Sitting of 19 June 1958

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  ESSEX COUNTY COUNCIL BILL
  Lords Amendments considered and agreed to.
  MANCHESTER CORPORATION BILL (By Order)
  Consideration, as amended, deferred till Thursday, 3rd July.
  SOUTH LANCASHIRE TRANSPORT BILL [Lords] (By Order)
  Read a Second time and committed.
  BRADFORD CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL

    MAIDSTONE CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL
    PIER AND HARBOUR PROVISIONAL ORDER (GREAT YARMOUTH) BILL
    PIER AND HARBOUR PROVISIONAL ORDER (KING'S LYNN CONSERVANCY) BILL
    PIER AND HARBOUR PROVISIONAL ORDER (SHEERNESS) BILL
    Read the Third time and passed.

  BRITISH TRANSPORT COMMISSION ORDER CONFIRMATION (No. 2)
  Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to the British Transport Commission, presented by Mr. John Maclay; and ordered (under Section 7 of the Act) to be considered upon Wednesday and to be printed. [Bill 137.]
ORAL ANSWERS TO QUESTIONS
  EDUCATION

    Mental Hospitals
    Mr. Mossasked the Minister of Education (1) how many local education authorities provide evening classes in mental deficiency hospitals, and in what subjects; and how far it is his policy to encourage such provision;
    (2) whether he will seek to extend his powers to enable local education authorities to provide evening classes in mental hospitals for the benefit of patients undergoing mental treatment so as to include all suitable patients, whether voluntary or not.
    The Parliamentary Secretary to the Ministry of Education (Sir Edward Boyle): In consultation with my right hon. and learned Friend the Minister of Health, my right hon. Friend will consider the scope of local education authorities' powers in the light of any changes in the law he may be proposing to make as a result of the recommendations in the Report of the Royal Commission on the Law Relating to Mental Illness and Mental Deficiency.
    Mr. Moss: Could the hon. Baronet tell me whether the policy of his right hon. Friend is still governed by Circular 312, dated 11th September, 1956, and called, "The Education of Patients in Hospitals"? Does he recollect paragraph 34 of that Circular? It says:
    "Local education authorities are encouraged to provide courses of educational value in hospitals to all patients who are able to profit from them."
    I should like to know whether that still applies.
    Sir E. Boyle: Perhaps the hon. Gentleman could put down a Question about that Circular or write to me. I know his concern with these matters. I know these classes are of value to all those who benefit from them, but this is a question which my right hon. Friend will be considering.

    State Scholarship Grants
    Dr. Kingasked the Minister of Education whether, in view of the fact that the new State scholarship rates will,

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    under the present arrangements, still be in force in 1961, he will agree to review his scales of means test and awards every two years instead of every three years.
    Sir E. Boyle: No, Sir.
    Dr. King: While the whole House will congratulate the Parliamentary Secretary's right hon. Friend on the many reforms he has introduced in his new university scale proposals and will support him in his efforts through Circular 339 to get the local authorities to carry them out, is he aware that there are still some defects and that university students become very anxious in the later part of the triennial period when the cost of living is rising? Will not he take steps to make the reviews more frequent?
    Sir E. Boyle: I am sure my right hon Friend will be grateful for the first part of that supplementary question. He sees no reason now to think the rates of grant for 1958 will not be sufficient by 1961, but, of course, it would always be possible to reconsider the intervals between reviews if special circumstances, such as an increase in costs, made this desirable.

    Building Programme, Newcastle-under-Lyme
    Mr. Swinglerasked the Minister of Education what projects were submitted to him by the Education Committee of Newcastle-under-Lyme for the 1959–60 building programme; and what projects he will approve.
    Sir E. Boyle: My right hon. Friend has approved the start in 1959–60 of one of the four projects submitted and hopes that work may begin on two more in the following year.
    Mr. Swingler: Is the hon. Gentleman aware that the Education Committee of Newcastle-under-Lyme regards this programme as seriously inadequate? Would he kindly reconsider the situation? Is he aware that there is exceptional overcrowding in some of the schools on the new housing estates in Newcastle-under-Lyme and that the position is very much worse than it is in some other parts of the country? Will he consider that in the light of the fact that the programme has been cut for many years?
    Sir E. Boyle: I know the problems in the hon. Member's area, and he has
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    raised them on a number of occasions, but I cannot hold out any hope that this can be reviewed. My right hon. Friend's policy is, in the first place, to include in building programmes projects for the increased number of pupils who will be at school in the early 1960s; secondly for the concentration of pupils arising from developments in new housing estates; and lastly, to meet facilities for the teaching of mathematics and science in schools with large numbers of children over 15 years of age. We have to concentrate on those priorities now.

    Mathematics
    Mr. M. Stewartasked the Minister of Education what consideration he has given to the report, a copy of which has been sent to him by the hon. Member for Fulham, on the mathematical ability of certain students at a teachers' training college; and whether he will make a statement.
    Sir E. Boyle: This useful report underlines in a striking way the need for better work in mathematics in both training colleges and schools.
    Mr. Stewart: Was the right hon. Gentleman able to form any opinion on whether the results shown in this report were exceptionally below average, or are they likely to be typical? If they are typical, is this not rather serious?
    Sir E. Boyle: The position of mathematics teaching in the country is definitely serious at present. It is fair to say that the shortage of first-class equipped mathematics teachers is one of the most striking problems of our schools at the moment. As the hon. Member probably knows, training colleges have been asked to give priority to the admission of candidates able and willing to make mathematics their main subject, and the importance of some work in mathematics for pretty well all students has been emphasised recently in pamphlets and by H.M. Inspectors and the National Advisory Council. I assure the hon. Member that we are taking this matter seriously.

    Secondary Modern Schools (Teachers)
    Mr. Sorensenasked the Minister of Education to what extent the number of young men and women training as

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    teachers for secondary modern schools is now declining; and to what extent the present intake falls short of the required desirable number.
    Sir E. Boyle: The number of students training for work in secondary schools has been increasing for some years and will, I expect, increase further, partly as a result of the measures my right hon. Friend has recently announced. I cannot state a precise aim, as the number of new recruits needed will vary from time to time.
    Mr. Sorensen: Are the hon. Gentleman and his colleagues quite satisfied that the intake at present will meet future requirements?
    Sir E. Boyle: As my right hon. Friend announced only recently, he will consider what further expansion is likely to be needed when he has had the advice of the National Advisory Council on the training and supply of teachers, but we are keeping a very open mind indeed on this subject and we recognise its urgency.

    Grammar Schools (Early Leavers)
    Mr. Sorensenasked the Minister of Education the percentage of students at grammar schools who fail to complete their full course; and to what extent this has increased in recent years.
    Sir E. Boyle: There has been a marked decline in recent years in the proportion of pupils leaving grammar schools before the age of 16. Details are contained in the answer given to the hon. Member for Morpeth (Mr. Owen) on 21st April.
    Mr. Sorensen: Will the hon. Gentleman say what is to be done about this matter? Has there been an exhaustive inquiry into the various causes?
    Sir E. Boyle: The hon. Member ought to recall the tendency for more and more pupils to stay at school till the age of 17 and 18. My right hon. Friend welcomes this change. The grammar schools today are increasingly recognising their responsibilities in the age in which we live, and the general position of our grammar schools today is extremely encouraging over the country as a whole.

    Classes (Size)
    Mr. Swinglerasked the Minister of Education what estimate he makes, in
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    planning the recruitment of teachers and the size of the school building programme, of the period in which he aims to reduce the sizes of primary and secondary classes to maxima of 40 and 30, respectively.
    Sir E. Boyle: My right hon. Friend cannot add anything to the Answer he gave the hon. Member a week ago.
    Mr. Swingler: Surely the Minister must take into account some estimate when he makes his plans for the number of teachers to be trained and the size of the school building programme. Does he not take into account any idea at all of the period when he is aiming to reduce the size of classes? Otherwise, how does he calculate the number of teachers required year by year?
    Sir E. Boyle: One cannot plan the supply of teachers as though we were living in wartime and dealing with scarce raw materials. If we are to achieve, as we hope we shall, classes no greater than 40 in primary schools and no greater than 30 in secondary schools by the second half of the next decade—[HON. MEMBERS: "Oh."]—even then we shall still need an increase in the teaching force of between 25 per cent. and 30 per cent. If we are to achieve classes not greater than 30, the all-round increase needed would be 40 per cent. It behoves all hon. Members on the other side of the House to be realistic about these figures and not to give unwise promises.
    Mr. Stewart: The calculation of a possible date was made a little while ago by the National Advisory Council. Since then, the Minister has taken certain steps about the supply of teachers. Can the hon. Gentleman tell us to what extent he thinks that the steps taken will bring the target date nearer than the Advisory Council calculated?
    Sir E. Boyle: My right hon. Friend made it clear that the expansion which he has already put in hand represents only a first instalment, but I remind the hon. Member, as he knows very well, that all the time we must reconsider our calculations in the light of new figures and trends that reveal themselves. It is no good adhering to a plan which statistics make out of date. I should have thought that hon. Members opposite would have learned that from their own plans in 1947.

  TRADE AND COMMERCE

    Canada and South America (Scottish Trade)
    Mr. Hector Hughesasked the President of the Board of Trade if he will make a statement on his recent tour in Canada and South America, giving details of the opportunities for trade between those countries and Great Britain, with particular reference to Scottish products.
    The President of the Board of Trade (Sir David Eccles): I would refer the hon. and learned Member to the replies given him on 15th May and 12th June.
    Mr. Hughes: Can the right hon. Gentleman find out from Canada why some qualified British tradesmen, encouraged by Canadian Government grants and promises of employment, find themselves on arrival in Canada without adequate employment and unable to find employment and forced to return to this country? Is he aware that that has a direct bearing on the question of international trade with Canada?
    Sir D. Eccles: That is another question altogether. I was asked about trade and opportunities for Scottish products, and I am glad to tell the hon. and learned Member that the Canadians seem very willing to buy Scottish products.
    Mr. Jay: When the right hon. Gentleman was in Canada, did he discuss with the Canadian Government their proposal for raising tariffs on imports of wool cloth from Scotland and other parts of the United Kingdom?
    Sir D. Eccles: Yes, Sir. I told them that it would be very disappointing if this result came about.

    New Industries, Aberdeenshire
    Mr. Hector Hughesasked the President of the Board of Trade, in view of the recent increase in unemployment in the City and County of Aberdeen, what steps he plans to take to mitigate it by the introduction of new light industries there.
    Sir D. Eccles: In April, the Board of Trade Controller for Scotland visited Aberdeen and district and discussed the employment position fully with the local authorities and the Chairman of the
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    District Committee of the Scottish Board for Industry. We shall do what we can do to bring the facilities available in the area to the notice of firms looking for new premises.
    Mr. Hughes: But what has the right hon. Gentleman done about light industry? Does he realise that a ton of precision instruments is worth more than a ton of the products of heavy industry, and that this is of particular value to a place like Aberdeen, which is harassed by high freight rates? I have asked this question often. Will the right hon. Gentleman direct his mind to it and say what he has done about it?
    Sir D. Eccles: I do direct my mind to it, but I cannot direct any particular industry.

    Electrical Goods (Kite Mark Schemes)
    Miss Burtonasked the President of the Board of Trade if he is now in a position to make a statement concerning a Kite Mark Scheme for electrical appliances and accessories.
    Sir D. Eccles: A number of B.S.I. Kite Mark Schemes for electrical goods are in operation and others are being considered. In addition, negotiations have been taking place to set up an Approvals Board to establish tests and standards, which might use the Kite Mark.
    Miss Burton: Is the right hon. Gentleman aware that I am very glad to hear what he has said about this national Approvals Board, because the British Standards Institute was wondering what had happened to it? Can he say when it will actively move into operation?
    Sir D. Eccles: I am afraid that I cannot say, because at the moment it appears that the negotiators are going into further technical details and I cannot say when they will conclude their discussions.

    Communist Countries (Trade)
    Miss Burtonasked the President of the Board of Trade whether he is aware that industry in Coventry is losing export orders because of the list of strategic goods and materials banning supplies to Communist countries; and if he is now in a position to announce a reduction in the list.
    Sir D. Eccles: I am aware that industry would welcome orders from these countries for a number of products which are now on the embargo list, though it is easy to exaggerate the volume of increased business which may result. We are continuing to do our best to expedite the review in Paris of the strategic controls; but it must still be some little time before the review can be completed.
    Miss Burton: But is the right hon. Gentleman aware that he gave me a similar answer on 24th April? Is he aware that our factories in Coventry really are affected by this embargo? Is there no chance of expediting this review?
    Sir D. Eccles: I am hopeful that we shall have a decision next month.

    Export Credits Guarantee Department (Insurance)
    Mr. Biggs-Davisonasked the President of the Board of Trade what examination is now taking place of the duration and other terms of insurance made by the Export Credits Guarantee Department; and when the results are to be made known.
    Sir D. Eccles: The period and other terms of Export Credits Guarantee Department insurance cover are continuously under review by the Advisory Council and the Department and the results announced from time to time.

    Cotton Spinning and Doubling
    Mr. Haleasked the President of the Board of Trade (1) whether he is aware that male employment in cotton spinning and doubling had fallen by February, 1958, by 22½ per cent. since June, 1951; and what steps he proposes to take to revise this trend;
    (2) whether he is aware that female employment in cotton spinning and doubling had fallen by February, 1958, by 21 per cent. since June, 1951; and what steps he proposes to take to reverse this trend.
    Sir D. Eccles: I am aware of the decline in employment in cotton spinning and doubling in the last seven years. There has been some increase in productivity, but much of the contraction in the industry has been due to its loss of export
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    markets and to the increase in imports, particularly from Asian Commonwealth countries. We are supporting the endeavours of the industry to reach voluntary agreements for the limitation of these imports.
    Mr. Hale: Yes, Sir, but what is the use of the right hon. Gentleman talking this nonsense when we have been told in the last few years that the workers in, for example, Hong Kong are working 80 hours a week? Is not the situation such that every trade union representative claims that the actual effect of unemployment is much greater than the figures published, that this great industry has been continually declining, that the Government have no policy and have no apparent intention of having a policy, that Conservative Member after Conservative Member at the 1955 Election promised that steps would be taken and said they had a plan, and that a great industry is slowly dying without any attention whatever from Her Majesty's advisers?
    Sir D. Eccles: I think the hon. Gentleman is exaggerating. [HON. MEMBERS: "No."] For example, exports have fallen every year in the last seven years by some 400 million square yards. Those markets are lost, not for anything that the Government can do, but because the competition abroad is too fierce.
    Mr. Hale: What about the Congo Basin Treaties?
    Sir D. Eccles: If the hon. Gentleman wants us to impose limits on Commonwealth goods, which is part of the Motion on the Paper, that is a very serious request.
    [That this House is deeply concerned by the continued decline of the British cotton industry brought about by adverse world conditions and the unlimited import of textile goods, many of which are produced by sweated labour; and that this House deplores the spread of unemployment and short time working amongst Lancashire textile operatives and calls upon Her Majesty's Government, as emergency measures, to take steps to limit these imports and by legislative and other action to establish civilised standards of labour in Hong Kong.]
    Mr. Jay: As it is certainly no exaggeration to say that imports from Hong Kong have had a great deal to do with those troubles, will the right hon. Gentleman at least undertake to consult the Colonial Secretary about improving labour conditions in Hong Kong?
    Sir D. Eccles: Yes, Sir, I will, but I do not accept that labour conditions are as bad as reported in some papers.

    Butter (Imports)
    Mr. Hurdasked the President of the Board of Trade what undertakings have now been given by the Governments of Sweden, Finland and Ireland to eliminate export subsidies on butter shipped to the United Kingdom; and in which of these cases countervailing duties under the Customs Duties (Dumping and Subsidies) Act, 1957, are to be imposed.
    Sir D. Eccles: I apologise to the House for the length of the Answer.
    The Governments of Finland and Sweden have agreed to limit their exports of butter to the United Kingdom in the twelve months commencing 20th May to 75 per cent. of their average exports in 1936–38 or 1955–57, whichever is the higher.
    Her Majesty's Government have had consultations with the Government of the Irish Republic in accordance with the provisions of our Trade Agreements. The Government of the Irish Republic estimated that the export of butter to the United Kingdom will be less than it has been recently. We agreed that the two Governments will consult together if it appears likely that actual exports in the twelve months from 20th May may exceed the total exported in 1957.
    I have also considered the application by the New Zealand Government relating to Argentine butter, and decided that a case of subsidisation has been made out. As, however, the quantity of butter imports from Argentina this year is expected to be substantially less than 75 per cent. of shipments in 1955–57, there is no need at present for any further action. Should the position change the matter would have to be reconsidered.
    In these circumstances, Her Majesty's Government have decided that it is not necessary to impose countervailing duties.
    Mr. Hurd: In welcoming this move to restore a fair price for butter here, may
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    I ask my right hon. Friend whether New Zealand is now reasonably happy about the prospects, whether we have really stopped the subsidy element in these countries and, further, whether he has made clear to those concerned that, if need be, we shall have to impose countervailing duties if these present proposals do not work?
    Sir D. Eccles: I have gone a good way in many directions to meet the New Zealand case. I think that, on the whole, the New Zealand Government appreciate what we have done. None of the exporting Governments concerned in the applications appears willing to give up its subsidy practices but has preferred, as we gave that alternative, to restrict the amount of exports to us. We shall watch the butter market and, if it is necessary to take further action, we will do so.
    Mr. J. T. Price: Whilst the House will be quite pleased with the action taken by the right hon. Gentleman's Ministry in dealing with this stabilisation of butter prices and checking the unlimited import of very cheap butter at subsidised rates, why is not the Ministry also prepared to take similar action on behalf of Lancashire cotton, which it has just turned down?
    Sir D. Eccles: In the case of Lancashire cotton, we are dealing with goods coming from the Commonwealth which have a right to duty-free entry.

    Iceland
    Mr. Hector Hughesasked the President of the Board of Trade, in view of the almost complete dependence of Iceland's economy on the fishing industry and of the bearing of this dependence on Iceland's claim to extend her territorial sea and fishing limits, if he will state his plans for increasing imports from Iceland into the United Kingdom of commodities other than fish in order to assist a solution of the present international dispute as to sea territorial limits.
    Sir D. Eccles: The United Kingdom already takes about one-fifth of the exports to which the hon. and learned Member refers. I am not aware of any restrictions on the import of these goods and I should be pleased to see the trade increase.
    Mr. Hughes: But does not the right hon. Gentleman realise, as other countries—notably Russia—realise, that there must be international reciprocity in territorial limits, and that we cannot expect to limit Iceland's staple fishing industry without some compensation to her? Will the right hon. Gentleman take steps to set up an expert and authoritative commission to investigate all aspects of this complicated problem?
    Sir D. Eccles: That would not be a question for me, but these fishing rights are of great interest to the fishermen of Scotland.

    Spain (Minister's Visit)
    Mr. Stonehouseasked the President of the Board of Trade if he will make a statement on the results of his recent visit to Spain.
    Sir D. Eccles: We are Spain's best customer, and the Spaniards are only prevented from buying more British goods by their shortage of foreign exchange. I discussed the possibilities of increasing trade in both directions. In particular, I stressed the advantages for Spain in moving closer to the multilateral system of European trade, and I believe that the Spanish Government appreciated the argument.
    Mr. Stonehouse: May I ask the Minister two questions arising out of that reply? First, to what extent is it proposed to extend credits to Spain? Secondly, in his discussions with General Franco, did the Minister discuss defence questions, and why did he imply on Madrid Radio that Spain was part of the free world?
    Sir D. Eccles: Credit did not come into the discussions. There is no question of any special credit. The Export Credits Guarantee Department insurance cover has been available for Spain and will continue to be available in the same terms. I did not discuss defence. On the last question, Spain certainly is not part of the Communist world and, therefore, is part of the free world.
    Mr. Jay: Could the President of the Board of Trade tell us what he did say on Madrid Radio?
    Sir D. Eccles: I should be very pleased to send the right hon. Gentleman a copy if he wants weekend reading.
    Mr. J. Griffiths: Are we to take it that the President's conception of freedom is the régime that exists in Spain?
    Sir D. Eccles: I did not go there for a political purpose. I went there to discuss trade.

    Goatskins
    Mr. Ramsdenasked the President of the Board of Trade whether he will repeal the 10 per cent. import duty on foreign raw goatskins.
    Sir D. Eccles: An application from the British Kid Tanners' Association for the removal of this duty is at present under consideration. The preference is guaranteed to certain Commonwealth countries and Colonial producers also have a strong interest. The matter is therefore by no means a simple one.
    Mr. Ramsden: Would my right hon. Friend agree that the effect of this duty is to reduce supplies of suitable raw materials available for the British kid tanners, and whilst nobody on any side of the House wants to do away with preferences, would he try to reach a decision as quickly as possible?
    Sir D. Eccles: The object of Imperial Preference is to give some help to producers in the Commonwealth. If we were to do away with it we might get slightly more supplies, but we should injure Commonwealth supplies.
    Mr. Ramsdenasked the President of the Board of Trade what percentage of the raw goatskins exported from Commonwealth countries went to the United Kingdom and other importing countries, respectively, during the years 1929–31 and during the latest three-year period for which records are available.
    Sir D. Eccles: In 1929–31, 19 per cent. of Commonwealth countries' exports of raw goatskins went to the United Kingdom and 81 per cent. to other countries; in 1954–56, the latest three-year period for which figures are available, the percentages were 21 and 79.
    Mr. Ramsden: Is not the constant pattern in these figures, both before and after the institution of the preference, an indication that it is serving little useful purpose? Do not other countries which are interested in the import of this raw material allow it duty-free entry anyway?
    Sir D. Eccles: We could not get rid of this preference unless the Commonwealth suppliers agreed. It is because we have to consult them on a matter like this that it has taken some time to consider the application.

    South Africa and India (Trade Agreements)
    Mr. Ramsdenasked the President of the Board of Trade when the United Kingdom-South African Trade Agreement of 1932 and the United Kingdom-Indian Trade Agreement of 1939 are due for revision.
    Sir D. Eccles: Neither of these agreements is due for revision. The general practice in the case of all our trade agreements with Commonwealth countries is to revise them as and when both parties think it appropriate to do so.
    Mr. Speaker: Mr. Ramsden.
    Sir J. Duncan: On a point of order. Is it not possible for one hon. Member to ask a supplementary question?
    Mr. Speaker: I think the Answer was of a nature that precluded any possibility of a supplementary question. Mr. Ramsden.
    Sir J. Duncan: Further to that point of order. If you will allow me to put the supplementary question, Mr. Speaker, it might be possible to show that there was a possibility of a further reply.
    Mr. Speaker: I have called Question No. 24. Mr. Ramsden.

    Law of Bankruptcy and Deeds of Arrangement (Report)
    Sir F. Medlicottasked the President of the Board of Trade what action is proposed to be taken on the Report of the Committee which inquired into the Law of Bankruptcy and Deeds of Arrangement.
    Sir D. Eccles: The Committee's Report, which covers a wide and complex field of legislation, is still under consideration. I will make a statement as soon as I am in a position to do so.
    Sir F. Medlicott: Will my right hon. Friend bear in mind that some of the recommendations of this Committee repeat the recommendations made by an
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    earlier Committee as long ago as 1906, so that there has been, therefore, a certain amount of delay?

  NATIONAL FINANCE

    Income Tax and Surtax (Collection)
    Sir F. Medlicottasked the Chancellor of the Exchequer if, in view of the large amounts of Income Tax and Surtax which the revenue loses annually through the bankruptcy, insolvency or disappearance of those liable for the tax, he will examine the possibility of designing a system comparable to Pay-As-You-Earn to be applied to tax due under Schedule D Which is at present payable directly and not by deduction.
    The Paymaster-General (Mr. Reginald Maudling): I am afraid my hon. Friend's suggestion would not be practicable.
    Sir F. Medlicott: Is my right hon. Friend aware that some people, especially in the entertainment world, seem to be allowed to build up arrears of tax which would be unthinkable in the case of ordinary workers? Surely, it must be possible to devise an extension of the area over which tax is deducted at source, leaving it to the taxpayer concerned to claim his allowances, as is done by millions of other taxpayers?
    Mr. Maudling: Legislation designed to strengthen the hands of the Revenue in dealing with the liabilities of theatrical and other professional people was included in the 1956 Finance Act. It is beginning to have some effect but has not yet had time to have full effect.
    Mr. Jay: Is it really impracticable to extend P.A.Y.E. to at least some sections of the entertainment world? Will the right hon. Gentleman think again about this?
    Mr. Maudling: This has been examined several times both by the Inland Revenue and by the Royal Commission. It is impossible to have a P.A.Y.E. system when there is no regular employer to make the deduction.
    Mr. Shinwell: How does it happen that so many of these entertainers, or so-called or would-be entertainers, manage to escape Income Tax and the discovery

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    is made only after a period of years? Why should they be afforded this privilege?
    Mr. Maudling: I ask the right hon. Member to await the full effect of the Finance Act, 1956. A change of that nature, as included in the 1956 Act, is bound to take some time before it can have full effect because of the system of assessment of arrears. I think that it is already making an improvement.

    Monthly Digest of Statistics (Textiles)
    Mr. Haleasked the Chancellor of the Exchequer why he has ceased to publish in the Monthly Digest of Statistics figures showing the imports of cotton piece goods.
    Mr. Maudling: I think the hon. Member is under a misapprehension. Figures for imports of "woven cotton fabric, grey unbleached", which are the only category of cotton piece goods which have been included in the Monthly Digest of Statistics, are still given in Table 118, "Other selected imports".
    Mr. Hale: Is the right hon. Gentleman not aware that that information is wholly insufficient for any Lancashire Member, that it is now presented among other selected imports, that the amount of information given concerning the textile industry generally has been reduced and that we have to ask Questions month after month to find out about these imports, which are a serious menace to the industry?
    Mr. Maudling: The hon. Member asked why we have ceased to publish certain figures. The answer is that we have not ceased to do so.

    Wages
    Mr. Leeasked the Chancellor of the Exchequer whether he will give some further explanation to the National Joint Advisory Council of his views on recent wage advances.
    Mr. Maudling: My right hon. Friend's predecessor spoke to the N.J.A.C. last October about the Government's views on costs and prices generally and as occasion demands, my right hon. Friend will be Very ready to do the same.
    Mr. Lee: Does the right hon. Gentleman not agree that the statement by his
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    right hon. Friend the Chancellor of the Exchequer was a gross interference with the negotiating machinery of certain industries, but that he did not trouble to define the industries to which he was referring? On the National Joint Advisory Council are represented the leading people on both sides of industry, plus the nationalised industries. Unless the right hon. Gentleman defines to them his attitude to their own specific industry, they will be no wiser as a result of his intervention.
    Mr. Maudling: I answered Questions last week on the statement made by my right hon. Friend, from which it is clear that I do not agree with the supposition contained in the hon. Member's supplementary question. My right hon. Friend is ready to have discussions with the National Joint Advisory Council on a suitable occasion.
    Mr. Lee: Does the right hon. Gentleman not agree that this is a suitable occasion? Already certain allegations have been made by the Chancellor against trade union leaders and employers in undefined industries. Why can he not define to the National Joint Advisory Council the Government's precise attitude on his recent statement.
    Mr. Maudling: The hon. Member is putting a wholly unjustifiable gloss on my right hon. Friend's statement.

    Unemployment
    Mr. Leeasked the Chancellor of the Exchequer whether he is aware that between April, 1957, and April, 1958, unemployment increased by 113,000, that the number of vacancies on 7th May, 1958, was 10,000 less than in April, 1958, that the numbers working short-time in manufacturing industries on 26th April was 46,000 more than in the previous month, and that on 12th May 448,000 persons were unemployed, an increase of 4,000 over 14th April, while total vacancies are only 207,000; and what action he proposes to take to arrest this deterioration.
    Mr. Maudling: My right hon. Friend is aware of the facts mentioned by the hon. Member. He is keeping the situation under review, but has nothing to add to the statements he made in the debates on the Budget.
    Mr. Lee: As the Minister of Labour has referred this Question to the Chancellor of the Exchequer, may be take it that he agrees that these results have been brought about as a result of deliberate Government policy? That being the case, will the right hon. Gentleman define how long we must suffer this policy rather than have a change which would help to get rid of the awful figures I have quoted?
    Mr. Maudling: My right hon. Friend has made clear, and the Opposition has agreed, that the prime consideration must be the strength of sterling. Subject to that consideration, my right hon. Friend is keeping his policy, as he said, flexible. Only yesterday, we had an example of what that means.
    Mr. S. Silverman: Can the Paymaster-General confirm that these figures are the figures returned by the employment exchanges in respect of fully insured workers and that there are a large number of other workers, notably married women, especially in Lancashire, who are not included in these figures because they are not separately insured? Are there any means of finding out how many unemployed there are in this category?
    Mr. Maudling: I confirm that the figures included in the Question are correct. As to whether there should be further and better statistics, I should be grateful if the hon. Member would put a Question on the Paper.

  TANGANYIKA

    Land Tenure
    Mr. Stonehouseasked the Secretary of State for the Colonies what measures the Tanganyika Government propose in regard to land tenure in rural areas; and to what extent it is expected that these changes will improve agricultural productivity.
    The Under-Secretary of State for the Colonies (Mr. John Profumo): Proposals recently published by the Tankanyika Government envisage the conversion to individual ownership by Africans of land in rural areas at present held in customary tenure but only in areas where there is a general desire for such a change. It is hoped thereby to promote better use of land, particularly in areas of high fertility, and consequently to secure
    1302
    increased productivity. Copies of the Tanganyika Government paper are being placed in the Library of the House.
    Mr. Stonehouse: Is the Under-Secretary aware that any measures to achieve higher agricultural production will meet with general approval? In these changes, however, may we ask him to bear in mind the importance in some areas of co-operative ownership by co-operative societies and tribal clans?

  KENYA

    Detention Camps (Visits)
    Mrs. Castleasked the Secretary of State for the Colonies what facilities are given to the African Members of the Kenya Legislative Council to visit detention camps in Kenya; and under what conditions they are allowed to interview detainees.
    Mr. Profumo: All visits to detention camps in Kenya and the conditions under which detainees may be interviewed are at the discretion of the officers in charge or the Commissioner of Prisons, and no special facilities are given to Members of the Legislative Council.
    Mrs. Castle: Does the hon. Gentleman not consider this situation entirely unsatisfactory? Is it not wrong to leave to the discretion of prison officials and the Commissioner of Prisons the question whether Kenya Members of Parliament should be entitled to exercise the same sort of rights as Members of this House of Commons exercise automatically? Will not the Under-Secretary look into the matter again with a view to raising the whole status of Members of Parliament in Kenya, as well as allowing independent supervision of conditions in detention and prison camps?
    Mr. Profumo: No, Sir. The privileges of Members of the Legislative Council are matters to be determined by local ordinance under Section 46 of the Kenya Constitution Order in Council. I think we can leave Members of the Legislative Council to look after themselves.
    Mr. Callaghan: Is the Under-Secretary going back on the assurance given by his right hon. Friend the Colonial Secretary on Tuesday that he would convey to the Governor, whatever may be in the

    1303
    discretion over there, our view that an improper impression would be created unless Members of the Legislative Council were allowed the same facilities to visit these prisons in view of their isolation from civilisation?
    Mr. Profumo: Of course, I am not going back on any undertaking given by my right hon. Friend. If the hon. Member reads my right hon. Friend's Answer, he will see that my right hon. Friend added that he intended to leave this matter to the discretion of His Excellency the Governor. I will draw this to my right hon. Friend's attention, but I do not subscribe to the Socialist theory that the gentleman in Whitehall is always right.
    Mr. Paget: The question here has nothing to do with the gentleman in Whitehall, nor with whether there should be a discretion. There is a discretion but the question is how the discretion should be exercised. Surely, as a matter of practice, Members of Parliament, if they are to be treated as responsible people, ought to be able to go and see public institutions, unless some of them behave particularly badly when they get there, in which case it might have to be said that they could not go again. However, in the ordinary way and as a general rule, they ought to be allowed to go.
    Mr. Profumo: What I am trying to tell ton. Members is that my right hon. Friend is in complete agreement with me that this is a matter which should be left to the discretion of the Governor, and I am not prepared to go further.

    Akwirimo Njogu
    Mrs. Castleasked the Secretary of State for the Colonies in which camps in Kenya Akwirimo Njogu has been detained; and whether he will make a statement on the course of this man's imprisonment.
    Mr. Profumo: I have no information about this man and am consulting the Governor of Kenya. I will circulate a further reply in the OFFICIAL REPORT.
    Mrs. Castle: I thank the hon. Gentleman for that reply. When circulating the statement, will he include information about whether this man is still alive; if not, on what day he died, in which detention camp, and from what cause?
    Mr. Profumo: I will certainly circulate a full statement.

    Coastal Strip (Lease)
    Mr. J. Johnsonasked the Secretary of State for the Colonies under what conditions the Government of Kenya lease the 10-mile coastal strip, including Mombasa, from the Sultan of the Zanzibar Protectorate.
    Mr. Profumo: The conditions under which Her Majesty's Government administer the Kenya Protectorate are set out in the Treaty of 1895 between Great Britain and Zanzibar. The text of the Treaty appears in Volume XX of Hertslet's Collection of Treaties and Conventions, copies of which are in the Library of the House.
    Mr. Johnson: Is the hon. Gentleman aware that a certain gentleman called Mr. Khamisi made a statement in the last African elections saying that the African Nationalist movement would annex this strip of Kenya? Will the hon. Gentleman deny that and point out that any future settlement will be made by the Kenya Government, the British Government, and the Zanzibar Government?
    Mr. Profumo: The situation is as I told the hon. Gentleman, and anything contrary to the published Treaty is obviously deniable by Her Majesty's Government.

  ZANZIBAR

    Education (Committee)
    Mr. J. Johnsonasked the Secretary of State for the Colonies what progress the Resident of Zanzibar has made in appointing the Committee to make an examination of the educational problems of the Protectorate.
    Mr. Profumo: The Committee consisting of fourteen members under the chairmanship of the Chief Secretary held its first meeting on 16th May.
    Mr. Johnson: Will special attention be paid to African education? Is he not aware that there are 200,000 Africans in Zanzibar but that in the last ten years only 44 boys have finished their secondary school courses and that only one young man is now in the United Kingdom for higher education? Is not this an impossible state of affairs, especially since the African Nationalist Party gained power in the last election?
    Mr. Profumo: The terms of reference of the Committee, as the hon. Gentleman knows, are fairly wide and we had better await its report.

  NORTHERN RHODESIA

    Africans, Copperbelt (Liquor Sales)
    Mr. J. Johnsonasked the Secretary of State for the Colonies if he will state the amount of profits from the municipal sales of liquor to Africans in the Copper-belt during the last five years; and how many community centres have been built with money from that source.
    Mr. Profumo: I am consulting the Governor and will circulate the information when received in the OFFICIAL REPORT.
    Mr. Johnson: Is the hon. Gentleman aware that last week he told me that he was cutting back African education on the Copperbelt because of the loss of tax from European copper mines? Is not this a glorious chance to increase African education by means of the Africans' own money through their own beer shops?
    Mr. Profumo: I am consulting the Governor.

  AGRICULTURE, FISHERIES AND FOOD

    Dock Strike (Perishable Foodstuffs)
    Mr. Doughtyasked the Minister of Agriculture, Fisheries and Food what is the estimated amount of foodstuffs which may become unfit for human consumption in the Port of London unless it is moved by the end of the week.
    The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): The greater part of the perishable food in the main docks has already been moved, but the Medical Officer of Health for the Port of London estimates that two hundred to three hundred tons, mostly of potatoes and onions, may have to be condemned. I cannot at present estimate the loss. Losses may also have been suffered by deterioration of quality in food already moved, but I have no information on this.
    In addition, there are between seven thousand and eight thousand tons of butter and cheese in insulated barges in
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    the river. Some of this may now be unfit for consumption, but no accurate estimate can be made of the quantity until it is discharged.
    My right hon. Friend regrets that in answering my hon. and learned Friend's Question on 16th June he gave the approximate value of the food condemned up to that time as £150. The figure should have been £470.
    Mr. Doughty: I thank my hon. Friend for the correction he has just made. Can he tell me what prospect he sees of a large proportion of the deteriorating foodstuffs being moved before the end of the week?
    Mr. Godber: The present position is encouraging in that much of this food is now being moved, and being moved fairly rapidly.

  AGRICULTURAL RESEARCH

    Farm Buildings Research Committee
    Mr. Willeyasked the Minister of Agriculture, Fisheries and Food, as representing the Lord President of the Council, what consultation there has been with the Royal Institute of British Architects about the work of the Farm Buildings Research Committee.
    Mr. Godber: There has so far been no formal consultation with the Royal Institute of British Architects about the work of the Farm Buildings Research Committee, but two members of the Committee particularly interested in farm building design are members of the Royal Institute. When the Committee's activities reach a stage at which consultation with the Institute is likely to be of value, it will be arranged.

  HOME DEPARTMENT

    Electoral System
    Mr. E. Fletcherasked the Secretary of State for the Home Department what proposals Her Majesty's Government have for introducing the alternative vote or other modifications of the existing electoral system.
    Sir F. Medlicottasked the Secretary of State for the Home Department

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    if he will consider the introduction of legislation to make provision for proportional representation in the election of Members to the House of Commons.
    The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): Her Majesty's Government have no proposals to make for altering the present electoral system.
    Mr. Fletcher: May we take it from that that the Home Secretary agrees that an attempt to make any fundamental change in the electoral law between one General Election and another without a mandate from the people would be quite unconstitutional?
    Mr. Butler: In any case, I do not think that the time is appropriate. I do not like the method, and I certainly do not think that it should be done unilaterally.
    Sir F. Medlicott: Looking around the existing House, is it not clear that the existing electoral system is both effective and discriminating, but that it is not perfect and not necessarily permanent? Should we not always be alive at least to the possibility of improvement?
    Mr. Butler: Yes, Sir. We should always live in hope of improving human endeavour, but the only way in which the House can be improved is if we have a larger majority on this side.
    Mr. C. Pannell: Does not the right hon. Gentleman agree that it is better to have people elected on the first choice of the electorate rather than to have a majority of bad second choices?
    Mr. Butler: Yes, Sir. I think that love at first sight is usually best.

    Parkhurst Prison
    Mr. Royleasked the Secretary of State for the Home Department how many cells are unoccupied at Parkhurst Prison, Isle of Wight.
    Mr. R. A. Butler: On 14th June, 1958, there were 138 unoccupied ordinary cells at Parkhurst.
    Mr. Royle: Is the Home Secretary aware that Manchester Prison at the moment has 1,200 occupants, although it is supposed to house only 800? In view of the vacancies which exist at Parkhurst and of the fact that other prisons
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    are in the same position as Manchester, in spite of the fact that Parkhurst Prison is for preventive detention cases, cannot some of its accommodation be used at least to ensure that there are not so many as three men in a cell?
    Mr. Butler: It would not be normal to use this accommodation in the way suggested by the hon. Member, but we are considering doing so in view of the overcrowding elsewhere.

    Carlisle and District State Management Scheme
    Dr. D. Johnsonasked the Secretary of State for the Home Department whether he is in a position to make a statement about the police investigation concerning the Carlisle and District State Management Scheme.
    Mr. R. A. Butler: The Director of Public Prosecutions has informed me that, after considering a report by officers of the Metropolitan and City Police Company Fraud Department, he has instituted criminal proceedings against ten public house managers, the wives of two of them and one former manager.
    In addition, following detailed examination of the Carlisle trading returns by my own Department, disciplinary proceedings are being taken against seven other managers. Meantime, all the managers concerned have been suspended from duty.
    Dr. Johnson: Can my right hon. Friend say when he next proposes to make a review of the working of this scheme, in general, and his policy of disinterested management, in particular?
    Mr. Butler: As these cases are sub judice, I would rather make no further statement today.

  SPAIN (SPEECH BY PRESIDENT OF THE BOARD OF TRADE)
  Mr. Stonehouseasked the Prime Minister whether the speech of the President of the Board of Trade broadcast by Madrid Radio on 11th June represents the policy of Her Majesty's Government.
  The Prime Minister (Mr. Harold Macmillan): Yes, Sir.
  Mr. Stonehouse: Is the Prime Minister aware that in his broadcast over Madrid Radio the President of the Board of Trade implied that Spain was part of the free world? Does the Prime Minister believe that Spain is part of the free world, and does he want Britain to follow the example of the United States in establishing more direct defence arrangements with Spain?
  The Prime Minister: The second part of that question does not arise. Spain is, at any rate, part of the non-Communist world.
  Mr. Gaitskell: Is the Prime Minister aware that in his radio speech the President of the Board of Trade went much further than that and, according to The Times report, described Spain and Britain as follows:
  "Both shared Europe's history and the present dangers that threatened the free world. Wherever two countries in the free world could expand their trade, they were helping to raise the standards of life in all countries"?
  Is it either wise or sensible to describe a Fascist State as part of the free world?
  The Prime Minister: I should have thought that all the propositions put forward were true, certainly about our common history and our European tradition and being non-Communist. If the speech as a whole is considered, there is nothing of which there can possibly be complaint.
  Mr. Gaitskell: Does not the Prime Minister appreciate that if the phrase "the free world", which is commonly used by different members of N.A.T.O., is taken to include Fascist countries, it enormously weakens any political significance of N.A.T.O.?
  The Prime Minister: The speech must be taken as a whole, and taken as a whole it is a sensible speech.
  Mr. Doughty: Does not my right hon. Friend agree that it is entirely correct, as the President of the Board of Trade said over Madrid Radio, that Spain has been taking an active part in defending the free world against Communism?
  Mr. S. Silverman: Are we to infer from the right hon. Gentleman's answer—which is very similar to an answer given by the President of the Board of Trade to a similar question put a little while ago—that Her Majesty's Government at
  1310
  this moment are prepared to support and defend any kind of tyranny or oppression in the world so long as it is non-Communist?
  The Prime Minister: No, Sir. What the President of the Board of Trade was chiefly taken up with in his speech was the extension of trade, and I understood it to be the point of view of the hon. Member below the Gangway that trade should be extended in all directions.

  SUMMIT CONFERENCE
  Mr. Swinglerasked the Prime Minister if he will make a statement on the letter about the proposed Summit Conference which he received from Mr. Khrushchev on 13th June; and what reply he intends to make.
  The Prime Minister: Yes, Sir.
  We had hoped that the preparatory discussions in Moscow would continue on a confidental and businesslike basis. By reverting to the earlier practice of addressing long letters to the Heads of Government of the Western Powers and then publishing them Mr. Khrushchev has, I am afraid, made progress more difficult.
  His letter seems to be designed to publicise once again the positions taken by the Soviet Union and to create the false impression that the Western Powers are impeding progress.
  In addition, the Soviet Government has unilaterally published all the communications which have been made so far during the preliminary discussions. It had earlier agreed that these discussions should be confidental.
  As far as my reply is concerned, that is something which we are discussing with our Allies. As the House knows, Mr. Khrushchev has sent similar letters to President Eisenhower and General de Gaulle.
  Mr. Swingler: These exchanges have now been going on for more than six months. Is the Prime Minister aware that, in view of the tragic deterioration in the international situation in several respects, the time has now come for a supreme initiative to try to bring the leaders of the Great Powers together for effective discussions before there is a general reversion to the worst crimes of the cold war?
  The Prime Minister: When we suggested in a short Note—which I am happy to see the Soviet Government accepted—in the spring that we should start with these discussions between ambassadors and try to fix the preliminary talks leading to the Foreign Ministers' meeting, I was very hopeful. What I feel is rather distressing is that this procedure has been made very much more difficult. I am still not without hope, but I do not intend that we should relax our efforts.
  Mr. J. Eden: Does not my right hon. Friend agree that the recent murder of Hungarian patriots gives one little cause for confidence or trust in the Russian word?
  The Prime Minister: I agree that a most tragic position has developed. Nevertheless, I think we must try to do our best to do anything which will maintain peace. The whole House, the whole country and the whole civilised world have been shocked by this latest development. Nevertheless, we have to try to keep a balance and do our duty, but all this makes us even more cautious in the steps that we have to take.

  Nos. 10, 11 and 12, DOWNING STREET (PRESERVATION)
  Sir G. Nicholsonasked the Prime Minister whether he has yet received the Report of the Committee on the Preservation of Downing Street and whether he will make a statement.
  The Prime Minister: Yes, Sir. The Report is being presented to Parliament as a Command Paper and copies will be available in the Vote Office this afternoon. I am most grateful to the noble Lord, Lord Crawford, and his colleagues for their labours.
  The Report recommends—and I wish to make it clear that the Committee was concerned only with the fabric of the building—that Nos. 10, 11 and 12, Downing Street should be given a major structural overhaul. The external appearance of the houses would as far as possible be retained, together with rooms and features of historic importance. The Report also recommends the appointment of an independent architect to draw up plans. For this purpose, my right
  1312
  hon. Friend the Minister of Works proposes to appoint Mr. Raymond Erith, F.R.I.B.A.
  Sir G. Nicholson: Is my right hon. Friend aware that the whole House will wish me to join him in thanking the Committee, and also in expressing the unanimous wish that my right hon. Friend may have a prolonged tenure of these premises?
  Mr. Gaitskell: May I take the opportunity of thanking the Prime Minister for recognising the interest of the Opposition in this matter, and for letting me see a copy of the Report? In my opinion, the recommendations seem sensible, but I agree with him that a final decision on this matter should be left until there has been a greater opportunity for public opinion to express itself.

BUSINESS OF THE HOUSE
Mr. Gaitskell: May I ask the Leader of the House whether he will state the business for next week?
The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): Yes, Sir. The business for next week will be as follows:
MONDAY, 23RD JUNE—Report and Third Reading of the Landlord and Tenant (Temporary Provisions) Bill.
TUESDAY, 24TH JUNE—Report stage of the Agriculture Bill.
Consideration of the Motion to approve the Draft Furniture Industry Development Council (Amendment) Order.
WEDNESDAY, 25TH JUNE—Conclusion of the Report stage and Third Reading of the Agriculture Bill.
Consideration of the Motions to approve the Draft Fertilisers (United Kingdom) Scheme and the Protection of Guarantees Orders relating to Cereals, Eggs and Fatstock.
THURSDAY, 26TH JUNE—Supply [17th Allotted Day]: Committee.
Debate on Cyprus.
FRIDAY, 27TH JUNE—Second Reading of the Children Bill [Lords], and Committee stage of the necessary Money Resolution, which it is hoped to obtain by about 2 o'clock.
Report and Third Reading of the Distribution of Industry (Industrial Finance) Bill.
Mr. Clement Davies: Do I understand that only Thursday is to be allotted for the debate on Cyprus? Inasmuch as the future of this island and its people is bound to raise very widespread interest throughout the House, ought not two days to be allotted for the debate?
Mr. Butler: We have had certain discussions on this subject. While I am always ready to hear ideas, especially from the right hon. and learned Gentleman, I do not think that there will be an opportunity to extend the debate beyond one day.
Mr. H. Hynd: Has the attention of the Leader of the House been called to a widely signed Motion on the Order Paper, on the state of the cotton industry?
[That this House is deeply concerned by the continued decline of the British cotton industry brought about by adverse world conditions and the unlimited import of textile goods, many of which are produced by sweated labour; and that this House deplores the spread of unemployment and short-time working amongst Lancashire textile operatives and calls upon Her Majesty's Government, as emergency measures, to take steps to limit these imports and by legislative, and other action to establish civilised standards of labour in Hong Kong.]
and a fairly widely signed Amendment to it.
[Leave out from "industry" to end and add "and the spread of unemployment and short-time working amongst Lancashire textile operatives and calls upon Her Majesty's Government to do everything possible to support the efforts of the Lancashire textile industry in their negotiations with producers in India, Pakistan and Hong Kong for a rational limiation of cloth imports to the ultimate benefit of themselves as well as the Lancashire industry".]
Is he considering allocating time for a debate on that subject before the Summer Recess?
Mr. Butler: I cannot give any such undertaking today, but I have the Motion before me.
Mr. S. Silverman: While we cannot ask him for an answer today, may I ask the right hon. Gentleman at least to bear in mind that, without distinction of party at all, throughout Lancashire there is deep and grave anxiety about the position in the cotton trade; and that Parliament ought to have an opportunity to consider the matter—whatever decision it may ultimately be thought right to take—before we adjourn at the end of July for the long vacation?
Mr. Butler: Parliament is certainly the proper place in which to ventilate grievances, especially those of so important a county. I cannot give the hon. Gentleman an undertaking—he did not ask for one—but I will note what he has said.
Mr. Willey: Is the right hon. Gentleman aware that the proceedings in Committee on the Agriculture Bill were finished only this week and that it is rather unfair to take the Report stage next week? As no one wants this Bill, could not the right hon. Gentleman arrange for the Report stage to be taken later?
Mr. Butler: I realise that the time between the two stages is not very long, but we have given two days for the concluding stages of the Bill, which is more than we had wished to give. I hope that this concession will indicate the liberal frame of mind in which we are.
Mr. Donnelly: Last week, the right hon. Gentleman was giving consideration to the prospect of a debate on the Wolfenden Report. Can he tell us how far he has progressed in his thinking about this?
Mr. Butler: I often think about it, but I have not yet found time for a debate.
Dame Irene Ward: May I ask whether my right hon. Friend has studied the all-party Motion on the future of the Hampton site and whether he can give his great mind to the future development of that site in the national interest?
That this House, having noted that the vacant, Hampton, site, on the north side of Trafalgar Square, will not be required for use by the Canadian Government, and conscious of the opportunity now available to complete the development of Trafalgar Square as a unique

1315
centre of the Commonwealth, urges Her Majesty's Government to acquire the site in order that such further extension of the National Gallery, as will certainly be required in the future, may be safeguarded.
Mr. Butler: Yes, Sir. I have also discussed it with my right hon. Friend the Chancellor of the Exchequer. We are not in a position to make a statement about it yet.
Mr. Benn: Is the right hon. Gentleman proposing to tell us whether it is the intention of the Government to make a statement about British policy towards the Lebanon, in view of the rapid increase in the number of British forces in Cyprus?
Mr. Butler: That is a matter which must be put to my right hon. and learned Friend the Foreign Secretary.

CYPRUS
The Prime Minister (Mr. Harold Macmillan): With permission, Mr. Speaker, I now propose to make the statement on the Government's policy on Cyprus which I had intended to make on Tuesday, but which, with the forbearance of the House, I decided to defer at the request of the North Atlantic Treaty Organisation Council.
The policy of Her Majesty's Government in Cyprus has had four main purposes:

(a) To serve the best interests of all the people of the island.

(b) To achieve a permanent settlement acceptable to the two communities in the island and to the Greek and Turkish Governments.

(c) To safeguard the British bases and installations in the island, which are necessary to enable the United Kingdom to carry out her international obligations.

(d) To strengthen peace and security, and co-operation between the United Kingdom and her Allies, in a vital area.

These are the aims which Her Majesty's Government have consistently pursued and which have guided their efforts in recent months to find common ground on which an agreed settlement
1316
might be reached. It is deeply regretted that all attempts in this direction have hitherto proved unsuccessful.
In view of the disagreement between the Greek and Turkish Governments and between the two communities in Cyprus, and of the disastrous consequences for all concerned if violence and conflict continue, an obligation rests with the United Kingdom Government, as the sovereign Power responsible for the administration of the island and the wellbeing of its inhabitants, to give a firm and clear lead out of the present deadlock. They accordingly declare a new policy which represents an adventure in partnership—partnership between the communities in the island and also between the Governments of the United Kingdom, Greece and Turkey.
The following is an outline of the partnership plan:
Cyprus should enjoy the advantages of association not only with the United Kingdom, and, therefore, with the British Commonwealth, but also with Greece and Turkey.
Since the three Governments of the United Kingdom, Greece and Turkey all have an interest in Cyprus, Her Majesty's Government will welcome the co-operation and participation of the two other Governments in a joint effort to achieve the peace, progress and prosperity of the island.
The Greek and Turkish Governments will each be invited to appoint a representative to co-operate with the Governor in carrying out this policy.
The island will have a system of representative Government with each community exercising autonomy in its own communal affairs.
In order to satisfy the desire of the Greek and Turkish Cypriots to be recognised as Greeks and Turks, Her Majesty's Government will welcome an arrangement which gives them Greek or Turkish nationality, while enabling them to retain British nationality.
To allow time for the new principle of partnership to be fully worked out and brought into operation under this plan in the necessary atmosphere of stability, the international status of the island will remain unchanged for seven years.
A system of representative government and communal autonomy will be worked

1317
out by consultation with representatives of the two communities and with the representatives of the Greek and Turkish Governments.
The essential provisions of the new constitution will be:

(a) There will be a separate House of Representatives for each of the two communities, and these Houses will have final legislative authority in communal affairs.

(b) Authority for internal administration, other than communal affairs and internal security, will be undertaken by a Council presided over by the Governor and including the representatives of the Greek and Turkish Governments and six elected Ministers drawn from the Houses of Representatives, four being Greek Cypriots and two Turkish Cypriots.

(c) The Governor, acting after consultation with the representatives of the Greek and Turkish Governments, will have reserve powers to ensure that the interests of both communities are protected.

(d) External affairs, defence and internal security will be matters specifically reserved to the Governor acting after consultation with the representatives of the Greek and Turkish Governments.

(e) The representatives of the Greek and Turkish Governments will have the right to require any legislation which they consider to be discriminatory to be reserved for consideration by an impartial tribunal.

