his time or even forego a meal for the price of pencil and paper. But where in this world is one going to get £250,000? One can get it at present only by enlisting a guarantee in advance from the cinemas.
  The more one examines the problem, surely, the more abundantly clear it becomes that the only solution is somehow or other to create a multiple market; and that, in turn, can only be done by tackling the heart of the problem. We have got to increase the number of circuits and diffuse the ownership. There should be not merely two circuits—which is, in effect, all there are now—but there must be four or five, This proposal has been embodied in a scheme drawn up by Members of this House in Committee, but I will not elaborate that because it

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  would be one of the schemes that the new Commission of Inquiry will inevitably examine: and as you, Mr. Speaker, are becoming impatient, I will leave it with my recommendation in their hands.
  6.36 p.m.
  Colonel Gomme-Duncan (Perth and Kinross, Perth): I am delighted to follow the hon. Member for Eton and Slough (Mr. Levy), with his wholesale renunciation of Socialist precepts. I cannot help feeling that gradually it is dawning on him and his friends on the other side that this does not apply only to the film industry, but to any other industry which is to be efficiently run—which I can well believe Members opposite have tried to prevent hitherto, with this exception. It still remains fundamentally a principle of the Socialists that the means of production, distribution and exchange shall be in public hands. If so, how do they leave out the film industry?
  Mr. Levy: I would like to point out that I made a distinction which is important for Socialists and for non-Socialists—that is, the distinction between industries which concern means of expression and industries which do not.
  Colonel Gomme-Duncan: I am very interested to hear that, in which case I expect the Labour Party will have an addition in its programme marked with an asterisk which says "With the exception of the film industry." At the moment, it has not that addition and, therefore, there in no doubt that the dawn is at last breaking in their hitherto very dark forest. I expect the hon. Member for West Fife (Mr. Gallacher) would not even agree to the film industry being under this capitalist system. So far as I can remember, one hon. Member also said there was a Marxist influence in the film industry and he hoped there would continue to be. I can only ask which branch of the Marx family he was referring to.
  Dr. Taylor: I am afraid the hon. Member is mistaken. I did not say a Marxist influence. I was illustrating a Marxist hypothesis.
  Colonel Gomme-Duncan: Would the hon. Gentleman tell us which Marx he means? Is it the Marx Brothers, or that silly old man Karl Marx? However, I will leave that at the moment. There are two points in a serious vein to which I want to draw the attention of the House.
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  One has already been mentioned. It is the question of the Films Council. I am frankly disturbed about that and I think there is an undue balance proposed in favour of the production side. The hon. Member for Eton and Slough gave some extremely interesting figures on money and the exhibition side, and the production side very often goes a bit thin, but I feel there is, as at present proposed in this Bill, an undue weight of representation on this council in favour of the producer.
  Mr. Gallacher: Does not the hon. Member agree that really the undue balance in the Council is the fact that there are only two Scottish representatives? Film exhibition in Scotland is a different proposition from exhibition in England.
  Colonel Gomme-Duncan: If the hon. Gentleman will leave me a moment, he can rest assured that I will not let his point go by without saying something about it. I ask the Minister to give some assurance that this actual balance, as set out in the Bill, as between production and exhibition is not final. I hope it is not final. I understand that the Films Council is for the purpose of advising the Board of Trade on matters appertaining to the carrying out of whatever films Act may be in operation at any time. I understand that in advance of each quota year they decide what, in their opinion, should be the percentage of British films to be imposed—if I may use that word—upon the exhibitors. At the end of a quota year, if an exhibitor has been unable to fulfil his quota requirements, the Council recommends whether or not that exhibitor should be prosecuted. I think I am right in saying that.
  That seems to emphasise very clearly the necessity for tremendous care being taken in the representation of the different interests on a council which has these powers. I think it is a matter of high principle. In fact, it is the big principle inherent in the Bill that fully adequate representation of both sides of the industry, and particularly of the exhibitors' side, should be guaranteed on the Council. I say "particularly of the exhibitors' side" because, after all, whatever may be said about the other side, it is the exhibitors' side that produces the money; and it is the public which, we must remember, ultimately provides the money for the whole industry. I hope

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  that we shall have an assurance on this matter at some stage of our consideration of this Bill.
  Clause 10 lays down that Northern Ireland is exempt from the operations of the Bill, and I presume, therefore, that we can take it for granted that Scotland is not exempt. My hon. and gallant Friend the Member for Argyll {Major McCallum) has drawn attention to this point, and the hon. Member for Eye (Mr. Granville) from far away Suffolk has given a ray of hope to our Scottish hearts, by saying he would encourage us in all possible ways to secure a Scottish Films Council. I should like to know, if the Board of Trade is dependent upon the Films Council for advice on all matters affecting the film industry, why it is they can do without a Council advising them on Scottish interests and, more particularly, Scottish tastes and opinions concerning this most important industry. It is no good pretending that representation on an English Films Council covers our Scottish interests. It does not. One is not being parochial in saying so.
  Many of the English pictures which are sent to Scotland are totally unsuited to Scotland. That does not mean to say that they may not be very good and suitable for some parts of England. We have had a most deplorable series over the years of so-called Scottish films. Never has my Scottish soul been rent as it has been when watching some of my ancestors—some of my fellow countrymen's ancestors, at least—as they were supposed to have been, and doing things they were supposed to have done, according to English producers and American producers. One case that I felt very deeply was that of a film which had for its sub-title, "A History of the Famous Black Watch." That particular film started off at the date 3rd August, 1914, in the evening, and showed the officers of the First Battalion of the Black Watch in a mess which was a cross between the Albert Hall and a Lyons' Corner House. They were sitting at dinner, and in came the entire pipe band—not just a few pipers, but the bass drum and all the side drums as well; and they bowled round that table in a pandemonium that not even the Black Watch could stand for long. That film went all over the world as a history of the famous Black Watch
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  —and the rest of the film was exactly on the same lines as those of the opening scene.
  Mr. Gallacher: It was what we might call "rank."
  Colonel Gomme-Duncan: Really, it was before the present Rank system. We had another film, "Mary, Queen of Scots," on which tremendous energy was expended, but nothing much else. It showed her, after she had had her usual troubles with the lords of her Kingdom, putting her hands on the side of her throne and saying, "My lords, I am through." I do suggest that, whatever our views on the great disputes over that great lady may be, it is a little hard that those words should have been put into her mouth as being her final decision to the assembled lords of her Kingdom. We have later instances than that, and one in course of preparation. It all points most distinctly to the vital necessity of having a Scottish Films Council to advise on the proper spirit of Scottish films that are sent out to the world as being representative of Scottish life and history.
  Mr. Gallacher: And Scottish production.
  Colonel Gomme-Duncan: And Scottish production. There should be a Films Council for Scotland to advise the Board of Trade and the right hon. Gentleman its President, for he is the one who has to decide. I want to emphasise this point. If, at the end of a quota year, a Scottish exhibitor is found not to have fulfilled his quota, he must submit his case for consideration to the English Films Council. His inability to fulfil the quota may have been due to the fact that his audiences, whom he had to please, would not take films included in that quota. The English Council, however, presumably sits in judgment on that Scottish exhibitor, and recommends to the President of the Board of Trade whether or not that exhibitor should be prosecuted. With a council heavily overloaded with Englishmen, what justice is likely for a Scottish exhibitor, who, very likely, failed through no fault of his own to fulfil the quota, the reason for his failure being that his public would not take the stuff? Yet, a Scottish exhibitor may be arraigned before this English body, and may be recommended for prosecution. That points very clearly to the need for a change, and I hope that at a later stage, at least, this matter will be looked into.

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  Speaking generally, the Bill is worthy of support, and will be more so if these few points are attended to. Of course, there will be some Committee points as well. Anything which will ensure an improvement in the quality of films which are put out to the people of our country, whether in Scotland or in England, is to be supported. It is absolutely essential that, if there is a shortage of quantity—that may be necessary on financial grounds, and on others which I do not understand—we should never let down on the quality, because the amount of drivel which we have to watch in a cinema before we can see the good picture we have gone to see is almost enough to make one get up and walk out without seeing any more of the programme at all. Whatever happens I hope that the President of the Board of Trade will give instructions to the Films Council that they must never let down on the question of quality. Any contribution that may be made by this House or by a Committee of the House towards ensuring the maintenance of quality will have most important results.
  6.47 p.m.
  Mr. Mallalieu: The hon. and gallant Member for Perth (Colonel Gomme-Duncan) began his speech with some amusing play about the Black Watch, and also about the speech of my hon. Friend the Member for Eton and Slough (Mr. Levy), who said that, in his view, the film industry was not a fit subject for nationalisation. The hon. and gallant Gentleman deduced from that that my hon. Friend must feel the same about other industries. I would say to the hon. and gallant Gentleman that there really is a difference between material things and thing spiritual, that there is a difference between a brick, on the one hand, and an idea, on the other. One distinction is that ideas are things which are held on this side of the House, and bricks are things which are dropped by Members on the other. Whatever one's views about the correct way of dealing with material things, it is certainly true that anything to do with ideas is not a subject for monopoly, whether that monopoly be in private hands or whether it be in public hands.
  We are, however, faced with the difficulty that the organisation of the film industry today, if it is to be efficient, necessitates this vertical combination running
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  all the way through, so that the producer can have a link-up with a circuit. That being so, I believe that the proposals which were referred to by my hon. Friend the Member for Eton and Slough, and which were put to the Board of Trade by a group of Members of the Labour Party, are the most sensible ones for dealing with the present situation in the film industry that have yet appeared.
  I was particularly delighted that this afternoon the President of the Board of Trade announced his intention to have a working party and a full-scale inquiry into the industry, because that would present us with yet another chance of putting forward our particular views. Our views were, in essence, that we should have, not just two circuits, but at least four large circuits, two in private hands and independent of each other, and the other two in public hands, each of the public corporations being independent of the other and of the Government. We believe that in that way it would be possible to secure freedom in the sense that we on this side of the House mean; freedom for the fullest possible expression of ideas, not the freedom for exploitation and suppression, which we are tending to get in the film industry at present. We shall be able to get the type of freedom we require in no other way.
  Everybody who has spoken so far has given praise to the President of the Board of Trade for his extremely lucid exposition this afternoon, and, indeed, for the content of his Bill. I should like to add my congratulations on both those scores. However, there are, of course, a number of questions about which I wish to ask him in regard to the Bill—points on which I am genuinely not very clear.
  I am delighted to see in the Bill an attempt to introduce a provision to beat the old practice of putting in the quota time at ten o'clock in the morning by showing a film to an audience of charladies engaged in cleaning the cinema. The Bill provides, at the moment, that for a film to count for quota purposes it must be shown at least once—which means once a day, I imagine—between the hours of five o'clock in the afternoon and ten o'clock at night. That is good as far as it goes, but there still seems to be a loophole. It still seems possible for anybody who wanted to get round the quota provisions to show a film only on Mondays, Tuesdays and Wednesdays,

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  and not on Thursdays, Fridays, Saturdays or Sundays at all. I believe it is possible for him to do that and still have the film count for quota purposes. Most exhibitors will agree that the most profitable days of the week, the days on which the takings are the largest, are the last days of the week, Thursdays, Fridays, Saturdays, and probably Sundays. I should like an assurance from the President, or from the Parliamentary Secretary when he replies, that there is some provision whereby British films can be assured of a showing not only between five o'clock and ten o'clock, but also on the best days of the week.
  I am not yet quite satisfied—because I have not the information which would allow me to make up my mind—about the exemption from quota obligations of the smaller cinemas, the £100 a week and below types of cinema. The President himself said that there were not very many of them, and that the work of administering the quota would not be worth the takings that would come in. That may be so, but before I am prepared to be convinced on that subject I should rather like to see the figures, and I hope the President of the Board of Trade will produce figures to justify that, if not tonight then during Committee. The more normal objections to imposing a quota on these small cinemas are that they cannot compete with the big circuits to get a British film in time.
  I consider those sorts of objections to be quite invalid. In the first place, they have four years grace in which to get a particular film; a film will count for quota purposes if it is not more than four years old, so there is plenty of time to get a particular film if they want to. Further, a great many—I should say the majority—of the small cinemas do not suffer competition of any sort or kind. They are usually the one cinema in the village or small town, and there is no danger that they will have to compete with large and powerful interests in getting a film. Finally, of course, there is always the provision that if they genuinely cannot get hold of a British film they can be specially exempted by the Board of Trade. That provision is already in the Bill.
  There are one or two points, too, about the six films proposal. I cannot make
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  out whether it is six, 12, or 18 which the President of the Board of Trade will have the right to insist on being shown. Is it six? It is a point on which there seems to be tremendous argument on these benches already. I should be glad if the President could clear up whether it is six, 12 or 18. Let us call it six for the moment. Why are these six films to get a showing only in the large circuits? If the idea is a good one, why does not the President carry it on to cover the vast majority of cinemas? If it is a good thing for six selected films to be shown in the large circuits, why should it be a bad thing for them to be shown in the smaller circuits, or even in individual cinemas? If an idea is good, I do not see why it should not be carried out wholesale right through the industry.
  I am seriously bothered, however, about the whole idea, although the intention is extremely good. The intention, of course, is to give a helping hand to the independent producers; but I very much doubt whether that particular proposal can really give very much help at all. The time when the independent producer needs help is before he makes his film, and unless he can be reasonably certain of an assured market he probably will not make the film at all, because he will not get the finance. In my opinion, if he is to be helped it is not very much use this selection board merely going to a cinema to see the finished product. In order to decide whether they will back a film they must look at the idea only, before the film is made, and decide from the idea whether the proposed film is likely to be a good one. One can imagine that that is an extremely hazardous undertaking, but unless the selection is made at that stage I believe this six films proposal will not be particularly effective in helping the men it is designed to help.
  The last point I wish to make is one which I was glad the hon. Member for Eye (Mr. Granville) touched on earlier in the Debate. We have heard a great deal from both sides of the House this afternoon about the freedom of the industry. Some hon. Members have said they do not want producers to be dominated by the people who control large circuits. Others have said they do not want the film industry dominated by the Government. Yet others have said they

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  do not want the film industry dominated by Hollywood. I am very much afraid, even if we did all the various things that have been suggested in order to safeguard the freedom of the industry or the various sections of it, that freedom would still be in danger unless we did something else along the lines referred to by the hon. Member for Eye.
  The greatest single menace to the independence of the British film industry at the present time seems to me to be the fact that it is, I believe, wholly dependent upon the United States for one or two absolutely essential pieces of equipment or material. I believe that every single inch of stock, of base—that is, the raw material—which goes into the making of a British film comes from the United States. It certainly did until quite recently. If it is still true that any large proportion of that raw material comes from the United States, then if the United States wanted to be awkward at any time—and it looks as if they might want to be awkward in the near future—they could switch off British film production almost overnight, or as soon as our supplies of stock had worn out. What applies to the question of base or stock applied also for a very long time to lenses, cameras, and to many other aspects of equipment. I should like to hear from the President, or from the Parliamentary Secretary in winding up, a little of what has been done to try to relieve the British film industry of this dangerous dependence upon the United States, because unless that position is rectified, and rectified soon, it will be useless for us to stand up in this House and ask for a free and unfettered British film industry.
  7.0 p.m.
  Mr. Osborne: The hon. Member for Huddersfield (Mr. Mallalieu) expressed the fear that the British film industry was rather in the hands of the United States for its supplies. He quoted lenses as an example, and suggested that we could not carry on unless we got our supply of lenses from America. So far as I know, the best lenses used in Hollywood are made in Leicester, and something like 95 per cent. of the lenses used in America come from a very fine firm in my city. I hope that his other information is more reliable than that.
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  If I understood the Minister correctly, he said that if there were no settlement with Hollywood, the cinema habits of the people of this country would have to be seriously altered. It is only fair to the people of this country that they should know exactly what he meant by that. He told us that at the present time we had two films per night, and a double change each week. He went on to say that at the present time British films occupied only one-fifth of the showing time.
  I want to make a special plea on behalf of the film-goers that every effort should be made by the Government to come to terms with Hollywood, because if there is no settlement arrived at, and if what the Minister envisaged happens, four cinemas out of five will have to close down, or cinemas will be showing only one night in every five. I wonder if Members realise what would be the reaction of factory workers to the closing down of cinemas to that extent. I think it would be as serious, if not more serious, than if all the tobacconists shops were closed, or even the "pubs." If there is a breakdown involving the closing of our cinemas, there will be some very serious social consequences. Therefore, I ask the Parliamentary Secretary to tell us what was meant by the President of the Board of Trade when he spoke of altering the habits of the cinema-goers if there is no settlement.
  We were told that if the people of this country were asked whether they would prefer food to films, they would choose food every time. I agree, but why should it be a question of food or films? Why cannot it be food and films? The hon. Member for West Nottingham (Mr. O'Brien), who speaks with great knowledge of this industry, took up this point, and said that the cost of American films represents two-thirds of a pennyworth of flour per person per week, and that if every film-goer were asked if he were prepared to go without that two-thirds of a penny of flour every week, he would elect to have films. The hon. Member put the matter in its true perspective. When we are told that the problem is this £17 million pounds of rent which goes to America each year, we ought to look at the matter in this way. In the White Paper of 1947, it was stated by the Government that our total national income was £8,200 million per year and of that amount, this £17 million represents

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  only one five-hundredth part. To bring it down to terms which the wage-earner can understand, it means that a man working a 40-hour week would have to work only five minutes extra per week to get all the films he wanted.
  I think that we are letting this problem get out of all proportion. I am glad to see on the hoardings a letter signed by the Prime Minister asking for a 10 per cent. increase in production. I wish that he had said that two years ago. If we achieved that 10 per cent. extra, we should have a national increase of income of £820 million, and then there would be no question of cutting out films, basic petrol, or any of the other desirable things this country needs so badly. The hon. Member for Barnet (Dr. Taylor), who spoke with great authority on the production side, said that there were about four tiers of producing studios. He told us that the third tier, which was controlled solely by British interests, produced films of rather an inferior quality. These, he said, were not the sort of films which could be shown in London, but they were, of course, shown in the provinces and in the North of England. Being a provincial myself, and representing a provincial constituency, I consider that to be a bit thick. It smacks a little of the attitude of the Lord President of the Council to people in the provinces generally, with the Londoner always looking down on the provincial. I say that this is not good enough, and it should be realised that those of us who are proud to come from the provinces do not give an inch to people who live in London. We were told that people in small villages and little market towns had to take what is sent them. It should be remembered that these people, owing to the restrictions in travel and on petrol, cannot go into the bigger towns to see the films which are being shown there, and, therefore, I make a plea to the industry and to the Government to see to it that the provinces get as good a show as the people in London.
  7.8 p.m.
  Mr. Reeves: I am sure that the reception this Bill has received must be most gratifying to the President of the Board of Trade. On that account, it is likely that the spotlight of public attention will not be so much on the Bill itself, but upon the extremely important
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  pronouncements which the President of the Board of Trade has made today. I am sure that his proposal to set up a committee of inquiry into the whole working of the industry is one which will meet with general approval. We all feel that this industry is so important to the life of our people that it is essential it should be run as efficiently as possible, and to the best advantage to the nation. I sincerely hope that vigorous steps will be taken so that the committee may get on with its job as quickly as possible, because it is now that we need its recommendations.
  The situation in the industry at the moment is extremely critical on account of the various circumstances which confront us at the moment. The tentative suggestion that the Government may consider providing studio space is a matter which will become more and more important in the months ahead. Studio space is one of the limiting factors in the field of film production. We need studio space more than anything else, and if we are to expand our productions so that they meet the ideal of the President, namely, that they should occupy 50 per cent. of screen time we must do something very quickly. The suggestion that a joint production advisory council should be established is a proposal which will create a great deal of interest. I think it is agreed on all sides that every country wants to show its own films, and, not only that, but, if possible, wants to show them abroad. In that respect we have been very backward. The fact that we have supplied only 20 per cent. of screen time with British films is an indication of how backward we are. It means that we must make a big advance. Quite apart from the crisis caused through the imposition of the 75 per cent. tax we must, for our own sake, be sure that considerably more than 20 per cent. of film time is occupied by British films.
  We do not have to be anti-American in wishing to see British films on British screens. We are entitled to ask our industry to meet our needs on behalf of the British people, and as the Bill encourages British production, and guarantees an increasing measure of showing time of British films in our cinemas—because it does this—I am sure that it is a good Bill. The President has said that the rate of the quota will be on

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  an ascending scale, and by that I presume he means that it will be something above, perhaps considerably above, the rate which was laid down in the last Act. There is no doubt that the film industry, unlike any other industry, except, perhaps, the Press and the radio, has an enormous effect on people's minds. It is always expressing ideas and influencing public opinion. Commissions which have been set up have proved beyond a peradventure, that people learn more quickly through the eye than through any other medium. It therefore follows that the Government cannot help being interested in the film industry, perhaps more than any other industry.
  I was reading a very interesting leading article in "The Times" only this morning, which reproduced a statement made by the Films Council some time ago. It said that the possibilities of the film were vast as a vehicle of expression, of national life, ideals, traditions, and as an instrument of propaganda. No one can doubt that it is a most important medium. If that is true then, in a sense, the provisions of the Bill do not go far enough, quite apart from the question of nationalisation. During the war, the Government recognised the potency of the film as being of extreme value in the field of influencing the minds of the people at home, carrying British prestige abroad, and influencing public opinion abroad. They spent many millions of pounds on the production of films. They created new film-producing organisations, such as the Crown Film Unit, which undertook some very important work, and produced some first-class documentary feature films which some of us have seen. The Government also called into being the Colonial Film Unit, which was quite a new departure. The Army, Navy, and Air Force also had their own productive organisations making films, because it was so urgently felt that this work should have the attention of the Government at that time.
  Not only that, but the Government literally kept going a number of documentary producing organisations which were working almost exclusively for the Ministry of Information, and a large number of documentary films were produced for showing in our own cinemas and for sending abroad. In spite of the artistic objections which have been
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  raised against the Government having a hand in the production of films, the Government were actually responsible for the production and financing of two feature films. One was "49th Parallel," which was a great success and out of which, I am told on reliable authority, they made money as a result of their investment, and the other was "The Lion has Wings." It is important that the Government should take a direct interest in the industry, that they should give it every encouragement. If the industry is failing, the Government must meet the deficiency, no matter in which field that deficiency occurs. We must remember in and out of season that only 20 per cent. of screen time is now being occupied by British films.
  I want to say, with great respect to Mr. Rank and all those associated with him, that this situation proves that the industry has failed up to a point. It is true that remarkable progress has been made during the last 15 years, more especially in the last 10 years. A great deal of the credit for that is due to Mr. Rank, and I want to pay tribute to his enthusiasm for the industry and for the first-class work which has been done by his organisation.
  Earl Winterton: I am sure that in fairness to British producers the hon. Member will recall that during the war it was extremely difficult for British production to be carried on in this country in the way in which it could be carried on in other countries.
  Mr. Reeves: During that time I was associated with the industry and I realise, of course, the severe handicaps under which it had to work. It is not so much that the industry failed during the last 10 years as that it failed before that time.
  I want to say a word or two now about our documentary film industry, which is the Cinderella of the film industry. In spite of the fact that we all say that our documentaries are the finest in the world, and that we praise them up hill and down dale, they are not being supported. They are not being shown in our cinemas to any great extent. The exhibitor has the feeling that the public resents the documentary film. I think such exhibitors are quite wrong. When the public have the opportunity of seeing

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  documentary films, they always appreciate them. In my own experience, I have found that they enjoy seeing the type of documentary film produced in this country. We have to encourage that side of the industry. Documentary films rank for quota, but sometimes you cannot give them away, let alone sell them, because the exhibitor does not want them. I think that we ought to insist that a certain percentage of the takings should be allocated to documentary films, because they are so characteristically British. It is a form of art which we ought to encourage. I would like the President of the Board of Trade to give consideration to that suggestion.
  Colonel Dower: Does the hon. Gentleman think that he knows what the public want, or that the public should be told what they want?
  Mr. Reeves: I think that the trouble is that a kind of habit has grown up. The public have the habit of going to the cinema to see two feature films. Most of the cinemas have two-feature film programmes. An exhibitor is afraid to cut out the second feature and substitute a series of "shorts" or a longer documentary feature film. I think that is the difficulty. Where a supporting programme of short films has been tried, it has been, I understand, successful.
  I think that the President of the Board of Trade will have to use with a considerable amount of care the power he proposes taking to regulate the showing of sub-standard films. Hitherto, substandard films have not been included in the Acts of Parliament, and those who work with this medium have had complete freedom to show them under any given circumstances. I feel that any regulations which are made ought not to cover the exhibition of scientific, educational, or any type of film outside the commercial cinema, and by the commercial cinema, I mean not only the cinemas where the standard films are shown, but also the units that go about the country showing feature films for profit-making purposes. I am in agreement that the regulations should apply to sub-standard films in that respect, but I would not like to see them applied in any other way.
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  Finally, no proposals have been included in the Bill to regulate the children's film clubs. Certain film organisations are doing a first-class piece of work, and spending a lot of money for the purpose of showing children specialised films on Saturday mornings. Only a few days ago, I went to see that delightful film called "Bush Christmas," which was made specifically for children. The Rank organisation allocate very large sums of money for the production of specialised children's films. This thing is growing, and all manner of people are taking an interest in it. The level of quality differs from organisation to organisation, and sometimes the children are shown exactly the same programmes as are shown in the ordinary cinemas. I think that this thing has to be properly regulated, and I would like the Government to interest themselves in it. It is a matter of supreme educational value, and I would like the President of the Board of Trade to give it consideration.
  7.26 p.m.
  Mr. Peter Roberts: I should not have risen had it not been for the interesting remarks made by the hon. Member for Eton and Slough (Mr. Levy) with regard to monopoly. Resulting from that, we had a definition, I think, from an hon. Member who followed him, of the principle of demarcation of nationalisation. He said that the Socialist Party would not nationalise ideas, but they would nationalise material things. He seemed to forget—I think that this point must be made—that production is one long battle of ideas. It is the whole essence of production that the man with the better ideas gets on, and the man without ideas does not. We on this side of the House should not allow to go by a statement of Socialist principles based on such a misconception. I believe that we are beginning to see dawning on the other side of the House an appreciation of some of the great dangers of monopoly. It is on that matter that I wish to address the House for a very few minutes.
  I think there is danger in the cinema industry of this country suffering from monopoly. In my opinion, the organisaton of Mr. Rank and others, in the long run, will not have done good service to this country, because I consider that they have canalised initiative and stifled the

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  independent producer. If we look to France, Czechoslovakia and other countries, we find that the independent producer is really leading the progress of the cinema industry. I consider that the Government, because of the monopoly build-up in this country, is not in as strong a position as it might be to deal with American competition. I would point out to the Parliamentary Secretary that it is a bad thing to start a battle when we are not on our own ground and certain of our own defences Because of the stifling of the independent producer and the monopolistic attitude, I do not consider that the cinema industry of this country is capable of stepping into the breach quickly enough.
  Mr. O'Brien: Would the hon. Gentleman develop the point about stifling and monopoly, and his suggestion that the Rank monopoly would, in the long run, stifle British production? Can he give the alternative?
  Mr. Roberts: I was coming to that. The alternative lies in the actual financing and producing of films. One should not have to go to one monopolistic cinema organisation for the financing of films; films should be financed by other organisations.
  Earl Winterton: Will my hon. Friend explain exactly what he means by that? What is the one monopolistic organisation that we have to go to? There are a number of organisations.
  Mr. Roberts: There are a number of big organisations, but once the film is produced it has to be shown, and I am referring more to the distributive side. I do not know whether the noble Lord has experience of film production, but, if he has, he will have found that to invest any serious amount of money in it he has to be certain of showing the film once it is produced, and that is where monopoly comes in.
  I want to come back to the more constructive point which arises out of that. When a film has been produced, goes before the various councils which are to be set up under this Bill and gets the approval of those councils, I consider the Government should enter into some sort of arrangement whereby such films, although they may have been produced under the auspices of a monopolistic organisation, should be able to be shown in the cinemas of the country. At the
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  present moment there is likely to be a ban on these films. It is the breaking down of monopolies, whether the films, the B.B.C. or any monopoly of ideas, in which I am interested. The independent producer should be able to show his film whether or not he is in the good graces of one big distributive organisation or another. It is along those lines that the Council may do beneficial work. Under the auspices of this Council, these films from independent producers will be shown. It was to speak on the subject of monopoly that I got up. I dislike monopoly whether it is in coal, films or transport. I will fight monopoly to the best of my power. I consider it is the job of the Government to help the independent producer and to give the lead which is necessary in this case.
  7.31 p.m.
  Mr. Scott-Elliot: I hope the hon. Member for Ecclesall (Mr. Roberts) will forgive me if I do not follow him too closely, although I do not dissent altogether from what he was saying. There is only one point I should like to make in regard to what he said and it is that in any event the producer has to make a film before it can be decided whether that film is a good proposition. I know it can also be said that at one time there was an arrangement between Mr. Rank and Sir Alexander Korda that in view of the outstanding merit of Sir Alexander Korda's films, Mr. Rank would take so many of these films each year. That was an exceptional case. Any ordinary producer would have to wait until a number of circuits undertook to show his film in order to be sure of a release for it.
  If I had to describe this Bill in two or three words, I would say that it was a sensible but not very important Bill. Indeed, I go further and say that the announcement by the President of the Board of Trade this afternoon in regard to the setting up of a commission to inquire into the working of this highly complicated industry is a considerably more important matter than the introduction of this Bill. I want to turn to the Bill itself, and it seems to me that we have got to remember certain points. The first is that the film industry in this country differs from that in the United States in that production and exhibition in this country are more integrated than they are over there.

