Sitting of 17 May 1961

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  ROYAL NAVY

    Plymouth Training Squadron
    Mr. Hollandasked the Civil Lord of the Admiralty how many junior sea men and artificer apprentices have completed their training in ships of the Plymouth Training Squadron since the inception of the present scheme.
    The Civil Lord of the Admiralty (Mr. C. Ian Orr-Ewing): Since the scheme was started twelve months ago, 210 artificer apprentices, 787 junior seamen and 584 junior ratings of other branches have been given sea training in ships of the Plymouth Training Squadron. The apprentices are with the squadron for 15 weeks and the juniors for two weeks.
    Mr. Holland: Would not my hon. Friend agree that the sea-going training provided by Her Majesty's ships "Chaplet" and "Ulysses" has been invaluable in giving junior seamen and apprentices a very large measure of self-assurance and self-reliance so vital to the efficiency of the Navy? Is it the intention to continue this sea-going training even after the ships have been withdrawn from other duties?
    Mr. Orr-Ewing: I thoroughly endorse the value of sea-going training, especially in the early part of a young man's career, and sometimes during his training period. I am not in a position today to announce what will happen in the future. We are considering it, and we certainly understand the success of the scheme.

    Dartmouth and Manadon Colleges
    Sir P. Agnewasked the Civil Lord of the Admiralty if he will state the number of cadets under instruction as
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    against each member of the teaching staff, proportionately, at the Royal Naval College, Dartmouth, and the Royal Naval Engineering College, Manadon, respectively.
    Mr. G. R. Howardasked the Civil Lord of the Admiralty what is the present ratio of teaching staff to students at the Britannia Royal Naval College, Dartmouth, and the Royal Naval Engineering College, Manadon.
    Mr. C. Ian Orr-Ewing: Approximately 1 to 5½ at the Britannia Royal Naval College, Dartmouth, and 1 to 3 at the Royal Naval Engineering College, Manadon. The ratios are based on an average figure for staff and students in the current financial year. The teaching staff include all the General List and Instructor officers, civilian lecturers, ratings, and skilled non-industrial employees, who take part in the wide variety of academic, professional, seamanship and other practical instruction at the two colleges.
    Sir P. Agnew: Are not the figures my hon. Friend has just given rather different from what was said by the right hon. Member for Huyton (Mr. H. Wilson) in his speech on the Budget?
    Mr. Orr-Ewing: I am afraid that the right hon. Member for Huyton (Mr. H. Wilson) was completely erroneous. His figures were 550 per cent. out.
    Mr. Howard: In view of my hon. Friend's reply, and referring to column 983 of the OFFICIAL REPORT for 18th April, I presume that the other remarks about admiral-warship coefficient were equally inaccurate?
    Mr. Orr-Ewing: They were not equally inaccurate. They were 250 per cent. out.
    Sir W. Bromley-Davenport: Should not even Socialist Privy Councillors check their facts before holding themselves up to ridicule by making stupid and assinine statements?
    Mr. Brockway: On a point of order. May I ask if it is not the usual custom for notice to be given when matters of this kind are raised? May I ask if notice has been given to my right hon. Friend the Member for Huyton (Mr. H. Wilson)?
    Mr. Speaker: The hon. Member cannot ask me if notice was given, because I would not know anyhow. The other matter he raised is not, I think, one for the Chair.
    Mr. Howard: Further to that point of order. Did the right hon. Member for Huyton (Mr. H. Wilson) give notice to those interested in Navy matters that he was going to raise this question in his original Budget speech?
    Mr. Speaker: That has no appearance of being a matter for the Chair. Do not let us waste time on matters which are not points of order.
    Mr. S. Silverman: Further to that point of order, Mr. Speaker, may I ask in exactly what way the Minister now answering Questions becomes responsible for statements made by my right hon. Friend the Member for Huyton (Mr. H. Wilson) so that he may be asked questions about what my right hon. Friend said?
    Mr. Speaker: I think the Minister might be asked about the substance of the matter to which the statements are alleged to be related.
    Mr. Paget: When we hear comments in percentages we are always a little inclined to wonder what percentage of what. Are not the figures which the hon. Member has given us surprising enough in themselves? They reveal ratios of 5½ to 1 and 3 to 1. What is the ratio in other schools run by the Government? Is it not nearer 30 to 1?
    Mr. Orr-Ewing: There is a later Question on this very issue. The teaching staff-student ratio at Dartmouth does not compare unfavourably, on the information available to us, with other colleges within the Services and outside them. I have checked this point as carefully as I can, and they are about the same.
    Mr. Dugdaleasked the Civil Lord of the Admiralty what steps he is taking to reduce the cost per student at Dartmouth and Manadon.
    Mr. C. Ian Orr-Ewing: We have announced that we are concentrating officer training at Dartmouth, and this will lead to more economic use of staff and facilities. We are building up the numbers of cadets under training at
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    Manadon from 224 to 460: this development should reduce the training cost markedly.
    As I told the House on 14th February, my Finance Committee has called for detailed costings at many training establishments in order to see what administrative savings can be achieved without reducing the high standard required. Dartmouth and Manadon are both included in this review.
    Mr. Dugdale: I fully realise that it is exceedingly difficult to have the ordinary staff-student ratio in these cases, but is this not a ludicrously high staff ratio? Instead of spending time on criticising my right hon. Friend the Member for Huyton (Mr. H. Wilson), would it not be better to see if something can be done to alter these very extraordinary figures?
    Mr. Orr-Ewing: I said in my original Answer that we are not complacent about them. We are reviewing them. I point out to the right hon. Gentleman that it was the same ratio when he was in my job in 1950.
    Mr. Dugdale: Is the Civil Lord aware that I took very great care to look this up? He is incorrect. It is not the same. The figures now are 490 staff to 478 students, as against 414 staff to 542 students when I was there.
    Mr. Orr-Ewing: I can also give the figures, but perhaps it would be better if the right hon. Gentleman and I compared notes outside the Chamber. In early 1950 there were 460 students under training at Dartmouth and just over 400 naval and civilian staff, so the ratio is very much the same as it is today.
    Mr. Mawbyasked the Civil Lord of the Admiralty if the pay scales of lecturers at the Britannia Royal Naval College, Dartmouth, are now related to the scientific officer class; and if he will make a statement.
    Mr. C. Ian Orr-Ewing: Since 1956, the salary scales of lecturers at the Britannia Royal Naval College, Dartmouth, have been related to the scientific officer class. This relationship has recently been under review. The review is not yet complete but in the meantime the lecturers will be given an interim increase in salary similar to that awarded to the scientific officer class.
    Mr. Mawby: Is my hon. Friend aware that his Answer will give great satisfaction to those concerned and will help to reduce any friction caused by his Answer to Question No. 6, because we want as efficient an establishment as possible?
    Mr. G. Thomas: How much of that increase was for the teachers?
    Mr. Orr-Ewing: I cannot answer that without notice.

    Royal Marines Barracks, Plymouth
    Miss Vickersasked the Civil Lord of the Admiralty if he will make a statement concerning future arrangements for the Royal Marines Barracks, Stonehouse, Plymouth.
    Mr. C. Ian Orr-Ewing: We are considering whether to modernise the Royal Marines Barracks at Stonehouse in order to provide accommodation which could be used in the Admiralty's plans for re-deployment of the Royal Marine Commandos.
    Miss Vickers: Is it possible to speed this up? It has been going on for about two years. The buildings are very fine, but they are detriorating considerably. We should have the Royal Marines back again in Plymouth, which has been their home for many generations.
    Mr. Orr-Ewing: I acknowledge the value and dignity of the buildings. We hope to preserve the historic and architectural features. This modernisation is a very big undertaking and we cannot go ahead with it until plans are more detailed and finalised than they are at the moment.

    Research and Development Contracts
    Mr. Willisasked the Civil Lord of the Admiralty (1) how many research and development contracts are at present being fulfilled in Scotland by private firms, research associations, and universities, respectively;
    (2) what proportion of the estimated sum to be spent on research and development contracts by his Department during the current financial year will be spent in Scotland.
    Mr. C. Ian Orr-Ewing: Thirty-nine naval research and development contracts have been placed with private firms and one with a university. In addition, two contracts have been placed with the National Engineering Laboratory at East Kilbride. The estimated sum to be spent on research and development contracts in Scotland is about 15 per cent. of the total naval expenditure for this kind of work.
    Mr. Willis: Will the Civil Lord draw these figures to the attention of his colleagues in the Government and see whether they can do as well as the Admiralty does in respect of Scotland?

    School Leavers (Recruitment)
    Captain Litchfieldasked the Civil Lord of the Admiralty whether he will expand the intake of recruits straight from school in order to take advantage of the increased number of school leavers.
    Mr. C. Ian Orr-Ewing: The bulk of the recruits already enter the Royal Navy straight from school. Juniors (U), all of whom come straight from school, are recruited between the ages of 15 and 16¼ Juniors (O), some of whom come straight from school, between 16¼ and 17½. We aim in particular to accept an additional 500 Juniors (U) this year which will raise the entry to 2,600.
    Captain Litchfield: Does my hon. Friend agree that this indicates an encouraging future for naval recruiting? Does he agree also that any increase in recruiting into the Services at the moment is to be welcomed?
    Mr. Orr-Ewing: Yes. It is extremely encouraging, particularly in regard to juniors, who turn out to be first-rate boys and of great value to the Navy during their service.

    Control Artificer (Weapons)
    Captain Litchfieldasked the Civil Lord of the Admiralty whether, in view of the increased complexity of control mechanisms for weapons, he proposes to introduce a greater degree of specialisation in the artificer branches.
    Mr. C. Ian Orr-Ewing: Yes, Sir. We are about to introduce a new category

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    of artificer to be known as control artificer (weapons). They will gradually take over the electronic and light mechanical engineering duties on weapons and control systems now done by electrical and ordnance artificers.
    Captain Litchfield: Does my hon. Friend agree that this will improve efficiency and the career structure of these artificer ratings and eventually their prospects of skilled employment outside the Service?
    Mr. Orr-Ewing: Yes, I think it will. It is a higher degree of specialisation in a very specialist field. The training we give them is absolutely first-rate and serves the Navy extremely well.
    Mr. Willis: Are these artificers to get any different wages or promotion than other artificers?
    Mr. Orr-Ewing: No. They will rank pari passu with other artificers.

    H.M.S. "Leopard" (Visit to Angola)
    Mr. Stonehouseasked the Civil Lord of the Admiralty what is the purpose of the good will visit of H.M.S. "Leopard" to Angola.
    Mr. C. Ian Orr-Ewing: As I explained on 15th May, the ship was making its 4,000 mile return journey from Sierra Leone to Simonstown and paid a routine visit to this and other ports.
    Mr. Stonehouse: Is the Civil Lord aware that the incredible stupidity of arranging a so-called good will visit of this kind to Angola has resulted in a great sense of shock among the newly independent countries, but not alone among them? There has been a sense of surprise also in Brazil and, indeed, among the Portuguese themselves. Will the hon. Gentleman take this opportunity of making clear that there is no question of this visit in any way endorsing the repressive colonialist régime?
    Mr. Orr-Ewing: I made my views clear in answer to the Private Notice Question on this issue on Monday. I cannot endorse the supplementary question asked by the hon. Gentleman. This is one of 800 routine visits which Her Majesty's ships have made in the last four months to different ports in the world. It would have proceeded quite
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    satisfactorily if it had not been made a political issue by hon. Members opposite.
    Sir J. Maitland: Is it not also a traditional duty of the Royal Navy to visit places where there are outbreaks of rebellion or troubles? [Laughter.] I cannot understand why hon. Members are laughing. Is it not traditional that the Navy should visit such places in order to see that British nationals are looked after properly and also to bring information back to this country, of which we have very little?
    Mr. Orr-Ewing: I endorse what my hon. Friend has said.
    Mr. Paget: The Civil Lord used the word "paid". Does that mean that the visit is now over? If it is over, is he aware that that will be very welcome news indeed? Is it convenient for any of Her Majesty's ships to choose this particular moment for a visit to Seoul?
    Mr. Orr-Ewing: I used the word "paid", perhaps inadvertently. The ship arrived there at 08.00 hours on Monday and is due to leave tomorrow, so the visit is still continuing. I have another Question on this.
    Mr. Biggs-Davison: Have not all of us great good will towards the people of Angola and deep sympathy with all those, black or white, who have suffered so atrociously since the abominable invasion of Angola from across the Congo border.
    Mr. Shinwell: The hon. Gentleman said in reply to Questions the other day on this matter that this had been cleared with the Foreign Office. If this ship was proceeding from Simonstown to some other port, how was the matter cleared with the Foreign Office?
    Mr. Orr-Ewing: It was cleared at the Foreign Office because we perfectly well understood the anxiety concerning Angola. There is another Question to be answered later on this matter and I would prefer to wait until it is reached before making any further comment.
    Mr. Stonehouseasked the Civil Lord of the Admiralty what is the complement of H.M.S. "Leopard"; how many ratings and officers will be allowed shore leave in Luanda during the good will visit; and what steps he is taking

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    to protect them from disturbances, in view of the dangerous situation in Angola.
    Mr. C. Ian Orr-Ewing: The complement of H.M.S. "Leopard" is 13 officers and 184 ratings. Shore leave is being allowed. Admiral Copeman, who is in the ship, sent me a signal this morning reporting that Luanda was absolutely quiet and that everything in the city was normal.
    Mr. Stonehouse: Can the Civil Lord say what reports were available on conditions in Luanda when arrangements for this good will trip were made? From the reports which have appeared in The Times and elsewhere, it would seem that the position in Luanda was far from secure a short time ago.
    Mr. Orr-Ewing: We have a consul in Luanda and the Foreign Office were consulted and, presumably, they got their information from our consul in Luanda. Therefore, the situation was quiet then and it was quiet as of this morning, when I received the signal. Perhaps the Press reports to which the hon. Gentleman referred were somewhat exaggerated.
    Mr. Dugdaleasked the Civil Lord of the Admiralty whether he authorised the good will visit to Luanda now being paid by H.M.S. "Leopard".
    Mr. C. Ian Orr-Ewing: The visit was authorised, after consultation with the Foreign Office, in the normal way.
    Mr. Dugdale: In view of the Admiralty's ineptitude in having this visit—[HON. MEMBERS: "No"]—will the Civil Lord now assure the House that after H.M.S. "Leopard" has spent a few days in Simonstown it is not proposed to visit Mozambique, where Africans are also being murdered and imprisoned in large numbers?
    Mr. Orr-Ewing: This Question asks who authorised this visit. My noble Friend authorised the visit and takes full responsibility for it.
    Viscount Hinchingbrooke: When H.M.S. "Leopard" returns to port in this country, will my right hon. Friend provide transport to enable the officers and ratings of that vessel to come to the House of Commons in order to leave green cards for hon. Gentlemen opposite?
    Mr. Shinwell: I am sure that the Civil Lord would not deliberately mislead the House. Can he state, specifically and categorically, on which date the Foreign Office cleared the proposal, by the Admiralty presumably, that this vessel should visit Angola?
    Mr. Orr-Ewing: We have been in consultation with the Foreign Office over a period of weeks, the last occasion being on Wednesday of last week.

    Apprentices, Rosyth
    Dr. A. Thompsonasked the Civil Lord of the Admiralty whether he is satisfied that, in view of the large number of candidates applying for admission to apprentice training at Rosyth, the maximum possible intake is being admitted.
    Mr. C. Ian Orr-Ewing: The number of apprentices approved for entry at Rosyth in 1961 is 146. This represents an increase of over 50 per cent. over the 1960 intake, and more than 100 per cent. increase compared with 1959.
    Dr. Thompson: While thanking the hon. Gentleman for that reply, might I inform him that when I last visited this apprentice centre I found that the excellent facilities that are provided are being considerably under-utilised. Will the Civil Lord bear in mind that this is an area of high juvenile unemployment and what action is he taking to maintain the right level of intake.
    Mr. Orr-Ewing: I look as sympathetically as I possibly can at this subject, but I have to pay attention to the vacancies which will eventually exist for them when they become craftsmen. I realise the point that the hon. Gentleman is making and hope that the publicity of this Question will help to recruit even more people for these vacancies.
    Mr. Lee: Can the Civil Lord assure hon. Members that there is no danger of the payroll tax which the Government are imposing having the effect of reducing the number of apprentices?

  BRITISH ARMY

    Warrant Officer L. N. Taylor
    Mr. Shinwellasked the Secretary of State for War for what reason Warrant Officer L. N. Taylor, Royal

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    Army Pay Corps, was discharged from the Army after 24 years' service although he had a contract to remain for a further three years; and, in view of the fact that no satisfactory explanation has been given for his discharge, whether he will make a statement.
    The Secretary of State for War (Mr. John Profumo): Warrant Officer Taylor was discharged in 1958 on termination of engagement. The undertaking that he signed in 1946 to re-enlist on a 3-year Supplemental Service did not constitute a contract binding either party; and specifically his re-enlistment was subject to his being recommended at the end of his existing engagement. Although Warrant Officer Taylor had given good service in the past, I am satisfied that there are no grounds for changing my predecessor's decision not to recommend him for this further period of employment.
    Mr. Shinwell: I am obliged to the right hon. Gentleman for that reply and for his investigations into this matter. Can he say whether Warrant Officer Taylor appealed against the decision, and whether the decision was endorsed by the Army Council?
    Mr. Profumo: He did not, in fact, appeal, but, as is customary, he saw the confidential report on which basis it was decided not to recommend him and, although he could have appealed, he did not do so at the time. I do not say that that made any difference, but it answers the right hon. Gentleman's question.

    Civilian Employees, County Tyrone
    Mr. Forrestasked the Secretary of State for War how many civilians are employed by his department in County Tyrone; and how this compares with other years.
    Mr. Profumo: 103, compared with 105 last year and 94 the year before.

    Commonwealth Recruiting
    Mr. Chapmanasked the Secretary of State for War what conclusions he has now reached in his review of possible recruiting in the Commonwealth for regiments of the British Army.
    Mr. Profumo: As I explained to the hon. Member for Orkney and Shetland (Mr. Grimond) in answer to a Question on 15th March, I cannot well introduce direct recruiting to the British Army in the Commonwealth, since most of those countries have their own military manpower problems.
    Mr. Chapman: Since West Indians, in particular, pride themselves in sharing the British way of life and since they integrate easily with other Service men—and that has been proven many times—will the Secretary of State give an assurance that from time to time, when he is short of, say, a batch of transport drivers or nursing orderlies, he will recruit fifty or one hundred of them in an area like Jamaica, where many men like to serve in those capacities.
    Mr. Profumo: I will most certainly consider the potentialities of recruitment from this source.
    Mr. Mayhew: When the Secretary of State says that they have their own manpower problems, is he basing himself on talks with Commonwealth countries? If so, what talks are these?
    Mr. Profumo: I was not referring to what, I think, the hon. Gentleman has in mind—which is the Caribbean—but countries which I regard as free Commonwealth countries, which, as the hon. Gentleman knows, have in their own armed forces problems of recruiting. It would be wrong, therefore, for us to set up recruiting stations there and pinch their manpower.

    1st Grenadier Guards (Strength)
    Mr. John Hallasked the Secretary of State for War if the 1st Grenadier Guards will be at full strength when the battalion relieves the King's Own Royal Border Regiment in the Cameroons.
    Mr. Profumo: The battalion will be at a strength of just over 700 all ranks, which I am satisfied is adequate for its task.
    Mr. Hall: Will the Secretary of State confirm that the 1st Grenadier Guards and all regiments of the Brigade of Guards will be up to strength in both men and equipment so that they will be able to undertake, at any moment, the tasks normally given to an infantry battalion in a combatant rôle?
    Mr. Profumo: I think that is a wider question. Since I know that my hon. Friend takes a keen interest in this, I would not like to give him a snap answer. Perhaps he would put down a further Question on that point. What matters is that the battalion concerned is built up to strength, I think that possibly my hon. Friend has been misled by reports concerning the 540 men who sailed. That figure represented the main party. The advance party had gone on before.

    Gurkhas (Pay and Allowances)
    Mr. Rankinasked the Secretary of State for War if he will state the pay and allowances of Gurkha soldiers serving in the British Army in this country; and how they compare with those of similar rank in other British regiments.
    Mr. Profumo: As Gurkha forces have not before been regularly stationed in this country, I cannot give the comparison which the hon. Member asks. The question of allowances is at present under consideration.
    Mr. Rankin: In so far as we can follow the figures in the Army Estimates, is it the case that for the gunner, the sapper, the private and other similar ranks, the pay of the Gurkha soldier runs at about 5s. a day, whereas British soldiers of similar rank receive a minimum of 15s. per day, and some as much as 24s. 6d. per day? Are those figures reasonably correct? Can the hon. Gentleman also say why it is that we still have to pay awards to individuals who manage to get Gurkhas recruited into the Brigade of Gurkhas?
    Mr. Profumo: I do not fully understand the last part of the hon. Gentleman's supplementary question. If he is hinting, as he said to my hon. Friend last week, that we are paying subventions to the Nepalese Government in order to get Gurkha soldiers, I will not endorse that but wholeheartedly reject it. I think I know what is behind the hon. Gentleman's question. The Gurkhas get a different basic rate of pay to the British soldier—they are all in the Royal Warrant if hon. Members wish to study them—but this is by agreement with the Nepalese Government and the Indian Government, because the Indians recruit Gurkhas as
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    well. What matters are the allowances we pay. I can set the hon. Gentleman's mind at rest by telling him that when Gurkhas come to this country it is my intention to see that their total emoluments are in line with our costs of living and with our standards.
    Mr. Rankin: May I respond to the right hon. Gentleman and repeat the second part of my supplementary question? I was asking in the second part of my supplementary question why we need to have, as is shown in the Estimates, a system of paying awards to those persons or groups who get Gurkhas to join the Brigade of Gurkhas.
    Mr. Profumo: I am afraid this is a bit too deep for me. The hon. Gentleman had better put down that Question again.

    Recruits (Discharge and Wastage)
    Mr. Mayhewasked the Secretary of State for War what percentage of recruits was discharged on medical grounds during the last two quarters of 1960 and the first quarter of 1961.
    Mr. Wingfield Digbyasked the Secretary of State for War what steps he is taking to improve the medical examination of recruits, in view of the fact that about 16 per cent. of those enlisted in 1959 have already been discharged on medical grounds.
    Mr. Profumo: The percentage of recruits discharged on medical grounds during the last two quarters of 1960 and the first quarter of 1961 are 3·6 per cent., 5·5 per cent., and 2·9 per cent., respectively. The percentage of those enlisted in 1959 who have since been discharged on medical grounds is about 96 per cent.—not 16 per cent. We are talking here about men who have left the Service over a period of more than two years. The annual rate is about 4 per cent. of intake.
    Mr. Mayhew: Is the right hon. Gentleman aware that this pressure to get recruits puts a great temptation on recruiting offices to accept recruits without the same discrimination as heretofore? Will he give an assurance that there will be no lowering of the medical and intelligence standards required in recruits?
    Mr. Profumo: I can certainly give that latter undertaking, and I hope the House will take heart from the fact that although the recruiting campaign is beginning to speed up and we are getting more people into the Army, nonetheless there were only 2·9 per cent. discharged on medical grounds in the last quarter. This shows that we are gaining on the problem.
    Mr. Mayhew: Does this not show that the standards are being lowered?
    Mr. Profumo: If I were increasing the number of people who come into the Army and the standards were lower, would not the hon. Gentleman expect to find that the number of people who are being "hoofed out" on medical grounds was lower and not higher?
    Mr. Digby: Is the right hon. Gentleman not aware that the figure in Question No. 27 is based on an answer which was given last week? If the corrected figure is 9½ per cent. of those who enlisted in 1959, surely this is still too much and some steps ought to be taken to correct it?
    Mr. Profumo: Last week my hon. Friend quoted not 16 per cent., but 14 per cent. He said that 14 per cent. were accounted for on medical grounds and other reasons. My answer here refers only to medical grounds. Of course, we will do all we can to watch the matter very carefully, but I take heart from the fact that the figure is going down steadily.
    Mr. Wingfield Digbyasked the Secretary of State for War whether he has carried out an investigation as to why about 9 per cent. of recruits enlisted in 1959 have bought themselves out; and what steps he is taking to remedy this wastage of volunteers, who are urgently needed by the Army.
    Mr. Profumo: As I said in the Estimates debate, and as my hon. Friend reminded the House only last week, the Army Operational Research Group is making an extensive study on the question of wastage.
    Mr. Digby: Are not these figures rather high? Is my right hon. Friend taking fully into account the Report of the Resettlement Board? Is it not possible that there is anxiety about a second career after these men leave the Army, and can my right hon. Friend say how
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    the figures compare with those in the other two Services?
    Mr. Profumo: I cannot give a comparison with the figures in the other two Services. I am taking this matter very seriously indeed, and we are improving the situation by degrees. We are devising ways and means to try to introduce to the Army people from civilian life in a modern and contemporary way.
    Mr. Fernyhough: Would not the right hon. Gentleman agree that while there may be a wastage in this respect in the Army, it is no greater than in industry in general? Does he not believe that so long as we have a free society, nothing should be done to prevent men having this facility?
    Mr. Profumo: I have not said that we would do anything to prevent the men having this facility, but I should like the situation in the Army to be close to that in industry, and when it is I shall be satisfied.

    Television Recruiting Campaign
    Mr. Mayhewasked the Secretary of State for War what have been the results of his television recruiting campaign.
    Mr. Profumo: I have nothing to add to the answer which my hon. Friend gave the House only last week.
    Mr. Mayhew: Can the right hon. Gentleman say in general whether the response has been satisfactory? He will recall that in the debate on the Estimates he stated that recruiting had been improved by 18 per cent. during the experimental period of television broadcasting. Can he say anything about the results now that the full campaign is in operation?
    Mr. Profumo: I am not trying to conceal anything. I am encouraged by what is happening in the television campaign, but I am loath to give the House figures until they mean something. As the House will know, there has to be a hang-over period after the end of the television campaign before we can assess the number of people who have come in after it has ended. The first slice of the national campaign on television is only now beginning to come to an end, and I shall require a month in which to

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    get all the letters in. I hope that by the middle of June I shall get some figures which may mean something to the House, and if they are interesting I shall tell the House at once. Meanwhile, I am encouraged by the 20 per cent. increase which occurred in the north of England where we were able to assess the number of people who were recruited in that part of the country through television advertising.

    Army Cadet Force, Denaby
    Mr. Wainwrightasked the Secretary of State for War, if he will take action to prevent the disbanding of the Army Cadet Force at Denaby Main in the Dearne Valley constituency.
    Mr. Profumo: No, Sir. It proved uneconomical to maintain this unit as a separate detachment, and I support the County Cadet Commandant's decision.
    Mr. Wainwright: Is the right hon. Gentleman aware that in the village of Denaby there is great enthusiam for this Army Cadet Force? Does he believe that these boys, if they should happen to parade towards Buckingham Palace this coming Saturday, should be labelled "the forty thieves"? Will he reconsider his decision? Will he consult the Civil Lord of the Admiralty who seems to be very interested in recruiting young boys, and make certain that the Army obtains its full strength through boys of this kind joining the forces in later life?
    Mr. Profumo: I cannot reconsider this matter. I have given it the most careful consideration. I am happy to say that those who are still keen to work—and I am very interested in the work of the cadets—can attend parades at Mexborough which, I am told, is only three miles away. Therefore, they will still have a chance of recruiting themselves to the service of the country. I have only a certain amount of money which I am able to spend on this organisation, and I must judge it, as my predecessors have, by those units which are efficient. While I do not want to weary the House with a lot of details, this particular unit had over a period of time been very inefficient indeed. However, I hope that those who still want to work will do so through the Mexborough camp.

    Royal Palaces (Soldiers)
    Mr. W. Hamiltonasked the Secretary of State for War from which regiments the 11 soldiers currently employed at Royal Palaces are drawn; how long they have so served; how many are National Service personnel; and who pays them.
    Mr. Profumo: The eleven soldiers now employed in Royal Households are all Regular soldiers of the Household Brigade. They have been so employed for periods varying from one year to thirty years and are paid by my Department.
    Mr. Hamilton: Does the right hon. Gentleman not think it ludicrous that at a time when there are complaints in all quarters of the House from all shades of opinion about the shortage of recruits, this kind of man should be engaged on menial tasks in Royal Households? Can the right hon. Gentleman give any sound reason why these men should not be recruited through the normal channels of the employment exchanges?
    Mr. Profumo: Yes, Sir, I can. I think there is nothing ludicrous about this at all. They are all volunteers, and all but three of them are employed in clerical jobs. It is the remaining three who are employed as personal orderlies. As the hon. Gentleman will probably know,—and so that I can help the tongue-waggers' club—every officer above the rank of field officer is entitled to a batman or an orderly or the equivalent, and why we should make exceptions for the Sovereign and two Royal field marshals I cannot imagine.
    Mr. Hamilton: Is the right hon. Gentleman aware that there was a good deal of public concern about a fortnight ago when a request was made to a certain regiment for a servant and the suggestion was turned down by the commanding officer with, I think, considerable unease on his part? Can the right hon. Gentleman not undertake to improve public relations to the extent that this kind of thing is not given the sort of publicity which was given to it?
    Mr. Profumo: If the hon. Gentleman really meant what he was saying, he would not try to add insult to injury.
    Mr. Hamilton: On a point of order, Mr. Speaker. As the right hon. Gentleman chooses to hurl that kind of accusation across the House, I give notice that I shall seek to raise the matter on the Adjournment.

    Trooping the Colour (Television Broadcast)
    Mr. Emrys Hughesasked the Secretary of State for War, in view of the fact that the Trooping the Colour ceremony is to be televised to Russia, what modifications are being made in the arrangements.
    Mr. Profumo: None, Sir.
    Mr. Hughes: In view of the fainting incidents in recent years, will the right hon. Gentleman give a special instruction that the men should not be called upon to stand to attention for too long? If more fainting takes place on a television programme, it will cause a disagreeable impression. Will the right hon. Gentleman also consider introducing a civilian element into the parade and call upon the trade unionists to march along with their banners in order to give the Russians an idea of our democratic way of life?
    Mr. Profumo: I do not think that anything could give the Russians a better idea of our democratic way of life than to have a look at the Queen on her birthday surrounded by some of the most valiant troops in the world.

  ROYAL AIR FORCE

    Book (Departmental Letter)
    Mr. Roy Jenkinsasked the Secretary of State for Air why a letter written by his Department to Mr. Richard Collier on 28th March, 1961, formally expressed disapproval of Mr. Collier's treatment of the subject in his book, "The Sands of Dunkirk", despite the fact that there was nothing in the book to which objection could be taken on security grounds.
    The Secretary of State for Air (Mr. Julian Amery): Mr. Collier had enjoyed certain official facilities from the Air Ministry and submitted his text to us. In giving it clearance from a security
    1364
    point of view, my Department thought it right to dissociate themselves formally from a number of disparaging references to the conduct and discipline of the British Army at Dunkirk. I think it was fully justified in doing so.
    Mr. Jenkins: Even if the Air Ministry regarded Mr. Collier's treatment of the subject as undesirable, which, having read the book, I would not accept for a moment, is it reasonable that the Air Ministry, in a formal letter, using the most portentous language, should express opinions about a matter which is not the concern of the right hon. Gentleman's Department? Does the Ministry think it proper to set itself up as an unofficial literary censor?
    Mr. Amery: There is no question of censorship about this, but it was our duty, both to Mr. Collier and in loyalty to the War Office, to point out what we thought were disparaging and unbalanced remarks.
    Mr. Jenkins: Is the right hon. Gentleman aware that I am speaking of matters necessarily not of fact but of opinion and that his Department thought it right to censor in the most officious language those expressions of view? Will he give an assurance that this will not be done in future and that the mechanism of submitting manuscripts for security clearance will not be used for entirely different purposes?
    Mr. Amery: No, Sir. It is our duty to express opinions, particularly in matters which engage our responsibility. As we gave clearance to the book, we were also quite right to point out that we thought that it contained inaccuracies and gave an unbalanced picture. In no way was this an attempt to censor the book or to stop Mr. Collier publishing it. It was our duty to point out to him that we thought that it was unbalanced.
    Mr. Cronin: Although hon. Members on both sides of the House appreciate the versatility and literary abilities of the Air Ministry personnel, is it not most improper for the Ministry to enter the field of literary criticism in this manner?
    Mr. Amery: I do not think so at all. I think that this is an example of good co-operation with the War Office.

    Security
    Mr. Croninasked the Secretary of State for Air if he will give an assurance that satisfactory measures have been taken to strengthen security arrangements in the Royal Air Force, having regard to the recent disclosures of pro longed and successful espionage in the Foreign Office and the Royal Navy.
    Mr. Amery: Security arrangements in the Air Ministry and the Royal Air Force are of course, examined regularly, but I have recently ordered a further Departmental review.
    Mr. Cronin: While we are obviously glad to hear the Secretary of State's reassurance, in view of the gravity of the situation, may I ask him whether he will assure the House that two elementary precautions have been taken? First, has there been a security check on the past hisory of all personnel who have access to secret information? Secondly, has there been a recent investigation into the adequacy of security measures to prevent unauthorised persons from having access to secret information and secret equipment?
    Mr. Amery: I think that both points will be covered by the further review for which I have asked, but I should not like to give the hon. Gentleman a formal affirmative answer off the cuff. If he wants further information, perhaps he will table another Question.

    Married Quarters
    Mr. Whitlockasked the Secretary of State for Air why, as from 1st July, 1961, the system of allocating married quarters to Royal Air Force personnel will be changed.
    Mr. Amery: Since the end of the war the allocation of married quarters has been decided largely by the family circumstances of the officer or airman concerned. Under the new system family commitments will still be given weight, but with the change-over to an all-regular force we think it right to place the main emphasis on Service responsibilities as reflected in length of service and rank.
    Mr. Whitlock: Has not the right hon. Gentleman been informed that many airmen bitterly resent the fact that con-
    1366
    siderations of rank are to be introduced into the system for the allocation of married quarters? Is he aware that many airmen, having signed on for extended service in the belief that under the present system they would obtain justice, now deeply regret having done so? Will the right hon. Gentleman scrap this system and formulate a new one which will give justice to these men without consideration of rank?
    Mr. Amery: I have visited fairly extensively Air Force stations in this country and in Germany. I have heard the pros and cons of the new system debated. I should have thought that, on the whole, opinion was in favour of the new system. That is the impression that I have derived. I think that the hon. Gentleman must realise, and will agree with me, that conditions as well as pay form part of the material rewards of a Service and that it is right that housing should be allocated to some extent in terms of length of service and rank as well as the size of families.
    Mr. Lipton: Is it not a fact that, with more weight now being given to rank rather than to family commitments, airmen who are in trades where promotion is slow will be unfairly penalised?
    Mr. Amery: No, I do not think so, because length of service could be just as important as rank, and a man will keep ahead of people with shorter service in his own rank and may even remain ahead of men with less service who have reached a higher rank.

    Thor Missile Sites
    Mr. Croninasked the Secretary of State for Air what steps he is taking to render the Thor missile sites less vulnerable to missile attack.
    Mr. Amery: None, Sir.
    Mr. Cronin: Is it not the case that as they are at present the Thor missiles could all be destroyed within a few minutes of the outbreak of hostilities unless special attempts are made to harden them? Does the Secretary of State appreciate that these Thor missiles can be no more than a provocation? They are not really an effective instrument of deterrence? Are they not obsolete, and has not the time come to

    1367
    get rid of them or to give them some other use?
    Mr. Amery: No, Sir. We are convinced at present that the threat is still predominantly from manned bombers and that the Thor missile still presents a serious deterrent.

  MINISTRY OF DEFENCE

    Citizen Force Units, South Africa
    Mr. Brockwayasked the Minister of Defence whether the citizen force units of the Union of South Africa will remain affiliated with British Army units after South Africa becomes a Republic; and what co-operation this involves.
    The Minister of Defence (Mr. Harold Watkinson): This is one of the issues that arise from South Africa's withdrawal from the Commonwealth that is not yet resolved.
    Mr. Brockway: Has the attention of the right hon. Gentleman been drawn to the statement by the Minister of Defence of the Union Government in the South African Parliament that the citizen forces of the Union are to remain affiliated to the British Army? Does the Minister repudiate that statement? Does not he think that it would be very bad that our Forces should be used in conjunction with citizen forces for the supression of the African people's protest against apartheid?
    Mr. Watkinson: The hon. Gentleman has the wrong view. Perhaps I can put it right. These are associations formed in very honourable circumstances, mainly as a result of being comrades in a war. They are in no sense an operational tie. They in no sense bind British units to do other than have this association with their South African opposite numbers, which is nothing to do with operations or anything else. It is an honourable association coming from two world wars and one which I should be very reluctant to break without some very serious thought.

    Polaris Missile
    Mr. Frank Allaunasked the Minister of Defence if he is aware that eight out of 18 underwater tests of the Polaris missile have now failed; and,
    1368
    in view of this fact, if there is now to be any revision of plans for the Polaris base in Great Britain.
    Mr. Watkinson: I have seen certain Press reports to which the hon. Member is no doubt referring. The answer to the second part of his Question is, No, Sir.
    Mr. Allaun: Does the Minister accept as correct the statement by an American Navy spokesman on 14th April that eight out of 18 such tests were failures?
    Mr. Watkinson: I am not responsible for what American Navy spokesmen say, but I would comment in this way. It would not be at all surprising that in the test programme of a new missile a certain number of failures occurred.
    Mr. F. M. Bennett: Would my right hon. Friend agree that we should welcome very much the concern of the hon. Gentleman about the maximum possible efficiency in the defence forces of this country and the West?
    Mr. Paget: Is not ten successes out of 18 in the initial programme of a rocket very satisfactory indeed and in fact far above average, certainly in the American ones which we know and, more than probably, in the Russian ones which we do not know?
    Mr. Watkinson: I think that that is a very fair statement.

    N.A.T.O. Forces (Polaris Submarines')
    Viscount Hinchingbrookeasked the Minister of Defence whether Her Majesty's Government will oppose the acceptance of the offer of the United States Government of Polaris nuclear weapons for the North Atlantic Treaty Organisation.
    Mr. Watkinson: I take it that my noble Friend is referring to the offer by the United States Government to commit five Polaris submarines to the 6th Fleet which is earmarked for assignment to N.A.T.O. Details of this plan are being considered by N.A.T.O., but Her Majesty's Government welcome the objectives of the United States' proposals.
    Viscount Hinchingbrooke: How does my right hon. Friend reconcile this last

    1369
    statement with the statement he made in the defence debate on 27th February, when he said:
    "We do not see any advantage in setting up N.A.T.O. as a strategic nuclear Power; nor, I understand, does General Norstad."—[OFFICIAL REPORT, 27th February, 1961; Vol. 635, c. 1204.]
    Will the Government stick firmly to that position, and if they are to change their point of view on this, will he consult the House before doing so?
    Mr. Watkinson: I quite agree with my hon. Friend. The difference is this. These Polaris submarines are merely a part of the American 6th Fleet, which is only assigned to General Norstad in certain special circumstances and does not come under his command in normal times.

  TRANSPORT

    Safety Belts and Harnesses
    Mr. D. Smithasked the Minister of Transport if he will now institute a publicity campaign by his Department to encourage car drivers to wear safety belts and harnesses.
    The Minister of Transport (Mr. Ernest Marples): I inaugurated a publicity campaign on 21st July last, when the British Standard was published. As recently as 27th April, I said in answer to a Question that the Society of Motor Manufacturers and Traders had agreed to recommend types of harness which suited their vehicles and to supply complete kits and fitting instructions. The exchange of letters between the President of the Society and myself was published. I shall continue to give my fullest support to every effort to encourage the fitting and use of effective harness.
    Mr. F. Noel-Baker: As part of that campaign, will the Minister take steps to warn the public about unofficial bodies like the so-called British Safety Council, which are misleading the public about the qualities of safety belts?
    Mr. Marples: I have said before and say again that the public ought not to buy a safety belt unless it bears the mark of the British Standards Institution on it.
    Mr. Langford-Holt: Will my right hon. Friend bear in mind that it is not only a question of the mark on the belt
    1370
    but of how the belt is fitted into the car? Is he aware that I myself have a belt which is emblazoned with a fine mark on it, but the belt is quite unwearable because it was not properly anchored?
    Mr. Marples: Knowing my hon. Friend's sagacity, I am astonished that he has not seen to the anchorage. His folly is a warning to the nation that people should look at the anchorage as well as at the belt.

    Motor Vehicles (Air Pollution)
    Mr. F. Noel-Bakerasked the Minister of Transport what further progress has been made with the development of a smoke meter suitable for measuring fumes from diesel and petrol driven motor vehicles.
    Mr. Marples: I have nothing at present to add to the Answer I gave the hon. Member for Dunfermline Burghs (Dr. A. Thompson) on 19th April.
    Mr. Noel-Baker: Is the right hon. Gentleman aware that that is a very disappointing answer? Has not the Minister seen the statement of his right hon. Friend the Minister of Housing and Local Government, reported yesterday, that smoke and dirt in the air killed 50,000 people last year—30,000 from chronic bronchitis and 20,000 from cancer of the lung—and that 20 million working days were lost by dirty air? Is it not time that he took steps to do something about this problem of air pollution from motor vehicles? How is he getting on with his investigation of the two smoke meters—the Hartridge and the Dunedin—at which he has been looking? If he insists that smoke meters are really necessary in order to enable police officers or any other intelligent witnesses to determine whether or not a motor vehicle is polluting the air, which we do not think is necessary, will he assure the House that he will reach a decision in the near future?
    Mr. Marples: The difficulty is to get a meter which will register the amount of smoke in the air in order to make for effective enforcement? No country in the world has yet succeeded in doing that, but the Warren Springs Laboratory of the D.S.I.R. is assisting me in developing a meter that will meet certain criteria.
    Mr. F. Noel-Bakerasked the Minister of Transport if he will now amend regulations 21 and 79 of the Motor Vehicles (Construction and Use) Regulations, 1955, in order to deal with the growing danger and nuisance caused by fumes from vehicles with diesel engines.
    Mr. Marples: I expect to make and lay before the House shortly regulations to supplement these provisions by requiring the excess fuel device to be so placed that it cannot be used while the vehicle is in motion and making it an offence to have the device in operation while the vehicle is in motion.
    Mr. Noel-Baker: The Minister will be aware that that answer will give a great deal of satisfaction to a number of people who have been worried about the problem for some time.
    Mr. Marples: I am most grateful to the hon. Gentleman.

  ROADS

    South Wales Motorway
    Mr. Ridleyasked the Minister of Transport what are his plans for improving the A.40 road to South Wales.
    Mr. Marples: The South Wales Motorway is planned as the major artery between London and South Wales. However, substantial improvements have been and are being carried out on the A.40 and others are planned—notably the High Wycombe by-pass.
    Mr. Ridley: As my right hon. Friend has been to the by-pass at High Wycombe on this road, he must give it considerable priority in his mind. Will he have a look at the other towns and bottlenecks on that road which are causing considerable restraint, and, in particular, try to expedite the by-pass at Northleach, which is the worst bottleneck further to the west?
    Mr. Marples: I will look at that particular case, but I am quite certain that when the motorway is built it will relieve this road in the same way that M.1 relieved A.5.
    Mr. G. Thomas: Can the Minister say what degree of priority is being given to expediting motorway No. 2? Can he
    1372
    tell us whether he is able to hurry up operations on that dangerous part of the motorway between Chepstow and Gloucester, to which his attention has been drawn in correspondence?
    Mr. Marples: I cannot answer the second half of the Question without notice. On the first part, we shall shortly let the viaduct over the Great West Road, which will form the first part of the extension from the Chiswick fly-over.

    Imber, Wiltshire
    Mr. Chapmanasked the Minister of Transport when a public inquiry is to be held into the proposals to close public roads and rights of way in the area occupied by the Army at Imber, Wiltshire.
    Mr. Marples: Progress has been made towards the satisfactory settlement of a number of the objections to the proposed order which I hope to refer to the War Works Commission before the end of June. It will then be for the Commission to fix the date of any inquiry they decide to hold.
    Mr. F. Noel-Baker: The Minister will be aware that in the whole of Wiltshire and throughout the country there is very great anxiety about this whole problem of Imber. Apart from the arrangements which he is making about an inquiry, will he have a talk with his right hon. Friend the Secretary of State for War and those immediately concerned in the Government to see whether the whole question cannot be looked at again?
    Mr. Marples: We are trying to meet the objections. Fifteen objections were received during the objection period of three months. I think we shall go some way to meeting the majority of those objections. Then it is up to me to send the case to my right hon. Friend, when the War Works Commission will be holding an inquiry.
    Sir R. Grimston: Is my right hon. Friend aware that the hon. Member for Westbury has had talks with his right hon. Friend on this subject and that I think matters are progressing satisfactorily?
    Mr. Marples: I am obliged to my hon. Friend. I am sure that is so, because he has from the beginning taken a great interest in this question.

    Double White Line System
    Mr. Gowerasked the Minister of Transport what have been the results, to date, of the operation of the double white line system and its restriction on overtaking; and if he will make a statement.
    Mr. Marples: From the information so far available, it is not possible to say, with any certainty, what effect the double white line system has had on the accident rate. The Road Research Laboratory is making a survey of the behaviour of drivers on roads marked with double white lines: I hope to have its report shortly.
    Mr. Gower: Can my right hon. Friend say whether he has had any police reports on the degree to which it is observed?
    Mr. Marples: We have had certain reports, but the difficulty, from what I have received, is that these are not comprehensive enough upon which to come to a decision. I should prefer to wait until the reports are complete.
    Miss Bacon: Is the Minister aware that on some roads where the double white

    SCHEMES IN THE ROAD PROGRAMME IN WALES COSTING OVER £100,000 STARTED IN 1960

    —

    Estimated Cost

    Work Started

    Completion Date

    Trunk Roads

    £

    A.465 Heads of the Valleys Road. Stage I—Brynmawr to Abergavenny

    1,500,000

    March, 1960

    December, 1962

    A.148 Port Talbot By-Pass. Stage I—Briton Ferry to Baglan

    475,000

    July, 1960

    September, 1961

    A.494 Queensferry By-Pass

    832,000

    July, 1960

    July, 1961

    Classified Roads

    A.483 Swansea East side Approach Road: Section 5—Fabian Street

    420,000

    September, 1960

    April, 1962

    Section 6—York Street to existing New Cut Bridge

    618,000

    October, 1960

    March, 1963

  SHIPPING

    Dry Docks (Capacity)
    Mr. Awberyasked the Minister of Transport if he is aware that there are several vessels of 77,000 tons now under construction with a beam of 113 feet; how many dry docks in this country are capable of accommodating these vessels when they require under-water repairs; and what steps are being taken to provide repairing facilities for them.
    The Joint Parliamentary Secretary to the Ministry of Transport (Vice-Admiral Hughes Hallett): Yes, Sir. There are at
    line ends there is a notice which says "You May Now Pass"? Does he not think such notices are rather misleading?
    Mr. Marples: If the hon. Lady will tell me which road she has in mind, I will look at those particular circumstances.

    Road Schemes, Wales
    Mr. Gowerasked the Minister of Transport if he will issue a list of schemes in the road programme in Wales, costing more than £100,000, which were started in 1960, with the estimated completion date and total cost of each.
    Mr. Marples: Yes, Sir. As the list contains detailed information, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Gower: Can my right hon. Friend say how many such schemes there are?
    Mr. Marples: Quite a number; I think nine, altogether.
    Following is the list—
    present four dry docks in this country which can accommodate ships of this size. Two more are expected to be completed this year, and work on yet another is expected to start this summer. This programme should for the time being be adequate.
    Mr. Awbery: Is the Minister aware that the construction of our ships is in danger of out-stripping the facilities of our ports? While we know that these tankers can come up to the estuaries and that there is no need for them to enter the harbour, there are times when it will be necessary for these ships to

    1375
    come into the harbour and enter dry dock, and we have not got the facilities for catering for them? Will he do something to hurry up the matter, because it is very urgent to Bristol?
    Vice-Admiral Hughes Hallett: Apart from the "Queens", there are no ships of this tonnage and width of beam or over on the United Kingdom register and none under construction here. There are some eight ships of that size in operation and thirteen under construction. All are tankers and are now being built in Japan. They mostly run between the Persian Gulf and Japan, and none has yet discharged at a United Kingdom port.
    Mr. Awbery: Does that mean that we we cannot accept these ships in this country because we do not have the facilities at our ports? That is a reflection upon this country and our shipping industry.
    Vice-Admiral Hughes Hallett: I cannot agree with that. As I said in my Answer, we have sufficient of these big docks for the time being.

BUSINESS OF THE HOUSE
Mr. Gaitskell: May I ask the Leader of the House if he will state the business of the House for the first week after the Whitsun Recess?
The Secretary of State for the Home Department (Mr. R. A. Butler): Yes, Sir. The business for the first week after the Recess will be as follows:
TUESDAY, 30TH MAY—Committee and remaining stages of the North Atlantic Shipping Bill, and of the Human Tissue Bill.
Consideration of Lords Amendments to the Flood Prevention (Scotland) Bill.
At seven o'clock, as the House is aware, the Great Ouse Water Bill has been set down for consideration.
WEDNESDAY, 31ST MAY—Supply [15th Allotted Day]: Committee.
The subject for debate will be announced later.
THURSDAY, 1ST JUNE—We shall make further progress in Committee on the Finance Bill.
FRIDAY, 2ND JUNE—Third Reading of the Land Drainage Bill.
Second Reading of the Police Pensions Bill [Lords].
Committee and remaining stages of the Patents and Designs (Renewals, Extensions and Fees) Bill [Lords].
MONDAY, 5TH JUNE, and TUESDAY, 6TH JUNE—The proposed business will be Report and Third Reading of the Licensing Bill.
Mr. Gaitskell: Is the right hon. Gentleman aware that, in view of the Private Business which will come on at 7 p.m. on 30th May, it will obviously be difficult to get through the business which has been set down for that day?
Mr. Butler: We will just see how we get on.
Mr. P. Williams: Can my right hon. Friend give any further undertaking on a debate on shipping and shipbuilding matters? He will be aware that he has made a number of helpful statements on this matter, but that something much more definite is needed in terms of a debate before the Summer Recess. The House would be perfectly reasonable in pressing my right hon. Friend to give a specific undertaking on this matter today, if possible.
Mr. Butler: My hon. Friend has already seen me on this subject and I am aware of his interest and that of other hon. and right hon. Gentlemen in the matter. I cannot, at this stage, before the Whitsun Recess give a definite day. I can only reassure my hon. Friend of the interest and importance of the subject.
Mr. Darling: Can the Leader of the House tell us when he hopes to introduce the Weights and Measures Bill into the House, so that we may get it through during this Session?
Mr. Butler: I have no statement to make at present.
Mr. Jay: Does that answer mean that the Government not merely do not know whether they are proceeding with their main Bills, but do not even yet know when they will be able to tell us?
Mr. Butler: No, Sir. The Government will make a statement when they choose to do so.
Mr. Shinwell: How does the right hon. Gentleman assume that he can get the North Atlantic Shipping Bill through its Committee stage by seven o'clock? If he does not get it through by seven o'clock—and I warn him that he may not, unless we get satisfactory answers from the Government, which is most unlikely—what will happen after ten o'clock?
Mr. Butler: As I said, we must see what progress we make.
Dame Irene Ward: Is my right hon. Friend aware that hon. Ladies like myself, and not only right hon. and hon. Gentlemen, are interested in shipping, shipbuilding and shiprepairing?
Mr. Butler: Yes, Sir. According to the Interpretation Act, "hon. Gentlemen" covers hon. Ladies, also.
Mr, Ross: In view of the trouble that the right hon. Gentleman might now well anticipate over the North Atlantic Shipping Bill, will he consider the position of Scottish Members? We do not like being here late at night. Will the right hon. Gentleman promote Scottish business on 30th May to the first item instead of the last?
Mr. Butler: I cannot accept that.
Mr. Gaitskell: In response to the powerful representations which have been made from both sides concerning the North Atlantic Shipping Bill, will the Leader of the House at least give an undertaking that he will not continue
1378
with discussion of the Bill after ten o'clock?
Mr. Butler: No, Sir. I can give no such undertaking.
Mr. G. Thomas: While in no way wishing to embarrass the Leader of the House, may I ask whether he is aware that he now has an opportunity at one blow of pleasing Wales in two directions, that if he were to substitute a debate on leasehold in place of his licensing proposals he would be received with acclamation in the Principality? Will the right hon. Gentleman give further consideration to the question of a discussion on leasehold?
Mr. Butler: I must give licensing precedence for the time being over leasehold.
Mr. Rankin: Are we to assume from the right hon. Gentleman's answers concerning the North Atlantic Shipping Bill that he intends to proceed with it on the day of our return after the Recess and to complete the Committee and remaining stages in the one day?
Mr. Butler: I cannot give any undertaking about what progress we shall make. We shall simply do our best.