If the full benefits of this policy are to be realised it is evident that violence must cease. Subject to this, Her Majesty's Government intend to take progressive steps to relax the Emergency Regulations and eventually to end the state of emergency. This process would include the return of those Cypriots at present excluded from the island under the Emergency Regulations.
A policy based on these principles and proposals will give the people of the island a specially favoured and protected status. Through representative institutions they will exercise authority in the management of the island's internal affairs, and each community will control its own communal affairs. While the
1318
people of the island enjoy these advantages, friendly relations and practical co-operation between the United Kingdom, Greece and Turkey will be maintained and strengthened as Cyprus becomes a symbol of co-operation instead of a cause of conflict between the three Allied Governments.
Her Majesty's Government trust that this imaginative plan will be welcomed by all concerned in the spirit in which it is put forward, and for their part they will bend all efforts to ensuring its success. Indeed, if the Greek and Turkish Governments were willing to extend this experiment in partnership and co-operation, Her Majesty's Government would be prepared, at the appropriate time, to go further and, subject to the reservation to the United Kingdom of such bases and facilities as might be necessary for the discharge of her international obligations, to share the sovereignty of the island with their Greek and Turkish Allies as their contribution to a lasting settlement.
Mr. Speaker: Mr. Gaitskell.
Mr. Gaitskell Mr. Gaitskell rose—
The Prime Minister: Perhaps I might be allowed just to add one or two words. That is the statement of policy which I had intended to make last Tuesday and I have arranged for it to be published. It will be available in the Vote Office shortly. I would just like to add these words.
I have myself sent a personal appeal to the Prime Ministers of Greece and Turkey asking them to approach this policy in a spirit of co-operation and moderation. I have given the House the main outlines of the plan. There are, of course, many details which will require to be filled in after discussion. We are, therefore, not asking for immediate acceptance of our policy in every particular. While I recognise that some initial reactions may be unfavourable, I believe that further consideration will lead to the recognition of the genuine merits of this policy.
Meanwhile, it is a great support to the Government in discharging their heavy responsibilities in this matter to have the good will and understanding of the North Atlantic Council. Its assistance in the process of conciliation is proving, and I

1319
feel sure will continue to prove, of the highest value. Finally, I trust that our efforts, which are constructive and fair, will commend themselves to the House and to the country.
Mr. Gaitskell: The Prime Minister has given us a very full, detailed and important statement of the Government's plan, a statement which, in any event, would need to be very carefully considered by the Opposition before we expressed our opinion upon it. The statement is made at a very tense moment when there is, unhappily, danger of civil war in Cyprus. We cannot, unfortunately, rule out altogether the danger of conflict between Greece and Turkey. In those circumstances, I feel that we must all be keenly aware of the responsibility that rests upon us in anything we may say. Anything we say here on either Government or Opposition benches might affect that situation.
That being so, and in view of the fact that there is to be a debate next week, I do not feel that it would be wise for me to put questions to the Government at this stage. There will be opportunities next Thursday for putting questions and for putting our position clearly to the House and to the country. That being the case, I prefer to leave the matter there, and I would urge upon all my right hon. and hon. Friends the greatest possible restraint at this point in our proceedings.
Mr. Clement Davies: I would wish to be allowed to associate myself with what has just been said by the Leader of the Opposition. There is a very heavy
1320
responsibility upon all of us in this matter. We are only anxious for one thing, namely, for a proper settlement to be arrived at for the future of Cyprus.
Sir Roland Robinson: My right hon. Friend the Prime Minister will be aware that it will be the hope of hon. Members on all sides of the House that this plan, which, obviously, has imagination and inspiration, will be accepted and adopted by Turks, Greeks and Cypriots alike and that it will succeed. Nevertheless, would my right hon. Friend care to say what would be the position if the new policy were not accepted, or failed?
Hon. Members: No.
The Prime Minister: The policy which I have described deals with the next seven years. Of course, if in the long run all these hopes are dashed and all fails, then the British Government will stand by their pledges; but I do not want us to think in terms of failure. Let us think in terms of success and, starting from today, of a new approach. Perhaps the example we give here may have its effect on our allies, both Greek and Turk.

SCOTTISH ESTIMATES
Committee of Supply discharged from considering the Estimate set out hereunder and the said Estimate referred to the Scottish Grand Committee:—
Class VIII, Vote 11, Department of Agriculture for Scotland.—[Mr. R. A. Butler.]

ORDERS OF THE DAY

  SUPPLY
  [16TH ALLOTTED DAY]
  Considered in Committee.
  [Sir CHARLES MACANDREW in the Chair]

  SUPPLY

    CIVIL ESTIMATES AND ESTIMATES FOR REVENUE DEPARTMENTS, 1958–59, AND NAVY ESTIMATES, 1958–59.
    Motion made, and Question proposed,
    That a further sum, not exceeding £30, be granted to Her Majesty, towards defraying the charges for the year ending on the 31st day of March, 1959, for (toe following services connected with Shipping and Shipbuilding, namely:—

    CIVIL ESTIMATES, 1958–59, AND NAVY ESTIMATES, 1958–59

    £

    Class IX, Vote 1 (Ministry of Transport and Civil Aviation)

    10

    Class IX, Vote 3 (Transport (Shipping and Special Services))

    10

    Navy, Vote 8 (Shipbuilding, Repairs, Maintenance, &c.)

    10

    Total

    £30

  SHIPPING AND SHIPBUILDING
  3.45 p.m.
  Sir Frank Soskice: The Opposition selected the subject of shipping and shipbuilding for the purpose of a probing debate, in order to review the present situation of those industries and to put a number of questions about the Government's intentions in relation to the industries.
  We have not discussed these industries for a very long time. In March this year there was a most informative, debate on the subject in another place. Her Majesty's Opposition thought that in the circumstances it would be appropriate to bring these industries into review and to examine their present working and prospects, and to press the Government for a statement of intention.
  One cannot look at the industries at all without being conscious at once of the effect of a world recession upon them. Shipping, obviously, is most sensitive to world movements of trade. I always think that figures in the form of statistics lead to the most lugubrious conclusions and
  1322
  that statisticians must be one of the most melancholy communities in the world, whether the statistics appear in a pass-sheet of one's own bank account or, as in this case, reflect the present situation of the industries that we are about to discuss.
  I will try to avoid inflicting upon the Committee too great a plethora of figures, but the only way in which we can, with approximate accuracy, see the state of an industry is by seeing what the figures tell us. I also feel considerable trepidation in speaking of these two industries in the presence of so many hon. Members on both sides of the Committee who have spent many years in association with them. I confess to feeling some irritation sometimes when hon. Members make observations upon my own profession. I feel that if they knew us better they probably would not make them. I will accordingly do my best to avoid causing similar feelings of irritation to the many hon. Members who are so kind as to be here to listen to me.
  Perhaps I might address myself to the first big feature of the situation. Obviously, it is the existing recession. The figures are eloquent and are worth looking at. Out of a total world merchant fleet of about 107 million tons, there is, I am informed, at present laid up a deadweight tonnage of 6 million, representing about 616 ships throughout the world. If one considered what is the underlying cause of that, one sees that present freight rates clearly give the reason for so many ships being laid up. They are the first melancholy tinge in the picture.
  If one does what statisticians do, and assumes that 1952 represented 100—the Treasury Ministers are especially responsible if I inflict too much of this sort of thing on the Committee, because it is what they do and I am following their bad example—one sees that there has been a steady decline to a low rate which, in relation to that figure of 100, has dropped to 64 in February this year. In August, 1957, it was 86·9 in relation to the figure of 100 and with the exception of one in each succeeding month there has been a regular decline of shipping rates until they are now not very much above half what they were in 1952.
  If one considers how that world shipping slump is reflected in our own merchant fleet, one finds an equally depressing picture disclosed by the figures

  1323
  got together by the statisticians. Perhaps I may summarise them, to make the point, by referring to three periods. If one starts with January, 1957, British ships to the number of 16 had been laid up, totalling about 32,000 tons. A year later, in January, 1958, that number had gone up to 108 ships, representing over half a million tons and, if one jumps from January, 1958, to March, 1958, the number of 108 has increased to 182 and the tonnage increased from over half a million tons to about 967,000 tons.
  In the course of numerous debates on the general trade situation we have discussed the wisdom or otherwise of the policy of the Government towards recession. I feel sure we are glad to see the announcement made today of a further reduction in the Bank Rate. One would have thought that perhaps in the case of shipping, sensitive as it is to trade movements, it would be particularly unwise on the part of the Government to superimpose upon the world shipping slump an artificially created internal recession based upon restricted credit and a high Bank Rate—although I am glad to see it falling.
  I wish to pass from the present slump situation, on which I have no particular question to ask the Minister, except what his anticipations are, how far he thinks the slump may go, and what steps the Government think they can take to arrest it before it goes too far and gets out of hand. I turn to the rather longer-term question of the shipping industry. If I may again inflict comparisons on the Committee I think that they may perhaps indicate the direction in which the industry is going.
  For that purpose I wish to take three dates in the history of British shipping so that we may see how it has developed. For a reason which I do not quite understand, I think it customary to start with the year 1906. All comparisons I have seen start with that year, so I will follow suit. I then go to 1939—which is an intelligible date, immediately before the outbreak of the Second World War—and 1956, because that is one of the last years in relation to which complete figures have been got together.
  In 1906, the world merchant fleet was 37½ million tons and the British share of it was 16½ million tons, representing
  1324
  45 per cent. In 1939, the world total had gone up to 69½ million tons and the British share had gone up only to 18 million tons, representing a considerably reduced percentage of 26 per cent. When one jumps from 1939 to the third date I selected, 1956, one finds that British shipping had gone up to only 19½ million tons—I believe it has dropped a little since then—whereas world shipping had gone up by that time to 105 million tons. The British percentage had gone down to 18 per cent. That was the procession of decline from 1906, 45 per cent., 26 per cent., 18 per cent.
  I recognise that no such comparison would be other than misleading unless one were to take into account that this country bore the brunt of two world wars and that its merchant fleet, in particular, was in the front line and suffered the most devastating losses. I have seen a figure, which perhaps the Minister will be able to confirm, suggesting that in the Second World War the losses of the British merchant fleet were in the region of 11 million tons. Therefore, in any comparison one makes one must take into account the losses we suffered in the First and Second World Wars, but it still remains a fact that with an increase in world tonnage of 67 million tons, all of which with the exception of 6 million tons is now gainfully engaged, the British share of the increase has been no more than 3 million tons.
  I apologise for inflicting figures on the Committee, but I think that these figures are of importance because it could be said, at any rate at first sight, without explanation, that that shows a somewhat alarmingly disappointing increase in the proportion of British shipping as against world shipping. One has to take into account that a number of nations which started, as it were, almost from zero will make much more rapid progress in comparison with the progress of a country which started far from zero, far along the road, and, therefore, finds it perhaps not so easy to make noticeable progress as countries which start from the beginning of the road.
  So that I should not be thought to be expressing only my own untutored and uninformed view, I have had recourse to views expressed by, I think, recognised authorities in the shipping world. In particular, I would cite to

  1325
  the Committee the view expressed by Viscount Simon in an article he wrote as President of the Chamber of Shipping of the United Kingdom, expressing his interpretation of the figures I have put before the Committee. If the Committee will forgive me, I wish to quote the words he used, because they give a picture which is not only informative in its terms, but obviously authoritative in view of the quarter from which it comes.
  Viscount Simon said:
  "The British Merchant Navy, totalling today about 19 million gross tons, is slightly larger than it was in 1939. At first sight this fact may appear to give us no cause for despondency. But if the position is examined more closely, we find that the British share of world tonnage (including 14 million gross tons of shipping laid up in the United States reserve fleet) has in those 18 years fallen from 26 per cent. in 1939 to 18½ per cent. in 1956. During this same period Sweden has increased her tonnage by over three-quarters, Norway, by two-thirds and Holland by a third. The United Kingdom fleet has meanwhile increased by no more than one-twelfth and, in fact, nearly half of that increase is due to the transfer of certain Canadian-owned ships from the Canadian to the United Kingdom registry."
  I cite that opinion, as I have said, to give the interpretation put upon the figures which I have produced by an authority who will be recognised on both sides of the Committee as expressing a reliable view.
  The noble Viscount, in the debate to which I referred in another place, elaborated his description by saying that of the total increase of British tonnage, since 1939, of 1½ million tons, the breakdown showed an increase in the tanker fleet but an actual decrease of 1 million tons in our dry cargo fleet. He went on to break down that figure by saying that of the 2½ million tons increase in our tanker fleet, no less than 2 million tons represented tankers built by the large oil companies and operated on what the noble Viscount described as a kind of C licence basis.
  Viscount Simon ended his speech by saying that our position had worsened, and I quote his words because they are weighty and carefully chosen:
  "If it is serious now, it will be critical in the near future."—[OFFICIAL. REPORT, House of Lords, 20th March, 1958; Vol. 208, c. 359.]
  Therefore, when I refer to the melancholy conclusion to be drawn from figures, I think that it is apposite to bear
  1326
  in mind that the unskilled conclusion of a non-statistician does conform with the interpretation of a very big figure in the shipping industry.
  That at once brings me to what is perhaps one of the major causes of alarm for those who view the future of the British merchant fleet, namely, those ships which are comprehensively described under the somewhat difficult term Pan-Lib-Hon-Co ships. I think that the whole Committee will know at once what is meant by that—ships registered under flags of convenience of various countries, Panama, Liberia, Honduras, Costa Rica—
  Mr. C. R. Hobson: And Greece.
  Sir F. Soskice: Anyway, fleets registered in those countries I have mentioned which are, owing to circumstances which, I think, the Committee have very fully in mind, in a position to compete with other merchant fleets on terms which cannot possibly be decribed as fair terms.
  There again, I should like, if I may, shortly by reference to figures, to trace the growth of this menace. If I may again take the same course of looking at the years 1906, 1939 and 1956 and then adding the latest figures of April, 1958, the development of these fleets is really most startling. In 1906, there were not any; in 1939, not more than 750,000 tons, 1 per cent. of the world fleet and in 1956, when we had an increase to the extent of 1½ million tons, as I have previously indicated, these Pan-Lib-Hon-Co fleets had gone up to 10½ million tons and had reached a 10 per cent. proportion of the total merchant fleets of the world. When one goes to April, 1958, two years later, one finds that their total average had gone up to 14½ million tons and their proportion of the world's merchant fleet has gone up to 17 per cent.
  If one looks at the total increase of world tonnage since 1939, it really is astonishing that the total increase is accounted for, as to no less than 43 per cent., by the increase in these Pan-Lib-Hon-Co fleets. When one sees which are the constituent countries in this rapid and remarkable growth, the figures given are most informative and somewhat depressing. Liberia and Costa Rica are prominent competitors, and I feel sure that the Committee will agree that while the Costa Ricans and Liberians are no doubt most

  1327
  estimable people they can hardly be said to have played a leading rôle in the development of world shipping in past decades. For instance, Liberia had 1,000 tons of shipping in 1948 and in 1951 the figure had gone up to 709 million tons. [HON. MEMBERS: "No."] I am sorry; that is the danger of figures. I apologise. I mean 709,000 tons. I will, if I may, courageously go on to 1954. The figure in 1954—I think I am right—was 3,206,000 tons and in 1957, 9,187,000 tons.
  For a country with a population of about the size of the combined population of Manchester and Liverpool—and the feet of the population have been, as far as I know, solidly based on dry ground, as solidly as my own—that is a very remarkable achievement if it is, indeed, its achievement. It is owing to the remarkable characteristics of their maritime legislation which allows nationals of any country to register on the Liberian register ships built anywhere for a modest registration fee of 1 dollar 20 cents per net ton and an annual tax at 10 cents per net ton. I think that it is roughly true to say that one can register a substantial ship on the Liberian register for something under the cost of one journey through the Suez Canal. Our Merchant Shipping Act of 1894 is certainly far more stringent and rigorous in dealing with our own ships.
  A serious feature of the situation, which we must take into account, is that these Pan-Lib-Hon-Co fleets are good ships—they are not in any sense "coffin" ships—are not so old as our own, and, to a large extent, are faster. An estimate was made in June. 1957, of the percentage of Pan-Lib-Hon-Co ships under five years' vintage and the figure was 36 per cent. If we make a similar test with regard to United Kingdom tonnage, the figure is only 22 per cent., and if we take the tanker tonnage of those fleets alone one-half were under five years of age and only one-third of our own United Kingdom tankers were as young as that.
  Another feature to which I should -draw attention—I am speaking of December, 1956—is that if we look at the Pan-Lib-Hon-Co tanker fleets and our own tanker fleets, on an average the Pan-Lib-Hon-Co tankers are bigger and faster than ours, with an average tonnage of 23,400 tons as against the United
  1328
  Kingdom tonnage of 14,000 and with a speed of 15·4 knots as against our 13·2. This disparity in terms of age and in terms of speed is not being diminished inasmuch as Pan-Lib-Hon-Co owners are able to set by for purposes of capital investment moneys which other competing maritime owners have to set aside to pay taxes on the profits they earn. Therefore, their fleets will go on getting younger and younger in comparison with the fleets of other maritime countries.
  If I may seek again to take refuge in an impartial and authoritative opinion I would quote from an O.E.E.C. report which is set out in the 1957 Annual Report of the Liverpool Steam Ship Owners' Association, because it does state clearly, I think, the situation, in relation to the existing legislation of Pan-Lib-Hon-Co countries, in which these owners find themselves. This is what the O.E.E.C. report says:
  "The virtual freedom from taxation of ships sailing under flags of convenience enables many of the shipowners concerned so to arrange their business enterprises that their profits are not liable to taxation in this country. They are thus able to devote to the expansion and development of their fleets that proportion of their profits which their competitors in other countries have to set aside to meet tax requirements. This advantage is cumulative, since increased fleets earn increased profits which in turn provide for further increases in the fleets, and so on. The 'convenience' fleets are therefore in a position to grow and indeed are growing at a rate which the fleets of the maritime countries cannot match. This favourable position, coupled with periods of heavy demands for shipping space—particularly for tankers—has made it easy for the shipowners of the 'convenience' fleets to obtain substantial credits."
  I think it is, and is known to be, a fact that about 40 per cent. of these Pan-Lib-Hon-Co fleets are American owned and that about 53 per cent. are owned by Greek nationals largely financed from American sources, by American banks and American insurance companies, and that the United States, for reasons of policy, for which, I know, the right hon. Gentleman is in no sense responsible, but about which I should like to ask him for information, has treated these Pan-Lib-Hon-Co fleets on very favourable terms indeed.
  To complete the citation, the report reads:
  "This advantage enjoyed by owners of flags of convenience ships in being able to accumulate capital and to obtain large and often extended credits has already led to a faster

  1329
  growth of fleets under flags of convenience than of other fleets. This in turn, has led to a diminishing degree of influence on world shipping on the part of the maritime countries with their generally accepted standards of effective jurisdiction and authority."
  This is extremely serious in our case particularly, living as we do very largely upon our exports, visible and invisible. I have seen an estimate, the last figures, I think, being analysed in 1952. I take it from the authority to whom I have referred before, Viscount Simon. If we analyse the total amount as at that time, 1952, in terms of foreign currency earned by our own merchant shipping fleet, which is now menaced by these Pan-Lib-Hon-Co fleets, it is, in a year, £220 million plus a saving of about £197 million, a total earning and saving in foreign currency directly and indirectly of about £400 million a year.
  If our economy is menaced by the threat of losing this important source of foreign currency earnings it is a serious situation not only from the point of view of the industry as a whole, but, in particular, from the point of view of the seafaring men engaged in these ships. It is pointed out by the International Transport Workers' Federation that in the case of these fleets there are few trade unions which can protect the seafarers engaged in those ships. There are no collective bargaining arrangements to ensure that their wages are protected and their living standards and working standards cared for. There is no protection in the event of a shipowner's suddenly reducing the wages of those who serve in those ships.
  I believe I am right in saying that recently one of these Greek shipowners did reduce wages by some 20 per cent., there being no organisation capable of negotiating with regard to that reduction and resisting it. The I.T.F. characterises these Pan-Lib-Hon-Co ships as a menace to the traditional maritime navies and to the economy of the traditional maritime countries, international maritime standards and to the seafarers' wages and working conditions.
  I think I am right in saying, and I would ask the Minister if I am right about this, that, so far, our cargo liners have not been really seriously affected by this competition. They are, I think, protected by conference rates, which move far more slowly than the tramp
  1330
  rates upon which these Pan-Lib-Hon-Co fleets operate. But I should like to put to the Minister this question: what are his estimates for the future? If they have not yet been seriously affected, what does the future hold in store for our cargo lines?
  I should like to ask him, also, what is the measure of the threat to our tramp ships and our tankers. Would I be right in saying that about one-quarter of our tanker fleet remains in private hands, the rest either being owned by big oil companies or Government owned, and that the menace hangs over that one-quarter of our tanker fleet which remains in private hands plus the 2 million or so of tonnage of our dry cargo fleet? I should like to ask him if that is really the main point of weakness over which the threat impends.
  Would I be right in thinking that our own merchant fleet, apart from our cargo liners, has survived the slump so far to an extent considerably better than the Pan-Lib-Hon-Co fleets? Would that be attributable in part to the fact that when profits are not being made the Pan-Lib-Hon-Co fleets do not enjoy the same tax advantage? Perhaps, also, it could be due to the fact that British owners, broadly speaking, prefer security in the form of time charters, whereas these Pan-Lib-Hon-Co owners try for and are able to obtain quick profits by spot charters. I should be grateful for any information that the right hon. Gentleman could give to the Committee upon that.
  It is, I know, easy to state the problem. What is far more difficult is to state or suggest the remedy. I think that you would probably rule me out of order, Sir Charles, if I were to embark, on a Supply Day, upon any detailed discussion of one remedy which is suggested, namely, tax relief; but perhaps you will not say that I am trespassing beyond the bounds of order if I make one or two general observations about the kind of suggestion which is made.
  I should have thought, and I should like to ask the Minister for his view upon it, that a suggestion for tax relief in this country to meet the difficulty would have very serious difficulties to overcome. One is that to make any serious impact upon the problem one would have virtually to abolish Profits Tax and Income Tax on all undistributed shipping profits. That

  1331
  would be a very radical change in our tax legislation, and if it were done it could hardly be done in the case of an industry which remained in private hands.
  Surely, also, if it were considered as an appropriate remedy, it would introduce considerable confusion into our fiscal system, because the motor vehicle industry, to take one example, if it were exposed to severe and possibly unfair competition in the event of the setting up of a European Free Trade Area or Common Market, might seek to claim similar relief. Would it not also be open to this more general objection, that once one country started seeking to deal with the Pan-Lib-Hon-Co question by tax reliefs for its own shippers, the other countries would, as it were, engage in competition with it?
  I believe I am right in saying that the West German Government have just announced a reduction of tax on 50 per cent. of shipping profits. Would the Minister not agree that one serious objection to a remedy of that kind would be that one would start an international race between various countries, each trying to give its own shippers more and more generous tax reliefs? Would he not agree, quite apart from anything else, that that would make it very difficult to contemplate tax relief as the appropriate remedy to deal with the Pan-Lib-Hon-Co menace?
  Would it not be right to say that, really, the most hopeful remedy lies in international agreement? I wish I could find a word other than "Pan-Lib-Hon-Co". May I call it "flags of convenience" for a while? I am sure that it will relieve the nerves of hon. Members if I do. The only really hopeful approach is through the medium of international agreement. Would not hon. Members agree that there have recently been some extremely hopeful developments in this respect? I should like to refer to the 1948 Convention which set up what is called I.M.C.O.—the Intergovernmental Maritime Consultative Organisation—an organ of the United Nations, which is grappling with the problem of securing some international agreement on standards to be applicable to these flags of convenience fleets.
  1332
  I should like to register the satisfaction which I think many hon. Members on both sides of the Committee will feel at the success of the Attorney-General in having Articles 5 and 6 inserted into the final text adopted by the conference at Geneva on international maritime law. For myself, I regard that as a starting point from which further international agreement can proceed. Article 5 lays it down that there must be a genuine link between the country where a ship is registered and its ownership, and that the country of registration must effectively exercise its jurisdiction and control in administration over technical and social matters affecting the ships and the crews of the ships flying its flag.
  I should have thought that that was an important advance. I understand that it is very much welcomed by the trade unions responsible for the welfare of men serving on the ships, and they did at the ensuing conference, the forty-first Maritime Session of the International Labour Organisation, in Geneva, seek to implement those Articles by two recommendations seeking to bring it about that the flags of convenience countries will really bestir themselves in an effort to apply to crews and ships registered with them the same sort of minimum standards as are applicable to the crews of most traditional maritime countries.
  A rather regrettable feature in relation to the recommendations agreed up at that session is that the United States and Greece did, as regards all the recommendations ultimately adopted, not perhaps actively oppose but abstained. It seems most unfortunate that the United States, with its immense influence, should be lukewarm or even act in opposition to efforts to procure some international co-operation to put an end to the sub-standards of these flags of convenience countries.
  Mr. C. R. Hobson: Part of the war against sterling.
  Sir F. Soskice: I want to put a specific question to the Minister about one final development which, I think, holds out hope. Is it not the fact that the Norwegian Government, having obtained full agreement from other Scandinavian countries as to the method of dealing with the flags of convenience ships, have recently prepared and sent to the British

  1333
  Government a memorandum containing proposals for dealing with the matter? Have the British Government received such a memorandum? My information is that, at any rate until 9th June this year, the British Government had sent no reply to the Norwegian Government, and that what I think is technically known as a "chaser" is on the way. Is the Minister aware that the purpose of the memorandum is to agree upon a form of procedure with a view ultimately to taking the matter up with the United States Government, in Washington?
  This debate is to extend to shipbuilding. I have spent an inordinate time on shipping already, but I have one or two questions to put about the shipbuilding industry, and no doubt my hon. Friends will follow the matter up later. Is the position at the moment in the shipbuilding industry that orders on hand amount to about 6·3 million tons? I have seen different estimates. One estimate is that that tonnage is too high and that the appropriate figure is more like 5 million tons. Will the Minister agree that there are, nevertheless, disquieting features in the prospects for shipbuilding?
  I believe that orders representing 6 million tons, amounting to, I think, about £900 million in value, are enough to keep the industry fully occupied for from three to four years, but, if one looks, for instance, at the first quarter of 1958, are there not certain disquieting features? Is it not a disquieting feature that, in the orders placed in the first quarter of 1958, there are no foreign orders at all, and is it the fact that, though the orders placed from this country total about 41,000 gross tons, that tonnage is more than wiped out by cancellations of orders previously placed far in excess of that? If that is the situation, is it not a cause for some alarm?
  In the debate to which I have referred, Lord Mancroft stated that the present capacity of British shipyards was about 1¾ million tons, and that it was proposed that there should be expended in bringing the shipyards up to date and improving their facilities about £70 million in the next few years. Is it the fact, as the noble Lord said, that the limiting factor is still shortage of steel? The noble Lord said that the object was to increase the potential output of British shipyards to about 2 million tons by the expenditure of this
  1334
  £70 million, but he was doubtful whether the steel requirements could be adequately met, the target date being 1961. The Minister was doubtful whether that target date could be kept.
  In particular, I should like a reply from the Minister to this question. If steel is really a limiting factor, when will the Government make up their mind about the new steel plant? We have pressed the Government over and over again for an answer on that, and we greatly hope that, if the Minister accepts that steel is a limiting factor in the expansion of our shipyards, the Government really will decide when they are to start building the new plant we have asked so much about and where it is to be.
  I gather that, in any event, our output last year was under 1½ million tons. I think that the actual figure was 1,406,000. If that is the case, what is the point of increasing the potential output to 2 million tons? What are the Minister's expectations? When does he think that the 2 million ton potential of British shipyards will be fully taken up?
  In conclusion, I should like to put to the Minister this question about shipbuilding prospects. Is it a fact that the output of Japanese shipbuilding had, by 1956, begun to overtake the output of British shipbuilding? Is that due to the fact, at any rate in part, that the Japanese Government is providing credits for Japanese shipbuilders which make it unnecessary for them to have to ask for the initial deposits that have to be asked for by British shipbuilders and which enable Japanese shipbuilders to give credit terms up to five years in length? A note of warning is sounded in a number of the financial papers dealing with shipbuilding which centres upon the inability of British shipowners to give fixed dates. Has the Minister anything to say on that point?
  I should like the right hon. Gentleman to give his opinions generally about the likely developments in British shipyards. Is the 2 million ton potential likely to be achieved? If so, when, and, if it is achieved, is the industry likely to be kept fully occupied in the coming years? Although the industry is likely to be reasonably fully occupied in the next three or four years, would I be right in thinking that a serious menace may develop at the end of that time, largely

  1335
  because of Japanese competition? Has the Minister any proposals for dealing with that matter? I agree that he may say that it is very unfair of me to ask what he proposes to do in 1961, as it is most unlikely that either he or any of his colleagues will have any responsibility for doing anything except asking the kind of questions that I am asking today, only in a much better way. However, in the most unlikely event that he is where he is at the moment perhaps he would give us the benefit of his ideas.
  I have asked a number of questions and apologise for having kept the Committee a long time. My excuse for this must be that these are two widely extended industries and that it is difficult to cover the ground in a shorter time.
  4.33 p.m.
  The Minister of Transport and Civil Aviation (Mr. Harold Watkinson): I am at one with the right hon. and learned Member for Newport (Sir F. Soskice) when he says that too many statistics will not be helpful in this debate. Indeed, if selected carefully, statistics can prove a lot of very odd things. Although I shall have to use some statistics, I will at least try to analyse them and draw what conclusions I can from them.
  The right hon. and learned Gentleman asked me a number of questions, as he was perfectly entitled to do. I think that most of them will be answered in the course of my speech. However, there is only one thing which is more dangerous than statistics, and that is speculation, either as to political futures or shipbuilding futures. Nevertheless, I shall certainly not go into the speculative field of what might happen to world trade or Japanese shipbuilding in four or five years time, although I will give the trends as fairly as I can.
  The position as the right hon. and learned Gentleman has outlined it has been clearly stated—and I know he will accept it—in a number of recent speeches by prominent shipowners and other people interested in the industry. Therefore, I do not think I need go into the general problem which he has statistically presented. The first point that I want to deal with is, is the recession in shipping in any way concerned with affairs at home? For example, have we
  1336
  had a recession here which has had some effect on the shipping industry?
  Before I come to that matter, I should give one figure which I think we ought to keep in mind during the debate because it gives about the best sense of proportion of the problem that we are discussing. I think that it is a little more up to date than the figure that the right hon. and learned Gentleman used. The present position, as accurately as I can obtain it, is that there are about 1·2 million gross tons of British shipping laid up, compared with the world total of laid-up shipping of over 8 million gross tons. That is the proportion with which we are dealing.
  As to the impact of affairs at home on British shipping, it is worth considering our total tonnage of imports and exports. I give only two figures, because I do not want to get drawn into a vast mass of statistics. Let us consider the imports and exports for January-April last year compared with January-April this year. One will find that although we are talking about very large tonnages—over 42 million tons—there is a drop of only 300,000 tons between the two years. In other words, in 1957 the movement was 42½ million tons; this year it is 42,200,000 tons. Therefore it cannot be said—and I think we should be clear in our minds on this point—that the recession in the shipping industry derives largely from a decrease in our exports and imports.
  As I have shown, in volume—and that is the thing that matters—they have been remarkably steady, and I do not think home economic policy can in any way be brought into this argument. Indeed, the reverse is the case, because the shipping industry depends on the maximum level of trade. It depends on expansion, flexibility and a successful economic policy. Therefore, the Government have certainly played their part in trying to expand exports, as we have done, in trying to keep a healthy position here at home. So I think that we can get that argument out of the way by saying that this is a world problem, as the right hon. and learned Gentleman fairly said. The economic policy of the Government at home, as far as it concerns our domestic affairs, has had very little effect upon the situation, and, I would say, none at all in making a major contribution to the shipping recession.

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  Although I know that the debate will range widely, I think that the main problem in the minds of most hon. Members is the problem of flags of convenience. I think I shall call them that because, although they have various odd names which are difficult to say, on the whole the basis of the difficulty is that they are a convenient way of evading taxation and evading responsibilities which, as I hope to show, should not be evaded either in the long-term interests of world trade or in the interests of seafarers and shipowners.
  Let us look for a moment at the facts, because they are very interesting. Today, about 6 per cent. of the total tonnage of the British merchant fleet is laid up for lack of employment. The figure for world shipping is about 8 per cent. In other words, we have done rather better on average than the rest of the world. The total percentage for flags of convenience shipping is 21 per cent.—in other words, nearly four times as high.
  That leads to a very important point. These fleets have been built up rapidly. Because they have offered quick profits they have been able to come in at a time of world boom in the carrying trade and they are proving extremely vulnerable to the present recession, far more vulnerable than the fleets of the main mercantile nations. There is some measure of comfort to be drawn from the fact that those shipping companies and nations that have tried to serve their customers all over the world, year in and year out, in good times and bad, have at least retained a lot more of the trade than those interests which have come in and tried to scoop a quick profit. They are now suffering from the recession in a much greater measure than the regular maritime nations.
  Commander J. W. Maitland: Is not it a fact that the United States of America, which has a considerable interest in the business of flags of convenience, has allowed shipowners who have been registered under flags of convenience to reregister under the United States and thereby get the benefit of both worlds?
  Mr. Watkinson: I shall come to some of those problems presently.
  Mr. C. R. Hobson: Tell us why.
  Mr. Watkinson: Perhaps I may be allowed to continue. I hope not to be quite as long as the right hon. and learned Member for Newport, although this is a long and technical story. Perhaps we shall get on better if I develop the point I intend to make. My intention is to set out the Government policy, which is what I should do on this occasion.
  Now, we come to the broad picture. I have said that on the whole this country has suffered a little less than the rest of the world. On the whole, the flags of convenience have suffered far more than anybody else. Let us for a moment analyse our own shipping position. The right hon. and learned Member has rightly said that we lost 11·5 million gross tons during the last war. We have now rebuilt our fleet to 18·9 million gross tons. Our fleet is still the largest active seagoing merchant fleet in the world and represents today one-fifth of the active world tonnage.
  In the House of Commons we do not often debate shipping matters in the widest sense. Perhaps I might be allowed to say that those who, like myself, had the honour to serve at sea during the last war will never forget the bravery and courage and devotion to duty of those men who served in the Merchant Navy. [HOn. MEMBERS: "Hear, hear."] They were sunk time and time again in conditions of horror and danger. They never refused to go back to sea. Men who were sunk three or four times immediately volunteered to return as soon as they were landed as survivors. Their great bravery and courage is a living encouragement to us always to try to do what we can to foster this great industry.
  I hope it will be understood, therefore, that I speak this afternoon as one who certainly intends, on behalf of the Government, to do all that he can to ensure that the British merchant fleet continues to expand and be prosperous, as it must for the very security and safety of our nation. Perhaps I should not have made that personal intervention, but I will now go on with my task of trying to analyse our present position.
  I have said that although we have made this wonderful recovery, we have declined in relation to the fleets of the rest of the world. Therefore, our percentage

  1339
  share in an expanding world fleet has declined, for two reasons. One is that new nations always seem to demand two things. They seem to demand an airline which carries their flag and a mercantile marine which carries their flag. Whether those things are economic or profitable often does not seem to enter into the question. That is one reason why we have seen this expansion, particularly on the part of nations who have not previously had large, or, indeed, any, merchant fleets. Secondly, there is the problem of the flag of convenience and its 15 million gross tons which now sails, or is laid up, under that flag.
  I should like to analyse quickly the position within our own industry. The right hon. and learned Member asked me about the position of liners, both cargo and passenger, and tramps. The whole position is changing. Liner tonnage has remained about the same as it was in our pre-war fleet-9·4 million gross tons at the end of May, 1958, as compared with 9·6 million gross tons in 1939. The passenger element, however, has dropped by about 1 million gross tons, although about the same number of passengers, or slightly more, are being carried because of faster ships and quicker turn-round.
  Where the big development has come is in the tonnage of the cargo liner, which, as all hon. Members who take part in this debate will know, is a liner which carries either cargo or both passengers and cargo, and which runs to a fixed schedule. This total is now 6·6 million gross tons. That is the result of the change in trade and the result of merchandise and exports of all kinds now being required in the shortest possible time, and, indeed, of our export trade switching much more to things like motor cars and manufactured goods and away from things like coal.
  The main factor in the decline of the United Kingdom tramp tonnage is to be laid at the door of two features. One is the decline in the coal export trade and the other is the temporary decline in the carryings of primary producing countries all over the world.
  Within our industry, therefore, the position is that the passenger liner is holding its own and is doing so very successfully against enormous competition
  1340
  in the air. The cargo liner is expanding and improving its position, as one would expect it to do, because of the changing pattern of our exports. But because of the drop in the carriage of bulk cargoes, because of almost the ending of our position as an exporter of coal, the tramp position has declined. The coasting tramp position has declined also, because of the great increase in various methods of transporting goods by road and rail within the country. That is the position within our industry. I need add only that the tanker tonnage, which now totals 5·7 million gross tons, is the main element of increase in the British mercantile fleet since the war.
  To sum up, what we see is an industry which is expanding in many sectors and which is much more efficient than it was in ships, particularly in passenger and cargo liner ships, which are the finest in the world. Although it is suffering some difficulties, largely out of its own control, it is a unified and efficient mercantile fleet and ready to play its full part in the world. The figures I have given show that even in difficult times, it rather more than holds its own.
  Mr. H. A. Marquand: The right hon. Gentleman said that he thought the fleet was ready to play its part in whatever may come. If it should happen that we were fortunate enough once again to expand our export trade in coal by a million or two tons, would we have adequate tramp shipping available for the purpose?
  Mr. Watkinson: Yes, I understand, we would. That would not present any difficulty. The difficulty is presented by the problem of securing the trade.
  I turn now to our customers. Here is the main reason for the present difficulties of the shipping industry, particularly the recession in the primary producing countries. There is no need for me to say amongst expert hon. Members that that has had this inevitable effect on our shipping industry, because nearly one-third of shipping earnings are derived from trade between countries outside the United Kingdom. It is not surprising, therefore, that ships are at present laid up and it is not surprising that at the moment the balance between supply and demand in shipping is out of gear.
  To come to the Government's part in this: what are the Government doing to

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  play their part, first, in trying to expand world trade again? In talks with the United States, at Prime Minister and all other levels, and in the visits which my right hon. Friend the President of the Board of Trade has made to many overseas countries, we have tried to do all we can to preach the gospel that the free world must now expand its trade again and that the whole future of the free world might depend upon the success of that operation.
  In Montreal, towards the end of this year, the Finance and Trade Ministers of Commonwealth Governments will be meeting to see what new plans we can make to expand Commonwealth trade. Not only will that conference deal with Commonwealth trade, but it will try to consider the wider problem of expanding world trade. I can perhaps best sum this up by saying that it is the Government's policy to do everything they possibly can in any way open to them to try to reverse the declining trend in trade in the free world and to try to expand it again.
  Mr. John Rankin: Does that include the expansion of trade with China and Russia?
  Mr. Watkinson: Certainly, it includes the expansion of trade with those countries, but I think our first job, particularly in Montreal in September, will be to see if we can expand trade between the Commonwealth countries. I do not for a moment rule out an examination of what can be done to expand trade with China and Russia.
  To come to the more particular point, and to answer some of the questions which the right hon. and learned Gentleman asked me, we must consider what we should do about flags of convenience, because they are not removed by an expansion of world trade. Indeed, if it becomes much more profitable, flags of convenience shipping will come back into the picture. I think it is a fair statement that they might well prove creatures of boom rather than creatures of normal times. Certainly, this practice is not going to expand in times of recession.
  What hopeful policies can we adopt on this front? I shall not bother to analyse the nationalities of the countries which run these ships. The largest single interest in flags of convenience is probably in the United States, with Greece second,
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  but what I want to examine for a moment is what should be the attitude of the traditional maritime countries like our own to these flags of convenience and this form of tax evasion and evasion of due responsibilities. It is a difficult problem, because the traditional policy of our shipping is that of freedom.
  I think any British shipowner would say that even in today's conditions, he gains far more from freedom to trade and order his ships where he likes in this world carrying trade than he would gain from a restricted world in which all sorts of controls and restrictions were placed upon this great industry. The difficulty is how does one square this freedom to participate in trade and take any opportunities that are offered with this problem, and, indeed, with the recognised international standards of safety and welfare which we all want to see maintained?
  I think that, first, there is something to be done perhaps on the international front. I must say, so as not to mislead the Committee, that I do not think that it is the view of the Chamber of Shipping that there are great possibilities at the moment for international action; but I do not think that that should stop the Government—and I have told the Chamber this—from pursuing every possible means they can to try to get international agreement on this problem, but it is very difficult.
  I think there are some points that we should bear in mind. First of all, these ships are not subject to proper merchant shipping legislation. I am not saying for a moment that their crew's conditions are bad, that their pay is low or that the ships are not modern, but the right hon. and learned Gentleman mentioned one case—and there are others—of the crews of these ships, when bad times come, suffering a sudden reduction in pay and a sudden deterioration in their conditions. That is something that we should watch very carefully. In that respect, we ought to try to pursue, as far as we can, any policy that would bring these ships up to the normal standards of pay and conditions which those of the maritime nations enjoy. I think there is some interest in, and that there may be some possibility of linking these ships more closely in some way that would

  1343
  make them more subject to proper conditions in that respect. I will return to that in a moment.
  One other point that I want to make, which is a very serious one, is that these ships enjoy the freedom from taxation that goes in defence, yet they would be the first to demand protection if war or trouble ever came. They escape entirely the enormous burden which this country, America and other countries are bearing for the defence of the free world, and yet they would certainly have no hesitation at all in demanding help and assistance if the need came. That is another point which we should try to stress—that their position in that respect is one of repudiating clearly the responsibilities which they ought to be bearing as nationals of the country in which they live, wherever they may register their ships.
  These two points are largely moral ones, and are only points that can be put forward in discussion and so on. It is fair to say that the Maritime Transport Committee of O.E.E.C. has studied the problem and was unable to suggest any positive solution at all. There is the hopeful possibility, as the right hon. and learned Gentleman said, of the law of the Sea Conference. Perhaps I might read a provision which was agreed upon at this conference:
  "There must exist a genuine link between the State and the ship. In particular the State must effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag."
  I know that the Maritime Session of the I.L.O. adopted a somewhat similar recommendation. The Government are studying this matter very carefully and with great interest. They think that the acceptance of these concepts of the genuine link and effective jurisdiction and control would be very desirable, if we could find some measure of agreement or some way of implementing them. I cannot say more than that.
  Mr. David Jones: Would the right hon. Gentleman confirm that, when that Convention was passed, the representatives of the American Government and the Greek shipowners abstained from voting?
  Mr. Watkinson: I will leave my hon. Friend who will wind up the debate to
  1344
  answer that question. Whether they did or not does not alter the Government's policy; we attach great importance to these recommendations and would like to see what we could do to implement them.
  Then we come to the question of what help can be given by the Government under their fiscal policy. It would be out of order to discuss taxation matters today, but I can go so far as to say that the General Council of British Shipping was asked by me some time ago to put forward its views on how we could best meet this menace. The Council has given me a long and detailed memorandum, but, here again, I do not want to mislead the Committee, and therefore I should say that the memorandum deals practically entirely with matters of taxation. As I have said before, the General Council finds it very difficult to suggest any measures of meeting this matter other than measures of further reductions of taxation and burdens of that kind.
  Perhaps I may sum up this part of my speech by saying that I shall listen with great care to any proposals that hon. Members like to put forward in this debate. So far, the proposal put forward by the Conference on the Law of the Sea seems to the Government to be the most hopeful one, and we shall pursue it; but, as I have told the Chamber of Shipping, if it or any other responsible body or individual can bring forward some proposals by which we can assure proper standards and a proper measure of bearing the burden of these flags of convenience ships, they will be most carefully considered.
  On Monday, I received a memorandum from the General Council with its proposals. I have had a preliminary discussion with the Council, and, as I told it, we will have to examine all these changes most carefully. I think I should say, as indeed the right hon. and learned Gentleman himself said, that the shipping industry cannot expect to be completely removed from the British taxation system. Obviously, therefore, any changes that can be made must be limited. But there is one matter which the General Council specifically raised with me on which I can give some good news.
  In common with all other United Kingdom industries, British shipowners seeking to raise any substantial capital

  1345
  sums have had to seek the approval of the Capital Issues Committee. The effects of the restriction on credit which the Government imposed were, of course, felt by the shipping industry in the same way as by other industries. The shipowners have represented that for them the effects were especially severe by comparison with their foreign competitors, even including foreign owners building in United Kingdom shipyards. They have claimed, with justice, that they are essentially an export industry and that they should be able to have recourse to the sources of capital in this country best suited to their requirements.
  The Government appreciate the force of these arguments, and I think that the shipping industry will now find that any Government restrictions on the sources from which it may raise capital in this country have now been removed. I need say no more at this stage except to emphasise that his is perhaps a sign of how willing the Government are to help wherever they possibly can. The concession which I have just announced meets at least one of the points which the General Council put forward in its recent memorandum.
  I would only add that, of course, in the 1957 Budget, the shipping industry secured the very considerable concession of 40 per cent. investment allowance. This allowance, of course, is only just beginning to bear fruit. A shipowner acquiring a new ship, I am advised, is given tax-free allowances over the life of the ship which would amount to 140 per cent. of its cost. Of course, hon. Gentlemen may say, "If you are not building ships, you cannot get the concession." Of course one cannot, but a company with a reasonably steady building programme is relieved—and I think the shipping industry accept this—of many, and, indeed, perhaps most, of its competitive disadvantages.
  Those companies which are going on with their building programmes, and that is what this concession was intended to help—the shipbuilding industry as well as the ship-owning industry—are deriving very great benefit, and a much greater benefit than any other industry can claim in this respect. Therefore, I do not think that the shipping industry can claim that it has not had a major taxation concession even though it is only just beginning to take effect.
  1346
  These two measures, on the tax and the capital investment front of 40 per cent. which is now bearing fruit, and the concession on the capital issues side which I have announced, I think show that the Government mean to do all they can to help whenever they can possibly do so.
  Mr. A. J. Irvine: Can the right hon. Gentleman say on how many occasions the Capital Issues Committee has turned down an application by a shipping company?
  Mr. Watkinson: I cannot answer that question without notice. All I am saying is that this is a concession to which the shipping industry attaches importance and which it has received. That is my answer to those who say that we are not doing all we can to help the shipping industry.
  There are other matters at which we are looking. There is, for instance, the Transfer Restriction Act, 1939, which still remains on the Statute Book, and the Voyage Licensing Regulations which. I know, are irksome to many owners. Both these Measures were strategic in origin and their removal might improve the competitive position of British shipowners. We are looking at these matters very carefully.
  I assure the shipping industry that, if it is at all possible to do so, the Government will dispense with these powers. The same is true of control on the sale of ships for scrap. I know that there are two views on that, as on the sale of British ships to foreign owners. It is a difficult subject, but I think that we are all agreed that if we could get rid of the control at least on the sale of ships for scrap that would be an advantage to the industry. I hope that we shall be able to do so in the not too distant future.
  Mr. Rankin: Will the right hon. Gentleman also bear in mind the sale of ships to Pan-Lib-Hon-Co?
  Mr. Watkinson: I said that there were two views about the sale of British ships abroad, but, of course, when we get into that argument we have to remember that the shipowner will say, "I prefer freedom to trade as I like." Hon. Members should, and I think will, recognise that that is a principle that I do not think

  1347
  a single British shipowner would ever wish to give away—the principle of freedom to trade, the freedom to purchase or sell as he thinks best according to his commercial judgment.
  The right hon. and learned Gentleman asked questions on one or two shipbuilding matters, with which I will deal very briefly because, no doubt, some other hon. Members will be dealing with the matter.
  Sir F. Soskice: Before the right hon. Gentleman passes from shipping, can he answer the question which I put to him with regard to the approach from the Norwegian Government?
  Mr. Watkinson: I am sorry. I should have done that. I am advised that the Norwegian document on flags of convenience, which was dated 16th June, was received by our Foreign Office yesterday.
  Sir F. Soskice: The second one?
  Mr. Watkinson: Perhaps it is the second one. I will certainly give the undertaking that we will look at it very carefully, and if it is, as the right hon. and learned Gentleman suggested, a second one asking for a reply, I will consult my right hon. Friend the Foreign Secretary with a view to seeing that it is given early consideration. That is the answer to that.
  On the various shipbuilding points, the position at the moment is that we have an order book for 6 million tons which represents four years' work. The cancellations have amounted to one-quarter of a million tons. Of course, one of the difficulties—and, I think, the cause of some of the cancellations—has been the fact that up till now British yards have not always given as quick a delivery as their foreign competitors.
  I am glad to say that the shortage of steel is no longer the limiting factor in that respect and that, except in quite exceptional conditions, there is no shortage of steel in the shipyards. I hope that will result in quicker delivery both on repairs and on new building. That might be the biggest single contribution at the moment which the shipbuilding industry could make to the prosperity of its own
  1348
  future—to be able to offer quicker delivery and a quicker turn-round on repairs.
  In answer to the right hon. and learned Gentleman's question, the shortage of steel is not a limiting factor and is not now standing in the way of the industry working up to this target of 2 million tons. I have answered the question by saying that at the moment the shortage of steel is not the limiting factor.
  Sir F. Soskice: That is not quite the question I put to the right hon. Gentleman. My question was, can he give us any indication of the Government's decision with regard to the new steel plant?
  Mr. Watkinson: I do not miss the point. I understand that the right hon. and learned Gentleman has a constituency interest in the matter, but I am sure he would not expect me to give an answer to a question which does not concern me as a Departmental Minister—although it certainly concerns me as a member of the Government—in a debate in which it is not relevant. Therefore, I am afraid that the right hon. and learned Gentleman will have to wait for his answer. I accept that he has a definite constituency interest, and no doubt if I had such an interest I should be pressing it, too. He asked whether the shortage of steel was a limiting factor today in the production and repair of ships. I have given him the answer that it is not.
  As to the question of Japanese shipping and its rival position, I think that on tankers it is fair to say that the Japanese are giving very long credit terms. Perhaps I should add that the whole operation of overseas credit is being looked at by my right hon. Friend the Chancellor. No doubt my right hon. Friend will take this example into account in his deliberations in the same way as he is taking into account aircraft and many other problems.
  I would sum up by saying that the first thing we have to face is that this is the product of a world recession. However, we have the consolation that the British shipping industry appears to have stood up better to that recession than anyone else. There is also the consolation that it has dealt a major blow to those flag-of-convenience ships—to some owners who have plunged in in the hope

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  of making big profits. They have taken on enormous building commitments which some of them do not now seem able to implement. While I do not say for a moment that the menance of the flag of convenience has disappeared, at least at the moment some operators of flag-of-convenience ships are learning a very salutary lesson.
  For the future, the Government will do all they can to find ways of trying to see that these ships carry the proper responsibilities which we believe that they ought to bear, both for the conditions of their crews and for their terms of operation. They should also bear some of the responsibilities which the maritime nations bear for defence and many other things.
  The Government will this year do all they can to try to start world trade again on an upward move, because in that lies much the greatest hope of the shipping industry. We shall also do what we can at home to help the industry to be more competitive and more efficient, and we have given some sign of our determination to do that in the 40 per cent. concession and in the capital issues concession.
  The industry is going through difficult times, but it is efficient and it is competitive and it is standing these times well. I think that it has every right to look to the future with a reasonable and sober confidence.
  5.11 p.m.
  Mr. E. Shinwell: We can all join with the Minister in expressing our gratitude to the men of the Merchant Navy for their gallant services during the last war. Those of us who were in the House or associated with the officers and men of the Merchant Navy during that period are aware of many tragic incidents. We also remind ourselves of their gallantry and behaviour, which was worthy of the Merchant Navy and was of great credit to the United Kingdom.
  While I agree with the right hon. Gentleman on that issue, I was disappointed with his speech. I am convinced that my disappointment will be shared by the shipping industry. We have had plenty of statistical information in the debate, and statistics are valuable, but I think that it would be to the advantage of the Committee if we came to the
  1350
  crux of the problem, and in order to do that perhaps a little history may be of value.
  I have taken part in almost every shipping debate in the House since 1922, except for the short period when I was absent and on one occasion during the last war when I declined to take part in a debate during a secret session. The right hon. Gentleman referred to the losses sustained by the United Kingdom in shipping during the war—about 11 million tons. This was part of the reason why I refused to take part in that debate, on the ground that the time had arived when the public should be fully informed about our losses and the responsibility placed on the right shoulders. I have also had some association for twenty-five years or more with seafaring interests and have learned quite a lot about shipping affairs.
  The right hon. Gentleman made several statements which were slightly inaccurate. He is, of course, presented with a brief and he sticks to it; that is what we usually do when we are speaking from the Government benches for the Government.
  I regret that the Ministry of Shipping was ever abandoned. We had something to do with the creation of that Ministry before the Second World War. It was then merged into the Ministry of War Transport, at the suggestion of many of us in the Opposition. I regard the shipping industry, with shipbuilding, as so vital in the interests of the United Kingdom that it would be of great value to concentrate both in a Ministry of Shipping. Now they are diversified. The right hon. Gentleman has responsibility, which he transfers to the Joint Parliamentary Secretary, as was the case in the old days when the mercantile marine was concentrated in the Board of Trade and the Parliamentary Secretary had responsibility for dealing with mercantile marine matters. In addition, the shipbuilding side is concentrated in the Admiralty. I think that this is a cockeyed arrangement and that we ought to put it right. In my opinion, it is responsible for a great deal of confusion and lack of direction which is so important in an issue of this character.
  What is responsible for the present position? The right hon. Gentleman said that it was the recession and that when

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  the recession disappears or diminishes, United Kingdom shipping will come back into its own. He forgets that when the recession disappears or diminishes Pan-Lib-Hon-Co ships will also come back into their own. We shall not drive them off the high seas and out of existence when the recession disappears. The danger will remain.
  Who is chiefly responsible for the danger? Let us pinpoint it and make no mistake about it. It is the United States. I regret having to indulge in even a mild criticism of the United States, because I have a strong and profound belief in the value of Anglo-American co-operation, not only for the purpose of avoiding an international conflict or meeting an emergency, should it unhappily occur, but also for the purpose of economic stability throughout the world.
  We cannot ignore what is happening at present or seek to put the blame on the wrong shoulders. The United States' accumulation of dry cargo ships and tankers in Pan-Lib-Hon-Co—that is to say, registered in Panama, Liberia, Honduras and Costa Rica—exceeds the accumulation of shipping by any other nation. The Greeks are next. Why do the United States indulge in this extraordinary conduct to the detriment of United Kingdom shipping? I cannot understand this sort of thing. There is a great deal of talk about Anglo-American co-operation in matters of atomic energy and fissionable material and international affairs, but what is the good of all that if by their action they destroy the value and the effectiveness of United Kingdom shipping?
  Sir Roland Jennings: I agree with every word which the right hon. Gentleman is saying about the Americans, but could he tell me what remedy he has in mind?
  Mr. Shinwell: But I have only just begun. I am sure that the hon. Member' will not take advantage of me in matters of this sort and will give me a chance. There is so much to say. I do not want to speak at great length because my hon. Friends and hon. Members opposite are anxious to speak. Hon. Members opposite have great knowledge of these
  1352
  matters, particularly the hon. and gallant Member for Barkston Ash (Sir L. Ropner) and the hon. Member for Yeovil (Mr. Peyton), and naturally they will want to speak.
  We must speak quite bluntly and with the utmost candour to the United States. It is no use talking about international conferences, because if there are such conferences the very people who constitute the menace—the Greeks and the others—must be included; and does anybody suppose that they would agree to abandon their present methods of tax evasion? To speak of tax evasion is to address oneself very mildly to the subject. There is no taxation at all. That is the very purpose of the scheme.
  The Paymaster-General suggested the other day—and I was very amused by it—and I note that the Minister of Transport repeats the suggestion today, that, after all, the British shipowners have nothing to complain of, because they get 40 per cent. investment allowance and 100 per cent. on top of that, making 140 per cent. That looks good, except that the shipowners do not believe that it is as good as the Government try to make out. I made inquiries. I was a little suspicious about it when I read it.
  I found out what the shipowners had to say, and it is just as well that the Committee should know it. After hearing it, perhaps the right hon. Gentleman will change his mind. The Paymaster-General said:
  "The shipowner operating under a flag of convenience and paying no taxation has no advantage in that respect over the British ow who pays taxation but gets 140 per cent. of what he pays back again."
  We must bear in mind that if one pays no taxation at all one is much better off, even without some rebate, than somebody who has to pay tax. That is the first point.
  But this matter goes much deeper than that, for the Paymaster-General went on to say:
  "That being over and above the 100 per cent. depreciation, it means that if one spend £100 on replacing a ship not only does one get back the tax of £100 but in addition one gets tax on £40."—[OFFICIAL REPORT, 17th June, 1958; Vol. 589, c. 999.]
  Shipowners point out that this is misleading.