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  Secondly, arising out of this and certain other circumstances, there is a certain tendency to monopoly to which attention was drawn by a report published some two and a half years ago by a subcommittee of the Films Council. My third proposition is that today British audiences appreciate British films to a greater degree than at any time in the past. I believe I am right in saying that of the ten films which last year were rated as the best, five were British films, which is a considerable achievement having regard to the relative output of American films compared with our own. My final proposition is that because of circumstances over which the industry has no control, it finds itself in a period of transition.
  I come now to the special duty which the Government have been obliged to impose. I recognise it was absolutely essential because in our present economic circumstances we could not afford to import American films at the rate we were doing. I believe I am right in saying that the effect of the duty is not being felt to the extent that it will be later on owing to the fact that a considerable number of old American films are being released, and these films are not subject to the duty. In the intervening period I hope that there will be an agreement between us and the Americans on this question, because such an agreement would seem to me to be to our mutual interest. The average American feature film depends to a great extent for its profits upon the money that it earns overseas. It is generally agreed that the British market is by far the largest market. In other words, the largest amount of the profit on the average American feature film is likely to be made by showing in this country.
  Similarly the British feature film needs to earn overseas money if it is going to be a high-class film and achieve a certain degree of distinction. I do not want to be misunderstood when I say that. An expensive film is not necessarily a good film, and a modestly priced film is not necessarily a bad film. To continue my argument, it seems to me to be absolutely in our interests as well as in the interests of the Americans that we should come to some agreement. They should agree to what they have never agreed before, and that is to take a limited num-
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  ber of British feature films for their circuits. Mr. Rank has shown films in America, but never to my knowledge on the circuits. Any showing he has arranged in America has been by special arrangement.
  Until we get British films being regularly shown on the circuits, we shall fail in the earning of the amount of dollars which we need to earn if we are going to get a proper return from the film industry. Equally the Americans could send us a good many more films for the same money owing to the fact that the British market is a considerably smaller market than the American market. I believe it is fair to say that the American market is four times the size of our own. Therefore, it is reasonable that the Americans should send us a great many more films than we send them.
  I turn to the question of British cinemas closing down. I do not agree with the hon. Member for Louth (Mr. Osborne), because I think that the whole question was being overdone. I will not say that some of the smaller cinemas may not have to close down, but I do not believe that it is going to happen for some considerable time. Cinemas will go to any length in order to avoid closing down, and, if necessary, they might even go so far as to provide "live" turns. Exhibition in this country is very nearly as wasteful as is production. There is no need for two programmes every week, and there is no need for the double-feature programme. If single-feature programmes were developed, it would help the production of documentary films. My hon. Friend the Member for Greenwich (Mr. Reeves) made reference to this subject, and I think it is particularly important that we should develop the British documentary films in which this country is pre-eminent. Documentary films do not at present bring in the amount of money that they ought to bring in.
  Let us now consider what increase in production is possible. When giving a Press interview the other day, the President of the Board of Trade said that this year we should be able to make 75 feature films. I hope we shall be able to step up that figure as the years go on and increase the production of studio space, which is the limiting factor. We must aim ultimately at 200 feature films a year. We must remember the very great importance of what can be called "second feature"

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  films. They are tremendously important in an expanding industry, since they are to be the training ground of technicians who will ultimately come into the making of British feature films.
  To turn to the details of the Bill, I approve of the abolition of the renters' quota. Despite the very high level of the Debate it has not been made clear that the renters' quota has tended to encourage the production of inferior types of films, which have done no good to our industry. There is no minimum figure in the Bill for the exhibitors' quota but no doubt that is all right provided a clear assurance is given when the first order is made laying down what the quota shall be that that is the minimum. I am glad to see that there is a new definition of a feature film—it is a very good definition—and that the whole question of quota no longer depends on the cost of a film. I cannot emphasise too strongly that it is possible to make films of a very high order which do not necessarily cost a great deal of money. I am sure that a special quota is desirable, and I do not see why the big interests should not shoulder it. I do not regard it as a burden. If only six feature films made by independents are to be chosen every year I do not see why they should not bring in good box office returns.
  There is also the question of the monopoly. It is right to take power to forbid additions to the existing circuits. As the hon. Member for Huddersfield (Mr. Mallalieu) said, we want more circuits. That will probably grow of its own. I believe I am right in saying that in the period of the slump in 1931 both Gaumont British and A.B.C. built up their big circuits. It may be that a rather more difficult time will come to the film industry—every industry has its ups and downs—and, provided there is a ceiling on the existing circuits, that will be the time for one or two other progressive individuals to buiild up larger circuits by means of amalgamation.
  Like other hon. Members, I am not entirely happy about the Films Council. The hon. Member for Barnet (Dr. Taylor) gave as an excuse for cutting down the number of independent members that certain of those members did not turn up at the meetings. That is not a very good answer. If they do not turn up they ought to be put off the Council and replaced by new members who have higher
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  regard for their duties. The number should be kept at 21. I recognise the need for producers to increase their representation and I equally recognise the need for the employees, but let us keep the number at 21 and cut down the number of independents from 11 to seven instead of the steeper cut suggested.
  Mr. Skeffington-Lodge: Why cut it at all?
  Mr. Scott-Elliot: If the Council is kept at 25 members, it will be altogether unwieldy. I am convinced that this is a useful Bill and that the House will give it a Second Reading without a Division.
  7.45 P.m.
  Mr. William Shepherd: The House in general will agree with what the hon. Member for Accrington (Mr. Scott-Elliot) has said about the reduction of the number of independent members of the Films Council. The President of the Board of Trade did not make out the case for, or even give the House the impression that he is convinced that, the decision he has arrived at is the right one, and I hope this matter will receive further examination in Committee. Another point with regard to the Council which is important is the extent to which representation as exhibitors, renters and producers will be accorded to what I may describe as the cartel element of the British film industry. It will be highly undesirable if we are to make this material increase in the representation of producers, renters and exhibitors and to give a great deal of it to those who represent the Rank organisation. That would be undesirable, and I should be glad if the Parliamentary Secretary would give an assurance that it is intended to encourage the independent producers and exhibitors by giving them improved representation on the Council.
  The President of the Board of Trade has been very lucky today because, for his first Bill, he has introduced one which has met with the general approval of the House. Even more than that, his view on the background and the general situation obtaining in the industry has also met with the general approval of the House. As the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) said, we on this side approve in principle what His Majesty's Government have done in restricting the earnings of American films in

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  this country. Our American friends must realise very firmly that the pattern of trade and trade principles which we observed in the years before the war is no longer possible and that we have to cut our coat according to our cloth, and they must come to a reasonable compromise with us. It is obviously a good thing that we should exchange films with America, and we must try to arrive at some compromise.
  I want to say one or two words about the Rank organisation. Nobody ought to be very satisfied or secure about the position. I should say that the Rank organisation as it is has done immensely fine work for the British film industry, but that it is a potentially dangerous situation. Those people who condemn Mr. Rank surely do so only in complete ignorance of what he has done for the industry. The industry would not be in the state it is today had it not been for what he has done. What the British film industry needed in the years before the war was a man of integrity who would clear out all the doubtful elements, all the speculative elements and all the fly-by-night elements who absolutely infested the industry. Mr. Rank has given the industry tone and integrity and he has built up a group which is by no means too large. When judged by American standards, Mr. Rank's group is of moderate size, but it is sufficiently strong to give this country a bargaining ground to deal with the Americans on something like their own footing on their side.
  We should not decry what Mr. Rank has done, because he has done immense good for the industry, but what we should be very careful about is that this situation is potentially dangerous. It is obviously undesirable, whether in times of scarcity or of plenty in the supply of films, that there should be so close an integration of the producer and exhibitor. The solution is not to pour scorn upon Mr. Rank but to encourage independent producers, so that Mr. Rank's position in the producing world no longer occupies the major proportion as it does today.
  Government experiences with independent producers, so far as financial assistance is concerned, have been very grim. We all know what happened when we gave guarantees to independent producers to produce films some 15 years ago. Every kind of racketeering gentleman in
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  the City of London or outside it got on to this and said, "Here is a good thing; we will get a Government guarantee, we will get the money, and clean up very soon," and in fact, they did clean up. However, I do not think those experiences, unprofitable and discouraging as they were, ought to stop the Government from pursuing the all-important task of encouraging the independent producer. We have, on the one hand, the Films Council which ought to be able to "vet" the producers, and we have also two Government corporations designed to finance industry. From their reports it would seem that these two organisations are not lending as much money as they had hoped to do. They have not found as useful and secure an outlet for their activities as was the intention when they were formed. I put it to the Government as a suggestion that we might try to utilise the services of these two corporations for the purpose of financing men of proved worth in this business. It is well worth investigating what can be done along those lines.
  If we are to have sound production in this country, the cost of film production must of necessity come down. We do not want to aim at merely financing independent producers; we want to aim at getting the costs of British films to such a level that it is a proposition for independent people, by their own finances, to produce the films. In this industry one wants a constant flow of new ideas and people. We want people coming into the industry to give it new life, new ideas and new vitality. We have to get those costs down. The hon. Member for West Nottingham (Mr. O'Brien) is an official of a trade union intimately concerned with the industry, and I am sure he can do something to reduce the costs of film production in this country—
  Mr. O'Brien: Does the hon. Member suggest by that remark that I should start reducing the costs by advocating reductions in the already inadequate wage scales in the industry?
  Mr. Shepherd: I feel sure that the hon. Gentleman's intelligence is more keen than that. I would not suggest for one moment that one should reduce the wages, which I would not describe as inadequate, although of course, as a trade union leader, he must always do so even

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  at the height of the inflationary boom. What I suggest is that on film sets generally, and in all the film industry, far too many people are employed in doing far too little work. We have to get the costs down to an economic level which will enable people to go into the business, develop their ideas, and start new companies and studios, because on that depends the vitality of the industry. Therefore, I hope the hon. Member for West Nottingham will play his part as a trade union leader in doing something along those lines
  I hope that by the force of circumstances, over which we have little control, we shall get away from the evil of the double - feature programme which is disastrous to the film business. First it is quite impossible to manufacture the necessary volume of films of good enough quality to support two films in each cinema every week. It is impossible to get sufficient original ideas, or slants on old ideas, to inspire producers to produce the enormous number of films necessary for a double-feature programme. Therefore, we ought to go for quality rather than quantity. Secondly, the transport facilities today are so poor, and stop so relatively early in the evening that it is much better in the interests of the people themselves that the programme should not be as long as it used to be in the days when more facilities were available.
  I am certain that this moment is a good one for British films. We have the writers, the technicians, a great background of literature, and all the necessary things for producing films, and we are now on the quality scale. I am sure that if we tackle this problem aright and the Government act wisely and give reasonable support to people who can do something, the British film industry will be not only satisfactory to the people of this country, but a great earner of revenue in foreign countries.
  7.57 P.m.
  Mr. Eric Fletcher: My reason for venturing to rise after the long and interesting Debate we have had this evening, which has covered so wide a field, is merely the fact that a substantial part of my professional career happens to have been spent in advising various sections of the film industry on the construction of previous Quota Acts, sometimes producers, both American and British, sometimes technicians, sometimes
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  cinematograph theatre owners and others. As some hon. Members may be aware, I am at present closely associated with the A.B.C. circuit, about which I gather my hon. Friend the Member for Barnet (Dr. Taylor) had some rather critical things to say when, unfortunately, I was out of the Chamber. Whatever he may have said about the A.B.C. circuit, I think it will be generally recognised that it provides the sole surviving bulwark in the industry against a complete monopoly by Mr. Rank.
  Dr. Taylor: I think when my hon. Friend reads HANSARD he will find that I was really remarkably uncritical of the A.B.C. circuit.
  Mr. Fletcher: I am glad to hear that, and it is what I should have imagined knowing that my hon. Friend, as an independent member of the Cinematograph Films Council has played such a prominent part in the deliberations of that Council and had some opportunity of studying the subject. I would like, first, to add my congratulations on the exhaustive way in which my right hon. and learned Friend the President of the Board of Trade opened this Debate, showing that he had mastered completely a complicated and intricate subject.
  I found myself in substantial agreement with much, though not all, of what my hon. Friend the Member for West Nottingham (Mr. O'Brien) said. It is perfectly true that the trade find that this Bill is being introduced in circumstances of some unreality, because the industry at the moment is overshadowed by the uncertainty of the present deadlock on the tax situation. It is obvious to those who have listened to the Debate, and to those who are aware of the position, that the present deadlock in the negotiations between His Majesty's Government and the Americans have produced a situation which must be disastrous to the cinematograph trade in this country and, if not equally disastrous, very inconvenient to the Americans themselves. Therefore, in such a situation it is not unreasonable to expect, by a measure of good will on both sides, that a solution will be found which produces equally beneficial results for both sides. It is notable that the conditions in which the Bill is introduced assume that some such solution will be

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  found. Without it, the Bill would be unnecessary.
  I will leave the tax situation, adding my wishes to those which have already been expressed that another attempt will be made with a reasonable attitude on both sides, in order to arrive at a solution of the unfortunate deadlock. The Bill, like the Quota Act has, as its primary objective—a very laudable one—the protection of the British film industry. Statutory protection was essential to enable the British film industry to be set up on its feet at all. Its continuation is necessary to enable the industry to meet competition from America. I welcome the innovations in the Bill, as compared with the two previous Quota Acts.
  One or two ambiguities have been referred to. I hope that the Parliamentary Secretary will be able to dispose of them. For example, it has been found difficult to know the precise effect of Clause 5, which imposes upon circuits the duty of showing six films per year. The three circuits will in future each be under that obligation to show six British films certified by a selection committee. That will make 18 films per year. Those films will be counted in the quota obligation of the circuits. If they have satisfied their quota obligations by booking other films, that fact will not excuse them for departing from the obligation to show six specific, selected films. All the three circuits willingly accept the obligation. For the purposes of accuracy it is important to point out, in view of the alleged hardships and grievances of independent film producers, that the provisions of the Bill do no more than to give legislative effect to the undertakings which were given by the circuits two or more years ago to the then President of the Board of Trade, the present Chancellor of the Exchequer.
  It is also significant, in the bearing which it has upon the alleged grievances of the independent producers, that, during the last two years, as far as I know, when each of the circuits had voluntarily assumed an obligation to show six British films a year approved by the selection committee, no films have been submitted to the selection committee. Certainly, none has been passed by the Committee. The circuits have not been asked to honour that undertaking, which is now to be given legislative effect. That fact
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  disposes of the grievances to which I think my hon. Friend the Member for Aston (Mr. Wyatt) referred, in a contribution to one of the weekly papers a few days ago. In that contribution my hon. Friend suggested as indicating one of the hardships of the independent producer—he has been good enough to lend me his copy of the paper—that
  "the only hope for them has been to take a place in the queue for the few available weeks on the A.B.C. circuit."
  So far from that being a true statement of the position, the truth is that the A.B.C. circuit have, for a very long time been only too willing and anxious to give a showing to any independent or other British film produced in this country.
  That brings me to the point which was made by my hon. Friend the Member for Barnet, when referring to the studio at Elstree belonging to the A.B.C. circuit. My hon. Friend suggested that that studio ought to have been producing films during the past two years. The fact is that, as a result of the occupation of the studio by His Majesty's Government during the war, it has been impossible to use it. The A.B.C. group have spent a very large sum of money in modernising, enlarging and re-equipping it, with a view to producing, in what I think will be one of the finest studios in the country within a few months, a series of high-class British films.
  In view of the remarks made by my hon. Friend about the association between Messrs. Warner Bros. and the A.B.C. circuit, the House will probably be interested to be reminded of what has already appeared in the Press. It is that Warner Bros. have agreed to show throughout their circuit in America at least three of the films to be produced each year at the Elstree Studios.
  Dr. Taylor: Can the hon. Member hold out any hope of the A.B.C. at Elstree going into production? Secondly, will that take place even if the embargo continues?
  Mr. Fletcher: For the benefit of my hon. Friend I will say that I was at Elstree on Monday and that very considerable progress is being made in the extensive work which is in progress. It is confidently hoped that the studios will be in production in July of this year.
  Dr. Taylor: Even if the embargo continues?
  Mr. Fletcher: Irrespective of the embargo.
  Perhaps I may now pass to the most serious point of criticism of the Bill, the constitution of the Cinematograph Films Council. Concern is felt in more than one quarter about the provisions of Clause 8 and at the reduction in the number of independent members. Concern is also felt at the inadequate representation of exhibitors. Hon. Members will appreciate that the Bill, no doubt necessarily, places obligations only upon exhibitors and not upon producers, distributors or technicians. Exhibitors are required to show a certain number of films yearly, and a higher figure is required if the cinemas are owned by circuits, than if they are owned independently.
  Bearing in mind the fact that the Cinematograph Films Council is a statutory body to advise the President of the Board of Trade, that the Bill will give him a much wider measure of discretion and flexibility than he has ever had before in the fixing of quotas, and indeed in the fixing of differential quotas; and the further fact that he has to be guided on each occasion by the Cinematograph Films Council, it does not seem unreasonable to suggest that exhibitors, including those from Scotland, ought to have adequate representation upon the Council. That would put them in a position to express their points of view about the quota and the differential quota and, equally important, whether in the case of an unfortunate exhibitor who is unable to fulfil his quota obligations, that exhibitor should be penalised or should be given some relief.
  Mr. Gallacher: Does not the hon. Member recognise that there is a language difficulty between Scotland and England and that there should be a Scottish advisory films council? At the present time there are two representatives of Scotland on this Council and one of them is Irish.
  Mr. Fletcher: I am glad to have the support of an hon. Member from Scotland on this occasion. Passing from that may I suggest for the consideration of my right hon. Friend who is always so reasonable in these matters, that it might be of advantage if, instead of fixing the
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  quota for half yearly periods, as is contemplated in the Bill, the quota were fixed for yearly periods in order to give exhibitors and producers and others concerned more time to make their arrangements. The only advantage in fixing a quota for a half yearly period instead of a yearly period is to ensure that the proper proportion of British films is shown not merely during the summer months, but also during the winter months from October to April. It would be more convenient to the trade and the Government would be equally protected, if the quota were fixed for a year ahead with a qualification that at least 50 per cent. of the quota obligation should be fulfilled during the six winter months.
  I should like to commend the announcement made by the President of the Board of Trade of his intention to appoint a committee of inquiry into the conditions of the industry. That will be welcomed by all but I hope the terms of reference will be wide enough to enable the Committee to deal not only with the conditions of exhibition, but also with conditions of production. It is important for the future health and prosperity of this British film industry that any tendency to extravagance should be curtailed, that we should have a rational system of making British films, and should not assume that it is necessary to spend large sums of money on the Hollywood scale. It is desirable in my opinion that the industry should be looked at as a whole.
  Mr. Wilson: The question of production costs will be a matter for immediate inquiry by my own Production Council, and not for the Committee of Inquiry into the exhibition side of the industry. It may be that my Advisory Council after a first look at this question will decide to set up some special inquiry to go into these questions, but in the first instance it is a matter for the Production Advisory Council.
  Mr. Fletcher: I appreciate that assurance, and will conclude by saying that, subject to the details I have mentioned, I welcome this Bill. I hope and believe it will lead to greater collaboration between all sections of the industry. It will make a notable and valuable contribution to the building up of a healthy and vigorous British film industry, which in turn, by virtue of its immense possi-

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  bilities, has such an important part to play in the economic and cultural welfare of our country.
  8.18 p.m.
  Mr. John Foster: The hon. Member for East Islington (Mr. E. Fletcher) said that the Bill was necessary at the present time. While not dissenting from that, I think it is a matter of regret that the British cinema industry is not yet in a position to stand up to competition. I hope the aim will be kept in view that the British industry should stand on its own legs as soon as possible.
  It is true that in the past the renters' quota has led to abuse, and to the production of films perhaps not of the first quality; but, in the light of the American difficulties, that creates a difficult situation for the independent exhibitor. At first, exhibitors were opposed to the abolition of the renters' quota, but their opposition was withdrawn on the understanding that the American companies would continue in this country; I have been informed of that by the exhibitors. If the American deadlock continues, it may well be very difficult for exhibitors to fulfil their quota under this Measure. It would not be so difficult for the producer-exhibitor, but it would be difficult for the independent exhibitor. I hope the right hon. Gentleman will have in mind that by abolishing the renters' quota he may create a difficult situation. It is important to see that all studio space is fully utilised for production, both English and American studio space. That is very important because, if the deadlock continues, it is suggested the American companies in some instances will refuse to make films over here. That is the fear of exhibitors who have communicated with me. Then the independent exhibitor will have difficulty in fulfilling his quota. We are grateful for the assurance of the hon. Member for East Islington that this particular American company is going on producing irrespective of that.
  Mr. E. Fletcher: I said the American company in association with A.B.C.
  Mr. Foster: Warner Bros., I am sure, will play a prominent part in the partnership. I think some speakers, including my hon. Friend the Member for Bucklow
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  (Mr. Shepherd) are rather too quick to welcome the abolition of the double feature. From the point of view of the cinema-goer, that means a reduction in the quality of what is being shown. My hon. Friend said it was impossible to produce good double features, but we ought to remember that from the point of view of the consumer the production of one feature is a reduction in the article supplied. It is possible to have two features, but that, of course, is probably only possible if the American impasse is ended.
  On the question of the tax, there is doubt whether it was wise to impose it without consulting the Americans. Hon. Members from all sides of the House have asked the right hon. Gentleman to use his best endeavours to be reasonable and to come to some arrangement with the American film interests which will allow the consumer in this country, who deserves a good product, to benefit from good English and American films.
  Finally, I wish to raise the point, which was raised by the hon. Member for East Islington, about the representation of the exhibitor on the Films Council, which seems to me to be too small. He is the man who has to deal with the consumer, the cinema-goer; he is the man who has an obligation under this Measure. It is important that in considering this industry and the necessity for this Measure, we should remember the point of view of the man who goes to the cinema and sees the films. It is important to keep him very much in the foreground, because, after all, the whole industry exists to produce an article for him. I ask the right hon. Gentleman to bear this point in mind, and to see whether it would not be possible, perhaps at a later stage, somewhat to increase the representation of the exhibitors, because those gentlemen who represent the exhibitors will, in fact, be representing the independent exhibitors who have the choice of what film is to be shown, and upon whom the prosperity of the industry, in the last resort, depends.
  8.22 p.m.
  Mr. Collins: I entirely agree with the hon. Member for Northwich (Mr. J. Foster) on the importance of the person who goes into the cinema and pays his 1s. 9d. It is the first time during this Debate, and I have heard the whole of it, that the member of the public, who is, after all, the most important of all in this matter, has been specifically mentioned.

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  It has been a Debate on the highest level, with a number of expert contributions. I think I am the first Member who has spoken who has not been intimately connected with the cinema in some way or another. Perhaps for that reason we have had a Debate in which there has been a great deal of Rank, but very little rancour. I feel, too, that the Debate has been deficient in one or two respects, in that we do not seem to have realised sufficiently that it may be another 10 years before we again consider this vital question of the film industry in so far as new legislation in concerned. In those 10 years there may be major differences in the position of the cinema. It may well happen that in that period television may have just such an effect upon the cinema as the development of the cinema 20 years ago had on the music hall as a means of entertainment.
  I feel, too, that during the Debate there has been a tendency to treat the American situation as if it were to be permanent. After all, we hope that whatever happens about this vexed and unhappy question it will only be a temporary difficulty, although most hon. Members seem to have taken the view that the present position will continue, and that there would be an overwhelming demand for British films for a long time. If we accept that position, and if we do not do all we possibly can by means of legislation to ensure the future of the British film industry, we shall be failing in our duty. We have to see that this Bill ensures that we encourage by all means in our power the development of the British film industry to the maximum possible extent, particularly with regard to the quality of its output. Present conditions create a tremendous opportunity for improving the standard of the programmes that are offered.
  A great deal has been said about documentary films, and it has been rightly put forward that they could properly be developed into a means of providing adequate supporting programmes. I hold the view that the first essential for a film of this kind is that, however much it informs and educates, it must at the same time entertain. I do not want to attempt a definition of what entertainment is, because obviously it must differ according to different types of people. It has been suggested during the Debate that docu-
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  mentaries are something rather painful to endure. Yet, in this very House, a few weeks ago, I saw a documentary film called "The World is Rich," which I think is one of the most remarkable films I have ever seen. I do not know whether it would be called entertainment. It certainly gripped the emotions, informed and held the attention as very few films do. Everything possible should be done to ensure that the public get an opportunity of seeing films of that kind. The point is that it is at present, and as far as I can see from this Bill it will be in the future, utterly impossible or extremely foolhardy to produce films of that kind because there is no assurance that they will be shown. Only one organisation, British Lion, has agreed to the showing of that particular film, and it will be shown in one London cinema. That is disgraceful.
  The real reason has not been spoken about in this Debate. It is the one reason why the documentary or specialised film industry has never been able to get its products into the ordinary commercial cinema, and has, therefore, had to confine itself to sponsored film production outside theatrical circles. The reason is that the whole of the film industry has for years been built up on the "star" appeal system. Feature films are based on well-known "stars." There is publicity, very clever publicity in all possible ways, directed to ensure that when a particular film is offered to the exhibitors there is already a demand for it, and in many respects they must have it. In fact, the renters hold the whip hand. They may demand perhaps 50 per cent.—sometimes even more—of what the film will take in a particular cinema. In order to continue to foist that system on the cinema industry, they have been ready, sometimes literally, to throw in the second feature and everything else for nothing. That system has made it absolutely impossible for real documentaries with ideas, with thought and energy of mind behind them, to be shown in the commercial cinema.
  There has been some discussion on nationalising the film industry, some talk, even, of socialising or nationalising ideas. Any such talk is utter and complete nonsense. But what we have to do, if possible, is to see that in this Bill, or by some legislative means, ideas can have an opportunity of finding a proper out-

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  let. They must not be completely stultified by the fact that the eventual production of the idea in the shape of a respectable film is denied a showing in the cinema. My hon. Friend in his reply, may say that the provision in this Bill regarding labour costs of 10s. per foot minimum is a step in the, right direction in ensuring that the worst of the "quickies" can be eliminated, but I submit that the limit is so very low that it will only ensure the elimination of the very worst of the films, and that many others will still be made of a very poor quality.
  The difficulty is that if there is no certainty that a film can be shown, in all probability, it will not be made. I submit that it is absolutely necessary, in the case of second-feature films—and probably of all films—for the Board of Trade, not merely to fix a labour cost figure, which I submit should be at least £1 per foot, but to ensure also that the second-feature films, or the shorter films, do receive a minimum percentage of the money which is paid by the public at the box office. In that way a floor would be put under this particular section of the industry.
  I want to reinforce what has already been said about quota obligations applying to all cinemas. One of my hon. Friends mentioned a figure of 1,400 cinemas out of the 4,800 which have weekly takings of less than £100 a week That figure, it was suggested, was too high. In any case, it is obvious that the number of those cinemas is very high indeed and there seems to be no reason at all why they should completely escape the quota obligation, particularly as many of them are in rural areas, which would provide a very useful field for good British films of the type about which I have spoken.
  I believe that if these alterations which I have suggested could be made, it would be possible for the British film industry to produce, in a year, some 50 long films, not first-feature films, but long films as defined in the Bill, and possibly 200 short films of good quality. That would mean a major contribution to the entertainment of the British public supplied by the British film industry. That, together with the excellent first-feature films already being made, and which it has been sug-
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  gested should be considerably increased, would mean that our own industry could supply a proportion very much larger than the present 20 per cent., or any of the figures suggested during this Debate.
  I hope, therefore, that my hon. Friend will, pay particular attention to these points which have been raised, and which are all aimed at ensuring what must certainly be the prime object of this Bill—that anyone who is prepared to use ideas and to spend time and money in producing a good film can do so in the certainty that there will be no artificial obstruction to the witnessing of that film by the public, and then letting it have the real test of public opinion as to whether it is a good film or not. If it is a good film it will reap the reward of its value. If it is not, it will not. We cannot have this situation where there are barriers, either of big combines of renters or of exhibitors combining together, to ensure not merely that these productions are not shown, but that they are not, in fact, made at all. In welcoming this Bill, I submit that these matters should be considered in order that we can give the industry a real opportunity over the next ten years of building up on the right lines.
  8.34 p.m.
  Mr. Wyatt: I thoroughly agree with most of the references made by my hon. Friend the Member for Taunton (Mr. Collins) to the fact that we should have no artificial barriers between the film consumer and the film producer in the first instance. Obviously, this Bill goes a very long way towards stimulating the production of British films. I wish to add my congratulations to all the others that have been showered upon the President of the Board of Trade this afternoon. But I would point out to him that it really is not very fair to come down to the House, when introducing his first Bill, and concede in advance all the points which his backbenchers wish to make, because that takes away most of the fun of the Debate. It really is not done. However, I think that he can be forgiven on this occasion as this is the first time that he has introduced a Bill. All the concessions should come at the end of the Debate and not at the beginning. They should appear to be made as a result of pressure from the back benches.

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  This Bill does go a long way, but to be really effective the sights must be set high. As other speakers have emphasised, it is a pity that there are no quota rates fixed in the Bill to give a minimum, so that the trade can know exactly where it stands and that the figure will never go below a fixed minimum. I do not think that it would be too high to start it off at something like 35 per cent, for first feature films. British film producers made 50 first features last year and, no doubt, they can make as many this year. No doubt, in a short period of time they will be able to make more than that. Of course, it might mean some closing of cinemas and abandoning of twice-weekly programmes. That would not matter a great deal in our present very difficult circumstances. Even if we had to close down a few cinemas, there ought to be other even more important work for the usherettes now employed there.
  It is clear that the Treasury cannot commit itself to a very severe dead loss on American films for any period within the next four or five years. Therefore, if we do not make more films ourselves, very largely, we must do without. The big circuits ought to start off with nothing less than 35 per cent., and cinemas other than those taking under £100 a week, at something like 25 per cent. I agree with the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) that it is a very strange anomaly that the under £100 a week section are not included in the Bill. I am told by a highly reputable distributor that the figure of cinemas taking under roc, a week is somewhere in the neighbourhood of 800 and not 1,500 or 500. That represents a very large aggregate gross taking per week.
  The real trouble about this is not merely the fact that many of the cinemas are in isolated districts in villages where they are the only cinema and if they do not take the British film then the people who live locally will never see it. It is also the fact that these types of cinema are the most difficult of all in regard to the taking of British films in the first instance. They can get for £5 outright—or even cheaper; sometimes for 10s.—an American Wild West film. They show it and people are obliged to see it. They would rather do that than show a good British film. It is very dubious to fix the special quota to apply only to circuits of 200 or more
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  cinemas. Some of the very worst of the circuits with regard to the taking of British films are the smaller circuits. It is quite notorious that Mr. Sidney Bernstein, who owns the Granada circuit of some 35 cinemas, refuses point blank to give a fair and decent price for British films. He says, "I will not give you above a certain figure. If you do not like it, you can leave it. I can quite easily get a cheaper American film." He will always get an American film of comparative quality more cheaply, because the British market is merely surplus profit for the American films. Without a tax being in operation, American films must always be able to undercut British films in Britain. That fact should be made clear; it has not really been mentioned in this Debate.
  That is why the smaller circuits have been able to maintain this policy of refusing to take British films. If anything, they should have a higher quota than the over 200 circuits. In the case of the Granada circuit, it owns every theatre in Shrewsbury, it has a virtual monopoly in Rugby and the best cinemas in Bedford. That is an example of the way in which it operates. It means that no British films, or very few of them, will be shown in this circuit, unless Mr. Bernstein is forced to take his full quota. The same applies to the Shipman and King organisation of 37 cinemas in the Home Counties, and in many places like Esher and some other small villages and towns, this circuit has the only cinema there, and its refusal to take British films means that the people will not see them. The same applies to another organisation—the Eckart circuit in Yorkshire.
  In spite of all that has been said in defence of the Rank organisation and A.B.C., particularly by my hon. Friend the Member for East Islington (Mr. E. Fletcher), they really do represent the greatest menace to the future of the British film industry. I would like to try to explain what I mean. They are not an immediate, day-to-day menace because of the peculiar circumstances operating today, but what has happened has been precisely this. They are, in the main, the best cinemas, in the best and most paying positions. Roughly speaking, the Rank organisation cinemas and the A.B.C. cinemas take about three-fifths of the total box office takings in the country, and they are obviously in a tremendously

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  strong position from the buying point of view. Despite all that my hon. Friend says about the desire of A.B.C. today to show British films, in the past, there has not been that overriding desire in that organisation to show British films, because of the tie-up with M.G.M. and Warner Brothers. There has been recently a slowing-down in production in Hollywood which is now of many months' standing, and that has made it possible for more British films to be shown in the A.B.C. organisation, and the same applies to the Rank organisation. It is because of these tremendous financial ties, with which I will not bore the House, and of which I am sure my hon. Friend is fully aware, that British films, in the past have not had the openings which they could have had on the circuits and on the British screen, and that affects particularly to the independent producers. It is because of that past situation that all the independent producers, or very nearly all of them, have been driven out of business, except for Ealing Studios and London Films, who were the only two large ones tough enough to stand this racket.
  With the slowing-down in production at Hollywood, the limitation and the new quota which comes in under this Bill, of course, there is a very different situation. Of course, today, any independent producer who makes a film in which all the characters do not walk backwards can sell it to a circuit, because they are very short of films, but that is not always going to be the situation. It certainly is not likely to remain like that for another 10 years, because Mr. Rank, very wisely, no doubt, from his own point of view, is building up a large number of producing companies, and A.B.C. are doing the same. What is going to happen, if we do not take very great care, is that Mr. Rank and the A.B.C. organisation are going to be the sponsors of films which they need to fill the quota for their own circuits, and they will then say to the independent producers, "Thank you very much, but there is no room for more than six of your films on our circuit in a year." That is not really enough to keep an independent producer going at all, for even an independent producer of the type of London Films has the capacity to make at least 12 films a year, and, if they are to be cut down to six a year, it will not be worth
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  their while to try to embark on any new production. If Mr. Rank goes on like this, he could sell every film he makes, because he will have no competition, and the same thing applies to A.B.C. Then they are likely to produce some shoddy work and get careless about it. It is like a man having the only grocery shop in a small town, in which he can sell very poor quality goods because he has no competition.
  But, of course, this does not only affect the independent producers; it very largely affects the consumers as well in places like Oxford, where, I think, my hon. Friend's company is the only one which owns the cinemas. If they have not booked a film which has been made by Rank, then the film will not be shown in that particular town. Again, it works very badly on the wretched independent producer who gets his film taken by a circuit which then refuses to let any other cinemas in the district have the film, as, for instance, in Gloucester. Again, I am afraid, the A.B.C. is the culprit. It owns a somewhat poor cinema which is not in the middle of the town, and which only takes an average of £450 to £500 a week. There are two independent cinemas in the middle of the town which average £1,000 a week, but, whenever the A.B.C. circuit buys a film, that film is only shown in Gloucester in the poor quality cinema, and not in the two larger independent and better cinemas. Therefore, the wretched independent producer gets only half the value which he might have got in his returns.
  Mr. E. Fletcher: Does my hon. Friend want the A.B.C. to have more cinemas in Gloucester or better cinemas?
  Mr. Wyatt: I am going to deal with the A.B.C. circuit in a moment. It is clear that I am not alone in seeing this danger. The Government have seen it and have set up a committee of inquiry. If they think fit, they will take powers to refuse a licence to anybody who owns a circuit of more than 200. I think they could lower that figure to 20, in view of the danger from the smaller circuits. One of the ways in which the monopolistic situation could be broken up—and I hope my hon. Friend the Member for East Islington will think this is not a bad idea, because, at the moment, it is operating with, I think, a fair measure of success