ADJOURNMENT (WHITSUNTIDE)
House, at its rising on Friday, to adjourn till Tuesday, 30th May.—[Mr. R. A. Butler.]

FOREIGN AFFAIRS
3.36 p.m.
The Lord Privy Seal (Mr. Edward Heath): I beg to move,
That this House supports the efforts of Her Majesty's Government to strengthen the unity of the free world and thus to create, in cooperation with the Commonwealth and with their allies, greater opportunities for the improvement of relations between East and West and for the promotion of conditions of peace and order throughout the world in accordance with the principles of the United Nations Charter.
There is a double theme running in common throughout the Motion and the Amendment which has been tabled by the Leader of the Opposition and his right hon. and hon. Friends. The double theme is that the object of our foreign policy should be to ensure peace and order in accordance with the principles of the United Nations Charter and that we should work for the peaceful settlement of international disputes. The second part of the theme is that there should be a positive approach towards better relations between East and West and that, at the same time, we must build up the strength of the free world, ourselves, our Commonwealth and the European and Atlantic communities.
There is bound to be a wide-ranging debate during these two days and I propose, in this speech, to limit myself to certain specific subjects. I propose, first, to deal with two subjects under the theme of working for a peaceful settlement of disputes—in Laos and in the Congo, and secondly, to say something about a positive approach to the improvement of East-West relations and towards securing greater unity in Europe.
Let me turn, first, to Laos. In Laos, we have been carrying out our policy in a particular respect, because my noble Friend the Foreign Secretary is one of the two co-chairmen who carry on from the Geneva settlement of 1954. Looking back to three weeks ago, we all felt that there was grave danger that internal strife would spread and that there would be further intervention, with grave international implications. I have never disguised from the House that in that situation we had obligations under the Treaty of Manila to S.E.A.T.O., and that if we were called upon to carry out those obligations we would do so. That remains the situation.
1380
The House will realise full well, however, that our aim throughout was to secure a political settlement of these difficulties and a political settlement by negotiation. The alternative was that Laos would be swallowed up by the Pathet Lao and its supporters or, alternatively, that Laos and South-East Asia would be plunged into international strife; and so my noble Friend the Foreign Secretary has been devoting all his energies and diplomacy to securing a political negotiated settlement.
Mr. Nehru put forward the proposal in January for the return of the International Control Commission. We supported that. At the time, it did not prove acceptable. It was when my noble Friend, on 23rd March, was able to put forward the three-pronged suggestion—that there should be a ceasefire and then the return of the Control Commission, to be followed by a conference—that we began to make progress towards a settlement.
Then, when after discussions through diplomatic Channels with the other co-chairman, Mr. Gromyko, it was possible to arrange for the announcement that these things should be done at the same time and that a date should be fixed for a conference, we were able to make further progress. Now we find that the cease-fire has been confirmed by the International Control Commission and a formal cease-fire agreement signed last weekend.
As the House knows, the conference met yesterday afternoon. Our objective is—I think it is an objective agreed by both the American Government and the Soviet Government—to establish an unaligned, independent and peaceful Laos. My noble Friend the Foreign Secretary yesterday afternoon put forward five proposals to this end at the conference. He said that, first, there would need to be the establishment of a united Laos with no special armies or groups working against the Government; secondly, that there would need to be genuine neutrality for Laos pledged internally by the Laotian Government and externally by other countries; thirdly, that there would need to be an agreed ceiling on Laotian military requirements under proper control; fourthly, that there should be arrangements to prevent foreign economic aid being used as a

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political instrument; and, finally, that there should be a re-examination of the powers and responsibilities of the international Control Commission, which should be defined.
If reports are true which are now coming through this afternoon that there has been agreement both in Geneva and Vientiane of the formation of a coalition Government between the Laotian parties, that is also most encouraging.
To sum up this part of my speech I think that it shows the way in which the Government have been working with all their strength to secure a peaceful settlement of a dispute. Despite all the uncertainties which still face us at the conference which is going on, I think that we can regard with some satisfaction, and perhaps even a little pride, the success of my noble Friend the Foreign Secretary in bringing together the Governments in order to talk about these matters in Geneva rather than that we should see fighting continue or even be extended in Laos.
Now I turn to another dispute, that in the Congo. It is almost a year ago since the Congo lapsed into anarchy and violence only a few days after achieving its independence. We are carrying out our responsibilities to work for a peaceful solution as a member of the United Nations, with no particular responsibilities such as we have had in Laos because of the position of my noble Friend as a co-chairman.
Right from the beginning we have given our full support to the United Nations and to its work in the Congo, and our objects there have really been three: first, to endeavour to prevent through the United Nations major intervention from outside; second to ensure the preservation of law and order so far as possible within the Congo—here, of course, we have a particular British interest, because of the close relationship between the frontier of part of the Congo with our own territory of Northern Rhodesia; and, third, to achieve an independent Congo which can be helped and guided to establish itself.
This, I think, requires two things. It requires, first, the closest form of cooperation between the United Nations and those who are serving the United Nations and those who are responsible in the Congo itself; and, second, it requires
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the patience to help and guide the Congolese themselves through their difficulties in trying to reach solutions.
I think that we can say that in this operation the United Nations has had a measure of success. It has prevented large-scale intervention and it has been able to reduce the amount of strife and inter-tribal warfare. We have throughout, in all the efforts we have made, both in speeches in the United Nations and again through diplomatic channels, been urging the closest co-operation between the United Nations and the Congolese. It is, therefore, encouraging to us that in these last few weeks, and at last, we should see progress now being made along the lines which we have so long wanted.
There are today improved relations between the Congolese and the United Nations. We have seen Mr. Kasavubu's agreement with them. We have seen the Coquilhatville conference and the constitutional proposals which are emerging for a unitary Congo. There has been Mr. Kasavubu's request for the recall of Parliament; his request, also, for the retraining of the Army, with which Mr. Hammarskjoeld is able to help, and we have seen also Mr. Munongo's agreement with the United Nations that Katanga should implement the resolution of 21st February. We believe that the United Nations can now build on this co-operation and build, also, on the stability which exists in Katanga.
The efforts of Mr. Tshombe over the last year have maintained order and stability in Katanga. As the House knows, in the episode of Coquilhatville we asked Mr. Hammarskjoeld to use his good offices to see, if possible, that Mr. Tshombe should be released to carry on in that conference because we believed that a solution was desirable. Now the situation has changed, in that charges have been made against Mr. Tshombe, and it has become an internal Congolese matter. At the same time, the Secretary-General of the United Nations has told us that he will do everything possible to see that, as in the other case Mr. Tshombe receives fair treatment. We believe, moreover, that Katanga has a part to play within the Congo as a whole in order to keep it as a viable entity.
This is the first operation of the United Nations of this kind and I think

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that it behoves us to look at the lessons which emerge from it. It is the first operation in nation building. First, I think that it becomes obvious that the United Nations must have a clear objective when it is going to carry out an operation of this kind; and, second, that its object should be to support the independence of the country concerned, that its policies should not be to substitute another form of colonial administration; and, third, that it must carry out the obligations of maintaining civil law and order, and that it must do this in conjunction with the Power itself if it is not to infringe its independence; fourth, that those who are in command of the military forces must have clearly defined objectives also, and clear orders what their responsibilities are; fifth, that the United Nations greatly restricts its activities by limiting the field from which it draws its resources in cases of this kind, a very restricted field of personnel for aid and assistance, and a somewhat restricted field for the forces.
Leaving aside the question of the great Powers not taking part, with which, of course, I would fully agree, I am glad to see that the United Nations is now proposing to draw on a wider field of personnel to help the Congo. The last lesson which emerges is that if an operation of this kind is to be successful then it must be supported by the Powers, great and small, for the United Nations' purpose and not for political purposes of their own; moreover, that countries must be prepared to pay their contributions towards the cost of such operations. We, for our part, are now paying a very large proportion of the cost of this operation. As I said, we have always given full support to it, but responsibilities do rest on other countries to carry out their part.
I turn now to the second theme which I mentioned at the beginning of my speech, the need to strengthen the unity of the free world so that we may secure better relations between East and West. Last autumn, when we last debated foreign affairs, we recognised that there had been a break down of the détente which had started from the time that my right hon. Friend the Prime Minister went to Moscow. I pointed then to signs of that and I do not propose to go over them again now. What is clear is that in
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the early months of this year we have seen very few signs of a change of attitude. There have been some. There has, perhaps, been greater restraint by Mr. Khrushchev in his remarks about President Kennedy and the United States and other countries, and there was the release of the American airmen. There have been some indications, but very few, and we must face that fact. But we are urged, and we accept, that we should continue to take positive steps towards better relations between East and West, and I want here to emphasise to the House that we have done this.
There was the Prime Minister's suggestion at the United Nations General Assembly, last autumn, of a committee of experts in order to find ways of control over disarmament. There were, secondly, the approaches we made through the Nuclear Tests Conference at Geneva. I think that the whole House would agree that there could be few things more important than this, and when the conference was resumed on 21st March the Western Powers made the most positive suggestions to the Soviet Union on how agreement could be secured.
There were put forward by the American spokesman and by my right hon Friend the Minister of State for Foreign Affairs fourteen changes, of which at least three were major ones, to meet the Soviet position. There has, alas, been no response to this. Indeed, the Soviet has gone back on one of its provisions and has introduced its idea from the United Nations, of turning the administrator into a triumvirate instead of being a single person.
Here again, there has been a positive approach by Her Majesty's Government in conjunction with their allies without answer from the Soviet Union. But now there are to be talks about disarmament in general and bilateral talks to prepare the way as far as procedure is concerned between the Soviet Union and the United States. We must hope that there will be a response from the Soviet Union to the positive approaches which are being made.
But when we are thinking of general policy and when, no doubt, the Opposition spokesman who is to follow me puts forward other suggestions for an approach to the Soviet Union and its friends from the West, let us always bear

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in mind the response which we have received to those we have already put forward. Meantime, the House will agree how necessary it is to substantiate the unity of the free world.
My right hon. Friend the Prime Minister and my noble Friend the Foreign Secretary have both been working to this end. In his talks with President Kennedy, the Prime Minister found the President determined to give fresh life to the alliance and I should like to say something briefly about the N.A.T.O. Conference. N.A.T.O. is sometimes said to be suffering from an indefinable malaise The Foreign Secretary found, during its last meeting, that that was certainly not the case. He found that the N.A.T.O. Council is tackling the problem of how to deal with changes in the military situation which have come about from weapon developments in the last few years. But the main object of the conference was to improve the techniques of consultation and the Council is now evolving long-range planning machinery for dealing with specific studies of international problems.
It is not true, as has been suggested in some Press reports, that permanent committees are being set up to study the Communist challenge in different geographical areas of the world, but there was general agreement in Oslo that N.A.T.O. was bound to be concerned with major difficulties in the world, even if they were outside the N.A.T.O. area. The Permanent Council, therefore, is to examine how it can improve individual consultation on problems which concern individual members of the alliance. I should like to emphasise that the object of this is not to ensure that there is a unified N.A.T.O. policy towards every problem that arises throughout the world, wherever it may be. The object is to ensure that individual N.A.T.O. countries do not take firm policy decisions about these problems without knowing the views of other members of the alliance.
There was hardly any discussion on the question of military strategy at this meeting. The general aim is to discuss the conclusions of the present study of this at the meeting at the end of this year, and as this is not a defence debate I do not propose to deal now with particular questions of N.A.T.O. strategy.
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But there was discussion of Berlin and I feel it right to say this. From time to time Mr. Khrushchev continues to threaten unilateral action over the Berlin question. He said this in a memorandum which he sent to Dr. Adenauer on 17th February. We must do everything possible to ensure that Mr. Khrushchev realises the dangers of such a course.
The essential element in any discussion of Berlin is the freedom of 2½ million Berliners. They regard themselves as free at the moment. They certainly do not look upon Mr. Khrushchev's proposal of a free city as offering them security or continued freedom for the future. They wish to retain the ability freely to choose their own form of Government by secret ballot, and they regard the continued presence of Western forces in the city as the guarantee of the maintenance of their present liberty.
The Western Powers are not in Berlin just to maintain an out-dated occupation. They are there to fulfil their responsibility towards the people of the city. We cannot and will not acquiesce in any unilateral Soviet action purporting to change the status of Berlin or to relieve the Soviet Government of responsibilities which still fall upon them. I hope that the Oslo communiqué will have made it abundantly clear that all members of N.A.T.O. still stand by the Declaration of the British, American and French Governments in 1954. That Declaration describes the security and welfare of Berlin and the maintenance of the position of the three Powers there as essential elements in the maintenance of the peace of the free world.
Mr. Sydney Silverman Mr. Sydney Silverman (Nelson and Colne) rose——
Mr. Heath: I am sorry, but we have a two-day debate, in which many hon. Members will be able to catch Mr. Speaker's eye, and I think that it is much better that points should be made in speeches and that one should be allowed to deploy one's case as one wishes.
Looking at the problem of Western unity, I wish to turn now to the question of Europe. The problem with which we have to deal in Europe is a fundamental one. It is the question of what are to be the relations of ourselves and the Commonwealth and the E.F.T.A.

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partners with the new Europe that is emerging. This I believe to be a most fundamental question and I propose to devote the rest of my speech to it.
After the war, Europe was weak. It was disunited, its buildings destroyed, and its economies in ruin. Over the next ten years it slowly and gradually made its recovery, economically with the help of Marshall Aid and O.E.E.C. militarily through N.A.T.O., and politically through such organisations as the Council of Europe. Throughout that period we played our full part in all these organisations—and when I say "we" I refer to Governments of both sides of the House. We played our full part in working for the recovery of Western Europe.
Today, Europe is strong. The pattern has changed and a fresh relationship has to be established between ourselves and the other countries of Europe and the six countries of the Economic Community. What is that relationship to be? This is one of the major problems of our time and it confronts us with decisions of immense importance to ourselves, to Europe and to the Commonwealth. It is only right that these decisions should be taken with as full a knowledge as possible of all that is involved. There must be no misunderstandings. We must weigh all the factors carefully, but, above all, we must set them in the right perspective.
The Government are often urged to enlighten the House and the country about these issues. That is perfectly right, but it is not always easy to do so on an issue of this kind. Our own tradition of parliamentary government is one in which the Government take a decision, submit it to the House and await its verdict. But in a situation like this, which is evolving, in which one is trying to establish relations with a number of other countries, and in which, later, it may be necessary to undertake negotiations, it is by no means easy to enlighten the House and the country to the extent which is being asked at the moment and to the extent to which we should like to do. Nevertheless, as this is one of the great issues of our time I believe it right to try to set before the House, as fairly as I can, what the issues are and what we are trying to do to reach a solution to them.
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We see today in Europe a powerfully developing group of nations in the European Economic Community. Its strength is shown by its size of over 170 million people compared with 50 million in the United Kingdom and rather under 90 million in E.F.T.A. as a whole. Their reserves of manpower are much greater. In ten years' time the populations under the age of 45 in France and Germany alone will be double that of the United Kingdom. The gross national product of the Six is two and a half times that of the United Kingdom. Their rate of industrial growth is much higher. The internal trade of the Six rose by 30 per cent. in 1960 compared with 16 per cent. for the internal trade of the Seven.
The Six have a strong balance of payments position and large resources. Their prospects are already attracting increased investment both from the United States and from the United Kingdom. In the past, over 50 per cent. of the investment in Europe from the United States came to the United Kingdom. In 1960, it was down to 41 per cent., and in 1961 over 50 per cent. of the United States' investment in Europe is expected to go to the Six.
I give these facts to the House as an indication of the strength and the size of the new group which has emerged in Europe. It has established itself, and it is showing every sign of future success.
What, then, we must ask ourselves, is to be the impact of this group on ourselves, on our Commonwealth and on our partners in E.F.T.A.? We now see opposite to us on the mainland of Europe a large group comparable in size only to the United States and the Soviet Union, and as its economic power increases, so will its political influence.
Throughout our history—I am trying to put these facts before the House because I think that they are necessary for making a balanced judgment—we have recognised the need to establish a relationship with the other countries on the mainland. Usually, it has been because we feared their military hostility. Our relationship has been part of the balance of power. Today, that is certainly not the case. It is the great blocs of the Communist world and the Western Powers which confront each other. But the problem remains for us to establish a relationship with the new

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and powerful group on the mainland of Europe.
In the political sphere we see the growth of political consultation between the countries of the Six. There is regular consultation at the level of Foreign Ministers. There is frequent and regular consultation between Ministers of other kinds at other levels, and between, for example, the governors of the State banks; and proposals are being considered for more formalised consultation at the level of heads of Government.
This is not in any way blameworthy, as is sometimes suggested. It is the perfectly natural development of the cohesion of a group such as we see now developing in Europe. From the point of view of political consultation, we have consultation in Western European Union, in which the Six and the United Kingdom sit. At the last meeting of Western European Union the members of the Six told me that they had postponed some of their political consultation from their own meeting the day before until we were present, so that we could take part in it. That was, I think, an indication of their desire that we should take part in some form of permanent political consultation with them. Western European Union is being used meantime as a substitute until more permanent arrangements can be made
This development poses for us and the rest of Europe considerable political problems. I am talking now not only of the next six months, or the next two or three years, but of a much longer period. We can then see the danger which faces us of a decline in political influence in the world at large and in our Commonwealth. So the first point that I want to emphasise is the political factor involved in this new arrangement of the European countries which has come about since Europe recovered from the after-effects of the war. That is the political background to this problem.
What will be the economic consequences for us of its development? Until the creation of the Economic Community our trade with Europe was increasing. It amounted to 15 per cent. of our trade. During the past five years our exports to the Six have increased at nearly twice the rate of our total export trade. This trade is bound to be affected by the creation of the common tariff
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round the markets of the Six and the gradual abolition of their internal tariffs.
This will be particularly the case, first, because most of our trade with them is in industrial products, and, secondly, because our markets were in those countries such as the Federal Republic of Germany, which have to raise their tariffs to reach the common tariff level. The creation of a group of this kind means, in any case, that they have all the advantages of mass production with a large market. This, again, poses economic problems for us of competition. More than that, it also means that the Six will be better able to compete in third markets of the world. This will be a challenge to our export trade as a whole. What I have already described also means that the Six will prove a continuing attraction for investment on both sides of the Atlantic. I am not telling the House that our trade is in immediate danger. What I am trying to do for the House is to look into the future over a longer period and see how these things may well develop.
Those are the consequences of the division today between the European Economic Community and the rest of Western Europe. The results of a closer unity between the group and ourselves and our partners in E.F.T.A. would, of course, be the reverse. It is not only that we would together be able to share the benefits and advantages of this new development. We would also be able to contribute very much to it ourselves. On the political side, one of the major political achievements of the Six has been to create a Franco-German rapprochement which is invaluable. Our presence would undoubtedly consolidate this and contribute towards the balanced development of the Community.
These, then, are most powerful reasons why we should use all our strength and energy to find a solution to the problem of a closer relationship between ourselves and our partners and the European Economic Community. It is against these political factors that we should place the very real difficulties of finding a solution in the economic and commercial field.
Of course, if we examine these, we shall find some things which we do not like—some individual things which maybe disadvantageous to us and some

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things which they do differently from the way to which we are accustomed. But, against this, we must weigh the very formidable political and material advantages to be gained from a closer association, and we must weigh it all in the context of the future position of our country and the Commonwealth, and of the future position of Europe as a whole and its influence throughout the world.
I would now like to tell the House something of what has been done since we started a new approach to this problem nine months ago. At the meeting then between Chancellor Adenauer and my right hon. Friend the Prime Minister it was decided that we would explore through diplomatic channels, by official and ministerial talks, to see whether a basis for negotiations could be found.
Two things were necessary. The first was to create the will on both sides in Europe to find a solution. The second was to find the technical means whereby the differing interests could be reconciled. On the question of creating a will to find a solution, I believe that there is now a greater will in Europe than ever before to find a means of settling this problem. We have many friends in Europe, and all of them are anxious that these things which now divide us should be removed.
We have made good progress with the technical talks and have covered a lot of ground. Some hon. Members—and I can quite understand it—may ask why it is that this work has still to be done. The reason is that the earlier solutions which were proposed to this problem, in particular, the Free Trade Area, by their nature excluded the sort of problems which we have been closely examining with great energy over the past few months. The Free Trade Area solution excluded by its nature anything to do with agriculture and Commonwealth trade, and institutional problems. Therefore, it is only since we made the new approach last September that this work has been done.
At the meeting of W.E.U. Ministers at the end of February, I was able to report on the progress which had been made. Again, hon. Members may ask why this should be done in W.E.U. It was done there, first, because the Union has as its object to help create closer
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unity in Europe, and, secondly, because it is the only forum in which members of the Six and ourselves together meet as of right.
I reported our view of the political position in Europe. Briefly, it was this: discussion amongst the Six themselves about their own problems is a matter for the Six. We have no desire to force our way into it. On the other hand, if an arrangement is made between the two groups, or in some other way there is political discussion, then, of course, we will play our full part in it. If there are political discussions on Europe of a nature outside the domestic affairs of the Six, about Europe's influence in the world, then we believe that we should be present, that we have long played our part and have much to contribute. Lastly, as my right hon. Friend the Prime Minister has told the House, if he was invited to attend a conference of heads of Government he would be disposed to accept.
That statement made our political position, as far as Europe is concerned, absolutely plain to all its members, and I am sure that there is no doubt about it today. As far as the economic position is concerned, all I put forward was a report. It was not a series of proposals for negotiation which were to be accepted or rejected. It was a report on the way things had been going in the talks so far and the position that we had reached. I told the members of the Six that if they were able to meet our problems with regard to the Commonwealth and to domestic agriculture, we could then consider a system based on a common or harmonised tariff on raw materials and manufactured goods imported from countries other than the Six, the Seven or the Commonwealth. This was an important change on our part, because it meant that over that sector, excluding the Commonwealth and E.F.T.A., we were accepting the common tariff and its implications. That is the context in which we have been working.
I now want to mention to the House four matters which we are very concerned about. The first is our trade with the Commonwealth. The second is our domestic agriculture. The third is our E.F.T.A. partners. The fourth is the institutional question. We have always made it plain—and I repeat it now—that we shall keep in close touch

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throughout with other Commonwealth Governments, and will have full consultation with them before we decide on the course to follow.
We have been examining imports from the Commonwealth under four heads—raw materials, tropical products, manufactured goods and temperate foodstuffs. Very few raw materials present any difficulty since, with a few exceptions—I think that there are five main ones—they are imported duty free both into the E.E.C. and into the United Kingdom.
Tropical products present a more complex problem which is, indeed, world wide. It vitally affects the interests of countries outside Europe, including those which have no links with European countries. This must be borne in mind. I have good hopes that progress can be made as far as tropical products are concerned.
The difficulties lie with manufactured goods and temperate foodstuffs. Together, they represent about half our imports from Commonwealth countries, and we have been and still are studying the complex problems involved. But I must tell the House that we cannot yet see clearly what can be done. In our talks with the Six we have naturally been asked what we think should be done, in the context of an overall settlement, in regard to the preference at present enjoyed by United Kingdom exports in some Commonwealth countries. We have replied that we should see no difficulty of principle in the way of discussions between the Six and the Commonwealth countries concerned about possible reductions in tariff preferences, as part of a satisfactory overall settlement so as to put it in general balance.
This has helped confidence. This is where we showed, in our desire to reach an arrangement, that we are not trying to get the best of all worlds and that we are not putting forward the Commonwealth as a reason why we should not have an arrangement with the Six.
Our second main concern is domestic agriculture. If a settlement is to be reached, all the E.E.C. countries now consider that agriculture cannot be excluded altogether. In trying to place the position fully before the House, I must make it plain that that is their view. There must be further discussion
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before a clear picture emerges, but I want to make three points about it today.
First, while the Rome Treaty lays down the general scheme for a common agricultural policy—a scheme which is different from ours—its detailed implementation has not yet been decided. Secondly, there are indications—and these have come since my statement to the W.E.U. ministerial meeting—that the Community might be ready to consider the possibility of modifications in its present proposals for a common agricultural policy in order to go some way to meet us.
Lastly, while there might be difficulties in one or two commodities—just as there would be problems in industry—British agriculture as a whole, as its post-war record shows, is in a sound state to contemplate participation in a common agricultural policy, provided that that participation is on equal terms as part of an enlarged European Economic Community. The British farmer is efficient and competitive.
The next point I want to make is that the Common Market in agriculture will be introduced gradually, and it will be a long time—perhaps eight years or more—before it comes into full effect. We have, of course, given firm pledges to our farmers, and any change in the method of support we consider would have to take full account of them.
Thirdly, I want to talk about our E.F.T.A. partners. I am very glad that it was possible to reach agreement about the association of Finland with E.F.T.A., and it is also very pleasing to us that so soon after reaching this agreement it was possible for the President of Finland to visit this country. A shadow has been cast over our memories of his visit by the sudden death, shortly after his return to Helsinki, of the Finnish Foreign Minister, with whom I had talks last week in London. That is a matter of great regret to us.
In these exploratory talks we have been speaking only for ourselves. We have always made it plain that the interests of E.F.T.A. must be safeguarded. We have kept the member countries of E.F.T.A. fully informed of all stages of the ideas that have been put forward and examined. We shall continue to do this, and we shall also consult them before we take any final decisions. Some anxiety has recently

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been expressed by the Press of some of the E.F.T.A. countries that the United Kingdom, or another E.F.T.A. country might suddenly decide "to go it alone without consideration for its partners. This would break up E.F.T.A., and leave the other countries in a weak position in which to make their own arrangements.
The United Kingdom will not abandon its E.F.T.A. partners in that way. We all wish to find a solution—
Mr. A. C. Manuel: In what way?
Mr. Heath: I was referring to the allegations that have been made in the Press that we would "go it alone". We are not prepared to abandon our E.F.T.A. partners in any way in trying to find a solution, which may not be the same one for each of us, but we should all help each other to find a solution.
That was the original purpose for which E.F.T.A. was formed. If E.F.T.A. were to disintegrate because some members were looking for solutions on their own without thought of their partners, that would be deplorable. If, on the other hand, E.F.T.A. eventually disappears because we have each found an arrangement that suits us in a wider Europe, E.F.T.A. will have achieved its purpose.
We have also been examining the question of institutions, and this ought to be faced frankly and openly. It is necessary that we should understand what is involved in them. The Treaty of Rome set up a permanent commission under a Council of Ministers. What I wish to emphasise is that the activities are limited to commercial and tariff policy on behalf of the Council of Ministers which takes the decisions in these matters.
The operations of the Community affect two particular aspects of national sovereignty and, again, there should be no misunderstanding, in looking at these problems, as to what is involved. First, the power to make commercial agreements passes to the Commission when it is that sector. Secondly, an appeal from commercial decisions lies to the international court. It is only right that those two things should be mentioned; they are both important, and we should face them frankly and openly.
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I now wish to deal with the particular point mentioned in the Amendment standing in the name of the Leader of the Liberal Party—[HON. MEMBERS: "Where is he?"] This is an important matter which is constantly brought before us. He suggests that we can make progress in solving this problem only by first announcing that we propose to sign the Treaty of Rome and then start to negotiate such derogations as may be possible.
I do not believe that to be the case. The signature of the Treaty of Rome does not, of itself, solve any of the difficulties that I have been describing to the House. They would still remain to be resolved. If it were necessary to do this to convince Europe that we were genuine, there might be some argument for it, but that, I am quite convinced, is not the case. Neither have any of the members of the Six, in our talks, asked us to follow this procedure. They realise that it is reasonable that we should see the broad lines of a settlement before any request is made to start negotiations——
Mr. Arthur Holt: Neither the Leader of the Liberal Party nor any other leader has stated what the right hon. Gentleman has ascribed to my hon. Friend. To say that we should apply is quite different from saying that we should sign before commencing negotiations. We have only said that we should apply for entry first, and negotiate later.
Mr. Heath: It is only reasonable, and is accepted by Europe as reasonable, that we should first see what the broad lines of a possible settlement are, and that is the procedure that we have been following——
Mr. Harold Davies: We have listened to a quite important speech, to a very dramatic statement. Would the right hon. Gentleman let the House know whether or not his party and the Government would take a dramatic and major step like this without first discussing it with the British electorate? This problem is of such magnitude that the whole life of our people might be changed by it. The issue is one which should be put forward in a General Election programme—not pushed through Parliament without discussion at the polls.
Mr. Heath: I am putting forward these points today so that the House might consider the great issues involved; and I am sure that the country, too, will be the better able to do so. I am sorry if, perhaps, from some points of view in the House, I am devoting so much time to this issue, but I think that it is right to do so. [An HON. MEMBER: "On this Motion?"] Yes, on this Motion, because this matter of European unity is of the greatest possible importance.
I have tried to describe the European position and I now want to say a brief word about the United States position, because its trading arrangements may well be affected by any solution we may reach. The new Administration in Washington have made their attitude quite clear. The United States is prepared to accept additional discrimination against its goods provided that the arrangement reached can be shown to strengthen the political unity of Europe. It does not feel itself obliged to accept further discrimination from a purely trading arrangement which carries no political advantage. This is a position we can all understand and appreciate. At the same time, it is for the countries of Europe themselves to decide what action they want to take in those circumstances.
As to the attitude of the Six, there is now evidence of a desire throughout the Community that we should reach a settlement. M. Couve de Murville, with whom I had most useful talks last October, which were followed by talks between the Prime Minister and President de Gaulle, has now publicly stated that it is open to us to accede to the Treaty of Rome, which is what the French Government would prefer, or to form some kind of association with it. This view is shared by France's partners in the Community. I therefore submit to the House that what remains is for us to pursue as vigorously as we can our discussions with the members of the Six about the nature of any settlement that is possible, and the means of dealing with our particular problems.
There are really four courses that are open. The first is to abandon the search for a solution. That would be a counsel of despair. The second course is to try to make an economic arrangement between the two separate groups,
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which will continue to retain their identity. We have, of course, been exploring this, and exploring it fully. It would mean some additional discrimination against the outside world without the corresponding political advantages necessary to offset it. As far as we can see at the moment, it is not a solution that particularly commends itself to the members of the Six.
The third course is for the United Kingdom, and other members of E.F.T.A.—not as a group, but individually—to make a form of association with the Community. In that course, one has to consider the degree of political participation which would be involved, which I emphasised at the beginning of my speech. One would also have basically to consider the influence of an association on the economic policies of the group. On this, again, there is much exploratory work to be done because the first form of association between the Economic Community and another country, that with Greece, has only just been made and has not yet been published.
The fourth course is that of full membership, provided that proper arrangements are made for Commonwealth trade and for our agricultural system to reconcile them with trade and agriculture in Europe, and proper arrangements for our E.F.T.A. partners. If we are to reach agreement there must be give-and-take on both sides. We shall not secure all we would like, but we shall share in great benefits which are not now available to us. To be lasting, any settlement must be fair to both sides.
This is an urgent matter. As the Community develops and its policies crystallise so it will become more difficult to fit into the arrangements which are made. So long as uncertainty exists, businessmen and those engaged in industry and commerce cannot make their plans, either for sales promotion or for investment. On the political side consultations cannot fully develop until this problem is solved. Nevertheless, it is bound to take time, in a matter as complex and as difficult as this, to find a solution to these problems.
As we have so often repeated, we are resolved not to start negotiations until

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we can see the prospect of a successful outcome from them.
Mr. Woodrow Wyatt: Negotiations have started.
Mr. Heath: We have not started negotiations, but have been carrying out exploratory talks without any commitment of any kind.
I have tried to put as fully as I can the aspects of these European matters, the political and economic aspects of the problem. We recognise that there are for the people of this country very deep human feelings involved in great matters of this kind. Those are feelings which sometimes are buried. They survive from times long ago but today they often colour, perhaps subconsciously, our attitude towards these things. After a point, human beings come to dislike change. Working out a new relationship with Europe involves major decisions and changes. It would be much easier if none of these developments had come about and if no decisions had to be made about them in future, but no nation which allowed that attitude to govern its actions could survive in the world today.
For all of us it is perhaps the Commonwealth which most permeates our thoughts on this problem. Our love for the Commonwealth is deeply bred within us and the question immediately raises itself: will our connection with the Commonwealth in any way suffer if we establish a new relationship with Europe? We must face this situation frankly and openly. Those who have been handling this matter have thought long and deeply about it. I believe that we can maintain our close connection with the Commonwealth and I believe that is what Europe itself desires. The personal ties which link individuals within the Commonwealth and the channels of trading which are so well established, the network of consultation which has grown up over the years, the Prime Ministers' conference, all these can be maintained.
Indeed, with the strengthening of our economic position we should be more able to help in developing the Commonwealth and to strengthen the ties which bind its members together. These then, are the issues which are involved.
Sir Harry Legge-Bourke. I am very sorry to interrupt my right
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hon. Friend, but could he say whether Her Majesty's Government have yet come to any view as to the likelihood of the Common Market countries going on to a common currency? If so, what are likely to be the consequences of that for sterling?
Mr. Heath: I could have dealt with the individual matters concerning the institutions. There are a number of other matters of Article III of the Treaty of Rome, of which financial and investment questions are one. On those other questions the members of the Six are only beginning to formulate policies and they are in the early stages. These are matters we shall have to explore in our talks.
I hope that hon. Members will realise the complexities and difficulties of finding a reconciliation between these matters and policies in the different countries. This is the problem that we are discussing in Europe today. I believe that it is one of the greatest which confronts our generation. It is technical and complex and its aspects must be kept in perspective. Above all, I think that the technical and commercial matters I have mentioned must be set among the great political issues I have described. They must be set in the context of the unity of Europe and the contribution they can make towards the freedom of Europe, on the unity and freedom of which peace depends.
4.36 p.m.
Mr. Denis Healey: I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
"in view of the dangers to world peace which have recently arisen in areas of political instability, particularly Cuba, Laos, the Congo and Angola, regrets the failure of Her Majesty's Government to cancel the visit of H.M.S. "Leopard" to Angola, and calls upon all Governments to base their foreign policies on the Charter of the United Nations, to seek the peaceful settlement of international disputes, and to promote positive co-operation between the Communist and Western Powers as the only means of ending the cold war and halting the arms race".
This Amendment stands in the name of my right hon. Friend the Leader of the Opposition, my right hon. and hon. Friends and myself and certain other hon. Members.

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We have listened to a rather extraordinary speech from the Lord Privy Seal, in which he spent a whole forty minutes talking about an issue which is not referred to directly in any way in the Motion that he was purporting to commend to the House. I shall have a word to say later about the rather odd practice of the Government Front Bench on this issue in this respect.
It is now almost exactly one year since we had a general foreign affairs debate in this House. Our last debate, at the end of May, 1960, was in the atmosphere of shock and dismay caused by the collapse of the proposed Summit Conference in Paris. We are met today in the lively expectation that within perhaps two or three weeks from now the President of the United States and the Leader of the Soviet Union will be meeting to discuss world problems in Vienna. I think it quite astounding that at a moment like this the Lord Privy Seal should have chosen to make a long academic, Ministerial statement on a subject which is not referred to in the Government's Motion. After all, the world as a whole is facing some very serious problems at present.
We cannot honestly report very much improvement in the situation since we last debated international affairs a year ago. The arms race continues, atomic weapons are spreading fast, Soviet action in Geneva is threatening to torpedo the conclusion of a treaty to ban atomic tests. I do not think chat we even had a mention of that from the right hon. Gentleman in opening the debate. A whole half of the world is convulsed by revolutionary change. We have had fighting in the Congo, in Laos, Cuba, Angola and Algeria, a coup d'état in Turkey and Korea and trouble in Iran. In many places the United States and the Communist camp are being dragged into these local conflicts.
Meanwhile, as the Lord Privy Seal did mention, the whole structure of the Western world is undergoing great changes. The Common Market is now solidly established on the Continent of Europe. The Whole programme of the North Atlantic Treaty Organisation is paralysed by the attitude of the French Government and we in Britain find ourselves in a position in which we may soon be forced to make some very difficult
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and perhaps unwelcome choices between the Commonwealth and Europe, and perhaps between loyalty to our N.A.T.O. partners and our obligations to the United Nations and the world community.
At a moment like this, the British people need leadership from Her Majesty's Government and a clear declaration from the Front Bench opposite of the priorities which are to guide our policy. I am sure that if they get that clear leadership, the British people will respond to it, but we are still in a state of total confusion about what the Government's basic aims and methods in world affairs are to be.
The only guide available so far to the British people is the interesting speech made by the Prime Minister, a month or so ago, not in the House of Commons, but to a mixed audience at the Massachusetts Institute of Technology, in the United States, a speech which, at first sight, looked quite interesting and novel, but which, on closer examination, turned out to be full of platitudes, many irreproachable, but also self-contradictory.
There was the right hon. Gentleman's reference to a nuclear partnership being a good thing, but a day or two later he told us that that was just a thought which he had thrown out and that in any case it was not yet relevant. Indeed, there is probably some truth in the rumour that the Americans are to erect in Harvard Square a woollen statue of the Prime Minister to commemorate his speech.
All we had from the Lord Privy Seal, apart from reading a number of briefs on the situation in the Congo and Laos, was a very long statement on what sort of problems the Government are facing in Europe, but there was no clue about how the Government proposed to deal with them. The British people and Europe as a whole need something a little more definite than we have had from the Lord Privy Seal, particularly in view of the great confusion caused by the flood of contradictory statements by the Prime Minister and other Government spokesmen in the last few weeks.
No sooner did the Prime Minister leave Washington the other day than we had a spate of inspired rumours that

1403
he had promised President Kennedy that Britain was to join the Common Market, rumours which seemed to be so well founded that they caused panic among Conservative farmers all over the country, and we heard rumours that the Government would lose 80 seats at the next General Election if they carried out that policy, and there was serious alarm among our fellow Governments in the European Free Trade Association.
In response to that alarm and panic, we heard from the Prime Minister last week that there was no question of our joining the Common Market and that the only question which we were facing was whether we would have some form of association which would be governed by a protocol to safeguard our special interests in agriculture, the Commonwealth, and E.F.T.A. That statement caused almost as much consternation among the six Governments with whom we are negotiating about the Common Market as the previous rumours caused among our partners in E.F.T.A., and so, yesterday, we had another statement from the Prime Minister, saying that, in fact, his mind was completely open and that he was prepared to join the Common Market, subject to amendment, or to some sort of protocol, or to have some sort of loose association entirely from outside.
On behalf of Her Majesty's Opposition, I must formally complain at the way in which the Lord Privy Seal and other members of the Government have handled this business this afternoon. They have put down a Motion which does not even refer to the European problem, except in the vaguest way with a phrase about Western unity, and yet we had a long and in some respects interesting statement by the Lord Privy Seal—forty minutes of it—for which we had been given no preparation whatever and which bore no relation whatever to anything in the Government Motion.
I would like the Lord Privy Seal to tell us why, instead of having a day's debate on this issue, which would surely be desirable in view of the nature of his statement to us, the Government have chosen to smuggle this very important issue into a two-day general debate on foreign affairs which is concerned with quite other issues. Of course, we
1404
know perfectly well what the answer is. The Government are scared stiff of providing a target for their own backbenchers. They believe that if they deal with the matter in this way criticism from their own side of their behaviour—justified or not—will be interspersed with remarks about Cuba, about Laos and about the Congo and that, somehow or other, the Government will go scot free. I hope that hon. and right hon. Gentlemen opposite will have the courage to support me in my complaint on this issue.
The question of Britain's relations with Europe is far too complicated and difficult to be dealt with in a corner of a general debate on the world situation. The Government should make it clear—and it is still not yet clear from what the Lord Privy Seal said this afternoon—that Britain would consider joining the Common Market provided that our special difficulties were met—if the Common Market countries prefer us to join it subject to our difficulties being met rather than have us associated with the Common Market in some way from outside.
But it seems very unlikely that the French Government, at any rate, will now agree to our doing anything other than signing the Treaty of Rome as it stands. In the light of the knowledge which one obtains from reading newspapers and talking to French politicians and civil servants, it seems that there is very little likelihood that General de Gaulle will change his position on this issue, at least until the Algerian problem is a good deal further along the way to solution.
For that and other reasons, we in Britain ought to send a message of good will from the House this afternoon to those participating in the talks at Evian this weekend between the French Government and the Algerian rebel leaders, because I am convinced that unless those talks launch the two countries on the way to a peaceful solution of their problems we simply will not get any effective negotiation on the Common Market problem.
Meanwhile, we make a great mistake in over-dramatising the dangers, which might flow ten, twenty, or thirty years ahead, from a failure to reach a settlement of the Six-Seven problem. There was a good

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deal of truth in some of the points which the right hon. Gentleman made, although I must confess that his presentation of the problem was very one-sided. It is fatal to give the impression—as much of what he said must have done—that there is no alternative for Britain to entering the Common Market and signing the Treaty of Rome.
To magnify the dangers of not taking that course inevitably means that the Common Market countries will be tempted to wait until we are prepared to sign the Treaty of Rome unconditionally, and I cannot help feeling that the way in which the Government have handled this matter in the last three or four weeks has gravely impaired our chances of obtaining from the Common Market countries the sort of concessions which we must have—and I know that the Government agree about this—if we are to consider entering the Common Market outright.
I must apologise to the House, even if the right hon. Gentleman will not, for spending so much time on our relations with Europe in my introduction of our Amendment, because, although our relations with Western Europe are important, they are not the most important problem facing Britain, or mankind. I must confess that I find some of my British and European friends almost as parochial about the Six-Seven problem, taking the view that the European problem is the only problem in the world, as those people in this country who think that Africa begins at Calais.
The question we ought to consider during these two days is how we are to live at peace with the Communist countries now that we both agree that war is suicidal. Whether we like it or not, the answer to this problem will depend in very large part on relations between two Governments, the United States Government and the Government of the Soviet Union. On behalf of my right hon. and hon. Friends, I welcome the rumour, which I hope is correct, that President Kennedy is to meet Prime Minister Khrushchev in a few weeks to explore the possibilities of making progress on this issue.
I admit to feeling that, if he takes such a decision, President Kennedy will be making a gamble. It is at least conceivable that a personal confrontation at this
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time might lead to less understanding rather than more; but I think that the gamble will be justified. Indeed, if no other issue would justify it, the complete paralysis of the test ban negotiations at Geneva makes it very necessary that there should be some initiative taken to try to break the deadlock.
In Britain, what can or should we hope from a meeting between the heads of the Soviet and American Governments? I would hope that we should gain greater clarity about what the Russians really mean by "peaceful coexistence". I think that we all, on both sides of the House, welcomed the declaration of the 81 Communist parties, in December, that war was not the inevitable end of the conflict between the Communist and non-Communist camps and that co-existence should be a permanent feature of relations between them, but I myself have increasing doubt about whether the Soviet conception of co-existence is sufficient to prevent war.
I cannot help recalling that Mr. Khrushchev, speaking on 6th January, defined peaceful co-existence in the following terms:
"Peaceful co-existence is a form of intense economic, political and ideological struggle of the proletariat against the aggressive forces of Imperialism in the international arena."
Lest any of my hon. Friends may feel that that lets us out. I can assure them that Mr. Khrushchev regards the British Labour Party as just as imperialist as any hon. Member opposite.
The Russians must be made to understand that co-existence in the sense of an absolutely unlimited struggle between two power groups is certain to increase international tension and that an increase of international tension is absolutely incompatible with disarmament or with peace. I believe that the sooner we make this clear to the Russians the better, and I hope that Mr. Kennedy, when he meets Mr. Khrushchev in Vienna, if he does meet him there, will make this one of the major objects of his visit.
I cannot help recalling, also, that in the same speech, on 6th January, Mr. Khrushchev, although excluding the possibility of most sorts of war, said "Communists most fully support just wars and march in the front ranks of the peoples waging liberation struggles".
Mr. Frank Tomney: Whose definition of a just war?
Mr. Healey: Exactly. Is if possible that we and the Russians will agree about what a just war is? I do not think so. I honestly do not believe that it is possible to pick and choose in the matter of war. If we want to prevent war, we must oppose all wars and all use of force in the pursuit of political ends.
We must tell the Russians, adapting the words of one of their greatest statesmen of the past, that co-existence, like peace, is indivisible, and that it is no good their expecting to reach agreements on questions like disarmament and other things if they simultaneously reserve the right, in Mr. Khrushchev's words, to make the very Governments with whom they are negotiating "jump about like fish in the frying pan".
If a confrontation of the Soviet and American leaders in Vienna does nothing else but bring this point home to the Soviet Government, it will perform a major service for world peace. The Russians must clear their concept of coexistence from that basic contradiction if co-existence is to work.
A short time ago I had the pleasure—it was a pleasure—together with several hon. and right hon. Members from both sides of the House, of spending a weekend in Sussex discussing these problems with several leading Russians, including the editors of Pravda and Izvestia. It was very difficult to get the point across, although I had the feeling that, by the time the weekend had closed, the Russians realised that there was a point there to be got across, although they were extremely embarrassed about how precisely they were to deal with it.
We must point out to the Russians that co-existence will not work unless it is constructive, that co-existence must involve co-operation, not conflict, between the two systems, that this cooperation may well end by modifying the nature of the competing systems, and that we on our side would welcome this. Positive, constructive co-operation between the two systems is absolutely essential to any form of disarmament or arms control. My right hon. Friend the Member for Derby, South (Mr. P. Noel-Baker) will deal with this aspect tomorrow.
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I believe, also, that this type of cooperation is essential if we are to prevent global war from arising from political conflicts in those many areas of instability which are now scattered throughout the world. It is this theme to which we attach so much importance in our Amendment, and to it I propose to devote the rest of my speech.
If we look back on world affairs during the last twelve months, we must be struck by the fact that there are nearly twenty countries in which some sort of armed conflict has taken place since we last debated these matters in the House. Most of these countries are in Africa and Asia; one is in Latin America. Indeed, most of Africa and Asia and much of Latin America is going through a long period of social, economic and political transformation. There is what is called the revolution of rising expectations, the determination of peoples in the developing areas to raise their standard of life quickly. There are innumerable problems of readjustment now that new countries have come into existence on the ruins of the colonial system. In one country of the world after another it is being discovered by bitter experience that the old social and political forms are quite inadequate to cope with the sort of changes which the people living there demand.
Change is an inevitable feature of development in these areas and is likely to remain so for another generation, if not two. The change will often be violent, as it has been in the Congo, Laos, Cuba, Korea, Iraq, Egypt, Angola, Iran and Turkey. So long as the basic cold war conflict continues, we have to admit that either side may be tempted to intervene in these local conflicts either because it thinks that it can exploit change to its own advantage, or because it thinks that the other side will gain by change unless it intervenes.
Perhaps the greatest single danger to peace today is the uninhibited pursuit of great Power rivalries in these areas of political instability in Africa, Asia and Latin America. We must think very hard indeed about the answer to this problem. Too often in the past, it seems to me, Western policy has been based on the assumption that we can prevent change by buttressing the status quo through alliances and large-scale military

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aid. I believe that the experience of the last ten years has shown this to be a fatal illusion. All too often, this attempt to deal with the problem hastens the very change it is desired to prevent and, moreover, ensures that the change, when it takes place, is to the disadvantage of the West.
Anyone surveying the world at present, particularly Africa and Asia, cannot help being struck by the fact that the injection of vast sums of money into undeveloped economies for military purposes has produced rampant and uncontrollable corruption, has actually widened the gap between the rich and the poor, and so promoted revolution with no consequent or accompanying gain in military strength to the West as a whole. We see it at this moment in Korea, which is seething with discontent and is the plaything of military cliques, with unemployment and famine rife, with total instability, and a coup d'état liable to take place from one day to another. We read in our newspapers this morning that in Iran, which is allied to us in the Central Treaty Organisation, 33 generals and 270 colonels have been dismissed for corruption. What value does that sort of military ally provide to the West? In the last six years 300 million dollars have been poured into Laos in military aid, but they failed to produce even 1,000 men who will fight against the Communists. Indeed, the consequences of the corruption which have accompanied the pouring in of that aid have disgusted many decent elements with the whole set-up and driven them towards the Communists.
It is often forgotten that General Kong Lae was trained by the Americans under the American aid programme. It was only when he completely lost patience with the corruption in Vientiane that he decided to try to put in a different sort of Government. When that was thrown out he decided to fight against Bonn Oum side by side with the Pathet Lao. I cannot help wondering if perhaps the United States is not about to repeat this mistake in South Vietnam.
There may well be cases, as I believe there are—I think that Pakistan is one—where great military and political advantages are to be gained by strengthening a stable and fairly honest Government. But we must recognise that
1410
in Africa and Asia the only battle that really counts is the battle for men's minds. We shall win this battle only if we treat change, in the phrase once used by the Minister of Health, as our ally and not as our enemy. I wholly agree with the remark in today's The Times that
"liberal political adjustments, foreign aid, and even action against corruption are not enough unless accompanied by social and economic reforms."
That is absolutely true. I am very glad to say that the American Government have realised this and that Mr. Kennedy's programme in Latin America, which he calls the alliance for progress, is based entirely on this principle.
We cannot hope to prevent change in these areas. Change is likely to be endemic there for a long time. What should we do if change produces Governments who are neutral or even hostile to the West? This is the very difficult problem about which none of us has fully made up his mind. When Mr. Khrushchev was talking to Walter Lippmann the other day in that very interesting interview which was published in Britain in the Observer, he seemed to suggest that this problem should be dealt with by dividing the world into spheres of influence and that, in a phrase used the other day by my hon. and learned Friend the Member for Northampton (Mr. Paget), America and Russia should constitute a Holy Alliance, each reserving the right to ensure that it had friendly Governments in its own part of the world.
We know full well that no attempt to solve the problem along these lines, quite apart from its flagrant immorality, has the slightest chance of success. It is not possible in the twentieth century for great Powers to make a decision and then impose it for ever on small Powers. Above all, it is not possible even for totalitarian Governments to impose their will for ever on ordinary men and women, as we have learned and as they have learned in Eastern Europe and Yugoslavia.
We are forced to the conclusion that the only possible answer to the problem in the long run is some sort of agreement between the big Powers not to intervene at all in areas of instability and, if political changes take place, not to take advantage of them. I believe that this sort of agreement can be made to work in the long run, provided that the United