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  This refers only to tax rebates, and the owner will only recover the replacement-value of the ship over a far longer period and then, as they say,
  "provided that he is operating at a profit, since during that time he is also dispersing a considerable amount of his income in taxation."
  It is quite misleading to suggest that the British shipowner has had an advantage because of this 40 per cent. plus 100 per cent. and I am sure that shipowners on the benches opposite will agree.
  I am not suggesting that relief of taxation is the remedy. Nor do I believe that the shipowners want that, but we have to take account of the fact that every maritime nation engaged in shipping and shipbuilding indulges in a policy of subsidisation. The United States spends millions of dollars, even billions of dollars; but we have had enough of statistics. Let us deal with the facts. [Interruption.] Yes, people need to get the idea.
  The United States, first of all, wants to build a great merchant fleet so that it can be available in time of war. It has been doing this for a long time. The Americans were responsible for building the Liberty ships.
  Mr. Rankin: And selling them to the Greeks.
  Mr. Shinwell: Shipowners in this country would have been glad to buy them, but what prevented them? I will come later to the profit gained by the Greeks and others as a result of running those ships.
  During the 1930s, the period of recession because British shipowners could not meet their liabilities with the banks and the finance houses, the banks foreclosed and British shipowners had to sell what ships they had. These were bought by the Greeks and others who could afford to pay for them at low prices.
  When it came to the matter of buying Liberty ships, British owners were refused permission to use dollars. Since the war many shipowners would have been glad to buy Liberty ships, but they were refused permission. Some of these ships were bought by Greeks and other foreign owners for about £100,000, and they were sold at the end of 1956 and in 1957 for £600,000 and more.
  British shipowners have been suffering a great deal as a result of all this. It
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  might be asked why I am concerned about the shipowners. I am not concerned so much about them, though there are very decent people among them, people no doubt of good education and social behaviour. I am concerned about the seamen. Unless British shipping is profitable, obviously the National Maritime Board can never agree to pay good wage rates.
  There have been great improvements since 1911 when I was first associated with seamen. That was also the beginning of trouble. Men on deck were sailing to the River Plate for £3 a month, and men in the stokeholes of coal-burning ships sailed for £3 10s. a month. There have been many improvements in wages since, and vast improvements in accommodation. Some of our tramp ships and cargo liners have wonderful accommodation. There are none of those old forecastles and glory holes. Many of the men now have their own rooms and live like fighting cocks, and why not? There have been vast improvements, partly as a result of agitation, partly as a result of public opinion, and partly because we have some very enlightened shipowners in the country, to whom I pay tribute.
  We must find a remedy for the situation. I shall tell the Minister and my colleagues on both sides of the Committee something which has not yet been mentioned in the debate, but which in my judgment is the real cause of the trouble. It is not so much flags of convenience. I am surprised that there has been concentration on flags of convenience, for which there is no immediate solution and perhaps no solution at all. The real trouble is flags of discrimination.
  It means that if the United States enters into a contract to send goods into this country at our request, it insists upon discriminating to the extent of at least 50 per cent. being carried in American bottoms. The same applies to other countries. There is hardly a maritime country in the world, or any country at all, that does not operate the discrimination policy. We suffer far more from that policy than from the policy of flags of convenience.
  How can we deal with that? I hope that the Joint Parliamentary Secretary will address himself to this subject and

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  tell us how to find a remedy. I shall make a suggestion. I have said before that we have to be pretty straight with the United States in this matter. I wish we had a larger attendance in the Chamber, and some excitement and agitation, and that hon. Members had been stirred up to make a strong protest and let the United States know That we are sick and tired of the policy they have adopted and which in our judgment is to the detriment of British shipping.
  That is the way to talk to friends and, if they are friends, they will understand. I know what international conferences are. I had experience of them when I was in Government. There is plenty of talkie-talkie, but not much action. They love talking. Well, so do we all. Therefore I do not attach so much importance to conferences but to going to the fountain head and saying that we will not stand for this any more. After all, if the Americans were reasonable about flags of convenience, and also about the discriminating policy they are attempting in connection with the carriage of cargo, it would be of inestimable value to this country. It would make all the difference in the world.
  Now I come to another matter. I know the position is not as serious as some people make out and that we are inclined to exaggerate. Many shipowners are doing well. Many are making profits. Many are living on past profits. Let us not exaggerate the position, although it may become more dangerous. My right hon. and learned Friend the Member for Newport (Sir F. Soskice), in opening the debate, dealt with the decline in British tonnages since 1906, since the First World War, during the Second World War and since 1945. It is a serious state of affairs.
  The only advantage we possess is that our ships are probably better and faster than others and have a greater capacity, although it is true that many ships registered in the countries about which we complain are good ships. I think the majority are only about five years old. Nor should we pretend that the conditions of the crews who sail in those ships are inferior to the conditions in our ships. It is not possible to get crews for those ships unless they are paid well, particularly if they happen to be Americans. The Greeks do not matter in this context.
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  Reference to the decline in shipping brings me to the subject of declining freights. This is also a serious matter. I will give the Committee one fact. About a year and a half ago shipowners could get 100s. per ton carrying coal from the United States to this country or to Europe. What are they getting now? Twenty-five shillings. There is no ship which can pay on that basis. It could not wash its face on that basis. At the very least it needs 35s. a ton, and even that presents great difficulties.
  This reminds me that when the right hon. Gentleman was saying that British shipping was not so badly off and that, after all, there are many British ships sailing the high seas, I thought that a ship can sail the high seas but, if it has not got a sufficient cargo, how can the owner pay his way? Many British ships are sailing the high seas but with cargoes that are not satisfactory from the point of view of making profits or meeting depreciation charges. That is the position and the shipowners are well aware of it.
  I hope the Committee will address itself seriously to this problem, because if there is a further decline in British shipping it will be serious for us. We have enough ships laid off at present. There are great economic problems confronting the country but we cannot afford to allow British shipping to go by the board. We must not allow that. My right hon. and learned Friend pointed out that a sum of about £400 million is gained from invisible exports and in other ways as a result of the operations of British shipping. That is of great value to us.
  What is to be done? The first thing is that the Government must take their courage in both hands and must not be afraid. There is far too much timidity in matters of this kind and in international relations. We must say to the United States "This kind of conduct will not do. See the adverse effect on our shipping as a result of your behaviour", and we must try to get some agreement with them.
  On the question of how we can help British shipping financially, many years ago I had something to do—together with a departed colleague of mine, David Kirkwood—with the agitation for the guarantee of credit facilities for the Cunarders. What a grand thing that

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  turned out to be. If those credit facilities had not been provided at the time we should not have had the advantage of those two fine vessels during the war which were of such value to us and which were able to proceed on their missions without escorts.
  Can anything be done on those lines today? I see that the West German Federal Government have now decided to subsidise their shipbuilding to the extent of 50 per cent. There is a competitive factor which we must face in the future. Cannot we do something like it? Perhaps credit facilities could be provided. I noticed what the right hon. Gentleman said about the relaxation of the Capital Issues Committee. That may be of value, but something more needs to be done and we ought not to be afraid to say what we want if we think it will be of value.
  Do not let us be too mealy-mouthed about subsidies. We have subsidies for agriculture and we have had subsidies for other industries. We had them in 1925 for our mining industry, amounting to £25 million, which went into the pockets of the mineowners. There might be partial subsidies to enable the shipping industry to carry on when the money is required for replacing ships. I do not see why that policy should not be accepted.
  I beg hon. Members on both sides of the Committee to interest themselves in shipping and shipbuilding. The Chancellor of the Exchequer in the course of the debate the other day said something which was commonplace and has been said thousands of times by various people, namely, that shipping is the life-line of our country. So it is; but if it is the life-line, let us hold on to it.
  5.39 p.m.
  Mr. John Peyton: I agree profoundly and most warmly with most of what the right hon. Member for Easing-ton (Mr. Shinwell) has said. He never disappoints us by a lack of robustness and vigour. Today I particularly welcome his suggestion to the Committee and to the Government that this country should address itself to our American partners and allies. There can be no gainsaying American responsibility for the huge growth in flags of convenience fleets. In those circumstances, when we
  1358
  are seeing our own merchant marine undermined by that growth, there can be no forgiveness if we fail to address ourselves with the utmost directness and frankness to the American Government and nation. Incidentally, it was only yesterday that a report was brought to my attention to the effect that the American Government were introducing a measure into Congress to permit mortgage finance for foreign ships, which means that these flag of convenience fleets will get further aid.
  A further point which the right hon. Gentleman touched on is the possibility of establishing a Ministry of Shipping. I do not know that I would go all the way with him on that, but at the moment I do not feel satisfied that we have any organisation which combines representatives of both the Government and the industry adequately to consider the many angles of the shipping problem.
  As to the speech of my right hon. Friend the Minister of Transport and Civil Aviation, I very much welcome the concession which he was able to announce, and even more do I welcome the general sympathetic attitude shown throughout his speech. However, I felt that he was slightly optimistic, particularly in one respect when he said that the present shipping slump was seriously affecting the flag of convenience fleets. I would hazard a guess that much of the flag of convenience tonnage now laid up is of the older variety and that the new ships are not laid up. I should have thought that it was a commonplace and a triusm that in any future slump the chief supplier of the scrapyard and the chief occupier of the lay-up berth will be the owner of outdated tonnage. If the Pan-Lib-Hon-Co fleets are enabled to keep well ahead of the British Mercantile Marine there can be no doubt as to who will be in the lay-up berth in future slumps, and the present slump should not give us too great a confidence as to the effects of future recessions upon the shipping industry.
  I have previously had the privilege of addressing the House on the question of flags of convenience, and I do not want to repeat what I have already said, except to say in a general way that this country cannot allow its Commonwealth and strategic interests to be prejudiced by the eclipse of the British Merchant

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  Navy. As the right hon. and learned Member for Newport rightly said, in the light of our trading position it is unthinkable that we should contemplate—we cannot possibly contemplate—the huge adverse burden which would be thrust upon our balance of payments if the immense contribution which is made by the British Merchant Navy were to be withdrawn. There has been a steady decline, as the right hon. and learned Gentleman pointed out, over the last fifty years, and it has seemed that every year in recent years our share of world tonnage has declined by about ½ per cent. Also, whereas total world tonnage has increased by 50 million since 1950 the United Kingdom increase has been only 1½ million.
  I recognise that it is very easy to pose this problem, but it is very much more difficult to solve it. I do not believe that we shall have a hope of solving it—certainly I am sure that there is no quick, off-the-cuff, ready-made solution available to anybody—unless an organisation, comprising representatives of all concerned, is set up to look at the problem from its many angles. I should like to remind the Committee of some of the angles and aspects involved.
  Firstly, there is the slump in freights. Secondly, as the right hon. and learned Gentleman so rightly mentioned, there is the background of the losses of two world wars which it is so easy for us some years afterwards to ignore. We should pay tribute, as he did, to the tremendous efforts which were made in times of shortage of finance and other resources to recover from the devastation of war and regain the momentum of development.
  Another factor which we should bear in mind is that this is very much of a pioneer industry. The industry was, in fact pioneered from this country. Pioneer industries have great traditions, but they are also inclined to gather a few relics with those traditions. It is only natural that an industry of that kind should have a good deal of outdated equipment, and when we add to that the effect of two world wars it may indeed constitute something of a handicap.
  I believe that the Committee and the country are entitled to remind the industry
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  what we expect from it. We expect to be assured that it still has the enterprise and initiative which launched the two "Queens" upon their long reign in the Atlantic. We are also entitled to remind it that in the these days of interdependence it is impossible to live in ivory towers.
  I am never satisfied, or quite certain, about what arrangements are made to take account of modern developments in shipping and shipbuilding, what general, all-round consideration is given, for example, to the growth in the size of ships, to the new means of propulsion which are not very far away from us now, and to the provision of facilities for these ships. I know of the Milford Haven project and other projects, but I should be very interested to know whether there is yet any certainty when those facilities will be completed. In considering the problems of the shipping industry, and, immediately with them, the question of our imports of raw materials such as oil and iron ore, it is of the utmost importance that we should give simultaneous thought to the problem of how these big ships are to be handled. Consequently, we should like to have from the Government an assurance that their attention is constantly applied to the question of providing adequate port and docking facilities.
  Another aspect which we must consider is the immense increase in our oil consumption. Is it likely, as has often been suggested, that our oil consumption over the next ten or twelve years will be doubled again? If so, who will carry the increased quantity into our ports? We know that we cannot rely with any assurance at all upon the Mediterranean communications; pipelines and the Suez Canal are uncertain. We have, therefore, to provide ourselves with an immense amount of tonnage to bring in that increased quantity of oil. I think it fair to observe that the oil companies themselves are not primarily carriers of oil. They are highly international affairs. That may be a good or bad thing in these days, but it is irrelevant to the debate. However, with this country's intimate dependence on oil, we cannot possibly afford to leave ourselves in a position where either the necessary tonnage is not available, or we have to pay a ransom price for it.

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  Another angle is that of taxation, but it would be out of order for me to go into that, although previous speakers have referred to it in general terms. We cannot possibly escape the fact that those who pay taxes cannot compete with those who do not—and I am sure that there will be little controversy about that. Yet that is the position in which the British Merchant Navy finds itself today. I need not remind hon. Gentlemen that both parties when in Government have taken remedial measures and have given exceptional treatment to the shipping industry, for the best of reasons, and the Government would do well to consider what further steps could be taken along that road, because they must satisfy themselves that taxation does not hamper the growth of an industry upon which our very survival depends.
  I come to the subject of subsidies and discriminatory practices. The right hon. Member for Easington suggested that subsidies might be necessary. While tax concessions may be essential, I believe that it is necessary as long as possible to avoid resort to subsidies. They only involve a race and retaliation by others, and the longer we can keep ourselves in the position of non-subsidised enterprise, the stronger we shall be.
  The flags of convenience fleets have struck a great blow at the principle of the genuine link between the country of registration and that of the actual control of the ship. Unless we recognise that this fact is bringing with it a wholly new development in maritime trade, we shall fail even to begin to tackle the problem. Certainly this practice is undermining all the traditions on which maritime countries have so far based themselves. If the trend develops and gets worse, as it may well do as the years go by, the shipping industry and the Government may have to be prepared to take another and very uninhibited look at the problem.
  How far can the Government help, and in what way can they help? I am certain that one of the most important methods is to arrange for some co-ordinated examination of the whole problem which will fully take into account the various aspects which I have mentioned. Unless we do that, any decisions which we take and any opinions which we form will be only piecemeal and fragmentary, and ultimately we shall be forced back to
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  our starting point and have to think out the whole matter again.
  Undoubtedly the Government can also help in taxation, but I will not deal with that again. The right hon. Member for Easington was absolutely right when he said that we have to speak frankly to the Americans. We have to ask the Americans whether they understand the direct and inevitable consequences of their economic policy. Do they understand that by financing what has been described as a huge scab growth they are undermining the merchant fleets of their allies upon whose security their own security ultimately depends?
  Mr. Cyril Bence: They understand that. They want to do it.
  Mr. Peyton: I do not accept such a harsh construction.
  In addressing ourselves to this problem, we do not help matters by launching great denunciations of the owners of the ships which sail under flags of convenience. They are men of great initiative and enterprise who have had the freedom of the seas given to them on a plate. They have also had made available to them by a benevolent uncle a great quantity of dollars and they have had the wit to exploit their position. They have done nothing dishonest or shabby, although they have done very well for themselves. It is idle and a waste of time to pursue them with vilification and abuse.
  I also suggest that it is no good denouncing those countries which lend their flags to these fleets. I do not believe that an appeal to uphold the principle of a genuine link between the ship and the country of registration will have a devastating effect on public opinion in Liberia, nor do I think that it will stir the crowds in Panama and Honduras.
  There are two things which we must have, a co-ordinated examination of the whole problem, with Government Departments bearing their share in a comprehensive discussion of these issues, and some assurance that, possibly when he next visits the United States, my right hon. Friend the Prime Minister will take the opportunity of not hesitating to acquaint the President not only with the undoubted effect of American policy upon the merchant fleets of America's allies, but with the strength of public

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  opinion here about the effect on what is one of our most important industries. I very much hope that we shall be fully assured on those two points when the debate is concluded tonight.
  6.0 p.m.
  Mr. C. R. Hobson: It is a great pleasure to follow the speech of the hon. Member for Yeovil (Mr. Peyton), because I was associated with the Motion that he put on the Order Paper even before the matter was discussed in another place. The shipping industry is of vital importance to the people of Britain. As my right hon. Friend the Member for Easington (Mr. Shinwell) said, we depend upon it for our very survival.
  I shall divide my speech into two parts. I shall deal briefly, first, with the shipping industry and, secondly, with shipbuilding, with which I was associated for many years, as a young man. I have the honour to be, and have been for many years, a member of the Amalgamated Engineering Union, which is responsible for the organisation of the bulk of the membership of the workers in the shipbuilding industry.
  I want to take up one or two points made by the Minister. Many statistics have been thrown about, and the right hon. Gentleman himself gave us the tonnage of cargo liners. It was quite impressive, but I still think that there is a need for a great increase in the number of our cargo liners. They are competitive with those ships belonging to the flags of convenience; they are speedy, so that a quick return can be obtained from them, and if there is an emergency, which heaven forbid, they are probably the only ships afloat, other than the main passenger liners, which can outstrip submarines.
  If we consider the tragic loss of tonnage in British shipping during the war we find that the loss among cargo liners, once the convoy system got under way and the sailing of ships was scheduled, was very much lower than in the case of any other form of merchantmen at sea. I want to see every encouragement given by the shipping companies to the construction of cargo liners.
  We all want to expand trade. Ministers travel round the world to try to get more trade, and we welcome their efforts, but
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  the sad fact is that some nations—fortunately not in the British Commonwealth—have a habit of insisting that up to 50 per cent. of their cargoes shall be carried in bottoms belonging to the State from which the cargoes in question have been bought. It is the normal American technique. Even when we were receiving Marshall Aid the Americans insisted upon 50 per cent. of the goods shipped to us under that scheme being carried in American ships.
  Mr. Paul Williams: Surely the point here is the hon. Member's reference to "at least 50 per cent." In practice, it is very often considerably more than 50 per cent.
  Mr. Hobson: Yes. That reinforces my argument. I agree with the hon. Member for Yeovil and my right hon. Friend the Member for Easington that we must talk straight to the Americans. They will appreciate it, and they will like it. I am in favour of the American alliance, but true friendship and understanding can exist only if there is not this continual war against sterling. This was reflected in the struggle over Suez. It was to them a war for oil. There was not to be oil for £ notes; there was to be oil only for dollars.
  The American shipping industry is pursuing precisely the same technique. Not only do the Americans subsidise the industry but, as has been said by every speaker today, they are largely responsible for support being given to the flags of convenience. I am informed that up to 95 per cent. of the capital invested in the countries of the flags of convenience is Wall Street capital. The Government are in a position to approach the American Government and tell them that they have gone far enough in the war against British shipping, which is really part and parcel of the war against sterling.
  The Minister has referred to the shortage of steel. All those who know the state of the industry agree that there is no longer any shortage of steel plate, but there is some shortage of specialised steels. But they go more in the construction of turbine blades than in the construction of the actual vessels and, therefore, do not have much effect upon the ship builder. In this connection, I was

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  very pleased to hear that the Minister appreciated that some of the delays in British shipyards, in the matter of delivery dates, were due entirely to the shortage of steel and not to the restrictive practices of the trade unions involved, which are frequently stated to be one reason why British shipyards cannot achieve the appropriate delivery dates.
  The general tone of the Minister's speech was one of appreciation of the importance of the industry, and I think that he succeeded in convincing the Committee that his counsels would be for its development. Its importance is derived, first, from the thousands of workpeople engaged in the industry, in one way and another. Many trades are involved in the construction of ships. Secondly, there is the employment of seamen. From that point of view alone the industry is very important. It is also important because it saves foreign currency. About half our food is carried to this Country in British ships, with a corresponding saving of foreign currency. Further, the shipping industry earns foreign currency, both dollars and soft currency.
  It is interesting to dwell on that point for a moment. Our imports and exports have never balanced since 1903—and that was before I was born. Any balance that has been achieved has been made up entirely by invisible exports—banking, insurance and shipping, with shipping the largest of those three. We are only too pleased to be told that British shipping is earning about £119 million in foreign currency each year.
  Mr. Peyton: Not long ago my right hon. Friend the Chancellor gave a figure of £300 million for the last year, excluding tanker earnings.
  Mr. Hobson: Yes, I am aware of that figure, and I have seen the explanation of it. There are many other hon. Members who wish to speak, however, so I will not give the answer now, although shall be only too happy to show the hon. Member the relevant calculations when I have finished speaking. I have been into the matter most carefully, and I can assure him that the actual figure in relation to what may be classed as invisible exports is £119 million.
  Shipping is performing a yeoman service to the British economy. Even with all the invisible exports
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  that we had before the war we were never even then able to balance our Budget. In fact, we sold over £127 million in gold or investments to balance our Budgets between 1936 and 1939, when the war broke out. Shipping is more essential to our economy now than it ever was, because we do not possess the investments that we had before the war. We must, therefore, do everything we can to encourage the industry. In 1937, British shipping earned roughly £105 million in foreign currency, and, in our present economic position, to achieve a comparable result we should have to earn about £400 million.
  The welcome sign is that the size of the fleet has increased. That was pointed out again by my right hon. Friend the Member for Easington, whose association with this industry goes back a long time. Some hon. Members will recollect the verbal fights that he had across the Floor of this House many years ago in association with the late Lord Kirkwood and the late Arthur Greenwood. I am convinced that if there is a full understanding and appreciation of the problems with which we are faced, we can develop the industry considerably.
  Much has been said about flags of convenience and no one knows the remedy. We are all agreed that we do not want any bias to be shown against them, because of retaliation. I agree with my right hon. Friend the Member for Easington that the conditions provided for the seamen in those ships are as good as in the best British ships, because the fleet is new. But I am not convinced that the rates of pay, other than those for the officers, are anything like comparable with the rates paid by British shipowners. There is also the point that there is something wrong, thoroughly wrong, with a system whereby these people are able to "pinch" skilled sea-going officers, without having to share in the expense of training them. That is something which adds to the unfairness of the burden.
  A lot could be done at international conferences to see whether the international sea law could be improved. Perhaps the trade union movement, as such, could take some action, if the C.I.O. in America and the Scandinavian and our own trade unions appreciated the position. I see nothing particularly wrong in

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  trade unionists being awkward when these ships come into British ports, if standards are not conformed with. I should like to see action of that character being taken, although I confess that that is the only positive suggestion which I can advance. I believe that the great international brotherhood of the trade union movement, when faced with a position where normal standards are not conformed with, could take action in self-defence.
  Lord Mancroft, in another place, gave a wonderful example afforded by the "Olympia", which went on her maiden voyage to America amid a lot of "ballyhoo". It is as well to recall what the noble Lord said. The vessel was built on the Clyde by John Brown. She sailed for Greek owners under a Liberian flag. The crew were German; the barman came from Skegness. That is the sort of cosmopolitan crew that we get. But I am not concerned about these luxury liners, where conditions have to be good. There have to be good conditions at the Savoy Hotel and so there have to be good conditions in these vessels. I am sure that the large numbers of new tankers all conform with Lloyds, and that the rates of pay are reasonable. It is when we come to the small Greek tramp owner that the story is different. Their vessels are probably what remain of the old "coffin ships" and we should take a tough line with them.
  The shipbuilding picture is quite rosy. The figures given by the Minister and other statistics prove that this industry is doing very well indeed. Certainly, the steps taken to modernise the shipyards have been considerable. I am sure that all hon. Members would wish to pay tribute to that. Without this modernisation we should not be able, as we still are able, to compete both with the Japanese and the Germans. The danger is that of this tonnage a large amount is tanker. While that may not affect the members of my trade union, because ships have still to be engined and auxiliaries must be supplied, it affects those in the finishing trades responsible for finishing vessels in the shipyards. I think that there we shall be letting ourselves in for trouble; indeed, there are already indications that that is likely to happen.
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  Reference was made to the construction of new liners. New orders are not too satisfactory. We may, as a nation, have to do something about that. The "Queen Mary" and the "Queen Elizabeth" were mentioned. These vessels are over twenty years' old and cannot go on for ever. There is need for liners of that calibre and capacity on the transatlantic route but I cannot imagine the Cunard or White Star or other companies being able to build liners of that size. It is not a good proposition for them. Yet there is prestige in it. The Americans subsidised the construction of the "America", but I do not want us to do it in that way. The recollections of my right hon. Friend the Member for Easington were refreshing when he reminded the Committee of the struggle, waged largely by the late Lord Kirkwood, in connection with the insurance of these vessels. It may well be that we ought to have talks with the larger shipowners with a view to seeing that more large and up-to-date liners are built and put on the transatlantic route.
  I wish to refer to the position of ship repairs, about which we have heard little today. This is where the red light is showing. We have passed from the yellow light to the red light. Not so long ago I was taken round Wallsend by officials of my union and I was amazed. If we look at the statistics we see that the percentage of unemployed men is negligible. If one goes round the larger works, Parsons and places like that, on the Tyne, one will see that certain types of skilled labour are required. But the fact is that ship repairs are suffering from the slump. That is understandable when so much shipping is laid up, on the Fal and elsewhere.
  Help could be given in this direction. I have never heard a satisfactory explanation—I never heard one even when I was an ordinary lay member of my trade union—of why so much ship repairing is done abroad. We have heard about Rotterdam, but there is not a big difference between the wages paid there and in this country. The work is done there slightly quicker, but they do not do the same job as is done on the Tyne. I know some of the tricks, I have seen them operated, but I will not weary the Committee with a description of them.

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  In my opinion it is a foolish and shortsighted investment to send British ships abroad to be repaired.
  I should like some assurance from the Minister about the repairs position. This is essentially a specialised job which is done very well indeed in this country. There are some shipowners, for example, the Post Office, which has cable ships, who send their ships to the Tyne for repair because of the type of work done and the speed with which it is carried out. I hope that we may get an assurance on this matter from the Civil Lord.
  One thing that the British people can do is to build ships and sail them. I am sure that we shall always continue to do so and that the shipbuilding industry will grow, provided it gets a fair deal. I am not advocating an open subsidy. I know about the 40 per cent. investment allowance, but some people might consider, when discussing the taxation of industry, the rate of depreciation of vessels, and the fact that they now cost five times more than they did in 1939. I am sure that this industry has the best wishes of hon. Members on both sides of the Committee.
  6.21 p.m.
  Colonel Sir Leonard Ropner: I am glad that the right hon. and learned Member for Newport (Sir F. Soskice) has returned to his place, because I would like him to know that, except when he embarked upon political prophecy, I agreed with almost everything he said.
  I thought the speech of my right hon. Friend the Minister of Transport a little over-optimistic. I hope he will remain on the Government Front Bench during the course of my remarks, because I would like to pick up some of the points that he made.
  I fear that it is inevitable that a debate of this sort is largely statistical and that there should be some repetition in the speeches. The right hon. and learned Member for Newport almost apologised for going back in history to 1906; I wish to trespass still further on the patience of the Committee by going back to 1900. In that year, more than half the total of the world's shipping flew the Red Ensign. Since 1900, there has not been a quinquennial period in which there has not been a reduction in the proportion of United Kingdom compared to world
  1370
  tonnage, until, by 1957—here I must repeat figures which have already been given—only 18 per cent. of world shipping was British. It was more than half in 1900 and is less than one-fifth in 1958.
  The comparative decline in British shipping is by no means a new phenomenon. A large number of factors have contributed to the decline. They have not only been damaging in the past, but they are perhaps more damaging now, and they look like becoming even more pernicious in the future. I hope that I may remind the Committee of some of the ways in which the very existence of the British Mercantile Marine is being threatened.
  Over a long period, other nations, with increasing frequency and with greater effectiveness, have devised methods of discriminating in favour of their own tonnage. More and more frequently other nations have sought, in trade agreements, to insert clauses which increase the difficulties of the British Mercantile Marine. They have, over a long period and an ever-widening field, completely reserved certain trades for ships flying their own flags and have become more and more inclined to subsidise their own shipping.
  A new manifestation which is hurtful to the British Merchant Navy has already been mentioned during the debate, the determination of new nations, as an expression of nationalism, to acquire and run their own mercantile marine quite irrespective of economic considerations or of existing services. I learned only yesterday that during the last two years, a short period, about 20 trade agreements had been reached between various countries and all included a shipping clause which reserved the traffic between the two countries to ships of their own flags.
  Right hon. and hon. Gentlemen on both sides of the Committee may ask, as many have, why, during the last half century, no Government has been able to do very much to assist the Merchant Navy, and why, for that matter, the British shipping industry itself has not been very forthcoming with remedial proposals. The answer is that up till recently the British Mercantile Marine had presented a bigger target than the fleets of any other country. Moreover, the trade which it has conducted has been more vulnerable than that of any

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  other nation, in that it has carried a higher proportion of passengers and cargo between foreign countries in addition to that carried between this country and the Commonwealth and Empire. It has certainly been the policy of the British shipping industry and of successive Governments that the interests of British shipping were best served by efforts to minimise action by foreign nations calculated to restrict free and fair competition.
  In addition to the difficulties which have been created by foreign Governments over a long period and with growing intensity, two world wars have been responsible for the wholesale massacre of British ships. I would join hon. Members who have already paid tribute to the courage and bravery of the Mercantile Marine. Perhaps a record of the losses sustained by my own fleet would be of interest to the Committee.
  We started in 1875 with one little iron ship of 500 tons. By the beginning of 1914 and the First World War we had acquired and were running a fleet of 57 ships. At the end of the First World War only 21 of the 57 remained afloat. We built up a fleet again until by 1939, the beginning of the Second World War, its number was 45. In 1945, all but 11 of those ships were at the bottom of the sea. Nearly two-thirds of our ships were lost in the First World War and three out of four were sunk in the Second World War. All fleets suffered in the same way. The loss of so many ships by the British Mercantile Marine in two wars was completely calamitous.
  Even that setback to the British Mercantile Marine is not the full story of the handicaps which arose out of war. The ships of the British Mercantile Marine which remained afloat were requisitioned and sailed at controlled rates. Of course, no shipowner complained that such was the case, but the ships of neutral countries, and, indeed, of Allied countries, were hired at rates which earned prodigious profits and enabled them to amass reserves by the use of which they have been able to modernise and greatly enlarge the fleets which now compete against us.
  Even that is not the end of the havoc which arose from the war for, however willing the United Kingdom shipping
  1372
  companies may have been to pay increased insurance premiums on higher values, in point of fact they were not allowed to do so. Values were controlled, but not, of course, the price of new ships, subsequent to the termination of hostilities. As the price of a new ship in 1945 was about three times what it had been before the war, and is now about five times what it was in 1939, British owners were able to add to their fleets after the war only perhaps one ship for every three or four, or even five, which had been sunk during the war.
  In reviewing the decline of British shipping over a considerable period, I must also remind the Committee that, certainly since 1916, the rate of direct taxation borne by British shipping has been on a scale considerably higher than that levied on the earnings of the majority of its competitors.
  I have ventured to remind the Committee of what has happened over a considerable period because, except for the tragedy of war and the results of war, all these factors continue to operate against the British Mercantile Marine. I am sorry that the Minister of Transport, in replying to the right hon. and learned Member for Newport, although he mentioned the difficulties which arise out of flags of convenience, did not mention what the Government want to do and think they can do to meet these old difficulties, which continue in an ever extending form.
  Every member of the Committee will know that since 1939 the British Mercantile Marine, with the merchant fleets of the traditional maritime nations, has had to meet intense and growing competition from an entirely new quarter. I refer, of course, to the rapidly expanding fleets of Panama, Liberia, Honduras and Costa Rica which until today I had known as Pan-Hon-Lib, but which the right hon. and learned Member for Newport has christened by the more phonetic name of Pan-Lib-Hon-Co. Is it Bonca or Honc? One reminds me of Monte Carlo and the other of old motor horns. However the combination may be pronounced, I am in the habit of using the term Pan-Hon-Lib. If it is not up-to-date, I hope that I may be forgiven.
  It is altogether wrong to suppose that Pan-Hon-Lib ships are old, or shoddy, or ill-equipped, that the accommodation

  1373
  they offer for their officers and crews is below standard, or that the salaries and wages which are paid are low. That is not the case at all; in fact, British owners have complained that owners of Pan-Hon-Lib ships have enticed away our best officers and crews by paying wages which are higher than are paid to the British Mercantile Marine. Except in the case of the ships of the United States of America—which country, as has been mentioned, makes great use of flags of convenience—the advantage gained by ships flying such flags arises wholly from the fact that, however high their earnings, they pay virtually no taxation whatever.
  When freight rates are high, when profits are high, that total exemption from taxation—which I think is always guaranteed for a minimum of twenty years and in the case of some of the Pan-Hon-Lib countries for thirty years—confers an overwhelming advantage on Pan-Hon-Lib ships. The extent to which foreign shipping is making use of flags of convenience is illustrated by the rapid growth of the practice. I repeat the figures. In 1939, those countries had, to all intents and purposes, no shipping at all, but by 1957—only last year—the figure stood at more than 14 million tons.
  I do not think that it has been mentioned this afternoon, but so far as I have been able to ascertain there is a further 4 million or 5 million tons either under construction or on order for Pan-Hon-Lib countries. In only a very few years, perhaps three or four, fleets flying flags of convenience will in total exceed the tonnage of that of the United Kingdom, which at present, by only a very slight margin—and a margin which is being rapidly reduced—is still the largest mercantile marine in the world.
  In Committee of Supply, Sir Gordon, it is not easy to raise matters which deal with taxation, but no doubt your predecessors in the Chair have told you that some latitude has been granted to previous speakers during this debate. Perhaps I might draw a comparison of the treatment of a shipping company in this country in regard to taxation and one with ships registered in a Pan-Hon-Lib country. Between 1949 and 1958 a British company owning on an average throughout that period 12 vessels,
  1374
  each of about 10,000 deadweight, might have made a profit of about £8,850,000.
  I know of such a company. If such had been the case that concern would have paid in Income Tax and Profits Tax alone no less than £3,380,000. I think it must be appreciated that if its ships had sailed under a flag of convenience it would have had nearly £3½ million additional funds available for adding modern ships to its family of ageing sisters.
  The grave and growing and now urgent problem presented by the competition of tax free ships is quite distinct from the difficulties which faced the shipping of the world as a result of the current severe depression in freight rates. I think that it was the Minister of Transport who tried to give us comfort by remarking that it would appear that the Pan-Lib-Hon-Co ships are suffering most from the present depression of freight rates. I think that to some extent that is true, but the reason is a very different one from the one which he suggested.
  The reason is that the managers of Pan-Lib-Hon-Co ships have, on the whole, refrained from taking long-term contracts, long-term charters, which they could quite well have done if they had wanted to; but in their tax free position they were happy to seize the chance of quick and high returns. Now that the bad times have come it is their policy rather than their ships which may, and, perhaps, some of us hope will, land them in trouble.
  In point of fact, the threat to British shipping presented by Pan-Lib-Hon-Co tonnage would disappear completely should the time ever arrive when no efficient shipping company in the world was able to make any profit. We cannot get much comfort out of that, for no doubt good times will return, and, as a consequence, the danger will grow again. Moreover, if bad times continue I am in wholehearted agreement with the warning which has been voiced in two speeches from the other side of the Committee, namely, that these ships, or the owners of these ships, may be tempted to slash salaries and wages and to allow worsening conditions afloat.
  This they could do since they are not bound by any international convention. They are free from Government control and are not answerable, so far as I know,

  1375
  to a powerful trade union or even any trade union at all. They can inaugurate worsening conditions without restraint and without notice. So what is the answer to these problems which have been posed to the Committee by every speaker this afternoon?
  I venture to assert that neither the Minister of Transport nor the right hon. and learned Member for Newport, nor any other right hon. or hon. Member of the Committee, nor for that matter any member of the shipping industry, can give a satisfactory answer to that question, one which is at present both politically possible and economically sound. Certainly, the Government have not been able to answer that question today. To the uninitiated the answer seems obvious. They say, "Let us have an international agreement. Let us have an international scheme which will penalise in some way the tax-free tonnage of the world." We just cannot get it.
  I believe that it is not the slightest good any Member of the Committee, even if he were tempted to do so, pretending that we can get international co-operation of that sort. I hope I am quoting the Minister correctly when I suggest that he said that he was all in favour of international co-operation if he could get it and could find a way of implementing it when he had got it. That does not take us very far.
  The International Chamber of Shipping, the Conference on the Law of the Sea at Geneva this year, O.E.E.C. and many of the Governments of other traditionally maritime nations, the Council of British Shipping—all these and many more national and international bodies have searched in vain for even the basis of a plan. We can get no comfort at all out of Articles 5 and 6 of the Geneva Convention. How are we to enforce it? I would not be in the least surprised if every maritime nation voted in favour of that proposal. I am not surprised that Greece and America abstained from voting, but even when we have got that far no one in the world knows how we are to enforce proposals of that sort.
  We must face the fact that up to the moment failure to find anything in the way of an international scheme, let alone agreement on the scheme, has been a complete failure and among the many discouraging rebuffs one factor, even
  1376
  standing by itself, rules out anything in the way of international agreement. Forty per cent. of the ships flying flags of convenience are American owned, and I believe that the bulk of the money of the ships which are ostensibly registered with Pan-Lib-Hon-Co by Greek owners comes from Wall Street.
  Mr. Rankin: Can the hon. and gallant Member say whether any are British owned?
  Sir L. Ropner: There is no Pan-Lib-Hon-Co British owned ship.
  Mr. Rankin: None at all?
  Sir L. Ropner: No, none at all.
  Mr. Rankin: Can the hon. and gallant Member go a little further and say that no British owners are interested in these ships?
  Sir L. Ropner: No, I do not think that I can do that, not because I believe that it would be the case but because I simply do not know.
  I will shortly give one reason why I believe it is correct to say that there is no British owner who has registered his ship in a Pan-Lib-Hon-Co country. I said just now that 40 per cent. of the tax-free shipping in the world is American owned. America, far from co-operating in any effort to prevent the merchant navies of the traditional maritime countries of the world being swept from the sea, and which already heavily subsidises her liners, now actually encourages her tramps and tankers to make use of flags of convenience.
  I now come to the point: why do not British owners register in Pan-Lib-Hon-Co countries? There are two answers. One is that I do not know an owner who wants it; the other is that no one would be allowed to even if he did want it. In point of fact, very great difficulties and considerable obstacles are put in the way of United Kingdom shipping companies which wish to register ships in low tax Commonwealth countries. I have thought—at one time I was sure—that it might be a solution to the problem presented by tax-free ships for British owners to be allowed to register their fleets in Commonwealth countries.
  I have reminded the Committee that in good times and fair times Pan-Lib-Hon-Co ships acquire an enviable trading

  1377
  advantage by virtue of their tax-free status. I should be out of order, in Committee of Supply, if I suggested the obvious counter to the threat to British shipping which arises from this source. I would say only that I am fully conscious of the size of the pill which may have to be swallowed quite soon by the Chancellor of the Exchequer if this country is to maintain a Merchant Navy which will continue to rank in size and efficiency at even the greatly reduced proportion of world tonnage to which it has already sunk.
  I am not in a position to assert it, and it may be said that, in any case, my opinion is biased, but I certainly believe that both strategically and economically the case for the preservation of our Merchant Navy is complete and is overwhelmingly convincing.
  6.51 p.m.
  Mr. Cyril Bence: There is no doubt that every hon. Member who has spoken this afternoon has spent a great deal of time on, and feels deep concern about, the problems facing the British shipping industry.
  It is unfortunate that not more hon. Members are present to appreciate the grave difficulties with which the industry is faced—difficulties which arise not from any ineffectiveness of the British Mercantile Marine or the British shipbuilding industry but from the fact that there are individual owners and Governments in the world who, in this great international transport system, will not play the game according to the recognised commercial rules which have been accepted for many years. Shipping is an international transport system, and unless the nations and the owners who ply their ships round the world agree on some principles of general practice and commercial conduct, many of them will go to the wall.
  We have been told on all sides that none of the ideas for solving the problem which have been mooted in various quarters will work because we cannot get international co-operation. The hon. and gallant Member for Barkston Ash (Sir L. Ropner) also said that there is no hope of getting an international agreement on the problem of registering ships under flags of convenience. I have read a good deal about it and I have
  1378
  been to several meetings connected with it, and I subscribe to that view.
  Since it appears that the most powerful maritime nation in the world, the United States, will do nothing to influence its owners and will pass no legislation for-bidding its owners to register ships under Pan-Lib-Hon-Co flags, I do not see how it is possible for any international agreement to be reached. Tackling the problem along that line will lead nowhere. The problem will continue, British shipping will be faced with these difficulties and perhaps British shipping will decline, particularly in certain categories, over the next twenty years. That can never be allowed to happen.
  It has been said, and I agree, that it has been a tradition of all countries which have a seaboard also to have a fleet. I think that Alfred the Great started it. Indeed, it may well have been started long before his time in Ninevah or the Mediterranean, but I think it was Alfred the Great who first conceived the idea in Northern Europe of a great fleet. Throughout the Middle Ages in England, throughout the Tudor period and the reign of Charles II, and even up to the nineteenth century, the ships in the British yards were built by and under the supervision of the State. It was the British Navy and Government building which led to the building of almost all the merchantmen that sailed the seas in the sixteenth, seventeenth, eighteenth and nineteenth centuries. It was only later that shipping became a purely private enterprise matter. Earlier it was a great State activity.
  Now, in the twentieth century, when we have built up this huge system of international shipping with the United States, France and Germany on the basis of a private transport system, the new nations who want to build their mercantile fleets are doing it by the same techniques as we were using 300 or 400 years ago.
  Perhaps I may give an example. The American merchant marine wants two new passenger liners for the Atlantic and two for the Pacific. The information about this has been published in the Press. America is building four such liners, two for the North Atlantic and two for the Pacific. They are being built at Government initiation at a cost of £26¾ million each. Tenders have been put out offering these ships on extended

  1379
  terms at a total cost to American mercantile owners of £16½ million each, which means that they are being subsidised by the State. This is the kind of thing which was done in Tudor England.
  What shall we do about it? Shall we still try to survive in international transport over the oceans of the world by sticking to the nineteenth century idea of financing and building ships by trying to get the owners to depreciate their existing vessels in order to get enough money to build new vessels at what may be a much higher cost, not merely because of inflation but because of the competition in forms of transport? This competition necessitates replacing one ship which has a certain economic earning capacity by a ship with a higher capacity.
  Exactly the same situation arises when we replace a machine in industry. The machine which replaces it is much more expensive and we hope that it will be more efficient. The shipowner has to follow the same procedure. Like the builder of ships, he is continually being driven by the competition of air transport and of the ships of the world to seek higher efficiency, and the initial capital cost of higher efficiency is always very high. This is one of the difficulties which meets every industry, not only the shipping industry.
  My interest in this problem arises from the fact that we have John Brown & Co. Ltd., the ship builders, on Clydebank. On the stocks at the moment I think there are seven tankers, from 18,000 to 30,000 tons each, one cargo vessel, a small frigate, but no passenger liner. The American, German, French and Japanese Governments are initiating the construction of ships. When they initiate this, these Governments ensure that they get the maximum efficiency out of a yard in which ships are being built. They do this by ensuring that the keels laid down on the slipways of those yards are for ships which will employ a balanced labour force in the yard.
  This is very important. It is a great cost advantage if one builds a cargo vessel in a shipyard where all the remaining ships are tankers. Riveters, welders and electricians are needed, but not joiners, carpenters or furnishing tradesmen. There is an unbalanced labour force, which means a hold-up here and
  1380
  there. Every shipyard manager likes to have a balanced order in his yard. The French, German, Japanese and American Governments see to it that that is done, but it is not done here, though it was done at one time.
  Of course, the argument can be made, and I accept it, that orders for cargo vessels are falling off. Everybody wants tankers. The oil companies and the big charter companies want tankers. Here again, of course, we come to the point that any solution for increasing the number of cargo vessels to enable our shipyard managers to balance their labour force depends upon expanding world trade. It is no good building ships if there is no cargo to carry and no trade. Therefore, it is the duty of any Government concerned with this vital activity to maintain the tempo of international trade. That is the root of the problem, as was said by my right hon. Friend the Member for Easington (Mr. Shinwell).
  I want to be as brief as possible, and I am eliminating many things I had in mind to say because I know that other hon. Members want to speak. I will come at once to the main conclusion I want to put to the Committee. I believe that any attempt to reach international agreement in all the different ways which have been suggested will fail. It has been tried for so long. I was very pleased to hear what my right hon. Friend said about this. What we must do in this country is to set up an organisation—my right hon. Friend called it a Ministry of Shipping—to co-ordinate shipbuilding and merchant shipping.
  We can no longer afford, in the absence of international agreement, to see our industry disintegrate. There is little or no co-ordination. A Ministry of Shipping might be the right way to go about it. We might even do what was done in Tudor times, and is done now by the Germans, Japanese and Americans. They are all doing it now. Ghana will be doing it before long. The Soviet Union, of course, and China, are doing the same thing. We may well come to the stage, whatever resistance may be offered from the other side, where the State will build the ships and they will be managed and run as they were run 400 years ago in this country.
  That may well be the only way Britain will be able to hold her own in seafaring.