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  in that great home of the films, America—is by copying the consent decree operating these. By this, if any cinema in any district desires that a particular film should be put up for auction in that district, the distributor of the film is obliged to offer it to him.
  To take the example of Gloucester, both those two independent cinemas in the centre of the town, which each take £1,000 a week, could say, when a film such as, for instance, "An Ideal Husband" had been booked by the A.B.C. circuit, and when it was due to come to Gloucester, "We desire to bid for that film, and we do not wish it to be shown in Gloucester beforehand. We can prove that our takings are greater than the A.B.C. cinema in this particular district." The film would then have to be surrendered to that particular cinema. That, I think, my hon. Friend would agree, is one method of breaking up that particular type of monopoly, or, at any rate, of lessening some of its evils. It is something which is working in the United States, and I do not see why it should not work here. It gives the independent producer the chance to get a better price for his pictures, and also gives the consumer a better chance to see the films he wants to see. That, of course, as I think my right hon. Friend the President of the Board of Trade clearly recognises, is the direction from which the chief danger to the British film industry will come in the future.
  It is not altogether fair to curse Mr. Rank as a monopolist, because he has done his best to sell and sponsor British films in America. I would not wish to deny him the credit for doing that. But this monopoly is a dangerous business, and, it nothing is done about it, will ruin the health of the industry which, if allowed to flourish a little more freely, would bring us great credit abroad if not as much money as we desire. It will certainly save us a good deal of money if we are able to show more British films at home. I hope this commission of inquiry which is now being set up will go very closely into the remarkable financial ramifications which operate within these circuits, and all their various tie-ups with American companies, and will also ensure that it is not possible for there to be any further wriggling round the quotas in the future and that one circuit which happens also
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  to be a producer will not be able to crowd out other producers by fulfilling its British quota from its own production.
  8.51 p.m.
  Mr. Skeffington-Lodge: I am in some difficulty in making the points I want to make in this Debate because I understand a Member from the Opposition is to reply within five minutes. I would like, however, to touch on one or two aspects of the Bill which have not been adequately and fully dealt with in what has been a most interesting discussion. As I see it, one of the most important objects of the Bill consists in countering and curbing American competition. In the speeches which have been made from both sides, not enough has been made of the considerable American influence in all the ramifications of the British film industry. It exists in greater or lesser degree in the three biggest existing circuits, and it is always exerted where it can make its weight felt against those trends which I, personally, think desirable in the film world.
  The fact that the composition of the Cinematograph Films Council is being altered, as I think in an undesirable way—and I was very glad to have the support of the right hon. Member for Aldershot (Mr. Lyttelton) in this respect—will not help at all in countering the undesirable influence of which I have spoken. The change in the composition of this Council means that the subservience of this advisory body to the trade will be considerably increased. In recent years the cinema has undoubtedly become one of the strongest influences in family life. I think it was Professor Joad who once spoke of people taking "an emotional bath in the dark" when they watched the average film, and it is the average film which I contend is often so bad. The policy of producing, in the shape of British films, a few expensive and extravagantly priced films has inflicted more average stuff on film-goers than would have been the case if a diversified output had not thereby been slowed down. As it is, with the curtailment of American imports, it looks as if before long some cinemas may have to close altogether. This I must confess will not worry me in the slightest degree.
  One reads a lot about public taste in films. About that, all I would say is that one can defer too much to a public taste based mainly on habit. Where something

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  better and newer is produced in films, as in most other things, one finds that people will generally give it a fair chance, and when this happens they usually grow to like it. As things stand in the film world, and despite the considerable measure of monopoly in the industry, I do not think the bad influence of many films lies half so much in their propagation of any form of ideology, be it British or American, as in their becoming a sort of anodyne for the public mind, lulling and soothing in its effect. Where this happens, alertness to social and political urgencies is definitely blunted. Hollywood's good gifts to us in the shape of Walt Disney and the Marx Brothers are few compared with the long list of films which act as a social narcotic and which have merely a brassy vulgarity.
  The shocking of social conscience in American films never plays the same part as creating a thrill through violence or through erotic suggestion. What we need in this country is a cinema which fully reflects the values of British democracy, that will show us the zest and courage necessary for building a life we can live in fun and in grace. What we do not need and what are positively harmful are those American pictures whose content reflects escapism, sensationalism, glamour and the belief that cinema-goers need to be put to sleep in their hours of recreation. Perhaps one day the more radical measures of reform advocated by employees of the Council will take concrete form. Their proposals are certainly dramatic and drastic; the provision of Government studios and also State finance for the independent producer are two things we would do well to think of for the years that lie ahead. Until then, this Bill does at least represent some progress, though not all of what I personally might wish to have.
  8.58 p.m.
  Mr. Walter Fletcher: It is no exaggeration to say that not only has the ground of this Bill been covered this afternoon, but it has been trampled over by a herd of experts drawn impartially from both sides of the House. The winding up speech which I have to make has been made at least six times already by three Members on each side of the House.
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  Before coming to the actual Bill itself, I would like to say that the announcement made by the President of the Board of Trade, regarding the setting up of a commission, which I thought at first was going to be so entirely welcome has taken a rather disappointing turn since he intervened a little while ago. I should like to ask him and the Parliamentary Secretary who will, no doubt, reply what form this commission is going to take. It is vital that whichever form it takes—whether it be a Parliamentary Commission or a Royal Commission—it should be one which reports to this House and is responsible to this House. I think that it should cover the productive side of the industry as well as the exhibiting side. During this Debate the close link between production and exhibition has been proved as an actual fact, whether it is good or bad. If this report is to have the effect it should have not only inside this country but throughout the world—because it is an examination of the whole of the industry, and it may have a vital effect in popularising our films and raising the prestige we already enjoy as producers of films—it is highly important that it should not be the less important committee which the right hon. Gentleman is to have at his disposal but the main commission, which should examine these two vital sides of the industry. I would ask him if he would reconsider the matter, because I believe the general consensus of opinion is that if we are to have this desirable commission, the full value cannot be got out of it unless it examines production as well as the exhibition side.
  I turn to one or two points in the Bill itself. The quota question has been examined and re-examined to such an extent that I do not wish to say much about it except that I think I join with those who wish to see the quota extended to the cinemas—800 I believe is the correct figure—which take about £100. I believe one should declare one's interest, but I can declare with some relief that I recently abandoned my interest in this trade and disposed of my small chain of independent cinemas which I built and created over the last 15 to 20 years. I can speak now with relief. It lies with many of these smaller cinemas which are sometimes dignified by the name of "flea pits" and sometimes promoted by being called cinemas—between

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  the "flea pit" and the luxury cinema there is the ordinary cinema—to show British films to those who pay to go there, because they have no alternative cinema to which to go, and to have a quota of British films. I should like to speak from the point of view of the man who pays to go to the cinema, and I believe that there is a need to show British films in those cinemas. The case for it is firmly based on the interest which those have in showing British films who distribute British films. If British films are to succeed in the world they have not only to maintain their present standard, but to improve it, and that will be achieved only by the force of public opinion.
  I am not one of those who believe that we have a certain right, because of our own tastes, to impose our tastes on others. There is a freedom of taste as well as of everything else, and to arrogate to ourselves the right to say "This is what ought to be shown to the public" would be mistaken. I have had support very recently in so thinking from the leading low brow on the Government side, who happens to be also the Leader of the House. He has declared without any doubt that he likes Dick Barton on the B.B.C.; and he likes Dick Barton because he likes him—and that is ultimately the best reason of all for liking anything. I, therefore, feel that the remarks which were just made by the hon. Member for Bedford (Mr. Skeffington-Lodge) will bring him into head-on conflict with the Leader of the House.
  I do, however, believe that it should be urged upon the group of some 800 smaller cinemas that they must come into the quota scheme in some form or another and show British films, just as much as any other part of the exhibiting industry must show British films. It should be made possible for them to do so. I believe also that the smaller circuits, the smaller groups outside the big three group, should also be brought into some form of the set quota, but graduated; and that to this end some of the many bodies which are being set up should see how the small cinemas can shoulder their share of the burden of showing British films in this country, so that the quota shall be as evenly spread as possible throughout the whole exhibiting industry. I would urge upon the Board of Trade, who are taking a very enlightened part, as is obvious
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  from this Bill, that they should not content themselves with having imposed on the three big circuits this burden, but that they should distribute it more widely and more evenly. It is sometimes rather dangerous to talk of these three big circuits as though they were one, or as though they were three components. Although they are locked in an embrace which is sometimes of mutual affection where there are mutual interests, they are sometimes constrained by less good intentions than all-in wrestlers; they are always very close to each other because of the nature of their business; but I think we should remember, in considering the problems which arise from the three big circuits, that they are sometimes antagonists and sometimes close friends.
  In the Preamble we are told, quite rightly, that this is a 10-year Bill. In the two decades in which I have followed with some interest the working of the cinema industry in all its ramifications in this country, two major changes took place, and the grave danger in this Debate today has been undoubtedly that it has been conducted too much under the spell of present circumstances that will not exist 10 years hence and which did not exist 10 years ago.
  The laws of supply and demand work in this industry as in every other. They may be antiquated in the view of many, and substitutes that are temporarily satisfactory may have been found; although I very much doubt their satisfactoriness in the long run. I remember so well, as a former small cinema proprietor, the days when there was too much profit, when the film renter would be at one's door saying, "Now, old boy, won't you take this? If you take it we will give you this, that and the other." They cooed like turtle doves. A man in a solo position could more or less name the figure at which to book a film; but if a man were one of the small circuits, then the barring clause of the big circuits was waved in his face for one reason only, namely, that there was too much profit. After that phase, the wheel turned and we entered the era of too little profit, when the independent cinema was very lucky to get anything and could not argue about the price.
  In this Bill there are many provisos for getting round the evil of blind and bulk booking, but they will not work. If there is the urgent need of a man who

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  owns a cinema to keep it open because his livelihood is at stake, then the sort of practices which existed before will start up again: one cinema is booked for, a contract is made and there is an agreement, but there is still the risk, because whether there is a contract or not the small independent cinema owner knows quite well that in many cases contracts are not of very much value. For instance, we have to consider not only whether there are enough films, but whether there are enough copies, because if there are not enough copies of a film then, inevitably, two days before the small cinema is supposed to have its copy the telephone rings and the owner is told, "Sorry, old man, but your copy is rather badly scratched," and so on. But the cinema proprietor knows quite well what that means—that somebody who has more pull than he has is to get his copy.
  These are matters which the various bodies that the President of the Board of Trade is to set up must undoubtedly examine. When the Films Council is being constituted independents of all sorts must be very fully represented. I join issue with the right hon. Gentleman on the question of the constitution of the Films Council, because I do not think it is a sound argument to say that a body of 24 members is notably more unwieldy than a body of 21 members. I know from experience that a body of 19 stone is not very much more unwieldy than one of 17 stone. That matter of degree does not make all that much difference. What does matter, and matter vitally, is that the independent representatives on the Films Council shall be drawn from a great many sources, and that they shall be much more representative than has been the case in the past. We are again starting from scratch, and the old Council has not worked very well. The new Council, inspired by this Bill and by the great interest that there is in this question now, must undoubtedly work quite differently.
  In this Council two things are very necessary. First, in the representatives of the trade itself, in the various categories—outside the trade union category—the greatest care must be taken to see that the big circuits have not a plural vote; and those who come from the same interests, and from interests which are centrally controlled by the circuits, must not make that part of the Council some-
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  thing like a packed jury. There must be sufficient opportunities for independents. As to the 11 members, who are now being reduced to five—although I hope they will be restored to a greater number—let us have public representation of the widest possible sort.
  A little later I shall suggest certain dangers that exist in this industry at the present moment on the propaganda side. That leads me to make the following suggestion, which falls into place here, namely, that one representative on the Films Council should be a newspaper representative. Just as there is a move to watch what the newspapers are doing in the way of controlling in too narrow a way the means of influencing the public, so will that be very necessary in the film industry, and a representative from the newspapers may very well be called for on the Films Council.
  I should like to turn to a topic which all Members have tackled today, and that is the Rank organisation. When Mr. Rank reads the report of this Debate tomorrow, or when this Debate is reported to him tonight, he will have a sort of hot and cold feeling. He will be hot because of the nice things that have been said about him, and he will feel cold because of the threats of nationalisation. It was he who created the industry and put it on its feet. How rapidly we tend to forget the great courage he showed a good many years ago, when the film industry was not at its best from the financial point of view, or from the point of view of what it was producing. He had no need to get into the industry, and he has never really been in it primarily for financial reasons. We forget very easily the great courage and enterprise needed to take over what was not exactly an Augean stable or a boudoir. We must pay a great tribute to Mr. Rank and his organisation for what he did and has done. Nevertheless, I think that that form of organisation does constitute a great danger, although not necessarily because of what Mr. Rank wishes to do.
  It has been referred to by many Members on the other side as a vertical integration, but I do not believe it is that at all. On the contrary, I believe that it is a lateral expansion. It is a pyramid standing on its apex, and as such is a source of great danger, because it represents to the world in general and the people in this country the essence of the film industry.

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  It is the most dangerous thing in the world to follow this easy argument in business. It is the easiest thing in the world to say "I am an owner of cinemas. I must make sure of my profits, and the only way I can do that is to make certain of production. Therefore, I must go into production." Then, having gone into production, to use the same argument to go into the renters' business, and then into the building business and to producing machinery.
  These are not fancies, but are facts. The Rank organisation is at the present moment in the lens-producing industry, and I doubt very much whether that is really an economic necessity. It has even gone so far as to take a controlling interest in the make-up industry. Although the total consumption of make-up by the stars may be higher in this line than in any other, an investment of that size cannot be justified. The trouble with this sort of organisation is that when it achieves justifiable success, due to imagination and courage, it really expands dangerously and laterally.
  Mr. O'Brien: Would the hon. Member develop that point? I asked the hon. Member for Ecclesall (Mr. Roberts) to develop it, but he did not do so. I speak of the trade with some knowledge. While I agree that the situation is becoming difficult and dangerous, these ramifications of the Rank organisation are very necessary in order to have that complete command of facilities so that good British pictures can be made to meet American competition. If Mr. Rank is the only one who has had the courage to do that could the hon. Member suggest what alternative there is?
  Mr. Fletcher: I do not think the hon. Member can really believe that it is necessary for the production of good films in this country to own a make-up business. If he will give me the figures of consumption, within the Rank organisation, of make-up during the war, and what was invested in it, we shall get some idea of what is necessary. The Rank organisation is expanding overseas into the Empire. It is curious that in this Debate little has been said about the Empire as a taker of films. The overspill, both from the American market and the home market, will one day compete strongly in the rest of the British-speaking part of the world and it is, therefore, wise
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  to think of what will happen. I am afraid that it presents a great danger, by putting too many of our cinema eggs into too few baskets. If this or any other organisation expands to that extent, by taking an interest in South Africa, New Zealand, and Australia, it is making itself vulnerable. We must remember the Æsop fable of the frog which tried to swell itself to be an ox, but only succeeded in bursting with an atomic explosion.
  The Rank organisation has expanded, and has been pushed, I think sometimes willingly, in a way which makes it extremely vulnerable. When we talk comparatively of the British film industry and Hollywood we must remember that Hollywood has been making films for 30 years. Its finance, experience, and equipment render it infinitely more powerful and better equipped from every point of view. What we have to do is what so often happens when there is just a position of mass production against quality. It is essentially quality that we have to set against it. That means quality fined down to the production end, which is the basis of the whole industry as it stands at present, and as it is likely to stand for a few years. I believe that the only remedy for this expansion—which, I think, had to take place in many cases, although it has been rather overdone—is to see that other groups, equally powerful and well financed, are created inside the industry. This Bill is a step in the right direction, but I must issue a warning about it. It is not easy, as so many have said today, to attract the necessary capital to the very difficult business of making films.
  I would like to turn for a few moments to the question of film production. I built a cinema in Elstree, when there was not one there, and I have a fairly intimate knowledge of what went on in the studios there. The films that were made were run off in my modest cinema, and I used to hear of what went on in those studios. In essence film-making is expensive, extravagant, and rather wasteful, because it needs a spark of genius, which may not be present on Monday, but may be present on Tuesday, to produce what is wanted. It is possible to have all the cookery books, the best cooks in the world, and all the ingredients, but unless there is, at the head, a chef who instils into the dish he is making part of his own genius it is a flop. The same might

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  be said of cocktails, although nowadays the ingredients may not be so easy to obtain.
  One of the things to be emphasised is that every sort of restrictive practice which may hinder the making of good films by circuit or by independents must be cut out. Restrictive practices can arise from various sides. There are instances of organisations stopping independents from making films. But that does not hold good today because of the shortage of products. There is a large proportion of floor space in small hands, and there is no sign at present that it is being abused. There is also the possibility of restrictive practices by the unions. As a Member for a working man's industrial constituency, I speak with great regard for the union when it is carrying out its proper functions. It is a vital part of the industrial life of this country.
  There is one union behind which the controlling genius is the hon. Member for West Nottingham (Mr. O'Brien). I have no criticism to offer; he has done a good job by his members with reason, moderation and proper methods of negotiation. I saw a look of horror on his face when it was suggested that if we were really short of products and could not run two features, we might run a few music hall turns in the cinemas. I think that upset him. On that point, I belong to those who prefer the music hall to the cinema. I would rather have half-an-hour of Marie Lloyd than three hours of celluloid.
  There is another union—the A.C.T. That is a very different kettle of fish. I would say openly in this House that one of the things which the Board of Trade and the various councils that are to be set up must watch very carefully is the pressure, the almost bottle neck pressure, that may be brought from that quarter which is not inspired from the same source as the hon. Gentleman's union, and which may in fact produce exactly the state of things we do not want. Those are restrictive practices. We cannot tell, when we are producing films, at what particular moment the spark will kindle, and when after hours of work we will get what we want. By knocking off at a certain time because it is the rule, one may waste a day, and increase the cost of a film. It is not only
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  on the trade union side that we have to watch restrictive practices, but it is on every side. I think that we are in the stage when all sides of the film industry understand that we are passing through an extremely dangerous period, and when all sides have to make their contribution so that the natural genius that is behind the making of films shall not be frustrated by the mechanics necessary to their making.
  I would like to say a word on the propaganda side. As the House knows, the set up of the Press is being very closely examined. The difference between Press and cinema propaganda is this: With Press propaganda, we know when we open our paper—with the exception of one or two which wander to each side of the road with some irregularity—what particular colouring will be given to the news by the paper we are reading. When one goes into the cinema one does not know that. The news reel is a very potent weapon of propaganda for influencing public opinion. If the news reel is confined in its production to too few hands, as it is, in my view, at the present moment, it is putting into the hands of people, who may not be in any way abusing it now—but when it is taken over by others it may be abused—a weapon of public influence which should not, without being very carefully regarded by the President of the Board of Trade and his various councils and advisers, be left in exactly that state. There is, I believe, at the moment no real abuse; but there is a possibility of abuse. I think that we should be very jealous of seeing that it is not allowed greater freedom without being carefully watched.
  There are certain other sides of this industry which I need not touch upon, but I want to ask how are we going to persuade the correct flow of capital which must come into this industry from its most natural sources. Obviously, the first way in which we can do it is by proving in every possible way that it is a sound industry. At the moment we cannot do that because we are restricted by the dollar situation, to which I am coming in a moment. If we see as a result of the Commission which is being set up that the renter is no longer over-favouring the big groups, that the producer is going to have free and proper access to the means of making films, and that the exhibitor is not

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  tied down in any way when booking and exhibiting what he believes is right in his part of the world, we have the three essentials which will attract that flow of capital without which this industry will go sterile in a short while. No matter how powerful the circuits may be, that will happen unless the capital is forthcoming. They themselves have shown that they do not want to remain in the position in which they find themselves today.
  I should like now to come to the question of the situation with America as it exists today. There is a little parallel between films and tobacco. When we cut off the import of tobacco and of films we are to a great extent exporting unemployment; that is to say, we are creating in the tobacco growing districts of America and in Hollywood a very serious situation for those who have to spend their lives in building up those great industries and for the Government who are responsible for looking after them. It is extremely important to consider the Hollywod point of view. It is not wise, nor is it justified, to condemn Hollywood films as being, one and all, very much worse and inferior to ours or anyone else's. France, Czechoslovakia and Russia have produced good films, and we are producing good films. Hollywood, too, has produced good films and also bad ones, as we have done. The worst service that can be done by the President of the Board of Trade in his negotiations is to say that Hollywood films should not be admitted here on their merits or on their demerits. The whole cinema structure in this country may possibly survive and will survive even if we do not come to an arrangement. It will go through lean years and we will have to tighten our mental belts as well as our physical belts. What we have to do in our approach to America on this subject is to give the impression, which is fully justified throughout the country and has been proved in this Debate, because of the support which has come from both sides of the House, that we are fully and absolutely determined, because of the situation in which we find ourselves, not to give way on the main point that we cannot at the moment afford the dollars for films.
  What will influence the mind of Hollywood and secure support from their own Government is if the American public
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  and the public in the rest of the world, from which the ultimate pressure will come, are convinced that the films we are producing here and which we are going to produce here, are such that it is in their interest to supply the public demand in America for our films. If that is accomplished, then half the battle has been won. To do that we must be perfectly fair-minded. We must find a means of reciprocity and must realise the serious situation which has been caused. There must be firmness in negotiation, and no doubt that will be displayed. Firmness is not necessarily synonymous with obstinacy.
  We have heard this afternoon from one or two sources that, as the Americans would say, the Minister is soft in his opinions. He has to be a little more flexible possibly, without conceding the principle that we cannot spend more dollars, but in various other ways. If he will do that and explain that he has the full support—he has had full support during this Debate—of all sides of the House in the attitude he has taken and preach, as he is entitled to preach, that the films we want to send to America are high-class films with great attraction which will make money for those who take them out there, he will break down the difficulty of getting into the circuits and the difficulty of Hollywood giving up something like a 30 years' monoply in its own market, which represents 61 per cent. of the world's cinema-goers. In that task he must be refreshed by the unanimity which has been displayed in this House in giving him a welcome.
  We on this side of the House welcome the Bill and do not propose to divide against it. We have issued certain warnings and made certain constructive suggestions, and we realise that, inspired by the sort of feeling that so often blows up suddenly in this country, these negotiations will succeed because we are right in what we say, we are determined to see them through, and every side of the industry and the public are well behind us.
  9.32 p.m.
  The Parliamentary Secretary to the Board of Trade (Mr. Belcher): It will be agreed that we have had a very good Debate indeed. I have been impressed by the knowledge displayed particularly by hon. Friends of mine who obviously have

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  a much closer acquaintance with the film industry than I have. I am one of those people—to whom reference was made by the hon. Member for Taunton (Mr. Collins)—whose acquaintance with the industry consists of a few visits to the cinema when I have had the time and an enjoyable visit to a film studio when I was entertained by some very delightful ladies. I am not an inveterate cinemagoer. Like most hon. Members, I cannot often find the time. I do not even listen to Dick Barton, so I cannot qualify for fame on that account. I am interested in the industry because of its value as an entertaining and educational medium in this country and because I believe it possesses great potentialities for good in its use to explain our people and our manners and customs to the people of other countries.
  I am glad that the hon. Member for Bury (Mr. W. Fletcher) drew the attention to the fact that here we are not dealing with something which is static. It is indeed very dynamic. It is a comparatively young industry and there have been wide changes over the past 20 years. I have no doubt that equally wide changes will come about during the next 10 or 20, years, and therefore we ought, in our consideration of this Measure to keep away from the existing backcloth, if I may use a theatrical expression. It is true that this Bill is presented to the House at not the most propitious time, but it would be wrong, I hope, to assume that that situation will necessarily continue.
  Again, I agree with the hon. Gentleman about the necessity for all those people who have the capacity to indulge in restrictive practices to stop doing so, not only in this industry but in all our industries at this time when we are doing our utmost to make ourselves more efficient, to build up our productive capacity and to expand our possibilities of trading with other countries. It is vitally essential for all people who have any ability to impose restrictive practices to examine them and get away from them as quickly as they possibly can.
  The right hon. Member for Aldershot (Mr. Lyttelton), and most hon. Members who have spoken, have had a good deal to say about the import duty on foreign films, and I think it is a matter that we
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  are entitled to discuss on the Second Reading of this Bill, because its operation, when it becomes law, is bound to be affected to a very considerable extent by the situation vis-a-vis American films particularly. I am most grateful to the right hon. Gentleman and his colleagues, and all those hon. Members who have spoken, for the support they have given to His Majesty's Government on this subject. It is, of course, a fact that we cannot afford the outlay in dollars. We have made that quite plain. That is our only reason—as I have said on a previous occasion in this House—for imposing the duty. I agree with the hon. Member for Bury that it is certainly not my job, or anybody else's job, to talk about the merits or demerits of Hollywood films. I agree entirely with him that good and bad films have come out of all the studios of all the countries in the world. I do not pose as a judge. I know my own taste; the hon. Gentleman's taste may be quite different. It is not a question of discriminating against Hollywood films because we do not like them; it is a question of stopping the drain on our dollar resources.
  We heard some rather interesting statistics from my hon. Friend the Member for West Nottingham (Mr. O'Brien) and from the hon. Member for Louth (Mr. Osborne). My hon. Friend spoke about the amount of dollars saved by this import duty being the equivalent of two-thirds of one penny worth of flour per week spread over the whole population of the country. I have had very little statistical experience, but what I have had has led me to be extremely suspicious of cases represented in that fashion. I am reminded of the occasion when I was told by a very wise man that there were such things as lies, bad lies, and statistics, and I suggest that one can reduce this to something too simple—
  Mr. O'Brien: It is the truth.
  Mr. Belcher: The fact is, of course, that there has been an outpouring of something in the nature of £17 million worth of dollars a year on imported American films, and the country cannot afford it at this time. What the situation will be like at some time in the future, I do not know. One hon. Member referred to the negotiations going on between this country and the representatives of the American film industry. I can assure him, as I can

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  assure the right hon. Gentleman opposite, who hoped that what appeared to be a deadlock would end soon, that there is no question of my right hon. Friend or any other Member of the Government or representative of the Government going into these negotiations with the firm resolve not to yield an inch, not to bargain in any way. That is far from being the truth. We are prepared to consider most sympathetically any reasonable suggestion which can be put forward by anybody, as long as that suggestion does not involve us in additional dollar expenditure. Whether the suggestion took the form of a greater showing of British films on American circuits with a view to balancing the amount of dollars earned by American films in this country by the amount of dollars earned by British films in America, or in any other way, we would be quite prepared to consider any reasonable suggestion of that kind.
  The right hon. Member for Aldershot spoke about the suggestion made by my right hon. Friend that, with a view to assisting in the financing of the British film producing industry, there might be a film bank. He said he was more aware of the dangers of a film bank than of the advantages. I would point out that my right hon. Friend was being quite tentative. He did not suggest that there was anything final about this suggestion; in fact, he stressed the difficulties attaching to film finance. I agree with the hon. Member for Bury that it is important to get capital into this industry, and my right hon. Friend showed that he is prepared to look far and wide with a view to seeing how far it is possible for the Government to assist or to encourage the better financing of the film industry.
  The right hon. Gentleman and my hon. Friend the Member for West Nottingham and one or two other hon. Members have suggested that we should have included a minimum quota in the Bill. The Bill leaves it to the Board of Trade to fix the minimum quota, but if we were to attempt to legislate a minimum quota, I am afraid we would have to fix a figure low—possibly too low—at present because we would have to allow for all sorts of contingencies. We prefer not to fix a figure which might be too low, and therefore discouraging to producers, but to look at the number of films in sight at the time when it is necessary to make the Order and then
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  to fix, in the light of the information available at the time of making the Order, a quota figure which will encourage the producer, and which will be capable of being fulfilled.
  My right hon. Friend gave an assurance this afternoon that the initial quota figure will be fixed with close relation to the number of films in sight at that time. The right hon. Gentleman was critical of the provision for three months' notice only of a quota alteration and suggested that this was not long enough. We are aware that there are people in the industry who feel that a three months' notice of a quota alteration is not long enough, but our feeling is that if we fix the quota too far ahead—that is to say, if we give six months, 12 months, or two years, as is suggested by some in the industry—we cannot really be giving a realistic figure. I do not think it is possible to fix the quota in relation to two years ahead with any real knowledge of what the supply situation may be at that time. As the period diminished, it would be easier, and six months would not involve such a possibility of drastic error. This is a matter into which we can go more fully in Committee, and it may be proved to our satisfaction that this is a point on which there should be some adjustment.
  A number of hon. Members suggested that special quotas should be extended beyond those circuits to which it is proposed they should apply at present, and some cogent arguments were produced in favour of such a policy. There is an answer to those arguments, and we are advised that that suggestion is not really practicable. It is an extremely difficult technical point, but I believe it is the case that the mere fact of being one of a group does not necessarily make it possible for one to bear a higher quota. I believe the point was made by one of my hon. Friends that in some cases an individual cinema proprietor, if placed in the right geographical situation, might find it easier to bear a quota than a member of a group in competition with bigger groups of cinemas in the same town. We are satisfied that the amount of work which would be involved in extending a special quota agreement applied to other circuits than the three which have been mentioned, or right down to the individually-owned cinemas, would not be justified by results. However, that is something which can be considered in Committee. It is a point

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  of detail, and we are prepared to give consideration to any arguments which might be brought forward.
  Mr. W. Fletcher: Is the hon. Gentleman judging results entirely on the financial side? The results, in the view of a great many people, are not to be judged only by that yardstick, but also by the fact that it would build up, in the long run, the biggest possible backing for British films.
  Mr. Belcher: I must confess that I have in mind the financial relations, but I agree there is a great deal to be said for the point made by the hon. Gentleman. The right hon. Gentleman opposite, referring to the selection committee to choose the six special films, mentioned the possibility of some future President of the Board of Trade—I am quite sure he did not mean the present President—forcing the selection committee to put some unwelcome propaganda on at several hundred cinemas. I really do not share his apprehension, although I do agree that there is, of course, always the incipient danger of these things. There may be changes of Government at some time in the future. There may be changes of personalities serving on the selection committee which may result in something of that kind taking place. But so long as we have the present selection committee, the present Government and the present President of the Board of Trade, there is no danger.
  Mr. Lyttelton: And the present Parliamentary Secretary.
  Mr. Belcher: He is not important enough to be mentioned. This is a matter I would like to consider in Committee, and if it is possible to introduce something to make absolutely certain this eventuality will not come to pass, I see no reason why we should not put such words into the Bill. There was a most interesting discussion about the reference made by my right hon. Friend to the possibility of the Government constructing some premises which might be used as studio space, particularly for independent producers. My right hon. Friend said that nothing had been finalised about this. It has been suggested that it might be leased by the State to independent producers or that it might be better left in the hands of private individuals to lease it to independent producers. It is not
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  merely bricks and mortar walls that are needed. There are all kinds of accessories and all kinds of technical staff involved, and the position is not so simple as it sounds. I am glad the idea was welcomed by my hon. Friend the Member for West Nottingham, who is very knowledgeable in these matters, but I was not too sure about his insistence—perhaps I was wrong in interpreting it as insistence—that studio space should be leased only to independent producers who have proved their worth. If the State go in for this kind of encouragement, they should encourage not only people who have proved their worth, but also people who have never had a chance to prove their worth.
  My hon. Friend the Member for West Nottingham put forward the interesting suggestion that we should finance the production of British films in the future by subsidising productions out of the yield of the Entertainments Duty. The House will realise that is not a matter about which I should be expected to say anything. It is a matter of high fiscal policy which would have to be considered very carefully by the Government, and about which the Chancellor of the Exchequer would have a good deal to say; but the suggestion will go on record, and I have no doubt that at some stage during the Committee discussions he will have something further to say about it.
  There was an intervention by two Scottish Members who, as usual, were very concerned to safeguard the particular interests of their country. The hon. and gallant Member for Argyll (Major McCallum) asked for an assurance from me that Scottish taste would be catered for when films are being produced or sponsored. That is not really a matter for the Government or for the Board of Trade to deal with. We do not produce films, nor do we dictate as to what films shall be produced. The matter of Scottish taste may be left to the film producers who will no doubt have an eye on the Scottish market, though what its value is compared with the English market I do not know. So far as we have any say in the matter, Scotland will be safeguarded. The hon. and gallant Member for Perth (Colonel Gomme-Duncan) was anxious to have Scottish representation on the Films Council. I am prepared to say that we shall be ready to deal with this in Com-