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Nations can take the responsibility for keeping the cold war out of Africa and Asia. Above all, this approach to the problem has a chance of success because it meets the passionate desire of the Afro-Asian people not to be forced into commitments in the cold war and not to be lined up on one side or the other of the great divide.
Mr. Hammarskjoeld, in his very interesting report on his work as Secretary-General of the United Nations last year, accepted this responsibility as a proper one for the United Nations to adopt. Indeed, as the Lord Privy Seal said earlier, it has been the basic principle which the United Nations has been trying to follow in the Congo. I welcome all that the right hon. Gentleman said on this subject at any rate and hope very much that President Kasavubu carries out his promise to recall the Congolese Parliament and try to create a more satisfactory basis for some sort of United Government in the Congo.
I believe also that the West and the Communist Powers are groping towards some such solution in Southern Asia. After all, this is the basis on which the Geneva Conference is now meeting on Laos. Many of us feel that it would be a very good thing if the neutral area in this part of Asia could be expanded, as Prince Sihanouk suggested, to include Cambodia and any other governments in the area, perhaps Burma, who are prepared to accept this sort of status. I believe that the moves which we have seen in the Congo in the last twelve months and which we are now seeing in Laos represent the first timid faltering steps of mankind towards some sort of world government. Her Majesty's Government must throw all their weight behind it.
I am glad to pay tribute to the work of Her Majesty's Government in bringing about the Conference on Laos in Geneva at present, though I deeply regret that they did not follow our advice and press on with this proposal in December. Nobody has gained by the delay, except the Communists in Laos.
If we are honest, we must accept the fact that if we try to move the world in this direction we shall, in the short run at any rate, run into difficulties with the Soviet Union. The Soviet Union does not conceive of the United Nations
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operating as a world government. On the other hand, I believe that the Russians now see it as inevitable that the United Nations will extend its sphere of action in this direction. This is perhaps the reason why in the last nine months the Russians have shown themselves so determined to restrict the authority of the United Nations Secretariat and to extend the veto into every field of United Nations activity.
None of us on this side of the House thinks that the United Nations as it stands is perfect. In particular, we think that the Peking Government's admission to the United Nations is long overdue. We also believe that the reform of the Security Council is long overdue so as to reflect the real state of affairs in the world in 1961 and not the world in 1944.
But the Soviet proposal to introduce the triple veto into every activity of the United Nations is wholly wrong and is certain to be fatal to the development of the United Nations. Indeed, it would be fatal to the survival of the United Nations even in its present form, because introducing the triple veto, by the West, by the Communist bloc and by the uncommitted countries, would mean making the divisions of the cold war a permanent feature of a world which can live in peace only if the cold war is ended. But I believe that Russia can be led to change her policy on this issue, as she has already been forced to change her policy on the inevitability of war, providing that the West adopts the right policy; providing, in particular, that the West can win and keep the confidence of the uncommitted peoples in its sincerity and loyalty to the Charter of the United Nations.
Despite all the difficult and urgent problems that face us in Europe, I believe that the winning and keeping of the confidence of the uncommitted peoples is perhaps the most important single task of the West at the present time. How can we do it? Certainly we must give as much economic aid as we can possibly afford, and give it without strings, and, where possible, through the United Nations. I believe that the American Government has set a wonderful example of this by its very generous offer to India of one billion dollars for India's new plan. But we must remember that this offer depends on European

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co-operation, and I should like to ask the Government why the United Kingdom is giving so little.
As I understand it, at present the offer by the Government is only 20 per cent. of the offer of the United States and indeed is less than the offer of Western Germany. I press Her Majesty's Government most strongly—perhaps the Joint Under-Secretary of State will talk about this tomorrow—to recognise that the success of the Indian economic plan is probably the key to the survival of freedom in the whole of Asia.
We cannot hope to win political confidence by economic aid alone. Political confidence can be won only by political means. It depends on convincing the uncommitted peoples that we understand and sympathise with their aspirations; that we share their desire to see the remnants of colonialism liquidated; that we share their desire to abolish racial discrimination. I believe that here the policy of Her Majesty's Government is open to criticism, especially at the United Nations when the question of colonialism arises. We all recall the shameful incident last December when the British Prime Minister telephoned the President of the United States to get the American delegate to vote against his convictions in the United Nations Assembly on a resolution condemning colonialism. We on this side of the House are very glad that the new American Administration has given notice that it is not prepared to accede to such requests in future.
As is well known, we are disgusted by the sluggish reluctance of Her Majesty's Government to condemn apartheid in South Africa. We believe that on this and on similar issues Her Majesty's Government should take the initiative and not wait to be blown forward by the wind of change like a piece of tumbleweed or thistledown. In particular, we believe that Her Majesty's Government must take the initiative over the issue which is now arising in Africa so reminiscent in so many ways of the problem of apartheid in South Africa. I refer, of course, to the troubles in Angola.
Having at last plucked up their courage to attack apartheid in South Africa, I simply cannot understand why Her Majesty's Government should not have been prepared to do the same and
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to attack the inhuman action of the Portuguese authorities in Angola. Her Majesty's Government know perfectly well that human rights are not recognised in Angola. There is forced labour on an immense scale. Possibly 400,000 human beings are subjected to it. At the present time there is going on what is perhaps the bloodiest repression in African history.
It is very difficult to get reliable facts about this because it is as difficult for foreign journalists to get into Angola at present as it was for them to enter Tibet when the Chinese were in Tibet. But there have been reports that 20,000 people have already died, and if one is to take the statements of the Portuguese authorities at their face value, one must fear atrocious repression in the coming weeks. I should like to quote to the House the remarks of the Portuguese Army Minister, reported in a Portuguese newspaper, when he was saying goodbye to reinforcements for Angola. This occurred a fortnight ago on 5th May. He said:
"We are going to fight savages. We are going to fight wild beasts, wild beasts who are not Portuguese because they obey orders from international Communism. We are face to face with terrorists who have to be fought as one fights wild beasts…."
I had the opportunity last week of talking to English missionaries who had just returned from Angola and who brought with them appalling stories of mass shootings and casual murders. I really cannot understand why Her Majesty's Government should at this very moment have sent a British warship on what they call a good-will mission to Angola. I understand from what the Minister told us the other day that it was given Foreign Office clearance for this visit. The British Navy has a very old tradition, that of turning the blind eye. If Her Majesty's Government had not the courage to cancel the mission, could not at least there have been discovered some engine failure in the warship while it was still lying at Freetown, just as many of us suspect happened to the British warships searching for the "Santa Maria" in the Caribbean not so long ago? It seems to me that the Admiralty has developed blindness in both eyes and it is a blindness which this country cannot afford.
Above all, I think it fatal, as the Prime Minister did the other day, to

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make Portuguese membership of N.A.T.O. an excuse for the visit of this warship, because there is no better way of turning the uncommitted peoples of the world against N.A.T.O. and the West as a whole. It is absolutely essential that, as members of N.A.T.O., we should reserve our right to criticise our allies when they commit acts of which we disapprove outside the N.A.T.O. area—which in fact is what the Portuguese are doing at present.
Mr. Stevenson had no hesitation in doing that in the United Nations debate on Angola. Why did not the British delegate do the same? There may be some truth in what the American Secretary of State, Mr. Dean Rusk, is reported as saying in Oslo, that the main problem facing the West now is political in Africa and Asia rather than military in Europe. That may well be the case and if so we must not let military ties in Europe destroy our political position in Afro-Asia. Indeed, the opposite may well be necessary, as we found to be the case in South Africa.
This point applies to Belgium in the Congo and to Holland in New Guinea just as much as it applies to Portgual in Angola.
I believe that unless the Portuguese Government changes its policy in Angola N.A.T.O. may well have to decide, as did the Commonwealth in the case of South Africa, that the military advantage of Portugal's membership is not worth the political disadvantages of her membership. If we look at the situation honestly, we must face that fact, unless there is a change in Portuguese policy in Angola.
At present any change is likely to depend on a change of Government if not a change of régime in Lisbon. As we know from the experience of Captain Galvao, there is a chance of such a change. I do not ask Her Majesty's Government to encourage such a change, but I do ask them not to discourage those who are seeking to bring it about.
I wish to ask the Joint Under-Secretary two questions to which I hope he will reply tomorrow. First, is it true that the British consul at Sao Paulo has refused a visa to Captain Galvao who was invited to come to London, and if so, why? Secondly, I should like to ask
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a question about the visit of the Secretary of State to Portugal in the next week or two. I do not want to make a party issue of this, but I hope that the Secretary of State will reconsider his decision to visit Portugal at this time. I understand that at the present time his programme commits him to be present in Lisbon on 28th May when the anniversary celebrations of Salazar's coup d'état are taking place.
The Secretary of State must recognise that if he is present at these celebrations it will be taken as a sign of British support for the Portuguese régime, and it will intensely discourage all those elements in Portugal which do exist and which want a change in Portuguese policy in Angloa and a more liberal system in Portugal itself. I do not press for an answer on that at this very moment, but I ask the Under-Secretary of State and the Lord Privy Seal to convey this feeling to the Secretary of State and to ask him to reconsider his plans for a visit to Portugal in the light of developments since he first made his decision.
I believe that we in Britain have a very good colonial record and that we can win and keep the confidence of the uncommitted peoples in our sincere attachment to the principles of the United Nations provided that we show ourselves prepared to apply our own principles to our allies as well as to our enemies and provided that we are pre pared to follow them ourselves. Above all, we must resist the temptation to follow the Soviet example of violating United Nations principles when they conflict with our own judgment of what is our national interests. This is a temptation which I confess must often be very strong, especially when we see the Russians or Chinese getting away with the violation of international law and of the United Nations Charter as they did in Hungary and Tibet.
I believe that it would be fatal to surrender to this temptation. To do so would be to play into the hands of the Soviet Union and would do more than anything else to justify the Soviet demand for diving the world into spheres of interest and for introducing a tripartite veto into the whole structure of the United Nations. It is certainly very often inconvenient for the Western democracies to be judged by a double

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standard, but do we really want to be judged by Communist standards?
I must say something here about the recent events in Cuba. I have already paid tribute in my speech to the revitalising effect of the new American Administration on American foreign policy—to the tremendous progress it has made in its policy on Laos, in its proposals for a ban on atomic tests and in its imaginative plan for Latin America. It has gone a long way to restore the Roosevelt image of the United States as a vigorous, imaginative and progressive Power.
I think that it is for that reason that the recant events in Cuba came as such a tragic shock to many of us. I am not concerned with the incompetence of execution but with the assumptions that governed its conception. I think that we all are comforted that at least President Kennedy ruled out that direct intervention by American forces which I understand had been planned by the previous Administration.
But the sombre fact is that the aid which was given to the Cuban revolutionaries was a violation of America's own Neutrality Act, a violation of the treaty establishing the Organisation of American States, and a violation of the United Nations Charter. It is true that there is a long tradition in Central America for such aid for revolutions. At one time Castro himself benefited from this tradition. Indeed, I think that many people who complain about American action in Cuba have never complained about the Tunisian and Moroccan Government giving help to the F.L.N. But a great Power which aspires to leadership of the world cannot permit itself this type of liberty.
I believe that the solidarity of the whole of the Western Alliance depends to a very large extent on the confidence of the allies in the wisdom and good will of the United States Government. Anything which shakes that confidence is not only a disservice to the United States but to the Western Alliance as a whole. It is for this reason, as a strong and consistent supporter of our alliance with the United States, that I believe that I have the right, and indeed the duty, to offer these words of criticism.
I could not help feeling that in some ways the arguments that President Kennedy used after the operation had
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failed were more worrying than the operation itself. I believe that, on reflection, he will regret the speech which he made to American editors in which he appeared to claim the right to break international obligations if they appeared to conflict with America's national security. I think that he will regret, in particular, the extent to which he appeared to claim the right to shelter behind the precedent set by Russia in Hungary.
I believe, too, that President Kennedy made a great mistake in invoking the Monroe Doctrine to justify American intervention in the internal affairs of Latin-American countries. He certainly knows now that the Monroe Doctrine in this sense is totally unacceptable to all the other countries in the Western hemisphere. Indeed, such a claim to spheres of influence plays right into Russia's hands.
I believe that the American Administration has already learned most of the lessons of this unhappy experience. In particular, I think that it has learned the danger of putting so much political power into irresponsible hands, and I believe that there are grounds for confidence that the American Government is now going to establish effective political control over the Central Intelligence Agency. This, I believe, is as much an allied interest as an American interest. Because I believe that in the last few years the Central Intelligence Agency has been responsible for many errors in American policy, in Laos as well as in Cuba.
I must say that I deeply regret that Her Majesty's Government did not speak up for international law and the United Nations Charter when this matter was debated in the United Nations Assembly. I can understand that they might have felt a peculiar embarrassment in doing so in the light of their own record in the Middle East four or five years ago. I believe that President Eisenhower was right then to oppose his allies when they undertook a disastrous adventure without consultation. I believe that the West as a whole gained from its lack of solidarity on that occasion and would similarly have gained on this occasion had Her Majesty's Government spoken up for principle similarly in the United Nations Assembly the other day.

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Above all, I still fail to understand how the delegate of Her Majest's Government could justify not supporting those passages in the Mexican resolution which asked that members of the United Nations should refrain from encouraging and fomenting civil war in other States. It seems to me that abstention on this occasion—and we were in very poor company when we abstained—is liable to be open to the most serious misinterpretation in many parts of the world in years to come. But, above all, I believe it is vital that the British Government should make it quite clear that they will oppose any further attempt to use force against Castro contrary to international law. I believe that we have the right and duty to make this clear not only as a trusted ally of the United States and as a member of the United Nations but also as a major Power in the Caribbean area.
Nothing that I have said means any support or, indeed, sympathy for the Castro régime in Cuba. It is, indeed, repugnant in very many respects, though I rather agree with The Times editorial which recently suggested that although it had great Communist influence inside it, it was not yet a Communist State in an East European sense. But the whole point of co-existence is that one must live with countries whose régimes one dislikes or even detests. It is easy enough to live with those whose régimes one likes. As I say, the whole point of co-existence at present is to live with régimes one dislikes.
Hon. Members: What about Portugal?
Mr. Healey: Whilst I believe in living with the régime, I do not believe in allowing the Portuguese régime to violate the United Nations Charter of Human Rights in Angola without a protest from Britain as a member of the United Nations. I believe that the same argument which led the British Government to vote against apartheid in South Africa should lead them to vote against the Portuguese attitude in Angola.
One of the most dangerous immediate effects of the Cuban episode was the revival in the United States of the old heresy, which has its counterpart on the Soviet side of the Iron Curtain, that the world is somehow divided into democratic saints and Communist devils, and
1420
that compromise is impossible. I regret very much the remark by Mr. Lincoln White, when the Castro Government offered to negotiate with the United States, that Communism was not negotiable.
I think that we are learning now that there are as many varieties of Communism as there are of democracy, and that there are many countries which are not Communist but which are not democratic either. The Communists may fear this diversity. Indeed, they do, because this diversity is the greatest threat to their system. It is incompatible with their doctrine, but we, if we are democrats, must welcome it.
The Communists ask us to accept their challenge to competition and conflict to see who can win the cold war. I believe that the important thing is not to win the cold war, but to end it, and to end the cold war means co-operation between the two systems, and not conflict. I believe that the vast majority of mankind sees the basic international problem in this way, and I believe that provided we stick to our principles, and provided we adhere loyally to our obligations in international law, we can, and must, make the Russians see it this way too.
5.33 p.m.
Mr. Francis Pym: In addressing the House for the first time, I ask for the indulgence which the House so generously accords its newest recruits; the indulgence which the House has in the past accorded to the several members of my family who have had the honour to sit here over the last three and a half centuries. I hope that the House will not think it presumptuous of me to have said that.
I am privileged to follow Sir Gerald Howard, as he now is. For ten years he was a well-known Member of the House, and he has been a most distinguished member of the Bar. I am sure that all hon. Members would want to join in wishing him well in his new and important office.
I represent Cambridgeshire, one of the loveliest English counties, and famous for its villages. I think that right hon. and hon. Members would wish that that peacefulness which is a characteristic of Cambridgeshire was more prevalent in the world today.

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I venture to speak on this occasion and in support of the Motion, because I know from my recent experience in the election how strong is the desire for peace and the willingness to attain it; and our foreign policy is nothing if it is not the pursuit of peace.
The first point that I want to make is on defence. We must have adequate defence forces, for at present, whether we like it or not, there can be no peace or security otherwise. The people in my constituency, and the people in the country as a whole, are prepared to foot the bill. In fact, they know that if they do not the other bill will be higher.
The tragedy of Singapore, in the last war, when so many Cambridgeshire men were taken, is still a real memory. The people of this country are not prepared to forgive weaknesses in our defences. Indeed, they do not appreciate weakness at all, and this applies to our economic and domestic policies as much as to foreign affairs. But the risk of weakness in defence is too great, and there is some disquiet at present about the level of our conventional forces. Our regiments become amalgamated one with another and grow less in number, yet our commitments for those forces do not seem to diminish in any way. I urge the Government, with all the earnestness that I can, to make sure that our forces are adequate for the tasks which confront them, and that we are bearing at least our part of the burden which we share with our allies.
One of the problems of the so-called Western world is that it comprises a much larger number of countries and covers a much wider area than the Communist and Eastern bloc. Clearly, this makes our task the more complicated and we group together to protect ourselves by a series of alliances. These alliances are arranged geographically, and the problems are tackled area by area. This is right, but I wonder whether it is enough.
Is there anything to be said for an occasional meeting of all the free countries in the world—those not under Communism or under the Communist yoke? The only occasion at present when all these countries meet is in the Assembly of the United Nations, and there are many influences present in that forum which have to be token into
1422
account. I think that it might help to get a new purchase for negotiations with the Soviet Union if the free world held a conclave of its own. I would welcome any measures of this sort to further international co-operation.
That leads me to consider the Commonwealth, which is the only alliance or group of nations which comes anywhere near to encompassing the earth. Some people say that it is now disintegrating, but I do not accept that. Gloomy forecasts as to its future have been made in the past and been proved wrong. The Commonwealth has a substantial history behind it, and is in the habit of evolving, of adapting itself to changing circumstances. I am one of those who believe that the Commonwealth is one basis of our hope for the peaceful co-existence of nations, and I think that we must try to build on it.
If we believe in that policy, we need to do two things. First, to invest more in the Commonwealth, especially in those countries which are under-developed. I welcome the increased emphasis which has been placed on this policy lately, but I should like to see more done to publicise and bring home to our people the importance of it, the purposes behind it, and the sacrifices involved. I am not thinking only of financial investment, but also of the many opportunities which exist overseas today for our young men and women with a spirit of adventure. I believe that this is an appeal which would go down well in the country, and one to which the country would respond.
The second thing which we need to do is to try to increase the membership of the Commonwealth. It is normal practice today for associations and clubs to try to increase their membership, and I do not think that the Commonwealth should be any exception. Certainly, we do not want any closed doors. We want an open association. Is it possible that countries in addition to those who have recently attained their independence and joined the Commonwealth might become members? It is an expansion and extension of membership which we require so that the influence of Commonwealth ideas can spread.
It is in that sense that I see the Common Market as an opportunity. I welcome my right hon. Friend the Prime Minister's reaffirmation only yesterday

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that we shall not sign the Treaty of Rome in its present form. I know that that is partly due to the agricultural difficulty, but there is also the difficulty of Commonwealth trade. If we become associated with the European Economic Community, it will surely be with the Commonwealth, and in that way the influence of both groups will be enlarged.
There seems to be a tendency sometimes to look at the Common Market in isolation, whereas, in fact, it is one of the stages in the economic integration of the West. This is not a process that we could or should arrest, but one we want to foster in principle in the general interests of the widening of world trade and the strengthening of the economic position of the West. Naturally, we must look after the interests of our own people, but, equally, we want to break down international barriers. I hope that we shall be able to find a satisfactory way of bringing Europe and the Commonwealth closer together, to the mutual benefit of both.
I believe that this movement towards unity, coupled with adequate defences, will contribute significantly to that peace which, as I said at the beginning, is the one desire that is common to the hearts of all our people.
5.40 p.m.
Mr. Arthur Henderson: I should like to extend the congratulations of the House to the hon. Member for Cambridgeshire (Mr. Pym) on his thoughtful and interesting maiden speech, and to express the view that we shall look forward to further contributions from him.
I can tell the Lord Privy Seal that I share the regrets which have been expressed by my hon. Friend the Member for Leeds, East (Mr. Healey) at the way in which this debate has been opened. To spend forty minutes on an admirable exposition of the various phases and technicalities of the problem of entering the Common Market does not fit well into what was thought to be a two days' debate on foreign affairs. It would have been well worth while for the Government to have had a special day for a discussion of this problem.
Having said that, I want to make it clear to the Lord Privy Seal that, speaking
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for myself and not for my party, I am very much in agreement with what he said. Those who believe in the building up of a United States of Europe—a concept for which I have stood all my political life—are convinced that there is an overwhelming case for saying that the beginnings are to be found in the establishment of this Community of the Six, and that it is very much in our national interest to enter that Community one day. On the other hand, it would be fatal if Her Majesty's Government were to take precipitate action before public opinion was well seized of the implications of such a step. I do not know how many hon. Members have taken the trouble to study the Treaty of Rome, with its 248 clauses and its nine protocols, but anyone who has will realise that it raises many complicated and technical problems which must be understood not only by those who are responsible for taking action but by the whole of our people.
Although I am in favour of our entering the Community, I realise that if we are going to carry the public with us we must wait until various agreements have been negotiated, in the form of protocols to the Treaty, covering the three reserved matters to which reference has been made this afternoon. It will not be possible to sell this concept to our people unless they understand what will follow from it. Nevertheless, sooner or later, our people must realise that it is very much in our national interest, as well as being in the interests of international co-operation, to take this further step towards building up a United States of Europe.
I now want to say a few words about the problem of disarmament. In the past ten years, like other hon. Members, I have had many occasions to deal with this very difficult problem. Many of us have been very disappointed at the continued deadlock in disarmament negotiations. On the other hand, we must remember that world disarmament is perhaps the most elusive of world problems. It is also one of the most important and most complicated, which is one reason why it is so elusive. I do not feel too discouraged by the length of time that has been taken up in discussions of this vital problem, without very much apparent progress having been made. I was therefore encouraged

1425
by the recent announcement that informal discussions were to take place in Washington between the United States and the Soviet Governments on procedural matters involved in securing a resumption of disarmament negotiations.
Like my hon. Friend the Member for Leeds, East, I welcome the report that President Kennedy and Mr. Khrushchev will meet in the near future. It looks as if those talks will be informal. That will be an advantage. We all remember the fiasco of the Summit Conference of last year, when the publicity attendant upon the failure to hold it did a great deal more harm than good. I believe that informal talks between Mr. Kennedy and Mr. Khrushchev—the kind of informal talks that our own Prime Minister has had with President Kennedy—can be most useful.
There seems no likelihood of any real progress being made towards peaceful co-existence between East and West unless and until some measure of confidence and understanding has been achieved as a result of personal talks between these two statesmen. This is an essential step towards breaking the ice. I therefore hope that there will be an early meeting between the Soviet and American leaders. This would be the most helpful first step that could be taken to end the present deadlock and bring about a resumption of serious negotiations, especially on disarmament.
On 7th May, Mr. Khrushchev said:
"the peoples are waiting for the talks on disarmament to get out of the stage of endless discussion. They are waiting not for control over armaments but for disarmament under control."
How right Mr. Khrushchev is in urging that we should get out of the stage of endless discussion. But he, more than anyone else, could end the endless discussions at the Geneva Conference. On Monday last, Mr. Tsarapkin, the chief Soviet delegate, threatened that unless the French stopped their nuclear tests the Conference would become abortive and a treaty impossible and, further, that if they did not stop the Soviet Government might be obliged to resume their own tests.
All this is very unconvincing. The French Government have carried out four tests in the past fourteen months—in February, April and December of 1960
1426
and in April of this year. Why have the Soviet Union waited so long before raising this matter at the Conference as representing a major obstacle to the conclusion of a treaty? It has always been the general view—shared equally by all three Governments represented at Geneva—that the signing of a treaty for the cessation of nuclear tests would make it most unlikely that any future nuclear tests would be held by any other Government. It seems evident that the Soviet Government are stalling for time. Those who, like myself, believe in the sincerity of the Soviet Union's desire for disarmament, are not only mystified but discouraged. I hope that the Soviet Government will reconsider their attitude and will sign the Treaty.
On the same occasion, Mr. Khrushchev talked of the need for disarmament under control. But this also is common ground. M. Jules Much first proposed this formula six years ago with the approval of the United States, the British and the French Governments. Moreover, the Soviet proposals of 2nd June, 1960, the United States proposals of 27th June, 1960, and the Commonwealth Prime Ministers' proposals of 17th March this year all proposed general disarmament under control. In view of that, what is holding up an agreement? Why are Governments so hesitant?
Intensified public pressure on all Governments, including Mr. Khrushchev and the Soviet Government, is needed. Talk alone is not sufficient. Both the United States and the Soviet Governments should take the Commonwealth Prime Ministers' disarmament proposals as the basis for further negotiations. This scheme of general and comprehensive disarmament represents the views of a great variety of nations, especially the non-committed countries like India, Pakistan, Ghana, Malaya, as well as countries like Australia and New Zealand, neither of which has been directly associated with previous negotiations.
The United Nations Association is doing very useful work with its inquiry on disarmament—a national campaign designed to make as many people as possible think about the proposals put forward at the Commonwealth Prime Ministers' Conference. I hope that the Government do not accept the view of a

1427
Sunday newspaper which recently made the accusation that it would be undermining the security of the Civil Service to ask civil servants to express their opinions on such questions as China's representation at the United Nations and the problem of disarmament.
I should like to refer to the growing policy of intervention in the internal affairs of another country, to which my hon. Friend the Member fox Leeds, East referred in his powerful speech. In recent years there has been in South-East Asia persistent talk of Communist penetration across the post-war boundaries by guerrillas and political cadres.
There has been active reaction by the United States in the form of the provision of military aid of various kinds. Laos and South Vietnam are glaring examples of this dangerous policy of intervention, characterised by large-scale military aid by the United States and by the Communist States to the contending parties in both countries.
In Cuba, the United States has provided assistance and training for Cuban rebels. Intervention breeds intervention, whether it be direct or indirect and whether the forces are used conventionally or otherwise. Intervention by guerrilla operations, terrorism and political subversion organised from outside a country could constitute just as much a threat to world peace as could an open attack by conventional forces.
It seems, in recent years, that this method of intervention is becoming more frequent, and I remind hon. Members that it is dangerous to play with fire. It can spread, get out of hand and lead to a major conflict. We are told, meanwhile, that the United States is talking about preparing what are called non-conventional forces to deal with situations involving Communist intervention. In that case, we may expect the Soviet Government to act in like manner.
The strong attack made by the Chinese Foreign Minister yesterday at the Laos Conference on the United States is indicative of the dangers of this policy of intervention. The statement made by our own Foreign Secretary yesterday, in which he said that a
1428
young, weak country like Laos could hope to survive only if free from strong international pressure, seems to illustrate the value and principle of non-intervention.
No time should be lost in considering ways and means of bringing an end to intervention in the affairs of small nations by so-called non-conventional military action and military aid. I agree that if we are to safeguard the security of the small nations of the world—there are fifty to sixty of them at the present time—it ought to be done through the economic channels, by building up standards of living and by making their peoples impervious to the onward march of Communism.
This responsibility should be placed on the United Nations, backed up by active co-operation from the countries of both East and West. As my hon. friend the Member for Leeds, East said, we are not going to resolve these great international problems unless we can secure co-operation between East and West, and one country should not have to assume this responsibility on his own. As the Lord Privy Seal reminded us this afternoon, mainly through the United Nations efforts a policy of non-intervention was largely followed in the Congo which averted the possibility of serious international conflict.
Mr. Khrushchev said the other day that Russia will achieve the victory of Communism without war. That suggests that co-existence is compatible with a continued struggle with Communism. It is becoming more evident that the Western democracies are to be compelled to take part in a world struggle in which victory will not be decided in the field of battle but in the minds of men. That means that the most powerful weapons in the hands of the democratic countries are the moral principles of the United Nations Charter.
It is vital, therefore, that the democracies should preserve their moral authority and should denounce all cases of internal revolution instigated from abroad. I do not believe that any alteration or strengthening of the powers of the United Nations will necessarily deal with revolutions that are organised within a country. But those instigated and aided from abroad must be dealt with on this basis, and democracies must

1429
adhere firmly to a policy of non-intervention and to a loyal observance of the principles of the United Nations Charter.
Hon. Members on this side of the House believe that it is only possible, through loyal observance of the obligations which we incurred when we signed that Charter, that we can hope to build up a world in which war will be outlawed and in which the security, freedom and independence of all countries, including the small ones, can be assured.
In a world that is based on power politics, the only way that we can ensure that aim is by the method suggested in our Motion—the return of our foreign policy to the principles of the United Nations Charter.
5.59 p.m.
Mr. Aubrey Jones: The Lord Privy Seal has been twice chided for having opened this debate by talking, in the main, about Europe. I hope that I shall be forgiven for taking a leaf out of his book, not that I would not have preferred to have had a debate specifically devoted to Europe. A specifically European debate would have been better, for the quality of our debates suffers when the Motion before the House is not pointed—and no hon. Member can say that this Motion is pointed.
In the absence of a pointed Motion on Europe, I choose Europe as my subject because the problem of Europe is basic to practically every other problem mentioned today. In almost all the subjects that have been raised—Laos, Cuba, East-West relations, disarmament—the fundamental question we are discussing is the influence which Britain can exercise in the world. It is probably true to say that for long stretches of our history our influence has exceeded the power that we have actually wielded. None the less, there is a broad correspondence between influence and power, and as our power as declined our influence has also declined. This is a fact which, it seems to me, neither of the two speeches which we have so far heard from the other side of the House has fully recognised.
It is against this fact that I suggest we ought to look at what my right hon. Friend described as the new power unit which has arisen on the European Con-
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tinent. My right hon. Friend asked us to look at this European problem in perspective. I do not think we can put it in perspective unless we go back to the day, ten or eleven years ago, when the Europeans first came to London and put before the then Labour Government the proposal for a European Coal and Steel Community. I did not participate in the discussions and my interpretation of what then happened is of necessity based on reading and conversation. I hope, none the less, that my interpretation is not basically in error.
My interpretation of what happened on that occasion—and I think this is extremely relevant to the problems that we still face today—was this: the Europeans spoke to us in terms of the broad objective of integrating some of the countries of Western Europe into a new political unit. They described the purpose of this new unit as twofold: first, to end the fragmentation of Europe and to secure a pooling of resources so that Western Europe could more effectively match the Soviet bloc; and, secondly, so to bind Germany with Western Europe that her eyes would be permanently averted from her lost Eastern territories. These were the objectives of the European Community—I do not use the word "Economic" Community, which was in the phrase used by my right hon. Friend.
If my interpretation of the history is right, the Government of the party opposite replied to the effect that this country was prepared to negotiate on coal and steel. Receiving that reply, the Europeans put the then Government on the spot. They said, "Do you accept the basic objectives? If you do we can negotiate, but, if you do not, then there is simply no point in negotiating." At that, the then Labour Government baulked and there were no negotiations for our entry into the Coal and Steel Community.
Mr. Douglas Jay: I happened to take part in those conversations. The right hon. Gentleman has said that he did not. I would only say that he has given an inaccurate account of what happened.
Mr. Jones: If I am at fault I ask forgiveness. I am only giving the interpretation which I have received from elsewhere. Be that as it may, the Labour Government rejected the objective, even

1431
though two years earlier the Labour Patty conference had passed a resolution calling for
"co-operation of the European Socialist parties in taking practical steps to achieve the United Socialist States of Europe (including the establishment of supra-national agencies to take over from each nation powers to allocate and distribute coal, steel, timber, locomotives, rolling-stock and imports from hard-currency countries) in complete military and political independence of the U.S.A. and the U.S.S.R."
It may well be that that resolution explains the absence today from the Order Paper of a pointed Motion on Europe from the other side of the House. But it is important to ask ourselves why the then Labour Government baulked at this objective of a new European unit. I speculate that there were two reasons. The first was that they did not believe that, without our participation, the European movement would effectively get under way. I think that the events of the past ten years have disproved that belief.
The second and much the more important reason is that they saw the position of this country in the world in the terms in which it was described in those days by my right hon. Friend the Member for Woodford (Sir W. Churchill) and Sir Anthony Eden. The House will recollect that both my right hon. Friend the Member for Woodford and Sir Anthony Eden drew the flattering picture of this country at the junction of three large circles—the Commonwealth circle, the Atlantic circle and the European circle—and by virtue of this happy position we exercised worldwide influence.
To ensure the continued exercise of this world-wide influence and to ensure the continuance of this happy position at the junction of three large circles, it was thought that we had to continue as an independent national entity. That is the picture that was drawn of the position ten years ago, and it is perfectly true of the British position then and as it had been in history. The question which we have to ask ourselves is whether that picture is true today.
Take, first, the European circle. I would suggest that our influence in Europe has declined. I think that my right hon. Friend the Lord Privy Seal was right in describing the main threat of the Six to this country not so much as a threat
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in the sense of commercial discrimination, but as a political threat. It is a fact that though the treaties establishing the European Community are so far couched in economic terms, there have arisen habits of political consultation from which this country is excluded. We saw evidence of this a year ago, when the Summit Conference failed.
Surely, one of the reasons why the Summit Conference failed was that we failed to convince our European friends of the desirability of holding a Summit Conference. I suggest that our influence in Europe has declined and that our influence with the United States must go in the same direction, not only because the United States feels ideologically sympathetically inclined towards the concept of a United States of Europe, but also because the emergence of an important new power on the Continent must, in time, displace us from our special relationship with the United States.
It is indisputable that to ensure the maintenance—I would even say the restoration—of our influence in Europe and the United States we must join the Six. There remains, however, the question of the Commonwealth. I do not think that any of us can find it easy mentally to reconcile the concept of the Commonwealth with the concept of this country as a member of an integrated Europe. I do not think that any of us can deny that if we in the United Kingdom were to join the European Community it would be embarking the Commonwealth on a course the end of which none can foresee. None the less, I have come to the conclusion that the maintenance of our influence on the Commonwealth and the maintenance of the Commonwealth influence requires that we join the European Community.
I venture to offer the House two reasons for this belief. First, what is the Commonwealth? It is a loose assembly of independent, often self-assertive States, scattered throughout the world. It is not a power unit, although some people may argue that, had more positive policies been pursued towards the Commonwealth, it might have become a power unit. I personally question that; I believe that the fact of geographical dispersal has always been against the Commonwealth being a power unit. Be that as it may, as it

1433
is, the Commonwealth is a loose assembly of States, and throughout the world this structure of a loose assembly of independent States is threatened by a quite new phenomenon—the phenomenon of regionalisation, or the tendency to form regional groupings.
Of these regional groupings, Europe is only the first in time. There is emerging a Pan-African movement and a South-East Asian movement. If, on grounds of the Commonwealth, we elected to stand apart from Europe, our whole effort in a few years' time might be shown to have been abortive, because we might well be confronted with exactly the same problem in Africa and again later in Asia. I can only conclude that we cannot freeze the Commonwealth in its present pattern. We must adapt it as best we can to this new movement.
My second reason for suggesting that our influence and that of the Commonwealth in the world will decline unless we join the Six in this. I have used the language of Sir Anthony Eden and have spoken of three circles. But they are not mutually exclusive circles. They are, in fact, complementary circles. Our influence in Europe and the United States has depended in part on our influence in the Commonwealth. But the converse is also true. Our influence in the Commonwealth depends in part on our influence in Europe and the United States. Day by day we see new Commonwealth territories acquiring independence and asking themselves whether it is worth while their remaining in the Commonwealth. Their motive for arriving at an affirmative answer to that question must weaken as the influence of this country in Europe and in the United States weakens. I think that on all three counts—our influence in the Commonwealth, Europe and in the United States—we must join the Six.
I agree, however, that we have difficult problems of reconciliation concerning the Commonwealth and Europe. Here I should like to venture a comment on the Government's approach to this difficult problem of reconciliation. It appears to me that their approach has been too negative. I suggest that in talking about this subject we have repeatedly given the impression of trying to protect an established Commonwealth interest. I wonder whether we could
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present the Commonwealth to Europe in more positive terms—very much in the terms used by my hon. Friend the Member for Cambridgeshire (Mr. Pym), in his admirable maiden speech.
As I see it, the value of the Commonwealth is that it is a model of co-operative relationships between developed and underdeveloped countries, or, if we like, between rich and poor countries. But the value of this model in the world is infinitely enhanced if the range of developed countries with which it is associated is extended. Similarly, the value to the Europeans of a new European unit is significantly enhanced if Europe is engaged in this crucial world problem of relationships with under-developed countries. I suggest that we must talk in terms of a synthesis in the widest sense of the Commonwealth and Europe and that this ought to be our strategic aim.
Sir Harmar Nicholls: My right hon. Friend is making a very important suggestion to the Government. Is he saying that we should join the Common Market on the present terms as we understand them, without any alteration, and then, having accepted those terms, that we should try to sell the Commonwealth? Or is he suggesting that we should first sell the Commonwealth and then get terms which would enable us to join? Is he suggesting that we should join first and sell afterwards, or that we should sell first and join afterwards?
Mr. Jones: I am not suggesting at the moment either. I will come to the question of tactics in a moment.
If we want to obtain the best terms from Europe, we must sell the Commonwealth to Europe, not in the sense of a fused Commonwealth and Europe, because we cannot fuse the loose association of the Commonwealth with an integrated new Europe, but we can admit slowly and gradually, over time, the Europeans into the co-operative structure of the Commonwealth. This is difficult and something which has not been done before. But our pride in the Commonwealth is that it is a flexible institution. It would be a poor day for the Commonwealth if we concluded that it could not in time adapt itself. I put this forward as a strategic aim.

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I come now to the question of tactics. Although it may be disputed, my version of the events of ten years ago is that Europe said to us, "Accept the objective first. If you accept the objective, we can negotiate". I think that this has always been the main obstacle to our entry into Europe. If there is any French nationalist sentiment hostile to our entry into Europe, which I doubt, it is quite subsidiary and subordinate to this earlier difficulty.
Ten years ago, the Labour Government said, "We must negotiate before we accept the objective". The attitude of the present Government, as explained by my right hon. Friend the Lord Privy Seal in his speech in February at the Western European Union Parliamentary Assembly, was, as I understood it, in exactly the same terms. He said that we must negotiate first before we accept the objective. The speech of my right hon. Friend today was, I think, again in those terms. I am not sure of that, but that is my interpretation of his speech.
I well understand the reluctance of the Government to weaken our bargaining position by accepting the principle in advance. It may well be true, as a broad generalisation, that one ought not to enter into negotiations by accepting the principle in advance. What we must ask ourselves is whether that generalisation is valid in this context. I suggest that it is not. I believe that for ten years the Europeans have not changed their position. They have always said, "Accept the objective first and then we can negotiate".
On the other hand, for over ten years we have constantly shifted our position. We started by saying that we could not accept the Coal and Steel Community and Euratom. Last summer the then Under-Secretary of State for Foreign Affairs said that we were now prepared to accept both. We originally said that we could not accept the principle of a common external tariff. My right hon. Friend the Lord Privy Seal said at the Western European Union Parliamentary Assembly last February that we are now prepared to accept a limited common external tariff.
Bit by bit we have changed our position while the Europeans have not changed theirs one iota. If this trend
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continues, it must end up as the Europeans have always wanted, and that is by our reluctantly accepting the objective. But, by giving the impression of reluctance, our sincerity will be questioned and our bargaining position will be infinitely weaker than it otherwise would have been.
If I might draw an analogy—I hate analogies, because they are always to some extent false—I would say that one does not begin to negotiate with a prospective father-in-law over the size of the dowry before deciding in principle whether to marry the bride. One first decides to marry the bride.
The hon. Member for Leeds, East (Mr. Healey), and again the right hon. and learned Member for Rowley Regis and Tipton (Mr. A. Henderson), differed from my right hon. Friend the Lord Privy Seal in not attaching too much importance to the urgency of this question. I think that the hon. Member for Leeds, East told us not to dramatise unduly the effect of doing nothing for the next ten, twenty or thirty years, but I agree with my right hon. Friend that it is urgent that we should reach a decision on this matter, and my reasons are twofold.
For ten years, this country has hovered uncertainly between the Commonwealth and Europe and has presented the world with the unhappy spectacle of a country torn between its past and its future. The net result of all this has been to diminish this country's prestige, not only in Europe and in the United States of America but throughout the entire world. I do not think that we can afford this continued vacillation.
There is also a second reason for urgency. In my judgment, it is that we ought to join the Six while the Six are making a success of their efforts. In a few years' time, a new generation of leaders will be assuming power in France and Germany. We do not know what their attitude will be. It may well be that when this new generation of leaders comes to power in these two Continental countries, the European movement will suffer a check, and it might well be that in those circumstances we would secure better terms than we could secure today. But, by the same token, if that were to happen, the ancient Franco-German problem would

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be reopened and if that were to happen this country would be liable to be arraigned at the bar of history for having held on to lesser issues at the cost of resurrecting the most fearful issue of our lifetime—the Franco-German dispute. If we are not to expose ourselves to that possible condemnation, we must act now.
Mr. George Brown: In his very interesting speech, it seems to me that there was one question which the right hon. Gentleman did not clearly answer. Is he arguing that we should now join unconditionally?
Mr. Jones: I have been arguing that if we accept the principle, if we genuinely accept the objective of European union, not trying to define it too closely and not making it minimal by saying confederation rather than federation, we should accept it. I think that acceptance of the objective will improve our negotiating position and that that having been done, we should then negotiate.
6.24 p.m.
Mr. Roy Jenkins: I find myself in very close agreement with the extremely impressively argued and well presented case which the right hon. Member for Birmingham, Hall Green (Mr. Aubrey Jones) has just put to the House. I certainly intend to follow him in dealing with the subject of Europe almost exclusively in my speech, although on a slightly different aspect from that upon which he touched.
I agree that it is unfortunate that we have to discuss this issue on a Motion which has nothing to do with it, and in the middle of a general foreign affairs debate, but I think it is much better that we should discuss it in a general foreign affairs debate than that we should go on, as we have been doing for the past ten months, not discussing it at all. To that extent, it is a good idea that we should be discussing it at the present time.
Nor do I accept the view that this is in some way a rather parochial problem, with which we should not be much concerned at the moment and with which we should not waste too much time because there are more widely ranging issues in the world. The value of spending time in dealing with a problem is a function not only of the size of a
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problem but of our ability to solve it. It seems to me to be a good deal more useful to discuss the problems on our doorstep, which we must solve one way or another, than merely to take refuge in general brooding about problems which we cannot solve.
I thought that the speech of the Lord Privy Seal, though obscure in some parts, certainly marked a substantial step forward, but how much better it would have been if he or some other Government spokesman had made that speech four years ago. Had he recognised the position then, how much more easy it would have been for us to get into the Common Market, and how much better terms we might have been offered. What I hope, particularly, is that the speech of the Lord Privy Seal—still not clear on a number of issues, but pointing fairly clearly in one direction—means that we have come to the end of this extraordinary period of tergiversation and rumour and counter-rumour which has characterised Government pronouncements, over the past few weeks, and has befogged an already confused issue to a most disturbing extent. I have no idea who these rumours and counter-rumours were intended to convince or impress, but they certainly caused a great deal of confusion in Europe and a certain amount here at home.
To some extent, the Prime Minister is the worst offender here, and I was surprised that ten days ago he raised the old dead horse issue of association with the Common Market. Two days ago, in reply to my hon. Friend the Member for Leeds, East (Mr. Healey), he tried to clear that up by saying that his attitude was that there was
"no question of…walking down the street and buying a ticket and joining a club."—[OFFICIAL REPORT, 16th May, 1961; Vol. 640. c. 1111.]
This conjures up the most extraordinary picture of the club-joining habits of the Prime Minister, and I cannot help feeling that it must have been the sort of club which the Home Secretary and the hon. Member for Wimbledon (Sir C. Black) were worrying about a few weeks ago rather than the clubs which which the Prime Minister would normally wish to be associated that he must have had in mind. I agree with the right hon. Member for Hall Green that analogies

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or metaphors are often dangerous and misleading, and I think the whole of this club metaphor has been a pretty misleading one on this problem.
What I should like to deal with is the point which my right hon. Friend the Member for Belper (Mr. G. Brown) raised with the right hon. Gentleman at the end of his speech. It is the question of what we should do about unconditional or conditional signing of the Treaty of Rome. I think the main point here is that we should accept and make It clearly known that when we talk about going into the European Economic Community we are seeking no special position for ourselves, in the sense that when we come to the end of the day we should be less full members than France, Germany or Italy or any of the other three members of the Community. If we seek that half-way position, then we might as well not start the negotiations, because they will not succeed. At the same time, the Treaty of Rome itself is to a large extent tailor-made for the requirements of each of the participants in the Community, and particularly for the requirements of the three major members of it.
The best we can hope for is to be forgiven for not having gone to the Messina Conference in the summer of 1955. It is a great pity that we did not go, because had we participated in the negotiations we should have been able to shape the Treaty negotiations to some extent for ourselves. The best that we can hope for is that we should be allowed in now, at this late stage, to a large extent to shape certain aspects of the Treaty to meet our special requirements, as those other countries did when the Treaty was being drawn up, but not to seek some special position involving less full membership than any of the other participants in the Community. It is possible that that can best be achieved, not by taking the whole Treaty apart, because there would be enormous difficulty in doing that, but in attaching some sort of protocol or addendum to the Treaty dealing with certain special problems which undoubtedly confront this country.
The chances of being able to achieve that depend overwhelmingly upon our convincing opinion in Europe and in the Six that we accept the full political
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implications of the Treaty. The Lord Privy Seal amazed me today by saying that there was no suspicion whatever in Europe about our position in this matter. Of course, the right hon. Gentleman has seen more of the detailed negotiations of the past few weeks and months than anybody else in this House. As, however, evidence relating to successive Ministers has shown over the past few years, seeing more of the detailed negotiations does not necessarily mean that one sees the broader picture more clearly or more accurately. The right hon. Gentleman, I think, is still acting under a serious misapprehension if he thinks that there is not a lot of opinion in Europe—and opinion which is not ill-disposed towards this country—which is still suspicious about the extent to which we are prepared to accept the full implications.
I want to say a word about two of the difficulties or special problems which confront us in going in. I choose only two out of the four because I do not want to take up too much time. The two which I want to mention are, first, what is, in a sense, the most difficult of the spoken, enunciated problems—that is, the problem of E.F.T.A. or the Outer Seven. Then, I shall deal a little with the unspoken difficulty which is at the back of the minds of many hon. Members and of other people—the question of the surrender of sovereignty.
The European Free Trade Association is probably now the greatest single practical difficulty, greater, probably, when one comes down to hard terms, than the Commonwealth or British agriculture. What is particularly irritating is that it is a difficulty of our own creation within the last few years. To rush in to E.F.T.A., as we did, was an act of extraordinary folly on the part of the Government without thinking out the implications, saying at one time that it was to be a weapon against the Six and at another time that it was to be a bridge towards the Six. I do not know in which of these two directions it is thought to have been effective, but it did not sound as though the Lord Privy Seal was very proud of it in his speech today when he postulated a sort of winding-up or liquidating arrangement for this organisation which was entered into so rashly.
The particular foolishness of having entered into it was that by doing so we

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imported into the question of our relations with the core of Europe the one difficulty which was not there previously: that was, the difficulty of political neutralism. We had plenty of difficulties in our relations with the Six—difficulties of federalism, economics and all sorts of things—but at least, from the viewpoint of political and military alignment, there was no difficulty of that sort. By creating E.F.T.A., however, we gratuitously introduced this further difficulty by having three neutral countries within it.
I again felt doubtful when I heard the Lord Privy Seal today say how much he welcomed the association of Finland with E.F.T.A. On a narrow commercial front, that may be a good thing, but at the moment when we are undergoing these difficult negotiations, to have associated with E.F.T.A. an eighth country which, for perfectly understandable reasons, is completely inhibited in every action it takes in its political alignment by what the Soviet Union wants, this is an extraordinary thing to recommend in these circumstances.
None the less, the organisation has been created, so we cannot run out of it. Is it possible to get round this difficulty? I think that it is possible provided that the Six will agree, as I hope they will, to a provision for certain members of the Seven which they have resisted, and rightly, in respect of this country over the past few years. If we decide to go in, there is no doubt that Denmark and Norway would automatically follow us into the Six. Both Sweden and Austria would probably find no difficulty, or little difficulty, about accepting the full economic aspects of the Treaty, certainly the full Customs Union provision. So far as Portugal is concerned, there is no doubt a possible "Greek" solution. Switzerland is, perhaps, a difficulty on its own. I would hope, however, that our entire political alignment would not be affected by a country which is a professional neutral above all else in its attitude to world affairs.
The question really is whether in the case of Sweden and Austria the Six will be prepared to accept a half-way solution to allow them to become full members economically but not politically—something that they have always resisted in the case of the United Kingdom. They have resisted it in the case of the United
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Kingdom because they have said that to have a country as big and important as the United Kingdom half-way in and half-way out would inevitably dilute the coherence of the whole organisation. That would not apply to the same extent to Sweden and Austria. I hope, therefore, that the half-way solution might be possible and that if it is possible, we can overcome the difficulty of E.F.T.A. It would be a lucky escape for us from an extremely ill-considered and rash act of economic and political policy.
My second issue is one which is at the back of many people's minds. I refer to the degree of political commitment and the degree of surrender, of sovereignty which is involved in going into Europe. One should, I think, put the issue to begin with as follows. Clearly, within the Six there are varying schools of thought in different countries. Some want to be federalist and some confederalist. Some want to go fast, some want to go more slowly. It would be wrong for us to go in—indeed, I do not think we will get in—unless we can convince the Europeans that we accept the fact that by whatever method it is eventually achieved, while the pace may vary a good deal, the ultimate direction is towards a much closer political unity in Europe, leading ultimately to the creation of some sort of super-State, and that we are prepared to accept this as a long-term objective and are not going in with the intention of sabotaging this development. It would be wrong for us to go in if we wanted to do that.
At the same time, having gone in, our ability to influence the form and the speed of the development would be substantial. To those, in this House or elsewhere, who recoil from this idea and say that it is a surrender of sovereignty which we cannot contemplate, I would in turn say, "If this is your answer, if you say that we must stand resolutely on our sovereignty—and we are not now discussing the 1960s or, necessarily, 1970s but the years towards and, perhaps, beyond the end of the century—is it really the view of those who say that we must preserve sovereignty at all costs that in the medium- and long-term there is a future for a nation State of the size of Great Britain jealously guarding its insular sovereignty and refusing to share it in any effective way? I do not believe

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that. I believe that when they really examine the issue from the long-term point of view, few people in this country believe that. Some might say that they do not believe it, but that it does not mean that we must merge our sovereignty with Europe. We might merge it with other people. With whom?
Viscount Hinchingbrooke: Will the hon. Gentleman apply the same test to France, Italy and Germany? Does he think that when Dr. Adenauer has passed into higher spheres and when the same thing has happened to General de Gaulle there will be some president of the Common Market who will be subscribed to by all? Would the hon. Member apply the same test of sovereignty to those countries?
Mr. Jenkins: I do not propose that we should give up our sovereignty faster than the other members, If, however, the noble Lord considers this a greater difficulty for the Six than for us, he is living in a world so out of touch with what is going on in Europe that it is difficult to discuss the issue closely.
Viscount Hinchingbrooke: Answer the question.
Mr. Jenkins: While I indicated that there are varying views about the speed within which it will go within the Six, the desire is strengthening that it will go in this direction. It is we who are hesitating outside on the brink.
I wanted if I might to deal also with the point of those who may say that if we do not want a union with Western Europe why not merge with some other group—with the Commonwealth? There are two things to be said on that. I rather agree with the right hon. Member for Hall Green. I think that the Commonwealth is geographically too disparate to become both an economic and a political unit in a world where the idea of regional groupings will be of extreme importance in the future. Moreover, nobody in the Commonwealth, so far as I am aware, has suggested such a move towards that political unity. The economic movement over the past ten years—greatly encouraged by the present Government and welcomed by most countries in the Commonwealth—has been all away from cohesion.
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I see no evidence at all that there is any substantial body of support in the Commonwealth which would welcome tight economic or political union. And if there were to be so complete a union with the countries of the Commonwealth, which have immensely different historical, racial and religious traditions, I think that we should have a much greater upheaval and that we should have a more difficult thing to achieve than is involved in entering into a union with other countries of Europe which, while different in language and in some other respects, are at roughly the same stage of development and share a large part of our history and traditions.
Then some people may say, "Not necessarily the Commonwealth, but there should be a North Atlantic union". Again, there is no proposal from the United States of America, which must be the dominant partner in North Atlantic unity, for any such arrangement. I would say about this that I think that a North Atlantic union might very well be a very good thing, but it should come about by our first joining a union in Europe which is establishing itself at the moment and advancing from that towards a North Atlantic union, rather than by merely adding ourselves to the fifty States of America.
Then there is the point of view that it is a world government which we want to achieve. So indeed we do. It might be the third step, perhaps—first a European union, and then a North Atlantic union, and then a world Government—but do we seriously believe that that is likely to come about overnight or even this year or the next? I should think it much more likely to be the result of achieving, first, regional groupings merging with one another. That would seem to me as a practical proposition at the moment, and to say all or nothing is really a recipe for achieving nothing.
Then there is the point of view of those who say that there is great instability in Europe, who point to the fact that there was nearly a revolution in France the other day, and who say that Germany, perhaps not in the past ten years but certainly farther back in its history, has a political background of which no one would be particularly proud. People would say that we do not want to mix ourselves up with those

