Sitting of 30 July 1953

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
MESSAGES FROM THE QUEEN
The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answers to Addresses, as follows:

INTERNATIONAL WHEAT COUNCIL (IMMUNITIES)
I have received your Address praying that the International Organisations (Immunities and Privileges of the International Wheat Council) Order, 1953, be made in the form of the Draft laid before Parliament.
I will comply with your request.

CIVIL AVIATION (TRANSFER OF FUNCTIONS)
I have received your Address praying that the Transfer of Functions (Ministry of Civil Aviation) Order, 1953, be made in the form of the Draft laid before Parliament.
I will comply with your request.

RHODESIA AND NYASALAND FEDERATION
I have received your Address praying that the Federation of Rhodesia and Nyasaland (Constitution) Order in Council, 1953, be made in the form of the Draft laid before Parliament.
I will comply with your request.

ORAL ANSWERS TO QUESTIONS
  MINISTRY OF HEALTH

    Ancillary Dental Work
    Mr. Baldockasked the Minister of Health whether he is aware that paragraph 109 of the University Grants Committee Report indicates an insufficient demand for dental education, and that accordingly the Committee cannot recommend the necessary acceleration of additional provision for dental education, although the present entry of 600 students a year is one-third less than the entry figure recommended by the Teviot Committee; and whether, in these circumstances, he will ascertain to what extent the status of the dental profession can be raised and made more attractive by permitting a larger part of prosthetic and other dental work to be carried out by suitably qualified technicians and auxiliaries.
    The Parliamentary Secretary to the Ministry of Health (Miss Patricia Hornsby-Smith): Yes, Sir. Certain clauses of the Dentists' Bill, which will be reintroduced when Parliamentary time permits, provide for the establishment, subject to suitable safeguards, of ancillary dental workers.
    Mr. Baldock: In view of the shortage of dentists as well as people under training for dentistry, will my hon. Friend consider whether these technicians should be allowed to carry out work which is not applied to living tissue, the type of work which they already do to qualified standards?
    Miss Hornsby-Smith: That is another question. The Dentists Bill does not provide for that type of ancillary worker.

    Student Nurses (Entrance Examination)
    Mrs. Braddockasked the Minister of Health if his attention has been drawn to the resolutions approved at the annual meeting of the Association of Hospital Management Committees in June, with reference to the recruitment of student nurses and the difficulties experienced in recruitment, due to the actions by the General Nursing Council in endeavouring to raise the present educational entrance

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    examination, and lengthening the time between school leaving age and eligibility for the nursing profession, copies of which have been forwarded to him; and, in view of the serious situation these alterations can create, what steps he proposes to take to ensure a continued adequate recruitment of nurses.
    Miss Hornsby-Smith: Yes, Sir, my right hon. Friend has received these resolutions and is considering them. There is no educational entrance examination for student nurses, and no such examination can be instituted without my right hon. Friend's approval, which he has hitherto refused to give. My right hon. Friend is watching carefully the effect of the rule which makes the age of 18 the minimum age for entry to training.
    Mrs. Braddock: As the matter is giving the very gravest concern to every hospital management committee, will the Parliamentary Secretary ensure that during the Recess, if necessary, it is referred to the Central Health Services Council for careful investigation, because there will have to be a very full discussion on the subject next Session?
    Miss Hornsby-Smith: I can assure the hon. Lady that my right hon. Friend is watching progress in this matter very carefully.
    Mr. K. Robinson: Is the hon. Lady aware that, whatever effect this may have on general nursing students—it will probably be very serious—its effect on recruiting for mental nursing will be absolutely disastrous? Will she and her right hon. Friend do their utmost to get the General Nursing Council to think again about the matter?
    Miss Hornsby-Smith: The hon. Gentleman should also bear in mind that if there was any branch which required the additional seniority, it would be the mental side.

    Detention Orders (Legal Representation)
    Lieut.-Colonel Liptonasked the Minister of Health whether he will take steps to amend the Mental Deficiency Act or make other arrangements to enable the next-of-kin to be legally represented in appeals to the Board of Control against the making or renewal of detention orders.
    The Minister of Health (Mr. Iain Macleod): I do not think that legislation is needed for this. The Board are always prepared to give interviews to the legal representatives of the next-of-kin of mentally defective patients, as they have always been to the next-of-kin themselves, and to give full consideration to any representations made.
    Lieut.-Colonel Lipton: Is the Minister aware that that answer will be greeted with some satisfaction because it was possible to hear in the past that justice was being denied to people in humble circumstances where issues of civil liberties were at stake? Will he do what he can to make it known to the next-of-kin that this right is available to them?
    Mr. Macleod: Yes, certainly. I think that this Question and answer will help. The recent case which the hon. and gallant Member has in mind was a protest against the Visitors not receiving counsel representing next-of-kin, but in that particular case the Board of Control did give full attention to the counsel representing the next-of-kin.
    Mr. K. Robinson: Is the Minister aware that in many other respects this 40-year-old Act is out-of-line with up-to-date medical thinking? Can he hold out any hope of amending legislation next Session?
    Mr. Macleod: I should not like to do that, but I am very conscious that it is important to revise and consolidate the Mental Acts as soon as possible.

    Medical Supply Association (Contracts)
    Mr. K. Robinsonasked the Minister of Health what conclusions he has reached with regard to contracts with the Medical Supply Association, Park Royal, N.W.10, following his inquiries into the firm's alleged breach of the fair wages clause.
    Mr. Iain Macleod: I regret that I am not yet in a position to add anything to the answer given by my right hon. and learned Friend the Minister of Labour on 23rd July.
    Mr. Robinson: Is the right hon. Gentleman aware that this firm is advertising for non-union labour and has a staff almost entirely of non-union men; and

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    will he arrange for an inspection of the quality of the work that is being done for his Department?
    Mr. Macleod: This is rather outside my field. A number of allegations have been made about this firm, but I should like to make it clear that the firm deny all these allegations, and it is only reasonable that the investigation set in train by my right hon. and learned Friend the Minister of Labour should be allowed to proceed, so that we can find out on which side justice lies.
    Mr. Albu: Is the Minister aware that these things are arising from the strong feeling among members of the Amalgamated Engineering Union, which is officially supporting the strike?
    Mr. Macleod: I am very well aware of the circumstances, but all I am saying is that we should not pronounce a verdict before listening to the defence.

    Hospital Beds, Bristol
    Mr. Awberyasked the Minister of Health if he is aware of the need for a further 120 beds in the Southmead Hospital Group; that the cases to be dealt with are growing beyond the capacities of the hospitals; that the number of cases on the surgical waiting lists are increasing; that some of the buildings are old and need replacing; that the committee is unable to carry out its plans for development because of the lack of finance; and what steps he is taking to secure an increase in the grants to prevent any impairing of the efficiency of these hospitals.
    Mr. Iain Macleod: I agree that some additional beds are needed to serve the City of Bristol, but not necessarily at hospitals in the Southmead Group. The Regional Hospital Board are providing more surgical beds at Frenchay Hospital and are improving the operating facilities at Southmead. Other improvements will be made as resources permit.
    Mr. Awbery: Is the Minister aware of the deep frustration of people who are interested in hospital administration in the Bristol area, particularly in connection with capital expenditure? The amount that has been allocated in Bristol this year is so small that it will take seven years to catch up with what is now
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    required, leaving out of account the accumulation of needs during the seven years. Can the right hon. Gentleman increase the amount and do it as quickly as possible?
    Mr. Macleod: On the question of Southmead, I should have thought that the first need there was for an operating theatre, which is being provided, and the second was probably for out-patient facilities, which will come next. The capital allocation for this region is being increased by £30,000 for next year, apart from the share they may have of the £2 million for large schemes.
    Mr. Wilkins: Is the Minister not aware that his reply will cause bewilderment in the City of Bristol? There has been a huge expansion of house building in this area. Nearly half the population of Bristol is now centred around this hospital group and we believe that the minimum requirement there is at least a block of four new wards.
    Mr. Macleod: I have conceded that there is a need for additional beds to serve the City of Bristol, and I would give the same answer in respect of many other cities. The only point is that I am not tying myself by stating exactly in which hospital in Bristol they should be provided.

    Hospital Waiting Lists, Cardiff
    Mr. G. Thomasasked the Minister of Health whether he is aware of the growing waiting lists at Cardiff hospitals; and when he expects building operations to commence in connection with the proposed new training hospital in Cardiff.
    Mr. Iain Macleod: My information is that although they remain substantial the lists, in the aggregate, have shown a reduction over the past year. I am not yet able to say when a start with the building of new hospitals will be possible.
    Mr. Thomas: Is the Minister aware that doctors and patients alike are distressed at the fact that people who are in pain are being told they will have to wait as long as two years before they will be able to get into a hospital? Will he try to ensure a speeding up?
    Mr. Macleod: It distresses me as much as anyone else that there should be a

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    waiting list of whatever size. But the waiting lists, taking the city as a whole, have been slightly reduced in the past year. I want very much to see a start made on the teaching hospital in Cardiff, which the hon. Member knows has a very high priority, but I cannot give a precise starting date. I think that the architectural competition is at present under discussion.

    Cerebral Palsy Unit, Alton
    Dr. Kingasked the Minister of Health when he hopes to establish a cerebral palsy unit at Treloar's Hospital, Alton, Hampshire.
    Mr. Iain Macleod: The need for such a unit is now being considered by the South-West Metropolitan Regional Hospital Board, who are responsible for planning the hospital services in this area.
    Dr. King: Is the Minister aware that Hampshire parents are eagerly looking forward to the establishment of such a unit, and will he do everything he can to expedite that decision?
    Mr. Macleod: I have seen the representations to which the hon. Member refers, but detailed priorities of this nature are, of course, for the Regional Board.
    Mr. Hastings: Can the Minister say whether this proposed unit will also deal with the early diagnosis of these cases, which is of fundamental importance if the correct treatment is to be given?
    Mr. Macleod: I agree with the hon. Member, and I am sure that that will be the case.

    Mental Defectives, South Ockendon (Accommodation)
    Mr. Braineasked the Minister of Health what progress has been made in providing additional accommodation for mental defectives at the South Ockendon Institution.
    Mr. Iain Macleod: Two new villas of 40 beds each have just been completed and the Board plan to begin work on another similar villa this year and have proposals for a fourth in 1955. In addition, three properties have been purchased for adaptation to provide 98 beds.
    Mr. Braine: While recognising that this additional accommodation will substantially reduce the tragically long waiting list in Essex, can my right hon. Friend say whether he anticipates any staffing difficulties?
    Mr. Macleod: I have no particular knowledge of any staffing difficulty at the South Ockendon Institution, but I do not attempt to disguise the fact that the staffing problem in the mental services generally is most serious.

    Food Poisoning, South London
    Lieut.-Colonel Liptonasked the Minister of Health whether he has investigated the recent cases of food poisoning of children in South London; and what action he is taking.
    Mr. Iain Macleod: Officers of my Department have been in touch with the public health departments of the London County Council and the Metropolitan borough councils concerned. My right hon. and gallant Friend the Minister of Food and the L.C.C. have taken steps to recall the milk powder suspected to have infected the food responsible for the outbreak.
    Lieut.-Colonel Lipton: Is it not scandalous that school children should be poisoned by powdered milk supplied by the Ministry of Food to local authorities? In view of the fact that the number of poisoning cases of this kind is double those of last year, will the Minister guarantee that stocks held by the Ministry of Food will be immediately examined, and, if found unfit, destroyed before any further damage is done?
    Mr. Macleod: That is largely a matter for my right hon. and gallant Friend, but I am certain that it is being done.
    Dr. Stross: Is the Minister aware that it is a great blow to our trust in tinned powdered milk that we should have any cases of this type at all? Can he say what is the causing agency—was it staphylococcal poisoning—and what action is to be taken to see that there is no further possibility of contamination of any forms of dried powdered milk in the future?
    Mr. Macleod: Investigation into this particular outbreak is not yet completed, so I cannot add to my answer so far as

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    the first part of the hon. Member's supplementary question is concerned. As to the second point, we are taking all possible steps in this matter.
    Mr. Skeffington: Is it not a fact that food poisoning from this source of supply was first reported in Surrey on 10th July? Can the Minister say why no instructions were given to the L.C.C. until 23rd July?
    Mr. Macleod: This is a rather complicated story, and I think it would be more appropriate, if we are to have a debate later, that the matter be raised then.

    Hearing Aids
    Mr. Edward Evansasked the Minister of Health if he will consult the Minister of Education with the object of providing young deaf children with residual hearing, and hard of hearing children, with a light weight monopack hearing aid under the provisions of the National Health Service Act.
    Mr. Iain Macleod: I have already decided, in consultation with my right hon. Friend the Minister of Education to provide children who can benefit from it with a Medresco aid in monopack form. It will inevitably, however, be some considerable time before these can be made available through the National Health Service.
    Mr. Evans: Whilst thanking the right hon. Gentleman for that statement, may I ask whether, before he develops this scheme too far, he will consult the parents and teachers of children who will have to use these aids, before going in for a general supply?
    Mr. Macleod: Yes, Sir. The position at the moment is that we are asking the Post Office, who act as technicians in these matters, to carry out the necessary field trials. I will give an undertaking that I shall consult with the persons concerned.
    Mr. D. Brookasked the Minister of Health the reason for the long delay in the supply of hearing aids in Halifax, as compared with some other parts of the country.
    Mr. Iain Macleod: The pressure on the Bradford distribution centre, which serves Halifax, is very heavy and it has not so far been possible, as elsewhere, to open an additional centre in this part
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    of the country. I hope, however, that it may be possible to open a centre at Halifax itself before the end of the year.
    Mr. Brook: Is the right hon. Gentleman aware that he has been telling me that story for nearly two years and that while the waiting period in other parts of the country is three months, in Halifax it is nearly three years? Will the right hon. Gentleman keep the promise he has just made to open the centre at the end of the year?
    Mr. Macleod: I cannot have been giving the same answer for nearly two years as I have only been one year in office as Minister of Health. It is true that to some extent this area is lagging behind. The reason is that the regional hospital board have not found it possible to fit it into this extra programme. But I think that we can reasonably hope that it will be operating at the end of the year.
    Mr. Edward Evans: Is the delay due to the fact that personnel are not available for the work? When the right hon. Gentleman opens the centre will he make sure that he provides not only the appliances but the personnel to see that the aids are adequately applied and that the people concerned are taught how to use them?
    Mr. Macleod: I will certainly look at that, but the difficulty in Halifax, I think, has been financial and not one of personnel.
    Mr. McLeavy: Is the right hon. Gentleman also aware of the difficulty in the City of Bradford? Can he assure the House that he will give constant attention to the complaints which I have sent to him on numerous occasions?
    Mr. Macleod: Yes, certainly. It follows that the opening of a sub-centre will take a great deal of the weight off Bradford, but with the position as it is we have reduced the waiting list in Bradford from 4,800 in February, 1952, to about 3,700 now.

    Ambulance Service
    Sir W. Smithersasked the Minister of Health what alteration there has been in the system of reckoning the number of journeys and patients carried by the

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    ambulance service since 1950; what were the dates; and if he will give details of the alterations.
    Miss Hornsby-Smith: In 1950 there was no uniformity of reckoning; since then an increasing number of authorities have adopted the system advocated by the Ministry. It is impossible to give any single date. The process is not yet complete.
    Sir W. Smithers: Is there any truth in the suggestion that this scheme was introduced to show that the Health Service has been more active and conveyed more patients when, in fact, more patients have not been conveyed by the ambulances?
    Miss Hornsby-Smith: I do not think that the introduction of the new method was with that purpose, although, quite obviously, the result would be to make the figures look larger than they had hitherto been. I think it is accepted that the only fair basis of comparison between one authority and another is as a single unit and a single journey and I hope that that shortly will be carried on throughout the Service.
    Sir W. Smithers: Is not this scheme, therefore, dishonest?

  EDUCATION

    School Meals
    Mr. Doddsasked the Minister of Education how many parents have applied for assistance to meet the increased charges for school dinners; and what action she is taking to ensure that this service is fully utilised in view of the decline in the number of meals served to schoolchildren.
    The Minister of Education (Miss Florence Horsbrugh): I have no information on the first part of the Question. I have told local education authorities that I am willing to consider proposals for the adjustment of income scales to avoid hardship to parents.
    Mr. Dodds: As many parents are unaware that assistance can be obtained under certain conditions and as it is the children from the poorest homes who usually need the meals most, would the Minister, before the schools reassemble, try to find some way of informing parents
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    that the meals can be obtained, so that no child will be deprived of a school dinner by reason of too little finance in the family?
    Miss Horsbrugh: Certainly, if it is not known, but from information I have from education authorities I think they have made it known and 85 of the authorities have already revised their scales. If there is any other information I can give the hon. Member I shall be glad to give it to him.
    Miss Ward: Is it not true that teachers know all about this arrangement? Do not the teachers do their job satisfactorily by letting the parents know?
    Miss Horsbrugh: Yes, I think the teachers are in touch with the parents and tell them and the authorities. If there are any cases such as those referred to by the hon. Member for Dartford (Mr. Dodds) I think the very fact of his Question and the answer will draw the attention of the public to the matter. If there is anything else I can do to let them know I will certainly do it.
    Mr. Lewis: Would not the easier way, rather than playing about with this, be to put back the price which was in operation prior to the measly increase of 2d. a meal which the Minister made last March? Would it not be better to give all children an opportunity by reducing the charge to what it was?
    Miss Horsbrugh: No, I do not think so.
    Mr. H. Wilsonasked the Minister of Education the percentage by which the number of school meals served in the Huyton-with-Roby area, or if separate figures are not obtainable for the appropriate divisional executive, since charges were increased, and comparable figures for England and Wales.
    Miss Horsbrugh: I have no separate information about the number of school dinners served in the Huyton-with-Roby area or in the divisional executive in which it is situated. With regard to the last part of the Question, I would refer the hon. Member to the reply which I gave on 16th July to the hon. Member for Leicester, North-West (Mr. Janner).
    Mr. Wilson: As the authority in question has put out figures suggesting a fall

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    in the consumption of school meals by about 20 per cent., is the Minister not able to check with the divisional executive whether these figures are correct? If so, what is she going to do about this very serious state of affairs.
    Miss Horsbrugh: I have the figures for the Lancashire County Council area as a whole, but I have not asked for figures of individual schools or divisional executives. If the right hon. Gentleman has the figure, it is perhaps not necessary to ask me for it.
    Mr. Chetwyndasked the Minister of Education how many children were receiving school meals on a day in June, 1953, and a comparable day in June, 1952.
    Miss Horsbrugh: I would refer the hon. Member to the reply which I gave on 16th July to the hon. Member for Leicester, North-West (Mr. Janner).
    Mr. Chetwynd: As that answer was tucked away in a series of answers in Written answers to Questions, may I ask the-Minister whether she is not appalled by this serious drop of a quarter of a million in the number taking school meals? Is not the real figure from the increase in last September about half a million? What does she intend to do about it?
    Miss Horsbrugh: I have compared the figures for June last year with the figures for June this year. As the hon. Member knows, each year the number goes up in the winter and down in the summer. I have taken the same months, and the decline is from 49·1 per cent. of the children in the one year to 43·1 per cent. in the other, but I think the hon. Member should bear in mind that it is quite clear that there are other causes for this decline in the number as well as the fact of the extra charge.
    Mr. G. Thomas: Is the Minister aware that there has been a 25 per cent. drop in the number of children in Wales who partake of school meals since she increased the cost, and will she not realise that this is a public menace? She is breaking down the whole service.
    Miss Horsbrugh: I do not know upon what the hon. Member bases his figure of a 25 per cent. drop. If he means the school children in the whole country, in
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    England and Wales 49·1 per cent. were taking meals in June last year and 43·1 per cent. in June this year.
    Mr. Thomas: In Wales?

    County School, St. Blazey (Admissions)
    Mr. H. Wilsonasked the Minister of Education (1) if, in view of the health and other questions involved, she will now reconsider her decision not to allow the child of Mrs. Morshead, Ivybank, Doubletrees, St. Blazey Gate, Cornwall, to attend the school of her parents' choice;
    (2) if, in view of the numbers likely to apply for admission to St. Blazey Infants' School, Cornwall, in September, 1953, she will reconsider her previous decision in respect of the four children she refused admission, and allow them to attend the school of their parents' choice from the beginning of the new school year.
    Miss Horsbrugh: As I have already explained to the right hon. Member, the control of admissions to county schools rests, not with me, but with the authority, subject to the right of appeal by the parent against unreasonable exclusion. If it is considered that there are any new relevant circumstances, the proper course would be for these to be brought to the notice of the local education authority in the first instance.
    Mr. Wilson: Since, in this case, after the Minister's first ruling, 20 children were admitted to the school that was supposed to be overcrowded, will she now press the local authorities, in view of the considerations mentioned in my second Question, to reconsider this matter before the September term and bring an end to this very long standing unsatisfactory state of affairs?
    Miss Horsbrugh: I think that when the hon. Member used the word "ruling" he did not quite understand what I said. It was that I would not overrule the local authority in coming to their decision. I have not interfered with the local authority in coming to their decision and, as I have explained, the local authority have the right to make these arrangements; but the parents have the right to appeal to me against unreasonable exclusion.
    Mr. G. Wilson: Does my right hon. Friend agree that this matter was gone into fully with three or four Members of Parliament, including myself, some months ago? Have any new features arisen since then to alter her decision?
    Miss Horsbrugh: I think my hon. Friend will agree that at the time I discussed it I said that my decision was, on the information I then had, not to overrule the decision of the local authority. If any new circumstances have arisen, they ought to be brought to the notice of the local authority.
    Mr. H. Wilson: Is it not extraordinary that the Minister, who is given a definite responsibility under the 1944 Act, is unwilling to overrule the activities of a local authority which has behaved in this manner against the interests of the parents and children concerned? Is the right hon. Lady aware that the prospective admissions to this school for September suggest that there is a totally new set of circumstances which would justify her in reversing her previous decision?
    Miss Horsbrugh: I do not know how to make it clear to the right hon. Member, but I have tried to do so. The decision is the decision of the local authority and any parent has the right to appeal to me against unreasonable exclusion. At present, no parent has appealed to me against unreasonable exclusion. If there are new facts which the right hon. Member thinks should be brought to the notice of the local authority, I hope that they will be brought to their notice.

    Javelin Purchases, Kent
    Mr. Doddsasked the Minister of Education how many javelins were obtained for the expenditure of £730 by the Kent Education Committee; and for what purpose they have been used.
    Miss Horsbrugh: Three hundred and eighty-two javelins were purchased as part of the physical education equipment of certain secondary schools.
    Mr. Dodds: Will the Minister now give an undertaking that she will see that none of the children who are expected to hurl these javelins will be deprived of mid-day school meals because of the lack of money?

    School Children, Leicester (Dental Examination)
    Mr. Jannerasked the Minister of Education what proportion of school children have been examined by school dentists in Leicester during 1952.
    Miss Horsbrugh: Approximately 33 per cent.
    Mr. Janner: Is the right hon. Lady aware that owing to the difficulty in getting the necessary staff to attend to the teeth of school children, nearly 2,000 permanent teeth were extracted from children in Leicester schools in 1952? What action will the Minister take to ensure that the children's teeth are properly attended to and the necessary staff provided? The position is very serious.
    Miss Horsbrugh: I hope that there will be an increase in the staff in Leicester, as there has been in the rest of the country. The dental staff in the schools is increasing, and I hope that that increase will very shortly be experienced in Leicester.

    College, Eastry (Additional Building)
    Sir W. Smithersasked the Minister of Education if, in view of the seriousness of the economic situation, she will refuse to sanction the grant of £30,000 for an additional building at Nonnington College, Eastry, Kent.
    Miss Horsbrugh: Provision has been made in the 1954–55 building programme for work costing £30,000. Before any expenditure on this work is actually approved, my Department will give careful consideration, in consultation with the Kent local education authority, to the whole project and its cost.
    Sir W. Smithers: Will the Minister bear in mind that as Britain is the one country in the world which is not and cannot become self-supporting, and that all increase in expenditure must impede or destroy our ability to compete in the markets of the world, our first social service must be food? What is the good of children and teachers in schools if they have nothing to eat?
    Miss Horsbrugh: I very much hope that under this Government the children will have both schools and food.
    Mr. Bottomley: Is the right hon. Lady aware that there is need for more, not less, education in Kent?

    School Building
    Mr. Morleyasked the Minister of Education if she has now decided to increase the amount that local education authorities may spend on minor building projects; and if she will make a statement.
    Miss Horsbrugh: I am not yet in a position to tell local education authorities what will be their permitted allocations for minor building works for the coming year.
    Mr. Morley: Can the Minister say how many local authorities have applied for sanction for increased expenditure upon minor building works, and in how many cases she has agreed to increased expenditure?
    Miss Horsbrugh: The minor works expenditure is discussed in the autumn. We are still dealing with the major works. I can tell the hon. Member that there was an increase in the current year; it is up to £5 million. Last year, it was £4 million and the year before £3 million. I have increased the allocation in each of the last two years, and I shall be discussing with the authorities in the autumn the amount for minor works.
    Mr. Morleyasked the Minister of Education if she has now decided to urge local education authorities to carry out more work of maintaining, repairing and bringing up-to-date the older schools.
    Miss Horsbrugh: So far as maintenance and repairs are concerned, I do not think it necessary to add anything to what has been said in my Department's reply to the Select Committee on Estimates—published as their Tenth Report. So far as capital improvements are concerned, I would refer to the reply which I have just given the hon. Member.
    Mr. Morley: Is it not a fact that Her Majesty's Inspectors, in their reports on schools, very frequently strongly criticise the school buildings? When the right hon. Lady receives such a report what action does she take on it?
    Miss Horsbrugh: Certain action has been taken, and as I have said in my reply, and as was stated in the reply to
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    the Select Committee, if I find that local authorities are not doing what they are responsible for doing—keeping their schools in proper repair—I shall not hesitate to take further action.
    Mr. Morley: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment.
    Mr. Morleyasked the Minister of Education if, in view of the Report of the Select Committee on Estimates on schools, she is arranging for a greater allocation of building resources for schools in the coming year.
    Miss Horsbrugh: As my detailed discussions with local education authorities are not complete, I cannot yet say what will be the total volume of school building work that I shall be able to authorise for getting started in 1954–55. I can, however, already say that it will be a larger total than was authorised for starting in 1953–54.

    Leicester
    Mr. Jannerasked the Minister of Education why she refused to approve the building of five of the eight schools included in the Leicester Education Committee's building programme for 1952–53, three out of the six in the 1953–54 programme and four out of the seven in the 1954–55 programme; and if she will reconsider these decisions owing to the increasing shortage of school places which will result from the curtailment of the building of new schools.
    Miss Horsbrugh: With regard to the 1952–53 programme, I approved so much new school building as I considered necessary to meet the minimum needs set out in Circular 245. With regard to the 1953–54 programme, I would refer the hon. Member to the answer which I gave him on 23rd July. I am considering a recent request from the authority to review their 1954–55 programme.
    Mr. Janner: Is the Minister aware that the 4,000 places to which she referred in a previous answer to me are not adequate to cover the needs of children requiring school places? Is she aware that there was a large increase in the birthrate from 1944 to 1948, and that there are about 2,150 children who will not be provided

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    for, and who will have to travel a considerable distance to get to school? Will she reconsider this matter, which is a serious one in Leicester?
    Miss Horsbrugh: I am considering the recent request from the authority about the 1954–55 programme but in some cases, as is laid down in Circular 245, if there is room in neighbouring schools transport must be provided to take these children to those schools.
    Mr. Callaghan: Is the Minister in favour of the imposition of a colour bar in those schools, and, if not, why did she not have the courage to speak out in answering the previous Question?
    Miss Horsbrugh: I have the courage to speak, but, at the same time, when I am asked about the recognition of efficiency I must stick to my statutory duties. I object to the colour bar, but that has nothing to do with efficiency of education.
    Mr. Bowdenasked the Minister of Education why she has refused permission to the Leicester education authority to proceed with the proposal to build the Overdale Road junior school; and if she will reconsider the position, in view of the need for junior school places in this area of Leicester.
    Miss Horsbrugh: On the first part of this Question, I would refer the hon. Member to the answer I gave to the hon. Member for Leicester, North-West (Mr. Janner) on 23rd July. I am considering a recent request by the local education authority that I should review their 1954–55 programme, in which they proposed to build the Overdale Road School.
    Mr. Bowden: Will the Minister bear in mind that the 480 children for whom this school was to cater will now have to be scattered over a wide area, which will involve transport and considerable expense, and that in Leicester generally the position is such that there is overcrowding in almost all schools? Does the right hon. Lady not realise that there is a limit even to the number of sardines one can get into a tin?
    Miss Horsbrugh: I have already informed the hon. Gentleman that I am discussing this proposal with the authority.

    Radnorshire
    Mrs. Whiteasked the Minister of Education which education authorities besides Radnorshire have been informed that they are not to be allowed to undertake any new school building in the ensuing year.
    Miss Horsbrugh: I think it likely that when all authorities' programmes for 1954 have been settled there will be, in addition to Radnorshire, five Welsh and about 16 English authorities with no school building programme for that year. Of these, four did not ask to undertake any new building in 1954.
    Mrs. White: Is the Minister aware that the announcement of the programme, or rather lack of programme, in Radnorshire has been a shock to Wales and that if there are to be other authorities who are not to build any schools there will be still further shocks? Is she aware that it is most disturbing to those authorities who have asked to be allowed to build schools and have been refused? How does she square this with the suggestion that the school building programme is not being thwarted in any way?
    Miss Horsbrugh: The school building programme is being increased, and the number of new starts is being increased. But, as I think the hon. Lady will agree, these new schools must go where there exists the greatest need, where there is an increase in the number of children going to school, and where there are more housing estates.

    Cheshire
    Mr. Blackburnasked the Minister of Education in which year's programme it is contemplated that new schools at Millbrook, Stalybridge, and Newton, Hyde, are to be included.
    Miss Horsbrugh: Although the Cheshire local education authority did not ask me to include in their 1954–55 programme schools at either of these places, I thought it wise to include a primary school for Newton, Hyde, in the reserve list to that programme. I cannot say when it will be possible to authorise a new school at Millbrook. Stalybridge.
    Mr. Blackburn: While thanking the Minister for the fact that there is some hope in the foreseeable future, at any rate at Newton, Hyde, may I ask whether she

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    thinks it is not time that this area of Cheshire was given more generous treatment? Would the right hon. Lady agree that the overcrowded conditions and the lack of amenities in these two schools are as bad as anywhere in the country? Is it not a fact that the new school at Newton Hyde would have been built in 1950 but for the difficulties about a site, and would definitely have been started in December, 1951, if she had not postponed all school building?
    Miss Horsbrugh: No, I think we have a better arrangement. As I have pointed out to the hon. Gentleman, although the Cheshire local authority did not ask me to do so I have put one school into the reserve building programme so that we may even get it during this next building year.
    Mr. Blackburn: The only hope we have is that it will be this century.

    Penley
    Mrs. Whiteasked the Minister of Education why permission to include the proposed modern secondary school at Penley, in the building programme for next year, has been refused.
    Miss Horsbrugh: Because there is room for the children from this neighbourhood in existing schools.
    Mrs. White: Is the Minister aware that the children from this rural district have to go into three different counties for their secondary schooling and that they have no community life in the rural district at the secondary school stage? Would she agree that the Flintshire Education Authority, through this and other cuts in their programme, have been penalised because they were quick off the mark with their earlier school building?
    Miss Horsbrugh: I do not think they have been penalised. Having got on with their earlier school building they got better conditions for their children. I agree that the secondary school children have to go outside the county, but I think the hon. Lady will agree that if there are places in schools in the neighbourhood we should use them.
    Miss Bacon: Can the right hon. Lady say how her answers to Questions Nos. 23, 24, 27, 30, 35 and 36 are in keeping with the speech she made in the recent debate on school building?
    Miss Horsbrugh: They are entirely in keeping. The numbers of places provided this year and last year are greater than ever before. More starts are being made and more schools are being completed.
    Mr. Marquand: Will the right hon. Lady say how it is in keeping with the Government's agricultural programme to refuse to build schools in counties like Radnorshire and Flintshire?
    Miss Horsbrugh: In Flint, the children are all provided with places, but in certain cases the secondary school is over the border. Where there is room in such a school which is just over the border of one local authority, I think the right hon. Gentleman will agree that it is far better that the places should be used.

    Preparatory School, Cheam (Recognition)
    Mr. G. Thomasasked the Minister of Education when the Homefields Preparatory School, Cheam, Surrey, was last visited by Her Majesty's Inspectors of Schools; and what report was received by her.
    Miss Horsbrugh: Homefield School was last inspected in May, 1932. The report indicated that the standard of work was satisfactory, and the school was placed upon the list of preparatory schools recognised by the Board as efficient.
    Mr. Thomas: In view of the fact that this school now openly practices a colour bar, and that a child has been refused admission because its parents are Indian and English, will the Minister now withdraw recognition, because that sort of action is alien to the whole principle on which our education services are founded?
    Miss Horsbrugh: I think that the hon. Member is asking me to answer his next Question, No. 26.
    Mr. Thomas: That is another Question.
    Mr. G. Thomasasked the Minister of Education what account she takes of the existence of a colour bar in deciding whether to recognise an independent preparatory school.
    Miss Horsbrugh: When deciding whether to recognise a school as efficient under rule 16 the question is whether it provides a suitable education of a sufficiently high standard in adequate premises for the pupils who are attending it.
    Mr. Thomas: Is the Minister aware that if the school referred to in my previous Question is creating social prigs, if it is encouraging a colour bar, it cannot be satisfactory to decent people; and will she not recognise that the least she can do is to give public expression to the offence which this headmaster has created?
    Miss Horsbrugh: As Minister of Education, I think I must keep to what is the statutory duty of the Minister on this subject of recognition. The very fact that the hon. Gentleman has drawn attention to this matter will bring it more to the notice of the public, but it is clear that the Minister of Education has no authority to say who should be admitted to a school. The recognition of efficiency is of efficiency in the actual education provided.
    Mr. J. Griffiths: Whatever may be the Minister's statutory duty, will she not express to the headmaster her own and the Government's disapproval of his action?
    Miss Horsbrugh: I think I should have to look into that further, because the Minister has no control over independent schools as to who are admitted. We must be clear about this: the actual recognition of efficiency that is being discussed is a recognition of efficiency as laid down very clearly in the rules as to the recognition of efficiency. I do not think that I can go beyond what is laid upon me.
    Mr. Griffiths: Will the Minister not do what I am sure the whole House and the country would desire her to do—withdraw recognition from this school?
    Miss Horsbrugh: May I try to make it plain to the right hon. Gentleman? All I can do as Minister of Education is to recognise as efficient the educational standard in the school. I have looked into this very carefully and that is the only power I have. If the education comes up to standard, and if there are adequate premises, that is where my responsibility for recognition of efficiency begins and ends.
    Mr. G. Thomas: In view of the unsatisfactory and disturbing nature of the Minister's reply, I beg to give notice that at the earliest possible moment I shall seek to raise this matter in the House.

    Bus Services, Leek
    Mr. Harold Daviesasked the Minister of Education if she will encourage the Staffordshire County education authority to maintain the bus services for the children to their schools from the villages of Harriseahead, Mow Cop, Baddeley Green and Tean in the Leek constituency; and what instructions she has given to the education authority about these services.
    Miss Horsbrugh: As the hon. Member is aware, I do not in present circumstances consider it justifiable, generally speaking, that children who live within statutory walking distance from school should be conveyed there free of charge. I recognise, however, that there are circumstances in which exceptions should be made and I am raising no objection to the Staffordshire local education authority's proposal to reinstate the former transport facilities in the Mow Cop—Harriseahead and Baddeley Edge districts. The same considerations do not apply in the Tean district.
    Mr. Davies: While thanking the right hon. Lady for that reply, may I ask whether the same considerations apply to the Biddulph Moor district? Is she aware that this is an exceptionally beautiful part of North Staffordshire? If she would like to hack her way through the country lanes there she would realise that the children cannot walk these distances. I should be delighted to invite her to dinner, if she would come along.
    Miss Horsbrugh: I do not know whether I should be in order in accepting the hon. Gentleman's invitation, but I can at least inform him that where there are exceptional difficulties free transport is allowed; but each case has to be examined on its merits.

    School Canteens (Food Poisoning)
    Mr. Doddsasked the Minister of Education if she is aware of the public concern at the outbreak of food poisoning from school centre meals; what inquiries are being made; what information has so

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    far resulted; and what precautions are likely to be introduced to obviate further trouble when the schools reassemble after the summer holidays.
    Miss Horsbrugh: Yes, Sir. I would refer to the reply given by my right hon. Friend the Minister of Health to the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton). The school canteens, which are my concern, do not appear to have been responsible for these outbreaks by any neglect of proper precautions in the preparation or serving of food. I am awaiting the results of the inquiries which are being made by my right hon. and gallant Friend the Minister of Food and my right hon. Friend the Minister of Health as to the origin of the poisoning.
    Dr. Summerskill: Are cold storage facilities provided in schools in which large-scale catering is undertaken?
    Miss Horsbrugh: Yes, most certainly.

    Comprehensive Schools
    Miss Baconasked the Minister of Education how many comprehensive schools are already in being; and how many are likely to be in use in the next two years.
    Miss Horsbrugh: There are eleven comprehensive or similar schools in England and Wales. Of the 14 such schools or instalments of schools which were under construction on 30th April last, I am informed that, given no delay in building, nine will probably be ready for occupation by September, 1955.
    Miss Bacon: Is the right hon. Lady aware that the selection of children of 11 years of age for different types of school causes greater dissatisfaction among parents than any other educational problem? What is she doing to speed up the building of schools that will obviate this difficulty?
    Miss Horsbrugh: From what I have heard of the opinions of parents what they dislike more is the idea of their children going into comprehensive schools.
    Mr. Chetwynd: Sheer prejudice.

    Secondary Technical Schools
    Miss Baconasked the Minister of Education how many secondary technical schools admit children at 10 and 11 years of age.
    Miss Horsbrugh: Eighty-seven.
    Miss Bacon: Can the Minister say how it is decided that at 10 or 11 years of age children have technical ability? Does not she consider that that is much too young an age for an irrevocable decision to be taken that a child should go in for a technical career?
    Miss Horsbrugh: The hon. Lady is probably aware that these secondary technical schools give a good and wide general education. No doubt she will remember the amendment, in 1948, of the 1944 Act, which gave local authorities wider scope for arranging transfers for secondary education. That brought the age down to 10 years 6 months.

    Secondary School Places
    Mr. J. Johnsonasked the Minister of Education how many new secondary school places are to be provided in 1953 and 1954, respectively.
    Miss Horsbrugh: I estimate that about 70,000 new secondary school places will be brought into use during 1953. I cannot yet give an estimate for 1954, but I expect that the figure will be higher than in 1953.
    Mr. Johnson: Is the Minister aware that what is called the post-war bulge in school population will move up to the secondary schools by 1955 and 1956? Can she give an assurance that she can meet the demand for places in those years, because instead of 70,000 there will be nearer 150,000 or 200,000 places wanted then?
    Miss Horsbrugh: The real pressure will come after 1957—about 1958. The peak in the junior schools will be in 1957. We are looking into this matter. The number of secondary places in major school building projects started in the financial year 1952–53 was 74,445. The number of secondary places in major school building projects to be started in the financial year 1953–54 is 128,830.
    Mr. Johnson: The Minister said that the bulge will move up in 1957. Is not she aware that if a child was born in 1944 that child will be 11 in 1955? It is imperative to provide accommodation for that year.
    Miss Horsbrugh: If I may use jargon that I have heard, the peak of the bulge will not be in the secondary schools until 1958.

    All-Age Schools (Reorganisation)
    Mr. J. Johnsonasked the Minister of Education when she will be able to begin the reorganisation of all-age schools.
    Miss Horsbrugh: As a result of the provision of new secondary schools in successive building programmes the gradual reorganisation of all-age schools will continue. I cannot foresee when it will be possible to authorise building projects designed for this purpose alone.
    Mr. Johnson: Is the right hon. Lady not aware that about a million children between the ages of five and 15 are in these all-age schools, and that in Warwickshire and many other counties the position is a mockery? Can she give an assurance that she will begin building secondary modern schools in local areas in these counties?
    Miss Horsbrugh: I know of the difficulty. It is a result of the policy of both Governments to build new schools and not to reorganise; but I assure the hon. Gentleman that the situation is improving. On 1st January, 1953, in the all-age schools there was 14·3 per cent. of the school population aged 13. Last year the figure was 15·8 per cent. and in January, 1951, it was 16·19 per cent., so there is an improvement.

    Teachers (Subversive Activities)
    Sir W. Smithersasked the Minister of Education if she has read the particulars which have been sent to her regarding subversive activities in the teaching profession; and if she will make a statement on the policy of Her Majesty's Government in this matter.
    Miss Horsbrugh: I received a communication from my hon. Friend yesterday, and I shall be replying to it as soon as possible. As a matter of general policy, I should take a serious view of any case where a teacher was found to be using his position to propagate his political views in school.
    Sir W. Smithers: As the whole free world is straining every nerve to overcome the menace of Communism will the Minister, if she cannot tell the local education authorities what to do, take this serious matter to Cabinet level?
    Miss Horsbrugh: My attention has been drawn to this matter several times by the hon. Member. Always, when I am considering it, what I want to know of, and what I should be pleased to receive from him, is a definite case of any teacher using his position in school to propagate his political views. We should take a very serious view of that.

  COMMONWEALTH RELATIONS

    Bechuanaland (Imprisoned Persons)
    Mr. George Craddockasked the Under-Secretary of State for Commonwealth Relations if he will now review the imprisonment of Chief P. Sekgoma and the imprisonment of others in Bechuanaland arrested at the same time in order to create a better psychological atmosphere under Rasebolai's appointment as Native Authority.
    The Under-Secretary of State for Commonwealth Relations (Mr. John Foster): No, Sir. These persons, of whom none are chiefs, were found guilty of most serious criminal charges, namely, assault with intent to do grievous bodily harm and public violence, arising out of grave disorders in which three policemen, unfortunately, lost their lives.
    Mr. Craddock: Will the hon. and learned Gentleman continue to keep this matter under review? Does he not think that if a little less harsh treatment is meted out we might get a better atmosphere?
    Mr. Foster: I do not believe that a better psychological atmosphere would be brought about at this stage by releasing these men, who were guilty of very serious offences.
    Mr. Beresford Craddock: Is not it a fact that conditions in Bechuanaland have much improved since the appointment of Rasebolai?
    Mr. Foster: Yes, Sir. That is so.
    Mr. Brockway: Does the hon. and learned Gentleman remember saying, when the announcement of the new Native Authority was made, that it was intended that the administration should be on broad and tolerant lines? Would not one of the first steps towards this be the release of these prisoners?
    Mr. Foster: I do not agree with the hon. Member. The administration is on broad and tolerant lines, but it would not be an example of such breadth and tolerance to reprieve these men.
    Mr. George Craddock: Owing to the unsatisfactory nature of the Minister's reply, I shall exercise my prerogative and raise the matter on the Adjournment as soon as possible.

    High Commission Territories (Report)
    Mr. Dodds-Parkerasked the Under-Secretary of State for Commonwealth Relations whether he will say when Lord Hailey's Report on the High Commission Territories is to be published.
    Mr. J. Foster: The Report is being published today by Her Majesty's Stationery Office.

BUSINESS OF THE HOUSE
Mr. Attlee: May I ask the Leader of the House whether he can state the business for the week after the Recess, and whether he has any statement to make about today's business?
The Lord Privy Seal (Mr. Harry Crookshank): Yes, Sir. In regard to the progress of business today, at the request of the Leader of the Opposition, a debate on foreign affairs will take place on the Third Reading of the Consolidated Fund (Appropriation) Bill until about 7 p.m. Afterwards, a debate will take place on the Motion relating to cotton.
The business for the first week after the Summer Recess will be as follows:
TUESDAY, 20TH OCTOBER—Committee stage: Enemy Property Bill [Lords.]
Second Reading: Auxiliary Forces Bill [Lords], which is a consolidation Measure.
WEDNESDAY, 21ST OCTOBER—Debate on the Report from the British Transport Commission.
THURSDAY, 22ND OCTOBER—Second day available for a debate on a report from a nationalised board. The subject will be announced later.
FRIDAY, 23RD OCTOBER—Committee and remaining stages: Auxiliary Forces Bill [Lords.]
Report and Third Reading: Enemy Property Bill [Lords.]
Afterwards, the Adjournment of the House will be moved and a debate will take place on the work of the Council of Europe.
It is expected that Prorogation will take place during the following week beginning Monday, 26th October, and that the new Session will be opened on Tuesday, 3rd November.
I would remind the House that power already exists, upon representations being made by the Government, to call the House together at an earlier date, if such a course should be necessary in the public interest.
It may also be convenient for me to mention that it is proposed, after the Summer Recess, when the Departments concerned will have been amalgamated, that Oral Questions to the Ministry of Transport and Civil Aviation should be answered on Wednesdays and those to the Ministry of Pensions and National Insurance should be answered on Mondays. In order to redress the balance, it is proposed that Questions on Defence should be answered on Tuesdays instead of Wednesdays. This matter has been discussed through the, usual channels and with the authorities of the House.
Mr. Attlee: As food hygiene cannot be debated today, perhaps there could be discussions through the usual channels with a view to finding time to discuss it on our return. I take it that the business for when we return must be considered as necessarily provisional, because events in the world outside may make a discussion of foreign affairs desirable in the first week after we return.
Mr. Crookshank: Yes. We are talking about a long way ahead, and it is somewhat provisional. There will, of course, be opportunities immediately afterwards, when the new Session is opened.
Mr. Attlee: Will the right hon. Gentle-man remember the desire for a day for a debate on Wales?
Mr. Crookshank: I should very much like to arrange a day for a debate on that subject in the second week after we return.
Mr. Assheton: Is my right hon. Friend aware that it is extremely inconvenient to the House when the Opposition suddenly change their minds and decide to switch business without giving any previous indication whatever?
Mr. Crookshank: My right hon. Friend is not the only person who has been inconvenienced. But the representations were made with such urgency that the Government had to accede to them.
Mr. Harold Davies: Is the right hon. Gentleman aware that the House has had very little information for many months about the situation in Malaya? Would the Government give time for a short debate on the Malayan situation very soon after the Recess?
Mr. Crookshank: I could not go further than the general programme which I have outlined for that week.
Mr. Davies: But will the right hon. Gentleman bear in mind the request that some of us—I am sure on both sides of the House—would like more information on that subject?
Mr. Crookshank: Yes, I will bear it in mind. Perhaps the matter could be discussed through the usual channels, in two or three months' time.
Dr. Stross: With further reference to the proposed discussion through the usual channels about a debate on food hygiene after we return, may I ask the Leader of the House whether he is aware that the last time it was debated, two years ago, a whole day was given to it, and a remarkably good debate ensued? Would he bear in mind that three hours is not very long, or even satisfactory? Could we have a full day's debate, if possible, in the week after we return?
Mr. Crookshank: I cannot commit myself to anything of that kind, because, after all, this was a debate asked for by the Opposition at the end of a period in which a large number of days were at their disposal. Because they have changed the order of today's debates, I really cannot commit myself to giving days or parts of days to this matter.

CIVIL SERVICE PAY AND CONDITIONS (ROYAL COMMISSION)
The Chancellor of the Exchequer (Mr. R. A. Butler): With your permission, Mr. Speaker, I wish to inform the House that, in the opinion of Her Majesty's Government, the time has come for a comprehensive review of the pay of the Civil Service (including the principles which should govern it) and of certain other conditions of service such as hours and leave. For this purpose the Queen has been pleased to signify her intention of setting up a Royal Commission. I will, with permission, circulate in the OFFICIAL REPORT the full text of the proposed terms of reference. The Chairman will be Sir Raymond Priestley. The names of the other members will be announced later.
Mr. Attlee: May I ask the right hon. Gentleman what is the reason for setting up a Royal Commission on this matter? It seems unusual to announce it at the end of the Session, seeing that for many years these matters have been dealt with by Whitley Councils, which have all the information at their disposal with regard to comparisons of rates, wages, holidays and the rest. It is not at all clear to us what the Royal Commission is to inquire into. Is it with a view to improving the conditions?
Mr. Butler: The answer to the right hon. Gentleman is that it has been found that, about every 20 years, a review of this sort is necessary, and it is now 20 years since we had the last Royal Commission. On looking back, hon. Members will find that in these intervals some review of the Civil Service, which serves us so well, becomes necessary. What we need is some review of the pay structure of the modern Civil Service against the background of the modern society in which they have to work; and secondly, to look again at the principles upon which the pay of the Civil Service should be regulated.
Mr. Attlee: Surely, is not that a matter of Government policy? I am a little puzzled why there should be a Royal Commission, particularly in view of the choice of the chairman, who does not seem to be anybody with particular

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acquaintance with the subject, but one who has been mainly interested in Antarctic matters.
Mr. Butler: I do not suppose the right hon. Gentleman would wish to cast too cold a mantle on this singularly distinguished man, who has been vice-chancellor of two universities, is a man of distinction in many fields and of very wide experience. I personally consider that we are very lucky to get a man of such varied experience as chairman. The other question was why it should be a Royal Commission and should not be left to the Government. Strange to relate, there are some matters better done by Royal Commission than by any Government.
Miss Ward: May I ask my right hon. Friend whether the terms of reference will include yet another examination into the question of equal pay?
Mr. Butler: The question of equal pay is within the terms of reference, but, as the House knows, the Government's policy on this matter has already been stated; namely, that we are in favour of the general principle, and that we hope to make progress on the matter as soon as the economic and financial circumstances of the country permit. I shall draw the attention of the Commission to this statement.
Mr. W. R. Williams: Why will not the Chancellor be frank with the House? Surely it is not sufficient to say that, because we have not had a Royal Commission for 20 years, we want one now, irrespective of the need for it? Why does not the Chancellor be frank and tell us what gave rise to the suggestion in the mind of the Government?
Mr. Butler: I have told the House all that is in my mind, but if the hon. Gentleman wishes to plant some sinister ideas in it, he had better tell me them afterwards, and I will digest them.
Mr. Pannell: In so far as the Chancellor of the Exchequer has indicated that the Government accept the principle of equal pay, can we take it that the Treasury will not again be allowed to obstruct by putting in any back-door papers on this matter?
Mr. Butler: I am not aware that the Treasury has obstructed in the matter.
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The position of the Government remains clear, and I do not believe that it differs very much from that of the party opposite. The question is when the situation will arise which will make it possible to go ahead with this desirable reform.
Mr. Houghton: Is the right hon. Gentleman aware that all these matters are within the scope of the long-established machinery of joint negotiation of the Civil Service National Whitley Council, and that he has given the staff side of the National Whitley Council, of which I am a member, only one week in which to consider his intentions, the reasons for them, and to make observations upon them? Is he further aware that there has been no failure, neglect, deadlock or other obstruction in the working of this machinery which would justify the transfer of these matters to another body?
Further, does the right hon. Gentleman realise that the appointment of this Royal Commission will hamstring the whole of this machinery while it is sitting, and, finally, is he aware that the staff side of the National Whitley Council have declared that this step is wholly unwelcome? Is the right hon. Gentleman willing to reconsider such a grave decision impairing the joint negotiation machinery in the public service?
Mr. Butler: I would not accept the hon. Gentleman's statements despite his long experience in these matters. I value this joint machinery which has worked exceedingly well, and I am glad to say that relations have been very well maintained. We have explained to the staff side that there is no question of putting a spanner in the works, or stopping the machinery working. It will not be the case that the Commission will completely upset the machinery, and we have explained that to the staff side. Lastly, while the hon. Member has his own source of knowledge and his own authority, I would not accept, from my own experience, the suggestion that what is proposed is wholly unwelcome.
Mr. H. Morrison: Can the right hon. Gentleman say, unlike his refusal to say yesterday in connection with another matter, whether in relation to the work of this Royal Commission and the evidence which, presumably, the Government will give, the Government have a line on the subject of the inquiry?
Mr. Butler: Unlike certain previous Administrations, this Government has a line on everything. I can assure the right hon. Gentleman that the Government will faithfully put their view before this Royal Commission. The Commission is designed to be in the interest of the Civil Service as a whole, and I am sure it will be so.
Mr. Morrison: As the Chancellor has stated that the Government have a line upon everything—which is interesting—presumably, therefore, they have a line upon this, and surely the right hon. Gentleman ought to tell the House now what that line is.
Mr. Butler: We have a great deal of other business to do today, and I am satisfied that the Royal Commission will carry out its task in the best interests of all concerned.
Mr. Beresford Craddock: Do I understand that the terms of reference are to include an inquiry into the present structure of the Civil Service in order to satisfy ourselves that it is capable of falling in with the requirements of modern conditions?
Mr. Butler: I referred to the pay structure, and the hon. Member should accept that as the accurate description, and then read the terms of reference which I am circulating.
Mr. Callaghan: Does not the Chancellor realise how thin it sounds when he says that we do this sort of thing about every 20 years in view of the fact that there has been a re-organisation of the structure of the Civil Service since the end of the war? If he bases his case on this, why has he drawn the terms of reference so narrowly that this time they include only pay and conditions of service which, as my hon. Friend the Member for Sowerby (Mr. Houghton) says, are dealt with by a complex of trade union and Whitley Council negotiations? What deductions does the right hon. Gentleman expect us to draw from a situation in which he is not willing to allow the Royal Commission to review the organisation and structure of the Civil Service, but merely to look at their pay and conditions of service?
Mr. Butler: I said that it was necessary to deal with the principles upon
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which the pay structure is based, and it will be within the terms of reference to look into the hours of work, remuneration for extra duty, annual leave allowance, and matters of this sort. As this has been designed in the interest of the Civil Service, I hope that the House will consider it in that spirit.
Mr. Speaker: I have to inform the House that there are two other statements of considerable length, and that we have a short time in which to debate a very interesting topic after that.
Following are the terms of reference:
To consider and to make recommendations on certain questions concerning the conditions of service of civil servants within the ambit of the Civil Service National Whitley Council, viz.:—

(a) Whether any changes are desirable in the principles which should govern pay; or in the rates of pay at present in force for the main categories—bearing in mind in this connection the need for a suitable relationship between the pay of those categories;

(b) Whether any changes are desirable in the hours of work, arrangements for overtime and remuneration for extra duty, and annual leave allowances;

(c) Whether any changes are desirable within the framework of the existing superannuation scheme.