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  mittee. There is at the present time, and always has been, a Scottish exhibitor included among the four exhibitors' representatives on the Films Council. We are ready to look at that suggestion in Committee and to see what can be done.
  Apart from the tax and the quotas, the point of most interest in the discussion has been the change in representation on the Films Council—the reduction in the number of independent representatives from 11 to five and the increase in other representatives. I quite realise the desire of some of my hon. Friends on this side to ensure that there is on the Films Council an adequate representation of people who are not connected with the industry. An industry of this kind is not merely a producing industry in the sense that the engineering and other industries are; it is much like the Press, the stage and radio in having a capacity for influencing people's minds, and it is essential that the cultural interest should be carefully watched by people whose prime concern is the cultural interest and not the commercial interest of producers or exhibitors.
  On the other hand, we feel that the present membership is somewhat unwieldy. It is true that present membership is not reflected in the attendance at the meetings. I do not know whether it is a particularly strong argument for the reduction of the independent membership if I tell the House that, leaving aside the five independent members who have the best attendances, the record of the remainder is that, on an average, they have attended only one meeting in 3·9, but it does show that we can possibly get along quite well with a smaller number of people there. I am advised that one of our difficulties is to get the right sort of people to serve on these bodies. There are so many bodies of this kind, not only Government but voluntary bodies, upon which people are continually being invited to give their services, and there are not such great numbers of people with the requisite qualifications and the amount of, time to spare to serve. We propose to reduce the number of independent representatives from 11 to five.
  Then there has been a further suggestion that the scales are weighted unduly at the present time against the exhibitors. I am not prepared to say now whether
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  I think that is the case or not, but having carried this Bill, we do not want to embark upon a new Films Council and start off on our new course with dissatisfaction in the various camps. If, in Committee, any accommodation can be reached which will give satisfaction to those who feel that there should be more independent representation and those who feel there should be a closer approximation of trade interests on the Council, there is no reason why we should not be able to come to an agreement on the subject.
  My hon. Friend the Member for Huddersfield (Mr. Mallalieu), who takes a close interest in these matters, made an interesting point about the Bill containing nothing which would stop people showing British films on three days in the week and not on the other three days in the week. I am advised that it would be burdensome to exhibitors to make an allocation for different parts of the week, and that there is always a difficulty that in many parts of the country a large number of theatres change their programmes in the middle of the week. I do not know how many do so, but I believe it is quite a large number.
  The point was raised by the hon. Member for Greenwich (Mr. Reeves) that there was no reference in the Bill to the children's Saturday morning film clubs. I do not know that this is the correct vehicle for dealing with that subject, but I do know that there is very considerable controversy about the Saturday morning film clubs. About 50 per cent. of the people I meet are wholeheartedly in favour of them, and the other 50 per cent. regard them as the work of the devil in the person of Mr. Rank. I am not prepared to express an opinion. My children are not old enough to go to Saturday morning film clubs. It is certainly not a matter to be dealt with in this Bill, although I agree that, in view of the impact of films upon a child's mind, it is something which should receive the attention of everybody who has the good of the children and of the film industry at heart.
  My hon. Friend the Member for Accrington (Mr. Scott-Elliot) and the hon. Member for Bucklow (Mr. Shepherd) were both very much concerned about the point, with which I have just dealt, about independent representation on the Council. I would merely repeat to them

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  that it is a matter that can be discussed in Committee and that we will be as sympathetic as we can on the subject. My hon. Friend the Member for East Islington (Mr. E. Fletcher)—another one of those who speaks with far more knowledge of this matter than I do—asked me if I would clear up the position under Clause 5 in regard to the six independently produced films to be shown by the three circuits. He asked me if it meant that each one of the three circuits would have to show six specially selected films and that they would count as quota, but that if the quota had already been filled, then that would be no argument. The answer to that, of course, is that he is perfectly right. His assumption is quite correct.
  Mr. Lyttelton: Eighteen.
  Mr. Belcher: It could mean 18 films. I do not think that it necessarily means that there will always be 18 films, but it could mean that.
  We have come to the end of our discussion of this Bill. I am sure that we will have some equally helpful and cooperative discussions during the Committee stage. There is a considerable amount of detail which falls to be discussed in Committee, but I am encouraged, by the way in which the Debate has been conducted today, to believe that we shall not run into undue difficulty. We are dealing with an industry which has grown very rapidly. I would like to say how much I agree with the noble Lord the Member for Horsham (Earl Winterton) who intervened to point out that during the last 10 years the British film industry, for the greater part of that time, has had to put up with inconveniences and disabilities such as have not been known certainly by its greatest competitor on the other side of the Atlantic ocean. In view of these very great difficulties which have been encountered, including not only the smashing up of their studio space but the drafting away of their actors, actresses and technical people, and everything else, I think that the fact that they have done as well as they have in the last 10 years is very encouraging. I hope that this Bill will mark one further step in the onward march of an industry which I feel has a great deal to give to this country in the years to some.
  Question put, and agreed to.
  Bill accordingly read a Second Time.
  Bill committed to a Committee of the Whole House for Monday next.—[Mr. Snow.]

CIVIL SERVICE AND INDUSTRY
Motion made, and Question proposed, "That this House do now adjourn."—(Mr. Snow.)
9.59 P.m.
Mr. Geoffrey Cooper: Debates in this House since this Parliament assembled have necessarily, due to the heavy programme of Bills, been concentrated upon the subjects of the Bills themselves. I believe that insufficient attention has been devoted to the procedure that is required in order to implement those Bills. When a big change in policy takes place, whether in the country as a whole or in separate industrial organisations, it is generally recognised that it is necessary simultaneously to give the fullest consideration to the functioning of the machine which is going to implement that policy, and I believe that insufficient thought and attention have been given to the subject of implementation. The future prosperity of this country necessarily depends on our inventiveness, industrial progress and efficiency, and I believe that the industrial efficiency of this country is being impeded at the present time, according to such evidence as comes to me—
It being Ten o'Clock, the Motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Pearson.]
Mr. Cooper: I believe that the industrial efficiency of this country is being somewhat impeded by the way in which regulations are being carried out and the way in which Bills are being implemented. The Government machinery is creaking under the strain of the new conditions, and it seems to me that if more thought had been given to the way in which the machinery functions, a great number of the difficulties now experienced even by the Civil Service itself, would have been smoothed out.

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I think nobody will seriously argue against the need for an overall economic plan for this country. I think it is now being widely accepted that this country has to be looked upon as an economic unit within the world economy. That has, of itself, necessitated the bringing into being of a central planning department, and it has also necessitated Cabinet Ministers using their influence to urge higher production and increased efficiency in industry so far as they can do it by exhortation. I believe myself that exhortation is not enough, and I think opportunity should be taken by Ministers to go further than that and think of methods by which increased efficiency could be obtained and place these methods clearly before both industrialists and employees.
I believe evidence comes forward to many hon. Members to show that there is an increasing frustration on the part of industrialists and employees in the feeling that they are being held back instead of being allowed to go forward with the energy, drive and initiative which they wish to express. I think we must be fully alive to the fact that the present sellers' market is quickly becoming a buyers' market, and that real difficulties, big difficulties, loom ahead for this country. If our present exports are restricted from going into the overseas markets owing to high prices occasioned by undue restrictions in this country, it means that the economic position of this country will be seriously worsened in a very short period ahead. I refer now particularly to those Departments and their functioning which are most closely associated with industry and commerce—the Treasury, the Board of Trade, the Ministries of Supply, Works, Fuel and Power, Transport, Civil Aviation and so forth.
Let me illustrate what I believe to be the lack of appreciation on the part of the personnel of these Departments, who really must be equal to their jobs. The first illustration which I will give concerns the Ministry of Supply and it applies to cement. A manufacturer of cement applied to the Ministry of Supply for sanction to obtain steel for repairing the kilns of his plant. He could not get sanction immediately, and made contact with the Department. It was suggested to him by the responsible official that he should use bricks instead of steel. If the official had had even a catalogue knowledge of
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his job, he would have realised that the kilns were revolving kilns, and that bricks were quite impossible of use. I hope the Financial Secretary to the Treasury will not think that I am trying to draw my picture too widely. I have, necessarily, only a very short time available in which to sketch the canvas somewhat widely in order to draw the conclusions I wish to make at the end. I hope that, in his reply, he will not use that as an argument against what I say.
I would like to refer to one instance closely associated with his Department. I believe the Financial Secretary is intimately responsible for the function of the Civil Service Commission. By the way they are carrying on their job, they themselves are introducing difficulties and bottlenecks into other Government Departments. The Ministry of Civil Aviation have wanted since the war to expand and to develop overseas airlines. For the overseas services there have, necessarily, to be meteorological officers along the routes. When demobilisation of such officers in the Air Force took place, it was necessary to have civilian meteorological officers. A man with the necessary qualifications who was in the Navy applied to the Civil Service Commission for a civil appointment when he was demobilised. The Commission were so long in notifying this man that he had obtained the appointment—it was something exceeding nine months—that, in desperation and not knowing whether he would get the job or not, he accepted a continuation of his naval commission. When, later on, he was notified that he had obtained the appointment, the naval authorities would not allow him to obtain his discharge.
That sort of thing is working right against the necessary peacetime development of an expanding new industry which, if it is given a chance to develop in the right and proper way, could, perhaps in a short time, be a means of earning foreign currency. That indicates a way in which my right hon. Friend could, by urging the Civil Service Commission to to their job more expeditiously, prevent such troubles from arising.
I would like to give one or two further illustrations. I refer to the way in which the Department responsible for manpower handles its work. We are given to understand that this country is short of

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essential manpower to the tune of some 500,000 men. We have looked all over the place to find the necessary manpower, and we have even gone to the length of obtaining displaced persons from the Continent to the figure of some 20,000—a mere drop in the bucket compared with the figure of 500,000 by which we are short. We are looking for productive manpower from those who are described as "drones." Efforts have been made to urge the responsible Ministers to reduce the numbers in the Services, and demobilisation is now just about completed to the lower limit it is intended to retain in the Forces.
I believe that every country, if it really gives an opportunity to its people to get into the jobs for which they are suited—if, in other words, the manpower is properly distributed—is sufficient to itself. I have paid visits to Scandinavian countries, to Holland and to Switzerland, and it seems that, in those countries, they have a less acute manpower shortage than we have in this country, that is to say it is not so aggravated as here. I believe those countries have taken steps to reduce their overhead absorption of manpower. I am referring here to the way in which manpower is absorbed into the Civil Service. If an industry is in difficulties, anybody coming in to advise how it should overcome those difficulties will look at the balance sheet, the profit and loss account, and will see to what extent the overheads are in excess of the productivity of that industry and, perhaps, how much they are out of proportion to what they should be. The Government should look into the use which they are making of manpower, and should see whether it is not vastly in excess of what it should be.
For instance, some time ago it was suggested, I think by the Prime Minister, that there should be a 10 per cent. reduction in all departments, and afterwards we heard that that suggestion was abandoned. Why was it abandoned? We ought to know. Before the Prime Minister abandons such a decision he himself should urge that a proper investigation be made, because otherwise he is only abandoning it on the advice of those who are affected. He is asking the departments to be judge and jury in their own case. He should have got outside people
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who understand industrial organisation to advise on whether or not perhaps something in excess of 10 per cent. might have been obtained. Moreover, I believe that when this Government came into office in 1945, concurrently with considering what its political strategy should be in the passing of Bills through the House, at the same time it should have initiated an investigation into the Government machine to see if, when the time came for those Bills to be implemented, that machine would be capable of coping with the work involved in a swift and straightforward manner. If that had been done, we should have found it possible to have implemented these Bills, not with the figure of something now over one million that there are at present, in the Civil Service, but something in the nature of the pre-war figure of 600,000.
I would like to refer to the bottleneck in industry which is being introduced in the carrying out of the steel control. Again, it shows that those in the departments are not fully conscious of their responsibilities and of the way in which they should carry out those responsibilities. I believe it is generally accepted that the allocations of steel were vastly in excess of the production. If the civil servants in the Department concerned had had any knowledge at all of things which are known in industry as budgetary control and material control, such a gross bungling of responsibilities would not have occurred. The Financial Secretary should urge, through the Civil Service Commission, that such matters as industrial efficiency and new methods of industrial organisation should be taught to the departments, and the fullest opportunity should be provided to the officials, when they find they have to do a new job which, perhaps, is quite different from what they have had to do before, to have close consultation within industry on industrial management to ensure that they are using the best methods.
Sir William Darling: The hon. Member said that the Government should see that the civil servants are taught. I would like to know by whom they should be taught. Who are to teach the civil servants?
Mr. Cooper: That is quite an interesting point. Obviously, one has to consider all the practical considerations involved. There are in this country well-recognised

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management organisations who have studied the best methods of industrial organisation, not only in this country but in America and elsewhere, and in conjunction with the Ministry of Education the facilities could easily have been laid on if there had been the desire to do so.
Sir W. Darling: The Sales Managers Association, for example, might teach the Board of Trade. Is that what the hon. Gentleman means?
Mr. Cooper: No doubt, a suggestion of that sort is quite worthy of consideration. There are other organisations such as the Institute of Industrial Administration, and there is the Government's own sponsored organisation, the British Institute of Management. The efforts to rectify this position of over-allocation which the Government Departments have created are having a serious effect on industry. I have had a case brought to my attention recently by a constituent of mine who is the managing director of an iron foundry and who requires supplies of pig iron. It is not a big foundry, but he is making parts for other manufacturers who are engaged on priority work. Yet this particular firm were not themselves given priority for pig iron and the effect of that, of course, is causing very serious trouble not only in this industry, but in the other industries depending upon it.
As a further example, in the production of steel, ingot moulds are required. If the supply of ingot moulds is not up to the requirements of the steel producers, production of steel will be reduced. A firm in my constituency which concentrates on making ingot moulds, seeing the need for an increase in steel output, is endeavouring to expand its ingot mould section. This means it requires the sanction of Government Departments to erect the necessary sheds and other equipment. It puts in an application to the Department. Immediately, the application is returned asking for all sorts of details—the sort of details required in a full specification if the job were to be carried out by an outside contractor. In point of fact, the firm could do the job themselves and simply need sanction to go ahead with the work right away. This introduced weeks and eventually months of delay. I suggest that is the sort of thing the Financial Secretary should look into, not as a matter for that single Department concerned, but in relation to
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the overall methods employed throughout the Civil Service. I believe there is not sufficient elasticity in the Departments. They are bound tightly by red tape when it would be far better if they were bound rather more with red elastic.
This same firm had an export order and required asbestos sheets for covering steel framework to supply an overseas order. They were given the necessary priority and then another Government Department, the Ministry of Works, came along and snaffled the asbestos sheets right from under the nose of the firm. The firm needed them for export and the Ministry required them only for home use.
Time is short and I shall have to reduce my number of illustrations, but I should like particularly to refer to the Prime Minister's list of priorities. The Prime Minister came into this picture because of the need for the highest possible level of authority to be given to certain firms to receive essential raw materials. These firms were given the priority but unfortunately—again I believe because of a defect in the machinery implementing the policy, which is sound in itself—officials failed to realise that the manufacturers making these priority items depended also on sub-contractors for certain supplies. The smaller contractors were not given the necessary priority in materials. For example, iron steps and gantries are required in power stations. The firms making these things were given no priorities and yet the firms making electrical equipment were given priorities. Thus we can get the equipment into the power stations, but the men cannot walk up and down in order to service the equipment properly.
I would like to close my remarks with a suggestion as to how this problem can be handled. I believe an organisation job can be done in two ways. I believe we can administer the Civil Service in the same way as one administers an industry. One can either build up a big bureaucracy, a big staff, in order to see that the policy of the Executive is carried out, or one can obtain the co-operation of those responsible for carrying out this actual policy and thus ensure that the job is done more efficiently, because the men on the spot know more about it than someone coming in from outside. I

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realise that something of that sort, now recognised as being required in industry, has resulted in the system of organisation which involves joint consultation understand from their public pronouncements that Ministers are completely in favour of the spread of joint consultation, in industry. Yet I have not seen a single example of Ministers themselves taking steps to ensure that joint consultation in its fullest form, takes place between Government Departments and industries. During the war the obvious need for this was clear, and the regional organisation of industry was perpetuated into peace; and yet it is not being given a chance to develop in the way it should in peacetime.
Finally, I ask the Financial Secretary if he could not give some assurance tonight that some investigation will be made into this matter. I know that some seven investigations have been made into the Civil Service for various purposes since the first World War. I do not want really to suggest another investigation just for the sake of it, but I do believe that the Civil Service has a particularly difficult job to do, and I think that that very fact should induce the Government to see the need for looking into this matter much more closely than they have up to the present time. The Organisation and Methods Division of the Civil Service, the Whitley Council system, and so forth, are not in themselves sufficient. They are only playing with the problem involved, which is vastly greater than they can manage. It needs to be tackled as a great reorganisation problem, and it is urgent at the present time.
10.21 p.m.
The Financial Secretary to the Treasury (Mr. Glenvil Hall): I am sure that my hon. Friend will not expect me in nine minutes to answer a speech which has taken 22 minutes to make. When he reflects that the ground he has covered has included a number of Departments for which I have no responsibility, and that the complaints about those Departments, and the instances that he quoted about manufacturers who have dealt with them are matters of which I can know nothing, he will, perhaps, be content with such answer as I am able to give him in the time allotted to me. I
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think it emerged quite clearly that he did not think much of this Government.
Sir W. Darling: With very good reason, I thought.
Mr. Glenvil Hall: He condemned the way in which the present controls operate, and he said that firms were suffering from a sense of frustration and felt that they were being held back, that there should be far more consultation between the Departments concerned and the industries with which they deal than there is now. I could not help wondering, as I heard him speak, who briefs him, because there is in fact an enormous amount of consultation between industries and the Departments with which they work. In fact, many of the people running the controls in the Departments—in the Board of Trade, for example, in the Ministry of Supply, and in certain other Ministries—have actually come into those Departments from industry during the war, as an act of patriotism for little or no money, in order to assist the Government Departments in their relationships with the industries from which they came. Many of those men are still there. When my hon. Friend makes complaints about civil servants knowing nothing about industry he is really charging men who have themselves spent a lifetime in industry, and who are now working temporarily in the Government machine. In that capacity they now assist the industries to which they originally belonged, and to which presently, when we return to more normal times, they will return with the gratitude of the nation and of this Government. I hope that that may be soon and that many of these controls which are so irksome—I do not deny it—may soon be abolished. In the time I have left I shall not be able to elaborate that particular point, much as I should like to do so. My hon. Friend had some hard things to say about the Civil Service Commission, and he committed himself to the assertion that I was closely responsible for it. I assure him that that is not the case. It is true that in the old days, the Government and Members of Parliament had a good deal of influence over who should or should not be appointed to the Civil Service. Many people thought that was a bad system, and I think that today we agree

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that it would be bad for us to return to it. But it was thought by Parliament in its wisdom—and I agree with what was done—that an independent commission should be set up, and that entry to the Civil Service should be by open competition on an educational basis. This is the system which now prevails. The Civil Service Commission is an independent body over which I have no authority whatever, and it would be quite wrong if I had.
One thing my hon. Friend has forgotten is that at the present moment we are, under the authority of Parliament, passing through a reconstruction period. Men have been in the Services for many years, and have left their school days some years behind. Therefore, it has been decided that over a period, which has not yet come to an end, men shall enter the Civil Service on a shortened form of examination, coupled with certain other tests in order to ensure that the Civil Service obtains the best type of men.
Mr. Cooper: Was my right hon. Friend thinking I had suggested that there should be a reversion to the former method? I am well aware that the Civil Service Commission is an independent body, but surely, if defects are shown up, is it not right that those defects should be brought to their attention by my right hon. Friend?
Mr. Glenvil Hall: The Treasury is responsible, and works in close association with the Civil Service Commission in these matters, acting for Parliament. There is a White Paper—which I take it my hon. Friend has read—which lays down quite definitely, by the authority of Parliament—and I was here when the matter was debated—what should happen during this reconstruction period of the change over from war to peace. One of our troubles is that we want to keep some places open for men who are still serving their country, and who presently will want to find an outlet for their energies in the Civil Service.
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My hon. Friend also suggested that the Government should go to outside organisations who might assist the Government to be more efficient in the way they manage their business. At the Treasury we have what is known as the Organisation and Methods Division. It may interest my hon. Friend to know that that division is extremely efficient. It is so well thought of that outside industries come to us for advice, which is, of course, freely given. It is quite wrong of him to imagine—and it would be grossly unfair to the Civil Service were it to go out to the world—that the Civil Service is inefficient and that we do not know anything about organisation and methods. We have not only a central organisation, but in 20 Departments they have now set up, with Treasury consent and in association with the Treasury, their own Organisation and Methods Divisions. In one direction alone, within the last month or two the number of items under control has been reduced from 94 to 23.
Therefore, I think I can say that my hon. Friend is not so well-informed on this matter as he would have us believe. If he cares to come along to the Treasury at any time, provided it does not take up too much of the valuable time we want for other things, we would be perfectly willing to show him what we are doing, and I am sure he would be surprised. My time is nearly up, so I cannot add anything further. I do assure my hon. Friend and the House that we are perfectly well aware that the Civil Service is not perfect. But it has a very hard job to perform, and we are very short of staff. Controls are there, and they are irksome to us all, and we shall be glad when they disappear. Meanwhile, we are doing the best we can with the machine we have, and it is not such a bad machine at all.
Question put, and agreed to.
Adjourned accordingly at Twenty-nine Minutes past Ten o'Clock.

CIVIL AVIATION
  D.C. 4M Aircraft
  D.C. 4M Aircraft
  Airport Services
  Airport Services
GERMANY
  Missing Persons (Declaration of Death)
  Missing Persons (Declaration of Death)
  Price Structure
  Price Structure
ARMED FORCES
  Strength
  Strength
  Chiefs of Staff Board, Washington
  Chiefs of Staff Board, Washington
FOOD SUPPLIES
  Bread and Potatoes
  Bread and Potatoes
  Animal Slaughter (Jewish Method)
  Animal Slaughter (Jewish Method)
  Controlled Foodstuffs (Prices)
  Controlled Foodstuffs (Prices)
  Mackerel Prices
  Mackerel Prices
  Consumption Statistics
  Consumption Statistics
  Bread, Rationing
  Bread, Rationing
  Exports and Stocks
  Exports and Stocks
  Fruit Exports
  Fruit Exports
  Russian Feedingstuffs (Cost)
  Russian Feedingstuffs (Cost)
  Marshall Plan (Fruit)
  Marshall Plan (Fruit)
AFRICAN COLONIES
  Nigeria (Native Administrations)
  Nigeria (Native Administrations)
  Uganda (Hydro-Electric Development)
  Uganda (Hydro-Electric Development)
  West African Cocoa
  West African Cocoa
  PALESTINE (CASUALTIES)
  PALESTINE (CASUALTIES)
  SARAWAK (MR. BROOKE)
  SARAWAK (MR. BROOKE)
ROYAL NAVY
  Released Personnel (Debts to Crown)
  Released Personnel (Debts to Crown)
  Storage Depots, Palestine
  Storage Depots, Palestine
  Apprentices' Association (Non-Recognition)
  Apprentices' Association (Non-Recognition)
  Personnel, London
  Personnel, London
  Manpower Economy
  Manpower Economy
  Boy Entrants
  Boy Entrants
  Air Bombing Practices
  Air Bombing Practices
POST OFFICE
  Pillar Boxes, Moorgate
  Pillar Boxes, Moorgate
  Telephone Installations
  Telephone Installations
  Scottish Bank Notes
  Scottish Bank Notes
  Agency Work
  Agency Work
  Telephone Kiosk, West Wycombe
  Telephone Kiosk, West Wycombe
  Personnel Statistics
  Personnel Statistics
  Postal and Telegraph Officers' Association
  Postal and Telegraph Officers' Association
ROYAL AIR FORCE
  Marston Moor Aerodrome
  Marston Moor Aerodrome
  Release Rate (Retarded Trades)
  Release Rate (Retarded Trades)
TRADE AND COMMERCE
  Trade Mission, China (Report)
  Trade Mission, China (Report)
  Strawboard
  Strawboard
  ECONOMIC SURVEY, 1948 (PUBLICATION)
  ECONOMIC SURVEY, 1948 (PUBLICATION)
  GERMAN ASSETS (DISPOSAL)
  GERMAN ASSETS (DISPOSAL)
  TOBACCO AND PETROL
  TOBACCO AND PETROL
  CIVIL SERVICE (PERSONNEL STATISTICS)
  CIVIL SERVICE (PERSONNEL STATISTICS)
BRITISH ARMY
  Petrol Consumption
  Petrol Consumption
  Arena Road Camp, South Tidworth
  Arena Road Camp, South Tidworth
FUEL AND POWER
  Hire Car Service, Nether Whitacre
  Hire Car Service, Nether Whitacre
  Petrol Economy
  Petrol Economy
  RAILWAYS (SCOTTISH REGIONAL HEADQUARTERS)
  RAILWAYS (SCOTTISH REGIONAL HEADQUARTERS)
  BUILDING OPERATIVES EXETER
  BUILDING OPERATIVES EXETER
  PRISONS (RATIONED FOODS)
  PRISONS (RATIONED FOODS)
Preamble
The House met at half past two of the clock, The Lord Chancellor on the Woolsack.
Prayers.
The Lord Hemingford—Sat first in Parliament after the death of his father.

BATTLESHIP STRENGTH OF ROYAL NAVY.
THE EARL OF CORK AND ORRERY: My Lords, I rise to ask His Majesty's Government a question of which I have given private Notice—namely, whether any decision has yet been reached to dispose of any major units of the Royal Navy.
THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): My Lords, the battleship strength of the Royal Navy has been under review in the light of the age and condition of the ships concerned and their possible value in a future emergency. The useful life of a battleship is normally reckoned to be approximately twenty years. This period is calculated on a normal peace-time usage, and is greatly reduced when the vessels are subjected to arduous war service. As a result of the review, the Admiralty have come to the conclusion that of the capital ships remaining in the Royal Navy, "Queen Elizabeth," Valiant," Renown," "Nelson" and "Rodney" are likely to be of the least value as fighting ships.
The possibility of maintaining the battleships in reserve was taken into consideration, but they would be costly to maintain in this state, both in money and in man-power. Moreover, if they were to be of any value in a future emergency they would need extensive refits and modernization which, in view of the heavy cost and the labour involved, could not be justified during the next few years. Even if the work were done the vessels would fall considerably short of the standard and capabilities of modern construction. In particular, their speed could not be increased to such an extent
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as to render them capable of taking their place in a modern fleet. In view of the above considerations, instructions have been issued that these vessels should now be scrapped. A number of cruisers and smaller ships, all obsolescent or of little fighting value, will also be disposed of in the near future. This action does not represent any new departure, but is a continuation of the process which has been going on since hostilities ceased, under which redundant and out-dated warships have been scrapped or sold, if a market could be found. The Admiralty is satisfied that these reductions do not reduce the effective strength of the Navy below that required to meet any emergency which is likely to arise in the foreseeable future.
EARL HOWE: My Lords, may I ask the noble Viscount when he will be able to make a comprehensive statement showing exactly what the strength of the Royal Navy will be and the strength of the Royal Navy at which the Admiralty is now aiming? May I also ask whether he is aware that this reduction in the strength of capital ships of the Royal Navy reduces the number of capital ships available to four, and whether he thinks that will be sufficient for all practical purposes in the future? May I also ask whether he will remember that in this war, as in the last, the Royal Navy was forced to use older ships as bombardment units, and whether he is sure that it is right to scrap these ships absolutely rather than to keep them on a very reduced system of upkeep and maintenance?
VISCOUNT HALL: My Lords, I would like to assure the noble Earl that all those questions have been taken into consideration. Indeed, we shall have five modern battleships which, as he knows, will include the "Vanguard." With regard to a comprehensive statement, I may say that the Naval estimates will soon be presented in another place, and I have no doubt that opportunity will be taken to deal with that matter.
LORD STRAB0LGI: My Lords, may I ask the noble Viscount whether he is now publishing the document known as the Return of Fleets which we had before the war, and in which we had complete lists of all the ships?
VISCOUNT HALL: Not at the present time.

SUNDAY ENTERTAINMENTS ACT, 1932.
URBAN DISTRICT OF FROME ORDER;
URBAN DISTRICT OF HALTEMPRICE ORDER;
URBAN DISTRICT OF MELTON MOWBRAY ORDER;
URBAN DISTRICT OF NEW HUNSTANTON ORDER;
URBAN DISTRICT OF WELWYN GARDEN CITY ORDER;
URBAN DISTRICT OF WHITCHURCH (SALOP) ORDER.
LORD WALKDEN: My Lords, I beg to move that these Orders be approved.
Moved, That the Orders made under the Act by the Secretary of State for the Home Department, for extending Section one of the Act to the said areas, be approved.—(Lord Walkden.)
On Question, Motion agreed to.