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relatively unstable régimes. I think that this is really to confuse the shadow of sovereignty with the substance of sovereignty. We have been irrevocably mixed up with instability—if there is instability—in Europe at least since 1914, and in 1914 and in 1939 we became involved in real terms and in substantial terms in a greater abrogation of our sovereignty than anything we are called upon to do institutionally in the next fifteen or twenty years.
I certainly think that if one takes the view that we have greater political maturity and political wisdom and less political instability than those countries of Europe—and I hope we will not take it too selfrighteously—then it is our duty, and, indeed, it is plain common sense, to contribute what we have to offer to help make them more stable in the future. Let us contribute to the great Franco-German rapprochement and make it permanent, rather than stand aside and say, "This is all too dangerous, we do not want to get mixed up in this so that, if things go wrong, we can contract out", in a way in which we should be quite unable to do.
Therefore, I believe that the practical opposition to our going into Europe is misconceived, and that, on the contrary, it is wiser from the point of view of our political influence in the world to join it. It is inevitable by 1970 or 1980, if we do not take this step, that the main axis of Western power will run from Washington to Strasbourg or Brussels, or wherever the capital of the Common Market will be regarded as being, and that we shall be, outside it, relatively un-influential and unimportant. Therefore, from the point of view of our political influence, from the point of view of injecting some dynamism into our economy, and, indeed, from the point of view of what I would call our whole national psychological tone, at a time when we are, perhaps, rather backward-looking and insular and complacent—from all these points of view—it is essential that we take this step, and take it boldly, to get into the Common Market.
To that extent I welcome the move forward by the Lord Privy Seal. I wish he had been much clearer. I wish even more that it had come years ago. I wish, too, that more effective pressure could have been put upon the Government from this side of the House to take the
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country into Europe. But at any rate, I hope that the Lord Privy Seal's speech will be the prelude to early, effective and decisive action.
6.46 p.m.
Lady Tweedsmuir: I think that if the late Ernest Bevin had been alive he would have been very surprised to have heard the speech of the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), because I can well remember Mr. Bevin, when he was Foreign Secretary, saying from the Dispatch Box that this country could not go into the early negotiations on the European Community, as it now is, unless we could unconditionally accept everything which was entailed in the merging of sovereignty in the political institutions.
I do not myself share the rather sanguine attitude of the hon. Member, or the very sincere attitude of my right hon. Friend the Member for Birmingham, Hall Green (Mr. Aubrey Jones) that it will be all that easy, or wise, to give over old friends in the Commonwealth and new friends in E.F.T.A. and enter lightly, without most serious negotiations, into the Common Market, although I am myself a great believer in it.
I think that industry in the part of Scotland whence I come could greatly benefit, despite certain obvious disadvantages. Nevertheless, I think the Government are right in going slowly on this issue, bearing in mind our obligations, particularly to Canada and New Zealand.
The general tenor of the debate so far, and of the three speeches of hon. and right hon. Members opposite makes me wonder really what this Motion of censure is about, because the terms of the Motion originally put by the Opposition on the Order Paper were very similar to those of the Government's Motion. It was really only the addition of the reference to Angola that turned the Opposition's Amendment today into a Motion of censure on the Government in this foreign affairs debate. According to the hon. Member for Leeds, East (Mr. Healey), the reference to Angola was due to what he called "certain other hon. Members." Therefore, one is driven to the conclusion that the Opposition Front Bench, in fear of an amendment by

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some of the more extreme hon. Members of their party, have sought to move an Amendment of censure on the Government in terms, most of which, apart from the reference to Angola, would have been acceptable to the whole House.
Both the hon. Member for Leeds, East and the right hon. and learned Member for Rowley Regis and Tipton (Mr. A. Henderson) ranged widely over the field of foreign affairs and came to the conclusion, as far as I could make out, that the best answer to our problems at present was that the United Nations should be vested with greater authority to try to contain the cold war wherever it might occur. In a debate of this nature, when several of one's hon. Friends wish to speak, it is wiser, as a back bencher, to confine oneself to one issue. Therefore, I shall restrict myself to talking briefly about the United Nations, and trying to reassess what it can do and what it should do.
As some hon. Members may know, I was lucky enough to be a member of the British delegation to the United Nations during its last session. I therefore venture to make a few observations, because I feel that I have been there long enough to know something about it but not long enough to have caught that disease called "delegationitis". It was a valuable experience to be able to see at first hand what are this country's obligations, responsibilities and difficulties in this world organisation, which, after all, was established for the express purpose of trying to substitute the force of argument for the argument of force. It may be that many of us when it was first created set great store by it, and now, because of its obvious failures, it may be that we set too little.
I believe that our membership of the United Nations as at present constituted must at no time be considered a substitute for our own foreign policy. At the same time, I think that it is an organisation which is worth having and that it is a British interest to belong to it. When we look at the obvious difficulties of the United Nations we should not forget or under-rate its solid achievements on a non-racial basis in the developing countries, in the work of U.N.E.S.C.O., W.H.O., I.L.O., and in what has been done for refugees.
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But it is when we come to the big political issues that we have to admit that the United Nations is only a very early experiment in a world collective conscience. What we are trying to do through this organisation is to bring some law and order into the world through a kind of world collective disapproval. The House perhaps would agree with me that the history of world collective disapproval and its effect on the actions of countries is a sad story. We have only to look at the history of Hitler, of Franco, of apartheid and of the forces of oppression in Hungary. The attitude of countries to the United Nations naturally varies according to whether they think it helps or thwarts some national desire. The mere fact of joining an international organisation has not stopped nationalism in the world, which, if anything, is even more on the upsurge than ever before.
The mere act of gathering together 99 nations in one place will be utterly useless unless there is a majority desire to reduce differences and a determination to pay the bills which are the price of peace. My right hon. Friend the Lord Privy Seal dealt in detail with the problems of the Congo. The Congo is the crucible of the United Nations' troubles. There, one can see the three main problems which concern this world organisation of which we are a member. The first is how the United Nations is to contain the cold war. The second is how it is to do that with a totally inadequate force, for which Russia, for example, refuses to pay a penny. The third is how is it to keep law and order and justice without violating one of the main principles of the Charter—concerning domestic jurisdiction.
This matter of domestic jurisdiction is of great importance. It applies to the right of a sovereign State to employ whom it will from outside its own country if it so wishes. It means also that a sovereign State has the right to have its own forces within its own borders however disorderly they may be. It implies that a sovereign State has the right to have its own civil war if it so wishes. This country must uphold the principle of domestic jurisdiction, because it was put in the Charter in the first place to protect the smaller States, and if we who are a member of the United Nations say that we want to uphold the rules of the

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world we must surely first uphold the rules of our own organisation, otherwise we cannot possibly expect other countries to do the same.
Many hon. Members have had more experience of the United Nations than I have, but when I was in New York my first view was that the United Nations is trying to do two quite contradictory things. First, as a forum of 99 countries with "one nation, one vote", it is an organisation of great value in assessing world opinion. But as an organisation which, through the Assembly, tries to make recommendations for effective action and tries to enforce them, it seems to me that it is quite unrealistic. Because "one nation, one vote" cannot reflect accurately the political and economic position in the world outside, and, after all, the United Nations is only a reflection of the political realities of the cold war and the economic and political strength of all the member States.
As hon. Members will recall, the United Nations passed a resolution called the "Uniting for Peace" resolution some years ago at a time when the Security Council was completely hamstrung by the constant use of the veto by Russia. The Council therefore gave power to the Assembly which the Assembly was never created to receive or to enforce. I, after only attending one session, am certainly not one to submit any answer to the problem. I understand that the Committee on Arrangements is due to report this year on some aspects of a review of the Charter of the United Nations, and in a case where many international lawyers and Foreign Ministers have been unable to produce an agreed revision of the Charter I would not attempt to do so.
I suggest, however, that there are two principles which should be carried out in any such revision. First, any country which does not pay its contribution should not receive the benefits of the United Nations. There is provision under Article 19 of the Charter that any country not paying its contributions should be deprived of its vote but this Article has never been enforced. Secondly, we must see that there is no double standard in the United Nations—a standard, on the one hand, for the law-abiding nations and a standard, on the other, for those who ignore the United Nations. Because
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this organisation is intended not only to keep law and order, but surely, also, to ensure justice.
I would remind those who call the Assembly an expensive and damaging debating chamber where nothing but nonsense is talked that it is, nevertheless, good to have a world debating chamber even if it is a place where only nonsense is talked. There are other assemblies where all of us have had experience of the same thing. It is surely a safety valve that the world should see in a free-world debating assembly that nonsense really is nonsense.
We must also agree that one of the most valuable guardians of civil liberty in this country is Question Hour in the House. I would say that the United Nations forum is in a way a "world question hour". It is a very important aspect of democracy. In fact, in the United States—where the Constitution drawn up by Alexander Hamilton is really crown colony government and not responsible government as we know it—the President has now substituted a public Press conference which strives to do exactly that which we have every day in the House of Commons.
Naturally, of course, one could not give one's support to any organisation which was only a debating chamber. To my mind, the United Nations Assembly is far more valuable than that. I think that the proof of the growing status of the United Nations is the simple fact that Mr. Khrushchev thought it necessary to attend the Assembly in New York, to go there personally to try to make friends and influence people. It shows quite clearly that he could not possibly ignore that Assembly even as it exists now.
Therefore, if one asks, "Will the United Nations, after this session, which was, after all, rather a stormy one, decline slowly, like the League of Nations, or will it gradually become invested with greater authority?" I am personally an optimist and I reply that it will grow—with great difficulty. It may not be the final form of world organisation, but I think that it will grow because I believe that the majority of the nations want to see it work. Perhaps not all will want to do so for virtuous reasons, but a nation cannot go on for ever

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behaving badly if there is constant pressure upon it by world opinion to act differently.
I think that it is a British interest to take a lead in the United Nations. The first reason is because, as was said by my hon. Friend the Member for Cambridgeshire (Mr. Pym), in his excellent maiden speech, it is the only organisation at this time where all the 99 members and their delegations can meet. Of course, it is the lobbying and the personal contacts which are far more valuable than what takes place on the floor of the chamber.
I should like to suggest to the Lord Privy Seal, in this connection, that he might consider it a good idea to take some note of the Canadian practice whereby, quite apart from the ordinary delegations, Members of Parliament are sent to New York for six weeks at a time to act as observers at the United Nations. I well appreciate that as Canada is so close to the United Nations' headquarters it is a far less expensive operation for her, but, on the other hand, I should have thought that it was in our interest as a country that as many of our Members of Parliament as possible should have the opportunity, if they wish it, to go and see at close hand the work of the United Nations.
If the United Nations is used to prosecute the cold war, as it has been this time, I submit to the House that we should use it to try to end the cold war. That must be our job. We must, in many of the debates, there meet falsehood with fact, and stand up and fight for British interests. Facts are being distorted in that Assembly and we must try to get rid of the attitude which is sometimes quite prevalent, which was very well summed up by an Australian who said that people so often say, "I have made up my mind. Do not confuse me with facts."
Lastly, I feel that, as is said in the Government's Motion, we must make use of the United Nations Assembly to make our intentions absolutely clear and to go on working, however tough it may be, with the Commonwealth, with our allies and with the uncommitted countries to try to get a greater understanding of the interdependence of all those who are still free.
7.5 p.m.
Mr. Frank Tomney: The hon. Lady the Member for Aberdeen, South (Lady Tweedsmuir) gave the House a very thoughtful speech about the purposes and functions of the United Nations, and I agree with a good deal of what she said.
The hon. Lady raised two special points which are of vital importance for the future. The first is the power of the veto in the Security Council. The other is the equal vote representation irrespective of nationalism, economic power, political prestige or a nation's position in the world. Both these matters will have to be gone into by the United Nations in order to make the Assembly even more workable.
Having said that, I now want to leave the subject of the United Nations and try to bring the debate back to the subject of the Motion and the Amendment which are before us. Neither is concerned with the Common Market. It was halfway through his speech that the Lord Privy Seal introduced the subject of the Common Market. I began to wonder about another man with the name of Ted Heath. He is a band leader and blows his own trumpet. The Lord Privy Seal has blown the Prime Minister's trumpet. I have no quarrel with that, not on this occasion.
Both the Motion and the Amendment deal specially with the issue of foreign affairs. It is now almost twelve months since we had a debate on foreign affairs, and since then a great deal has happened in the world, much of it on the usual pattern, and to much of it we have not found the right answer through the United Nations, by direct action, by intervention or in any other way. I will try to elaborate some of these things as I go along because, despite the speech of my hon. Friend the Member for Leeds, East (Mr. Healey), which I thought was based more on hope than on realism, it is obvious that we who represent the West have been steadily losing in the cold war. The pattern has not changed, and our future looks, if anything, far less bright than it did twelve months ago.
We do not seem yet to have understood that the dialectical approach of the Soviet Union to foreign affairs is a

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permanent one. The talks at Geneva on disarmament and nuclear controls, some of which have now been going on for as long as 300 meetings, bear no relation to the main philosophy of the Soviet Union. The economic penetration which the Soviet Union is now imposing on the rest of the world is the result of the overwhelming power in armaments with which the Soviet Union is prepared to back it up by overt threat or otherwise. This has been proved in every case. It was proved conclusively in Cuba. Within the hour the threat was received by President Kennedy that intervention of any kind would result in rockets on the United States.
These are the real words of real power politics. Mao Tse-tung said as much at an international conference of Communist Parties last year, when he said quite bluntly that the only power he recognises is that which comes out of the end of a gun barrel. In the light of this kind of philosophy, how does the West stand, on the basis of the morality of the United Nations, or does it form regional pacts or power groups to form some force which is complementary within itself as a means of offering some kind of opposition?
Everywhere we are up against the same trouble. My hon. Friend the Member for Leeds, East said that he would welcome an individual Communist outlook. That is not possible. The only independent Communist opinion has been Yugoslavia's, which came directly after the war. The last time that a Communist country attempted to assert it was in 1956. The Hungarians then only wanted their own sovereign Communist Government in their own borders. But no, Albania today is offering some kind of sovereign challenge to its Communist Government, but no such sovereignty will be allowed.
I consider it to be rubbish when anybody asks me to accept that the dialectics of Communism can be approached with the morality of Western political thought. The Communists simply do not understand the same basic laws. They do not approach these things from the same concept.
There are three explosive issues facing the world. None of them is settled, and one will never be settled, in my belief. They are Africa, Persia and Germany. Part of the problem of the so-called under
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developed countries has been the rapid industrial advance of the West, which has widened the gap in standards in sixty years. The transference of technical assistance to these people cannot be achieved in a space of time which will allow them to adopt Governments established on the Western democratic pattern. Our type of Government is not exportable, but that is not to say that the pattern is not there for the people of these countries to look forward eventually to adopting in their own countries.
We have seen the same pattern in Germany, Czechoslovakia and Hungary. A Government is established by covert means, and then it asks for outside help. Then that Government is recognised and a sovereign tie-up is brought into being. That sort of thing happened all over Europe up to 1950. Is it to happen in Africa as well?
Sir Kenneth Pickthorn: Speak up.
Mr. Tomney: The hon. Member should move nearer.
In the main, there is a small number of African intelligentsia, most of whom have been educated here. Quite frankly, they see the access of power quickly and easily to themselves. Democracy does not mean a thing to them in the sense that we know it. Of course, the Russians realise that fact. We see in Africa the result of too much concentration on too few people.
The Russians have invited many of these leaders to Moscow, where they are indoctrinated. Even Mr. Odinga, Mr. Mboya's lieutenant, is reputed last week to have received quite a large sum in Chinese dollars. This is going on. This is the pattern. The doctrine is drummed into them—the doctrine of hate. With all the good will in the world, all the efforts of the West to put matters right are failing.
In Persia there is the same pattern, with the usual small aristocratic landlord clique imposing its rule and taxing the peasants out of existence. There are the under-surface convulsions, and the manacled Shah. He has to do something to deal with these people. The Russians are not involved directly, but if I understand Marxist theory correctly, as I believe I do, they are already at work

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there. And the pattern is the same throughout the Middle East.
When we form an organisation like CENTO, all we can say about them is that it has restricted the sphere of influence of Communism to Iraq and Egypt. The Soviet Union knows that the key to Africa is Egypt but—and make no mistake about this—Persia is the key to Egypt.
The tragedy for us in the Middle East lies in the question whether there should be direct intervention or something else—and if something else, what? The last intervention was in the Lebanon by the Central Intelligence Agency. No doubt the Agency has made a lot of mistakes, but we should post the question: what does one do when the United Nations, which is supposed to combat these influences, is not only powerless by veto in New York but powerless by executive action throughout the world, as the Congo situation has shown?
Two or three nations were involved in the Congo, each for its own ends. In Germany there is a similar longstanding problem. We had this situation in the Berlin airlift. Threat after threat has been made in Germany. At the moment, none has materialised but there is no doubt that the Soviet Union is planning a confederation, if it can be achieved. Only about 25 per cent. of the German population is in Eastern Germany. If the Russian plan materialises, we should look back to post-war Czechoslovakia, where there was the same pattern.
What does one do in a situation when the corridor to West Berlin can be closed and when East Germany can be recognised by the Soviet Union? There is no formula in the United Nations for getting out of that one.
One has to take the long view. One must try to understand the Communists in every single thing they do. The most valuable thing they have done for the West recently has been allowing Eurovision on television. They showed the May Day parade, and that demonstrated to the West exactly what the situation is. It was a display of military force, which was seen for the first time by the people of the West to be on the same pattern of the mass parades at
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Nuremberg. That fact may get home at last.
Not a trick is missed by the Russians in propaganda. Take Major Gagarin, for example, who was supposed to have gone into orbit. Have hon. Members ever seen a more photogenic boy than he? He even turns out to be a first-class orator, as well. Certainly somebody went round the world but I doubt if Major Gagarin did. How beautifully it was all laid on! There were the Russian leaders, beflagged and bedecked. Down comes the aeroplane, out goes the carpet, and one man walks out along the carpet. He is the embodiment of youth and manly enterprise. He walks right up to the rostrum to President Khrushchev.
But it was not that that interested me most. What interested me most was how he reported after he had been round the world, had come down by parachute, and had landed on his feet. The first thing he said was "I report to President Khrushchev and the party that the mission is complete". Let us think what any one of us would have said in his place. I know that if I had gone round the world like that, and had landed like that, I would have said, "Thank Christ for that". What do they think we are over here? It is too funny for words.
So it goes on, but it creates an impression on some. This is the kind of propaganda we have to combat all the time—it never stops. The Communists are prepared to think in terms of generations, and do so. Time is immaterial. Neutral nations they call committed to their side. I wonder what will be the position of Mr. Nehru when China gets the atom bomb or the H-bomb in two or three years' time? There has already been one shift to the West; there will then be a great gallop. These things take a long time in coming. I took the view a long time ago that if Nehru had come along with us in his struggle for democracy things would have been a lot easier.
The same pattern has been repeated in Laos. It is basic—and a net defeat of the West. In this context, the only strong people we have are the Americans—these poor, lambasted Americans! From some of the speeches one hears in this House one would think them mean, tight-fisted, grabbing, power-conscious,

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but it is astonishing what they have done without thought of reward. Since 1945 the Americans had given over 2,000 million dollars—not in military aid but in general aid. We are apt to forget these things—the filling of empty bellies. But let the Soviets do anything of the sort and the propaganda is turned on full.
Whether or not we can make enough of our resources is one thing—I do not think that we are able to, and that is why this European movement is so necessary and vital above all else. We want the single purpose of a political bloc, with some surrender of sovereignty, and economically and politically tied, which will mean the imposition of one will. Whatever other groupings take place, this one is important.
Nevertheless, these problems will not be settled by us on any basis of good will, and I do not believe that they can be settled on the basis of tough bargaining. We are not in a position to bargain militarily; each side now possesses the power to annihilate the other. As I said earlier, the purpose of Soviet military power is to back up the drive in the economic sphere.
What do we do in this context? The Western civilisation is a civilisation of prosperity. Everywhere in the free world we find everybody working. There are well-ploughed and tended fields and trade is booming, but how much of these resources are devoted to carrying out our philosophy? Why do not the Government really give a lead and put over the inspiration of this real story of denial by us as a means of getting peoples to accept our philosophy? We should do these things on a world pattern. Unless we do so, we shall always be defeated.
Whether or not we accept the Cuban revolution, Cuba is only eighty miles from the United States, and almost any American threat of nuclear rockets becomes null and void if the Soviets negotiate with Cuba to base rockets there aimed at the United States. In modern terms, the Monroe Doctrine is nonexistent. How can the Americans try to stumble to an answer to an ideology that they do not fully understand? What can we do to stop this great sweep across the world, active and never ceasing?
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There is no end to the cold war; it is permanent. It is a matter of their politics, and the sooner we realise it the better. The position in which the West is placed is a very serious one, and I cannot see this pattern going on for ever without the serious risk of an outbreak. This is a grave danger that concerns us all.
Must we forever go on making adjustments, retreats, and calling conferences, summit or otherwise? We all know how the Summit Conference fell down over the U.2 incident, but what has happened in our own country in the last few weeks makes the U.2 incident look very small beer indeed. The truth is that the Summit Conference failed because the will to succeed was not there. If a succession of conferences fails the onus is always with the Soviets. There are troughs and balances in their policy, and now Mr. K. goes to see Mr. K. and everyone's heart beats more quickly in the hope that something will come of it—but it will not.
The American Mr. K. learnt a lesson from Cuba—and he certainly learnt it quickly. I grew tired a long time ago of talking with these people, and so did Ernie Bevin, one of the finest Foreign Secretaries this country ever had. We can go to conference after conference—300 conference meetings at Geneva on nuclear disarmament, and then no agreement. Thirty meetings of the Paris conference to try to formulate an agenda—and no agenda; just blockade, subversion, difficulties.
A time comes when there is tiredness of wills. Down through history, from the days of the Macedonians, or of the Byzantine Empire, or in the days of Genghis Khan, we can see how much has been won for progress, for truth, for democracy by those people who had the strong will to stand out, but how long can people stand out under conditions like the present? To these things there is no ready answer.
I believe that every conference called by the Soviet Union, especially on issues which are in dispute at the United Nations, is called for the purpose of legally establishing positions which have already been established by force. The conferences are called for no other purpose.
There may be differences between the two sides of the House about the conduct of foreign affairs and the foreign

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policy of the Government. I think that the trip to Angola could have been avoided, and should have been. Nevertheless, despite the fact that both parties are probably split down the middle on the issue of the Common Market, if there is a common will to go into the Common Market without any qualifications, I am sure that we will do so.
If it is possible to set up a group in S.E.A.T.O. consisting of the United States, Australia and New Zealand, that also should be done.
Mr. Khrushchev says that he does not want to put rocket bases in Cuba. Of course he does not. He wants Cuba to be an example to the other Latin American States. This is the real challenge. He wants to convey to the other Latin American States that if they follow Cuba's example they can rely on the friendship of Russia.
I do not intend in any way to deny the poverty, the lack of privilege and the denial of a full life and liberty which is common among people in South America and elsewhere. Those factors are as important to me as to anybody else, but in directing our efforts to defending those people let us make sure that in the process we do not lose our own rights and liberties.
7.33 p.m.
Mr. Anthony Kershaw: I entirely agree with almost everything said by the hon. Member for Hammersmith, North (Mr. Tomney). I agree, in particular, that our influence in the world has a direct connection with our economic and military power.
It is sometimes said that moral power is physical power which is not used. To some extent, that is true. That is why, like the hon. Gentleman, I believe that it is necessary for us to associate ourselves with the great power bloc which has come into being in Europe.
On the question of sovereignty, it is interesting to note that no one who spoke—and that includes speakers from both Front Benches—jibbed at the inevitable loss by this country of its sovereignty if we entered into the Common Market. This shows that a remarkable change has taken place in the thinking of people in this country over the past years.
It might be thought hardly necessary to emphasise the importance of the loss
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of sovereignty, but I believe that a study of the economic difficulties, which has led one to realise that those difficulties are not as great as we first thought, has rather overlaid our first anxiety about the loss of sovereignty which will necessarily be involved.
It is true that we do not know what the loss of sovereignty will be. It is true that we can influence the degree of the loss of sovereignty by being inside the Common Market and being able to negotiate from inside. Nevertheless, it is clear that the changes which will take place in our sovereignty will be important, and in spite of our past history we have come to accept that.
When we recall that we survived the last war by virtue of the fact that we were separated from Europe, and that the allies whom we are to join more closely on the Continent, as I trust we will, are democracies, mostly of a rather different type from ours, the change in our thinking is remarkable.
It is clear that the day of the nation State is over, although every month sees the birth of a new one. It is also clear that the relative importance of this country vis-à-vis Europe and the rest of the world is declining. It is because it is necessary for us to have this power to back up our moral position, and because it is necessary for the West to be united if it is to meet the openly avowed challenge of the East, that we must forgo our sovereignty and co-operate to a greater degree in Europe than we have in the past. This loss of sovereignty is necessary not because the Six demand it as the price of our entering the little garden which they have created, but because the facts of life today impose it.
Economically, I believe it to be fairly clearly accepted that our industry has no cause to fear, and, in fact, has reason to welcome, inclusion in the Common Market. There may be a certain down turn of activity at the beginning, although even that may be avoided, but certainly, in the long run, British industry will benefit, for three principal reasons.
First, because of the economies which a large market necessarily brings with it. Secondly, because of the attraction of foreign investment to the United Kingdom, which we may reasonably expect because we are politically rather more

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stable than some other parts of Europe. Thirdly, because of the increased competition which we would have to meet, and which I think it is generally accepted our industry has been in need of for some time.
It is clear that in joining the Common Market there will have to be some derogations from the full record of the Treaty of Rome as at present constituted. I refer, in passing, to only two of them, because I do not want to speak for long. First, agriculture. Having studied this problem, I see no reason why, given sufficient time to adapt itself to the new arrangements of the European market, British agriculture should not be as prosperous, and possibly more so, than it is at the moment.
Secondly, the Commonwealth. It is true that we will face difficulties about the import of temperate foods into this country and of high-cost manufactures, which come to us mostly from Canada, but, provided it can be arranged that those sections of the Commonwealth likely to be hit by this will not suffer too much at first, I am sure that we can rely on the great growth of industrial activity in Europe to compensate the Commonwealth quite quickly, if not at once, for the share which it may lose in the United Kingdom market in the first instance.
Sir John Barlow: I do not agree with that.
Mr. Kershaw: It is true. If one discusses commodity by commodity, this will become a long and technical debate, and I content myself with the general proposition that the Commonwealth can be adapted to these new patterns of trade.
I do not believe that anyone would disagree that one of the greatest benefits we can give to the Commonwealth is to strengthen the basis of our economy. We will be able to do that more quickly if we are part of a prosperous Europe than if we find ourselves to some extent isolated and suffer a decline in our economic power and prestige over the years. That will do most to hold the Commonwealth together in the curious but powerful association which it has at present.
The third item on which we will obviously have to have some derogation is in connection with our relations with E.F.T.A. It is natural that E.F.T.A.
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should suffer some kind of change when the negotiations come to a conclusion. It is no disloyalty to E.F.T.A. to say that it was formed with the express intention of coming to some arrangement with the Six—that is written into the Treaty of Stockholm—and it is no lack of loyalty to E.F.T.A. to say that some arrangement between E.F.T.A. and the Common Market is envisaged.
I do not agree with the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) that E.F.T.A. should be regretted. One especial reason is that from the European point of view, and perhaps rather more from the United Kingdom point of view, the one thing which E.F.T.A. has done is to keep in association with ourselves and other democratic countries neutral States who, without long preparation, could not possibly associate with political organisations such as the Common Market is designed to become. It is very important to the health of Europe that those neutral States, some in key positions, like Austria and Finland, and in this connection one could add Yugoslavia, should not be excluded from the principal organisation of European Powers.
Therefore, if E.F.T.A. has done nothing else it has kept those neutrals, whose interests we must always regard in whatever solution we come to, in the concert of Europe while we work out what a more satisfactory solution shall be. Let us not forget that E.F.T.A. includes Scandinavian countries who are like ourselves in having the sort of pattern of democracy which we have. That, too, is important, for we should march in step with them.
It would be natural and to the point for each of the countries of E.F.T.A. to come to a particular arrangement with the Common Market, but that is to say not that they need to come one by one to the Common Market to see what terms they can get, but that the arrangements which suit one country of E.F.T.A. will not necessarily suit another. Although the negotiations for a solution must be undertaken in common, for all the members of E.F.T.A., each will have to have a separate arrangement. That is the way in which we will be able to get the best terms and to come to the most sensible arrangement, taking the different interest of the separate countries into account.

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For those reasons, and because each of those solutions is likely to have a peculiar character, there is not much value in now making the declaration, as urged by my right hon. Friend the Member for Birmingham, Hall Green (Mr. Aubrey Jones), that we will adhere to the Common Market. It its implicit, I hope, in the present conversations at a technical level between the Governments that we accept some degree of loss of sovereignty and accept that in the end we want to be associated with the Treaty of Rome, but a declaration now that we wish to sign the Treaty of Rome would not get us very much further. It seems to be a negotiating trick designed to put General de Gaulle in the wrong and, as such, it would not advance matters very much.
In referring to General de Gaulle, I am bound to admit that the obstacle to our joining the Common Market, as seen from this side of the Channel, is the French. I welcome some signs, shown in recent months, that the French position is altering. I believe that they, too, realise that they will have some benefit from the association of the United Kingdom with Europe. I believe that they have come to realise that they have nothing to fear, but something to gain economically, and that politically, too, especially since the events in Algeria, they have something to gain if we and the Scandinavian nations are associated with the Common Market.
One particular drawback to our now saying that we will sign the Treaty of Rome is that it commits us publicly to negotiations at a time when they may not have been properly prepared, and, if the negotiations are compelled to start by our taking a public position before things are ready, if the negotiations fail there is no doubt that the position of Europe will be much worse than it now is.
However, I welcome the statement of the Lord Privy Seal that it is doubtful whether we can long postpone a decision in this matter. The integration of the Six is growing every month and takes a decisive step forward on 1st January, next year. They cannot wait indefinitely for us, because of the uncertainty induced in business, especially in E.F.T.A., because nobody knows what the tariffs will be, or where factories should be
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sited, and so on, and also because the continued uncertainty in this country will become politically intolerable in the end.
I do not charge the Government, as they have been charged by the Liberal Party, with idleness or inconsequence for not coming to a decision straight away. For the reasons given, it is necessary for many detailed discussions to take place before we can know whether negotiations can be undertaken successfully. It is clear that those talks have to go on in private and cannot be fully explained now. However, I say with all the emphasis I can command that if we do not get some sort of agreement with Europe in twelve months, we may find that it is too late and that the terms on both sides have become too high and cannot be lowered.
If we succeed in uniting Europe more closely, as I hope we will, during the next twelve months, that will be only the half-way house. I look forward to much closer organisational connections between the Atlantic Powers and Europe, and including Australia and New Zealand, but I am certain that we will not get that bigger picture until we have properly organised ourselves in Europe. If we do not achieve that unity in Europe, we may have to try for the Atlantic solution and I am certain that that will not be nearly so easy or so good a solution if the poison from a split Europe has permeated the organisation of Western Europe.
If the negotiations fail—and I do not believe that they will—I hope that it will not be the fault of Her Majesty's Government. I am certain that we ought to do everything we can, in our own interests and in those of the West, to achieve unity in Europe.
7.48 p.m.
Mr. R. E. Prentice: The leader in The Times this morning said that there was a danger that this debate would break its own back from ever-extension, and against that background I hope that it is pardonable if I do not follow the comments of the hon. Member for Stroud (Mr. Kershaw). There are so many problems to be debated today. I make the comment that this debate within a debate, which is taking place on the prospects of our joining the Common Market, illustrates the fact that we ought to have had a

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separate day's debate on the subject, which is of tremendous importance. There are many other matters of importance which should be given an airing.
If I had to make one general criticism of the Lord Privy Seal's speech, and those of many Government spokesmen on foreign affairs, it would be that they lack any sense of direction. They comment on a number of crises, giving the reactions of the Government, sometimes rather belated reactions, to events without giving a lead to the House and to the country about the type of foreign policy which the country is pursuing in the long term.
There are many things which could be said in a debate on foreign affairs, but I shall concentrate on two topics. One is that it is the paramount duty of this country of all countries to pursue multilateral disarmament by all the means at its disposal. The second matter on which I should like more emphasis to be laid by the Government is that we should aim at strengthening the United Nations by all the means at our disposal, with the ultimate objective of helping to create a world government.
I have found it rather surprising that there have been so few references in the debate so far to disarmament and, in particular, to the situation which has been reached in the test ban talks. We have all been profoundly disappointed at the way the talks have gone in the last week or two. I hope that it is realised in the Kremlin that this disappointment must be shared by millions of people throughout the world, including millions of people in the uncommitted nations whom the Kremlin is trying to influence. I hope that the price of Soviet tactics is seen in that light, because to take an optimistic view, this is, perhaps, one thing which might lead the Soviet Union to be more accommodating.
The hopes arising from the prospect of an agreement for a ban on tests were that such an agreement in itself would be a tremendous achievement and that it would be an example of the way in which the great Powers, despite their political differences, could agree about something of common concern to them—their common wish to avoid the spread of nuclear weapons to other countries and to put an end to the nuclear arms race.
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I support my hon. Friend the Member for Leeds, East (Mr. Healey) who said that the proposals put forward recently by the Western Powers, as distinct from those on which they were taking their stand some months ago, are reasonable proposals and we should resist Soviet pressure on the paint of having tripartite control of the test arrangements. If there is to be any satisfactory treaty at all, it must involve the countries concerned in giving up at least a small part of their sovereignty in this respect and not trying to retain the right to veto from day to day the powers of the inspection teams to carry out inspections.
I believe that this move of the Soviet Union should be resisted also because of its wider implications. It seems that it is part of the Soviet Union's campaign to undermine the whole international secretariat, particularly the secretariat of the United Nations itself, by having a veto at all stages. This we must resist.
Whereas, of course, we all hope that there will be a new turn in the negotiations, we must face the implications of what may happen, that is to say, that there will be no early prospect of an agreement to stop tests. I ask the Government to say something about this and about the situation which arises there from. I suggest that there are certain essentials. First, it is vital to prolong the moratorium on tests. It is important not only that this country should declare that it will not itself start tests, but it should use its utmost influence with the United States to dissuade them from beginning tests again. We all have read of the powerful lobby in Washington in favour of beginning nuclear tests again.
Putting the argument at its lowest, if there is to be a resumption of tests, they should not be started by the West. Any resumption of tests should come from the Soviet side. We hope that there will be no resumption, and I should have thought that there was at least reason to hope that the Soviet Government's attitude is that they hope that there will be a de facto situation in which tests will not occur, despite the fact that there is no agreement about inspection. If that is so, there is every reason why the West should maintain the moratorium.
We have to consider the effect of this situation upon the problem of the spread of nuclear weapons. Various Ministers,

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when questioned about this matter, have said in recent months that, after we had reached a test ban agreement, it would be our objective to invite other countries to sign it and by that method to discourage or prevent the spread of nuclear weapons to other countries.
It seems to me that we ought now to be thinking out a different strategy to be applied, if necessary, if a test ban agreement is not signed. This is a problem of growing urgency. The French have begun testing. One sometimes hears it said that China will be ready to make tests soon. It may well be that Mr. Khrushchev's attitude is connected with that possibility and it is one of the reasons why he is trying to hold back at the moment from reaching a test ban agreement.
I submit that this country is in a better position than any other country in the world to take the initiative in this respect. Present developments strengthen the argument in favour of the Labour Party policy of taking Britain out of the race as an independent nuclear Power. They strengthen the case for saying that Britain, while remaining in and being a loyal member of N.A.T.O., should not remain an independent nuclear Power. If we took that initiative, we might in that way more than any other do something to discourage other countries from entering the so-called nuclear club. In any case, the economic and technical reasons for not remaining an independent nuclear Power are very strong, particularly since the failure of Blue Streak. All these reasons are growing in importance all the time, and if there is to be continued deadlock at Geneva the matter is all the more urgent.
What are the prospects ahead? One thing which is almost certain is that the situation will not be frozen at the point where there are just three or four nuclear powers. One possibility, the very best, is that there will be a multilateral disarmament agreement and there will be no nuclear Powers. Another possibility, the second best, is that for the time being there will be only two nuclear Powers, the United States and the Soviet Union, and there will be a world-wide agreement not to spread nuclear weapons to other countries.
Another possibility, which is growing in strength all the time, is that there will
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be a large number of nuclear Powers, 12, 15, or perhaps 20, as more and more countries acquire the technical "know-how" which is needed to become an independent nuclear Power. Those are the possibilities, and all are stronger than any prospect that the situation will be stabilised as it is now.
We ought to hear from the Government about their proposals. The Prime Minister referred to the problem in his speech at the Massachusetts Institute of Technology. He referred to it again at the conference of Scottish Conservatives when he came back. He referred to a "nuclear partnership". He has not defined what that means. We ought to be told soon what it means and what is in his mind. In any event, any concept of a nuclear partnership is inferior to the proposal we have been urging from this side of the House for some time now, that Britain herself should drop out of the race and thereby be able to take the diplomatic initiative in order to persuade other countries not to enter.
I suggest that there are very strong reasons why both the United States and the Soviet Union would try to discourage other countries from joining the nuclear club. If we once took that step, they would be in a strong position in trying to persuade their respective allies not to become nuclear Powers.
Mr. William Warbey: My hon. Friend has made a rather interesting statement about the proposal that Britain should cease to try to be an independent nuclear Power. Does he mean by that that Britain should unilaterally renounce nuclear weapons? If so—and that is what he appears to mean—in what way does he differ from those who call themselves unilateralists?
Mr. Prentice: It is tempting to speak on this at length. I think that my hon. Friend really knows the difference.
Mr. Warbey: No, I do not. I am asking.
Mr. Prentice: I said a few minutes ago that the position I take—which is the position which most of us on this side take—is that Britain should stay in N.A.T.O., should fulfil its obligations to N.A.T.O., including the basing of weapons in this country, but that there is no case on strategic or economic

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grounds for remaining an independent nuclear Power. Further, I said that there are growing diplomatic reasons for taking the step which I advocate.
Mr. Sydney Silverman: Would my hon. Friend agree that this is a fair way of putting the point: there is not now, and there has not been for nearly two years, any difference at all among hon. Members on this side of the House on the question of unilateralism defined at its narrowest—that is to say, that this country should not itself be a nuclear Power, whatever other countries do, and that the differences between us have been that we have not been able to agree as yet as to the logical consequences of that decision? Is that a fair way of putting the point?
Mr. Prentice: It is true that among Members on this side of the House there is general agreement that Britain should not remain an independent nuclear Power, but the other differences are there, and my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) tempts me to say that it is a great pity that we have been distracted by an argument about other forms of unilateralism when we could have been arguing much more constructively. We could have done that if we had not been distracted by my hon. Friend, among others, from the really important arguments in this respect—because there are important differences on this point between hon. Members opposite and hon. Members on this side of the House. My hon. Friend, and many who think like him, have done a disservice to the cause of disarmament by the way in which they have caused trouble.
Mr. Silverman Mr. Silverman rose——
Mr. Prentice: I cannot give way. If I complain about distractions in general I must not yield to too many of them.
Mr. Silverman: On a point of order. I apologise; I did not mean to intervene at all, but if my hon. Friend makes a personal criticism of the kind he has just made, is it not a matter of recognised courtesy in the House to allow me to reply? I put that point to my hon. Friend because I know his friendliness and his courtesy.
Mr. Deputy-Speaker (Major Sir William Anstruther-Gray): That is not a point of order.
Mr. Prentice: I am glad that my hon. Friend deplores personal criticism in the way that he has indicated. I hope that he will always observe that rule.
Mr. Silverman: On a point of order. Is it in order for my hon. Friend to persist at one and the same time with deliberate misrepresentation and a refusal to give way in order to allow me to put that misrepresentation right? Is not that really an abuse of the courtesies of the House?
Mr. Deputy-Speaker: There are certain courtesies of the House, but there is nothing out of order in the hon. Member who now has the Floor continuing with his speech.
Mr. Silverman: Then there jolly well ought to be.
Mr. Prentice: There is another aspect of this matter. Earlier on the Lord Privy Seal spoke about the prospects of renewed general disarmament talks, and said that discussions would be taking place between the Western Governments, prior to wider discussions taking place on general disarmament. I want to ask the Joint Under-Secretary of State what studies are being made in this country of the technical problems of disarmament and arms control. From what little I know about it, I feel that not nearly enough is being done about this in Britain, at the official level.
We seem to have reached a stage in which the Soviet Union and the United States are arguing from rather different concepts—in which the United States is putting emphasis on arms control and on the need to make very modest progress and to set up very elaborate machinery for enforcing it. They aim at trying to reach agreement for stopping further progress in the arms race rather than taking large steps in actual disarmament in the short run, being very suspicious of the more ambitious proposals of the Soviet Union, whereas, on the other hand, the Soviet Union policy, if I can summarise it in a few sentences, is governed by their suspicion of proposals put forward for arms control because they think that this will give the West a means of establishing posts inside their territory, perhaps constituting a disguised form of spying, and their preference is therefore for putting forward rather grandiose schemes for general disarmament.

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I was recently speaking to someone who took part in an unofficial international conference on this problem. He pointed out one advantage of the American approach, saying that the Americans were doing a great deal of detailed work on the problem of arms inspection and control, and the problems which will arise from a treaty. He asked a Russian at that conference how many people in Russia were working on this, and, after hesitating, the Russian replied: "Everybody in Russia is working for disarmament". Be that as it may, from what we hear the same detailed work is not going on in the Soviet Union as is going on in the United States.
My view is that Britain should be doing a lot of this technical work, and should be striving all the time to find ways of marrying the concept of disarmament and the concept of arms control. These are not incompatible ideas. The gap between them can be bridged. This, again, is a matter in which the British Government are particularly well fitted to take the lead, and they ought to be thinking in those terms.
The other theme that I want to touch on for a few moments is my belief that it should be a constant aspect of British Foreign policy to try to strengthen the United Nations in every possible way. I particularly welcomed the reference to this point in the Amendment moved by my hon. Friend. This must involve the objective of world government. When the term "world government" is used, at worst one gets the reaction that it is a rather far-fetched idea, conceived by some longhaired cranks, and, at best, the reaction that it is a good idea but it is so long-term that it has no relevance to the day-to-day crises which the world faces. I agree that it is a long-term idea, but there are many ways in which the beginning of world government could be advanced and which would have some relevance to day-to-day problems.
If we hope to achieve disarmament it must involve handing over authority to some kind of body with supra-national powers. The inspection teams will have a type of sovereignty over and above national sovereignty. If we visualise disarmament going a long way, we must envisage some sort of international police force to take the place of national armed
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forces. This is very much a question of practical politics, not only in relation to disarmament but to many other matters. Therefore, I should like to see the British Government taking every possible step to strengthen the functions of the United Nations.
I should like to give one or two examples of the way in which this could be done. First, there could be the admission of the Peking Government to the United Nations. The Government's record in this matter has been a very bad one. In recent years more and more countries have been prepared to vote for the admission of the Peking Government. The voting figures in 1960 were 38 against, 34 for, with 26 abstentions. In that situation Britain could have tipped the scale last year, or perhaps some years ago, if the will to do so had been there. I hope that a different stand will be taken this year.
Secondly, we could work on and submit proposals for the alteration of the composition of the Security Council, the Economic and Social Council, and other bodies, so as clearly to take account of the balance of power in the world as it is at present, and the proper representation which the new nations of Africa and elsewhere deserve.
Thirdly, we could return to proposals that have been supported in the past by the British Government for the establishment of a permanent United Nations force. With the experience gained in Gaza and the Congo, the time has arrived when a new initiative to establish such a force might well be taken. If the force were in existence permanently, it could be moved quickly not only to parts of the world where a crisis had occurred but to parts where one might occur. There are situations which one can envisage in which the presence of a United Nations force would have a healthy effect. I hope that at some stage the force may be made up of individuals recruited from different countries directly to is so that they would become soldiers of the United Nations, and not soldiers of a national army seconded to the United Nations.
Fourthly, I believe that the Government should press for a permanent expansion of technical assistance and for more of it to be carried out by the agencies of the United Nations. In the recent debate in this House on the new

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Department of Technical Co-operation the fact emerged that last year £150 million was spent by this country on various kinds of overseas aid, and of that amount only £6 million went to the agencies of the United Nations. It seems to me that we ought deliberately to try to expand that method of doing things, partly because it is a very efficient method which is more acceptable to many of the newer countries than any other method. After all, if a country is a member of the United Nations there is certainly no hint of any imperialistic relationship in accepting help from the United Nations. We should also do it for the fundamental reason which I am trying to advance, that we should take any opportunity deliberately to build up the United Nations setup and make it more powerful.
Another point we should consider is whether the General Assembly ought not to become the place where the Heads of Government meet as a matter of course. It could be the theatre for summitry by smaller or larger groups of Heads of Governments. This happened rather fortuitously last autumn when, as was referred to by the hon. Lady the Member for Aberdeen, South (Lady Tweedsmuir), there was a rather stormy session. I think it was a good thing that Mr. Khrushchev should attend an assembly at which he was heckled for once. It was good for all the people concerned.
It seems to me that the question of summit meetings has been tackled in the wrong way. People have tended to build too many hopes on summit meetings, expecting them to work as a sort of gimmick to solve all sorts of problems which could not be solved by other methods. What should happen is that Heads of Governments, as a matter of routine, should meet regularly at least once a year—preferably more often—in order to exchange views and to see whether any new attitudes of mind ought to be explored. I should have thought that the Assembly was a good forum for that, in order to build up the prestige of the United Nations.
Finally, I wish to make the general point that if we accept the view that the United Nations Organisation and the principles of the United Nations Charter should play a bigger and bigger part in world affairs in the years to come, it imposes on us, and on all countries
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which accept this view, the duty to make sure that our foreign policy is at all times consistent with the requirements of the Charter. This point was made earlier, but I make no apology for returning to it.
The hon. Lady the Member for Aberdeen, South made the same point and said that there should not be double standards in regard to this. I am afraid that what has happened is that nearly every major country, at some time or other in fairly recent years, has departed from its obligations as a member of the United Nations when its national interests were thought to conflict with its obligations under the Charter. In nearly every case its policy has failed and this I think is a point which should be more generally understood. Where national interests have been thought to conflict with the United Nations Charter it has not usually worked out in that way.
From the failure of Britain and France at Suez right through to the failure of the invasion in Cuba there are many examples of countries which have failed in an attempt to establish their national interests in conflict with the Charter.
Mr. William Yates: Tibet?
Mr. Prentice: The hon. Member mentions Tibet. One might say that Tibet and Hungary are exceptions to this rule because the countries concerned were prepared to be so ruthless as to carry through the operation to what might be called its logical conclusion. But, even then, I doubt whether in the long run they could be regarded as exceptions. What happened in Hungary may have done permanent damage to the reputation of world Communism in the uncommitted countries which it is the intention of the Communists to influence, so I do not think that in the long run it may be regarded as an exception to what I am saying.
It is in this light that we should regard some of the present crises. It is in this light that we should condemn definitely the policy of the Portuguese Government in Angola. It really is an appalling thing that in this situation we have sent a warship on a good will visit to Angola. About ten days ago there was a statement by some Portuguese democrats

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condemning the policy of the Portuguese Government in this respect, and people like that deserve support from world opinion. We should be doing a duty by helping to provide it.
I would say the same thing about Cuba, although the events in Cuba are in a category very different from the Portuguese policy in Angola. Nevertheless, the British Government should have made clear their criticism of the action taken in Cuba, and done it in the sense in which I think many of us on this side of the House approach the matter. We are in no sense favourable to the Castro régime and in many ways we admire the Kennedy Administration. But we feel that this was a terrible mistake and it should be attacked as such. Even had the invasion succeeded, it would still have been a mistake because the long-term effect on the prospects of democracy in Latin-America would have been damaged.
To sum up, I think that the United Nations approach is not merely the better approach in principle but is rapidly becoming the more practical approach and the one most likely to succeed. I consider that the greatest danger to world peace is that in too many countries too many people are hanging on to the old-fashioned approaches and concepts which belong to the pre-nuclear age. This applies to British policy in the Middle East up to the time of Suez, to the remains of colonialism in Africa, to the Monroe Doctrine, to the fundamental Marxism of Mao Tse-tung—they all, I think, have this in common; they have been made rapidly out-of-date by the development of the nuclear age in which only a policy of respect for the letter and the spirit of the United Nations Charter will make any sense. That should be the main theme of British foreign policy, and I should like to hear it expounded often from the Treasury Bench.
8.19 p.m.
Sir Anthony Hurd: I wish to bring the debate a little nearer home to the Economic Community and the Common Market. We have heard a number of interesting, persuasive and perhaps dangerous speeches made in this Chamber this afternoon. I think that the tide of argument is carrying Britain,
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week by week and almost day by day, very much closer to the Common Market. There has been a great deal of fine and compelling talk about European unity in politics, trade and defence. That persuasion comes equally effectively from both sides of the House.
I wish, briefly, to try to reflect the views of the rural areas, because I think that the House should know what is in our minds. I often have the feeling that more fundamental good sense is talked in the village "pub" than in most other places. Our farmers certainly do not want to stand in the way of Britain getting export business with the Continent. They know that the high standard of living in Britain and the growing demand for high quality food which suits the British farmer and housewife depend largely on our success in export business on the industrial side. Therefore, our interests are at one with industry in wanting to see expansion in industrial exports.
Our trouble is that we cannot yet decipher the lines of a common agricultural policy in Europe. My hon. Friend the Member for Stroud (Mr. Kershaw) said that British agriculture could adapt itself to a common agricultural policy and could be just as prosperous as it is now. We do not know what that policy is, or what it is likely to be. There is no vestige today of a common agricultural policy. It is rather dangerous to say that we can adapt ourselves to something of which nobody knows the shape.
Until we can see the prospects more clearly, and judge how their policies and ours might be made to match, farmers and, I am sure, farm workers and their wives, and indeed everybody in the villages, will not feel at all agreeable to scrapping the forms of agricultural support which suit us here in Britain. They suit the producer, who, in recent years, has come to rely on fairly steady prices backed by guarantees. They suit the consumer, who has come to expect a free choice of food at world prices, in most cases well below the prices that rule on the Continent of Europe.
The dearer food issue is one that has to be faced by the Government and weighed when we are thinking of these approaches to the Common Market and of adapting our methods to the methods that it is hoped