ANGLO-LIBYAN TREATY (SIGNATURE)
The Minister of State (Mr. Selwyn Lloyd): With your permission, Mr. Speaker, and that of the House I will make a statement on the Treaty of Friendship and Alliance just signed between this country and Libya.
Just over 10 years after the liberation of Cyrenaica, Tripolitania and the Fezzan during the Second World War, I take great pleasure in informing the House of the signature yesterday at Benghazi of a Treaty, and related Military and Financial Agreements, between this country and the United Kingdom of

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Libya. The texts of these Instruments have today been laid before the House in a White Paper.
Ever since His Majesty King Idris (then Amir of Cyrenaica) became our ally in the recent war, the relationship between the two countries has been close, and it was during our administration of Cyrenaica and Tripolitania that Libyan independence was achieved at the end of 1951, in accordance with United Nations resolutions.
The Treaty provides that Libya will afford us military facilities, and that the United Kingdom will furnish financial assistance in order to help Libya to enjoy financial stability and orderly economic development. The military facilities are set out in a Military Agreement, whereby we are permitted to station British Armed Forces in Libya under conditions agreeable to both parties.
For our part, we have undertaken in the Financial Agreement to provide financial aid for 20 years, the period of all three Instruments, and have agreed to pay during each of the first five years £1 million for economic development and £2¾ million as assistance towards the Libyan budget. A re-assessment will take place at the end of each five-year period.
Provision for the necessary funds will be made annually in the Foreign Office Grants and Services Estimate which will, of course, be subject to Parliamentary approval. Her Majesty's Government propose to ratify the Treaty and Military and Financial Agreements after they have lain before the House for the customary period.
Meanwhile, the Treaty and the Military and Financial Agreements are being put into operation at once, in advance of ratification, in order to preserve continuity during the present financial year. Token provision for this was made in the Supplementary Estimate which was approved last week; and approval will be sought for a specific provision in the next Supplementary Estimate. In the meantime, the necessary payments will be made from the Civil Contingencies Fund.
We believe that this settlement will form a sound basis for continuing and fruitful collaboration between the two countries. It is an arrangement fully consonant with the independence of
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Libya, consistent with the principles of the United Nations Charter, and, as I believe firmly, a contribution to the peace and security of the area.
Mr. H. Morrison: Naturally, we shall all be examining the matter in further detail in due course. In the meantime, I would only say to the right hon. and learned Gentleman that, in principle, I think this Treaty is one that should commend itself to both sides of the House. I know that it was a subject on which the late Mr. Ernest Bevin worked very hard over the years that he was at the Foreign Office, and I should like to congratulate the right hon. and learned Gentleman on having achieved this Treaty between two United Kingdoms.
Mr. Bellenger: May I ask the right hon. and learned Gentleman whether this is exclusively a Treaty between Libya and ourselves or whether it is envisaged that at any time it will form part of a wider organisation, such as N.A.T.O., for airfields or things of that nature?
Mr. Selwyn Lloyd: At present, the Treaty is one between us and the United Kingdom of Libya, but there is nothing in it inconsistent with a wider development which I think many of us would like to see.

POST OFFICE STAFF ASSOCIATIONS (RECOGNITION)
The Assistant Postmaster-General (Mr. David Gammans): With the permission of the House, I should like to make a statement on the decision of the Government on the recognition of staff associations in the Post Office.
My noble Friend deferred any immediate decision on the Terrington Report in the hope that it might still be possible to bring the recognised and unrecognised Post Office associations together. In one case a settlement has been reached, that of the National Guild of Motor Engineers, which has agreed with the Post Office Engineering Union to amalgamate on terms which give the motor transport staff in the Post Office more voice in their affairs. I congratulate both parties on the good sense and statesmanship they have shown.
I will now deal with the case of the Engineering Officers (Telecommunications)

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Association and the Post Office Engineering Union. It is not disputed that on the basis of numbers E.O.(T.)A. was entitled to the consideration which one of my noble Friend's predecessors had promised. Consideration, however, is a very different thing from automatic recognition. The consideration that was promised has certainly been given in full measure.
Since this matter was first raised, the situation has changed in several respects. My noble Friend has had the benefit of the advice of an independent committee under the chairmanship of Lord Terrington. He has also had the advantage of the opinion of a man with wide experience in labour relations, Sir Richard Lloyd-Roberts, whose appointment was agreeable to both sides and who attempted conciliation between them. The advice tendered in each case was the same: that E.O.(T).A. should not be recognised.
There are some facts of which the House may not be fully aware. As pointed out by the Terrington Committee, out of 60,000 engineers, the grade of technical officer, for which E.O.(T).A. claim recognition, comprises some 14,000; but members of this grade hold 16 out of 23 places on the Executive of the Post Office Engineering Union. This grade also has ample representation at lower levels in the P.O.E.U. structure. Moreover, each separate section has its own separate conference, and although the National Executive Council has ultimate power to override the sectional bodies this power is rarely, if ever used.
In addition, the Post Office Engineering Union, during the recent negotiations, made an offer, in my view almost unprecedented, to alter their rules so as to provide that no recommendation by a sectional committee could be over-ruled by the Executive Council without a two-thirds or even higher majority. As I have already said, the grades which E.O.(T).A. seek to represent already possess a majority of at least two-thirds on the Executive Council.
All these facts lead to the inevitable conclusion that the interests of the staff whom E.O.(T).A. claim to represent are already fully safeguarded and that no injustice is being done or is likely to be done to that staff. While, therefore, he
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honours the persistence and sincerity with which E.O.(T).A. have fought their case, my noble friend is afraid that there are no valid grounds, as things are now, for acceding to their claim for recognition.
There remain two other cases that I must deal with; first, the National Association of Postal and Telegraph Officers and the Union of Post Office Workers. N.A.P.T.O. claim to represent a grade numbering 21,900; only 2,600, or about 12 per cent., are in N.A.P.T.O., the rest being in U.P.W. On figures, N.A.P.T.O. do not qualify even for consideration; on merits their case is not strong either. I should mention that U.P.W., like P.O.E.U., have shown their willingness to facilitate a friendly settlement by amending their rules. My noble Friend is afraid that N.A.P.T.O. have not made their case, and for this reason he is unable to grant them recognition, although he appreciates the sincerity of their aims.
In the case of the National Association of Telephone Supervising Officers and the Association of Controlling Officers, both associations agreed to the appointment of Sir Richard Lloyd Roberts as conciliator, and my noble Friend is now considering his report.
It has, of course, for long been accepted that the departmental classes of the Post Office are not typical of the rest of the Civil Service and I would therefore make it clear that what I have said does not apply to the Civil Service generally. In particular, nothing I have said in any way invalidates the undertakings given in 1951 to the staff side of the Civil Service National Whitley Council that the findings of the Terrington Committee would not result in any change being made in the system in operation for general service classes.
I have tried to give a complete picture of the main recognition disputes in the Post Office. It would, however, be unwise to lay down any hard-and-fast rules for the future, and my noble Friend will continue to consider any future claims on their merits.
Mr. Hobson: Is the hon. Gentleman aware that the acceptance by Her Majesty's Government of the Terrington Report, welcome as it is, is a corroboration of the statesmanlike policy which was accepted by the Labour Government when in power? Will the hon. Gentleman see that the statement in question

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is brought to the notice of the Financial Secretary to the Treasury?
Mr. Gammans: While I agree that the statesmanlike policy now being accepted by the Government is the same as under the last Government, I would remind the hon. Gentleman that my hon. Friends on this side of the House divided the House because they were not satisfied that full and impartial consideration had been given to this claim.
Sir R. Grimston: With regard to E.O.(T.)A., is my hon. Friend aware that there is on the Order Paper a Motion containing 47 names of Members on this side of the House expressing a contrary view to the one which he has enunciated, having regard to the past history of this organisation? Does his statement mean that in the future the door is bolted and barred to any further consideration of E.O.(T.)A.'s claim in all circumstances?
Mr. Gammans: With regard to the first point raised by my hon. Friend, I would remind him that we are to have an Adjournment debate on this subject tomorrow. In regard to the other point which he raised, my noble Friend, as I said in the statement, has said that he
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will consider any future claims on their merits, and he has now made a decision in this particular case on the facts as they are at this moment.
Mr. Wallace: May I ask the Assistant Postmaster-General whether he and his noble Friend are quite satisfied that consideration was full and impartial in this case? Is he aware that on this side there are many more than 47 Members who welcome his declaration this afternoon?
Mr. Gammans: Yes, and I am glad of what the hon. Gentleman has said. I would remind him that since there was a debate in this House there have been two impartial inquiries, of which the House did not have the benefit at the time we last voted.
Several Hon. Members Several Hon. Members rose——
Mr. Speaker: Order. We are debating this subject tomorrow.

ADJOURNMENT (SUMMER)
House, at its rising Tomorrow, to adjourn till Tuesday, 20th October.—[Mr. Crookshank.]
ORDERS OF THE DAY

  CONSOLIDATED FUND (APPROPRIATION) BILL
  Considered in Committee, and reported, without Amendment.
  Motion made, and Question proposed, "That the Bill be now read the Third time."
  Mr. Ellis Smith Mr. Ellis Smith (Stoke-on-Trent, South) rose——
  Mr. Speaker: Is the hon. Gentleman rising to a point of Order?
  Mr. Ellis Smith: Yes, Mr. Speaker. The point, which is one for the future, is that there are certain standard charges against the Exchequer in this Bill, and whilst I do not want to raise the matter at present, I hope that in future, in view of its seriousness, the House will consider these standard charges before we part with the Consolidated Fund (Appropriation) Bill.
  Mr. Speaker: We are now at the Third Reading stage. The matter should have been raised earlier.

KOREA AND FAR EAST
4.0 p.m.
Mr. C. R. Attlee: I make no apology for having asked for the business for today to be changed. Indeed, I think that I should have been remiss in my duty if I had not taken that action, because the House is about to rise for the Recess and very serious issues of foreign policy have arisen. It was quite clear that these matters had come somewhat unexpectedly to the Chancellor of the Exchequer. He could not give a full answer at Question time yesterday nor, I think, has a full answer been given in another place. Therefore, it is right that we should debate these matters here. I do not intend to take up much time. I have already spoken recently on the general position, but the point which I wish to bring before the House is the statements made by the United States Secretary of State, Mr. Foster Dulles.
In view of the interjections that sometimes come from the other side of the House, I had better make it perfectly
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plain from the start that I am not anti-American. There is nothing anti-American in raising this matter. Indeed, I have endeavoured to co-operate to the full with the Government of the United States. I believe that it is essential that we should do so, but we must also remember that co-operation does not come from one side only. There is a two-way traffic in this.
We have very recently had our Ministers in Washington discussing foreign affairs and the noble Lord, the Acting Secretary of State for Foreign Affairs, has returned from Washington. He has given his account in another place and an account has been given here, and yet we suddenly have a number of statements made which would seem to us to run contrary to the policy of the present Government; and I think that it is right that the Government here should have the opportunity of stating where they stand.
I think that everybody was disturbed by the report of the statements made by Mr. Foster Dulles to a Press conference. It is always difficult to judge of what happens at a Press conference. It is not like the kind of considered speech that is made by a Secretary of State in this House. But this has been very fully reported. I think that the leading article in "The Times" of yesterday expressed very much the opinion of the ordinary citizen of this country when he read that report, because the report seemed to be of a laying down of conditions by the United States Government, the taking of a line by the United States Government in regard to the political consequence of affairs in Korea, without taking into account the views of their colleagues.
The whole of this affair in Korea has been an undertaking by the United Nations. It has been a vindication of the United Nations. We all gladly recognise that the greater part of the heat and burden of the day has been borne by the Americans and we are duly grateful, but we have also taken our share in it and it does seem a peculiar thing that, just when the Assembly is to meet and when we are looking forward to those discussions, there should be this unilateral declaration of policy.
I think that Mr. Lester Pearson, a very distinguished chairman of the Assembly, expressed the common view as to what

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should take place—a general round-table conference at which all these matters could be considered in a spirit of give and take. But it seems to us that the American Secretary of State limited it to the one question of Korean unity. We all wish to see Korean unity just as we all wish to see German unity. We may wish for it but it may not be easy to achieve, and it is a question of what kind of unity we shall get. It may well be that Korean unity may not be achieved at once. That does not mean that there will then be a reversion to war. There might be some modus vivendi for a considerable time.
But it seems extraordinary to me that a declaration should be made that in this conference Korean unity must be achieved and that, failing that, the United States representative will walk out of the conference. That seems to me to be quite contrary to the whole of the spirit of the working of the United Nations, and we all recognise the magnificent support of the United Nations which has been given by the United States Government from its inception. We are very grateful to them. This seems to be quite out of tune. There is a further general underlying suggestion that if everything does not go exactly as Mr. Dulles wants it, then the United States may go on on its own. I think that is a very dangerous matter.
We did not enter into this contest with any desire to go to war. We entered into it, as indeed did the United States Government, in order to vindicate the principle of the United Nations. We certainly did not enter into it on behalf of Mr. Syngman Rhee, to make him ruler of a united Korea. That might or might not come about, but Mr. Syngman Rhee now seems to be consulted and there seems to be a desire to co-ordinate policy with Mr. Sygnman Rhee rather than with the other members of the United Nations who are taking part in Korea. I fully recognise the sacrifices made by the South Koreans. They have put up a fine fight, but other people have to be consulted—the Australians, the Canadians, the Turks and ourselves and the rest of the United Nations, because the whole basis of this matter was the United Nations.
It seems to us strange that after policy had been co-ordinated at Washington we should have statements of this kind made.
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Further, we are concerned in this matter hot merely from the point of view of Korean unity but from the general point of view of securing peace in the Far East. I will not enter further into that, except to say that another disturbing factor is the emphasis laid on the continuance of economic measures against China. An economic blockade of that kind is a double-edged weapon. It may be that China feels the edge. We feel the edge as well. Apparently America does not. We do not suggest that immediately we begin those talks we can at once get a lifting of the blockade, but it ought to be a very early consideration.
In the same way, we do not suggest that before we have started the armistice talks we should have recognition of the de facto Government of China. But it is a matter that must be considered. To leave all these matters out, to narrow this down to one question, the unification of Korea, seems to me dangerously likely to make the whole conference infructuous and certainly to disregard the legitimate views and interests of other members of the United Nations, including ourselves.
I do not want to make a long speech on this matter, but I want to give the right hon. Gentleman the opportunity of making clear what is the British position. There are many things that one might say on this. There have been some very shrewd comments in the American Press. That very distinguished publicist, Mr. Walter Lippmann, suggests that Mr. Dulles is immobilised by his own promises. That is a very dangerous thing. We are not immobilised by those promises. We have the duty to put forward our point of view, and I hope that we shall press that, when this conference comes along, it shall not be bound within some narrow limits, that there will be a full give and take, and that we are aiming at something more than putting Mr. Syngman Rhee in command of Korea.
We are out to try to get a peaceful settlement throughout the Far East, so that this should be the beginning, and the settlement of the Korean question is only the beginning. Unless this is taken in a broad and statesmanlike way, it will not be the beginning of a new era of peace. Therefore, I hope the right hon. Gentleman will make it plain that we cannot subscribe to these narrow policies, but that we shall put forward our point of

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view and claim that that should have full consideration and, above all, that we should insist that this is a United Nations matter and not a matter of purely American concern.
4.13 p.m.
The Chancellor of the Exchequer (Mr. R. A. Butler): I well understand the reasons why the right hon. Gentleman the Leader of the Opposition has raised these matters today. As he says, it is almost impossible to give a proper picture at Question time by Question and answer, and, if I may say so to those hon. Members who have questioned me, I am only too glad to do my best to be at their service today and to give some picture as best I can of the attitude of Her Majesty's Government.
We welcome the opportunity before the House rises for a clarification of future policy on Korea and on Far Eastern problems generally, and so, while I shall try not to speak very much longer than the right hon. Gentleman, because other Members no doubt wish to state their views, it will be necessary for me to cover several matters if I am to do justice to what I have just said. It is, of course, important that we should try to get a little clarity and some sort of skein of thread which we can follow in what is undoubtedly a very complicated situation.
Before I come to some of the detailed points raised by the right hon. Gentleman, perhaps I might answer quite definitely, for the sake of this House and of the country, that the policy of Her Majesty's Government is firmly based on the United Nations and the United Nations Charter and its principles. The right hon. Gentleman also asked whether we intend to use the machinery of the United Nations, and I can answer that question with an equally emphatic "Yes."
Further, to make matters even clearer, I, too, have read the statement of Mr. Lester Pearson, and I will say that it is our objective to enter these discussions, to compare notes with our partners and allies, and altogether to conduct ourselves as a member of the United Nations itself and take full advantage not only of that opportunity for discussion but of the spirit of the Charter itself. We based our policy on that, and I may say in passing, as it is a very important element
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in this problem, that so have the United States Government. It was the United Slates Government that introduced into the Security Council on 27th June, 1950, the resolution which constitutes the authority for the United Nations action in Korea itself. It recommended—I would remind the House of the terms—
"that the members of the United Nations furnish such assistance to the Republic of Korea as may be necessary to repel the armed attack and to restore international peace and security in the area."
Not only do the objectives remain as stated by the right hon. Gentleman, but we are seeking international peace and security.
It is, however, in our view, essential that the same machinery should remain, that not only should we have carried through the struggle under the auspices of the United Nations but the peace settlement should be made under the auspices of the United Nations also. It has been essentially a United Nations action, and the right hon. Gentleman is quite right in saying—we all endorse what he has said—that the United States have borne a vast burden; but we have also borne a share of the burden ourselves. The first thing to make absolutely clear, therefore, is that our policy has in no way changed.
The right hon. Gentleman referred to certain reports of a Press conference with the Secretary of State in the United States. These Press reports are necessarily truncated, and fuller reports often modify the impressions received. I do not doubt though that some of the news received yesterday from the United States may have cast doubts on the position of the United States as regards future Korean problems.
The right hon. Gentleman and the House, therefore, may be glad to hear that even before the right hon. Gentleman and his friends voiced their apprehensions on this score—long before, in fact, the right hon. Gentleman raised the subject today—my noble Friend and Her Majesty's Government had exactly the same reaction and had already decided to make our position clear to the United States Government. Accordingly, instructions were sent yesterday morning to Her Majesty's Ambassador in Washington to make our position clear. I have already

1553
amplified those instructions by my statement, which I am sure will be fully reported, that we base our attitude and policy on the United Nations itself.
I would go further and give the House a very short statement of the nature of these representations, because I believe that if we are to clear up the position I must be absolutely frank with the House. In view of the obvious interest and feeling of the House, I will tell them that my noble Friend urged the United States Government to make every endeavour to induce President Syngman Rhee to abide loyally by the purposes of the United Nations both at the forthcoming meeting of the Assembly and at the Political Conference itself. We made that quite clear to the United States Government.
The House will want to know more than that. They will want to know what is the position of Her Majesty's Government if the South Korean Government break the Armistice. Let me make this clear beyond all shadow of doubt. Her Majesty's Government are in no way committed before the event to any action they may take. We reserve ourselves to be completely free to adopt whatever attitude we think right in the circumstances which may prevail at that time.
The right hon. Gentleman raised the question of the statement in the Press interview referred to about the decision of the United States Government after 90 days to walk out of the Conference under certain conditions. I am not going to attempt to make any explanations of the actions of another Secretary of State. I have quite enough to do under present circumstances in my present situation. Nor would the House wish me to comment on or to attempt to influence the policy of another and very friendly Power. I think it is legitimate to say that there are certain clarifications, at any rate, of these statements which have now come in from the United States Government which do give a rather better picture of at least one or more of these statements than we have already had in the very short Press reports.
For example, the right hon. Gentleman expressed some anxiety whether, after Mr. Dulles had made this statement about the 90 days, the United States would automatically resume the war. The report which we have now had from
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the State Department, and which gave us a full account of the Press interview, goes on to make clear—and this answers another of the right hon. Gentleman's points—that the question of what the United States Government should do, if anything, would then be a matter for discussion and agreement at that time in the light of the surrounding circumstances. That part was not included in the original Press summary, and that indicates that discussion and agreement are intended—and we take that to mean discussion and agreement with the partners and allies in this business. That is our interpretation of those remarks. If that be the case, it gives a clearer picture of what was intended, and what was reported in a somewhat truncated manner.
I should like to go further in stating the attitude of Her Majesty's Government about this statement on the "walkout," as it is called. We are in no way committed to any such statement. Furthermore, I want to make it absolutely clear—and in this I express the view of my noble Friend and Her Majesty's Government—that we should expect definitely to be consulted before any such action was taken.
Now I come to another aspect of the statement, in relation to the veto. Some anxiety has been expressed about the statements in the Press concerning the vetoing by the United States Government of the entry of China into the United Nations. While I shall be dealing more fully with this question of Her Majesty's Government's policy or attitude towards the entry of China into the United Nations, I think it only right to state that in the fuller account we have now asked for and received of this interview, Mr. Dulles was asked, "Would you do it?"—in relation to the veto—and he answered that he was reluctant to see such a step taken and he did not think it would be necessary. Those are clarifications both in relation to the statement about the 90 days and in relation to the veto.
There I leave the statement of another Secretary of State and another Government, and come to a discussion of the action which will be taken and the attitude adopted by Her Majesty's Government. I have stated that we would expect to be consulted before any action such as a walk-out took place, but we should like to consider—and no doubt the House

1555
would like to hear—what would be the attitude of Her Majesty's Government if any action were taken by President Rhee, for example, which might result in the breaking of the armistice. Then, clearly, a situation of the utmost gravity would arise.
The right hon. Gentleman is perfectly legitimate in saying that the House is about to rise, and that is why I am trying to enter into all these points and give the House a picture before it rises. In the view of the Government, the first step should be consultation between Her Majesty's Government and the fellow members of the United Nations. Indeed, I would go further and say, in answer to the point which I am sure will be raised from the benches opposite, that we consider that in such an eventuality it is inconceivable that the United Nations itself should not meet. Hon. Members must not muddle that statement with the fact that the United Nations is in any case going to meet to deal with the particular matter of Korea in about a fortnight's time.
In the alternative event of there being a renewal of aggression by the Communists, our view is that it must be within the framework of the United Nations that any risk of renewed aggression, or renewed aggression itself, should be resisted. Into that picture falls the gloss upon the statement made by the Secretary of State in relation to the 90 days' issue, which I quoted in our fuller report. The House may like further to hear what are our views on how we think events may develop. Here again, I shall try to give them as much information as I can, bearing in mind that we accept at once the advice of the right hon. Gentleman that in matters such as this it is wise—as, indeed, "The Times" leading article said—to keep the situation as open as possible, and just have the one rule that we shall discuss with our partners and work within the framework of the United Nations.
Subject to that, I shall give the House some idea how we think events might develop. The first event will be the meeting of the General Assembly, which has been convened for 17th August. The House will be glad to hear definitely that my right hon. and learned Friend the Minister of State will represent Her
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Majesty's Government at the meeting. A request was made by the right hon. Member for Lewisham, South (Mr. H. Morrison) that our representation should be at Ministerial level. I am glad that we have somebody with such great experience of the United Nations, who will go straight from this House, knowing the impression of the statements that have been made on both sides of the House, in order to represent Her Majesty's Government at this meeting.
It may be necessary, if there is a debate and points are raised, for my right hon. and learned Friend to wind up the debate in a short speech later tonight. My right hon. and learned Friend will note all the points that may be raised and they can be answered before we go on to the next subject of debate. We hope that the General Assembly will pass a resolution setting up the Political Conference, which is the next step, and prescribing broad terms of reference. So the second event will be this Political Conference.
I should like to say a word as to its composition. Here again, we should like to clarify the attitude of Her Majesty's Government. The composition can be settled only after consultation with the various Governments concerned, but we have certain preliminary views, and as I am stating the views of Her Majesty's Government I should like to state these. We consider that there is a very strong case for urging that the following should be present: the United States of America, ourselves—I have already indicated in answer to Questions that we expect that—France, Soviet Russia, the South and North Koreans, the People's Republic of China, Australia, India, Turkey, and perhaps others. That is the most comprehensive statement of our views made so far, and I thought the House should have it.
As regards the agenda, it is quite clear, as the right hon. Gentleman said, that the Korean problem must come first. It is too early to forecast the precise terms of a permanent settlement for Korea. The right hon. Gentleman referred to unification. All we can give is an idea of our general aim, which must be a permanent solution, which alike secures freedom and unification in Korea and the safety of her neighbours within the conception of the Charter of the United

1557
Nations. As the right hon. Gentleman will be the first to realise—and as, indeed, he hinted in his remarks—this may not all be practicable immediately. In that case there may have to be an interim period of pacification and rehabilitation. Here I should like to pay tribute to the sufferings of Korea in this dreadful struggle, which has lasted so long. It should be the object of all civilised nations to do their best to help in this rehabilitation.
The aim and object of the Political Conference will be to make progress with Korean problems, but we hope for something further—and this takes up some answers given at Question time and attempts further to clarify them. We hope that the success achieved and the atmosphere created, against the background of the general situation in Asia—where we hope to see the same sort of relief of tension as we hope for in Europe—will lead to consideration of the other outstanding major problems in the Far East.
This brings me to the question of Chinese representation in the United Nations. This matter, strictly, can be decided only by the United Nations, and not by the Political Conference. All the Political Conference can do is to make agreed recommendations. I used the word "decided" in connection with the Political Conference, in answer to a question by the right hon. Member for Lewisham, South yesterday, and I must therefore make it clear that the decision, naturally—as it is a matter for the United Nations—must be for the United Nations. Otherwise, the tenor of my remarks is not altered.
Our conception of the United Nations is that of a family of nations and not of an anti-Communist alliance. The hon. Member for Uxbridge (Mr. Beswick) put down a Question today, which was not reached. I do not want to dodge it. I saw some Members looking anxiously at the clock as Question No. 45 came up. I was equally anxious. I was asked by the hon. Member for Uxbridge a Question about the three Powers' common policy towards China referred to in the communiqué and I want to give an indication of my answer to that. It was agreed at the talks in Washington that, while any immediate change of policy would be impracticable until the situation
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is clearer, this question could be further examined in the light of experience gained after the armistice. That seems to me to coincide with the attitude adopted by the Leader of the Opposition that we have to do one thing at a time. That is why we have not adopted any rigid attitude on this question, and the position in this matter, which is of such interest to the House of Commons, is open, as it should be.
I want further to describe the attitude of Her Majesty's Government. The Government's views on this question of Chinese representation in the United Nations have been stated from time to time and I should like to give this resumé of them; and these were the words of the Foreign Secretary, the right hon. Member for Warwick and Leamington (Mr. Eden) on 18th June, 1952, when he said:
"I am in complete agreement with my predecessor's observations of last June, which I may, perhaps quote."—[OFFICIAL REPORT. 18th June, 1952; Vol. 502, c. 1183.]
He then quoted the words of the right hon. Member for Lewisham, South on 27th June, 1951, as follows:
"His Majesty's Government … believe that … the Central People's Government should represent China in the United Nations. In view, however, of that Government's persistence in behaviour which is inconsistent with the purposes and principles of the Charter, it appears to His Majesty's Government that consideration of this question should be postponed."—[OFFICIAL REPORT, 27th June, 1951; Vol. 489, c. 1371.]
I can take that matter further, because that statement was made before the armistice was signed. I should like to endorse the spirit behind that statement made by the Foreign Secretary and say that the accretion or addition which I can make to it today is that we hope and trust that the day for settling this and other problems will have been brought nearer by the armistice.
A word about trade with China. The right hon. Gentleman said he did not wish us to lift the blockade at once. My attitude and the attitude of the Government towards trade with China has frequently been stated. Our policy is based on the embargo on the supply of strategic goods, and any change in this policy can be made only in co-operation with other Governments which maintain similar strategic controls. Again, the fact that an armistice has been signed, that the

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United Nations is meeting and that the Political Conference is coming on means that this attitude, like the other which I mentioned, is open, and if a situation arises when it can be envisaged that it should be altered, then we shall be ready to consider that matter. At the same time it is our policy to carry out strictly, while it is in being, this policy which we have agreed upon, and secondly it is our duty to develop trade in non-strategic materials. That is not only in the interests of the country from the international point of view, but I can endorse it as being vital in the interests of the country from the economic point of view.
Mr. Woodrow Wyatt: I think we should like to be clear on this matter of the policy both about the admission of China to U.N.O. and the removal of the embargo on strategic materials. What I do not quite follow is this: does the right hon. Gentleman expect to pursue both those matters only at the Political Conference or before he pursues then at U.N.O.? Supposing the Political Conference were to last as long as the truce negotiations, does that bar us from proposing at U.N.O. that both these things should now be altered?
Mr. Butler: That will depend on the circumstances of how long the Political Conference lasts and what progress it makes with the first item on its agenda, the main item, namely, the settlement of the Korean problem. I would not exclude anything which is based on statements already made by Her Majesty's Government about their attitude on those matters. I should not like to be pressed to go further today because we must take one step at a time and further, as the House will be aware, on both these subjects we must have some consideration for our allies and partners and we must behave as a loyal member of the United Nations in approaching these important matters, otherwise my opening remarks would not be binding and we should not be acting within the concept of the Charter of the United Nations.
Mr. Geoffrey Bing: Would the right hon. Gentleman not now consider the relaxation or at least the reexamination of the strategic list? There are included on it a great number of things which have only the most distant
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strategic value, such as streptomycin, which was denied to China on the ground that it might be used to cure somebody of trench fever. Japan has voted for complete freedom of trade. In those circumstances, we should at least review our list to see that it is not more stern than the lists of other countries now in the United Nations.
Mr. Butler: There is no embargo on streptomycin; it is permitted only in small quantities. This is a question which I undertake would be looked at from the point of view of need, but I cannot go further than that today.
I have attempted to cover most of the points raised by the right hon. Gentleman. Hon. Members may wish to have a detailed and absolutely accurate account of exactly how the policy of this Government is going to develop over the summer. That is really impossible. It contrasts with what I said originally that we have to work as a loyal member of the United Nations, but the fact is that we are going to approach the summer and all its responsibilities in the spirit which I have indicated.
I have been only too glad to give the House as good a picture as I can before we rise, but in considering these problems I think we should bear in mind some words which were used by the Foreign Secretary on his landing after his illness and before he leaves to complete his recovery. He used these words:
"I know and the Americans know that there are bound to be differences between us—political issues we shall have to argue. They would not respect us if we did not argue them strongly and firmly."
That remains the attitude of Her Majesty's Government and that is the spirit in which we shall conduct our partnership. My right hon. Friend went on to say:
"As long as we try to understand the point of view of the other, no great harm will be done."
I want to conclude by saying that whatever opportunities there may be can only be taken, as they should be taken, and not missed, as they might be missed, if we maintain the absolute unity of front with our American friends, with our allies in N.A.T.O., with the West German Republic and all the countries of the free world; if we base ourselves on the spirit and concept of the United Nations Charter; and, lastly, if in this House, despite

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the natural bickerings which we all have to put up with and the natural difficulties which we face, we have a little less of politics and a little more of the united front. Then we shall get through this exceedingly difficult time and come to our goal of peace.
4.39 p.m.
Mr. John Strachey: The Chancellor of the Exchequer has answered some of the questions put to him by my right hon. Friend the Leader of the Opposition, but he does not seem to have answered them all. He has assured the House that Her Majesty's Government's policy will be based on the United Nations. That is extremely satisfactory, but surely we did not expect anything else. What we wish to know is what Her Majesty's Government's policy is to be in the United Nations, and on that point the right hon. Gentleman seemed to me to be very much less clear.
There is no question, of course, and no one from this side of the House is urging for one moment, that Her Majesty's Government should now take unilateral action either on trade with China or on the matter of the recognition of China in the sense of her membership of the United Nations. We know that we cannot do that. We cannot attempt to "go it alone" in this matter. What, in fact, my right hon. Friend was complaining about was that the American Government showed distinct symptoms of trying to "go it alone" in the diplomatic field. Of course, it is perfectly right of us to base all our actions on the United Nations, but for that very reason the House does deeply desire to know what the policy of the Government is to be at the meeting of the General Assembly and subsequently to that at the meeting of the conference, and I cannot say that the Chancellor seemed to me to tell us at all clearly what we were going to urge there.
It will not be very easy. We know from the statements of the American Secretary of State that they are approaching this conference with a very different attitude from that which has been put forward by the Chancellor. All the more reason, surely, why the Government should speak in the firmest possible way and tell the House at the earliest possible chance what their policy is going to be. The two crucial issues are the ones raised by my right hon. Friend today. Are we going
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to press, not by unilateral action but by action by the United Nations itself, for the easing and subsequently the raising of the trade restrictions on China, and, beyond that, for the membership of the United Nations of the actual Government of China?
We know from the statement of the American Secretary of State that it will be exceedingly difficult to persuade America on these two issues, and we have, no doubt, got to exercise great patience. We cannot have our own way on these issues immediately any more than America will be able to have her own way. We realise that to the full, but is not all this all the more reason for the Chancellor's going much farther than saying that these matters are open?
This is surely the occasion on which he should have told the House quite clearly that we should press at the meeting of the General Assembly and at the meeting of the subsequent conference our own policy, which has always been the policy of successive Governments of this country, that as soon as the shooting stopped in Korea we should raise the issue of the easing of trade with China and subsequent to that of Chinese membership of the United Nations.
Surely it would have a real and wholly beneficial effect if the Chancellor or the Minister of State told us today that, in principle, these were the two things we were going to urge in the vital negotiations which are ahead of us during the forthcoming Recess. We can take our time in doing it; we can do it in the most tactful way; we should use every method of persuasion with our American allies; but surely, at the outset, we ought to make it clear that those are our objectives.
We can understand the American mood. We have had a distinguished American here in this country in the last few days, a liberal American, Mr. Adlai Stevenson, and he has made us understand American feelings on this matter; and they are very natural; but they are not wholly rational. They are emotional, and we have the difficult task, the Government's representatives have the difficult task, of overcoming those natural American feelings and of making them see that membership and representation of the Chinese Government in U.N.O. is not a

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reward: it is the simple fact that the United Nations, if it is to work at all, must be an assembly of all the real, actual Governments, good, bad or indifferent, that exist in the world. To deal with Far Eastern issues so long as the real, actual Government of China is excluded from the counsels of the United Nations will be exceptionally difficult.
How long it will take, I do not know, but it may take a long time to make the American nation realise that, but that is all the more reason surely why we should in the calmest but also the firmest way begin the task of doing it. Because we have got surely to consolidate the achievement—and it is a great achievement—of this armistice. This armistice makes it possible some day, not, I think, in the very immediate future, but some day, to achieve peace in the Far East.
I am not suggesting that the new Government of China will be an easy Government to deal with. Very few young revolutionary Governments are easy Governments to deal with. But again that is all the more reason why they should be represented in the United Nations, because that is the place where they can be dealt with. The obvious argument is that as long as Russia is a member of the United Nations there can be no logic in excluding the other large Communist Government in the world. Therefore, it is a matter, I think, of the greatest regret that at the very end of this Session we have not yet, at any rate, had a clear statement from the Government of their objectives in these negotiations.
Cannot we be told not simply that these questions are open—we know that—but that our objective will be to persuade the majority of the United Nations and, above all, of course, the American Government, because they are the most important Government concerned, that as a part, at any rate, of a settlement in the Far East it is necessary to modify our economic relations with China and to secure the representation of the actual Government of China on the Security Council of the United Nations? A clear-cut British declaration that that is our policy would have a considerable effect in the world today.
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We know we cannot impose that policy on our fellow members of the United Nations or on America, but we can say that those are the two objectives towards which we work. Cannot we hope that before the House rises we shall have a statement in that sense from the Government?
4.47 p.m.
Mr. Clement Davies: I want to say only a very few words. First, I thank the Leader of the Opposition, and I think the whole House would desire to do so—indeed, the whole country—for taking the opportunity to raise this matter today before we separate. It is a very great service not only to the country but to the world that we should have a clear statement from the Government. Secondly, I thank the Chancellor of the Exchequer for his very clear statement, his very firm statement. I do not see that he could have gone any farther today. He has made it quite clear that the object of the Government is the same as that of the previous Government, and that is to work within the United Nations.
I would just add this to the right hon. Gentleman the Member for Dundee, West (Mr. Strachey). I regard the main object of the United Nations as being contained in the famous preamble of the United Nations Charter. That is what we all desire to achieve. Nobody could have gone any further than the right hon. Gentleman has gone today. He has made it quite clear where we stand, and that our desire is for peace and understanding with everybody. So long as we adhere to that, we shall earn the gratitude of everybody.
4.49 p.m.
Sir Victor Raikes: I find myself entirely in agreement with what my right hon. Friend has said in regard to our working within the common fabric of the United Nations, but I am not by any means satisfied that it would be advisable for the Government at this moment to make a declaration which roughly amounted to this: having once got the armistice, irrespective or almost irrespective of what happens in the near future, we propose to accept the aggressor straight away in the comity of the United Nations.
The main difficulty with Southern Korea at the present time—and I think it is right that someone should say just a

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word in regard to the difficulty of our Southern Korean allies—is not merely that Dr. Syngman Rhee is a very difficult man, which undoubtedly he is, but the fear, and the not entirely unjustified fear, in South Korea that she may become a pawn of the great Powers and be left out on a limb at the end of the negotiations.
Mr. Ellis Smith: Is the hon. Member bearing in mind the appeal that the Chancellor of the Exchequer has made to the whole House in regard to this?
Sir V. Raikes: I quite appreciate the appeal of my right hon. Friend the Chancellor of the Exchequer, but when we are facing this sort of issue it is not a bad thing for a moment or two to consider what are the anxieties of certain persons who have had their country destroyed and who we want to bring into the general spirit of a lasting settlement.
I do not think I should be saying anything which could embarrass anybody if I were to say that, obviously, any country in the position of Southern Korea would have the same anxiety as to whether they were going to have their position secure or would have sufficient confidence in the representations to secure their future. After all, there have been instances in the past where countries have been left on a limb. Not least was the case of the Treaty of Yalta and what happened later to Poland.
If we want to give to the Southern Koreans confidence in the future, would the first move towards that be to take the step which the right hon. Gentleman the Member for Dundee, West (Mr. Strachey) more or less indicated? That was, that we should make it clear that practically as a result of the armistice, we were looking almost as the next step to the bringing of China into the United Nations, irrespective of the kind of steps we were taking in negotiations after the armistice had taken place.
What we really want to see is a united Korea. That may take time, but I am certain that if as a result of our negotiations within a period of time we could get free elections throughout Korea, with troops of neither side in any way within Korea during that period, we would have a precedent which might be of enormous value in a great deal of Europe in the
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years ahead. I should have thought that at this time it would be in the interests, both of our future negotiations with China and also of the future position of Korea, if our first step were to see how far in the Political Committee the parties who have signed the armistice can move forward in the direction of some sort of peaceful unification of Korea by means in due course of elections.
Mr. Philip Noel-Baker: Of course, everybody wants a united Korea, as, indeed, the Chinese and the North Koreans profess they do. Everybody wants to do that by free elections. But would the hon. Member also consider that it is very important as from now that we should persuade all the Koreans, including the South Koreans, that they must have a friendly China if they are ever to be secure, and that it is greatly in their interests that China should be a member of the United Nations and recognising that they are bound by the restrictions of the Charter?
Sir V. Raikes: Obviously, for a small and rather weak country like Korea, however she is unified, a friendly China must be of enormous advantage. But it is no good merely saying that we want a friendly China. The first step towards creating the spirit in which Korea could appreciate the possibility of a friendly China—she has had a bitter time from China in the last two or three years—would be some sign that China herself, as, I hope, may be the case, will be prepared to co-operate on the lines which have already been laid down by the United Nations for working for that end. If there are signs that China really is working for that end and that there will not be a million troops indefinitely in North Korea, it would then be very much easier, with the confidence of the Southern Koreans and everybody else, to begin to consider the question of China vis-à-vis the United Nations.
I only raised that issue because great suspicions and anxieties could be caused if the thing was turned the other way round and the South Koreans were to feel that the moment the Armistice was signed, the interests of China, as apart from their own interests were to be the immediate line and the immediate attitude of Her Majesty's Government. I welcome what my right hon. Friend has said because I

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think that in the framework of the United Nations we must be somewhat elastic until we see how far things develop towards the lasting peace which we all wish for.
4.56 p.m.
Mr. Sydney Silverman: I hope that the hon. Member for Garston (Sir V. Raikes) will not take it amiss if I say that it seems to me—I say it with some diffidence, because I have my own tendencies towards controversial speech—that the kind of speech he has just made is not the most helpful kind of speech to make at this moment. It depends upon raising the highly controversial questions—however little controversy there may be about them in this House, they remain highly controversial questions in the world—about the origins of the Korean war.
The hon. Member must not suppose that there are not two very strongly held opinions about those origins. There are many people in the world today who have more doubts about the rights and wrongs of that question, especially in the light of Mr. Syngman Rhee's recent performances, than they had in 1950, when nearly everybody thought that it was so clear a matter that it was not even necessary to hear the North Korean delegates and their point of view.
If the kind of debate that the hon. Gentleman had in mind was to take place, it would necessitate longer speeches than anyone has the right to make in a short debate like this. I only say that to him because I think we can, at least, all agree that if the most and the best is to be made in the shortest time of the opportunity afforded by the armistice, the less that either side says about the past, the better for the moment.
Bearing that in mind and looking towards the future, as we are all trying to do—how to rescue the world, if it is to be rescued, on the very brink of what might be a world-wide catastrophe absolutely unparalleled in all history—it is perhaps as well to see what the problems are, and not try to burke them or evade them or think that they can be settled by an eloquent demonstration of self-righteousness.
The Chancellor of the Exchequer said two things. Taken separately, each of
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them would command a wide measure of acceptance. One is the view that we must always, in all reasonable circumstances—I know that the right hon. Gentleman would not say in all circumstances; but in all reasonable circumstances—maintain a common front with the United States. Another thing that the right hon. Gentleman said is that the Government base their policy upon the United Nations Charter. Without wishing to be highly controversial about it, it is quite plain that there are circumstances in which there might conceivably be an opposition between those two policies.
For instance, take the question of the admission of China. No one at the time of San Francisco regarded the United Nations as an anti-Communist club. If it were so, the Soviet Union could never have been a member of it, and neither could some other nations. If that is so, then the mere fact that the de facto Government of China today is a Communist Government has nothing to do with its right to represent its country in the United Nations and in the United Nations institutions in accordance with the United Nations Charter. I am sure that in this country, at any rate, there would be no doubt about that.
The next point is that we shall not have a United Nations constituted in accordance with the United Nations Charter until China is represented there. The Charter clearly provides that there are five permanent members of the Supreme Council and that China is one of them. While we have a situation in which the Chinese people are not represented on the Supreme Council, it is a mere abuse of words to talk about the United Nations at all, because we have not got it. It is possible to say, "Oh yes, but in a technical, legal, documentary sense we have got it because the Government of Chiang Kai-shek is still recognised by some nations, its representatives are there, and therefore there is no such imperfections as you have been describing."
This may be a perfectly logical and consistent answer for the Americans to make because they still recognise, rightly or wrongly, the Government of Chiang Kai-shek as the Government of China. It may also be a perfectly valid answer for any other nation to make which still recognises the Government of Chiang

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Kai-shek as the Government of China. It is not a position which this country can tolerate because we do not recognise the Government of Chiang Kai-shek as the Government of China and we do recognise the People's Government in Peking as that Government.
It is perfectly true that so far it has been possible for us to avoid bringing that matter to a head because of the existing Korean situation. It is equally true, or nearly so, that so far we have a mere armistice in Korea which could conceivably break down, and therefore one can follow the Government when they say that the mere signing of an armistice does not automatically—the emphasis is on the word "automatically"—mean that this problem can be solved. It does mean, however, that assuming that the Political Conference were to fail through no fault of the North Koreans or of the Chinese Government, we could not go on indefinitely, and could not go on very long, prentending that we were basing ourselves upon United Nations principles or the United Nations Charter in present circumstances; that is to say, without the admission into the United Nations of the representatives of the de facto Government of China.
I recognise the difficulties, but all the same I think the Government could have gone much further in declaring their policy on that matter than they have gone; not merely because of the mere legal or technical points that I have been making, but for the much more important human reason that there can be no settled peace in the world unless we have peace in the Far East, and there can be no settled peace in the Far East until China is inside the United Nations.
It is not good enough to say that we will maintain our common front and our common policies with the United States of America and, at the same time, to say that we are basing ourselves on the United Nations Charter and the United Nations principles in circumstances where the major American parties—the Government party and the chief representatives of the opposition party—have both said, "We cannot conceive of any early circumstances in which this conflict can be resolved and the Chinese Government can be brought in." I think the Government might have gone a good deal further without embarrassing itself in
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future negotiations, in making it clear that they, too, believe that peace in the world must ultimately depend on peace everywhere in the world. Peace remains indivisible and it is impossible of achievement in the Far East without the proper recognition of the proper representatives of those who are de facto in control of the Chinese people and their resources.
That is one thing. The other thing is about the Korean development and the Political Conference. The Chancellor of the Exchequer had a good deal to say about the unification of Korea, and so had my right hon. Friend the Leader of the Opposition. With the unification of Korea the United Nations has nothing whatever to do. When it intervened, it was in order to repel an aggression by one half of that divided country upon the other, or at any rate on the facts as it then knew them. When, later, the Assembly went further and passed a resolution about the political unification of the country, most of us recognised that it was travelling quite outside its jurisdiction.
It would be hopeless to expect a Political Conference in Korea to succeed if one major participant in those negotiations were to take the view that it must get in the negotiations a unification of Korea which it failed to get by its armed forces improperly used under the so-called authority of the United Nations. That would be to do the very thing we have always complained of in the others, namely, to seek to obtain without war the results of a successful war.
When Mr. Dulles talks about walking out unless he gets his way about this, it is a threat to wreck the whole negotiations. We ought not merely to say that we are not bound by that declaration but to make it perfectly clear that, except by agreement for which everyone would hope, there shall be no attempt to enforce upon anybody a political unification of the country because in the circumstances as they exist this does not really come within the ambit of practical politics.
Finally, there have just arrived back in this country the representatives of an important business mission which has just been travelling in China in an endeavour to improve our trade with that country, even within the restrictions of the present political understanding. I want to reinforce strongly what my hon. and learned

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Friend the Member for Hornchurch (Mr. Bing) intervened to say, that even if we feel bound in present circumstances to maintain some kind of embargo upon strategic materials, at least let us examine that list to see whether it is not so wide that all we are succeeding in doing is blockading our own trade rather than theirs.
The right hon. Gentleman said in a speech he made the other day—I forget the exact phrase—that he was at his wits end looking for export markets. Here is a useful one ready to be used, and one that could develop into a very important means of redressing the faulty economic balance of world trade. Do not let us neglect our opportunity, and if it is not too immoral to say so, do not let us wait until everybody else gets in first.
5.10 p.m.
Lieut.-Colonel Walter Elliot: We are embarking on a very important course of policy, and it would be a pity if it developed into a simple argument about the merits or demerits of Mr. Syngman Rhee or how much of our view we should insist upon at the coming conference as compared with our allies, the United States.
This is the first attempt that our generation has seen and almost the first attempt that the world has seen for a century and a half to negotiate a peace. Since the end of the dynastic wars it is the first attempt so to do. Even in the Napoleonic wars, though an attempt was made by the Treaty of Amiens to call a halt in the middle of the struggle, it failed; and the nations concerned were forced to go on to the kind of conclusion with which we are all familiar, namely, the forces of one block occupying the capital of the other and its ruler driven to death or into exile in distant lands.
This is an attempt to stop the guns, before they cease from exhaustion. This is an attempt to conclude a peace when the two sides are each in command of great resources both of materials and of morale. In the present struggle there is still the will to continue fighting as well as the will to stop, and what we have got to see is that the will to stop the fighting prevails over the will to continue the fighting.
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The omens are certainly dubious. There is a chance that the sons of Zeruiah will prevail and that the dangers of war will overpower the attractions of peace. In those circumstances, I think it would be a terrible pity if we in this House were to try to lay down exactly what we have complained about others attempting to lay down, namely, the sine qua non of the terms which we will accept. The hon. Member for Nelson and Colne (Mr. S. Silverman) said that if a certain course of action were adopted it would be intolerable to this country.
Mr. S. Silverman: No.
Lieut.-Colonel Elliot: "Intolerable" was the word used. I wrote it down. It would be intolerable, he said, if the position were to go on without the recognition and admission of the People's Government of China. Exactly, but the United States might say it would be intolerable if this were conceded. If the two intolerances clash we might get a shipwreck of what we hope, namely, the commencement of negotiations for a real peace. For this, as the hon. Member said, is indivisible, and links up closely with the initiative for peace with the Soviet Union as well.
Mr. Silverman: The right hon. and gallant Gentleman is slightly wrong, but I do not think intentionally. I quite agree that it cannot be done automatically. What I said was that it would be intolerable if the situation would go on indefinitely or too long.
Lieut.-Colonel Elliot: Indefinitely or too long, those are just the points at which the argument begins to break down. What is too long? I think we should all agree that a rigid 90-day limit would be unreasonably short to demand the termination of these discussions one way or another. I think that the danger of one side or the other laying down terms in advance, and saying that it must have them accepted by a given date or else it will not agree to anything, is a danger that we should avoid. My right hon. Friend went far indeed in the statement he made in the House today. I do not know whether the House fully grasped the significance of the suggested composition of the political conference.
Mr. Harold Davies: Yes, we appreciate that.
Lient.-Colonel Elliot: It almost seemed to me as if it were not appreciated. It laid down without any hesitation not merely that it should consist of ourselves and the United States, but should include France, Soviet Russia, South Korea, North Korea and China. On one of the most difficult points which we have to discuss, my right hon. Friend said, without any hesitation, that the policy of Her Majesty's Government was to urge that in the forthcoming conference the present Peking Government was to be represented. That was a step of the very greatest importance. He also stated that India should be included. I myself should think that Pakistan might well be invited also, though far be it from me to suggest an alteration to a declaration which has obviously been most carefully come to and is of such high importance.
The declaration of Her Majesty's Government carries us really as far as we can go this afternoon. It is suggested that we might have gone further, but, in fact, I find it difficult to know how we could have gone further without doing what we object to other people doing, that is, laying down rigid requirements beforehand which it would be impossible for the other side to accept.
We all read and heard the speeches here of Mr. Adlai Stevenson with the greatest interest. He is a man who nobody could accuse of being reactionary or of being unduly insensitive to the opinions of other peoples. He is a man who has just returned from a most extensive world tour. Yet he pointed out how difficult it would be for his country to accept the membership of the Peking Government in the United Nations. In America, Mr. Stevenson stands well to the left of that country's present position.
I have had the unusual experience of debating this subject with Senator Knowland. It was shortly after the declaration of my right hon. Friend the Prime Minister followed by the declaration of the right hon. Gentleman the Leader of the Opposition. We had a wireless and television debate across the Atlantic upon this matter. Naturally, I defended to the utmost of my power the speech of my right hon. Friend. I defended, also, the speech of the Leader of the Opposition. That did not go down at all well with Senator Knowland. He made specific reference to the recognition
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of China. There, it seemed to me that perhaps my right hon. Friend the Chancellor of the Exchequer went a little too far when he said that what we want is a family of nations. At any rate, we want a forum of nations. It may be too early to hope for a family of nations.
Mr. Harold Davies: The right hon. Gentleman said it might be too early to give way, but I would remind him that it did not take the United States very long to recognise Japan and make a Treaty with her despite the dastardly attack upon America by the Japanese just six years before.
Lient.-Colonel Elliot: If the hon. Gentleman is willing to wait six years I am afraid that he will come into conflict with his hon. Friend the Member for Nelson and Colne, who, no doubt, would think that six years is an undue length of time to wait.
Mr. Davies: Casuistry.
Lieut.-Colonel Elliot: It is not casuistry. One hundred and ninety thousand dead and wounded men cannot be called casuistry. There is a difference between six days and six years. I was only trying to put forward the case that the immediate presence of the Peking Government in the United Nations was not the kind of point on which we should stand out of the negotiations. It takes time for all that blood to flow away and be merged in the sea.
But for our part we recognise Red China as we recognise Mount Everest, or as we recognise a wet day in the middle of summer, not because we like it but because it is there. It is no use the umpires coming out and saying that they will not recognise a cloudburst over the pitch at Old Trafford or elsewhere; they go out there to see what has happened, and report. In the same way, we recognise the existence of a Government as a fact. We wish that to be admitted because that would be a most convenient place of meeting. It is very inconvenient that we should all have to go to Panmunjom if we want to talk to the Chinese Government. From our point of view and from the world's point of view, it would be more convenient if that Government were in some forum of nations where the arguments on both sides of any question could be put. But we have to convince the United States of that.