  1381
  However the Americans, Germans, Japanese or French may put it, that is what they are doing. They are doing it under a cloak, but, nevertheless, that is what they are doing. The terms on which those four American vessels to which I referred are to be hired to American shipping companies will be terms on which no British shipowner could possibly have a ship built in any shipyard in the world.
  It is no use the British shipowners or ship builders telling the British shipyard workers that, in order to defeat this form of competition, they must work harder. That is all nonsense. It is not that the workers of other nations work harder than our boys, but that the owner in America, for instance, can have his ship more cheaply because the American Government are using financial techniques to see that he shall have a ship more cheaply than can any owner in the United Kingdom or in the sterling area. I agree with my hon. Friend the Member for Keighley (Mr. C. R. Hobson). American finance houses are fighting a battle against sterling. They have been doing it since 1947, and they still are. This may well be one of the instruments.
  My right hon. Friend the Member for Easington said that we should talk straight to the Americans and tell them what they are doing. Does any body here believe that there is any American financier or big businessman doing these things who does not know what he is doing? I was in industry between the wars and met many employers in a big way of business, but I never met one who did not know what he was doing or the consequences of his action. Every American industrialist and businessman or head of an oil company which is pursuing certain activities today knows what he is doing and knows the consequences of it.
  If we cannot alter things by international action, we shall have to use the same techniques in financing our own merchant fleet in order to compete and hold our own. It may well be that the taxpayers generally will have to make some contribution towards it. I would rather that be done than that we should see the nation go under to devices and techniques employed by a country which calls itself a country of free enterprise and free competition, but which, to win and establish its own position, uses methods which, in public, it renounces.
  7.6 p.m.
  Mr. Paul Williams: Until today, I did not know that there were so many Members of the House who took the same view as I do of American financial policies. I had always understood, certainly in the months towards the end of last year, that interdependence was the great slogan and that everyone accepted that interdependence meant that was a sharing of policy and approach with America. It has been a great revelation to me today to know that there are so many people at last willing to criticise American financial policy—
  Mr. Bence: At last?
  Mr. Williams: —in the way that I and some of my hon. Friends have criticised it for a number of years. However, I do not at this moment want to go off at a tangent about American financial policies, against which I have spoken repeatedly for some time. I want to talk about the success story of British shipping, both operating and building.
  There is a particular danger today, when there has been this very heavy slump in freight rates and when there is an absence of new orders from both home owners and foreign owners, of crying "Woe" too much. There is a great danger of building up a feeling that the British marine fleet is in decline and that there is no future for young people in it. This is just not true, and, if we can do anything in this debate to paint the true picture, that there is a pleasant and remunerative future for people who still think of going to sea in ships, we shall do something well worth while.
  As has been said, whether in the change from wood to steel or from sail to steam, and now to nuclear power, Britain has led in matters nautical through the centuries. Whether the parallel be with the Tudor era, the earlier Elizabethan age or this latter-day Elizabethan era, we have led in nautical research and developments, in building and in operation. It must be our purpose to maintain our fleet, although, unfortunately, as my hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) said, there has been this tragic decline in our percentage of total world tonnage. Obviously, the paramount reason has been two world wars, but,

  1383
  surely, our success over the centuries has been based on far-sighted, capable and wise management, upon sound workmanship and upon the loyal patriots of this country.
  Mr. Bence: And Government support.
  Mr. Williams: Moreover, it has been based on our not being placed at a disadvantage vis-à-vis our competitors abroad.
  We have heard a great deal about the damage done to our mercantile marine in two world wars, and we have heard a great deal about flags of convenience. The right hon. Member for Easington (Mr. Shinwell) spoke about flag discrimination, a most unfortunate practice which has grown up after the end of the Second World War, largely at American instigation. These, surely, are the present causes of our discontent and unhappiness about the situation of our merchant marine. These are the things which, together with high taxation here at home, raise the problems of unfair competition and avoidable handicaps. I believe that we should in this debate impress upon the Government and the leaders of thought throughout the nation the consequences of things that have been said both within and without the House. We have heard so often of the vital rôle of British shipping, but to go on paying wordy votes of thanks is not enough when in the end this is a matter of hard pounds, shillings and pence.
  Shipping is vital to our national economy. Whether the figure which is disputed is £300 million a year, £190 million or £180 million, or even £115 million, the point is still taken that the difference between solvency and bankruptcy may well be made by the success of this vital industry. After all, it is not merely ship operation which is the vital matter; it is the ability of this nation to build the best ships that the world wants and to make them available for foreign owners.
  We heard my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) in the Budget speech last year speak, then as Chancellor of the Exchequer, of the special position of British shipping. That was not an unimportant remark from a Chancellor of the Exchequer—a deliberate reference to the special position.
  1384
  It makes one believe that the Government are convinced of the special position of British shipping. But to go on saying it is not enough. Surely further action is needed. One can obviously welcome the further action announced by my right hon. Friend the Minister of Transport and Civil Aviation today in relation to the Capital Issues Committee. Some of us think that it would be better to disband this Committee, but if it is to continue in existence the advance announced today is worthwhile.
  If these statements of Government policy over the years add up to anything it is this. A solution must be found for the problem of flags of convenience. I am not sure that the Government have made a sufficiently positive approach. We have heard this afternoon of representations made, I believe the Minister said, by the Chamber of Shipping. This is all right as far as it goes, but is it sufficiently positive? Is it not the responsibility of the Minister of Transport to establish a body—I refrain from suggesting a committee because committees sometimes go off into the backwoods and forget about the problems; if it is a Royal Commission nobody takes any notice—made up of representatives of the building side, the operating side, the Admiralty, the Foreign Office, the Treasury and the Ministry of Transport itself to go behind locked doors, perhaps, sit down and produce an answer within three months or, at the very least, in time for the next Budget.
  We are obviously prohibited in this debate from referring to detailed matters of taxation. But in saying what I have said, I think the Committee will see that I, personally, believe that the only solution is one of taxation. I do not follow the argument about subsidies, because it seems to me that to take the money in taxation and to give it back in subsidies is wasteful in the process.
  Surely, in relation to Pan-Hon-Lib countries there are only two possible practical solutions, or perhaps an amalgamation of the two. Either the Pan-Hon-Lib countries must impose conditions similar to those of the genuine established maritime Powers or we must alter our conditions in order to be more approximate to theirs. With the background of taxation in mind, the gist of what I am trying to say should be obvious. If they cannot raise taxation to our level—

  1385
  obviously that is not a practical proposition—we have to do something to make a special position available for our own shipping industry. I think that this is a matter which rests fairly and squarely upon the Government.
  I now turn to the question of shipbuilding. Here, again, one can reasonably claim a success story, and if in the next few moments I talk about the River Wear I hope the hon. Member for Sunderland, North (Mr. Willey) will forgive me for trespassing on the geographical territory of his division. But, as he knows, it is of considerable interest to me and to the people who live in my division. We can claim a success story for this country since the war, although it is perhaps temporarily blurred by the depressed freight rates and the absence of new orders.
  I think that the answer which I received from the Civil Lord a few weeks ago helps to give a balanced picture of what is the true situation today. A few weeks ago he told me that our present order book stands at 6·2 million tons, which, at the 1957 rate of completions, would take four and a half years to work off. I am not suggesting that it will take four and half years and that no speed-up can be achieved, but from the employment side of things this will help to remove some of the alarms and fears which some people have about employment in the shipbuilding industry. Perhaps it will not remove them altogether, but it will certainly prevent an exaggerated picture being painted.
  Some people say how unfortunate is our order book, for only 20 per cent. of the orders are for export. I should have thought that that was just the reverse of the truth and that that is the strength of our order book, that these are orders upon which we can rely because they are placed by home companies which we know to be responsible people and less liable to cancellation.
  Again, since the war, especially in recent years, there has been far too much praise of the success of the re-equipment of the German and Japanese yards and other yards on the Continent and in Scandinavia.
  Commander Maitland: Does not my hon. Friend agree that if we build our own ships in this country we get a double
  1386
  advantage, and surely that ought to be strongly pressed?
  Mr. Williams: I could not agree more with my hon. and gallant Friend that there is a double saving and double advantage to our national economy.
  Too often in recent years one has heard people praising the ability of the German worker and the supremely efficient way in which German and Japanese yards have been laid out. This may have been the advantage of losing the war, of being bombed and being destroyed, getting American finance for rebuilding, having the best techniques and having the land cleared free of charge at the expense of a few bombs. Too often we have failed to sing the praises of British shipbuilders and the industry generally, achievements which have been carved out of the banks of our rivers and often the slum areas of our towns. These are real achievements which have been achieved in spite of the burden of high taxation under which they have all suffered and other burdens, such as the shortage of steel about which we have heard and know so much in this House. I propose to have no reticence about the achievements of the River Wear in this matter.
  Dame Irene Ward: And the Tyne.
  Mr. Williams: My hon. Friend may have a chance to support the river which once I loved later. One has only to think of the advance and achievements on the Wear since the war. Ships have been built developing from 12,000 tons up to 17,000 tons. One yard has a vessel taking shape on its stocks today which will be of 34,000 tons. Plans exist for the building of ships of 40,000 tons and later up to 65,000 tons. These are no mean achievements. It is worth while quoting a few words of the chairman of the company where these developments have taken place. He said, in June this year:
  "Shipbuilders realise that they must compete for further orders on an international basis under conditions of the fiercest competition. It is because we realise this and because we have faith in the continued co-operation of our workers that we are going ahead with our large new berth."
  This is part of the great development that is taking place in British shipbuilding. This is the success story which

  1387
  has for too long been hidden and not seen by the general public at large.
  Another example on the River Wear is of a 10,000-ton vessel which took only 11 weeks from keel-laying to launching. Another firm on the same river plans to double its intake of steel next year as the result of a vast reorganisation and reconstruction programme. At the same time, everyone is actively interested in the development of nuclear power. These are some of the positive things that are going on in the British shipbuilding industry.
  In spite of all this, however—I say this with no acrimony or ill feeling—there is, I believe, an Achilles heel to this industry. I refer to the many outdated restrictive practices and the rivalries which exist between certain unions. It may be that my remarks would have been more palatable had they been made by someone from the other side of the House, but it would be unfortunate if a debate such as this were to pass by without some remarks being made about the demarcation disputes which exist in this industry.
  It serves the industry no good if people pretend that they do not exist. It serves the members of the unions ill to pretend that disputes do not take place and it serves the long-term employment position less well still if we try to camouflage the reality of the situation.
  I have recently seen a letter written by a Norwegian saying that the British shipbuilding industry could see off all foreign competition most easily if it were not for the restrictive practices and the demarcation disputes which exist. This may be true. It is, of course, possible to paint an exaggerated picture either way. It may be possible to pretend that these things do not exist or to exaggerate their importance. In matters of repair, however, the feeling that there may be demarcation disputes during the repair of a ship may well sway an owner from having the repair done in a United Kingdom yard and placing his order with a Continental yard.
  Mr. D. Jones: Does the hon. Member suggest that there are no disputes in Continental yards? Does he not remember that last summer the German metal
  1388
  workers' union was on strike for three months?
  Mr. Williams: I am grateful to the hon. Member for his intervention. I want, however, to come to the gist of what I am saying concerning demarcation disputes.
  I wish to quote some remarks made by people of note. I do not put them in any order of precedence. I quote first some remarks made by Major-General Dunphie, chairman and managing director of Vickers-Armstrong, in July last year. The first few words have a ring which is, perhaps, just as true now as twelve months ago. He said:
  "During the last few weeks we have been told that we are in grave economic danger as a nation"—
  those are the sort of words we hear from time to time—
  "we have also been told that we are having great prosperity. I am convinced that the danger can only be averted, that the prosperity can only be achieved, if we produce more—that means, if as shipbuilders, we build faster.
  This can only be done as a combined operation by both parties in the industries. Management must provide newer and better equipment and methods—and this we are doing and shall do; labour must use them to the full. I purposely referred to both 'parties' and not both 'sides' of the industry. I think of 'sides' as the participants in a contest which one wins and the other loses. Industry is a contest in which both win or both are well and truly lost."
  There is the key to what can be done in industrial relations if we can help to create this feeling of co-operation.
  I believe that the disputes which largely take place in the shipbuilding industry are not always disputes "against the bosses." They are disputes between the unions. This is where the people who stand most to gain from success are doing most to cut each other's throat. That is why I take great heart from some words used by Mr. George Barratt, the general secretary of the Confederation of Shipbuilding and Engineering Unions, earlier this month. He said:
  "I would like to see this Confederation of ours become a big amalgamated union. The officials of the present unions could form themselves into an executive covering various trade groups handling their individual problems, and you could have an overall executive to cover general problems."
  Mr. Hobson: Concerning restrictive practices, of which I have had a lot of

  1389
  experience—indeed, I took part in disputes many years ago—does the hon. Member not consider it wise to make the distinction that disputes rarely arise from restrictive practices in repairs, but that in the case of new construction the new techniques should be discussed beforehand between employer and employee?
  Mr. Williams: That is why I drew attention to the remarks of Major-General Dunphie, who referred not to the "sides" in industry but to the "parties". If one could get this consultation, as in many shipyards it already exists, in places where, unfortunately, there may be a bad tradition, if we could get the tradition that the hon. Member for Sunderland, North and I know exists in many of the yards of the North-East, the industry in general would not be blackened with the misfortune of one or two limited instances.
  I have entered this note, which may be one of dispute between the two sides of the House, and even among Members on each side of the House, in the hope that by spotlighting the fact that these demarcation disputes and troubles exist and that there is a way out if the two sides of the industry co-operate, I shall be able in some small way to contribute to the success of British shipbuilding. Thus far, since the war, success. I believe that it can continue if we have a flexibility of approach combined with soundness of judgment and there is vigour and ambition at the top.
  7.28 p.m.
  Mr. Frederick Willey: I share the concern for the shipping and shipbuilding industries which my temporary neighbour in Sunderland, the hon. Member for Sunderland, South (Mr. P. Williams) has expressed tonight.
  Mr. P. Williams: Why; where is the hon. Gentleman going?
  Mr. Willey: Concerning the question of demarcation, the hon. Member must know—we all should know—that discussions are at present taking place. This is a delicate matter and it is best to leave the discussions where they are.
  I intend to speak about shipbuilding, but it is impossible to do so without also speaking about shipping. I have said many times in this Chamber that freight rates are a barometer as much for ship-
  1390
  building as for shipping. In general, I feel that far too much has been said about Pan-Lib-Hon-Co.
  I supported and welcomed the increase in the investment allowances. I support every step that is taken to establish a genuine link. I feel, however, that we have concentrated too much on this issue. However, if the present situation in shipping remains much longer, we are likely to face a more real threat from discrimination and subsidisation. What we are concerned with is our position in relation to world shipping. I am surprised that nobody has mentioned the British Iron and Steel Corporation's ore fleet and the development which has been taking place over the past few years.
  What we have to consider is the changing shape of world trade and world shipping. What we are anxious to do is to form an accurate forward picture of the position of British shipping and also, equally important, the relationship of world shipping to world trade. These are the matters which are disturbing the shipbuilding industry.
  I welcome and readily acknowledge the initiative taken by the Government in the international sphere. Of all the steps we can take, this is one of the first importance. I think we can congratulate ourselves on the successes we have attained this year, and I was surprised that the right hon. Gentleman was not more forthcoming in speaking of the creation of the Inter-Governmental Maritime Consultative Organisation. We may as well be quite frank about it. I know that this has not been helped by the Chamber of Shipping. I thought at one time that the right hon. Gentleman was speaking by leave and licence of the Chamber of Shipping.
  Here, we have to recognise the creation of this organisation, which will be the first United Nations Agency to have its headquarters in London. After ten years, this organisation is being created and can have a very important part to play in world shipping. We realise its limitations and the fact that its membership is limited, but now that we have got twenty-one signatures and ratifications, some of the countries which have dragged their feet in the past may come in. We know that this body's powers are limited and that it has a limited competence

  1391
  only, but we must recognise that it is in this sphere that we must promote effective action, because we have a primary interest in it.
  I think we should expect and must ensure that I.M.C.O. is as successful in shipping as I.C.A.O. is in civil aviation. We must pursue this matter still further. Whatever success or lack of success we have in international co-operation, there is no excuse for us in Britain, because of the great importance of these industries to us, not taking some initiative ourselves.
  It seems to me that one of the melancholy conclusions which one reaches from this debate so far is that no constructive proposals have been made with regard to British shipping. I can only say, as representing, with the hon. Gentleman opposite, a shipbuilding constituency, that we are therefore all the more vulnerable. Shipbuilding does no more than reflect the prosperity of shipping, and at the present time I would say that shipbuilding has an apprehensive prosperity.
  I want to deal briefly with two matters which reflect that apprehensive prosperity. We are apprehensive, for one reason, and I think we should recognise and not disguise it, that our production figures have not been good enough. I pay my tribute to management and men in the shipbuilding industry, but, whether we regard these figures absolutely or relatively, they are not good enough. If we regard them absolutely, we must be disturbed by the fact that production has fallen, and has only begun to pick up in the last quarter. Relatively, the proportion of shipbuilding of British yards has fallen dramatically over the past few years.
  I know the difficulties of making comparisons and the necessity for making allowances for the types of ships constructed, but we have to recognise that here—and I would not join anyone in advocating an extension of our shipbuilding capacity—we have a capacity for producing possibly 2 million tons, at any rate 1¾ million tons, and only once during the past four years have we passed the 1½ million tons mark. This is a matter which must prejudice the industry, and it is one which we must face.
  One of the factors has been steel. We discussed this in March last year, and the Civil Lord, who has the endearing quality
  1392
  of being an optimist, was unduly optimistic then. Every reply from the Government Front Bench is unduly optimistic, and he was unduly optimistic and persuaded us that there were no difficulties there. Yet any review of the industry last year reveals steel shortages as one of the cardinal reasons for the fall in production last year. I do not think it is good enough. I do not want to mislead the Civil Lord, and I agree that the position regarding steel deliveries at this moment is better than it has been for years, but I do not want the Government to rely upon present circumstances.
  Are they saying that the present slack in industry will continue? I think that is what they are saying. It is because there is some slack among other competing industries that steel is now going into the yards. We do not want that position to continue, and I mention it because I do not want the Government to relax any pressure on the iron and steel industry to meet its production targets. The industry is saying that it cannot meet these targets, but we want pressure from the Government to ensure that the steel will be there. I would still say, although the position is much better than it was, and I know that the Civil Lord thinks that I am doctrinaire about it, that there is room for improvement, and I hope that before the end of the debate he will be able to give us a progress report.
  I should like to mention another point, in view of the contribution from the hon. Member for Sunderland, South. One of the factors which has affected production in the shipyards is the shortage of labour. There is a shortage in some of the skilled trades. I hope the hon. Gentleman will see what has been done recently by the trade unions in Sunderland about riveters, because it would be unfair to create the impression that the unions are difficult over demarcation questions. We have difficulties about the shortage in particular skilled trades, and especially the black trades. This again is a matter which affects the overall production of the industry.
  The other matter to which I want to refer concerns cancellations, together with the dearth of orders. We can have some consolation, if little solace, just as we can when we consider the position of shipping.

  1393
  We can say that our shipyards have been less badly hit than many of the other shipyards in the world, but I would ask the Civil Lord how serious the present cancellations are. I have no desire to exaggerate them, but we are told that at present many of these cancellations are no more than the cancellation of very speculative orders, cancellations of options which will not now be taken up, and that they were tentative rather than firm orders.
  If this is so, I hope we shall have a more realistic statement about the order books. If we get cancellations and we are given an explanation such as this, it makes the order books themselves look a little unreal. I hope that the Civil Lord will be able to say whether the cancellations have been mainly of this category, but I hope he will also impress upon the industry, particularly as it has been prejudiced by this long order book, that it should try to reduce its order book to realistic proportions.
  I have said before that I readily concede that in some respects a reduction of the order book would be a very good thing. It would be a very good thing if we could safely rest on the premise that pressure of orders on the yards is likely to return, because if, after a while, the recession passes by and orders come back, we should not like the British yards to be prejudiced regarding new orders by an unduly long order book.
  Another conclusion which it seems possible to arrive at here, when we have yards with long order books and orders are being cancelled, is that when they are cancelled, the shipping line cancelling them is saying that it is prepared to lose its place in a very long queue and to take a risk about getting back in that queue. If that is so, it seams to me that we ought to look at these cancellations very seriously indeed. It would seem to me that opinion is hardening that the present conditions will obtain for much longer than has hitherto been believed. Although we must be as realistic as we can when we consider cancellations, we must also realise that there are in these cancellations signs that judgments are being taken that the recession will last much longer than we had believed.
  Two years ago I wrote my proposals about the future of the industry. I have looked back to them, and I make no
  1394
  apology for them. I would emphasise two of the assumptions that I made, which caused some challenge at the time. First, I assumed that the industry would probably face difficulties beyond its own control. I still believe that. Secondly, I assumed that there would inevitably be some contraction in demand for new shipping from British yards. I still believe that. Those assumptions are still valid, and what we have to do in the light of our present experience is to decide how proximate the conditions will be. That is the real importance of this debate. I have no reason to change my opinion, and that is why I said that I oppose any proposal to expand the capacity of British shipyards. I want security and continuity of employment in them. I have no reason to change my belief that the capacity of the British yards will eventually be reduced, and that we shall not be able to sustain the capacity at its present rate.
  Mr. William Shepherd: What is being done to improve the conditions in respect of demarcation? Apart from the subsidy in the form of the low cost of steel plate, it is clear that we should not carry on some of the ridiculous practices which we have done in the past ten years.
  Mr. Willey: I have dealt with that matter. I said that it was being discussed by responsible people who will seek to obtain the best solution to a very difficult problem.
  I was saying that my assumption that there will be a contraction in this great industry is confirmed in the light of our present experience. This places serious responsibilities on the Government. I will mention two of them. It emphasises the need for the provision of alternative work in the shipbuilding areas. We have had no sign of this from the Government. This is absolutely necessary. It must not be provided haphazardly; it must be work similar to that which is carried out in the yards.
  The second point—this, also, ought to be tackled now—is that within the yards themselves there ought to be provision for alternative work. This is a factor which affects present capital development in the yards. We ought not to be content with calling attention to the need for alternative employments in the neighbourhood of the yards; there must be

  1395
  new developments in the yards themselves and we should be considering the possibility of the use of the premises for alternative work. This is very important when large sums are being spent and there is a rapid development of prefabrication in the yards, for the development of prefabrication, if we are rational about this, will lend itself to use for other purposes.
  I should like to re-emphasise the two conclusions to which I was driven when I wrote my proposals two years ago. I think that the hon. Member for Yeovil (Mr. Peyton) will be with me in this. We cannot expect too much from the present Government—I did not expect too much from them then, and I do not now—but we must expect a recognition of this problem. Here I think the hon. Member for Sunderland, South is with me. I appeal again for the setting up of a fact-finding committee. I know the reply that I shall get from the Civil Lord about the advisory committee which was set up in 1946, but we need more than that.
  Mr. P. Williams: I take it that the hon. Member is referring to the Shipbuilding Advisory Committee. I gather that he wants something more than that, and so do I.
  Mr. Willey: I am glad that we are agreed that we ought to have something more than that.
  There are further reasons why we need such an approach. One is that we must recognise the possibility of public support for the industry, and if we have to recognise that possibility, it is very important that all the facts should be established. There are many problems on which we want broad advice to guide us about the industry and to guide the industry itself.
  We have talked about the intensification of competition in shipbuilding. We are living in a period of revolutionary change in methods of construction, and I think these might be examined by such a body. One important factor is standardisation of design. I know very well that it is the pride of the British yards that they will produce anything to order, but we are concerned with shipping and shipbuilding and I think we have a lot to learn from some of the other shipping lines about standardisation of design.
  1396
  We have talked about capital investment. I pay tribute to the fact that the industry has put in £50 million over the past ten years and is at present putting in a further £70 million. But we are considering new circumstances in the world of shipbuilding. We have even to consider—this is a very difficult question for all of us—the construction of new yards. One of the difficulties this country faces is the siting of our present yards. The hon. Member for Sunderland, South will realise the very considerable ingenuity which has been shown by Sunderland shipbuilders in extending the yards but he will also recognise how limited they are because of the character of the river. Unfortunately, that applies to almost every shipyard in Britain.
  We have also had some reference to reduction in costs. I am obliged to the hon. Member for Cheadle (Mr. Shepherd) for his intervention, for he has reminded me of this. We can out-compete the Japanese. Although the Japanese have far lower labour costs, our steel costs are sufficiently less to mean that if we take into account both labour and steel we have the advantage. However, Sweden can on occasion out-compete us, and she is at a disadvantage in respect of both labour costs and steel costs. The only reason why Sweden can do that is that she has a high productivity based on good management. I recognise that we have good, enterprising management in the British yards, but I still believe that we have something to learn from countries like Sweden and Holland.
  We have a good record on research, but the demands now being made are far greater than they have ever been. We were recently discussing in the House the difficulties of the aircraft industry. Circumstances have driven the firms in the aircraft industry to group themselves for the purpose of meeting the heavy research and development costs which are entailed. We must realise that similar problems are besetting the shipbuilding industry.
  I should like to conclude upon that matter, because it is probably the most important issue before the industry at the moment. The whole future of shipbuilding could be altered overnight if we had a revolution in the form of propulsion. It is very difficult to forecast anything about shipping and shipbuilding,

  1397
  but what one can forecast is that if there were a new form of propulsion which was commercially satisfactory, it would transform the position of both industries.
  Some years ago we looked to the gas turbine, but now we are looking to nuclear propulsion. This is a type of research which is enormously expensive. I recognise what has been done by the team at Harwell and by the special committee of the Admiralty, but we have also to consider not only what is happening in the United States, but also what is happening in the Soviet Union. We have to consider what the Soviet icebreaker "Lenin" is doing.
  The moral to be drawn from this, and it is critically important to the future of the shipbuilding industry, is that we must recognise—and this is the burden of what I have said—that both shipping and shipbuilding are vitally necessary industries for Britain. We have a national responsibility. The proposal which I have made to the Government—and I am very glad that it is supported by hon. Gentlemen opposite—is that at any rate we should have the essential factors in the argument and the information before us so that we can then decide what to do.
  7.52 p.m.
  Commander J. W. Maitland: The hon. Member for Sunderland, North (Mr. Willey) ended his speech by saying that shipping and shipbuilding were vital industries for the United Kingdom. I absolutely and entirely agree. No one who has taken part in the debate has yet said anything to the contrary. I cannot recall a debate in which there has been such complete unanimity, and I hope that that unanimity will be continued when the Civil Lord replies to the debate.
  It has been a rather difficult debate, because under our rules of order we are not able to discuss suggestions for reducing taxation, and, as the hon. Member for Sunderland, North said, that has resulted in not many helpful suggestions having been made. That is part of our difficult procedure and is understandable.
  I wish to impress upon the Government the fact that if it is believed that these two industries are vital to the country, then something must be done to help them. We can have a Mercantile Marine if we help it now, but if we do
  1398
  not we will find that Great Britain has a Mercantile Marine which is gradually dwindling. I cannot think of any two industries which are more vital to our economy.
  If there is any doubt about that, let us consider what is happening in America. There has been much criticism of America today, but the American Government have been using every device—with some of which I entirely disagree—to foster and build up the American shipping industry—by subsidy, by flag discrimination and by the tactical use of flags of convenience. The United States of America has shown the world that she at least believes in the vital economic importance to her of the shipping industry. That is a lesson which this country should learn and do something about.
  There has been much justifiable criticism of America during the debate, but I cannot allow it to pass without reminding the Committee that in answer to a Question which I put last week I was informed that the American Government have made it possible for us to use the nuclear propulsion mechanism of the American submarine. That will be of enormous help to this country in speeding up nuclear development for marine propulsion. It will enable us to get a nuclear-powered submarine to sea very much more quickly than would otherwise have been possible. We shall inevitably learn a tremendous amount of the "know-how" of construction, and so on, and will thus be able to speed up the development of, and improve, the device which we ourselves will eventually produce.
  One of the principal reasons for the importance of shipping and shipbuilding is strategic security. I do not mean by that our need for a great many ships in the event of war to save us from submarines. This is, of course, important, but I am one of those who believe that so long as we remain as strong as we are, and do not flinch, the dangers of physical warfare are rapidly fading away and that the principal danger is the economic threat from Russia.
  Mr. Bence: From America.
  Commander Maitland: From Russia. That will develop enormously in the next few months and years, and I can

  1399
  think of no weapon for our protection more important than having a healthy Mercantile Marine.
  Another thing which has not been mentioned, and which may seem sentimental, since it cannot be measured in exact monetary terms, is the great value of having the British and the British Commonwealth flags busily going about their business in the great ports of the world. I have seen something of that and it is something about which I do know, and I can assure hon. Members that it is of the utmost importance that the flags of Great Britain and the Commonwealth should not fade from the scene. For that to happen would do our prestige far greater harm than can easily be realised.
  One of the reasons for our agreement in this debate is that at the back of our minds is the memory of the 1920s and 1930s, when ships were laid up in all our ports and when we saw the shipyards fading away to nothing.
  Mr. Rankin: Rationalisation.
  Commander Maitland: That was the beginning, and it is as well to remember that it is in shipping and in world trade that terrible slumps first make their appearance. That is why we have to take great care when we see these signs which are now being observed.
  My right hon. Friend the Minister of Transport rightly said that we are coming through better than others. That is certainly the case with the shipbuilding industry, where the great majority of cancellations have been in other countries—probably in Japan, although it is very difficult to get exact figures. It is fairly clear that we have done better than the rest of the world, and the same is probably true of the shipping industry.
  One of the best and quickest ways of getting rich—it has never happened to me, but it happens to some people—is to consolidate when one is in a good position. When the market is low and one is in a good position, that is the time to buy in. If we have succeeded as well as the Minister has said, now is the time to go ahead and strengthen the position of our shipping industry. Then, in the tough years ahead, we shall have something which will be a great support to our economy.
  8.0 p.m.
  Mr. Edward Evans: I am well aware that the debate must concern itself with the widest implications of shipping and shipbuilding; that there is concern about the international aspects of the problem—with the flags of convenience, finance and all that goes with our great maritime history—and that the question of our maritime supremacy must rank very high in our concern. I had it in mind to traverse some of that territory, but it has been explored so thoroughly already that I shall leave that aspect of the matter.
  Together with shipping in the mercantile sense, we must concern ourselves with the related problem of shipbuilding. Although interest must inevitably centre on the largest areas of shipbuilding, I want to remind the Committee that it is not only the firms on the Clyde, the Tyne, the Wear and in Belfast which view the present situation with anxiety; quite a number of other ports, perhaps not se well known, look to the future with a considerable degree of anxiety and apprehension. I and those in my port of Lowestoft do not share the Minister's optimism in this regard. Although he spoke of the order books being full for four or five years, I can assure him that at Lowestoft we look beyond 1959 with a great deal of worry.
  I therefore make no apology if I do some special pleading in respect of the particular problems which assail Lowestoft. It is the constituencies which make up the nation, and we must obtain the views of people in all parts of the country. I would disabuse the minds of hon. Members of any misconception they may entertain about the economic position of this port. It is a delightful seaside resort, but it is also a fishing port. Indeed, in the near and middle water fisheries it is in the front rank, maintaining the most modern fleet of vessels and catching prime fish. It plays a great part in the East Anglian herring season.
  Since the war there has been a dramatic change in the industrial development of the town, which has done a great deal to counter the economic unbalance which formerly depended on two seasonal industries—the holiday industry and the autumn herring fishing. We have always had a reasonably stable trawling industry. Lowestoft has for a long time been engaged in shipbuilding, chiefly of

  1401
  fishing craft—first of the old wooden drifters of sail and steam, and then steel vessels in the same range.
  The port contains two main shipbuilding yards, with a number of engineering factories doing subcontracting and repairs. Before the war one of those yards employed about 200 men. It was engaged in building and repairing relatively small craft of about 90 or 100 feet. During the war the yard was taken over by the Admiralty, and the number of men employed rose to 500. Eighty-seven vessels were built—minesweepers, steel coasters, landing craft and other types. In 1946 the Admiralty work ceased, but the yard was kept busy reconverting fishing vessels from war service to fishing. The labour force fell to 250, until in 1950 the Admiralty gave orders for coastal minesweepers and seaward defence boats, and brought the number back to about 500. I am glad that the Civil Lord is here, because I want to stress what an important part the Admiralty can play in the economic life of the town.
  There then came a small boom, with the introduction of fishing grants, the subsidy scheme for new vessels and the conversion from steam to oil. That was a valuable incentive to the fishing and shipbuilding industries. Since then, however, the town has felt a gradual recession. Our order books are incomplete after 1959. We are now faced with the Icelandic trouble, which has put an inevitable brake upon new construction and development. There has been a very serious falling off in orders, and in a short time there will be hardly any.
  The other yard, in its present form, is a post-war development, and has been expanded to deal with a very valuable contract secured from the Russian Government for 20 modern trawlers. Large sums have been invested in constructing large engineering shops, runways, dry docks, clearing channels and other necessary work in order to meet this huge commitment. The Russian order is now practically ended; it will be completed in August this year, and the recession in the last few months has left this modern and capable shipyard with a bleak future.
  Large sums of money have been invested in it and many men have been attracted to the town, chiefly from Scotland, the Tyne and other similar areas.
  1402
  It can proceed with a great deal of work. It can do building and repairing, and it could develop the type of vessel in which we on the East Coast have specialised for so long. We feel that we have depended in the past on Admiralty orders, and we ask now only for a fair deal; we ask not to be ignored. If the Admiralty makes up its mind about its programme and gives us what we regard as our fair share, it can make a tremendous contribution to the town's economy.
  This is probably the only constituency speech that has been made tonight, but unless I put forward these points there is no one else here to do it. I have been subjected to a great deal of pressure, which I have not resisted in any way. If the Admiralty is not forthcoming in this matter Lowestoft is faced with the bleak prospect of a falling demand, rising unemployment and a return to an economy which is too dependent upon seasonal fluctuations.
  The Minister has been subjected to this pressure before, but I wish to press him again with regard to the harbour bridge, and I hope that he will listen to what I say, because he and I have already had words about it. The channel on which the harbour bridge stands forms the only access to the sea from the magnificent yard that I have been describing. Hitherto, the narrow range of the channel, which admits vessels of no more than 57 ft. beam, has inhibited this firm from tendering for larger vessels. It is circumscribed by this narrow exit to the sea. What it wants is an 80 ft. stretch of water, which could take much bigger vessels. Lowestoft could then build tankers of up to 16,000 ft. and dry cargo vessels of 8,000 or 9,000 tons.
  Mr. Ede: My hon. Friend means 16,000 tons.
  Mr. Evans: I mean 16,000 tons. The firm could build tankers of 16,000 tons, and dry cargo vessels of 8,000 or 9,000 tons. The facilities are there and I am sure that the prospects at Lowestoft would be better than at other places because, as the Minister said, most other yards are full up for five years and the yard at Lowestoft is not. We could do the work. We should like the Minister, in conjunction with the Railway Commission and the Eastern Area Board, to

  1403
  examine the possibility of carrying out my suggestion. It is a considerable project, as is realised in Lowestoft, but, were it carried out, I am sure that in the near future it would provide rewarding returns.
  I urge the Government not to turn their back on this small port. We are aware of the demands and pressures put upon the Minister by a number of Members of Parliament who have constituency interests. But I ask the Government to treat the small ports with sympathy and understanding and to provide real help for them. I am pleading especially with the Civil Lord because if the Admiralty returned to the practice of providing the kind of private work which it formerly provided for Lowestoft, that would do a great deal to secure the economy of the town.
  8.10 p.m.
  Mr. Douglas Marshall: I hope the hon. Member for Lowestoft (Mr. Edward Evans) will forgive me if I do not follow his remarks in detail. I have a great deal of sympathy with what he has said. The hon. Member and I have fought through the years on behalf of the fishing industry and I hope that the Minister will take due notice of the situation at Lowestoft.
  After sitting here for just over four hours, listening to the debate, I feel that the whole subject has been covered. But there are, perhaps, one or two points which have not been mentioned.
  The right hon. and learned Member for Newport (Sir F. Soskice) said that the purpose of a debate on shipping and shipbuilding, from the point of view of the Opposition, was to enable them to probe the question and to try to get some answers from the Government. The right hon. and learned Gentleman did not suggest how certain of these problems, of which we are all aware, might be solved. It is probable that the right hon. and learned Gentleman had no reason to believe that the Government would reply with any suggestions which would be immediately practicable. I certainly had no reason to believe that. But I do not think that sufficient notice has been taken of what has been said by the Minister about the financing of the shipping industry.
  1404
  Mention has been made of the remarks that he directed to the C.I.C. One hon. Member said he hoped the C.I.C. would not remain for very long in any case, but I think that the Minister went further. One of the difficulties which has beset the shipping industry is that it is variable in its earnings and in its loss capacity. Consequently, in financing anything to do with the industry it may well be necessary from time to time for money to come in faster than the rate recognised for some other long-term purposes and the financing of this industry may prove much more to be a banking operation than a question of long-dated financing.
  I think that my right hon. Friend said that in future the shipping industry would be given the opportunity to find the money it required in its own way without having regard to any form of direction from the Government. I hope that I am right. If so, I think that my right hon. Friend has done a great deal for the industry in making that statement.
  I wish to spend a few moments discussing the question of shipbuilding before referring again to the shipping industry. The tone of one or two of the speeches made today has caused anxiety. On the whole, the majority of speakers gave the impression that all is well. It is true that we have had statements from the Civil Lord that there is work available for four and a half years. It is true also that there is anxiety because no new orders are coming in but only 5 per cent. cancellations have taken place, but I think that we have a lot to worry about.
  If we contemplate the position of Japan we realise that her building costs are probably 15 per cent. lower than ours over all; that her financial operations are on quite a different plane from ours and call for only 20 per cent. deposit and finance over six or seven years at a reasonable rate of interest of 6 or 7 per cent. Roughly speaking—I am not referring to ships laid up, or anything of that kind—the world shipping capacity at sea at present is about 100 million tons and the capacity to rebuild of the world's shipyards is sufficient to replace those ships in twelve and a half years.
  That is a worrying thought. I do not want to give any cause for anxiety regarding our ability to build ships. I am sure that our management, men and our skill

  1405
  and technical "know-how" is up to the task. But it is better to recognise that it is a task which will not prove an easy one. I am certain that as the years develop it is a task which may become even more difficult.
  I was glad that one hon. Member mentioned certain restrictive practices. I do not want to develop this point, but I am certain that the one thing which is more important than anything else is that our shipyards and our country should by every means possible retain a reputation for value and quality. I feel sure that all hon. Members will agree on this point. Figures have been quoted showing the changing position of the United Kingdom shipping industry during the last few years and how, although the total tonnage of its fleet has gone up, compared with the figure for world tonnage expressed in percentages, the United Kingdom figure has declined steeply. Although I do not think that figures were actually mentioned, all hon. Members recognise that for the flags of convenience ships they have gone up. They have gone up 9,000 times in nine years. That is rather a telling figure and one which can be remembered easily. The total tonnage of ships flying flags of convenience have gone up 9,000 times in nine years.
  Let us look fairly at this matter. We have been discussing two separate things at the same time. We have discussed the recession and ships which are laid up, and also the difficult position of the repair yards, about which little has been said and about which I hope the Minister will not be forgetful. At the same time, we have been discussing the question of flags of convenience. If the recession went on, flags of convenience would not matter one way or the other. Their only advantage is that ships flying them are more or less exempt from taxation.
  The matter begins really to worry us when things are getting a hit better and when we start normal competition on the high seas. If this is allowed to go on in the way it appears to be developing, the situation must arise when United Kingdom fleets become smaller and flags of convenience ships more numerous. This is a very serious matter. Hon. Members, without exception, recognise that the Mercantile Marine and our shipbuilding industry are vital to the country and to the men in them, whom I may call some
  1406
  of our best people. Those who had anything to do with them during the war will know that that is true.
  What are we to do about it? The right hon. and learned Member for Newport posed the problem. The Government have not answered and the right hon. and learned Gentleman did not expect them to do so. At present, it is more than likely that if we asked the chambers of shipping and the mercantile fleets in Europe they would not know the answer to the problem. One has to face the fact that about 40 per cent. of the flags of convenience belong to the United States and that the United States transferred her ships to flags of convenience. The remaining 50 per cent. or so are Greek, but the money has come from the United States so we are back again where we started.
  Furthermore, there are two other factors governing the matter. We may be moving into a loss position in shipping in which the United States of America may agree to these ships being transferred easily back to United States flags and away from the flags of convenience. There are many different arrangements by which the United States has a 50–50 share of cargoes and all the rest of it. Let us not forget that this is a very dangerous matter to be complacent about. It does not apply only to the ships attached to United States of America. Other people look around and realise that this is quite a nice practice. Therefore, we get arrangements between Iran, Kuwait and Saudi Arabia, resulting in their oil being carried in their own national bottoms. It is a matter of the gravest danger.
  Her Majesty's Government have done everything they can to put this matter to the United States of America at the very highest level. We all have admiration for the United States, especially those who were privileged to fight side by side with them during the war. We also know that it is much more difficult to get agreements at a little lower level than at a little higher level. This problem has to be pressed at the top and to be worked downwards. We have to measure up to this situation.
  I am, therefore, proposing to make three suggestions, purely as cockshies, if the Minister cannot make any suggestion

  1407
  nor can the right hon. and learned Gentleman who posed the problem. Hon. Members have said quite rightly that the Government have not offered any form of solution. There are three methods which might be adopted. The first is rather difficult for me to mention because I might be ruled out of order for going into detail on taxation. When we talk about flags of convenience, the only reason why they existed during a time of profit was that they give freedom from taxation. It is difficult to make a suggestion without a monetary basis, where that basis is purely about monetary difficulties.
  The point I would put to my right hon. Friend is to remember the investment allowances. We are dealing with a flexible industry, so we should make the investment allowances flexible. They must flow backwards as well as forwards so that they can be taken advantage of by a flexible industry which at different times makes different sizes of profit and loss.
  The second suggestion is that if we find that there is no method of overcoming this problem without indulging in the principle of discrimination, which no one acquainted with shipping wants, we must ease the Bermudian way. We must make it possible to wear a flag which measures up to the flag of convenience and so settle this matter once and for all and still remain under the Red Duster.
  The third suggestion I make is to impose a tax upon every ship coming into every United Kingdom port and for arrangements whereby our European friends in the Free Trade Area and the Common Market also impose a tax upon every ship, without discrimination.
  The Temporary Chairman (Mr. W. S. Duthie): Order. The hon. Member must refrain from any suggestion of taxation.
  Mr. Marshall: Certainly, Mr. Duthie. I will not mention it. A port due must be imposed upon every ship by Europe and ourselves and it would be allowed as a full allowance against the taxation payable. Thus there would be no discrimination. If any particular company bears no taxation there will be no question of discrimination but, an the other hand, no rebate in tax, and the method would, at the same time, measure up to the flags of convenience.
  1408
  I have rather trespassed on the rules of order, and I apologise. One thing which is quite sure is that the whole Committee has been very attentive in this debate, which has not been of a party controversial nature. The whole Committee is absolutely satisfied that the Mercantile Marine and the shipbuilding industry are vital to the United Kingdom. The Committee is fully aware of the difficulties confronting them. Hon. Members realise that this is a problem which gnaws at the very vitals of the industry and that a clear solution has not yet been found. Let us trust we shall find one, because British shipping and shipbuilding and British prosperity are one and the same thing.
  8.30 p.m.
  Mr. A. Blenkinsop: Almost every hon. Member who has taken part in the debate, including the hon. Member for Bodmin (Mr. D. Marshall), has made various proposals and suggestions, no doubt very rightly, about how various forms of assistance can be given to the shipping and shipbuilding industries to meet the special difficulties they face. If we are to discriminate in favour of the shipping and shipbuilding industries, as we may very well need to do, it is of the highest importance that there should be the fullest sense of public responsibility in the industries. It may prove to be absolutely essential that we should provide for that public responsibility if in one way or another, by means of subsidy or forms of special taxation, public funds are used.
  It seems absolutely vital that that point should be borne carefully in mind. Everyone who lives in a shipbuilding area or represents shipbuilding workers, as I and many of my hon. Friends and others who have spoken do, should make it clear that they admire the efforts of many of the shipbuilding companies to make good use of the funds at their disposal. As the hon. Member for Sunderland, South (Mr. P. Williams) said, both on the Wear, and certainly on the Tyne, enormouse capital funds have been made available for modernisation and reconstruction of the industry.
  That brings its problems. As one who represents an area with some of the largest yards in the world, some of the biggest dry docks very close by and the biggest, if not the only, research unit, also

  1409
  very near, I should point out that there have been admirable efforts by many shipbuilding firms to make good use of the reserves they have accumulated, and very large reserves those have been. While recognising that and paying tribute to the firms for the way in which they have carried out and are continuing to carry out a very high expenditure on modernisation and development, we must also bear in mind that it is a matter of real concern to those working in the industry and living in the area that there shall be a continuance of full public responsibility.
  Certainly, we would look with some anxiety on any suggestion that the reserves at the disposal of those firms should be transferred in any way into private hands, either by a shoe manufacturer taking over firms by financial deals through the Stock Exchange, or any other way. It is not wholly their own money which they are putting into this business; it is the money of the whole area, indeed of the whole country, which is being used in this way at the moment.
  I have found the tenor of the debate rather unreal. One of the vital issues we should have been considering should undoubtedly have been what action is being taken to ensure that there is work for the ships we build in our yards today. That issue was touched on by the Minister in his speech, which otherwise I found rather tepid. The Minister touched on the problem of what action is to be taken to try to encourage development of world trade upon which the whole future of our shipping and shipbuilding industries depends. That is what matters.
  What I cannot understand is how we can hope for the steady advance and development of our industry if there is ever danger of restrictive practices by Governments, our own and others, which may endanger the prospect of the development of world trade. I hope that this matter will be discussed at the forthcoming Commonwealth Economic Conference, because it is a matter of supreme importance.
  Take, for example, the question of India. Will there be any way of ensuring, and do the Government intend to insist, that India should carry on her five-year plan, involving enormous imports of goods from this and many other countries, which have to be carried in ships? That is the kind of practical
  1410
  problem that we are facing. If the Government, together with the Governments of other countries, are unwilling to plan some way of helping to maintain and develop the plans of countries like India and other under-developed areas of the world and if no effort is made to help shore up that development and assist it, the whole basis of trade upon which our shipping prospects depend will be lost.
  The longer-term prospect for shipbuilding should, I think, be good if we can envisage a reasonable advance of standards of living in the underdeveloped parts of the world, because that will ensure the advance of trade between countries and make it possible for our ships as well as other people's ships—for other countries have a right to their shipbuilding development, too—to be fully used.
  I am concerned because I do not see any sign of any real energy or action from the Government devoted to this end. I do not see the kind of really vigorous effort being made to stimulate and encourage the development of those backward countries upon whose development so much in our own country depends.
  I was a little surprised by a casual remark which the Minister threw out. I am sure that it was a mistake, and I give him the opportunity to correct it now. He said, when talking about the present Government's own economic policies, that they had not affected the position of shipping recession—that the Government had not "made a major contribution to shipping recession". I am quite sure that he did not mean that. He used a most unhappy phrase. I believe that in fact he did use those words, and it is quite extraordinary to us that the Government were rather proud, apparently, that they had not made a major contribution to the shipping recession. What we are asking for is some assistance for the development of shipping, not for a minor contribution towards depression.
  Mr. Watkinson: As the hon. Gentleman has raised this question, I had better point out that the remark is taken out of its context. I was answering a point made by the right hon. and learned Member for Newport (Sir F. Soskice)

  1411
  that our economic policy had not been one of expansion, and I was saying quite clearly that the economic policy of the Government—and the hon. Gentleman can read my words in HANSARD—had had no adverse effect on the shipping industry; indeed, the very reverse.
  Mr. Blenkinsop: I am glad to hear the Minister say that he did not mean what he said previously; I am somewhat relieved by that.
  One major question which has been referred to only casually in the debate is research, which is a question of supreme importance to the future development of the shipbuilding industry. It is again a matter of some pride to the Tyne that it is on the Tyne that the new development has taken place of linking one of our biggest shipbuilding firms with one of the big nuclear plant consortia to try to ensure the most rapid development of nuclear power for ship propulsion. That carries in it the seed of the same exciting possibility of development as we saw, also on the Tyne, many years ago when the steam turbine was brought into use.
  Mr. P. Williams: Without wishing to detract from what the hon. Member has said, I am sure that he is aware that everybody in shipbuilding is actively interested in what is going on at Harwell.
  Mr. Blenkinsop: I agree. I was saying only that it is rightly a matter of pride to all of us that this work is going forward. I think we have the right to ask the Government what assistance they are prepared to give, or can give, in ensuring the most rapid development possible of the project. The costs involved must be enormous. Some people have said that other countries have gone well ahead in some of the applications of the new nuclear propulsion to shipping. That may or may not be true, but certainly this is a key issue for the future of our shipbuilding and shipping industries, and I therefore hope that the Government will be able to make an announcement about it.
  We should pay a tribute to the trade unions for the work which they are doing to try to meet in their own way some of the problems of discrimination against British ships. We should compliment them on the work which they are doing through their international headquarters
  1412
  to try to make sure, for example, that the British shipbuilding industry is not defeated by undercutting due to low wages abroad. Often we hear pleas from hon. Members opposite for reductions in wages or reconsideration of wages in this country because of competition from low-wage countries abroad. I would much rather see what the British trade unions are helping to bring about; I think we should try to see whether we can encourage the raising of wages in other countries. It is to the credit of our trade union movement that it has been able to play a part in assisting other countries, including Germany and even Japan, to a considerable movement forward in wage conditions, not only to their satisfaction but also to our satisfaction in knowing that we should not be subject to the same kind of unfair price competition.
  The hon. Member for Sunderland, South raised the very important question of trade union practices, and my hon. Friend the Member for Sunderland, North (Mr. Willey) made the perfectly fair reply that this matter was being considered and that already in some yards much progress had been made. The hon. Member's quotation shows that this matter is very much in the minds of trade unionists. This is a matter which has been brought all the more to the fore over the last few years by the revolutionary developments in the industry, and not all the difficulties are by any means on one side.
  I strongly support the suggestion made by my hon. Friend and others that there should be a meeting between both sides of industry and the Government, and I hope that before long it will be a Government of the Labour Party rather than of the Conservative Party. I very much hope that there will be such a meeting to discuss some of these problems as well as problems of the full use of the new capacity in the yards and the new techniques.
  I hope that the Government's assistance will be forthcoming in offering reasonable security to the men employed in the yards. That is the point which is still at the back of the minds of hon. Members who represent areas of this kind. I am sure that it would have a real prospect of success, provided that the Government in office at the time were willing to play their part in helping to bring the

  1413
  parties together and offering conditions in which there could be a hope of real success and advance.
  I do not think that we need leave the debate unduly depressed. The prospects are reasonably good for the future, provided that we take full advantage of the opportunities available and provided that the Government are willing to play their part in helping to ensure the development of world trade, upon which the future really depends.
  8.45 p.m.
  Mr. William Shepherd: I am very glad that the hon. Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) finished his speech on a note of mild optimism. I feel that during the debate today we have had a little too much pessimism, which is, perhaps, inevitable in special pleading.
  As I see the situation, it is by no means as poor as many hon. Members on both sides of the Committee have suggested. It is certainly not bad in shipbuilding. I am very glad that my hon. Friend the Member for Sunderland, South (Mr. P. Williams) told the Committee of the magnificent achievements of the British shipbuilding industry since the war. There have been too many people decrying and minimising what we have done in many branches of industry, and it is about time that somebody took the contrary view. I am very glad that my hon. Friend did it. Nevertheless, good though the performance in shipbuilding has been, it really could have been very much better.
  In the shipbuilding industry we are not getting anything like the maximum utilisation of plant and machinery. It is a very curious quirk of fate that we should not have been able to indulge in some of the nonsense which has been indulged in by that industry on the labour and production side had it not been for the fact that our shipbuilders had an enormous subsidy through the cost of their steel for construction purposes.
  Had we not had that big subsidy, both men and management in the shipbuilding industry would, a long time ago, have had to get down to the real problem of doing away with demarcations and similar out-of-date practices. It is a very great misfortune that they have
  1414
  not done it before. Steel prices in Great Britain are beginning to match world prices, and this is an indication to us that we must get on with the job in the shipbuilding industry of putting right those things which reduce output from our yards and make our ships—I will not say non-competitive, because they are still competitive—less competitive than they would otherwise be.
  I said that I did not believe that the industry was in such a bad state. I say this as an outsider, because I am about the only Member taking part in the debate who is not connected with the sea.
  Mr. George Thomas: The hon. Gentleman is one of the few who do not come from the North-East Coast.
  Mr. Shepherd: That may perhaps be so. Indeed, I have a great respect for those who go to sea. I cannot set foot on a ship without feeling sick, and I admire all those who can go to sea with no such fear. I share the admiration of the whole Committee and the country for the men who make the ships and for those who sail them. It is extraordinary that the sea seems to attract an essentially good type of man. I do not know why it is, but it is so in this country and in almost every other. I should not like to see this great industry of shipbuilding and the Mercantile Marine damaged through any lack of action on the part of Her Majesty's Government.
  I do not share the extreme pessimism sometimes expressed. We are now in a steep trough in regard to freights, and we are meeting a great number of difficulties, but we really must appreciate that these things have followed a period of unparalleled prosperity when rates were amazingly high. One cannot expect the unreal situation of enormous freights to go on indefinitely. Neither can one expect to employ for all time liberty ships which in the ordinary way would have ended their life many years ago. I think that when we have got rid of the totally unworkable tonnage in this industry, then the forward prospects of the industry will not be as bleak as they appear to be today. Indeed, had it not been for the Korean war and the coal situation in Europe and, to some extent, the grain harvest, the situation which we have

  1415
  known of inflated rates and unreal conditions would have evaporated a long time ago.
  We are not now facing a severe depression but a return to conditions that more approach the norm that we should expect. It is in the light of that attitude that we ought to judge our problems. I know that there are very real problems facing the industry, but I do not think that we are in too bad a position to deal with them.
  Many hon. Members have spoken about the competition that we face from countries flying flags of convenience. I admit that this is a real problem. But we have to realise that our competitors in the main are not flying flags of convenience. Eighty per cent. of our competitors are facing taxation conditions as bad as ours, some of them worse than ours and some of them better than ours.
  Therefore, we ought to get a little sense of proportion about the problem of flags of convenience. One sees from the figures of laid up tonnage that it is not always a good thing to sail under a flag of convenience. Indeed, I understand that some American shipowners are seeking permission to transfer from flags of convenience back to the American flag so that they can share in the available shipping that is offered to those who have a privileged position under the American flag. I do not think it is true to say that the flag of convenience is necessarily the greatest evil.
  I agree with hon. Members opposite and on this side that discrimination in the long run is likely to be a greater danger to our shipping. I wonder whether the shipping world can carry on for an indefinite period on what is a rather hazardous basis. After all, shipping is one of the most hazardous businesses in the world. One goes on building ships which cost enormous sums of money, but there is no co-ordination between world requirements for shipping and the numbers of ships built. One relies upon one's judgment and the people of this country do that extraordinarily well. But if we are to aim at stability in this industry, will it be possible for all time to go on without a method of international co-ordination?
  I know that international co-ordination does not come easily and that our ship-
  1416
  owners are independently-minded men. I have no doubt that there have been many times when they themselves have rejected any suggestion that more order might be put in this industry. But I do not think it is, on the whole, wise over a long period in the future to allow the industry to continue on the basis of having no international co-ordination and making no attempt in the broadest terms to match the new building capacity with the real means of trade and the movement of goods and passengers. It is not, therefore, a question so much of trying to get tax reliefs as of getting more order and stability into the industry.
  I know that in this debate we cannot talk about taxation reliefs in detail. I do not, however, favour the principle of giving tax reliefs to specific industries. The' idea of giving tax reliefs to particular individuals or industries does great violence to the whole concept of equity. Much as I dislike subsidies, if we had to take such action as would result in money being paid to this industry I would much prefer to see a direct subsidy than the method of a tax relief, which is grossly unfair to other industries which have to bear the full rate of tax.
  I hope, however, that it will not be necessary to give any form of relief of this kind or a subsidy. We should aim at getting rid of the difficulties which face our mercantile marine. I am fully satisfied that in fair competition we can more than hold our own with the other nations in this business.
  I agree with what has been said about the position of the United States of America. Some of my hon. Friends and some hon. Members opposite have, however, been unrealistic in their attitude towards the United States. It is no good our saying to the United States, in the most polite terms, "Please get out of the tramp business", which is precisely what hon. Members on both sides have been saying today. It should occur to us that the United States has a strategic interest in maintaining a tramp fleet, as we have. If we are to go along with the United States—and I am in favour of this—we must do it with a sense of realism.
  What can we say to the United States if we go along with them? It is clear that discrimination by the United States is harmful to our trading interests and

  1417
  that America is largely responsible for the growth of the ships under flags of convenience. The United States has led the idea of discrimination with her 50–50 business and has largely fortified financially the flags of convenience ships.
  As hon. Members know, America subsidises heavily the building of liners and their operation. I wonder whether we could say to the United States, "If you will agree to stop discrimination and cause your shipowners not to use the flags of convenience, if you prevent them, as we prevent our shipowners, from using flags of convenience, we would be agreeable to your subsidising your tramp shipping in a manner similar to that in which you subsidise your liners." The United States makes some effort to ascertain our operation costs with our liner traffic and then gives a subsidy to its own operators largely to balance that out. I would think that that proposition might have some little chance of success.
  Mr. Willey: Does the hon. Member know that there is now a possibility that the United States may be making representations to us complaining of restrictive practices in the Conference arrangements about liner traffic.
  Mr. Shepherd: That might provide us with an opportunity of raising this issue.
  I am quite convinced that the path for us to pursue is not to look to the Government to subsidise the industry and not to look to taxation relief, but to say to ourselves that under fair conditions we can meet and beat the world. What we have to do is to try to get a realistic approach to the United States, because the United States is the key to all this business. We must not expect the United States to put itself out of the tramp business. We have to find some arrangement with the United States which will enable it to continue in the business, but we know that because of high wages and the high cost of construction, unless the United States Government give some sort of subsidy to ship operators, they could not be in the business.
  Therefore, I hope that we shall not have too pessimistic an overhang in this industry. When one is pressing the Government to do something, even though one is not quite sure what it must be, one is inclined to lay it on rather thick and heavy, and there are real problems to
  1418
  face. I look upon the industry as one of great vitality and energy. British shipowners and seamen are the best in the world, and I am convinced that if we can get an equitable arrangement with the Americans, the British Mercantile Marine will continue to hold the proud place it now has in the world.
  Mr. Rankin: On a point of order. May I draw your attention, Sir Gordon, to the fact that not one hon. Member from Glasgow has been called tonight, and only one Member from the whole of Clydeside, the greatest shipbuilding area in the world?
  The Deputy-Chairman (Sir Gordon Touche): One Member has been called from the Clyde. I am sorry that more Members have not been called.
  Mr. G. Thomas: Further to that point of order. May I also submit to you, Sir Gordon, that, while I realise that it is too late now, the people of Wales have a very special interest in merchant shipping and shipbuilding? It is most unfortunate that we should have had such an unbalanced debate and that not a single back bencher from the Principality has been called.
  The Deputy-Chairman: I am equally sorry that a Member from Wales has not been called.
  9.1 p.m.
  Mr. David Jones: I feel that I ought, first, to crave the indulgence of the Committee in making a speech from this unaccustomed position on the Opposition Front Bench. To my hon. Friends the Members for Govan (Mr. Rankin) and Cardiff, West (Mr. G. Thomas), who have complained, may I say that some months ago the North-Eastern Development Council published a document entitled "The Land of the Three Rivers". My hon. Friends will not be able to complain that in this debate the voice of the "Land of the Three Rivers" has not been heard.
  This debate has ranged widely, but it has mainly concentrated on shipping and shipbuilding. It is true that, as a consequence of the state of the shipping industry throughout the world, there is an effect upon the shipbuilding industry. I was interested yesterday, in looking at the annual summary of Lloyd's Register of Shipping for 1957, to find that during