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to develop generally there. It may be that a bridge or a series of bridges can be found. The Lord Privy Seal told us this afternoon that the European Economic Community might be ready to consider modifications in their ideas to meet us. Well and good. Let us talk. But I think that Ministers know that farmers here will resist any idea that our agricultural policy should be decided by a Council of Ministers sitting in Brussels. That would not be tolerable in the rural districts.
Mr. Ellis Smith: Nor in the industrial areas.
Sir A. Hurd: Farmers, and certainly the present generation of farmers, do not forget conditions in the agricultural areas twenty-five and thirty years ago. They will want to scrutinise thoroughly alternatives to the present price support system. I think that it is foolish at this stage to talk about abandoning the Agriculture Acts of 1947 and 1957. I am sure that the basic assurances in those two Acts, one passed by a Labour Government and the other by a Conservative Government, will still be needed by farmers and farm workers in this country, which provides the largest open market for food in the world. Our own home producers will need those basic assurances if we are to have a decent agriculture of which we can be proud.
The confidence and stability engendered by those two Agriculture Acts have given us a productive and progressive countryside. Men are employed in much better conditions and have much greater scope and fuller lives than they had before, and they do not want to risk those advantages. This has been a considerable benefit to the nation as a whole. Indeed, the Lord Privy Seal paid British agriculture a compliment this afternoon when he said that, as a whole the industry is in a sound state to contemplate partnership in a common agricultural policy. I think that that is true today. It was not true twenty-five or thirty years ago and I doubt whether it would be true in ten or twenty years' time if we allowed our production policy to be decided by a Council of Ministers in Brussels.
Having said that, I agree that we could find markets—and they would be profitable markets—on the Continent for
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some of our high quality beef and lamb, and so could Australia and New Zealand. Indeed, commodity agreements might rid us of the anxieties about dumped produce in this country if all played fair in the Common Market. Those are two positive advantages which might well come out of a link or a common framework in agricultural thinking and policy in Europe. Certainly, countries like New Zealand would warmly welcome commodity agreements that would let her keep the right of free entry into our great world food market for her butter and cheese and would, at the same time, give her the chance to break into the high-price markets of Europe. These are problems and differences which have got to be weighed very carefully.
I am not one who would wish to be a party to rushing into the Economic Community, signing on the dotted line and thinking about it afterwards, and, indeed, possibly repenting of it. We must move cannily in all this. Vital interests in agriculture and horticulture could be at stake. As recently as last December the Government, in their White Paper, spoke of their concern to see whether means could be found of achieving closer European unity without sacrificing the vital interest of the United Kingdom farmers and horticulturists. Those are fine sentiments that we can all agree. Some of us on these benches are determined to see that those sentiments are remembered today when we are moving, I think pretty quickly, towards the Common Market in Europe.
I hope that we may have another debate, devoted entirely to this topic, before the Summer Recess so that Parliament and the country as a whole may understand more fully the issues before we find ourselves married up into the Continent. Things can happen without anybody quite knowing what is happening, and it is important that Ministers should be frank, as I know the Lord Privy Seal was this afternoon. I thought that he made a helpful and interesting speech. We want more explanations and explorations of that kind before we come to a decision. When we get them Parliament and the country will be better able to reach the right decision, whether it is for or against going into the European Community and joining the Common Market.
8.29 p.m.
Mr. E. L. Mallalieu: Like, I imagine, a number of other hon. Members, I very much enjoyed the tribute which the hon. Member for Newbury (Sir A. Hurd) paid to the work of the Labour Government after the war in laying the foundations for a prosperous agriculture. I do not think that anyone disputes that the foundations which were then laid were really good and that agriculture has benefited very greatly as a result of what was done. But, of course, conditions change, and I submit that, at present, if agriculture were to remain out of the Common Market a creeping paralysis would come upon it which would knock the present slight paralysis into a cocked hat.
British agriculture has to compete with exports from the Continent which are sent here at world surplus prices—that is, at dumped prices. If British agriculture's price goes down in consequence, by and large it is made up by subsidy. In other words, what is happening is that the British industrialist is being subsidised to pay lower wages than he otherwise would have to pay because his employees are receiving cheap, subsidised food. The more there are surpluses on the Continent, the more will this happen to the detriment of the British farmer and his main interest, which is to keep on good terms with the consumer and the taxpayer. It seems to me that the only hope ultimately for the British farmer is to come inside the Common Market, where he will be competing with other farmers at Common Market prices, not world surplus prices.
I am, therefore, not surprised to find that the agricultural workers of this country, and, I think, a large number of farmers, are very much in favour of a proper deal with Europe in this matter, so that we may compete on equal terms with it.
Sir A. Hurd: Has the hon. Member consulted his hon. Friend the Member for Norfolk, South-West (Mr. Hilton), who is President of the National Union of Agricultural Workers, because some of his recent speeches have not read in the same sense as the hon. Gentleman has just indicated?
Mr. Mallalieu: That could be. It is interesting to see how this matter cuts across parties. If the hon. Gentleman
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follows the resolutions passed by the National Union of Agricultural Workers, he will find that what I have just said is broadly accurate and that the organised workers in agriculture are in favour of joining the Common Market because they realise that there will be competition on fair terms with their opposite numbers in Europe. Most of us believe that our farmers and farm workers are at least as efficient as those with whom they will have to compete.
I was interested to hear the hon. Member for Newbury say that we could not have some body in Brussels, a council of ministers, dictating what should be done here. That is not what is suggested. The whole idea is that we shall be part of this body which is doing the dictating, as the hon. Gentleman calls it. It appears as though, like one of my hon. Friends who spoke for the industrial areas on this point, he was afraid of accepting a majority decision of a group to which he belongs merely because there happen to be some foreigners in the group. That is not democratic.
Mr. Ellis Smith: None of us would live very well if it were not for our export trade.
Mr. Mallalieu: Of course not. We all want to keep the export trade going. I submit that at present industrialists are being subsidised to pay less wages than they otherwise would have to pay. Yet it is called a farmers' subsidy, and some farmers resent this.
The Lord Privy Seal was castigated rather severely in that most remarkable speech of my hon. Friend the Member for Leeds, East (Mr. Healey) for having introduced the Common Market and Europe into our debate. That was the only point on which I disagreed with my hon. Friend. I am extremely glad that the Lord Privy Seal did introduce this matter. I should like the right hon. Gentleman to take anything that I say as supporting him in his efforts to come to a sensible solution on the lines that he outlined this afternoon.
We have recently had economic debates. We are in the middle of the Budget debates at the moment. So far as economics go—I will not dwell on this matter very long, because if I did I

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should be out of order; this is merely an illustration—it is common ground that, if development in this country is not stagnating, it is at any rate not going ahead at as fast a rate as that of most of our competitors in Europe.
Last week, some of us were in France with our colleagues of the French Parliament at a conference. We were shown certain of France's developments. The whole of the Rhone Valley is being turned from a derelict, sunbaked or torrent-swept area of gravel into fertile land by what is being done there. Electricity is being produced from that extraordinary raging torrent, which is being turned into a navigable channel. During the next seven years, all the way from the Mediterranean right up to the Rhine it will be made navigable; a most remarkable development is going on, while we are virtually stagnant. All we do is to put up vast office blocks. I think this is a tragedy: and the immensity of the development that is going on in France, particularly in this sphere of economic expansion, is matched by the complacency of the Government Front Bench on this matter of an expanding economy in our own country.
This brings me back to the question of Europe. There are two points on which I feel that the Government have been dragging their feet very badly, and I apologise if it might be thought that on the first point I am dealing with something which does not match up in importance to many of the subjects which have been touched on today—the great questions of East and West, peace and disarmament. We recently had a proposal by a very important and high-powered study group which went into the whole question of whether or not it would be desirable, possible and economic to make a tunnel under the Channel to France. It reported most favourably on this matter. All sorts of excuses have been brought up from time to time—the questions of expense, the military danger, the fact that it would not in times of unemployment contribute towards a solution of that problem and the fact that, in prosperous times, it would use raw materials which might be scarce and which should be used for other things. All these excuses have been trumped up at one time or another, because the Government had not thought fit to match their thinking with the
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breadth, the warmth and the imagination of this great idea of uniting us with France and with our other friends in Europe.
Here we have presented to us on a plate, as it were, by private investors, every penny of the expenditure that would be wanted to bring this great project of peace to fruition; and yet nothing has been done about it. I say that nothing has been done, but I know that the Government have studied this report, though they have said nothing about it. Now we have come to the point where in France it is being said that we are dragging our feet, while we are saying, "No, it is the French". It is said that it is the Civil Service or even "Le grand Charles" himself. Any excuse is given to justify the fact that our Government have done nothing about it.
This seems to me to be such a tragedy, because here, in one single act, the Government could demonstrate in a way which everybody in all countries in Europe, and particularly in France and in this country, could understand that we acknowledge at last that our destiny and that of the Continent of Europe is so intertwined that it is impossible any longer to hold ourselves apart.
The other matter on which I was prepared to throw all sorts of stones at the Government, and the Lord Privy Seal in particular for dragging his feet, is about the Common Market. I have read reports in the European Press, and, indeed, in the Irish Press, for a long time now that we have definitely made this decision to go into the Common Market, but all the time nothing has been said to confirm this. Indeed, things were said in the contrary sense by the Prime Minister recently.
Since I have heard the speech of the Lord Privy Seal, I shall take him at his word, and I hope that I shall not be found to be a mug for doing so. I believe that that speech meant that the Government wants to try to go into the Common Market, and I do not put it any higher. It does not mean that we should sign on the dotted line tomorrow, but it does mean that the Government have now realised that they have got to get down to the business of trying to work out a modus vivendi between ourselves and our European friends, inside

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the Economic Community of Europe. To that extent, I am profoundly thankful, and I think that the debate has been a most important debate. It has been to me intensely interesting to see how on both sides of the House the same opinion has been expressed, and what we must do now is to get to business with the Common Market. I am more delighted than I can say about that.
Having criticised the Government about their failure to achieve economic expansion and for having dragged their feet over the tunnel and over the Common Market, though now they have come to a better frame of mind, I come to the even more important question of today's foreign affairs debate—how we are to achieve peace and disarmament. The Government are to be immensely congratulated on the declaration which was made after the recent Commonwealth Prime Ministers' Conference. I regard that as quite the most important declaration ever to come out of a Commonwealth Conference. What are the Government doing about it as a matter of follow-up? They have acknowledged that we cannot really have peace until we have something which, to my way of thinking, means world government.
It does not mean a world authority which will come into this country and tell us where to build this school or that, what to teach in it when it is built, where to have a road and whether to close down this or that pit or industry. It does mean, however, according to what the Prime Ministers—in the plural—said after that Conference, world government within the limited sphere of peace-keeping. They said that we must have complete disarmament, a world force and a world security authority to ensure that the disarmament is effectively done and to manipulate the world force.
Coupled with the continued existence of the United Nations as we at present know it, to my way of thinking that constitutes world government. I am delighted that the Government should have used their influence in the Prime Minister's Conference and that all the Prime Ministers should have come together and made that declaration which, in effect, means that they think that we will not get peace and disarmament without effective world government.
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What are the Government doing about this? Is no further Commonwealth follow-up to be undertaken, with all the Commonwealth countries in concert in the United Nations? That is what I should like to see. I am not suggesting—this is the most important thing I wish to say—that this should be followed up now at the United Nations by the Commonwealth in concert because I think that next week or next fortnight we shall get this world government. What I do suggest is that we must go on saying that that is our objective.
We must reach the pitch when there is nobody who can read, write or listen to a radio anywhere in the world who does not know that that is the goal of the West. People know very well what is the goal of the Communist bloc. They must know what our goal is, too, and that it is the achievement of peace and disarmament through world government in the sense in which I have used the words just now.
If only we could achieve that—I should like to see it coming through the Commonwealth—so that everybody knows that that is our goal, what a weapon we should have forged for peace, much mightier than the sword and mightier even than the ideology of the new revealed religion, Communism. Let the Commonwealth place this weapon in the hand of the free world.
Notice taken that 40 Members were not present;
House counted, and 40 Members being present—
8.45 p.m.
Mr. Ronald Russell: Like most of the speakers in this debate so far, I want to concentrate on the question of the Common Market. I make no apology for doing so, because it is a very important question, and if it were wrongly handled irreparable damage would be done to ourselves and to the Commonwealth; and, incidentally, it would offend our friends in E.F.T.A.
I am very glad indeed that the Government seem to be taking a firm stand on our threefold obligation—as is clear not only from what my right hon. Friend the Lord Privy Seal said today, but from what my right hon. Friend the Prime Minister said yesterday—to agriculture, the Commonwealth, and the European Free Trade Area. I have been disturbed during the last few weeks by the rather

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arrogant attitude taken upon this problem by some people—not Members of this House—who write letters to the newspapers, and, indeed, taken by some of OUT newspapers themselves. They seem to take the view that all that we have to do is to sign on the dotted line without any thought of our obligations at all.
It is the sort of line that Britain should delay no longer in getting into the Common Market. Some of the letters seem to be written in the rather plush armchairs in places like the Reform Club, the fountain head of the Liberal Party. Those people are entitled to their point of view, but we are equally entitled to put the other point of view. We have been told that there is a danger of delay, but in one respect I think that delay may be a bit of an advantage.
My right hon. Friend said today that there is a much better understanding now about our problems. I take it that he was referring to Government levels. I should like to confirm that there is a much better understanding at the back bench level, if I may put it that way, among our colleagues in the Council of Europe.
As evidence of that I would mention the last report on this subject we debated in the Assembly only three weeks ago. It was a Report drawn up by a Dutch rapporteur, M. Vos. which made some reference to the Commonwealth. He said:
"It is in the interests of us all both political and economic to establish the best relations with the Commonwealth countries."
After a reference to what he calls Imperial Preference, in the old-fashioned way, he went on to say:
"It would seem reasonable not to upset the present equilibrium more than necessary."
In a report from the Political Committee the rapporteur, an Italian, M. Montini, also stressed the value of the Commonwealth. Though I hate blowing trumpets if any part of what is trumpeted is mine, I think that that is due to the work done by the British delegation, including our Government representatives, and hon. Members from both sides of this House as well, over the past two or three years. I think that because of that there is a much better knowledge about the Commonwealth than there was a few years ago. At one time we were
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accused of always raising the Commonwealth "bogey". Now there is no thought of any bogey at all, but rather the thought that in the Commonwealth there is something of great value for us all.
During the last few weeks there has been published by the Council of Europe one of the best booklets I have seen on this subject. It is called Commonwealth and Europe and is written by the working party of members of the Secretariat under the direction of the Deputy Secretary-General. I imagine that hon. Members who are interested could obtain it without difficulty. It contains a statement of all the advantages and disadvantages and all the arguments which could possibly be thought of, and, besides all that, some very useful tables at the back.
For example, one shows how the Commonwealth depends on the United Kingdom and on the O.E.E.C. countries for the larger part of their markets for some of their most important exports such as meat, meat preparations, dairy produce, wool, sugar, cocoa. Another table shows how some of those countries depend on the Six and the E.F.T.A. countries, including our own, of course, for more than half their exports. Among them are Nigeria, New Zealand, Ghana, the Federation of Rhodesia and Nyasaland, and the Republic of Ireland, which still enjoys Commonwealth preference, but is also a member of the Council of Europe.
What is the attitude of Commonwealth countries towards this problem? Recently, before going to Strasbourg for the last meeting of the Assembly, I took the trouble to find out from some of the Commonwealth Trade Commissioners over here their attitude and their fears. The Canadians, for example, are deeply concerned about the preference they now have in this country on secondary manufactured goods, such as toys and sporting goods, which, if it were not for that preference, would have to compete with similar goods from Germany and the United States. Naturally, they do not want that. This is a problem which I am sure will be taken into consideration when the question of common external tariffs is considered. The Canadians, also, would be vitally affected if the preferences on primary products were tampered with in any way.

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India does not want to lose her privileged position of free entry which she now enjoys in the United Kingdom market, more especially as her exports of tropical produce to the Six are expected now, with the establishment of the Common Market, to face increasing difficulties in competition from similar exports from the overseas associated territories of the Six which will enjoy preference. Moreover, Indian exports of manufactured goods such as cotton and jute textiles face the high tariff wall of the Common Market now. Already, the duties which have been raised affect her most important continental market, particularly in Germany and Benelux.
Pakistan is greatly concerned at the possible loss of free entry for her manufactures if Britain goes into the Common Market. Australia is anxious about the future of her trade in dairy products and meat not only with us but with the Six. She had been looking for an expansion of trade as the Common Market expanded, but now she is facing difficulties with the Common Market policy. It is essential, therefore, that we should maintain free entry and help trade in Australian and other produce.
The Federation of Rhodesia and Nyasaland, unfortunately, is facing stagnation in development because of the uncertainty of her political future. I should like to say a great deal about that, but I will not because it would be outside the scope of the debate. If we cannot do anything to settle that uncertainty we should at least make sure that we do not do anything to damage her trade.
People there are concerned to ensure that existing preferences are maintained or, if that is not possible, that adequate compensation is provided for any loss. Tobacco is one of the chief exports, totalling £4½ million in 1960. That trade is faced with competition from the associated overseas territories which will enjoy preference in the Common Market and also with competition from Greece if she becomes a new member of the Common Market.
Everyone knows the difficulties that New Zealand has been suffering in recent years with her butter trade, largely due to low prices. Mr. Holyoake summed up the attitude of
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New Zealand to this problem in an article in The Times on 27th February, when he said, among other things:
"We should, therefore, deplore it if unity in Europe were to be achieved only by economic measures damaging to New Zealand which, in turn, led to a weakening of our associations with the United Kingdom and Western Europe and added to our isolation…. In New Zealand we do want to see a European settlement successfully accomplished. Yet we are unable to give our wholehearted support to this end while our fears remain concerning the export outlets upon which our economy depends."
There is another country—it was rather cagey about letting its identity be disclosed—which is worried about the possible expansion of tropical products in the associated overseas territories thanks to their preferential treatments, which would damage its own trade.
There is also Sierra Leone, to whom we gave independence only three weeks ago. I did not have a chance to find out its point of view in detail, but I cannot imagine that it would want its exports of palm kernels, which now enjoy preference in this country, to be damaged in any way. There is also the Republic of Ireland, which certainly does not want to lose the preference which it enjoys on agricultural products. Nor would the Republic of Cyprus—the latest recruit to the Council of Europe, and one of the latest recruits to the Commonwealth—like to lose the preference which it enjoys on its fruit and wine. That trade is comparatively small by world or Commonwealth standards, but it is important to Cyprus.
My hon. Friend the Member for Cambridgeshire (Mr. Pym), in his excellent maiden speech, stressed the need for investment in the Commonwealth, and he was referring to investment of manpower as well as finance. He said how much there was from the United Kingdom and the United States in Europe, and asked about the Commonwealth. It may be a little difficult to persuade investors to enter Africa at present most of it, at any rate—but—certainly under the heading of "underdeveloped" from the point of lack of development come, surely, Canada and Australia.
Is there anyone here who would not like to see the populations of those two countries vastly increased and large

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markets provided there, for that would surely permit a terrific expansion of Commonwealth trade? I know that it is easier said than done, but are there not Canadians who visiualise a population of 100 million and Australians who visualise a population of 50 million? We are a long way from such an achievement, but surely we should think about it.
Mr. Ellis Smith: Is not the logic of the whole of the hon. Gentleman's speech the need for a Commonwealth approach to world problems?
Mr. Russell: I agree. I wish that we could have a Commonwealth approach to world problems. It is a very difficult thing to achieve, although we achieved it over disarmament, as has already been pointed out, at the last Conference of Commonwealth Prime Ministers. I wish that there was a definite Commonwealth approach. I wish that the Commonwealth was not plagued with things like the General Agreement on Tariffs and Trade, but was able to regulate its trade in the way that the Commonwealth thinks fit and enabled to bring it up to date in line with post-war conditions.
We have been told by some of the chief protagonists of our joining the Common Market that it is a dynamic new power. That may be so. I wish that the Commonwealth could also be made a more dynamic power. I hope that my right hon. Friend will be aware of the attitude of the United States to this problem. I believe that there are some people in the United States who would like to see us pushed into the Common Market so that they could assume the leadership of the Commonwealth. I do not like criticising the United States, in view of all that she has done for the world in the years since the war, but I do not think that all Americans are very keen on furthering the interests of the British Commonwealth. If that is the case, it is our duty to say so.
My right hon. Friend has received a visit from Mr. Ball, the Under-Secretary of State for Economic Affairs, this week. According to the report in the Daily Telegraph, a few days ago, one of the things Mr. Ball was coming over here to discuss was the possible abandonment of Commonwealth Preference
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in Africa in order to help Latin American exports.
If such an approach is made, I hope that it will be rejected with contumely, because Latin America has formed a free trade area of its own. I do not know how it is succeeding; I think that it has been in operation only about a year. Those countries are looking after themselves. If they do not, the United States usually looks after them from its own point of view. Without hesitation, I say that it is our duty to look to the Commonwealth first and then to Europe, and not to worry about Latin America. Therefore, I hope that this proposal, if it is put forward, will be turned down.
My right hon. Friend the Lord Privy Seal also said that the United States was willing to accept further discrimination against itself in world markets if such discrimination were to strengthen the political unity of Europe. That may be so, but what irritates me is that apparently the United States has never been willing to accept further discrimination if it benefits the economic or political strength of the Commonwealth. That adds a little to what I said just now about the American attitude.
We are told that the Common Market is dynamic and expanding. I believe that it is expanding, but how far does its potential go? It has a European population of about 160 million people, which adding the populations of the associated overseas territories, probably reaches 200 million. Some of these overseas countries are underdeveloped, but the basic population of 160 million constitutes largely a saturated market, except, perhaps, for Italy, which has a lower standard of living than the rest. It is mainly what one might call a replacement market.
On the other hand, the Commonwealth has a population of about 650 million. Many of its territories are under-developed and the great majority of the people have a very low standard of living compared with European standards. Surely one could call that a very uncommon market in the world which we would do well to develop. For instance, there are the enormous underdeveloped areas of Canada and Australia, with their scope for increased

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population. There is the chance of improving the living standards of 400 million Indians, 80 million Pakistanis, 30 million Nigerians, 5 million Ghanaians, and 8 million Ceylonese, as well as the peoples of East Africa, Central Africa, the Pacific, Malaya and elsewhere.
All this is surely a terrific potential—far greater than anything which the European Common Market can provide. That does not mean, however, that I am against doing what we can to associate more closely with the Common Market. The easiest way would be to get a revision of G.A.T.T. and use the simple method of secondary preference. That, however, seems to be permanently ruled out by rigid disapproval from across the Atlantic.
If we cannot do it that way, I hope that we can find another way, but I believe, as my hon. Friend the Member for Cambridgeshire (Mr. Pym) has said, that Europe needs the Commonwealth and that the Commonwealth would be greatly helped by association with Europe. Together, they would form a very strong economic bloc which would be a bulwark of peace and progress in the world.
9.4 p.m.
Mr. William Warbey: The last three speakers have dealt mainly with the subject of the European Common Market, although the hon. Member for Wembley, South (Mr. Russell) referred to the importance of the Commonwealth, and my hon. and learned Friend the Member for Brigg (Mr. E. L. Mallalieu) referred to the importance of world government. I am sorely tempted to follow them, but if I were to do so I should be falling into the trap laid for us by the Lord Privy Seal, who tried to divert our attention from the things that we should be discussing, which the Opposition intended to discuss, and which are far more urgent than the subjects to which the last three speakers have devoted their attention.
I will say, however, that this country, in playing its part in the world must make its contribution towards the unity of the world politically, economically and even ideologically—though that is much more difficult—but I do not
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believe that we can make a contribution by building up small, sectional associations which, in reality, lead to further and continued divisions in the world.
That is the danger contained in the concept of the Common Market. Economically, I think that it has serious dangers for this country, and particularly for our industrial workers. The workers in the coal, steel and other basic industries would see their livelihood affected and the policies of their industries dictated by a committee sitting in Luxembourg while, as the hon. Member for Newbury (Sir A. Hurd) said, our agricultural policies would possibly be dictated by another committee in Brussels.
I believe that the Lord Privy Seal made it clear that the main motive that is driving the Government towards the Common Market—under very strong pressure from President Kennedy—is political. They want to join in a closer political association with those countries that are already associated in the military alliance of N.A.T.O. Therefore, the object of the whole exercise is to form a closer ring around those countries that form one part of a divided world. It is sheer nonsense and complete hypocrisy to talk about seeking the unity of Europe when, in fact, it is sought to emphasise the division of Europe and of the world.
Many of my hon. Friends and I are certainly not prepared to accept a position in which our foreign policy can be dictated by people like Dr. Adenauer and General de Gaulle——
Sir K. Pickthorn: By whom would the hon. Gentleman like it dictated?
Mr. Warbey: I will tell the hon. Gentleman. I am prepared for this country to surrender its national sovereignty and to accept the higher authority of one body, and one body only—the United Nations Organisation. I believe that it is essential for the peace of the world in particular that we should, through the United Nations, create a world authority. Any less concept of unity than that, any attempt to unite countries sectionally, does not unite the world but helps to divide it.
Therefore, when people talk, as the Government talk in their Motion, of the unity of the free world, I hope that we shall be able to go beyond that and

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to think in terms of the unity of the world as a whole. The "free world" is a nonsensical, explosive and hypocritical concept, embracing as it does the dictatorships, the repressive dictatorships, of a score or more of countries which are under the patronage of the United States and its allies, from General Franco in Spain to President Ngo dinh Diem in South Vietnam.
This begins to bring me towards what I regard as the real subject of this debate as put forward by my hon. Friend the Member for Leeds, East (Mr. Healey), and that is the troubled areas of the world, particularly in Latin America, Africa and Asia.
These countries south of the Tropic of Cancer in these three great continents have until the recent past, and continuously into the present in some cases, been exploited by capitalist industrial nations lying north of the Tropic of Cancer, and concentrated mainly in Europe and in the Anglo-Saxon countries.
Since the 1914–18 war we have been faced with a growing revolt within these countries against colonial domination and capitalist exploitation. This is the great wind of change which the Prime Minister thought he saw suddenly arising in Africa a year ago, but which, in fact, has been rising since 1917 and has been spreading through these areas.
It is important to realise that this is not merely a protest against foreign political domination. In most cases it is a protest against foreign economic exploitation. In most of these countries the imperialist Powers have opened up areas for their capitalists to exploit for the sake of profit and personal gain.
This is a familiar story but it is true. This is an incontrovertible fact which, oddly enough, seems to be forgotten when we are faced with the practical problems which arise from its development, because what has been happening in the Congo, in Cuba, in Angola, in Vietnam and in many other parts of the world is a vivid illustration of the revolt of the people in those countries against these twin forces of political domination and capitalist exploitation. Unless we recognise that this is happening and discover how to come to terms with it, and live with it, and keep the peace of the world in spite of it, we shall head towards disaster.
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We have seen in the Congo a classic example of what happens when a country is driven belatedly to give up political domination but tries, nevertheless, to continue its economic exploitation of the country. In Katanga and Kasai we have seen the Belgians giving up politically but returning to dominate the economic wealth of those areas through the Union Minière and the Foraminière, and it is these companies which have financed and supported the mercenaries who have helped to maintain Mr. Tshombe and Mr. Kalonji in power.
I was astonished to hear the Lord Privy Seal go out of his way to pay a tribute to Mr. Tshombe for maintaining order and stability in Katanga for a year. He has done it with the aid of foreign mercenaries, and this has been condemned by the United Nations. He has done it in such a way that there have been tribal massacres and counter-massacres among the Balubas in Northern Katanga. There has been so much order and stability that the Prime Minister of the Congo and two of his fellow Ministers were murdered in Katanga during Mr. Tshombe's rule and while they were in his care.
That is the kind of order and stability which we have had, and I am astonished that the Government should even think in terms of saying one word of approval of this Belgian capitalist stooge—not only Belgian but French and British capitalists, incidentally, because, as we all know, there are Britons such as a former Member of the House, Captain Waterhouse, who are directors of the boards of the Union Minière and other companies concerned and who have been engaged in the political wire-pulling which has been going on behind the scenes in order to retain effective Belgian economic power in the Congo during the last year.
Mr. Russell: Has the hon. Member any proof of that statement which he has made against Captain Waterhouse?
Mr. Warbey: Yes, I happen to know and in a French newspaper there will be found a report of the draft of a political constitution for the association of Katanga with Northern Rhodesia which was drawn up by Captain Waterhouse. That is not the least of the activities of this gentleman. His is a typical example

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of the kind of activity which has been going on and which has been bedevilling the activities of the United Nations, which was called in by Mr. Lumumba himself in order to establish order and stability throughout the whole of the Congo, and it is people like Mr. Tshombe and others with Belgians behind them who have obstructed the United Nations from the start.
Lady Tweedsmuir: Does the hon. Gentleman agree that a sovereign State has the right to employ whom it wishes, or to ask for such technicians as it wishes?
Mr. Warbey: There are two question-begging words in the hon. Lady's question. First, Katanga is not a sovereign State.
Lady Tweedsmuir: The Congo is.
Mr. Warbey: I was talking about Katanga and Kasai and objecting to the activities of the people who want to be the rulers of those territories and to the employment of Belgian mercenaries by those people, which nobody can deny. First, they are not sovereign States and, secondly, this activity has been condemned by the Security Council in resolution after resolution. It is the task of the Government, which I hope the hon. Lady supports, to see that these foreign mercenaries are withdrawn from the Congo, and I hope that the Government are supporting the Security Council in that action. That is the situation in the Congo.
Mr. John Biggs-Davison: An exhaustive survey!
Mr. Warbey: It was not an exhaustive survey, but it provides an illustration of my theme.
Cuba provides another illustration of the same theme in a somewhat different context, but, basically, the essential issues at stake are the same. The Americans gave up political domination of Cuba some time ago, as they have done in other Latin-American countries, but they have retained and sought to retain a free field for capitalist exploitation. This is known euphemistically as free enterprise or the American way of life. But that is the essential object of the exercise. So long as they were able
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to do this and so long as there was a free field for capitalist exploitation, the Americans were content to allow the Governments which were in power to remain in power even if they were the most abominable and brutal dictatorships. But when a Government came to power in Cuba which did not seek only political independence but sought also economic independence and an end to capitalist exploitation—in other words, a Government which was a frankly thorough-going anti-capitalist Government—the Americans could not stand it and found that they had to intervene.
Castro has expropriated the landowners in favour of the poor landless workers and settlers and he has expropriated the industrial capitalists, who happen to have been mainly American, in favour of the masses of the Cuban people. This may have been a little bit ruthless, but it is a kind of rough social justice because the people who have exploited Cuba, as they have exploited other Latin-American countries, have had their money out of it many times already and there is no particular reason why they should have any more.
Although, as a matter of wise politics, it might have been better if Castro had paid compensation and had done the thing a little more gently, in terms of social justice and in terms of the way in which the world is actually developing, what Castro has done in Cuba is certainly no worse than what the Americans did in Guatemala and what they are attempting to do in South Vietnam and other parts of the world, except, of course, that what the Americans are trying to do is to reverse the process. They are trying to establish dictators who will maintain a régime in which there is still room for capitalist free enterprise. So long as their protégés are prepared to do that, the Americans are not in the least worried if they happen to be not very respectable members of the so-called free world.
Castro would have got into no difficulty with the Americans if he had not been a quite ruthless and thorough-going anti-capitalist. This is his real crime in the eyes of the Americans. This is why he has been subjected to an invasion fomented from outside.
It may be asked, why rub salt into the Americans' wounds when it is so

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clear that they have made a serious mistake in Cuba and are not likely to repeat the effort? My hon. Friend the Member for Leeds, East said that they had probably learned the lessons of their mistake and were not likely to repeat it. If that were so we might be able to overlook this mistake and not make too much fuss about it, although I do not think that we could ignore it altogether, as the Lord Privy Seal did in his speech this afternoon.
Unfortunately, the Americans show no signs of having learned from this mistake; indeed, in every speech—not merely in his speech, in anger, to the American Society of newspaper editors but in all his subsequent speeches and in many Press conferences—President Kennedy has returned again and again to the theme of the necessity for the United States to combat, by physical force if necessary, the spread of Communism in Latin-America and other parts of the world. I have a sheath of Press cuttings here referring to his Press conferences and speeches. I shall not read them to the House, but in every one there is a recurrence of the same theme, that the United States must now concentrate on the building up of what are called anti-subversion forces in order to contain Communism and prevent it from spreading further in Latin-America and other parts of the world.
In every one of those speeches and conferences there has been a special mention of South Vietnam. It is clear that that is to be the next centre of American anti-Communist activity. Indeed, some units of the special forces trained by General Maxwell have already been flown to South Vietnam to support the 5,000 Americans already there, in various disguises, to assist the dictatorship of President Ngo dinh Diem. We are being prepared with the usual propaganda story that what they are doing is to help in the suppression of Communist guerrillas who have infiltrated from outside and who are trying to overthrow the legitimately elected Government.
Anybody who has been to Saigon, in South Vietnam, as I have, will have very different views from those about the character of the present régime there. President Ngo dinh Diem is a nepotistic dictator who tolerates a régime of corruption, speculation and exploitation
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which has to be seen to be believed. The economic aid given by the United States has been used for the grossest exploitation and for the widening of an already excessive gulf between rich and poor in that country. One has only to spend a few hours travelling round Saigon in order to appreciate how deep this gulf is and what a crime against civilisation it is that this appalling poverty should exist in Saigon, side by side with the flaunted wealth of those who have gained from massive speculation and corruption.
That is the kind of régime which the Americans are propping up in South Veitnam, and to which they are prepared to give military aid and even direct military assistance, merely because it is anti-Communist. This is the kind of action Which we cannot afford to tolerate, not merely because it is wrong, immoral, inconsistent with the principles of the United Nations and certainly with any conception of a free world, but because it is also a danger to world peace.
If a country is attacked as Communist in the way that Americans have done, inevitably, whether it be Communist or not, it is driven into the arms of the Communists. That has happened with Cuba, so that the efforts of the Americans are self-defeating. But at the same time they inevitably turn the struggle into one between the two major powers in the cold war. Immediately the whole of mankind, and not merely the local people, become concerned in this conflict. That is why we have to take a firm line against this form of great Power intervention in the revolutions which are taking place, and will continue to take place, in so many parts of the world—particularly in the Southern hemisphere.
Unless we are prepared to see that the great Powers are forced to come together to try to reach agreement and to neutralise these problems, or unless we are prepared to bring in the United Nations in order to hold the ring in these areas, the whole world may well be threatened by the consequences of these activities. That is why today we find it necessary to condemn most emphatically the recent activities of the United States Administration in Cuba. As was said once by the right hon. Member for Woodford (Sir W. Churchill), the value of recriminating about the past is in order

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that we shall learn useful lessons for the future.
Clearly the Americans have not learned that lesson. It is necessary for us to speak up and ensure that the British Government play their part in seeing that the Americans, as well as the Russians, learn to behave as reasonable human beings in the world; not arrogating to themselves the right to act as international policemen but recognising that the only international policemen can be those provided by the United Nations.
9.32 p.m.
Colonel Sir Tufton Beamish: In attempting to wind up the first day of this long overdue and wide-ranging debate I can only try to pick out the highlights from the colourful canvas which has so far been painted—that is, what I can still see of the canvas after the "red paint" put upon it so liberally during the last half-hour. The hon. Member for Ashfield (Mr. Warbey) said only one thing in his half-hour speech with which I agreed. He said, "This is a familiar story." I can only wonder how he can bear to live in this rotten capitalist country. No one could accuse the hon. Gentleman of departing one iota from the straight party line.
Mr. E. Fernyhough: Silly rubbish!
Sir T. Beamish: When I looked at the Order Paper yesterday I was very pleased to see—[Interruption.] Does the hon. Member for Nelson and Colne (Mr. S. Silverman) wish to interrupt me?
Mr. S. Silverman: No, I do not.
Sir T. Beamish: The hon. Gentleman has already gone out of the Chamber in a huff once today.
When I looked at my Order Paper yesterday, I was very pleased to find that there was practically no difference that mattered between the Government Motion and the Amendment put down by the Opposition. But today when I saw my Order Paper, I was disappointed to find that the Amendment had been changed in a fashion which, to be frank, appeared to me rather irresponsible and ridiculous. I could not see the point of the "Leopard hunt" in the difficult period in which we are today. Surely, the visit of H.M.S. "Leopard" to
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Angola is a very trivial incident in comparison with the immensely important subjects which we have been debating so seriously.
To me, at any rate, it was a mistake to change the Amendment in that way and I feel that it will also be largely misunderstood abroad, in spite of the considerable unanimity of views on both sides of the House on most of the great problems of the world. I had thought for a moment that the Amendment had been changed in order to try to get the whole party opposite into one Lobby, but when the hon. Member for Leeds, East (Mr. Healey) drew such a clear distinction between his hon. Friends and "certain other hon. Members"—whether intentionally or unintentionally I am not sure—I did not think that that could be the proper explanation.
By the way, what a funny Motion of censure. There have not been more than ten hon. Members opposite in the last five hours and yet this is supposed to be a Motion of censure. In fact, the hon. Member for South Ayrshire (Mr. Emrys Hughes), who sat on this side of the House for a little while—and we were delighted to see him here—actually tried to count the House out.
Mr. Emrys Hughes: Surely the hon. and gallant Gentleman will realise that, representing as I do a very large agricultural constituency and knowing that hon. Members opposite represent agricultural constituencies, it was very shocking to me that only three hon. Members opposite had discussed the consequences to the agricultural community of entry into the Common Market.
Sir T. Beamish: The debate has depended very largely on hon. Members on this side of the House. Of course, we have to eat occasionally.
May I now address my remarks to Europe, and when I say Europe I mean the whole of it. Practically every hon. Member looks forward to the day when the whole of Europe will be re-united by peaceful means. The question that we have all been asking ourselves has been: to join or not to join the Common Market? We have also been asking, if we are to join, whether our approach during the last year or two has been the right one. For three years, from 1950 to 1953, I was a delegate at the Council of Europe, and when I think back to

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those years I must admit that I did not expect that the Six would get so close together as they have. I was certainly not alone in that view, and this was not a party matter. Hon. Members on both sides of the House were apt to pay lip service to the European Community and perhaps there was not sufficient follow through. It is, however, in my opinion—and I am glad to see one member of the Liberal Party here—a great exaggeration to speak of "misjudgment and hesitation" as being a characteristic of the Government's policy.
Mr. Donald Wade Mr. Donald Wade (Huddersfield, West) rose——
Sir T. Beamish: I would rather not give way. The hon. Gentleman has not been here all day and I do not see why I should give way to him. Perhaps he will have an opportunity to speak tomorrow.
In my opinion, the Government made genuine and strenuous efforts to join the Free Trade Area. Those efforts failed and E.F.T.A. was created as a second best solution. After our failure to associate with the Six, we undoubtedly went through a year of heart-searching. It was widely held at that time that France alone had blocked Britain's entry to the Common Market and some hon. Members still believe that to be the case. It may have been so at one time, but when I think back to the brilliant and encouraging speech that General de Gaulle made in June last year I do not think it would be true to say that France has blocked our efforts to get closer to the Six since then.
There was another speech made a month or two ago by M. Couve de Murville, and I should like to read a short extract from it because these words are important and emphasise what I have said. He said:
"Nobody has ever suggested, or ever thought that it would be possible, to unite at one go, either economically or politically, all the countries constituting Western Europe. A more modest start must be made, we must act, more or less, empirically. One must take into account the character of each country, of the ties and of the special obligations which may bind it. In other words, let us do what we can as and when it is possible. This, on two conditions, of course. One is that no initiative should ever be aimed against anyone; our object is to unite not to divide. The other condition is that we should never art any time lose sight of the ultimate goal, which is the union of all Europeans in all fields".
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I am sure that my hon. Friends will agree that those were very encouraging words. It is true to say that the French attitude now recognises our difficulties and that they are not standing in Britain's way.
Should we join? The main considerations which I have in mind when I answer that question were brilliantly pointed out by the Prime Minister when he spoke on 7th April at the Massachusetts Institute of Technology. He said:
"I believe that we must"—
that is, we should join—
"and we can do this without detriment to our domestic interests or to our Commonwealth association and without injury to any other nation or group of nations".
He went on to point out that, not only did he see important economic advantages in joining, but that
"The political gains will be even more significant. The consequences of the economic division of Western Europe are only just beginning to make themselves felt in the political field. Yet if this economic division persists, the political rift will inevitably widen and deepen. This must, sooner or later, affect our military coherence and strength. It will be a canker gnawing at the very core of the Western Alliance."
I agree absolutely with those words, and I believe that that was a very significant speech. In my opinion, we cannot afford the political disunity which will inevitably arise from lack of economic co-operation, and the more I study this extremely complicated problem the more convinced I become that the Government's present attitude is correct.
There have been good reasons for the delays of the last twelve months, and, as my right hon. Friend the Lord Privy Seal made clear, a great deal more has been going on behind the scenes in the last six or eight months than many people realise. I do not agree, however, with the approach, which I think is rather naive, suggested in the Liberal Party's Amendment. I understood the hon. Member for Bolton, West (Mr. Holt) to say that what the Liberal Party wanted Britain to do was to apply to join, but not to join. I do not know whether I am paraphrasing what he said accurately, but we will see in HANSARD what he said. I understood him to say in an intervention during the speech of my right hon. Friend the Lord Privy Seal that he thought that Britain should apply to join but should not join until we have been able to clear the difficulties out of the way.
Mr. Wade Mr. Wade indicated dissent.
Sir T. Beamish: I am not intending to rag the hon. Gentleman in any way. I am sure that he will acquit me of that. No doubt tomorrow a Liberal Member will speak and we will know more clearly what is in the mind of the Liberal Party.
The main difficulties as to whether we should join are fairly clear to all of us by now. Let me first deal with agriculture. I think that the National Farmers' Union's economic analysis of this problem is rather disappointing. In my view, it lays far too much emphasis on the cons and far too little on the pros. If I were an efficient farmer, which I am not, I should not worry if Britain joined the Common Market once we have been able to make satisfactory arrangements to protect British agriculture. [Interruption.] What I intended to say was that, of course, this is one of the great anxieties in the minds of all of us. We had a very clear assurance from the Lord Privy Seal today when be said that any new arrangements made would take full account of our pledges to farmers. That was what was in my mind when I made that remark, which was rather badly phrased.
I am confident myself that the agricultural problem can be overcome, though it is certain to result in quite considerable readjustments in the pattern of our production. I am in no doubt at all that the Government are under a clear obligation to make those readjustments as painless as possible. The hon. Member for Leeds, East said that there was panic among the farmers. I can assure him that I have been very often among the farmers in my constituency, and that there is no panic amongst the farmers of Lewes, though there might well be, for all I know, panic among the farmers of East Leeds.
The second aspect of this problem which worries all of us in this House is that of the effect on the Commonwealth. Again, this is outside party affiliations. It seems to cut across party, so that I feel that both parties are equally divided on the issue. My hon. Friend the Member for Wembley, South (Mr. Russell) made an extremely interesting speech in which he pointed out some of the gravest anxieties of some of the Commonwealth countries. There are other angles on this
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question. He will agree that Commonwealth Preferences have been so much eroded since 1937, when they were worth between 10 and 12 per cent. of all goods imported, that today they are worth only 4½ per cent. They are nothing like as valuable as they used to be, and, incidentally, less than half of the imports from Commonwealth countries enjoy any form of preference whatever.
There is also the point about the anxieties which hon. Members feel about the possible loss of sovereignty, and there is no doubt at all that all of us in this House will want to know exactly what loss of sovereignty is likely to be involved if we join the Common Market, and the European Parliamentary Assembly has not only a consultative but also a legislative function. That is one of the problems which we shall want to study very carefully indeed before we can make up our minds fully on this important matter.
I do not have any serious fear that joining the Six would endanger the high standard of our social services, and I think that point has been much exaggerated. Nor do I think from the studies I have made that the freedom of the migration of labour, foreshodowed by 1970 in the Rome Treaty is likely to be a serious disadvantage from our point of view.
I should like to conclude my remarks on this subject by saying that joining the Six will be no panacea for Britain's economic problems. We are up against it in the world, losing our fair share of an expanding world export market, and joining the Six will not solve that problem. Though it may help a little, it definitely will not solve it. If and when we do join, we can only look forward to a tough struggle to survive in an increasingly competitive world. Joining will be painful, but staying out premanently could well be shortsighted and in the end possibly crippling.
If the Government's attitude to this immense problem has now been made pretty clear, where on earth do the Opposition stand? The Opposition stand nowhere; they are sitting on the fence very firmly indeed. Like in this party, there are sharp divisions of opinion, and I do not wish to make any special point out of that, but I hope that the Opposition are not going to play

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party politics over this hoping to pick up cheap votes, because the issue is much too big, and the only responsible approach to the problem is for the Opposition to take the same attitude to it as if they were, in fact, in power.
I read an extremely interesting article the Sunday before last written by the hon. Member for Leeds, East in the Sunday Dispatch, which is a good Tory newspaper, and I hope they paid him well. I thought that that article was based on two wholly false assumptions and also on one piece of very inaccurate tittle-tattle. The tittle-tattle was the suggestion by the hon. Member that my right hon. Friend the Prime Minister had been pushed into the European water—those were almost the hon. Member's exact words—by President Kennedy last month. In my view, for what it is worth, if anybody did the pushing it may well have been my right hon. Friend the Prime Minister. Who pushed whom does not really matter, but it is important that America apparently favours the sort of approach to the Six that the British Government have made during the last few months.
The two false assumptions on which the article seemed to be based were, first, that the Six intended to create a close Federation, although I must admit that this was an Aunt Sally which was fairly well knocked down by the end of the article. The second false assumption was that the French Government were insisting that we sign the Rome Treaty exactly as it stands or that we do not join the Six at all. I do not believe that that is the case. I do not wish to be discourteous to the hon. Member for Leeds, East, for whom I have considerable admiration, when I say that his article was cunningly inconclusive and extremely readable.
My hon. Friend the Member for Cambridgeshire (Mr. Pym) made an eloquent and interesting maiden speech. He related our Common Market problem with the problem of aid for developing countries. One of the positive advantages in joining the Six is that co-ordination will be possible between the efforts now being made by the countries of Western Europe to help the less-developed countries of Africa and Asia. This was a point to which the hon. Member for Leeds, East also referred when he said that one of the most important things that we have
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to do from Westminster is to win and keep the confidence of the uncommitted peoples. I entirely agree.
How are we to set about this if we cannot work in ever closer liaison and understanding with other free countries who wish to aid the less-developed countries? There is no limit to their requirements, especially in Africa. We in this country have made a big effort, but there is room for a much bigger effort, and not only by the Government, but by private enterprise. In these less-developed countries, some of which I toured twice last year, there is a terrific challenge which must be met. There is an unquenchable thirst for education and a great need for more technical aid. If we can co-operate with the other countries of the Six in providing the very large amount of assistance that is required, we will be making one of the most constructive contributions to the stability of the free world that I can imagine.
On this side of the House, there are serious anxieties about what is happening in the Katanga Province of the Congo. There is a Motion on the subject on the Order Paper which has been signed by a good many of my hon. Friends. My hon. Friend the Member for Aberdeen, South (Lady Tweedsmuir) touched upon the United Nations problems as they impinged to some extent upon the situation in the Congo. I cannot help wondering whether the United Nations is performing the proper rôle for which it was designed in the Congo. It is carrying out a semi-military rôle and has its own military forces. Its proper rôle is a humanitarian one and to take technical and administrative aid to the Congo at the request of the Central Government of the Congo coupled, perhaps, with a police rôle.
Let us remember that the Congo as a whole is a geographical fiction. I liked Mr. Tshombe very much when I met him last October. I am saddened by the way he was tricked into going to the recent conference and then arrested. We must admit that if he is guilty of any of these crimes now, he was guilty when he was invited to the conference. Nothing changed after the conference started—except that he had a rapturous welcome from the people in Coquilhatville. It may have been that jealousy was one of the reasons he was arrested.

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However, I very much hope that the British Government will not be associated with a policy which could possibly have the effect of sucking Katanga Province, which has 60 per cent. of the wealth of the whole of the Congo though only 12 per cent. of the population, into the chaos we unhappily see in the rest of the Congo, although I frankly say that the rest of the Congo will be nothing without Katanga, and I hope to see them come together. But we do have considerable anxieties about this matter.
We live—everyone will agree with this, at any rate—in a very confused and very turbulent world, and we have done since the war ended. The struggle has waxed and waned but it has been relentless. But the struggle has not been of our choosing. We and our allies in the free world have been merely standing up for ourselves. Occasionally grave mistakes have been made by one ally or another, but on the whole there has been a clear understanding of the nature of the struggle in which we are involved, a struggle which was very clearly described by the hon. Member for Leeds, East by quoting the words of Mr. Khrushchev. From 1945 to 1950 we were rushed off our feet. Since then we have roughly held our own.
I agree very much indeed with what the hon. Gentleman the Member for Hammersmith, North (Mr. Tomney) said from the benches opposite in a memorable speech and a very moving one. I hope that hon. Members who missed that speech will read and study it, particularly the hon. Member for Ashfield. It would do him a lot of good. The struggle in the world will go on, may be with increasing intensity. That is what the hon. Member for Hammersmith, North said. We must do much more than merely hold our own. Our long-term aim is to see freedom's frontier extended, and to see every country free to choose its own form of government and its own way of life without foreign domination.
There are many prerequisites for success in achieving this aim, and I have tried very briefly indeed to touch on some of them. We must work ever more closely with all like-minded countries. A logical step in this connection would be to join the Common market, if we cam do so on satisfactory
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terms. I should like to see a vast, imaginative programme of aid to less developed countries. I should like to see our propaganda services greatly improved. They are nothing like good enough, in my opinion, and they have been increased over the last ten years by about one-third while the defence Estimates have gone up by 80 per cent. Till we can achieve a measure of disarmament we dare not lower our guard. We must make many sacrifices, including, if need be, conscription. We must have efficient defence based on all-party agreement and including British possession of the nuclear deterrent. That is the only safeguard against the unthinkable and ghastly prospect of another war. Therefore, defence must continue to be, in the present uncertain world in which we live, the first charge on the taxpayers' pockets.
When I was at luncheon with a friend of mine at the Soviet Embassy not very long ago he said to me, "The trouble with capitalism is that it is not withering away fast enough." I replied to him, "It is not withering away at all." Very far from it. There are, in my opinion, some very encouraging signs that we and our free-world partners are about to take on a completely new lease of life.
Debate adjourned.—[Mr. Chichester-Clark.]
Debate to be resumed Tomorrow.

HOUSE OF COMMONS MEMBERS' FUND
10.0 p.m.
Mr. James Griffiths: I beg to move,
1. That in pursuance of the provisions of section three of the House of Commons Members' Fund Act, 1948, the maximum annual amounts of the periodic payments which may be made out of the House of Commons Members' Fund under the House of Commons Members' Fund Act, 1939, as amended by the said Act of 1948 and by the Resolutions of the House of 17th November, 1955 and 7th March, 1957, be varied as from the first day of June, nineteen hundred and sixty-one, as follows:—
(a) for paragraph 1 of the First Schedule to the said Act of 1939, as so amended (which provides that the annual amount of any periodical payment made to any person by virtue of his past membership of the House of Commons shall not exceed five hundred pounds or such sum as, in the opinion of the trustees, will bring his income up to six hundred and fifty pounds per

1509
annum, whichever is the less), there shall be substituted the following paragraph:—
"1. The annual amount of any periodical payment made to any person by virtue of his past membership of the House of Commons shall not exceed five hundred pounds or such sum as, in the opinion of the trustees, will bring his income up to seven hundred pounds per annum, whichever is the less:
Provided that if, having regard to length of service and need, the trustees think fit, they may make a larger payment not exceeding nine hundred pounds or such sum as, in their opinion, will bring his income up to one thousand one hundred pounds per annum, whichever is the less";
(b) for paragraph 2 of the said Schedule (which provides that the annual amount of any periodical payment made to any person by virtue of being the widow of a past member of the House of Commons shall not exceed three hundred pounds or such sum as, in the opinion of the trustees, will bring her income up to four hundred and fifty pounds per annum, whichever is the less), there shall be substituted the following paragraph:—
"2. The annual amount of any periodical payment to any person by virtue of her being a widow of a past member of the House of Commons shall not exceed three hundred pounds or such sum as, in the opinion of the trustees, will bring her income up to five hundred pounds per annum, whichever is the less:
Provided that if, having regard to her husband's length of service or to her need, the trustees think fit, they may make a larger payment not exceeding four hundred and fifty pounds or such sum as, in the opinion of the trustees, will bring her income up to six hundred and fifty pounds per annum, whichever is the less";
(c) in paragraph 2A of the said Schedule (which provides that the annual amount of any periodical payment made to any person by virtue of being the widower of a past member of the House of Commons shall not exceed three hundred pounds or such sum as, in the opinion of the trustees, will bring his income up to four hundred and fifty pounds per annum, whichever is the less), for the words "the annual amount of any periodical payment" to the end of the paragraph, there shall be substituted the words—
"The annual amount of any periodical payment made to any such widower shall not exceed three hundred pounds or such sum as, in the opinion of the trustees, will bring his income up to five hundred pounds per annum, whichever is the less:
Provided that if, having regard to his wife's length of service or to his need, the trustees think fit, they may make a larger payment not exceeding four hundred and fifty pounds or such sum as, in the opinion of the trustees, will bring his income up to six hundred and fifty pounds per annum, whichever is the less".
2. That, in pursuance of the provisions of section three of the House of Commons Members' Fund Act, 1948, the amount of the sums
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to be deducted or set aside from the salaries of Members of the House of Commons under subsection (3) of section one of the House of Commons Members' Fund Act, 1939, as amended by the Resolution of the House of 18th July, 1957, shall be varied as from the date of this resolution by the substitution in that subsection of the word "twenty-four" for the word "eighteen".
The Motion is in my name and that of hon. Members of all parties who serve with me in administering the House of Commons Members' Fund.
I do not think that I need detain the House for more than a moment or two to explain the new provisions which this Motion will authorise the trustees to make, because they are set out in considerable detail. I hope that it will be unanimously approved by the House. I assure the House that there is need for it and that it will be warmly welcomed by those who benefit from the Fund.
I should like to say, on behalf of my fellow-trustees, that recently we were informed that a former colleague, the late Viscount Bracken, known to us as Mr. Brendan Bracken, had made provision in his will for a bequest of £1,000 towards the Members' Fund. I think that all hon. Members will remember his kindness with gratitude and I hope that the House will accept the Motion unanimously.
10.1 p.m.
Mr. Sydney Silverman: I do not propose to detain the House for more than a minute and I do not propose to oppose the Motion. I know that it will do a great deal of good and that some people will be assisted as a result of it as they ought to be assisted.
I therefore hesitate very much to say a single word in criticism of the Motion, but I should not like the occasion to pass without recording my surprise that my right hon. Friend the Member for Llanelly (Mr. J. Griffiths), who has spent half a lifetime opposing the means test, should be in favour of a means test as applied to the pensions of Members of this House.
The principle is all wrong. I know that I can do little or nothing about it, but I did not want the occasion to pass without saying that it was wrong.
10.2 p.m.
The Secretary of State for the Home Department (Mr. R. A. Butler): As Leader of the House, I should like to

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support the Motion and to pay a tribute to the trustees of the Fund for the manner in which they have administered it. The right hon. Member for Llanelly (Mr. J. Griffiths) and his colleagues have done a good service to the House and have helped many retired Members and widows.
I feel that the Motion represents an advance. It involves an increase in Exchequer contribution. This is a benevolent scheme. It is not a pension scheme. One day we may move into the sphere of a pension scheme, but that would involve considerable extra financial liability and we are not able to do so at the moment. In the circumstances, I hope that the House will approve this at the best arrangement for the time being.
I should also like to pay my tribute to the bequest of the late Lord Bracken and again to thank the trustees for their work.
Question put and agreed to.