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Arguing that case with Senator Know-land is not nearly as easy as arguing it here on the Floor of the House.
We have always to remember that this is very closely linked with the talks which we hope to enter with the Soviet Union, first of all, the talks on the Foreign Secretaries' level, if they can be brought about, and subsequently the talks at a higher level which Her Majesty's Government have suggested and which have met with such universal acceptance. Oddly enough, nobody on the other side seems to have noted that that idea was put out by the Prime Minister during both the two last General Elections.
The whole Conservative Party fought solidly behind my right hon. Friend in the General Elections of 1950 and 1951 on this very same declaration of high level talks to try to solve some of the difficulties of the world. If I might permit one small incursion into more controversial matters, it seems very odd that right hon. and hon. Gentlemen opposite should now be so keen to keep his finger firmly fixed on the trigger.
My right hon. Friend is in control of these initiatives. We are most anxious to see them, on both sides of the world, come to fruition. But they cannot, either of them, come to fruition if we start laying down the law beforehand too vigorously. The Chancellor of the Exchequer has, as I said, stated very clearly some most important desiderata which Her Majesty's Government will strive for at coming conferences, such as not only the composition of the conferences but also our attitude towards trade. That Her Majesty's Government is to press for even a further development of trade in non-strategic materials is a statement of the greatest importance, not merely to this country but to other units in the Commonwealth. For instance, Ceylon would find herself in great difficulty if the rice-rubber deal were not in operation. That may well be further developed.
These are matters to be brought forward with great care and great understanding of the views of other people, and with great sympathy for the enormous efforts which the United States has put out. Ninety per cent. of all the manpower provided by the United Nations was provided by the United States; 95 per cent. of all the casualties
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suffered by the United Nations were suffered by the United States. In addition, there are the sufferings of the Republic of Korea, which, though not itself a member of the United Nations, has certainly mobilised much greater forces than anyone else and has suffered, of course, infinitely greater hardships in every possible direction.
This is a matter in which we are in an unusual position. This has been a great war in which we have not played the major part. Such a thing is almost unknown. We are usually the chief protagonist, the first in and the last out, the people who carry on when everyone else has gone out; and when it comes to the end of the day and the negotiations begin, we usually come forward with the right to speak with most authority and above all the other voices, because we have borne the heat and burden of the day.
That is not the position in this case. We are present as peacemakers, who can adopt a very detached view, because in this war we have not suffered the wounds, either material or moral, that the other two countries engaged in it have done. Therefore, let us not take up a self-righteous position. Nothing annoys us more than to find other people, who have not suffered as much as we, coming forward at the end of the day and giving us wonderful advice about how things should now be arranged. We have felt very resentful about this more than once in many fields of activity. In colonial activities, for example, we have been lectured by those who have no experience of the problem, and we have resented it very much indeed.
Let us remember that in this case we are now going forward as partners in an argument concerning a war in which we have not undergone the greatest of the hardships and the severest of the wounds and suffering. That is not to say that we should not insist with the utmost vigour upon our point of view and upon our right to be considered in the matter. But we should not do it with an air of self-righteousness and intolerance, the air of those who say, "Unless we get exactly what we want, the whole thing should come to an end."
We shall be there, with others, to try to negotiate peace for all the world. It

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is a great opportunity. Let us see that we in this House rise to the height of the opportunity and encourage to the utmost our representatives to the talks. Let us give them as far as we can united backing from this House. We are 90 per cent. united in these matters. Do not allow our inevitable bickering to cloud over the fact that in this great opportunity we are solidly behind the cause of a lasting peace. We believe not only that that will be to the greatest advantage of this country, but that it is indispensible if the world is to escape the frightful disaster and doom which we see looming over it, and approaching more closely every time we open our daily newspapers.
5.27 p.m.
Mr. Tom Driberg: Short speeches are appropriate for a short debate, and I hope, therefore, that the right hon. and gallant Gentleman the Member for Kelvingrove (Lieut.-Colonel Elliot) will excuse me if I do not attempt to traverse in detail his very interesting speech, except just to say, in passing, that we sometimes get even more illumination about the realities of a situation from the Scottish Conservative newspapers than from Scottish Conservative Members of this House. I wonder if the right hon. and gallant Gentleman happened to read the Glasgow "Daily Record" on 20th July. It contained a very interesting news story about trade with China as it affects Western Germany. I was rather startled by the news it contained, to this effect:
"West Germany is pushing a trade offensive with Communist China, which already ranks just behind Eastern Germany as the Federal German Republic's best customer behind the Iron Curtain. West German trade with China has doubled in the last year … and German trade experts estimate that it can be increased tenfold without running foul of the Western embargo on shipments of war materials."
I would also say to the right hon. and gallant Gentleman, arising out of some passages towards the end of his speech, that those of us who have been critical of the American attitude on the recognition of the Peking Government have never underestimated the difficulty of persuading our American friends to change that attitude. We do not underestimate what they have suffered, their immense sacrifices and casualties. We only say that, proportionately to the
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respective sizes of our populations, we have also contributed and suffered casualties, and that we are therefore entitled to be treated with consideration and to be consulted in the same way as the right hon. and gallant Gentleman said we have to consult and consider the views of our allies.
It might be of use to the Minister of State, when he is discussing this very difficult problem with our allies, if he were to refer them to a book which was cited by a noble Friend of mine in a recent speech. He said:
"There is a most interesting book by a learned American jurist, who makes out that there is an obligation in International Law, plainly laid down by the United States themselves, that once the factual question of who is in control is answered, there arises an obligation in International Law to grant recognition to the person so in control."
In other words, the People's Government of China ought to be in the Security Council as of right, unquestionably, not simply as a prize for good behaviour: as the Chancellor of the Exchequer rightly said, the United Nations are not an anti-Communist alliance nor are they a club of people with whom we happen to agree. They are an association—for mutual discussion, for making peace if possible—of people who may disagree with each other very strongly about a number of subjects.
This may possibly be a suitable moment, in our discussions with America, to suggest a course which, I think, was first suggested by my right hon. Friend the Member for Ebbw Vale (Mr. Bevan)—that the difficult process of transferring recognition from the Formosa Nationalist Government to the People's Government might be accomplished at Washington in two stages; that first of all our allies might be induced to de-recognise General Chiang Kai-shek, and that, after a suitable, decent period in which there would be a sort of vacuum of recognition, they might then recognise the new Government. It may be that the Political Conference now pending will provide an occasion for, as it were, the de facto derecognition of Nationalist China by the Americans, if—as I am sure we all hope—the list of countries read out by the right hon. Gentleman today is accepted by our American friends and by others as a suitable composition for that conference.

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I must at once say that the Chancellor of the Exchequer created a very much more satisfactory impression on my mind this afternoon than he did yesterday, or indeed than his noble Friend Lord Salisbury did yesterday in another place. Of course, whether my initial satisfactory impression is justified or not is a matter which I shall have to consider carefully when I have had the opportunity of reading and analysing the right hon. Gentleman's speech in HANSARD, because he is a very smooth operator and one sometimes feels that the things he says which are likely to be, and are, pleasing to my hon. Friends on this side of the House are said in a much more general and vague way than the other things he says which are less likely to be pleasing to my hon. Friends on this side of the House.
For instance, we were glad, as I have already mentioned, to hear his suggestion for the make-up of the Political Conference. We are very glad that the Minister of State, and not a noble Lord from another place, is going to be the nation's representative at the forthcoming deliberations. We were glad also to hear what the right hon. Gentleman said about the representation of China in the United Nations, so far as he went; but this is what—quite seriously, and without joking at all—I meant when I said that I was worried by the right hon. Gentleman's generalisations and vagueness.
After a tremendous build-up about how completely frank he was going to be with the House, this is what the right hon. Gentleman said about the admission of China to the United Nations: "We all hope and trust that the day on which all these problems can be solved will be brought nearer by the signing of the armistice. Everyone hopes and trusts that. That is not an announcement of any new initiative by Her Majesty's Government.
Would it be possible for the right hon. Gentleman—or may it still be possible for his right hon. Friend—to say something a little more definite than that? Cannot we be told tonight not merely that Her Majesty's Government "hope and trust" that these problems may be solved at some time in the indefinite future? Cannot we be told that they are going to take the initiative and urge that this problem should be high up on the agenda and that the views of Her
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Majesty's Government are the views that have been expressed from both sides of this House this afternoon? I hope very much, as was said by the right hon. and gallant Member for Kelvingrove, that what we say in this House today, even when we are critical of the Government, may have the effect of strengthening the hands of the Chancellor and of the Minister of State in negotiating with our allies and in discussing these matters with them.
After dealing in this indefinite way with the question of Chinese representation, the second main point which the right hon. Gentleman had to talk to us about, with this terrific frankness and candour on which he congratulated himself, was the question of trade with China. Here again, although he said nothing exceptionable, he did not say anything really new. He reiterated the familiar policy: for the moment we are "standing pat" on the strategic embargo, plus development of non-strategic trade. I think that is a fair description of the policy.
I do not see that that is a particularly candid announcement, in view of the fact that this has been the policy for many months; and I should have thought that it is just at this moment, just after the armistice has been signed and things are loosening up and tensions are easing, that we could afford to be a little less rigid and unyielding in the application of the embargo. One of my hon. Friends urged that the lists should be revised. I quite agree. But there are some kinds of commodity which are not entirely embargoed but are limited in quantity, such as one already mentioned—medical supplies, streptomycin, antibiotics, and so on.
I was glad to hear the Chancellor, in his short intervention, say that supplies of these could be determined by need, and I hope he will look at the short adjournment debate which took place on this subject a month or two ago and study some of the appalling statistics quoted there, and quoted also by several hon. Friends of mine—the hon. Member for Stoke-on-Trent, Central (Dr. Stross) among others—about the vast need for these drugs that there is in China, not primarily for military purposes at all, but simply for dealing with tuberculosis and diseases of all kinds among the civil population.
I should have thought that would have been a very useful way in

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which the Government could show good will and could, without any undue strategic risk or annoyance to our allies, act in the spirit of the Prime Minister's statement when he said, in effect, "Let us look around us for things to do which are agreeable to our opposite numbers instead of things to do which are disagreeable to our opposite numbers." This would be a harmless and humane thing to do—to increase the quantity of these drugs that can be exported to China.
One of the factors which made it necessary for my right hon. and hon. Friends on this side of the House to decide to have this further short debate on foreign affairs today was the very disturbing report of Mr. Dulles's Press conference on Tuesday. The right hon. Gentleman referred to that in his speech. I thought he seemed rather to be depreciating the importance of the Press conference in question. We all know that the Press conference in America is an institution of considerable importance and influence—roughly corresponding, in a sense, to Question time in this House in the opportunity it gives for every-day questioning of executive Ministers. The right hon. Gentleman said, or implied, either that Mr. Dulles had been misquoted or that he had not been fully reported by some of the newspapers, and we gathered that he had been in touch by transatlantic cable or telephone, to get clarification of some of the more disturbing things reported to have been said by Mr. Dulles on that occasion.
I hope that on one point the Minister of State can say a little more this evening than the Chancellor said. One of the most disturbing points made by Mr. Dulles at that conference was about the veto—when he said that the Eisenhower Administration is deliberately departing from, or holding itself free to depart from, the policy followed by the Truman Administration. President Truman and his Administration always took the view, that the question of which delegation for a country is recognised by the United Nations is not a subject for the great Power veto. Mr. Dulles announced that they now felt free to alter that policy. That, at first sight, seemed to be a clear threat, as it were, to sabotage any attempt to bring the Peking Government into the United Nations. I could not quite understand what the Chancellor said in his
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amplification. I thought he said that Mr. Dulles had explained also that he would be "very reluctant to see that step taken." Did he mean reluctant to use the veto, or reluctant to see Peking admitted to the United Nations? I hope the Minister of State can clear up that point, because it is of some importance.
Mr. F. Blackburn: Reluctant to make a decision.
Mr. Driberg: Perhaps the Minister of State will make it clear. If it is merely that Mr. Dulles would be reluctant to alter the Truman policy or to use the veto, I do not see why he felt it necessary to refer to the matter at all, in this alarming way, in advance, at this Press conference.
The main point on which many of us have had some apprehension is this. We give Her Majesty's Government credit for holding what we believe to be sound views, realistic views, about the admission of China to the United Nations and on trade with China too, but we doubt very much their ability to persuade our American Allies that these are the right views. Naturally, we were disappointed—as was repeatedly said in the last foreign affairs debate—by the apparent failure of Lord Salisbury to persuade our allies of the views of the Prime Minister and Her Majesty's Government as they were thought to be. In his speech in another place yesterday Lord Salisbury, rather irritably referring, apparently, to some of us, said:
"It really is no use people in Parliament, or outside, behaving as if we have no Allies—or, at any rate, had no need to pay the slightest attention to them."—[OFFICIAL REPORT, House of Lords, 29th July, 1953; Vol. 183, c. 1028.]
Of course I quite agree with that, but the Noble Lord might with more point have addressed those remarks to Mr. Dulles, because it is Mr. Dulles who has shown signs of not realising that we are an ally with some right to be considered in these matters. What is disturbing to us is the frequent reiteration of phrases such as, "the common policies of the Western Powers"—in the White Paper, for instance; again yesterday—not quite perhaps in this context—the right hon. Gentleman said in one of his answers that there was
"absolute unity of aim and policy on behalf of the three Western Governments."—

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29th July, 1953; Vol. 518, c. 1293.]
If Mr. Dulles is not to take the salutary advice of Lord Salisbury and remember that there are such things as allies, "absolute unity" between Her Majesty's Government and the Washington Administration can only mean the unity of the young lady from Riga with the tiger on which she went for a ride. That is not a very satisfactory basis for a real partnership or a real alliance. Therefore, when the right hon. Gentleman refers to such "absolute unity," he seems either to be talking absolute rubbish—since obviously there is, in fact, no complete unity between ourselves and the Americans on the representation of China, the recognition of Peking, and so on, or to be announcing another serious surrender by Her Majesty's Government to the high-powered pressure which we quite understand Lord Salisbury met when he was in Washington and to which, unfortunately, he proved too yielding.
As I promised to be brief, I shall skip the latter two-thirds of my speech. There is one point, however, which I would beg the Government and the right hon. and gallant Gentleman the Member for Kelvingrove to remember. The right hon. and gallant Gentleman stressed the sufferings and casualties of our American friends. We understand and appreciate that. But I ask hon. Members to remember also that there have been casualties—many casualties, if one considers the size of the respective force—among our troops. In particular, I would ask them to remember the relatives of the prisoners of war who are now just on the verge of being released. As they witness the swaying to and fro of public policy, the arguments, the reiterated protests by the Chinese against alleged—perhaps wrongly alleged—violations of neutral territory, their anxiety must be agonising. It would be too cruel to them, and to all who have friends and relatives in that terrible position, if anything now were to go wrong and their hopes were to be still further deferred. Will the right hon. Gentleman please never lose sight of that simple human consideration, which is of great importance?
We go away tomorrow for nearly three months with, perhaps I can say, a rather
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less complete absence of confidence in the Government than we had yesterday afternoon, but still, I am afraid, with all too little confidence that they can really manage our affairs so as to establish real peace in the world and reassert the interests and the proud independence of this country. We have no confidence—this is really what it means—that they understand the whirlwind of history in which they are being tossed to and fro with, as it seems, so little power to voice the real views of this nation.
5.49 p.m.
Mr. R. Brooman-White: The intervention I am going to make in this debate will be considerably shorter even than the first third of the proposed speech of the hon. Member for Maldon (Mr. Driberg).
I will follow him only on one point, which was his initial one. I could not quite see the significance he was trying to draw from the "Glasgow Daily Record" quotation about the expansion of West German trade with Red China. That surely is a phenomenon which is common over the whole world. I agree with him it is a disturbing one. German commercial competition is, in the widest economic sense, of great concern to us all in our export drive. But the fact that Germany is being successful, without transgressing the strategic list, in pushing her trade in China seems to me to indicate no more than is indicated by a German success in pushing her trade in Turkey, the Middle East, Greece, and many other areas where we are meeting her rivalry in the commercial field.
The main point I wish to make, follows what has been said by my right hon. and gallant Friend the Member for Kelvin-grove (Lieut.-Colonel Elliot), that there is 90 per cent. agreement in this House on the statement made by the Chancellor about our main objectives. It seems extremely important that, when this debate is reported in the Press overseas and studied in other countries the difference on matters of emphasis and timing in our discussions should not be in the forefront of the news, and in particular, undue or exaggerated attention should not be paid to points such as those made by the hon. Member for Nelson and Colne (Mr. S. Silverman) who laid such great emphasis on the point of the early admission of China to U.N.O.

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We are agreed that the ultimate admission of China—the earliest possible admission—is the aim of our policy. The hon. Member for Nelson and Colne quite rightly made the point that U.N.O. was not an exclusive club. Communist Russia was there, he said, and so why should not Communist China be there? We are agreed that the United Nations is not concerned with the internal regime of Member States. But it is concerned with the external behaviour of Member States. The preoccupation and hesitancy which arises, and naturally arises, is not because of China's internal regime, but the important aftermath of China's behaviour over the previous years.
It is quite easy to understand this hesitation among other member nations, when the smoke has scarcely cleared from the battlefields. It is also easy to see that people may not attach the same weight of importance to the effect it may have in China, and upon her behaviour in the future, if she be admitted. We took the lead ourselves in diplomatic recognition of China. It may have brought some benefit, but no one can claim it was very marked. One hopes that when China re-enters the United Nations there will be an early and more obviously beneficial effect on her conduct in world affairs. We are agreed that a lasting settlement in the Far East, or in the world, cannot be achieved until that entrance has ultimately been effected. But the entrance, in itself, will not necessarily make a great, an important and a sensational difference.
What is also important is that the machinery for admission is extremely complicated and delicate. I am speaking without having had the opportunity of checking up on the Charter itself before this unexpected debate, and I am open to correction, but I believe that admission is only upon the unanimous vote of the permanent members and the rotating members of the Security Council.
Mr. Noel-Baker: China is already a member of the United Nations. There is no need to go through the process of admitting China. The question is who represents China? Who shall sit in the seat now occupied by the representative of Chiang Kai-shek?
Mr. Brooman-White: I am aware of that, but surely that also is subject to a unanimous vote and if we are to see that
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a unanimous vote is given the operation requires a careful diplomatic approach. A rebuff might do more harm than good.
As my right hon. and gallant Friend the Member for Kelvingrove pointed out, in the speech of the Chancellor an important new statement has been made about the constitution of the Political Conference and the very wide range and power which will be given to Chinese, to the North Koreans, and others, to express their views at the Conference. That is the important consideration upon which emphasis should rest at the moment and not on other questions. If the emphasis is laid on that point, on the constitution and scope of the Political Conference, the whole effect on world opinion, on all the hopes and aspirations of free nations, and perhaps the attitude of the Communist nations also may well be favourable.
It would be wrong to emphasise the other points on which there are difficulties and differences, and put them to the forefront until we see how these negotiations go. It is analogous to the debate we had last week on the question of the discussions at the Foreign Ministers' Conference, when hon. Members opposite stressed the limited nature of the agenda. But, in these discussions the Communist Powers are at perfect liberty to make suggestions for broadening the agenda if they so wish. They can put forward their point of view, and I believe that we should be perfectly willing to discuss with them any questions they wish to raise. It is quite unlike the 2 o'clock race at Bath. We do not know in advance what the results will be, but we do know that the telephone line will not be cut, and that we can cover our position if we do not like the way things are going.
I believe it is the wrong approach to seize upon any one specific issue, such as the early admission of Communist China, or early meetings between the leaders of States, and say that that is the touchstone or the yardstick by which we should measure progress toward world peace.
One of the greatest and most effective speeches in recent times on the question of the improvement of relations between the free world and the Communist nations was made by the Foreign Secretary just after he took office when he spoke of the piecemeal approach. He said any small benefit or advantage might open the way to wider benefits. The truce

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in Korea has been a major advance, and the constitution of the Political Conference and its agenda is a wide and more dramatic move forward than we had reason to hope for, even a few weeks ago. Surely the present discussions can do nothing but good, and the future can be considered as more hopeful than we have hitherto expected.
5.57 p.m.
Mr. A. J. Irvine: I wish to reinforce the expressions of deep disquiet about the situation which have been voiced by hon. Members on this side of the House. I feel confident that it is not sufficiently realised in the United States how disastrous, in our opinion, was the recent statement made at a Press conference by Mr. Foster Dulles.
The Chancellor said that after a Press conference it is a common practice for fuller reports and amplifications to come through which sometimes give a rather different picture of the situation, and which are sometimes reassuring to some extent. But what we wish to know is what the Government understand to be American policy. I should be grateful if the Minister of State would indicate—because it is important we should know before we disperse for three months or so—what the Government believe American policy now to be upon the central issues of the problem.
For example, is it the policy of the American Government that they will accept no outcome of the Political Conference other than a unified Korea under Mr. Syngman Rhee? Are we to understand that that is now the declared policy of the United States' Government? If it is, then it is in my view impossible to exaggerate the gravity of the position. It is the duty of the Government to make it clear that that attitude of certain elements in the United States which seems at present to be the attitude of the American Government, is regarded over here as entirely indefensible.
It seems to me—and this will be a widely-held view in the country—that if the Americans were now to require that the Political Conference which formed a part of the armistice terms must result in a united Korea under Rhee, it was wrong for them not to insist that that should have been a term of the armistice. As a member State of United Nations we
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accepted the proposition at the time of the armistice that there should be a Political Conference within a given time. If what was really intended was a Political Conference out of which some thing already agreed upon between the American Government and Mr. Syngman Rhee must imperatively emerge, we as a member State were placed in an entirely wrong position.
The support which British public opinion was glad to give to the truce would have been in large measure withheld if it had been known that, before the truce was arrived at, it had been determined by so enormously powerful a country as the United States that the Political Conference proposed should have a certain outcome and no other, namely, the unification of Korea under Mr. Syngman Rhee.
We are discussing an issue which is above party. In the last analysis it is the issue of whether a third world war is to be avoided. A great deal will depend on the extent to which we prove successful at every stage in this first application by the United Nations of the principle of collective security. The Chancellor of the Exchequer in his statement, which was admittedly more forthcoming than his answers to Questions have sometimes been, asked for a united front between the parties upon this matter. He can only hope for a united front if he sufficiently appreciates the sincere and deepening anxieties held in this country over the recent developments of American policy.
If the American Government insist, all or nothing, upon a Korea united under Mr. Syngman Rhee, other member States are equally entitled, all or nothing, to insist on the admission of China to the Security Council. But it is wrong that any one member State should approach this matter in terms of insistence upon its own point of view. Our anxiety as we rise for the Recess is lest there should not proceed during the coming weeks, vital and important as they will be, a constant presentation of British and Commonwealth opinion on this matter to the American Government.
The plain truth is that the intervention of the United Nations against the North Korean aggressor was a turning point in history. It has been a successful intervention. The fact that it has been

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successful has not been sufficiently emphasised recently. It would be the most appalling tragedy if now at the conference table, at the insistence of Mr. Rhee of all people, the Americans, who have played the great part we all acknowledge, were to take up an intransigent attitude.
There must be millions of American citizens who would deplore such a frustration of our hopes as is now threatened. It is for the British Government to add their voice to the voices of those anxious Americans—and there can certainly be added the voices of all the Commonwealth Governments—to ensure that the situation develops more favourably than it threatens to do today.
6.5 p.m.
Mr. James Hudson: I am sorry that the right hon. and gallant Gentleman the Member for Kelvingrove (Lieut.-Colonel Elliot) is not in his place. He said something which should be considered by every party in this House. He said that we had arrived at a point where it was a question of deciding whether to accept the will to stop the fighting or the will to continue. He said that it was our business to put all the support that we could behind the will to stop fighting and that we must try to prevent any reversion to the continuance of the fighting.
I am entirely with the right hon. and gallant Gentleman in that expression of view, though I agreed with little else in the rest of his speech. He was wise to start from that point and to admit or seem to admit—what I certainly admit—that all our fighting has really brought us to nothing and certainly to no victory. Many people are saying that there is a victory for collective security. That victory has yet to be won. That victory will come out of the discussions which have now started at the peace table. Unless it does come out of the discussions of free men one with another, there will be no security. Security can be obtained only in the processes that are now starting rather than in the processes which for the time being, and I hope for ever, have come to an end in Korea.
The only reason I strike a jarring note against the valuable point the right hon. and gallant Gentleman made is that we have in the Dulles speech, and in the gloss that has been placed on it by the
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Chancellor today, a threat to the efforts that will have to be made to work out a collective security based on reason rather than on force. The speech of Mr. Dulles, despite all that has been obtained by the Chancellor in his telegrams, is one that deliberately encourages in its worst courses all that Mr. Syngman Rhee has been threatening now for some weeks.
Mr. Dulles puts himself on the side of the man who threatens to overthrow collective security. Even now, when we have heard the new gloss put on the matter by the Chancellor, Mr. Dulles stands behind Syngman Rhee in threatening to break again into war and to smash up the armistice if conditions as he sees them are not secured. Because Mr. Dulles, speaking with the great power of the United States behind him, has said that, I shall go away for the holiday not with the sense of satisfaction and security which some of my hon. Friends seem to have. The situation is about as dangerous as it could be.
I do not think I can do any harm in that situation by speaking out quite frankly in this House of Commons and saying that if Mr. Dulles and Mr. Synghman Rhee between them wreck what has been done, there is a great public opinion in this country, so far as I can understand—and I may be as much mistaken as anyone else in judging public opinion; I leave America to speak for itself—which would not support any such procedure, and that, indeed, the whole of the unity that has been secured up to the moment would vanish like a dream.
I hope that we shall not permit this debate to come to an end without someone from the Front Bench saying that a great mistake has been made. Although I admit that there was much with which to be satisfied in the speech of the right hon. and learned Gentleman, and although I was delighted with the strength and vigour of the speech of my right hon. Friend the Leader of the Opposition, I still want to hear from this House a voice more powerful than mine, with a greater influence than any that I could ever have, say quite frankly on behalf of this country, so that the Americans may understand it, that a very great mistake has been committed by Mr. Dulles, and that some new approach to the problem must be sought again by him and by his collaborators.
Dr. Barnett Stross: Before my hon. Friend leaves that point, will he consider the possibility or the probability—or as I think, the improbability—of America, faced with that position and with a different point of view, "going it" alone?
Mr. Hudson: I hope it will not be so, and I would rather not deal with the American situation. I am speaking at the moment only of our responsibilities in a very great difficulty, and I am saying that the voice of this House of Commons ought to go forth very clearly to the Americans in order to help them to arrive at a very clear decision on the matter, as I have arrived at it for myself, and for no one else.
I am glad to observe that, in the speech of the Lord President of the Council in another place, the noble Lord referred to the day which will come when we can offer security even to Russia and China by their loyal acceptance of conditions inside the United Nations. The noble Lord's words were:
"And do not let us forget that Russia, as a member of the United Nations, if she is a victim of aggression, is as fully entitled to the support of her fellow members as any of the other members of the organisation, nor in such an event, were she the innocent victim of aggression would, I am sure, she be denied that support."—[OFFICIAL REPORT, House of Lords, 29th July, 1953; Vol. 183, c. 1033.]
That was a statement of view with which I entirely agree. If we get an effective system of collective security, with members loyally abiding by it, an aggression, however serious, could not succeed because of the whole will of the world being against the practice of that aggression.
My feeling at the moment in regard to America is that the speeches of Mr. Dulles and the speeches of others give the impression to Syngman Rhee that he could justifiably engage in aggression at the end of 90 days. He has said that he would do it himself, and it should be the business of the United Nations and of the United States, if they are thoroughly loyal to the idea of the United Nations, to tell Syngman Rhee now that they would consider that act to be an aggression of the most abominable kind.
That is all I really wish to say, except one word more in praise of something which the right hon. and gallant Gentleman
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the Member for Kelvingrove said at the end of his speech, and with which I did agree, although I disagreed with much that he said in the middle of it. He said that we in this House today are making a contribution towards international peace. We have taken a small step forward towards that end, and I thank heaven that the armistice, for which I have prayed, has come. I cannot use words that would do anything to injure what has been secured, and I agree that, if we could go away on our holiday with the feeling that at any rate this country was going to stand firmly for the righteous condemnation of any attempt to break through into fighting once more, I would feel much happier about the situation than I am just now, but, at least, let us all re-echo the prayer of the right hon. and gallant Gentleman that there may be peace, and peace in our time.
6.19 p.m.
Mr. Woodrow Wyatt: Although I agree with others who have spoken this afternoon that the tone of what the Chancellor said is a great improvement on what he said at Question Time yesterday, one was left with a very definite feeling that there was confusion in the mind of the Government between what should be done at the Political Conference, which is supposed to settle the question of Korea, and what should be done at U.N.O. The admission of Communist China to U.N.O. is a matter for U.N.O. alone, and has nothing to do with any conference which might meet for the unification, peaceful or otherwise, of Korea.
We used to support the admission of Communist China to U.N.O., and we actively canvassed for that until China joined in aggression by entering Korea on the side of the North Koreans. At that moment when the United Nations passed a resolution condemning China we withdrew our support; but China has ceased to fight against the United Nations, and there is therefore no longer any reason why our support for her entry into U.N.O. should continue to be withheld. Our position should be back where we were before the aggression began, and, if our policy were still the same as it was about the admission of Communist China to U.N.O., we would now be renewing our efforts to get her

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in. But we are told instead that we must wait for the Political Conference.
The first thing we are told about this political conference by Mr. Dulles is that, if it does not come to a satisfactory conclusion or does not look to be shaping his way in 90 days, he will leave it, and the second thing was that in any case at the conference he will oppose the admission of Communist China to U.N.O. So that, even if the Political Conference or some members of it wanted to put Communist China in U.N.O. as a result of the conference, he will oppose it. He has also said, and his words were quoted this afternoon, that he would be reluctant to use the veto at U.N.O., but he thinks it would not be necessary. All that he means by that is that he hopes there will be a majority on the American side for refusing Communist China admission to U.N.O.
Are the Government now telling us that we should wait for the conference before presenting the case for the admission of Communist China to U.N.O.? It is perfectly irrelevant, superfluous and nugatory, because nothing is going to happen as a result of the Political Conference in regard to the admission of Communist China. Mr. Dulles has told us that already, and has announced his intention beforehand. In any case the Conference might go on for two years. The truce negotiations took more than two years. Why should anyone suppose that the settlement of this question of Korea is going to take any less time? If truce negotiations take two years, a peace conference is likely to take even longer.
We seem to have got ourselves very confused about this question of the admission of Communist China into U.N.O. and what it means. What is our objection to having Communist China in U.N.O.? If we want to talk to Communist China—and presumably we do—we want to discuss other matters with her also, her behaviour in Indo-China and other questions affecting the Far East——
The Joint Under-Secretary of State for Foreign Affairs (Mr. Anthony Nutting)The Joint Under-Secretary of State for Foreign Affairs (Mr. Anthony Nutting) indicated dissent.
Mr. Wyatt: The Joint Under-Secretary of State seems to indicate that we do not want to talk to Communist China, but if we do not eventually talk to her about
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Indo-China we shall not get very much farther.
Mr. Nutting: The hon. Gentleman is completely misrepresenting the speech of my right hon. Friend.
Mr. Wyatt: I am making my own speech at the moment; the Chancellor's speech will have to stand on its own feet, if it can.
As I was saying, there is no disadvantage to us in having Communist China in U.N.O. We behave as though something awful were going to happen to us as a result of that. On the contrary, if we are able to talk to her about matters in which we are mutually interested, we can exercise some sort of restraint on her if she adopts an expansionist policy in South-East Asia. In any case, Korean unity has nothing to do with whether or not Communist China is a member of U.N.O. There is another thing to be said for it. It would make it more difficult for China to commit aggression if she were a member of U.N.O.
I think it is quite wrong for the Government to behave as though the Political Conference is to deal in a kind of horse trade with Communist China over the question of her admission to U.N.O. and the question of trade with her. We should stand by principles at the conference, and the main principle by which we should stand there is that the unification of Korea should be brought about by free elections throughout the whole of Korea. That is a point which the Communists would find difficult to resist in the eyes of public opinion throughout the world, and that, after all, is our only interest in Korea. It has nothing whatever to do with the restriction of trade with China because of her aggression, which has now ceased, or her admission to U.N.O.
I heard Lord Salisbury speaking this afternoon in another place. I gather that we are now allowed to refer to his activities with some freedom. He was saying that the question of trade with China must be settled at the appropriate time. What is the appropriate time? It is clearly at the moment when her action which caused trade to be restricted has ceased, which is now. Therefore, we should now be considering this matter.
I notice that in this matter the Government have supinely taken all kinds

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of insults from Senator McCarthy and the Senate Sub-Committee about British trade with Communist China. The Government should instruct their information services to inform the United States people about the purchase by America of goods from China last year for which they paid 28 million dollars to her, which represent the most potent implement of war one can have in the whole of that area. This has never once been said by this supine Government to the American people.
This Government are thoroughly afraid of the Americans and will not make any move without their approval, but the Americans are not afraid of us. Mr. Dulles suffers from no inhibitions about us as to what he says before a conference takes place or before U.N.O. meets on 17th August. It is time that we took a lead in this respect at U.N.O. How do we know that when U.N.O. meets on 17th August, India or some other country will not propose the admission of Communist China to U.N.O.? If they do, what is our attitude to be? Are we going to take a back seat because Mr. Dulles has not given us permission? Are we going to say that we cannot do anything about the matter on which we have clearly stated our policy over the last three years because the Americans have not given us permission?
The Government are going to U.N.O. without any prepared plan for that eventuality. We should go there determined to raise this matter, because this is a major division with the United States which is not going to be solved by the passage of time. It will not be solved by letting matters drift along for a few months and hoping for a change of attitude. Mr. Dulles has made it clear that there will not be a change of attitude. Even Mr. Stevenson was forced to take a similar stand here in London where he is not subject to persecution by Senator McCarthy.
When faced with a situation like that, there is only one way of dealing with it, and that is to show America and other countries that we are not going to be put into a false position by the bludgeoning of the United States. This divergence is symptomatic of the whole fallacious and inaccurate policy which the Americans have had towards Asia since the war.
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It was remarkable that only a few years ago President Roosevelt was able to tease the present Prime Minister in front of Stalin—in an endeavour to placate Stalin—about British imperialism. This appeared to amuse and please Stalin. No American President could do that today. The roles are completely reversed, and the reason is that America has made no attempt to understand the course of events in Asia. She has consistently confused nationalism with Communism.
The other countries of South-East Asia have felt all along that in the Communist Revolution in China there has been a large element of nationalism. The Americans have assisted them to believe that and to believe Communist propaganda to that end by supplying large quantities of arms to Chiang Kai-shek and by trying to put back the clock. That is why they have placed themselves in a false position.
This is a tremendously important matter today because we have to make Asia feel that China has been given a fair chance. Asians quite understand that Communist China cannot be admitted to the United Nations so long as she is actually fighting against U.N.O. But if we insist on refusing to treat China as an equal once she has stopped fighting against U.N.O., then we are going to lose the sympathy of the neutral areas in Asia. Our prestige in Asia today is very high, thanks to the Labour Government. It is much higher than that of America. It is of vital importance to this country to maintain her leading position in that part of the world by taking a lead on this matter.
It is most unfortunate that we have this row of Conservative supine, resting bodies in office today, who just do not understand the movements of events in Asia at all. If they did, they would realise that in order to get Asia to undertake the necessary measures in her own self-defence and to see clearly what is nationalist, what is Communist, what is aggressive and what is imperialistic in the attitude of China towards the rest of Asia, we have got to be fair and correct with Communist China. Then only will they believe in the evilness of China, if such there should be in future. Otherwise, we shall not even be able to make them take the right measures in their own defence.

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I hope that during the Recess when, unfortunately, we shall be unable to give any sustenance to, or help to bolster up this miserable, decaying Government, they will take a stand on this matter, and not just wait feebly behind the Americans before taking any action.
6.29 p.m.
Mr. Jack Jones: I enter this debate with a tremendous amount of temerity. It is the first time since I have been a Member of this House that I have attempted to intervene in a foreign affairs debate. But I am of the opinion, of course, that we democrats have the right to express an opinion when we feel that it should be heard.
I have the same feeling today as I had at school when waiting for the headmaster to make himself really known in an objective manner. We had to wait until the end of term, and it seems that we have done so on this occasion also. The headmaster opposite has been really forthcoming today, and we really know where Britain and the Government stand in this connection. One should give credit where it is due. The spokesman for the Government is not given to the idea of making statements which are based upon an effort at being over-popular. I give him credit for being a person who is prepared to take facts as he sees them and to make a statement accordingly.
The voice I want to put forward is the voice of the British trade union movement. I want to speak for a moment, as I have the privilege to do, to the American trade union movement on this matter. I was privileged in the middle of the war, in 1942, to go out to America to represent the trade unions of this country, when I had something to say pretty forthrightly to the Americans. I believe that the American mother and the ordinary American worker are just as pleased about today's happenings and the Armistice as is the British trade unionist and the British mother with boys out in Korea.
I do not intend to attempt to go into the details of this matter. I have listened till I have been rather perplexed and tired to what has been said about Mr. Syngman Rhee and the "rotten, corrupt government" and all about it. We have arrived at a day and hour in the history of the world when the future of the world
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will be decided one way or the other. That is how I see the situation. It will be decided whether we shall, from now on, gain the peace we have prayed and hoped for or shall drift and muddle and get into the unholy mess of a third world war.
I am pleased that the Government have made themselves very plain on where we stand about the Mr. Dulles incident. I do not want to be rude, but one could quickly misconstrue the word "Dulles" into "dull ass." I believe there are occasions when statesmen in this world get pretty dull, and a little bit like the quadruped to which I have referred. I was glad that we had the speech from our own Front Bench and that the Leader of our own party made the position of this party pretty clear in terms we all understand.
I want to say to our brothers in America, in the C.I.O. the A.F. of L., the Railway Brotherhood and the Miners' Union, that they should support us, support this House, both parties, through the means that they have at their disposal. They have never had a Socialist Government and have never worried so long as the pay packet was not too much political, although they are on the eve of so doing.
I say, on behalf of the ordinary, rough-necked back benchers, the navvy class—we are not ashamed of that—that we see an opportunity on this occasion to put our voice forward and to say to our opposite numbers in America that we hope and trust that they will support us and support this Government in what has happened here today. I am fortified in that request by knowing that a great capitalist leader of the employer class in the steel industry in America has announced himself pretty definitely on this subject. He has said in no uncertain terms that Dulles is wrong and that we are right.
I hope that this brief speech—once in a way—will do what I would like it to do, namely, say to our brothers on that great continent that we are with them in their desire for peace. I hope and trust as a result of this debate, of Her Majesty's Government's declaration and the declaration of the party on this side of the House, that Britain will continue to use all the forces that she can employ in the interests of world peace. It is not

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only the interests of Korea itself I am thinking of; that is only one small corner of a very large problem.
I hope that we shall go away fortified by believing that what we have been waiting for, something about which to be pleased and enthusiastic and for which we have had to wait until the end of the term, has come, and that our enthusiasm will not be misled. I hope that peace will make progress, and that when we come back we shall be able to concern ourselves with a world at peace and not, as in the past, with a world perplexed and wondering what would happen next.
6.35 p.m.
Mr. Arthur Henderson: I am sure that the statement which the Chancellor made at the beginning of the debate will have removed many misgivings which have exercised the minds of hon. and right hon. Gentlemen on this side of the House and, I am sure, of a good many Members on the Government side. I well understand his difficulties. The right hon. Gentleman has manifold duties at the present time and no doubt he thought that he had to consider the feelings of the United States. They played, as he pointed out, the greatest part of any of the United Nations in the conflict in Korea. I sometimes feel that, in spite of our differences of approach with them, we have not always recognised the difficulties of the United States in dealing with the recalcitrant President Rhee.
I wonder whether the Chancellor and his colleagues have been right in being so sensitive about expressing themselves frankly on this problem, on which we do not quite see eye to eye with our American friends. I do not see why our point of view should not be frankly stated. A very distinguished American said a few weeks ago that there should be the utmost frankness between friends. I am sure that the Chancellor would agree that friendship should not involve subservience. Why should we be quite so squeamish about expressing our point of view on matters of this vital importance?
The American Congress has had no hesitation. I believe I am right in saying
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that both the Senate and the House of Representatives have passed resolutions by great majorities indicating that they are opposed to the admission of China to the United Nations. That is their point of view, but it is not a point of view which is shared, I believe, by the great majority of Members of this House and of the people of this country. Therefore I see no reason at all why the Chancellor should have been quite so reluctant to face up to what he has done today.
The right hon. Gentleman and I have been opposite one another for a good many years. I remember his efforts in the pre-war days. I hope he will not mind my saying that he might have been much more forthcoming, when this debate might have been avoided. Questions were put by hon. Members on this side of the House on 16th July, 27th July and 29th July, and the right hon. Gentleman insisted upon taking rather evasive action and refusing to say more than that the matter would be considered now that the Armistice had been signed. In the debate yesterday in another place, so far as I can gather, not a single reference was made by the acting Foreign Secretary to the position of the Government on this matter. The only reference that got near to it was one by the Under-Secretary of State in that House, and all he would say was that the Government had a view on this subject of the entry of China into the United Nations.
The Chancellor has at long last spoken, and I am not sure whether he has been stimulated by the action of my right hon. Friend the Leader of the Opposition in giving notice that he was going to have this discussion today or was partly influenced by the language used by the American Secretary of State in his Press conference on Tuesday. I do not think that it matters very much which it is. It is the result that matters, and we have got results.
So far as the Chancellor's statement goes, I think that I can say on behalf of nearly all my hon. and right hon. Friends that we very much welcome the indication he has now given of the attitude which Her Majesty's Government is to take in dealing with these problems in the next few months. I should like, however, to raise one or two questions

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with the Chancellor, to which I hope the Minister of State will be able to reply. The communiqué which was published a few days ago contains the phrase:
"They considered that, in existing circumstances and pending further consultation, the common policies of the three Powers towards Communist China should be maintained."
I should like the Minister of State, if he can, to say whether these consultations are, in fact, taking place. If they are, it is extraordinary that Mr. Dulles should have made those very strong statements, even though they have been considerably modified by what we have been told today. Are consultations taking place between Her Majesty's Government and the United States Government on all these problems that are now arising? It seems to me that if they are not we shall have very great difficulties arising between us and America. It may well be that we shall have them in any event——
The Minister of State (Mr. Selwyn Lloyd): May I give a straight answer straight away? Yes, consultations are taking place.
Mr. Henderson: I am very glad to hear it. All that I can hope is that Mr. Dulles will remember that fact and that when he comes to give his Press statements he will have some regard to the effect on his friends and allies.
The Chancellor made a very satisfactory statement about the composition of the conference, but I was a little disappointed when I understood him to say that the question of Chinese entry into the United Nations would wait until the Political Conference took place. As I understand it, the non-Communist elements in this Political Conference are to be representatives of the United Nations. The supreme organ of the United Nations, the Assembly, is to meet in a fortnight's time and I hope that it will be found possible for this vital international problem to be discussed in that Parliament of the United Nations. I should like to know from the Minister of State whether what the Chancellor has said rules out any discussion of the China problem at the Assembly before we get to the Political Conference.
The hon. Member for Rutherglen (Mr. Brooman-White) referred to the legal or constitutional position in relation to the admission of Peking China, if
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I may so call it, into the United Nations. He thought that there was a difficulty because the seat was already occupied by another authority which was recognised as the Government of China. He may have forgotten that in 1948 there was a change of Government following a coup d'état in Czechoslovakia, but today the Government who carried out that coup d'état are members of the United Nations. The test has always been whether a Government are recognised as the Government of a country.
I admit that the Government of Peking China have not been recognised by the Government of the United States. They have been recognised by our Government. Provided that one day we get over the bridge with our American friends on the recognition of the Peking Government as the Government of China, there will be no difficulty, legal or constitutional, standing in the way of that Government taking a seat in the United Nations. That Government are in effective control of that great country and, as we have seen in the last two or three years, they have an army of three or four millions. We know how their army and air force have been equipped, but that does not alter the fact of the existence of that country of 400 million people with a great army and air force.
I agree with those who have preceded me that the sooner we get China within the comity of nations, once the aggression committed three years ago is a thing of the past, the better for the peace and stability of the world. I hope that the Minister of State will make it quite clear that our representatives go to the United Nations meeting, recognising this fundamental difference that divides us and our friends in the United States but nevertheless taking a strong and courageous line in advocating what they and my hon. Friends on this side of the House believe to be the right course. If they do that they will carry the people of this country with them.
6.46 p.m.
The Minister of State (Mr. Selwyn Lloyd): I should like to begin by referring to some of the opening remarks of the right hon. Gentleman the Leader of the Opposition. He began by paying a tribute to the people of the United States. He made it quite clear that we in this House were not anti-American. He said

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that it was essential that we should cooperate and that we were grateful to the United States for the great burden which they had borne in Korea, and, to quote his own words, for the "magnificent support given to the United Nations by the United States." I think that in all quarters of the House that tribute to the United States is endorsed. I hope very much that as there have been certain criticisms of the United States in this debate, and of certain representatives of the United States, that that background will not be forgotten by those who report this discussion—that the right hon. Gentleman began with that tribute to the United States which certainly we, Her Majesty's Government, wholeheartedly endorse.
I agree with the right hon. Gentleman that, of course, that co-operation is a two-way traffic and that at a time like this we are apt to think of disagreements and not to remember the very large measure of agreement that has been obtained. But I assure the House that we have not failed to express our views clearly and emphatically. Where I differ with some hon. Members who have spoken is that I think that it must be left to the Government of the day to decide whether those views should be expressed publicly or privately. Sometimes when dealing with friends public ventilation of views is not the best way to make progress.
Criticism was made of Mr. Foster Dulles by reference to what Mr. Walter Lippmann had written, that he was "immobilised by his own promises." I rather felt that some hon. Members opposite similarly would like to immobilise Her Majesty's Government but this is also a case for two-way traffic. If Mr. Foster Dulles is criticised for that, there is no good reason why we should similarly be immobilised.
The two main issues are Chinese representation and strategic controls. On the first, the right hon. Member for Dundee, West (Mr. Strachey) said that he did not think the position of Her Majesty's Government had been clearly put forward. I would remind him of the endorsement which the Chancellor gave to a speech of my right hon. Friend the Foreign Secretary, who in turn was referring to a speech by the right hon. Gentleman the
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Member for Lewisham, South (Mr. H. Morrison), when the right hon. Gentleman said that His Majesty's Government believed that the Central People's Government should represent China in the United Nations and then, in a second sentence, qualifying that, said:
"In view, however, of that Government's persistence in behaviour which is inconsistent with the purposes and principles of the Charter, it now appears to His Majesty's Government that consideration of this question should be postponed for the time being."—[OFFICIAL REPORT, 27th June, 1951; Vol. 489, c. 1371.]
Mr. Strachey: May we take that as, a declaration, therefore, that Her Majesty's Government will press this matter at the forthcoming United Nations Assembly?
Mr. Lloyd: If the right hon. Gentleman will give me a moment to develop my point, that is what I am going to deal with. The point of principle is made perfectly clear, that Her Majesty's Government believe that the Central People's Government should represent China in the United Nations. The issue, therefore, is one of timing, and here I find myself again very much in agreement with what the Leader of the Opposition said. We do not say that recognition should come at once, but it is a matter which should be discussed. Her Majesty's Government entirely agree with that observation.
It is a matter for discussion, not necessarily for public discussion, but we have again and again indicated that as soon as the armistice occurred this was a matter which would have to be considered between us and our allies. I would say categorically that I regard the signing of the armistice as having advanced this matter. It has certainly brought us one stage further forward.
Mr. A. Henderson: Would the right hon. and learned Gentleman clarify that point? He has stated that this is a matter which must be discussed between this country and our allies. I agree, but is that not also a matter of concern to the United Nations as a whole?
Mr. Lloyd: I shall come to the United Nations aspect of the matter rather later on, if I may. I shall first deal with some of the considerations which appear to me to affect the timing. The hon. Member for Aston (Mr. Wyatt) suggested, I