  1419
  last year 260 merchant ships were launched in the United Kingdom, amounting to 1,413,000 tons, which was 30,314 tons more than in 1956, but 60,000 tons less than in 1955.
  If we look at world tonnage and the United Kingdom proportion of that tonnage—and a number of speeches this afternoon, including that of the Minister, indicated that the recession in world trade has affected the world position even worse than that of the United Kingdom—it is interesting to note that Lloyd's Register of Shipping shows that, in 1952, 29·6 of the world's total launchings were from British shipyards, that in 1953 the figure was 25·9, that there was a slight increase in 1954 to 26·8, another slight increase in 1955 to 27·7, but that the figure fell in 1956 to 20·7 and was down again in 1957 to 16·6, showing that the proportion originating in British yards had dropped by 13 per cent. between 1952 and 1957.
  If we look especially at the North-East—and I referred a moment ago to the "Land of the Three Rivers"—we find that normally, in connection with shipbuilding and the shipping industry, the "Land of the Three Rivers" is regarded as one area for that purpose. We also find that during 1957 there was a drop of slightly more than 15,000 tons in the launchings from these three yards. It is true that on the Tyne there was an increase of about 3,800 tons. The Wear came out almost equivalent in the second year. However, the Tees, which I regard as the most important of the three rivers, dropped by 18,999 tons, and that seems to me to call for some important consideration by the Government.
  There was a debate on the Adjournment on 19th February, 1954, initiated by my hon. Friend the Member for Sunderland, North (Mr. Willey), who called attention to the shipbuilding position in the North-Eastern area. The then Civil Lord, the hon. Member for Dorset, West (Mr. Wingfield Digby), said, referring to my hon. Friend:
  "The hon. Gentleman has run true to form and once again has been pessimistic and tended rather to cry 'Wolf'."—[OFFICIAL REPORT, 10th February, 1954; Vol. 523, c. 2385.]
  On 9th March, 1954, replying to a debate on the Navy Estimates, the hon. Gentleman said:
  1420
  "Undoubtedly the main problem of the industry is no longer so much that of steel as of future orders."
  The hon. Gentleman was, therefore, saying in 1954 that the problem of steel had been solved and that it was now a problem of orders. I see the hon. Member for Sunderland, South (Mr. P. Williams) shaking his head. All I am saying is that the representative of the Government replying to the debate indicated that in the Government's view, in 1954, the problem of steel had been solved. The then Civil Lord said:
  "I think that has been generally reflected during the debate which we have had this evening, and it has been the central problem which the Admiralty has been watching for the last six months or more. Until early 1956, work is there, and the position is satisfactory for the larger yards, although smaller yards will need orders before that. We have naturally to ask ourselves whether orders will come along after that to make good the deficiency."—[OFFICIAL REPORT, 9th March. 1954; Vol 524, c. 2055.]
  We now know that, however much they were looking for those orders, the orders have not arrived.
  In its 1957 summary, Lloyd's Register of Shipping refers to a total production—no returns were available from Russia and China—of 1,690 ships with a total tonnage of slightly over 7 million, an increase over 1956 of 1,800,000 tons, of which the United Kingdom got about 31,000 tons. The summary contains a list showing the production of completed ships during 1957 in 13 countries. Japan topped the list with nearly 2½ million tons of shipping and Germany was next with 1,231,000 tons. All but three of the 13 countries increased their tonnage by more than the United Kingdom in 1957.
  No one wishes to decry the magnificent record of the shipbuilding and shipping industries in the United Kingdom, certainly since the war, but the House of Commons, the country and the industry are entitled to know what the prospects are not in the near future, but two or three years ahead. It may be that they have sufficient orders in hand at present to keep the yards reasonably busy for four years, but a shipbuilding yard cannot be efficient unless it can attract to its labour personnel some of the brighter lads leaving the secondary and modern schools.
  The industry must recruit annually a substantial number of intelligent youths

  1421
  to man the industry. What parent with any responsibility would advise his son to enter the shipbuilding industry if there is no indication that beyond three and a half to four years there is likely to be a reasonable assumption of employment in the industry for lads leaving our modern and secondary schools, lads who, in four or five years, would be qualified technicians?
  In Lloyds List for 23rd April it is said:
  "In view of the low level to which freight rates have fallen, the absence of any sign of early improvement, and the mounting tonnage of laid-up shipping, it was expected that the intake of new orders would virtually cease, and that there would be a number of cancellations."
  That shows that the people in the industry are apprehensive about the future.
  I have a further quotation, this from a reprint of the Financial Times, in which it is said:
  "Although the U.K. industry—"
  that is, the shipbuilding industry—
  "is not complacent about the present dearth of new orders and the possibilities of further cancellations, it feels it is in a much better position than some of its competitors, particularly Japan. The order book is worth at present-day prices about £900 million"—
  but the industry is concerned about what is to happen in four or five years' time—
  "Many yards in Japan have little more than 18 months' work in hand."
  If that is the case, and world competition becomes keener because of quicker and firmer delivery dates, it is possible that Japan will continue to increase her share of world shipbuilding. We should not be complacent about that.
  This is the position which the Government should carefully examine in a special kind of way. It is no good succeeding Civil Lords of the Admiralty saying that everything in the garden is all right and that we have three or four years' orders and that there have been only a few cancellations and that we can, therefore, continue in the way we are going.
  The hon. Member for Cheadle (Mr. Shepherd) had something to say about British shipyards. I do not claim to be an authority, but there seems to be a conflict of view among the people who claim to be authorities on the shipbuilding industry. We are told by some—and we
  1422
  had it from the hon. Member for Sunderland, South—that a good deal of money has been put into the industry since the end of the war. I believe that to be true.
  Mr. Andrew Shonfield, the economic editor of the Observer, has recently written a booklet, issued in the Penguin series and entitled, "British Economic Policy Since the War." On page 42, he says:
  "The striking thing about the British shipping industry that emerges, when one comes to look beyond the blanket excuse of steel shortage which has covered its activities ever since the war, is the stubborn refusal to invest in the creation of more productive capacity. Things may now be changing, but in most years during the 1950s the amount of money spent on plant and equipment can have been barely sufficient to cover normal wear and tear and obsolescence in the shipyards. During the four crucial years from 1951 to 1954, when first the German yards and later the Japanese were going ahead with large-scale re-equipment. British shipbuilding firms spent £4 million annually on their fixed assets. For an industry, which was producing an average of £120 million a year at this time and employing over 200,000 workers, this is a figure which is so low that it would sugegst to the outside observer that someone was trying to get out of the business, and in the meantime was determined to spend as little as possible on it."
  I do not altogether subscribe to that view, but people are entitled to know the facts. That is a further justification for the argument that the Government should take special steps to ascertain how the efficiency of the industry can be improved and how it can re-equip itself.
  I agree with the hon. Member for Sunderland, South that we ought to write the success story of the industry, but we must face facts fairly and squarely as keen observers in the industry see them. If there are two points of view the truth can be resolved finally only if the Government will undertake an examination of the facts and see what can be done to make the industry more attractive for people in the future.
  The hon. Member for Cheadle spoke about restrictive practices in the industry. A good deal of nonsense is talked about this. I have read that trade unions have restricted the work of their members in the welding of sea-going vessels. I have made inquiries on the point, and I understand that the union concerned has placed a limit to the amount of welding that a craftsman can do in an hour, because of the vital importance, to the crew manning a ship, of the reliable welding of those

  1423
  plates when that ship is tossed in a rough sea.
  The Committee should remember that these weldings—certainly on the hull of the ships—are subjected to some of the most severe strains that can be experienced, and if there is reason to believe that the welding of British ships has been faulty seamen will be less ready to go to sea in them. It is, therefore, important that this matter should be left in the hands of the people responsible for it, who know most about it.
  Criticisms have been made, not necessarily in this debate, that the number of hours worked by workers in British shipyards are substantially less than those worked by people in other countries. The Ministry of Labour Gazette for March, 1958, states that the hours worked in the last pay week in October, 1957, in British shipyards, on shipbuilding and repairing, all persons, averaged 48·3 per week.
  On page 103 of the same publication it is stated that shipbuilding workers in Germany, all workers, worked an average of 45·3 hours a week. On page 102, for France, they will find that for shipbuilding, machinery, automobile, cycle and aircraft workers the average number of hours worked during the same period was 48·2 per week. I understand that Japanese shipyard workers work 42 hours a week, but that that is over six days. This is a clear indication that the nonsense talked about the efficiency of this industry being affected by the shorter working hours in the United Kingdom is not true.
  When we talk of the success story of this industry we must bear in mind what is said by the people concerned with the industry. I have here a page taken from the Economist for 31st May of this year, giving an account of the annual meeting of Cammell Laird and Company Limited at which the chairman stated:
  "It is not surprising, therefore, that while our shipbuilding company has an order book which includes a wide variety and size of vessel and will provide a steady flow of work for our yards for some time to come new orders became scarce during the year and still remain so."
  Turning to the report of the meeting of Messrs. Harland and Wolff, Ltd., we find that the Chairman, in his address to the shareholders, said:
  1424
  "Whilst I am glad to say that our present order book provides a varied and well balanced programme of work for some time to come, I must sound a note of warning. Against a background of a diminishing number of inquiries for new tonnage, and increasingly competitive conditions …"
  I do not think that we can afford to ignore warnings of that kind, made by people connected with the industry, and, therefore, I should like to ask the Civil Lord what plans the Government have in mind for dealing with this situation.
  It may be that there is a reasonable amount of work for 1961 and 1962, but ought we not now to be examining carefully what we should do at the end of 1961 or the beginning of 1962? Has there been enough modernisation? Should more capital be put into this industry? Is there still modernisation work that we can do? The industry and the country are entitled to know the Government's plans. We should not be fobbed off with an explanation that, as all is well for the next four years, we need do nothing about it—unless, of course, the intention is that because this Administration will not be in office at that time, they need not bother.
  I wish to say a word about Pan-Lib-Hon-Co. It is true that the tramp shipping rates have dropped. If we take 1952 as 100, in April, 1950, they were 62·7 for voyage freighters and in March, 1958, 51·8 for time charters. The Prime Minister made a speech at the annual dinner of the Shipping Federation, from which I should like to quote. He said:
  "No industry is more important than the shipping industry to the maintenance of the economic strength of this country and its influence in the modern world."
  I think that everybody will agree with that, but we are entitled to know what the Government propose to do about the Pan-Lib-Hon-Co fleet of roughly 15 million tons.
  I think it was the hon. Member for Bodmin (Mr. D. Marshall) who complained that suggestions had not been offered from this side of the Committee. If he can get his right hon. Friend the Prime Minister to place at our disposal all the commercial and diplomatic evidence that the Government collect from the embassies of the world we will reach a conclusion in a reasonably short time. We cannot be expected to have the information which is available to the

  1425
  Government at any moment of time from every capital city and most of the other big towns of the world.
  I will make another suggestion. Mr. John Foster Dulles made a statement on 6th June to the Foreign Relations Committee of the United States Senate. Dealing with N.A.T.O., he said:
  "N.A.T.O., a defensive organisation, is now much more than merely a military alliance. It is becoming a true community of free nations. Within this community, to a degree unprecedented in history, countries are carrying out a policy of close co-operation in peacetime without abandoning their independence. This development is one of the most significant and promising events of our time."
  If N.A.T.O. has these intentions at present, and if the reason for the United States Government keeping a benevolent eye on, if not actually encouraging, United States shipowners to transfer their ships to the countries of the flags of convenience is, as one American writer said the other day, for the purpose of "creating a fifth arm in the event of trouble in the world", ought not the American Government to be told in no uncertain terms by their partners in N.A.T.O. that in doing that they are breaking the lifeline of those other European countries if that trouble should arise?
  However dependent the United States might be on its merchant shipping in a war, this little island will be far more dependent. We should, therefore, use the powers that are available to us in N.A.T.O. to make it quite clear to the American Government that this is not the kind of co-operation that Mr. John Foster Dulles talked about when he addressed the American Foreign Relations Committee. I should be astonished if the Prime Minister did not seek an opportunity last week, when he was in the United States, to make this point clear to the President. If he did not, will the Government now undertake to raise the matter before the next meeting of the N.A.T.O. Council?
  Will the Government also say to the United States of America that, in our view, it will be going beyond the normal freedom of the seas if the United States Government permits its merchant ships to be registered in countries the total population of which is less than 7 million, and where any of the regulations cannot be applied, even if it gives lip-service to international regulations for regulating ships on the high seas?
  1426
  When a Government accept a convention, or a recommendation of an international conference, one has a reasonable expectation that that Government will be able to carry out the recommendation if any of their nationals should violate it. The United States has the power, authority and responsibility to regulate its merchant fleet if it is registered in the United States of America. If the Tanker Times for April is to be believed, the reason why United States shipowners, with the connivance of the American Government and of the American banking houses, allow their merchant ships to be registered in the Pan-Lib-Hon-Co countries is that it will give them an advantage over British shipping in competition for cargoes.
  It is no use the Minister contenting himself by pointing out to us that there is a greater proportion of Pan-Lib-Hon-Co ships than of our ships laid up. Probably the reason is that in an effort to get rich quick they have been engaged for the whole time in spot charters, while the British tramp owner has been mainly accepting time charters. The spot charters are no longer available and the Pan-Lib-Hon-Co countries have got to the difficulties quicker than we have got to them.
  Whether it is a depression or recession in America I am not prepared to say. I read in a newspaper the other day that the ex-President of the United States, Mr. Harry S. Truman, when asked to define the difference between a recession and a depression, said, "If your friend and neighbour loses his job that is a recession; if you lose your job it is a depression." If the chairmen of some of the British shipping companies are to be believed, this depression, or recession, is likely to affect British shipping for at least a year or two more. By that time a number of the time charters on which British tramp ships are working will have run out and there may be no renewal.
  Is the information given to me right, that nearly 40 per cent. of the oil which arrived at the Fawley Refinery in 1957 was carried in Pan-Lib-Hon-Co ships? I also ask: are there any ships under flags of convenience laid up in our rivers and estuaries? If so, why do we permit them to stay there? If those ships are competing unfairly with us in the rest of the world, they ought at least to go back to the countries of registration when they are laid up.
  9.33 p.m.
  The Civil Lord of the Admiralty (Mr. T. G. D. Galbraith): On the whole, this has been an interesting debate. It is the first debate we have had on shipbuilding for more than three years, although shipping was discussed in another place rather more recently. Unlike the right hon. Member for Easington (Mr. Shinwell), I think there is a distinction between shipbuilding and ship operating. Shipbuilding is essentially a manufacturing industry, while shipping is really a service. They have little more in common than, for example, the road transport industry has with the motor manufacturing industry.
  As a result of this duality, the debate today has inevitably been somewhat ragged. Some hon. Members have been concerned mainly with the difficulties of the shipping industry and especially with the problem of flags of convenience, while others have commented on the present and future position of the shipbuilding and ship-repairing industries with special reference to employment prospects in them. Nevertheless, in spite of the duality, I think the debate has been well worth while.
  The three industries, shipping, shipbuilding and ship repairing, are of great value to the country, and the Government welcome the interest shown in all quarters of the Committee in their future welfare.
  The problem which worries most ordinary people is the large number of ships at present laid up in various parts of the country because there are no cargoes to fill them. The right hon. and learned Gentleman the Member for Newport (Sir F. Soskice) seemed to suggest that it was the economic policy of this Government that was to blame for this, but, of course, as he mentioned in the later part of his speech, Britain is not the only country suffering from idle shipping, and the proportion of British ships laid up is about the same as the British share of world tonnage.
  Sir F. Soskice Sir F. Soskice indicated dissent.
  Mr. Galbraith: If the right hon. and learned Gentleman did not say that, I apologise. That was what I understood him to say. Although it does not bring much consolation to those who are affected, we must recognise that this is
  1428
  a world problem and not a purely national one which it is in the power of any Government, whatever their politics, to solve by their own actions.
  If the laying up of ships is, as we hope, a temporary problem, the problem posed by flags of convenience and flags of discrimination is not one which time will necessarily solve by itself. As my right hon. Friend said this afternoon, in opening the debate for the Government, the Government share the concern of the shipowners in this matter. We are well aware of the industry's special difficulties. Indeed, that was recognised in last year's Budget and in the further concession announced this afternoon by my right hon. Friend.
  It would, I think, probably be difficult to go much further along that line, although my right hon. Friend will certainly bear in mind all the suggestions which have been made this evening. In his opening remarks, I think that he covered many of the points which have been made since then, so I want, for the remainder of my speech, to turn to the shipbuilding industry because here the picture is rather different from what it is in the shipping industry.
  Mr. G. Thomas: Will the hon. Gentleman, in the course of dealing with the shipbuilding industry, make reference to the state of that industry in the Principality of Wales?
  Mr. Galbraith: I shall be dealing with the shipbuilding industry in general. No doubt my remarks will have reference to the conditions in the Principality, as well as in other parts of the United Kingdom.
  The shipbuilding industry may not be booming but it certainly is not depressed just now. In fact, the order books in the United Kingdom, taken overall, are, if anything, a little too large. Orders include over 6 million gross tons of shipping, which, at the present rate of output, of about 1½ million tons a year, would last for approximately four years. Of course, as hon. Members realise, the sum is not quite as simple as all that. On the one hand, I hope that no one in the industry will take the present rate of production as being in any way the maximum; and, on the other hand, in general, it is the big yards which are better off than the smaller ones. A very

  1429
  long order book is not necessarily a healthy one. If shipowners are unable to place orders with yards with the prospect of reasonably quick delivery and reasonably firm prices, they will be tempted to go elsewhere, and from that point of view the shorter the order book the better.
  On the other hand, it takes up to about two years to get every thing ready for building a ship from the moment an order is placed, and so on the average we should not want the order books to be shorter than two years. But, of course, the size of the order book is not the only thing that counts. What is just as important as the size is the sort of items which are contained in the order book. The strongest card in the British industry is that our order books cover a rather wider variety of ships than do those of most of our competitors. Tanker tonnage, for example, accounts for only about half of our order books and the other half is composed of vessels of a more complicated type, especially liners, the design and building of which give work to a host of industries which are not directly connected with shipbuilding.
  In addition to these merchant ships there has been a large programme of naval building, not only for the Admiralty but also for foreign Governments. This work requires the highest technical skill and craftsmanship and gives to the British order book a balance which is the industry's best guarantee of insurance against bad times. It also gives it a value which is out of all proportion to the size of the order book.
  Much has been said about growing competition from foreign yards, especially from Germany and Japan, and the fact that we have lost our old lead. In this matter it is perhaps wiser to pay more attention to economic common sense than to feelings of national prestige. Of course, it is agreeable to lead in anything, but in an era of full employment it is much wiser to keep a balance between one industry and another than to put all our eggs in one basket.
  It is perfectly true, as has been pointed out in several speeches this evening, that in 1957 we launched, approximately, 1·4 million tons against 2·4 million tons from Japan and that this represents a declining proportion of the world's shipbuilding
  1430
  output. Although the proportion of launchings from British yards was down, the tonnage was up, and, after all, that is what is important. In fact, ever since the war the output from British yards has been extraordinarily steady, with a slight tendency to increase all the time.
  Mr. D. Jones: When the hon. Member says that the output was up in 1957, with what is he comparing it? With 1956? How does it compare with 1955?
  Mr. Galbraith: The industry has been very steady. If the hon. Member goes back to the war he will see that there has been a very steady, slow increase all the time. One year may have been slightly down on the previous year, but if he plots the graph he will see that it is rising all the time.
  Another aspect which is very important is that ships built in Japan are preponderantly tankers and small vessels for which, as far as my information goes, the price is around £100 per gross ton. Our shipyards, on the other hand, produce ships of all sorts, and many of these are of a much more sophisticated construction than the tanker. As a result of this, the value of British output last year was not far below the value of Japanese launchings, in spite of the wide difference in the size of the tonnage launched. This is a feature of our order books and of our launchings which is often forgotten yet it goes to the very root of our shipbuilding industry. It is a quality industry and its earnings are high relative to its output.
  The hon. Member for Sunderland, North (Mr. Willey) spoke about output and wondered whether it was as high as it ought to be. He made a reference to steel. It is perfectly true that until recently uncertain supplies of steel plate and heavy sections have been the chief problem, but the supply is improving and in none of the yards which I have visited in the last year has this matter been raised with me. I have taken particular care to ask in as roundabout a way as I could in order to find out whether the people who were entertaining me were merely being polite, and not once did they say that shortage of steel was what was holding them back. Over the last three years the average supply of steel received in the shipbuilding and marine

  1431
  engineering industry has increased by 3,600 tons a week.
  As for the future, about which the hon. Gentleman asked me, the additional needs of the shipbuilders and engineers have been calculated and phased into the development of the iron and steel industry. I quite admit that, until that development is completed and the new mills come into production, the position, although it has improved, will remain tight.
  Another difficulty affecting output, which was referred to by my hon. Friend the Member for Sunderland, South (Mr. P. Williams), has been restrictive practices and disputes over demarcation. Several hon. Members referred to this matter. The Committee will, no doubt, remember that following last year's strike in the industry there was an agreement between the two sides that a series of joint conferences should be held to discuss the problems. I understand that meetings have since been held, but these do not seem to have led the two sides to much agreement as to how progress might be made. As has frequently been said by Government spokesmen in the past, the problems of restrictive labour practices can be satisfactorily dealt with only by each of the two sides in the industry concerned acting jointly in the light of the industry's own need and circumstances. I will just say in passing that there is encouraging evidence of the willingness of parties in a large part of the rest of industry to give serious joint consideration to matters of this kind.
  It is rather disturbing that joint discussion in the shipbuilding industry should, apparently, be encountering such persistent difficulty. The Government certainly hope that the two sides will make further efforts and will yet find it possible to achieve a greater measure of co-operation and progress.
  Mr. C. R. Hobson: Since the hon. Gentleman is speaking on behalf of his Department and the Government, does not he think that it ought to be made perfectly clear that the dispute last year was over wages? It was a dispute over wages, which coincided with a dispute in the general engineering industry. It was as a result of the previous strike at Cammell Laird over the boring of the holes by the respective trades, a dispute
  1432
  which was finally settled by T.U.C. arbiters in conjunction with the employers' representatives, that this joint machinery was set up. It did not arise from the strike in the industry as such.
  Mr. Galbraith: I do not think that it is any good going over the past now. The point I want to make is that people in other industries, apparently, get together and discuss these things rather better than they do in the shipbuilding industry, and we hope that the improvement which has taken place in other industries will take place in the shipbuilding industry, too.
  Mr. Shepherd: Will my hon. Friend do what he can to impress upon both sides the importance of achieving some progress? One does not want to exaggerate the effects of these practices, but it is perfectly true that a great deal more output could be had from existing yards if we could deal with the problem.
  Mr. Galbraith: I do not feel that I can say anything more on that subject, except that it would be possible to increase production in British shipyards from 1·5 million to 1·75 million tons a year as the steel becomes available, without any increase in the labour force.
  One or two hon. Members have spoken about modernisation. There was, until recently, a limitation of output because the yards were laid out in a very old-fashioned manner. In recent years, the yards have been transformed out of recognition, as the hon. Member for Keighley (Mr. C. R. Hobson) remarked. Over £60 million has already been spent on modernisation, and plans for another £60 million are in hand. The most notable feature of the modernisation is that it has been carried out without disrupting the capacity of the yards concerned. Unlike Germany or Japan, which were able to start from scratch—I dare say that that explains the points which the hon. Gentleman the Member for The Hartlepools (Mr. D. Jones) read to us—British shipbuilders have modernised their yards and have kept going at the same time.
  During last year I visited forty yards. I have been enormously impressed by the energetic modernisation being undertaken at them all. I admit that this was a complete surprise to me. Before coming

  1433
  to the Admiralty, although I am a Clydesider, I had always heard that the industry was rather a backward one. I have seen with my own eyes that nothing could be further from the truth. This is a go-ahead industry. The hon. Member for The Hartlepools is able to see in his own constituency the kind of thing I mean. I would counsel him to use his own eyes rather than the remarks of the gentleman from whose book he was reading.
  Mr. D. Jones: I was asking for somebody to inquire, because obviously neither the Civil Lord, nor I, nor most of the hon. Members who have spoken in the debate, are qualified to reach firm conclusions.
  Mr. Galbraith: Of course, I accept that; but the evidence of my own eyes after visiting forty yards in different parts of the country leads me to the conclusion that a great deal of modernisation is going on.
  A particular aspect of this modernisation which struck me was the reduction in the number of building berths. At first sight it might appear anomalous—and I know that sometimes it causes misunderstanding among the workers—but, with prefabrication in large units, space is at a premium and the alteration of a berth into storage space often makes it possible to halve the building time on the actual berth. At one yard in particular which I visited in the North-East these modernisations have recently achieved the outstanding success of building a 15,000 ton ship from keel to launching in nine weeks.
  The industry is clearly virile and go-ahead. It has shown faith in its own future by the enormous sums that it has spent on modernisation, and it now has the equipment and layout which will enable it to be highly competitive.
  Looking to the future, some concern has been caused by the recent cancellation of orders, but I do not believe that this is as serious as it may appear at first sight. After all, in the last twelve months only thirty-five ships, totalling about one-third of a million tons, have been cancelled, and this represents less than 5 per cent. of our present orders. One hon. Member wanted to know whether these were firm orders. The answer is that these were cancellations of firm orders.
  1434
  There is nothing unusual about fluctuations of this sort. In 1954 orders fell off in the same way as today after a period of intensive ordering. Furthermore, as my hon. and gallant Friend the Member for Horncastle (Commander Maitland) said, some other countries are much worse off and have been much worse hit by cancellations than we have been. I think that these quite modest cancellations were probably highlighted by the recent so-called cancellation of a Cunarder at John Brown's.
  Mr. Bence: It was postponed.
  Mr. Galbraith: As the hon. Member for Dunbartonshire, East (Mr. Bence) says, what happened was that the order was only postponed. Other work took its place and not one man lost his job. This should show to the hon. Member for Dunbartonshire, East, that private industry is just as capable of phasing its work as an industry run by the State.
  Mr. Bence: I am surprised at what the Civil Lord says. Although I mentioned that it may well be that the British Government, in defence of their vital interests, may have to do the same as the United States, I was not suggesting that the Government should step in because our people were inefficient. What I said was that the Government might have to step in to save Britain from the unfair competition thrust against it by the American Government stepping in in her own shipping industry.
  Mr. Galbraith: I must have got it the wrong way round. I thought that the hon. Member was suggesting that private industry could not phase its orders as efficiently as the State.
  Another fact which has been mentioned as proof of the weakness of the shipbuilding industry is that the world's merchant ships amount to about 100 million tons, while world output is running at about 8 million tons. This point was made by my hon. Friend the Member for Bodmin (Mr. D. Marshall). I call this formula the Runciman formula, because I think it was Lord Runciman who first propounded it. If what my hon. Friend said is true, it means that ships could be replaced every twelve years or so, whereas, as hon. Members know, the life of a ship is about twenty years.

  1435
  It would seem, therefore, that there is an excess capacity of shipbuilding. This calculation, however, fails to take account of the fact that demand is at the moment at a particularly low level and that everything points to an increase in the future, not only from world trade, such as the increasing demand for oil, but also because a large amount of tonnage is almost at the end of its useful life and will soon have to be replaced.
  Nevertheless, it would be idle to deny that competition is likely to be keen for some time to come. The shipbuilding industry is aware of this and so are the Government. It is for this reason that so much effort is being put into the development of nuclear marine propulsion of a type that will be economic, so that, as the hon. Member for Sunderland, North said, this country might have the advantage of being first in the field in this new development.
  In the military and strategic sphere, the Americans are ahead of us and the Russians have already launched an icebreaker; but commercially we lead on land and we hope that technical development now being undertaken will pave the way for a marine propulsion unit that will be economic. I assure the hon. Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop), that we are pressing ahead with this as fast as we can. It is too early yet to be definite, but the Committee may like to know that developments have reached the stage at which the shipowners and the shipbuilders are working together with the Atomic Energy Authority at Risley so that the technical possibilities of nuclear power can be married at the earliest possible stage to the practical requirements of shipping and the manufacturing know-how of the shipbuilder.
  Furthermore, so that shipbuilding and shipowning firms may be kept fully in the picture, representatives attend a study group which meets every quarter. In this way, we in the Government hope that the industry will be in a position to go ahead quickly once the technical problems involved in the development of an advanced gas-cooled reactor are overcome.
  The hon. Member for Keighley also referred to ship repairing. It is true that compared with the prosperity and the
  1436
  strong position of shipbuilding, ship repairers have been hit much more heavily. The extent of unemployment varies in different parts of the country from as little as 1 per cent. in Barrow to 13 per cent. on Merseyside.
  There are, however, one or two points which mitigate the position. In the first place, while ship repairing is the first industry to suffer from a fall in freight rates, it is also the first to profit when the rates go up. Secondly, ship repairing is nearly always done in a shipbuilding area. As long as there is plenty of work in the shipbuilding yards, there is a chance for suitable labour from the ship repairers to find alternative employment there.
  What has perhaps aggravated the repair position has been the reduction in naval work, which has also affected places like Lowestoft, as was mentioned by the hon. Member for Lowestoft (Mr. Edward Evans). Everywhere I go, I am asked whether the Admiralty can make more repair work available to private firms. The right hon. and learned Member for Newport asked me the same question privately. Sometimes the larger firms want a frigate and the smaller firms, perhaps, an inshore minesweeper.
  I recognise the tremendous help that would be given if more Admiralty work were available, but as a result of the shrinkage in the size of the Navy the Admiralty has had to strike a balance between closing down some of its own dockyards—for example, Hong Kong. Sheerness and Portland—and reducing the amount of naval work put out to contract.
  I hope I have shown that, although we do not underestimate the difficulties, there is no need for undue anxiety about British shipbuilding. It is a thriving, efficient and forward-looking industry. Most firms have full order books and costs are no higher than those from other Western European countries. In these circumstances, I believe that the industry can look after itself at least for the time being.
  It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.
  Committee report Progress to sit again Tomorrow.

  NATIONAL INSURANCE AND NATIONAL ASSISTANCE TRIBUNALS
  10.1 p.m.
  Mr. R. E. Prentice: I beg to move,
  That an humble Address be presented to Her Majesty, praying that the National. Insurance (Determination of Claims and Questions) Amendment Regulations, 1958 (S.I., 1958, No. 701), dated 25th April, 1958, a copy of which was laid before this House on 1st May, be annulled.
  I submit that it might be for the convenience of the House if we could discuss, at the same time, the other two Motions on the Order Paper, which are in similar terms:
  That an humble Address be presented to Her Majesty, praying that the National Insurance (Industrial Injuries) (Determination of Claims and Questions) Amendment Regulations, 1958 1ST. 1958, No. 702), dated 25th April, 1958, a copy of which was laid before this House on 1st May, be annulled.
  That an humble Address be presented to Her Majesty, praying that the National Assistance (Appeal Tribunals) Amendment Rules Confirmation Instrument, 1958 (S.I., 1958. No. 714), dated 28th April, 1958, a copy of which was laid before this House on 1st May, be annulled.
  Mr. Speaker: I think that all these Motions refer to different tribunals but deal with the right of representation before them. It is really the same point, so they may be discussed together.
  Mr. Prentice: The changes in the procedure before the tribunals which are mentioned in these Regulations are not large or fundamental changes. They are changes of detail. Nevertheless, they raise points of importance, and I want to submit to the House that the tribunals which we are discussing tonight are also of great importance within the framework of the Welfare State.
  To put the matter in perspective, may I remind the House that in the last year for which figures are available, the local appeal tribunals under the National Insurance Act heard a total of 38,000 appeals, those under the National Insurance (Industrial Injuries) Act heard a total of over 7,000 appeals, and the tribunals under the National Assistance Act heard a total of nearly 10,000 appeals. In the same year, more than 50,000 people had their cases considered by these local appeal tribunals—people who, in the main, were appealing against the rejection of
  1438
  their claim or the reduction of their benefit under National Insurance legislation, and who, in many cases, were suffering from hardship or tragedy in the form of bereavement, sudden unemployment or some other tragedy which led them to make application for these benefits. Therefore, we make no apology for bringing this matter before the House at this rather late hour, because we are dealing with something of great human importance to a large number of people, and particularly people in need.
  I believe that the changes proposed in this procedure are clearly small within the framework which was laid down nearly ten years ago or which came into force nearly ten years ago and which has worked very well. It is now nearly a year since the Franks Committee issued its Report on Administrative Tribunals and Enquiries. In the course of that Report, the Committee examined all kinds of different tribunals, and this group which we are considering tonight was the one which affected far more people than any other group which the Committee had to consider, and yet it devoted rather less space to this group than to the others, and made fewer recommendations.
  The Committee found that they were working well, and said, in paragraph 171:
  "The impression which we have gained of the working of the system of adjudication for national insurance and industrial injuries claims is most favourable. The system is generally considered to have operated smoothly for many years, and we are satisfied that no structural changes are called for."
  I think that that verdict is borne out by the experience of most of us who have worked before the tribunals and have had experience of the way in which they operate. I believe that the system laid down in 1946 was, on the whole, a wise system, but that, after it has been in operation for about ten years, we should certainly examine it in case some reforms are required, though on the whole no structural alterations are necessary.
  The Regulations which we are considering propose very few changes. The first proposes four changes affecting the National Insurance tribunals, the second extends two of those changes to the Industrial Injuries tribunals, and the last one makes one change relating to the National Assistance tribunals. I wish to deal with the four changes under the National Insurance Act and to refer to the others as far as may be necessary.

  1439
  The first change to which I wish to refer is that which lays down clearly the right of a claimant before a tribunal, or other parties who have a right to be there, to call witnesses and put questions to them directly in evidence. This is a useful extension of the claimant's rights. I do not anticipate that any hon. Member will wish to quarrel with it. My hon. Friends and I have no objection to it.
  The second change is the one which allows an automatic appeal from the local appeal tribunal to the Commissioner under the National Insurance Act without the claimant having to seek leave to appeal. Again, that is something which most of us would welcome. If I may speak as one who has had experience from the trade union point of view, the trade unions have enjoyed the automatic right of appeal all along, and I see no reason why claimants appealing on their own should not have the same right. As I understand, the Commissioner will retain the right to refuse an oral hearing of an appeal if he thinks it is not merited. That is a wise safeguard against appeals which do not merit an oral hearing. This is also a change which we welcome.
  The Regulation dealing with the Industrial Injuries Act does not make a similar change. I understand that the reason is that it cannot be done by regulation, but will require legislation. I hope that such legislation will be forthcoming at an early date, because the same principle should apply.
  I now turn to the two other changes, where there are some grounds for criticism. One relates to legal representation before local appeal tribunals. The first Regulation says that:
  "Any person … may be represented by some other person whether having professional qualifications or not. …"
  This is a fairly big departure from the existing position. At the moment, in cases under the Industrial Injuries Act a claimant may be represented by a legally qualified person with the leave of the chairman. I believe that in about 2 per cent. of the cases before the industrial injuries tribunals a lawyer is present under that rule.
  However, under the National Insurance Act there is at present no provision for a lawyer to represent a claimant. I think that this was a deliberate decision when
  1440
  the Act was before the House in 1946, because it was felt that, above everything else, there should be established in the local tribunals an atmosphere which would be informal and in which the people in the room could get straight to the point and the claimant would feel at ease. The desire was to avoid an atmosphere of professional disputation. It was left to the claimant either to state his own case or to be represented by a friend or a member of a trade union or other organisation of which he was a member.
  That was felt to be right for the local tribunals, which would be concerned mainly with finding out facts rather than with legal arguments. However, that did not mean to say that there could not be a legal argument at a further stage. To get the matter into perspective, we must recognise that from the beginning there has been a right for lawyers to argue cases before the Commissioner. It is at that level that the case law has developed. It is important that lawyers should be able to appear, and, in fact, in many cases the Ministry of National Insurance, rather than leave it to its insurance officers, expert though they are, have briefed counsel in cases appearing before the Commissioner.
  The Commissioners' decisions were available to the chairman of local tribunals. Many of them are lawyers, or people with considerable detailed experience of the Act. Therefore, the law is there in the background, and the local tribunal could do its job without a legal atmosphere coming into its proceedings. That was a sensible sort of compromise. The Franks Committee proposed modest changes. It recognised that some people would come before a National Insurance tribunal who would not feel confident to state their own case; who did not belong to an organisation which could provide them with someone who could speak for them; who would have no one else to whom they can turn and who desired to have a lawyer representing them, particularly if their case was legally complicated.
  The Committee therefore suggested that the same rule which applied already under the National Insurance (Industrial Injuries) Act should apply under the National Insurance Act as well. It suggested that a claimant could ask leave of the chairman to be legally represented.

  1441
  This is an important point, so I should like to quote from para. 174 of the Franks Report, which states:
  "There are, however, claimants who do not belong to an organisation which can provide them with skilled lay representation. They may find great difficulty in conducting their own cases and may have no friend or acquaintance with the necessary skill to represent them. Such persons are particularly handicapped by a ban on legal representation While we do not wish to recommend changes which would lead to the general employment of legal representatives before National Insurance Local Tribunals or which would foster the impression that legal representation was necessary if the claimant were to have a chance of success, we are in no doubt that some provision should be made to covet this type of claimant."
  The Committee goes on to make the recommendations to which I have referred. I think it would have been right to have accepted that recommendation. There was force in the argument and I do not think that many people would quarrel with the change proposed. But these Regulations go much further than the recommendations of the Franks Committee. In all three of them it is proposed to give the claimant the unfettered right to have legal representation. Therefore, I think we run the two risks to which the Committee referred in the extract from para. 174 which I have read.
  The first is that if it becomes common for lawyers to argue cases before these tribunals, the atmosphere of the tribunals may be damaged. I do not wish to appear to be too prejudiced against the legal profession, for which I have great respect. I do not wish to generalise too much. But I have had experience of appearing before tribunals, particularly medical appeal tribunals, where lawyers have been allowed to appear, and while awaiting my turn I have listened to the cases which have been argued. There is a tendency for a barrister to arrive with a rather wordy brief; to stick to his brief; to give a long recital of facts already well known and take up time which keeps other claimants waiting.
  Mr. Douglas Houghton: He is earning his money.
  Mr. Prentice: That may be why he tends to carry on in that way.
  Another thing is that a barrister is inclined to use legal terminology which
  1442
  is not often understood by his client or by some of the non-legal members of the tribunal. I realise that what I am saying is a generalisation and that it depends on the individual. But these professional habits which are appropriate in a court of law are not necessarily appropriate before a tribunal. There is a danger that if this happens on too general a scale the whole attitude of the tribunals will alter even towards claimants who are not legally represented and we shall damage the informal atmosphere to which I have referred.
  The second danger is that people may get the impression that to succeed they need a lawyer. They may feel that the only safe way of presenting their case is to have a lawyer with them. People who cannot afford a lawyer and who lose their case may feel aggrieved, and may feel that if they had had one they would have succeeded. On that point, I would remind the House that at the moment the Government have no proposals for extending legal aid in these types of case. The ability to employ a lawyer before these tribunals will depend on the ability to pay for a lawyer, and that introduces a distinction between claimants, as to their ability to pay.
  The proposal was looked at by the National Insurance Advisory Committee, which said that it felt that on balance there was no danger of lawyers being employed too widely. That may be so. I hope that the Committee was right, but it is a curious situation, in which the Government are introducing this change and are hoping to avoid various dangers—hoping that people will not take advantage of the benefits they are being given. If people do take wide advantage of them it may be that the dangers to which I have referred will materialise. I can only urge that this point should be very carefully watched, and that the Government should bear in mind the possibility of introducing at some future stage the proposals recommended by the Franks Committee.
  I want to refer, finally, to the fourth change proposed in the Regulations. The relevant paragraph in Statutory Instrument No. 701 says:
  "Every hearing by a local tribunal shall be in public except so far as the chairman of the tribunal may otherwise direct if he is of the opinion that intimate personal or financial

  1443
  circumstances may have to be disclosed or that considerations of public security are involved."
  This proposal was criticised by the National Insurance Advisory Committee, and I support its criticism. It said that hearings should be in public unless the claimant insisted on a private hearing. The point is that the Regulations suggest that the chairman should decide whether or not a hearing should be in public, and the Advisory Committee think that the claimant should have the last word. I believe that the Committee's reasoning is sound.
  In these cases, in which intimate personal, financial and family details may be brought into the open, a claimant may feel that it is essential for him to have a private hearing. Whereas, in 99 cases out of 100, the chairman may accede to the wishes of such a claimant, in the hundredth case he may not, and in those circumstances the claimant may be caused great embarrassment. In such circumstances some people might feel that they did not want to go ahead with their appeal. Unless they can be assured that their appeals will be heard in private it is possible that some people with a good case for appeal may refrain from appealing. This situation is open to criticism, and I hope that it will be watched to make sure that no troubles arise from it.
  It is clear, therefore, that my hon. Friends and I are taking rather a mixed view of these Regulations. We feel that some are useful changes, but that others may be criticised. We hope that the dangers will be watched. At some stage in the not-too-distant future I hope that we shall have an opportunity for a wider debate on the working of these tribunals than is allowed within the scope of these Regulations, because the tribunals do an important job. The people serving on them deserve much credit. They serve voluntarily, and their work is making the operation of these schemes a success. They deal with vital human questions, and the House should look at their working at fairly frequent intervals to make sure that we are doing everything possible to lay down a framework in which a fair system can operate and people can feel that they are having a fair deal.
  Mr. George Thomas: I beg to second the Motion.
  10.20 p.m.
  Mr. R. H. Turton: Never in my experience in the House have I heard an hon. Member more anxious than the hon. Member for East Ham, North (Mr. Prentice) that his Prayer should not be answered. I find myself in general agreement with a great deal of what the hon. Member said. However, when I was serving in the Ministry of National Insurance, my experience was that these tribunals worked extremely well and that they had a very friendly and informal atmosphere. The evidence and the findings of the Franks Committee supported that view.
  After very full consideration, the Franks Committee came to the conclusion that a certain alteration could be made and I should like to take this opportunity of congratulating my right hon. Friend on being so quick about implementing the Committee's recommendation. All of us had been worried about some of these problems ever since Lord Hewart wrote the book, "The New Despotism" and these Regulations make the position very much better.
  The very minor criticisms which the hon. Member made—and I regard them as minor—were directed to legal representation. However, the Regulations do not refer to that. They permit any claimant to be represented by some other person, whether having professional qualifications or not. If the claimant goes to a tribunal and desires that his case should be put by some other person, it is rather difficult to argue that he should be denied that right. This happens especially when the claimant is not a member of an organisation. He should be allowed that protection before a National Insurance tribunal.
  The hon. Member argued that such a procedure would destroy all the informal character of the tribunal. All I can argue against that is the fact that we have had a similar provision for Industrial Injuries tribunals and that has not happened, except in 2 per cent. of the cases.
  Mr. Prentice: The position is not quite the same, since under Industrial Injuries legislation legal representation has been allowed only with the consent of the chairman, and it was that proposal which

  1445
  the Franks Committee wanted to extend to National Insurance tribunals. However, these Regulations open the door to legal representation without the chairman's consent.
  Mr. Turton: I think that my right hon. Friend is right to make this an unrestricted right and not to leave it to the discretion of the chairman. The circumstances in which a person may wish to be represented will not always be known to the chairman and it may well be that the claimant is not able satisfactorily to put his own case. The weakness of the system under the Industrial Injuries practice is that to succeed in his application that he is not fit to put his own case, the applicant must argue that very point before the chairman. In justice it is better to give this unrestricted right of legal or other representation.
  The hon. Member was a little unfair to a profession in which I once practised some thirty years ago—although I have not since—in saying that lawyers would protract the proceedings. The class of case where it is in the interest of the claimant before a National Insurance tribunal that he should have some professional help is the type of case which is of vital importance, because it is that where some issue of principle is involved. I would far rather that that question were argued properly before a local tribunal than that it were left to be dealt with later before the National Insurance Commissioners. There is here a slight disagreement between the hon. Member, with his great experience of these local tribunals, and myself with my experience of considering these matters in an administrative capacity. I believe that this change is of very great importance.
  We come finally to the question of the public character of the proceedings. My right hon. Friend is adopting the recommendation of the Franks Committee. Perhaps the hon. Member for East Ham, North will reverse his argument on the last point about an unrestricted right as to whether the proceedings are held in camera or otherwise left to the discretion of the judge of the court or whoever is in command. I do not believe that the judge can rid himself of that responsibility. That is the difficulty of those who put the opposite argument. The publicity or otherwise of the proceedings must be left to the court.
  1446
  Knowing that that is the procedure for the tribunals, and having seen them working, I cannot believe that that discretion will be exercised unreasonably. The hon. Gentleman said merely that he thought we ought to watch how this recommendation of the Franks Committee worked out when implemented; I agree that we should, and I believe that we can do so with every confidence. The chairmen of the local tribunals have been successful in keeping both the dignity and the friendly atmosphere of the courts. We have to guard against a certain amount of malice on the part of claimants who make unreasonable applications.
  It is therefore right that we should adopt the recommendation of the Franks Committee—we have great confidence in those who were members of the Franks Committee—and not make an exception to the general rule by derogating from the responsibility of the court by saying that the appellant himself should demand whether the proceedings should be in camera or not.
  The hon. Gentleman mentioned legal aid. When I was a young Member of the House twenty-nine years ago, I introduced and brought into law one of the first Measures to give legal aid to persons brought before a court and who had not sufficient means; so I think I can be regarded as friendly to the argument put forward by the hon. Member. That cannot arise on this Regulation. Whether legal aid can be implemented or not is another matter, which is not in the hands of my right hon. Friend. Those who have recourse to any tribunal should never be denied the right of legal representation through lack of means.
  My right hon. Friend has met that point fairly well by saying that the person concerned can be represented either by a legal representative or by some other friend and that will meat the case in a great number of instances. I hope that the Government, when looking into the operation of the Regulation, will remember this point and in due course will secure some system whereby legal aid can be given to those who are without means and who want to argue a difficult point of law before a National Insurance tribunal.
  10.30 p.m.
  Mr. Douglas Houghton: The House always listens with close attention to the views of the right hon. Member

  1447
  for Thirsk and Malton (Mr. Turton) on matters which so recently have been within his official Ministerial responsibility. I think that the House will agree that in both the speeches which we have heard so far opinions have been well balanced and expressed with moderation and understanding of the difficulties of this trouble. Especially I would congratulate my hon. Friend the Member for East Ham, North (Mr. Prentice) on the comprehensive and fair-minded way in which he presented the arguments for and against the change which it is proposed to make by these Regulations.
  It is a fundamental condition of what we are proud to call British justice, our judicial procedure, and the procedure that we have before all committees and commissions of inquiry, that anyone who has a case to present should be given the utmost facility to do it to his best advantage, and if he feels unable to do that adequately himself he should be allowed assistance in doing so. We all want to see that preserved.
  The only tribunal that comes readily to my mind where that right is denied is the tribunal in the Civil Service which inquires into alleged security risks of individual civil servants who, when they appear before the tribunal, which we generously call the "three wise men," are not allowed to be represented either by their trade union or by a lawyer or even by a friend. However, there are special reasons which the Government have adduced for that procedure, and it would be quite out of order for me to pursue that matter any further. I just mention it in passing as perhaps the one exception that comes to mind in the observance generally of the principle that I have mentioned.
  I was not in the House when the National Insurance Act was being considered. I saw my right hon. Friend the Member for Llanelly (Mr. J. Griffiths) a little earlier in the evening and we exchanged reminiscences about the early days; and, whether we were in the House or not, we perhaps remember some of the reasons why at that time the House felt that it was proper to make the arrangements which these Regulations propose to alter. Perhaps I am wrong—I do not know—in thinking that a good deal of prejudice against the legal intervention in these social benefit questions arose
  1448
  from the operation of workmen's compensation. There is no doubt that many a lawyer sent his sons to Eton on his profits and gains from operating in the field of workmen's compensation.
  The stage was reached when one was not dealing with the employer. One was dealing with the insurance company which was covering his risk; though, in fact, one was dealing not with the insurance company but with its lawyers, and it had unlimited funds at its disposal to employ the best counsel in the land. Therefore, the citizen, the worker, felt quite unequal to the forces ranged against him, and he went to his union. The union felt inadequate to meet the strength of legal representation which confronted it in the courts, so the union had to employ lawyers, and the whole thing got into the hands of the legal profession.
  It seemed to be far removed from the origins of the principles of workmen's compensation where the workman had a claim against his employer and where, generally speaking, they tried to settle the matter on commensense lines within the confines of the organisation in which they were both employed. I think it was the desire of the Government of the day to avoid the appeals machinery, under the National Insurance Act especially, being swept up into this jet stream of legal representation.
  The Franks Committee commented on the criticism which there had been of the ban on legal representation. I do not know how widespread that criticism was, but if any citizen felt at a disadvantage in not having the opportunity of representation at an appeal tribunal, it seems to me that the ban on representation had to be reconsidered. I admit that.
  It is true that most of the appellants, under the National Insurance Act at all events, had trade union representatives there with them, not all of them, admittedly, competent to represent their member's case. But I am not sure that lawyers will find this a familiar field or that they will easily take to the complexities of National Insurance, the contribution conditions and all the other things which now make the whole field of National Insurance a little bewildering to the ordinary person.
  I am a member of the General Council of the Trades Union Congress and of its Social Insurance Committee. The T.U.C.

  1449
  gave evidence to the Franks Committee against any change in the old arrangements, which it thought worked very well; there seemed to be no strong reason for making any change. When the Franks Committee recommended that the same procedure should be applied to National Insurance appeal tribunals as was applied to Industrial Injuries appeal tribunals, however, that seemed to be a compromise and reasonable middle course to meet the problem. The Minister, with the approval now of the right hon. Member for Thirsk and Malton, has gone the whole way and given unfettered representation at the appeal tribunal, thus going somewhat further than the Franks Committee recommended.
  We can only express hopes and fears about it. We cannot dogmatise on what may be the result. That is why we are approaching this Prayer with reason and appreciation of the differences of the problem and are not being dogmatic about what we think the consequences will be, but we shall have to see how it goes. I express the hope that the trade unions will not feel it necessary now to employ lawyers because of a feeling that non-trade unionists are employing lawyers in increasing numbers and because the trade unionist, who is probably now at some advantage in being able to be represented at an appeal tribunal, soon feels at a disadvantage if he has not legal representation. We certainly do not want to see a gradual approach to the situation which I described about workmen's compensation.
  As for the National Assistance tribunals, I can only say that it strikes me as rather odd that any appellant before a National Assistance appeal tribunal, whether for National Assistance or for a non-contributory pension, should be represented by a lawyer. In National Insurance tribunal cases there are frequently little, tricky questions of eligibility for benefit by reference to the conditions under the Act, but before a National Assistance appeal tribunal it will mostly be evidence of need and factors which have to be balanced between the need of the appellant and the general practice of the National Assistance Board in meeting it.
  I have misgivings about this, I frankly confess. They are, perhaps, made a little greater by reason of my feeling for quite a long time now that many claimants for benefits under the National Insurance
  1450
  scheme are told as a matter of form that if they are dissatisfied with the decision of the National Insurance officer they can, of course, appeal to the statutory tribunal, when it seems pretty obvious to any well-informed person that they have not a dog's chance if they do.
  After all, in some cases there is no evidence of the qualifying contributions, and nobody can find any. In those circumstances one can employ Sir Hartley Shawcross, but he cannot convert disqualification from benefit into a successful outcome. The straw is not there with which to make the brick. Yet the claimant is in many cases given the impression that there is some chance if he avails himself of this opportunity. "Otherwise," he says, "they would not have told me I can appeal. They would not, if I have not any chance." It is only when the claimants go to their trade union officer or Member of Parliament—and we all get these cases—that we are able to see that it really would not profit them to go to the tribunal unless they could find some rebutting evidence against the opinion. "You do not satisfy the qualifying conditions for benefit."
  In these circumstances, are these hapless claimers going to a lawyer to be advised that they have no chance, and are they to pay to be told it? Or will the lawyer say, "Let us see. Let us make a case of it"? They pay the lawyer, and go to the tribunal in vain. These are dangers. I have not exaggerated them.
  All I can ask the Minister to do tonight is to keep in close touch with those who have their misgivings, to take note of any tendencies which he feels are undesirable, and to report to the House as he feels necessary, and ask us, if necessary, to approve amending regulations. I hope that will not be necessary. It is far better to have the fullest rights which are not abused and which do not get into undesirable channels than to impose restrictions in order to avoid those abuses and undesirable tendencies. I hope that everything will go well, and that nothing will occur which will lead those of us who have misgivings at the moment to feel that we told the Minister so.
  In conclusion I would say that the Trades Union Congress is equally concerned. Without attempting to represent its view officially in this House, which it would not be proper for me to do, I

  1451
  think that what I have said broadly represents the approach to these Regulations of the Trades Union Congress.
  10.44 p.m.
  Mr. Charles Doughty: This debate has certainly been conducted upon a high level, with very much the same views being expressed on both sides of the House. Personally, I should like to congratulate the Minister on the very prompt way he has read the Report of the Franks Committee and adopted it, with variations to which I shall refer in a moment. I hope that my right hon. Friend will be an example to other Ministers who may be tempted to read it and not to follow it up. It is an extremely important Report, and one of which we shall hear a great deal more in the future. It would not be right of me—indeed, I should be out of order if I did—to refer at greater length to that Report, or to the subsequent tribunals to be formed, we hope, after legislation is passed, to keep an eye upon this type of tribunal and upon all tribunals to see that they function correctly and efficiently.
  My right hon. Friend certainly has followed the Report, and I feel sure that this change will make an improvement, in a small way, in the tribunals which hear so many cases in the course of a year.
  Let us look at the matter from a practical point of view. If people were to have the advantage of the services of the hon. Member for East Ham, North (Mr. Prentice) and if they knew that their case would be presented with fluency and detail, as the hon. Member presented his own case tonight, no one would be more satisfied with the result. At least they could say that their case could not have been better presented.
  But that is not always the position. To begin with, the people concerned may not have the services of an official of a trade union. They may not, for reasons best known to themselves—I am not suggesting that they would be right—wish to be represented by a trade union official. After listening to the argument of the hon. Member for East Ham, North, I would say that a claimant should be represented by no one except a lawyer. Is that really what we want to say?
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  I want to explain that I am not saying a word against trade union officials who conduct such cases extremely fairly and with great skill; but supposing that professional people, members of the legal profession, were to be excluded, would there not grow up a different type of person, an undesirable type of person, with perhaps the gift of the gab and a rough knowledge of these Regulations, who could easily impose themselves for small sums upon the gullible? Such persons would be responsible to no organisation and no professional tribunal could have them up for unprofessional conduct.
  Does the hon. Member for East Ham, North really wish to encourage that type of person and to loose them upon the public? That is what he is encouraging by this Prayer.
  Mr. Prentice: Has the hon. and learned Gentleman seen the evidence to the effect that this is happening now, because the existing practice of excluding lawyers has been in operation for twenty years?
  Mr. Doughty: A Herbert Committee sat between the wars to consider this matter and it said that this type of individual was becoming a nuisance. There is evidence of that. Recently that nuisance has not appeared, but there is no reason why it should not appear again.
  We are in complete agreement about the first two matters referred to in the Regulations. It is right that witnesses should be called and that there should be a chance of appeal to the tribunal.
  Coming back to the question of legal representation, one talks about an informal atmosphere. What is meant by that? I am sure that the hon. Member does not mean that a lot of extraneous matter, irrelevancy and hearsay should be brought in and that the time of the tribunal should be wasted by that means. One knows—the hon. Member for Huyton (Mr. H. Wilson) referred to it—
  Hon. Members: The hon. Member for Sowerby (Mr. Houghton).
  Mr. Houghton: I have many responsibilities to bear, but not all those of my right hon. Friend.
  Mr. Doughty: I meant the hon. Member for Sowerby. We as Members of Parliament know that people come to see us in order to put their case before us.