NURSING HOMES (ELDERLY PERSONS)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Whitelaw.]
10.3 p.m.
Mr. Norman Dodds: In an effort to raise the subject of a most disquieting aspect of our national life I have been fortunate enough to have the Adjournment debate under the title "Nursing Homes for the Elderly".
I should make it clear that the situation in respect of the care of elderly people is confused by the vagueness of official definitions of the words "home" "old" and "aged", and that there is no clear guidance on the lines of demarcation. The definitions also cover old persons' homes, hotels, boarding houses and guest houses where elderly persons in need of care and attention are handled for private profit, and I would stress "for private profit".
I raised the matter of nursing homes and the care of the aged in a Question to the Minister of Health on 5th December, 1960. I asked the Minister
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"in view of the concern expressed about the deteriorating standards in many nursing homes for elderly people where charges range from 7 to 30 guineas a week, if he will set up a Committee to look into the matter, and if he will consider the need for legislation requiring these homes to register annually, and prescribing precise standards of furnishings and staffing."
I was pleased that the Minister said, in reply:
"I am at present considering suggestions for strengthening the powers of the registration authorities."—[OFFICIAL REPORT, 5th December, 1960; Vol. 631. c. 853.]
I hope that the Parliamentary Secretary will tell us tonight that some progress has been made.
I first took an interest in this matter as a consequence of visiting a nursing home. I was asked to visit an old gentleman who had some complaints to make. He was paying seven guineas a week, and he was accommodated in a large room with seven other elderly men. He had been very much upset when the so-called matron walked round and said, to the so-called nurse, "Who is this old geezer?" The old gentleman replied, "I am not an old geezer. I am paying seven guineas a week to be here, and my name is So-and-so".
While I was in that nursing home I was told some terrible things by the old gentlemen. It was pointed out that, as they were all of a great age, deaths frequently occurred, and it was said that that on most occasions the dead body lay in the bed for at least twenty-four hours and that, on one occasion, a body had been forty-eight hours. There was no dining room or communal room. The old people got up once a day when a fire was lit, and when it died out there was no more heating—there was no central heating—and so they went back to bed. I could not think of anything more terrible than such conditions for elderly people who possess all their faculties but are probably a little weak because of advancing age.
I have visited a number of nursing homes since then, and I have been appalled at the lack of comfort and miserable furnishings in them—the old-fashioned beds, the old flock mattresses, and so on. Frankly, it seems to be time for us to have in many of these homes a modern Dickens to stir up the public conscience so that something is done about it. I have had pointed out to me the consideration that is shown to

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children and the care which is taken about children's homes, their staff and the training of the staff. I submit that the elderly people need in many respects as much care, toleration and patience as children do.
There is plenty of evidence to indicate—I think that the situation is getting worse—that some local authorities with long waiting lists of elderly people are most reluctant to turn down applications from individuals who wish to open homes for the elderly. I believe that as a result there are some shocking places where the elderly and the weak are at the mercy of unscrupulous people.
So little emphasis seems to be put on the need for registration by some local authorities that they are not always aware of the existence of old persons' homes or, as they are sometimes called, nursing homes. Because of complaints, an investigation was carried out in one town, and it was discovered that there were twelve places about which the local authority knew nothing. Less than half of those places have been registered as a consequence of the investigation.
I understand that all private homes for old people must be registered with the appropriate local authority, which may refuse an application on the ground that the applicant, or anyone employed by him in the management of the home, is unsuitable, or because of the unsatisfactory nature of the services provided. An existing registration can be cancelled for similar reasons.
I am informed that there are between 1,100 and 1,200 private homes registered with local authorities in England and Wales for the handicapped and the aged. There are many excellently run homes, but I do not think that anyone need dwell on these, for they should be well-run, particularly where the charges are fairly high. There are many homes which provide fine amenities at reasonable charges, but I am informed that there are as many which are poor and even deplorable in terms of amenities or staffing.
There are very large waiting lists for the best homes. I am informed of one established home, with a very fine record, which had 900 applications last year for 20 vacancies. Another has a waiting list of 500. Because of this situation, many odd people, through desperation,
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have to take the only roof over their heads that they can get.
I have had masses of correspondence from all over the country revealing that it is fear of being turned out of that one place that prevents many old people from giving testimony. Because of that, there is great difficulty—which I appreciate—for the local authorities in gathering specific evidence. As long as there is this fearful shortage of homes for old people, many of these conditions will continue to flourish.
The powers of registration authorities are vague and so weak that one can understand their reluctance to tackle this problem. That is why I hope that the Parliamentary Secretary will be able to tell us that some progress has been made since December in strengthening these powers.
Occasionally, one sees advertisements for elderly gentlefolk, and in that connection it is rather deplorable that some of the places are offered to them. I understand that the Government have announced their intention to introduce legislation to enable local authorities to contribute to the cost of maintaining resident in private homes for the aged. I would like to know whether progress has been made in this and, if so, what is to be done to ensure that all these homes are deserving of public money in this way.
I wish that I had ten times longer in which to deal with this subject, but last year we had the preliminary result of a national survey of homes for the aged which was carried out by Mr. Peter Townsend, who is Lecturer in Social Administration at the London School of Economics. He has a small team of social workers, and his interim report shows an alarming state of affairs.
The report says that information was gathered from all parts of England and Wales and one or two important points come out. The researchers interviewed the heads of 65 local authority welfare departments, many of whom expressed considerable disquiet at the present situation. The team encountered a few cases of proprietors defrauding the residents, and chief welfare officers told them of some proprietors being "on the bottle", and admitted that some of these people who had fallen foul of them had simply packed up and had opened up again in another area.

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In one-third of 42 homes visited by the team, no member of the staff showed any form of qualification. The team found that inspections are often carried out by junior officials as a minor part of their duties—and sometimes such an official is content to ask the proprietor a few questions on the doorstep. Charges range from 3½ to 25 guineas. A number of them charge extra for heating or special services, and the report states that occasionally.
"…we found that the staff expected tips and even legacies."
It has been said by the Secretary of the National Co-operation for the Care of Old People that residents are being defrauded, and are being persuaded to leave legacies to the matron or someone else in the Home. We read that in the 42 homes with just under 500 residents there had been nearly 100 deaths in a year prior to the visits.
The report states:
"We came across three independent instances of undertakers paying £5 to a proprietor for seeking his services in connection with a death."
I should like to know why such a condition was allowed to exist as I found in the place I visited, where dead residents were allowed to remain in the same room for 24 hours or more. The report also states:
"Homes were managed by people with immense patience and tact, but, nevertheless, we considered that one quarter of the people in charge of the 42 homes were indifferent to the needs of those in their care."
Thirty-six out of the 42 homes were not centrally heated. In these old people's homes it is vital that there should be heating, particularly in the winter time, because, without it, life must be a misery for them as it would be for anyone else. I have here the testimony of a former social worker and organising secretary of a charitable society who, in turn, has testimonials from the highest quarters. She writes:
"I am shocked and haunted by what I have seen in my own 11 years' search for anything that could be called satisfactory—of the neglect and exploitation of these defenceless old people."
This lady suggests that
"The Press, both national and local, should not be permitted to accept advertisements from anyone offering to take in old people unless vouched for by a competent and experienced inspector and committee, and this also should apply to old people's welfare and housing societies."
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There is a vast amount of testimony that there is a very bad state of affairs and, with an ageing population, there is no doubt that unless something is done, and done quickly and efficiently, this state of affairs will go from bad to worse.
The official testimony that I would like to mention is from Dr. William Fielding, Bournemouth's Medical Officer of Health. In his latest report he mentions that there are more old people in Bournemouth than in most towns. He says:
"A lot of them spend their last years in nursing homes, where they pay anything from 7 to 30 guineas a week."
He wants the homes to be more strictly supervised. He adds:
"Far too often the standard of registered nursing homes has deteriorated. The law at present states that the homes must have qualified staff, but does not say how many. Nurses are in short supply, and one nurse to 20 patients is not enough".
Dr. Fielding also complains about the furnishings.
I have to give the Parliamentary Secretary an opportunity to reply, so I conclude by saying that any country that does not look after its children or its old people deserves the utmost criticism. I assure the hon. Lady that there is grave disquiet throughout the country about what is happening in nursing homes for the elderly. Many local authorities turn a blind eye when complaints are made to them, for the very simple reason that they do not know what to do with the old people. It is a terrible state of affairs, and I shall make it my duty, during the next few months, to visit more nursing homes and to raise this matter again because defenceless old people certainly need a champion at this time.
10.20 p.m.
The Parliamentary Secretary to the Ministry of Health (Miss Edith Pitt): Perhaps I might first thank the hon. Member for Erith and Crayford (Mr. Dodds) for his courtesy in telling me in advance of the points he wished to raise. He and I had some discussion on the first point he introduced tonight, the confusion which exists about the different kinds of accommodation which is available for old people. It is a confusion which is widely shared, and I hope that I might try to remove some of the mistaken impressions.

1517
There are private nursing homes for the elderly, and private residential homes for the elderly. The former provide nursing and medical care; the latter, residential care for the elderly who are perhaps a little infirm but who are usually able to get about.
Both those types of accommodation come within the province of my Ministry. Both are subject to registration and inspection by local authorities. I think that the confusion between the nursing home and the residential home may account for the statements attributed to the Medical Officer of Health for Bournemouth, to which the hon. Gentleman referred. He referred to two separate kinds of care, but they appear to have become mixed in the reporting, and I will return to that point in a minute.
Both these types of care fit into the framwork of facilities as a whole for the care of the elderly. I stress that they are part of the facilities. The nursing home proper is defined in the 1936 Act as:
"any premises used or intended to be used for the reception of, and the providing of nursing for, persons suffering from any sickness, injury, or infirmity, and includes a maternity home".
The significant words are "the providing of nursing for".
Under the Public Health Act, 1936—there is a separate one for London, and I make that clear for the benefit of the hon. Gentleman—statutory control over private nursing homes is vested in local authorities. It is an offence for any person to carry on a nursing home without being registered by the local authority concerned. The authority has power to refuse registration if it is not satisfied that the person applying is a fit person by reason of age or otherwise to carry on a home; that the premises are not fit for use as a nursing home; or that the medical and nursing staff does not include a proper proportion of qualified persons.
The provision includes the power of inspection by the medical officer of health himself, or a qualified nurse, or other authorised officer of the council. They have power of entry and inspection of premises and the inspection of records. The frequency of the inspection depends, of course, on the local authorities, but I am advised that they inspect regularly, and in many cases as
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frequently as every three months, so I would expect that they check on any nursing home which does not live up to the required standard. Inspection is within the discretion of the registration authority, but no doubt as it affects nursing homes the point made by the hon. Gentleman will be taken into account by the local authorities.
I must make it clear that in the case of private nursing homes, other than mental nursing homes, my right hon. Friend has no power to make regulations either as to the way in which local authorities should exercise their powers of registration, or inspection, or fees, or the standards of accommodation, or care to be observed by the management of such nursing homes.
More stringent powers of registration and inspection would need legislation either for nursing homes for the elderly or for nursing homes in general, and that is not a matter which we can discuss on an Adjournment debate, but the hon. Gentleman referred to the Question he asked my right hon. Friend on 5th December when my right hon. Friend indicated that he was considering the need for strengthening the power of local authorities. The present position is that we are reviewing the powers in relation to all nursing home accommodation and that, of course, will include nursing home accommodation for the elderly. In doing so we will certainly consider the points put forward by the hon. Member tonight.
Arising out of his supplementary question, which the hon. Member repeated tonight, my right hon. Friend undertook to look at the report of the Medical Officer of Health for Bournemouth. He has done so and we also made inquiries and learned that the views expressed in that report for 1959 did not relate specifically to nursing homes for the elderly in that medical officer's area.
Fees as high as 30 guineas a week were mentioned, but some newspapers apparently linked that with old people's homes and suggested that fees of that order might be charged in Bournemouth. The medical officer said that was certainly not so in his experience and that fees at that level related to better-class general nursing homes where the standards maintained were consistently of a high level. The charges for old people's residential homes are much lower, the

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majority of them being found within the price range of 5 to 8 guineas a week. The hon. Member referred to a particular nursing home which he has visited and where, apparently, the expression "old geezer" was used, which I, with him, abhor. If he would like to send me details of that place, I will certainly see that it is looked at.
I now come to the question of private homes for the elderly. Here the powers of registration and inspection are conferred under the National Assistance Act, 1948, and again devolve on local authorities. The registration authority may refuse to register a home, or cancel a registration, subject to appeal, if it is not satisfied that the person carrying on the home is a fit person, or if the home is not being run in a way to provide the facilities or services reasonably required by the persons in that home. If the authority feels that there is reasonable cause to inspect a place which is not registered it may of course do so.
In March, 1961, very recently, we introduced new Regulations under which a condition was laid down requiring that the number of residents in a home should not exceed the number specified in the certificate of registration, and a covering circular reminded local authorities of the encouragement and advice which their officers could give by regular visits. It also recommended that there should be a review of these arrangements for oversight of registered homes and the use of powers to bring about improvements, where desirable, in management and staffing of such homes. Our own regional welfare officers have been asked to encourage local authority officers in this respect and to take part, so far as they can, in joint visits of inspection. That is already being done.
It is our intention to review the position when we have seen the effects of these new Regulations and after a review, which will follow the publication, expected next year, of Peter Townsend's Report, which the hon. Member mentioned, arising out of the survey, which he made with financial help from the Nuffield Foundation, of residential accommodation for old people.
The hon. Member referred to waiting lists for some of the residential homes.
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In part, the answer lies in the substantial improvement which local authorities have been able to make in Part III accommodation under the National Assistance Act, that is, their own residential accommodation run by the local authority. The capital investment programme has been stepped up in recent years. In the financial years 1956–57 to 1958–59 the yearly average was £2·6 million, but in 1959–60 it rose to £6·3 million. The estimated figure for 1960–61 is £8·2 million and that for 1961–62 is £10 million.
In connection with waiting lists, the hon. Member referred to the suggestion that there might be legislation to enable local authorities to use private homes. In fact, local authorities have no such power at present, and there is as yet no suggestion of any legislation to that effect.
The Government are urging local authorities to provide more special housing for old people, with the services of a resident warden where necessary. In a joint Circular issued on 17th March by my right hon. Friends the Minister of Health and the Minister of Housing and Local Government, authorities were recommended to plan together, through their housing, health and welfare services, to meet the needs of old people for special housing, for domiciliary help and welfare services and for the extension of Part III accommodation to which I have referred.
Similarly, in regard to hospital care for those who need it—this, again, would affect some of the people to whom the hon. Gentleman has referred—we have taken steps to increase or improve the use of hospital accommodation. In 1957, we issued a memorandum to hospital authorities, following a nation-wide survey of hospital and specialist services for the elderly and chronic sick in which we stated that the number of hospital beds required for this particular form of treatment was, in the Minister's view, probably adequate but that better use should be made of existing beds, supplemented by better domiciliary and welfare services rather than more beds. We suggested various improvements that hospitals might consider and, since 1957, hospitals have been able to make considerable improvements. There has been an increase in the number of specialist

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geriatric units and an increase in the number of beds allocated to, for instance, the chronic sick. The increase in the past two years has been 900 beds.
All hospital authorities throughout the country have been asked to submit to my Ministry by the end of the present month their long-term programmes for the future, and in those the needs of the elderly and the chronic sick will be taken fully into account.
I assure the hon. Gentleman that my right hon. Friend keeps in close touch with developments in the care of the elderly. I have no more time now to expand on the subject. I agree that it is a most important matter. Much has been done, as I hope I have been able briefly to show. I should not like to suggest that all has been done, but certainly we are making considerable
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progress both in checking the accommodation provided in private nursing homes and residential homes and in improving the facilities provided directly by authorities.
Mr. J. C. Forman: Does the hon. Lady think that, if local authorities took greater advantage of the powers they have to build small houses for the elderly, houses really suited to their needs, that might reduce the waiting lists to which my hon. Friend referred?
Miss Pitt: That is covered in the figures I gave in regard to the capital development programmes of local authorities.
Question put and agreed to.
Adjourned accordingly at twenty-seven minutes to Eleven o'clock.

ROYAL NAVY
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  Knowle By-pass
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SHIPPING
  Shipyards, North-East Scotland (Orders)
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Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Exeter

MESSAGE FROM THE QUEEN
2.35 p.m.
The EARL OF SCARBROUGH: My Lords, I have the honour to present to your Lordships a Message from Her Majesty The Queen signed by her own hand. It is in these terms:
"I have received your Address praying that the European Free Trade Association (Immunities and Privileges) Order, 1961, be made in the form of the draft laid before Parliament.
"I will comply with your request."

DISPOSAL OF KRUPP'S ASSETS
VISCOUNT ELIBANK: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government (1) whether they can state the total value of the personal property, steel, iron and coal-producing assets of Herr Alfried Krupp von Bohlen and Halbach (a) already sold under the 1953 deconcentration plan, and (b) remaining in his possession and due to be sold;(2) whether the obligation to sell under Law 27 of the Bonn Convention (taken over by the West German Government) remains in farce;(3) whether they are aware that at the 150th birthday of the firm in March Herr Krupp announced the biggest turnover,£460 million, in its history; and(4) what is the present position regarding the enforcement of the deconcentralion orders.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (THE MARQUESS OF LANSDOWNE): My Lords, the answer
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to the first part of the noble Viscount's Question is that assets to the value of about £12 million at the times of disposal have been sold or ceded under the Krupp Deconcentration Plan. While there is no firm basis for an estimate, the actual present-day value of the Rheinhausen assets represented by the shares held by disposition trustees on Herr Krupps's behalf, which of course include all the coal and steel assets subject to disposal under the Deconcentration Plan, is thought to be considerably in excess of £100 million.
The answer to the second part of the noble Viscount's question is, "Yes". The answer to the third part of the noble Viscount's question is also, "Yes", but the figures I have give the turnover announced on the firm's 150th birthday in March of this year as £452 million (at the new exchange rate), or £430 million (at the old rate), not £460 million, as the noble Viscount has said.
As to the last part of the noble Viscount's question, the present position is that the Mixed Committee of Experts met again in January this year and extended the time for disposition of the Rheinhausen securities for another year until January 31, 1962.
VISCOUNT ELIBANK: My Lords. I beg to thank the noble Marquess for his Answer. May I ask him whether he is aware that in the House of Commons on March 4, 1953, the then Minister of State, Mr. Selwyn Lloyd, said [OFFICIAL REPORT, Commons, Vol. 512, col. 389):
"Under the provisions of the Bonn Conventions, signed last May, the Federal Government undertook to ensure that all deconcentration plans are carried through. The Federal Government will continue to give effect to Allied High Commission Law No. 27 until the whole deconcentration programme for the West German iron and steel industry has been completed."
May I ask whether the noble Marquess can assure the House that the Federal Government are still continuing to pursue their task of bringing to an end the deconcentration plan, as adumbrated in 1953?
THE MARQUESS OF LANSDOWNE: My Lords, as the noble Viscount is well aware, the Federal Government are still under an obligation, as he was told in 1953 by my right honourable friend. The same obligation still applies.
LORD HENDERSON: My Lords, in view of the fact that the time has been

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extended I think at least on two occasions, may I ask the noble Marquess, whether the Mixed Committee has any power to abrogate Law No. 27; and, in any case, if a situation were created where this law could not be fully implemented, that there would be no question of its being abrogated without Parliamentary sanction in advance?
THE MARQUESS OF LANSDOWNE: My Lords, I think I have explained to your Lordships on previous occasions that the only power which the Mixed Committee has is to allow or disallow an extension, and of that I am quite certain the noble Lord is well aware. I have also told your Lordships on previous occasions that, in the event of there being any decision taken, your Lordships' House and Parliament will of course be informed.
LORD HENDERSON: My Lords, will Parliament be informed in advance? I think that the noble Marquess will appreciate that the Bonn contractual engagement was approved by Parliament, and surely Parliament is entitled to know in advance if there is any intention or any recommendation to vary that undertaking.
THE MARQUESS OF LANSDOWNE: My Lords, I am not in a position to reply to that question, but I will refer the matter to my right honourable friend.
LORD LATHAM: My Lords, would the noble Marquess agree that the Mixed Committee could, of course, abrogate by successive extentions?
THE MARQUESS OF LANSDOWNE: My Lords, in effect, of course, that is correct.
LORD OGMORE: My Lords, is it not a fact that the only complaint Krupp ever made during the war was to the S.S. to the effect that the supply of steel whips was not sufficient for the flogging of the slave prisoners? Are we to believe that the West Germans, who are always telling everybody how clever they are, are quite incapable of running the great industries of West Germany without the assistance and control of this murderous blackguard, Krupp?
THE MARQUESS OF LANSDOWNE: My Lords, I think it is extremely unfor-
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tunate that these words should have been used. I do not think they have any bearing whatever on the original Question.
LORD OGMORE: My Lords, it is true, and it is about time that the American and the British Governments took action with regard to this man whose conduct during the war to these unfortunate people under his control was perfectly appalling, many of them dying and many being ruined for life owing to the treatment that Krupp and his subordinates gave to these poor people.
THE EARL OF LONGFORD: My Lords, may I deplore the use of the words "murderous blackguard"? I call it an absolutely abominable misuse of language.
VISCOUNT ELIBANK:My Lords, may I ask the noble Marquess this? Quite apart from the production of iron and steel, the thing that really matters is that Krupp is using the assets, of which he was ordered to be deprived by the Military Court, to compete from an ill-gotten position of strength with British industrialists in markets all over the world.

OFFSHORE DRIFT NET SALMON FISHING
VISCOUNT STUART OF FINDHORN: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper:
[The Question was as follows:
To ask Her Majesty's Government whether they are aware of the grave danger being caused to our stocks of salmon in this country by the netting of salmon in waters outside our control whereby thousands of fish have been netted recently in drift nets several miles offshore, and whether they are prepared to take early action either by extending the limit of our territorial waters, as Iceland has done, or by other effective means.]
THE JOINT PARLIAMENTARY SECRETARY MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL WALDEGRAVE): My Lords, Her Majesty's Government are aware that during the last two years appreciable numbers of salmon have been caught in drift nets in the high seas outside the

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three-mile limit off the coast of Northumberland, and particularly off the mouth of the Tweed—where, as a matter of fact, this method of fishing is prohibited by the Tweed Acts up to five miles offshore—and that in the present year this type of fishing has extended to other parts of the sea off the Scottish coast. There is at present no scientific evidence as to whether or not this fishing at its present level is causing damage to salmon stocks, although it is difficult to predict what might happen in the future if such fishing should substantially increase. Her Majesty's Government now have the whole question under close review.
VISCOUNT STUART OF FINDHORN: My Lords, while thanking my noble friend for his Answer, which does show that the Government have this matter under consideration, may I ask him whether he is aware that in order to be effective action must be taken before the end of the present year?
EARL WALDEGRAVE: My Lords, all I can say is that this matter is under urgent review, as my right honourable friend the Secretary of State for Scotland said in a reply in another place only three or four days ago.
LORD BALFOUR OF INCHRYE: My Lords, arising out of that reply, may I ask the noble Earl whether he is aware that, even if Her Majesty's Government are not sure of the damage this drift net fishing is likely to do to salmon stocks, other people are quite sure that it is very profitable, in that twice the number of boats are operating this year as compared with last year; that there are no restrictions of the close season as to when the fish can be sold; and that it is calculated that some 20,000 fish have been taken off the mouth of the Tweed? If the noble Earl says that the Government are not sure that damage has been done, nobody can be sure that damage has been done until five years from now, and the damage will be irreparable if action is not taken now, even without positive proof, but on the assumption.
EARL WALDEGRAVE: My Lords, the Government have no precise records of what numbers of salmon have been taken by drift nets or by any other methods outside territorial waters—that is to say, five
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miles off the estuary of the Tweed. Until we have some information as to what fish are being caught outside territorial waters—there is ample jurisdiction to control the fishing by drift nets or by other means within territorial waters—it is difficult to say what action should be taken.
LORD BALFOUR OF INCHRYE: My Lords, is the noble Earl aware that no fish caught outside the territorial limits can be sold in the close season without a certificate of origin, and that some 7,000 salmon have had certificates of origin in January in Billingsgate which proves that that fishing is extensive during the close season outside the limits?
EARL WALDEGRAVE: My Lords, I am, of course, aware of the certificates of origin, and that appreciable numbers of fish have been so certified. But the total numbers of salmon marketed run into many hundreds of thousands. It is an appreciable number, but at the moment one would say not a very great number.
LORD BOOTHBY: My Lords, in view of the action that has already been taken by the Icelandic Government, and seems likely to be taken by many other Governments in countries fringing the North Sea, I would ask the noble Earl whether Her Majesty's Government will now give urgent consideration to the possibility of giving extra protection to our inshore fishermen generally—not only to salmon fishing but the other inshore fishing—by extending the territorial limits right round the East coast of Scotland, with particular reference to the Moray Firth?
EARL WALDEGRAVE: My Lords, the question of extending territorial limits involves far wider issues, as the noble Lord has inferred, than salmon fisheries. It raises general maritime and fishery issues, and Her Majesty's Government are, of course, always keeping the question of extending fishery limits under review, in the light of developments that are taking place throughout the world.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, in view of the correspondence I have had with certain Scotsmen in the last two or three weeks as to what are the territorial limits for Scottish fisheries, may I take it that these are the regular recognised three-mile limits?
EARL WALDEGRAVE: My Lords, so far as I am aware, the territorial waters in Scotland are three miles, as they are anywhere else in the United Kingdom. The fishing of the estuary of the Tweed, to which I have referred, is regulated by the Tweed Fisheries Acts, which actually impose a ban on (among other things) drift net fishing up to five miles. But the normal territorial limits in this country are three miles.
VISCOUNT STUART OF FINDHORN: My Lords, I do not ask for an answer to this question, but will my noble friend bear in mind that, as with medicine, prevention is to be preferred before death rather than after death?
VISCOUNT ELIBANK: My Lords, could the noble Earl say what precise measures of urgency he is taking in this matter? Is it not, like toxic sprays, a molehill which will develop into a mountain before action is taken?
EARL WALDEGRAVE: My Lords, it is difficult to define "urgency" precisely. My right honourable friend is this very afternoon having a meeting with senior officials on this subject. This is a matter that is being treated, as I have said on behalf of my right honourable friend the Minister of Agriculture, and as the Secretary of State for Scotland said in another place, with urgency.

KENYATTA'S STATUS
2.50 p.m.
THE EARL OF ALBEMARLE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether—oaths-taking having recommenced, together with attempted murder, and theft of arms from Mr. Osborne, in revenge for his security services—they will reconsider their action in building up Kenyatta's status, as when they arranged the 60-strong Press Conference for him, he being the convicted organiser and manager of Mau Mau, of which the main oath was to swear to harry and expel White Africans from Kenya Colony.]
THE MINISTER OF STATE FOR COLONIAL AFFAIRS (THE EARL OF PERTH): My Lords, while I cannot comment on what my noble friend says on the particular case, since a person has been charged in connection with it, I can make clear the position on Kenyatta. It is no part of Her Majesty's Government's policy to enhance the status of this man. When the Governor made his statement on March 1, he said:
"The people who form the electorate and the political leaders and the world at large must be allowed to see him and know him as he is now and see his effect on the country and its politics."
It was with this in mind that the Governor decided to remove Kenyatta to Maralal where more people, including the Press, could visit him.
THE EARL OF ALBEMARLE: My Lords, arising out of that, may I draw the noble Earl's attention to an extract from the Nairobi Standard early this month by an ex-Minister of Kenya? That says:
"Is it true that the emergency was proclaimed in Kenya in 1952 because Crown witnesses against Kenyatta and others disappeared and the prosecution could not succeed?"
Is it true, as stated in the Nairobi Standard, which I have just quoted, that those witnesses disappeared over a period of six months prior to the arrest of Kenyatta, and that their bodies were subsequently dug up in the Central Province?
THE EARL OF PERTH: My Lords, just before I came into the House the noble Earl gave me notice of these supplementaries which hardly arise from the original Question. I will certainly look up the Nairobi Standard, to which he referred, and write to him, in so far as I cannot answer him directly now. The Governor, at the time of the emergency, when he was making the broadcast giving the background of reasons for it, said, among other things, that it was the mounting lawlessness, violence and disorders, owing to Mau Mau, which caused the need for the emergency regulations.
THE EARL OF ALBEMARLE: I thank the noble Earl.

HOLY TRINITY BROMPTON BILL
Read 3a, with the Amendments, and passed, and returned to the Commons

PEERS' TRAVELLING EXPENSES
THE MINISTER WITHOUT PORTFOLIO (THE EARL OF DUNDEE): My Lords, I beg to move the Resolution standing in my name.
Moved to resolve, That this House approves the proposals contained in the answer made on behalf of Her Majesty's Government yesterday for enabling Members of the House to recover the cost of travel by rail, sea and air in attending the House for the purposes of their Parliamentary duties and allowances in respect of the cost of travel by road for that purpose.—(The Earl of Dundee.)
On Question, Motion agreed to.

THE ECONOMIC SITUATION
2.53 p.m.
LORD PETHICK-LAWRENCE LORD PETHICK-LAWRENCE rose to call attention to the Economic Situation; and to move for Papers. The noble Lord said: My Lords, it is a year since I moved a Motion in your Lordships' House similar to the one that I am moving to-day. I then said that I felt sure the great majority of your Lordships would feel, as I did, a sense of depression when they regarded the economic outlook of this country. Now what do I feel on that matter to-day? I think that in the interval there have been some bright periods and that, on the other hand, there has been a good deal of cloudy weather. Summing it all up, I would say that we are just jogging along here; and that method of proceeding does not fill me with great enthusiasm.
What are some of the most depressing factors? I would say, in the first place, the figures of the balance of payments, and, in the second place, the rate of growth of the gross national product. On the question of the balance of payments, I find that a great many people who read these figures are mostly concerned with the items of what are called visible trade—that is to say, of course, the excess of imports of merchandise over the corresponding exports. That is indeed a very serious matter. But from my point of view I am equally concerned, if not still more greatly concerned, with the position with regard to
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the balance of invisible trade, because many of the items which form the invisible figures are, I think, at least as important as those of the visible items, and in some cases even more important.
There are two among the invisible items that I single out for special mention, both relating to ships. In the first place, there is our construction and sale of ships to other countries and in the second place there is the carrying that we do of the world's trade in ships from our own country and from one foreign country to another. In both those respects, I notice that we are steadily going downhill, whereas in years gone by we were leading the shipbuilding of the world. I believe that at one time we produced nearly half the whole tonnage of world shipping. We have gone steadily down. In the second place, where we did a large part of the carrying trade of the world overseas, our proportion is steadily being reduced year after year until, in those two important items, and one or two that go alongside of them, we are now, instead of making a considerable profit, as we used to do in days gone by, reduced, I think, in some cases even to a negative—we actually lose more than we make in profit.
I regard those factors as a very serious attack upon an island community like ours, which has always boasted of its importance on the seas, from which in the past we drew a large economic revenue. Some people may say—and I go practically all the way with them—that we must remember that in the days when we had all these successes we trusted to Free Trade, and that one of the causes which has prevented a continuance of those successes is the fact that we impose large tariffs on goods coming into this country. That may be so or it may not: I would not finally decide that point. But undoubtedly it will occur to a number of people, and I think there is at least something in that view of the situation.
Equally with my concern about the balance of trade, I am very much alarmed at the situation with regard to the gross national product. I never weary your Lordships with a lot of figures when I am talking in these debates, because I take only figures which are matters of common knowledge and of which I imagine the great

623
bulk of your Lordships are fully aware without my having to remind you. But there is no question whatever that, compared with all the leading industrial countries of the world, we show a very bad return. Whereas other countries are going rapidly ahead, and every year show a large advance in gross national product, in this country the figures of growth of national product are very meagre indeed. There is no doubt that we are a long way down in the list, with only a very small percentage increase, compared with that of many other important countries in the world.
Not long ago I was attending upstairs a talk by a very distinguished industrialist and economist. He said to his audience: "You must not be too alarmed about that, because, of course, the fact is that in the years immediately succeeding the war we made such a wonderful recovery and made such great advance. These other countries who are outside our borders are making a similar recovery now, a good deal later on. Therefore, it is not unexpected that their rate of progress to-day should be considerably greater in percentage than ours in this country." There may be something in that argument: I am far from denying it. I would just remark, incidentally, that the years immediately following the war, when the advances that were made, were years when the Government of my Party were in office, and that the years of stagnation, which have been since the beginning of the 'fifties, more or less, are current with the term of the present Party in power. I do not want to press that Point too far. I am prepared to admit that to some extent it may be a coincidence. But I think it would be a little unwise if noble Lords opposite pressed that favourable unction to their hearts and thought that that explanation of coincidence was entirely the case. In my view, remembering all the troubles that have afflicted industry since Conservative Governments have played ducks and drakes with the monetary system of this country, there is a good deal to be said for the view that the circumstances owe at least some origin to the way finances have been managed during the rule of successive Conservative Chancellors of the Exchequer.
I turn next to the question of the matter that was raised a little while ago in this country. If your Lordships will carry your minds back, you will recall that about a couple of months ago the noble Lord, Lord Boothby, had down a very important Motion relating to the liquidity of the world's finances. We had a most interesting debate on that occasion, and it has since come to my knowledge that some of the persons most concerned in this matter have taken a very favourable view of our debate and have found it of great value to their discussions. But the real question is: what are we going to do about it?
I think noble Lords who read the papers dealing with these financial matters will find there has been a very great deal of discussion of this question, realising, as I think most of us who took part in that debate did, that the time might be coming when it would be too much for two individual countries, the United States, with their dollar, and we, with our pound, to support practically the whole burden of maintaining the liquidity of the finances and trade of the world. That, I think, is dawning upon large numbers of people who understand the financial situation, and I think the very least that we are entitled to hope is that some international organisation—perhaps the International Monetary Fund—may become the ultimate basis of world credit, buttressing up the finances of the dollar and the pound. That is, I think, the least we can expect. It may be that circumstances carry us even further, and that the actual basis of credit may be shifted from the dollar and the pound to some international body such as I have already mentioned. However that may be, I think world financial circles are now awake to the fact that the present situation is dangerous; that it is unfair to the two currencies which bear the burden at the present time and that, sooner or later, some steps will have to be taken to remedy that situation.
Now let me say a word on another subject; that is, the Common Market. Only in recent weeks it has become clear that this matter of whether Britain shall join the Common Market or remain outside it has been for some time past exercising the minds of Ministers of the Crown, and that all through Parliament, and outside Parliament, in large

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sections of the country, industrial and otherwise, this matter is arousing the very deepest interest. Whether it be right or whether it be wrong, it seems quite likely that steps will be taken, advances will be made, which may or may not result in our entering in some shape or form the Common Market. It is certainly not for me to drag into an economic debate of this kind any lengthy comment upon that very important matter, but it does seem to me that one or two words may be appropriate with regard to it, even here and to-day.
The first comment I would make is that there are quite obviously two more or less separate questions that have to be answered. The first is whether our economic advantage will be furthered or retarded by entry into the Common Market and I shall have one remark tar make about that in a moment. The second question is whether our political position will be improved or injured by entering the Common Market. Here I think we have to be very careful of what we mean and what is intended, because I can conceive of our entering the Common Market to our very great detriment if the terms of doing it were not carefully considered in advance. On the other hand, I believe that if proper terms are found it may be to our very great advantage, both economically and politically, if we take part.
Therefore the first necessity is that we should know—I presume that the Government do know, but I think that we on our side also should know—precisely what is involved; what is involved to our economic position and what is involved to our political position. When I say what is involved to our political position, perhaps I may explain what mean by the use of two words. There has been talk of a Common Government, or something of that kind. I think most of us would take the view that anything in the nature of a Federal Government which included ourselves and other countries is one that we should be very careful about. On the other hand, we might feel more satisfied about something which could possibly be a confederal relationship. On the economic side—and I want to say this with all the emphasis at my disposal—I believe it to be essential that we should enter negotiations with the people of the Common Market from a position of
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economic strength and not from a position of economic weakness. That is just as important in the economic world, when we want to do a practical bargain with other people as it is in the military world. That is why I hope we shall put our own economic house in order either simultaneously or before we actually enter into the final argument on whether or not we should join the Common Market.
I venture to turn now to an entirely different subject, which to some extent arises out of the Chancellor of the Exchequer's speech. I think it has long been recognised by economists and leading industrialists that there is something very artificial in the annual character of our financial statements. It has long been recognised in business circles that if they want to make progress they have to plan not merely for the current year but for several years ahead. It is those firms and industries which think in terms of the future that are most likely to succeed land make progress. What is true of industry is equally true of the country. If it is necessary for industries to think in terms of years and not in terms of twelve months—whether the twelve months be a calender year or a Treasury year is of no importance on this point—we in political circles must accept that we also need to have a financial and economic period that is greatly in excess of a single year.
I was reading a most interesting article only a few days ago by a lady called Ursula Hicks, in, I think, the Lloyds Bank Review for April, in which she used a rather extraordinary ward to describe the present position. She calls it "the curse of annuality"—of depending on the single year for our estimates for the future. Remembering that, and taking as a start our nationalised industries, we see that the Government are already beginning to think in terms of a quinquennium and even a decade; and in matters relating to the Colonies—only this morning I think with regard to Kenya—the money devoted by the Government is a matter of a loan. We have to think in terms of several years.
Of course, this idea of planning for the future was started long ago by other countries, some inside and some outside the Iron Curtain. The fact that it was started by other countries which we

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regard of lesser importance than ourselves ought not to deter us from following an example which is obviously a good one. What are we going to plan for? To put it rather crudely, and over-simply, I would say; planning for prosperity—because a great deal of planning that goes on today is not planning for prosperity. I think we have to plan not for stagnation and deoay, but for growth and advance, not only in economic and financial affairs but in all the affairs of the country. Unless we hitch our waggon to that star we shall travel very pedestrianly along the road, and I do not think we shall get where the country would like us to get to.
I said just now that this attempt at departure from the annual basis of the Budget arose in the Chancellor of the Exchequer's speech. He rather turned the thing that I am aiming at and stood it on its end, because instead of arguing in favour of a longer period than a year, he said that a year was too long, and that he must therefore deal with matters that might arise in the course of the year and attempt to meet them by a quicker method than a new Finance Bill. I can see some point in that view, though, as I shall show a little later on, I see certain objections to it. I want to make some criticism of his proposals, but before I come to that let me just finish what 1 was saying. There are, I think, reasons why we should plan for three, four, five or even as much as ten years hence, and I hope that Members of the House, whatever their political views (because this is not a purely Party question) will find themselves in substantial agreement with what I am attempting to say.
Finally, I come to the question of the Budget speech and of the various points that were raised. There are three points with regard to that to which I want to draw attention. First of all, let me say that I have long thought that it was quite unfair that a person with earned income should be allowed to deduct a certain portion of his income for the purposes of income tax but should not be accorded the same right when it comes to sur-tax. It seems to me that it is just as much legitimate to deduct from earned income for one tax as for the other. Therefore, in so far as the Chancellor of the Exchequer has made that proposal, I think it was justified, pro-
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vided that he did other things at the same time.
I should have thought that the time when he was making these large but justifiable concessions to people who had earned income, allowing them to make the same deduction for sur-tax that they made for income tax, was not the occasion to make by other methods some much larger and considerable alleviation in the payment of sur-tax. That is particularly true when we remember that only a few weeks before, as the noble Earl, Lord Dundee, will recollect, the Chancellor of the Exchequer had put forward proposals, which were approved by both Houses, for additional burdens by way of a health tax on some of the lowest paid people in the country and those who are living on scraped-up income for their old age. I think that, if he was going to make those larger concessions, it ought to have been at a time when he was making proposals for other relief in all parts of the country and for all classes.
Therefore, although there is something to be said for the better treatment of earned income taxpayers, and certainly for their having the relief they were given, making the same deductions for sur-tax as they are given for income tax, I cannot think that it was appropriate at the same time to make these other rather large concessions. If is, of course, a well-known fact, which I do not think we need argue about here, that the earned income people make a considerable "getaway"—I will not put it higher than that—Hby means of so-called expense allowances. I think that is admitted. Although the Chancellor of the Exchequer made some almost nugatory move in that direction, I feel that it is quite time that he went a great deal further in that matter than he has done so far.
The second item I want to call attention to in the Budget is this. There is the question of this optional taxation that he may or may not impose in the course of the year. To the principle, I have not much objection; but I cannot say that I approve of the precise measures and items that he selected for this optional tax. While purchase tax has some merit, I do not think it would be right, or wise, to extend it. It is largely a poll tax on the people and, as such, I do not

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think it is the proper method. As to the business tax on the number of employees (I believe that there was at the back of his mind some idea which I will not develop at present), I do not think it would achieve the purpose for which it was set up. I think it is a quite capricious tax, affecting some industries very much more than others.
I think, in the third place, that it is very dangerous to flaunt in front of industry, which needs encouragement by the Government, a possible burden that will unsettle their views for all the months in the year. It reminds me of a man who was playing golf, and who, instead of having an ordinary handicap, said he would have three "boos". When it came to the second hole and he thought this opponent was going to make a successful stroke, he said, as loudly as he could, "Boo", with the result that his opponent was put off all the time of the rest of the match. He never knew when the second "Boo" was going to be allowed to interfere with his stroke. It is rather like that with the Government and this proposed new taxation. Leaders of industry will never know whether or not the Government are going suddenly to impose this very considerable burden on them. It is bad enough to have the risk of high bank rate being imposed upon them; and they will certainly be reduced in their activity by the uncertain knowledge of what the future holds in store.
The last thing I want to say a word about is the capital gains tax. I know perfectly well most of the snags of the capital gains tax, and I know that it is not nearly the simple thing which many people who have advocated it think it is. Nevertheless, knowing what was done with regard to P.A.Y.E., which was regarded as quite impossible until it became an accomplished fact, I believe that it is certainly within the means of possibility for the Treasury to find a form of capital gains tax which would work. I am not going to discuss that now, because, as I say, I am quite aware, as most people who have thought about it in this House are, of the very great difficulty about it. It is certainly not for me to make any policy suggestion.
What I will say is something slightly different. It has become increasingly clear in the course of recent years that the sur-tax can be avoided by various
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ingenious means of converting income into capital gain; and, however fast the Chancellor of the Exchequer runs in trying to stop up the holes in the sur-tax laws, he will be outpaced by the very clever lawyers and accountants who are struggling all the time to enable Mr. A to convert his real income nominally into capital gain. Therefore some means will have to be found by the Chancellor of the Exchequer to get over that difficulty. There must be some means by which the Treasury can catch capital which is really a converted form of income. I believe that in saying that I am not saying something which will be opposed by thinking Members of the Party opposite.
The idea went around at the beginning that the suggestion of a capital gains tax was an illicit effort of the opulent poor to grind the faces of the rich. I think that that idea must be got out of all our heads. Some means or other must be found to prevent people whose honesty is not too apparent getting away from the burden which they owe, and thereby putting an undue burden upon honest people who pay the taxes they should pay. I say that because I believe that at some time or other—and I noticed that the Chancellor of the Exchequer himself was careful in what he said—some means must be found; and so long as the Conservative Government are in power I hope that their Chancellor of the Exchequer will find a means of achieving the purpose I have described. I beg to move for Papers.
3.25 p.m.
LORD CLITHEROE: My Lords, we always enjoy very much hearing the noble Lord, Lord Pethick-Lawrence, introduce this Motion every year; and on this occasion he has, I think, covered even more ground than usual. I hope to be able to deal briefly with one or two of the points he raised, but I certainly shall not be able in the time I propose to inflict myself upon your Lordships, to deal with all of them. I think it is some 30 years since the noble Lord occupied the position of Financial Secretary to the Treasury; and it is about sixteen years ago since I did. In the noble Lord's time the expenditure was just under £800 million. To-day, according to the figures (and I am not going to bother the House with many figures) it is over £6,000 million. That does not only represent the change in the value of money, I am happy to say, but

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it represents a very great revolution in the whole of our financial affairs. But the interesting thing is that the amount of money we spent last year was almost identical with the amount of money we spent in the last year of the war. In the interim, of course, expenditure went down a lot, but it has now come right up again to what we spent in that last year of the war.
The noble Lord talked about the gross national product. I would just make one observation about what he says. I cannot reconcile my experience of the last decade with the terms that he used: "the years of stagnation". I do not know whether or not others of your Lordships quite agree with that. There may be comparisons to be made between what has happened in this country and what has happened in certain other countries, but they have not really been years of stagnation. The progress that has been made, the work that has been done, and the employment that has been given, have been, I think, greater perhaps than at any period during my time.
On the question of the Common Market I propose to say very little, as the noble Lord did, because I believe that my noble friend Lord Boothby is going to talk to us about that. He knows infinitely more about it than I do, and I feel that it would be much better to listen to him. But I rather share the view of the noble Lord, Lord Pethick-Lawrence, that we want some rather clearer definitions of what practical measures can be proposed to enable us to join this Common Market without doing undue damage to our agriculture, to our Commonwealth partners and to our partners in the European Free Trade Association.
We very much want to know also, what limitations are going to be put upon our sovereignty, because that is the point that largely underlies the noble Lord's anxiety about this matter. What limitations, I am going to ask my noble friend Lord Boothby to tell us, would need to be put upon our sovereignty if we were to engage in the Common Market, as, like the noble Lord, I should like to do if these difficulties can be met? There are some things we can do by way of preparation for it. I am not going to make the case for it, but I hope that
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the Government will press on with the decimal coinage. That is something we are rather slow about, and the longer we wait the more expensive it will be to alter all the machines, and so on.
I congratulate the Chancellor of the Exchequer, on the whole, on his Budget, in the sense of the approach he made to it. I think the fact that he budgeted for a large surplus of over £500 million above the line was strong action, intended to preserve the stability of our currency and to maintain a healthy balance of payments. All that we must applaud. None the less, the Chancellor of the Exchequer obviously feels—and I think understandably—some anxiety about the balance of payments later this year. He sought to arm himself with some new means of curtailing purchasing power. The new surcharges or regulators, to which the noble Lord has referred, certainly mark a change of emphasis from monetary controls to fiscal controls. I am a believer in the efficacy of using the bank rate, for the simple reason that, when properly applied, it works. But I recognise that not only is a steep rise in the bank rate very painful—and it is, as noble Lords have often said, a blunt instrument—but it takes some months to work itself through the system unless it is applied, as the Radcliffe Committee said (and I am quoting their words),
"with a vigour that itself creates a major emergency."
I believe that if the use of the bank rate had always been timely, it would not always have received quite so much criticism as it has done, and perhaps we should not have had so many jerks on the horse's mouth on the part of the driver. I daresay that some of the drivers have thought that a jerk was needed. I know that in the West of America, where they still occasionally drive a mule team, they can drive a twenty-mule team with a jerk-line. If you are driving a twenty-mule team, it may sometimes be very necessary to give them a jerk; and possibly that idea may be in the minds of some of the people who look after our monetary and financial affairs. There may sometimes have to be jerks, but we do not like them if they can be avoided.
An argument which is sometimes put forward, and which deserves a great deal of consideration, is that now we are

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committed to a policy of full employment we have to pay the price for it. I think that is clear. It is suggested that that price is a greater manipulation of the economy by the Chancellor of the Exchequer—a greater manipulation, certainly, than was possible under the old machinery or was thought desirable in former times. Now we have recently tried a monetary regulator, the special deposits, which are, in fact, to put it bluntly (if I may do so) to your Lordships, forced loans from the banks. They are called special deposits, and it sounds rather nice. But they are, in fact, forced loans from the banks. I am a critic of this system, and perhaps I may be allowed to ask whether reliance need be placed upon this system much longer. I must declare an interest here, as I am a director of two of the clearing banks; but, being in that position, I have also had the advantage of seeing how it works in practice.
As many of your Lordships know, the use of this regulator has resulted in the banks having to sell investments very heavily to finance export trade and for other legitimate trading purposes, and this has not helped the gilt-edged market, which sadly needs help. I do not think the system is wholly just or effective because, among lenders, the banks alone have to provide these forced loans. No other lenders of money are called upon to provide these special deposits—only the banks. I recognise, however, that the problem of returning these special deposits to their owners is a delicate one, lest the impression is given that the dangers which they were designed to meet has disappeared. That I recognise. It is always easier to put on controls of any sort than to dispose of them. We have all in this House, on both sides, discovered that by experience. There will therefore have to be a very carefully thought-out public explanation of why this is done if, as I most sincerely hope it will be, it is done later in this year. I most sincerely hope that the first step will be taken later in this year.
The fact is, my Lords, that the banks would like to see their liquidity rate higher before the end of the year, because great pressure comes upon the banks in the early months of every year owing to the demands of the tax collector. The banks have a very difficult time then, and it is very in-
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convenient for the banks to be bumping along the bottom of this 30 per cent. of liquidity. That, in itself, is an arbitrary figure—30 per cent. of liquidity—but the banks like to adhere to it. The reason it is so awkward for the banks to be bumping along the bottom of it is that in many cases bank customers have limits up to which they can borrow from the banks, and the bankers just do not know when particular customers are coming to them to take advantage of those limits. The banker does not know how much money is going to be drawn out from his bank to-morrow or the next day. In fact, emergency payments often arise. One has a good illustration of that in the case of the death of a very rich man. In order to get probate to deal with his estate, his executors may be obliged to borrow very heavily from the bank to pay duty. Requests for payments of this sort come very unexpectedly and, as a rule, cannot be foreseen. All sorts of other demands come upon banks very swiftly, and I can assure your Lordships that these special deposits have created very difficult problems for the banks and for their customers, which I should wish to avoid. I do not think it has worked out to be a very good plan.
Having dealt with that attempt to regulate monetary affairs, may I now come for a few moments to the two proposals made by the Chancellor of the Exchequer in his Budget—these two new regulators, the object of which is said to be to give quick and flexible means of regulating the economy between Budgets. Obviously, there are advantages in that from the Chancellor of the Exchequer's point of view, and if Budgets are (as they are normally) annual affairs, and are, as the noble Lord suggested to us, governed by the number of days which it takes the earth to go round the sun, rather than by a time selected more appropriately for the task in hand, whatever it may be, it is quite understandable that the Chancellor wants something of this sort. But, of course, all such proposals to help the Chancellor regulate his affairs to that very extent unregulate the affairs of every private citizen in this country, and particularly traders and people engaged in commerce. Therefore, naturally, they do not like them. If you are a shopkeeper, you do not like suddenly being