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think in conflict with the Leader of the Opposition, that automatically on the signing of the armistice there should be the recognition and admission of Communist China to the United Nations. We do not hold that view. To begin with, one has to see whether the armistice is going to be observed.
Mr. Wyatt Mr. Wyatt rose——
Mr. Lloyd: I shall state all the points which seem to affect the matter, and then I will give way to the hon. Member. First of all, there is the question of the observation of the armistice agreement itself. It is an exceedingly complicated agreement. Speaking frankly, there is ample opportunity for friction between the parties to it; we sincerely hope that it will be honoured on both sides in good faith, but there is a great deal of opportunity for friction, and we have to see how the situation develops.
Then under the terms of the armistice agreement a Political Conference has to be set up, and until we see what progress is made at the Political Conference, with the very thorny problem of Korea, we cannot know whether the armistice is going to be permanent. We have to see how the Political Conference shapes. I do not say for a moment that we have to wait two, three or four years, but we have to see how the discussions take place, and whether there is really on both sides the degree of good faith which will make a success of the armistice. That will be shown in the course of the political discussions.
Then there is the question of the development of our own relations with the People's Government of China and the way in which our mission is treated there. Under conditions of great difficulty they have conducted themselves with dignity and have advanced our prestige, but they have not been treated in quite the way in which we expected them to be treated when China was recognised. I do not wish to say anything today which will make things more difficult, but I have certain material with me about the propaganda line which has been taken. That is a matter in which we hope that on both sides there will be a damping down of name calling.
Again there is the question of the treatment of our traders in China. They really have not had anything which could
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be described as good treatment, even if there is an ideological difference on the question whether there should be private enterprise traders there or not. They really have not had a fair deal. These are all matters which must be considered and which must enter into our judgment.
Mr. Wyatt: May I explain that I did not mean that automatically Communist China should become a member of U.N.O. on the signing of an armistice? What I wanted automatically to return to was the policy which we were pursuing of actively canvassing the other members of the United Nations to persuade them to get Communist China into U.N.O. Now that they have ceased the aggression we should go back to that position. We should automatically go back to the same position as before.
Mr. Lloyd: The hon. Gentleman has used the expression "actively canvassing." The only active canvassing that I know consists of going round the streets, knocking on doors and getting people to give their votes. That is not the way to deal with this question. Our view is clear, it has been stated again and again, and we shall continue to try to persuade people to think of this matter in the way in which we think of it. I do not know whether one could call that active canvassing, but our influence has been consistently directed that way.
I do not wish to go at great length into the question of the telegram about Mr. Dulles's speech about the veto. I will let the hon. Member for Maldon (Mr. Driberg) see it some time, but it puts what was first reported into a different context. It does not seem as though Mr. Dulles said anything nearly as dogmatic on that matter as at one time appeared from the Press reports.
Mr. Noel-Baker: On the question of the veto, will the right hon. and learned Gentleman look into the point raised by my right hon. and learned Friend the Member for Rowley Regis and Tipton (Mr. A. Henderson) as to whether the veto applies at all? Will he consider the Czechoslovak precedent of 1940 to which my right hon. and learned Friend referred, and see what really is the meaning of the Charter in this context?
Mr. Lloyd: I think the right hon. and learned Gentleman will see what Mr. Dulles said. He was, in fact, in one part

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of his statement, putting forward that very view, the opinion that this was not a matter for the veto, but he was not certain whether that was the position. In justice to Mr. Dulles, it would be right that the whole of the passage should be read.
Then I come to the question of strategic controls. This again, I submit, is a question of timing. The only point about that, as compared with the issue of representation, is that there is a little more flexibility over the question of strategic controls. Obviously, with regard to admission, it is either "Yes" or "No," but with regard to strategic controls there is obviously a little more scope for give and take. I repeat what my noble Friend said in another place yesterday, that if the need for some of these drugs can be shown, that is certainly a matter which we will willingly consider again.
Again on the general question of strategic controls, it seems to me that we have got to act in collaboration with our allies in the United Nations, and again something of what I have said on the question of representation also applies. We must see how these other factors develop.
I think that the next stages have got to be taken step by step. First of all, there is to be the meeting of the Assembly on 17th August. Our preliminary view is that that meeting should be a procedural meeting in order to get quite clear the procedure for the setting up of the Political Conference, to decide who is to be present at that conference, where and when it is to meet and what are to be its terms of reference in relation to the United Nations itself. That is a matter for negotiation and not so much for public debate.
I am not certain that we should advance the cause which we all have at heart if we were to embark there and then upon an acrimonious debate upon the admission of the People's Government of China to the United Nations. I think this will be appreciated by hon. Members who have been saddened, as I have been again and again during the United Nations debates on these topics, when one seems almost at once to get into an atmosphere of name calling, abuse and recrimination. We all hope that we are starting on a new phase, and we want to do everything we can to see that this new
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venture of the Political Conference goes on in the best possible way.
We do not want at this next meeting to force people out into the open on matters about which they have strong feelings. That applies to our own friends, to the Soviet Union and to other countries of the Soviet bloc. It is easy to say that that is one's view. When one gets there, one finds that circumstances are different. It may be impossible to do it as we want to. Putting the position quite frankly before the House, that is the way in which my right hon. Friends and I look upon this matter at the present time, and we shall try to get the greatest measure of agreement we can upon the setting up and the terms of reference of the Political Conference.
The next step is the Political Conference itself. I agree with the hon. Member for Nelson and Colne (Mr. S. Silverman) that its task should be to deal with the peaceful unification of Korea. But he then added that it was no business of the United Nations. He is quite wrong with regard to that, because it was one of the United Nations resolutions of December, 1948, which said that the
"General Assembly … resolves … that a Commission on Korea … be established to … lend its good offices to bring about the unification of Korea."
Mr. S. Silverman: I accept fully what the right hon. and learned Gentleman says, that in 1948 a resolution was passed; and, of course, it is the business of the United Nations to lend a hand and its good offices in regard to any question which might ultimately affect the peace of the world. What I meant was that it was no part of the business of the United Nations following upon the outbreak of the Korean war. It was not a necessary part of the settlement or of the armistice.
Mr. Lloyd: I am not quite certain what the hon. Gentleman means when he says it was not a necessary part of the armistice. In our discussions in the United Nations in regard to Korea we have said again and again that our object is the peaceful unification of Korea.
Mr. Silverman: I said in my speech that in so far as the Political Conference could agree upon unification that would be all right, but it ought not to be any kind of sine qua non on our side, and no attempt should be made to force it through.
Mr. Lloyd: I certainly agree that there should be no sine qua non in regard to this Political Conference. We must try to work out a practical way to unify Korea peacefully.
Mr. Silverman: By agreement.
Mr. Lloyd: Yes, by agreement. As my right hon. Friend said, there are difficulties about whether conditions are yet right for free elections or a free all-Korean Government. It may be a gradual process. We have had sufficient difficulty about trying to work out methods to unite other countries, where there have been no hostilities for eight years. It will be a very difficult problem, and there may have to be an interim period of different stages. The first and primary task of the Political Conference is to seek to get the peaceful unification of Korea. When that matter is tackled we shall probably see what are the prospects of a wider measure of agreement about other problems in the Far East.
We feel that there has been nothing to complain of in the tone of this debate. Only one speaker tried to bring in a little party politics. In all sincerity, I can say that the debate has been most helpful to me. The hon. Member for Rotherham (Mr. Jack Jones) gave expression to the feelings of very many of us. Legitimate doubts were expressed by hon. Members opposite as to our capacity to persuade the United States Government. As I have already said, it is perhaps the greatest psychological mistake to boast of success in persuasion.
Mr. Silverman: Especially when we have not had it.
Mr. Lloyd: Yes, but I think that our record over the issue of the repatriation of prisoners of war should count for something, when we were successful in our endeavours to get opinion in the
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United Nations mobilised almost unanimously.
Mr. A. Henderson: It came from public debate.
Mr. Lloyd: The right hon. and learned Member says that it came from public debate. It came from a process which took about six weeks, in which public debate, on the whole, formed the smallest part. But I do not want to go into that story.
Mr. Noel-Baker: Where are the prisoners?
Mr. Lloyd: We sincerely hope that the exchange of prisoners of war is going to begin almost at once.
Looking to the future, this is a new phase. I agree with the hon. Member for Edge Hill (Mr. A. J. Irvine) that we should place on record more definitely our feelings that aggression has been successfully repelled. I also agree very much with the hon. Member for Ealing, North (Mr. J. Hudson) that we now have to try to give expression to our collective will to stop the fighting, and that this armistice has happened., in some measure, because of that collective will to stop the fighting. I can promise the hon. Member that the whole weight of the influence of this country will be devoted to the prevention of a resumption of hostilities, whether the danger comes from the North or the South.
I shall go to this Assembly fully realising the responsibility of the task, and remembering the background to our discussions. There one has a great collection of politicians, diplomats, television cameras, reporters and the rest, but the background to all that is the wish of the ordinary people, in every country, for lasting peace.
Question put, and agreed to.
Bill accordingly read the Third time, and passed.

COTTON INDUSTRY
7.5 p.m.
Mr. Harold Wilson: I beg to move:
That this House takes note of the Report of the Cotton Import (Review) Committee (Command Paper No. 8861) and the Annual Report and Statement of Accounts of the Raw Cotton Commission or the year ended 31st August, 1952 (House of Commons 197).
I suppose that it is an unusual procedure for the Opposition to put down a Motion to take note of two Reports which have been presented to the Government, but the House will be familiar with the reasons which have led us to do that, namely, the technical fact that we cannot debate the activities of the Raw Cotton Commission either on a Supply Day or in a debate on the Consolidated Fund, because the finance required for the Raw Cotton Commission is not provided under the mechanism of the Consolidated Fund.
We certainly make no apology for raising the question of the Report of the second Hopkins Committee. One reason why we feel it necessary to have this debate is to draw attention to the fact that there has been a major change of policy without consideration or express sanction by Parliament. I am not suggesting that the President of the Board of Trade has acted in any way illegally. So far as I can see from reading the Act, he has not done so, but he has certainly strained to the fullest possible extent the legislation which we bequeathed to him, and it might be argued that he has overstrained it.
I cannot claim that he has acted in a way which is contrary to the letter of the Cotton (Centralised Buying) Act, 1947, but he has certainly acted in a way contrary to its spirit. I know that in a court of justice the intentions of Parliament are not considered. What is important is what is in the Act. But there was certainly no doubt about the intentions of Parliament in connection with the Measure which was introduced into this House and piloted through all the stages of its legislative career by my right hon. Friend the Member for Middlesbrough, East (Mr. Marquand).
At all times in that debate, the only thing being considered was a monopoly for cotton buying. There were one or two
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minor loopholes, some of which were introduced in Committee, providing, for instance, for re-export purposes, for samples, and certain other purposes, requiring the assent either of the Board of Trade, after consultation with the Commission, or of the Commission itself. Now that we have reached a state of affairs where well over half the raw cotton coming into this country in the coming year will be on private account, for the President still to operate that by an Act which sought to create a monopoly in cotton buying is over-straining this Act and straining the relations between the Government and the House more than one would have expected him to do.
Since we are so near the Recess, I am not going to say all the harsh words about the President's action which would be appropriate to the occasion. I shall not even attempt to guess what the party opposite would have said if we had tried to introduce nationalisation by a back door in this way. Here is the President—perhaps he did not know what he was doing, because he did not know the percentage contracting out—introducing denationalisation by a loophole in a Nationalisation Act.
Mr. Ralph Assheton: Oh.
Mr. Wilson: The right hon. Gentleman seems to be amused, but if he will reflect upon this for a moment I think he will decide that it is not the right way to treat this House. In the next Session the President of the Board of Trade should introduce legislation to give effect to what his policy now is.
I want to ask him to look into another question. I am not a lawyer, although the right hon. Gentleman is, but I have said that as far as I can see there is no direct breach of the Act. I am sure that is right and I am sure that he was well advised on these matters, but I notice in the Act a point to which my right hon. Friend drew attention, that permission to import is dependent on written permission from the Raw Cotton Commission in each case. Will the President assure us that written permission has been given by the Commission in each case of importation and that the Act has been strictly complied with? Again, I hope he will look into

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the question before the next Session and put the relations between the Government and the House right by introducing legislation covering what he is now doing.
Our second reason for choosing this subject for debate was to underline some of the main conclusions of the Hopkins Report, one in particular, to which the President has already referred—their statement on page 7,
"… we are unanimously agreed that it is intrinsically undesirable that cover for private trade should be provided at the risk of public funds, and that the time has now come for this issue to be faced."
That unanimous recommendation of the Committee was endorsed by the President when he reported to the House that he had received this Report. As soon as he said that, his statement was, of course, instantly supported from both sides of the House. We all agree, in all parts of the House, that it is thoroughly undesirable to provide cover for private trade at the risk of public funds. That is one of the purposes of this debate, but I want to warn the President, also, of some of the dangers into which we may be running as a nation, and Lancashire in particular, with this swing over from public to private buying and to warn him of some of the dangers of the policy which he appears, perhaps rather un-surely, to have marked out for himself in this matter since he took office.
The whole question of private cotton buying arose from one of those sudden and unpredictable economic decisions for which the Prime Minister has sometimes been famous. We have had other cases, such as the Excess Profits Levy, but it would be out of order to debate them tonight. Opening the Conservative Party's Election campaign at the beginning of October, 1951, the right hon. Gentleman gave a clear pledge to reopen the Liverpool Cotton Market. That raised hopes in Liverpool and caused a depression in very many hearts in other parts of Lancashire.
When he took office the President obviously wanted to give effect to the Prime Minister's pledge, and he has certainly been subjected to pressure by some of his more doctrinaire supporters, especially those who represent residential constituencies well inhabited by members of the Liverpool and Lancashire Cotton Exchanges. The right hon. Gentleman
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has, however, found that this problem has turned out to be much more complicated than he expected. He therefore set up the Hopkins Committee very quickly after taking office.
I do not think the right hon. Gentleman could have chosen anyone better to head that Committee than Sir Richard Hopkins, a public servant with a particularly great reputation since he has left the public service for finding a way to reconcile two opposing and apparently contradictory points of view. We certainly found that when he presided over the discussions on the proposals for a development council in the wool industry, where there were two entirely incompatible points of view. If anybody could have brought the two sides together it was Sir Richard Hopkins.
He was therefore the right person to appoint to head this Committee to reconcile the desires of the Prime Minister, on the one hand, with the facts, on the other hand. Of course, the Committee itself was bound to reflect the prevailing tendency and views of the Government. Certainly the trade union members of the Committee went along with the main recommendation, although they must have had many doubts and reservations in their minds. One of the things on which I imagine they insisted was the maintenance of the Raw Cotton Commission.
From the Hopkins Committee came an unusual proposition, namely that a public body, the Raw Cotton Commission, should provide, ultimately at public risk, cover for the private buyer. This is a tremendous reversal from the days of the debates on the Cotton (Centralised Buying) Bill, as my right hon. Friend will remember, because in those debates, in 1947, we had one hon. Member after another from the party opposite contending that private buyers alone were capable of providing cover for the spinner and the manufacturer against changes in raw cotton prices.
It has been a surprise, although perhaps a welcome surprise, to hon. Members in all parts of the House that the Raw Cotton Commission has been able to work out an extremely valuable system of providing cover and to do it in what has been a much more difficult situation than any which the Liverpool Cotton Market ever had to face. Here we had this reversal, nevertheless, by the first

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Hopkins Report, going right back on what was said in 1947 and asking that a public body should provide cover for private merchants.
Sir John Barlow: How could private buyers provide that hedging if they were not allowed to work at all?
Mr. Wilson: I am coming to that point, which is absolutely bound up with the present economic situation which the country faces, whatever Government we have in power. It does not seem to have been very clearly considered by the Prime Minister before he gave his pledge in October, 1951. The result, in any case, of the first Hopkins Report and its acceptance by the Government was that the Commission had to provide its umbrella for the private buyers as well as the public buyers. We all realise that in the conditions of the post-war world, with the dollar shortage and other difficulties, and with the need for non-dollar growths, the private buyers could not provide the facilities which it was possible for them to provide before the war. The hon. Member for Middleton and Prestwich (Sir J. Barlow) is quite right about that. It was impossible for them to provide dollars for hedging. I am not criticising the private buyers but merely describing the kind of world in which we live. Again, this suggests that my right hon. Friend and the Government in 1947 appreciated the kind of world in which we live rather better than some of the Tory critics at that time.
The second Hopkins Committee, of 10th March last year, was asked to review the situation for the coming 12 months. I thought at the time that this was rather an unusual procedure. The President announced that cover was going to be provided for another year by the public body, and then set up the Committee to tell him how to do it. Surely it would have been desirable to set up the Committee first and to find out how to do it before coming to the decision on principle of whether it was right for cover to be provided.
His announcement perturbed many hon. Members on this side of the House and probably some on his own side. It was felt that there would be a danger of public capital being involved to cover the normal risks of private trading, even
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the risks of private miscalculation, but nevertheless the Committee was appointed and we awaited their Report. I think we must congratulate the Committee on the commendable speed with which they produced their Report, which was issued a few weeks ago.
There are one or two points in the Report to which the attention of the House should be drawn. First, they had a rather important pronouncement on the subject of prices. There has been a great deal of propaganda in not disinterested quarters in Lancashire suggesting that private buyers have been buying a great deal more cheaply than public buyers during the period of the dual purchases. The Report says:
"But we have the impression that if a thorough general examination of results over a complete trading period, conducted in the light of all the circumstances, were practicable, it might well appear in the net result that differences were only marginal."
The Committee therefore award equal points to both sides. That is on page 4 of the Report.
The second point, which I think is the essence of the problem which the House faces, is that the Commission could not hope to provide as good a cover for contractors out as it could for its own customers, simply because they could not identify the precise qualities of cotton for which cover was being asked. The Commission could not provide a service for other than its own customers because of the difficulty of identifying particular grades of cotton.
The first Hopkins Committee a year earlier had proposed that rough cover could be provided by relating the cover offered to a choice between the whole range of the price indices and the sterling equivalent of the New York futures market or the Alexandria futures prices. What the second Hopkins Report said was that this system would not work well at all and had been virtually ruined so far as Egyptian cotton was concerned by the closing of the Alexandria futures market.
I should like to draw the attention of the House, or, at any rate, of those hon. Members who have not already seen it, to paragraph 27, which draws attention to the very serious state of affairs—indeed, something approaching a racket—in which the cover system provided by

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the Commission is being played for private advantage by a number of importers. The Hopkins Committee says that:
"A cover scheme based on public funds should not be capable of misuse in this way."
The third point mentioned in the Report, of some importance to the House in considering this matter, is the obvious failure of the merchants to build up a stock for spot use, despite the help given by the Minister of Materials earlier this year when facilities were provided for the very purpose of building up such a stock.
One can quite understand the difficulties of the Cotton Association and its members. They may well feel that this is not the time for building up stocks with the price trends as they are, but what it means is that if it were left to them Lancashire would be extremely vulnerable in an emergency, if, for instance, we ran again into a new dollar crisis necessitating economy in dollar purchases, or if we ran into another state of affairs such as those in 1950 and 1951 when there was a short American crop and the American Government severely rationed supplies to us far below the proportion of the supplies we ought to have had, or if there were a military emergency. This really makes the Lancashire industry very vulnerable to any changes of that kind.
The fourth point which struck me as I read the Report—and, certainly, I read it with very considerable relief—was given in the key passage I quoted a few minutes ago and the unanimous view that it was intrinsically undesirable to provide cover for private trading at the risk of public funds. One purpose of this debate is to strengthen the right hon. Gentleman in his clear statement that he accepts this principle. I think it will be valuable if we make it clear in all parts of the House that we are all opposed to the use of public capital for this purpose, and if we remove any illusions which may well exist in certain interested quarters in Lancashire about this question.
I do not think I need argue this case. One has only to consider its reactions on other industries. The wool industry, for instance, has suffered far more violent fluctuations in the prices of its raw material in the last few years than the
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cotton industry, and this is a privately bought non-dollar commodity. One can imagine the difficulties the President would face if the wool industry came along and said, "Cotton has got public cover. Why cannot the wool industry have it as well?"
Mr. William Shepherd: I should like to get this quite clear. To whom does the right hon. Gentleman refer as being the private traders in this industry? Is a private trader one buying cotton from the Raw Cotton Commission and spinning it?
Mr. Wilson: I was referring to private importers in this case, the customers of the private importers. The House will see the difficulties in which we should get if, in fact, public cover could be used in this way. The Committee recommends that there should be close study of alternative means, private means, for giving this cover, and says that that study is urgently necessary.
I think it is our duty to warn the right hon. Gentleman about the reference in the Report to convertibility. I do not think anybody on this side of the House or many on his own side feel that convertibility is something which is a likely or desirable economic policy of this country. I should be out of order if I were to debate that now. We have debated it on a number of occasions, but it would be wrong for the cotton market to assume that convertibility would provide for them the escape from this problem they are facing.
Equally, however, we must emphasise that it would be entirely wrong to provide for any further use of scarce dollars for hedging purposes on the New York market. I hope the right hon. Gentleman will put his foot down firmly on any proposal of this kind. I asked him for an assurance on this point at Question time some five or six weeks ago, and I hope to get it tonight.
I ask the President to realise where we get to on this. There is a danger that this urgent examination, which has been called for, will find there is no way out, that there is not any way of providing adequate private cover. If that should be the position I think the President should be told he must not come back to the House at the last minute and again announce there has not been a

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solution and that he must provide cover for a further year. Yet it is evident that in the interests of the cotton industry the maximum possible cover should be provided.
I think the right hon. Gentleman may find before long that events will put him back to a higher proportion of public buying instead of to the 100 per cent. proportion of private buying to which he is obviously directing himself. I think he should be warned against further encouragement to contracting out. Whatever may be the views of some on his side of the House I do not think there are many of us who would be guilty of pressing him to wind up the Raw Cotton Commission entirely. If he were to do that it would be a body blow to Lancashire's future.
I think that he will recognise that the Raw Cotton Commission has done a first class job in difficult circumstances. I think the whole House would wish to compliment Sir Ralph Lacey and the other independent members and part-time members and all those concerned with the work of this Commission. Also, I think, a special word should be said about the staff. As the annual Report makes clear, the staff have had to face over the last year or two the most unpleasant atmosphere charged with partisanship, misleading rumours, and attacks to which they were not able to reply.
What is one rather serious thing is that a considerable number of the staff, of the senior staff, are under notice at the present time and will be leaving the Commission's employment this week—tomorrow—and as far as I know there is no provision for compensation for them. I hope the President is going to look at this as a matter of urgency. This really bears on my opening remarks, when I said the President has entirely changed the policy without coming to the House and telling it. I shall not use the word which is a favourite with the Secretary for Overseas Trade and say the right hon. Gentleman had not the "guts" to come to the House about it.
But certainly he ought to have come to the House, because if he had done so I think one thing we should have insisted upon putting into the Measure
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would have been compensation for loss of office of some very good members of the staff who came into this employment thinking, on the authority of a decision of the House, that it was going to be permanent. They are suddenly cast off without any change in the legislation governing their employment. I am told that the suggestion that they should be compensated for loss of office has been rejected on the ground that the President has no statutory authority to pay compensation. I should have thought that a little thing like that would not have stood in his way. He has done what he has done with a scant amount of statutory authority for doing it.
If he needs statutory authority, I hope he will ask for it. I can certainly promise him that if he makes a request for any authority he needs for compensation of the staff it will be readily supported from this side of the House. Certainly in Measures of nationalisation and of denationalisation the House has been concerned with compensation, but in this case what has been done has been done by administrative means, and nothing has been done about that.
The Commission should be complimented particularly on the reputation they have earned for the quality of the cotton that they have been buying. This, again, is a reflection on a lot of earlier criticisms, which were more a reflection of the supply and dollar position than of the competence of the Raw Cotton Commission. Now, the Commission have a good name for the quality of the cotton they buy. One knows that throughout the spinning and weaving districts of Lancashire there is a real fear on the operative side that the return to private buying would mean a return to some of the poor qualities that they knew so much about in pre-war days. [Laughter.]
The hon. Member for Cheadle (Mr. Shepherd) laughs, but I suggest that he should show that attitude in some of the weaving districts before a good trade union audience who know even more about good spinning and bad spinning than he does. I draw the hon. Member's attention to the leader in the "Manchester Guardian" of 19th June:
"On the operatives' side good cotton has come to be associated with State buying, and there are fears that private buying might lead to the use of inferior cotton and so to a lessening of the operatives' earnings."

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However, I leave that question to my hon. Friend the Member for Farnworth (Mr. Thornton), if he is fortunate in catching Mr. Speaker's eye.
There have, of course, been big price fluctuations in the sales of the Raw Cotton Commission; they have been a reflection of world events. One has only to look at the price fluctuations in the United States for raw cotton last year; and I have already referred to the much bigger fluctuations in wool. It was inevitable that if the Commission set out to effect replacement prices for its cotton sales, there were bound to be fluctuations corresponding to those which occur in world markets.
I am sure that the hon. Member for Cheadle is only itching to get up and talk about the loss of £22 million last year. I suggest to him, or to anyone else so itching, that such a loss was inevitable in a falling market and that it was made out of past profits, which were made equally inevitably on a rising market. It is a familiar effect with other raw materials. The Minister of Materials has come to the House on a number of occasions with Supplementary Estimates. Of course, we did not criticise him about them, because we—I take no credit about this—had made big profits on a rising market, and it was always envisaged that those profits would be set aside for meeting the losses which would be inevitable when some of the goods bought at the higher prices were finally sold off.
But there are other reasons too. The Commission last year or the year before made some uneconomic purchases of American cotton—I grant that readily. They had to do that in order to build up stocks after the action of the American Government in cutting supplies to us in the previous year. I do not think any Member of the House would criticise the Commission for placing such large orders in the Sudan a year or two ago, because those were necessary as an insurance against troubles in Egypt. The Commission were right to buy. I do not know whether or not private buyers would have bought. If they had not, they would have been running undue risks of the necessary supply for the Lancashire industry.
The Report shows that the Commission provide better cover for those who buy from them than they can for others, and a better choice from stocks, but it empha-
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sises that this position cannot be maintained if a majority of the mills contract out. The Commission cannot be a supplier of last resort if they are supplying only a minority of buyers within the industry.
I warn the President against any ideas he may be entertaining of scrapping the Commission. He will probably find that private buying has gone as far as it can go, and there will be no return to pre-war conditions for a very long time to come. Already three import crops—Egypt, Brazil and Pakistan—are being offered for sale by tender or barter and other methods which by-pass the ordinary mechanism of the market. Even the American crop is now dominated by political considerations and price support policies. As for Colonial products, the whole House knows that we shall not get an adequacy of Colonial supplies except on the basis of long-term contracts, which simply cannot be provided by the private Liverpool market.
Recently "The Times Review of Industry," not by any means a Socialist journal, stressed that
"The world market for cotton … seems to be in or near a condition where the process of transferring importation and distribution from a State-supported monopoly to private traders may be checked. In present circumstances buying involves an unusual amount both of risk and of complexity; thus there is greater scope and, perhaps, a greater need for centralised buying than there would be under more normal conditions."
Does the President of the Board of Trade see any hopes of a return to the "more normal conditions"? Have not the conditions described by "The Times Review of Industry," that were met with last year, come to stay?
How does the President think that the present dual system, or, worse still, an entirely private system, would operate if we run into a new dollar crisis? The changes that have so far taken place have been against a background of a favourable—I believe, a temporary favourable—economic climate. Suppose there were a dollar crisis. Can we imagine private buying working in those circumstances? The first thing that the President would have to do would be to allocate dollars and cut down dollars. Then, we would find that certain merchants were getting a scramble for the cotton that they import, and there would be an artificial premium on some of it. The mills who were closely

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tied to the merchants, perhaps by some of the new integrations going on in the industry, would be specially favoured and others would be left out in the cold. Worse still, there would not be any mobilisation of stocks for meeting a crisis when we need the very last ounce of imported supplies.
In 1949 we just got through without a single mill closing down, because the Commission were able to squeeze out the very last ounce of their stocks and ensure that supplies were allocated fairly, although not always in accordance with the desires of particular mills for the particular grades they wanted. But is there any hope of that system of fair shares if we run into a dollar crisis on the basis of private buying? Would private buyers also have the ability or the incentive to switch from dollar to non-dollar cottons?
The right hon. Gentleman gave some figures in answer to a Question the other day, showing that since 1938 Commonwealth supplies of raw cotton have come to account for, not 23 per cent. as in 1938, but 37 per cent. of our raw cotton imports last year. That is a very fine achievement, but it is partly due, at least, to long-term contracts and centralised buying. Does the President think that that will continue if we abolish the Raw Cotton Commission, or even if we continue the present dual system with a preponderance of purchases coming through the private traders?
I hope the President will realise that he may have already gone too far. I hope he will be ready to put more reliance than he has been doing on the Commission. Especially he must be ready to face the consequences for Lancashire of a dollar crisis, which has more than once since the war threatened Lancashire's supplies of raw materials. If the right hon. Gentleman is prepared to look at the problems in this way and not in accordance with any doctrinaire ideas about whether it should be private or public buying, he will find a ready support from this side of the House.
I hope that the President tonight will answer some of these points, especially about his use of the legislation, about the assurances for which we have asked, about the methods of private cover that will be made available, about his assurance that he will not wind up the Raw
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Cotton Commission, and about what he will do to encourage Commonwealth development. Last, but by no means least, I hope that the right hon. Gentleman will give us some assurance that the staff of the Commission, who have served the Commission, the industry and the nation faithfully and well for many years, now that they are being discharged, through no fault of their own, will be adequately looked after, and that he will give his personal attention to the problem that is created by these redundancies on the staff of the Commission.
7.40 p.m.
The President of the Board of Trade (Mr. Peter Thorneycroft): Her Majesty's Government welcome this debate. I think it is an appropriate moment at which to have some discussion about some of the future problems concerned with the purchasing of raw cotton not for the purpose of announcing policy for this season, because I have already done that and it is now implemented and going forward, but because, in cotton as in most other industries, it is important to look ahead and decisions have to be taken early in order that merchants, traders and others concerned in the industry can make their plans.
The reports which we are considering here are, first, the Report of the Cotton Import (Review) Committee and secondly, the Annual Report and Statement of Accounts of the Raw Cotton Commission. As the right hon. Gentleman said, the Cotton Review Committee sat under the distinguished chairmanship of Sir Richard Hopkins, and I should like to agree with the right hon. Gentleman in saying how big a debt we all owe, whether in Government or in industry, to the work of Sir Richard Hopkins on these two inquiries. This Committee, like the previous one, included representatives of all aspects of the industry, including the trade unions.
Before I turn to the details of that report, I want to say something about the background and the context in which its conclusions were reached. The report deals with the question of how we should buy raw cotton and how we should cover the traders, but it must be read against the background of the original Hopkins Report which was produced just over 12 months ago, and it must also be read in the context of the Report

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and Accounts of the Raw Cotton Commission.
Perhaps the most convenient way of presenting these problems, so that hon. Members may direct their arguments towards them, is to take the position of the Raw Cotton Commission first of all. After all, it has in recent years purchased the bulk, and still purchases a very substantial part, of all the raw cotton that is coming into this country. Like the right hon. Gentleman, the first thing I would say about the Raw Cotton Commission is to pay a tribute to its staff and not least to the work of Sir Ralph Lacey. The work he has had to carry out is of an extremely difficult and technical character, and it has been done at a period when textiles throughout the world have been going through a difficult patch. Throughout all those times Sir Ralph Lacey has not only shown his outstanding ability, but he has earned and kept the respect of men of very varied interests and views throughout Lancashire.
The Raw Cotton Commission has two jobs. One is merchanting and the other is cover, and I want to say something about both of them. The Report and Accounts to which the right hon. Gentleman referred were published on 23rd June of this year and they show a total loss of just over £25 million as set out in detail on page 41. Of this, about £2 million relates directly to the cost of covering its clients on a falling market, though I think I should tell the House that substantial losses on the Raw Cotton Commission's covering of its clients on a falling market are also probably concealed in the remaining £23 million; that is to say, the total cost of cover is probably more than the £2 million incurred directly.
Allowing for the profits and losses in previous years, including the £25 million loss just referred to, the reserve fund is now down to just under £10 million. As to the likely position in the current year, it is too early to say with any certainty, but I should warn the House that until the spring of 1953 prices continued to fall and some further loss is likely in the current year's trading.
Whatever else is said about all this, it must be recognised that these figures face us all, on whatever side of the House we sit, with a really serious problem which we must face calmly and dispassionately. What can be said about it? I agree with
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what has been said by a great number of the financial commentators on this point, that the real cause of these losses is not to be found in some lack of skill in the Commission but is inherent in the system, in trading conditions which have operated during this period. The fact is that the Raw Cotton Commission are absolutely committed to supply all the cotton that the industry needs, and this commitment has forced the Raw Cotton Commission to hold larger stocks than the private operators might have done, as the right hon. Gentleman indicated. While it is true that the Raw Cotton Commission may gain on a rising market, it is almost certain to lose on a falling or a fluctuating market.
It may be that the normal accountancy practice which requires stock to be valued at cost or replacement, whichever is the lower, may tend to emphasise the losses on a falling market and minimise the gains upon a rising market. I accept that at once, but that is not a fact which alters the true nature of the problem we have to face. It may alter the size of the picture, but not its true nature. The basic cause of the problem lies in the statutory obligation on the Raw Cotton Commission to hold stocks of all types large enough to service the whole industry. It was this statutory obligation which compelled the Raw Cotton Commission to buy expensive Sudanese cotton in the winter of 1951–52, part of the losses of which are reflected in the accounts we are now considering.
One word as to the quality of the service. I believe that the general view in Lancashire is that the Raw Cotton Commission has done a fine job within the limits imposed upon it. I was going to call attention to paragraph 4 of the Cotton Import (Review) Committee's Report, to which the right hon. Gentleman referred, which compares the various types of service extended to spinners and which comes to the conclusion, I think fairly, that both contractors in and contractors out could be very well satisfied with the service which was extended to them.
If I might summarise this side of the matter, I do not stand here to apologise for the Raw Cotton Commission. I am firmly of the opinion that the staff of that organisation have done a good job in the circumstances with which they were

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confronted, but equally I do not minimise the real difficulties which arise from the statutory obligations that have been imposed upon them in the market conditions which have obtained. The truth is that these facts and trading results, and these inherent risks to public funds, provide a background against which future action must be judged.
We recognised this two years ago and we have been anxious to solve it. May I ask right hon. Gentlemen to believe that I have always been anxious to solve this not on a basis of party passion at all. I have always been anxious to solve it on the basis of an objective approach. I have always felt that if we tried to tackle it that way we would be likely to get a better solution, and I am quite certain we would be more likely to get a lasting solution. That is why, as the right hon. Gentleman pointed out, within a very short time of being appointed to my present office I appointed the first Hopkins Committee, which reported in 1952. I thought it was a matter of satisfaction to see the way in which all the interests in Lancashire showed their willingness to work together in what was, after all, a controversial sort of problem. The trade unions, the spinners, the merchants, the Cotton Board, the Raw Cotton Commission and the Liverpool Cotton Association were prepared to sit down together and see whether they could work out a satisfactory solution to a problem which concerned the whole industry.
That Committee in their report recommended two things. First, they recommended that the spinners should have a right to contract out, that is to say, a man could buy either directly if he wished or through the Raw Cotton Commission. The second thing they recommended was that cover should be provided for the whole industry by the Raw Cotton Commission. The result, I thought, was interesting. The result was not a landslide towards private buying. There was a cautious approach, and I think it was quite right to be cautious. There was much at stake. The situation and the conditions of the world particularly were most uncertain, and the amount of contracting out varied for different groups. On an average about 30 per cent. was being bought direct,
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that is, not through the Raw Cotton Commission.
At the beginning of this year we were faced with the possibility that more spinners might contract out. The choice, after all, was theirs by a unanimous decision of the industry itself. Only they could take it. It was not for me to tell them which way to buy or which way they ought to choose, but it was clear to me that if large numbers were to contract out it might affect the Raw Cotton Commission's ability to carry out its statutory obligation.
Last, but by no means least, spinners trade privately and for profit. A change in the price of their raw material is part of the risk they run. We have always had to consider, and we always must consider, how far that risk could or should be taken off them and carried by the public purse. After all, there are other traders in other trades running similar risks, and they might start to ask for the same beneficent treatment.
The right hon. Gentleman sought in this matter to draw a distinction between contractors-in and contractors-out. I do not want to be dogmatic about it, but I am not altogether clear why those trading as contractors-in should be regarded as less private than those trading as contractors-out. The difference is not completely obvious, at least not at first sight. I am not going to be dogmatic about this nor am I making final decisions on it but I rather thought that the right hon. Gentleman was leading himself towards the conclusion that we might have, as it were, one lot of cover operations or methods for one lot of spinners, and another for another. I am rather doubtful whether that would really be a workable proposition.
Against that background we did appoint a further Hopkins Review Committee. As I say, I make no apology at all for trying to move in this matter as far as possible in agreement with all sides of the industry and on a basis of joint Government and industry study. The Report which is the subject of this debate is, I think, in many ways encouraging. It states that the previous year's experiment worked smoothly, and I think it is generally agreed that the Raw Cotton Commission, under the able chairmanship that it has had, has certainly given

1629
as good and probably better public service since it ceased to have a monopoly of cotton imports.
The recommendations of this second Hopkins Committee, like its predecessor's, were unanimous. They considered that the previous year's experiment should continue for a further twelve months with certain detailed modifications. The spinners were invited to declare their option for the coming buying season, and the result of those options is again interesting. There was no landslide. They moved quietly and on a considered basis. The number of mills buying all their requirements direct actually equalled the number of mills buying entirely through the Raw Cotton Commission. About 56 per cent. of the cotton will be bought directly or through merchants. For both main groups the proportion of contractors-out has risen substantially.
The right hon. Gentleman did not challenge the legality of these operations, but he said that he thought we were straining the purposes of the Act. As he knows, the Act contains powers which enable the Government and the Raw Cotton Commission to permit private importation and sale under licence. I should like to give him an assurance that the statutory requirements are being carried out in every case. We have used these powers in accordance with the unanimous recommendation of the Hopkins Committee in two successive reports.
I would agree with the right hon. Gentleman that it is perfectly right to draw this point to my attention and to the attention of the House, and I can assure him that we will watch these developments very closely with an eye on the ability of the Raw Cotton Commission to carry out their statutory obligations, and if, in the interests of the cotton industry, it should appear necessary that some modification of the existing Act should be made, we will naturally approach Parliament for that purpose.
I should like now to say a word about the cover side. As I have already said, the Committee confirmed the view that for the 1953–54 buying season we should continue on similar terms. I make no apology for having announced it beforehand, because if there is one thing that is required in the industry it is certainty
1630
for the future, and it was right that I should say in advance that I accepted the principle that cover should be extended on broadly the same terms in the coming season.
The Committee made some useful technical suggestions designed to limit the risks to public funds, which are being considered by the Raw Cotton Commission, and it proceeded to examine possible courses for the future. May I emphasise that these courses for the future are still for examination, and I am having discussions with various sections of the industry on a technical level to explore some of the suggestions made by the Import (Review) Committee.
Let me say a word about what were those courses. It is, in theory, possible to remove cover altogether, but that would be in direct conflict with the view of the original Hopkins Committee. In my view it would be very damaging to the industry and it would be difficult for any spinners, particularly the small horizontal spinner, to spin for stock without cover being provided. To remove cover would cause some danger and risk of unemployment, and a decline in exports, and therefore to remove cover is, I think, a solution more in theory than in practice.
Secondly, the Government could continue to provide cover, either through the Raw Cotton Commission or otherwise, at the risk of public funds. I have already referred to that. I draw the attention of the House to the possible methods, apart from the use of public funds, whereby some cover could be provided. It was suggested, as a possibility only, that facilities might be granted for hedging on the New York futures market. The right hon. Gentleman invited me to say something about that. If it were done that way there would be a certain expenditure in dollars, with no return of the sort which would flow from a revived international commodity market here. Speaking for myself, and without pre-judging the opinion of anyone else, I would say that I find that to be a not very attractive proposition.
There was another possibility, to reopen the Liverpool futures market on the old basis, with the full pre-war facilities. But to do that would require conditions of full convertibility—the right hon. Gentleman is, of course, quite right—and

1631
the unrestricted operation of a free market. While I am sure that Her Majesty's Government may be reasonably satisfied with the improvement which has taken place in our economic situation, I would say at once that it has not yet reached that stage. So I think there would be difficulties about pursuing that course to its ultimate extreme.
Another course which was examined was to open the Liverpool futures market on a modified basis. That could be done without convertibility. Under that method foreign operators would have free access to the futures market, settling their transactions in sterling. But international dealings in cotton would be subject to whatever exchange control restrictions were in operation at the time. For example, a Frenchman could hedge on Liverpool, but he could not buy dollar cotton for delivery in France and pay in sterling. That would obviously be a strain on our dollar resources.
Mr. H. Rhodes: Not even on consignment?
Mr. Thorneycroft: If the hon. Gentleman presses me too far I shall probably give the wrong answer. I would say, and I think that the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) would agree, that unless one has spent many years of his life actually operating a futures market one ought not to give too many spot answers about what could happen. But I will look into that.
The fourth possibility which is mentioned in the Hopkins Report was for a futures market not based on raw cotton, organised co-operatively by the various interests in the trade which would not depend on the foreign exchange position. All I wish to say about that is that it is an entirely new idea and something quite different from the Liverpool futures market or the Raw Cotton Commission or Government cover. I make no comment, except to say that it would require very careful study by many sections of expert opinion before it could be put into operation. What requires to be done now is to consider these various alternatives in the light of our present exchange position.
My right hon. Friend the Minister of Materials and myself are already engaged in these discussions. I think it would be wrong to announce final decisions in
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advance of their conclusion. This is not a simple situation. There is, in fact, despite all that has been said, no ready-made precedent for solving all the problems existing today, and which are not necessarily the same problems as those which confronted us 10 or 15 years ago. Some of them are concerned with stockpiling, some with the development of cotton throughout the Colonies and throughout the Commonwealth in general. It is the desire of everyone to see that development maintained and if possible improved. I am in consultation with the interests concerned on matters of that kind.
I believe that these problems are not insoluble. So far we have moved in an atmosphere of minimum controversy and maximum co-operation. I think it essential that so long as possible we should continue so to do. I wish to examine these matters for what they are, problems of practical business, in which the Government and all concerned in the industry should combine to find the answers. The future of Lancashire cotton must be based upon ensuring that we have the best and the most economic methods of buying our raw material, and covering the traders against some of the risks inherent in processing it. It is upon that task that we are now engaged, and to which I hope this discussion will contribute.
8.7 p.m.
Mr. Ernest Thornton: I hope the President of the Board of Trade will not mind if I do not follow him into the intricacies of the technical arguments about the Liverpool cotton market. I make no pretence of understanding these highly technical problems, but I wish to express views indicating the apprehension felt, particularly among operatives in our industry—and to some extent among some employers—about the changes envisaged.
I do not for a moment question the right of the Government to hand back completely the importation and distribution of raw cotton if they so desire, but I should have questioned their wisdom, if they had at heart the interest of the public as a whole and the well-being of the cotton textile industry. As my right hon. Friend the Member for Huyton (Mr. H. Wilson) remarked, the promise made by the Prime Minister at

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Liverpool was not one of his most discreet utterances. I feel it was that promise rather than the pressure of the appeals and demands within the industry which led to this chain of events. I submit that had it not been for the undertaking of the right hon. Gentleman to provide cover there would not have been an increase in contracting out this year but rather a decrease.
In setting up the Raw Cotton Commission the Labour Government were not motivated primarily by ideological considerations. In fact, what happened was that it merely passed from one form of public statutory authority to another; from the Cotton Control established by the Coalition Government during the war to the Raw Cotton Commission. The driving force for the handing back to private hands comes without doubt from the Liverpool and Manchester raw cotton interests. That is, we have a self-interest which is involved and not the common well-being.
This self-interest is unquestionably the main driving force. I am not saying that self-interest of itself is always bad. But self-interest, before establishing itself at the bar of public opinion, should be weighed against the public interest, and, in this case, against the well-being of the cotton textile industry as a whole. It is well known in the trade that early last year there was a keen division of opinion within the Federation of Master Cotton Spinners Associations as to the desirability of a fundamental change in the method of buying and distributing raw cotton.
After the first Report of the Hopkins Committee, within a few days of the last date for contracting out, it is true that by weight of cotton only 10 per cent. had indicated that they intended to contract out. That led to a last minute ramp. There was a hastily convened meeting of cotton spinners. To use the blunt Lancashire expressions used in our industry, something like this transpired at this meeting of employers. It was said, "Well, now look here, lads. We are all gathered together here. We believe in private enterprise, we stand for private enterprise, and yet 90 per cent. of us are going to elect for public enterprise and only 10 per cent. for private enterprise. We have to do something
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about it" That was the tone of the meeting.
We get to know what happens at employers' meetings just as the employers get to know what happens at our meetings. I do not think that I am giving any secrets away. As a result of ideological considerations—and self-interest was not completely absent because there is a considerable tie up between the big spinning concerns and the raw cotton merchanting firms of Liverpool—the percentage which contracted out was eventually built up to 30 per cent. I do not think that the statement I have made can be denied. An illusion is being built up that private trading in raw cotton served the industry well between the two world wars and before the First World War, but that is not true, as I will attempt to indicate. The "Economist" for 26th February, 1949, said:
"Before the war cotton spinning employers were vociferous in their complaints about the Liverpool Cotton Market."
That is not cotton trade unionists speaking; that is the "Economist." The President of the Federation of Master Cotton Spinners Associations in the early 1920's, Sir Charles Macara, who was a very formidable figure in his day in the cotton spinning industry, on numerous occasions and over a period of years voiced strong criticisms of the methods of importing and dealing with raw cotton in the Liverpool market. On 18th December, 1923, the Cotton Spinning and Weaving Employers' Associations made a report from which I will quote. They said:
"In our opinion one cause which contributes very seriously to the bad trade which has been for some time experienced in the cotton industry is the fact of the excessive gambling on the Liverpool Cotton Exchange Futures Market. It should be noted that, although the Liverpool Cotton Exchange does not keep any record of the transactions which go through its Futures Markets daily, it is estimated on most reliable authority that the average number of bales bought and sold on the Liverpool market in the course of a day is 200,000. A similar number of bales of raw cotton is bought and sold on the Futures Market in New York and quite a considerable number are to be added to this for the transactions which take place in New Orleans. It would be a very moderate estimate to say that an amount of business goes through the three exchanges in Liverpool, New York and New Orleans in futures per annum which is equivalent to ten times the amount of American cotton grown in any one season, and this dealing in futures to such a large extent must

1635
seriously hamper purchases of cotton for legitimate purposes."
These are the opinions of the employers within our industry. I know that the attitude of mind has changed. I do not say that my last quotation would stand very complete analysis today, but I suggest that the whole weight of evidence in the years between the wars and before the First World War was that the Liverpool Cotton Market and its system of importing and distributing cotton did not serve the industry well especially during the difficult years.
Mr. Charles Fletcher-Cooke: May I ask the hon. Gentleman a straight question? Is he or is he not in favour of permitting people to contract out?
Mr. Thornton: I do not object to a limited system of contracting out in special instances, if it can be devised. I believe in a pragmatic approach, as the President of the Board of Trade indicated in some parts of his speech. I am concerned about the elimination of the Raw Cotton Commission which would be a disaster to Lancashire. I will come to that soon. In the few instances which I have quoted from the great weight of evidence which is available, there is an indication that all was not well when private trading held full sway, and it held full sway in a period when raw cotton was in plentiful supply throughout the world and when there were no currency or exchange problems.
The Government would have been wise to have heeded the advice given early last year to the Cotton Import Committee by the trade unions. That advice was to concentrate on improving the operational efficiency of the Raw Cotton Commission. The Commission, in incredibly difficult conditions, has served the industry and the trade well. One of the services it provided was that of the Commission's spot stock. Mr. W. T. Winterbottom, who is probably one of the leading employers in the spinning industry today, called attention to this in the "Manchester Guardian" on 15th July. He said:
"We must admit, however, that the existence of the Raw Cotton Commission's spot stock is extremely convenient and reduces the necessity of employing one's capital to carry cotton stocks."
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If cotton spinners are to employ great amounts of their capital to finance cotton stocks, we shall not get the degree of capital re-equipment for which some of the more optimistic of us hope. The Government would have been well advised to wait until more normal trading Conditions returned. Then, and only then, could a really objective assessment have been made of the relative merits of public and private operations in raw cotton.
Whether we like or not, whether it is true or not, the cotton operatives of Lancashire associate better spinning and weaving with the public buying and distribution of raw cotton. The records of the trade unions are conclusive on this point. During the last 10 years there have been fewer complaints of bad spinning and bad weaving than in any other 10 years since the keeping of records was begun, and the records go back for more than 50 years. This point is of great importance to the workers.
Mr. Shepherd: Is the hon. Gentleman telling the House that this is caused by better buying, or does he believe that it is caused by better grading facilities and more attention being paid to quality in the countries where it is grown?
Mr. Thornton: I am coming to that. I do not want to distort any arguments I have to put across, and I am at least trying to be fair. It is of great importance to cotton textile operatives that the quality of raw materials is adequate for the task, because they are mostly paid on piece rates. If we have a lower grade cotton than is required for spinning, or a lower grade yarn than is required for weaving the cloth, we get yarn breakages, which reduce output and proportionately reduce wages under the piece rates system.
I agree that, in saying that, it is an over-simplification. It is true that, during the last 10 years, we have been operating mainly in a buyers' market, and because of that, employers' margins have been good. The supply of operatives during most of the period has been short, and it was up to the employers to get a better grade of cotton to ensure that they got the maximum productivity from the machines and from the limited supply of labour.