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  One knows the irrelevancies and extraneous matters which are sometimes dragged in and that one has to pick out the bits relevant to the case. A man with a legally trained mind or a trade union official is able before the case is presented to get the relevant facts, and the relevant witnesses if necessary, so that the case is properly presented to the tribunal. In an informal atmosphere one gets everybody talking at once. Everyone will be contradicting everyone else and extraneous matters will be brought in. If we are to have this informal atmosphere, let us know exactly what we mean.
  What about legal aid? I am not arguing about that for a moment, but let us consider the priorities. The day may come—I do not know whether it will or not—when everyone who is qualified to claim it may have legal aid when appearing before any kind of tribunal, but that will not happen for some years. The scheme is working well, with possible criticisms, but if we overload it we shall break it down. The hon. Member may not have been present when a recent announcement was made extending legal aid for further criminal cases. That was a step forward. That should certainly come before any question of representation before these tribunals where, in any case, only a small percentage of cases will be affected.
  I am not disagreeing that this is a matter which can be brought under these Regulations, but in my view it is not a matter which should be brought in, at any rate for some time to come. I think that on reflection the hon. Member will agree with the Franks Report that people who wish for it should have legal representation before almost any tribunal before which they may have to appear or before which they bring a case.
  On the question of public hearings, it is a fundamental principle of our law, with a few exceptional cases, that all hearings should be in public. On the whole, that is a very good rule. I do not mind whether it is a civil or a criminal case, or an appearance before a tribunal, it should take place in public. If members of the Press want to attend, they should be allowed to do so. It may mean injustices to some against whom a crime has been committed, and who may not wish to come to a court and discuss matters which they do not wish to be made public, but on balance the
  1454
  system works well and I would rather have that system than that tribunals should hold trials in secret—
  Mr. H. A. Marquand: These tribunals do not hold trials. They merely decide whether people are entitled to pensions and inquire into their circumstances.
  Mr. Doughty: I was dealing with the general question of whether cases, both criminal and civil, should be heard in public or in private. On balance, I think it is better that both should be heard in public. It is much better that we should have justice done in the open, rather than behind closed doors. In exceptional cases the chairman has the power to order a hearing in camera. That follows the general practice of the law, with which I am wholly in favour.
  It is true that the variation from the Franks Report is an unqualified right to legal representation. The Franks Report suggested that there should be legal representation only where the chairman thought that the applicant was not capable of presenting his own case. That is really not practicable. A chairman would have to wait until a case was half over before saying to the applicant, "I have heard what you are saying, but I cannot follow it, and I think that you had better get yourself legally represented." The case would then be adjourned when it had been half-heard, or half mis-heard, and it would come before the Tribunal again on another occasion. The chairman could not make a decision until he had heard at any rate part of the case whether the applicant was a fit person to present his own case.
  Having heard the hon. Member for Sowerby referring to the complexity of the Regulations and the detailed matters which have to be gone into, I would say that it is clear that an ordinary person with no experience of this kind of work would do one of two things. He would get someone to speak for him who could be better understood and followed, or he would waste a great deal of the time of the tribunal, which would itself have to do the work of finding out the facts of the case before it could decide upon those very facts.
  I welcome these Regulations. I hope that our discussion tonight has made clear the reason that they were brought in, and I hope that I have been able,

  1455
  in some small degree, to set at rest some of the fears which have been expressed, perhaps not very forcefully but very correctly, by hon. Gentlemen opposite.
  10.55 p.m.
  The Minister of Pensions and National Insurance (Mr. John Boyd-Carpenter): I should be the last Member of the House to be in any position to object to any hon. Member putting down a Prayer. But in any case, I certainly should have no grounds for quarrelling with the hon. Member for East Ham, North (Mr. Prentice) and his right hon. and hon. Friends in putting down these Motions and so giving us an opportunity to discuss these very important Regulations. As the hon. Member for East Ham, North said in his own opening remarks, of all the changes which flow from the Franks Report, these are perhaps those which, in human terms, have the greatest importance. I am bound to say that I very much welcome the opportunity which these Motions have given me to say a word or two to the House about the reasons which led me to follow, and in one case to go further than, the recommendations of that very expert Committee.
  It might be for the convenience of the House if I were very quickly to summarise what the three sets of Regulations before us actually do. The hon. Member for East Ham, North said that they do four things. In a formal and technical sense, that is so, but one of the four matters which he included, that which related to the express right given to persons concerned before these tribunals to call witnesses and to ask questions of witnesses, is, in fact, declaratory of the existing practice, as I think he knows, and does not constitute a change. I thought, none the less, that it was right, when setting out in new form the Regulations governing certain aspects of the procedure of the tribunals, to set out clearly that, I think, very important right. But I should not like to appear to be claiming credit for a change which is no change at all except in the purely formal sense. That part is declaratory.
  The National Insurance Regulations give the automatic right of appeal, they provide for public hearings subject to the right of the chairman to vary that—on which I will say a word in a moment—and
  1456
  they abolish all restrictions on legal representation. The Industrial Injuries Regulations do not deal with the right of appeal. For the reason which the hon. Gentleman the Member for East Ham, North hinted at, that matter being already dealt with under the Industrial Injuries Act, it can be varied only by leglislation. Also, the Industrial Injuries Regulations do not provide for public hearings, because that is already the position, but they do remove all restrictions on legal representation. The National Assistance Regulations also remove the restriction on legal representation, and they follow the Franks Committee in providing neither for public hearings nor for further appeals. In both cases, that is strictly to follow the Franks recommendation.
  The hon. Member for East Ham, North concentrated the greater part of his speech upon his cricitisms of the provisions relating to National Insurance tribunals—and, in particular, he criticised the unrestricted right of legal representation. He indicated, I thought, that he had no great enthusiam for legal representation, but he would not particularly mind it if it were permitted at the discretion of the chairman, as is the existing practice in the Industrial Injuries tribunals.
  I will deal with that point in a moment, but perhaps I ought first to remind the House of the somewhat anomalous position which has existed so far. It has been the position that a claimant before one of these National Insurance tribunals could be represented by a friend, provided that that friend had no legal qualifications. I came across that matter some two years ago and, but for the appointment of the Franks Committee, I should have laid regulations dealing with that anomaly some time ago. I thought, however, that, as it was clearly within the purview of the Franks Committee, it would be an impertinence on my part to do so and, therefore, I let the matter rest. The present is not only a slightly ridiculous situation—and neither you nor I, Mr. Speaker, can for one moment accept the view that a lawyer cannot be a friend—but in individual cases it has also had embarrassing and unfair effects.
  There was one case when an elderly widow who desired to be represented before a tribunal by her son was unable to

  1457
  do so because her son happened to be a qualified solicitor. My hon. Friend the Member for Devonport (Miss Vickers) has on a number of occasions raised with my hon. Friend the Joint Parliamentary Secretary the case of a solicitor who is good enough to give free advice on National Insurance questions to poor people affected by the Regulations but who has been debarred from representing them before the tribunals. Clearly, that is not consonant with fairness to the applicant.
  Let me take now the narrower point that this should be at the discretion of the chairman. On principle, I do not see any advantage in putting that on the chairman. I see some disadvantage. It is extraordinarily difficult for the chairman to form a view as to how to exercise that discretion. I understand that the practice in the Industrial Injuries tribunals, where that has been the rule, has been that almost invariably permission, when asked for, has been granted. If that be so, however, there would seem to be little justification for entrusting the chairman with that duty and there seems to be, on principle, almost everything to be said for saying that if, in a matter of importance to him that is being argued before one of these tribunals, a person wants to be represented by somebody, he should not have arbitrary and artificial limitations imposed on his choice of that somebody. That is why it seemed to me that though it is true that the Franks Committee recommended more the assimilation with the Industrial Injuries rule, the right thing to do was to go further and give an unfettered choice to the applicant as to whom he should be represented by.
  Fears have been expressed—my hon. and learned Friend the Member for Surrey, East (Mr. Doughty) has dealt effectively with some of them—that this will result in the wholesale introduction of lawyers into these tribunals with unfortunate effects upon their procedure. I do not believe there is any reason to assume that the right to legal representation will be very freely exercised. On the contrary, I think it will be in only the exceptional case that a lawyer will appear professionally, although it may well be that in a certain number of other cases a man who happens to be a qualified lawyer will appear, as in the cases I have mentioned, in the rôle of friend.
  1458
  I have had a check made of what has happened in tribunals in three of the National Insurance regions since these Regulations came into effect on 5th May. That check reveals that in 1,084 appeals heard in those three regions, there has been legal representation in five cases. It may be said that that was the early days of the Regulations before their effects were fully appreciated and that the tendency may be for numbers to increase. That may well be so. So far as it goes, however, that appears to indicate that the view which I have taken is right and that it is unlikely that in any very large number of cases applicants will feel it desirable or necessary to have legal representation. They will, after all, not be opposed by trained lawyers. There is no suggestion that the normal practice in respect of insurance officers before the tribunals will be changed.
  In that context, perhaps I might correct the hon. Member for East Ham, North in what he said about legal representation before the Commissioner. I understood him to say that my Department was inclined on occasions to brief counsel in front of the Commissioner. Quite apart from the point, which is a good deal more than a technicality, as the hon. Member knows, that it is the chief insurance officer, not the Ministry, who is the party, it is not the practice of the chief insurance officer to brief counsel. If he finds, even before the Commissioner, that the case is one requiring legal assistance, he falls back upon the extremely able lawyers on the legal staff of my Department. As the hon. Gentleman, who has had such a long experience, had fallen into that slight error, I felt that it would be right if I were to put the record straight.
  On the broader issue, going back to the tribunals, I do not feel that the fears which have been expressed of any damage to their extremely effective procedure, to which the Franks Committee paid a justified tribute, are likely to be realised. What happens in front of the tribunal is, after all, largely in the hands of the chairman of the tribunal. It must be the experience of many of us familiar with advocacy that it is extraordinarily poor advocacy for any advocate to try to impose his methods on the tribunal before which he is appearing. The better advocate adapts himself with some flexibility to the procedure which the tribunal

  1459
  approves and practises. Even if I am wrong in my earlier suggestion that legal representation will be the exception rather than the rule, I do not think that we need fear that the expeditious and sensible procedure of these tribunals will be adversely affected by having professionally qualified advocates appearing before them.
  I should like to make it clear that there is no reason to assume that it will be necessary for any applicant before the tribunals to be legally represented if he is to obtain justice. The chairmen are now very experienced and the procedure is well settled, and I do not think that any applicant need be under the impression that unless he is legally represented he will in general be subject to some handicap. I should not like that impression to get about.
  As to the hon. Gentleman's point that lawyers may be incomprehensible to the tribunals, I must point out that with two exceptions the tribunals have legal chairmen, and, once again, that an advocate, feed or unfeed, who addresses a tribunal in such a way that the tribunal is unable to understand him is not on the whole a very good advocate.
  Mr. Prentice: I was referring to the non-legal members of tribunals.
  Mr. Boyd-Carpenter: They have the advantage on points of law of the guidance of the legally-qualified chairman. Again, when one is addressing a tribunal, it is best to make sure that one's argument is understood by the members of the tribunal. Therefore, though I fully understand the hon. Gentleman's point of view and would not wish to regard it as frivolous, I do not think it is well founded, but I will, of course, as is my duty, watch what effect the change may have on the practice of the tribunals. If, contrary to my views, there were a deterioration in their working, I would not hesitate to consider what should then be done.
  I turn to the other point to which the hon. Gentleman addressed himself, as did the hon. Member for Sowerby (Mr. Houghton)—the matter of public hearings. As my hon. and learned Friend the Member for Surrey, East pointed out, the argument of hon. Members opposite here was almost the converse of that which they put forward on the subject of legal representation. Legal
  1460
  representation, they said, should be, if at all, at the consent of the chairman, not the absolute right of the claimant. Here, on the other hand, they say that the right to a hearing in closed court should be the absolute right of the claimant and not at the discretion of the chairman.
  We can possibly exaggerate the importance of this matter. It is not realistic to believe that the opening of the tribunals will cause immense flocks of the public to queue up for the purpose of attending. Their work is extremely interesting to those of us interested in this matter, but it does not, which is perhaps fortunate, have the sensational character which sometimes attends a criminal trial. I do not believe that the question of coping with the public gallery will necessarily be one of the major problems with which we shall have to deal.
  However, it is true that the opening will mean that some people will attend and in many circumstances it is a good thing that the local Press should be able to attend. I hold very strongly as a matter of principle that, as my hon. Friends have said, justice is much best done in public and abuses or suspicion of abuses are much better prevented if judicial bodies do their duty in public where, if the Press so desires, the Press can come and report what is done, and where if anything is done amiss, newspapers, the public and Members of Parliament can become quickly aware of it and can take the necessary steps.
  I start with a very strong bias in favour of the public doing of justice. I accept that when that principle is applied to these tribunals, there are circumstances in which someone may genuinely be deterred from going to the tribunal if he feels that intimate and personal matters may have to be brought out in public and perhaps reported. That is a problem which to some extent faces those who attend our courts of law where closed sittings are very exceptional, indeed.
  Mr. Houghton: The Income Tax appellant is completely protected all the time.
  Mr. Boyd-Carpenter: That, of course, is a matter solely of personal circumstances, and I do not think that that is in pari materia with this. At any rate, we provide the necessary safeguard in the discretion of the chairman. It would

  1461
  be somewhat derogatory to the position of the chairman, who, after all, is responsible for the conduct of the tribunal, if the decision as to whether it should sit in public should be taken from him and placed in the hands of the claimant.
  There is another side to this. There may be cases, possibly exceptional, in which the chairman may well think that the hearing should be closed, even though the claimant has no wish to apply for that. There may be cases, not unknown, where there is a malicious desire to bring out things about other people in public which might be very harmful to those other people and where the chairman might think it his duty to use his discretion, whether the claimant asked or not, or even if the claimant specifically asked otherwise, for the hearing to be closed.
  The right method is to leave it with the chairman. I appreciate, however, that the National Insurance Advisory Committee expressed some doubts about the matter and that it is my duty in connection with my responsibility for these tribunals to watch this matter very closely. Perhaps I may tell the House what I have arranged to do.
  I have arranged that for the first three months from 5th May—and the process is now going on—the clerks of the tribunals shall report the number of requests for private hearings, the number of such requests granted, the number of cases where a private hearing has been refused and the claimant has thereupon declined to proceed personally with his appeal or taken some other step to withdraw it. I am arranging for reports to be made available to me, and if any hon. or right hon. Member cares at the appropriate time to put down a Question, or in some other way to elicit the information, I shall be happy to give it to the House.
  Hon. Members will agree that that is probably the best and most satisfactory way of testing whose judgment is right in this matter. Once again let me say that, if I saw that this provision was adversely affecting the working of these very important tribunals, I should not hesitate to make any adjustment which in the circumstances seemed necessary.
  So far, on the test check to which I referred a few moments ago, in three regions there have been twenty-four applications by claimants for closed hearings. Twenty-thee have been granted, and the
  1462
  twenty-fourth case—of which I have obtained particulars with which I do not want to weary the House—was one, in which, although it would be impertinent for me to express any view upon the chairman's decision, the circumstances were plainly very unusual.
  Despite the views expressed on these two matters, I think that the House generally has taken the view that these three Regulations constitute a real step forward. They involve the acceptance, over quite a wide sphere, of the recommendations of the Franks Committee, and they will involve some new problems for those concerned with the administration of these tribunals, as well as those concerned in appearing for either party before them.
  I was glad to hear my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) pay tribute to the very high quality of the chairmen whom we are fortunate to get on these tribunals—and I would also like to pay a tribute to the other members. These Regulations will mean new problems for them, but I believe that in following the principles which the Franks Committee recommended, after most careful study, and which public opinion has overwhelmingly accepted, we are taking a step which will ensure that these important tribunals will do their vital job even better than they have done it in the past.
  11.16 p.m.
  Mr. H. A. Marquand: My hon. Friend the Member for East Ham, North (Mr. Prentice), in his excellent speech, reminded us that during the past year 50,000 individuals had appeared before the various tribunals whose work we are discussing. It was principally because of the very large number of our fellow-citizens who are affected by the workings of the tribunals that we decided to put down these Prayers.
  In doing so, we had two main objectives. One was to give greater publicity than might otherwise be obtained to the very important changes which these Regulations are making in the workings of the tribunals. We are very grateful to the Minister for the full way in which he dealt with these changes in a very short time the excellent explanation he has given as to how he thinks they will work, and also the evident care with which he will watch their operation. Although this matter is being taken late at night in the House of Commons and

  1463
  arouses no political controversy, I very much hope that the newspapers will find room to report, not my speech, but what the right hon. Member has said, in order that all the people affected by the working of these tribunals can get to know what their new rights are. I think my hon. Friends will agree that although there may have been misgivings many of them have been removed by what the right hon. Gentleman has said.
  Our second objective was to examine the way in which the tribunals worked, and the Reports of the two Committees which have commented upon them. Although little has been said about it, I want to say how much I approve of two of the main changes made in the procedure by the Regulations which the right hon. Gentleman has laid. First, there is the extension of the right of appeal. That is a very welcome improvement. I attach enormous importance to the right of appeal, as part of our social services. I have been a Minister of Pensions myself, and I know extremely well how valuable it is to the working of the system of pensions—war pensions and civil pensions—that the applicant should feel that he has the right of appeal if his first application, put forward in good faith, is found to be faulty. It strengthens our social services, and the acceptance of the services by our citizens, if that right of appeal is obvious, regular and automatic. I go further; I say that it strengthens the operation of the rule of law in our society generally if people feel that they have a right of appeal; the right to a second opinion. I could not express my pleasure too strongly that this automatic right of appeal is now being granted. In the same way, it is valuable that the unfettered right of persons concerned to bring witnesses and have evidence put before the tribunal by their witnesses if they so choose is granted to them. These things are excellent.
  As my hon. Friends have said, we had some misgivings about the extension of representation, particularly because it was evidently intended to be an extension of legal representation. I do not propose in the short time that is left to say very much more about that. The case has been well put by my two hon. Friends, and two Members opposite, both of whom have legal experience, have put the other case. I think that case has been well debated.
  1464
  I hope that all lawyers in this House who have pride in their profession will not misunderstand us when we remind them that the ordinary man in the street is a bit intimidated when a lawyer appears and takes part in an argument in front of a tribunal. He feels uneasy and unsure of himself. He feels afraid that some sort of learned jargon is being used which may misrepresent his opinions and feelings.
  What we were doubtful about, and the danger to which my hon. Friends wanted to draw attention, was not that there had been legal representation, but that the right hon. Gentleman was taking action which went even further than the recommendations of the Franks Committee itself. That seemed to us a very srange thing. We were certainly entitled and bound to ask for an explanation of that. If there were no other reason to move a Prayer, this was certainly a reason: why should the right hon. Gentleman think it right to go beyond the recommendations of that formidable Committee?
  I think that what the right hon. Gentleman said tonight was reassuring on those aspects. It was certainly very interesting to hear his explanation of the anomalies which sometimes arise with regard to the absolute bar on legal representation. I at any rate was not aware that that kind of case which he cited had arisen. I personally have some sympathy with his argument that if, after all, the applicant wants to have legal representation one is going rather far if one says that the chairman is entitled to deny that. Whatever our views and however far we go—I may not go so far as my hon. Friends in my doubts of the wisdom of the legal representation before these tribunals—we were all reassured to know that in only five out of the 1,084 cases in a recent period had legal representation taken place.
  Particularly we were glad to hear the Minister say that there will be no need for any applicant to believe that he will be handicapped if he is without legal representation. That was a most significant sentence which, I hope, will be reported and related to all the people who may have cause to go before these tribunals. That is a very valuable assurance, and we are glad to have had it. I am glad also that the right hon. Gentleman gave the assurance that he will

  1465
  watch the working of the tribunals and will not hesitate to change it or ask the House to change it if it proves in any way unsatisfactory.
  On the question of publicity of the hearings of the tribunals, I am not yet won over from my misgivings about this. I must say that I cannot help attaching in this matter more validity to the opinion of the National Insurance Advisory Committee than I do to the opinion of the Franks Committee. The National Insurance Advisory Committee, which has on it men with great wisdom and knowledge and vast experience of the working of our system of social security, said categorically,
  "In our view it would be preferable for the applicant to have an unfettered right to a private hearing."
  The right hon. Gentleman said categorically that he regarded it as his personal duty to watch this aspect of the new changes, in particular, very closely, and he added that he is doing so already, that he is collecting the information and that so far there has occurred only one refusal when a claimant has asked for a private hearing.
  Mr. Boyd-Carpenter: In case I have misled the House, I should repeat that that was in the three regions where we made this test inquiry and out of the 1,084 cases. I do not wish to give the impression that it covers the whole country. We have not yet obtained the figures.
  Mr. Marquand: I am obliged to the right hon. Gentleman. I remember that he said that, but for the moment it had slipped my memory. In any event, the proportion was very low. I dare say that from time to time my hon. Friends will take the opportunity at Question Time to ask what the figures show.
  I feel that we have gained a great deal through having put the Prayer on the Order Paper tonight. I am sure that if the Press do as I have asked them and give publicity to our proceedings, we shall have helped thousands of our fellow citizens considerably. We shall do so if we make known to them the availability of these new provisions and if we make known to them the assurance about fair dealing which the right hon. Gentleman has given us tonight.
  Having said that, I hope that my hon. Friends feel that they can now withdraw the Motion.
  Mr. Prentice: I beg to ask leave to withdraw the Motion.
  Motion, by leave, withdrawn.

  ATMOSPHERIC POLLUTION, THAMES-SIDE
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hughes-Young.]
  11.27 p.m.
  Mr. Bernard Braine: Yesterday I handed to my right hon. Friend the Minister of Health a petition signed by over 5,800 residents of Canvey Island protesting against the continued pollution of the atmosphere by emanations from the Thames-side oil refineries. These signatories represented over half the adult population of the Canvey urban district, and the petition was remarkable in another sense, in that all the signatures had been collected as a result of the public-spirited activities of one woman, a Mrs. Allen. With the petition were copies of letters from a number of people, many of whom were invalids, alleging that the nuisance was distressing in the extreme and was aggravating their condition.
  I have no desire to exaggerate this nuisance or to misrepresent the efforts of the oil companies to get it under control, but I think it should be said that up to a few years ago South-East Essex had a reputation of having almost the purest air in the United Kingdom. At any rate, large numbers of people suffering from chest and throat complaints made their homes there, and found that the place suited them. It is hard enough for healthy people to put up with the kind of nuisance our constituents have been experiencing, but it is extremely distressing for those who already suffer from ill-health.
  Although the nuisance is intermittent, it is never far away. For example, in the period January-October last year, when a special record was kept by the very efficient public health inspector of Canvey Island, obnoxious fumes were detected on no fewer than thirty-nine days. On six of those days, the fumes were described as "overpowering," and on fifteen as being "strong." My hon. Friend will remember that I raised the matter with him in December. He very

  1467
  kindly wrote to me and informed me that, though the instances of complaint had been fewer last year than they were the year before,
  "The number of very strong smells has risen."
  Unfortunately, since then the nuisance has not abated, and, judging from the volume of letters on the subject I have received and the number of signatories to the petition to which I have referred, the public certainly think that it is getting worse. What is more, it is spreading. Only yesterday, I received a letter from the Clerk to the Rayleigh Urban District Council saying that up to about three months ago the smells had been of a slight nature, of short duration, and infrequent; that during the past three months, however, the smells had become more frequent and more intense, though generally of short duration. Now Rayleigh is about 6¾ miles from the refineries, and in the northern part of the district, at Battles-bridge, about eight miles from the refineries, the nuisance has been detected in the last few months for the first time.
  Of course, we all accept that we have to live with refineries. They are essential to the economic life of our country, and as industry expands, as we hope it will, the demand for energy resources will increase and the output of the refineries will grow in volume. One must recognise too that, even at the best of times, a refinery is an uneasy neighbour to live with. It dominates the landscape, and by the nature of its operations it has its own characteristic odour. But so has a gas works or a factory, or a fish and chip shop, and it is probably true that in normal conditions the characteristic odour of an oil refinery is not more and may be less offensive than that of certain other large industrial plants.
  The problem which faces my constituency, however, is that we have to live with not one but three oil refineries, two of them on the north bank of the Thames at Coryton and Shell Haven to the west of Canvey Island and in the constituency of the hon. Gentleman the Member for Thurrock (Mr. Delargy). The third refinery is on the Isle of Grain situated opposite us on the Kent coast. These three plants have an annual throughput of at least 8 million tons of crude, and I am given to understand that in the next few years it is not unlikely
  1468
  that this figure will be doubled. Thus, we not only face on Thames-side a problem greater than that of any other community in the United Kingdom living near refineries, but the possibility also of the nuisance increasing in the years ahead.
  It may be convenient here if I say something about the nature of the problem. Every now and again, when the atmospheric conditions are favourable, an extremely unpleasant odour sweeps over the whole of the coastline from Canvey Island and Benfleet to the west to Shoeburyness in the east, a densely populated area. Canvey and Benfleet seem to suffer the most. Sometimes the odour is barely noticeable; sometimes it is very bad, and people feel sick, and vomit, and suffer headaches, and have difficulty in sleeping.
  It may be that there is no direct effect upon health as a result of this nuisance, but local medical opinion considers that there may be an indirect effect upon health in the sense that the nuisance causes loss of appetite, whilst people already suffering from ill health, and the elderly, may be experiencing an indirect effect which, in the words of the Public Health Act, 1936, could be described as "prejudicial to health."
  What are the causes of the problem? I doubt whether even my hon. Friend's experts could be precise about this. I certainly cannot be, but there appear to be four main sources of trouble. First, there is the hazard arising from the large volume of gas produced in the cracking process; secondly, the hazard from a smaller volume of particularly evil smelling gas engendered during the distillation processes; thirdly, some of the compounds produced as by-products are themselves evil-smelling; and fourthly, there is risk of smell from the contaminated waters used in the various distillation processes, and for the purpose of raising steam.
  As the hon. Member for Thurrock will agree, it is a fallacy to believe, as many of our constituents do, that refinery operations require vast quantities of waste gas to be released into the atmosphere. There is no truth in that. People believe, quite wrongly, that the problem could be solved if instead of burning up the gas at the top of the flare it could be piped away for other purposes. No one disputes the fact that refineries are among the most

  1469
  efficiently run plants in the world, and ours are no exception. Hardly any of the gases engendered by these processes are sent voluntarily into the atmosphere. The bulk are used for heating oil or for raising steam. In the case of the Shell Haven refineries, I understand that only one-twelfth of 1 per cent. of the total crude intake finds its way from the flare stack out into the atmosphere.
  Moreover, the flare stack is a safety valve and the public should be told that this is not merely a means of burning waste gas. Indeed, it is an ideal form of safety valve, for if there should arise a sudden need to release a quantity of gas because of a defect or a leak in some part of the plant, this is an ideal method of doing so because, as the flame shoots up into the sky from the stack, everyone working in the plant can see that something has gone wrong.
  Sometimes it happens that when an excessive amount of gas is released through the flare stack incomplete combustion occurs and unburnt gas or heavy black smoke is released into the atmosphere. If there are also atmospheric conditions where there is a layer of warm air above the stack which does not allow this emission to escape upwards into the atmosphere where it could disperse harmlessly and forces it to spread laterally, and if the wind is blowing in the wrong direction, then my poor constituents get the full benefit.
  Mr. Richard Body: And mine.
  Mr. Braine: No doubt the constituents of my hon. Friend suffer too.
  The nuisance seems to come not from one but from a variety and a combination of causes, which it is difficult for the expert, let alone a complete layman like myself, to separate and to assess. This seems to be borne out by the observations of my constituents that the smells vary; sometimes they are of a pungent onion nature, sometimes they smell like burnt oil and sometimes like gasoline. My hon. Friend will remember that the Alkali Inspectorate Report of 1955 made plain that
  "… the complicated operations of the temperatures and pressures at which some are conducted, render the avoidance of emissions on the wrong side of the combustion system a matter of considerable difficulty."
  1470
  I have a copy of the minutes of a meeting held by the Essex Borough and District Councils Association on 5th June to discuss this subject at which the Deputy Chief Alkali Inspector was present. He is reported to have said
  "… that all known methods were being adopted to eliminate the smells but when they occurred it was probably due to accidents in the refineries."
  Now this was in line with what my hon. Friend told me last December. It implies, of course, that the problem could be solved by careful and painstaking efforts to prevent accidents, and that therefore we shall not always have to live with this unpleasantness, as some people have suggested. Were this true, it would give us great hope and encouragement.
  After all, the refineries are run by highly experienced companies commanding considerable financial resources and some of the best technical brains in the country. Therefore, if the cause is purely accidental, then the matter would seem capable of early solution. I wonder if this is true. Certainly the oil companies are not running away from the problem. My inquiries over a wide field have revealed that they are spending a great deal of money in efforts to solve it.
  I am told that at Fawley, for example, the Esso Company is spending £100,000 a year solely to minimise the effects of pollution, and I have no reason to believe that the Shell Company is lagging behind in this respect. Indeed, I get the impression that our local refinery managers are most keen to solve the problem and to appear as good neighbours.
  Can my hon. Friend say whether the alkali inspectors are correct in assuming that the problem is solely or mainly due to accidents in the refineries? This leads me to ask some further questions. Is my hon. Friend really satisfied that the alkali inspectors are equipped to exercise effective supervision in defence of the public interest. I have met some of them, and know that they bring great skill and diligence to their tasks. But are there enough of them? It is true that the relations between the inspectors and the oil companies and local authorities are cordial. That is not the point. Are those relations effective?
  Is my hon. Friend really satisfied that adequate technical research is being conducted into the causes of this nuisance

  1471
  and, if so, can we be assured that the results of such research are properly co-ordinated? We all know that oil companies are highly competitive organisations. Their very processes are competitive. Are they exchanging enough information on the subject? If adequate research is not being undertaken, can some steps be taken by my hon. Friend's Department to ensure that it is? Can my hon. Friend also say how many local authorities in the area affected, including those on the Kent coast, apart from the Canvey Council, are keeping detailed records? Is he sure that effective liaison exists between the local authorities and the refineries in order that the incidence of the nuisance can be pinned down to particular times and to particular refineries?
  Lastly, can my hon. Friend give the House a categoric assurance that the nuisance is not detrimental to health? If, as I suspect, he cannot give such an assurance, is he prepared to urge that an appropriate inquiry be carried out?
  There is the problem, there is the grievance, and there are the difficulties. I see no easy solution, but I look with confidence to my hon. Friend to tell us that his Department will at any rate not flag in its efforts to find one.
  11.43 p.m.
  Mr. Hugh Delargy: Two of these offending refineries, as the hon. Member for Essex, South-East (Mr. Braine) has reminded us, are situated in my constituency at the extreme eastern end of the Thurrock Urban District at Shell Haven and Coryton. In Thurrock itself, nevertheless, there seems to be little complaint about this nuisance from the oil refineries. At all events, the local council has not received any official complaints during the last few years.
  It would appear from the evidence submitted to the special meeting of the Essex and Borough District Councils held on 5th June that it is those areas to the east of the oil refineries and, therefore, in the direction of the prevailing wind that have the chief cause for complaint. Not that we in Thurrock are without complaints. We suffer from another nuisance, another form of domestic pollution—from the plague of cement dust in West Thurrock. Houses, hedges and domestic laundries are often enveloped in a thick blanket of
  1472
  grey dust. Of course, the people inhale it. Complaints have been made to successive Ministers, but so far precious little has been done.
  I hope that the Minister of Housing and Local Government, together with his Alkali Inspectorate, will examine this problem again. It is causing acute distress. Perhaps this is not the most opportune moment to raise it, but I feel that any time is good enough to refer to this particular grievance. I know that the Parliamentary Secretary is a conscientious Minister, much given to research. I assure him that, if he wants any information about this particular nuisance, the files at his Ministry are full of it, including a few letters from me.
  However, I must not take up too much time airing my own grievances at the expense of others. In Thurrock, we have every sympathy with our neighbours who are subjected to these appalling stinks from the oil refineries, and we shall certainly do our best to help them to abate the nuisance. A special subcommittee has already been appointed to examine the problem, composed of representatives from Basildon, Benfleet, Canvey Island, Rayleigh, and Thurrock. The Thurrock representative on this committee and the civic officers can be relied upon to give every assistance possible to rid our neighbours of the nuisance, and I hope that, in return, our neighbours and all the neighbouring authorities will give us their assistance in our endeavours to rid ourselves of our particular local nuisance of cement dust.
  11.46 p.m.
  Mr. John M. Temple: Representing a constituency with a boundary common with the great Stanlow oil refineries in Cheshire, I associate myself with the remarks of my hon. Friend the Member for Essex, South-East (Mr. Braine). I have no wish to exaggerate the problem, but there is no doubt that it exists. There is one point I should like to add to what my hon. Friend said.
  Will my hon. Friend the Parliamentary Secretary take note of the fact that there is a doubt about whether these odours are affecting crops and foliage? When he is carrying out this survey, through his Alkali Inspectorate, I should like him to bring this point to the attention of his inspectors.
  11.48 p.m.
  The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. R. Bevins): I am sorry that we have no: a great deal of time in which to conclude this debate tonight, but I want to say that I am most grateful to my hon. Friend the Member for Essex, South-East (Mr. Braine) and to other hon. Members who have spoken. If I fail to deal with all the points which have been raised, it will not be due to any desire to be discourteous. Everything which has been said will be studied by my right hon. Friend.
  As the House knows, the oil refining industry is, of course, of tremendous importance to our economy and to each one of us. We cannot do without its products, its motor spirit, its paraffin, and all the rest. But we could, of course, very profitably do without some of the fumes and smells which issue from the oil refining plants from time to time.
  My hon. Friend the Member for Essex, South-East raised the question of the effect of these smells on the health of the community. I want to say quite categorically that there is no evidence at all at present that these smells are in any sense injurious to health. Indeed, the consistently high standard of health enjoyed by the workers at the refineries themselves appears to corroborate this. Nevertheless, I sympathise with the constituents of hon. Members who have spoken when they are assailed by these odours. I agree that it is poor consolation to tell them that these things are not injurious to their state of health.
  Our aim, which is, I believe the aim of the oil companies as well—I emphasise that—is to see that everything possible is done to remove the sources of these complaints in two ways: first of all, by the more rigorous supervision of the plants and, secondly, by a readiness to deal quickly with any source of smell which may be detected by the local residents.
  As my hon. Friend said, the responsibility for controlling pollution by noxious and offensive gases rests with our Alkali Inspectorate. I should like to pay my modest tribute to the members of that Inspectorate, who do an excellent job of work not only in this but in other spheres also. I have been asked whether the
  1474
  Inspectorate is sufficiently equipped and strong enough in numbers. I want to assure hon. Members that it is. We have recently expanded its strength from ten to twenty—it has been doubled—and we hope shortly to recruit another eight members to the force. Our inspectors are very much alive to their responsibilities here.
  I recognise that oil refineries are always a potential source of air pollution and particularly of unpleasant odours. They are capable of producing smells over relatively large areas. My hon. Friend the Member for the City of Chester (Mr. Temple) has spoken of the Stanlow refinery. I sympathise with him in what he said, because I am familiar with some odours, which are not exactly pleasant, which sometimes drift across the River Mersey when a south-westerly wind is blowing. There have, however, been no serious complaints about Stanlow during the last two years.
  Certainly, my right hon. Friend is under no illusions, especially after receiving from my hon. Friend a petition signed by nearly 6,000 people living on Canvey Island. There is, however, a good deal of public disquiet in certain parts of the County of Essex. I admit that it is a difficult problem, partly because of the large scale of the operations carried out at these refineries and partly because of the highly polluting nature of the gases involved in the various processes.
  The policy of our Inspectorate is that all these processed gases should be collected and sulphur compounds removed wherever it is feasible to get rid of them. The gases should then be burned completely and the final waste discharged without smell at a high level. That is important, as my hon. Friend said. The flares which can be seen at the top of the stacks of the refineries are part of this process. They are, in effect, safety valves which ensure that any waste gases are burned and, therefore, made harmless. In this way, we have control over all the major emissions of gases. Having said that, however, I entirely agree that that in itself is not sufficient.
  The refining processes require very high temperatures of up to 600 deg. C. and very wide ranges of pressure. In these conditions, there is always a risk of small

  1475
  leakages at different points—for example, a gland leakage or one resulting from some quite unexpected failure in the equipment. This is where the nature of the gases comes into the picture. The most offensive of them is hydrogen sulphide, which is well known to some of us from our younger days, and what are known as mercaptans, which at certain times have, I believe, a garlicy smell.
  The trouble is that hydrogen sulphide is noticeable in the atmosphere in concentrations as low as one part per million. Mercaptans are even worse, only a few parts per hundred million being sufficient to assail one's nasal susceptibilities. Therefore, it happens that a most minute escape, lasting perhaps for only a few minutes, may be detected a long way away.
  There are innumerable points at which quite small leakages are possible. Even with the best system of testing and maintenance, it is not always possible to detect leakages until they have occurred. By the time a leak has been stopped, however quickly it is stopped, the chances are that people have been complaining. This is the real difficulty, as, I suspect, my hon. Friends know.
  What we are trying to do is to insist on the highest possible standard of maintenance and of good housekeeping at the refineries. We are seeing that the various parts of equipment are taken down regularly for inspection and overhaul and we are also insisting on constant vigilance against chance escapes. We are also giving a good deal of our attention to the prevention of escapes from the ancillary operations, such as the unloading of tankers and the discharge of aqueous effluents and oil storage.
  I am very glad that my hon. Friend expressed his appreciation of the co-operation of the oil companies. I am sure that they are alive to this problem and to their responsibilities. I hasten to say that I know that not only are they spending very large sums of money on research into the chemical engineering problems involved but they already have a joint committee for the mutual exchange of information on this aspect. Our
  1476
  inspectors keep themselves abreast of all the new developments which come to light, and the oil companies have certainly been most co-operative with the inspectorate.
  I would add that our Inspectorate is working very closely not only with the oil companies but with the local authorities in Essex and elsewhere. Our deputy chief inspector and the district inspector attended a meeting only a few weeks ago with representatives of the oil companies and the Essex local authorities. It was arranged at that meeting that the authorities should keep records of outbreaks and report them to the companies so that they could be investigated at once. We certainly propose to continue that kind of collaboration and generally do all we can to help reduce the dimensions of the problem on the lines I have indicated.
  I apologise to hon. Members if I have not answered all their detailed points, but I assure them that all that has been said tonight will be studied and that my right hon. Friend, with his advisers in the Alkali Inspectorate, will do all that is humanly possible to lessen the dimensions of the problem.
  Mr. Delargy: Will the hon. Gentleman bear in mind what I have previously said about cement dust?
  Mr. Bevins: That is a slightly different question, but I shall be very happy to review it again and get in touch with the hon. Gentleman.
  Commander C. E. M. Donaldson: There have been two hon. Members present on the opposite side of the House and seven on this side and five officials in support of the Minister, and I think, supporting my hon. Friend the Member for Essex, South-East (Mr. Braine) in what he has had to say, that the debate has been well worth while from the point of view of health. Both you, Mr. Speaker, and I come from Scotland—
  The Question having been proposed after 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 three minutes to Twelve o'clock.

EDUCATION
  Grange Park School, Sunderland
  Grange Park School, Sunderland
  Monkwearmouth Grammar School, Sunderland
  Monkwearmouth Grammar School, Sunderland
  Industrial Fund for the Advancement of Science
  Industrial Fund for the Advancement of Science
  London County Council (Building Programme)
  London County Council (Building Programme)
  State Scholarships and Training Colleges (Awards)
  State Scholarships and Training Colleges (Awards)
TRADE AND COMMERCE
  Waste Paper (Salvage)
  Waste Paper (Salvage)
NATIONAL FINANCE
  Cost of Living
  Cost of Living
AGRICULTURE, FISHERIES AND FOOD
  Swine Fever
  Swine Fever
  Potatoes
  Potatoes
HOME DEPARTMENT
  Robberies with Violence, Greater London
  Robberies with Violence, Greater London
  Criminal Courts (Inter-Departmental Committee)
  Criminal Courts (Inter-Departmental Committee)
  NUCLEAR TESTS
  NUCLEAR TESTS
  ECONOMIC POLICY
  ECONOMIC POLICY
MINISTRY OF HEALTH
  Tinned Food
  Tinned Food
NYASALAND
  Economic Survey
  Economic Survey
EAST AFRICA
  Muslim Education (Report)
  Muslim Education (Report)
EMPLOYMENT
  Leadhills, Lanarkshire
  Leadhills, Lanarkshire
MINISTRY OF POWER
  Electricity Pylons (Agricultural Land)
  Electricity Pylons (Agricultural Land)
SCOTLAND
  Industrial Fund for the Advancement of Science
  Industrial Fund for the Advancement of Science
Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers
The Viscount Hill—Sat first in Parliament after the death of his father.

BUSINESS OF THE HOUSE
2.35 p.m.
THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (THE EARL OF HOME): My Lords, I have to inform your Lordships that I shall make a statement on Cyprus at about 3.45 this afternoon, after which, with your Lordships' permission, I will make a short statement on the future of Downing Street. I am sorry to interrupt business in this way, but I think your Lordships would wish me to do so.

THE NATIONAL GALLERY AND THE "HAMPTON" SITE
VISCOUNT ESHER: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether, in view of recent developments as reported in the Press, they can now make any further statement on the prospect of acquiring the site in Trafalgar Square adjacent to the National Gallery for the purpose of extending that Gallery.]
THE MINISTER OF STATE FOR COLONIAL AFFAIRS (THE EARL OF PERTH): My Lords, I can only repeat the assurance given in another place by my right honourable friend the Minister of Works, that if this site becomes available Her Majesty's Government will give careful consideration to the question of buying it for the National Gallery.
VISCOUNT ESHER: My Lords, I should like to ask the Government to consider carefully whether they do not think they will be despised by posterity
1110
if they miss the opportunity of obtaining this site. And would it not give some verisimilitude to the Prime Minister's assertion that we are to be the Greeks and not the Romans of this century if the Government were to use for the financing of this operation some of the £2½ million they are spending on making reserve barracks at Kahawar?
THE EARL OF PERTH: My Lords, I note what the noble Viscount says about the danger of the Government being despised, but I can only repeat that we will consider the question carefully if the site becomes available.
LORD KINNAIRD: My Lords, I should like to ask a supplementary question. While recognising that a permanent extension of the National Gallery on the "Hampton" site may not be possible for some years, could not the site be put to immediate use by erecting on it a temporary, inexpensive gallery to house the excellent and popular exhibitions which the Arts Council provide, such as the Renoir, Van Gogh, Braque and Niarchos Exhibitions, for which it would be possible to make a charge? Or could not the site be used to display exhibitions of open-air sculpture?
THE EARL OF PERTH: My Lords, I would again say that if the site becomes available, then Her Majesty's Government will first need to decide whether to buy it. However, I will bring the noble Lord's suggestion to the attention of my right honourable friend.

THE EXECUTION OF IMRÉ NAGY
2.38 p.m.
LORD BIRDWOOD: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government if they will convey to the Soviet Government the deep horror and disgust of public opinion in this country at the execution of Imré Nagy and his companions after a secret trial; and whether they will further draw the attention of the Soviet Government to the effect of their action on the prospects of success of any Summit Conference which may be held.]
THE MARQUESS OF LANSDOWNE: My Lords, Her Majesty's Government consider that the manner in which Mr. Nagy and General Maleter were kidnapped, held in custody, tried in secret and executed is repugnant to every principle of justice as practised in this country. As regards formal representations to the Soviet Government, both that Government and the Hungarian Government have consistently refused to receive representations about the Hungarian rising and all events associated wtih it, even when they have been backed by the authority of the General Assembly of the United Nations. I have no doubt that any representations Her Majesty's Government might make now would equally be rejected on the ground that the decision to try Mr. Nagy, General Maleter and their associates was a matter within the domestic jurisdiction of the Hungarian Government.
Her Majesty's Government welcome the opportunity afforded by the question put down by the noble Lord, Lord Birdwood, to place on public record the horror and indignation which this latest shameful act has aroused in this House and throughout the country. This barbaric behaviour must have seriously diminished the confidence of the West in the sincerity of Soviet intentions, either in relation to the preparations for a Summit Conference or to the settlement of international problems by other means.
LORD BIRDWOOD: My Lords, I thank the noble Marquess profoundly for the very strong expression of Her Majesty's Government's views which he has given. Arising out of the Answer, I would ask leave to submit two supplementary questions. The first is: would the Government consider, perhaps in consultation with other Powers, recalling their representative at Budapest for consultations? Second, would the Government continue to bring home to the Soviet Government the point that, until and unless they are prepared to accept our representations on these matters of morality, there can be no real peace between us; and that such issues as disarmament are seriously prejudiced? If we go on repeating this, day after day, year after year, perhaps it will one day get home into their thick skulls that it is these issues which divide the world, and
1112
not the issues of the atomic bomb and such like.
THE MARQUESS OF LANSDOWNE: My Lords, in reply to the first question, it so happens that Her Majesty's Ambassador is returning home to-day on his normal annual leave. This leave was arranged months ago. So in fact Her Majesty's Ambassador has not been recalled, but he is returning to-day, and noble Lords may take it for certain that he will be consulted very closely on this matter. As regards the noble Lord's second question, I would remind your Lordships that the United Nations Special Committee on Hungary is still in being, and I have had reports (though they are still unconfirmed) that it has already met in New York. Her Majesty's Government will, of course, co-operate and give the Special Committee any assistance it can in its consideration of this horrible crime.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, is the Minister aware that it is common to every section of our British Parliament to have very shocked and injured feelings about the action which has been taken against these people in Budapest: it is a cruel and shameful perversion of the proper way to deal with justice in any country. However, whilst I sympathise a good deal with the indignation of the noble Lord, Lord Birdwood, would it not be unwise, at a time when all the people who are concerned in promoting a Summit Conference are still hoping that such a conference will be held, to make any of the gestures he proposes? Things might happen at a Summit Conference that might be much more likely to lead to a change of heart and practice than the action suggested by the noble Lord, Lord Birdwood.
LORD CONESFORD: My Lords would not the holding of a Summit Conference be quite shameful if the liberation of Eastern Europe is to be excluded from the agenda?
THE EARL OF BESSBOROUGH: My Lords could the noble Marquess none the less assure us that, despite this horrific and outrageous act, there will be no diminution in the exchanges between this country and the Soviet Union, since I believe it is only by such exchanges that

1113
Soviet citizens can be brought to recognise the moral values which we in the West all hold so dear?
THE MARQUESS OF LANSDOWNE: My Lords, I think that your Lordships' House from all sides has made its feelings sufficiently clear. I can assure noble Lords that Her Majesty's Government are as aware as the noble Viscount, Lord Alexander of Hillsborough, of these feelings and will take them thoroughly into account.

THE LEBANON
2.45 p.m.
VISCOUNT STANSGATE: My Lords, I beg leave, speaking from the Back Benches, to ask Her Majesty's Government the Question of which I have given Private Notice—namely: What is their policy concerning the present crisis in the Lebanon, and whether they can give an assurance that British troops will not be committed outside the provision of the United Nations?
THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (THE EARL OF HOME): My Lords, if the noble Viscount is dissatisfied with my reply, or the House thinks it rather short, I must ask to be excused because I knew the terms of this Question, in its final
form, only at about half-past one.
VISCOUNT STANSGATE: They were communicated much earlier.
THE EARL OF HOME: Part of it. I would answer the Question as follows: Her Majesty's Government wishes an independent Lebanon to be preserved. With that end in view we are giving our full support to the present United Nations operation. We hope that this operation will be successful, and the Foreign Secretary had a useful conversation with Mr. Hammarskjoeld yesterday about the problems involved in implementing the Security Council resolution. With regard to the question of the commitment of British troops, I must refer the noble
1114
Viscount to the statement of the Foreign Secretary in another place on May 19 when he said that no action would be taken contrary to the Charter or established rules of International Law.
VISCOUNT STANSGATE: My Lords, I can assure the noble Earl I did my best to meet his convenience by communicating very early, but these things are difficult. I would ask whether he has read in The Times this morning the statement that the concentration of troops in Cyprus is the largest since the emergency began, with the possible exception of the build-up for the Suez intervention. Then the statement goes on to say:
"The Government are clearly taking care … to preserve a strategic reserve for use elsewhere in the Mediterranean if necessary. … The obvious deduction is that the Parachute Brigade will not be committed to internal security duties, but will be kept as a mobile strategic reserve. If an intervention in the Lebanon became necessary, it would have to be mounted from Cyprus."
I should like to ask the noble Earl whether the Government contemplate the possibility of early intervention by British troops?
THE EARL OF HOME: That is a question which I do not think the noble Viscount properly should have asked, but it is one that I intend to answer; and the answer is that there is no connection whatever between sending troops to Cyprus and the Lebanon situation.
VISCOUNT STANSGATE: The noble Earl is perfectly proper in rebuking me, but I asked the question in the light of our experience with Suez. Some people think it a possibility that we might meet on Tuesday finding British troops committed to a very indiscreet—indeed, one might say insane—adventure.

PIER AND HARBOUR PROVISIONAL ORDER (MARGATE) BILL
Read 3a (according to Order), and passed.