CIVIL AVIATION.
2.42 p.m.
VISCOUNT SWINTON VISCOUNT SWINTON rose to call attention to the condition of British civil aviation, and the operation and financial results of the national airline Corporations; and to move for Papers. The noble Viscount said: My Lords, I would ask your Lordships' indulgence if I deal rather fully and in some detail with the matter which is before us to-day. It is a very wide field, and the reports and accounts of these three Corporations afford the principal, and may be the only, opportunity we have for considering the activities of civil aviation companies. I am sure your Lordships will agree that the accounts and the reports call for thorough and indeed meticulous consideration.
We now have the reports and accounts for the year ended March 31, 1947, of all three of the Government air Corporations. Two of them present indeed a very gloomy picture. I doubt whether any of your Lordships expected to see great profits, but I do not suppose any of your Lordships expected to see such enormous and formidable losses. The B.O.A.C., whose accounts cover a full year, have lost no less than £8,000,000. The B.E.A., doing the European and the domestic services, whose accounts cover only eight months, have in that eight months lost over £2,000,000. British South American
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Airways, whose accounts were published last night, present an agreeable and striking contrast. Without taking credit for the profit of about £75,000 which was made in the first four months by the private enterprise company which was established to run those South American airways and which the Government Corporation took over (and I am glad to see that the Corporation still has the same Chairman and Managing Director, and, to judge by the results, the same method of conducting business) B.S.A.A. in the last eight months have shown a profit of £32,000.
There are the three results. B.O.A.C., in a long report, give a great many reasons why they have incurred these losses. They have had to use uneconomic aircraft; they have had to use scattered and improvised maintenance bases; they have encountered difficulties in route organization; and other reasons are given. Well, we shall consider in debate how far those reasons are valid or wholly valid: but twelve excuses for failure do not constitute a success. And are not these problems very much the same as those with which the South American Company have had to contend? They had to use what are called improvised aircraft, and, in the financial year with which we are concerned, the Lancastrian and the York—the same machines that B.O.A.C. have been flying. Since the close of their financial year they have been flying, I understand, with the Tudor IV, about which I shall have a word to say presently. They must also have had improvised bases, and inadequate hangars. They are all in the same boat. And the organization over the route—in part the same route as the others—has certainly not been perfect on the South American or the Caribbean route.
In passing, I may observe that when, in the National Government, I proposed that this company, formed by the shipowners who were conducting the South American lines, should have services to South America and the Caribbean, one of the criticisms advanced was that the area was too small, that they could not run enough services to spread and sustain their overheads. Yet they have made a profit where the other people have made a loss. And, be it observed, on this line they have not had it all their own way; they have had international competition as keen as, if not keener

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than, that on either of the other lines. I am informed that there are no fewer than six competing lines flying from Europe to South America; and if you take into account the formidable competition of the American lines flying to South America it means that they have seven keen competitors.
Let us pause for a moment to compare these results. I know that it may be said that comparison betwen one line and another operating in different areas is not completely satisfactory, and is not entirely comparing like with like; but, broadly, the comparison is not an unreasonable one to make. Let me take one or two parallels. One would expect. I think, that in any airline the number of people employed would bear some sort of relation to the number of aircraft: or rather that the more aircraft a company had, the fewer per aircraft there would be of staff. A company with only two aircraft may require quite a lot of people. I do not mean just to run the aeroplanes, but in the organization of the lines. Let us have a look at the figures. It may not be an exact comparison, because one must have regard to the types of aircraft and the length of routes. But the facts are these, and the Minister can check them. B.O.A.C., taking all its staff, has 140 for every aircraft; B.E.A., with a good deal fewer aircraft, has 57; B.S.A.A., with a good deal fewer aircraft than either of them, has only 49 people per aircraft. In fact, the ratio is exactly the opposite to that which one would expect.
If it be said that that ratio of personnel to aircraft is not wholly a fair one, let me take another standard of comparison—a general comparison of receipts and expenditure; and the ratio of receipts to expenditure!—which I think everybody would regard as essentially reasonable. Let me take it (I think it is fairer) as between B.E.A. and B.S.A.A. It is not very easy, but I think I have made this comparison right; I hope it will be checked. I notice from the report that the European Corporation make their returns in. ton-kilometres while the South American Corporation make their returns in ton-miles. However, the conversion is not difficult for those who know their vulgar fractions—I do, although I was not at Cambridge. According to my calculations, the ton-miles flown by the two Corporations were approximately the same.
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B.S.A.A. had a rather lower Lord factor than B.E.A. The total revenue was not very different. Your Lordships will see that the accounts are all in the same form, so we can compare like with like. B.E.A. had a total revenue of £1,206,000; B.S.A.A. had a total revenue of £1,021,000—not very different. But when you come to the total expenditure, the contrast is really alarming. The total expenditure of B.E.A. is £3,300,000; the total expenditure of B.S.A.A. is under £1,000,000— £909,000. B.E.A. is spending three times as much.
I ask the Minister why the operating costs of one Corporation should be three times as great, and the ratio more than three times as great, as the corresponding costs of the other. I hope I shall not be considered as introducing a controversial element if I venture to suggest that in the case of the South American Corporation, those business methods which actuated the Chairman and Managing Director, and no doubt many of the staff, when they were a company operating for profit, have continued to animate them now that they are a company operating for the State. I should be glad to hear what other explanation there is. Nor, I think, is it irrelevant to observe during all this time the results of the charter companies who have not been greatly helped by the Government. They have certainly not been given any undue preference in the way of hangars and aircraft facilities; they have to take what is left. I am not complaining. Naturally, the Government would give the first cut in the hangars to their own Corporation—jobs for the aircraft, as well as jobs for the boys! We cannot complain about that. But the charter companies have certainly not had any undue preference in this matter. They have had to operate on the same routes, with the same facilities—or with the same absence of facilities—and yet some of them have managed to pay their own way and to keep going.
I would like, first, to make some observations and to put some questions affecting all the Corporations (I have given the Minister notice of everything I am going to raise), and then I want to deal with some matters affecting individual Corporations. I have selected a few of what I think are the more important and outstanding matters, for one cannot cover the whole field. Let me take a few matters which affect them all. The

507
accounts, as your Lordships will observe, are in similar form. What I would like to know is this: Are all the Corporations following a similar practice in the way in which they make up their accounts? For example, is the same standard of depreciation (which is very important) applied by each of the Corporations in depreciating their aircraft and other wasting assets? Then I observe that both B.O.A.C. and B.E.A., and perhaps also B.S.A.A.—to use these rather Russian abbreviations—have a number of aircraft on lease or on loan from His Majesty's Government, from the Air Ministry or the Ministry of Civil Aviation. Your Lordships will see the details set out in a schedule. Are those aircraft which are loaned or leased to these Government Corporations being charged for at a strictly commercial rent?
Your Lordships will observe that that is very important because, if they are not being charged for on a strictly commercial basis, then it means that part of the cost of those aircraft and their maintenance, and their depreciation, which has to come from somewhere, is being borne by one of the Ministries and is not being charged to the Government. I am not making any charge about this, but it is a thing which the House ought to know, because it is clear that, if everything is not being charged for at a strictly commercial rate, then there is a concealed subsidy and the loss which has actually been incurred is considerably greater than that which is disclosed in the accounts, heavy enough though that is. I would also ask whether apart from the specific cost of aircraft about which I have asked, there are any facilities which are not being charged for at a commercial rate.
Then I want to come to a most extraordinary matter. This applies to all the Corporations. All the Corporations complain that they are not allowed to order their own aircraft, to order their own engines, or even to order their own spares. It is so important that I venture to trouble your Lordships with two quotations. In the report of B.E.A., on page 13, we find this:
"Our difficulties in obtaining firm prices for spares for aircraft and engines are largely attributable to the practice under which these spares were purchased on our behalf by the Ministry of Supply without quotations for our requirements being first asked for and given. We have on several occasions represented to your Department"—
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that is the Minister—
"that we would prefer to deal direct with the suppliers."—
I am not surprised at that.
"We believe that we would then be able to establish the normal commercial procedure of quotation preceding order, a procedure which would be of immediate benefit, financially and from the point of view of our airline operations."
This is not a criticism advanced by somebody on this side of the House, making a political point. This is the criticism of the Government's own selected board, a unanimous report by the board to the Minister.
The South American Corporation, which made a profit in spite of these handicaps, put it no less forcibly, and it cannot be suggested that Mr. Booth and Air Vice-Marshal Bennett do not know what they are talking about. Page 12 of the South American report says:
"… it is necessary to state that the present system of ordering aircraft through the Ministry of Supply is entirely contrary to the interests of the Corporation. It imposes a third party between the user and the manufacturer, causing delays and misunderstandings. It takes control from the Corporation but leaves it with the responsibility. It adds to the cost of aircraft, as the manufacturer's price is loaded with departmental overheads. One of the prerequisites of successful airline operation is that the right aircraft shall be available at the right time at the right price. Under the present system, the Corporation has no control over price, is in the hands of the Ministry of Supply as to priority of deliveries, and is subject to very considerable interference as to design."
That is the report of the Government's own directors.
Then they set up the Courtney Committee, and a more able body of people one could not have. Something is said about this matter in the Interim Report of the Committee of Inquiry into the Tudor Aircraft (Cmd. No. 7307). If your Lordships look at that Report, at paragraph 89, you will see that the Committee say:
"The fact that B.O.A.C. were not themselves the buyers of the aircraft also played its part in causing delay."
The paragraph goes on to say:
"On the one hand they were not subject to the restraining consideration that the cost, direct and indirect, of every modification was to fall on them; on the other, A. V. Roe, Ltd., could not be certain how far they had to do what B.O.A.C. asked if they felt that their demands were unreasonable."

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It seems to me that this practice, which the Government still insist on following, is really senseless. There is now no question—and there can be no question—as there was in the war, of the Government having to apportion every order, and every inch of floor space. I think it was quite right that in the war, when they could take only a fraction of a factory for civil aircraft, that the one co-ordinating Ministry (in that case the Ministry of Aircraft Production), had to place the order. Bat why should that be so now?
The factories are not full. The Government, with their solicitude for defence, are not filling the aircraft factories of this country so full of Service orders that the civil people cannot get a look in. Over and over again we have debated this, quite apart from the principle of nationalization, and there has been a large measure of agreement as to the principles which should govern us when we are trying to run a nationalized industry. Ministers have repeatedly told us that the nationalized Corporations must be free to manage their own concerns, and say that that is one of the reasons why they cannot give any information about the Corporations. But what is one of the first functions (and I would say the first function) of management? It is to order the tools with which to work. If you are a transport company, you order the lorries with which you conduct your business. What would you say was the first function of management in a shipping company? Surely, it is to buy a ship. Why is it different with an aircraft? Why is it different because the thing which carries the people goes in the air and not on the sea?
Of course, the Government have the right to lay down the general principle of how far these people are to buy British, and how far they may buy from foreign countries. Indeed, the Corporations could not spend a dollar without going to the Treasury for permission. Subject to that, surely the Government will cease to be so obstinate, and will respond not just to my appeal but to the appeal of their own Corporations to let them place their own orders. I would add (to anticipate a possible argument) that I think there is a function for the Government in regard to the placing of orders, and the direct placing of orders by Corporations would not in the least preclude the Government
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from engaging in long-range research and development projects. I think that may be very right and proper.
Such projects are large. They affect the whole of civil aviation. Indeed, they do more than that; they overlap with the Royal Air Force requirements, if you take matters like pressurization, or the development of jet engines and long-range projects of that sort. It may be perfectly reasonable for the Government, in close consultation with those concerned, to place those orders. I would not dissent a bit from that. It would be a good case for having a Committee, but not for placing the ordinary orders for the commercial aircraft of different firms which are going to make a profit or loss. I have never heard of it being done anywhere else. It is not done in any other business. It was not even done in the aircraft industry before the war. Before the war Imperial Airways and the other operators all ordered their own aircraft from the makers. Why cannot we go back to that?
Here, it may be convenient if I ask what is the policy about aircraft generally. The delay over the Tudors has been very unfortunate. It has been far longer than was ever anticipated. I well recollect the forecast which was given to me by the firm and the Ministry of Supply, and from which B.O.A.C. did not dissent. They were with me in all the discussions in May of 1945, when we were just going into the first meeting of the Commonwealth Air Transport Council, a most valuable body. It was very important to give accurate forecasts to the Dominions. We had given them one forecast in London or Montreal a few months before, but we had to revise that because there was some further delay. I was most anxious. The Dominions were going to buy these machines, and perhaps some of your Lordships may remember our dealings with South Africa. We were to lease them the Yorks, and the Tudors were to take their place; and we hoped that they would go on all these Commonwealth routes. Therefore it was vitally important that we should be able, so far as possible, to give a firm figure. And the figures underwritten by everybody were these.
In regard to the Tudor I the prototype was to fly in June of 1945, and the twenty on order were to be delivered between

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September, 1945, and May, 1946. The Tudor II, about Which, of course, we do not know much, was to my mind more important than the Tudor I, because it was to go on all the Commonwealth routes in the partnership. That prototype was expected to fly in November, 1945, and delivery of those on order—I think to the number of eighty or eighty-five—was to be made between November, 1945, and December, 1946. I have checked these figures. I checked them some time ago and I have checked them again recently for another purpose. I feel sure that the Minister will be able to verify them. Orders, of course, had been given long before—I think in 1943. But neither Tudor I nor Tudor II is yet in service.
What did seem to me very odd was this. Tudor I and Tudor II were ordered in 1943 and this forecast of delivery had been given to us and to the Commonwealth people in May, 1945. They have not got into service, but yet the Tudor IV, a newer Tudor, has come through and is apparently giving complete satisfaction to B.S.A.A., the South American Corporation. I am sure your Lordships will have wondered, as I have done, what is the explanation. Did the fault lie with the makers, or was it that B.O.A.C. failed to finalize their requirements and kept on asking for modifications? I asked myself this question, for during the short time that I was at the Ministry of Civil Aviation I impressed upon the makers the importance of these aircraft both to the Commonwealth Air partnership as a whole and for the Atlantic, and the importance of recognizing that producing a civil aeroplane (derivative from a bomber though it was) was quite a different thing from building a fleet of bombers. At the same time I impressed no less forcibly, and perhaps more forcibly, upon B.O.A.C. that they really must take rapid, firm and practicable decisions as to the layout and equipment of the plane.
Now we have the Report of the Courtney Committee on Tudor I. No doubt a Report on Tudor II will follow. The Report which we have is very revealing. It is quite clear from it—and I want to be quite fair about this—that the relationship between B.S.A.A. and the firm and the relationship between B.O.A.C. and Avro's was very different. I think it was that difference in relationship which
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probably accounted for the Tudor IV coming out and getting into service, and also, in some part, accounts for Tudor I and Tudor II still being on the stocks. I think it is clear that though the Courtney Report finds errors of judgment in the firm—errors in regard to alterations which they made themselves (I think there was some alteration to the rudder and to the tail-plane), an error of judgment in not bringing in Farnborough soon enough and in not flying soon enough with the full load, which I consider is very important indeed—when all is said and done, the firm of Avro's were no doubt greatly handicapped and delayed by the failure of B.O.A.C. to finalize requirements and to control the medley of people in their Project Department who appear to have been putting in un-co-ordinated demands, and by B.O.A.C.'s failure to balance the practical against the ideal.
As the Courtney Committee pertinently point out—I will not quote the Report again; I have already done so—all this might have been very different if B.O.A.C., and not the Ministry, had been the responsible buyer, because then B.O.A.C. would have had direct responsibility. The Courtney Report asks: "Could the Ministry have done more to abate friction and resolve difficulties?" Again I want to be quite fair, and I will speak as to what I think was the responsibility. I have told how I myself impressed upon both sides the need for finality and for reasonable agreement. I do not think that it would have been right or proper for the Ministry to usurp the whole function of management of B.O.A.C. and say: "Look, these are the exact specifications and modifications which you are to have." That sort of thing cannot be done. The decision on those matters must rest with the user. But the Ministry could have done more, and at last they have. The user must decide and decide reasonably, but I think the Ministry could and should have insisted with the Chairman and Board of B.O.A.C. that they must finalize their demands and control their team. That is a matter of general policy and not of detail. Now, in the end, but a bit late I suggest, they seem to have done it.
The Courtney Committee have presented a most exhaustive Report on the past. What about the future? The Courtney Committee make two proposals

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on which the Government, at the beginning of this document, offer what they call some observations. I am rather glad that they do not say that they offer a policy, because "observations" is accurate and "policy" would not he a correct description. But I am bound to say—and I hope that I am not being offensive in so doing—that I find the Government's observations rather woolly. Two proposals are made by the Courtney Committee. The first is that the Tudor I should be used—assuming it goes through some trials and gets a certificate of air-worthiness—on the Atlantic route, United Kingdom to Canada. As I read the Government's observations, they take no decision upon that at all. If I may put it shortly, but I think accurately, they "pass the buck" to B.O.A.C. and the aircraft company to say what they are going to do about it.
Therefore I am going to venture to make a suggestion myself. I do it with a good deal of reserve, but I do not want to be wholly unconstructive, as indeed I hope I have not been in the past, and shall not be in the future. Anything an outsider can say, however, is, of course, limited by the fact that he has No 1nside knowledge but only the knowledge which comes from these Reports, full though they are. I observe that the Courtney Committee, in paragraph 112, I think, say that with the Constellations which B.O.A.C. have, there is some doubt as to whether there will be sufficient traffic to warrant using the Tudors as well on the Atlantic service. I understand that in addition to these Constellations there are some Boeing Stratocruisers on order—I suppose that they will be delivered very shortly, and they will certainly be put into service on the North American route, for that is what they have been purchased for. I would venture to think that it might be sound policy to convert these Tudor I's into Tudor IV's. I understand that that can be done pretty easily and at no great cost. The Tudor IV has been flown by the B.S.A.A. with great success and great satisfaction. When converted, these Tudors, I suggest, should be used on the Commonwealth routes where the York has long been obsolete and where for years we have been longing to get the Tudor into service. I make that suggestion, although I realize that there may be many arguments against it. In the face of the evidence which is given in the
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Report, however, it seems to me that that might possibly be the right course.
The other proposal which is made by the Courtney Committee is one with which I have already dealt—namely, that the Corporations should order their own aircraft. There, I must admit, the Government have taken a decision, but they have taken the wrong decision. They have come down absolutely flat-footed against the Corporations being allowed to order their own aircraft. They say, in their observations on the Courtney Report, that the Corporations may be represented on a Committee—that is a great privilege! They shall he made financially liable for the results of a policy over which they have no control, but they shall not have the elementary responsibility of ordering the aircraft they are to use. In other words, "Auntie knows best." Or "Uncle knows best"—I am not quite sure where the responsibility is divided. It must be hard for competent and self-respecting men to carry on in face of such frustration. Does this unexplained and senseless policy apply in the case of other nationalized industries? What is happening there? Does the Minister of Transport buy the railway engines and rolling stock which are used by the Transport Commissioners, or is that left to the Commissioners? Does the Minister of Fuel buy the mining machinery, or is it left to Lord Hyndley and his staff? I assume that no such folly is committed by other nationalized industries. If not, why cannot that policy be followed here? No reasons are given. I trust that the Minister will give us some to-day, and we shall certainly await with interest any information which he can give us.
Before passing from aircraft, I should like to add that the controversy over the Tudor I and II has overshadowed the achievements of other British aircraft. The Tudor IV seems to be doing all right. The Viking is doing very well indeed. One of the Corporations, the B.E.A., who use it most, say that after teething troubles the Viking has "gained great popularity on all routes." It is economical and efficient. This is especially agreeable to me, because I must admit having had very considerable responsibility for ordering the Viking. The Dove has also done very well and has sold in quantities overseas, and in this smaller range others are coming forward well. In engines,

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whether of normal reciprocating type or varieties of jet, we still hold our pride of place.
The next complaint the Corporations have to make is that of lack of accommodation and unsuitable airfields. There were a great many airfields and hangars constructed in this country during the war, to accommodate Transport Command, Fighter Command and Bomber Command, and, as we were glad to do, the vast American Air Force as well. There must be a great deal of accommodation. Some of the noble Lords on the Bench opposite will remember that in the National Government Mr. Churchill laid down that there must be a great deal of co-operation in the future between Civil Aviation and the R.A.F. We had to "muck in" together and have common user of airfields and facilities. I should like to ask if that policy is being carried out, because I should have thought there was enough accommodation to go round. If there is an airfield peculiarly suited to civil aviation but not essential to the R.A.F., there ought to be reasonable give and take between the two. I am sure the Government could do more about that.
They next complain—B.E.A. make this complaint particularly in paragraph 12—about the confusion in booking arrangements. There has been much expense in building up offices and staffs overseas to handle traffic. I cannot refrain from this reflection: How much wiser and cheaper it would have been not to have rejected the proposal I and the National Government made for a partnership of the railways, the shipping companies and the travel agencies, with all their vast experience and world-wide connexions? If that had not been discarded, they would have taken all this in their stride and we should not have so many millions of deficit to-day. While I am critical about that matter, let me, in justice—because I have been travelling by air a great deal in the last few months—pay tribute to two sets of people. One are the staffs on the airfields and the planes. I have received invariable courtesy wherever I have gone, and not just courtesy to an ex-Minister. I should like to pay equal tribute to a set of people who do not so often receive compliments—the officers of the Board of Customs. When I have arrived early, I have deliberately sat and watched these
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gentlemen carrying out what, under all the regulations about currency and everything else, is a very thankless, invidious and delicate task. I do not think I have ever seen people, the ordinary rank and file, discharging their duties with greater courtesy or more thoroughness. I would like to pay my little tribute to them.
I want to put one or two other questions which relate specifically to individual Corporations. First of all, I will deal with the B.E.A., which has made a loss of £2,000,000. The pre-war operators of all these airlines were doing very well. They, and the railways, the shipping lines and the travel agencies were prepared to join together and put up the whole capital themselves and carry on these services without any subsidy. We know the loss for the eight months to April, 1947, but I want to ask this question, because I wish to give the Minister a chance to show that it is getting better. I hope it is. I cannot believe it is not. What have been the financial results from April, 1947, to, I do not say the present time, but to the time the various travel restrictions were imposed? Those created a new situation, but there were some months in which there must have been normal operation during the late spring and early summer, which the B.E.A. regard as the best travelling months for internal services, which depend on the season. Obviously the Corporation must know these results because every company knows month by month whether they are making a profit or loss. Then there was the fuel crisis—and I thought it was tactless of the Corporation to refer to the losses owing to the fuel crisis. That is all behind us, please God! The fuel crisis must have been over. Then the Vikings, which are now giving such satisfaction, were coming into increasing use. All those things are on the right side, and I trust the B.E.A. have been doing much better. I would like the Minister to give the House some consolation by telling us what are the results.
Then may I ask him a question about the internal services? If I may say so, there are some very odd statements in paragraph 13 of the B.E.A. report, which I cannot follow. Why can no replacements of obsolete aircraft be available before 1949 at the earliest? Why should navigational and blind-approach aids be a prerequisite to the introduction of a replacement type on these routes? I

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ask that particularly, because the report emphasizes that on the internal services it is the summer months that count. I really do not see why a new type of machine should not be operated on these short inland services without getting in a completely new set of blind-landing approach aids. Then they say that the fares are much below the Continental rates. If that is so, why is it?
Lastly, let me ask this question about B.E.A., because it deals with a complaint which they make. Why do not the Government Departments pay for the priority reservations which they give up too late for the company to sell? It seems to me not unreasonable that they should pay for them. It may be said that it is a book-keeping transaction, and the wretched taxpayer pays out of one pocket or another. As a matter of fact, I think there is far too much of this priority. I have had some talks with foreign companies about this matter, and I never find any difficulty in getting on a foreign line. It really must be a handicap to the company, and it would be a great deal simpler to cut out most of these priority reservations. If the Foreign Secretary wants a passage, if he is not taking his own aircraft, it could always be arranged, as with the shipping lines, that he should get a place on the plane. It is not sensible that places should be reserved for a lot of clerks. Sometimes, I should have thought, these people might even take their chance with the business men. But perhaps that is rather an outrageous suggestion.
I have dealt with a number of points that are common to both Corporations, and now I want to put two points in connexion with B.O.A.C. Your Lordships will see on page 6 of the B.O.A.C. report that they complain that some services were operated, not because they were commercially attractive, but because they were required for reasons of Government policy. That is one of the reasons they gave for the loss. I would like to ask the Minister what the services were which the Corporation did not want to operate but which were operated because they were required for reasons of Government policy; and what proportion of this £8,000,000 loss, on a fair assessment, is due to those services, and not to other causes. On page 20 reference is made to
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the reduction of fares made by international agreement or direct negotiation. I should like to ask whether the other operators who were affected by these international agreements lost money through those fares. That ought to be quite easily ascertained, because the Chicago Convention provided for companies supplying regular statistics of operating costs.
I am not sure that we are not asked to give too many statistics. I think we have to be careful that we do not set up a tremendous organization in Montreal, or wherever it may be, and have far too many forms sent in. But I am not sure that this Government are very good people to bring that proposal forward. I think it might be said to them: "Physician heal thyself." Seriously, I think there can be far too many forms. If an international body is set up, naturally it would like all the information in the world. But it is much better to concentrate on the few things that really matter just as good business concentrates on the information and returns that really matter. Anyway, with all the mass of paper there is, we must know whether the other people are making or losing money. I believe K.L.M. made a very good profit. I have seen the Reports of Sabena, the Belgian Line, and I understand that they were able to make enough profit, presumably on these fares, to pay back to the Belgian Government all the subsidies which they had had from them over the past three or four years.
I apologize for having kept the House so long, but I thought that these subjects were so important that they must be presented in a proper perspective. I have one specific question to ask, of which I have given the Minister special notice. I would like him to tell us about the extraordinary story of the West African Service. West Africa is a very air-minded place. Both the Civil Service and the commercial community want to send their people out and bring them back home by air. It is a very good pay-load. The people come home and go out again all through the year. When I was Resident Minister I went into the figures and received returns from the commercial firms and from the Government. I found they were all extremely anxious to have the service, and there was a very good clientele all through the year. The great bulk of these people, of course, come from the

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two great Colonies of Nigeria and the Gold Coast, and more particularly from Nigeria. The quick direct route is across the Sahara—to Algiers or Tunis, Kano, and on to Lagos and Accra.
The Belgian Air Line, Sabena, has for eighteen months or more been flying a regular service; though it has a much smaller clientele, it is flying, I think, several times a week. I believe they used to carry our air mail for us; I do not know whether they still do. Air France are also flying a service direct across the Sahara to Brazzaville. K.L.M., the Dutch company, are flying a similar service once or twice a week across the Sahara, stopping at Kano and going on to Johannesburg. The only people who were not flying on that route were ourselves—to our territories. The only British service was by Dakota, down the west coast of Africa and then along the 2,000 miles or more of the bend, through Bathurst and Sierra Leone, and past all the French territories to Accra, taking three or four days against one day or eighteen or nineteen hours of direct flying across the Sahara to Kano.
What happened? Skyways, a Charter Company, made an offer to the Nigerian Government and to the Gold Coast (the Nigerian Government were the principals in the matter) that they would charter a weekly service with a Skymaster, which, I am informed—and I made particular inquiries—was there and then available, and the service could be started within a month. That service would have flown once a week to Kano, on from Kano to Lagos and Accra, and back the same way. The aircraft could carry thirty-six passengers; the fares were to be similar to the fares which the foreign lines were charging, and, as I have said, the service could be ready to start within a month. The Nigerian Government were willing to guarantee this venture. It was not at all an onerous guarantee, because I can assure your Lordships that the amount of traffic which certainly is available on a service out of Nigeria and the Gold Coast would far more than fulfil the guarantee. I would like to underwrite it and keep half the profits; I would take that on at any time. They offered to guarantee £75,000 a year. It would not have been less than that; indeed it would have been far more. Nigeria, naturally,
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was anxious to close with this offer. His Majesty's Government forbade them to do so, and they said: "Instead of this, we will put in a service run by Halton aircraft, and we will run three of these a week."
I am informed that the Halton aircraft can carry only ten passengers across the Sahara—if so many—and that therefore every trip involves a heavy loss. I have taken considerable care to verify my facts, and I shall be greatly interested if the Minister contradicts one of them. I ask the Minister, therefore, this question: How much are B.O.A.C. losing every week on this Halton service across the Sahara? By that I mean really losing. I do not mean simply what is the cost of the petrol they put into the 'plane. I mean what is the loss on a proper commercial assessment, attributing to the service all the proper costs for hire, depreciation of aircraft and every other proper charge. That is the first question I ask: How much is the weekly loss upon that service? If, as I suspect, it is considerable, I ask him these further two questions: Why was this Nigerian service forced upon the Government of Nigeria, and why was this additional loss forced upon the British taxpayer? I beg to move for Papers.
3.42 p.m.
THE MARQUESS OF READING: My Lords, I ought perhaps to begin by saying, on behalf of my noble friends, whose absence from these Benches at the moment is perhaps somewhat blatant, that it is due neither to lack of interest in this particular Motion, nor to any neo-Athenian revival of the practice of ostracism in regard to myself, but to the unfortunate fact that a meeting was arranged some time ago before to-day's business was known. The noble Viscount who has just spoken has acquired in obvious ways so great a store of knowledge and experience of this particular subject that it need be no surprise to any of us that his oratorical take-off this afternoon was so expert, his flight so smooth, or his landing so safe. If, occasionally, his remarks were punctuated by a burst of machine-gun fire we have to remember that he is not only an ex-Minister of Civil Aviation but also an ex-Secretary of State for Air.
I can speak upon this matter merely as a member of the public and as an

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occasional passenger—perhaps a somewhat scared passenger, not always entirely-reconciled to finding himself suddenly with no visible means of support. I make no apology for speaking without technical knowledge or experience, for after all this matter—and in particular the two main topics we are discussing this afternoon—is one which the taxpayer is not only deeply concerned with, but deeply concerned by. Here is a service with immense potentialities, a service which might hold great possibilities of dollar-earning capacity and which, equally, might bring to this country immense prestige. Neither of those two considerations is to be lightly dismissed. In the B.O.A.C. report, which your Lordships will have read, there are advanced a number of reasons why it was difficult, if not impossible, for that Corporation to show a profit for the year's working. No doubt those considerations, in varying degrees, have had an influence upon the balance sheet which is now presented. But without any desire to over-state the position, I think it is true to say that the public has been genuinely shocked at the figure of loss of over £10,000,000 for these two Corporations, and that, even taking into account the adverse factors, some explanation is required for those figures.
We are accustomed in these days to speak in large amounts in dealing with matters of public finance. I sometimes picture in my mind members of the Government, in their rare moments of relaxation, gathered in the Cabinet Room for a quiet game of "shove million." But even so, £10,000,000 is a very substantial amount. Although this may be the first year of the working of the B.O.A.C., I have no doubt that your Lordships and another place will carefully watch this next year's transactions and will hope for a very much more favourable result at the end of that period. This, and the question of the Courtney Report, both have an importance outside their actual application to the question of civil aviation. They have an importance of general application, particularly in view of the trend of modern legislation. After all, nationalization is not, or should not be, an end in itself, but rather a means to an end. It is not an incantation; it is a social economic and political policy. The results which flow from it depend not merely upon pronouncing some magic word of incantation, but primarily upon
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the organization and administration which, once the method of nationalization is accepted, is applied to meet the requirements not of every industry which may be nationalized, but of the particular industry which is being dealt with as the moment. This House will no doubt watch with interest the various features which become common as matters progress in the different industries to which nationalization has been applied.
Before I turn briefly to the Courtney Report, it is perhaps fair to say that much had happened, both in regard to the accounts and in regard to the history of the Tudor aircraft, before the present Minister found himself suddenly caste in the rô le of Ariel. I think that it may well be that he deserves a measure of sympathy from the House for having acquired a not very attractive inheritance and because the time he has had may not have given him a full opportunity of exercising authority over his new domain. But I am bound to say, viewing it from a perfectly detached and dispassionate aspect, that the Courtney Report is a deplorable document: admirably considered, carefully drafted, but, in what it reveals, a deplorable and horrifying document. It seems to me to contain almost every ingredient which those who like bureaucratic control hoped would be avoidable and those who dislike it prophesied would be inevitable. It would be almost possible to reduce it to the terms of a recipe in the work of the late lamented and invaluable Mrs. Beeton: "Take two Departments, a Corporation and half a dozen Committees; rub well the wrong way until all are thoroughly sour; cut up responsibility into as many pieces as possible; add procrastination, hesitation, lack of co-ordination, lack of imagination, lack of control"—in fact almost every ingredient except of or ginger—"do not stir. Leave to simmer for several years and serve lukewarm."
The summary of this Report is contained in a paragraph to which the noble Viscount, Lord Swinton, referred but did not I think actually read, and it is perhaps worth reading. It comes immediately after the paragraph which he read. It is paragraph 90 on page 20, and it reads as follows:
"Summing up, we consider that the root cause of the trouble lay in defective cooperation between user and producer where

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there should have been single-minded concentration on the primary object, namely, to get the aircraft into service as quickly as possible; there was such an effective division of constitutional responsibility among the organizations concerned that each could find unimpeachable reasons for keeping its constructive activity within moderate limits; and on none of the parties was there such clear financial responsibility as would have impelled action. None the less effective leadership could have come from either of the two Departments, but for reasons which doubtless seemed good at the time, it did not."
There is the typical example of too many authorities intervening in a procedure the essence of which is speed of execution.
And even now, when we turn to the recommendations of B.S.A.A., to which the noble Viscount has already referred, where they criticize the intervention of the Ministry of Supply, and then turn to the observations of His Majesty's Government on the Courtney Report, we find there is one clear omission. The B.S.A.A., having called attention to the system of ordering aircraft, put as their first recommendation, as a condition precedent of their being able to conduct their affairs on a satisfactory basis
"That the Corporation has control over as well as responsibility for ordering its aircraft."
"Has control over"—that surely is the essential ingredient. Yet when we come to the Government's observations, after they have had time to consider this Report and have presumably been in consultation with B.S.A.A. and the other Corporations, we find they are careful to omit those essential words which give to the Corporation control of its buying operations. They go no further than to give themselves a gentle pat upon the back and say that the procedure for the ordering of aircraft was altered as long ago as September, 1946, and that for any contracts placed since that date "the Corporation take full financial responsibility." Nothing about transferring to those Corporations this all-important aspect of control. I do not pretend to be well versed in the inter-relations of Government Departments, but I confess I find it very difficult, reading this Report with the history of the past that it gives, to come to any logical conclusion as to why the Ministry of Supply were allowed to intervene and hold up this matter at all from beginning to end. And yet obviously the presence of the extra and extraneous Department was one of the prime causes
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for the muddle and delay which has unfortunately taken place.
I hope that the Government's observations attached to the Courtney Report do not represent the distillation of their ultimate wisdom on the subject. I hope that they are still considering the matter with the intention of making some radical changes and amendments; because, quite plainly, from the balance sheets and from the findings of the Courtney Report there is ample room for very serious heart-searching as to an adjustment of the present balance between the parties concerned, and for the introduction of a great deal more satisfactory machinery of administration than exists at the present moment. I would suggest that the venerable slogan "Peace, Retrenchment and Reform" may perhaps commend itself to the Minister: peace between the conflicting, or at any rate non-co-operating, bodies who are associated or should be associated in these operations; retrenchment which will at least bring the figures of loss down to a more reasonable size; and reform which will enable us to avoid in the future being confronted with any such document as unfortunately we have to consider to-day.
3.58 p.m.
The MINISTER of CIVIL AVIATION (Lord Nathan): My Lords, in his opening observations the noble Viscount, Lord Swinton, made it clear that he was going to cover a pretty wide field, and he sought the indulgence of your Lordships' House for the time which he would occupy. If he will allow me to say so, I do not think that any of your Lordships will feel that he occupied a moment too long. I have to ask for a similar indulgence, and I shall cover very much the same field. The noble Viscount brought to bear on this subject many years of experience and much interest in aviation, both in the military field and in the civil; and I regard it as right that this debate on the presentation, for the first time, of reports by the Corporations should be initiated by one who was the first Minister of Civil Aviation.
The noble Viscount addressed himself to this matter without reference to the political implications which I think we are agreed are behind us. He discussed the subject from the point of view of business, and it is from that same standpoint of business that I propose to address