1637
In a period of real scarcity of raw cotton, the Raw Cotton Commission has succeeded in providing a choice in an upward, and not in a downward, quality direction, and, when all allowances are made and when all the factors are taken into consideration, it remains a very unusual coincidence that 10 years or so of public enterprise in raw cotton has synchronised with a quite unparalleled period of relative freedom from operatives' complaints about the inferior quality of raw materials. It is very strange and an unusual coincidence, and it would be the responsibility of the private dealers in raw cotton, and of those who contract out, to explain away this factor if it so happens that we get back to the old conditions in which stuff that was not equal to the job was being put through the machines.
I do not think it can be denied that the Raw Cotton Commission operates primarily to serve the needs of industry and trade, and not to extract a profit for certain private individuals. The driving force for the return to private trade comes from people who hope to extract a substantial private profit, and, I may add, also have a tax-free gain from private speculation. Under these circumstances, the well-being of the industry as a whole would be a mere by-product of these activities. I am not denying that there are occasions when private interests and the public interest synchronise, but the history of the Liverpool Cotton Market during the 50 years prior to World War II indicates that raw cotton does not come within this category.
The hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield) made an excellent speech in this House on 16th July on the need for increasing cotton growing in the Colonial Empire. The hon. and gallant Gentleman is very knowledgeable on this particular subject—far more knowledgeable than I could hope to be—and he indicated in that speech that, before the war, only 8 per cent. of our raw cotton imports came from the Empire, whereas in 1952 26 per cent. of our raw cotton imports came from the Empire. Although dollar problems have contributed to this, the main reason, I submit, is that the Cotton Control, followed by the Raw Cotton Commission, were able to give the long-term assurances and guarantees which led to a growth of
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confidence in developing and extending cotton production in the Empire.
If the Raw Cotton Commission ceases to exist, or exists in a position in which it is only handling a minor portion of cotton imports, the danger that I see is a decline and not an increase in Empire cotton growing. One of the weaknesses of the cotton textile industry in our national economy at the present time is, as I think the right hon. Gentleman opposite would agree, that the cotton textile industry is a heavy dollar spender and a small dollar earner, and it is of vital importance that nothing should be done which would in any way retard this growing development of cotton growing within the Colonial Empire.
Leading Liverpool cotton merchants have been talking openly of the need for foreign—presumably, American—capital being brought in. It is intended that this capital should be used for financing cover schemes and spot stocks. I hope the Government will completely reject this idea. It would do immeasurable damage to the future of our industry and to the development of the Colonial production of cotton, and would certainly not contribute to improving Anglo-American relations as far as the population of Lancashire is concerned.
One last point. The Chancellor of the Exchequer, a few days ago, was making a speech calling for higher productivity and increased efficiency in industry, sentiments with which I agree. One thing I should like the President of the Board of Trade to bear in mind in this problem which we are discussing today is that, in the Lancashire cotton textile industry, as in most industries, there has been co-operation between the trade unions and the employers to attempt to increase productivity by redeployment schemes and so forth.
I should like the President to examine this problem from the point of view of how much more personnel will be required to operate cotton importation and distribution on a private basis by a whole series—scores, even hundreds—of firms, as compared with the present method through the medium of the Raw Cotton Commission, and particularly of the Raw Cotton Commission set-up when it was importing 100 per cent. of our requirements. We in the trade union movement will take a very dim view of an outlook

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that seems to indicate that re-deployment and increased productivity is for the manual worker, but that it can be put in reverse for the administrative workers, and private profit seekers.
I hope that the President of the Board of Trade will examine that aspect of the situation. While in terms of manpower it may not be important, psychologically it can be very important indeed. I appeal to the Government to go with infinite care in this matter of handing back to private interests dealings in the whole or in a substantial portion of our cotton imports. As has already been indicated, great dangers are involved, and I feel quite certain that any steps taken on this matter in the next year or so will be of fundamental importance to the future of the County Palatine.
The Government, I submit, will be taking a serious risk with the livelihood and wellbeing of scores of thousands of Lancashire people if they hand back this vital trade to private interests whose past record overall—and I say this quite frankly—has not been good, and whose motives are not altogether above suspicion.
8.32 p.m.
Sir John Barlow: I consider myself fortunate in having the opportunity of following the hon. Member for Farnworth (Mr. Thornton) who, apparently, has a great knowledge of this industry, and who, of course, represents considerable cotton interests. If I emphasise some of the differences of opinion between us, I hope that he will not think for one moment that I do not agree with a great deal of what he said. We are both out for the improvement of the Lancashire industry and to maintain the prosperity of the Lancashire cotton industry, especially the exporting of cloth. Therefore, if I do not mention the points on which I agree with him, I hope he will not think that I disagree with him in everything, which would be very far from the truth.
In the early part of his speech, the hon. Gentleman said that the original idea of the Raw Cotton Commission and of Government buying was not motivated by ideological considerations. I think that if he had sat through the debates of 1946 when the Bill was passed, and previously when the Motion discussing this
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matter was before the House, he would not altogether take that view now. Many arguments were put forward at that time in favour of Government buying which were very difficult to refute, because there was really no experience and no argument to show how it would work in peace-time. We knew how it had worked during the war and that the ordinary methods of buying privately would have been impossible in war-time, but we did not know how it would work in peace-time. Therefore, in many cases, it was a mere expression of opinion on the part of individuals regarding the possible advantages and disadvantages of Government buying at that time.
I wish to point out two or three arguments—which have proved to be inaccurate—that were put forward in March, 1946, when this matter was being discussed, and when the principal Government speaker of the day based his argument largely on three views as to what would happen. One point has been mentioned by the right hon. Member for Huyton (Mr. H. Wilson) tonight, the difficulty of great fluctuations in the price of cotton. No consuming industry such as the woollen industry or the cotton industry likes violent fluctuations. But there is always the difficulty of considerable fluctuations in raw commodities. In some industries it is far greater than in others. At that time the then Chancellor of the Exchequer said:
"I will quote one figure only in order to state the case to the House"—
that is on this general point—
"If we take the 10 pre-war years and consider the fluctuations over the yearly periods, we find that in no fewer than five out of these 10 years there was a fluctuation between the highest and the lowest price in the course of the year of 45 to 65 per cent."—[OFFICIAL REPORT, 28th March, 1946; Vol. 421, c. 658.]
That may have appeared to be high at the time, but if we look at the figures given in the Report which has just been issued by the Raw Cotton Commission, it will be seen that fluctuations in the past year have been very considerable indeed, that is with Government buying, after it was supposed that fluctuations had been diminished and the undulations of prices had been ironed out.
The Chancellor of the Exchequer of that day quoted the views of that great individualist in Lancashire, Sir Frank Platt, who is so well known throughout

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the industry, and who had said that he welcomed the idea of Government buying. The Chancellor went on to say what fine work had been done during the war by Sir Frank Platt in helping and organising the cotton industry, with which remark we all agree. It is interesting to see that recently Sir Frank Platt indicated that all the spindles for which he is responsible had opted or contracted out of the scheme and were going to buy direct. Sir Frank says, in his usual outspoken way, that he much prefers and thinks its much better and more economic to have private buying rather than through a Government body.
A third point mentioned by the Chancellor of the Exchequer in the same debate concerned the argument put up that centralised buying would lose a considerable amount of invisible exports, that is, trading from country to country outside England. The Chancellor said it had been computed that the value of the business amounted perhaps to £1 million a year, and with centralised buying he hoped that that figure might easily be increased to as much as £10 million a year. I have heard that that business has been almost entirely lost to this country, although we know that we require all the invisible exports we can get. If, in time, the Liverpool Cotton Exchange is restored, we may win back some of that very valuable trade.
Obviously, as has been pointed out by other speakers, when the Raw Cotton Commission was first brought in there was a sellers' market. Cloth was in great demand all over the world and the Commission could not help making enormous profits. It was a most unusual situation that we knew could not last very long. Now the market has turned round and values have diminished, while the demand for cloth in this country and in foreign markets has diminished very substantially indeed.
We have arrived at a moment when it is of the utmost importance for us to buy cotton in the most economic way possible to supply the spinners of Lancashire. The fact that 30 per cent. of them contracted out of the scheme last year, and that 56 per cent. have contracted out this year when they had the option, in view of the experience of both systems they have had, it is clear that the majority are gradually coming out. We must assume that the spinners
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know their job in buying in the cheapest market.
I should like to pay my tribute to the buyers of the Raw Cotton Commission. They have done a very fine job in most difficult circumstances, and whether one agrees with centralised buying or not we can all agree about the fine work that Sir Ralph Lacey has done in this sphere.
It is clear that a change is needed. That is being brought about by the greater competition in the world's markets. Whilst the home market is important, it does not matter so much as the export markets of the world which, unfortunately, have been diminishing owing to foreign competition. We shall have to fight by every means to hold on. If direct private buying is, in the view of the spinners, the best and cheapest way to do it, and they ought to know, that should be encouraged and facilities should be given to do it.
To give some indication of the immensity of this market and of its importance, hon. Members should know that probably the value of cotton, at present values, amounts to some £200 million a year and that it is necessary to hold in this country stocks of something approaching £150 million worth of cotton. That is a very large figure indeed. If the Liverpool Cotton Market is to be restored it will require a great deal of capital. When it was closed at the beginning of the war a large number of people went out of business. Many firms closed down entirely, funds were invested in other directions and the personnel were dispersed. It will be a slow and difficult process to find the people with sufficient experience to re-open the market.
For that reason I hope that when the re-opening is a practical proposition the Government will do all they can to supply funds for the purpose. Not only do we have to carry very large stocks in this country but it should be realised that it only takes three months at the most to pick the cotton crop and that crop is consumed over a whole year. Obviously, therefore, much of the cotton is in warehouses and in the course of shipment, and a large amount of finance is required to carry it, whether the Government or private enterprise carry it.
The advisability of hedging in New York has been discussed. The difficulties of doing so and the drawback of the

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cost of dollars have been pointed out. I would add another reason why hedging in New York is not a complete cover and is not very satisfactory. It does not guard against a change in the rates of freight or insurance, or indeed against any change in the value of the pound. So any hedging in New York could never be so satisfactory or complete as hedging would be in Liverpool.
If and when this Liverpool market is re-opened, as I hope that it will be, because it is for the benefit of the trade, some changes and possible improvements might well be made in the Liverpool contract. I am told that in the past it has only dealt in spot cotton, whereas if documents representing nearby cotton were allowed it would require less money to finance those transactions and it might be a considerable help.
Another change which I suggest would be the incorporation of colonial growths. I believe that the standard Liverpool contract dealt primarily with American cotton, but there is no reason why Colonial cotton from Nigeria, Uganda, Nyasaland or other cotton of comparable staples should not be included. That would help to promote the growing of Empire cotton, which would be a very great advantage and would tend also to save dollars.
One other advantage to cotton merchants in Liverpool would be a saving in taxation. I believe that firms in America doing similar business—it may apply to all businesses; I do not know—can carry profits forward for a period without being taxed. In this sort of business it would add to the security of the market very greatly and would facilitate the provision of the capital for this purpose, of which there is an undoubted shortage, if a similar system were allowed here. It is allowed in certain other industries in this country, and it might well be advantageous if this system of carrying profits forward without taxation for a limited period were allowed in Liverpool. For that reason, I hope the President of the Board of Trade will look into this matter.
Although there is disagreement on both sides of the House about details, we Lancashire Members in particular are very conscious of the fact that this should
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not be a political matter. It started, I believe, largely politically, but the sooner it gets away from politics the better. We are out for the good of Lancashire and the improvement of cotton exports.
8.47 p.m.
Mr. F. Blackburn: My hon. Friend the Member for Farnworth (Mr. Thornton) said that he was not an expert on this aspect of the subject, but for a non-expert I think he put a very formidable case. If my hon. Friend is not an expert, then I myself must come very far down the scale, although for many years I have tried to understand this question of cotton buying. More years ago than I care to remember I was at the university studying and trying to understand the working of the Liverpool futures market, and my judgment then was that it was a crazy system. I do not think anything ever happened later to make me change my views.
I am very interested in how the Tory mind works, and I am particularly interested to understand exactly why this Raw Cotton Commission should be discontinued and replaced by the Liverpool Cotton Exchange. I am afraid that the hon. Member for Middleton and Prestwick (Sir J. Barlow), in whose constituency I live, has not exactly convinced me of the importance of re-opening the Liverpool Cotton Exchange. It is not very convincing to mention the number of firms that opted to buy their cotton privately last year. I think my hon. Friend the Member for Farnworth exploded the myth about the 30 per cent. last year, and I am sure that everyone will agree that there would not be 56 per cent. this year were it not for the fact that the cover is being provided by the Raw Cotton Commission.
I have risen not to make a speech but as a searcher after the truth, and I shall content myself with asking one question only. I presume that the Minister of Materials will be replying to this debate, and I should like to know whether, for the benefit of such Members as myself, he will try to explain, in words of one syllable if necessary, exactly what reasons there are, other than ideological, for doing away with the Raw Cotton Commission and re-opening the Liverpool Cotton Exchange.
8.50 p.m.
Mr. William Shepherd: As another Member who has no expert knowledge on this issue, I should like to reply to one or two of the points raised by the hon. Member for Farnworth (Mr. Thornton) and the hon. Member for Stalybridge and Hyde (Mr. Blackburn). I was rather intrigued by the speech of the hon. Member for Farnworth, who told us how dreadful the spinners thought the Liverpool merchants were and how shockingly they had behaved in the past, and then told us that 56 per cent. had voluntarily opted to buy their cotton from those merchants. The argument did not make a lot of sense; nor were the quotations from that lone gentleman—a distinguished spinner—really convincing against the background of the body of opinion on this issue in Lancashire.
I agree with him that we have jumped from the Cotton Control to the Raw Cotton Commission, and that only now can we see this issue in a broader and more open perspective. I also agree that the issue should not be one of politics, but a question of how best we can buy the cotton for Lancashire so that the big battle which Lancashire has to face in the future will be dealt with in the best possible way. We want the best ammunition for Lancashire, in the form of the right cotton at the lowest price.
I do not attack the Commission for what they have done. As my right hon. Friend said, they have done extraordinarily well, and have been served by a body of men most anxious to do their best for the county, and they have done so according to their limitations. I think they were a little petulant in their Annual Report, about the manner in which they were regarded. The Raw Cotton Commission should realise that a single seller is never popular. They ought not to imagine that the spinners of Lancashire would see a halo round the head of a single seller, and it was rather silly of them to include that rather petulant paragraph in their Report this year.
The hon. Member for Farnworth was a little less than straightforward when he quoted what Mr. W. T. Winterbottom had said. I do not mind him quoting from Mr. Winterbottom, who is a great authority in this industry, but he should have finished the quotation so that we could have got a clear idea of Mr. Winterbottom's views. I shall do him the
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service of quoting Mr. Winterbottom's conclusions on this issue. He said:
"We consider that your Company"—
that is, the company of which be is chairman—
"has derived considerable benefit from the facility to secure from the growers the cotton of its own choice for contracting-out mills."
That is his considered opinion. The hon. Member for Farnworth ought to have been good enough to quote Mr. Winter-bottom's conclusions, and not merely one aspect of the case.
Mr. Thornton: I did not quote all Mr. Winterbottom's speech, but there is another quotation which the hon. Member might consider, and that is:
"No industry should be content to rest on public funds and the return to private trading must be the aim of the cotton industry, but an excess of zeal could lead to complete chaos and prove a dis-service to those who are most anxious to restore private trading in full."
Mr. Shepherd: I still think that the hon. Member should have quoted Mr. Winterbottom's conclusions upon this issue. The hon. Member told a romantic story about a meeting in some part of Lancashire, where the spinners got together and said: "We are, after all, very altruistic, and we do not care whether our competitors steal the advantage over us. We, for the common good, are going to band together to contract out." Knowing some of the spinners in Lancashire, I do not regard them as being motivated mainly by altruism. I am prepared to believe that the 56 per cent. or the 30 per cent., who have contracted out have done so for their own benefit, and for no other reason.
Contrary to what the hon. Member says, I believe that more spinners would have contracted out than have done so up to now. When one realises that 56 per cent. have contracted out in the face of a most difficult situation, one appreciates how strong must be the pressure against the Commission in the minds of the spinners. A spinner contracting out runs a good deal of risk. In the first place, for example, he has very little chance of getting any Sudanese cotton between now and the new crop in the spring. I am prepared to believe that had that position not existed many more spinners would have contracted out, especially for the Sudanese crop, than have done so.

1647
The House should realise that the spinner has to lose the advantage of the Commission's spot stock, and he has to be content with a cover scheme which, as hon. Members have admitted, is less satisfactory for the contractor-out than for the contractor-in. He has also to accept supplies from merchants with a very much more limited range. I therefore consider the fact that spinners have been prepared in all those circumstances to contract out shows how strongly they must feel the desire to go to the wicked merchants whom the hon. Member for Farnworth believes to be the real enemies of the spinners.
As I expected, the right hon. Member for Huyton (Mr. H. Wilson) made some play over the failure of the merchants to keep a spot stock. I agree that that would appear to be a legitimate criticism, especially as they had an extra allocation of currency for the purpose, but I ask the House to realise that there are very special circumstances involved which we ought to bear in mind before condemning the merchants on this account.
In the first place, I think it is agreed that the pattern of trade has somewhat changed, and many spinners prefer to buy c.i.f. rather than to buy from stock. They save handling charges and make some saving in the general cost of cotton. The need does not exist, therefore, for such large stocks on the spot as before. Secondly, the exchange offer came too late in the buying season for merchants to buy last season and, in addition, it is difficult for merchants to hold large unhedged stocks in Liverpool while the Raw Cotton Commission is itself the holder of very large stocks and has no need to meet the cost of the cotton. It can, as it has done in the last 13 months, lose £22 million on its sales.
It is not unreasonable, therefore, to believe that the merchants would be hesitant in those circumstances to provide spot stocks. I am perfectly satisfied that if a cover scheme can be initiated to their satisfaction, merchants will carry the stock which Lancashire needs. I do not think we need doubt that, because obviously if they cannot serve the needs of Lancashire properly they will not do the business they ought to do.
The right hon. Member for Huyton said that we should not cover private
1648
traders at Government expense, and we had a little difficulty in learning whether he believed that a spinner who was buying cotton from the Raw Cotton Commission and spinning for private profit was, in fact, a private trader. I agree that this is a very doubtful question, but I am inclined to side with my right hon. Friend in the view that if we supply a spinner who is buying from the Raw Cotton Commission, and give him cover, we are still covering the cost of private enterprise on public funds. The argument is not quite in the light in which the right hon. Gentleman presented it. There is even less justification, in my view, for covering by public funds people who contract out.
The right hon. Gentleman performed a most remarkable feat in his speech, because he produced a long string of arguments to prove that the only thing to do was to re-establish the Liverpool futures market, but he carefully refrained from emphasising the logical conclusion to which his arguments were in fact directed. I invite him to say what proposals he has in mind if he has not in mind the establishment of that market.
Mr. H. Wilson: I dealt with most, if not all, of the proposals for providing private cover, and I thought I made it quite clear that the way in which people would work the Liverpool futures market would require convertibility of sterling. That was made clear by the President of the Board of Trade. Surely convertibility must be ruled out at the present time? Surely there is not a single one of all the items which it is considered feasible at this moment? The result of dismissing all of these means that the only hope is the restoration of greater power in the hands of the Raw Cotton Commission.
Mr. Shepherd: The right hon. Gentleman is now saying that he wants, apparently, the policy which he has already said is unsatisfactory of providing cover for private traders out of public funds. He cannot have the argument both ways. I want to deal with this question whether it is practicable to re-establish the Liverpool cotton market on the basis of limited facilities for foreign exchange.
Let me say straight away that I am wholeheartedly in favour of re-establishing the Exchange. I much prefer to see

1649
£1 million or £2 million or £3 million of foreign currency earned by this country than see the Raw Cotton Commission spend £2 million of the taxpayers' money in providing cover. The former is a much better proposition from the national point of view. I do not see the serious objections—not, at any rate, in the insuperable sense—of re-opening the Liverpool Cotton Exchange even in the light of the difficulties over dollars.
After all, we have got commodity markets operating now, and they operate under an arrangement with the Exchange Control. They are authorised by the Exchange Control to engage in certain transactions. They make a certain code of conduct binding upon their members. If they overstep the mark, the Treasury comes in and causes the body with the authority to put the matter right. If that body did not respond to the requirements of the Treasury quite readily, the Treasury would close down on the scheme.
It is not impossible—surely the House will realise this—to visualise a commodity market based upon a restrictive access to foreign exchange and having the safeguard which already applies to one or two, or perhaps three or four, existing commodity markets. That is not impossible, and I suggest to my right hon. Friend that the best thing to do is to proceed as fast as we can, bearing in mind the need to get a satisfactory arrangement, to set up the Liverpool cotton market with these restrictions and safeguards as far as foreign exchange is concerned.
I agree with some hon. Gentlemen opposite that there was in the past, so far as the Liverpool market was concerned, some element of outside speculation. I am not quite sure who is right in this argument, whether the speculator helps the market and is indispensable, or whether he ought to be excluded. I have listened to both arguments, and I am not at all sure that the speculative element, however undesirable it may be ethically, is not indispensable, especially as one has to give speed of reversal in acute price fluctuations.
However, the future Liverpool market is determined, from what I can gather, to avoid the element of speculation which existed in the past, and they are proposing, I am told, to have daily settlement of differences, which, as the right
1650
hon. Gentleman knows, will make a substantial difference to the speculative element. Moreover, for any outsider who wants to buy futures they will insist upon a pound per bale deposit on the order. These provisions will make a substantial difference to the extent to which speculation will go on in the Liverpool cotton market.
The remarks of the right hon. Member for Huyton have led the House to the inevitable conclusion that something in the form of a market must be established. If we are to have private buying—we all admit this to be the case, and 56 per cent. of the industry, under difficult circumstances, has accepted that and has voluntarily opted for it—we cannot continue a system under which public funds are put up to safeguard the private trader. Therefore, the only conclusion one can reach is that a futures market ought to be established. There is no other way in which a spot stock can be carried.
It is nonsense to say, as some hon. Members opposite have said, that we are going to run immense risks of losing foreign exchange in hedging. Apart from the minor operation of straddling, if we had a futures market in Liverpool the whole of the arrangements could be conducted in Liverpool. There would be no need to go to the New York futures market save for straddling purposes—that is, a two-way traffic. Moreover, there is no reason why we could not get American cotton sent here on consignment and sold by American agents in this country to the advantage of the balance of trade.
There have been many estimates as to the value in terms of foreign currency of trading in cotton in this country; but it is certainly true that from £2 to £5 million ought to accrue to this nation as a result of the re-establishment of the Liverpool market. The handling, the re-exporting, insurance and financing all contribute to the amount of foreign currency that we could obtain.
I agree that this is not a political problem. The right hon. Gentleman himself has shown that this course is inevitable.
Mr. H. Wilson: No.
Mr. Shepherd: I do not know what alternative the right hon. Gentleman has

1651
in mind. If it is wrong to have the private traders being backed by public funds for cover, and we are to allow the existence of private trade, I do not know what alternative the right hon. Gentleman has; and I am afraid that in this debate he will not be able to supply us with an answer.
Mr. Wilson: I merely said it was wrong for public cover to be provided for the spinners and the productive people in the industry. I played a leading part in persuading the Raw Cotton Commission to work out a system of cover for them. That is entirely desirable. But it is a different thing to talk about providing cover when the buying is done, not by the Commission, who provide the cover, but by private persons, and then to ask the public body to provide cover for the mistakes—possibly for the speculative mistakes—of the private buyer.
Mr. Shepherd: We have already been over this point, and we are not at all certain whether a spinner buying from the Commission is not a private person from the point of view of being a spinner working for profit. I doubt whether ethically the right hon. Gentleman is right on that point. He says that he admits the desirability—he certainly does not object to it—of allowing 60 per cent. of the spinners to buy their cotton privately, and he says——
Mr. Wilson: Who said that?
Mr. Shepherd: The right hon. Gentleman has not indicated that he thought it was wrong.
Mr. Wilson: I said it had gone too far.
Mr. Shepherd: Say, then, that the right hon. Gentleman admits to 30 per cent. being satisfactory. Whatever percentage is admitted, provided one admits of the possibility of private buying of cotton and simultaneously says that there should be no public guaranteeing of losses, obviously one admits of the necessity of the re-establishment of some form of futures market. The best thing that my right hon. Friend can do is to encourage the re-establishment of this market as rapidly as is consistent with careful planning. It must be carefully planned, and the national interest must be safeguarded in every conceivable way.
9.10 p.m.
Mr. H. Rhodes: We need tonight from the right hon. Gentleman a clear interpretation of the phrase,
"intrinsically undesirable that cover for private trade should be provided at the risk of public funds,"
because various interpretations are being given to it. It has been used by the people in Liverpool to demonstrate that the Raw Cotton Commission should be got rid of as soon as possible, but I cannot believe that to the trade union representatives who sat on the Hopkins Committee it meant the same thing. It may be that the President of the Board of Trade has an idea of his own about this, and if so I should like to hear it.
The right hon. Gentleman mentioned the two Reports, and it is most interesting to compare the terms of reference of the two Committees. The Raw Cotton Commission, which reported in April, 1952, had these terms of reference:
"To consider and report to the President of the Board of Trade and the Chancellor of the Duchy of Lancaster on the question how, in the current foreign exchange position, cotton can best be supplied to the United Kingdom cotton industry on the most advantageous terms as to quality and price."
Now notice the difference between that and the terms of reference of the Cotton Import (Review) Committee:
"To consider whether, within the framework of the Report of the Cotton Import Committee, any change would be desirable in the obligations and duties at present imposed on the Raw Cotton Commission, with respect in particular to the supply of cotton and provision of cover to the United Kingdom cotton industry; and to make recommendations."
There is a certain hardening of position there, which I also detected in the remarks of the right hon. Gentleman, despite his usual affable and nice way of getting his points over.
The right hon. Gentleman said that the large stocks held by the Raw Cotton Commission were a handicap and were larger than the private operator was prepared to carry. Of course they were. It is elementary. The private operator, operating in a dangerous time as it was towards the end of 1950 and even 1951, approaching a bearish condition of the market, runs down his stocks. That is precisely why in 1951 the Government had to come in and start buying wool, because of the run-down conditions of

1653
the stocks in this country due to the fact that the bearish conditions were obvious to the people in the trade and they did not buy. For safety, therefore, the Government had to step in, and they bought perhaps 50 million or 100 million bales of wool. I believe the President of the Board of Trade when he says that he approaches this with no party bias. That may be, but it is very difficult not to. We are all professing that there is no party bias about this, but it is not far from party bias to political opinion.
On the other hand, most people present are agreeable to a system whereby cotton can be purchased for Lancashire in the best possible way. The argument is in the way it is done. My right hon. Friend the Member for Huyton (Mr. H. Wilson) mentioned the legal aspect, and he got an answer of sorts. The President of the Board of Trade went on to say that they were considering various suggestions. I take it that the suggestions they are considering are contained in paragraph 21. They include a futures market not based on raw cotton, a New York futures market, principal imports from abroad and so on. We shall be interested to see how far they get with that as and when they are ready, but it struck me tonight that the right hon. Gentleman had the idea that sooner or later the Raw Cotton Commission was going to be replaced by some other form of organisation.
Mention has been made of the losses by the Raw Cotton Commission. I want briefly to say a word about them and some of the conditions leading up to those losses. The outbreak of the Korean war found everybody short of cotton. The House will remember that in 1949 there was a minor slump in America which culminated in the devaluation of the £ in September of that year. That caused a strong bearish market in the United States and apprehensions about the disposal of their cotton crop were very strong indeed. In fact, in 1949 America instituted what was known as the bag system. Cement bags and other kinds of bags were made of cotton—they were almost given away—with patterns on them so that housewives could cut up the bags if they so desired and make them into frocks.
All this had a tremendous effect on the planting scheme for 1950. America
1654
planted no more than enough for the normal year in the 1950 crop. It was equal to about nine million bales. Any student of the subject, as I am—I am very keen on this cotton-growing subject—knows very well that the Texas cotton crop is planted in March, the Central American crop about the 1st April and the Northern crop in mid-April. That is significant because the planting in this year was before the Korean war began, and the Americans had no time to catch up on their cotton supplies, so that the amount for the ensuing 12 months to which they were committed was what they could produce from the planted acreage. That could give them no more than nine million bales, and they could use that themselves and more, because American production for some time was running at something like 10 million bales a year.
What happened? There was a shortage of cotton and a shortage of dollars. Outside buyers cashed in and premiums of 24d. were paid for Brazilian cottons The result was it forced the Raw Cotton Commission to start averages with the American cotton they had bought with limited dollars. Everyone outside the United States had planted for bumper crops. The Colonies did so. Planting took place from September and October for picking in January, February, March and April. What was the Raw Cotton Commission to do? By its legal obligations it had to keep good stocks. If it had not bought stocks to cover the needs of the day adequately, what would this House have said had the trouble in Korea flared up all over the world? That was the very thing on which the Liverpool Cotton Association went wrong in 1939.
When the then Government wanted cotton for strategic purposes they went to Liverpool to buy it. The Minister of Materials knows this story better than I do, because he was in on it. They asked the Liverpool Cotton Association to buy 600,000 bales for them and the Association refused. The reason they needed 600,000 bales was because there was a bearish market and the stocks had run down. That is why it needed Government intervention to see that stocks were adequate.
The Government of the day had the same responsibility exactly, not in quite

1655
the same circumstances, but in circumstances which looked as though they could be just as serious. Let me deal with one point here about how that buying policy saved Lancashire last year. If private buying had been in operation, instead of the Raw Cotton Commission, there would have been no stocks available. I have explained what happened in 1949. The slump would have come, and instead of having adequate stocks ready to be moved into the mills as soon as the slump was over, or getting over in April and May of last year, Lancashire would not have been able to take part in the world trade available. The Raw Cotton Commission saved the Lancashire trade last year and the £25 million, or whatever was the sum, was a little enough price to pay for that.
The normal take-up from the trade was about 450,000 tons. The stocks the Raw Cotton Commission had kept was about 260,000 tons. They had to be adequate. The Commission may have been handicapped, but I will show in a moment what has taken place since the new arrangements have come into being. Before I move on to that, may I say that the losses sustained by the Raw Cotton Commission which offset some of the gains in the previous years were severe. But let us see what happened to one large consumer of cotton who covered their own cotton and brought their own stocks.
I have here an account which gives the annual report of J. P. Coats. In the period when the Raw Cotton Commission was operating and making this savage loss on account of world conditions—they made a loss of £5 million—J. P. Coats used about 3 per cent. of the total used in this country. If that is multiplied in terms of percentages, it means that unless the Raw Cotton Commission had been very astutely handled we could have run into a loss of somewhere near £150 million, if my reckoning is right. The chairman of this great organisation said:
"As I informed you last June, we decided to stop buying our cotton from the Raw Cotton Commission and for this season have purchased our requirements of Egyptian and Sudan cottons through our own organisation. It is as yet too early to make a comparison of how we have fared ….
I think that, taking it by and large, that has been the keynote of the speeches
1656
tonight. There has been a little bit more restraint than I expected, and it is a good thing too.
It has been said by many that before the war Colonial cottons were used here to the extent of about 8 per cent. Now, if we include Sudanese cotton, it is perhaps 30 per cent.: if we do not, it is something like 26 per cent. Why has this change taken place? I believe that it is no use talking about want and of raising the standard of living of people in other parts of the world, on the one hand, and then going out and doing something which takes away everybody's good will in the matter.
I have no objection to a futures market as such. What I object to is what goes with it. Futures depend on being able to tender cotton against them. When we sell cotton we sell futures; when we buy cotton we buy futures; and when we are dealing in the futures market what we are actually doing is having a second shot to be able to sell our stuff. That depends entirely on how tight the contract is for what we tender against the futures if anybody takes us up. I never heard so many half truths in a speech as there were in that made by the hon. Member for Cheadle (Mr. Shepherd). The tighter the contract the easier it is for a futures market and the less risk there is. That was why——
Mr. Shepherd: Would not it be a good idea, if we are to enter into this technical discussion on the futures market, to get what we do precisely clear. We do not sell futures when we sell cotton. When we buy cotton we sell futures.
Mr. Rhodes: The hon. Gentleman had better go to school. That was why 15/16ths was the basis. Liverpool before the war would not accept Empire or Colonial cotton except at a considerable discount. The reason for Sudanese bitterness about the Cotton Exchange was exactly because all their cotton was sold in Liverpool at a discount when it went through the futures market. It was always under-valued. When Sudanese cotton was at 9d. a 1b. more often than not there was a 2d. discount, which is a considerable one. Now, about 26 per cent. of raw cotton comes from the Colonies. There is no Liverpool futures market, and all the territories are encouraged to grow more cash crops in

1657
order to create better trade and earn a better standard of living.
The question of the futures market was mentioned at the annual meeting of the Empire Cotton Growing Corporation in Manchester a few weeks ago, which I attended. The Corporation are keen on the growing of Empire cotton, and they are doing a fine job. The chairman made an appeal to all the cotton interests present to include in any futures contracts that may be brought out at some time Empire and Colonial cotton, but the Liverpool Cotton Association know perfectly well we cannot do it.
Mr. Shepherd: Will the hon. Gentleman allow me?
Mr. Rhodes: No, I will not; I shall read it out to the hon. Gentleman. It is a waste of time answering that sort of question.
A variety of cotton cannot be included in a futures contract at the present time. They have already drawn up a tight contract, so tightly drawn that colonial cottons will have no place in the market at all. Listen to this. This is a statement made by Mr. J. R. Reynolds on 8th July at a general meeting of the Liverpool Cotton Association:
"Full consideration has been given to the possibility of establishing a broad contract against which a large number of growths would be tenderable, but, with so many of these arbitrarily controlled by foreign governments, such a contract was not thought practicable at the present time. At the initial stage, and until an adequate private stock had been built up, the Board felt that the best and safest procedure would be to start off with a pure American cotton contract which could be freely arbitrated with the American Futures markets and thereby assured of reasonable stability."
We do not need anything more than that; that is quite definite. If they do open a futures market, they are going to do it with pure American cotton.
Mr. Shepherd: It is perfectly true that they would want futures at a discount if outside growths were included and tenderable. But is if not a fact that it is intended that Empire and outside growths should be included but not tenderable?
Mr. Rhodes: What is the use of having them on contract if they are not tender-able? We shall never be able to use them at all. Good gracious me, I am not going to give way again for that sort of question. It may be said that those who
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have used Colonial cotton in the past few years will still buy futures if they are tenderable. How can they buy? I am asking the Minister of Materials to give us some information on this point, because we need it. How can they buy?
I do not want a waffling sort of reply; let us have a proper reply. Was the right hon. Gentleman not listening? What I said was that it may be said that those who have used colonial cottons in the past few years will still buy if they are not tenderable, and I am asking how can they buy. I am asking the question, and perhaps the Minister of Materials will tell me. I will give my opinion. I think they will only be able to buy 12 months' supply.
Who is going to buy a 12 months' supply if that cotton is not tenderable against futures? If it is not tenderable in Liverpool, nobody is going to take the risk. I think that the small spinner or small manufacturer will find that his best hope lies in the Raw Cotton Commission.
Let us take the facts as they are, and as we have seen them unfold during the last 18 months. The Cotton Import Committee made its Report last year in which it recommended that contracting out should be allowed. It was timed to coincide with major growths reaching this country. That was all right. But 30 per cent. contracted out on the United States and 50 per cent. on the Egyptian supplies. Most of them were large units, and I will answer the hon. Member for Cheadle right now.
In the main, the people who came out of the Raw Cotton Commission did not buy their cotton from the merchant. They went direct. When the hon. Member for Cheadle, in reply to my hon. Friend the Member for Farnworth (Mr. Thornton), spoke about the merchant and the spinner, he really was wrong because he did not add that it was for the merchants' benefit. I do not think that Sir Frank Platt was mentioned. He was never a merchant's man. Several in this organisation who have contracted out are quite big enough to buy direct, which they are doing. They may have an agent, but it does not alter the fact that they buy direct.
Then we see the entitlement for dollars. At long last this is what the Liverpool Association wanted. Most of those who went out did not go to the merchants; they went direct to the United

1659
States of America. Here I shall quote the Liverpool Cotton Association again. This is interesting because it throws a new light on this subject so far as modern times are concerned. It says:
"It is surely a misconception to suppose that a Futures Market of reasonable stability could be created with a large part of the industry still patronising centralised trade. A re-opened Futures Market will, in any event, have to look for support to a much wider circle of participants than in pre-war days."
But the intake of cotton is not as big as it was before the war. Just let the President think about that. The present day pattern of the private trade is based, to a large extent, on direct importing by spinners rather than by buying in merchants' spot markets. This is not secondhand; this is what the Liverpool Cotton Association says. It goes on:
"It would, therefore, seem to be vital to the initial stability of a Futures Market that a high proportion of those who will look to it for cover should be established as elements of the private market well before the time when Futures trading has to start."
That was at a time when they were touting for business, and when they were really looking at the market as it should be looked at from the point of view of participating in the scheme. The merchants were bound to be short of entitlements if the spinners were not giving them any. The merchants were short. They pleaded for some of their own, and the Minister of Materials gave them 30,000 tons of American cotton to buy. Ever since then they have not had more than 5,000 bales, that is 1,100 tons, in stock, despite the fact that the cover for the merchant was far better than any cover under the Liverpool Cotton futures market before the war.
There is no question about it that if they had been fulfilling the role which they said they could fill they would have increased the amount of stuff that they were carrying. The truth is that they had cold feet about it, and they have not carried what they led the committee to think they would do. It will be very difficult in the present world situation to open a futures market which does not do a lot of damage to colonial cotton growers. The trend is for large organisations to shake themselves free of merchants but they may be putting a noose round their necks because the focus
1660
will be on United States cotton all the time. For the small element in the trade, American cotton is something easy, just across the Atlantic, with no trouble or difficulty. The cover will be automatically on that alone, and meanwhile the picture elsewhere is one of barter and exchange.
The background in which all this is set shows Japan going to Pakistan and giving her textile machinery for bales of cotton, Brazil forcing cotton growers to keep their cotton rather than sell it at market prices and all over the world barter as a common means of trade. It will be exceedingly difficult for us to establish an exchange of this description. We should go very slowly about it. The smallest bidder should think very hard during the next few months, because if he does not it is quite likely that with the Government plus the small element of Liverpool merchants on the one side and the big spinners on the other, the small man might fall down between the two. That would be a big pity. I am a believer in the small man. I am one myself. It is the duty of the President of the Board of Trade to protect the interests of the small man.
I have one or two questions to address to the right hon. Gentleman. If he allows the Raw Cotton Commission to decline any more, how will they cope with the repayment of £30 million, the amount that had to be repaid over 50 years? The turnover will be less; what effect will that have on the finances of the Commission? The Commission are to carry adequate stocks, but already it is suggested that they will not be able to carry the stocks necesary to cover the trade, on account of the financial considerations.
The staffing problems have been mentioned by my right hon. Friend. The propaganda which went about that the spinners were able to buy more cheaply outside the Commission was accounted for by the 1·35 pence per pound for cotton bought two clear months before delivery. It may be that there will have to be a futures market of some sort. I am not saying that there will not, but it might have to be one made up so that it takes colonial cottons first and foremost. If there is a futures market for colonial cottons, the Colonies and the growers in the Colonies will have more faith in us in this country in the days to come.
9.47 p.m.
The Minister of Materials (Sir Arthur Salter): I have very little time but perhaps enough, for a reason which I will mention in a moment. This has been a rather unusual and distinctive debate. It has been conducted before a select audience, though perhaps that is not so unusual. It has also had a very intimate character. The right hon. Member for Huyton (Mr. H. Wilson), who opened the debate, preceded my right hon. Friend in his present office, and he preceded me in my present constituency except for a short intervening period. In addition, most of those who have taken part in the debate have a special interest in the cotton industry, either by virtue of their present or past official positions or by reason of their representing constituencies with a special interest in the industry. Finally, I am facing the hon. Member for Ashton-under-Lyne (Mr. Rhodes), as I did at 2 a.m. on another rather technical subject.
Those are not the only ways in which this debate has been rather distinctive. There have been criticisms of the Government, of course, but on the whole they have been constructive criticisms. They have not been directed so much to what we have done or are now doing but rather to what we may be doing after the period to which the second Hopkins Committee Report relates. We have been asked to state our policy. The general direction of our policy has been explained by my right hon. Friend the President of the Board of Trade tonight and on previous occasions, but the interest of the House has been in what will be the next steps after the period to which the second Hopkins Committee Report relates.
As everybody here knows, what has made the distinctive character of this debate is that we are now starting upon our consideration of the further steps that we shall take after this immediate period. We are doing it, as we have done in the past, with the closest consultation with those who are interested in and are expert in the industry. The distinctive character of the debate has been that those who have spoken have brought their own personal knowledge and have contributed at the first stage to this consideration of policy for the next ensuing stage. The speech of the hon. Member for Farnworth (Mr. Thornton) was an admirable example of
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that. He brought what was obviously direct personal expert experience to his speech in which he made certain suggestions on the way in which we should proceed.
He was immediately followed by my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) who again brought personal experience of a rather different kind, and whose suggestions to some extent complemented what the hon. Member for Farnworth said. He was followed by the hon. Member for Staly-bridge and Hyde (Mr. Blackburn) who said—and I should like to feel myself in his company—that he was a searcher after truth. So are we all. So are the Government interested both in the period to which the Hopkins Report relates and that which has occupied the interest of the House.
Then there were a number of exchanges of opinion as to the relative merits of a futures market of some kind, and of public trading, of which the Raw Cotton Commission is an example. Because I think we are right in proceeding along the lines that we are following towards greater freedom and liberty in private purchasing, I do not say that a greater measure of public purchasing was not desirable in the preceding period. We are feeling our way, but we are certainly not the slaves of any ideology or political dogma as to the particular steps or the pace or the methods by which we should proceed.
Mr. H. A. Marquand: I hope the right hon. Gentleman will forgive me for intervening at this late stage. The Act on the Statute Book at present provides for a public monopoly of purchasing raw cotton. I, personally, still believe that that is the right way to do it. The hon. Member for Cheadle (Mr. Shepherd) wants to see a free futures market re-established. At present we have a half-way house between those two positions. If the Government, in their search after truth, should incline to the view of the hon. Member for Cheadle, will they undertake to do it by a new Act of Parliament and not by messing about with the present Act?
Sir A. Salter: We are, in a sense, in a half-way state of policy, as indeed the conditions of the world which affect this industry are in a middle position between

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the conditions which we faced during the war and immediately after the war, and what I might call normal peace conditions such as we had before the war. The right hon. Member for Huyton agreed that we are acting legally in what we are doing. He agreed that if the present procedure tended towards the complete destruction of the central purpose and principle of the Act of 1947, there might well be a time when we should have to ask for a modification of the present Statute or the substitution of another for it. The answer is that the development that the right hon. Gentleman had in mind would require new legislation.
I must now turn immediately to the rather numerous and sometimes very difficult questions asked by the hon. Member for Ashton-under-Lyne.
In the first place, he asked what was our interpretation of the sentence in the Report of the Hopkins Committee which has attracted so much attention, as to its being intrinsically undesirable to use public funds as a cover for private trade. I can quite understand that different people may give a somewhat different interpretation to that sentence. It is not for me to interpret either the collective mind of the Hopkins Committee, still less what may have been in the minds of the Members of that Committee when they assented to that particular sentence.
Mr. Rhodes: All I want to know is what is in the right hon. Gentleman's mind.
Sir A. Salter: If the hon. Member is asking in what sense I believe in the principle enunciated in that sentence, I would say that even if it is interpreted in the wider sense, if we are not thinking of today or tomorrow but of a permanent system, I still think that it represents good sense.
The hon. Member raised the question of Empire cotton. As my right hon. Friend said, we realise that it is important that we should seek to maintain the development of production in the Commonwealth and Empire which has been witnessed in recent years. There are various ways in which that might be done. This week we have explored the matter with the relevant Government Departments and others. I cannot go into what is one of the possible ways in
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which we might help to solve this problem—the way in which the futures market develops in the future. There was quite a sufficient exchange of very technical expert knowledge between the hon. Member for Ashton-under-Lyne and my hon. Friend the Member for Cheadle (Mr. Shepherd).
The hon. Member for Ashton-under-Lyne asked me one or two further questions. I cannot answer him as to the precise financial arrangements that would be made in respect of the advance to which he referred. It is true that if we have a system of public trading it may be very well worth its ultimate cost in view of its particular purpose under the particular and temporary conditions which we may have to face when we wind up the whole concern. This question relates to other forms of public trading with which my Department is concerned. We may have to make special financial arrangements and recognise that a real service has had to be met.
As to the question of staff, this has been brought to our special notice in the last few days by Sir Ralph Lacey and we are definitely considering that problem now.
Mr. H. Wilson: Will the right hon. Gentleman report to the House?
Sir A. Salter: We shall undoubtedly make a statement after the Recess.
The fifth question about which the hon. Member for Ashton-under-Lyne asked concerned the propaganda against the Raw Cotton Commission. Both sides of the House have paid perfectly genuine and well-deserved tributes to the way in which the Commission, under Sir Ralph Lacey, have carried out their work. As to the point to which a great deal of propaganda was addressed—the prices which the persons contracting out paid as compared with the prices at which the Raw Cotton Commission supplied cotton—the answer is probably sufficiently given in the Report of the Hopkins Committee, which specially deals with that point.
Mr. Blackburn: The right hon. Gentleman has not said a word to help the searcher after truth. It is not that he has been using words of more than one syllable, but he has not said a word to explain why the Raw Cotton Commission should be done away with.
Sir A. Salter: Repeating what my right hon. Friend said, I did explain that we were adopting a procedure which was in itself a method of seeking the kind of truth which is wanted in connection with this problem. That must be my last word, because of the time.
It being Ten o'Clock, the debate stood adjourned.

SHOPPING FACILITIES, MIDDLESBROUGH
Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Redmayne.]
10.0 p.m.
Mr. J. E. S. Simon: I want to draw the attention of the Parliamentary Secretary to various questions relating to the loss of shopping facilities in Middlesbrough. I hope to deal with the matter fairly generally. I understand that the right hon. Member for Middlesbrough, East (Mr. Marquand) will also speak before the Parliamentary Secretary replies, and I will allow him time to develop his argument.
In 1942, the town of Middlesbrough, which had not been particularly well served before the war by shopping facilities, suffered a very great disaster. Three of the leading departmental stores—Messrs. Binns, Messrs. Dixon and Benson and Messrs. Upton—were destroyed by incendiary action by a small boy. That was due primarily and immediately to juvenile crime, but unquestionably it was the war conditions which prevented those fires from being brought under proper and immediate control. The matter did not rest there because in the same year the Middlesbrough Co-operative Society's main store in the Linthorpe Road—a very fine store and very well run—was destroyed by enemy action.
That resulted in a loss to Middlesbrough, even after the energetic reorganisation of these stores, of no less than 126,000 square feet of shopping facilities; and the remaining shopping facilities of those stores had to be dispersed throughout the town and away from the main shopping centre. That refers only to the private firms. In addition, the Co-operative Society lost their central administrative offices, their board
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room, their bank, their grocery, their butchery, their chemist's and optical departments. A wallpaper and paint shop which was rented was also destroyed; and the business is carried on at very great disadvantage, as in the case of the private firms, in temporary, unsuitable, and very much depleted accommodation.
That is the extent of the loss. But in this case one cannot merely measure the loss by what existed before, because two things have happened concurrently. First of all, Middlesbrough was not particularly well served for shopping facilities before the war. Secondly, owing to the development of Middlesbrough, the need has enormously increased. Before the war Middlesbrough was one of those areas which suffered very severely from unemployment. In 1930 it was as much as 50 per cent., although by 1939 it had dropped to 13 per cent. In 1950 it was 2·4 per cent. and today, I think, it is 1·2 per cent.
That means inevitably that there is a tremendous increase in money incomes which can legitimately be laid out in the shops. Concurrently, female employment, which was by no means common in the North-East, has enormously increased—from 17 per cent. in 1939 to 25 per cent. in 1948, and even higher today. The result of the pre-war unemployment was unquestionably to slow down the development of shopping facilities and, indeed, much of the development was unfortunately in these three stores which have been destroyed. It also means that there is a great increase in demand.
Further than that, all round Middlesbrough there has been a great industrial development. New furnaces have been blown in the steel works; vast extensions are still being carried on in the Dorman, Long Works at Laconby; there has been the great LCI. developments at Billing-ham and Wilton. Extensions in housing have been pressed on concurrently. But the development has got completely out of balance, because the shopping facilities have lagged far behind, and the loss to which I have referred has not at all been made up.
With this development there has been naturally a large increase in the population. There has been a large immigration into the area; and, in addition, the people of Middlesbrough being a lusty and vigorous people, there has been a great natural increase. The right hon.