LOCAL GOVERNMENT AND MISCELLANEOUS FINANCIAL PROVISIONS (SCOTLAND) BILL
2.50 p.m.
Order of the Day for the Second Reading read.
THE MINISTER OF STATE, SCOTTISH OFFICE (LORD STRATHCLYDE): My Lords, I rise to move that this Bill be now read a second time. The Bill has two main objects: to re-rate industry to 50 per cent. of net annual value, and to reform the present system of Exchequer grants, chiefly by replacing certain grants in aid of specific services by a general grant. The reasoning behind these measures was set out in the White Paper on Local Government Finance in Scotland which was published in July last year. Their underlying purpose is to give local authorities increased financial independence and to encourage local Government electors to take a fresh interest in local government affairs. While there may be some dispute about the method which we have devised to achieve these ends, your Lordships may well agree that they are worth achieving. The Bill has already been debated for no fewer than twenty days in another place—and I willingly admit that it has been improved in some respects. It has also received a great deal of attention outside Parliament, and this is particularly appropriate since the subject matter of the Bill affects all local authorities in Scotland.
No one would wish to dispute that local authorities, in the discharge of the important tasks which are conferred on them by Statute, must receive assistance from central funds. There is, however, room for argument about the proportion which the Government subvention should bear to the total revenues of local authorities. As your Lordships are aware, in recent years local authorities have received an increasing proportion of their revenues direct from the Exchequer, and a great deal of this Exchequer assistance has been given in the form of percentage grants on the expenditure incurred by local authorities. It is difficult for anyone to maintain a healthy interest in getting value for money if someone else is footing his bills, or a fixed percentage of them, and it seems to the Government that one of the results of local
1116
authorities' increased dependence on ad hoc grants has been the apathy and lack of interest at local government elections which I am certain all of us must deplore, no matter to what Party we may belong.
There does not seem to be any easy cure for this, but our view is that interest in local affairs can be revived by allowing local authorities a wider field from which to raise their rate revenue and by giving them assistance from the Exchequer, so far as possible, in lump sum payments which they may spend as they think fit.
This brings me to one of the main proposals in the Bill, namely, the re-rating of industry. De-rating was introduced in 1929 at a time of severe economic depression. To-day's economic climate is happily quite different, and it would not appear that the de-rating of industry to 25 per cent. of net annual value is still justified. It is obviously a question of judgment as to how far industry should be re-rated, and the Government are confident that at the present time the decision which they have taken, which is to double industry's rateable value by re-rating to 50 per cent. of net annual value, is the right one. Effect is given to this in Clause 7, which will create additional rateable resources in every local authority area in Scotland.
While the matter I am about to refer to is really one for another place, I should perhaps explain at this stage that, in fixing the total of the general grant for the first year—which will be 1959–60—it is proposed to take account of this additional income produced by re-rating. Half of that must go to the Exchequer to offset the loss in taxation; it is proposed to give local authorities two-thirds of the remainder; and the effect of the operation on 1956–57 figures, is to give Scottish local authorities an additional three-quarters of a million pounds a year.
May I now turn to the reform of the grants system? There are two alternatives. Grants can be given for specific services on a percentage basis, as at present, or they can be absorbed in a single general grant which would be given in aid of local authority revenues generally, as the Bill proposes. The existing system of ad hoc grants inevitably carries with it the meticulous

1117
scrutiny of each claim by the local authority for a percentage grant, while the knowledge that a fixed percentage of the total will be footed by the Exchequer tends to remove from local authorities the incentive to carry out a prudent husbandry. In our view, therefore, there is a clear balance of advantage in rolling up as many specific grants as possible into a single general grant and giving it to local authorities as the State's contribution towards the cost of providing the relevant services.
Clause 1 accordingly provides for the payment of general grants in lieu of the specific grants at present payable in respect of the expenditure set out in the First Schedule. The clause also provides that the aggregate amount of the general grants should be fixed, after consultation with the local authority associations, for periods of two or three years at a time; and that they should be embodied in general grant orders which will be laid before another place together with a White Paper explaining the considerations which have led to the fixing of the particular amount contained in the order. Your Lordships' House will have an opportunity, if desired, of debating this White Paper.
The distribution of the general grant between local authorities is to be governed by the Second Schedule. In the preparation of the formula contained in this Schedule we had the assistance of a Working Party of local authority officials. Its purpose, as I have indicated, is to get the distribution of grant away from the conception of a percentage of whatever the local authority chooses to spend, and to base it on objective factors of local need, such as population, numbers of children of school age, and sparsity. The Third Schedule provides for adjustments in the amount of general grant in respect of some special items of expenditure which are shared between local authorities or incurred by the Secretary of State on their behalf.
Clause 2 prescribes in detail the various factors which the Secretary of State is required to take into consideration in fixing the aggregate amount of the general grants. I invite the particular attention of the House to this, one of the crucial clauses in the Bill. Under the clause, the Secretary of State must take into account three things: first, the
1118
latest information about the rate of expenditure on the relevant services; secondly, any change in the demand for these services so far as the change is attributable to circumstances prevailing in Scotland as a whole which are not under the control of local authorities—there we have in mind such things as an increased demand for educational services brought about by an increase in the school population—and, lastly, the need for developing these services and the extent to which, having regard to general economic conditions, it is reasonable to do so.
Your Lordships will also note that subsection (2) of the clause empowers the Secretary of State to make an amending order increasing the total amount of the general grant payable in a specified year or years of a grant period, if he is satisfied that there has been an unforeseen increase in the cost of providing the services in question which is of such magnitude that it ought not to fall entirely on local authorities. I hope that the House will agree that this clause gives as fair and explicit an undertaking as any Government could give that the needs of local authorities will be fully met under the new system. I would wish to emphasise that there is nothing in the Bill to justify the allegations which have been made that the general grant is a device to enable the Treasury to reduce local authorities' revenue. My Lords, the Bill is not a '"Smiler with the knife under the cloak"—I do not claim that for myself; I am told that it comes from Chaucer's Canterbury Tales.
Clause 3 gives the Secretary of State power to reduce the general grant payable to any local authority Where the service in question is not adequately provided, and it also enables him to prescribe standards. The existence of this power will, I think, be sufficient in itself, and I am confident that—as in the case of the existing power in relation to the Exchequer equalisation grant—it will not be necessary to invoke it. I hope, however, that the existence of this sanction, together with the explicit undertakings in Clause 2 to which I have already referred, will be sufficient—and in our view they certainly ought to be—to allay the anxiety, which has so frequently been expressed by educational interests, that the effect of the Bill will be to reduce the standard of local government services.

1119
Clause 4 provides for the abolition of certain minor grants. Credit will be given for them in the first general grant order; and their disappearance will remove the need for much time-wasting examination of accounts.
Before I leave the question of the general grant, I should perhaps mention to your Lordships the transitional arrangements. These are to be found in Clause 15 of the Bill. In order to avoid any undue disturbance as a result of the introduction of the general grant, where losses occur they will be made good in full in the first year of the new system, as to nine-tenths in the second year, and so on for such period as may finally be decided on by the Secretary of State. The losses will be made good by the gaining authorities, but the effect will be that no one will lose anything in 1959–60, although many authorities will gain from the £750,000 to which I referred a few minutes ago. That will be received in full in the first year of the new system. In the year 1960–61 no authority will lose more than one-tenth of its loss as determined under the clause. The arrangements for tapering off the transitional payments in subsequent years are left by the clause to be dealt with by regulations, as revaluation under the Valuation and Rating (Scotland) Act, 1956, may alter the whole picture in 1961–62.
Clause 5 provides for the abolition of the Education (Scotland) Fund, from which the education grant is at present paid, and Clause 6 gives effect to amendments of various enactments which are required consequential on the new grant arrangements, and which your Lordships will find set out in the Fourth Schedule. I have already referred to the re-rating provisions contained in Clause 7. Clauses 8 and 9 make two minor amendments to the Valuation and Rating (Scotland) Act.
I now turn to Part III of the Bill. Clause 11 makes permanent the Secretary of State's control over borrowing by local authorities. This power at present depends on annual renewal under the Expiring Laws Continuance Acts, and it is now proposed to make it permanent. I appreciate that at first glance this may seem to be an odd provision for this Government to introduce. The House may agree that it will clearly be necessary for some time to come, in the in-
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terests of the stability of the national economy, for the Government to control the very considerable volume of capital investment which is created by local authorities. Since no end can be seen at present to the need for exercising this power, it is in our view only honest to make it permanent now. To rely on annual continuance implies that there is at least a possibility that the power will no longer be needed at the end of the year in question. That is not the case as regards borrowing control, and Clause 11 takes the realistic course of placing the power on the Statute Book in permanent form, as in England and Wales.
I should like to refer to some of the other provisions in the Bill which become possible when borrowing control is made permanent. Clause 10 removes the rating limitation on expenditure by town councils on halls for public meetings and assemblies. Clause 12 extends the maximum borrowing period for a wide variety of purposes, and Amendments will be tabled for the Committee stage to widen the scope of this clause still further. In that connection I would refer your Lordships to paragraph 6 of the new White Paper entitled Local Government and Central Departments.
Clauses 13 and 14 contain minor reforms which should be of financial benefit to local authorities. Clause 13 extends the powers of trustees to lend money to local authorities. This amendment of the law is in essence a reciprocal action with England and Wales, and a corresponding provision is contained in the Local Government Bill to which your Lordships' House gave a Second Reading last week. Clause 14 empowers the Secretary of State to increase certain registration and marriage fees by regulation. Nearly all these fees are received by local authorities. Most of the present fees were fixed as long ago as in the year 1854, and to-day meet only a fraction of the cost of the service.
I do not need to take your Lordships through the formal clauses of the Bill. I should, however, draw the attention of the House to further important relaxations contained in the White Paper published last week on Local Government and Central Departments in Scotland. As my right honourable friend, the Secretary of State, forecast some time ago,

1121
we have carried out an exhaustive review, in consultation with the local authority associations, of the relationship between the central Departments and local authorities in Scotland. The outcome of this review—which I have discussed with the local authority associations and which I am glad to say they accept—is embodied in the White Paper. This document marks an important stage in our relations with local authorities, and its proposals will give them substantially more freedom than they have exercised in the past. As regards capital expenditure, which is referred to in paragraph 5 of the White Paper, my right honourable friend intimated to local authorities last week an important simplification of the procedure for considering applications for borrowing consent. In particular, there will no longer be any scrutiny of applications for consent for projects costing less than £5,000—provided, that is, that the total amount of investment available for the service in question allows; and the procedure for larger applications will be simplified.
Other proposals contained in the White Paper include the abolition of the requirements that local authorities must set up particular committees to carry out certain functions, and that they must provide detailed administrative schemes for these functions and submit them to the Secretary of State for approval. The procedure for examining local authorities' accounts for the services covered by the general grant will be greatly simplified, and a number of important changes are also proposed in the regulations made by the Secretary of State under the Education (Scotland) Acts. In so far as these proposals involve legislation, Amendments to give effect to them will be laid before the House at the Committee stage when there will be an opportunity of discussing them in detail.
Meanwhile, I can say with some confidence that the introduction of this Bill, the publication of the White Paper, and the Government's determination to put the recommendations contained in it into effect at the earliest possible opportunity, are a clear sign that we mean what we say and that we intend to give local authorities more freedom to manage their own affairs. My Lords, I commend the Bill to you. I beg to move.
Moved, That the Bill be now read 2a (Lord Strathclyde.)
3.10 p.m.
LORD GREENHILL: My Lords, before I comment on the speech made by the noble Lord, perhaps I should say that any views I may express are the reflection of my own experience as a member of one of the four city councils of Scotland and that I do not regard myself as competent to express the views of members of county councils. I would add, in my opening remarks, that I am rather disappointed with the speech made by the noble Lord because, in spite of the twenty days which he told us was spent in another place debating this Bill, so far as I can judge he has shown little evidence of having been convinced by some of the arguments expressed in the other place. Noble Lords should bear in mind that although a Local Government Bill was debated in your Lordships' House last week, that was an English Bill and included two matters which do not appear in the Scottish Bill. That Bill not only contained financial provisions very similar to those explained by the noble Lord but also dealt with local government reconstruction in England and Wales, a matter about which Scotland is not concerned.
It may be, as the noble Lord has said, that a good deal of anxiety has been expressed outside Parliamentary circles and I believe Her Majesty's Government ought to ask themselves why it is that, in spite of the explanations given in another place both by the Minister of Housing and Local Government and by the Secretary of State, the public are by no means convinced that the purpose of the Bill is in favour of the local authorities. I believe that it is not an exaggeration of the state of mind of the general public to say that the feeling is that Her Majesty's Government, in the pretence that they are now giving greater independence to local authorities, are, in effect, saying to local authorities: "You have the power to do anything you like, provided you do what we tell you," because there is no doubt that these financial provisions do tighten up the powers in favour of the Government and against the interests of local authorities.
This is not a completely new matter raised by Her Majesty's Government. Not only is it part and parcel of a long record of financial changes which Her Majesty's Government have tried to put

1123
into operation, but if one looks a little further back one realises that this is one of the many changes which have taken place within recent years both in the scope of local government and in the relationship between local government and the Central Government. One has only to refer to the local government manpower inquiries which took place, I believe, from 1949 to 1952, when similar problems (not perhaps wholly concerned with the same financial considerations) were considered between the staff of the Scottish Office and representatives of local authorities. The considerations which they had before them were not merely manpower questions but included also questions of grant, methods of allocation and so on. I should say that this whole Bill deals mainly with administrative matters, and for that reason I do not think we ought to concern ourselves, in a Second Reading debate, with some of the detailed items to which the noble Lord has referred.
I should prefer to deal with one or two headings. Re-rating is one of them. As the noble Lord well knows, there has long been an agitation that the re-rating should be 100 per cent. When, after considerable pressure, Her Majesty's Government at last conceded that industry should be rated to the extent of 50 per cent., instead of 25 per cent., we were more or less grateful for being given "half a loaf"; but it was not the whole loaf for which we had asked and to which we thought we were entitled. But then Her Majesty's Government said: "Notwithstanding that we have increased the rating of industry to 50 per cent., you are not going to get that difference of 25 per cent. at all. Instead of getting the £2⅓ million to which Scotland as a whole would have been entitled by this increase, the second 25 per cent., you are to get only one-third of that amount—some £750,000—for the whole of Scotland".
I want to ask Her Majesty's Government upon what grounds of principle and equity—they say local authorities are not entitled to the whole of the increase which they have agreed industry should pay. I do not agree that industry would have suffered had it been rated at 100 per cent.; nor do I think it wholly a good thing that we should have waited
1124
until 1958, after some of the "boom" years of the 1950s, before industry was made to pay its fair share of the improvement in trade. But in good trade or in bad, the rates that industry pays are surely part and parcel of the local revenues which a town council or a county council ought to receive, precisely because, as the local authority, they have to incur expenditure through the existence of these industrial premises within their area. I believe, therefore, that Her Majesty's Government ought, if they will, to reconsider this deduction of part of the moneys which are really due to local authorities.
The general grant position is one on which perhaps I do not take quite the extreme view taken by a number of people of whom I know. This is not the first block grant within my own experience. I know that the original block grant of 1929 was meant to cover certain items which were not covered by the present general grant. I do not say that such things as the rating and other factors within that block grant were kept as was originally promised; but that was not due to any dishonesty on the part of any Government: it was due to war conditions and the like, about which no one can complain. When we come to the proposed new general grant, however, I believe that there is every justification for the anxiety which is being expressed, particularly by those interested in education—not merely those professionally interested, but those citizens outside who, like myself, are also interested in certain aspects of the subject.
Why is there this, as I think, genuine and reasonable anxiety about the future of education because of this general grant? I think I am right in saying that, altogether, eleven services are involved in this grant. The police are excluded; so are certain other matters. But I think I am right in saying that, of the total of approximately £37 million for these eleven services, about £33 million is in respect of education. I ask, in all seriousness, whether the Government can really say that it is right to make one grant in respect of the whole of these services, when education accounts for so large a proportion of the total concerned. Later, I propose to make a suggestion of my own about possible reconstruction; but for the present, I ask simply: Upon

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what grounds of principle do the Government say that there should now be one grant for the whole of these eleven services combined, when one service accounts for such a very large proportion of the whole amount under consideration?
We have been told that one of the aspects of this matter which has concerned the Government is the fact that the ratio of Exchequer grant to local rate has gone up considerably; that, whereas (I think this is the expression of the Secretary of State) some thirty years ago the ratio was one part Exchequer to two parts rating, it is now six parts Exchequer to five parts rating. Again I ask: Upon what principle do the Government say that that ratio is unreasonable? What difference, again in principle, would it make if the ratio were either one part Exchequer to nine parts rating or nine parts rating to one part Exchequer? This is not a matter which is being decided on principle at all; it is simply that the Government want, as I see it, to have the minimum of expenditure imposed upon the Exchequer and the maximum met by the local authority.
Here I should like to give an answer which has nothing whatever to do with Party politics. Some years ago, when a senior member of the City Chamberlain's Department in the Glasgow Corporation was lecturing to members of the City Chamberlain's staff on this very question of grants, he put a point of view which I think is wholly reasonable and which certainly had no Party-political significance. It was this: that the reason why Government contribute towards the expenditure of the services of a local authority is the fact that the services in question are as much national in character as they are local, and therefore there is an obligation on Government to contribute at least one half of the total cost in order to show their responsibility for a service which is as much national as local. I am perfectly sure that the noble Lord will not deny, so far as education alone is concerned, that at least one half of the cost of our education is a national responsibility.
There is one other point to which I should like to refer. The noble Lord is well aware that, as the outcome of the Report of what is called the Sorn Committee,
1126
the Rating and Valuation (Scotland) Act was introduced, and it has a bearing upon the equalisation grant. Some of us who were concerned with that Committee thought we saw, in the recommendations of that Committee, a source of considerable increase in income, purely from the equalisation of grant. As the noble Lord is well aware, Scotland has a particular grievance in that respect—for this reason. In the first instance, when this grant was being determined the old kind of formula was adopted (Goodness knows where it originated!) of adding 25 per cent. to the average of the country in order to determine the datum line. The noble Lord knows that as well as I do. A certain amount of money came to Scotland because of that arbitrarily chosen figure. It was found, after very short experience, that the amount was inadequate, and so we had a second bite at that cherry and the amount of equalisation grant given to Scotland was increased, if my memory serves me, by about £2 million.
That, too, being obviously inadequate, a later review took place, and I think I am right in saying (the noble Lord will correct me if I am not right) that, whereas in 1955–56 the amount in respect of equalisation grant was about £9 million, the year after it was something like £14·4 million. There had been that readjustment. Now, in spite of that, we are told that the figure of equalisation grant for Scotland is not to be determined at present, notwithstanding that we have this new Valuation and Rating (Scotland) Act on the books, but that we must wait until dilatory England and Wales have arrived at their figure and their valuation. When, after over a quarter of a century, that is ultimately decided, and when the Exchequer see what the total figure of equalisation grant will be, they will be good enough to give to Scotland what they regard as its fair share.
LORD STRATHCLYDE: My Lords, before that can be decided we have to complete our own revaluation, which will not be until 1961 or 1962. I would further observe that it was not this Government which introduced Exchequer equalisation grant; it is this Government which, as far as it has gone at present, has put right the difference which existed and added to the 25 per cent., for which we in Scotland are very grateful.
LORD GREENHILL: My Lords, far be it from me to claim credit which is not my due, and far be it from me to cast blame on the Government for which they are not really liable. But I would point out that the whole idea of equalising the burden upon local authorities was due to a political friend in another place; and although it may not be working as was originally envisaged, at least let us give him credit for having introduced that principle of equalisation.
The noble Lord has referred to the most recent White Paper. He will be well aware that, even in circles which normally support the present Government, there has been a doubt either about the importance of that Paper or about the new methods of relationship with which it deals. But I was rather impressed by one part of this Paper in which, after outlining the details of administration and referring, in paragraph 7, to other services—I will not read out the headings of all of them—it said:
"Although individual projects of the kind"—
the kind referred to—
"may often be small the total investment which they involve is too great to be exempted from the general restrictions applying to all local authority investment."
The noble Lord told us that one of the things which the Government have decided upon is that local authorities will no longer be able to raise money for capital purposes on their own initiative. The noble Lord is well aware that already under the 1929 Act a local authority could not raise money for capital expenditure unless a two-thirds majority of those voting approved of it; and, as the noble Lord is also aware, there are not many local authorities in Scotland whose political composition is such as to make a two-thirds majority the opinion of one political Party only. Looked at purely from the point of view of administration, which is what I am concerned with at the moment, I think it unfair so to tie the hands of local authorities that, even within the limited sphere which the Government have so far allowed them, they are not able to exercise that local individuality which, surely, even the present Government will agree is part and parcel of the inherent democratic atmosphere of our country. I cannot help wondering whether the
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noble Lord is wise. After all, what it means is an even tighter financial hold that the Government already have on local authority expenditure.
If I may trespass on your Lordships' patience for a moment or two longer, I should like to say this. We are bound to agree that changes take place and that to some changes there is always some feeling of resistance. But I think that now and again we ought to face the possibility that a change may be desirable. Exactly thirty years ago there was a conference on local government affairs, held under the auspices of the Institute of Public Administration, in which the opinions there expressed, strangely enough by three eminent Scotsmen of the time, make one feel that they were faced with problems of a similar kind to those that we are dealing with to-day.
As noble Lords are aware, in the pre-1929 days education, as such, was under a separate body, as were public assistance and other services. They were undertaken by separate individuals and covered by separate elections; each service was under an ad hoc body. Since the 1929 Act, when education and the other services were all combined under the one local authority, I have wondered whether Tom Johnston was not perhaps right in thinking that the time had come to revert to ad hoc education committees. The effect of that would be, I think, that we should then get people elected to education committees whose interests were primarily educational and who would therefore, on the whole, be those who knew most and cared most about it. My feeling is that it would be an experiment well worth discussing in the near future. From that one might lead on to the further point: that if there are not enough men and women available to go round, is there any reason why each ward in a large city should have three representatives rather than two or even one?
These are thoughts that I throw out because I think in this present time of change it may be appropriate that they should be discussed. Having said that, and realising that noble Lords are perhaps much more concerned to hear what the noble Earl the Leader of the House has to say, I will end on that note.

CYPRUS
3.35 p.m.
THE EARL OF HOME: My Lords, with your Lordships' permission, I now propose to make the statement on the Government's policy on Cyprus which the Prime Minister had intended to make on Tuesday but which, with the forbearance of the House, he decided to defer at the request of the North Atlantic Treaty Organisation Council.
The policy of Her Majesty's Government in Cyprus has had four main purposes: to serve the best interests of all the people of the Island; to achieve a permanent settlement acceptable to the two communities in the Island and to the Greek and Turkish Governments; to safeguard the British bases and installations in the Island, which are necessary to enable the United Kingdom to carry out her international obligations; to strengthen peace and security, and co-operation between the United Kingdom and her Allies, in a vital area. These are the aims which Her Majesty's Government have consistently pursued and which have guided their efforts in recent months to find common ground on which an agreed settlement might be reached. It is deeply regretted that all attempts in this direction have hitherto proved unsuccessful.
In view of the disagreement between the Greek and Turkish Governments and between the two communities in Cyprus, and of the disastrous consequences for all concerned if violence and conflict continue, an obligation rests with the United Kingdom Government, as the sovereign Power responsible for the administration of the Island and the well-being of its inhabitants, to give a firm and clear lead out of the present deadlock. They accordingly declare a new policy which represents an adventure in partnership—partnership between the communities in the Island and also between the Governments of the United Kingdom. Greece and Turkey.
The following is an outline of the partnership plan:—
Cyprus should enjoy the advantages of association not only with the United Kingdom, and therefore with the British
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Commonwealth, but also with Greece and Turkey.
Since the three Governments of the United Kingdom, Greece and Turkey all have an interest in Cyprus, Her Majesty's Government will welcome the co-operation and participation of the two other Governments in a joint effort to achieve the peace, progress and prosperity of the Island.
The Greek and Turkish Governments will each be invited to appoint a representative to co-operate with the Governor in carrying out this policy.
The Island will have a system of representative government with each community exercising autonomy in its own communal affairs.
In order to satisfy the desire of the Greek and Turkish Cypriots to be recognised as Greeks and Turks, Her Majesty's Government will welcome an arrangement which gives them Greek or Turkish nationality, while enabling them to retain British nationality.
To allow time for the new principle of partnership to be fully worked out and brought into operation under this plan in the necessary atmosphere of stability, the international status of the Island will remain unchanged for seven years.
A system of representative government and communal autonomy will be worked out by consultation with representatives of the two communities and with the representatives of the Greek and Turkish Governments.
The essential provisions of the new Constitution will be:
There will be a separate House of Representatives for each of the two communities, and these Houses will have final legislative authority in communal affairs.
Authority for internal administration, other than communal affairs and internal security, will be undertaken by a Council presided over by the Governor and including the representatives of the Greek and Turkish Governments and six elected Ministers drawn from the Houses of Representatives, four being Greek Cypriots and two Turkish Cypriots.
The Governor, acting after consultation with the representatives of the

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Greek and Turkish Governments, will have reserve powers to ensure that the interests of both communities are protected.
External affairs, defence and internal security will be matters specifically reserved to the Governor acting after consultation with the representatives of the Greek and Turkish Governments.
The representatives of the Greek and Turkish Governments will have the right to require any legislation which they consider to be discriminatory to be reserved for consideration by an impartial tribunal.
If the full benefits of this policy are to be realised, it is evident that violence must cease. Subject to this, Her Majesty's Government intend to take progressive steps to relax the Emergency Regulations and eventually to end the State of Emergency. This process would include the return of those Cypriots at present excluded from the Island under the Emergency Regulations.
A policy based on these principles and proposals will give the people of the Island a specially favoured and protected status. Through representative institutions they will exercise authority in the management of the Island's internal affairs, and each community will control its own communal affairs. While the people of the Island enjoy these advantages, friendly relations and practical co-operation between the United Kingdom, Greece and Turkey will be maintained and strengthened as Cyprus becomes a symbol of co-operation instead of a cause of conflict between the three Allied Governments.
Her Majesty's Government trust that this imaginative plan will be welcomed by all concerned in the spirit in which, it is put forward, and for their part they will bend all efforts to ensuring its success. Indeed, if the Greek and Turkish Governments were willing to extend this experiment in partnership and co-operation. Her Majesty's Government would be prepared, at the appropriate time, to go further and, subject to the reservation to the United Kingdom of such bases and facilities as might be necessary for the discharge of her international obligations, to
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share the sovereignty of the Island with their Greek and Turkish allies as their contribution to a lasting settlement.
That is the statement of Government policy. I now use the Prime Minister's actual words as he concluded his statement in another place:
"I am aware that I have taken up much of the time of the House, but since the words were chosen with care, I thought it my duty to give the full text to the House. It will be available as a White Paper this afternoon.
"I would only add this. I have myself sent a personal appeal to the Prime Ministers of Greece and Turkey to approach this policy in a spirit of co-operation and moderation. I have given the House the main outlines of the plan. There are, of course, many details which will require to be filled in after discussion. We are therefore not asking for immediate acceptance of our policy in every particular. While I recognise that some initial reactions may be unfavourable, I believe that further consideration will lead to the recognition of the genuine merits of this policy. Meanwhile, it is a great support to the Government in discharging their heavy responsibilities in this matter to have the good will and understanding of the North Atlantic Council. Their assistance in the process of conciliation is proving, and I feel sure will continue to prove, of the highest value. Finally, I trust that our efforts which are constructive and fair, will commend themselves to the House and to the country."
3.43 p.m.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I am sure that the House is much indebted to the noble Earl the Leader of the House for putting, such a statement before us this afternoon. People in all parts of the country, of all kinds of political and religious opinion, have felt very deeply for years past about the serious state of affairs in Cyprus, and many have been praying that peace may come to that troubled island. This, therefore, is a day of considerable importance, when a plan of such breadth and imagination as this is placed before Parliament as a preliminary to its being submitted to the various parties concerned in the discussions about Cyprus. The statement

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is fairly long and I am bound to say also looks complicated. Of course, the situation in Cyprus is so complicated that it is necessary to deal with all the complications involved, and I do not suppose that that can be done by a simple State memorandum. My noble friend Lord Pethick-Lawrence will remember our difficulties in dealing in the preliminary stages with the communal and racial difficulties in India, and I do not suppose that the size of the place makes much difference to the depth of feeling upon these matters.
I feel sure that it would be wise for us not to think of being for this or that point in the proposed plan. I think we had better examine it in the greatest detail. I am sure that all your Lordships want to be helpful to any discussions on this matter which may succeed this announcement. Perhaps all these questions can better be dealt with in a debate which, whilst I feel it cannot be long delayed, should not now be brought about until all Parties in Parliament have had a chance of studying this imaginative memorandum. I should like to express my personal hope that at last this may be the first step in bringing about such discussions as would bring peace and good will to this troubled community in Cyprus.
My only other point is that I should like to ask the noble Earl whether he has told the House as much as he can about consultation with the Council of N.A.T.O. and whether we can feel that we are really able to rely upon widespread help in conciliation in this matter from that Council.
THE EARL OF HOME: My Lords, I am very much obliged to the noble Viscount. I am sure that he is right. This question is necessarily complicated, although when the White Paper has been read I do not think that it will appear quite so complicated as it does of necessity as I read it out. Of course we shall have a debate arranged through the usual channels when we know what another place is going to do. So far as N.A.T.O. is concerned, the noble Viscount may not know, but there were discussions this morning, of which I have not had a full account, but I am informed that in these discussions it was clear that the Secretary-General and the Governments of the twelve countries not directly concerned
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welcome the United Kingdom plan as a basis for constructive discussions. Their help has been, is and I hope will continue to be, extremely valuable.
LORD COLYTON: My Lords, I feel sure that this constructive and imaginative plan will commend itself to almost all sections of your Lordships' House. I agree with the noble Viscount opposite that we do not want to ask a great many questions to-day; they can be held over for a future debate. The best contribution we can make to-day is to throw the whole influence of this House behind the acceptance of this plan by the parties concerned. Having said that, I hope your Lordships will not regard the two questions which I should like to put to my noble friend as in any way put in a spirit of criticism. The first question I should like to ask him is: what will happen if, unhappily, the present efforts to find a solution of this tragic problem fail? The second is: what would happen if, at the end of the period of seven years, no further agreement were reached as to the future procedure to be decided upon?
THE EARL OF HOME: My Lords, I do not want, and I do not think that the House will want, either to think or to talk in terms of failure. What we have to do to-day is to try to concentrate on making this plan a success and making it work. Nevertheless, as the noble Lord has said, we must face the realities of the situation. To-day, on behalf of the Government, I have put forward a plan for seven years, and we have looked beyond that to an even greater partnership. If in the long run all our hopes are dashed and all this fails, then the pledges given by the British Government will stand.
3.50 p.m.
LORD WINSTER: My Lords, as I have so frequently spoken about Cyprus in your Lordships' House, I should very much like to be allowed to say a word or two this afternoon. I welcome most sincerely the fact that the Government have come to a decision and have put forward a proposal which, whatever its ultimate fate, is an imaginative proposal which bears evidence of great labour on the subject. I think it is a proposal which certainly forms a basis for negotiation; it will be a great thing to get talks started again in Cyprus, and this proposal certainly forms an adequate basis for such

1135
talks. At this stage I hope that no criticism of the offer will go out from Parliament at this particular moment. I think the offer should have a fair run, and those outside this country who have to come to fateful decisions should not be distracted at this moment by conflicting Party voices from this country.
Criticism there must be at some later date, although I warmly agree with the noble Earl the Leader of the House that we need not this afternoon contemplate the failure of this proposal or wonder what we shall be doing in seven years' time. The time for criticism will come, but this most emphatically is not the time. In saying this, I particularly have in mind the Governor of Cyprus, who has the most difficult task to perform in putting this proposal forward and in endeavouring to commend it to the parties concerned. I remember that the Governor has inherited a most damnable legacy which has been none of his making. Let us not complicate his task in any way at this moment by raising discordant voices here at home. What is wanted above all at this time is deliberation by all concerned in a spirit of calm and toleration, seeking not the good of a particular view but the peace and security of Cyprus. So, my Lords, I will say nothing more at this moment, though the time will come when, no doubt, the noble Earl, Lord Perth, and myself will have some things to say to each other. But that time is not yet, and all I want to do is wish the Governor of the Island well and beg those who have deciding voices in this matter in Cyprus to rise to heights of responsibility at a crucial moment and to discard angry passions which have grown up in the past in favour of a calm consideration of the Government's proposal.
THE MARQUESS OF SALISBURY: My Lords, I should, of course, agree with what the noble Lord has said, and of course we all should. Nobody must approach these proposals in a negative, and certainly not in a hostile, spirit. But I hope the noble Earl did not mean that we cannot ask for elucidation. It is an extremely interesting and very novel scheme, and it is most important that we understand exactly what it portends. I do not propose to ask any questions to-day, because we have only just heard
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the scheme and it is difficult in a few minutes to understand its full purport. I was grateful to the noble Viscount the Leader of the Opposition for suggesting that we might have a debate at an early date, and I hope that when that debate comes the Government will understand if we do ask questions for purposes of elucidation, because, after all, it is not only the Government but this House which will bear ultimate responsibility for future policy in Cyprus.
THE EARL OF HOME: My Lords, I am first of all obliged to the noble Lord, Lord Winster, who speaks with authority as a former Governor of Cyprus and whose words will carry the more weight for that. Secondly, I would say, in response to the noble Marquess, Lord Salisbury, that we will certainly have a debate, as I said to the noble Viscount the Leader of the Opposition. This is a scheme of considerable complexity and considerable significance, and it will be your Lordships' wish to ask all sorts of questions about it. So far as elucidation is concerned, I hope that the Government will not fail to face all the questions but will be able to give answers which will satisfy your Lordships on the details of the plan.
LORD RADCLIFFE: My Lords, as one who has been concerned in earlier proposals for the Constitution of Cyprus, may I take the opportunity of saying one word, and it shall be only one word, with regard to the declaration of policy that your Lordships have just heard. Your Lordships, of course, have no wish to debate it to-day, but I should like to take this opportunity of saying how much, for my own part, I welcome a list of proposals of this kind, and how ardently I hope, for the sake of Cyprus and for the sake of peace in that part of the world, that progress may be made by discussion between the parties in developing what are at this stage only outlines. These proposals, I believe, contain the essential things that are needed to cope with the tragic situation that has developed, whatever the past contained, and they have, I think, this outstanding advantage: that they explicitly invite the two countries, Greece and Turkey, who have much responsibility for the situation that has developed in Cyprus, to associate themselves with ourselves for the future in the

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government of this territory, and to bear their share of responsibility for developing peace and security there.
THE EARL OF HOME: My Lords, everybody knows that the noble Lord, Lord Radcliffe, has given a great deal of his time and his great talents to putting forward constructive proposals in this matter for the future of Cyprus. We were at the time and are now grateful for his work; and to have his generous support for the approach which has now been made will not only be very valuable to Her Majesty's Government but, I hope, will make everybody think very carefully about this plan and realise that it is put forward as a constructive effort to help to solve what has seemed up till now to be an almost insoluble problem.
LORD HARDING OF PETHERTON: My Lords, may I associate myself, as one who has also had some experience of Cyprus, with those Members of your Lordships' House who have urged that this plan should be considered calmly and earnestly by everyone concerned? May I go on and suggest that your Lordships should express the view that people should not take up positions on this plan until they have had time to consider it earnestly and seriously and to discuss it quietly among themselves?
THE EARL OF HOME: I am grateful to the noble and gallant Field Marshal Lord Harding of Petherton. The House has probably not had much opportunity to show their gratitude to him for all that he has done in these very difficult years, but we should like to do so. I am indeed grateful to him for the words he has said this afternoon.

THE FUTURE OF DOWNING STREET
4.0 p.m.
THE EARL OF HOME: My Lords, I have a short announcement to make on quite a different subject, the future of Downing Street.
THE EARL OF SWINTON: Does the noble Earl mean the occupant or the place?
THE EARL OF HOME: I am confident about the future of the occupant—he needs no support; but the place might. The Report of the Committee
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on the Preservation of Downing Street is being presented to Parliament as a Command Paper, and copies will be available in the Printed Paper Office this afternoon. We are most grateful to the noble Earl, Lord Crawford, and his colleagues for their labours. The Report recommends—and I wish to make it clear that the Committee were concerned only with the fabric of the building: so that answers my noble friend's question—that Nos. 10, 11 and 12 Downing Street should be given a major structural overhaul. The external appearance of the houses would, so far as possible, be retained, and rooms and features of historic importance. The Report also recommends the appointment of an independent architect to draw up plans. For this purpose my right honourable friend the Minister of Works proposes to appoint Mr. Raymond Erith.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I am obliged to the noble Leader of the House for this statement. Many noble Lords, on both sides of the House, will know enough of the shakings that the premises had during the last war to realise that probably a good deal of work requires to be done. But I am old-fashioned enough to hope that, with the reinforcement of the fabric, we shall not have too big a change in the appearance of the house, which is a great relic of the efforts which have been made to establish democracy in this country.

LOCAL GOVERNMENT AND MISCELLANEOUS FINANCIAL PROVISIONS (SCOTLAND) BILL
4.2 p.m
Debate resumed.
THE EARL OF ELGIN AND KINCARDINE: My Lords, if we may now return to the more mundane subject of local government in Scotland, in presenting the Second Reading of the Bill to your Lordships' House the Minister of State used these words [col. 1115]:
"to give local authorities increased financial independence and to encourage local authority electors to take a fresh interest in local affairs."
I think your Lordships will all agree that that is a most laudable statement, but whether we shall all agree with the noble Lord's contention that the Bill presents

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that case, I am not sure. If I could be assured of it, both as an individual and as Provost of the Royal Burgh of Culross, I should give the Bill my welcome. But the noble Lord is aware that there have been considerable criticisms of the Bill in many places, and there is also the feeling that it may be presenting not financial independence but financial responsibility.
Speaking as a member of the town council of a small burgh, I would say that the present system of central controls is frequently extremely aggravating and has a most devastating influence on local interest and local patriotism. But at present I do not feel that I can quite go with the noble Lord the Minister of State in saying that the Bill presents the improvement which he was inclined to attribute to it. The Bill has been definitely criticised, both by the Convention of Royal Burghs and by the County Councils Association, and in spite of the small adjustments which have been made as the result of conferences and of the long debates in another place, I still feel that the Bill is one to which we cannot give a wholehearted welcome.
It seems to me that the Government are perfectly satisfied with the position from their own point of view, as indeed they should be, because by it they establish, absolutely fixed, their contribution to the schemes of development and otherwise which they carry out jointly with the local authority. But in doing so, they are handing over to the local authorities an uncertainty which may arise from the demands, particularly of education and of the provision for technical education, which may be increasing from year to year and which, even now, stand at colossal figures. The noble Lord, Lord Greenhill, dealt with this question of joint action and the responsibility of the Government to take their proper share in this matter: and he raised, quite rightly, the point that the only assistance which local government authorities will secure from the Bill are increased receipts arising from the re-rating of industry. Surely receipts from rates ought to be in the possession of local authorities, and not of the Government; and unless local authorities do get assistance in that way, they are faced, as I have already said, with the uncertainty as to where the money is to come from for the various schemes
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which they have in hand and which all need constant attention. These demands cannot be avoided or neglected, and should surely be shared between the Government and the local authority concerned.
In any case, Scotland is perhaps being more harshly treated in this matter than England and Wales, which were dealt with in the Bill which was before your Lordships' House last week; because the re-rating which the noble Lord mentioned, in reply to Lord Greenhill's speech, cannot in Scotland be finished until 1960–61, and therefore the uncertainty remains much longer with us than with England and Wales. I feel, as I said at the beginning, that, while the intention may be laudable, we should like more proof that the Government are not only keen to get the Bill through but are prepared to give the local authorities a fair deal. That is the point that I want to bring before your Lordships to-day. It is one that is creating great anxiety among all local authorities in Scotland.
4.9 p.m.
THE EARL OF DUNDEE: My Lords, I do not like this Bill very much, and I think perhaps it is a little difficult for a Member of your Lordships' House who is not very enthusiastic about the Bill to decide how much or how little he ought to say, or whether indeed he ought not to choose the more excellent course of saying nothing at all. This Bill received its Second Reading in another place as long ago as December 17 last year, and it is a little sad for some of us to think that this was the last Scottish debate in which Walter Elliot made a speech. Since then, for the best part of six months this Bill has been in Committee in the other House, where it seems to have been discussed with even less than the usual brevity with which Scottish Members of that House are accustomed to express themselves. Now, if your Lordships were to do this all over again, and if your Lordships were perhaps to insert Amendments which had not been agreed to in the other House, we should then be accused of acting in an undemocratic manner and of frustrating the will of the elected representatives of the people, although on this particular occasion we might perhaps receive the support of some institutions and individuals in Scotland who are not usually at all favourable to a hereditary Chamber.

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On the other hand, if we were to let this Bill go through in complete silence, it might then be thought that Scottish Peers were neglecting a matter which is of great importance to our country, and that some of us might even have preferred the attractions of an English race meeting to the performance of our Parliamentary duties.
This Bill is supposed to confer two great benefits on the local authorities in Scotland. One is to give them much greater freedom in the management of their own affairs, which is a thing I always like to have; the other is to give them an additional £750,000 a year, which is a thing I should not particularly mind having, either. But, my Lords, the local authorities in Scotland appear to be singularly unappreciative of the bountiful generosity of the Government in this matter, and they have even circularised your Lordships asking you to regard the Bill in a most unfavourable way and to amend it out of all recognition.
I am afraid that in some respects I dislike the Bill even more than the Scottish local authorities do, because it provides for the re-rating of industry. Some local authorities are in favour of that, of course, because it would mean that every penny from the rates would produce, a good deal more revenue, but I have always thought that the rating of industrial buildings and plant is a thoroughly bad and vicious method of raising money. When industry was de-rated in 1929, I wished that it had been derated 100 per cent. instead of only 75 per cent. I deeply regret now that the rating of industry should have been raised to 50 per cent.
The collection of rates on the assessment of house property is not an entirely fair method of raising money, because it is quite possible that a millionaire, if he chooses, may live in a single room rated at £10 or £15 a year. Conversely, there are some people who are obliged by circumstances to live in houses which are far bigger than they can really afford. But if you rule out a local income tax—which is recommended by some people but which is, I think, opposed by most people for reasons which I think are good reasons—then the collection of rates on the assessment of the valuation of everybody's house is, on the whole, the
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least unfair method of raising money for local purposes.
That cannot be said for the rating of industrial buildings and plant. Imagine two people living next to each other, one of whom is a local industrialist who has spent all his life building up a business and has put all his money into extending his business. He has now got a factory employing, perhaps, 300 or 400 men. The whole of his means has been put into this business, which may be rated at £10,000 a year. If the rates are 20s. in the £, he will now be rated at £5,000. That is a direct tax on employment and a direct tax on production. It discourages employment, it discourages enterprise, and it adds to the cost of production and to the cost of our export trade. Now suppose that his neighbour has never put a penny into local industry, and suppose he has £1 million invested in Government securities from which he is receiving an income of £50,000 a year. He does not pay one penny in rates except, of course, on his house, which his neighbour does in any case. But he gets exactly the same value from local services, on which the money from the rates is spent, as his neighbour who has spent his whole fortune and means on something which is really socially useful to the community. That, my Lords, is the case against any rating of industrial buildings and plant at all. I think it is a bad and vicious method of taxation, whether local or national, and I regret it should have been raised in this Bill.
Now whether you re-rate industry or whether you do not, I think you will still be left with the fundamental problem of local authority finance, which I do not think this Bill does anything to solve. That problem is this. If you go back a hundred years, you will find that local rates at that time were raised mainly for parochial purposes—for purposes which affected the local ratepayers and not the country as a whole. At any rate they were never much more than 6d. in the £, so it did not much matter how they were assessed. The local rates now not only go up to 20s. in the £ but have to be levied mainly far purposes which are really for the nation and not for the locality, and which ought properly to be paid for by national and not by local

1143
taxation. That is the problem which you have to consider.
There are two possible solutions, and I think there is a good deal to be said for both of them. One is that you should give the local authorities not 38 per cent., as I think it is at present, of their expenses from the national exchequer, but something like 90 per cent., and to allow them to administer the services in the way they think best. What fun it would be to have to justify that to the officials of Her Majesty's Treasury! I do not know how they would take it, but it would be very interesting. However, I think it would be one possible solution. The other solution is to remove the services like education, which are really national services, from the control of the local authorities and administer them nationally in the same way as the poor law and the health services, both of which used to be run not long ago—in our own lifetime—by local authorities but which have now been transferred to national administration.
This Bill does neither of these things. It allows local authorities to collect a little more revenue than they are now collecting on their own by a thoroughly bad and undesirable method of taxation, and at the same time tries to fix, by this general grant, a contribution from the State towards these services of national importance which local authorities consider is entirely inadequate and which will always cause trouble and difficulty in reaching agreement on how those services ought to be run most efficiently in the public interest.
The late Walter Elliot, in the speech I have referred to, supported this Bill and I like to read that speech because I believe that it was so characteristic of the man. Twenty years ago, when he was Secretary of State for Scotland and I had the honour to serve with him as Under-Secretary, I remember him once saying to me: "You know, the only people in Scotland who really like me are the people to whom I can say, 'Here is a bag of money. Take it away and do what you like with it'." In his speech on the Second Reading of this Bill in another place last December, just before he died, he said something very similar, though not quite in those words. He said [OFFICIAL REPORT (Commons), Vol. 580, (No. 31), col. 314]:
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"When I was in the Administration all kinds of people with whom I was working said to me, 'For goodness' sake, give us a little money and let us go away. We will use it far better than if every penny we spend is checked and counterchecked, accounted for, scrutinised, audited and summed-up by the auditors in your Department'."
He went on to say something of which I am sorry I did not have time to give the noble Lord, Lord Boyd-Orr notice:
"I remember Lord Boyd-Orr when running the Rowett Research Institute at Bucksburn, which we all know very well, saying 'I will take half the money if I can have it in a box and not have to bother with all the checks and counterchecks that I have to go through with the Department of Agriculture.' There is something to be said for that point of view."
Mr. Walter Elliot concluded by asking another place not to reject this Bill, and I certainly do not presume to ask your Lordships to reject it. I am utterly opposed to the re-rating of industry, and if there were an Amendment to that effect in Committee I should be glad to vote for it. But as for the Bill in general, I would only say to your Lordships that this long-term problem of local authority finance will remain with us. It will grow greater, and we shall have to decide sooner or later—and I think sooner rather than later—whether we are going to give local authorities a bag of money from the Exchequer and let them do what they like with it, or whether they are going to transfer education and other important services from the administration of the local authorities to the administration of the State.
4.25 p.m.
THE DUKE OF BUCCLEUCH AND QUEENSBERRY: My Lords, as a member of a local authority for a good many years and chairman of a county council for much of that time I should like to say a few words in support of this Bill and in support of the action of Her Majesty's Government in bringing it forward. I should also like to express thanks for the confidence shown in local authorities and for the fresh encouragement which is being given to them. Affection cannot be shown for any legislation of this kind and universal acclamation cannot be expected. The Bill is, however, a natural development, carefully prepared by persons impartial and experienced, both in central and in local administration, to enable each to be carried on more easily, efficiently and economically.

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In 1929, the last occasion when a very big and necessary advance was made, the proposals were extremely unpopular. The opposition was very violent, and as a candidate for Parliament at that time I remember being strongly attacked from many directions, the election being fought on that issue with representations from education interests and teachers who forecast that I should be easily at the bottom of the poll; but the majority of the voters upheld and returned me. Though I was strongly denounced at the time as a supporter of the proposals, I remember that wiser and more experienced people quietly gave one assurances that the proposals were necessary and appropriate. During the next few years it was found that the results worked well, and although the changes were not popular they were inevitable. This time the opposition and the criticisms are much less; and although changes are unlikely to be entirely welcome, and there are reasons why they may not be fully appreciated, I have not seen or read any real arguments against them, nor any alternative methods suggested for finding the money to pay for the services.
My noble friends Lord Elgin and Lord Dundee should perhaps restrain me in my remarks and in the display of any optimism, as they have been much less optimistic, and perhaps even slightly critical. Perhaps I should have followed them, for this reason: that if one does not take that line it may be thought that local authorities are being treated too well or quite well enough. Although there are more frequent demands for more independence for local authorities and for less control by the central Government, interdependence is close and important; and I have felt that this Bill probably provides sufficient freedom and about the correct amount of independence for local authorities and of freedom from control by the central authority. If there were less control over expenditure, local authorities would often spend more than can be afforded. Pressure to spend more money is continuous, as if the money could always be provided from somewhere. Ratepayers, as well as taxpayers, pay heavily and need some protection, and I hope that nothing in this Bill will put upon them heavier burdens than they already have to bear.
The main criticisms I have heard in Scotland about the proposals are in connection
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with education and the block grant. I have a warm admiration for Scottish teachers, but I admire the determination of the educational institutes of Scotland more than I admire their arguments and forecasts. About the block grant proposal, I have not seen any facts or evidence that would justify in advance its condemnation. I find that the present Government and their predecessors did not in any way discourage or reduce expenditure upon education, and that there has been a steady advance—as much as possible, I hope, in accordance with what the nation can afford. I have one question about finance and estimates. In Clause 1 (6) which deals with the fixing of the amount of grant, there are references to grant orders being made in advance for two or three years, perhaps in the nature of general orders, and without as much certainty as would be welcome. I think it is important that councils should know as far in advance as possible the exact sums they are likely to receive.
Before concluding I should like to say that I feel that much thanks and credit are due to those who give a lot of time, often in busy lives, to local government work. Sometimes it is a few of the busiest upon whom much of the work falls, and I do not think it would be wise to give to local authorities more responsibility and duties than are already entrusted to them. I feel that the proposals in this Bill are to control not so much what different people would like to see done as the nature of the services and duties which fall upon us as representatives of local government. I feel that this measure is a genuine effort to take a correct step forward in the development and devolution of local government.
4.33 p.m.
VISCOUNT COLVILLE OF CULROSS: My Lords, I hope that your Lordships will allow me, not to follow the wide approach that has been taken by the noble Lords who have spoken before me on this Bill, but rather to speak to one narrower effect of its operation, and that is upon the salmon net fisheries around the coasts of Scotland. It may surprise your Lordships to hear that the effect of this Bill on such fisheries would be to re-rate them to 50 per cent. instead of the 25 per cent. which they at present enjoy in company with all other

1147
industries. I think it is important to see how salmon net fisheries came to be classed as an industry for this purpose. In 1896 agricultural lands and heritages were defined in an Act of Parliament as:
"Any lands and heritages used for agricultural or pastoral purposes only or as market gardens, orchards or allotments."
In 1926 the Rating (Scotland) Act introduced certain rating differentials between various forms of lands and heritages, and in the First Schedule to that Act various forms of these lands were devalued to different extents. Among them were agricultural lands and heritages which were devalued to 100 per cent. in all; and there were certain other exceptions to the full rating. But among those exceptions did not appear salmon fisheries, and as a result of this it was found that, as they were not mentioned in any of the exceptions, they had to be rated to the full value of 100 per cent. and were covered by the general residuary clause, Section 12 (3) of that Act. As I believe the noble Lord, Lord Strathclyde, said, in 1929 it became necessary to devalue the rating of industry, and with this devaluation the benefit also came to the salmon fisheries. They were, in fact, expressly included by a special section in that Act, which rated them as industries for this purpose. It is perhaps indicative of the doubtful position they held that it was necessary to put in a special explanatory clause making it clear that they were industries for this purpose.
If these salmon fisheries are re-valued up to 50 per cent., I hope your Lordships will allow me to point to some of the very serious consequences that this will have, and also to draw your Lordships' attention to the fact that this is a matter closely related to the Motion yesterday of the noble Earl, Lord Dundee, in that it is connected with employment in rural areas. These salmon fisheries are carried on chiefly in very rural parts of Scotland which have suffered and are continuing to suffer to a serious extent from depopulation. They are mostly small concerns—they have to be, because the rivers and estuaries in which they are carried on are small in themselves, and there is not room for a big concern to grow up in any of the places where there are salmon fisheries. I would give as an example a river
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I know very well indeed: the Beirie, in Kincardineshire.
The very smallness of these concerns is the important fact, because they are situated in parts of the coastal areas of the country all round Scotland where there are only small communities, where there are no big towns particularly close, and where communities would have to travel a very long distance to find employment if they could not be employed where they live. I can give one example on the same coast. There is a small village, a fishing village basically, called Johnshaven, where until recently there was a paper bag factory which I believe was a branch of a factory in Aberdeen. Within the last six months this factory has ceased operation. The result of that was that there was nothing whatsoever to do in Johnshaven for the people who used to work in that factory; they had to go to Montrose, the nearest big town. And gradually Johnshaven is moving to Montrose; this is the result of taking away the only industry there was in Johnshaven. This is going to happen over a very wide extent if the only industry in certain small communities is taken away and that industry is the salmon net fisheries.
There is one other point: it is a rural occupation and it fits in particularly well with the rest of the agricultural picture. The off season of agriculture happens to be the highest period of employment in the salmon fisheries, while, conversely, during the close season of the salmon fisheries agriculture requires peak employment, and therefore it is very useful for agricultural workers to have an alternative form of employment when they are not actually wanted on the farms. The stations are already closing down. One closed down very recently at Gourdon, on the same part of the coast, with which I am familiar. This re-rating will strike a death blow at the rest of them, and although it may not seem that the re-rating of this particular form of industry in itself is going to mean a great deal of money—that is quite true from the point of view of what rates will accrue from it—from the point of view of the people who are carrying on these concerns it will mean the whole difference between continuance and closure. Her Majesty's Government cannot think that the rating difference between 25 per cent.