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myself to it. I apologize to the House for the fact that the report of the British South American Airways Corporation was in the hands of noble Lords only last evening. I had promised that I would push forward the printing of the accounts without delay; I indeed did so hut, for various reasons, they did not reach me until rather late. I ought to pay a tribute to His Majesty's Stationery Office for the effort they made to ensure that your Lordships should have the accounts before you for the purposes of this debate.
Let me say a word or two on the general form of the report and accounts. It is provided by Statute that I, as Minister, should prescribe the general form of the accounts to be followed by the Corporations; but when I have once prescribed the form, my responsibilities end. The reports and. accounts have been produced by the Corporations without any intervention on my part. From the beginning I impressed on the Corporations that these reports were to be their own, submitted by them to me. Accordingly, I must not be deemed necessarily to endorse everything that is included in the reports, although I feel that I may say—I believe I shall have your Lordships' concurrence in this—that the boards of the Corporations are to be congratulated on having presented very full and informative accounts to me. I, as Minister, in the position of a trustee shareholder, have laid these accounts before Parliament, as representing the general body of shareholders. I think it may be agreed that the accounts reveal a clear and frank statement of the affairs of the Corporations during the year in question. I have been pleased to observe the favourable comments in the Press about the form of the accounts, and I think I may fairly claim that the provisions of the Act, which lay down that the accounts shall be in a form complying with the best commercial standards, have been followed to the full.
So much for the form of the reports and accounts. Let me say a word as to the story they unfold. Let me make it clear, in the first instance, that I have not come here to-day to offer apologies. Losses, substantial losses, have, of course, been incurred by two of those Corporations. I will show why these losses have been incurred, why indeed they were inevitable. But consider, first, the other side of the picture—what has been
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achieved. Do not forget that the period we are considering is a period which ended last March—nearly a year ago. It began almost two years ago, within a few months of the end of hostilities. It is sometimes difficult to place oneself in the position of a past period, but we must do that in considering these accounts. They begin at a period shortly after the end of the war. During the war the whole of B.O.A.C's effort was directed to war tasks, in association, of course, with Transport Command. But the tasks of war are very different from the tasks of peace. You cannot train and organize a large-scale airline for a war task and expect it, in the twinkling of an eye, to transform itself into an efficient instrument for the completely different function of competitive airline operation, with the pretty high standards demanded in peace time. The whole organization has to be re-cast; you have to absorb and train new personnel; and, perhaps most difficult of all, you have to re-train your existing staff in new methods and instil in them a completely different set of values.
That is not a quick task, and it is certainly not an easy one. The Government could have said to B.O.A.C. "We appreciate the magnitude of the task before you, so we will ask you to undertake no new tasks until you feel that you are ready to shoulder them." We decided not to do that. We decided to take a different line, and I am sure that we were right. We said in effect to B.O.A.C.: "Opportunity waits for no man. Whatever the difficulties, the tasks must, in the national interest, be undertaken now, on the instant. Not only must you develop your services to Dominion and Colonial countries, but you must assist the development of civil aviation in those Colonial territories. You must make your technical services readily available to foreign countries with which this country has important historical and economic connexions." The result was that immediately the Japanese war came to an end, B.O.A.C. were called on to do simultaneously two very difficult and very different things. One was to reorganize their whole undertaking for peace-time operations in a highly competitive international field; the second was to expand their services in all parts of the world. In addition to that, they had to undertake a large number of responsibilities in the Colonies and in foreign countries which

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served important national and Commonwealth interests. I know of no airline that has been called upon to undertake such large-scale undertakings in such a short period of time. It has all been accomplished without any lowering of the high standards of safety and of service.
I may fairly ask your Lordships to look a little more closely at what has, in fact, been achieved. As a general indication of the effort achieved, I might mention that B.O.A.C.'s net route mileage in 1946–47 was 53,998; and 62,000 in August, 1947. B.E.A.C.'s route mileage by the latter date was already 17,000, after only one year's effective operation. B.S.A.A.'s figure was 21,000. Remember, too, though it is often forgotten, that B.O.A.C., as such, had had no previous peace-time experience; it was born only in 1940, when the war had already started. On the North Atlantic, the Constellation service started on July 1, 1946. Actual deliveries of the aircraft did not start until May. By November, 1946, four services a week were in operation, and since that date a service utilization of more than eight services a week has been attained, representing—I would draw your Lordships' attention to this—more than 3,000 hours per aircraft per annum—a very high utilization. Then, on the route to South Africa, the York services were increased in February, 1947, from two to six a week. Communications were maintained with West Africa (about which I shall have more to say later), and an extensive network of services was operated to and within the Middle East.
I want to say a word about those services in the Middle East. The noble Viscount asked me about unremunerative services undertaken for purposes of public advantage. Here is an outstanding example of services, not economic in themselves but essential in the national interest. They were originally operated by B.O.A.C. during the war as an adjunct to the war effort, and they were continued thereafter, at the repeated request of our authorities in the Middle East, as being essential to the discharge of our national responsibilities in that area. Those services undertaken for reasons of public importance cost some £600,000.
VISCOUNT SWINTON: Is that dead loss—no revenue at all?
LORD NATHAN: The cost was £600,000; it was not revenue; it was dead loss. I could continue the story of these achievements: increased services to India; a three times a week flying boat service to Australia, inaugurated to supplement the express Lancastrian service, a flying boat service from Singapore to Hong Kong, in addition to through services to both places from the United Kingdom, and so on. So much for the trunk services.
But in the year in question, B.O.A.C., with the active encouragement of my Ministry and the other Ministries concerned, associated themselves with, and actively assisted, a number of local air transport companies. In East and West Africa, for instance, local airline Corporations were set up, the general managers of both being seconded from B.O.A.C., and the resources of B.O.A.C. being made freely available to both. Then in the Middle East B.O.A.C. were also associated, in the capacity of technical advisers, with local airlines, as, for instance, in Iraq. This process has since been carried further. It would have been easy for me, as Minister, and for the Board of B.O.A.C., to have said that B.O.A.C. had too much on their hands to participate in these local developments. But would the broad national interest have been served if we had adopted that course? Had I come to you to-day and told you that these countries had been forced to look elsewhere for assistance, would you not have held me responsible? Would you not have said that I had neglected an important aspect of long term development?
I ought not to pass from this brief résumé of the achievements of B.O.A.C. in this year of transition and development which we are considering without placing on record a tribute to the services of B.O.A.C.'s late Chairman, Lord Knollys, to his untiring efforts, his extensive travelling, and his vision. Sir Harold Howitt, Deputy Chairman of B.O.A.C., placed his resignation in my hands fifteen months ago, but held it at my request till now. I should like to acknowledge his loyal and valuable services over the past critical years. As your Lordships know, Sir Harold Hartley succeeded Lord Knollys, and Mr. Whitney Straight was appointed to the post of Chief Executive, which was revived on the retirement of

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Lord Knollys. Sir Miles Thomes will be joining the board in March as Deputy Chairman and will concentrate mainly on problems of organization.
Now let: me turn for a moment to the other Corporations. Their achievement has been no less marked. I am not going to traverse the ground already covered very clearly in their reports, but if you will just glance—I hope you have already—at the maps in the reports, you will, I am sure, agree that both Corporations deserve the greatest credit for the development which has occurred in the face of very great difficulties. In the case of B.E.A.C., not only were they faced with the problem of forming an efficient unified organization out of the pre-existing companies operating internal services, the activities of which had been taken over by them, but, as their report shows, they were called on to tackle exceptional technical difficulties.
Of these, the main was the withdrawal of Vikings from service in December, 1946, for modification to remove the aircraft's instability in flight in certain icing conditions. The noble Viscount opposite referred to that matter. The aircraft were not reintroduced into service until after the close of the period under review. Of course:, these events had a serious adverse effect both on the revenue earned and on the costs incurred. Again, like B.O.A.C., B.E.A.C. have entered into association with overseas companies, a process which has since been considerably developed. In the case of B.S.A.A., not only were services on the trunk route to Buenos Aires, with a later extension to Santiago, started and developed well ahead of their competitors, but a new route opened to the Caribbean and extended to Venezuela, Peru and down the west coast of South America to Santiago. Thus, for the first time, not only the main countries of South America but also our British possessions in the Caribbean were connected by air with the United Kingdom.
I am confident that the long-term benefits of this development, economic and political, will be considerable. Let me add here that, on the best estimates presently available, in the twelve months ended December 31, 1947, B.E.A.C. flew 17,400,000 capacity ton-miles as compared with 5,400,000 for the eight months' period ended March 31, 1947. This represents an increase over
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the previous eight months' period of no less than 220 per cent. In the same twelve months' period ended December 31, 1947, B.S.A.A. flew an estimated 13,000,000 capacity ton-miles as compared with 9,200,000 for the twelve months ended March 31, 1947, representing a 48 per cent. increase, and B.O.A.C. 61,700,000, as compared with 59,300,000. These are important and significant figures and they show great progress. I have indicated briefly something of what has been achieved. It would have been easy to attempt less and it would have certainly cost less. But had we attempted less, had we been less courageous, in years to come we should have regretted our short-sightedness. Whatever criticisms you may level against the Corporations, you cannot say that they have failed in the face of great and, indeed, appalling obstacles, to show the British civil air ensign on every major air route of the world. That is something to be proud of.
Now I come to the question: Could what we have done have been more cheaply accomplished? Why is it that one Corporation has made a small profit and the other two substantial losses? Those are questions which were pertinently put by the noble Viscount opposite and by the noble Marquess, Lord Reading. Well, on the first point, the noble Viscount opposite rather indicated that his answer would have been "Yes, by private enterprise." But I do not see a particle of solid evidence on which to base his claim. It may be argued—I rather think the noble Viscount was inclined to argue—that Skyways and other charter operators have made money, but—
VISCOUNT SWINTON: What I said in comparing the three airlines was that the one which started as a private company and which presumably carried on with the same management, made a profit, as had its private predecessors; the others made very heavy losses.
LORD NATHAN: Well, all the D rectors principally concerned, the Chairmen and executives of all the three Corporations, come from very much the same school of experience. There is no argument, I think, to be deduced from that. I must point out to your Lordships that there are very different considerations and circumstances facing

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the scheduled and the unscheduled operators. I say nothing of the fact that Skyways have the advantage of owning a number of American aircraft. Quite apart from that, in the first place, the charter operator is free to choose the route he will fly, and when he will fly it. He is not required to maintain scheduled services on routes that may be uneconomic but are required in the national interest. In fact, he has been free to exploit to the full the abnormal backlog of travellers seeking passages at any price resulting from the war years.
In the second place, the charter operator sells the whole of the space in his aircraft before he sets off on a journey at all, so he is always, in effect, operating as if his aircraft were 100 per cent. full. Then, again, the charter operator is free to charge what the traffic will bear. He is not bound, as are the scheduled operators, by internationally agreed fares. Also, he has no responsibility for providing such extensive and expensive ground facilities as B.O.A.C. and B.E.A.C. have had. I would draw your Lordships' attention to the fact that in the case of B.O.A.C., station costs, after allowing for revenue received in the form of service charges to other operators, amounted to £2,736,241. There is nothing like that to be met by the charter operator.
VISCOUNT SWINTON: Surely the charter operator is charged the full commercial rate by B.O.A.C. or any other Corporation for the services they do for him. I am told, in fact, that they charge more than K.L.M.
LORD NATHAN: I have made it clear that after allowing for the revenue received in the form of service charges to other operators these expenses fall upon B.O.A.C. In the case of B.E.A.C., the figure was £524,000. In fact, charter operators, in return for modest user fees, have benefited considerably from the ground facilities that B.O.A.C. have had to provide and operate on a twenty-four hour day basis at their own expense at many overseas stations. I must make it clear that in mentioning these points I have no wish to detract from the achievements of our charter operators. Far from it. Their achievements have been considerable. I have repeatedly pointed out that as Minister of Civil Aviation I have a responsibility to charter operators in their
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legitimate sphere, no less than to our nationalized Corporations in their legitimate spheres. I have welcomed the formation of the British Air Charter Association, and I regret only that Skyways have not seen fit to join. It is a development which I have done my best to encourage. Moreover, I think I may claim that the relations between my Ministry and British charter interests have been relations of mutual respect and understanding. And I hope that our British charterers will feel, as is my wish, that my Ministry are doing all they can to help the operators in the field open to them under the Act. What I said earlier was merely to show that such comparisons between scheduled and unscheduled operators serve no useful purpose and certainly prove no point.
I may perhaps refer now to United States airlines, of which some mention has already been made. United States airlines are not socialized, but they illustrate the different character of scheduled airlines operating regularly to meet an uncertain public demand. So far as one can secure the comparative figures, in the period broadly covered by the present reports of the Corporations—that is for the year up to June 30, 1947—the three United States companies operating across the Atlantic lost on these services a total round sum of some 15,000,000 dollars. In the year ended June 30, 1947, which corresponds broadly with the period under review, the combined losses of United States internal airlines amounted to about 22,000,000 dollars. That is after taking into account any subsidy elements that may be included in the mail payments. So air transport, whether it be socialized or non-socialized, in the present state of the industry and the science presents difficulties from the point of view of profit making.
I come now to the reasons why one of the three Corporations has been able to earn itself a small profit. I do not think the noble Viscount sufficiently appreciated (he certainly did not make clear) that the circumstances facing the three Corporations were very different; and I must enter a warning against deductions made on misleading or mistaken hypotheses. Like cannot be compared with unlike. During the period of this account, B.S.A.A. were operating two long-distance trunk routes, one between the United Kingdom and Buenos Aires, with a later extension to Santiago, and the other from the United

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Kingdom to the Caribbean and the West Coast of South America. As B.S.A.A. will certainly be the first to admit, the fact that they were first in the post-war sphere of Europe and South Atlantic operations ensured to them a good traffic demand, concentrated on two routes, demanding the minimum ground organization—at first seven, and then thirteen, staging posts outside the United Kingdom. By contrast, B.E.A., with roughly the same traffic turnover, were operating on fourteen overseas routes, as well as on a network of internal services, many of them uneconomic but required in the national interest. The character and size of the ground organization required in these widely divergent circumstances is vastly different. In fact, B.E.A.C. maintained twenty-four overseas stations and twenty-seven at home. Furthermore, B.S.A.A. were operating with two types of aircraft, Lancastrians and later Yorks. Their operational fleet consisted of five Lancastrians and eleven Yorks. The former were hired to them at £2,000 a year each, an exceptionally low charge for aircraft in the budget of any operator.
VISCOUNT SWTNTON: Are they charged less than B.O.A.C. for their Lancastrians?
LORD NATHAN: That is not on the same footing at all. There were other factors, which I need not mention in detail, which favoured B.S.A.A. Their operational fleet was a small one, consisting of sixteen aircraft of two types, compared without about 140 of nine types in the case of B.O.A.C. This enabled them to save on aircraft maintenance costs by concentrating their maintenance at a single aerodrome, in close proximity to the aerodrome from which they were operating.
I feel that it is a little ungracious to make these comparisons, but it has been essential in view of the argument put forward by the noble Viscount. I have touched on these points not to detract from the merit, for it is merit, of what B.S.A.A. have been able to achieve, but to show that no effective comparison can be made between the efficiency of our three Corporations which does not give due weight to the very different circumstances in which they were placed and to the very different problems which they had to solve.
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Now I must deal for a moment with certain problems of wider application In the course of their report the board of B.O.A.C. say:
"There is only one conclusion. Heavy deficits will inevitably continue until the Corporation has the aircraft and facilities to make it financially self-supporting in a highly competitive international business."
I endorse that statement. It is no secret that some time ago the Board of B.O.A.C. represented to His Majesty's Government—as it was their duty to do—the extremely unfavourable competitive position in which they would be placed if they were required to operate interim types of British aircraft when their foreign rivals could use tried American types. Purely from the operator's point of view there could be only one answer to that. But the operator's point of view is not the only one of which account must be taken. His Majesty's Government decided, on grounds of national policy, that approval could not be given to the purchase of aircraft from the United States. In taking this decision the Government were not blind to what it would mean to B.O.A.C. themselves. The issues are so well known that I will not take up your Lordships' time in recapitulating them. But I must make it clear that the Government are determined that the British aircraft industry shall have the opportunity to make good these seven yeas that the locusts of war have eaten. The road we have chosen is a hard road, but I do not think any of your Lordships would say that it is not the right road. So let us not be misled by the comparative results of B.O.A.C.'s competitors who have been free to buy the types of aircraft they require in a free market.
Have you considered, quite apart from the direct operating costs of the aircraft they use, the problems with which B.O.A.C., unlike their competitors, are faced? Nine different types of aircraft mean nine different sets of spares—and spares on the scale required to back up scheduled operations are extremely expensive. It means conversion courses for air and ground crews—and crew training is an extremely expensive item. It means the maintenance of two separate organizations, one to deal with land planes and one to deal with flying boats, with all that that means in the way of ground facilities for flying boats, for which B.O.A.C., as the only flying boat users, are to a large extent responsible. The

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cost to the B.O.A.C. of their marine organization alone exceeded £1,000,000. In these circumstances, is it really surprising that a heavy loss has been incurred? And let me add this. These losses were not unpredicted. They were foreseen as an inevitable corollary of the policy to which I have referred. The figure of £10,000,000 which appeared in the Civil Aviation Act, 1946, was no shot in the dark. When the Civil Aviation Bill was before your Lordships in 1946, my predecessor in my present office warned your Lordships that he could not be certain that the whole of the £10,000,000 would not be required in the first year. But this loss is part of the price we have to pay if the British aircraft industry is to have the chance to produce the new breed of aircraft which we are confident will lead the world.
Another point you must not forget is that our air transport is in a period of development. Now development in all fields costs money. Consider, for example, the millions of pounds poured into the development of our railways a hundred years ago, and how much of that money was lost irretrievably. Any normal commercial undertaking expects to incur development expenses which it meets out of share capital over a long period of years. Had B.O.A.C. been a normal commercial undertaking, they would have said, first, that development would have to wait until suitable types of aircraft were available, and, secondly, that in their period of growth the tasks they could undertake would have to be limited. Would anyone suggest that either course would have been in the national interest?
Let me now mention one or two points in the accounts in this connexion. Take, first, crew training. People speak very lightly of crew training, but this is a large figure. In the case of B.O.A.C. it amounted in the year in question to no less than £1,095,000, and in the case of B.E.A. to £590,500. It would have been normal airline practice to spread these costs over, say, a five or seven year period. We have not adopted that course. The whole cost has been borne in this year's accounts, and the deficit increased accordingly. Another point is that an ordinary commercial company starts life with a share capital which is not repayable during the life of the company. Our Corporations have no share capital, only
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loan capital, which has to be redeemed and on which interest has to be paid currently. Substantial provision has been made in the accounts of B.O.A.C. for amortizing their loan capital.
I should like to say a little more on this point. Since the Corporations are working on loan capital, their accounts bear an interest charge of 2½ or 3 per cent. on the whole of their capital. Moreover, as soon as an Airways Corporation issues stock it incurs another charge on its revenue, which is in addition to anything private enterprise ordinarily has to meet in the early stages of a company's existence. This charge is the provision of annual contributions to a sinking fund sufficient to cover the redemption of stock at the due date, usually thirty to thirty-five years hence. The annual contributions are therefore equivalent to about 3 per cent. on capital, and, together with interest charges, impose on B.O.A.C. (the only Corporation which has yet issued redeemable stock) an annual capital charge of 5½ to 6 per cent. Thus, if B.O.A.C. were to break even, it would be equivalent to the earning of a dividend of at least 5 per cent. by private enterprise operating with the same amount of capital. We have provided not only for full amortization of all assets but also for the redemption of stock. We have, in fact, adopted a policy, not in this connexion only but elsewhere in the accounts, which is not merely conservative, not merely austere. We have adopted a financial policy which is even sadistic. No commercial firm would adopt a policy so puritanical as that adopted by these Corporations.
Having dealt in general terms with a good many points to which it seems to me the attention of your Lordships should be directed, and incidentally having touched upon some of the points mentioned by the noble Viscount, let me come to the specific questions he has put, or as many of them as your Lordships' patience will permit me to answer. He wants to know why the Nigerian Government were forbidden to make a charter agreement with Skyways; why B.O.A.C. operate the service with Halton aircraft at heavy loss, and whether Skyways could have operated with Yorks without subsidy.
VISCOUNT SWINTON: No, with Constellations.
LORD NATHAN: Skymasters. I will deal with the Skymaster point first. Skyways were authorized to buy Skymasters for a limited and specific purpose which did not include this purpose.
VISCOUNT SWINTON: I am sure the noble Lord would want to make the matter quite clear. Assuming they were authorized to buy mem to run on Route A, and they were not required for that, and it was in the interests of Nigeria and the British taxpayer to run them on Route B, why should that not be done?
LORD NATHAN: Skyways sought permission to use foreign currency for the purchase of Skymasters for use for a specific, stated, limited, authorized purpose and for no other purpose. At the time this matter came up for consideration, His Majesty's Government had already refused permission to the British Corporations to buy American aircraft. It would be an impossible position that the Government which refused the Corporations the right to buy American aircraft should allow another organization to compete with them on their own routes with American aircraft, when those aircraft were authorized for an entirely different purpose. At the time Skyways approached the Nigerian Government to operate a service between West Africa and the United Kingdom, B.O.A.C., as I think the noble Viscount said, were already operating a coastal service with Dakotas and were also planning to replace their service with Haltons. We have always held the view, which, I gather from the White Paper, is shared by the noble Viscount, that it is uneconomic to duplicate services unnecessarily. The main responsibility for providing imperial air services devolves on the United Kingdom, and it was an understanding with the Colonies, which has since been formally confirmed, that they would not normally seek to establish services competing with services provided by the Corporations. It was in pursuance of this policy, and of the fact that B.O.A.C. were planning a trans-Saharan service, that the agreement with Nigeria and Skyways as a long-term venture was discouraged.
Nevertheless, a contract was placed with Skyways during the interim period until the Halton service came into operation. It is part of the Government policy—which, again, seems to have been shared by the noble Viscount—that the respon-
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sibility for developing Imperial communications, which are of such importance to us, should be assigned to B.O.A.C. Moreover, under the Civil Aviation Act, 1946, these services are reserved by Statute to the Corporation.
When the war ended B.O.A.C. were obviously confronted with a formidable task in securing the necessary aircraft capacity to develop the Empire routes. In accordance with the policy of using British aircraft for this purpose, the Corporation had unavoidably to acquire Haltons in order to obtain sufficient capacity to develop their network of services. The Corporation did not wish to use this particular aircraft, but it must be realized that this course was unavoidable if they were to secure all the capacity necessary to develop Empire trunk routes. There are a limited number of routes for which these aircraft are suitable, and it was decided to use them on the United Kingdom—West Africa service, as well as to some extent on other routes. Wherever these aircraft were employed, their passenger-carrying capacity was no greater than on the United Kingdom—West Africa service and a loss of operation was bound to be involved. The noble Viscount asked what is that loss. It is approximately £9,500 a week operational.
VISCOUNT SWINTON: A loss of £9,500 a week, when the Skymaster could have done it with no cost to taxpayer?
LORD NATHAN: That must not be assumed.
VISCOUNT SWINTON: If the noble Lord means that the Skymaster would have made a loss, let him say so openly.
LORD NATHAN: I cannot enter into competition with the noble Viscount as to how the Skymaster operations would have worked out. I have told him how the B.O.A.C. operations would work out. It must be obvious that in the situation facing the Corporation, the development of this wide network of Commonwealth services, there were possibilities for a freelance private organization to offer a more economical service on a particular route or section of a route. But the Corporation is entitled to reserve to itself the right to develop the routes for which aircraft capacity has been planned and provided,

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rather than to allow private companies to single out a particular route which they think may temporarily be remunerative. It will be clear on reflection, I think, that if the principle were admitted that for every private company which foresaw the possibilities of running a particular route temporarily more economically than the Corporation were able at the moment to do, the position of the Corporation, charged with the responsibility of developing all the Imperial communications, would have been undermined. The companies would skim off the cream and leave the Corporation with the inherently uneconomic services. I do not think I need take that matter further, because there are a considerable number of other matters to which I must refer.
Reference has been made, quite properly, both by the noble Viscount and by the noble Marquess, to the Report of the Courtney Committee and the use of the Tudor IV. The Government statement annexed to the Courtney Committee's Report deals with the use of the Tudor I. The Tudor II, of which the first prototype was destroyed, has not yet completed its trials, and until more is known about its performance the question of its use must be deferred. The noble Viscount then asked about the Tudor IV. The Tudor IV is an adaptation of the Tudor I, the principal structural change being a lengthening of the fuselage by six feet. The Tudor IV, which has been developed almost concurrently with the Tudor II, has had the benefit of the incorporation during production of modifications found necessary in the Tudor I, following the operational trials of last year. Your Lordships will recall that the first prototype of the Tudor II crashed, but a second prototype has now reached Boscombe Down for trials.
I do not propose to say much on this occasion on the Interim Report of the Courtney Committee. All our efforts must be concentrated, and are concentrated, in getting the aircraft into service. With this in view, and with my encouragement, the Chief Executive of B.O.A.C. has been in touch with the senior executives of A. V. Roe & Company, the manufacturers, and a joint statement was issued on January 19. In case your Lordships did not see it in the Press, I would like to quote that statement here:
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"B.O.A.C. and Messrs. A. V. Roe entirely concur with the Courtney Committee that the aircraft manufacturer and the operator should work together with enthusiasm and harmony. With this in view the Corporation and the Company will co-operate fully in order that the Tudor aircraft should be put into operation on the B.O.A.C. routes at the earliest possible moment. In fact, they are already conferring as to the best means of giving effect to the wishes expressed in paragraph 4 of His Majesty's Government's observations on the Courtney Report."
I think your Lordships will agree with me that that is a good spirit to have developed, and will be pleased to learn of this announcement. I myself am anxious to say nothing, and I am sure others will say nothing, here to-day that might adversely affect the efforts that are being made. I must, however, make one comment upon the observations of the noble Viscount, Lord Swinton, in commenting upon the Government's observations. The noble Viscount suggested that possibly the Tudor I's in question might be converted into Tudor IV's. That is an interesting suggestion well worth taking into account, and I will certainly undertake to the noble Viscount that the suggestion shall have—if, indeed, it has not already had—very careful consideration.
There is another matter to which I must refer in this connexion. In a daily newspaper to-day there appeared a statement—indeed, similar statements have appeared, in actual terms or by inference, elsewhere—to the effect that B.O.A.C. had been ordered to use the Tudor I on the Atlantic. I must make it entirely clear that any such statement is wholly without foundation. No such order has been given, and the position is precisely as stated in paragraph 4 of the Government's observations, and in the joint statement by the operators and the manufacturers, to which I have already drawn your Lordships' attention.
The Report of the Courtney Committee naturally brings me to the important subject, to which both the noble Viscount and the noble Marquess referred, of ordering procedure. It is not quite such a simple matter. The ordering procedure for aircraft involves the reconciliation of the interests of a number of parties—the Corporations, the Ministries, and the manufacturers. These interests are interlocked and they cannot be dissociated or treated in isolation. The Corporations are financially responsible for the purchase of their aircraft requirements, but in certain cases

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the Government have assumed initial liability for the development of new types, a responsibility which, both in this country and the United States, has been acknowledged frequently to be beyond the resources of the operators and the manufacturers. The working of the procedure for reconciling these interests in a manner consistent with their liabilities and responsibilities is being constantly watched, and has been adjusted since the orders for Tudors and contemporary types were placed. Nevertheless, the Government are not entirely satisfied with the existing procedure, and have decided to call into consultation a few men of wide business and administrative experience to assist them in reviewing that procedure.
The noble Viscount opposite asked me about loaned or leased aircraft. No aircraft at present operated by B.O.A.C. are loaned or leased to them, but any leasing arrangements, if justified as an alternative to purchase, would be at an economic rental. The Jupiters, or JU 525, operated for a short time by B.E.A., were hired to them at a low rental. The earlier short-nosed Viking was loaned to B.E.A.C. at an economic rent pending replacement by the later version.
VISCOUNT SWINTON: The noble Lord is much more familiar than I am with this matter, but I notice at the end of the report of the B.O.A.C. a list of aircraft about half of which are stated to be owned by the company and the other half loaned or leased.
LORD NATHAN: If the noble Viscount will leave that point for now, I will see that an answer is given.
VISCOUNT SWINTON: Is every aircraft charged to the Corporation at an economic rate?
LORD NATHAN: I have given the facts with regard to the Jupiter aircraft which were hired at a low rental. If I find my observation erroneous, then I will correct it, but I understand the position to be as I stated it.
VISCOUNT SWINTON: At an economic rent?
LORD NATHAN: Yes. Various considerations have to be taken into account. For instance, at present, with so many interim types of aircraft in service, the prospective life of an aircraft is probably rather on the low side. That takes info
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account the probable future life of the aircraft.
VISCOUNT SWINTON: Thirty-eight aircraft are shown in this list as being on loan. If the noble Lord will look in the B.O.A.C. report, Appendix B, at page 38, he will see that there are 133 aircraft which are owned by B.O.A.C. Then it says: "Aircraft on loan from the Air Ministry," and of those there are thirty-eight.
LORD NATHAN: I think the noble Viscount would like me to give him a definite reply.
VISCOUNT SWINTON: The noble Lord will appreciate that if they are not charged at an economic rent, he is taking a loss. He is giving a concealed subsidy, and the loss of B.O.A.C. is even greater than appears.
LORD NATHAN: My understanding is that these are paid for at an economic rent. As the noble Viscount challenges me on a particular instance, I feel I should verify my facts. I should not like to mislead the noble Viscount. But, of course, I understand the implications of his argument.
With regard to priority reservations, I do not think the noble Viscount clearly differentiated between the releasing of priority reservations and the cancellation of priority reservations. They may be released some considerable time before the due date, and in that event they are given back to the Corporations in order that the seats may be sold in the ordinary way. But where there is a cancellation in inadequate time, as opposed to a release, then the Government Department concerned bears the cost. The noble Viscount would be much mistaken were he to think that these priority seats are limited to Ministers or Government officials. Most of them are reserved at the instance particularly of the Australian and South African Governments for business men. A question was also raised about aircraft replacement. Many of the airfields which aircraft employed by B.E.A. have to use are difficult of access to any known replacement type, and accordingly there is no alternative but to continue existing aircraft in operation. On other services the existing types are being replaced by Dakotas released as Vikings are brought into service on Continental services.