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Gentleman who wishes to follow me, who was Minister of Health and is the father of a family, can no doubt expatiate on that, if necessary. The result is this. The population of Middlesbrough in 1939 was about 140,000. Today it is about 147,000. That, too, of Tees-side, which the shops of Middlesbrough serve, as indeed they serve localities far beyond, has gone up from 350,000 to 365,000.
The increase in the need, I think, can be well measured by looking at the Cooperative Society's figures. The number of registered customers in the grocery department has increased since 1942 by 95 per cent., and of the butchery department by 100 per cent., and there are similar increases in other departments. I emphasise that that increase has taken place in spite of the loss of facilities there.
Despite the very great need which these figures show, licences have been persistently refused to allow of the re-development of the shopping centre of Middlesbrough. There was for a time an absolute ban on offices, shops, recreational facilities and so on throughout the country. I would ask my hon. Friend this first of all. Is a distinction drawn between civil and enemy damage, and if so, why? I suggest, with great respect to him, that the criterion ought to be the needs of the people, which are measured by the growth of the population on the one hand, and the loss of facilities to meet their demands on the other.
But even if there is a distinction, which to my mind is a quite illogical one, drawn between civil and military damage. I would draw to his attention, so far as the Co-operative Society's store is conserned, that the damage was caused by enemy action. I know he will view these needs with the utmost sympathy, particularly bearing in mind the pride which all Members of our party take in the part which Conservative Governments in the past, by the great statutes of 1846 and 1876, played in the development of the Co-operative Movement.
My hon. Friend, in a courteous interview which he gave to representatives of Middlesbrough on 25th June, said that there was a general ban on the rebuilding of shops, with infinitesimal exceptions. But it has been noted by the people of Middlesbrough that there has been even in the locality some rebuilding
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of departmental stores. Binns at Sunderland was destroyed by war action and has been rebuilt. Shepherd's at Gateshead was destroyed by civil action in 1946 and was rebuilt in 1947. I understand that McAlpine's are putting up a large new office and shop block in The Headrow at Leeds. I ask my hon. Friend why Middlesbrough should be penalised in comparison with neighbouring towns.
It is felt that the North-East area has been unfairly treated. I ask my hon. Friend how the northern region, which gets only £500,000 altogether, compares with the rest of the country. How do the figures compare per head of the population and with the damage that was done in the area? Is weightage given to the growth of the population and to the fact that the North-East suffered grievously in the economic slump of 1929 and 1930 and the effects that persisted until the war. Is weightage given to the industrial development, as well as to the ordinary recovery of trade, which has taken place since the war?
If these factors are taken into account, the claims of Middlesbrough are almost unique in the country. I ask my hon. Friend the Parliamentary Secretary what hopes he can hold out in the immediate future to the skilful and energetic productive workers in Middlesbrough—the steel workers, the engineers, the chemical workers, shipbuilders, dockers, and so on—whom both the right hon. Member for Middlesbrough, East and I are so proud to represent. What hope does my hon. Friend hold out to these men and then-wives that their hard-earned incomes can be conveniently laid out to satisfy their moderate and reasonable needs?
10.12 p.m.
Mr. H. A. Marquand: I want to leave the Parliamentary Secretary ample time to reply to the debate, but nevertheless I should like to intervene to add my support to what has been said by the hon. and learned Member for Middlesbrough, West (Mr. Simon). The hon. and learned Member and I disagree on many things, but in this matter we are in agreement. The town council of Middlesbrough, which, as it happens, is controlled by a Labour majority, is in full support of the request that something be now done to rebuild the shopping facilities which Middlesbrough

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lost one way and another during the war. Indeed, I hope that before long it may be possible to go even further and to provide improved and additional facilities for a town which, as the hon. and learned Member has said, is in a unique position.
Middlesbrough is a very young town indeed. It hardly existed 100 years ago. It has a population of between 150,000 and 160,000. It has a natural increase a good deal higher than most towns in Great Britain. When it was growing up and the great steel works and the like were being built there was little labour available for constructing amenities of any kind. During the intervening period between then and the war it suffered a great deal from unemployment with a low level of demand. Consequently it has not had in the past shopping facilities comparable with towns of a similar size and with a similar type of industry.
Although immense new building activities which have been taking place there recently—including the expansion of the steel works of Dorman Long and the Cargo Fleet Company, and the building of the enormous new I.C.I., works at Wilton, on the borders of the town, most of the workers in which live in Middlesbrough—have occupied a large part of the building force, and, therefore, we may be told, make it more difficult for the Parliamentary Secretary and his right hon. Friend to give us what we are asking for. Moreover there are competing demands, since the hospitals are sadly out of date and many of the schools ought to have been closed long ago, several of them having been condemned—one, indeed, actually fell down. Nevertheless, the mere fact that this immense new industrial building is taking place lends force to the feeling that additional shopping facilities are needed. The place is prosperous now in a way that it never was before. These workers in steel, chemical and dock industries are vital. Their work is essential to our national safety, and it is unfortunate that now they are in full employment and prosperous they do not have the opportunities for shopping in their own town which they would like to have.
The Parliamentary Secretary courteously received a deputation and certainly did not turn it down flat. I hope we shall have given him an opportunity tonight
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to be even a little more forthcoming than he was on that occasion and to hold out some hope for the future; particularly, perhaps, to be a little more agreeable towards the request of the Middlesbrough Co-operative Society than his regional officer was when he turned down the the request they made.
I must declare an interest here because I am a member of the Co-operative Society, though the amount of dividend I receive from it is necessarily small since I only occasionally buy a handkerchief or some toothpaste or something of that kind on visits to the constituency. I am not sure whether the Parliamentary Secretary was aware until tonight of the severe position in which this Co-operative Society finds itself.
The main part of its store was destroyed by enemy action during the war and the number of its registered customers in the grocery department has increased since then by 95 per cent. and in the butchery department by 100 per cent. while there were similar increases in all the other departments which were housed in that part of the building. I hope, therefore, that the Parliamentary Secretary can hold out some hope for them as well as for the town generally.
10.17 p.m.
The Parliamentary Secretary to the Ministry of Works (Mr. Hugh Molson): Naturally I make no complaint that the hon. and learned Member for Middlesbrough, West (Mr. Simon) and the right hon. Gentleman the Member for Middlesbrough, East (Mr. Marquand) should take this opportunity of raising in the House the great needs of Middlesbrough and the surrounding districts for additional shopping facilities. The destruction caused during the war, in some cases by enemy action and in other cases by the malice of small boys, and the great increase of population as a result of industrial and housing development, all establish a very strong case not only for re-building the shopping facilities which were enjoyed in Middlesbrough before the war, but for making such extensions as are needed to meet the greatly improved circumstances of Middlesbrough and district.
The task of administering building licensing is an extremely distasteful one. We inherited it from the Government

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which preceded us and it is one of those controls which we have found it necessary to maintain. We have relaxed it as much as possible and we look forward to continuing to relax this building control until it can be abolished completely. In administering it, we have to take two things into account. The first is the need for the work in any specific case where an application is made; the second is the availability of investment, materials, and labour.
It is obvious that so soon after the war, when there are still arrears of maintenance to be made up, when so much war damage has still not been completely made good, when employment is full, and when building for housing estates is at a higher level than it has been since before the war, that it is impossible for us to grant licences in all cases where need can be made out.
Let me begin by making the point that we draw no distinction between private enterprise and the Co-operative Society. When the deputation came to see me no application for a building licence had been received from the Co-operative Society. Even so the applications for £1¼ million for the three departmental stores that had been destroyed was more than it was possible for us to grant at that time, in spite of the fact that the gentlemen who came to see me made out an extraordinarily strong case. If it was not made with the forensic skill of my hon. and gallant Friend, at any rate the facts were all there.
I am glad to know that my answer was not thought to be unsympathetic. I did say to them that although it was impossible to grant licences at this time, they had established a need for additional shopping facilities in Middlesbrough, which would entitle them to some measure of priority as soon as we were able to relax the rules which we apply at the present time. I should like to say to the right hon. Gentleman, now that he has advanced the claim of the Co-operative Society, that it will be considered in exactly the same way as those of the privately owned departmental stores.
My hon. Friend and the right hon. Gentleman have referred to the great development that has taken place in and around Middlesbrough. While they
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have established a great need they have also been proving part of my case, which is how extraordinarily difficult it is for us to grant licences for shops. I must be quite plain about it, shops as such do not enjoy any priority at the present time.
This Government have, in the first place, sought to give priority to all industries which could show that they were likely to be able to increase the nation's exports. Further, at the General Election we gave a pledge that we would try to increase very greatly the number of houses built, and, therefore, there has been thrown upon the building industry a great additional burden. To that has to be added the defence programme. Again, my right hon. Friend the Chancellor of the Exchequer announced in his Budget speech that the licensing of factories was going to be very much facilitated.
During the first six months of this year there has been an increase of about 60 per cent. in the value of work licensed for factories as compared with the corresponding period of last year. In the case of Middlesbrough, the developments that are taking place are most remarkable. Imperial Chemical Industries have a programme of development in Wilton amounting in building work still to be done to £10½ million and they have another £2 million of work to do in Billingham. Dorman Long have a programme of about £6½ million.
When we look at the labour position, we find that in the Middlesbrough zone the outstanding vacancies for building operatives, skilled workers of various kinds and labourers, are very much greater than they are in any other zone in the Northern region. There is a programme of work now in hand in the Middlesbrough area which, as far as we can estimate, is likely to keep the building industry fully occupied until the end of 1954.
I turn to answer the questions of my hon. and learned Friend. We do not draw any distinction between damage done by accidents or civil malice and war damage. We try to grant our licences solely upon a consideration of need. I told the deputation which saw me on 25th June that, generally speaking, there is a ban on the building or rebuilding of shops. The two great exceptions to that are that we license shops in newly

1673
built up areas and we also grant licences for alteration of shops in cases of change of user.
The Gateshead and Sunderland jobs to which my hon. and learned Friend referred were licensed in 1947 and 1948 before the stricter rules were introduced as a result of the financial crisis which was threatening in 1951. The Leeds scheme to which he referred was given special treatment in quite exceptional circumstances. It had been necessary, largely because of danger that was arising, to allow the work to be started and it was extremely uneconomic to hold it up; but that was entirely exceptional treatment.
The Ministry tries conscientiously to treat all parts of the country fairly. We believe that, the national ceiling for investment being what it is, the treatment accorded to the North-East Coast is entirely in accordance with what has been done elsewhere. It is not possible for us to make any weightage, as my hon. and learned Friend asked, in the case of districts which perhaps before the war had indifferent shopping facilities. It is hard enough to administer a licensing scheme even according to broad general principles, but if we tried to take into account considerations of that kind, which must necessarily be largely matters of opinion, we should very soon be accused of allowing our prejudices to influence our decisions. We prefer to base them upon financial and statistical calculations.
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Both the right hon. Gentleman and my hon. and learned Friend asked what were the hopes for the immediate future. The very prosperity and development of Middlesbrough at present makes it especially difficult for us to grant licences for anything which is not a matter of outstanding national importance. I do not believe that the right hon. Gentleman or my hon. and learned Friend would ask that departmental stores should be given priority over either the development of the steel industry or that of the chemical industry upon which the future prosperity not only of Middlesbrough but of the country as a whole so largely depends.
Therefore, I must say that, because of the great industrial development which is now taking place, it will be difficult for us to grant these licences. At the same time, the whole system of building licensing will be reviewed in the autumn. We are hoping to make it more flexible and more generous, and I repeat what I said to the deputation—that I think that the needs of Middlesbrough for shopping facilities are quite outstanding.
The Question having been proposed at Ten o'Clock, and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at Half-past Ten o'Clock.

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  R.A.F. ACCIDENT, MEDITERRANEAN
  SUDAN (BRITISH PENSIONERS)
  SUDAN (BRITISH PENSIONERS)
  COLOMBIA (BRITISH MISSIONARIES)
  COLOMBIA (BRITISH MISSIONARIES)
NATIONAL INSURANCE
  Pneumoconiosis (Councils' Report)
  Pneumoconiosis (Councils' Report)
  New Ministry (Staff and Salaries)
  New Ministry (Staff and Salaries)
  Sickness Benefits (Claims)
  Sickness Benefits (Claims)
TRANSPORT
  Bicycles (Brakes)
  Bicycles (Brakes)
  Diesel Vehicles (Licences)
  Diesel Vehicles (Licences)
ROADS
  Hay-on-Wye-Clyro Bridge
  Hay-on-Wye-Clyro Bridge
  Garage, Abingdon (Access)
  Garage, Abingdon (Access)
  CROSS-CHANNEL POWER CABLE
  CROSS-CHANNEL POWER CABLE
  HONG KONG (FOREIGN DIPLOMATS)
  HONG KONG (FOREIGN DIPLOMATS)
  COLONIAL TERRITORIES (COMMODITY PRICES)
  COLONIAL TERRITORIES (COMMODITY PRICES)
  MALAYA (TAXATION REVENUE)
  MALAYA (TAXATION REVENUE)
KENYA
  Land Commission Report (Implementation)
  Land Commission Report (Implementation)
  Resettlement Schemes
  Resettlement Schemes
  MALTA (UNEMPLOYMENT PROBLEMS)
  MALTA (UNEMPLOYMENT PROBLEMS)
  RAW MATERIAL PRICES
  RAW MATERIAL PRICES
  CASUALTIES, KOREA
  CASUALTIES, KOREA
Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers

  MESSAGES FROM THE QUEEN
  2.35 p.m.
  THE EARL OF SCARBROUGH: My Lords, I have the honour to present to your Lordships three Messages from Her Majesty the Queen, signed by her own hand. The first Message is in these terms:
  "I have received your Address praying that the Transfer of Functions (Ministry of Civil Aviation) Order, 1953, be made in the form of the draft laid before Parliament. I will comply with your request"
  The next Message is in these terms:
  "I have received your Address praying that the Federation of Rhodesia and Nyasaland (Constitution) Order in Council, 1953, be made in the form of the draft laid before Parliament. I will comply with your request."
  The third Message is as follows:
  "I have received your Address praying that the International Organisations (Immunities and Privileges of the International Wheat Council) Order, 1953, be made in the form of the draft laid before Parliament. I will comply with your request."

  KOREA: MR. DULLES'S STATEMENT
  LORD SILKIN: My Lords, I beg to ask the Government the following Question, of which I have given them private notice: Whether Her Majesty's Government were consulted on the statements made by Mr. Dulles at his Press Conference, as reported in The Times of yesterday, July 29, and what are their views on these statements?
  THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALISBURY): My Lords, the answer to the first part of the noble Lord's Question is quite
  1150
  simple. It is: No; there is no reason why Mr. Dulles should have done so, since by long custom every Government has the right to make its views known as it thinks proper. The position of Her Majesty's Government is clear. Our policy is firmly based on the United Nations, and we intend to work through the machinery of the United Nations. I have already explained to the House in detail yesterday how Her Majesty's Government hoped events would develop in the forthcoming Session of the General Assembly and in the Korean political conference. Furthermore, I should tell the House that I have sent instructions to Her Majesty's Ambassador in Washington which are designed to remove any possibility of doubt as to our attitude on all these questions. In doing so, I have urged the United States Government to make every endeavour to induce President Syngman Rhee to abide loyally by the policy of the United Nations both at the forthcoming Session of the General Assembly and at the political Conference.
  LORD SILKIN: My Lords, I should like to thank the noble Marquess for his reply. Of course, one must agree that every Government is entitled to explain its own policy. But would not the noble Marquess agree that many of the statements made in the Press Reports are in marked conflict with the White Paper and with the speech which the noble Marquess himself made yesterday.
  THE MARQUESS OF SALISBURY: My Lords, my answer to that supplementary would be: No, not on basic objectives. We are both of us in favour of peace; we are both of us in favour of the United Nations. The main broad aims of policy, I should have thought, were identical in both cases. Of course—and nobody seeks to dispute this—there are always individual issues on which we may not see eye to eye. But it is really, if I may say so, far more profitable to us and the world to concentrate on our points of agreement, rather than merely to emphasise points of difference.
  LORD STRABOLGI: My Lords, would that not be a good thing with the Russians, too?
  LORD SILKIN: My Lords, of course we are in agreement when we deal with generalities. But when you bring these generalities into practical terms, it does

  1151
  look as if the purposes are not ad idem. I should like to mention one point in particular. Mr. Dulles is reported to have said that he has offered his terms and there can be no concessions, whereas the noble Marquess gave us to understand that the position has been kept absolutely open.
  THE MARQUESS OF SALISBURY: With regard to what?
  LORD SILKIN: With regard to the political negotiations that are to follow the truce.
  THE MARQUESS OF SALISBURY: I do not quite understand the meaning of the noble Lord's question. I think the position with regard to the negotiations following the truce is perfectly clear. A Political Conference is to be set up, and the countries concerned at that Conference are to negotiate for a permanent settlement for Korea, or if they cannot get immediately a permanent settlement, at any rate a temporary settlement in Korea agreeable to all Parties. I think that is common ground between me and Mr. Dulles and our Governments.
  LORD SILKIN: This is my last supplementary—perhaps I have not made myself clear. In his statement Mr. Dulles is reported to have said that the Communists have got to accept the American terms, and that if they do not then there will be no peace, whereas the noble Marquess gave us to understand that these terms would be freely negotiated and questions which are in dispute—and there are a good many—are open and would be subject to ordinary discussion.
  THE MARQUESS OF SALISBURY: My Lords, I understood Mr. Dulles to say that if, within ninety days, a settlement had not been reached, in that case he reserved the right not to continue the negotiations any longer. I may be wrong, but I cannot believe that he actually said that the Communists have to agree to the American terms without more ado. For my view, I would say this to the noble Lord. He is judging entirely from newspaper reports, and newspaper reports, though I do not say they are in the least inaccurate, are often truncated, and to that extent they do not give a full account of all that was said. I
  1152
  cannot answer for Mr. Dulles; it is not possible for me to do that. But so far as Her Majesty's Government are concerned, I stand by what we have said in the past. If we go into negotiations we do so with a view to getting an agreed settlement.
  LORD HENDERSON: In the communiqué it is said that the Governments agree that they will proceed with their common policies vis-à-vis China, pending a further conference or further discussions. It is well known that the two Governments have a different position as regards the entry of China into the United Nations, or the Pekin Government taking the China seat in the United Nations. Mr. Dulles has stated the position of the American Government on that particular issue. He has not waited for any conference. He has declared now what is the position of the American Government, and for a long time ahead. Is there any reason why Her Majesty's Government should not tell us and the world now what is their position as regards the entry of the Pekin Government to the China seat in the United Nations.
  THE MARQUESS OF SALISBURY: On that point I would say this; and it has particular relevance to what I said earlier. I do not believe that the newspaper report—from accounts I have heard later—was completely accurate on that point. I think the point of the question which was put to Mr. Dulles, as I understand it, was: would it be competent for the United States to use the veto for this purpose; and he said it would be competent. But I think he made it clear that he would be extremely reluctant to do so. The effect given by the first newspaper report was a definite statement that if it was put forward they would veto it. Perhaps I should make that more clear. If the proposal were put forward that the People's Government of China should become a member of the United Nations they would veto it. I think what I have told your Lordships puts rather a different slant on it from that. If noble Lords want the policy of Her Majesty's Government, I would refer them to a statement which was made by my right honourable friend the Foreign Secretary on June 18, of last year. He was speaking in answer to a question and he said (OFFICIAL REPORT, Commons, Vol. 502, Col. 1183):
  "As to the wider question"—

  1153
  that is the question of general policy—
  "I am in complete agreement with my predecessor's observations of last June, which I may, perhaps, quote: 'His Majesty's Government' "—
  it was at that time "His Majesty's Government"—
  " '…believe that…the Central People's Government should represent China in the United Nations. In view, however, of that Government's persistence in behaviour which is inconsistent with the purposes and principles of the Charter, it appears to His Majesty's Government that consideration of this question should be postponed.' "
  Her Majesty's Government have not in any way gone back on that declaration: but I would just make this proviso, which I think it is only right that I should do—and I did it yesterday. I said that the three Powers in Washington recently agreed that it would be premature, and indeed quite impracticable, that there should be any immediate automatic change of policy and I elaborated that by saying that the situation was still very uncertain and it was for that reason that it was premature. But I added that the situation was being kept absolutely open and that we reserved the right to raise the matter if we thought a proper time had come. If the noble Lord will allow me to repeat that, we stand by the statement of the Foreign Secretary, with the proviso which I added—and I believe that is the only attitude one can take up at the present stage. The Armistice is about three days old, and the Political Conference has not begun to sit. Obviously, there must be a breathing space, in order to see how the situation is going to develop. With that proviso I would assure the House again that we stand by the statements that have been made.
  LORD HENDERSON: I am much obliged to the noble Marquess for that reply. Of course, since the statement to which he has referred was made, there has been the Armistice, and I agree that it is only of short duration so far. But it may be that at the United Nations Assembly next month this question may be raised. Should I be right in understanding that, if it is raised, in the light of the new situation Her Majesty's Government would support the sitting of the Pekin Government in the seat for China in the United Nations?
  THE MARQUESS OF SALISBURY: The noble Lord would only be right in assuming that we should judge for ourselves of the state of the circumstances, when the subject was raised. I am certainly not going to tie Her Majesty's Government here and now to go any further than that. But as will have been seen from the Foreign Secretary's own statement, Her Majesty's Government's view is that the People's Government of China should represent China in the United Nations when the time is ripe for them to do so. That is our view and we must be left to judge whether that moment has arrived. For me to say now, three days after the Armistice, the time that on the 16th, 17th or 18th of August the time will have arrived, would be quite improper, and impossible for me to do. But we shall certainly judge the matter with a completely open mind when the time comes.
  LORD HENDERSON: The only point I wish to emphasise—and I hope the noble Marquess will allow me to do so—is this. Whatever the circumstances may be when the matter comes up, if it does come up, at New York (I do not question the position adopted by the noble Marquess as regards the consideration that should be given to it then by Her Majesty's Government), the difference is that the United States Government has declared a ready that it will not agree; and that, I think, shows a very serious division of opinion between the two Governments, and a division of opinion that must show itself if the matter is raised at New York during the Assembly in August.
  THE MARQUESS OF SALISBURY: The United States Government are entitled to take whatever positron they like. The purpose of foreign policy and diplomacy and negotiations between countries is to ease off those differences and try to obtain the policy that one wants. I cannot say that at any given moment the United States Government would be willing to do this or that. It would be improper for me to try. I have described the policy which is to be followed by Her Majesty's Government and no doubt it will be our policy to try to persuade every other Government to follow the same policy.
  VISCOUNT ELIBANK: What does the noble Marquess mean by "when the time is ripe"? Does not the qualification he

  1155
  has introduced undermine the position which, as I understand it. Her Majesty's Government and the country have taken up: that China has a right to a seat in the United Nations? Does not the qualification now introduced mean that the situation is going to be dependent upon China's behaviour?
  THE MARQUESS OF SALISBURY: The noble Lord might as well say that Her Majesty's Government were to do it when the time was unripe. I do not admit that. The whole essence of foreign policy is timing: to do a thing at the right time, neither too soon nor too late.
  VISCOUNT ELIBANK: What I asked the noble Marquess was whether his qualification does not undermine that situation in which China has a right to a seat in the United Nations. That was my main question. If it does not do that, it is all right.
  VISCOUNT STANSGATE: My Lords, there are two points. One is the position of China—and the Security Council covers both peace in the Pacific and our trade.
  We want to know what instructions he has given to our delegates. We are not cross-examining him about Mr. Dulles—he can give what instructions he likes. But the point is what instructions the noble Marquess has given. He talks vaguely about China's "behaviour." What behaviour? What conditions? Is the charge against China that she was an aggressor in Korea? Yes. If the aggression ceases, do our objections cease? The noble Marquess has left us completely in doubt, and to show how dangerous the doubt is, I would refer to M. Bidault's speech this morning, in which he said he cannot recognise China until she does something different from what she is doing in Indo-China. What instructions is the noble Marquess giving to our delegates for August 17 and, in particular, what conditions do Her Majesty's Government lay down for recognition of China's indubitable international right to sit on the Security Council?
  THE MARQUESS OF SALISBURY: I have already spoken about the position of China in the United Nations, and I cannot add to what I have said. With regard to instructions given to the British delegation, it would be contrary to the custom
  1156
  and practice of every Government to come down to tell the House, before an international conference, the detailed instructions given to their representatives. These representatives represent the Government of the day; and if Parliament disagrees with the action of the Government it is always open to Parliament to turn the Government out. That is the proper constitutional position. Certainly I am not going to be responsible for giving the House the detailed instructions which are to be delivered to this delegation.
  So far as trade is concerned—I think the noble Viscount mentioned trade—we all want to see trade renewed between Britain and China at the proper time. At present there are only controls and embargoes against trade in strategic materials. These are to remain on for the time being. The noble Viscount says there has been an Armistice and asks why the controls cannot be taken off. The Armistice is only an Armistice, and the position is very uncertain. What the noble Viscount must recognise is that only a week ago China was fighting this country; they had armies in the field against our troops—and he expects us to remove the embargoes within three or four days. That is unreasonable. What I said yesterday was that the subject would be reviewed in the light of further developments, I think that is the only wise and patriotic attitude to take.
  LORD STRABOLGI: My Lords, I am reluctant to continue this, but, after all, we are parting, reluctantly, from the noble Marquess now for many weeks, and this is our last opportunity. This meeting on August 17 of the United Nations in New York is going to be of outstanding importance. Who is it intended should represent Her Majesty's Government there? In particular, has the Acting Foreign Secretary himself any idea of repeating his triumphs in Washington by going to New York?
  THE MARQUESS OF SALISBURY: My Lords, the noble Lord will perhaps be glad to hear that that is not the proposal at present. The proposal is that my right honourable friend the Minister of State should lead the British delegation.
  VISCOUNT STANSGATE: Since this is the last day on which there will be an opportunity, I should like to ask the

  1157
  noble Marquess another question. Mr. Dulles has announced that after thirty days—
  A NOBLE LORD: Ninety days.
  VISCOUNT STANSGATE: —ninety days, it is possible that, in the event of certain behaviour on the part of the Chinese, he will walk out of the Armistice Conference. Mr. Syngman Rhee has announced that he will take further steps of an active kind. All we have from the Government on this point is that, in case of aggression by Mr. Syngman Rhee, we are entirely uncommitted; but we say that in the event of aggression by the Communists, the old rule stands and we are prepared to take up arms. What I want to ask the noble Marquess, because I am not at all clear about this, is what the situation is. Supposing you have the Conference and the United States delegate walks out, and Syngman Rhee walks out in a pugnacious mood. Do we stay there? It is very dangerous if we are left alone, if we stay there on the undertaking that we begin the war again—because that is what the New York Times seems to think is likely?
  THE MARQUESS OF SALISBURY: I think that is a fair and an important question. I have already indicated to the United States Government that, if such a situation should arise, in which the United States were proposing to walk out, they should take us into consultation first.
  VISCOUNT STANSGATE: That is very satisfactory.

  BRITISH TRANSPORT COMMIS SION (COMPENSATION TO EMPLOYEES) REGULATIONS, 1953
  2.58 p.m.
  THE EARL OF SELKIRK THE EARL OF SELKIRK rose to move, That the British Transport Commission (Compensation to Employees) Regulations, 1953, reported from the Special Orders Committee on Thursday the 16th instant, be approved. The noble Earl said: My Lords, may I bring you down to a much more parochial subject? I rise to move this Motion, the object of which is to enable the Minister of Transport to make regulations to pay compensation in certain cases which arise under the Act. These regulations have
  1158
  accordingly been submitted for the approval of both Houses. They are intended to meet the requirements of employees who suffer loss of employment or loss or diminution of emoluments arising from one of three causes: first, the disposal of property held by the Road Haulage undertaking; secondly, modifications of the functions of the Commission, such as the Commission's reduced responsibility in regard to the ports and harbours of this country; and thirdly, the reorganisation of the railways.
  These regulations follow generally the pattern which has been set up in the past and, of course, in particular, the regulations of 1948 and 1950, affecting respectively railwaymen and persons employed on road haulage. The Minister undertook to put these regulations before Parliament before disposal begins, and secondly, to do so after consultation with the trade union organisations concerned. Both these undertakings have been fulfilled, and I think I can say that it is both a matter for satisfaction and, indeed, of something of an achievement for the Department, that the regulations have come forward for approval within three months of the passing of the Act.
  If it is convenient to the House I will explain generally the manner in which these compensation regulations will operate, and I will note some of the differences from previous regulations. Afterwards, I will endeavour to answer any questions that your Lordships may wish to ask. So far as the railwaymen are concerned, in the first place these regulations follow very closely those of 1948. There are, however, one or two minor, though still significant, improvements, which I will mention shortly. First of all, the claimants may go straight to the tribunal, instead of going through the Commission. Secondly, ill computing interim payments only two-thirds of the earnings are to be set off, instead of the whole of the earnings. Thirdly, in setting off unemployment or insurance benefits no account would be taken of dependants' and wife's allowance. So far as road haulage is concerned, there are very material improvements in the conditions. Under the 1950 regulations, in order to get long-term compensation a man had to show expectation of compensation to retiring age in the event of discharge. This requirement has, in fact, proved

  1159
  almost an insurmountable barrier to the claimants. I am told that there are not more than six who have been able to establish a claim at all. These regulations are, therefore, put on a different basis, and the basis we have put it at is that a man must be able to show settled employment for a period of eight years, either with the Commission or with the previous employer whose business the Commission has taken over. These conditions are considerably easier for road haulage employees than those the previous regulations laid down.
  The terms of compensation fall broadly under two heads—resettlement payment, which is to enable a man to get settled in his new job, and long-term compensation. Resettlement payment is payable to anyone who has been three years in the service of the Commission or, in any case, has held a permanent appointment since the beginning of 1952. I should like to compare this with the short-term compensation of the previous regulations which required a minimum of eight years in order to qualify at all. It will be payable for thirteen weeks plus an additional week for every year of age over forty-five up to a maximum of twenty-six weeks, and this is one of the examples among others in which the regulations are weighted in favour of the older people. The rate of payment will be at two-thirds of the loss, calculated on the current net emoluments at the time when the loss occurred. This will, of course, include anyone who is holding acting rank at that time.
  Long-term compensation will be payable for those who can show eight years' continuous service. Continuous service will not be considered to have been broken by periods of National Service. It will be calculated at one-sixtieth of the current rate of emoluments for every year of service, and two-sixtieths for every year of service over the age of forty-five, again weighting the regulations in favour of the older men. Interim payments may be made pending the settlement of long-term compensation, but a decision on the matter must be reached within thirteen weeks. Any appeals can be made to a tribunal set up under the Ministry of Labour.
  Paragraph 16 of the Second Schedule deals with pension rights in one particu-
  1160
  lar sphere. It makes it possible for the Commission to add an additional year of pensionable service for every year of service over the age of forty. This means, in effect, that any man who has served for thirteen years over the age of forty will be assured of almost his full pension rights on reaching the age of sixty-five—that is, in accordance with the length of the service which he has given. I might further mention that the general regulations for pensions under Section 27, which deals with pensions, are in an advanced stage of preparation, and are now being considered by the trade union organisations.
  We are confident that the changeover under this Bill will be smooth and, accordingly, that few people will need to fall back on these regulations. At the same time, I can say in recommending them to the House that so far as the railwaymen are concerned they are as good as, and, if possible, slightly better than, those at the time of nationalisation. With regard to the road haulage employees, they are very much more favourable, and in asking the House to approve these regulations I suggest that they go as far as is reasonably possible to meet cases of hardship arising from the changes. I beg to move.
  Moved, That the British Transport Commission (Compensation to Employees) Regulations, 1953, reported from the Special Orders Committee on Thursday the 16th instant, be approved.—(The Earl of Selkirk.)
  LORD BURDEN: My Lords, I should like to thank the noble Earl for his usual careful exposition of the matter before your Lordships' House and also to acknowledge that the Minister of Transport has done his best, I think, to secure the largest measure of agreement with the trade unions concerned. It is a little unfortunate that full agreement was not reached, as it might easily have been by the concession of one or two minor points which I shall venture to submit to your Lordships in a few moments. Before I do so, however, I should make it perfectly clear that compensation for loss of office directly as a consequence of legislative action has a very long history in this country. It goes back for nearly a hundred years. The Civil Service Superannuation Act of 1859 in Section 7 conceded the principle. Again, it was conceded in the Local Government Act of

  1161
  1888 which set up the county councils, but it was not until 1933, after nearly a quarter of a century's hard work, that a code was included in the 1933 Act for local government officers.
  I refer to that deliberately because I should like to refer to a personal contact I had with compensation regulations more than thirty years ago when I was a member of the executive committee of the trade union principally concerned. I refer to the fight which was put up in a Committee Room of another place when the Railways Act, 1921, was being considered upstairs. I well remember the work which was put in by the right honourable William Graham, Member of Parliament for Central Edinburgh—or, as he was affectionately known to us, Willie Graham. I am bound to admit, as the noble Earl has, that that code was to some extent worsened in the compensation arrangements included in the nationalisation Acts of the Labour Government from 1945 to 1950. Again, it would be quite wrong if I did not admit readily that these regulations are in a few details an improvement on what was included in those compensation clauses in the nationalisation Acts.
  In considering that aspect of the matter I would submit that these regulations deal with an entirely novel set of circumstances. Let me make this perfectly clear. Over a fairly long experience of compensation regulations I have never had much regard for what I may call the money value aspect of compensation. Compensation provisions, both in the Railways Acts and in other Acts, have always acted as a deterrent against indiscriminate dismissals in the changeover from one form of administration to another, because if compensation flowed from dismissal obviously every reasonable effort would be made to organise the business to prevent dismissal. Clearly, no employer, whether it is the State or a local government body, would pay two-thirds of a man's salary by way of compensation if by some slight reorganisation of the business, the slowing up of recruitment or something like that, they could find a place for him. Therefore, broadly speaking, compensation provisions prevented people from being ruthlessly dismissed to suffer unemployment.
  But in the main these compensation provisions arise front the handing back
  1162
  for private profit—the working under private enterprise, if you like—of the nation's assets in road transport, which I have heard people refer to as a rare and refreshing fruit resulting from the Tory victory at the last Election. The people acquiring the physical assets of the nationalised road transport would not care a brass farthing about those whom they do not want to employ. They are not paying the compensation. That is the distinct difference as between compensation under the old Acts and compensation under these regulations. I know that the compensation is to be paid out of the transport levy. But who is paying the transport levy?—only the road operators. The levy has also to provide for other things than the payment of compensation, as the noble Earl well knows. Therefore, I venture to say that while I readily admit that these regulations are an improvement, obviously they would be very wicked indeed if they were not an improvement, because of the changed set: of circumstances. They are dealing with a position in reverse as compared with the other compensation regulations.
  I think the noble Earl is already aware of the points which I should like to put to him. First, we think that the period of thirteen weeks which might reach twenty-six weeks is not long enough, and that there should be a maximum of fifty-two weeks. Then we feel, as do the trade unions, that the date should be brought forward a little and that the compensation provisions should apply as from May 1, the date of the Government White Paper, when it was first made clear what the Government's policy should be. I venture to think that that will not mean very much in hard cash or compensation of any kind, but it would be a fair deal. My final point has already been touched on briefly by the noble Earl. I may be wrong, but, as I understood him, he said that the compensation would be based upon the rate of pay or the salary at the time. That would cover, shall I say, only acting appointments which are in operation, where the difference between the old and the new salary was carried as a difference of ray. That would apply, broadly speaking, to the whole, and not only to road transport, because there may be a difference in pay regulations so far as the railway side of the industry is concerned.

  1163
  I suppose that if we took the Explanatory Memorandum, we might discuss this afternoon the broad position flowing from the announcement of the Minister of Transport that he was dispensing with all the Executives except the London Transport Executive; but in an atmosphere such as we have this afternoon, and just as the House is rising, and as these regulations will come into operation before the House resumes, I think it would be far easier to postpone comment on that action until we can have a set debate on the question. As is the normal practice in your Lordships' House, it is not our intention to press our objection to these regulations to a Division, but we feel that we should voice here what those objections are. If they had been put right they would have carried the good will of the trade unions concerned.
  3.18 p.m.
  THE EARL OF SELKIRK: My Lords, I should like to thank the noble Lord, Lord Burden, for so frankly acknowledging that these are the most advantageous conditions of compensation which have ever been presented to Parliament.
  LORD BURDEN: I would ask the noble Earl to quote me accurately. What I said was that they were an improvement on the worst code—which was a very different thing.
  THE EARL OF SELKIRK: They are an improvement on anything which any Socialist Government has ever presented to Parliament: there is no doubt about that. Whether the noble Lord agrees or not I do not mind, but that is a fact. I am grateful to him for drawing attention to it and I think we all appreciate it very much. I do not want to detain your Lordships by explaining the advantages in detail, but, as I have said, there are one or two small but still significant improvements throughout the whole range of these regulations.
  The noble Lord mentioned three points particularly on which he would like some further information and with which I should like to deal. First, he has suggested that the resettlement period should be fifty-two weeks. In examining that, one must remember that there has never previously been a comparable period of
  1164
  resettlement. The 1950 regulations required a period of eight years' service before a person qualified for short-term compensation. He can now get short-term compensation after a period of two years' service. It is much more easy to get than it was at an earlier date. If the noble Lord's suggestion for fifty-two weeks' payment were adopted and a man were unemployed for that time, it is conceivable that someone would get a year's compensation after two years' work, which, I must say, is pressing the point a little far when we are dealing with public money. I think it would be over generous—certainly much more generous than any Government has ever attempted to be before. This is meant only to be a period of resettlement, and I suggest that for people under forty-five years of age thirteen weeks is quite a reasonable period, while for those above that age the period is up to twenty-six weeks—approximately six months. I think that this is a reasonable method and it is in line with previous regulations.
  The noble Lord also said that he would like the period of qualification to run from May, 1952, instead of from January, 1952. I admit that that is a fairly short period, and for that very reason I wonder why the noble Lord makes so much fuss about it. It is not a long period. There was no doubt at all of the position after the present Government took office, after the King's Speech in the autumn of 1951, in which it was laid down quite clearly what was going to happen. I will read the passage. It is as follows (OFFICIAL REPORT, Vol. 174, Col. 8):
  "Proposals will be made to facilitate the extension of private road haulage activities."
  The Home Secretary said (OFFICIAL REPORT, Commons, Vol. 493, Col. 720):
  "Whatever else honourable Members opposite may have doubt about, they cannot have any doubt about our intentions in this matter. They are set out quite clearly in our election documents, and our intention is, as it has always been, to diminish the monopolistic powers of the British Road Transport Commission…"
  Anyone who after that went into the Road Haulage undertaking of the Transport Commission must have done so with the knowledge that there was a measure of uncertainty with regard to its future. We have taken a date after these speeches—that is to say after the King's Speech and after the debate on the Address—and put it at the end of December, 1951.

  1165
  I think it is a very reasonable date from which eligibility for compensation should run.
  The third point which the noble Lord raised was the question of "acting pay." I have dealt with that already, and I think that what I have said covers the matter. Compensation applies to the current rate of emoluments at the time the loss occurs. All that is taken off are additional payments, perhaps for travelling, subsistence allowances, or anything of that kind. The current rate of pay at the time when the loss occurred is the effective basis. I hope that that meets the point which the noble Lord raised. The noble Lord says he would like the full agreement of the trade union organisations to have been obtained. I wonder whether the trade unions realty would like to be in a position to say that they got full agreement—to say that they had not asked for anything more than they had got. They are born negotiators, and they want to get as much as they possibly can for their members. That is only human nature. I think we can assume that the trade unions in this matter are not ill-satisfied with the outcome of the negotiations which they have conducted.
  On Question, Motion agreed to.

  MERCHANDISE MARKS BILL [H.L.]
  3.24 p.m.
  Order of the Day for the consideration of the Commons Amendments read.
  LORD MANCROFT: My Lords, I beg to move that the Commons Amendments be now considered.
  Moved, That the Commons Amendments be now considered,—(Lord Mancroft.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  [The references are to Bill No. 57 as first printed for the House of Commons]
  In the Title. Line 5, leave out ("increase certain penalties under those Acts.") and insert ("amend the Merchandise Marks Act, 1887, in relation to offences.")
  LORD MANCROFT: My Lords, this Amendment and the fourth Amendment on the Order Paper—that is, the one to put in a new clause after Clause 3—are really only drafting Amendments. They
  1166
  merely make apparent on the face of subsection (2) of Section 2 of the Act of 1887 the construction which the courts have frequently placed upon it, but which traders have from time to time failed to appreciate. This first Amendment is quite uncontroversial and I hope your Lordships will agree to it. I beg to move.
  Moved, That this House do agree with the Commons in the said Amendment.—(Lord Mancroft.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  Clause 1, page 1, line 11, leave out ("quality") and insert ("standard of quality of any goods, according to a classification commonly used or recognised in the trade; or (ab) as to the")
  LORD MANCROFT: My Lords, this Amendment is not quite so simple. The Bill extends the trade descriptions to which the Acts will apply, to include, amongst others, the characteristic of quality. Your Lordships may remember that when this Bill was last before the House criticism was expressed, particularly by my noble friend, Lord Llewellin, that the term "quality" by itself was toe wide and would probably catch a genuine trade "puff," such as "Beer is best" or "Guinness is good for you"—to quote two examples used at that stage in our debates. The noble Lord, Lord Lucas, also criticised the word on the ground that it was so vague that prosecutions would be discouraged by the difficulty of defining what the characteristic of quality was. Lord Lucas wanted to know by what form of comparison the accuracy of the description "first-grade quality "when applied to, say, fruit or food such as jam, or to boots and shoes and so on, was to be tested, and he suggested as more precise terms the substitution of the words "physically ascertainable and definable characteristic."
  This seemed to Her Majesty's Government to deprive the Bill of a word which, as it were, sets the tone of the Bill, and to enlarge unduly the field of "trade description"; but Lord Lucas's reference to "first-grade quality" provides an example of just the sort of description as to quality which we wee trying to cover in this Bill—namely, that which indicates an accepted gradation of quality. I endeavoured, I am afraid without success, to find a formula which would indicate more apparently that what we had in

  1167
  mind was gradation of quality. During the Committee stage in another place, however, the Amendment, in which I am now inviting your Lordships to concur, was put forward. This was accepted by Her Majesty's Government because it retained the essential word "quality" on which we placed such value, while restricting its sense to gradation of quality commonly used or recognised. It also made clear that the genuine trade "puff" would not be affected. I hope that this Amendment will meet with the approval of the House and will satisfactorily conclude the protracted discussions which we have had on this interesting subject. I beg to move.
  Moved, That this House do agree with the Commons in the said Amendment.—(Lord Mancroft.)
  3.28 p.m.
  LORD SILKIN: My Lords, I do not rise to disagree with the Commons in this Amendment, but to comment, as I think Lord Lucas would have done had he been here, on the way in which this particular matter has been handled by Her Majesty's Government. Lord Mancroft has dealt very gently with events that took place here and in another place, but the fact is that the Government to-day, and the noble Lord in particular, are asking this House to agree substantially to an Amendment which they have refused to Lord Lucas. The words are not exactly the same as those of Lord Lucas's Amendment, but in substance the two Amendments are exactly the same. It is a great pity, I think, that if such an Amendment is to be approved that of Lord Lucas was not accepted in the first instance.
  I know that the noble Lord gave an undertaking on the Committee stage that he would consider the matter between then and the Report stage. On the Report stage, he said that he would not be able to agree to what we wanted. But what we are now being asked to agree to is almost exactly the same thing. I do not want to hit a man when he is down—
  LORD MANCROFT: I am not down.
  LORD SILKIN: —but I hope that more attention will be paid to Amendments when put forward in this House. Having been refused them here, we should not be left in the humiliating position of
  1168
  having to accept them, perhaps dressed up a little, when they come from another place.
  On Question, Motion agreed to.

  POST OFFICE STAFF ASSOCIATIONS
  3.30 p.m.
  THE POSTMASTER GENERAL (EARL DE LA WARR): My Lords, with your Lordships' permission, I should like to make a Statement to the House. Your Lordships may remember that I deferred any immediate decision on the Terrington Report in the hope that it might still be possible to bring the recognised and unrecognised Post Office Associations together. In one case a settlement has been reached—that of the National Guild of Motor Engineers, which has agreed with the Post Office Engineering Union to amalgamate on terms which give the motor transport staff in the Post Office more voice in their affairs. I congratulate both parties on the good sense and statesmanship the) have shown.
  I will now deal with the case of the Engineering Officers (Telecommunications) Association and the Post Office Engineering Union. It is not disputed that on the basis of numbers E.O.(T.)A. was entitled to the consideration which one of my predecessors had promised. Consideration, however, is a very different thing from automatic recognition. The consideration that was promised has certainly been given in full measure. Since this matter was first raised, the situation has changed in several respects. I have had the benefit of the advice of an independent Committee, under the chairmanship of Lord Terrington. I have also had the advantage of the opinion of a man with wide experience in labour relations, Sir Richard Lloyd-Roberts, whose appointment was agreeable to both sides and who attempted conciliation between them. The advice tendered in each case was the same—that E.O.(T.)A. should not be recognised.
  I will give some of the facts which have impressed me and of which your Lordships may not be fully aware. As pointed out by the Terrington Committee, out of 60,000 engineers, the grade of technical officer for which E.O.(T).A. claim recognition comprises some 14,000, but members of this grade hold sixteen

  1169
  out of twenty-three places on the executive of the Post Office Engineering Union. This grade also has ample representation at lower levels in the P.O.E.U. structure. Moreover, each separate section has its own separate conference, and although the national executive council has ultimate power to override the sectional bodies, this power is rarely, if ever, used. In addition, the Post Office Engineering Union, during the recent negotiations, made an offer, in my view almost unprecedented, to alter their rules so as to provide that no recommendation by a sectional committee could be overruled by the executive council without a two-thirds or even higher majority. As I have already said, the grades which E.O.(T).A. seek to represent already possess a majority of at least two-third son the executive council. All these facts lead me to the inevitable conclusion that the interests of the staff whom E.O.(T).A. claim to represent are already fully safeguarded, and that no injustice is being done or is likely to be done to that staff. While, therefore, I honour the persistence and sincerity with which they have fought their case, I am afraid that there are no valid grounds, as things are now, for acceding to their claim for recognition.
  There remain two other cases with which I must deal. First, the National Association of Postal and Telegraph Officers (N.A.P.T.O.) and the Union of Post Office Workers (U.P.W.). N.A.P.T.O. claim to represent a grade numbering 21,900: only 2,600, or about 12 per cent., are in N.A.P.T.O., the rest being in U.P.W. On figures, N.A.P.T.O. do not qualify even for consideration: on merits, their case is not strong either. I should mention that U.P.W., like P.O.E.U., have shown their willingness to facilitate a friendly settlement by amending their rules. I am afraid that N.A.P.T.O. have
  1170
  not made their case and for this reason I am unable to grant them recognition, although I appreciate the sincerity of their aims. In the case of the National Association of Telephone Supervising Officers (N.A.T.S.O.) and the Association of Controlling Officers (A.C.O.), both Associations have agreed to the appointment of Sir Richard Lloyd-Roberts as conciliator, and I am now considering his Report.
  In has, of course, for long been accepted that the departmental classes of the Post Office are not typical of the rest of the Civil Service, and I should therefore make it clear that what I have said does not apply to the Civil Service generally. In particular, nothing I have said in any way invalidates the undertakings given in 1951 to the Staff Side of the Civil Service National Whitley Council, that the findings of the Terrington Committee would not result in any change being made in the system in operation for General Service classes. I have tried to give a complete picture of the main recognition disputes in the Post Office. It would, however, in my view, be unwise to lay down any hard and fast rules for the future, and I shall continue to consider any future claims on their merits.
  LORD SHEPHERD: My Lords, I am sorry that I was unaware that such a statement was to be made this afternoon, otherwise I would have been here prepared to speak or would have arranged for some other noble Lord to speak on our behalf. From what I have heard, I think I can say that we appreciate the decisions which the Postmaster General has reached. We do not desire to enter into a discussion to-day, but we will give serious consideration to the material he has put before your Lordships when we read the OFFICIAL REPORT, and if we find it necessary to raise any question we will do so later in the year.

  MERCHANDISE MARKS BILL [H.L.]
  3.38 p.m.
  Further consideration of Commons Amendments.

  COMMONS AMENDMENT
  Clause 1, page 1, line 11, leave out ("accuracy")
  LORD MANCROFT: My Lords, this Amendment was accepted in another place on the general ground that the word "accuracy," which this Amendment seeks to leave out, had rather a limited value unless it was qualified. For example, the accuracy of a thermometer must be far greater in a laboratory than in the oven of a domestic cooker, or so I am informed. The requirements of both are already safeguarded in the Bill by the expressions "fitness for purpose" and "performance or behaviour." I think that the Bill would be improved by the omission of this word, which may give some ground for doubt or hesitancy. Therefore, I recommend that your Lordships should accept this Amendment. I beg to move that this House do agree with the Commons in the said Amendment.
  Moved, That this House do agree with the Commons in the said Amendment.—(Lord Mancroft.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  After Clause 3, page 4, line 4, at end insert the following new clause—
  Clarification of s. 2 (2) of Merchandise Marks Act, 1887
  (" . Section two of the Merchandise Marks Act, 1887, shall be amended by the deletion of subsection (2) thereof and the insertion of the following subsection:
  '(2) Every person who sells, or exposes for, or has in his possession for, sale, or any purpose of trade or manufacture, any goods or things to which any forged trade mark or false trade description is applied, or to which any trade mark or mark so nearly resembling a trade mark as to be calculated to deceive is falsely applied, as the case may be, shall, unless he proves either—

  (a) that, having taken all reasonable precautions against committing an offence against this Act, he had, at the time of the commission of the alleged offence, no reason to suspect the genuineness of the trade mark, mark or trade description, and that, on demand made by or on behalf of the prosecutor, he gave all the information in his power with respect to the persons from whom he obtained such goods or things; or

  1172

  (b) that otherwise he had acted innocently;

  be guilty of an offence against this Act.' ")
  LORD MANCROFT: My Lords, this Amendment is purely consequential. I beg to move that this House do agree with the Commons in the said Amendment.
  Moved, That this House do agree with the Commons in the said Amendment.—(Lord Mancroft.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  Clause 4, page 4, line 8, leave out ("fifty") and insert ("one hundred")
  Clause 4, page 4, line 9, leave out ("one hundred") and insert ("two hundred and fifty")
  LORD MANCROFT: My Lords, as the noble and learned Lord the Lord Chancellor has indicated, these two Amendments follow one another. The maximum fines on summary conviction in the Act of 1887 were £20 for the first offence and £50 for the second or any subsequent offence. Clause 4 of this Bill, as it was introduced into your Lordships' House, provided for these figures to be increased to £50 for the first offence and £100 for a second or any subsequent offence.
  One or two of your Lordships, in particular, I think, my noble friend Lord Balfour of Inchrye, thought that these were not high enough. But no Amendment was actually moved in your Lordships' House. As amended by the Committee of another place, the Bill now provides for these figures to be increased to £100 for the first offence and £250 for the second or any subsequent offence. The general feeling in another place was that the figures of £50 and £100 did not reflect adequately the fall in the value of money since the year 1887, and that the increase to £100 and £250 was moderate and provided a sufficient deterrent. I think that those feelings reflected the sentiments which were expressed on Second Reading and at the Committee stage in your Lordships' House, and I therefore hope that these Amendments will also find favour. I beg to move.
  Moved, That this House do agree with the Commons in the said Amendments.—(Lord Mancroft.)
  On Question, Motion agreed to.