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told that there is going to be an increase in the tax on your goods. If you have a stock of goods or if you are short of goods, it affects you very much. Whatever your business, it is something you do not like. We are told that this is the heavy price we have to pay, due to the fact that we are trying to reconcile two things we all want, though we have not yet quite found out how to manage it—that is, to keep full employment and, at the same time, avoid inflation. That is the excuse for these new regulators.
I will say just a word about them: I shall not be too long. The payroll regulator is the first one proposed. After hearing all the many varied objections that have been put forward to this tax, at any rate in the form in which it is proposed, I will say only that I trust very much, even if it is accepted in another place, that as the airmen say "it will never get off the ground". I do not think it will be satisfactory. I feel that there is perhaps some confusion in the objective here: confusion between the desire, on the one hand, to regulate consumer demand, and the desire, on the other, to economise labour in the long run. I am not sure that it has been thought out as fully as it might be, and I hope that this payroll tax will not be used, at any rate in its present shape. I have interests in a great many industries in this country, and I have considered this tax in relation to each of them, and also in relation to agriculture. The firms in which I have a responsibility employ more than 100,000 people in various parts of this island, so I have had a good look up and down. In my humble opinion, if I may give it, I believe that in most cases this tax will not be effective, and that in some cases it will be definitely damaging. So I cannot say that I favour that particular regulator in the form at present proposed.
LORD BOOTHBY: It will not happen.
LORD CLITHEROE: The noble Lord says: "It will not happen", and I hope he is right.
I make only one other comment on the proposals in the Budget. Once again I want to stress the fact that I think the Chancellor of the Exchequer has done quite the right thing to budget for a large surplus, but I am anxious about the new tax on heavy oils. The Chancellor
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said that this would raise the industrial costs by one per cent. But, my Lords, it does not work like that; it raises costs very heavily in those cases where the burden falls. In the case of steel, or glass, or many of the chemical processes, the burden may be very heavy, and it may raise costs a great deal more than one per cent., when taken in combination with many recent rises in costs. In the case of steel, they have had increases in coal, coke, labour, transport and oils, and have been threatened with increases in rateable values. That all adds up to a considerable sum, and I think this will make increased prices for steel inevitable in the near future.
I wish that this new impost could have been avoided, because this tax is not deflationary. True, an argument can be put forward that it withdraws some purchasing power; but, on the other hand, it undoubtedly will raise costs. When you take into account the fact that, of the £50 million-odd which will be raised by the tax, a great part already comes to the Government by way of taxes—income tax, profits tax, and so on—I am inclined to think that this particular one was hardly worth the difficulty it creates and the damage it will do. I hope that that point will be very seriously considered.
I hope that the Chancellor of the Exchequer will continue to maintain his strong financial policy, and that he will not overlook the fact that when he strikes at private spending (if that is what is intended when these regulators, and so on, are used), it is no good doing so unless he can make quite sure that the money withdrawn is not spent in the public sector instead, and that any investments made in the public sector are really profitable. Because investment is very important. Everyone says we must have more investment, and I agree. But unwise investment is worse than no investment. Unwise investment loses money, and it is most important to avoid that because it is wasteful and retards growth instead of promoting it.
3.43 p.m.
LORD BRAND: My Lords, I follow two noble Lords who have ranged over a very wide surface. I intend to be rather more selective and to deal with what I regard as the most important

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problem in this country, and that is our balance of payments. I will not say anything about the Budget. I do not like the oil tax, because I have just changed the firing of my house from coal to oil, on the advice of the Government that we ought to. Now I am paying the penalty. I am glad, however, that the Chancellor has raised a large sum of money to try to balance our income and expenditure, and I think it may help us to get through this year, anyhow, without serious difficulty.
As I say, I want to devote my attention to one single aspect—namely, the balance of payments, which I regard as by far the most important and difficult problem to be solved, and certainly the most difficult to understand. We are making little progress at the moment in solving this problem. We are, with the United States, one of the two most important financial centres of the world. As everyone knows, dollars and sterling are two great international currencies. The German mark, strangely enough, is now, in some respects, the strongest currency in the world. Germany is now getting near to having £3 million worth of gold—or. I suppose, of dollars or sterling—and she has few international liabilities. On the other hand, our sterling balances—that is, our debts to the rest of the world—were, at the end of 1960, £4,436 million. As against these, our holdings of gold and convertible currencies were £1,154 million, only a little more than one-third of what the Germans hold, though our liabilities are so enormously greater.
I should add that we have now made arrangements with the I.M.F. to have drawing rights on them, which I think amount to £900 million. But we must not think that that is money belonging to us; we have to repay it to the I.M.F. We have to put our own house in order; they cannot do it for us. They can give us time to do it, but they cannot do more. Germany has had two great inflations. Every debt was wiped out by the first inflation, and much by the second. Our external debts of £4,000 million to a great extent arise out of the last war. Although they were still big, we never did what Sir Winston Churchill, I understand, recommended—namely, make what he called a "robust" settlement of those debts, which I suppose meant writing them down. We found that we could
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not do that with India and with other countries.
I have one other point to make on this question. I was one of those who negotiated the American Loan and the Canadian Loan at the end of the war. The Canadian Loan was only 500 million pounds—or dollars, I forget which. What strikes me as strange is that the big loan that we had from the United States was never amalgamated with Marshall Aid. So all the other countries, through Marshall Aid, received enormous help free, but we still pay heavily each year in interest, and to the sinking fund, to the Americans and the Canadians for the debts we incurred through helping to win the war.
Now I wish to refer in a little detail, but as limited as I can manage, to the happenings with regard to our balance of payments in this country in 1960, as explained in the Balance of Payments White Paper. I think the noble Lord, Lord Pethick-Lawrence, assumed that everybody knows what our balance of payment figures are. I only realised fully when I looked at them for the purpose of this debate, and I think that they are worth pondering over. Our reserves, strangely enough, considering the other figures, have increased by about £180 million this year. This is satisfactory, but quite how it was achieved, I do not know. Secondly, our sterling liabilities—that is, the £4,000 million are up by £200 million.
Thirdly, and most important, the excess of visible imports over exports was £366 million this year, which is bad. It could not be worse. Fourthly, our net invisible exports—and here I agree very much with the noble Lord, Lord Pethick-Lawrence—were down to the miserable figure of £22 million. They used to be some £400 million or so. They used to carry us along, but now they have gone. Shipping earnings, and I do not know what else, have almost disappeared. That makes a current balance shortage of £344 million. Out of that deficit (so to speak), we managed to lend the rest of the world £201 million, in either Government or private investment. That makes our total shortage £545 million on current account.
Against this, I understand that the Government know of capital movements into this country of £168 million. That

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leaves what the White Paper calls a "balancing item"—what balances it, I do not know—of £377 million, which has to be covered somehow, and of which the White Paper says:
"This figure is probably associated with an unrecorded flow of capital into this country."
That means that we have short money over here amounting to £377 million, which has balanced what we have lost on current and capital account. I apologise for all these figures, but they are important. What they seem to show is that during 1960 we went heavily into debt on our current account, notwithstanding which we lent £200 million over and above this very big current deficit to the world outside, but fortunately very large capital sums were sent here temporarily from abroad, I suppose owing to the high rate of interest. Therefore, I would point out to the noble Lord, Lord Pethick-Lawrence, that a high rate of interest has some use on some occasions.
LORD SALTER: My Lords, to the extent to which this high rate of interest attracts short money, is it really such an advantage? Is it not a momentary advantage, but a later danger?
LORD BRAND: I fully agree, my Lords. We have to repay it and we never know when.
LORD BOOTHBY: Or how.
LORD BRAND: We do not know when we shall have to repay it all. The result is for the moment good fortune, but it is not a procedure which we can expect to last. If we are to strengthen ourselves permanently and be able to lend abroad, we can do so only out of a surplus of exports, visible and invisible, and not out of a huge deficit. We may think it a compliment to us that so much money should be sent here when our trading figures are so bad. I think that there were in fact two causes. One was that the dollar was very weak, and the other, that our interest rates were high. We are, in fact, lending long and borrowing short, which is what no institution likes to do or can do for long. It is not a healthy procedure.
As your Lordships no doubt know—, indeed, it has been said just now—there are various schemes now being discussed
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to enable the International Monetary Fund to act as a means of coming to the help of countries that are in temporary difficulty. I do not agree with the scheme put forward by Professor Triffin, which makes the I.M.F. into a sort of United Nations Central Bank, like the Bank of England or the Federal Reserve Bank. He proposes that we should hand over our reserves to that body. On the other hand, I agree with Mr. Bernstein's plan, which I will not go into here. He was a friend of mine in the Treasury at Washington when I was there. His plan is to enable the I.M.F. to advance large sums to any country which gets into difficulties, but it does not in the least mean that that country has not to get out of its own difficulties by its own efforts.
I should like to quote certain figures, on a different subject, which were given by Mr. Bernstein in an article I have recently read, "A Comparison of Germany and the United Kingdom". Mr. Bernstein is a very competent statistician and observer. His statement is that, in the United Kingdom, private consumption absorbs between 65 and 67 per cent. of gross output. In Germany, the corresponding figure is between 57 and 59 per cent.—an "enormous difference", as he says. German wages have gone up, but the average hourly wages in manufacturing are, he estimates, about 18 per cent. higher in the United Kingdom than in Germany. He thinks it is doubtful whether "the productivity of British labour is that much greater than that of German labour." Of course, Germany has an advantage in that she spends much less on armaments. She also has had the advantage of 10 million refugees from Eastern Europe, all of whom she has absorbed. Wages have not risen as much, relatively to productivity, in Germany as in the United Kingdom. And, as your Lordships know, trade in the Common Market has increased much more than in the Commonwealth.
To come back to the United Kingdom, our balance of payments is the great problem which must concern the Government, industry, the trade unions and the British people alike. We are having a good time now, but we are not paying our way. Consumers' expenditure has gone up by £1.700 million in the last four years. In those years,

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total imports went up by £1,000 million and total exports went up only by £600 million. The country's great difficulty seems to me to be that the words "balance of payments" mean absolutely nothing to the mass of people, whereas the words "Welfare State" probably pre-suppose constant increase in salaries and wages and therefore a tendency towards inflation. The duty of trade union leaders is to understand fully this serious problem and to educate their followers, and the duty of industrial leaders is to devote their energies to increasing exports. The duty of the Government, in the end, is to take such action as will in any event maintain the country's financial stability. I note with pleasure Lord Amory's Motion on June 15 for a more purposeful and dynamic spirit of co-operation in industry. I hope he will show us the way we should go. If we cannot do better than we are doing now, we shall ultimately end up in deep water.
4.0 p.m.
LORD GRANTCHESTER: My Lords, I am very conscious of the difficulty of following the noble Lords who have already spoken, all of whom have experience in Government or in service on governmental or inter-governmental committees. Less ambitiously, therefore, I will try to speak in simple and non-technical words.
We used to speak of getting into a rut; that was something to which we reacted; we felt that we had to make an effort to get out of any groove, for a person in a groove was no longer able to decide his course. To-day we speak of trends and patterns and plans. That sounds rather less like an admission of having lost control, of having lost the power of initiative, the power to shake ourselves clear of the rut which holds us its slave. but really it means the same thing.
As the noble Lord, Lord Pethick-Lawrence, has mentioned, in theory Parliament decides expenditure each year and the means of paying for it, but for many years the pattern of the nation's expenditure has remained almost fixed, carrying over from one year to another a pattern accepted as almost inevitable. A Chancellor of the Exchequer is considered to be making a real effort if he tries to contain one year's expenditure within the overall total of the previous
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year. Then he finds certain inevitable increases—the higher cost of new drugs, or an increasing number of persons are living beyond the pensionable age, or an increased number of children are entering school. So he resorts to talking not in plain figures, but in percentages of expenditure to estimated gross national income. I think it is not surprising that the general public do not understand what is happening. This is the pattern to which we have become accustomed; should I say by a process somewhat akin to brainwashing? Surely the time has come to sound the alarm.
May I recall the staggering figure—and "staggering" is the only appropriate adjective to describe the sum taken from the people of this country by Government, which is no less than £7,000 million a year including National Health contributions and local rates? We can be glad that the Chancellor of the Exchequer feels that some administrative saving on an expenditure in the national Budget of £5,000 million a year must he possible, and has appointed a Committee to decide where and how much. We can praise this decision as showing a healthy respect for efficiency and economical administration. Any further saving can be achieved only by major decisions on policy. For instance, so far as Defence is concerned, whether and to what extent greater integration within our alliances can cut costs. But this is a decision which personally I feel must follow, rather than precede, closer political association, or at least the establishment of an acceptable authority for the taking of joint political decisions.
Excluding Defence, we are left with an expenditure of over £3,000 million a year on the social services. As we all know, the purpose behind the establishment of these services was humanitarian, to ensure minimum standards in health, education and housing, and a minimum income in unemployment and retirement for those incomes were too low to provide for themselves. First of all, in a day when we all try to dodge personal responsibility, and pass on to an official the natural obligation to care for others, in many cases even for our own elderly relatives, let us have a review of the measure of our humaneness to those in need, such as the level of National Assistance payments, war pensions and the training of the disabled, irrespective

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of the reason for what we may think is the cause of their being in need.
Having made that clear beyond all possibility of misunderstanding or misrepresentation, could we not ask some simple questions about our social services? For example, how much of the retirement pensions goes to people who have not paid for them and do not need them? Are the family allowances going to the purposes for which they were intended? How much of the housing subsidies is subsidising people who can afford to pay full rents? Should there now be a reconsideration of the compulsory starting age and leaving age at school, with greater flexibility both as regards choice of subjects and payments—that is to say, a greater approximation to the practice in non-State schools? What is the point of paying money and supplying services to people whose incomes are enough for them to do without them or to pay their cost or part of their cost? What sense, and how much waste, is there in forcing them to buy services from the State? How much more generous could we be to those in need if we could cut out these transfers of money from consumers, contributors and taxpayers to the State, and then back again? Has not the State become the super middleman, and are there not very great advantages to be gained by cutting down the services of this super-middleman? This might help to restore greater interest and freedom of choice to a large number of citizens who to-day think they could spend their money better than any official can spend it for them.
Could we not ask the Chancellor of the Exchequer to use the authority he has, as the keeper of the nation's purse, to shake up every spending Department, to shake them out of the rut? Could he not request plans which, while caring and fully providing for the needy, would enable many gradually to pay, like self-respecting citizens, for the services and the kind of education they desire if the Chancellor of the Exchequer no longer emptied their pockets of such a large proportion of their earnings, as he does at the present time? I suggest that this is the kind of shakeup which it is essential for the Chancellor of the Exchequer to bring about if this country is to present a modern outlook in to-day's conditions, rather than to be content with adjustments in taxation as between the individual and the corporation.
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Without having had sufficient time, perhaps, to achieve worthwhile economies—and it must take any new Chancellor a considerable time to find his way about—I am sure the Chancellor was right to place the emphasis in his Budget on increasing the reward for individual effort. The side effects, as the doctors would say, of taking away by taxation such an amount of a man's earnings as has been done since 1944, has undermined character and lowered standards all round. I think we are all conscious of this.
I should like Her Majesty's Government, in co-operation with the trade unions, to launch a campaign to encourage all who can to make a greater effort, to take a greater pride in the quality of workmanship. Some goods are rather carelessly produced to-day. But the prerequisite of any such campaign is surely that every worker and every craftsman should be satisfied that he is not being asked for more than a fair contribution out of his earnings from harder and more careful work by taxation. It is depressing to see to-day in London stores many foreign-produced household requisites selling at prices not less, but higher, than their British produced counterparts; being sold on their quality in design and workmanship. Surely, so far as American produced goods are concerned, particularly where there is a fairly high labour content, we should be able more than to hold our own in competition.
To return to the Chancellor of the Exchequer's recent Budget, it seems obvious that behind the framing of this Budget there lurked two great fears, one for the future value of sterling, and the other the fear of renewed inflation. To budget for a large surplus above the line was no doubt intended to show this country's determination to pay its way. I agree with the noble Lord, Lord Clitheroe, that this was desirable and necessary at the present time. The Chancellor's assurance that he will not engage in new borrowing during the year should also help to strengthen the nation's credit.
As the noble Lord, Lord Brand, has reminded us, to fulfil our minimum obligations without courting trouble it is necessary for us to earn a surplus on our balance of payments of not less than £250 million a year. Yet we have been

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falling short of this by something like £600 million (I put it in round figures; I think the noble Lord, Lord Brand, said £545 million) because our exports fell short of our imports by something like £350 million in 1960. It should be possible to make those simple facts clear to everyone. We have been spared a sterling crisis more by the actions of people in other countries than by our own good sense and efforts, but we cannot count upon such continued good fortune. When the gold standard was fully effective, an automatic corrective was brought into operation which had the effect of correcting deficits in balance of payments, and any surplus was properly used for external loans. There was perhaps more confidence in the political stability of the world in those days than these is to-day. Perhaps there was a little more commercial honesty in those days.
I do not believe, any more than does the noble Lord, Lord Clitheroe, in the Chancellor's proposed new payroll regulator. But if the nations which believe in a market economy free from unpredictable intervention by Government are unwilling to accept the discipline of a full gold standard, is it impossible to devise some automatic deterrent to living beyond a nation's means? If I may say so with respect, I agree with the noble Lord, Lord Brand, fully, that this is the most serious problem we have to face, and it cannot be put right by action taken by fits and starts. What we must try to find is something which works automatically as a corrective, as we had before 1914.
Fears of renewed inflation obviously behind this Budget are real and cannot lightly be brushed aside. The chief danger surely comes from overloading the economy by excessive Governmental expenditure, the increasing expenditure all through what is called the public sector.
Some Governments have during the past year experienced difficulty in finding means of restraining by monetary discipline excessive demand at home without attracting the inflow of short-term funds, to which the noble Lord has already referred, to the embarrassment of other Governments. No doubt any system which leaves any freedom to individuals tends at times to be considered by authority as a nuisance, and certainly there are many Government
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officials in various countries who look upon the movement of these short-term funds as a nuisance. But surely, without expanding credit—and that is what I understood the noble Lord, Lord Brand, to be afraid of in his reference to proposals which have been made for the organisation of a World Bank—without expanding credit, for this would be inflationary, it should be possible by co-operation between central banks to avoid disturbances caused by the international movement of short-term funds. I think the European central banks are taking steps to put some such corrective into, operation should it be necessary. Any measures which a particular country found necessary to restrain inflation could then be taken without causing embarrassment in another country where the internal conditions were different.
May I, in conclusion, sound a word of unbelief in the current excessive preoccupation with economic growth solely in terms of production? Nor can increased wages be based on an artificial stimulation of production irrespective of market conditions. Sound economic growth must come first from service to the consumer. To be of service is perhaps the highest ideal in business. Are we in danger of coming to think that a factory exists simply to produce and to provide employment for producers? Surely the key to growth is the good will of the consumer who is invited to buy and to use what should be produced for his pleasure or convenience. t should be every producer's pride as well as every salesman's pride to serve the public. This is the key, I suggest, to securing increased exports, so necessary for our country's existence and by which alone our high standard of living at home can be maintained.
4.26 p.m.
LORD WALSTON: My Lords, my noble friend, Lord Pethick-Lawrence, in opening this debate raised so many problems and covered such a wide field that ii is hard to know where to follow him and how much to restrict oneself, but I shall try to deal with one point and one point only, which, with great respect to the noble Lord. Lord Brand, is in my submission, even more important that the balance of payments, because without it I do not believe that we can solve our balance of payments problems. I refer to what the noble

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Lord, Lord Grantchester, has just mentioned, and that is growth—increased production. Of course, I agree with him that there is no point in producing just for the fun of producing. There is no point in producing simply in order to give employment. One can only produce successfully for the consumer. But, accepting that point, I believe that our efforts must in the first place be channelled into and focused on increased production. It is perfectly true that in theory we could solve our balance of payments problems without any increased production if we were to decrease consumption, if we were to lower our standard of living; but I do not think any noble Lord here would accept that as a practicable possibility. That brings us back to the increase in the total wealth produced by this country as being of prime importance.
LORD BRAND: At a price which enables it to be exported.
LORD WALSTON: I agree entirely with the noble Lord. We must not, as I said, produce willy-nilly. We must bear in mind the fact that our production must be sold, and therefore the consumer, his requirements and his pocket, must all come into our consideration. But if we look back through this country's history we can see that a very interesting and fundamental change has taken place over the years. We are now called a nation of shopkeepers; we have been for some time. We are also a nation of bankers and a nation of exporters. But the wealth on which all those activities originally were based came from basic production—from our iron, from our coal, from our factories and from our shipping, too, which is a basic necessity even if it is not technically producing anything, and, of course, from our land. There is no need to remind your Lordships that wool was the foundation of the wealth of this country and that in the past we have been considerable exporters of food. I am not suggesting that we should once again become sizeable exporters of food, though, in passing, I think that if the Common Market develops we may well find ourselves in the position of exporting food to the higher-cost Continental countries.
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But the change which has taken place has resulted in wealth now finding itself more and more in the hands of those people who are not actually producing anything but who are engaged in other activities, such as banking, merchandising and insurance. If you look round to-day at the profitable investments in this country you do not find that our basic industries are considered profitable. If you want to make a sound investment you look to the insurance companies, to the retail stores and to property shares—all things that are useful, in their way, but are not actually producing any more. I would not go so far as the noble Lord, Lord Clitheroe, in referring to bankers as a "team of mules"—he, being a banker, would have more right to do that than I have. But I suggest quite seriously that to-day the material rewards which come to people who work at any activity in this country are entirely out of gear with the value of what they are producing.
Let me give your Lordships a completely personal example. During the last six months certain personal investments of mine have increased in value and have shown me a profit in six months—and a tax-free profit at that—of double the profit I have been able to achieve by farming for twelve months on a relatively large scale, both in this country and in the West Indies. You may say that if I consider that wrong I should not profit from it. That is another story. But surely it cannot be right for a country, for a community, for a society to exist in this way, where more spendable wealth arises from shrewd or fortunate, but unproductive (in the strict sense of the word), investment, rather than from relatively hard work with a relative amount of skill and experience in producing something tangible. I believe that we must try to alter our basic concept in this respect and make a conscious effort to redress the balance. I am not suggesting that we go back to the Middle Ages, to the eighteenth century, or even that we go back to the nineteenth century, but that we redress the balance to the extent that the material rewards go somewhat more than at present to the people who are producing wealth, and somewhat less than at present to the people who are engaged in the exchange of wealth in one form or another. Until we do that,

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we shall not get very far with this problem, which is not a new problem but one that has been with us now ever since the end of the war—indeed, from rather earlier than that.
Coming down to rather more specific matters, what should we attempt to do in order to make this increased production possible? As the noble Lord, Lord Pethick-Lawrence, said, we must have stability. We cannot have an economy which fluctuates up and down from year to year, and from month to month. We must have a planned production—not a detailed plan but an overall plan—so that those engaged in producing know what is wanted, and know in what they should invest their money. In my opinion, we should also have far greater specific incentives to investments of the right sort—that is to say, investments in capital machinery.
I will not go into detail because it is not a matter on which I am qualified to speak, but as an example I would mention initial allowances and depreciation allowances, which can be used not as a fluctuating year-to-year weapon or incentive, but as a far longer-term means of encouraging the right sort of investment in the right sort of industry. There again, it should not be an overall form of allowance which gives a company equal incentive to buy a Rolls Royce for its director as to install a labour-saving and efficiency-producing machine; it should be a selective one with regard to the actual investment itself, and a selective one with regard to different industries, so that these industries which it is decided in the national interest must be encouraged are given that incentive, and those which are not considered to be so important can be left to fend far more for themselves.
But it is not enough simply to encourage the right sort of investment. It is not only machines that we need; it is the men to work the machines—and we must have labour in the right places and of the right kind. That is talked about now as the mobility of labour. It is perfectly true that we cannot afford to have labour sticking in one area of the country because it has always been there, regardless of whether there is any work or any useful work for them to do, and refusing to move elsewhere. But labour is not simply an entry in a ledger to which certain wages have to be given
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every week. Labour means you and me; labour is composed of ordinary people. It is quite obvious that we must regard the human needs of those people if we want them to change their homes, their surroundings and their work. It is not simply a question of going from one factory to another at seven o'clock in the morning. It is a question of moving, of finding a new home, of finding a new school for the children and new neighbours for the wife. Those are the problems which are holding up mobility of labour, and those are the problems to, which, if we are going to achieve mobility of labour, we must give thought and specific financial inducement in one way or another—in removal allowances, priority in housing, or whatever it may be.
I suggest to your Lordships that there is one further matter—one which has been talked about from time to time but, because it is so full of very real difficulties, has always been shelved. I refer to the whole question of wages, of a national wages policy. Can we really afford to go on to-day with wages being arranged, negotiated, as they are at present? I know that I am treading on dangerous ground, and many of my noble friends here may strongly disagree with me. But there is no getting away from the fact that at the moment wages that are paid are simply the result of conflicting forces: are the unions strong enough to get a rise in wages for their members? Are the employers strong enough to resist it? Is the market strong enough to stand it? It is purely a battle of strength. In my view, battles of strength, when resolved, rarely give the right answer. If we are going to plan our industry, if we are going to plan our production over a period of years on the right lines, we must be prepared to face this problem and be prepared to decide which industries are in need of more labour, which should be encouraged, which require or deserve higher wages and which should be lower on the list. We cannot go on dodging the issue for much longer.
There is, of course, one further, and perhaps even greater, advantage in having some form of national wages policy. It is probably one of the most effective anti-inflationary measures that can be made use of at the present time. As the noble Lords, Lord Brand and

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Lord Grantchester, have both said, our exports, our production (whether it is exported or not), must be of a type the consumer can afford to buy. The higher our costs, obviously the smaller our markets. I am not saying, "Let us keep our wages low for that reason". I certainly would not say that. But I do say that we cannot afford to allow the level of our wages to be left solely to the bargaining strength of the people involved. If we are to avoid inflation, if we are to keep our costs down and be competitive on the world markets, I can see no way of achieving this without the Government's having the strength and courage to go firmly for a national wages policy and, on that basis, really control inflation and, over a long-term period, control the type of production and the type of growth that is necessary to solve the balance-of-payments problem and the other economic problems about which my noble friend has spoken.
4.41 p.m.
LORD LUCAS OF CHILWORTH: My Lords, I join with other noble Lords in paying my tribute to the noble Lord, Lord Pethick-Lawrence, for opening his annual debate in an even more interesting manner than he usually does; it gets more interesting with the passage of years. I hope sincerely—and I feel other noble Lords will do the same—that we shall have the pleasure of this annual event for many years to come.
I should like to commence the few remarks I intend to address to your Lordships by following the noble Lord, Lord Clitheroe. If he will permit me to say so, I agree with nearly everything he said in a most admirable speech. He said—and it was underlined by the noble Lord, Lord Grantchester—that here we are to-day, taking 37 per cent. of the gross national income in taxation. The noble Lord, Lord Clitheroe, puts the figure at £6,000 million; the noble Lord, Lord Grantchester, made it £7,000 million because he added the rates. How much of that annual amount that is being taken out of the pockets of the people of this country is usefully spent, and how much is wasted?
The noble Lord, Lord Clitheroe, said that what we had to do in the future was to see that the money spent by the
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Government, which is an increasing amount as the years go by, was usefully and profitably spent. The noble Lord, Lord Grantchester, paid a tribute to the remarks of the right honourable gentleman the Chancellor of the Exchequer when he said that he intended to look at this whole question of Government expenditure, Government accounting. It sadly needs it. I understand that, as a start, a Committee has been set up (I do not know whether it was the same Committee as the one Lord Grantchester was referring to), presided over by Lord Plowden, to consider a new scheme of Government estimating. I think it has reported already. It is common knowledge that the Estimates of Government Departments are so unreal as to be meaningless, both in their origin and in their outcome. I should like to ask the noble Earl, Lord Dundee, who is to reply to this debate, whether it is not possible for the Plowden Committee's Report to be published, so that Parliament can read it. After all, Parliament is responsible to the people of this country. I think that all these facts and all facts of this kind should be made available to Parliament as soon as possible.
When I read the speech of the Chancellor of the Exchequer in introducing his Budget I searched, and searched in vain, for one thing that would make a contribution to what the noble Lord, Lord Brand, has stressed, balance of payments, and to what other noble Lords have referred to, increasing our exports. We have been told by Ministers of the Crown, who have perambulated this country stirring up industry, that industry must increase its exports. They have told labour that it must not do anything to increase the cost inflationary spiral. Yet that is just precisely what the Chancellor of the Exchequer's Budget has done.
I agree with the noble Lord, Lord Clitheroe: I cannot imagine a worse thing to do at this period of time than to increase the fuel tax. As he quite rightly said, it is no good the Chancellor of the Exchequer saying that it is only marginal; as he quite rightly said, where it falls it falls heavily. Once we start a cost inflationary spiral in the steel industry of this country it is going to have some devastating results upon our economy and upon our export prospects. In my view, everything should be done

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to make our great industries, particularly the steel industry, competitive. The competition they will have to endure in the future from the Continent makes it absolutely imperative that the costs of British steel are kept as low as possible.
That brings me to the point on which I feel strongly and which I shall perhaps be told is rather "dynamite". In my view, if the steel industry of this country can buy coal more cheaply from abroad it should be allowed to do it. I understand that a free hand is given to the Coal Board to buy steel abroad. We must not start interfering with the economics of the costs of basic industries and trying to "featherbed"—the word that comes into my mind, as perhaps a good term to use—a section of the community, at a cost to the rest of the community and at a cost to the thing we want more than anything else; that is, to increase our exports, which will be our prevailing need for many years to come.
I do not think the Government should hesitate one moment. They may have to face some trouble. If I may say so, with great respect, they have not been very good at facing troubles over these last two or three years. They have generally managed to clutch a tight hold on damp squibs, but when it comes to problems which call for real government they have not shown themselves very apt. In my view the whole of our fuel policy in this country needs to undergo a reappraisal. We are still committed to an expenditure of £3,000 million in our electrical production industry; we are committed to millions of pounds in other nationalised industries. I beg leave to doubt whether a large bulk of that expenditure to-day would fall within the category of what the noble Lord, Lord Clitheroe, calls profitable. I want to come to one specific case in a moment.
I see the noble Viscount, Lord Amory, sitting there. My mind goes back to this time twelve months ago. I made a plea, a plea that got me into a lot of hot water, I may say—but having lived a long time in life in hot water it did not have much effect upon me. I pleaded that the Chancellor of the Exchequer should relieve the surtax burden upon the young, up-and-coming executives, scientists and engineers of this country. I pleaded that one of the
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things that we in this country wanted above everything else was an increase in incentives. The noble Viscount, Lord Amory, was kind enough to agree with me. That did not do me any good, either —but that is just by the way. I am convinced that I was right then; and I am convinced now that they have to be increased.
I only hope that I can now enlist the support of the noble Viscount, Lord Amory, in this belief: that the whole of the individual taxation of this country has got to undergo a fundamental change. In my view, high taxation is one of the most inflationary factors we have to deal with to-day. I should like to see surtax and income tax merged into one. I should also like to see unearned income treated better than it is to-day. I say that on these grounds, my Lords: that capital is as worthy of its hire as labour, and one cannot do without the other. When the noble Lord, Lord Walston, was talking about the huge capital gain he had, I was tempted to interrupt him and to ask him what he did with it, but I did not.
LORD WALSTON: May I point out that I did not say that it was a huge one. I said it was double the one that I got on farming.
LORD LUCAS OF CHILWORTH: Then it must have been huge, because, knowing the noble Lord, Lord Walston, I know that he does not farm for the benefit of his health.
LORD CLITHEROE: He looks very well on it.
LORD LUCAS OF CHILWORTH: He does: but all farmers living on the verge of bankruptcy always look very well. But I suspect that what he did with his capital gain, whether it was huge or whether it was small, was to invest it, and he expected to get a return on it. I think there is so much nonsense talked about unearned income. When you come to think of those who have worked hard all their lives and who have indulged in thrift and saving, to live the last 20 or 30 years of their lives, perhaps, away from the hurly-burly, why should that not be counted a virtue as much as working on the productivity which gained them that amount? The fact is, my Lords, that we want investment and we want saving; but immediately the

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young executive, who now has the carrot dangled in front of his nose to go on and on, saves and invests what he has earned, he is taxed far more than when he was earning it. There is something wrong there.
I want now to come to one point which I have already briefly mentioned. There is one section of our economic and national life that has an unsatiable appetite for money—I refer to our nationalised industries. I have studied as well as I can the White Paper on the financial and economic obligations of the nationalised industries, and I have come to the conclusion that the prerequisite of any success in our nationalised industries is that they must be able to attract brains of a calibre equal to those in private industry. I was not in the country at the time it happened, but I doubt if I have ever read or heard so much nonsense about any subject as I read or heard about the Beeching appointment to the Transport Commission. And for people to say that this country was aghast at a man being paid a gross salary of £24,000 to do a really first-class job of work is just a misuse of language. My Lords, what the country has been aghast at with regard to the British Transport Commission is that, through rank bad management at the top and inept handling by the Government in allowing it to go on for so many years, it has lost £500 million of the taxpayers' money. That is where the Government are vulnerable: they have sat twiddling their thumbs, year in and year out, while that deficit mounted and mounted until, at last, the best part of £400 million had to be written off.
It was the noble Viscount, Lord Amory, who blew sky-high the ridiculous method of accounting which allowed that to continue. When he was Chancellor of the Exchequer, he said, "I am having no more of this nonsense the current deficit of the British Transport Commission will go above the line in my Budget, and will be paid for out of current taxation". That was £100 million there has been £100 million ever since, and there will be £100 million for very many years to come. That, my Lords, is one of the results of the unfortunate experience of allowing patronage to enter into nationalised industries. The deficit on the Budget of last year was, I think,
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£400 million. Twenty-five per cent. of that was contributed by the British Transport Commission. That is the estimate that will go in this year's Budget, and in next year's as well.
I want to ask the noble Earl who is to reply to this debate: When can we expect some turn in this sorry course of events? I come back to the remark made by the noble Lord, Lord Clitheroe: that we have not seen the worst of this colossal wastage of money on the nationalised transport service. The truth will eventually have to be told about the expenditure on the Modernisation Plan: bad expenditure, bad costing, bad financial management, bad over-seeing—and I think the Government have got to take the lesson of that very seriously. Because let it be said, in truth, that all the time this sorry state of affairs was being pointed out to the Government—and consistently, year in and year out, from the Opposition Benches here, it was pointed out to them; and chapter and verse were given—Government spokesmen were standing up, like small boys whistling in the dark to keep up their courage, saying that one day the British Transport Commission would be a profitable concern.
There is only one other point about which I want to talk for a minute or two: it was mentioned by the noble Lord, Lord Pethick-Lawrence, as one of his major points, and was also touched on by the noble Lord, Lord Brand. It concerns the present position of our shipping, which is deplorable. I should have thought that Ministers, especially Cabinet Ministers, have spent one or two sleepless nights since the Cunard Company produced their last accounts. The taxpayers' money is going into a pretty sorry affair at the present time: but that, to my mind, shows the weakness of the Government's financial policy.
Many of us have pleaded for a long time that it is not beyond the wit of man—I think the noble Viscount, Lord Amory, said this twelve months' ago—that those who export should have some preference on taxation. We are told by the Government that it is impossible to subsidise industry, because that will incite everybody else to retaliate. Yet the excuse, as I understand it, for the subsidisation of the Cunard Company to build another ship is that the French

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Government and the American Government subsidise the Cunard's competitors. But if the Government want to do this (and in their wisdom they may be right), what about the rest of our shipping all over the world, which is declining? What about South America, where the flag of discrimination is practically driving British shipping off the seas? In every port you will find the local Government saying that any imports into their particular country must be carried in their own national bottoms. And the situation will not get any better; it will get worse. What are the Government doing about it? One might also ask, at the same time, what is the shipping industry doing about it?
My Lords, there is only one thing that I think the Government can do, and that is to engage in retaliation. I know of no other way to cure this; and if it is not clone there will not be many ships sailing to South America, which in the future will perhaps be one of the most prosperous regions of the world. In my view, the shipping companies not only have to concentrate their fleets, but they have to reorganise the whole of their finances. Only in those two ways shall we start to build up once again a mercantile marine which, as I think the noble Lord, Lord Pethick-Lawrence, or the noble Lord, Lord Brand, said, contributed, years ago, so much toward our balance of payments. Now we are losing that, and it will not be got back by building a passenger liner which travels across the North Atlantic. It will not be got back by a subsidy of that kind.
5.5 p.m.
VISCOUNT AMORY: My Lords, I do not propose to inflict on your Lordships this afternoon a prolonged dissertation on the economic state of the country, because I think the salient facts were admirably set out with great lucidity by my right honourable friend the Chancellor of the Exchequer in his Budget statement.
I understand that in catering circles it is recognised as a rather rare event for a retired chef to be completely satisfied with the gastronomic confections devised by his immediate successor. Invariably there are apt to be allegations of an excess or a deficiency of salt in the soup, or perhaps that the fish would have been better cooked in white wine than in olive oil. Therefore I am glad to
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feel sincerely able to pay a respectful tribute to my right honourable friend for what I think is a sound, interesting, and forward-looking Budget.
It is seldom—or so it seems to Chancellors of the Exchequer, I think—that the general public indulge in rhapsodies about a Budget of an intensity that they are not well able to keep within control. Of my own Budgets, the appreciations I remember best approximated very closely to the well-known reply of the farm worker, when his farmer employer made a free issue of cider and asked his workers how they found it. The reply was: "Just right, boss. If it had been any better we would riot have had it, and if it had been any worse, we could not have drunk it." That is the kind of appreciation that is most lively in my own recollection.
My right honourable friend's Budget has been widely and rightly commended, I think his dilemma—and it is a dilemma to which we are becoming accustomed —is that he dared not add anything to spending power in the aggregate, and in fact wanted to restrain it. He did not want to discourage investment, so the restraint that was needed was a restraint concentrated, so far as possible, on consumer expenditure. He wanted to encourage incentive to effort, and to lighten the heavily progressive incidence of tax on personal earnings; and he wanted to see what further actions he could find to foster the growth of exports.
In truth, I think we are faced at the present time with a very strong contrast between the levels of our external and our internal prosperities. At home there is almost every sign of affluence and prosperity: more people at work than ever before; a record level of consumer spending; a record level, too, of saving and investment, both private and public; and of course, peak prices for equity shares on the Stock Exchange. We have also enjoyed about three years of almost stable prices, during which period (and this is what makes it so ridiculous, if I may say so, to refer to stagnation in connection with this period) the standard of living of the people of this country, in real terms, rose faster than, I think, at any other period in the past 20 years.
In the external sector—and I agree so much with my noble friend Lord Brand; thought the figures he chose about this

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were accurate and absolutely to the point —the prospects there give ground for continuing anxiety. Our export performance, in relation to that of our main competitors, is not good enough and is lacking in dynamism. Imports are still running high, although the figures published to-day indicate a better trend after allowing for the seasonal influences. Then, as my noble friend Lord Brand rightly pointed out, we have a continuing very high level of new net investment overseas; and, of course, on top of that, a rising figure for aid to the underdeveloped countries and in our overseas defence expenditure. All those things, when added up, are on a scale which make it very difficult to see how, in the immediate future, we are going to be able to finance them from current earnings. I agree with my noble friend that one cannot for long envisage borrowing short and investing or lending long on this scale.
In all the circumstances, sterling, for a variety of reasons, has stood up well. I believe that one of the reasons is that those in other countries who study these things feel that our Government and the Chancellor of the Exchequer have produced measures that are correct and timely in our circumstances. Nevertheless, we must never delude ourselves into being in any doubt whatever that, as between these two fields—the internal and the external—it is the external which is the more important. I was glad that my noble friend Lord Brand underlined that point. So there are two dangers, of which my right honourable friend the Chancellor of the Exchequer has shown that he was acutely aware: the overseas trade and payment situation, and the fact that, after three years of substantial stability in the price level, there are again signs of rising internal prices.
To what extent does the Budget help to solve these two problems? I would refer to two or three of the main features. First of all, as my noble friend Lord Clitheroe said, in budgeting for a big above-the-line surplus and a very small below-the-line deficit, surely the Chancellor of the Exchequer is completely and courageously right. That will make a really important contribution to moderating the excess demand from
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which we are suffering. And, incidentally, one would expect that it would strengthen the market for Government securities.
Next I would refer to the Chancellor of the Exchequer's proposal for reducing the incidence of surtax on income. Again his action is undoubtedly right and fair. That should increase the incentive to earn and to take risks. Noble Lords may ask me, if I feel that this is such a good thing to do, why I did not do it myself. I can only say, in retrospect, that I had my priorities which I thought were most urgent at the time, but I should dearly have loved to do this. As the noble Lord, Lord Lucas of Chilworth, pointed out, last year I had one rather unexpected burden to carry, rather late in the day, which was to provide above the line, for the first time, for a deficit of £105 million from the British Transport Commission. This certainly set me back a little in my calculations. But there are no sour grapes in this. I should like to congratulate my right honourable friend and give him the fullest possible credit for what he has done here.
I am glad to find myself, too, in substantial agreement with the noble Lord, Lord Lucas of Chilworth. I am sure that if he would join me here and sit by my side on these Benches, we should find ourselves in strong agreement on many other things as well. On one other thing I find myself in agreement with him—that is, on the seriousness of the flag discrimination situation. I would not venture to say what the solution is, because we cannot achieve anything by unilateral action. But this is something which is of growing importance, which is a severe handicap to us and which is also, I think, unjust.
This reduction in surtax may help our exports indirectly, but we must keep a sense of proportion and remember that, though they will provide a greater incentive to earn, if profits still remain easier to earn in the soft home market, then the effort is likely to be concentrated in that direction. The Chancellor of the Exchequer decided against a capital gains tax. I think that, on the whole, he was wise in present circumstances. The prospective yield would have been very uncertain. But I fancy that at some time in the future it may be sensible to

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look for a further opportunity of reducing the burden of tax on personal incomes by spreading the incidence of tax over at least some part of the field which is at present regarded as that of capital transactions. This is an extremely difficult matter and I do not wish to go into it further now.
I thought the tax on television advertising legitimate and even wonder whether, if necessary, the Chancellor could not go a little wider into the field of commercial advertising. As a retired and superannuated chef, there are two confections about which I find myself rather less enthusiastic. First of all, the need for a further increase in profits tax, after the increase last year of 2½ per cent., is a little disappointing. A year ago, I proposed an extra 2½ per cent. on the profits tax, which brought in nothing last year, but something like £45 million this year, which I had hoped might provide sufficient revenue to cover the reduction in personal taxation which has been made. But the Chancellor of the Exchequer decided that he required this revenue, of which he was assured, to improve further his surplus, and that is such a laudable objective that I do not wish to quarrel with him on that.
Then there is the fuel tax on heavy oil. If that is passed on by the oil companies, the bigger part of it will enter into costs of production. As my noble friend Lord Clitheroe said, oil happens to enter to a quite appreciable extent into the cost of such products as heavy chemicals, fertilisers and steel. These are three products of which our export prices have to be particularly competitive at present if we are to secure business; and I am rather afraid that this increase in fuel tax, if it is passed on to the manufacturers, may result in the loss of some quite important marginal export business which we can ill afford to lose.
I know that in one steel company, with which I am familiar, the incidence on costs of this tax, if passed on, would be upwards of £1 million; and in a chemical company, with which I am also concerned, it would amount to far more than that. I suppose that I ought to declare an interest. By some strange twist of fortune, I find myself a director both of a chemical company and a steel company, and, I may say, of a bank, too, as I shall be mentioning banking later.
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Frankly, I do not much like the fuel tax. No one realises the Chancellor's difficulties better than I do, but I do not like it because it is, at best, a very indirect way of imposing restraint on the consumer.
After picking those bones of modest dimensions, I should like to praise the Chancellor of the Exchequer wholeheartedly for his search for new short-term regulators, During my last few months at the Treasury, I felt increasingly the need for some new fiscal instrument which could be applied quickly and over a broad field of consumer expenditure, something which would leave a Chancellor of the Exchequer less dependent on short-term action in the monetary field by itself. I congratulate my right honourable friend on his idea of a surcharge on indirect taxes. It will be rough and ready, but if it is administratively feasible it will be simple and quick acting. If circumstances make it necessary, I trust that my right honourable friend will use it promptly and in good time. The other regulator, the payroll tax, is an interesting and, in many ways, theoretically a logical conception; but I personally share the doubts of a number of noble Lords who have already spoken, and rather doubt its effectiveness in its proposed form in either of its two roles as I understand them; that is to say, either as a regulator in influencing consumer demand, or as a disincentive in the wasteful use of manpower. As regards its possible influence in the direction of encouraging the installation of labour-saving machinery, I think that there we must pause to remember that, so far as it has an impact on the cost of labour, that fact will tend to raise the cost of the machinery which as a result of this it is hoped will be installed.
The last paean of praise that I should like to offer my right honourable friend is on his announced intention of pressing ahead with the development of the technique of forecasting and forward-estimating beyond one year. The Treasury and the spending Departments have been developing these techniques over the past few years because we have learned from experience that one year is a dangerously short period for estimating. In the case of a capital investment programme it is impossibly short, and in fact for some years we have been using three, four and five year forecasts

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there. But even in the case of current expenditure it is certainly undesirably short, because even there it is impossible to change the level of expenditure suddenly and substantially with efficiency.
There has been a growing demand from honourable Members in another place for these longer-term forecasts and estimates, but I am by no means sure that when they have them honourable Members will do much with them. My experience has left me in some doubt about whether many honourable Members really want in their hearts to tackle the control of Government expenditure. Many of them, indeed, would, I think, be horrified if a really efficient instrument were put into their hands which enabled them to do this. However, that may be the thought of someone with some sad and disillusioning experience behind him. I hope that I have said enough to indicate the staunch support that I should like to give to the policies and the main measures of my right honourable friend.
My Lords, there are two or three other points on which I should like to comment before I sit down. First of all, there is the question of the expansion of production which also is of basic importance. I want to repeat what I have already said to your Lordships: that there, quite clearly, our policy must be to seek the highest rate of expansion that is consistent with a sound balance of payments and reasonably stable prices. And I want to emphasise a sound balance of payments, because there is no country in the world, with, I suppose, the possible exception of Japan, that is more dependent upon a sound balance of payments than the United Kingdom. I have metioned that over the past few years the standard of living in real terms has risen faster than ever; but I should like to emphasise again that our right policy must be the highest rate of expansion we can get, consistent with those two other factors I have already mentioned—namely, a sound balance of payments and a stable price level. If I personally had the choice between a rate of expansion of 2 per cent., 3 per cent., or 4 per cent. with a sound balance of payments and with stable prices, or a much faster rate of expansion such as 6 per cent. or 7 per cent. without those two things, then I
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would have the lower rate of expansion and the sound balance of payments and stability of prices.
We listened with great pleasure to a speech from the noble Lord, Lord Pethick-Lawrence, which, for clarity and moderation in all these matters, is unrivalled. I thought the noble Lord was in particularly good form to-day, and we were all delighted with his speech. However, there was just one small matter to which I might refer, and that is his analogy of the Government "playing ducks and drakes" with the monetary system; and he implied that during the period of Labour office that particular game was not indulged in, very much to the benefit of the country. I would remind the noble Lord that those years were years of rampant and continuing inflation, and we suffered a devaluation of the pound. I think that is rather a high price to pay for the avoidance of the kind of game of ducks and drakes which the noble Lord feels we have been indulging in during the last few years. I will not say anything about the European problem which the noble Lord raised, except to agree with him about its tremendous importance. I am sure that we must seek the closest possible association, both in the political and the economic field, with Europe that is consistent with inescapable responsibilities that we simply cannot throw away.
My noble friend Lord Clitheroe mentioned decimal coinage, and I want to declare myself as a decimal coiner, if that is the right expression. I believe that the sooner we make that transition, the better. But the kernel of the problem, and one not often mentioned, is first to decide what the unit is to be. Is the basic unit to be a pound or the equivalent of 10s.? The latter fits much more easily and would bring the full benefits of the decimal system, because it would only involve two places of decimals. If we were to have the pound as the unit, we should not get the full benefits of the change. When once that basic question is settled, I feel that everything else will fall into place; and then the sooner the change is made, in my view, the better.
I should have liked to say something about special deposits, because my noble friend Lord Clitheroe mentioned them. Again I must declare my interest as a director of a bank; but I

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find it difficult to comment, because I was the introducer of special deposits. I do not think I should agree with my noble friend that they have been entirely ineffective; and, of course, though the banks no doubt do not like them, from all the information that I have had the banks would dislike still more any more direct form of control. Then, I should have liked to refer to world liquidity, which is so important, but we had a useful debate on this topic in this House a few months ago initiated by my noble friend Lord Boothby.
LORD CLITHEROE: I intervene for a moment only to inform my noble friend that I did not say (at least, I hope I did not) that the special deposits had been wholly ineffective. I criticised them, but I did not say they had been wholly ineffective.
VISCOUNT AMORY: I realised that my noble friend criticised them, and may have misunderstood him in thinking that he was implying that they had not produced any result.
LORD CLITHEROE: I said that they were riot wholly effective or just.
VISCOUNT AMORY: I agree that it is a rough-and-ready device—I will lease it there.
On world liquidity, I would only say, following on what was said by the noble Lord, Lord Pethick-Lawrence, that I believe one encouraging thing is the much greater degree of day-to-day cooperation between the central banks which is now taking place. Of the two proposals that have been mentioned, those of Professor Triffin and Mr. Bernstein, I find myself at the moment more inclined to Mr. Bernstein's. The thing If am sure about is that we must be looking for ways in which the role and scope of the International Monetary Fund can be steadily developed in the light of its success. That may carry us eventually to the point where that body may become a credit-creating body of some kind or another. Once again, I should like to underline what I think my noble friend Lord Brand said: that however desirable the increase, and however useful the increased resources of the International Monetary Fund are to us, we must never suppose they provide a substitute for carrying out the right internal policies at home.
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The noble Lord, Lord Walston, raised the question of production, and he will forgive me if I feel that he was taking a rather old-fashioned view when he defined what he regarded as production. He seemed to draw a sharp distinction between the production of physical products and other forms. Every year that goes by I think it is harder and harder to draw that distinction, and the only way of looking at production now is over a very broad field, covering the field of services as well as the production of physical goods. The noble Lord told us that the sale of some of his investments had been much more profitable to him than the production of agricultural commodities. Of course the noble Lord there was having a practical example of the advantages of having something to sell that people really want: to buy very badly. He found himself in the market and he had the good fortune to own investments for which there was a strong demand. He can acquire virtue, if he sold those investments, from having met that demand.
The noble Lord's suggestion of discriminatory investment allowances is one of which I personally am rather frightened. He said, if I understood him aright, that they would enable the right sort of investment in the right sort of place to be encouraged. But there is one definite qualification there, which is that they would be the right investments and the right places in the judgment of the Government; and that might not mean that they were, in fact, the right investments in the right places.
I have detained your Lordships rather longer than I had meant to do, and I should like, in conclusion, to return for a moment to the state of the economy. There is no need to emphasise the first requirement, which is for expanding exports. That means 'that we must preserve at all costs our competitiveness in terms of price, quality and up-to-date design; and, secondly, that we must have the productive resources available to enable us to make those products available in the export markets. We must make sure that those productive resources are not wholly absorbed in meeting the demands of a too soft home market. Therefore, I conclude that the Chancellor is right in feeling that home demand must be restrained a bit and that it must be kept really keen and competitive.