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The noble Viscount then asked me about fares. The position with regard to fares is as follows. There is an International Air Transport Operators' organization, where the international operators meet together and come to some conclusion as to the fares which should be charged. A reduction was made in the fares not very long ago. The United States airlines, as I have already indicated, incurred losses. It is difficult to indicate the full measure of losses of foreign operators compared with those of B.O.A.C. because of the practice in a number of countries of making generous mail payments which reduce the losses. I think I have covered the main questions put to me by the noble Viscount. I have already made large claims on your Lordships' patience, and I have no time to deal with other main aspects of civil aviation, but I feel I should say this to those concerned in private flying, in which I take a great interest. I can make no promise except that the interests of private flying will continue to engage my close attention, and that I will sympathetically consider any proposals designed to foster the well-being of this important part of our civil aviation, in so far as they are practicable, in the situation in which we find ourselves.
I have indicated to your Lordships something of what has been achieved. It was always envisaged, as far back as 1946 when the Civil Aviation Bill was before Parliament, that in these years of development heavy deficits would be unavoidable. I have explained in general the reason why these deficits have occurred. Indeed, I should be lacking in frankness if I did not warn the House that we are not at the end of our difficulties. We have accepted with open eyes the consequences of "flying British," which will involve continuing loss for the next few years until our new types on which we rely to lead the world become available. But the Government is determined that there shall be no element in that loss which powerful management or ruthless economy control can obviate. I realise, of course, that the House is disturbed at the results disclosed by the accounts of the Corporations. We are all to some degree disturbed. I have shown that unavoidable causes lie at the root of these results.
I ought perhaps to say to the House that I have observed in the Press various suggestions about the fundamental
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re-organization of civil air transport. I think it may be assumed that any such proposals, which would undoubtedly involve amending legislation, would emanate from the Minister of Civil Aviation. I have made no such proposals. Civil aviation arouses considerable interest in Parliament, but fortunately not political antagonisms. We all have the common objective of making our air transport the success which the enterprise, skill and resourcefulness of our people can make it. We have the finest air crews, maintenance and traffic staffs which the world produces. They are all loyally doing their utmost to carry out a policy dictated by the national interest and by the legacies of the war. By their efforts, in the face of these handicaps, they have already achieved marked success, in establishing in the air a reputation for safety and quality of service such as that for which we are traditionally renowned on the sea. The Government does not seek to evade criticism of its policies even if such criticism may prove to be groundless. I am sure we shall at least unite in avoiding criticism which may be misinterpreted by those responsible for carrying on the work as a reflection on their efforts. They are deserving of the fullest measure of our encouragement and the fullest measure of our confidence in their ability to triumph over unavoidable temporary disadvantages. It is for us to see that these disadvantages are indeed only temporary, and it is to that task that we bend ourselves.
5.1 p.m.
VISCOUNT KNOLLYS: My Lords, I find myself to-day in a rather unusual position. For the first time for many years my lips have become unsealed. I am taking the opportunity of speaking in this debate with the object, not of striking out wildly in various directions in virtue of any knowledge I may have accumulated, but of trying to add to the general information and to give some further information on various factors in the development of British air transport. I was very glad that, so far as the Corporations were concerned, the noble Lord, the Minister of Civil Aviation, was able to fill in some of the gaps in the information regarding their results and the conclusions which have been drawn generally from those results. I was particularly glad that he went back to some of the fundamental questions of policy and to the objects with which, as the noble

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Viscount, Lord Swinton, will remember, we began several years ago. Our main object was to put civil aviation on the map. It was to ensure that there was an effective British air service linking the whole of the world and particularly the various parts of the British Commonwealth. I think there was No 1llusion on anybody's part but that, if the only aircraft to be used were to be the British ones which were available, we were bound to pay a heavy price for our policy. The price, as the Minister has said, is now being paid.
But I think it is only fair to those who are concerned with civil aviation now, and particularly to the staffs of the Corporations who, under the greatest difficulties, have been labouring during these past few years to produce British air lines, and very worthy ones at that, to point out what have been the achievements and the developments. It has been suggested that very little has been obtained for the £10,000,000 which has been lost. Incidentally I was surprised that anybody should wonder that the figure was in the neighbourhood of £10,000,000, because only a comparatively short time ago that very figure was mentioned, and further deficits of a rather similar amount in the future were allowed for. But it is a question of what the country has got for its money. I need not go further into that now, because the Minister has covered the point fully and filled in some of the gaps which may have been left in the references of previous speakers to the deficits which have been published As to the cause of the deficits, it is true to say that it is always rather dangerous to put forward too many reasons for losses. That point was made very well, if I may say so, by the noble Viscount, Lord Swinton. But as one who has experienced, at extremely close quarters, those particular difficulties, I might mention one or two points with which everyone may not be familiar.
Two of the main problems which have been mentioned are those of uneconomic aircraft and of scattered bases, and perhaps I may say a word about the second one first. It is not perhaps realized that every passenger which B.O.A.C. carries, to and from the far parts of the world, embarks and disembarks at Heathrow Airport, London; and until very recently, and then only to a small extent, it has
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not been possible to stable, so to speak, at the point of embarkation and disembarkation, any of the aircraft which actually carried those passengers. These aircraft have been stationed at four different bases in England, at a base in Montreal, at a base in Durban, and at a base in the Middle East. Imagine what the position would be with a railway company in such a case, not only in cost but in loss of efficiency. There was indeed a time when very active preparations were being made for bringing Tudor I into service and the preparations were well advanced, and the aircraft had to be put in the only place which we could find any-where, and that was at Ringway aerodrome, Manchester.
A great deal has already been said about the question of uneconomic aircraft, but one point has not been brought out. Perhaps the Minister or whoever is replying to the debate may be able to give your Lordships a rough estimate as to the amount of the deficit or loss which would be eliminated, either in the past or now, if it had been practicable for the Corporations to use some kind of economic aircraft such as are used not only by their competitors, the K.L.M. and other European airlines, but even now, I am sorry to think, by their colleagues, the Qantas, operating in Australia, and the South African Airways in South Africa. I believe that the figure is very large. May I quote an authority who will, I think, meet with general approval, namely, somebody from the shipping world—people who are always supposed to be able to run airlines better than anyone else. I quote from a letter which appeared in The Times on January 8 from Major Thornton, in which he speaks of the possibility of a reduction of the operating loss from £7,000,000 to about £3,500,000 if aircraft had been designed for the special job. His remarks illustrate what uneconomic aircraft really mean. Major Thornton says in his letter:
"Ask a shipping man how much he would like to operate a cargo ship of 7,500 tons gross but capable of lifting only 4,500 tons weight of cargo, and watch his face."
I think it is realized that it is a very proper policy to use British aircraft, but that that policy must be paid for. It is only fair to the Corporations, however, that we should in some way be able to draw a distinction between those parts of the results which are due to national policy and those parts which are due to

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the ordinary commercial functions of the Corporations. If that can be done, and I believe it can—I do not think it is impossible for a competent accountant to produce these figures and then for them to appear in the annual reports—it would enable proper criticism to be directed to the results of the Corporations so far as their ordinary commercial operations and functions are concerned.
It is difficult to divide up the very large deficits of two of the Corporations into the amount which can be taken as a fair test of their ability and the amount which, on account of national policy as regards aircraft, they cannot control. I hope it may be possible to give these figures, if not now, in the future. There must be, of course, ways in which such a deficit could be largely reduced by the Corporations themselves if they were entirely free in their actions. There may have been proposals, as indeed there were at one time, as to how that could be done, although they may not have been recorded in the policy of the Government.
I would like to say rather more than has been said up till now on the all important question of equipment—in other words, aircraft. The question of equipment affects every phase of the Corporations' activities and is the primary factor in the whole of air operation. I will not to-day refer—I do not think it would be appropriate for me to refer—to what is in the Report of the Courtney Committee, because I myself might be held to be involved in it; but I will allow myself to refer to one point in it. Your Lordships may well remember debates some years ago regarding the great activities of the very energetic Director-General of B.O.A.C. at that time, General Critchley. His energy and activity were the subject of questions both in this House and in another place. Your Lordships must have been very interested in the criticism which was made at that time that there was a lack of drive in the attitude then of General Critchley and the B.O.A.C.
I would like to say something on a point which is not mentioned very much in the Report, but only rather indirectly, and that is the. all-important question of the procedure in ordering aircraft. That matter has been referred to by the noble Viscount who opened the debate and also by the noble Marquess, Lord Reading. I would like to support very strongly what
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has been said in that regard and also what has been said by the board of British South American Airways in their report, which puts the points of difficulty very clearly indeed. It is a question of finding the right procedure in this matter which, in my opinion, has had a great effect upon the difficulties of the past. I think I might be allowed to say that, looking back on it now, I always felt that the greater part of the difficulties in the development of, for example, the Tudor, would never have occurred had there been more direct responsibility placed on the Corporation. Had it been possible for them to talk those matters over, man to man, round a table and, what is more important, to take a final decision, they would have been enabled to get over many of these difficulties. It is the hardest thing in the world, when one is trying to get over rather difficult negotiations, to have to hold back and be constantly looking over one's shoulder.
But that is the past. Let us concentrate on what can be done in the future, and try to see how matters can be improved. The first thing one has to realize is that there are five parties to the development and production of aircraft for the air routes. There are four very active ones and one which is—but not for long—a sleeping partner: the Ministry of Supply, the Ministry of Civil Aviation, the user, the manufacturer, and, in the background, the Treasury. When I have been engaged in negotiations which were of a rather odd kind I have been reminded of a game of bridge. There were the two partners on either side—one a very senior partner and the other a very junior partner. On one side there were the Minister of Civil Aviation and the user, and on the other side there were the Minister of Supply and the manufacturer. I can say that the bidding was very much in the hands of one partner on each side, and I think I know from experience who was generally the dummy! Direct contact is all very well but it is not the least bit of good unless it is effective contact enabling decisions to be taken direct between the parties concerned.
In the observations of His Majesty's Government on this Report, the point has been made that the Corporations have been given, at some date which I did not find it easy to recognize, complete financial responsibility, and there was an allusion to the Self Committee, which in

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itself was a very valuable Committee but is not the solution to this problem. The giving of financial responsibility without power seems to me to be likely to make the position of the Corporations worse. I wish to be constructive. I would like to put to your Lordships, and perhaps for the consideration of the Government, a more constructive approach to the problem. I recognize from the very start, as I think all those connected with the Corporations have recognized, all that has to be done in the early stages in the way of consultation and all the various factors outside the direct interests of the airline, the user and the manufacturer, which have to be taken into account, but I still think that a way can be found round the difficulties. If we could carry it through on these lines, I suggest that we would get somewhere near the answer.
We have first to clear up the question of the broad amount of financial outlay which is involved in the production of an aircraft. The relationship between the airline operator and the Ministry of Civil Aviation comes naturally through the discussion of the Estimates in another place. In the first place, the size of the undertaking and the cost of its provision can be settled. You must, of course, clear up the question of military needs and also the question of the importance of delays to the aircraft industry as a whole. You must be quite sure that that is settled so that the operator can then deal with the aircraft manufacturer, who must not have too much imposed upon him, if he has a large amount of military work to do as well as the production of civil airliners. Having cleared up those matters very properly with the Government Departments concerned, then, and from then onwards, I can see no reason why there should not be full financial, technical and contractual responsibility between the user and the manufacturer, with the power to take effective decisions within the broad policy which has been agreed.
There were always problems about modifications, whether it was in the Air Force or in airlines before the war, but it is possible to solve problems when two people know that they can take their own decision after discussions. That is what one means by having effective direct contact. I think that we should be able to solve many of the problems which are facing the Government, and clear up
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these matters, both in regard to policy and finance, and yet give effective power to produce the aircraft to the two people concerned at that stage, the user and the manufacturer. I am perfectly sure that if we do that we shall be able to get the right aircraft at the right time. If the matter drifts on under the present conditions we are likely to have a constant repetition of the problems which have been illustrated by the Tudor Report.
There is one other point which I would like to make. This debate to-day, I am sure, has been invaluable from the point of view of everyone. I am sure that the same will be true of debates which will take place in another place later on the reports of the Corporations. But after the matter has been fully ventilated and discussed and criticized—and no one would have any objection to proper criticism in these debates—I would ask this question: When are those who are really responsible for operating airlines, and who face immense difficulties in every part of the world, going to have a real opportunity to settle down to do the job for which they are there? I would not suggest for a moment that there should not be proper criticism. I say only that it should not be at too frequent intervals and at too regular times. The inquiry into the Tudor I was very necessary, and there may be others; but I would ask your Lordships to think for a moment of the effect on those people who are trying to do their day-to-day work in running airlines.
In connexion with that, a recent incident will illustrate the point. The Courtney Committee were set up on September 27. They had an extremely difficult and full task to fulfil, but the Report was signed on December 11 and was published on January 19. It is to be followed by another Report on a slightly different aircraft from the same stable. There are, I believe, eight different marks of Tudor, and if there are to be a series of inquiries into each of those, and separate Reports, with all that that means in regard to effort and thought for building for the future, I think it will impose a very big and perhaps unnecessary handicap on the airlines themselves. There is, as your Lordships will know, an immense amount of work to be done in regard to the preparation of material and discussion, particularly when it goes back four years into the

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middle of the war, as it does in the last case. Naturally the airlines want all the help and co-operation they can get.
Those are the facts, and they are extremely disturbing to any smooth-running organization, or one which those concerned are trying to make smooth-running. I wonder whether we can find some way of having a close season for pulling out by the roots the various plants of civil aviation to look and see how they are growing, to see exactly why any individual crop is slightly withered, or why another has produced too many leaves and not enough flowers. I make that appeal mainly on behalf of the magnificent staffs of these Corporations throughout the world. Those at the top of these Corporations—the Board and, if I may say so, particularly the Chairman—are there for the purpose of taking the burden of this kind of public statement and criticism. It is their job to do that. It is not of them that I am thinking, although they have my sympathy; it is of the whole of the rest of the staff, who are most enthusiastic and desperately anxious to do a good job in what they very rightly look upon as a great national undertaking which needs to be developed for the benefit of this country.
Those of your Lordships who have had experience of the running of a large organization, as many of you have, will realize what a delicate flower is the enthusiasm, the loyalty and the esprit de corps of the staff. It is very delicate indeed. It is very difficult to build up. That spirit is there with the staffs of the Corporations now, and I hope they are going to have a chance to feel that they can look forward and apply their energies with some continuity, without reading regularly every week in the papers how extremely inefficient in one way or another their managers are. That, I think, is a most important matter in making a business a success—the human side and the feelings of the staff in the matter. It is on that account that I make that plea to you, to give all those fellows a real chance to be able to get on with the job.
5.28 p.m.
LORD KERSHAW: My Lords, in accordance with the custom of this House I must declare that I am a member of the British South American Airways
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Corporation, the Corporation that has been the subject of very generous tributes by the noble Viscount who initiated this debate. Unless I am mistaken, the accounts in the report which the House has been discussing to-day refer to a period before I was a member of the Corporation. Therefore, whatever tribute may have been paid to my colleagues could not possibly refer to me. I would, however, like to pay this tribute. In the six months that I have been a member of this Corporation I have come to certain conclusions which I feel entitled to ventilate in the House at this time. Before I do so, however, I would like to join in the tribute that has been paid to the officers and the staff of the Corporation. From a long experience of public and commercial life, I venture to say that no undertaking could have officers keener, more enthusiastic, and with more initiative than my colleagues who are responsible for the day-to-day administration of this Corporation. They would be the first to say that the pleasure which they have derived from the progress of their Corporation is limited only by the difficulties with which the other Corporations have been faced.
Parliament, in its wisdom, intended that the Corporations should be very much more than air transport organizations. They had to be responsible for the development of civil aviation as such. A loss was foreseen and provided for, and it is, I think, a compliment to those who made the estimate of loss that the loss over the whole is only 2 per cent. above the estimate. I repeat that when the Act of Parliament under which the Corporations work was passed, Parliament understood quite clearly that in view of the extra-commercial services that the Corporations had to undertake there was bound to be a loss. But the moment the accounts are presented the whole world appears to forget these extra-commercial responsibilities which have been placed upon the Corporations. It is quite natural that it should be so; generally speaking, one cannot complain about it. Naturally, people who look at accounts and reports relating to these Corporations cannot avoid applying the ordinary commercial test which they would apply to the balance sheet of an ordinary commercial enterprise. That is done even in quarters where it can be least excused.

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No doubt your Lordships will have listened to the news broadcast yesterday, in the course of which the accounts of the British South American Airways Corporation were mentioned. The only comment from the B.B.C. was to the effect that the accounts of that Corporation had shown a profit while the accounts of the others had shown losses. Nothing is said of the research carried on by other Corporations, or of their development services which are of such value to the nation as a whole. Who would dare to assess the value of the work that is now being undertaken by these three Corporations if ever there should be another Battle of Britain? The tendency to regard the Corporations as purely operational undertakings, and to look at their profits or losses from the standpoint of an ordinary commercial enterprise—that is to say, as the only measure of the efficiency or otherwise of the administration—is quite wrong. The emergence of a profit or a loss—and this is a matter which has been touched upon already by the noble Viscount, Lord Knollys—undoubtedly has a psychological effect on everyone associated with the industry, and not least on its rank and file. It is not good for the morale of the workers, the staff or the executive, that the making of a profit should be utterly impossible under this or any other system.
The noble Viscount, Lord Swinton, who, I am sorry to note, is not now in his place, was careful to interrupt the Minister to make quite sure that there were no further losses, hidden losses, in the accounts. The noble Viscount must have known that there were any number of hidden profits to the nation in the accounts. I agree with the noble Viscount, Lord Knollys, who has had much more experience of this business than I, that with the accounting knowledge at our disposal it should be possible to devise a system to separate more clearly factors which can be regarded as purely commercial from others. In the latter category I include research, design development, political factors, national, Commonwealth and other factors, operational and otherwise, all of which are vital to the nation, but which, except to a limited extent, would not be the concern of an ordinary commercial undertaking. There is, of course, considerable detailed analysis in the accounts, but there is no clear division between that which is
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purely commercial and that which is extra-commercial.
The principle of more accurate segregation of these factors in the accounts is not new. It is significant that in the report of the British European Airways Corporation on Page it, they say:
"our technical experts are undertaking practical research into two projects which may govern the trend of civil aviation in the future. … Your Ministry has recognised the value of this research work by arranging that the cost of the experiments will be borne by the Government departments concerned, and will not fall on B.E.A."
I would like to see an extended recognition of these services, which it appears are largely responsible for the deficit in the accounts. There should be a clear recognition of what is purely commercial and what is required by the nation, either for the development of aircraft as such or for the maintenance of communications which could in no circumstances be neglected.
The same report mentions a matter which I think ought to be considered, and that is the relatively high scale of landing fees charged in this country; also the fact that radio navigational and blind approach aids are inadequate. Then the report goes on to say, as is. perfectly true, that "the foundations of our success as airline operators in the years ahead must be laid now." But by whom? By the Corporations which the public, and even people better informed than the everyday public, judge by the balance sheet at the end of the year, or by the Government Department which is subject to Parliamentary control on the development charges? I believe that the moral effect on the Corporations—as on any other undertaking, for that matter—of not being able to contemplate, even in the remote future, a profit on their undertakings is bad. It is bad for the personnel from the top to the bottom. Private commercial enterprise might appear to be able successfully to run the business of air transport, but, as I think was mentioned by the Minister, they can run profitably only by eliminating all that I have referred to as extra-commercial factors and by limiting their operations to those things which are commercially profitable at a given moment of time.
The nation has a much wider interest in civil aviation than that Parliament has said so. There is the vital interest of the

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air communications with the Commonwealth as a whole, and, as I have said, there are other, to many of us most disappointingly, more tragic reasons why Britain cannot neglect aviation. I do not want to detain your Lordships at this late hour, but I would like to throw out a suggestion. It is this. It may be that because of the youth of the civil aviation industry, it is bearing a very much higher educational cost than any other industry in the country. It has not been in existence long enough to draw in its youth at the bottom, and gradually educate them up into its own sphere of work and technology. I mention this only because I believe it may be a factor tending to produce the deficits which, as I have indicated, it might be possible to segregate more clearly.
One other point was mentioned by several speakers, and I am glad that the noble Viscount, Lord Knollys, with his greater experience, also advocates it. I have quite clearly come to the conclusion in the short time that I have been associated with this task, that it is sound business to eliminate the Ministry of Supply from this work. I gather, from what the noble Lord, Lord Nathan, said, that the Government intend to look closely at that matter. The very fact that we are desirous of concentrating all our Government connexions in the Ministry of Civil Aviation is an indication that our relations with that Ministry are of the very highest and best order. That is not to say there are no differences of opinion at various levels within the Ministry and with the Corporations; but no Minister, certainly not a Minister associated with the Labour Party, would desire that the Corporations should be bodies of yes-men, kow-towing in every way to what the Minister wanted. We have these differences of opinion, but we are all convinced of the sincerity of everyone concerned. It cannot be disputed that everyone wants to provide for this country a lead in civil aviation.
5.43 p.m.
THE EARL OF SELKIRK: My Lords, I listened with great interest to what the noble Lord, Lord Kershaw, said, but I do not think it is desirable to emphasize over and over again that there is no chance of making aviation balance. It is not simply a search for profit; cost accounting is essential, and that is why I think it is desirable that there should be some
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approach to a balance. After all, it is in the payment of fares that the public expresses its wish to travel and it is when the aircraft are non-commercial that the public does not pay enough. Therefore, the requirements of the public are not being met. The requirements of the Corporations are totally inadequate. When the noble Lord, Lord Nathan, says that B.O.A.C. have too much on their hands, I agree. It was his predecessor who gave them more in their hands than they could manage. I deprecate the reference to the estimate of £10,000,000. That was not an estimate; it was a safeguard. I also deprecate bringing in such matters as the Battle of Britain. That has nothing to do with it. It is an entirely different subject.
We have heard much about the disadvantages that B.O.A.C. suffer, and it would be fair to recapitulate all its advantages. It is a statutory monopoly, with power to do almost anything it likes. The Minister took ample powers under the Act. He collected what he thought was the cream of civil aviation traffic, and if he has failed to produce what he wants it is not because he lacks power but because he lacks the capacity to use those powers effectively. The Corporations are not pioneers of these routes. They were more or less pioneered not only before the war but also by the Air Forces during the war. A great volume of development took place at the public expense during the war, although some of it was not entirely what was wanted and changes have had to be made. It was basically, however, of tremendous value to our airfields. The number of trained personnel, although admittedly they require conversion, is considerable. The impression one gains from these advantages is that there must be some very heavy millstones hanging round the necks of the Corporations.
The first is the supply of British aircraft. That is a terrible thing to say, but that is one millstone. The second is the manner in which they are assisted by the Ministry. I say that with regret. If we look at the Report on the Tudor we see that the procedure for the ordering of aircraft was altered as long ago as September, 1946. I should like to refer to the reply given to the Select Committee on Estimates by the present chairman of B.O.A.C., when asked about the difficulty, of ordering aircraft. He said:

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"The difficulty in answering that question absolutely specifically is that we have nothing in writing from anybody."—
and later on:
"I think perhaps we have reached a gentleman's agreement not to try to barge our way into industry."
I wonder what sort of agreement that "gentleman's agreement"is? I think it is a genteel way of saying, "We are just muddling through."
The noble Lord, Lord Nathan, said they had been puritanical and sadistic about the Corporation's accounts. There are one or two items, particularly in B.E.A.C. accounts, which I think hardly merit these terms. On a company with borrowed capital of £2,000,000, there is an estimated liability of £2,000,000. I doubt very much if public accounts ever contained such a statement in the history of commerce in this country. The impression one has is of a complete muddle. One point I should like to press on the Minister in regard to accounts, and I think it is essential for aircraft accounting, is that we should know exactly the value of aircraft which the Corporations have at their disposal. There is a statement in the accounts, but I think it is perfectly clear that it does not include a complete valuation of all aircraft. B.E.A.C. are stated to have £400,000 worth of aircraft, but a casual examination of the aircraft listed shows that there is at least £3,000,000 worth of aircraft there. B.O.A.C. accounts are the same, but the discrepancy is not so great.
There is nothing in these reports to show the flying hours per aircraft. That is fundamental to successful operation, and we have no knowledge of what these hours are. In the B.O.A.C. report it is stated that one type of Constellation averaged 3,000 flying hours a year. That is possibly the minimum on which an aircraft can be operated commercially. That is very satisfactory, but it should be known what hours all aircraft are operating. It would seem that the Tudors are doing something like 1,000 flying hours a year. I feel obliged to say one word about the Tudor Report. The noble Marquess, Lord Reading, has described it as horrifying, and I entirely agree. It is a showing-up which is certainly very shocking, but I feel that the Tudor Report has criticized the one sign of clear-cut decision. It criticizes B.O.A.C. because it has refused to accept the Tudor I.
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That criticism, I think, is unfair. I do not see how at that date, in the spring of 1947, B.O.A.C. could have done anything else but refuse to accept that aircraft. It was commercially and economically unsound. Two years before, the Constellation had been flying, and this aircraft, I believe, is still without a certificate of airworthiness. I may be wrong about that, and if I am I shall be corrected. I feel that in criticizing B.O.A.C. for taking a decisive action, the lack of which is shown throughout the whole Report, the Committee are putting the blame where it should not be. I am not one for defending B.O.A.C. generally, but in this particular they took the correct action in regard to an aircraft which could not have been used, except at considerable cost to the taxpayer of this country. It is stated that one reason why they ought to have used the Tudor I is for the manufacture. If I may say so, it is quite a different thing for the Government to order B.O.A.C. to use it, and for B.O.A.C. to accept it on their own responsibility. I would respectfully suggest that this country should have followed the example of the action taken by Canada, in which Trans-Canada Airways flew Lancastrians for two years, thereby gaining experience, no doubt equally valuable to themselves and to the Avro Company, and then went over to their North Star, which is substantially a satisfactory aircraft, and, contrary to the statement in this Report, is now pressurized. At all events, the new models are being pressurized as they come in. That is an aircraft built in Canada, with a Rolls Royce engine from the United Kingdom. I do not see why we could not have followed that example.
I think it is a great mistake to assume that aircraft cannot be operated commercially. Obviously, commercial operation should meet the interests of the community—I entirely agree with that—but there is no reason why it should not do both. At the moment, operation charges are rising, and the services are inadequate. I ask those who do not think the services are inadequate to try and book a passage to New Zealand or Johannesburg. If they want to go to New Zealand in the next two months, they will have to go via America. I think it is deplorable that we cannot operate economically in this country. Sabena, the Danish Air Lines and K.L.M. have done so, and aircraft have been operated for many years in

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America at a much lower cost. I have here a statement which refers to coal, but it appears to have some reference:
"Certainly, we must avoid waste. Certainly we must keep down costs. … But to deduce from these important platitudes the doctrine that every nationalized industry must necessarily pay its own way is to make a mockery of Socialism."
Is it a fact that it is expected that these industries will always remain subsidized, or is it not?
5.53 p.m.
LORD POLWARTH: My Lords, it was not originally my intention to detain your Lordships with any remarks, but having heard the debate this afternoon I feel that there are a number of points which still require to be mentioned. The debate has been carried on so far almost entirely by members of your Lordships' House who either occupy or have occupied positions concerned with the management and direction of airlines. I think the only previous speaker who has spoken from the point of view of the taxpayer and passenger is the noble Marquess, Lord Reading. It is from that same angle that I wish to raise one or two points. I hope the remarks of the noble Viscount, Lord Knollys, about sparing the Corporations for a while from some criticism, are not intended to apply to this debate, because there are remarkably few opportunities that the taxpayer and passenger have of raising points which vitally concern them. I regard this occasion as something in the nature of an annual general meeting, when we are able to examine and criticize the annual accounts.
LORD MORRIS: It is a very poor attendance.
LORD POLWARTH: The only exception seems to be that this is more in the nature of a protest meeting of the preference shareholders, because we are in fact unable to vote the directors out of office.
LORD MORRIS: The Chairman is not here.
LORD POLWARTH: I would like first to raise two points on which I want to question the accuracy of the reports, and I will follow them with a number of points which I hope will not be destructive criticisms of the operation of our
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internal air services. The first point concerns the report of B.O.A.C. Your Lordships will have seen that on page 10 where the report discusses the maintenance facilities, it mentions that for some time past the aircraft on the North Atlantic service have been maintained and overhauled at the base at Montreal. The statement made is:
"Apart from the advantages offered by Dorval, no suitable base was available in the United Kingdom, a fact which has been confirmed by subsequent examination."
That is rather a remarkable statement, if it means that we continued to use this base for maintaining our aircraft, and did not go into the question of whether we should maintain them here until some time afterwards. It seems apparent that a very large number of dollars must have been spent on the maintenance and overhaul of these aircraft—and that at a time when, because of the dollar position, the Government refused to allow the purchase of more than five American aircraft.
I want to ask the Minister (and as he is not here I hope that one of his colleagues will bring it to his attention) whether serious investigation was carried out into the possibility of maintaining these aircraft in this country. I want to ask him whether be investigated the possibility of maintaining them at Prestwick, in Scotland. I believe the facilities were available at this base. It is a fact that the company operating at this airport endeavoured at one stage to purchase Constellation aircraft for their own use, and because of the currency position were not allowed to do so. Do you think it likely, my Lords, that they would have endeavoured to purchase these aircraft if they had not the facilities for maintaining and overhauling them? That is my first point.
My second point concerns the report of the British European Airways. Paragraph 31 of the report deals with the charter of aircraft and crews. As your Lordships know, on a number of occasions B.E.A. had to charter aircraft from private operators to enable them to maintain the services which were scheduled. In paragraph 31 a remark is made which I consider to be rather unfair to the companies that provided these charters. It is said there: "We found these charters to be uneconomic." I do not suppose your Lordships have examined the actual figures quite in the detail that I have, but from the number of service hours

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flown by aircraft of charter corporations, compared with the cost of these charters, you will find that the rate paid for them has been in the neighbourhood of about £61 an hour. I am told, in fact, that at the standard rate for a Dakota aircraft—and most of the machines were Dakotas—if you compare the £61 rate with the cost of flying the Corporation's own aircraft, the equivalent sum covers only items under the heading of standing charges, maintenance and overhaul, flying operations, and, finally, the passenger service.
The amounts under those headings alone come to over £61 an hour, and the total expenditure of the Corporation on its own operations works out at something in the neighbourhood of £150 an hour. In those circumstances, I think it is most unfair to charge the charter companies with having provided uneconomic hire. It is also stated in the same paragraph that the regularity and other features of the arrangement were unsatisfactory. I think no further comment is needed except to say that in the majority of cases these charters were necessary in order to fill the irregularity which arose from the Corporation's own services.
There are just a few points of detail concerning B.E.A. internal services to which I would like to draw attention. I hope your Lordships will not think they are too much points of detail, because, as I said before, there are very few opportunities of raising them. Thanks to the offices of B.E.A., I was able this morning to breakfast in Edinburgh and to lunch in your Lordships' House. I was conveyed down here in great comfort and with great efficiency, but I was extremely disappointed to find that the complement of the aircraft consisted of myself and three other passengers—this in a Dakota capable of carrying twenty-one passengers. I would like your Lordships to think of the reasons which cause this state of affairs. First of all, there is no doubt that in our winter climate passengers on the whole are a little chary of taking means of transport which they cannot be certain will land them at their destination in time to carry out their obligations. But I think there are a certain number of other points to which attention could be given, and which would result in the more economical running of these internal services.
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I know that a number of people think that this Island is too small for the economical operation of internal services, but I am quite certain that that is not the case if attention is given to points of this nature. The first, which may sound strange at a time when the Corporation is losing a large sum of money, is that the fares are too high. They were in fact raised some two months ago. I did not notice very much publicity being given to the fact that they were raised, although a great deal of publicity was given at the same time to the fact that rail fares were raised. The increases vary on different routes. In the case of the Edinburgh to London and Glasgow to London routes the rise was rather more than one-sixth of the fare. I am quite convinced that this level of fares—which is, in fact, well ahead of the first-class railway fare—will have the opposite of the desired effect. It will not bring in more revenue but will choke off the traffic. Servants of the Corporation to whom I have spoken say that they have noticed a distinct fall in traffic on some of these internal lines since the rise in fares. As matters stand at the moment, the only people who can afford to use them are those who have their fares paid either by His Majesty's Government or by their own businesses.
The second point is the question of the routes which are being operated. A large number of them, particularly in the North, are admirable and most essential, but certain of them are operating in direct competition with some of the most efficient rail services in the country, and I am referring particularly to the services from London to the North. As things stand at present, there is very little advantage in taking the air service as compared with travelling by night. Indeed, the loss of daylight time is considerably greater if you travel by air. I think the Corporation would do well to be much more bold in its experiments with other routes—routes of a cross country nature which at present present formidable journeys by rail. I should like to see some form of route from the North-East to the South-West of England. Similarly, there is a route which was operated for a short time last year, but which has now been taken off, from Newcastle to Carlisle and Belfast. There are other possibilities in Scotland. There could be through services from Edinburgh to the West, and