  HISTORIC BUILDINGS AND ANCIENT MONUMENTS BILL
  3.41 p.m.
  Order of the Day for the House to be put into Committee read
  THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR THE COLONIES (THE EARL OF MUNSTER): My Lords, I beg to move that the House do resolve itself into Committee on this Bill. Before the noble and learned Lord, the Lord Chancellor, puts the Question, I should like to make some brief observations. In the debate on the Second Reading of this Bill the noble Lord, Lord Faringdon, and the noble Lord, Lard Methuen, raised one matter which I promised to look into. It concerned the preparation of photographs and measured drawings of historic buildings which had to be demolished. The noble Lords suggested that it might be wise if the Government took powers to make the preparation of such records a condition of agreement to demolish. The automatic imposition of such a duty would reduce the value of a building, and might mean the loss of money to an owner who had been striving to maintain it, but who, through no fault of his own, was forced to give it up. We are, however, willing to give an assurance that will ensure that adequate records are prepared before any important building is demolished. The Ministry of Housing has powers of entry under Section 103 of the Town and Country Planning Act for survey purposes, and they are satisfied that they could use these powers to enable proper records to be made before demolition, even if the owner did not give his consent. I hope that answers the question of the two noble Lords.
  The noble Lord, Lord Faringdon, raised another complicated question—namely, as to the use of settled funds for endowment of the National Trust. Under Section 3 of the National Trust Act, 1939, the National Trust are permitted, in certain circumstances, to accept a building, and also an endowment out of settled funds if these go with the building. But if the settled funds do not go with the building, or if somebody wishes to make endowments towards the upkeep of a building out of settled funds which are separate from the building itself, these projects would not be covered
  1174
  by the National Trust Act. It seems likely that these cases would arise only rarely, but I have been advised that if the National Trust want such a provision as this it should be properly made in a Bill amending the National Trust Act. If such a provision were included in a Public Bill, it would, in fact, turn it into a Hybrid Bill.
  There were two other brief points. The noble Lord, Lord Methuen, asked that, when a grant was made for an historic house, the Minister should either supervise or have the work done to his satisfaction. The answer is: Yes, certainly, either one or the other. Secondly, he asked whether, if a house which had a preservation order served on it had some very fine paneling, the owner of that house would be able to dispose of the paneling. The answer to that is that the building preservation order could be made to prevent its removal from the old and historic house.
  LORD METHUEN: My Lords, I thank the noble Earl for these answers.
  THE EARL OF MUNSTER: My Lords, I now beg to move that the House do resolve itself into Committee on the Bill.
  Moved, That the House do now resolve itself into Committee.—(The Earl of Munster.)
  On Question, Motion agreed to.
  House in Committee accordingly.
  [The EARL OF DROGHEDA in the Chair]
  Clause 1:
  Historic Buildings Council for England
  1.—(1) There shall be established a Council, to be called "the Historic Buildings Council of England", for the purpose of advising the Minister of Works (hereafter in this Act referred to as "the Minister") on the exercise, in relation to England, of his powers under this Part of this Act.
  (2) The said Council shall consist of a chairman appointed by the Minister and such number of other members so appointed as the Minister may from time to time determine, and the chairman and other members of the Council shall hold and vacate office in accordance with the terms of their appointments.
  LORD SILKIN LORD SILKIN had given notice of several Amendments relating to the appointment of the Historic Buildings Council, the first being to add to subsection (1):
  "and of advising the Minister of Housing and Local Government on the exercise, in relation

  1175
  to England, of his powers under sections twenty-nine and thirty of the Town and Country Planning Act, 1947."
  The noble Lord said: I beg to move the first Amendment standing in my name. The Committee will be relieved to hear that this formidable list of Amendments appearing in my name really resolves itself into three (I hope) short points, and that if the first Amendment falls, or is not accepted by the Government, then a great many of the others will fall by the wayside.
  I must confess that I rather hope the Government will not accept any of these Amendments, although I am moving them, because I fear that if any of them is accepted it will mean this Bill going back to another place, and there will be no time to get it passed before the Recess. Much as I should like to see the Bill improved, I feel that a bird in hand is better than one in October, and I would prefer that the Bill be passed and receive the Royal Assent to-morrow in its unimproved form. Nevertheless, I feel it is desirable to have a short discussion on the principles set out in these Amendments, and it is for that purpose that I have put them down. I feel that I should make one other confession. These are not my Amendments. They are Amendments which have been prepared by a group known as the Georgian Group, who naturally feel sincerely about these matters and feel strongly that they ought to be discussed in your Lordships' House. I believe that they even went so far as to say that they would rather take the chance of the Bill being postponed until October. I myself am not prepared to take that chance, but I think it right that the Amendments should be discussed.
  With that unusual introduction, let me turn to the first Amendment. The Committee will appreciate that the Bill provides for the setting up of three Historic Buildings Councils, one for England, one for Wales and one for Scotland. The object of those Councils is to advise the Minister of Works on the performance of his functions under the Bill. Those functions will be, broadly, to make grants, either capital or maintenance, for buildings of historic interest and architectural beauty. There is in existence, under the Town and Country Planning Act, a Committee which has the duty of advising the Minister of Housing and
  1176
  Local Government on preservation orders, and of preparing lists of buildings which should be included as historic buildings and made the subject of preservation orders. The purpose of this Amendment is to try to combine the functions of the Historic Buildings Council and the functions of the Committee under the Town and Country Planning Act, which are regarded as somewhat analogous.
  I mention in particular Sections 29 and 30 of the Town and Country Planning Act. Section 29 (3), which is the relevant subsection, provides for the confirmation of preservation orders which have been made by local authorities. It reads:
  "A building preservation order shall not take effect"—
  that is, the order made by the local authority for the preservation of a historic building"—
  "until it is confirmed by the Minister, and the Minister may confirm any such Order either without modification or subject to such modifications as he considers expedient.
  The Amendment would place upon the Minister of Housing and Local Government the obligation to seek the advice of the Historic Buildings Council before be exercised his duties under Section 29 (3). Section 30 of the Town and Country Planning Act is the section which requires lists of historic buildings to be prepared, and a Committee set up by the Minister of Housing and Local Government is engaged in preparing these lists. It is thought that the work of this Committee is analogous to the work which will have to be done by the Historic Buildings Council under this Bill, and that there is no reason for the continued existence of two separate bodies. The purpose of this Amendment is to set up one Committee which will have the purpose both of preparing the lists and of carrying out the functions under this Bill, and which will, in addition, advise the Minister of Housing and Local Government on the making of preservations orders. I think this would be a simplification, but I should be glad if the noble Earl could tell us whether or not this could be done administratively, without an Amendment to the Bill. As I have said, I am not encouraging the noble Earl to accept this Amendment. It may well be that it cannot be done administratively, and I

  1177
  should be satisfied if the noble Earl would give me an assurance either that this will be done administratively or, at any rate, that it will be seriously considered.
  There is one difficulty which I see in this; namely, that the Committee making a list of historic buildings is of necessity a temporary body. Once they have made their list the Committee would automatically go out of action; there would be nothing more for them to do. Furthermore, under Section 30 (5) of the Town Aid Country Planning Act the persons who are qualified to form the Committee to make the lists are set out. They are
  "…such persons or bodies of persons as appear to him"—
  that is the Minister—
  "appropriate as having special knowledge of or interest in buildings of architectural and historic interest."
  Therefore, what you have is a Committee of specialists preparing a list, and the Historic Buildings Councils which are to be set up under this Bill. I should welcome the noble Earl's view on whether it would be appropriate, or whether it is in the mind of the Minister for the purposes of the Historic Buildings Council, to have a Committee of experts, or a Committee of men and women who can take a broad view of an application for a grant—possibly with some general building experience, with an understanding of estimates and repairs, and so on—and who are able to form a judgment upon whether an application for a grant should be made. In other words, they would be people who, while not necessarily experts, would be able to weigh up the opinion of experts and form a sound judgment of their own. If that is the view of the Minister, then it would hardly be consistent that the Committee of technical people who are preparing the lists should be the same body as the people who are going to form the Historic Buildings Council.
  That is one of the difficulties that I foresee in this Amendment, which is asking that they should consist of the same people. In other words, I am raising this Amendment for the purpose of a discussion, rather than for t he purpose of pressing it to a Division or insisting upon its acceptance. My own view is that it would not be easy to combine the functions under Sections 29 and 30 of the Town
  1178
  and Country Planning Act with the functions which are required to be carried out by the Historic Buildings Council under this Bill. I do not think it would be easy for the same body of people to do the job. It may. however, be possible w combine them in some form and to have one Committee, comprising people of expert qualities, as laid down in Section 29 of the Town and Country Planning Act, and the kind of people that I have in mind, and I believe the Minister has in mind, for the purpose of carrying out the functions under this Bill. At any rate, I should welcome the views of the noble Earl on this matter, and for that purpose beg to move this Amendment.
  Amendment moved—
  Page 1, line 12, at end insert the said words—(Lord Silkin.)
  THE EARL OF MUNSTER: I would not in any way quarrel with the explanation that the noble Lord has made on the Amendment which he has moved, for he says quite correctly that its object is to provide that the Historic Buildings Council for England and Wales should replace the Minister of Housing's Advisory Council on buildings of special architectural or historical interest, which is, as the noble Lord knows, more commonly described as the Holford Committee. That Committee is primarily æsthetic and it deals with a large range of houses. As the noble Lord quite rightly said, the work of the Historic Buildings Council will be primarily financial, and they are likely to be dealing with only a small number of cases. If we joined these two bodies together it would have this effect: that in future the Historic Buildings Council for England and Wales would be appointed jointly by the Minister of Works and by the Minister of Housing. They would then advise the Minister of Works upon matters which would arise under Part I of the Bill, and the Minister of Housing on matters dealing with historic buildings which arise under the Town and Country Planning Act, 1947.
  As the noble Lord will know full well, proposals similar to this were made during the Committee stage in another place. A proposal was put forward to amalgamate the Holford Committee and the Historic Buildings Councils, but the idea was ultimately withdrawn in favour of a further proposal to amalgamate all the powers into the hands of the Minister

  1179
  of Works. My right honourable friend pointed out that, in his opinion, a single body advising two separate Ministers was an unfortunate half-way house, but he nevertheless promised to consult with the Minister of Housing about the transfer of his powers. The noble Lord who moved the Amendment asked me whether, if a decision is made, it can be carried out administratively, whether there will have to be an Amendment of the Bill or whether it can be done by an Order in Council. I think it would be advisable to wait until the discussions of the two Ministers have taken place and the results have been announced before I endeavoured to guess as to which might be the most appropriate method, if it were so decided to amalgamate these two bodies.
  The Historic Buildings Councils will be composed of a variety of people who are not necessarily experts in any one particular line, but they will certainly be in a position to advise my right honourable friend whether grants should be made for the upkeep of a house of historic interest. I would not say more to-day as these conversations are taking place between the two Ministers, but I have no doubt that, on the completion of their inquiry, one or other of my right honourable friends will take an opportunity of letting another place or, indeed, this House, know what has been decided about the future of these two Committees. In view of what I have said, I hope that the noble Lord will be prepared to withdraw his Amendment.
  4.3 p.m.
  LORD SILKIN: As the noble Earl rightly says, a number of proposals were made in another place, and the one that I am moving was one of them. There was the other proposal to transfer the relevant powers of the Minister of Housing to the Minister of Works. In fact, this particular proposal was never discussed at all in another place. The Minister described it as "a half-way house," and the whole of the discussion took place on the proposal to transfer functions. I therefore thought it was right to put down this Amendment in order that we might get the views of the Minister. From what the noble Earl has said, may I take it that the Minister has definitely rejected this method of dealing
  1180
  with the matter and of having a single Committee which will be answerable to both Ministers, and that the only matter which is being considered is the question of the transfer of functions?
  THE EARL OF MUNSTER: Yes, I think that is correct.
  LORD SILKIN: I have very little confidence in the transfer of functions; I do not think that will "come off." The question I want to ask before withdrawing this Amendment is whether, if he finds, as I believe he will, that it is not practical politics to transfer the functions because of the immense repercussions that would be involved, he will consider the possibility of simplifying the machinery, which I think he can do administratively, either by way of having one Committee or possibly by way of having one Committee and a sub-committee? I think it can be done like that. If he can give me an assurance that that will be considered, I shall be prepared to withdraw my Amendment.
  THE EARL OF MUNSTER: Yes, I can certainly give the noble Lord that assurance. I can go further and say that I am certain that my right honourable friend the Minister of Works is only too anxious to find some method whereby the machinery can be simplified.
  LORD SILKIN: In view of that, I beg leave to withdraw my Amendment.
  Amendment, by leave, withdrawn.
  On Question, Whether Clause 1 shall stand part of the Bill?
  VISCOUNT GAGE: I am not rising to move any Amendment, even for the purpose of getting it rejected, but I want to ask one question as this Bill has not been considered very deeply in detail. The Bill gives the Minister considerable powers. They are rather vaguely expressed and a good deal depends on how they are administered. I wonder whether my noble friend could indicate what is going to be the position of the Historic Buildings Councils in relation to owners. Will it be possible for owners to communicate directly with these Councils and for the Councils to correspond directly with owners, or shall we be told that an official edict will prevent any communication except with the Secretary

  1181
  at the Ministry of Works? Personally, I hope that there will be the freest contact between owners and Councils. I concede that it might result in correspondence which would be lengthy and, indeed, tedious, but I believe that a great deal will be gained if the Councils have direct experience, and if they know directly what the owners' problems are and do not have to rely entirely on the views of other experts.
  LORD CHORLEY: I should like to draw attention to subsection (6) of this clause and to express the hope that the Minister will take a wide view of the report which this subsection requires. It is the clause under which the Councils have to prepare a report in respect of the matters on which they have advised the Minister during the year. I felt inclined to put down an Amendment also, but my proposal was such a reasonable one that I thought the Government might well accept it. Like the noble Lord, Lord Silkin I am most anxious that we should have this Bill at once, bur I think that, with a certain amount of administrative elasticity, if the noble Earl would bring the matter to the attention of the Minister, what I want to achieve may in fact be achieved. What I should like is for this report to be widely drawn and, so far as possible, present every year to the nation a conspectus of the situation in respect of these historic buildings. I think everybody agrees that the work of the Gowers Committee has been of the highest value and certainly has disturbed the nation as a whole. In that way, I think it has brought enough pressure to bear on the Government to lead to the introduction of this Bill. It would be extraordinarily valuable if the Historic Buildings Councils could, during the course of their work, take a general view of the situation in respect of these historic buildings up and down the country. Such a report would be of very great value.
  During my speech on Second Reading the other day, I drew attention to the condition of two of our most important buildings which are, in fact, in the custody of the Government—namely, Hampton Court and Kensington Palace. I have reason to believe that the state of both these buildings is deplorable, and that among knowledgeable people in the country there is a great deal of disquiet about their condition, and, indeed, about
  1182
  the condition of other buildings of little less importance. I think it would be most valuable, if these Historic Buildings Councils are to be composed of really knowledgeable people, that they should be instructed by the Minister to take a very wide view of the whole of the transfer of these buildings, which are of such inestimable importance to the country, and should be encouraged to prepare a report which presents a wider view than that which they are required to give under the terms of this Bill.
  THE EARL OF MUNSTER: My noble friend Lord Gage asked me whether the relationship between the Historic Buildings Councils for England, Wales and Scotland, would be cordial as regards owners. I have no doubt whatsoever in my mind that the relationship between the two must be very close at all times, and I have no doubt at all that in the course of a very short time these Historic Buildings Councils will find out the views of the owners of historic buildings. The obvious way for an owner to try to obtain assistance through this Bill is for him to get into direct touch with the Historic Buildings Councils. He can, if he so desires, write direct to the Minister, but undoubtedly the Minister would submit his application to the Historic Buildings Council. The noble Lord, Lord Chorley, suggested that the report of each council which has got to be submitted annually to Parliament should be drawn in the widest possible terms, because the report would be of great interest to a large number of people. I am quite certain that my right honourable friend would not dissent from the views which the noble Lord has expressed, and I will certainly convey to him the suggestion which the noble Lord made: that the reports should be drawn as widely as possible, in keeping with the powers of the Council under the Act.
  LORD CHORLEY: I am very grateful to the noble Earl for his undertaking.
  Clause 1 agreed to.
  Clauses 2 and 3 agreed to.
  Clause 4 [Grants for preservation of historic buildings]:
  4.12 p.m.
  LORD METHUEN LORD METHUEN moved, after subsection (3) to insert:
  "(4) Any repairs towards the cost of which the Minister makes a grant shall be carried

  1183
  out in a manner approved by the Minister and, if he shall think fit, under the supervision of such person or persons as he shall appoint."
  The noble Lord said: I was rather surprised that as a matter of routine some such subsection as I suggest in my Amendment has not been inserted into the Bill. I think that every continental nation has some scheme for preserving its monuments, and where money has been granted by the State, there is provision that the Minister concerned must have a direct say in how it is spent. That may be through his personal supervision or through the work being done by his own Department, or being done to his satisfaction by the owner of the house or building. I do not want to press this Amendment, as I understand that the Minister will assume these powers. But, if I may say so, it is rather unwise for the Minister to assume universal power and for us to take it for granted that this will be done. I think it is in the public interest that such a power should be specifically mentioned in the Bill. I beg to move.
  Amendment moved—
  Page 3, line 37, at end insert the said subsection.—(Lord Methuen.)
  THE EARL OF MUNSTER: Subsection (3) of Clause 4 already gives the Minister of Works power to impose conditions when making a grant. If the noble Lord will turn to that subsection he will see that
  "A grant under this section may be made subject to conditions imposed by the Minister for the purpose of securing public access to the whole or part of the property to which the grant relates, or for other purposes, as the Minister may think fit."
  In point of fact, therefore, the Minister would specify the methods to be adopted in every case, and would subject each grant to conditions of control and inspection. If I accepted this Amendment—I sincerely trust the noble Lord will see his way to withdraw it after my explanation—it would make it mandatory upon the Minister to stipulate exactly how the work on any variety of ancient building was to be done. That would, in my view, be unfortunate, and my right honourable friend would rather the matter was left flexible so that he can subject every grant which he makes to adequate conditions and control. I can certainly, and most readily do, give the noble Lord an
  1184
  assurance in those terms. Of course, the noble Lord will remember that under the first three clauses of the Bill the Historic Buildings Councils are to be consulted about the grants and, indeed, about conditions. I hope that, with that explanation, the noble Lord will see fit to withdraw this Amendment.
  LORD METHUEN: I thank the noble Earl for his explanation. My point was simply that abroad it is a matter of routine to specify what I have suggested, and I am sorry that it is not laid down in the Bill. However, I ask permission to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Clause 4 agreed to.
  Clauses 5 to 17 agreed to.
  4.19 p.m.
  LORD SILKIN LORD SILKIN moved, after Clause 17, to insert the following new clause:
  Amendment of s. 12 of the Ancient Monuments Act, 1913
  " . Subsection (1) of section twelve of the Ancient Monuments Act, 1913, shall be amended by the insertion of the words 'properly to be described as ancient' after the words 'such monument' and again after the words 'such other monument' and by the insertion at the end thereof of the words 'and may likewise at any time amend any list prepared or published under this section'."
  The noble Lord said: On the Second Reading of the Bill I drew attention to the fact that there was not in existence a satisfactory definition of an ancient monument. I indicated the respects in which I thought the existing situation was unsatisfactory and anomalous. There was no clear distinction between ancient monuments and historic buildings. We have managed to get on very well in the past without an exact definition of an ancient monument, but while we are dealing with ancient monuments in this Bill it seemed to me that it would be a good thing if we could get a clearer definition of the term. At the moment, it really boils down to a building or structure which the Minister says is an ancient building; and there are many examples of historic buildings which could come into the definition of ancient monument, and vice versa. I have tried to produce a definition of "ancient monument," which no doubt the noble Earl will regard as wholly unsatisfactory. If he does think so, I will withdraw it, but I should like his view as to this question of a defini-

  1185
  tion, because a good many people attach importance to it.
  There is one practical point to which I referred last time and to which the noble Earl was not able to reply to then—it arises on Amendment No. 16. If we could get a clear definition of "ancient monument," it might well be that the body of people who are at present engaged in listing ancient monuments could also be engaged in listing historic buildings. The two functions are very similar, and it seemed to me there was a possibility of dovetailing the two functions with their respective organisations. That is really the purpose of Amendment 16, which I may be out of order in referring to at this stage, though it really covers the same subject matter. So I should be grateful if the noble Earl could tell me whether he agrees that the existing definition is unsatisfactory. Whilst I do not ask that the Amendment be accepted if it is considered unsatisfactory, I should like the noble Earl to tell me what it is he proposes to do about it and whether it is possible, by administrative measures, to dovetail the work of the Ancient Monuments Board and the Committee dealing with the listing of historic buildings. I think both are likely to go on their way for many years to come, though the listing of historic buildings must come to an end one day. But it is a slow business, and if the two bodies could be merged into one, so much the better, because there would be some saving in expense and trouble. I beg to move.
  Amendment moved—
  After Clause 17, insert the said new clause—(Lord silkin.)
  THE EARL OF MUNSTER: I hope it will be convenient to the Committee if I follow the noble Lord in dealing with this and the next Amendment together. As he said, they are closely related. I have been at some pains to find out the existing definition of "monument" and "ancient monument," and so far as I have understood them they are very wide. They have left a considerable latitude to the Ancient Monuments Board and, indeed, to the Minister. As the noble Lord pointed out, we have got on very well so far, and the Act has been in operation for some forty years.
  LORD SILKIN: Has the noble Lord not found that since the passing of the
  1186
  1947 Act there is some confusion as to what is an historic building and what is an ancient monument?
  THE EARL OF MUNSTER: I was coming to that very point. A "monument," in the definition of the Acts, has always been taken to include any man-made structure, with the exception of churches which are in use. An "ancient monument" has always been taken to mean any structure of some historical or archæological interest, the preservation of which is in the public interest.
  LORD METHUEN: May I suggest that the term "historic monument" covers the whole lot, and that it is of universal application, except in this country.
  THE EARL OF MUNSTER: I would disagree with the noble Lord. One is a monument and another is an ancient monument. If the noble Lord followed my explanation, what I was endeavouring to convey was this: these definitions do not exclude buildings which are occupied as dwelling-houses. The Minister of Works has power to list ancient monuments, to make preservation orders, to accept guardianship or to make grants which specifically exclude inhabited dwelling-houses. I have been advised by those who have many years of experience in this matter that the existing scheme has worked reasonably well, and they are not aware that there is any sound reason at the present time for a change. The raw material of the list of ancient monuments and of the lists published by the Ministry of Housing under Section 30 of the Town and Country Planning Act, 1947, does, in fact, overlap, but it is not possible for the same structure to be protected under both, since the Town and Country Planning Act excludes ancient monuments from the scope of its lists. But by administrative action in the Ministry, the fields of the two lists have, in point of fact, been kept separate. In my view it would be unwise at the present time, for the reasons I have already given, to insert this Amendment here. As I have said, we know that a certain amount of overlapping does occur, but administratively we have been able to sort the two out.
  May I come now to the other point which the noble Lord made on the next Amendment, which seeks to amalgamate

  1187
  the Ancient Monuments Board and the Historic Buildings Council. Here I am in a difficulty. I believe that amalgamation would be very unfortunate, and I should differ entirely from the noble Lord if he tried to amalgamate the two—and for this reason. The individual who is going to deal with ancient monuments is someone who, presumably, is well acquainted with earth works, ruins, bridges, and, indeed, with any building which is not in daily use. But the individuals who will be invited to serve on the Historic Buildings Council will be people who may have to deal with Georgian and other period architecture, but who certainly will not be fully qualified to deal with ancient monuments. I should have thought there was a valid difference between these two. The close liaison between the Board and the Council will, nevertheless, be maintained, inasmuch as both Board and Council will be dealt with by the same administrative branch of the Ministry of Works, and will be served by the same professional advisers in the Ministry.
  LORD SILKIN: As I have said, I have no desire whatever to press these Amendments. I think the noble Earl's explanation on the first Amendment is not unreasonable, and I am prepared to accept it. On the second Amendment I should be grateful if he would give an undertaking to look into this question. I am not at all satisfied that the qualifications required for listing ancient monuments are so very different from those required for listing buildings of architectural and historic interest. I want an amalgamation of members of the Ancient Monuments Board and the people who prepare lists of historic buildings. If the noble Earl would just look at the qualifications that are required—
  THE EARL OF MUNSTER: The noble Lord is referring to the Holford Committee.
  LORD SILKIN: Yes. Professor Holford is a great friend of mine, if I may say so. I should think that he is perfectly capable of playing a part in the work of listing ancient monuments. I should certainly be prepared to entrust any ancient monument to him and feel assured that he would recognise it. I should be grateful if the noble Earl would
  1188
  give us an assurance that he will look at that matter and see whether these two groups of people can be amalgamated, of course, with their attendant administrative organisation. If we can get one Board to do the same job it would be a substantial saving. If the noble Earl can give me that assurance I shall be grateful, and I shall be prepared to withdraw the Amendment.
  THE EARL OF MUNSTER: I can assure the noble Lord that my right honourable friend is only too anxious to introduce any machinery which will simplify the machinery at present in use. I will convey to him the views expressed by the noble Lord, and will ask him to give them careful consideration.
  LORD SILKIN: On that assurance, I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Remaining clauses and Schedule agreed to. Bill reported without amendment.
  Then, Standing Order No. XXXIX having been suspended (pursuant to the Resolution of July 28), Bill read 3ª, and passed.

  TREATY WITH LIBYA
  4.33 p.m.
  THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (THE MARQUESS OF READING): My Lords, with the permission of the House I desire to make a statement on the Treaty of Friendship and Alliance just signed between this country and Libya. Just over ten years after the liberation of Cyrenaica, Tripolitania and the Fezzan during the Second World War, it is a great pleasure to inform the House of the signature yesterday at Benghazi of a Treaty and the related Military and Financial Agreements, between this country and the United Kingdom of Libya. The texts of these Instruments have to-day been laid before the House in a White Paper. Ever since His Majesty, King Idris (then Amir of Cyrenaica) became our ally in the recent war, the relationship between the two countries has been close, and it was during our administration of Cyrenaica and Tripolitania that Libyan independence was achieved at the end of 1951, in accordance with United Nations Resolutions.

  1189
  The Treaty provides that Libya will afford us military facilities, and that the United Kingdom will furnish financial assistance in order to help Libya to enjoy financial stability and orderly economic development. The military facilities are set out in a Military Agreement whereby we are permitted to station British armed forces in Libya under conditions agreeable to both parties. For our part, we have undertaken in the Financial Agreement to provide financial aid for twenty years, the period of all three Instruments, and have agreed to pay during each of the first five years £1million for economic development and £2,750,000 as assistance towards the Libyan Budget. A reassessment will take place at the end of each five-year period. Provision for the necessary funds will be made annually in the Foreign Office Grants and Services Estimate which will, of course, be subject to Parliamentary approval. Her Majesty's Government propose to ratify the Treaty and Military and Financial Agreements after they have lain before the House for the customary period. Her Majesty's Government believe that this settlement will form a sound basis for continuing and fruitful collaboration between the two countries. It is an arrangement fully consonant with the independence of Libya, consistent with the principles of the United Nations Charter, and, as I firmly believe, a contribution to the peace and security of the area.

  EMERGENCY LAWS (MISCEL LANEOUS PROVISIONS) BILL [H.L.]
  4.37 p.m.
  Returned from the Commons with the consequential Amendment made by the Lords agreed to.

  COLONIAL DEVELOPMENT CORPORATION
  4.38 p.m.
  LORD WINSTER LORD WINSTER rose to ask Her Majesty's Government whether they have formulated any views on the last Report of the Colonial Development Corporation; and to move for Papers. The noble Lord said. My Lords, I have to begin with a short apology. I have been having some trouble with my throat, and if I consulted my own wishes I think I would have wanted to postpone my Motion. But
  1190
  I felt it would not be right to disrupt the Business of the Horse or to put to inconvenience those noble Lords who are proposing to take part in the debate. I hope, therefore, that if I get into difficulties, or cause difficulties in hearing, I may have the indulgence of the House. I have no wish to raise the temperature in this matter by anything I may say, or to indulge in any harsh criticism. On the contrary, I think that the noble Lord, Lord Reith, and his colleagues who serve with him on this Corporation have an extremely complicated and difficult task to perform and no possible criticism of neglect or lack of energy in its pursuit could possibly attach to them.
  Nevertheless, it would be useless to deny; that very grave misgivings exist about this Corporation. It was founded by the Act of 1948, but it had, in fact, begun to function in 1947. The Secretary o State for the Colonies is responsible for the Corporation, and with his approval the Corporation may borrow up to £100 million with Treasury consent, and another £10 million in temporary loans or overdraft. But the Corporation is required by the Act to balance its revenue with the charges on revenue, and in the course of its existence it has never done so. It had invested up to March 31, 1953—the end of the financial year, 1952–53—some £44,500,000 in Colonial industries, but by the end of the financial year 1951–52 its consolidated loss was over £8,250,000. And of those losses, £3,500,000 are represented by losses on abandoned projects. In his Report for 1951, the noble Lord, Lord Reith, expressed the hope that the year would be the worst in the history of the Corporation. But—and it must have been very distressing and a great mortification to him—he had to agree that the year 1952 had turned out to be even worse. That year eight more projects were abandoned, and the accumulated deficiency rose by over £3,750,000. I feel that, on those figures, we must conclude that more than two years of new outlook and financial discipline are required to shake off the effects of an unsuccessful start. If that is not the case, the alternative conclusion is that the work of the Corporation is more difficult than Lord Reith believed on taking office.
  As the result of these unfortunate figures, many voices are raised in favour

  1191
  of the liquidation of the Corporation. My opinion is that the Corporation ought to be given a longer chance, but I shall have something to say later as regards my view on whether an inquiry into the work of the Corporation may not be necessary. I shall suggest that as a well wisher of the Corporation, because it seems to me beyond doubt that if losses are to continue on the scale which I have quoted, they can only lead to disaster for the Corporation. I would mention here that in view of these losses I think the reports on the 57 projects which the Corporation are operating, given in their Annual Report, are too brief to give adequate information.
  Other points which have aroused my attention refer to the board of directors. The Secretary of State may appoint up to ten directors from persons who have had experience in and show capacity in
  "primary production, industry or trade, finance, science, administration and the organisation of workers or welfare."
  Further, it is laid down that experience should be available to the board "from directors who had obtained their experience in Colonial territories." I do not think there have ever been more than two out of the ten directors with such Colonial experience, and at times there has been only one, so that it is quite clear that the intentions of Parliament, as laid down in the Act, have been disregarded in relation to the board of directors. In the quotation I have just read, "primary production" was given priority amongst the qualifications required for the directors. For eighteen months Sir Frank Stockdale was Vice-Chairman. He died in August, 1949, and since then there has not been an agriculturist on the board although many, if not most, of these projects are bound to he agricultural in character. If this goes on, it will look like the end of agricultural settlement schemes. As State enterprise and private enterprise are often contrasted in this matter, I must say that I do not see private enterprise raising the standards of agriculture in Africa. These facts about the Board being so, I think the Secretary of State ought to pay more heed than he appears to do to the intentions of Parliament as laid down in the Act. The board has consisted of men from many walks of life—science, finance,
  1192
  administration and the organisation of workers—but they have not been men with Colonial experience, and, except for Sir Frank Stockdale, certainly not with experience of tropical agriculture. I cannot help feeling that in these facts possibly lies an explanation of many of the failures which lie at the door of the Corporation.
  The matter goes further, because the Act also enjoins co-operation with people in the Colonial territories. There was to be the appointment of committees to study and keep the Corporation informed of the circumstances and requirements of the territories where the Corporation proposed to operate. When they were set up, these committees were to be guided by persons with experience of the territories in question. I beg to ask the Minister who is going to reply if any such committees have been set up by the Corporation during their years of existence. If not, we would have to say that the Corporation have ignored the law framed for their guidance I have one last word to say on the board. A good deal of attention has been given to the resignation of Professor Lewis. I was rather surprised by his resignation. The statement has been made that he was not dismissed, but I understand that he asked that he be retained. I do not know if Professor Lewis was asked to resign, but I know he was anxious to remain a member of the board.
  I want to say a word about welfare, since it was laid down that one member of the board at least should be someone experienced in the organisation of workers or welfare. I see from the Report that these fifty-seven projects employ some 19,000 workers, of whom only four per thousand are trade unionists. Only twelve of these projects have joint machinery for the discussion of labour and welfare problems. Twelve employ part-time labour and welfare officers. There are five full-time doctors employed, thirty-seven projects have housing schemes and four of them have hospitals. I should think that there is room for an extension of workers' organisation and of welfare organisation, but I will not stress that point because I am not acquainted with all the facts and circumstances involved. I call attention to it, nevertheless.
  Voices are raised in criticism of the Corporation to say that the State cannot

  1193
  develop such projects successfully, and inevitably groundnuts are immediately quoted in support of that statement. The groundnuts scheme certainly failed, but a case cannot be established on one instance. Private enterprise has also frequently failed in Colonial territories. In Nigeria you will see a large tannery decaying. In East Africa various mining enterprises have failed. In Trinidad a large bamboo plantation was established hut its products were never used. In British Honduras projects by private enterprise to use the cohune nut and the cassava starch failed. In British Guiana mining enterprises, sawmills and earning plants have all failed. I could quote many more instances. So that if State enterprise has had its failures, undoubtedly private enterprise has had some very startling failures, too.
  As against the failure of the groundnuts scheme, I should like to quote a State enterprise which has succeeded, I think I may almost use the adjective, brilliantly: that is, the Cameroons Development Corporation, which was formed to take over the German banana plantations. They were bought for £850,000. The Corporation now has 75,000 acres under bananas, rubber and oil palm. In 1950, it made a working profit of £472,000—I am quoting round figures—and in 1951 of over £623,000. That Corporation pays export and income tax; it has contributed as much as £50,000 in one year to local welfare schemes; it pays 3½ per cent. on a borrowed capital of £1½ million, and the profits are retained to benefit the indigenous people of the area where it works. There we find, on examining that story of success, that the first chairman was Mr. F. E. V. Smith, who had long Colonial experience to his record, and there were also directors with much experience, such as Mr. G. R. R. Sharp, from Jamaica. There we find directors of great Colonial experience, evidently pursuing good methods in their administration; and they have achieved success. I feel that the facts and figures about the Cameroons Development Corporation would well repay study by the Colonial Development Corporation; and I may say, too, that I believe useful experience would be gained from the facts and figures about certain corporations in Porto Rico must repeat that I hope something will be done to strengthen the
  1194
  board of the Colonial Development Corporation in regard to having directors with more Colonial experience. I could mention several names of men with that experience who would be well qualified to serve on that Board, but who do not seem to have attracted the attention of the Secretary of State.
  I spoke about the brevity of some of the information which is given. In this Report of the Corporation for 1952, the fifty-seven projects I have mentioned in operation, exclusive of eight which have been abandoned, are covered in sixty pages; that is to say, just a trifle over one page per project. That is all the information the taxpayer gets as to the expenditure of his money. I think information about the projects which have been abandoned is particularly scanty. There are many flings one would like to know. Why was the cocoa-growing in British Honduras abandoned? After all, the cocoa plant originated in that neighbourhood. After the Corporation decided to try to develop cocoa production in British Honduras the Governor of Trinidad advertised 25,000 disease-resisting cocoa plants for sale. These plants had been bred by the Trinidad Department of Agriculture. Of those 25,000 disease-resisting cocoa plants Dutch Guiana bought 4,000, Ecuador bought 21,000, and the Colonial Development Corporation bought none. I wonder why they felt there was no attraction for them in that advertisement. Again, one would like more information about the Seychelles Fisheries. Then there is the project at Andros in the Bahamas to grow market garden produce. I should have thought that those islands have emerged far too recently in geological time for adequate soil to have formed there; indeed, it has been found that sea-water seepage renders the soil there infertile. I think that was a misguided project. The only question I should like to ask about it is: What expert advice was obtained before that project was embarked upon?
  There is no getting away from the fact that many of these projects seem to call for examination and comment. There is the Fort George Hotel in British Honduras, with forty bedrooms, built at a cost of £260,000. That sum has now been written down to £150,000, and we are told that it should show a reasonable

  1195
  profit on a reduced capital. If you reduce your capital, and keep on reducing it, probably you can show a profit; but it is not good finance. However, good judges tell me that they see little prospect of that hotel ever functioning at a profit. The history of the hotel is interesting. The building of that hotel was, I understand, recommended by the Evans Commission; they recommended the building of an hotel costing not £260,000, but £50,000; and they recommended its erection for housing the staffs of the industries which the Commission had recommended should be established in British Honduras. Those industries were recommended, but they were not established; but an hotel to accommodate their staffs was erected, as I say, at a cost of £260,000. I am told that the normal traffic in British Honduras would never justify a hotel of that accommodation. So the Fort George Hotel does not seem to have been a great success. On the other hand, the Corporation had a successful hotel in Uganda, which apparently was making a profit, but they have sold it. It seems to me that they sold the wrong hotel. The prices charged by the Fort George Hotel are extremely high, being some £3 a day, and £1 for the trip out to the airport. That is far too expensive to attract people to the hotel.
  Other things have been happening in British Honduras, and we do not seem to have been very lucky there. I hear, on good authority, that some Texan ranchers who were negotiating with the Government in British Honduras called attention to some failures of the Colonial Development Corporation, and they specially mentioned this project of the stock farm; an expenditure of 200,000 British Honduras dollars on a farm with forty-five head of cattle and an aeroplane. In connection with that project, machinery was bought abroad, and shipped to Britain, where it paid customs dues of thousands of pounds; and, being for tropical use, would have to be shipped out again. I should have thought that that machinery would have been held in bond for re-export; but apparently large sums were paid in customs dues. The aeroplane was bought for communications with the site of this stock farm, the Great Mountain Pine Ridge. But as there is apparently perfectly good road
  1196
  communication with Pine Ridge, I am riot sure for what purpose this aeroplane was bought—and whether it has been used or not, I do not know.
  Then there was another scheme there, a banana scheme that failed because the plants were planted in a locality known as the Stand Creek Valley, where the United Fruit Company had failed thirty years previously. The valley happens to be quite suitable for citrus fruit, but not for bananas. The Evans Commission, to which I have made reference, made a recommendation for planting bananas in the Toledo district, where the banana industry was started some way back in the 'eighties. Sir Charles Evans, the Chairman of the Commission, had been Chairman of the College of Tropical Agriculture in Trinidad for many years, and those who planted bananas where failure had previously been recorded by private enterprise ignored his advice and went ahead, with the failure which has been recorded.
  I do not wish to tell a tale of unmitigated woe, and in all fairness I want to say that, of course, there are many projects which have a good story attached to them, projects which are hopeful—the Palm Oil Estate and Building Society in Malaya, the ore mines in Kenya and the goldfields in British Guiana. I have not enumerated them all, but those are projects of which one may fairly say that good hopes can be entertained. As I have spoken about these abandoned projects and failures, I should like to call attention to what I think is possibly the most important point which I shall raise in the course of my remarks. Under the constitution of the Corporation it cannot write off its losses. I do not feel that the Corporation ought to have to use its successful projects to finance the unsuccessful, to pay interest and repay its losses. I think I am right in saying that the position about interest has been met—that the Government are now waiving the interest. I believe that is so. But it is my firm and considered opinion that the Corporation should now be allowed to write off the losses themselves. instead of these losses remaining, like the albatross round the Ancient Mariner's neck, to cripple and hamper its operations. I would beg the Minister, if he would be so kind, to bring to the notice of his right honourable friend the strong

  1197
  opinion which I have ventured to express: that the Corporation should be given powers to write off these accumulated losses.
  Having said that, I should like to look for a moment at the Secretary of State's views on the subject of the rules which should guide the Corporation in embarking upon its enterprises. The Secretary of State says that the Corporation
  "…should go into enterprises and incur great risks, but always where there is a prima facie possibility of making a profit."
  That seems to me rather like having the best of both worlds. He goes on:
  "We should not permit development of projects on which we know there is likely to be a loss."
  He added:
  "We cannot promote Colonial development by a series of losses."
  I interpret those statements of the Secretary of State only as saying that profitability is to be the test of the work of this Corporation: the Corporation must makes schemes pay; it must recoup itself for past losses, and it must work in association with private enterprise. Profit is to be the test. I do not believe that, wren the idea of this Corporation germinated, "Safety first" was ever intended to be its working motto. But that, apparently, is what the Secretary of State now thinks. It is to go into these projects which we know are likely to result in a loss, yet there must be a possibility of making a profit. I would say that what the Secretary of State is saying to the Chairman of the Corporation is what the old lady said in the nursery rhyme:
  " 'Mother, may I go out to swim?'
  'Yes, my little daughter,
  But hang your clothes on a hickory limb,
  And don't go near the water' "
  That is really the Secretary of State's advice to the Corporation.
  THE EARL OF MUNSTER: May I interrupt the noble Lord—only to ask him if he will clarify or expand the remark which he has just made. He said that he did not think the Corporation was ever set up to work on a "Safety first" basis. Is he advocating that the Corporation should enter into schemes of all sorts and all kinds, with complete disregard of whether the scheme should pay and of the fact that the taxpayer is finding the money?
  LORD WINSTER: I was on the point of answering that question, but I was going to answer it in the words of the noble Lord, Lord Reith, the Chairman of the Corporation. I repeat what I said, that I am sure "Safety first" was not the original idea when this Corporation was established, and I think that projects of the kind which the Corporation was set up to put forward must inevitably be risky. But I think the noble Lord, Lord Reith, was far nearer the original idea when he said:
  "The Corporation should be able to finance projects of great value but unlikely to be profitable such investment; should be recorded separately and judged on another than a profit basis."
  I am quite willing to answer the noble Earl's question in those words used by the noble Lord, Lord Reith. In using them, I think he has pot near the original idea.
  The Corporation was undoubtedly intended to pioneer, and not merely to invest money against good security. As one reads the Act, the Corporation must try things that have not been tried before, or try things which have been tried before but try them in a different way. It must also take long views about profits. It must do speculative things if it is to comply with the original intention. It must tackle things which, for one reason or another, private enterprise has been unwilling to tackle. It must initiate pilot schemes, and must provide technical assistance and training in areas where otherwise, without the Corporation, such assistance and training are unlikely ever to he provided. Possibly the noble Earl and many other noble Lords do not agree with me, but those are my views, and I think what I regard as the real duties and functions of the Corporation are really incompatible with insistence on showing a profit on every project. I believe that the prospects of the Colonial Development Corporation cannot be rosy unless it has the good fortune to function under Secretaries of State who have faith in it, and who intend to back it with their faith. I must confess that sometimes I am not quite sure that Mr. Oliver Lyttelton has that faith in the Corporation. If he has not, then that lack of faith must militate very strongly against the prospects of success.
  I wish to touch briefly upon one other matter. Of course, there has been criti-

  1199
  cism about the fact that Lord Reith has been given permission to take other directorships. I do not wish to express an opinion about that; I think it is too personal a matter. It is an affair of conscience whether the Chairman of the Corporation feels that he can take other directorships or not. To my mind, that is an affair of conscience for the Chairman; and, if he will allow me to say so, I believe the noble Lord, Lord Reith, to be a conscientious man. I leave it there. I must say that I thought the sense of timing was bad which allowed the unfortunate announcement of the heavy losses incurred by the Corporation in the last financial year to come out at the same time as the permission granted by the Secretary of State to Lord Reith. I felt that perhaps it might surprise some of the staff who are contending with great difficulties in the field to pull the affairs of the Corporation round: I felt that they might have thought it rather surprising that the work of the Corporation is not regarded as a full-time job. But there is one thing about which I want to express an opinion. I see that any criticism of the Secretary of State for having given this permission has always been met with the reply, "But the previous Government allowed Lord Trefgarne to take other directorships." There is one good reply to that; it can be expressed in the words of the Chinaman who said to his wife: "Two Wongs do not make a a White." I think that if it is considered wrong that Lord Trefgarne could take other directorships it is, perhaps, no different in the present instance; you cannot have it both ways. It is no answer to these criticisms to say that Lord Trefgarne also held other directorships.
  Reviewing it all, I feel that the main lesson we have learned is that the Corporation spread its wings too far afield in the beginning, instead of concentrating, as I think would have been wiser, on creating a solid nucleus somewhere and then working outwards. Because of that diffusion of energy in the early years, during the last two years the board's energies have, I feel sure, been almost completely absorbed in a cleaning-up process which is taking them longer, perhaps, than they anticipated when they embarked upon it two years ago. It is very dull to spend your time clearing up
  1200
  other people's mistakes and never having the fun of making your own. Probably that is a feeling which is very widespread among the members of the Board: that their time and energy have been almost completely absorbed by this cleaning-up process. But it will come to an end, and we must not repine about the past; rather must we look forward to the future.
  I said something at the beginning of my speech about opinions which are put forward about an inquiry into the working of the Corporations. I said that I thought the Corporation ought to have a longer term yet. Under its new board and Chairman it should have a longer run, to show what it can do. If these losses were to continue, and more projects were to be abandoned, the call for an inquiry into the administration would undoubtedly grow stronger; and in certain circumstances I think it might be very difficult to resist such an inquiry. After six years, the overall picture is certainly one of failure; and it might be found by inquiry that the methods of administration need to be improved. I myself am quite willing to leave that question for some time yet, in order to see whether, one of these years, perhaps soon, we may get a more satisfactory, a happier, picture of the work of the Corporation. Certainly I think that lessons are to be learnt from the Cameroons Development Corporation. The method of appointing the directors should be carefully inquired into, as I have already said, in the hope of getting men with more Colonial experience on to the Board.
  But the final conclusion to which I have come, after the inquiries and study which I have undertaken—I hope that I have been accurate in what I have said: I have certainly spoken in complete good faith, and given what I believe to be accurate figures—is this. Capital investment in the Colonies is about £2 per head. In highly developed parts of the world it is £500 per head. My mind goes back to something which Sir Stafford Cripps said in 1947. He said:
  "The whole future of the sterling group and its ability to survive depends upon quick and extensive development of our African resources."
  It is with that statement in mind, and against that background, that we should look at and consider the work of this Corporation, for it is a Corporation which

  1201
  has possibilities of forwarding that work which Sir Stafford Cripps in my opinion so correctly diagnosed as work of the highest importance, not only in the Colonies themselves but, as he said, in the sterling area. It may be that the possibilities have been exaggerated, and that certain assumptions have proved unsound; but the experiment of establishing that Corporation has, I consider, proved justifiable. And when more experience has been gained, I think the results that it will have to show may be very satisfactory indeed. I am sure of this: that the noble Lord, Lord Reith, and his board can rely upon the encouragement and support of this House in the very worrying but also very important task which they have in their hands. I beg to move for Papers.
  5.17 p.m.
  LORD BALFOUR OF INCHRYE: My Lords, I am sure we are all indebted to the noble Lord, Lord Winster, who, in spite of his vocal disability, has given us a broad review of the Colonial Development Corporation. Ashe said, this is a House of well-wishers to the Corporation. Though our criticisms may be varied and wide we all have one purpose in mind, which is to help forward the work of this Corporation. Therefore perhaps I may be allowed to make one criticism at the outset of my remarks. Before doing so I, too, should like to echo the tribute paid by Lord Winster to the great work and public service that the noble Lord, Lord Reith, has performed and is performing.
  My complaint is as to the form of expression of this Report. It is not only—and I agree in this with Lord Winster—too brief in its explanation of previous losses. It is also unusual and irritating in its form of expression. The staccato sentences, the constant references to "Corporation does this," the omission of the verb, the omission of the article, and sometimes of the pronoun, do not lend any weight to the value of the document. We all know men who wear exaggerated clothes, extra high collars, extra sloppy collars, or flowing ties—always in order to create an impression that they are something which they hope the world will accept them to be. Unfortunately, the world does not always do so; and it is the same with this Report, in its desire to portray to
  1202
  the world a picture of a dynamic efficiency and a highly organised body. I always understood that Government publications should be models of English, so far as they can be made so. This Report is far from that. I suggest, for greater clarity, a message, in the form of the Report, which I hope may be conveyed to the Board. This is the message:
  "Advise cease next year attempt impression ceaseless efficiency typified clipped sentences."
  Let us have something a little more normal next year, and it will not meet such a critical reception in that form as this Report has met with in the Press here and elsewhere.
  I want to say one word about a matter upon which the noble Lord, Lord Winster, touched—that is, about the acceptance by the Chairman of outside directorships. I was not going to say anything about it except that I am at issue rather with the noble Lord. He said it was a matter of conscience. I do not think much of that idea. If it were a matter of conscience, then I would agree wholeheartedly with the noble Lord that Lord Reith was free to accept any directorship, because we know he is a man of high integrity. I think it is a matter of administration and organisation and structure. I entirely support the idea that a Chairman should not he tied absolutely to executive work. I am glad to see the Chairman has outside interests, and he can decentralise his executive responsibilities to his senior executives in order that he may be the fountain of thinking on policy matters. So I come to the same conclusion as the noble Lord, Lord Winster, but I cannot agree that it is entirely a matter of conscience. The Secretary of State is right to make it an organisational matter.
  The Colonial Development Corporation is, as I see it, part of the general picture of the civilised world-wide responsibility for upraising the standards of backward peoples; and in particular it is part of our Colonial development policy. I agree with the Secretary of State that he is right to confine the Colonial Development Corporation to its proper rôle of embarking upon enterprises that have, if not an immediate, at any rate an eventual, prospect of profitability. I did not agree with the noble Lord, Lord Winster, when he read out the definition of the Colonial Development Corporation's purposes

  1203
  according to, I believe, Lord Reith. I prefer the Secretary of State's definition, because there are other organisations that must be considered at the same time that we consider the Corporation. There are the United Nations Agencies; the Colombo Plan; the Commonwealth Investment Corporation; the Overseas Food Corporation and the Colonial Development and Welfare Fund. Each of those has its particular function, and I believe that the Colonial Development Corporation's job is not to support socially desirable but permanently uneconomic projects.
  Of course, the Corporation must accept losses and I think it is right, provided there is some eventual prospect of economic independence for the particular project. For instance, there is mentioned in the Report—I gather from the Report that the matter is still under consideration—the question of communications in the British West Indies. I should be entirely in favour of the giving by the Corporation, if necessary, of some form of subsidy for a period of years in order to prime the pump, in order to stimulate the development of communications which are both necessary and which will in the long run be economically sound. What I should be against would be the giving by the Corporation of a subsidy for a period of years for some project which should rightly be done by one of the other Agencies I have enumerated.
  If the Corporation fits into the picture, as I submit to your Lordships it does, of our Colonial development, so also do I look at the Corporation as part of the economic development of Britain and of our Colonial Empire. I regard the Corporation as an important instrument in our economic planning, for two reasons. First, it can be the means of saving dollars for Britain. If we go more and more for dollar savers, we shall go some way towards relieving this country of our present dangerous dependence upon American economy. At present a small recession in American economy will have a disproportionate effect on the imports that America will accept from this country. The Corporation's list includes tobacco and cotton. I ask Her Majesty's Government whether they will be so good as to consider giving a direction to the Corporation that, on economic grounds, they
  1204
  should give a preference, wherever possible, to dollar-saving enterprises.
  The second point I should like to mention about the Corporation as an instrument of our economic planning is that, as the Secretary of State said in another place when speaking about Tanganyikan coal, it is no good producing goods unless there are markets able to absorb the products. It is no good building new industries in our Colonial Empire if we are unable to help those industries to find markets for what they are making. Hence, I think the Corporation's prospects are inevitably tied up with the question of reserved and preserved markets in this country for Empire goods and, contra-wise, the preserved and reserved markets for British goods in Empire markets. So long as we are tied—I do not want to argue it in detail, but I must bring this out—to the General Agreement on Tariffs and Trade in its present form, the Colonial Development Corporation can assist the production of some article in some Colony, but we are unable in this country to give that article any preference over a corresponding article produced in Japan or a corresponding article produced in Germany.
  There is going to be a session of G.A.A.T. at Geneva in September. I believe that the Secretary of State for the Colonies and his Under-Secretary ought to be assassins of G.A.A.T. if they are going to serve rightly the interests of the Colonial Development Corporation. You cannot divorce the future of the Corporation from the hamstrung position from which Britain is suffering under the present provisions of G.A.A.T. So long as they exist, for just so long we cannot guarantee preferential markets for the production which we have stimulated. Those are all the remarks I wish to make to your Lordships this afternoon and, having made one criticism and two suggestions, I would only say that I hope next year's Report will show us that the cleaning-up process has been accomplished and that the Corporation is embarking upon the road to that success which it is the wish of noble Lords on all sides of the House that it should eventually achieve.
  5.29 p.m.
  THE EARL OF LISTOWEL: My Lords, I should like to associate myself with what the noble Lord, Lord Balfour, said

  1205
  about the gratitude we all share to the noble Lord, Lord Winster, for giving us another opportunity of discussing the Annual Report of the Colonial Development Corporation. We discussed the Annual Report last year, and I hope we may soon be in a position in which such a discussion will become an annual event. I think it is particularly fortunate this year because, when this matter was dealt with in another place last week, it was associated with a discussion on the Colombo Plan. Quite naturally, the other place gave the lion's share of their attention to the Colombo Plan, and the Report of the Colonial Development Corporation did not receive very detailed consideration. Before I go any further, I should like to say that we on this side regret the absence, owing to ill-health, of the noble Lord, Lord Ogmore. He had special responsibility for the Corporation when he was at the Colonial Office and he therefore speaks with special authority on that subject.
  I feel, looking at the Report as a whole, that the Corporation can claim a very creditable record in regard to its work in the past year and considering that it has been asked to make bricks with very little straw. I feel—and I hope this view is shared by other noble Lords who have studied the Report—that the Board and its servants, both in London and overseas, have done the utmost that can be expected of them in extremely difficult circumstances. It is greatly to their credit that they have not been discouraged and have not attempted to relax their efforts, but have continued to do their best to dispose of an extremely awkward inheritance and to undertake fresh constructive work.
  The noble Lord, Lord Winster, touched on the question of whether or not the Chairman of the Corporation should take outside work. I think this is a matter which has caught the attention of the public, and it is a matter which ought to be frankly discussed. I agree with him that fundamentally it is a matter of conscience for the Chairman. I would be absurd to try to frame any general rule for the Chairman's action in this regard. One cannot say that in no circumstances should the Chairman of the Colonial Development Corporation accept any outside work. After all, it depends entirely on the particular circumstances, and the only person who can interpret those cir-
  1206
  cumstances is the Chairman himself, in the light of his conscience. I am quite certain that any Chairman of the Colonial Development Corporation would always leave time and mental energy for two things—first, to think out high policy in Whitehall, and secondly (and I am not sure whether this may not be equally important), to visit the Corporation's projects in our Territories overseas. I know from my own experience what an immense difference it makes to the morale of the people who are working for the Colonial Development Corporation if they receive a visit from the Chairman, and this can be translated into terms of added production.
  My Lords, having said that, I hope that I shall be allowed to make one or two criticisms. These criticisms I make in the spirit of the candid friend. After all, a friend is always more serviceable to us when he is criticising than when he is praising us, because we all know our virtues but we are occasionally inclined to overlook our shortcomings. I should like to start by a rather slight criticism of the form of the Report. I use the word "form" in quite a different sense from the noble Lord, Lord Balfour, and I will try to explain the difference in a moment. Of course, this Report is intended for people who are possibly as ignorant of the affairs of the Corporation as I am myself—for Members of Parliament, for the uninstructed layman and for the general public. What I think the ordinary person wants to know is, whether the Corporation is making progress from year to year, and for this purpose to compare one year with another. It would therefore be helpful, I think, if, in essentials, the form of the Report varied as little as possible in each Annual Report. I do not mean the style of the Report—we all prefer literature to White Papers; and if a Government publication happens to have a literary style, it is all the better for that. I find that White Papers are apt to he extremely dull, and part of their dullness is due to the fact that they are very diffuse. If one can criticise the style of the Report, it is that it is elliptical. The fact that it has not a style like an ordinary White Paper seems to be something in its favour. I have said that because I wanted to show that I do not agree with Lord Balfour's criticism of the form of the Report.