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and 50 per cent. on salmon fisheries is really going to help very much in the overall picture. Do they think that that is more important than the depopulation of these rural areas?
The point of my legal analysis of all that has happened is this. The whole reason why the salmon net fisheries are classed as industries is the definition in the 1896 Act. When it came to the 1926 Act, which rated all lands and heritages, salmon fisheries were not involved at all, but as they were not mentioned directly they had to become a residual industry and so accept the 100 per cent. rating. Naturally they were delighted to have a 75 per cent. reduction in 1929, but to the argument that they were pleased to be regarded as an industry in 1929 I would point out that they would have been far more pleased to have been classed as agricultural land or a heritage, because in that case they would have received not a 75 per cent. but a 100 per cent. reduction—the more so under the 1926 Act, under which they would not have been rated at all. Cannot Her Majesty's Government take this opportunity of putting this matter right? In Scotland, as in England, fisheries are associated with agriculture. Could not these fisheries also join their fellows in that general department?
4.42 p.m.
LORD LOVAT: My Lords, I should like to congratulate my noble friend Lord Colville of Culross on what he has said, and I would follow his footsteps in emphasising in lesser degree the points which he has raised. I would refer particularly to the new form of rating which the Under-Secretary of State in another place suggested should be levied on salmon fisheries. I simply cannot comprehend how, in any way of thinking, an occupation as hazardous as the salmon net fishing industry on the bleak coastline of North Britain can be considered as an industry in any shape or form. As my noble friend has already pointed out, it should be looked upon as part of the agricultural working plan. As salmon fishers, we are producing a food. That food is not snatched from the sea without a great deal of hard work, not only in the final phase but also in producing the grown salmon.
It is common knowledge to all owners of salmon rivers that they cannot extract
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fish without putting fish back into the water. I am the owner of a small river in the North of Scotland, the Beauly, and I have spent a great deal of money in building hatcheries. The salmon are caught, the spawn is extracted from them and put in the hatcheries, the baby salmon, the salmon fry, are hatched out and put back in the river. All the time the river has to be closely protected from two-legged and four-legged and web-footed "enemy agents". And all that time the salmon are treated like a farm crop. They are nursed and protected through every stage of development until they return as fully grown fish five years later, when the coast nets have a chance of catching them, whilst those that survive are caught on rod and line, no doubt a method which your Lordships approve of much more than the idea of hauling them out by net and sending them down to feed London's large stomach.
If these salmon stations go out of production, there will be no question at all that salmon will be much scarcer and not more numerous. There will be a great deal of inshore poaching, which to-day is largely prevented by the activities of those employed in the netting stations, who take good care that there is no interference which would play havoc with their livelihood. I should like to tell your Lordships—I do not think it is any secret—of the netting company to which I belong, the Moray Firth Salmon Fisheries, which employs 190 men, who are all crofters. They are the best type of men we can breed in the Highlands. They have seasonal work in the fisheries as well as on the land, without which they would certainly drift into the towns or move south and be lost to the Highlands. If my noble friend Lord Strathclyde was in any way sincere, and I am sure he was, when we had the debate on Scottish unemployment yesterday, I feel sure that he would be the last person to wish to see an industry closing down which has splendid people looking after it.
This small company of which I am a director lost a good deal of money last year. Its wages bill runs to £25,000. How are we going to begin to face the future when the prices of materials and wages are mounting all the time (nets are a very expensive item) and when the price of salmon is falling—and it will fall still further? It means that we are going

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to have no netting stations working in Scotland and have the English fish markets flooded with Japanese salmon or fish imported from other countries. I hope that my noble friend Lord Strathclyde will reconsider a decision which was taken in a hurry and which, I feel there is no harm in my saying, was taken without an opportunity for full discussion. A hasty conference was held at St. Andrew's House, Edinburgh, but the netting representatives had hardly time to marshal their facts or attend.
LORD FORBES: My Lords, I would give my full support to what has already been said about salmon fishing in Scotland. If these fisheries are re-rated, it will merely mean that another depopulation nail has been driven into the coffin of the Highlands and the more remote areas in Scotland.
LORD SALTOUN: My Lords, before the noble Lord replies, I should like to say one thing: that is, that all my life (it is getting rather long now, I am afraid) I have heard complaints of the rating system in Scotland in precisely the same terms as those used by the noble Earl, Lord Dundee, a few minutes ago. I feel that the re-rating of industry is a backward step, unless it can be justified by Her Majesty's Government in much more convincing terms than I have heard.
THE MARQUESS OF ABERDEEN AND TEMAIR: My Lords, I should like to say that every speech made this afternoon has my sincere support, because all that has been said is as true as can be. I think that we ought to help Scotland the best we can and make things more easy for those who really support the welfare of Scotland.
4.50 p.m.
LORD STRATHCLYDE: My Lords, we have had a number of very interesting speeches in the course of this debate and I will endeavour to the best of my ability to reply to the points that were made. The noble Lord, Lord Greenhill, spoke of the difference between the Bill which we are discussing this afternoon and that which your Lordships discussed on Second Reading a week ago applicable to England. The noble Lord pointed out that the English Bill dealt with local government reorganisation. I would say to the noble Lord that, so far as I have
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been able to discover, there is no great enthusiasm among local authorities in Scotland to-day for a reorganisation of the present system; at any rate, if such enthusiasm exists, I have been unable to find it.
The noble Lord asked why, in spite of all the explanations that have been given, public anxiety still exists. But I do not know that it does. It certainly should not exist, I suggest, in the mind of any fair-minded person who has read and studied Clause 2 of the Bill. As I said in my opening remarks, surely no Government could give a fairer explanation of what they intend to do. I cannot understand how it can be said that this Bill tightens rather than loosens control.
Several noble Lords, including the noble Lord, Lord Greenhill, and the noble Earls, Lord Elgin and Lord Dundee, have spoken on the subject of re-rating. I thought that the noble Earl, Lord Dundee, really answered the other speeches made on the subject. After all, one has to consider not only the ratepayer but the taxpayer also: we have to try to hold the balance fairly between the two. If industry has to be re-rated, then surely the taxpayer should get some relief, as in fact he will under the Bill. For, as I said, half of the total sum that will accrue as the result of re-rating will go to the Exchequer to recompense the Exchequer for the tax lost in consequence of this re-rating. That is also the answer to the question of the noble Lord, Lord Greenhill, about why the local authorities will get only part of the total that will accrue as a result of re-rating.
The noble Lord, Lord Greenhill, spoke also about industry being re-rated to 100 per cent., which he considered would be just. He said that the local authorities have to provide services for industry, and therefore they should be re-rated to 100 per cent. That, of course, is not strictly correct. After all, industry does not benefit very much from the education rate; and there are other matters. too. that perhaps will occur to the minds of noble Lords. What puzzles me about anyone who has taken such an active part in local government as the noble Lord, Lord Greenhill, has, is how he can have anxiety about the future of education because of this general grant. It would

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seem to me that anyone expressing that view can have little real trust in the local education authorities, because, after all, the ball is at their feet; the money is there, and they can use it is they will. If the noble Lord feels doubts as to the future of education, it can only be because he fears that the local education authorities will not put the money given to them to the purpose of education to the extent they have done hitherto.
LORD GREENHILL: I always hesitate to interrupt a speaker when he is summing up a debate, and I certainly will not say anything which will introduce new argument or elaborate something that I have already said. However, I think the anxiety of those interested in education should be made clear. They feel not only that education as a service may suffer, but that in these times, when we all admit that inflation is part of the increased total of cost, the danger is that if the Government alone are to determine the amount then the scope of education will suffer. The Government's answer, I confess, is a reasonable one, because they determine standards and they control the rate of development. The criticism is that the local authorities want to be able to exercise that function and that right on their own, and not have to depend wholly, as they will, on the good will of any Government which happens to be in power.
LORD STRATHCLYDE: I thank the noble Lord for that explanation, but I do not quite follow it, in view of what I said in my opening remarks about the matters that would be taken into consideration in arriving at the total sum of the general grant. It may be that I have some little sympathy with the noble Lord when he speaks of the desirability of a change to ad hoc education committees.
LORD GREENHILL: I am glad to hear it.
LORD STRATHCLYDE: Perhaps more than that I had better not say. It may also be an interesting speculation whether local authorities would really welcome a reduction in their numbers. I must confess that when the noble Earl, Lord Elgin, spoke, I felt that he was a little half-hearted in his praise of the Bill; and indeed, he confirmed that later in his remarks. I do not know what
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more proof we can give than is contained in the Bill itself, arid in the White Papers the Government have issued, about our extreme desire to give local authorities the fairest possible deal we can. That has been our wish and our intention, and I hope that the noble Earl, after considering the matter further, may feel that we have at least gone some little way towards securing that.
I think the noble Earl, Lord Dundee, is quite correct in saying that the local authorities are unappreciative of the Government's generosity, but I have never known them to be wholly satisfied where the question of money is concerned. I realise his anxiety in relation to the re-rating of industry. I believe that if we can take a middle course between the views expressed by the noble Lord, Lord Greenhill, and those expressed by the noble Earl, Lord Dundee, the Government may come out at about centre, and at the end of the day it may be felt, as I suggested earlier on, that they have arrived at the right total. I agree that the problem of local authority finance is one very difficult of solution and one that is likely to remain with us for a considerable time.
I sincerely thank the noble Duke, the Duke of Buccleuch and Queensberry, for the generous terms in which he spoke in support of the Bill. It was rather heartening that one Member of your Lordships' House, at least, should give the Government such support. I feel that the analogy which he gave between 1929 and 1958 may well prove to be correct, and that at the end of the day this Bill will be found to be of real benefit to the local authorities and, therefore, to local government throughout our country. The noble Duke asked me a question which is of considerable importance to local authorities, and I will endeavour, so far as I can, to make the situation a little clearer than I left it earlier on.
The point I want to make is how and when each local authority will know the amount of general grant it is to receive each year; and that obviously is of importance to local authorities. General grant orders, as I tried to explain earlier, will be made in advance for periods of two or three years, and they will be laid before another place for approval. But orders will not specify the sums payable

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to individual authorities. It will not be possible to do that until the total amount of the grant has been approved. I can tell your Lordships that I hope that the first order will be made in December next, and will be debated either in that month or in January, 1959.
LORD GREENHILL: Will the order be debated in your Lordships House?
LORD STRATHCLYDE: No, it is a matter for the other place, dealing with money. After approval of the order it will be possible to proceed with the calculation of the effect on each authority. This involves making the necessary adjustments provided for in the Third Schedule to the Bill and working out the distribution on the basis of the Second Schedule; estimating the additional rateable value arising from the partial re-rating of industry, estimating the effect of the changes on the equalisation grant; and, finally, calculating the transitional arrangements. Obviously, these calculations will take some time, but so far as can be foreseen at this moment we should be able to give the local authorities by the end of February, at the latest, the first estimate of the general grant they will receive. That will still be some two and a half months before the beginning of the local government financial year. It will not be possible to give local authorities at the same time the same details for the second year of the grant period, although as the aggregate amount of the grant for that year will be known the local authorities will have a broad indication of how they will fare. The reasons why we cannot make the detailed calculation for the second year in advance are that different figures of population and schoolchildren have to be used each year and that the Third Schedule adjustments will also differ from year to year.
I should like to join with the noble Duke in the tribute of appreciation which he gave to those who give so much of their time and energy to the service of our country in local government. I said in reply to the noble Lord, Lord Greenhill, a moment ago that we should not
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have an opportunity of debating the general grant orders, but on the other hand, as I pointed out earlier, the House will be able to debate the White Paper which is presented with the order if they so wish.
My Lords, we had two very interesting speeches from the noble Lords, Lord Colville of Culross and Lord Lovat. I would assure them that the Government's earnest desire is to maintain the population in our rural areas, and we are doing all we can to that end. I hope, therefore, that re-rating will not, as they say, strike a deadly blow at our salmon fisheries. In that connection I would say to the House that the history of this matter is somewhat complicated, but for most rates levied before 1929 salmon fisheries received no relief and were not associated with agriculture for rating purposes. De-rating to 25 per cent., on the same basis as industry, was introduced for the first time in 1929. There is no similar de-rating for salmon net fisheries in England and Wales, although I admit that the positions in the two countries are not entirely comparable. Under the Bill the rateable value of salmon fisheries, like that of other industrial subjects, will be doubled. The Government have considered very carefully the representations made on behalf of the salmon net fisheries, that their liability to rates should not be increased but should even be reduced, but I regret to inform your Lordships that they have not felt that any sufficiently substantial case has been made out for making special provision in the Bill for salmon fisheries. Having said that, I would add this to the noble Lord, Lord Lovat. He spoke about hurried consultations and being unable to get together all the relevant facts. If the noble Lord has other information which he would like to put forward, I shall be very glad to consider it. I thank all noble Lords who have taken part in the debate for the helpful contributions they have made.
On Question, Bill read 2a and committed to a Committee of the Whole House.

MERCHANT SHIPPING (LIABILITY OF SHIPOWNERS AND OTHERS) BILL
5.5 p.m.
Order of the Day for the Second Reading read.
VISCOUNT STONEHAVEN: My Lords, I rise to ask your Lordships to give this modest and, I hope you will agree, useful Bill a Second Reading. During its passage through another place it was usefully amended and its scope increased. As the law stands at the moment the liability for damages of owners and demise charterers of ships is limited to £15 per ton for loss of life, personal injury and damage to property, and to £8 per ton in cases where there is no loss of life or personal injury. The limits were set down by Statute in 1862 and re-enacted in the Merchant Shipping Act of 1894. This Bill replaces the limits of £15 and £8 by limits of 3,100 gold francs and 1,000 gold francs respectively. Where the tonnage of the vessel which was responsible for the accident giving rise to the liability for damage is less than 300 tons and the claim is in respect of loss of life or personal injury, the limit of liability is to be calculated as if the tonnage were 300 tons. The Bill also provides for the conversion of amounts calculated in gold francs into pounds sterling in accordance with a rate to be specified by statutory instrument. International agreement on these limits of liability was reached in the International Convention relating to the limitation of the liability of owners of seagoing ships (Cmnd. 353) which was signed by Her Majesty's Government on behalf of the United Kingdom on October 10, 1957.
The apparently unsatisfactory state of affairs under the present law has prevailed for some 90 years or more and has resulted in great hardship for the relatives of deceased seamen and many others who happen to have been killed in accidents and have come under the limitation clause. However, it is one thing to condemn a state of affairs; it is a very different thing to rectify it. I am no lawyer; I have no legal qualifications at all; but I hope your Lordships will forgive me if I say that the legal complications and complexities in this subject are enormous. I also hope your Lordships will forgive me if I leave it to my noble
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friend Lord Merriman to enlarge upon the vast amount of work that was necessary before this Bill could be drafted. It would be impertinent for me to congratulate those concerned, but I am sure he would like to say a word on that line; I will not endeavour to do so at all, because I am not qualified in any way to do so.
May I give your Lordships a few illustrations of how the existing law has operated in recent times? Presumably, many cases were settled on limitation figures without ever going to the courts because the limitation clause is well known. I can only assume that, but I believe it to be the case. As to the cases which went to the courts—when people felt that they had such a case that, limitation or no, something might happen—the figures for the period 1950–56 (which to the best of my knowledge are accurate), are as follows: the claims proved and allowed by the Courts total £1,918,000—practically £2 million—but owing to the limitation the amounts actually paid out to the unfortunate people who have suffered were only £396,000.
Totals and averages often hide as much as they disclose, and I will go on to the 1957 figures which are more detailed and are really most startling. Of the 47 proved claims totalling £163,076, the benefit that was handed out had to be cut down to £30,442; nine claims agreed at £42,876 had to be cut to £3,684, and three claims agreed at £11,478 were cut to £723. These figures are taken from the OFFICIAL REPORT (Commons) of March 25, 1958, at column 32. That is my authority, and I believe it to be accurate; the figures have not been challenged.
My Lords, I hope that I have shown by that short statement that cases of great hardship may arise, and indeed have arisen, and also that when a small vessel is concerned the situation can be really desperate; and I hope that the amendment calculating the limit of liability as if the ship was at least 300 tons will go a long way towards putting that aspect right. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Viscount Stonehaven.)
5.12 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD MANCROFT): My Lords, this is a Private Member's Bill but it

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is, as I think your Lordships will agree, an unusually important Private Member's Bill, and the Government reaction to it is also a little unusual. Perhaps I may be allowed to explain briefly the course which I am going to suggest your Lordships may see fit to adopt. As introduced in another place, the Bill sought to give effect to one of the provisions of the International Convention drawn up in Brussels last year on the limitation of shipowners' liability. This particular provision, as my noble friend Lord Stone-haven has explained, raised the monetary sum, based upon the tonnage of the ship, at which shipowners could limit their liability, provided they were not themselves guilty of actual fault or privity.
The Government welcomed this initiative because the sums laid down in the 1894 Merchant Shipping Act had been widely recognised as out of date. But the Government thought it a pity that the legislation which the honourable Member for Mid-Ulster proposed should be confined to this one provision of the Convention when Her Majesty's Government had strongly supported the Convention as a whole. We therefore announced in another place our intention of adding to this Bill so that it would give effect to all the provisions of the Convention. This would not only bring up to date our own law, which is now seriously out of date, but would also enable Her Majesty's Government to ratify the Convention with the minimum of delay. By doing so, we hope to encourage other Governments to ratify this Convention.
This is particularly desirable since the Convention represents, for the first time, international agreement in a difficult and complex field of maritime law which has been in a state of disorder and uncertainty for the best, or worst, part of a century. Furthermore, the agreement is based on the British system of limits which are calculated upon the tonnage of the ship rather than upon the Continental system of limits calculated upon the value of the ship. At the same time we should like to take the opportunity of tidying up one or two additional points in our law on limitation of liability which are not covered by the Convention.
The limitations imposed by the Long Title of Lord Stonehaven's Bill restricted the scope of the Amendments which
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could be moved in another place, but my honourable friend the Parliamentary Secretary explained during the Second Reading debate there that we hoped to be able to make good those deficiencies during the passage of the Bill through your Lordships' House. The Bill in the form now before your Lordships already incorporates one of the most important amendments needed—namely, the 300-ton minimum tonnage provision to which my noble friend has referred. This ensures that, even with the smallest vessels, an adequate sum will be available out of which death and personal injury claims can be met.
It also contains the safeguard that the ordinary monetary rates per ton of the ship's tonnage are expressed in what are rather charmingly known as notional gold francs of specific weight and fineness. This device was adopted in the Convention, and consequently in the Bill, to give some degree of protection against a decline in the real value of the monetary rates through inflation. Such a decline has been one of the most unfortunate aspects of the existing law, in that the monetary limits, in pounds sterling, have remained unchanged since 1862.
I propose to put down the remaining Amendments needed to give full effect to the Convention before the Bill is considered in Committee. In view of these rather unusual circumstances, may I indicate very briefly some of the more important of the Government's proposals? One will extend the categories of persons entitled to limit their liability so that anyone who is in possession of the ship, and thereby liable to the same risks as the shipowner, should be able to limit his liability in the same way as the shipowner would be able to in the same circumstances. This goes a little way beyond the Convention, but it is, I think, a reasonable extension.
Another provision which I shall ask your Lordships to insert in the Bill will allow limitation of liability in respect of death and personal injury on shore. As your Lordships know, limitation is already allowed for damage to property on shore, and the opportunity is being taken to repair this omission. I think we should also make some provision for the release of a ship, or of bail put up if the ship has already been arrested or

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satisfactory security has been given elsewhere and is actually available for the benefit of British claimants. The object of this provision is to avoid the great inconvenience attaching to repeated arrest of ships or requirement of security for the same incident.
Finally, my Lords, I shall suggest an Amendment permitting limitation of liability for the costs of wreck removal. At present, if I understand aright, most harbour authorities can recover these costs, in full, from the shipowner concerned. My Amendment will propose that this provision should not come into force until an appointed day, in order to provide time for a scheme to be worked out with the agreement of the harbour authorities and the shipowners by which the harbour authorities may be compensated for any loss sustained because of the prevision.
We have, of course, held consultations with the many outside interests likely to be affected by the amended Bill, including, in particular, with shipowners, covering ocean-going ships, fishing vessels, tugs, barges and other smaller craft; and also with the trade unions, shipbuilders, dock and harbour authorities. These consultations have now been completed, and I should like to express the Government's gratitude to the bodies concerned for their co-operation in this legislation. It is not only highly desirable for its own sake but also marks a further important step towards international agreement in maritime law. I hope, therefore, that your Lordships will support the Bill of my noble friend, Lord Stonehaven, on its Second Reading and, in due course, the important Amendments which I shall ask your Lordships to make to it in Committee.
5.20 p.m.
LORD WINSTER: My Lords, I think I should explain, as a personal matter, that my interest in this Bill arises from the fact that I am President of the Association which looks after the interests of officers of the Merchant Navy. In consequence of that, of course, I have had this matter constantly brought to my notice in the course of the last few years. The Bill has already been much improved by Amendments made during its passage through another place, and the remarks of the noble Lord, Lord Mancroft, indicate that we may expect further improvement
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while it is passing through your Lordships' House.
I think the necessity for the Bill can be illustrated if I make a comment upon the last figures mentioned by the noble Viscount, Lord Stonehaven, when he was introducing the Bill—the three cases where compensation amounting to over £11,000 was granted but was scaled down to £723. The effect of that was that the innocent parties got 6 per cent. while the wrongdoers got away with 94 per cent. I think those figures alone indicate the necessity for this Bill. The old figures of compensation which have prevailed for 100 years were most unjust. That is an injustice which is now being remedied by this Bill which, in my opinion, marks a milestone in the affairs of the Merchant Navy. It will help the crews of both large and small ships. It is the first time that the minimum tonnage has been laid down in a Bill regarding owners' liability to compensation. I am very glad to say that the noble Viscount, Lord Simon, is to speak later on, and I feel sure that we shall hear from him that shipowners welcome the Bill. That is my information, and I hope that I am not putting too wide an interpretation into the mouths of shipowners.
When compensation is limited on a basis of tonnage, it is of course very difficult for the crews of trawlers and fishing vessels to receive just compensation after accidents. Under this Bill the financial limits for personal and property claims are raised. Of the unions concerned, I can answer for the association that looks after officers, but my information is that the National Union of Seamen—which is the Union that looks after the interests of the seamen—is also quite satisfied with the Bill. I should perhaps have reminded your Lordships of a fact of which probably most of you are well aware: that physical damage caused by collision is covered by insurance by one set of underwriters or another, but loss of life or personal injury is not so covered at present. A member of the crew is not so covered, and hardship to his widow or children may, of course, result. This Bill will help such dependants at a very cruel time in their lives, and the provisions regarding liabilities in respect of death or injury to merchant seamen have undoubtedly long been out of date.
This legislation, as has been stated, stems from the Brussels Convention,

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which was adopted in October, 1957, some provisions of which were most important. It states (and these are the actual words) that the provisions of the Convention should apply:
"To the Master, members of the crew and other servants of the owner, charterer, manager or operator acting in the course of their employment."
The Convention adds:
"… such persons may limit their liability even if the occurrence which gives rise to the claims resulted from the actual fault or privity of one or more of such persons."
Those are two most important provisions. The Convention also provides that the limit of liability of shipowners in respect of personal claims is raised to the equivalent, in our currency, of £74 (for the 3,100 gold francs mentioned may be taken as the equivalent of f74) per ton of the ship's tonnage.
Another important point in the Convention is that limitation of liability shall not apply—and here again I am reading the actual words—to:
"claims by the master, by members of the crew, by any servants of the owners on board the ship or by servants of the owner whose duties are connected with the ship, including the claims of their heirs, personal representatives or dependants, if under the law governing the contract of service between the owner and such servants the owner is not entitled to limit his liability in respect of such claims or if he is by such law only permitted to limit his liability to an amount greater than that provided for in Article 3 of this Convention."
If those words are studied, it will be seen that, as I have said, that is a very important point in the Convention.
The improvements in the legislation were undoubtedly overdue as, under the provisions of the Merchant Shipping Act, owners could limit their liability to £15 per net registered ton—an absurd sum. That legislation dated back to 1894, and had long ago become outmoded owing to the change in value of money. Another very important change is the insertion of a tonnage limit of 300 tons. It follows that owners of ships of less than 300 tons can now limit their liability only on that minimum tonnage based on the new financial provisions. It may well have been that our Government would have preferred, and would probably have received support from the shipping industry for, a higher tonnage limit of 500 tons, instead of 300 tons, but I gather that the
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Government could not obtain sufficient support for this at the time when the Convention was adopted, and so had to remain satisfied with the 300 tons.
I should also like to point out that neither the officers' union nor the seamen's union has ever been adversely affected by owners claiming limitation of liability. That is probably due to the excellent industrial relations which, in the main, prevail between the seafarers' organisations and the shipowners—a matter to which I have paid tribute before, when dealing with Merchant Navy matters, and to which I am happy to pay tribute again in connection with this legislation.
My Lords, the new provisions may not give all that seafarers think desirable—of course, people in every walk of life would always have more—but they represent a distinct improvement on what previously obtained. It has been represented to the Ministry by those speaking on behalf of the officers and men of the Merchant Navy that in principle we are opposed to limitation of liability as applied to crew members. The Convention, however, is silent on that point, and I should not want to raise the point at any stage in the proceedings on the Bill, because I want the Bill to have a smooth passage. The seafarers' representatives can press that point on other appropriate occasions, and if this were done successfully amending legislation could be introduced to cover the question without in any way conflicting with the Brussels Convention or the obligations imposed by Britain's acceptance of that Convention. But in fact the disability of not limiting legislation so far as seafarers are concerned can be dealt with through the National Maritime Board, and if agreement can be reached there it will obviate the need for any amending legislation.
In any case, however, I regard this Bill, much as I welcome it. as a temporary measure which will one day be repealed and incorporated in a comprehensive measure. With those remarks, it only remains for me to say that I congratulate Her Majesty's Government on a Bill which, to my mind, is entirely in keeping with our tradition as a leading maritime nation and in harmony with the good treatment of the employees in the shipping industry which now prevails.
5.31 p.m.
VISCOUNT SIMON: My Lords, I should like briefly to welcome this Bill and commend it to your Lordships. I do that the more readily after hearing what my noble friend Lord Mancroft had to say about the attitude of Her Majesty's Government towards the Bill and what they propose to do. I am afraid I am not in a position to do as the noble Lord, Lord Winster, suggested—to tell your Lordships that this Bill has the approval of the shipping industry. Though I am not authorised to say that, believe, as a matter of fact, that it has. I believe we shall all be agreed that if the limits fixed in 1862 were right then, they must be wrong now, and that it is high time that they were raised. It is worth remembering that the movement to get these limits raised started very much in the shipping industry itself, among people who are concerned with it. I know, as a fact, that the shipping industry played a great part in getting these new limits agreed in the Convention, primarily at the Conference in Madrid and finally at the Diplomatic Conference in Brussels last year.
I believe it is important that we should endeavour to make this a matter of international understanding, and that is why I am so pleased to know that these Amendments are to be moved, to bring the Bill in line with the Brussels Convention and so enable Her Majesty's Government to ratify it without delay. I say that not just because in these days it is always nice to get international agreement on one of the few matters on which we seem to get international agreement, but because there is real value to the people concerned in having the law on these matters brought into line in the principal maritime countries.
Looking at this from the point of view of the claimant or the defendant, we want to avoid the position which I believe has arisen in the past where a claimant is busily trying to find if he can bring a suit in a court where the limits are as high as possible, and the defendant is doing his best to get himself out of the jurisdiction of that court and place himself solely in the jurisdiction of one which provides for lower limits. That is a very unsatisfactory state of affairs; but, quite apart from that, people like to know where they are and what they are about, and I am sure it will be of immense
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value if we can get international agreement and implement it.
As my noble friend Lord Mancroft pointed out, we believe that one of the great advantages of the Brussels Convention is that, as a result of the efforts of the British delegation, some of our friends were persuaded to abandon their principle of limitation by relation to the value of the ship and to adopt the British system of limitation by reference to tonnage. It is easy for your Lordships to see that if we have a limitation by reference to the value of the ship, then the owner of an old "tub" which is very badly maintained and which, one might think, was more likely to be the cause of an accident than an up-to-date and well-found ship, will have a lower limit of liability than the owner of the new, up-to-date ship. I am sure that that is a very bad arrangement.
I feel we can congratulate ourselves that in the Brussels Convention the British system of measuring the limitation by the tonnage of the ship was adopted. The addition of this special provision, incorporated in the Bill, by which the minimum limitation is related to a tonnage of 300 tons is again very valuable. I believe I am right in saying that in the Convention today the 300-ton platform applies both to personal injury and death claims, and to claims for damage; whereas in the Bill it has been applied only to personal injury and death claims. I imagine that among the Amendments which will be brought forward on the Committee stage there will be one to bring the Bill into line with the Convention in that respect.
The advantages of the Bill have been very well expressed already by the noble Viscount, Lord Stonehaven, when he introduced it, and by other speakers, and I do not want to say any more except that I hope your Lordships will give it a Second Reading and, when it comes to Committee, will agree to those Amendments which will bring it into line with the Convention. That will enable Her Majesty's Government to implement the Convention; and seeing that we are still, I am happy to say, the leading maritime nation of the world I am quite sure that our lead will encourage others to do the same, so that we may hope to get the Convention widely ratified. The Convention was in fact approved by

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twenty-two nations, including half a dozen of the most important maritime nations, and although I have to admit that the United States of America, for one, felt unable to vote for it, they did not vote against it. If there is general agreement we might even get the United States of America to join. I beg to support the proposal that we give this Bill a Second Reading.
5.37 p.m.
LORD MERRIMAN: My Lords, I am conscious that I have been intervening rather frequently lately in your Lordships' debates, but mostly—in fact entirely—with reference to the matrimonial aspect of the jurisdiction of the Division over which I have the honour to preside. But, as its name implies, we in that Division have to be versatile and accustomed to deal with the vagaries of the unpredictable "she"—whether the female concerned happens to be a wife or a ship; and we are now dealing with the Admiralty branch of my jurisdiction.
I do not propose to accept the invitation of the noble Viscount, Lord Stonehaven, to speak about the Amendments on which the noble Lord, Lord Mancroft, has spoken and with which I am familiar, having been to some extent consulted about them. I propose to speak solely on the main purpose of the Bill, and from two points of view: one, the hardship, about which I will say something in a moment, and the other a point which has not been mentioned—that is, the prestige of the Admiralty Court in foreign countries. There is no disguising the fact, which is perfectly well known, that the work in the Admiralty Court has been steadily decreasing for years. To a very large extent that is due to the transfer of the salvage work from that Court to arbitration. That is entirely irrelevant to our present purpose, and I want to eliminate that altogether from my remarks.
But doing the best I can, I have ascertained that some twenty-five years ago the collision cases, with which we are really dealing, took about ninety court days a year, whereas now they do not take as many as sixty court days a year. That is a very serious diminution in the business. Many causes have been suggested for this drop in the work, but there is one thing on which everybody I
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have consulted—Judges, members of the Admiralty Bar and my own officers—are agreed; and that is that this out-of-date limitation is at any rate one of the most serious causes of the drop in the work. I am going to suggest that the irresistible inference is that it is having the effect of depriving us of the pride which the Admiralty Court at one time enjoyed, in that it was quite commonly the resort not merely of an Englishman and a foreigner but of two foreigners. I have ascertained that it is becoming, and during the last year has increasingly become, the habit of foreign shipowners, when there is any suggestion of litigation in the Admiralty Court, to insist upon the substitution of their own limitation (which, as Lord Mancroft has pointed out, is, generally speaking, in many foreign countries based on the value of the ship) for our out-of-date limitation of so much per ton. I suggest that the irresistible inference is that unless, in some way or another, we are prepared to get rid, for a particular case, of our own limitation laws, the foreign shippers will not come to our courts. Therefore, I put the prestige of the Admiralty Court in the forefront of my reasons for supporting this Bill.
A great deal has been said on the subject of hardship. I expected hardly to add anything to the figures that have already been given, but, after all, the proof of the pudding is in the eating. I have recently, within the last year, tried a limitation action, and I think it may be of interest to your Lordships to know something about the way that that has worked out, because it is, as I think your Lordships will agree, a perfect illustration of the wrongness of the present system and also a perfect illustration of what this Bill will do to remedy it. The noble Lord, Lord Winster, mentioned particularly the question of trawlers. This action concerned a most lamentable casualty to a trawler. I am not going into the detail, of course, but what happened was that the ordinary, common, everyday accident occurred, and the trawler caught fast on the bottom of the sea. In the process of adopting the usual remedy of trying to get her head round and going to pick up the trawl from where it was held fast on the bed of the sea, unfortunately, owing to a mistake, for which liability was accepted by the owners, the ship was held with the winches jammed, and the warps out to the trawl bar tight, in such

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a way that she was shipping sea after sea. In less than ten minutes she went under on her beam end, with the loss, unhappily, of five valuable lives on board, while another one of the crew who was rescued died in hospital.
I had to try the limitation action. The liability to the widows and infants had been accepted, because it was admitted that there had been negligence. But as the noble Lord, Lord Mancroft, pointed out, in a limitation action it is, of course, necessary for the owners to prove—the burden is on them to prove—no actual fault or privity. That means that they have to prove they sent out a vessel which was seaworthy in every sense; that she was properly equipped. If she was not properly equipped she was not seaworthy; but she might be fully equipped yet nevertheless unseaworthy if sufficient instruction had not been given to those in charge of her about the equipment which had lately been put into her. In this limitation action both points were taken against the owners.
I am not going to bore your Lordships with the details, but after an investigation lasting several days I held that the owners had abundantly proved that there was no fault or privity on their part. There was no appeal, and I have not in fact heard any criticism of that particular decision. Therefore the matter came to the practical result of the limitation. The tonnage of the trawler was 227. There was no complication about any other claimants than the dependants for the £15. It all went to them. There were three widows, one of whom had five infant children, and there were two other infants: ten in all. Their claims were allowed at the sum of £23,350. I will give your Lordships just one instance. The claims of the woman who had five children and of the children themselves together come to £10,000; the amount they actually received was £1,693. The total fund was just £5 under £4,000, as against the £23,000-odd for which the claims were allowed. And may I just say, in parenthesis, that it is a very distressing thing for the Registrar in a case like that to have to assess claims on what he knows to be the just basis, with the absolute certainty that some pittance like that which I have mentioned will in fact be the result.
That is a particular case that has occurred within the last few months.
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How would it have worked out if this Bill had been in force at the time? As the noble Lord, Lord Winster, has pointed out, the liability limitation would have been raised from 227 tons to the minimum of 300 tons; the £15 would be raised, roughly speaking, to £74—speaking in round figures, five times as much; and these people, against their claim for £23,000-odd, would have received £22,200, instead of the miserable pittance which in fact they received. I think I have said enough to make clear that the Court would welcome this Bill as a belated step in the right direction.
5.48 p.m.
LORD SALTOUN: My Lords, my interest in this Bill, which I warmly welcome and which I have long been hoping for, is more of an inland interest. But I think I should make it clear to your Lordships that my interest occurred in that I married a lady who happens to own a property on the bank of the River Thames at Twickenham. The property is built on a hill fifty or sixty yards from the water—an ancient monument of which one portion is a kind of summerhouse or river room on the edge of the Thames, and there is a concrete block which extends down some five or six feet behind a strong concrete river wall about fifteen inches in thickness.
One night I happened to be sitting in this house when the whole house shook as if it had been bombed. I rushed out, but it was dark and there was a heavy fog and I saw nothing. But when I came to make an examination, I found that this river room had been completely wrecked, and it was extremely fortunate that the house did not fall also. By good fortune I was able to find out the tug that had done the damage and asked the owner for damages. Of course, he limited his claim under the Merchant Shipping Act to £8 a ton. We got £100 to £200 for damage which took the best part of £1,000 to repair No sooner had the repairs been done when, a year later, in another fog, there was another crash and the same thing happened. This time I was able to get out, and I discovered that the boat that had done the damage was stranded on the other side of the Thames. It was in heavy fog, however, and I never found it.
If a collision occurs at sea, even providing the boats separate, it is possible to

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trace the offending boat, which has to come into port somewhere; but on a river it is much more difficult because a boat can get back to port without being spotted. As the house in question is just below the upper limit of the Port of London Authority, I applied to the police to help me trace the boat. This is a rather important point. The police said that they had no duty to find the boat and would not help. They said they were concerned only when a duty was laid on them by Statute. I believe it is the case that if I live in a house by the side of the road and a lorry comes and knocks it down, the police will help me to find the lorry; but if I live on the side of a river and a ship comes and knocks my house down, the police will not help me to find the ship. I should be grateful to my noble friend Lord Mancroft if he would see whether this Bill cannot be amended a little to give some protection to riparian owners.
My excuse for bringing this matter before your Lordships at this length and in such detail is that though, fortunately, the house I live in is a strong one, built in the seventeenth or eighteenth century, the houses farther up the river are modern ones, of extremely flimsy construction; and if they had been subjected to the shock to which my house was subjected they would have collapsed completely on the owners. Yet if they had succeeded in tracing the offending ship, they would have been limited to £8 a ton damages. I do not know how far the operation of this Bill extends, whether it extends to the City of Oxford on the River Thames, but it appears to me that there is a question here that deserves consideration now that the Bill is going through your Lordships' House. I hope that when the Committee stage comes, we shall find on the Marshalled List not only the Amendment mentioned by my noble friend Lord Simon, which applies the limit of 300 tons to property damage as well as to personal injuries, but also one which will help people who may be injured in the way that riparian owners can be injured to obtain adequate compensation for any damage done. I very much welcome the Bill.
5.55 p.m.
LORD CHORLEY: My Lords, as one interested in maritime law for a large number of years, I should like to make a
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few observations on the Bill of a more general character than those made so far in the interesting discussion which we have had. This system of the limitation of liability according to the value or the tonnage of a ship is a unique institution, not only in our law but in other systems of law, and its history is interesting. It goes back to the Hanseatic League and was adopted by our own country some hundreds of years after it had been applied among the Hansa ports and in Holland, and even in France. The object, of course, was to protect the maritime marine, because in the days when ships were small it often happened that a shipowner was ruined if his ship sustained a serious collision and the claims made against him were large. No doubt it was part of the public policy of the maritime countries in the seventeenth and eighteenth centuries to strengthen their mercantile marine by cutting down the liability which might be placed upon shipowners and in that way prevent their being made bankrupt and driven out of business altogether.
In this country we have had a number of Merchant Shipping Acts over the years. The first one dealing with this matter was in the time of George II, but, as noble Lords have pointed out, commencing with the noble Viscount who moved the Motion, so far as the monetary side goes our system has been out of date for a very long time. Another interesting aspect, which was mentioned by the noble Lord, Lord Mancroft, is that we are now at the point of establishing a uniform system among maritime States in regard to this matter. One of the most fascinating aspects of maritime law is that it has led the way in the unification of private law, starting with the York-Antwerp Rules, in which this country took the lead in the middle years of last century, followed by The Hague Rules, in which this country again took the lead in the early 1920's. The Hague Rules have been adopted by all the maritime countries and the York-Antwerp Rules apply to 99 out of every 100 contracts of affreightment. During the years between the wars there were a number of important international conventions relating to the safety of crews on ships and their passengers and to many other questions. It is particularly happy that Her Majesty's Government are proposing to

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take the action which the noble Lord, Lord Mancroft, indicated, so that again this country may lead the way in what is obviously an important reform.
I entirely agree with everything that was said by the noble Lord, Lord Winster. The harrowing case which the noble and learned Lord the President of the Probate, Divorce and Admiralty Division told us about and the figures which the noble Viscount produced show that this has been a serious business over a number of years. But, as the noble Lord, Lord Winster, indicated, the largest proportion of these cases are of property damage, and property damage is almost always covered by insurance. Incidentally, I can advise the noble Lord who has just sat down that an insurance on his Thames-side property would probably be a more satisfactory way of guarding himself against further fogs on the Thames than reliance upon this Bill.
LORD SALTOUN: My Lords, after the first accident, we did insure. The point is, however, that it is not covered by a comprehensive insurance; it has to be a special insurance.
LORD CHORLEY: I appreciate that; and what I was saying was only by the way. So far as property is concerned, all these matters can be covered by insurance. I am wondering whether it would not be more satisfactory, if the international aspect could be got over (I appreciate that that makes it complicated) to introduce a system of compulsory insurance in respect of loss of life and personal injury of the kind which is operating in this country now—and not only in this country, but in a number of other countries—in respect of the other types of collision with which we are more familiar, namely, those that occur on the roads, and in regard to which, since the Road Traffic Act of the early 30's, all drivers have to be insured. If damage is caused to some unfortunate pedestrian or a passenger in another car, then that is covered by an insurance policy and the matter is almost always (in 999 cases out of 1,000, I think) satisfactorily dealt with in that way.
As the noble Lord, Lord Winster, said, even with this Bill the position will not be altogether satisfactory in regard to many cases where serious loss of life and personal injury result from a collision in which a ship, and sometimes two ships,
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founders with all hands, or with a large number of the crew, and sometimes with passengers as well. In that type of case, I think it would be much more satisfactory to have a compulsory insurance system, parallel with the sort of system which exists at the present time in connection with motor vehicles. I do not want to delay this measure—I think it is a good one—but I should like the Government to have this alternative method of handling the problem in mind, because it seems to me that it should be possible to get some kind of International Convention on these lines. So many other countries now have compulsory motor insurance that it would not be strange to them if the same proposal were made in respect of insurance in regard to loss of life and personal injury in the case of collisions between ships. With those observations, I strongly support the Second Reading of the Bill.
6.4 p.m.
VISCOUNT STONEHAVEN: My Lords, I should like, first of all, to thank all noble Lords who have taken part in the debate for the interesting and informed speeches they have made. In particular, I should like to thank my noble friend Lord Mancroft for the Government's welcome to the Bill, and also for the foretaste he has given us of how it will be largely improved and expanded to serve, as I am sure we all agree, a most useful purpose. It is getting late, and as there has been no disagreement and everyone has welcomed the Bill, I am sure your Lordships would not wish me to give a detailed reply. I should, however, like to refer to the last two speeches. I have great sympathy with my noble friend Lord Saltoun. The great difficulty is that this Bill is one dealing only with limitations, and you cannot bring the actions of the police under such a Bill. That is my own view, but I will take advice from those who are advising me. To deal with Lord Saltoun's point you would need to amend a Bill dealing with the police. I do not see that we could have a hybrid Bill of that sort. I think much the same applies to the interesting suggestion of the noble Lord, Lord Chorley. This Bill deals solely with limitations, and it would be inappropriate—I would say it is impossible, although I should have to take advice on it—to include in it what he suggests.
LORD CHORLEY: I agree. I was not suggesting that it could be put into this Bill.
VISCOUNT STONEHAVEN: Then there are no other points with which I need deal.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

LICENSING OF BULLS AND BOARS BILL [H.L.]
6.6 p.m.
Order of the Day for the Second Reading read.
VISCOUNT STONEHAVEN: My Lords, I can only apologise for speaking once again to-day—and I hope it is worth a guinea a time, which is how it is working out. I beg to move that this Bill be read a second time. This is an Enabling Bill. It enables the Minister of Agriculture, Fisheries and Food and the Secretary of State for Scotland to refuse licences for non-pedigree bulls and boars. It does not compel them to do so, but merely makes it possible for them to refuse licences on those grounds. The Ministers were given the power to licence bulls in 1931 and to licence boars in 1944, and the relevant Acts set out the grounds on which they may refuse or revoke licences which have been granted. As the law now stands, the Ministers are precluded from restricting licences to pedigree animals.
It is, I think, agreed on all sides that the control by licensing of bulls and boars which are used for breeding purposes has substantially improved the standard and productivity of livestock since it came into force. There may be some difference of opinion on the actual methods of licensing and so on, but the mere fact of that control has, I think everyone agrees, produced good results. I think it is startlingly brought out to anybody like myself who has been connected with farming in Swaziland, where no such control exists, and has seen the results of no control of the sire. The general principle that the better the sire the better the progeny, is, I think, a very sound tag for farmers.
The use of crossbred sires does not hand down the predominant features that one trys to get into one's breeding. It is for that reason that this power is
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essential. Cross-breeding with pedigree sires plays an important part in commercial livestock farming—in which I am engaged—and I should never agree to using anything but a pedigree sire. Those of us who are farmers know that if you are running a dairy herd and want to get rid of your surplus dairy calves, the practice is common now to use a beef bull in order to get the beef characteristics into the calf. You can sell it as a store animal for beef fattening, and you do not produce unwanted dairy cattle. In the same way, people use pure-bred white boars on a coloured sow to obtain pigs which will meet a particular market.
This question was dealt with in the Report of the Advisory Committee on the Development of Pig Production in the United Kingdom, which was published in October, 1955. It makes a particular reference to this matter, so far as boars are concerned, and with your Lordships' permission, I should like to read a short passage from the Report. It says:
"We further recommend that Ministers should seek powers to limit licences to pedigree boars and use those powers immediately. Known and pure ancestry is essential for intelligent breeding, and we can see no justification for the continued use of other boars in this country."
The Ministers can already refuse licences to bulls and boars known to be crossbred, but that does not really go far enough, because they cannot refuse to licence an animal of which there is no telling whether it is cross-bred or not. They cannot at the moment refuse to licence if somebody says, "That is not a pedigree boar."
I should like to emphasise that although I am advocating an extension of the Ministers' powers to refuse licences, it does not mean that the owner of the bull or the boar will have no appeal against the decision of the Minister or the Secretary of State. The present arrangements under the present Acts will continue; this Bill does nothing to alter them. If a person is refused a licence, he may appeal to an independent referee, and the referee's decision is binding on the Minister. That is not always the case, but it is the case here. The Bill is an Enabling Bill and it only slightly increases permissive powers, not compulsory powers, beyond what are already there. With those few remarks, I beg to move.
Moved, That the Bill be now read 2a— (Viscount Stonehaven.)
6.11 p.m.
LORD FORBES: My Lords, whilst I am in agreement with most things that my noble friend Lord Stonehaven has said about this Bill, and I agree that it is an attempt to improve the 1931 Act, I would point out very strongly that the 1931 Act is now totally out of date, in view of what is known, not only in this country but in many other countries, about animal breeding. There should be no question of patching up this old Act, the foundations of which are completely unsound and must be pulled down and completely rebuilt. Under the 1931 Act bulls and boars are chosen and licensed by their looks, and in the case of dairy bulls the milk records of their mothers are also taken into consideration. This little Bill seeks to add pedigree to the list of qualities. I shall very briefly try to explain why the 1931 Act and this Bill are now absolutely out of date.
What we want in this country is dairy bulls able to produce cows that will give the maximum amount of milk of the highest quality and be fed on the cheapest feed. With boars we want them to produce bacon pigs of the highest possible quality. Anyone connected with animal husbandry should know that you cannot tell whether a bull is going to transmit good milking qualities just by looking at him or going over his mother's performance. Often the ugly bulls produce the best milkers, and so do the non-pedigree ones. Regarding pigs, it is well-known that it is quite impossible to judge by the eye the best-grade bacon pig; it just cannot be done. I shall not bore your Lordships by going into and discussing any question of animal genetics. Instead I shall attempt to draw the simplest parallel.
The Act of 1931 merely means that you select a lot of fine-looking men, and the judges in this case are the civil servants. You then marry them to "Miss Englands" and "Miss Americas" and other people, and the results you get are expected to be the leaders of the future. I am afraid that you will be very disappointed. That is just how this 1931 Act works at the moment. Continuing the parallel, all this Bill seeks to add to the Act is that in future the selection
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of males should, if possible, be made from among the hereditary Peers of your Lordships' House, instead of from among the rank and file of another House or other such place. That might be a help if it were not for the fact that the whole theory of selection on looks is completely false. No, my Lords, the only way to breed better stock is from bulls and boars that have been progeny-tested and are known to transmit, or to be capable of transmitting, the desired qualities. If we want to continue to breed some of the best and finest stock in the world we must get down to and rely on progeny testing; otherwise we shall be left standing by those countries who have made a study of animal breeding and who are now employing progeny-testing methods to breed better animals.
6.15 p.m.
LORD DYNEVOR: My Lords, I intervene for only a very short time, and purely selfishly, if your Lordships will permit me. The noble Viscount who introduced the Bill did so with his usual clarity, but I want him, if he will, to clear up a special point. I happen to be the owner of a particular herd of cattle which is historically very famous and one of the original herds in this country. I merely want to make quite certain that the licensing of the bulls by the agricultural authority is not going to be impeded by these fresh regulations that are being suggested. It is a historic herd and it is very difficult to keep it going—it is really about the only domesticated one left. There are three or four herds which run in a semi-wild state in enclosed land, but the bulls are no good to me because one cannot handle them. We have been looked at with a benign eye by the authorities and, provided that the herd pass the T.T. test, we can have a licence for breeding. And, as I have said, it is a great struggle to keep the herd going. The noble Duke, the Duke of Bedford, has a herd, but I understand that he is giving it up, and the problem of getting fresh blood is going to be very difficult indeed. I should like an assurance, if possible, that there will be no further unnecessary difficulties placed in the way of anyone in my position who does try to keep an old historic herd of what are known as the White Cattle of Britain going as long as possible.
6.19 p.m.
LORD STRATHCLYDE: My Lords, like the noble Lord who has just sat down, I am sure that the whole House is grateful to the noble Viscount, Lord Stone-haven, for the clarity with which he has explained the desirability of this Bill and its provisions. I will not comment on the matters spoken of by the noble Lord, Lord Forbes, but I have taken note of what he has said, and I am quite sure that it will be studied by both my right honourable friends. On behalf of Her Majesty's Government, I commend this Bill to the House as a useful and beneficial measure, and I trust that your Lordships will give it a Second Reading.
6.20 p.m.
VISCOUNT STONEHAVEN: My Lords, I wish to thank the noble Lords who have taken part in this little debate. My noble friend Lord Forbes raised an interesting point, but I do not think it is quite relevant to this Bill. I would say that he would require to move the repeal of the 1931 Act. If he does that after this amendment of the Act comes into force, he will have a bigger and better Act to repeal. I do not know that his views are shared by everybody. Indeed, I cannot altogether agree with them myself, because pedigree is a sort of registration, and animal family characteristics are handed down and recorded carefully in the pedigree. It is not only a beauty contest—although I agree that perhaps the modern style of showing cattle frequently errs in that direction. However, that is rather beside the point.
The noble Lord, Lord Dynevor, asked me if I could give him an assurance that if your Lordships pass this Bill he will be in no worse position than he is already. If he will take it from me, I will give him that assurance "off the cuff". And if I am not correct, I will let him know before the next stage of this Bill; then he can do what he considers appropriate. I can see nothing in the provisions of this Bill that will make the situation more tiresome for him because he has a well-known, historic herd. In a way, it is a sort of "closed shop". Whatever he does, he is not selling bulls to other people for dairy purposes or something of that kind. Therefore, I am pretty certain that the licensing which exists to-day and the benevolent eye which is cast upon him will continue to be cast upon him.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

MAINTENANCE ORDERS BILL
6.23 p.m.
Order of the Day for the Third Reading read.
THE LORD CHANCELLOR (VISCOUNT KILMUIR): My Lords, I have it in command from Her Majesty The Queen to signify to the House that Her Majesty, having been informed of the purport of the Maintenance Orders Bill, has consented to place Her Majesty's interest, so far as it is concerned on behalf of the Crown, at the disposal of Parliament for the purpose of the Bill.
I want to detain your Lordships only by saying two things: one to apologise for having put down an Amendment on Third Reading. It is a purely drafting Amendment and is in consequence of the new clause that we added to the Bill on the Report stage, by which the tense of one of the verbs has to be changed. The other point that I want to make is that I am most grateful to noble Lords, and especially to the noble Lord, Lord Silkin, and my noble friend Lord Merriman, but indeed to all noble Lords who have helped at every stage of the Bill to send the Bill on to the Statute Book. It does two things. It improves the methods by which people who are entitled to payment under a maintenance order can enforce their rights; and secondly, it will prevent wasteful and expensive imprisonment to-day. On both these objects it has been greatly helped by the attention it has received in your Lordships' House. I should like once again to express my gratitude for that. I beg to move that the Bill be now read a third time.
Moved, That the Bill be now read 3a,—(The Lord Chancellor.)
6.26 p.m.
LORD SILKIN: My Lords, before we part with this Bill it would perhaps be a little ungracious if I did not say a word or two in reply to the noble and learned Viscount. I feel that the Bill has gone through both Houses in the best tradition of Parliament. It is a Bill which is beneficial to a large section of the community, in that it protects wives who

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have claimed maintenance orders and gives them rather more security, and it deals with the vexed question of the imprisonment of husbands who have failed to make payments.
It is no secret that when the Bill was first introduced into another place it was met with a good deal of suspicion—and I think justifiable suspicion—on the part of many of my friends. The sanctity of wages has been enshrined in our economic life for a great many years. Undoubtedly, this Bill is an attack upon wages in the sense that wages can be attached for the purpose of a civil debt. Of course, already wages are not sacrosanct—there is Pay-as-you-earn and there is insurance. But those are State liabilities and no one can seriously complain. But this Bill does constitute a breach into the sanctity of wages, and it was not surprising that a number of my friends, especially those connected with the trade union world, found some difficulty and needed considerable assurances in accepting the principle. The Government have been most reasonable and forthcoming in providing those assurances, and I think to-day the Bill has met with general acceptance.
When the Bill reached this House there were, I think, two blemishes: one, that imprisonment for failure to carry out a maintenance order wiped out the debt, and many of us felt that it might be a paying proposition for people to go to prison for a short period in order to wipe out what might amount to a considerable liability. That point has been met; imprisonment does not wipe out the debt. On the other hand, by a most ingenious piece of drafting it is not possible for a person to go to prison twice for the same debt. The other blemish was that, as the law stood, once a committal order had been made for a person to go to prison in default, it was impossible to stop it, whatever conditions might subsequently have arisen. Again, that has been met most satisfactorily by the noble and learned Viscount in the amending provisions which were introduced on the Report stage.
I should like personally to thank the noble and learned Viscount for having, as always, most conscientiously carried out the undertakings he gave on the Committee stage and meeting quite satisfac-
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torily all the points that we raised. I am sure that the result of that is that we now have a Bill which should work quite satisfactorily, and one in which all of us can feel rather proud at having taken some part.
On Question, Bill read 3a, with the Amendments.
THE LORD CHANCELLOR: My Lords, I beg formally to move the Amendment to which I drew attention a few moments ago.
Amendment moved—
Clause 17, page 16, line 11, leave out ("is") and insert ("has been").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Bill passed, and returned to the Commons.

MARRIAGE ACTS AMENDMENT BILL
6.30 p.m.
LORD WINSTER: My Lords, on behalf of my noble friend Lord Milner of Leeds, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a,—(Lord Winster).
On Question, Bill read 3a, and passed.

LAND POWERS (DEFENCE) BILL
6.31 p.m.
Order of the Day for the Third Reading read.
EARL BATHURST: My Lords, in moving that this Bill be read a third time I beg your Lordships' indulgence while I give an assurance to my noble friend Lord Dundee, who is not in his place, and to other Scottish Lords—who have now disappeared from their places—on the point which my noble friend Lord Dundee raised with regard to ownership of land in Scotland. The assurance is that, in regard to Scotland, in Clause 25 of this Land Powers (Defence) Bill the procedure is followed in exactly the same way as under Section 7 of the Acquisition of Land (Scotland) Act, 1947, and Section 63 of the Civil Aviation Act, 1949. With that assurance, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Earl Bathurst.)
On Question, Bill read 3a, and passed.

FALMOUTH DOCKS BILL [H.L.]
Referred to the Committee on Unopposed Bills.

FALMOUTH HARBOUR BILL [H.L.]
Reported from the Select Committee, with Amendments.
House adjourned at twenty-eight minutes before seven o'clock.