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particularly to Northern Ireland. There could be services from Edinburgh to Inverness. Most of these are journeys which occupy at least a whole day in travelling by the existing facilities, and which could be done by air in a matter of a few hours.
I know that the attitude of the Corporation at the moment is that there is not the demand for these services. Well, there will not be a demand until the facilities are provided. And it is not just a question of providing the service—it is a question of advertising it and pushing it. I do not mean just putting a few advertisements in the Press giving details of the time-tables. Much more progressive advertising is needed, giving details of the advantages which could be gained from using these services. In that connexion I should like to see co-operation between the Corporation and the two Tourist Boards. We hope to bring a lot of tourists to this country this summer, and we hope to bring in some dollars with them. I should like to see joint advertising by the two to show how best use can be made of these services. The other objection, I dare say, is that there are not enough aircraft. I would suggest that the Corporation should charter aircraft from the private companies to run these services. That is not contrary to the spirit of the Civil Aviation Act—in fact, it is expressly provided for—and at present, in the absence of such arrangements, companies in this country are being obliged to go abroad to find work for their own aircraft. I suggest those aircraft would be much better employed being used by the Corporation in this country.
My next point concerns the types of aircraft which are in use on the internal services. As your Lordships probably know, a large number of them, particularly in the north, are still being operated by the Dominie aircraft. The number of services in Scotland and the Islands looks very impressive in the time-table, but it is not quite so impressive when you realize that the capacity of these aircraft is six seats, and that a large number of the services—as I discovered to my own cost—would carry a Lord of only four passengers. I hope the noble Lord, the Minister, or somebody else, will be able to tell us what are the plans for replacing
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these Dominie aircraft on the more local and less frequented services, because I think there is a great need for an intermediate size of aircraft of something up to ten or twelve seats. The Dakota is too big for some of these remote services. I know that some of the outer Islands and other places have magnificent airfields, a legacy of the war, where you could land any aircraft you like. But there are a number of other places to which services must be developed, and it is no good relying on bigger and larger aircraft, because we simply cannot afford to keep up the size of airfields for these internal services. I hope we shall hear what type of aircraft is coming forward to fill the place of these Dominie aircraft, and how soon we may expect them.
Finally, at the risk of being slightly parochial, I want to try to find out what is the position about the airport for the City of Edinburgh. Numerous promises have been made on this subject. Some time ago we were told that work was going ahead for extending the runways so as to take Vikings and for giving private maintenance facilities. At the moment, there are no maintenance facilities whatever. Nothing much appears to have been done, but I hope we shall be able to hear when in fact something is to happen, and when something will be done. Another point, which again may sound local but which I consider is of wider importance, concerns the International Musical Festival which is to be held for a second time next summer in Edinburgh. Last year we were promised on several occasions that services would be provided direct to Edinburgh from other centres in this country and the Continent. In fact nothing has happened about those services, and I never saw any reason given why they were not provided. Is it too much to hope that this year, when we hope to make a major international event of this festival, some such air services will be provided?
I hope these criticisms have not been entirely destructive, and I should like to emphasize what several other noble Lords have said, and that is how very much we owe to the servants of the Corporations, the men and women who are doing the job. One thinks of many instances of courtesy and help, and perhaps I may be allowed to record two. One is of a navigator who insisted on providing me with a map and showing me exactly where we

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were going, on a journey round the Outer Islands. Another was of a commandant, again in one of the Outer Islands, who sent a telegram for me to inform some friends of ray time of arrival—and insisted that it should be paid for by the Corporation. I gather that is strictly against the rules! That is the sort of thing which constitutes service, and it is the sort of thing too that will sell our civil aviation. I only hope that that spirit of service will not be stifled by the system.
6.11 p.m.
LORD BALFOUR of INCHRYE: My Lords, I do not intend to detain your Lordships for very long, because the debate has already covered a wide range. Nevertheless, I think we are entitled, as the Opposition, to criticize some of the statements we have heard from the Minister this afternoon. But before making any criticism, I would like to associate myself most heartily with the tributes that have been paid to the air crews and the ground staffs of all three Corporations, who have carried out their duties, sometimes in spite of the Government, in circumstances not at all easy. If we must criticize some aspects of our civil aviation, let us set on the credit side the high standard of safety that has been maintained throughout the period which we are discussing and, indeed, up to the present. I am sure it is the wish of all noble Lords on all sides of the House that we should make "Safety first, Safety second and Safety third" the main plank of our civil aviation policy, irrespective of what Government it comes under.
This is, after all, a special occasion, and I think we are entitled perhaps to sit a little late, as we are doing, because it is the first time that we have debated a loss on one of the many nationalization measures that have been passed by this Government since the General Election—though I hazard a guess that it is not going to be the last time that we shall be debating a nationalization loss. I should like to refer for a moment to the very effective speech made by the noble Viscount, Lord Knollys, which was very clear except for one passage in which I was not quite sure what he was getting at. When he was dealing with what he called the "morale" of the staffs of the Corporations, he was making a plea, as I understand it, for a "holiday" from criticism and from debate. If I am wrong,
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I shall be delighted if the noble Viscount will correct me.
VISCOUNT KNOLLYS: I should like to make it clear that I meant a "holiday" between the regular occasions—that there should be the fullest possible debate and criticism at those times, but not continuous criticism.
LORD BALFOUR OF INCHRYE: But it is, after all, the duty of the Opposition, on behalf of the taxpayers of this country, to penetrate as deeply as they can into a loss of £10,000,000. If the Opposition do not do it, I do not think the noble Viscount, the Leader of the House, will bring forward a Motion for the discussion of the accounts. Indeed, I heard him or someone saying "Hear, hear" to the noble Viscount, Lord Knollys, when he was pleading for that freedom from debate and criticism.
VISCOUNT ADDISON: I will tell you what I meant by saying "Hear, hear" when I get up.
LORD BALFOUR OF INCHRYE: I look forward to hearing what the noble Viscount has to say. We on this side do not want fractious criticism, but we must take every opportunity presented to us in our Parliamentary life of raising these matters. Frankly, I have never heard a £10,000,000 loss to the taxpayers explained away so quickly as it was by the Minister of Civil Aviation this afternoon. And the only assurance which he gave us was that the loss is going to be repeated to some extent. That was the only assurance contained in his speech. There was no promise of better things, but there was a promise of further losses in the future. I do hope that the Leader of the House will be able to tell us broadly at what rate the present loss is continuing. After all, March, 1947, is as the Minister said, nearly a year ago and if we could know, not necessarily exactly but to some extent, whether the loss is approximately the same now, or a half, or a quarter, I feel sure that those who have to provide the money for these losses would be reassured.
The noble Viscount, Lord Knollys, and the noble Lord, Lord Kershaw, dwelt on the heavy price we had to pay for civil aviation, and made a plea that civil aviation should not be regarded as a commercial enterprise in commercial terms. But I think what we want to know is,

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could the price which we have to pay for the development of civil aviation be any less than it is? That seems to me the kernel of the problem. We admit that there are bound to be deficits. The Minister said that the noble Viscount, Lord Swinton, was inclined to make the point that things might have been different under private enterprise. My own view is that under a system of private enterprise there would, of course, have been losses, under the present set of conditions, but the losses would probably have been less; and secondly, those losses would not have fallen upon the taxpayers of this country. The Minister made play with the heavy American airline losses of £6,500,000; but at any rate not one cent of that loss has fallen on the back of the taxpayer in America; it has fallen on the investors and their reserves and those who operate in financial or other markets, and the important effect of that loss which America has suffered is that it will spur those concerned with commercial aviation to greater efforts in economy. It is that advantage that I would concede, and I think it is not unfairly conceded, to private enterprise as against State monopoly ownership. Of course, there are bound to he losses.
I liked the proposal of the noble Lord, Lord Kershaw, and other noble Lords, that we should try in future to segregate to a greater extent what I would call the development lines being run at Government behest, as against lines which are run for commercial purposes and which commercial traffic can reasonably be expected to make pay. If we could know how much the national development side costs we should be better able to judge the commercial results of the Corporations. One of the reasons why I think private enterprise would have made smaller losses is that undoubtedly there is a feeling that the administrative staffs of Corporations are somewhat out of proportion to those who are actually conducting operations. Noble Lords who, like myself, were in the National Government, will remember that Mr. Churchill was always chasing us in the Service Departments to see that the tail did not grow too big. He was always getting at what was behind the line, making the comparison of the number of men we required for maintaining the details of administration as against the
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number required for fighting. He was a constant spur in those days, and I believe that civil aviation needs something comparable in the way of a constant spur. If we do not get it from a commercial motive, then under nationalization the Government must try to import that constant spur.
There has been a recent appointment of Sir Miles Thomas to the board of B.O.A.C. I do not think that that really fulfils the requirement. Constructive criticism from within an organization is good and helpful, but it is not the same thing as an outside review. The Secretary of State for Air, or the Under-Secretary of State for Air, looking at the establishments in relation to the air crews, was not the same as the Prime Minister coming along and, as it were, beating us up about them. I would like to see a commission of business men who have had to forge their way ahead with great enterprise allowed to review and survey the establishments and the general administrative lines of organization of both B.E.A. and B.O.A.C. I do not think it would be infra dig. to ask the boards of directors to enable such a commission of outside business men to operate, and I hope that the Government will be prepared to consider that suggestion. After all, when you look at K.L.M. and at B.O.A.C—I know comparisons are very difficult to make and we have been told how dangerous they are—you find that the costs per ton-mile capacity of B.O.A.C. are approximately twice those of the Dutch K.L.M. company which is operating world routes and showing a profit at the present time.
The Minister put down the losses to various reasons. His first was that there was a loss in respect of the immediate post-war period, and he said that that brought about great difficulties in regard to staff and to getting the undertakings going. But, after all, the very difficulties that he said were, to some extent, the reason for the losses, were the same difficulties that B.S.A.A. had to face when they started from scratch and made a success of it. Then there were the high costs of route development and of training—the Minister reeled off a formidable list of figures as to what those costs had been. But is he really convinced in his mind that those costs could not be pruned somewhere by careful survey and careful investigation? Of course, we must accept

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that losses are inevitable, but let us make sure that, if those losses are to be accepted, they are not one penny greater than need be.
I want to say only one word about the procurement policy, the policy of buying aircraft, to which I think there is nothing really to add after the clear exposition of the position and the suggestions made by the noble Viscount, Lord Knollys, who speaks with such first-hand knowledge. The Minister said that the Government were not entirely satisfied, so another committee has been appointed. This committee, at any rate, has this advantage over other committees: that it is a committee of outside men and not of Government officials. But would the noble and learned Viscount, the Leader of the House, be so good as to say whether, if we ask him in a few weeks' time when the committee have reported to the Government and they have considered the matter, we may he apprised of what changes will be brought about as a result of the advice the Government may receive from those outside representatives?
I want to say a word on the Courtney Committee's Report on the Tudor aircraft, which is fairly critical of both the Corporation and the Government. The Minister will have noted the passage where it says that his Department was too busy nationalizing to give that lead at a critical time which the Committee felt should have been given. I do not think we ought to let this debate pass without saying that we on this side of the House have noted that what we said at the time of the Second Reading of the Civil Aviation Bill has come true, in that, instead of getting on with the job, the Government were too busy trying to push their particular doctrinaire policy on to the Statute Book in the shortest possible time. But the most critical part of the Courtney Committee's Report is its strictures on the internal organization, the organization as it existed at that time. We read of the technicians, the projective branch, running off, as it were, on their own, without adequate control by those who are commercially responsible for the success of the Corporation. We read how those experts made decisions on their own, havered, dithered, altered their decisions and in fact generally led an uncontrolled life.
I remember that in the Air Ministry in 1939 we got to a stage when production
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of aircraft: had almost come to a standstill because of modifications. Finally, Sir Wilfrid Freeman, when Sir Kingsley Wood went to the Air Ministry, was deputed as the man to look after modifications, and all those hordes of little experts were not allowed to introduce particular modifications; none could be accepted without the personal consent of Sir Wilfrid Freeman. It seems to me as if something of the same sort of condition has gradually grown up within the Corporation. I am sure that noble Lords, both on this side of the House and on the opposite side, would like some assurance that the internal administration and organization of the Corporation have been so strengthened that to-day the experts will not pursue one particular line of policy of their own without proper control by those who are administratively responsible.
I want now to refer to one question which the Minister dealt with, the question of West Africa. If the noble Lord will allow me to say so, I thought the weakest part of his speech was when he tried to justify the: position which the noble Viscount, Lord Swinton, exposed. The fact is that when we passed the British Overseas Airways Act, as the Minister said, we deputed to that Corporation the development of overseas lines, but we did expect that the Corporation would be able to do something about it. At that time the Corporation could not do anything about it and somebody else could do something about it.
VISCOUNT ADDISON: I do not quite follow that.
LORD BALFOUR of INCHRYE: The Minister said that when we had passed the B.O.A.C. Act, we had deputed to the Corporation the task of developing overseas air lines, the inference, therefore, being that the other line, Skyways, could not run on that route. When we passed that Act, we all assumed that, as the requirement was there, the Corporation would be able to fulfil it. Then the Minister said that, of course, it was an agreed policy that there should be no duplication of services. You cannot call a service requiring a journey of three or four days on a Dakota round the coast of West Africa a duplication in any sense of a direct service across Africa in eighteen hours. The real fact is that, in order to protect the Government's monopoly

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policy—I do not think I have put it unfairly—the Government felt it necessary to refuse facilities which would have brought many white men and women back from West Africa to this country for well-earned, much wanted leave. Many of those people have been unable to obtain their leave or have been delayed considerably by this close adherence to the policy of State-owned monopoly. It does seem to me that it is a doctrinaire outlook, which we on this side of the House have criticized in the past, and will continue to criticize in the future, and which has been responsible for this very regrettable and deplorable instance.
I have one further question to put to the noble Viscount, the Leader of the House, if he will be good enough to answer it. I have given notice of this question, and it is with regard to the Irish Company. We own 30 per cent. of the Irish National Aviation Company, and we pay half the loss on services. We do not control the company, but we pay half the loss. If the Irish Government felt it necessary for their own national reasons—reasons which we have been talking about to-day with regard to ourselves—to run a prestige service to Tim-buctoo, let us say, would the British taxpayers have to pay for half that service—a service ordered by another Government to be carried out by a company in which we are minority shareholders? If so, it seems an extraordinary position. There may be a safeguard whereby the minority shareholders have the right to exercise some control over what the company does. If so, I am sorry that such a safeguard was not made clear in the Report.
I ask that question in all fairness, in order to elicit a reply as to whether the British taxpayers are at the mercy, as it were, of a Government which wants to run prestige services. The same applies in regard to the Italian Company, in which we own 40 per cent. of the share capital but which we do not control. Suppose a new Government in Italy wished to run a prestige service daily, let us say, to Moscow, would that be run at the expense of the British taxpayer? Those are questions which I would like to have answered. I trust I have not detained your Lordships too long, and that at any rate my remarks, which may
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appear to have been critical, have, nevertheless, been constructive. I hope also that this debate, far from being the last on civil aviation, will be followed by many more in the future.
6.33 p.m.
THE LORD PRIVY SEAL (Viscount Addison): My Lords, I feel quite sure that a good many benefits will follow this debate and, except in the respect that I will mention in a moment, I think that the general influence of the debate will have been advantageous. Before I come to answer the various points which have been raised, I should like to clear up a little point that was left in some doubt, I understand, in an answer given to the noble Viscount who opened the debate. It referred to the terms affecting certain loaned aircraft, and I promised the noble Viscount that I would obtain a precise statement on the subject. Perhaps I may give that now and so clear it out of the way. These aircraft, which are mentioned in the appendix to the B.O.A.C. accounts, were special aircraft loaned by the Air Ministry for the operation of local services in the Middle East. These services are required for military and other official purposes, and they are those to which my noble friend referred as having incurred £600,000 in loss or cost. The noble Viscount asked the further question as to what was the rent which was paid for those loaned aircraft. The answer is that no rent was paid for the loaned aircraft and, therefore, in so far as they were provided without a rent, it was in that respect a subsidy. That is the correct answer to the question.
I should like now to take up the general point raised by the noble Viscount, Lord Knollys, and to express my sincere gratitude that he made it; that is to say, the general effect of debates of this kind upon the well-being and development of these great Corporations. I am sure that every one of us is impressed with the necessity of so conducting our business that we do not intentionally do harm. I agree with the noble Lord who has just spoken that Parliamentary criticism is to be expected, and is inevitable; but in cases of this kind it depends, shall I say, upon the form and frequency of the criticism whether it is helpful or not. We have to remember that, for the most part, these Corporations, with their immense responsibilities, are being conducted by men of

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great business experience; and we have to remember that they must be given a fair chance. We do not pull things up by the roots every few months to see whether they are growing or not, and therefore we have, I think, to remember that in cases of this kind, with the inevitable attachments to which I will refer in a moment, we must be careful that we do not disparage the machine which we have deliberately created.
For my part, before I sit down I would say a word in sincere appreciation of what these great Corporations are doing, a thing that is apt to be clouded when we conduct our debates purely from the point of view of a £10,000,000 loss. Your Lordships will remember that a little more than a year ago we passed an Act of Parliament, and that Act of Parliament deliberately provided £10,000,000 which we expected would be a public charge for some time in the course of the development of this great service. That was provided by Parliament and, quite frankly, I do not think, although I cannot recollect, that the noble Viscount opposite objected to it. I think he recognized that to some extent it was inevitable. Whether it was to be £10,000,000 or not was another point.
Here I would like to reply to the noble Earl, Lord Selkirk. Nobody suggests, and least of all this Government, that there should be avoidable waste; of course not. I am quite sure that those who are conducting the affairs of the Corporations are just as anxious as anybody else to curb any avoidable or discovered waste. But I noticed that the noble Earl opposite did go so far as to give us this present—that there would have been some loss, even under private enterprise. He went on to say that he thought it might not have been so great a loss, or words to that effect. I would also point out to him that I am absolutely certain that under private enterprise there would not have been so many services. There certainly would not, because as a nation we have deliberately gone out of our way—taking this £600,000 of which I have just spoken—to ask these Corporations to carry out development in the national and Commonwealth interests, knowing quite well that for some time to come those services would not be remunerative in the commercial sense.
Private enterprise certainly would not have undertaken the running of those
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services, and I would not blame private concerns for not doing so. It is not their business. Their business is to provide a decent return for their shareholders; so, as I say, I am not blaming them. The point I make is this. There would certainly have been some losses, even by private enterprise, in running undertakings of this kind, though they might not have been so great. The chief reason why they might not have been so great is that private enterprise would not have undertaken so many services.
THE EARL OF SELKIRK: Will the noble Viscount forgive me for interrupting him? Before the war the Railway Air Services used the airport at Weston-super-Mare. B.E.A.C. I understand, because they have operated so uneconomically. have just had to close that airport.
VISCOUNT ADDISON: That may well be true, but I am afraid I do not know anything about individual air services using Weston-super-Mare. I have not been given any notice of that matter. But even if that airport has had to close down because of uneconomic working, I would readily believe that a private enterprise concern would never have opened it.
THE EARL OF SELKIRK: A private enterprise concern did open it before the war.
VISCOUNT ADDISON: Then that shows how wise they were to pass it on to B.E.A.C.
LORD GIFFORD: May I interrupt the noble Viscount for a moment?
VISCOUNT ADDISON: No, please. We cannot discuss this great matter in terms of trifles. The noble Lord must really allow me to develop my case in my own simple way. As I say, we deliberately decided as a nation—that is to say, Parliament did, and noble Lords opposite, I believe, approved—that we would try to build up these services on the basis of British aircraft provision. When we came to that decision we knew that we should be committing this country to great expense for many years. We knew that, and no one has ever concealed it. It has been my duty to have charge of a Committee which has looked into these difficult matters, and it seems to me, on the whole, that a fair average interval between the time of the conception of an aircraft and the time it flies and carries

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people about is from six to seven years. I see that the noble Lord opposite shakes his head. At first I was told that the period was from four to five years, but as an entirely disinterested critic I came to the conclusion that that was an over-sanguine estimate. I put the period at between six and seven years.
Take the case of the Constellation, which is a really successful aircraft. I inquired into the genesis of the Constellation, and it appears that about seven years elapsed from the time when the machine was first thought of, designed, and construction started, to the time when it became a successful commercial aircraft.
LORD BALFOUR of INCHRYE: Including the war years.
VISCOUNT ADDISON: Yes, including the war years. If the period between the conception and the successful putting into service of an aircraft is going to be less than six or seven years, all the better. I shall be delighted. So will the Government, and the taxpayer. But I am simply trying to tell the House what I honestly believe to be true. From such information as has been provided to me by experts, I have formed the opinion that having regard to the getting out of the design, the time taken by questions arising thereon which have to be bandied backwards and forwards between different experts, the development of the prototype, flying it, the remedying of any faults which may develop, the making of various amendments and so on, the time which must elapse until finally it becomes an aircraft for carrying people is a period of several years.
Then, as a rule, so far as I can make out—it is the exception if it proves otherwise—various modifications have to be made. Each modification means that the machine has to go back to the workshop, and it may be there for a month, two months, or six months. So matters go on, until finally the machine emerges as a complete, acceptable and successful aircraft. That long and tedious process occupies several years, and I have put it, in all, at six or seven years.
As I say, we made a deliberate decision, I believe with the assent of noble Lords opposite. We realized that we had to pay the penalty for what we suffered in
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the war, and we sought to encourage the British aircraft industry. What did that mean? During the war the immense productive capacity of the United States, so far as aircraft were concerned, was not taken up wholly with military machines. In this country the whole of our aircraft industry, with all its technicians, artisans, factory workers and all the rest, was devoted to the production of military machines. A large part of the United States productive capacity was devoted, and quite properly devoted, to the building of transport machines. As a result, the manufacturers in the United States really had five or six years' start. That is a fact. And it was of advantage to the world that they had such a start, because we have had these successful machines of their making.
That was the position at the end of the war, so far as the British aircraft manufacturer was concerned. So we decided that we would try to develop the British aircraft industry and to encourage the production of civil aircraft by it. We are now in the stage of what are commonly called "teething troubles." I am afraid that there are a good many such troubles, and we are nothing like out of the wood yet. That is only my own opinion, of course, and I may be wrong. I believe that in due time we shall find that just as the British manufacturers produced the best aircraft in the war, so in time to come we shall have the best civil aircraft in the world. But we shall not get them yet. A good deal of work is being undertaken on some of these very promising machines, and I hope that the sanguine anticipations of those who are responsible for them will be realized.
The noble Viscount opposite knows a little about the history of the Brabazon I. It has been my painful experience to learn something about it. This machine was projected during the war, and I as a raw amateur have had to preside over investigations into this matter. I found that whilst elaborate provision was being made for the completion of this machine there were no facilities available for getting it off the ground when it had been built. The result was that we had at great public expense to make a runway several hundred yards long—about half a mile, I believe. To do this we had to buy a number of houses, a public house, a farm, and various odds and ends of that kind. This meant great public

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expense, but it had to be done before there was any hope of getting the machine off the ground. It did not seem to me that those responsible originally had shown as much foresight as I would have liked.
LORD BALFOUR OF INCHRYE: I have actually a memorandum which I wrote before going to West Africa in 1944 drawing attention to that very matter of the houses having to come down.
VISCOUNT ADDISON: I now understand that the runway was a mile and a half long. I am glad the noble Lord thought about this in 1944. What I, as a raw amateur, complained about, was that nothing had been done about it. That was the trouble. I am not making fun; I am saying that these things involve great expense and take a long time to develop. All kinds of difficulties emerge. The noble Lord indicated with great truth that he had often found, to use an old adage, that the good was the enemy of the best. I think that that accounts for some of the troubles of the Tudor I. I am not going into them, but we all know how, when something is nearly completed, somebody has a bright idea, and the machine is put back into the workshop and fresh difficulties arise. We have to safeguard against that kind of thing. The question of ordering procedure has been mentioned several times, and the history of the Tudor I is a good example of the kind of difficulties which emerge. A man cannot order aircraft in the same way as he orders a motor car—it is not quite so easy as that. What he is going to order, what type of machine, has to be determined beforehand.
The Ministry of Supply and what was the Ministry of Aircraft Production have, as noble Lords know, an elaborate and brilliantly staffed research organization, and it costs a lot of money. We cannot expect any private firm to be able to bear the costs of research and development which necessarily accompany the development of this industry, and they are borne by the Ministry of Supply. There always comes a point when development has reached such a stage that it becomes a question of giving a production order. These two stages necessarily overlap, and I do not think we could ever avoid overlapping. It is in the nature of the case.
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It is because of these developments, and the alterations and modifications of design arising out of them, that the difficulties have arisen. It is no good pretending that there have been no difficulties. There are bound to be difficulties. I remember that in the Ministry of Munitions, in the early days of the First World War, we were involved in these kinds of difficulty for eighteen months before we emerged from them.
It is essential that the good will and loyal co-operation of these great Corporations should be obtained. We want to see that the method of procurement is designed to be as efficient and as satisfactory as possible to the different parties concerned; but we do not want to do anything which will endanger development on the one side or to cripple the Corporations on the other. I have dealt rather at length with that particular point because it is fundamental to the issue. But behind it all there is also this. The costs which have been incurred and which I am afraid will continue to be incurred by the Corporations—I am not going to mislead your Lordships—in the development of airfields and services, sometimes in tropical places under immense difficulties, mean an immense expenditure. But it is a great British development. I am not justifying a pennyworth of waste—of course not-—but it will cost money. I expect the House to face up to that fact, and to recognize that it is inevitable. If we pay, we shall have for the whole of our Commonwealth a fine, efficient and loyal air service, and we shall build the British manufacturing aircraft industry into the best in the world.
6.58 p.m.
VISCOUNT SWINTON: My Lords, I am glad that the Leader of the House has taken part in this debate. He speaks with very long experience of administration, as an ex-Minister of Munitions and as Chairman and would-be co-ordinator of a good many committees, and he also speaks with great frankness. I am obliged to him incidentally for clearing up the point about the forty aircraft. They were given free, so the loss upon the services was considerably more than appears on the accounts. I am not going to follow him, certainly not at this hour, into the interesting speculation as to how long it takes to build aircraft. I ordered the four great bombers of the war in 1937.

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They took four years to produce, partly in peace-time and partly in war. It must have been four-and-a-half years before they were with the squadrons. But of course they were very new—the Stirling, the Halifax and the Lancaster which emerged from Manchester. We had very little experience in building at that time. When I went to the Air Ministry we had never built a single stress-skin monoplane, much less the great four-engined stress-skin bombers. It all depends on the novelty involved in the aircraft.
The Americans could have produced the Constellation quicker, but, very wisely, as they had not got to produce until they did, they waited until every problem was solved. The Viking came into use very quickly. It is a very good machine. There was a bit of trouble with icing at first but now many foreigners want it. It came out extremely quickly. I think it was eighteen months before it came into use, but in that case we were dealing with a machine which is a derivative. It is in every way a much more modern machine than the Dakota. The Tudor was a derivative. It changed a great deal from the original in the course of its progress, and I think some of us may have been unduly optimistic about the date of its production.
I had hoped that the Minister would be able to say something about what has been happening since the close of the 1947 financial year at the end of March. I had hoped that he would be able to give us a more hopeful picture (I did mention this) certainly so far as European Airways are concerned. He must know what is happening in these companies—every business man knows what is happening in his company from month to month. We have not been told, and I can only hope that the loss is being converted into a break-level, or, at any rate, that it is not going to be so great. But I really cannot accept what the noble Viscount the Leader of the House has said. The Bill was passed with the provision regarding the £10,000,000 in it; but he is not going to pretend that we liked the Bill. We passed it, but that does not mean that we liked it. If a loss of £10,000,000 is going to be made, I would far rather see it put into the Bill.
I always thought that B.O.A.C. would suffer a loss. I do not think they could
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have developed the Empire routes—certainly not with stop-gap aircraft—without suffering a loss. But I am entitled to remind the noble Viscount that if the policy and plan on which we all agreed in the National Government had been pursued, both the South American Airways and the European Airways, with an enormous schedule of services, would have had the whole of their capital subscribed without a penny of cost to the taxpayer, and would be operating without any subsidy at all.
I must say one word about the really extraordinary explanation which was given us with regard to the West African Service. The explanation was as unconvincing as the result was disastrous. There is no doubt that here there was an aircraft—I do not care what service it was bought for; it may have been bought for a service to Timbuctoo, for all I know—which was not wanted on that service at the time. It was available to put on to this West Africa service. It would have carried on that service without any loss. The service would have made a very considerable profit above the £75,000 guarantee of the Nigerian Government. I would ask for no better financial investment than to have underwritten that, and to have taken the surplus. The aircraft was there, and it would have run the service. The Governor of Nigeria was forbidden by His Majesty's Government to make that contract and to have that service, and His Majesty's Government ordered B.O.A.C. to run a service with three Halton aircraft, which were incapable of carrying more than ten passengers across the Sahara. The Minister has admitted to-day that that service is costing the British taxpayer in dead loss something like £10,000 a week. That is the story.
Then he says: "Well, I had to do it under the Act." I have never heard such nonsense! The Act never provided anything of the sort. The Act did provide that primarily scheduled services should be the perquisite of these Corporations. It was not unreasonable, if we were to have this nationalization scheme at all—though I would not have given them all the services of the future. What was the object of that provision? Its object was that it would be only fair (this was the argument) to say to the Government Corporation: "You shall run a number of unremunerative services as well as a number of remunerative ones; you must

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lake the rough with the smooth. You will not have someone cutting in on the remunerative services to skim the cream off the milk." The noble Lord, Lord Beavcrbrook, had an even more vigorous and descriptive analogy, but I have forgotten what it was. It was never supposed that that Act was going to force the Corporation to engage in unremunerative services, if someone was prepared to render that service without any cost to the taxpayer. The Act is not a very good Act, but it is not quite so stupid an Act as that.
It was perfectly possible, within the Act, for the Governor of Nigeria to have made the very business-like arrangement which he wished to make to have this service, and it was the duty of the Minister to save this country £500,000. To-day the taxpayer of this country is paying £500,000 more in this colossal loss, because the Minister of Civil Aviation decided that he would force one of his companies to run this unremunerative service. I must say that I regard it as a very unsatisfactory transaction. I know what would happen to a chairman of a public company if that were done. But no doubt to-day the Minister's great aim is to attain his target of £10,000,000 loss. That is one of the targets we have attained. A lot of the industries are doing very well. The steel industry is not doing so badly. The Minister of Civil Aviation has done best of all; he has attained his target of loss of £10,000,000, and he hopes to do better next year!
I really cannot understand the Government's opposition to allowing the Corporations to buy. To me it is quite unintelligible. All the Corporations are against them on it, and all business experience is against them. The noble Viscount, the Leader of the House, said that it is not quite so simple; that you have to have development expenditure on prototypes, and so on. I allowed for that in my speech. It is really more a question of arrangement as between the Ministry and the aircraft-producing firm. That has been the common practice for years. It was the common practice while all the civil aviation companies were buying their things direct. It was still the practice that Famborough worked in close touch with the makers, and projects were
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put in hand; orders for this or that experiment, or this or that prototype, were placed. There is nothing to prevent the Government from doing that, and I think it is a very proper function for the Government to undertake. As a matter of fact, they always make an arrangement with the maker about how the cost is to be borne. The Government in the past have always borne a fair proportion of the cost of the research.
At the same time, if Firm A or Firm B develops a very valuable machine on a prototype ordered by the Government, then perhaps the Government may pay £500,000 for the first prototype. They say to the firm: "We are going to recoup ourselves a bit on that, and when you sell that machine in the market you have got to charge so much for development charges. You must put that on to the machines you sell, and in proportion as you are successful so will we recoup ourselves." That is a well recognized procedure which we have been following all the time, but that is no earthly reason why, when the machine is a commercial machine put upon the market, the operating company should not buy. Indeed, I say this: I am perfectly sure that Air Chief Marshal Courtney and the Directors are right. You will never get these losses effectively reduced, you will never get the proper relationship between the operator and the firm, and will never get the business satisfactory, whether your company is a nationalized company or a free company, unless you let the user buy what he uses.
I believe that this debate has been valuable. I do not think we have too many of them. The Minister and the noble Viscount, Lord Knollys, said that there must not be too much interference by debate. We do not want to interfere, but on the other hand it is our duty to have a proper degree of supervision. I should not be ending on a controversial note, but I am sure that what handicaps these companies is not so much interference by debate in either House of Parliament, but interference by a brace of Ministries. I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

READING (PARK FARM) HOUSING CONFIRMATION ORDER, 1947.
Report by the Chairman of Committees of the House of Lords and the Chairman of Ways and Means in the House of Commons under Section 3 of the Statutory Orders (Special Procedure) Act, 1945, that no Petition has been presented against the Order: Laid before the House (pursuant to Act), and ordered to lie on the Table.
NATIONAL HEALTH SERVICE (SCOTLAND) (SUPERANNUATION) REGULATIONS, 1948.
Laid before the House yesterday, requiring affirmative Resolution and referred to the Special Orders Committee.
OVERSEAS RESOURCES DEVELOPMENT BILL.
Brought from the Commons; read 1a; and to be printed.

SUNDAY ENTERTAINMENTS ACT, 1932.
Orders made by the Secretary of State for the Home Department extending Section 1 of the Act to the

Borough of Farnworth;

Urban District of Denton;

Urban District of Harpenden:

Laid before the House (pursuant to Act) for affirmative Resolution, and ordered to lie on the Table.

  APPOINTMENT OF JUSTICES.
  APPOINTMENT OF JUSTICES.
  COAL CONSUMERS' COUNCILS.
  COAL CONSUMERS' COUNCILS.
  COAL CONSUMERS COUNCILS: MEMBERS NAMED.
  COAL CONSUMERS COUNCILS: MEMBERS NAMED.
  MEMBERSHIP OF THE COUNCILS.
  MEMBERSHIP OF THE COUNCILS.