  1207
  Let me give one example of what I mean by my criticism. The 1951 Report, the last Report but one, states that ten new undertakings were started during the year, of which some were investigations. But it does not say in the Report which were the undertakings that were not investigations. Nor does it say how many were investigations, or what type of thing was done which was an undertaking but not an investment. These other projects were probably mostly loans, but we do not know that from reading the Report. It is impossible, therefore, from reading this Report, to know whether, in fact, the Corporation started any new development work in 1951. Yet that is the sort of question that any ordinary person would ask. On the other hand, in the latest Report, which we are discussing to-day, it is clearly stated that nine new projects were started. I feel that the word "project" is perhaps better than "undertaking." I noticed that the noble Lord, Lord Winster, used it, and I hope that that will be one of the respects in which the Reports may become standardised in form. The Report states that of the nine new projects started during the year, five were investigations and the rest were loans. That is extremely important. It is quite plain from that information that no new development work was begun in the course of the year 1952. I hope that this improvement in the form of the Report, as compared with the preceding year's Report, may be standardised, so that we can have this very vital information every year from now on.
  Now, my Lords, let me say quite frankly what was my main conclusion from reading the Report. In a sense, it is a depressing conclusion, but not really depressing because it reflects on the work of the Corporation. As I have said, I think the Corporation has done its best in difficult circumstances. But what I think emerges from the Report is that the Corporation is unable, not through its own fault, to do the work for which it was set up by Parliament in the Overseas Development Act. It was intended in the Act, and certainly intended in the minds of those who adopted the policy of which the Act was an expression, that the Corporation should operate in
  1208
  the field of marginal profitability. Private enterprise was to continue to handle profitable and highly profitable development. Of course, if private enterprise had undertaken to develop this marginal field, there would have been no reason to set up the Colonial Development Corporation. The reason for the setting up of the Corporation was that this important field of development in the Colonies had been neglected by private enterprise.
  Then there is a third field, besides the marginal field and the profitable field; namely, the field of unprofitable development—the social services, public utilities, roads, railways, harbours and so on. These were to be financed by the Colonial Governments out of public funds. The C.D.C. was not to go into this field. This was just as different from the specific task of the C.D.C. as was ordinary profit development, which it was intended should be left to private enterprise. Therefore, the specific task of the Corporation was to develop the productive resources of the Colonies in the narrow field between the highly profitable and the wholly unremunerative. I think we all recognise that the largest potential increase in production in the Colonies lies in this field. What has happened in practice is that the Corporation is now competing with private enterprise in the field of commercial profits. That was not intended, but that is what is happening.
  I wonder whether the Corporation would be able today to look at any scheme with a profit margin of less than 12 per cent. I should like to ask the noble Earl, Lord Munster—because all the Corporation's schemes have now to be sanctioned by the Secretary of State—whether his Ministerial colleague and he himself would sanction a profit margin of less than this figure. It depends, of course, a little on the character of the risk, but, broadly speaking, I imagine that the line has to be drawn somewhere; and I should be very much surprised if it were drawn at less than 12 per cent. Looking at the pages of the Report it is clear that the least profitable schemes have already been abandoned. Eight undertakings were wound up in 1952 and five the year before, so the field of operation into which the Corporation has been obliged to go is quite clear. The result is that it is able to do very little new development work. For about two years the Corporation has been unable

  1209
  to start a single large-scale development scheme. That fact emerges from the last two Annual Reports of the Corporation.
  Look at the last Annual Report. They show that, of the nine new projects, live were investigations and four were loans to private companies. Investigations are not development schemes; they are preliminary work on which development schemes may later be based. Similarly, loans are just a means of helping to finance private companies already operating in the Colony. This is a development which, although good in its way, is deflecting the Corporation from the purpose for which it was founded. I was glad to know that the Secretary of State for the Colonies has said that the function of the Corporation is not to lend money but to carry out development. One of the consequences of inhibiting development work by considerations of profit, forcing the Corporation into fields of high profitability, is that the Corporation is becoming increasingly a money-lending agency. That is inevitable. Like the banks, it puts money into the soundest schemes, and those responsible are glad to get a loan at a reasonable rate of interest.
  I do not blame any Government (this is not a Party criticism) and least of all the Corporation itself, for this failure to develop the marginal resources of the Colonial Territories, which was the purpose for which the Corporation was set up. But I suggest that the time has now come, after the Corporation has been in operation for about five years, for a review by Her Majesty's Government—I am not talking about a review by the Corporation or an inquiry—of financial policy in relation to Colonial Development, and also of the terms of Overseas Development Act. I think it will be found that a more generous financial policy is essential if this development work is to go forward. I think it will also be found that the changes which are needed are so far-reaching that they will entail an amendment of the Overseas Development Act. That Act was passed by the Labour Government, and I am not in the least ashamed to say we all learn in the light of experience, and that if we were to find that the Corporation was unable to do its work because the provisions of the Act had not given it the instrument it required for its task, then
  1210
  I am quite certain we should be ready to support any proposal that might be made for the amendment of the Act. All I am saying at the moment is that the time has come, not for an inquiry into the administration of the Corporation—that would embarrass the Corporation and hold up its work—but for a review to be undertaken, at a high Ministerial level, of broad financial policy and of the terms of the original Act.
  May I now make two remarks about financial policy. I hope the Government will consider immediately two ways in which the burden of the Corporation may be lightened. The first suggestion I have to make has already been made by the noble Lord, Lord Winster, and I should like cordially to endorse what he said on this subject. The fact is the Corporation has to repay in forty years all the capital lost on unsuccessful projects. This liability naturally increases from year to year, as projects have to be written off as failures or as unremunerative, and it restricts more and more the number of new schemes that can be undertaken. The noble Lord, Lord Winster, has pointed out that the Treasury has waived its claim for interest on this capital loss. The Corporation regards its obligation to repay capital as a very heavy burden, and in one of its recommendations it says:
  "The Corporation hopes that those capital sums can be written off, as would seem logical and equitable."
  I hope that that point will be dealt with, and dealt with quickly, because it is difficult to see how the Corporation can get forward into the field of economic development work until this financial millstone is removed.
  Another suggestion in the Report which I think would be highly useful to the Corporation is that it might be permitted to undertake schemes which are not likely to be profitable, but which are of great social importance. An example given is agricultural settlements. We all know that the most vital need for improving the standard of living in the Colonies is an improvement in the standard and technique of local agriculture—thegrowing of rice and the cultivation of vegetables and so on, which is done by the ordinary inhabitants of the Colonies. Agricultural settlement schemes which are given as an example of what

  1211
  can be done in a local setting will obviously not be profitable, but they have an immense social value. I think it would be very right and proper if the Colonial Development Corporation were authorised to undertake that sort of scheme. I was glad to see a recommendation in the Report that,
  "to an extent approved, it should be able to finance projects that are of great value but unlikely to be profitable: that such investments should be separately recorded in the accounts and the results judged on other than a profit basis."
  It may be objected that unremunerative development, such as the provision of social services, housing, schools, and so on, should be financed by public authorities out of local funds, or from the Colonial Development and Welfare Fund. That is the general rule and practice, and in most cases it works quite satisfactorily; but there are certain cases where the costs of these services must be shared between the Corporation and the Colonial Governments. And in those cases where Colonial Governments are unable to contribute towards these schemes, highly useful development is quite frequently prevented. The prospect of the cost of this development makes it impossible for the Corporation to do the work.
  Just a word, in conclusion, about one other matter where I think the Government could help the Corporation to do even more useful work—that is, in the field of scientific research. There is, I am sure, a need for more co-operation and better co-ordination between Colonial Governments and local projects of the Corporation in the sphere of practical research—I am not talking about pure or theoretical research; I do not mean laboratory work, but field work of one kind or another: soil surveys, crop demonstrations, and so on. The snag about this is that it is completely unremunerative. I know of cases in which the Corporation has had to give up promising projects because it has been unable to afford the cost of this preliminary research work. If Colonial Governments had been able to assist with a little money from the Colonial Development and Welfare allocation this work could have been done. I understand that what happens now (I imagine that the procedure is the same as it was when I was at the Colonial Office) is that the
  1212
  Colonial Government approve a research scheme and submit it to the Colonial Office for approval. If the scheme is approved, it gets a grant from the Colonial Development and Welfare Fund.
  Here, I have a suggestion to make, which I think would be an improvement it the procedure and would bring in the Corporation. In those Territories where the Colonial Development Corporation has one or more development projects, why should not local representatives be consulted and brought in by Colonial Governments at the stage of drafting their research schemes? They might help to determine the character of the schemes, which are often apt to be a little too theoretical, and if a joint scheme emerged from the discussions they might also be able to agree about sharing the cost of the scheme when it was put into operation. This would have the advantage of preventing research being too much in the air, as it sometimes is now, and of ensuring that it is directed to the economic development of the resources of the particular Territory in which work is being done. My Lords, I am afraid that I have been critical rather than laudatory in what I have said. My reason is that I am a staunch friend of the Colonial Development Corporation, and I hope that the criticisms I have ventured to make have been such as may be of assistance to it in its work.
  5.52 p.m.
  LORD RENNELL: My Lords, the points which have been referred to by the noble Earl, Lord Listowel, are points I should very much like to take up before going on to the main subject of the Report. In the first place, may 1 say that when he spoke about the form of the Report, using the word in the sense which he used it, I find myself in very considerable agreement with him. I think the actual presentation of the affairs of the Corporation in this Report could be improved by segregating the financial schedules, which are necessary and must be published, into a separate document, and having a report of the activities of the Corporation rather in the form of a chairman's extended speech on the affairs of an ordinary commercial corporation. It is not sufficient just to give a number of notes upon what has

  1213
  happened to each particular project, without putting in also the information which the noble Lord, Lord Reith, certainly has about the sort of development that has been going on, the effects that economic changes in the world have had on the value of a scheme, and comments on the policy which is being pursued in adopting or turning down new schemes. I think that that would eliminate a good deal of detail in the descriptions of the projects, which is, perhaps, not entirely necessary, and would give a much better overall picture of what the Corporation was doing or trying to do.
  It would also obviate—though I think we are all in favour of brevity—some of the unduly brief references to projects or affairs in certain of those places—references which, I think, leave a good deal to be desired. I will give only one instance. On page 55 in Section 73 (which deals with West African fisheries) we are told that:
  "in February, 1953, one trawler sank in Lagos Harbour."
  How did it sink? Did someone pull out the bung? Did someone run into it? Did it turn over? I think there is a slight over-economy of description at that point and in several other places. The fact is that we want to know more—and in saying that, I think I am probably expressing the views of all noble Lords in the House. We want to know in what direction the Colonial Corporation is going. What is it trying to do? If you read the Report very carefully you will see that there are certain indications, and they have come into debates in your Lordships' House and into debates in another place in previous years.
  I should like now to touch upon something which is clearly in line with what Lord Listowel has just been speaking about. On page 5, under the heading "Association," we find this:
  "The Secretary of State endorsed Corporation policy in his public reference to association with private enterprise and local knowledge combined where possible with financial participation—governmental or other; indeed made such association a normal requirement for capital sanction."
  We have had a good deal of discussion on that subject in this House. I think that on more than one occasion I myself have advocated the bringing together of the Corporation and local interest or local government as a method of ensuring that
  1214
  those projects should not be fathered by the Corporation, as they have been in the past, because persons in this country or elsewhere have shown themselves totally unwilling to participate themselves or to put up any money. I regard that association as absolutely essential. Reading on a little further we find—and perhaps it is not altogether surprising—that there has been
  "reluctance to invest scarce funds in the kind of risks which Corporation normally undertakes."
  This, it says, is understood. The Report also goes on to damn Colonial Governments with, I think, lather faint praise. It says:
  "Colonial governments are substantial financial partners in some projects; in general they have been helpful."
  That seems to point very clearly to one thing: the Corporation has encountered great difficulties in pursuing this policy of association with people in either management or development who might be expected to know more about a particular project than the Corporation could ever get to know. There are one or two outstanding examples where this association has been successful.
  It is clear that if the Corporation has encountered these difficulties in getting this association even from Colonial interests for developments in their own countries, there is some good reason for it. To my mind that good reason is clearly that many of the projects on which the Corporation has embarked—and no doubt some of those which are being put up to it at the present time—are such as a wise, foreseeing and sensible person would not invest money in. That brings us to the point which has been raised already by the noble Lord, Lord Winster, and the noble Earl, Lord Listowel. What is, in fact, the purpose of the Corporation? I do not share what appeared rather to be Lord Listowel's view, that the Corporation should indulge in projects that, on the whole, are more likely to lose money than to make it.
  THE EARL OF LISTOWEL: My Lords, may I make clear what I meant? I am afraid I did not make it clear when I spoke before, and naturally, the noble Lord could have misunderstood what I said. I said that I thought the Corporation could operate in the field of marginal profitability, say between zero and 6 per

  1215
  cent., with variations on both sides. I meant profitability.
  LORD RENNELL: To that I would say that if any Corporation will operate by preference on low margins of profitability, say zero to 6 per cent., it is inevitable that that Corporation will over a period of years lose money, go on losing money and never make any. "Marginal" is a word which has acquired a new meaning in the English language. That is especially true in regard to farming. In farming, when applied to land it means land which you would not farm if you could get anything better. Marginal projects of this sort seem to me to fall into very much the same category. They are projects which no sensible person would invest in if he could help it, and the suggestion seems to be that he ought to be pushed into it by a Corporation like this. I personally am doubtful whether that is the right way to develop any country.
  I think this policy needs restatement more clearly than it has been stated in another place, either this year or in previous years, by Secretaries of State for the Colonies, because it is not consistent to say that, where possible, the Corporation shall obtain partners in the form of Governments or private enterprise, and, when they report that they cannot do that, to say at the same time that they ought to go ahead on projects which other people will not follow them into, which means that they have to go into projects on which they make losses. It is only right to say that if we have this policy (I do not say it is right and I disagree with it myself), we have used this £100 million for investment in the Colonies and do not expect to see it again. That is what is meant by "invested continuously only in marginal products." In past years—I am not speaking of present policy and present direction—the Corporation had some seventy examples of precisely that policy of going into projects which other people would not touch with the end of a bargepole.
  In spite of two years' clearing up by Lord Reith, we find figures which I frankly consider very disquieting. I do not share the more optimistic, the more sanguine, views of the noble Lords, Lord Winster, and Lord Listowel. On looking at the financial statements at the begin-
  1216
  ning of this White Paper, I find that the accumulated loss is about £80 million, which is getting on for about half more than the loss last year. In other words, the rate of loss is piling up by geometrical progression. If it is the policy to spend £100 million and see no return, judging by the balance sheets of these companies that policy is being actively and satisfactorily pursued; but I do not believe that policy is the right one. I am inclined to doubt some of the figures, and from what I can see by reading between the lines I think that next year will not show any substantial improvement in the appalling rate of loss. As the noble Lord, Lord Winster, pointed out himself, on £40 million-odd invested an accumulated loss of £8 million has already taken place. I would add that nearly half of that, some £3,500,000, is loss on this last year's operations.
  If noble Lords would turn to the balance sheet on pages 10 and 12, they will see an item of investments of £5,500,000 represented by shares in associated companies, debentures and secured loans. I should like the noble Earl, Lord Munster, in his reply, to tell us, if he can, whether those investments have been written down and, if so, by how much, because on looking through the comments on the balance sheet, I see that the provisions—otherwise reserves—which are made, and which are more particularly referred to on page 4, refer, in the main, to losses already incurred—in other words, losses written off. About half way down page 4, your Lordships will see that the board write that a reassessment has been made, and £3,965,000 has been provided under three headings—namely, so much for abandoned projects, so much for continuing projects (specific) and so much for continuing projects (general). The appended note says:
  "first two are money losses; third the best possible estimate of possible losses on doubtful projects."
  As I read it, that means that there is a current reserve of £1,375,000 carried against the assets of the company which include (on page 11) £5,500,000 of investments. From the experience of the Corporation in past years, it seems to me that this reserve is very small compared even with the item of investments, and I

  1217
  should deduce from that, without being unduly pessimistic, that next year's loss will probably be of the same order as that shown in the present balance sheet.
  We are not considering a Corporation which takes the good with the bad, he profit with the loss, and will eventually pay back any of the £100 million which has been provided. We must face the fact that £100 million has been granted by Parliament in this country for projects on which the money is going to be lost. It is going to be expended in the same way as the annual provision made under the Colonial Development and Welfare Act, under which grants are made to meet deficits and the money is written off. Do not let us "kid" ourselves into thinking that this is an undertaking which is going either to repay the capital or the interest or to produce a profit, if it is to be conducted in this way. I do not think this is the right way to do it, and I do not agree with the gist of what the noble Earl, Lord Listowel, said.
  As I have said before, I believe strongly that the functions of the Colonial Development Corporation ought to be to provide funds for other people to use, to associate with Governments and enterprises and provide money on loan, and not to go into management itself. The whole curse of the activities of the past years has been precisely that the Corporation has tried to go into management. It has embarked on seventy-five or eighty projects, dotted about all over the world, in all sorts of different fields which no Corporation and no board and no chairman of any board, with all respect to the noble Lord, Lord Reith, can possibly be expected to undertake. The alternative is to use the Corporation as the machinery for finding money. It should divorce itself from management as far as possible and leave the management either in the hands of local governments or of the commercial enterprises desirous of being associated with it.
  The fact of the matter is that I do not think there is a clear policy even yet in the minds of the Corporation, of the Colonial Governments or of certain noble Lords in this House. I base that remark on a consideration of the projects enumerated on page 1. May I take investigation projects first? These seem to me to fall into two distinct categories,
  1218
  and the distinction is not made clear here. An investigation project may be for the purpose of embarking on that project either oneself or on behalf of a third party. We have examples of both here. We have very good examples in the Tanganyika iron investigation and the earlier investigation in the Tanganyika coalfields. I do not think that it is contemplated—at least, I have never heard it suggested—that if either of these two projects proves to be commercially feasible the Corporation should embark on the development of either iron or coal in Tanganyika. Indeed, so far as the coal project is concerned, it was made clear last year, if not the year before, that the investigation into the coalfields was being carried out on behalf of the Tanganyika Government. I held the view then, and I still hold it, that it is not the function of the Corporation to undertake exploratory work and investigations, more particularly in a field where there are people better qualified and who are engaged is doing it for the Government all over the world at the present time. There is no point in the Colonial Development Corporation's putting up money to bore holes to see whether there is coal there, and then handing over a report to the Government of Tanganyika, receiving the payment of expenses, plus a small fee.
  The other types of investigation—namely, those which might lead to a project being developed by the Corporation itself—fall into a different category. But we have no guidance in the Report about which sort of investigation is which. It is because that is not there that I claim there is a certain confusion of thought in people's minds as to what the Corporation is really trying to do. To recapitulate, I do not think that the Corporation ought to go into projects which everybody else has condemned and for which nobody is going to put up any money. I do not think the Corporation should go in and do exploratory mining and development work in order to hand the enterprise over for somebody else to develop after payment of a small fee. Finally, I do not think the Corporation ought to embark on mining ventures. I believe there is plenty of risk capital of this sort in the world to go and do any mining which looks at all profitable anywhere in the world. It is not for the Development Corporation to embark on that with funds provided by the taxpayer.

  1219
  The real objection at the back of people's minds when the Corporation started—and it is still prevalent here to-day—was to the idea that this was a method of providing what the noble Lord, Lord Shepherd, referred to a few days ago as adequate, cheap, risk capital. Risk capital ought never to be cheap. By the nature of things it must not be cheap, but must be capital that can earn a sufficient remuneration to write off the losses incurred on other enterprises of the same sort. It is idle to suggest that there can be any form of solvency, either local or national, in an enterprise that will put up money at cheap rates for enterprises that the ordinary commercial institution will not look at.
  I feel that there should be—and I join entirely with the noble Lord, Lord Winster, on this—an inquiry into the activities of the Development Corporation. I want to be careful in what I say here. I do not mean an inquiry into the conduct of the Corporation to-day, or into the conduct of the Corporation in past years, but I feel that there should be an inquiry to try to clear up in people's minds what it is that the Government really expect the Colonial Development Corporation to do, in the light of what it is doing and in the light of possible developments in the future. Then let there come out, perhaps (as I should hope) that the emphasis should be on the development of communications in special cases where Governments are unable to foster it; the development of agriculture by the provision of irrigation or water, as was done by the Sudan Cotton Plantation Syndicate and the Sudan Government jointly; and the provision of certain necessary, what I might call quasi public utility institutions, such as the hotel at Belise. I have no objection to that. I think it is necessary to have the hotel as part of the development of Belise—it is what I might call a quasi public utility development. It must be clear that those are projects on which a small rate of return ought to be expected; and they could be, and I think, perhaps, ought to be, guaranteed by local authorities and by local enterprises. That return will be the remuneration of the capital of the Colonial Development Corporation—the money which they have borrowed from the Treasury. Then let us by all means start with a clean sheet,
  1220
  having written off as irrecoverable the losses which have been incurred, and not keep them as a purely fictitious, evaporated asset hung round the neck of the unfortunate Lord Reith.
  6.16 p.m.
  LORD MILVERTON: My Lords, if I may take up the debate where the noble Lord, Lord Rennell, has left it, on the subject of an inquiry, not into the executive activities of the Corporation, as he has said, but into the aims and objects of it, I suggest that there is nothing very fruitful in that proposal, because who would be better qualified to offer an opinion on that subject than the present board of the Corporation itself? They have considerable experience of the difficulties they have encountered under their present terms of reference; and they have given clear indications of where their difficulties have arisen owing to those terms. If they are not qualified to offer the best opinion, I really cannot visualise any body better qualified likely to be appointed. If it were to be a high-level political inquiry, one could immediately foresee that there would never be any agreement, because many noble Lords on the other side of the House obviously have fundamentally different views on what should be the aims and objects of such a Corporation. It would merely succeed in plunging the affairs once more into the political arena, which would be deplorable.
  At first sight, on reading the wording of this Motion, one might almost have thought that it was confined—as it asks a definite question—to speculation as to the views which the Government have formed on this Report. I should never have the temerity to attempt so precarious a task as the diagnosis of the Government's mind. But in the circumstances, and encouraged by the apparently quite irrelevant speeches of all noble Lords who have spoken in this debate, perhaps I may be allowed to add one more irrelevancy in putting forward the views I have formulated on this Report. However, before doing so, lest I should forget, I should like to mention one or two points to which noble Lords have referred and on which I profoundly disagree with them.
  To begin with, the noble Lord, Lord Winster, drew the analogy of the wonderfully successful Cameroons Development

  1221
  Corporation and cited it as an example to the Colonial Development Corporation. I suggest that there is no analogy whatever between the two organisations. I happen to have been responsible for the foundation of the Cameroons Development Corporation, so perhaps I can speak with a certain amount of authority. Where is the analogy? The Cameroons Development Corporation were handled over ex-enemy assets, planted by the Germans—banana plantations, rubber, oil palm, and so forth—and the job they had to do was a totally different one, their chief initial difficulty being the obtaining of working capital. They had to face none of the difficulties of deciding whether it was suitable to grow bananas, or whatever it might be: they were already there, and had been proved successful. There is, if I may say so to the noble Lord, no real analogy whatever in the problems which face this Corporation.
  As it has been mentioned, I should like, in passing, to refer to what I regard as the deplorable references made to the fact that Professor Lewis left the Corporation on the expiration of his term of appointment. As an ex-member of the Corporation myself, I cannot for the life of me think why, when a member's turn of appointment expires, it should be made a subject of invidious questions as to the reason for it. No such questions were asked in the case of half a dozen other members in similar circumstances. They were content, and so was everybody else: and I consider it deplorable to select this one instance—for what purpose I do not pretend to know.
  Another matter on which I profoundly disagree with the noble Lord, Lord Balfour, is his criticism of the style of this Report. To me it is extremely refreshing for once to get away from the diffuse "Whitehall-ese" in which such Reports are normally written. Again, I think it would be deplorable to stand by this craving for uniformity which now seems to attack all sides of this House, and try to stamp out any symptom of individuality which we may find in such Reports. It is also refreshing that the Report has been written by the Chairman himself and has not been left to the staff in his office.
  LORD BALFOUR OF INCHRYE: All the more deplorable.
  LORD MILVERTON: I have some remarks to make on that, but they will come in the course of giving my views about the emphasis which has been laid on the profit motive. I think that generalities about whether profit motives are good or bad are quite irrelevant. The fact is that the Corporation is working under certain terms of reference. They may be good or they may be bad, but it is no use flinging at the head of the Corporation beautiful thoughts about how it ought to work, if those thoughts involve breaking some of the terms under which the Corporation has been authorised to work.
  I suggest that a proper appreciation of this Report needs a reference to its background of the past. In the early days, five or six years ago, we all talked a great deal of any nonsense about Colonial development. We all talked nobly and generously about the great field of endeavour that lay waiting for exploitation. Everything we willed then seemed destined to be ours. To-day, we are sadder and, I hope, wiser men. That vast field of endeavour waiting for exploitation is just a mirage. Experience has taught us that it is much narrower and smaller than ever one would have dreamed from the way in which we all spoke. We have learned in an expensive school, and the history of the Overseas Food Corporation, as well as that of some of the worst disasters of the Colonial Development Corporation, has shown the danger of assuming that money can do anything. Economic and sociological facts, climatic possibilities, communications, markets and businesslike management, political stability, and a score of other factors have to be studied and co-ordinated into a picture which shows whether any given scheme is a reasonable risk or not.
  Now to come to the Corporation's Report for 1952, which is the subject of our debate. I regard this as the lineal descendant of the two Reports which preceded it, and. as I see it, the present Chairman took over an organisation which was hopelessly top-heavy, in which the Chairman was also chief executive. Control of a wide range of activities, agricultural, mineral, commercial and social, including also forestry, fishing and public works, scattered over the whole wide world, was

  1223
  heavily centralised in London. I do not want to stray into any detail, because it would take far too long. I am merely trying to sketch in a bold way the overall picture. As I read it, the Report before us reveals the steady development of what I may call a two-pronged policy, internal and external. May I take the internal aspect first? If I may say so with respect, many noble Lords who comment on this and suggest what should be done, do not seem to have analysed what is the actual present policy of the board, and much of the advice being tendered to the board is what they are already struggling, in the midst of a prevailing ignorance, to do. The Chairman and his board have been steadily cutting down inflated headquarters staff and have been decentralising authority.
  Your Lordships will remember that the basic principles of the Tennessee Valley Authority, and the principle which contributed most to its great success, was just this—the devolution of executive authority to the lowest possible levels, while retaining on top a broad overall control of policy. The present Board is paying something more than mere lip service to the idea of partnership with Colonial Governments, with statutory bodies and with private enterprise, and, at the same time, is building an efficient executive machine which can function without submerging the Chairman and his board in a mass of detail and, incidentally, without the Chairman's ceaseless personal attention. It is surely an entirely wrong conception, though a popular one in certain quarters, that the Chairman must have his hand on every lever and, as it were, be on duty for twenty-four hours a day.
  After all, indispensability in this sense is not efficiency. If I may draw an analogy from my own experience, even in the confines of one Colony a Governor who concentrated all control in his own hands would be a disaster—and often has been in our Colonial history while one who organised the machine of government so as to give the utmost possible authority to others, not only obtained better results and wider popular understanding and support but also left himself free to travel, to think and to acquire those outside contacts which are so necessary to efficiency in any walk of life. Criticisms of the
  1224
  permission given to the present Chairman to undertake other work, in addition to his Chairmanship, are, I suggest, based on nothing more than a complete misapprehension and misunderstanding of the proper functions of the chairman of an organisation in which it is not desirable that he should also be the chief executive. I do not think it is a matter of conscience or anything of the sort; I think it is a matter of administrative practice—and may I add that it is a matter of very common administrative practice.
  May I now give a brief sketch of the external aspects of the board's policy as I understand it to be from a perusal of this Report and its predecessors. It seems to me to have four points. First, disengagement from ventures with no commercial prospects—for instance, the abandonment of the British Honduras fruit scheme and the West African Fisheries; also the handing over to the Government of certain schemes as development schemes, for instance, the Gambia Rice Farm. Then, secondly, a reasonable investment in loans, under guarantee, to give a steady net income towards covering overheads, investigations and abortive pilot schemes. Thirdly, in regard to existing projects, the board aims at finding commercial associates for management and also for financial participation. Fourthly, in regard to new projects the board seems to me to be aiming at virtual restriction to those offering the possibility of association with private enterprise partners and/or with Government or statutory bodies like the development boards.
  It is clear that in working with local development boards or Governments, the Corporation can provide certain marked advantages—finance, access to London contacts, private enterprise, experience and knowledge. Moreover (and this is quite an important factor, too), it can be a mediating force, on the one hand allaying suspicion of business exploitation, and, on the other, reassuring commercial interests and safeguarding them from bureaucratic gaucherie. One gathers that the Corporation's object in such partnership is not majority control but to achieve a balance. For instance, a participation of Corporation 40 per cent., commercial enterprise 40 per cent., and Colonial Government or statutory body 20 per cent., would ensure both due

  1225
  consideration of Colonial development needs and also unimpeded employment of proper technical procedures. The board seems to have a natural preference for association with local development boards wherever they exist, as in Uganda.
  Lastly, one cannot but sympathise with the board's desire to be allowed to write off the burden of "dead" capital, and also to be allowed to segregate, and have special accounting for, projects that are developmentally valuable but unlikely to he profitable. As our experience has grown, one has been tempted by some of the initial disasters to say that the Corporation should be restricted, either to the provision of finance or to operation through established local development hoards and such bodies; but probably, none the less, it would be better to try to maintain, within approved policy limits, the maximum flexibility of operation. In passing, I would say that there is a case to be made, in my opinion, for the Corporation operating in that no-man's-land which lies between the profitable private enterprise and the Colonial Development and Welfare sphere. There are schemes which could be of great development value, which would not necessarily end in a loss but which would certainly not produce the profit which would be necessary under a strict interpretation of the terms of reference of the Corporation.
  My Lords, I have tried to give the picture as I see it. Personally, I am entirely in agreement with the policy of the board as exemplified in this Report. The gloriously amateur days of three or four years ago have gone for ever. The glad, confident morning of its birth has faded into the light of common day. As the Secretary of State for the Colonies has indicated, it is rendering no service, either to this country or to the Colonies, to initiate and run at a loss schemes which never had in them the ingredients of success. There is no intrinsic merit in commercial failures or in managerial inadequacy; and the Colonial Development Corporation would surely be failing in its duty if it regarded sterile expenditure of the overtaxed British taxpayer's money as a meritorious performance. I hope that the noble Earl, when he comes to reply, will he able to say that Her Majesty's Government endorse the policy of the Corporation, as exemplified in this
  1226
  Report, and also its requests for certain relaxations of its terms of reference, and that, in fact, they will give their blessing to the Report as it stands.
  6.36 p.m.
  THE EARL OF MUNSTER: My Lords, I feel the whole House will agree that we have had a very interesting and illuminating discussion this afternoon on the whole field of the Colonial Development Corporation. I feel sure, at the same time, that the House will have been glad to notice that the noble Lord, Lord Winster, who moved this Motion to-day, seems fully to have recovered his vocal chords. I fear that in replying to this debate I shall have to weary the House for some time in answering the many important questions which have been raised. I apologise for so doing, more especially as the House has heard sufficient of me in the course of this week; but if I now inflict a long speech upon the House, there is ample opportunity during the long Recess for noble Lords to recuperate.
  The House will recall that in May of last year we had an important debate on this Corporation; and in replying for Her Majesty's Government I made a somewhat lengthy statement on our policy towards this body. Whilst I have no desire to repeat that statement, I would remind the House of the policy which I then announced would be followed in the future. I do so briefly for this reason: that it has much bearing on what we have been discussing this afternoon. Subject to this the primary duty and principal purpose of the Corporation was to remain unchanged. Her Majesty's Government have never felt that it is their responsibility to supervise the detailed carrying out of each individual scheme undertaken by the Corporation, or at the same time to usurp its function of judging the commercial soundness of any scheme. However, as I said then and as I repeat to-day with equal emphasis, as so much of the taxpayer's money must inevitably be involved in every single one of these schemes, we feel that we must have a say in the choice of schemes and the final decision whether any particular one should he pursued or not.
  Of course, it is the duty of the Government to facilitate in every possible way the work which the Corporation is undertaking; and my right honourable friend is

  1227
  of the same opinion that the two major conditions which he laid down last year must still be fulfilled before he can sanction any new project. The first of these was that he would require enough information to enable him to judge whether a prima facie case had been made out; and secondly, as I think was mentioned by the noble Lord, Lord Rennell, that someone else besides the Corporation should normally share in the risk, whether it was a local or United Kingdom private enterprise or a Colonial Government. Indeed, the Corporation has itself been working on that basis for some time, and mention is made of the fact in paragraph 4 of the Annual Report. Now I should like to say a word about the Annual Report for 1952 with which noble Lords are fully acquainted, and which we have been discussing to-day. Complaint has been made that the Report is too brief; but that has nothing whatever to do with my right honourable friend the Secretary of State. The only responsibility that he has in any way for the Report is to lay it before Parliament and carry out a particular section of the Act.
  The House will have observed that nine schemes have been started and eight have been abandoned during last year, that there are now fifty-seven projects operating and a further number, which figure I cannot give, are still in the investigation stage. Unhappily, as the noble Lord, Lord Winster, remarked, the Corporation are still showing substantial losses even though it was hoped that the year 1951 constituted the peak of the loss. The greater part of that loss which has been sustained, however, can, I think, be attributed to projects which were begun in the earlier days of the Corporation. It is quite true that the number of new schemes started last year has not been large, but the Corporation has during the past eighteen months concerned itself with overhauling its organisation and steadily weeding out those bad schemes. In fact, during this pause in time, the Corporation has been taking stock of its position and endeavouring to put its house in order. At the same time, it is in the Corporation's own interest, and that of the Colonies as well, to keep all speculative projects down to a minimum and to proceed with any new schemes with caution.
  1228
  I should like now to say a word about the functions of the Colonial Development Corporation and the Colonial Development and Welfare Fund. Mention was made of it to-day in the speech made by my noble friend, Lord Milverton. I do so because I am not certain that the distinction between these two is always fully understood. There is at times much confusion of thought, and it might therefore be useful if I recall the different purposes of the Corporation and the funds provided for the working of Colonial Development and Welfare. The Corporation is, of course, only one of the agencies of Colonial Development. It was set up to deal with commercial type projects which I need not go into now, but which are in fact all enumerated in the first section of the 1948 Act. On the other hand, the Colonial Development and Welfare Fund can provide funds to assist Colonial development in drawing up long-term plans precisely because they are, as I think was pointed out by the noble Earl, Lord Listowel, commercially unremunerative and are usually regarded as a Government responsibility.
  The noble Lord, Lord Winster, and the noble Lord, Lord Milverton, both mentioned the fact that suggestions had been heard that the Colonial Development Corporation should be wound up and liquidated. Frankly, I admit that this is the first time that I have heard this rumour, and indeed it is without foundation. Although both noble Lords were not in favour of the idea of liquidating the Corporation, the noble Lord, Lord Winster, nevertheless suggested that a Committee should be set up to inquire into or to review all the workings of the Corporation. I could not support that proposition. In the first place, if it was intended to close down the Corporation, the responsibility for that action must rest on Her Majesty's Government alone, who always have obtained, and always can obtain, from the Corporation all the information which it is necessary for them to have in order to reach a major decision of that character. In my judgment, there is no necessity for a committee of inquiry into the workings of the Corporation.
  My right honourable friend, as the House will remember, has agreed with the Corporation upon certain conditions which it must fulfil, and he himself as

  1229
  Colonial Secretary is responsible to Parliament for the broad general principles of policy which the Corporation follow. If this was a departmental committee it could, I venture to think, add nothing at all to what is already known; and if it was an outside committee I venture to think it could find out nothing further; and there I would agree with my noble friend the Lord Milverton. There s a close relationship between the Colonial Office and the Corporation, and it is working to mutual satisfaction. But any committee which was set up to inquire into the functions of the Corporation could do no more than report that it was fulfilling the obligations which are written down quite clearly in the first section of the Act.
  I pass front that to deal with another point which was made by the noble Lord, Lord Winster—namely, the regrets which he felt that there were no directors with Colonial experience on the board of directors. In point of fact since the Corporation came into being there have been on the board five individuals with a considerable knowledge of Colonial territories; and, of course, Sir John Hall is still a member of the board. The noble Lord, Lord Winster, attributed some, but not all, of the Corporation's misfortunes to the fact that there has been no expert in tropical agriculture as a member of the board since, I think I am correct in saying, the death of the late Sir Frank Stockdale. It is quite true that to-day there is no member of the board with the necessary agricultural qualifications. But it could be argued—I do not want to rouse the noble Lord now—that the appropriate place for the expert is on the staff and not in fact upon the board.
  The House will be interested to know that the Corporation has recently set up a panel of scientific advisers, almost all of them experts in various branches of agriculture and science, for the special purpose of advising the Corporation upon how it can most effectively use scientific knowledge and experience in application to agricultural projects overseas. I understand from the noble Lord the Chairman of the Corporation that the Corporation consults this panel on the planning and inauguration of new agricultural projects, on problems which arise from existing projects and on the selection of personnel for investigations and for
  1230
  experimental work on projects. My right honourable friend the Secretary of State has told the noble Lord the Chairman of the Corporation that he regards this as an excellent innovation and I think it does meet in substance, though perhaps by a somewhat different method, the point which the noble Lord, Lord Winster, has raised.
  The noble Lord, Lord Winster, also asked me about and drew attention to Section 7 of the 1948 Act, which gives power to the Corporation to set up local committees in any of the territories in which it is likely to function or operate. The section states that the committee will have the duty of keeping the Corporation informed as to the circumstances and requirements of the inhabitants. Since that Act was passed, regional commissioners have come into being, and it is their duty and responsibility to keep the Corporation fully informed of what is occurring in their particular territories. Naturally, I take it (and I am sure that I am correct) that the regional controllers are in almost continuous touch with the local Governments in their regions, and they are fully acquainted with the views which those Governments would express. If the regional commissioners had not been appointed, there might have been considerable merit in having these particular committees functioning. I should mention, in passing, that the section in the Act, in effect, leaves the establishment and the composition of these committees entirely at the discretion of the Corporation. So, if they have not been appointed the Corporation is not in any way breaking any section in an Act of Parliament.
  My Lords, I should now like to answer some other detailed questions which were put to me during the course of this debate. As regards the resignation of Professor Lewis, I regret, with my noble friend Lord Milverton behind me, that this matter is constantly coming up as if there were something sinister or shady behind it. Professor Lewis was neither dismissed nor did he resign; he accepted appointment for two years, and at the end of two years his appointment expired. That is all I can say on that point. I am aware of no question which caused him to be dismissed or to resign.
  I should like now to deal with further important points which came up during this discussion, but I would say in the

  1231
  first place that every one of the schemes which the noble Lord, Lord Winster, referred to, and which have now been abandoned, were in fact founded and started in the days of the late Government. How right Lord Listowel was when he said in the course of his remarks that we all know our virtues, but that we are apt to overlook our shortcomings! The noble Lord, Lord Winster will forgive me if I do not go into all the questions he raised. In point of fact, the aeroplane in British Honduras was purchased for the main purpose of spraying from the air. Colonial Development Corporation employees are, of course, permitted, and I should imagine encouraged, to become members of registered trade unions where they exist. But as the noble Lord, Lord Winster, knows full well, there are not many registered trade unions functioning in the Colonial territories on the basis that we understand. As regards labour welfare, the Corporation is subject, of course to the local labour laws, and the Corporation co-operates, as it must do, with the local labour departments.
  Finally, there is the question of machinery being imported into this country from one project in a Colonial territory, to be sent out again into another. There the position is slightly complicated, but I think I can cover it in these terms: that if the machinery is of British origin no Customs fees or dues are paid. On the other hand, if the machinery has been manufactured in America, and has been supplied to a project direct from the manufacturers in the States, then the Corporation deposits with the Customs a sum based upon the value of the machinery when it is brought into the United Kingdom from the Colony, and that deposit is refunded when the machinery is exported to a fresh field of operations.
  Many noble Lords asked me questions concerning the writing off of capital losses on those projects which have now been abandoned. I told the House last year that we were prepared to relieve the Corporation of liability from interest in respect of capital advances which could properly be regarded as dead. Since then a further undertaking has been given to the Corporation that Her Majesty's Government intend to introduce legislation to permit the writing off of capital losses on schemes which can properly be
  1232
  deemed to have been abandoned. We hope that this legislation will be introduced early next Session.
  Then, my Lords, there was the question raised—I think by the noble Earl, Lord Listowel and by the noble Lord, Lord Winster—about the noble Lord who is Chairman of the Corporation. I feel that I cannot do better than to read to the House the reply which was given in another place by my right honourable friend on the question of Lord Reith and outside directorships. He said this(OFFICIAL REPORT, Commons, Vol. 516, Col. 209):
  "Now that Lord Reith has nearly completed his reorganisation of the Corporation both at headquarters and in the regions, I saw value in a suggestion which he made some time ago, that the Chairman, as in many large commercial organisations, should concentrate upon major questions of policy, leaving the day-to-day administration to be carried out by the strengthened executive. I therefore felt able to agree that the post of Chairman need no longer exclude the acceptance of two or three private directorships. I welcome this move, since it will keep the Chairman in closer touch with the business world outside the Corporation. The reorganisation of the executive will be completed in the autumn and thereafter Lord Reith's salary as Chairman will be £3,500 per annum instead of £5,000. He has assured me that he will still regard the Corporation as having the first claim upon his time and energy."
  In reply to a supplementary question, my right honourable friend said that Lord Reith would continue to give the whole of his time to the affairs of the Colonial Development Corporation, subject to attending one or two board meetings of those companies a month. The House will see at once that, although my noble friend is taking on additional directorships, he is at the same time having a very substantial reduction in his salary.
  Perhaps I may turn now to a criticism which has been made to-day, I think I am correct in saying, by the noble Earl opposite, that the Corporation has not been fulfilling the duties which have been laid upon it by the Act, but on the contrary has invaded the field which should be covered by private enterprise. I can only call to my aid the Act of Parliament which charges the Corporation
  "with the duty of securing the investigation, formulation and carrying out of projects for developing resources of Colonial territories with a view to the expansion of production of foodstuffs and raw materials or for other agricultural, industrial or trade development therein."

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  Surely the development of rubber in Malaya, or sugar in the West Indies, or copper in Northern Rhodesia, is a development of the resources of those territories, and indeed an expansion of the production of their foodstuffs and raw materials. It has been carried out by private enterprise, but is, nevertheless, part of the functions of the Corporation under the Act.
  My Lords, it seems to me that the difference between private enterprise and the work of the Corporation is not so much in the field of their activities as in the instrument used for developing that field. I am supported in this view by the observations which were made by a former Minister of Food, Mr. Strachey, who, when moving the Second Reading of this particular Bill in another place, admitted the part played by private enterprise in the past—and, indeed, particularly mentioned Malayan tin and rubber, and Rhodesian copper. He then went on to say (OFFICIAL REPORT, Commons, Vol. 443, Col. 2016)—and this is what I would ask the noble Earl to bear in mind:
  "This old type of development….has become decreasingly desirable and even decreasingly possible in the case….of many areas. The whole tenor of world Influence to-day in the areas themselves, and generally, is making it less and less possible to rely exclusively on that form of development."
  The right honourable gentleman went on:
  "I am not saying, of course, for one moment that there is no place in the future for private enterprise and profit-seeking in Colonial development. On the contrary, the organisations, the instruments, which the House is being asked to set up this afternoon, will undoubtedly use private firms in many cases in every kind of partnership and contractual relation with themselves."
  I do not, of course, support the views of the right honourable gentleman about the obsolescence of private enterprise, but the important point is that the late Government thought of this as an alternative instrument to private enterprise in developing exactly that field of development which had previously been the exclusive preserve of private enterprise. I really cannot understand why the Corporation can be said to be neglecting its duties. It seems tome, on the contrary, that it is doing precisely what it was originally set up to do; and it is doing it precisely in the way in which the noble Lord's own Party contemplated
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  it should—namely, in partnership with private firms. In view of the criticism that has fallen from noble Lords opposite to-day, I am inclined to ask whether the theory which they support is that good schemes should always be for the field of private enterprise and that bad schemes should always be for the field of the Colonial Development Corporation. That certainly is not what the Corporation was founded to do.
  There is one other matter to which I must refer—and I apologise for taking so long. Mention was made this afternoon of the Corporation's need to be able to spend money on investigations and experiments which were not likely to be of a remunerative nature. I would refer at this stage to the importance of pilot schemes. These two points are often linked together, although in fact they raise a very different set of considerations. I suppose that "pilot scheme" has become a fashionable term, and there is a tendency to think that any, and every, project must be preceded by a pilot scheme. You could not, however, carry out a pilot scheme to see whether it was practicable to dam a river and install a hydro-electric plant. Where pilot schemes are appropriate we should entirely support the view that they should be carried out.
  I wonder what really is meant by some noble Lords who use the term "pilot scheme," or other words to convey the same thing. Many people seem to think that it is an investigation which may, or might, throw up some useful result. But, of course, it is really nothing of the sort. It is a carefully controlled small-scale experiment, designed entirely to establish whether any particular scheme which looks good and workable on paper will work out in practice. For example, you may have a scheme which looks well and would certainly be an economic proposition but which depends on the ability to grow a certain kind of crop in a certain area on a certain basis of cost. It is wise to do it on the smallest scale, provided, of course, that it is big enough to establish evidence. The only way to be certain, naturally, is to try it out. But a general experiment into the agricultural or industrial potential of any area without any particular scheme in mind is obviously not a pilot scheme. Such expenditure may be very necessary, but it

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  does not seem to me to fall within the scope of the Corporation. I should regard this as falling far more within the ordinary responsibility of the Colonial Government, to be financed from their own resources or from allocations which may be made to them under the Colonial Development and Welfare Act.
  I do not deny that there may be cases where the finance of the Corporation and the finance of the local Government may be, and probably are, complementary to one another, and in that connection my right honourable friend, shortly after his appointment, circulated Colonial Governments, and suggested that they should consider the possibility of making a special effort to finance investigations which held the prospect of substantial long-term benefit. He asked all Colonial Governments to consider very closely, in consultation with the Corporation and local representatives, the possibilities of financing investigations which the Corporation itself was unable to undertake without assistance. That, I suggest, is the more appropriate way of using the taxpayers' money than the suggestion which I think was made by the noble Lord, Lord Winster, and indeed was certainly hinted at in the Report of the Corporation itself—namely, that it should have funds set aside for investigations which would be accounted for outside the normal accounts of the Corporation which, as the noble Lord knows, is required to "break even," taking one year with another.
  A number of other questions were addressed to me, but I hope that I have dealt with the principal ones, except, perhaps, one which was asked by the noble Lord, Lord Rennell, who quoted investigation costs, and asked whether they had been written off. I understand that the answer is in the affirmative and that they have been. If I have not answered all the detailed points, I trust that the House will forgive me, for I have kept noble Lords much too long, though the matter is of some importance. We are all directing our thoughts in the same direction, and we hope the day may not be far distant when the Corporation will find a better fortune than that which seems to confront it at present.
  7.7 p.m.
  LORD WINSTER: My Lords, I would make only a few brief remarks at the present hour. I was very struck by what was said by the noble Earl, Lord Listowel, about the possibility of a review of financial policy, and indeed of the very terms of the Act, becoming necessary if things do not go as we all hope. That was what I had in mind when I was speaking on the subject of an inquiry, and I am entirely at one with him: if there is an inquiry it should be along those lines. I am also in agreement with what he said about practical scientific research, and it seemed to me that, in Lord Munster's remarks about panels of experts which the Corporation ought now to set up, there was some measure of acceptance of the view put forward by one noble Lord today.
  There are two brief comments that I should like to make about Lord Milverton's remarks. I notice, from sad personal experience, that he usually knows better than anyone else, but he does not always listen to what other people say. I drew no analogy between the work of the Corporation and the work of the Cameroons Corporation. I was drawing a comparison between private and public enterprise, and I said that if State enterprise has its failures, it also has its successes; and against the failure of the groundnuts, I quoted the great success of the Cameroons Corporation. I was drawing no analogy between the work of the two Corporations. As regards the subject of an inquiry, and what the noble Lord, Lord Milverton, said about the board of the Corporation being the best people to conduct the inquiry, I think that would be a very strange principle to introduce into our legal system. But, in any case, the board, being bound by the Act, cannot express their own opinion. They are really the servants of the Secretary of State, so I should think that they would be most inappropriate people to conduct—in fact they would not be capable of conducting—an inquiry into their own conduct.
  I would not dream of attempting to reply in detail to everything which the noble Earl, Lord Munster, has said in reply to my Motion. I should like, however, to express the very great pleasure with which I listened to what he had to say about the writing

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  off of the losses of the Corporation. I think that is a great step forward. If this debate has served no other purpose, I think that in eliciting that piece of information from the noble Earl it has been well justified. In conclusion, I feel it is my duty to thank the noble Earl most sincerely for what, I think, is one of the fullest and most informative replies I have ever listened to from a Minister in this House. He gave us a wealth of information and endeavoured to reply in detail to the most important of the questions put to him. I should like also to thank noble Lords who have taken part in the debate for their assistance in making it, as I feel the House will agree, a useful one. If the noble Lord, Lord Reith, has had to listen perhaps to criticisms and admonitions this afternoon, I think he will be repaid by also having listened to expressions from every part of the House of determination to support the work of the Corporation and to do everything possible to bring it into a safe haven. And now it only remains for me to beg leave to withdraw my Motion.
  Motion for Papers, by leave, withdrawn.

  BUSINESS OF THE HOUSE
  7.11 p.m.
  EARL FORTESCUE: My Lords, I should like to remind your Lordships that after we have met to-morrow at half-past eleven for the Royal Commission which is to take place at 11.45 a.m. we shall adjourn until Tuesday, October 20. It is expected that Parliament will be prorogued during the Parliamentary
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  week beginning Monday, October 26, and that the new Session will be opened on Tuesday, November 3. A Sessional Order makes it possible to, recall the House earlier, if that should be necessary in the public interest.

  LONDON COUNTY COUNCIL (GENERAL POWERS) BILL
  Returned from the Commons with the Amendments agreed to.
  PART-TIME CLERKS TO JUSTICES
  PART-TIME CLERKS TO JUSTICES