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That is going to be a difficult thing to do, when we are operating as close to the ceiling of full employment and the strong demand that comes from it. I believe that we shall not achieve success in the future unless we can keep the home market really keen and competitive. Where existing tariffs on imports into this country are unjustifiably high—and some are—then I should be in favour of a drastic reduction. Such action may be bad temporarily for our balance of payments in the short term, but in the longer term it would be action which would be healthy and stimulating.
All the time—and this is not easy for a Parliamentary democracy—we must seek ways of giving encouragement to people to save and invest—as against consuming—a steadily increasing percentage of the national income. The proportion that is being saved and invested has been going up of recent years, and I should think it will turn out a good figure this year, too. Unfortunately/—and this appears to me almost inevitable—this year we are going to have some excess demand again in the home economy, and I am afraid that if we avoid price rises it will be almost a miracle. So far as wage rates have gone through the season, it looks as if they are likely to go up about twice as fast as production; and production cannot go up very fast in the short term, now that we are up against this ceiling of manpower. The vacancies at present for jobs are, I believe, just about equal to the total number of unemployed, and from past experience that is a notorious danger point from the point of view of inflation. It is quite right to be experimenting to see how close we can get to that ceiling with safety, but do not let us delude ourselves: at a certain point the pressure will be so great that we shall get rising prices again.
I believe the danger ahead for this country is not of a sheer precipice over which suddenly we may fall to destruction. It is something far more insidious. It is the danger of a gradual decline in our performance relatively to that of our neighbours and competitors, and a decline that is masked by the current wellbeing in our own internal standard of living and consumption. I think it was Emerson who said
"the British see more clearly on a cloudy day."
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Looking round the world, there are plenty of clouds about at present, but there are also patches of blue sky in the shape of challenging opportunities. If the nation as a whole really understands—and it is so difficult to get this over—that we have to earn our living in a very hard competitive world; and that the standard of living we shall, in fact, earn is the standard that is justified by our own energies, enterprise and efforts, and that work, saving and investment for the future are more important for our national strength and influence than short-term increases in our current standards of enjoyment, then I am confident that we shall see an upsurge in national spirit and a pride in our achievements which will enable us to give a good account of ourselves in the face of the formidable and rapidly changing challenges with which we are confronted.
5.38 p.m.
LORD BOOTHBY: My Lords, there is only one point on which I should like to take issue with my noble friend Lord Amory, and that is when he suggested, or seemed to hint, that he would regard with approval an extension of the tax on television to cover advertising as a whole. Here I must at once declare an interest. One of my occupations, unbeknown to your Lordships, is that of a billposter. Having declared that interest, I should like to say that I regard the imposition of any special tax upon a specific industry as wholly vicious in principle, and I do not think it can possibly be justified. In the case of the television companies, it has been done quite clearly because of the very great and quite unexpected profits that they have made. But this still does not vitiate my contention that to tax a particular industry, and to attempt to put a penal tax upon it, is quite wrong.
In fact, this particular tax will not be paid by the television companies at all; it will be paid by the public, and it would be paid by the public even if it were increased still further. There is only one way to deal with the situation that has arisen in independent television, and that is to create effective competition as quickly as possible against the existing contracting companies which at present enjoy a monopoly. But to say that it is a good idea to tax the advertising industry as a whole, or any

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other industry as a whole, is, I think, unjustifiable both in theory and in practice.
Having said that, I should like to say a word about the Chancellor of the Exchequer. It seems to me that much the same can be said of him as Mr. James Reston, an eminent columnist in the United States, recently said about President Kennedy:
"lie is reaching radical conclusions about his problems, but meeting them with traditional methods which still fall far short of the transformations he keeps talking about."
But I do not think that this is altogether a condemnation. He has not been there very long, and, to my mind, there are encouraging signs of a move away from purely monetary measures of restraint when the pound is under pressure—the "Stop-Go" policy which, in my view, had had on the whole a deleterious effect on the rate of our economic growth during recent years, though I hasten to say that I do not altogether blame the noble Viscount, Lord Amory, for what he did. On the contrary, he did his best to mitigate what I thought was the disastrous step taken by his predecessor of raising the bank rate to the unprecedented level of 7 per cent. But I do like to see a general moving away from purely monetary measures of restraint, in the direction of fiscal measures which can be held in reserve and applied without delay should the necessity arise.
For my pant, I should have preferred a tax on services to the proposed payroll tax. I think it would have been better. I think there are enormous industrial objections to the payroll tax, but I am fortified in my optimism—because I am by nature optimistic—by the conviction that the payroll tax will in fact never be applied, or at least is very unlikely to be applied. I think that the proposals of the Chancellor, on balance, are a big step in the right direction; because they rule out the probability, and perhaps the possibility, of further credit squeezes, hire purchase restrictions, and abnormally high bank rates, which have been in recent years the greatest dread of industrialists and all those who have o plan for the future. These things, high bank rate, credit squeezes and all the rest of them, may bring temporary relief in a crisis, and have done; but they cannot be any permanent solution
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to the economic problem that confronts us, because by reducing productive investment and throttling down economic expansion, they must over a period weaken our competitive power in the markets of the world.
My Lords, this is not the end of the story. There is a lot to be done, with imaginative thought and action on the part of the Treasury, in the next two or three years. I think we need a radical revision of the whole system of direct taxation. I should like to see, for example, a single graduated income tax —not divided into surtax and income-tax, but a single graduated income tax for individuals, with an emphasis at every level in favour of earned income. I should also like to see a single corporation tax for companies, to be paid before the distribution of dividends, such as they have in the United States. I think this is extremely important: it really is a vital point.
Together with my noble friend Lord Amory, I regret this addition to the profits tax. I am quite sure that the Chancellor of the Exchequer should give serious consideration to taking off income-tax altogether from companies: and to substituting for income-tax a corporation tax on companies, as they do in the United States, and seeing that this is paid before the distribution of dividends. I am sure that it is a necessary reform, and I hope that my noble friend, Lord Dundee, will be able to say that these matters will be considered. There is plenty of time to consider them before the next Budget.
Our primary objective must surely be to restore the dynamic of the national economy, and thereafter to maintain our economic growth at a stable and satisfactory level; because, whatever else can be said about our present situation —and nobody has contradicted this on either side of the House in this afternoon's debate—our rate of economic growth during the last four or five years has not been at the same level as the rate of economic growth of the countries on the Continent of Western Europe. There can be no doubt about that. In fact, I reckon that it has been about half their rate, and that shows that something has gone wrong.
Now I would give one word of warning, if I may, to the noble Earl, Lord

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Dundee, and to Her Majesty's Government. I believe that the whole country to-day is disturbed by the fantastic speculation which has been going on, and which shows no signs of ceasing, in land. I do not think that this concern is by any means confined to the Labour Party; I think it goes right through the country. Everybody you talk to is concerned about it; and all these tall tales in the Press, about Mr. Clore and others, upset the ordinary man in the street. I have talked to several country solicitors, who have told me of fantastic profits that have been made within 24 hours by quite small people all over the place, simply in this business of purchasing land and selling it. There is, after all, a great difference between whether you get planning permission or not; and therefore, let us face it, an enormous temptation to planning officers, and to executives of the county councils and even urban borough councils, to grant planning permission, when thousands of pounds are at stake, in profits which are untaxed. After all, our land is limited, it is a monopoly, and I think the Government will really have to give very serious consideration to this problem.
LORD WALSTON: May I interrupt my noble friend on that point? Would he not say that that was purely another example of what the noble Viscount said in referring to me: that the people who own this hind are lucky enough to have something that other people want at the right moment, and take advantage of it?
LORD BOOTHBY: Not altogether. I would not quite agree with that, because land is a monopoly. Let us face it, there is a monopoly in land because there is a limited amount of it. I am talking about building land, of course, and land for development; and the whole question is whether you can get permission to develop the land or not, which may make a difference of thousands of pounds upon a comparatively small deal. I am only saying that I think it is a question to which the Government should address their minds. I cannot, myself, see the solution. I am personally opposed to a capital gains tax.
LORD LATHAM: The noble Lord is aware that the 1947 Act dealt with this particular problem, and the present Government have repealed those provisions.
LORD BOOTHBY: My answer is that it did not deal effectively with it, and I have yet to see any concrete proposal that will deal effectively with it. After all, this has been on the programme since the early days of the Liberal Government in 1906. We had Mr. Snowden's proposals for the taxation of land values, and Mr. Lloyd George's proposals before that. They all broke down for one reason or another. I do not, myself, know the answer to this problem. I am against a capital gains tax on Stock Exchange transactions, because I think it is not worth the expense and bother of doing; and a real speculator on the Stock Exchange can very easily produce losses which will more than offset his gains, even in an inflationary market. But if there is no other way of catching the speculator in land then I, personally, would be prepared to say we had better have a capital gains tax applied over the whole field, if you cannot separate the two. All I want to do at this moment is to say that I believe there is great public anxiety about the speculation that is going on in land in this country to-day, and the enormous increase in land values; and that it is not confined to any one Party. I think the Government ought to give it very serious study, and see what can be done in the matter.
Meanwhile, my Lords, so far as our reserves are concerned, the noble Lord, Lord Brand, pointed out so rightly that we are living and continue to live on a knife edge. This will go on so long as our liquid reserves remain around £1,000 million and our short-term liabilities exceed £4,000 million, as they do at the present time. Reserves amounting to only 25 per cent. of short-term liabilities are inadequate for a country which provides one of the two currencies which finance the international trade of the free world. It is not a position that can be sustained indefinitely. We must build up our reserves.
As the noble Viscount, Lord Amory, pointed out, we had a debate in March on the subject of international liquidity, and I am glad to be able to confirm what the noble Lord, Lord PethickLawrence, said in his most interesting speech, that it commanded the interest and attention of President Kennedy's leading economic advisers. I agree with

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the noble Viscount, Lord Amory, and with the noble Lord, Lord Robbins, that an increase in the reserves of the International Monetary Fund will not itself solve the problem of countries which are in persistent imbalance, or provide the means of investment in the economic development of under-developed countries of Asia and Africa and South America. The latter is the function of the International Bank and not the International Monetary Fund; and a distinction must be drawn between the two.
What I do hope is that at the next meeting of the International Monetary Fund in September enough elbow room will be provided for the two key international currencies, the dollar and the pound, by means of one or other of the proposals which have already been made. It may be that Mr. Bernstein's proposals will hold the field. I do not mind which proposals hold the field so long as something is done. I think it is bad for the Free World that these two great currencies, quite different from all the others, including the deutschmark, should be under alternate and continuous pressure, They ought not to be subject to this pressure. They now finance practically the whole trade of the free world.
VISCOUNT AMORY: My Lords, following the excellent debate which the noble Lord initiated, perhaps I may hope that whatever is done will eventually have the name of the "Boothby Plan".
LORD BOOTHBY: It is very kind of the noble Viscount to say that, but there have been so many abortive Boothby Plans in the past that it might be unfortunate; it might never come to fruition. I do not care whether it is the Bernstein Plan, the Triffin Plan, or any other Plan. I think the noble Viscount will agree it is vitally important that something should be done at this forthcoming meeting of the International Fund and Bank. I have recently had encouraging news from Washington that they mean to do something if they can. I want both the International Fund and the Bank to be transformed into an effective force to stimulate and maintain economic growth throughout the Free World; and I do not think there would be any dissent from that in any quarter of the House.
Before I sit down I should like to turn to the question of exports, upon which the noble Lord, Lord Brand, placed the
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greatest emphasis, and rightly so. I think we are now suffering from a lack of arty comprehensive production plan in this country. We have no targets. The spectacular economic growth of France and Federal Germany during recent years is primarily due to the fact that they have both had comprehensive production plans, and targets for specific industries; and we have had no such things. In neither France nor Federal Germany has there been any need for compulsion. I think that the primary reason for their success is the genius of two men, Herr Erhard in Germany, and M. Monnet in France, who started the whole of the French planning arrangements. But the interesting thing is that compulsion has never been applied to industrial planning either in France or Germany. Mr. Andrew Shonfield, the Economic Editor of the Observer wrote an interesting article the other day in which he said:
"The French planning organization, now under M. Massé, has no executive authority; it is a small body with a planning staff of only 40 officials. Its effectiveness depends on the arrangements it has made for influencing people rather than ordering them about. It has managed to get rather more than 3,000 of the most powerful men occupying strategic positions in France's business and industrial life into a kind of voluntary planners' club under its wing."
The results are there for all to see, because the economic progress of France in the last few years has really been spectacular.
This has a direct effect upon exports, and particularly upon the conduct of East-West trade. It is awfully difficult from a trading point of view, to deal with the countries East of the Iron Curtain if you have no plan on your own side, because they are absolutely riddled with plans; and if you go there with none it is not easy to reach concrete agreements. Take the Leipzig Fair, which I attended the other day. Our steel industry there was in the forefront. In fact, they really had the measure of Lord Ogmore's "friend" Herr Krupp. I thought they beat him to it. They put up a marvellous show. Why? Mainly because the steel industry is the only major industry in this country which has, of its own accord, produced a five-year production plan, which is now in print; and without

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undue assistance, I may add, from the Government.
British industry at the Leipzig Fair, which is a great shop window not only for East Germany but for the whole of the East, and Africa as well, had a great success; and I must tell your Lordships that the West German Government did not like this at all. So far as trade with East Germany is concerned their philosophy is quite simple; they want the lot. They hold very strong views about the political side of East Germany and what should be done with Herr Ulbricht; but, so far as trade is concerned, they want the lot; and they want nobody else to get in. It may not be generally known that they have weekly meetings in Berlin, first in East Berlin and then in West Berlin, to discuss trading relations with the East German Government; and West Germany, at this moment, still do about 70 per cent. of the total trade with East Germany. They resented the intrusion of British industrialists at Leipzig, and even more the intrusion of British politicians. Indeed, there was a rumour emanating from Bonn that I was paid £1,000 by the East German Government to go to the Leipzig Fair. All I can say to your Lordships is that I only wish it were true.
This question of planning, I think, affects very much the trade that both France, and still more West Germany, are about to do with the Soviet Union. I would point out to your Lordships that the recent West German-Soviet trade agreement for 1961–3, the terms of which have just been published, envisages the doubling of exports of machine tools from West Germany to Soviet Russia, from 10 million Dm. to 21 million Dm.: an increase in the value of exports of chemical plant from 63 million Dm. to 272 million Dm.—more than fourfold; an increase by about six times in the value of exports of ships, ships' equipment and ship repairs, part of which we should surely be doing, from 22 million Dm. to 235 million Dm. by 1963; and a doubling of the export of light industrial equipment from West Germany to Russia for the building industry.
I should like to quote one extract, because I think it is important, from the report of the Institute of Directors dele-
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gation to the Soviet Union in June last year, which was led by Mr. Harold Drayton, Treasurer of the Institute, in which they say:
"On various occasions the Russians emphasised what they considered to be the advantages from a trading point of view of their longterm plans. Mr. Kosygin said they knew what they wanted even for 15 years ahead, and they knew what they could produce in those years. If not to-day, the Soviet Union could within two or three years provide Britain with materials and in return take in kind what Britain had to offer. Britain could produce any kind of equipment, and they were interested in equipment in a very broad sense."
This is encouraging, but if we are to do an expanding trade with the East—and I think we can and should, and that there is more to be done in the field of trade and culture East of the Iron Curtain than in the political field, and likely to be for some years to come—it will involve planning, not merely on the Communist side but also, to some extent, on our side.
I suggest to your Lordships that another thing that wants a pretty sharp look at is the list of so-called "strategic" goods, because now they really make no sense at all. When I was at the Leipzig Fair was taken to the Soviet pavilion and shown their exhibit of ball-bearings. I know nothing about them, but the engineering experts told me they were probably better than any in the world. Ball-bearings are still on the list of strategic goods which we are not allowed to export to the Soviet Union. This sort of thing simply does not add up.
Now I should like to say a word—perhaps I am expected to do so—on the subject of the Common Market. Last week the Prime Minister told the House of Commons that there was no question of our joining the Common Market but that we might have an association with it. This week he said that we might join it, subject to a protocol. I do not know what it all adds up to, and I do not think that anybody else does; but of one thing I am absolutely certain: this continued uncertainty about our attitude towards the Common Market cannot do us any good whatsoever, and must have a bad effect upon our exports to Western Europe. Indeed, there was a letter In The Times on Monday from Sir John Wedgwood which brought out that case very clearly. He said that until we get some settlement in regard to this matter there is going to be little or no buying;

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and implied that it would almost be better to say that we are not going to have anything to do with the Common Market than to go on in this uncertainty, which has lasted for quite a considerable length of time.
What are the alleged great difficulties? First of all, there is the Commonwealth. We can surely accept a common external tariff, subject to special arrangements regarding certain imports from the Commonwealth. I believe that this would be accepted by the Common Market. The Commonwealth itself has everything to gain and nothing to lose by closer association with the richest market in the world, which our entry into the Common Market would give it—and that includes access on their part to the development fund of the Common Market, which will certainly be greater than we could produce in this country by ourselves.
Secondly, it is held that we cannot let down the European Free Trade Association. I have always thought that we made a great mistake in rushing into the E.F.T.A. Agreement. We did it in a panic; we were frightened. For a long time we never believed the Common Market would become a reality. Then, suddenly, we woke up one morning and found that it was a reality, that we were in danger of being shut out of the European market, and we created E..F.T.A. in a great hurry. I do not believe from the news that has been coming recently from Sweden and other countries, that there are anything like the objections to the Common Market that are alleged on our part, particularly on the economic front. It may be that Sweden, with its neutral tradition, may not wish to have as close an association on the political side as we should; but I do not believe the economic difficulties are great.
Then there is the question of our own farmers and our own agriculture. Upon this I should like to say that I do not believe that this country can go on indefinitely for another decade or so subsidising both the farmers and the consumers on the present scale without becoming very nearly bankrupt. I believe that the only alternative is to give our farmers the measure of protection which those within the Common Market at present enjoy and to have a good reciprocal exchange of agricultural products; and even if it did mean as I think it
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undoubtedly would, a moderate rise in food prices, I think that would be very worth while from the point of view of the British taxpayer. I do not believe that there is here an insoluble difficulty. I believe we can get round this one.
Finally, there is the question of sovereignty, which was raised by my noble friend Lord Clitheroe, and has been raised by others. In a letter to The Times newspaper which was published last Monday, I said that so far as sovereignty was concerned we had already accepted obligations under the North Atlantic Treaty Organisation greater than any we should need to assume if we entered the Common Market. I was taken up upon this point; but it is in fact precisely true. We have placed—in the most vital field of all, the field of defence—our armed forces under international direction and control to an extent hitherto undreamed of in time of peace, or even in time of war. We have done it without, as yet, achieving adequate political direction. N.A.T.O. does not yet possess an effective central organ of political decision. The Common Market does, where we could thresh out all these matters in conjunction with our friends, and arrive at agreed decisions.
The Common Market organisation will get more effective as tune goes on, not only in the political field, but also in the economic field. If we can give up such sovereignty as we have already done to N.A.T.O. in the field of defence, without an effective central organ of political decision, I should have thought we ran far less risk in going into an organisation where there are central organs of political and economic decision, and where we could make our views heard and reach joint decisions. Almost a year ago I said to your Lordships that for us the European tide was ebbing arid that the time had come to jump. For a whole year the tide has continued to ebb, and if we do not jump soon it will really be too late. We shall be stranded.
6.7 p.m.
LORD SALTER: My Lords, we are once more, as so often before, indebted to the noble Lord, Lord Pethick-Lawrence, who introduced this debate to-day, not only for the reasons so justly given by my noble friend Lord Amory, but also for choosing this particular season of the year. This particular

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season is one in which public policies are being framed and discussed which may substantially affect our future economic development. But it is also one in which there is a great danger that policy may be so immersed in technical complexities and statistical argument that a general perspective and sense of proportion may be lost. Here I think your Lordships' House is particularly well qualified to bring out in their proper proportion the most important factors in our general problem.
I am glad that in the debate to-day, as in the Chancellor's general statement, the dominant importance which it deserves has been given to our external balance. So much has been said, both in the other place and here to-day, to emphasise the very grave weakness in our present external balance, and also the reasons for thinking that it may in the near future become even worse, that I will not cover that ground again. I would only suggest to your Lordships that it is not only a matter for the immediate future: there are certain longer-term dangers and possibilities which I think we should also take into account which may prove most serious unless we can adopt some corrective measures. It is a rather frightening calculation to reckon how much the items on the assets in our external balance have consisted in the products of countries, whether in Africa or Asia, such as Malaya, with cocoa and tin, and have accounted for our dollar and foreign exchange earnings. All these countries are countries which are changing their political situation. I do not think we can be sure that that political change, however necessary and desirable, will have no effect upon the amount and the proportion of that particular item in our balance of payments. In addition, there is, of course, what will be a very serious adverse factor, if we do not enter the Common Market—that is, the completion of the development, which is now well in hand, of the Common Tariff.
I would add one or two further comments on this subject of the external balance. One is that we must not delude ourselves that this is just a question of extra reserves. I agree it is extremely desirable that we should have extra reserves, and it is quite possible that we may get a very substantial supple-
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ment to our own national reserves from the International Monetary Fund. But do not let us delude ourselves that this solves our problem. Reserves are required to deal with downward fluctuations. They do not deal with a chronic and possibly increasing weakness at the heart. And that is what I think we have to guard against, for the reasons given both here and by the Chancellor of the Exchequer in another place.
Let us remind ourselves for the moment of what would happen if we were unable to deal with this crucial danger. First of all, of course, it would become impossible for us to continue external investments; still more, external aid to under-developed countries and, therefore, to maintain either our proper participation in the problems of the world or our proper influence upon the world situation. Soon it would begin to affect our standard of living; and if then we went on that way, beyond that, we should find we were unable to pay for the raw materials upon which the full employment of our industrial apparatus and plant depends. That, in turn, would mean serious unemployment, and is perhaps the only serious danger confronting this country—of such mass unemployment as has been known in the past. What this comes to is, of course, that it is not merely desirable but essential that we should greatly expand our exports; that we should give every possible impulsion and that we should remove every possible handicap to that expansion.
Of course, we have to face the fact that one of the greatest handicaps to expansion is that so much of our potential exporting industry has found a shelter both on the managerial side and on the side of labour: on the one hand, by having a soft option in an inflationary domestic market, and, on the other, in conducting wage negotiations on the basis of full employment and, sometimes, a surplus of available jobs over available labour. That is of the essence of our central and crucial problem. We must not delude ourselves, either, that other measures which are very desirable and which have been discussed, such as increased world liquidity, will give the answer to this particular national and domestic problem of our own. It will not. We are

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faced with these very great dangers which, in the absence of remedial measures, may increase rather than be reduced.
What are the measures that are being considered? I think it is quite clear that the Chancellor of the Exchequer was right to look for other means of regulating the economy beyond those we have known in the past—such as, for example, the effective but very expensive and damaging sudden increase in the rate of interest. That does indeed have an effect of the kind desired but, in addition, it involves enormous expense on the Exchequer, does a great deal of unintended damage, and gives a sense of illusory and dangerous relief by attracting hot money that soon goes out again. I am therefore very glad that he has looked for other regulators. I am happy about his objective and general diagnosis of the situation. I am not so happy about the specific measures he has proposed.
Take, for example, the surtax changes. I should like to discuss all the issues of direct taxation, surtax and ordinary income tax, but it would require a speech in itself and I could not venture to ask your Lordships' licence to take the necessary time at this moment. I will only say, without regard to other considerations, that I think the extent to which this new surtax incentive really operates to secure an actual increase in exports will be relatively small. Secondly, he has suggested a surcharge, sometimes put on, sometimes taken off, upon Customs and Excise. I agree that that may be of some use. But I think the limits within which it can work are pretty narrow. They are set by existing international Agreements, by the fears of international repercussions: and they may be further restricted by relations with the Common Market. I do not think we must put too much reliance upon that method having very much result. In the third place. of course, there is the payroll tax. I will not add to the exposition of the doubts expressed by my noble friend Lord Amory, which I share, with regard to that remedy.
What other suggestions are there that one can make? There is one point on which I venture to differ from my noble friend Lord Boothby. I think that a good deal more use should be made of turning on and off, making more restrictive and less restric-
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tive hire-purchase arrangements. After all, what is the hire-purchase system? It enables and encourages people at a time of boom and prosperity to purchase and use production to an extent greater than their current earnings. As a counterpart to that, when a depression comes we suddenly have an aggravation of that depression by the overhanging mass of these hire-purchase engagements. I should like to see much more resort to restriction during periods of inflation and to easing up at times of deflation.
LORD BOOTHBY: My Lords, may I ask my noble friend a question? Does he not think that it would be very complicated to put on and take off these restrictions? Would he not consider a general sales tax easier and quicker?
LORD SALTER: I think, that a general sales tax might operate. But there are complexities there, too. I am now concerned with the fact that, while it is true, as I think the Chancellor of the Exchequer said, that this is putting a very big proportion of the burden of regulatory measures upon a few particular industries, it is also putting this disproportionate burden, by comparison with the present situation, upon just those industries which have been able to increase their market by financial measures which other industries have not had at their disposal and which, cumulatively, have had the effect of first increasing an inflationary boom and then increasing deflation and depression when they come. I agree altogether with what my noble friend said about land, and I will not add to it.
Here I am going to make one suggestion which, if it were put forward with authority and power, would, I am sure, make every Chancellor of the Exchequer, past, present and prospective, shiver; and his Department behind him. I think it is highly desirable that we should be able to increase actual savings even more than we have done. I think it is miraculous, having regard to the way in which investors in fixed sterling bonds have suffered over the last few decades, that those responsible for stimulating savings have done as well as they have done this last year. But I am quite sure that there is a great deal of potential saving by people who desire, above everything else, that, if they lend their money, they

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can do so with security; that, however small the intermediate return there may be by way of interest, they will be able to get back in real value what they put in.
I need not remind your Lordships how sorry their experience has been in that respect. I wonder whether a Chancellor of the Exchequer would have the courage to try the issue of some constant-value bonds, in the sense that when they are ultimately repayable they should be repayable in such a way as to return to the investor the same purchasing value as he had lent, based upon an index of commodities at the time of repayment. I will not press that suggestion further now; but I think that it would not only tap a great source of saving by people who do not want to risk their money—people who want safety for their money, and real safety; not merely a fictitious sterling safety—but would also be a very useful form of self-discipline for Chancellors of the Exchequer and for Governments.
LORD PETHICK-LAWRENCE: May I interrupt the noble Lord? Of course he is aware that in savings certificates you have what he is asking for, except that they do not give any interest. They do not yield any interest that is paid out, but, in effect, they are what the noble Lord has been suggesting. They attract interest, but it is not paid to the investor until he sells out his savings certificates.
LORD SALTER: I do not quite follow that. When you get the money back which you put into national savings, you do not get it increased in terms of pounds sterling to the extent to which the purchasing value of pounds sterling may have depreciated in the meantime. That is what I am anxious about. I am anxious to save the investor from getting back ultimately so much less in real value than he has put in—and. even more, to save the investor who has to sell his bonds in the meantime from the fearful loss, even in terms of a depreciated pound, that he then suffers. However, do not propose to do more now than mention what I know is a highly controversial proposal.
LORD LATHAM: Would the noble Lord agree that his proposal is nothing more than a gold bond?
LORD SALTER: Not quite. I do not regard gold itself as being as certain a measure of purchasing value, whether in one direction or another, as I do an adequately constructed index of commodities. But I am now merely throwing out this idea. I realise the complexities. I should be very glad to discuss it on another occasion, but it would take too long now.
LORD LATHAM: If I may just put this point to the noble Lord, would he also agree that the rate of interest would have to reflect the guarantee that was given?
LORD SALTER: I think the actual rate of interest, from the point of view from which I am now speaking, is very much less important than the preservation of the real capital value of what was lent. I am quite prepared to argue this point on another occasion, but it would take too long this evening, and at this late hour. I want to say this further. The Chancellor of the Exchequer referred to the necessity of subjecting a considerable proportion of our industries to keener competition by, possibly, freer trade and lower tariffs. That is a principle which I warmly welcome; but, of course, it was not followed by any practical illustration or application.
We are brought back to the subject with which, like my noble friend Lord Boothby, I should like to conclude—that is, the Common Market. I do not think the Government's record an regard to this has been very creditable. A few years ago we were in a very strong negotiating position. Those in the Common Market were very uncertain as to whether they were going to succeed, and would have felt a great attraction in having us in with them under what they would regard as fair conditions. What we did do, however, was what seemed to them to be asking for the best of both worlds: full and complete entry within the Common Tariff and complete freedom to deal as we liked with our own tariff. We were inflexible in that demand. In spite of our superior bargaining position at that moment, it was, as we might have anticipated, refused. We then proceeded, as my noble friend Lord Boothby has said, to jump into the creation of E.F.T.A. which, on the one hand, does not offer an adequate alternative to the Common Market and, on the

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other, does not, as it was at one time hoped it would, serve as a bridge. It is now rather a barrier to our association with the Common Market.
Now, my Lords, at this present time I cannot believe that the sense of proportion and perspective of the Government is right in considering this question. They put this tremendous emphasis upon Commonwealth Preference and upon the complexities in our agricultural subsidy system, which are much less important, if you are thinking not of political psychology but of economic and political realities, than the factors which should determine the position. Much more important are the considerations which should determine policy—the economic consequences and the political consequences of joining the Six: the economic consequences of being inside this great and rapidly expanding market instead of being shut out by an increasing tariff harrier, and, I would add, the stimulus to just those industries that most need it of the direct and immediate prospect of competition with those already in the Common Market, which I think would have a very salutary effect; and then the political considerations, not all of which are indeed on one side. There are certain ultimate political consequences which I think, if anything, have perhaps not been adequately considered in this country but, against any which may cause hesitation, there are also enormous political advantages.
I think, therefore, that it is of the utmost importance that the Government should put an end to this long shilly-shallying process, and should make up their mind what they are going to do, and act quickly. Not only is the balance, in my view, very much in favour of their making a real and genuine attempt at once to join the Common Market, but I think that, for the reasons which my noble friend Lord Boothby gave, the period of delay is one in which we may well get the worst of both worlds.
6.30 p.m.
LORD PEDDIE: My Lords, I did not anticipate participating in this debate, but I am glad of the opportunity presented to me to pay tribute to my noble friend Lord Pethick-Lawrence for drawing attention to the important matter of the economic situation of this country.
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Unfortunately, unavoidable circumstances prevented my hearing all the speeches in this debate. Therefore, I must endeavour to avoid any repetition, and the best way to achieve that, I think, would be to exercise brevity on my part.
To my mind, there are two important factors which are bound up in this question of the economic situation to-day. There are two important pointers to which we must pay attention. The one is the present state of the export trade; the other is the overall national productivity of this country. Our export performance, in spite of efforts in certain directions, gives no ground for confidence in the future. When we examine the recently published figures concerning production, we find they indicate that the index for March is at the same level as that for the previous months. The average for the first quarter of 1961 is the same as that for the first quarter of 1960. In short, there has been no significant increase of national productivity over the past twelve months. These are the two predominant fundamental factors which determine our economic position.
So far as I can see, no positive steps are being taken by the Government: there is no indication of constructive planning that can remedy the situation. One would expect that capital investment would be some guide as to the prospects for the future, but when we compare the capital investment taking place in British industry with that in almost any other European nation, the examination is at least disconcerting to the average British investor. Figures which were published quite recently showed that in Western Germany 23 per cent. of the gross national product was devoted to fixed investment, compared with 15·5 per cent. in Britain. When we examine the overall position of this country, we find that essential enterprises, like the railways, have been starved of capital. We find very little activity in the development of one aspect which has probably already been mentioned to-day—that of the provision of educational facilities which will do something to develop our own competence and ability to stimulate production. We are in desperate need of a greater number of technicians; yet our educational system, controlled by the

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Government, is not geared at this particular moment to produce those extra technicians on which the productivity of this country depends. It seems clear to me that the general economic situation of this country to-day makes the reference to the "affluent society" a tragic joke.
The noble Lord, Lord Boothby, mentioned the speculation which is taking place in this country to-day, particularly with regard to land. If he keeps on with expressions of opinion of that sort, he will, before long, be speaking from these Benches rather than the Cross Benches. Without doubt, we are finding indications there of a form of affluent society which is providing opportunities for fantastic speculation and individual confidence, which is not in any way, or in all ways, related to the increased productive capacity of this country.
I believe—and I feel sure that this point must have received some emphasis during the debate—that what is desperately needed in this country, more than any other, with its limited economic resources, is direction and planning in the deployment of our economic resources. But at the moment it has been left to indiscriminate private decision. I would suggest that the economic position to-day indicates that we have gone well beyond the time when we can afford to have that indiscriminate kind of decision, based upon personal profit and not collective good. Therefore, the whole secret, in my opinion, is the necessity for the Government to recognise the need for far more constructive planning in the determination of our productive capacity and our prospects for the future. Again I would make reference to the comment of the noble Lord, Lord Boothby, when he asked the Government to restore the dynamic in industry. He will obviously agree with me that at one time we had it. I am not asking your Lordships to turn the clock back ten years, but I hope that we shall learn some lessons from the experience of ten years ago.
6.36 p.m.
LORD MELCHETT: My Lords, we have already had a very long debate, and your Lordships have listened to a number of important and expert speeches. I shall therefore try to avoid
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re-covering the ground that has already been thoroughly debated, and just emphasise two matters which I think are of very special importance. Before doing so I should just like to comment that, particularly in the early part of this debate (and I think we returned to it just recently), there was a particularly gloomy note struck by a number of noble Lords who spoke. I should have thought that it was quite an unwarranted note.
The noble Lord, Lord Brand, was extremely depressed about our balance-of-payments prospects. The noble Lord, Lord Grantchester, announced from the Liberal Benches that he was sounding an alarm. The noble Lord, Lord Lucas of Chilworth, is greatly concerned about the level of Government expenditure and the volume of taxation, although I think he rather unfairly omitted to mention that, as a percentage of our gross national product, the trend is in the right direction. The Government are collecting and spending, on the whole, a little less this year than in recent years. Then the noble Lord, Lord Peddie, I thought, was trying to paint a picture of the conditions in this country, and the general state of prosperity—or lack of prosperity—which simply does not match up to the facts when we look round the country and see the standard of living which people enjoy and the level of trade sand prosperity in general.
Having said that, I would add that there is no doubt we are faced with some very real problems—and I quite recognise that fact. But I think I am more optimistic than most of your Lordships who have spoken this afternoon. I believe there is much greater resilience in the people of this country than they have been credited with in the course of most of the speeches I have listened to; and I believe that we have much greater flexibility in our industries, both in their management and in the outlook which many of the leading companies are displaying. We were warned earlier that it was dangerous to make comparisons with other countries, but it is a matter of fact that during the last eight years (I think the noble Lord, Lord Boothby, said five years, but I think we can go back eight years) we have been expanding and increasing our production at a very much slower rate than the Common Market area. I believe the noble Lord

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mentioned that it was half; and I think, if we go back eight years, it is only about half the rate of expansion. This is a very salutary thought.
I think that there is no doubt that our relatively poor performance in this recent period, as compared with the Common Market association, is generally recognised now to be influenced by the constant use of monetary controls to control our own internal inflation and protect our balance-of-payments position. I believe that Her Majesty's Government have made an important step forward in introducing the so-called economic regulator taxes, as an alternative or supplementary means of controlling our own economy. As the noble Lord, Lord Boothby, has pointed out, they enable a control to be kept on our internal situation without having to resort so drastically to monetary controls, to a high bank rate and other forms of credit restriction. I am frankly surprised that your Lordships, with the notable exception of the noble Viscount, Lord Amory, have not seen fit to give the Government greater credit for this. It is a major development and, I should have thought, a most important step forward, which should do a great deal to redress the lack of balance between our own performance in recent years and those of other leading industrial countries.
No doubt these new regulatory taxes will be used in conjunction with a vigorous monetary policy. I think that the Chancellor of the Exchequer has made this clear. I should like to emphasise that it is quite useless having a vigorous monetary policy and a wise budgetary policy, both working in concert with each other, if at the same time we cannot prevent wages rising faster than production. I believe that it is of equal importance that managements—and I include the managements of the nationalised industries—together with organised labour, should find a method of preventing incomes rising faster than production and therefore once again putting up prices.
I have come to the same conclusion as the noble Lord. Lord Walston: that we must think in terms of a national wages policy, though I would not go so far as as he goes. He indicated that a national wages policy might be used to influence the movement and supply of labour. I
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should be content to try to get increases of wages somewhere in step with the increases in production and productivity. If !that could be done, in addition to the proposals which Her Majesty's Government have already in hand, of keeping consumer expenditure under control and using monetary restrictions when necessary, then this combination could have the desired effect of maintaining stability of our currency and keeping prices at a stable level, thereby enabling us to compete better in the export markets.
I do not think it is any good exhorting people not to negotiate for higher wages and trying to put over to them that they have a general responsibility towards the economy. The noble Viscount, Lord Amory, said earlier how difficult it was in his experience Ito put this idea across. I should have !thought that, to all intents and purposes, it was impossible. For this reason, I think that a wages policy which must be agreed by both sides is going to be an essential ingredient. If we were to accept a wages policy, I think it goes without saying that we ought to have a profits policy. I do not see how we could ask people to exercise restraint in the amount which they claim of the increase in national production, if we do not have some agreement about how much is claimed by capital and distributed in profits.
No doubt this would be a very controversial matter and difficult to achieve, but we have to face the fact that we are competing with other industrial countries, some of whom are only emerging as industrial countries. I have in mind countries like Japan. Japan is now the fourth largest industrial nation in the world. If we do not provide as good incentives for our people to give of their best, to work and save and plan ahead, as other systems will provide, then it goes without saying that our competitive power will become less and not greater, and our balance-of-payments problems, to which the noble Lord, Lord Brand, drew your Lordships' attention this afternoon, will become worse and not better.
The second point I should like to emphasise is that we not only have to compete with other manufacturing countries, but have to work with them. I think it was the noble Lord, Lord Boothby, who pointed out to your Lordships that we are already committed in

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defence and politics to an enormous extent. The noble Earl, Lord Home, in the last major debate in your Lordships' House on foreign affairs made it perfectly clear that Her Majesty's Government are committed, in all their thinking and planning, to a policy of interdependence. And if we are committed to interdependence from the points of view of defence and politics, which we surely are, then it goes without saying that we shall be more and more involved in interdependence economically. I think that there is a tendency for us to be much too insular in our economic thinking. We ought to be more outward-looking.
I agree with everything the noble Lord, Lord Boothby, said about the Common Market. I believe that in the end we shall have to go in, and the sooner we get to grips with the problem and make an arrangement with the other Rome Treaty countries, the better it will be. But I think that we should look beyond Europe to some other countries farther afield. We see that Japan is now the principal exporter of textiles in the world, and that India is the second largest. There is great concern in this country about the future of our textile industry. But how much better it would be to make joint arrangements with some of these other countries, particularly those in the Western camp!
Other industries, like shipping and shipbuilding, spring to mind. It is clear that we cannot compete in shipbuilding, which is a big employer of labour and is not a very skilled business, relatively to other modern engineering processes. It is nothing like so complicated as building aeroplanes. The Japanese now build very good ships, and their wage rates are lower than ours. We must face the fact that in some industries we are going to be uncompetitive, and we should seek opportunities of going into joint manufacturing agreements. We should think of the position of our aeroplane-manufacturing industry. How much better it would be for us to join up with some of the big American concerns, instead of trying to compete in our small market at great expense and with uncompetitive equipment! After all, we are absolutely involved in the American Alliance for defence and other purposes. Why not collaborate more closely with them in
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the economic field? This is not a very novel suggestion, and I apologise to your Lordships for it, because many enterprises and big companies have been doing this very thing.
In Japan, we see 50–50 companies, half owned by enterprises in the United States and in this country, with plant put up to manufacture for the local market and for export into South-East Asia. They are not complaining about the loss of traditional trade and of trying to protect established positions. They are trying to establish new trading associations in order to get a share in the markets of these new emerging countries. It is my view that this whole field could be greater given encouragement by the Government. The more it can be brought out that associations, right down into individual companies and businesses, should be made with other countries abroad with whom we are in political and defence associations, instead of our trying to fight a rearguard battle to protect some situations which are bound to be more and more difficult, the better it will be.
6.50 p.m.
LORD LATHAM: My Lords, we are near the conclusion of a widely ranging debate on a vital subject—namely, the economic state of the nation. The debate was introduced by my noble friend Lord Pethick-Lawrence, as always, in an admirable, succinct, clear and moderate way, in a speech which dealt with many of the important aspects of this subject. I propose to commence my remarks by quoting from a statement made by the Prime Minister in September, 1959, which happened, quite fortuitously of course, to be in the middle of the General Election of that year. The Prime Minister said:
"The British economy is sounder than at any time since the First World War. Sterling has been re-established as a strong and respected currency. Our balance of payments is strong"
I suppose that statement was made to justify the fact that at that time we were really living on the brink of a monetary crisis. The bank rate was raised within a few months of the Prime Minister's making that statement, and we have been living on a knife-edge of crisis ever since. The statement of the Prime Minister was, I suppose, the synthetic euphoria of the Election, and charity almost restrains one from questioning its

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truthfulness. I propose to let subsequent events tell the story, which is not a flattering one, of inaction and of shilly-shallying by the Government in this important respect.
In effect, as I have said, we have been, and we are, on the edge of an impending monetary crisis. The present position is precarious. Anxiety is prevalent not only in the City but in industrial and commercial circles widely spread; and the future is uncertain. Responsible people are perturbed, not only at the delicate touch-and-go position, but more so because the Government have no comprehensive, planned policy to deal with what has become, under their mishandling, a chronic state of crisis and of sudden expedients—tinkering with the bank rate; fumbling with hire purchase terms; footling about with bank credits and bank deposits, all to no permanent purpose. The breaking out of the crisis is postponed, but the innate causes remain to manifest themselves again whenever it may profit the manipulators of vagabond money which a higher bank rate has brought here—money we do not need; money we cannot use; money which is withdrawn precisely at the moment when we do need it, and which is here in order to earn (and it is only here for this purpose) a higher rate of interest if that be not available elsewhere.
There has been the inept and the unedifying spectacle of our competing with the United States in interest rates to attract "hot" money, and with Germany taking a hand, too. It has been pretty humilating, I suggest, that we had to go cap in hand to beg concessions and assistance from West Germany in order to avoid a crisis at any time during the past few months. This I suppose we can interpret as the outward and visible sign of the re-establishment of sterling stated by the Prime Minister to have been effected in September, 1959. Germany has been helpful; she has obliged and consented to the revaluation of the Deutschemark; she has paid in advance £67½ million; she has agreed to leave £25 million on deposit at the Bank of England, and to hold sterling instead of gold on her reserves, which seems pretty near to impinging upon the much-boosted convertibility recently partly established.
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And all this was not enough. So serious was the loss of gold from our reserves during the past few months that it is estimated that the outflow of money from London has been about equal to the loss of £200 million of gold. Here was the making of a first-class crisis. But the loss did not take place, for the central banks, at the instance of Germany and mainly with her support, are holding pounds sterling without converting into gold. But how long the central banks of Western Europe will be willing to hold sterling instead of gold remains to be seen. It is stated that conversations are taking place in some quarters, at the instance of the United States, in order to secure some co-operative international action with regard to currencies, especially the dollar and sterling. But why did we not move earlier? Must we always wait for the United States of America to take steps before we consider these problems or the methods by which they can be resolved?
How comes it about that West Germany is so prosperous, with so large a credit on the balance-of-payments account that it was, and still is, disconcerting for her, for the United States of America and for ourselves? I believe it is because West Germany, as well as other countries in free Europe, has gone forward in expansion of industry and commerce: she has been dynamic and virile, whilst we have been stagnant relatively since 1951, with one or two sporadic spurts of expansionist activity, which oddly enough, by some sprite of chance and good fortune, occurred near enough to a General Election to be recognised. So much for tinkering with the bank rate; for buying the presence here of money we do riot need, only to find it leaving us when we do, and costing about £35 million a year extra in interest, Which of course, pro tanto, diminishes our reserves.
We must rouse ourselves from this obsession of the balance of payments, notwithstanding all the doleful predictions of the noble Lord, Lord Salter. Opinion is moving away from this point of view. We must energetically pursue discussions to stop this competition between allies to attract money by offering higher rates of interest. The International Monetary Fund should be a convenient agency for this. In N.A.T.O. we do not compete for munitions: why should we compete for currency, especially when we know

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that it is insufficient for the expanding trade of the world?
As regards bank advances and hire purchase restrictions, it is doubtful whether they are effective in any case. We have the authority of Sir Oliver Franks, the Chairman of Lloyds Bank, for saying that the importance of bank lending is over-emphasised. Its effects percolate too slowly, and there are competitive alternative sources of credit. The Radcliffe Committee reached the same conclusion. Hire purchase hit the consumer durable trades, but most of the money was spent on other things, and it is doubtful whether the volume of purchasing power was significantly reduced by the sixteen changes in purchase tax and hire purchase which have taken place in the last ten years. So the methods followed by the Government to ward off balance of payments difficulties are, I submit, ineffective. They are sporadic, almost erratic, and do more long-term harm than short-term good.
The credit squeeze is unselective and bristles with inequities and irregularities. It is born of the mentality of "conventional wisdom", to quote the author of the Affluent Society. The real reason is that the Government resolutely refuse to recognise in their full amplitude the fundamental changes in our economic society introduced by the Labour Government in 1945 and onwards—changes which replaced a society based on low wages, low cost and cheap food, and a permanent pool of unemployed reaching to over one million, by a society based on full employment and, therefore, higher wages and the Welfare State.
The Tory Government understood the wretched squalor which existed between the wars, when scarcity was organised and destitution abounded. With a pool of unemployment they could control the system, with all its inequities and its savageries. This they understood. This the present Government understands. They reluctantly tolerate the Welfare State. They recognise that a return to unemployment would explode society, but they do not like full employment. They have no enthusiasm for, or faith in, our society as it is to-day. It is so different from that of the second "Norman Conquest" and making the pound look the dollar in the face, with all the
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misery which flowed from that tragic and calculated blunder. It is so different, and so much better, than before the War; but yet they do not like it. It does not fit into their social philosophy, and that is why the Tory Government since 1951 have sedulously chipped away at the Welfare State—and in the Health Services only within recent months there has been some further chipping—with the Rent Acts, the repeal of the protective legislation on land values (which have been referred to in such powerful language by the noble Lord, Lord Boothby) and town planning. In all those respects, as well as others, the Government have chipped away and eroded the Welfare State.
A society based on full employment and the Welfare State needs growth and active, planned expansion in order to maintain and improve the standard of living. The Government do not understand that this new economic system cannot give its full fructifying output unless it is planned. Nor are we alone in this. The Federation of British Industries organised a conference of leading industrialists recently, which suggested that the Government should give top priority to economic growth and should produce a five-year plan of expansion. In January, two of those persons who attended the Conference, to wit, Mr. Lionel Fraser, the Chairman of Herbert Wagg & Co., and Mr. Hugh Weeks of Truscon, both wrote to The Times advocating a five-year plan for Britain. Sir Roy Harrod, by no means a member of the Labour Party, writing in the Director of February, under the heading, "Prosperity without Inflation; a time to shed old Ideas", pointed out that ex-factory prices, retail prices and standard wage rates all rose more in the years of stagnant production than they did in years of increased production.
"The British economy is sounder than at any time time since the First World War"
said Mr. Macmillan in September, 1959, in the face of what I have just said in regard to the deterioration that had taken place. Let us examine some of the relevant elements of this alleged soundness. Take production. We lag behind our competitors in almost every respect. Between 1953 and 1959, industrial production rose in Germany by 62 per cent., in France by 52 per cent., in Italy by 58 per cent., and we increased production

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by 21 per cent. In 1950, when we had a Labour Government, Britain exported 25·5 per cent. of the world's total of manufactured exports. Ten years later, in the third quarter of 1960, this share of world exports was down to 15·4 per cent. Sir Roy Harrod wrote in the Financial Times as follows:
"It is perfectly obvious that productivity could have risen year by year in the three years prior to 1959 instead of being stagnant. The almost complete stagnation for three years was the effect of policy"—
that is to say, the policy of the present Government.
They have pursued a policy of stagnation. There has been no increase in the last three quarters of 1960, and no increase in productivity in the first quarter of this year. The improvement in the trade balance for April, announced to-day, shows that this is more due to a fall in imports than to any significant increase in exports. The Times to-day says that the figures are not as good as they look, and in my submission they look pretty bad as it is, especially as regards exports. This comparative falling away in exports, and our share in world trade, is all of a piece, I submit, with what has happened in the past ten years. In 19.50 when the Labour Government were in power there was, as I have said, an export of 25·5 per cent.
Nor can it be said, as has often been the case, that the difference is due to the burden of wages and welfare. The labour costs per hour in Germany are 5s. 6d, including all the marginals; in this country the figure is 5s. 7d. The hours worked by the Germans are, on the average, less than those worked in this country. Taxation is not lower. In West Germany it is 34 per cent. of the national income, as against 29 per cent. in this country. So none of these excuses avails. As I have said, it is Government policy, or rather the lack of policy, which is responsible for the parlous state of our economy in comparison with other free nations. If this State is sound, as the Prime Minister boasted, one would like to know what degree of decline would be regarded as unsound. Or perhaps, going back as he did in September, 1959, to the First World War, he was comparing it with the state of our economy between the wars. This, to apply one of the Prime Minister's clichés, I suppose, is "the
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opportunity State"—the opportunity to decline and wither; the opportunity to slip back to third place, or below, in the list of the world's exporters of manufactured goods.
The Government have no patterned comprehensive policy to restore the health of our economy; nothing but gimmicks; a series of expedients; no consistent long-term policy; encouragement to-day and discouragement tomorrow; encourage boom conditions at one time and then clamp down almost before the effect of the previous squeeze has been overcome. Exhortation by the mile. Even that is unplanned, so that one Minister says one thing and another Minister something quite different; indeed, the same Minister may well himself have a different story on different days. That has been notably and embarrassingly the case as regards the relation of this country to the Common Market; a classic example of confusion between Ministers; an infirmity of purpose which has made this country almost a laughing stock in many countries of Europe. It is an engaging subject, but it is too late for me to go into it now. Lord Pethick-Lawrence and other noble Lords have made reference to this important question.
I should now like to refer to two of the regulators, which have been introduced for the first time by the Chancellor of the Exchequer. The first is the surcharge or rebate on revenue duties and purchase tax. I have little to say in regard to that. It can quickly reduce or increase purchasing power, but to the extent that it applies to foodstuffs, or as regards purchase tax to necessities, it can, I submit, be a hardship upon the poor and upon the aged. A large part of this surcharge, of course, would be paid out of taxed income. There is one item where I think there will definitely be hardship, and that is the proposed surcharge upon paraffin oil. It can be a real hardship where pence count as much as shillings do to others who may be more fortunately placed.
With regard to the payroll tax, as noble Lords have said in the debate, there seems to be a confusion of function, as the noble Lord, Lord Clitheroe, stressed in his interesting comments. If it is aiming at a reduction of spending power, it is difficult to see how that

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reduction would be effected. One must bear in mind that the yield of this tax would not be, I submit, £200 million a year, because it would be subject to income tax. It would be a deduction from expenses, and the income tax with profits tax (from which, of course, it would be also deducted) is estimated to represent something like 53½ per cent. So what would be received would be less than £100 million, which, of course, would come out of taxed income.
If, of course, this tax is intended to secure an economy of labour, it seems to me to be misconceived. It would be most indiscriminate and unfair in incidence on local authorities and Government Departments for them to be subject to this payroll tax. Is it to be applied to the police, for instance? There is a great shortage of police, and recruiting is most difficult, notwithstanding the substantial increases in pay. Is it to be applied to local authorities in respect of the teachers whom they employ? There is a great shortage of teachers, not only in the secondary schools, where it perhaps receives more attention than otherwise, but in the primary schools which are the basis of technical schools and of further education. Is it to apply to them? Is it to apply to a concern which is manifestly short of labour, which has kept up to date with regard to introducing labour-saving processes, devices, methods, and equipment?
There is also the other point made by the noble Lord, Lord Clitheroe, that the labour constituent in the cost is such a variable factor; and this tax could represent a serious additional charge without, it seems to me, achieving the purpose (if that be the purpose) in mind—namely, economy in the use of labour and the installation of labour-saving equipment and machinery, In a recent issue the Banker says as regards this payroll regulator
"as a flexible regulator of demand the payroll tax is a delusion."
The British Employers' Federation, having examined it in several paragraphs, say this in their penultimate paragraph:
"In what circumstances would the surcharge be imposed? In time of rising demand prices tend to rise. If applied then, the surcharge would send prices still higher. In time of falling demand some temporary unemployment might occur. Would the surcharge be
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applied then, increasing the number of workers to be declared redundant? Once imposed, shall we ever see the surcharge taken off?"
My Lords, those are considerations which must be taken into account. There is the danger, a very real danger, that this payroll tax could be an instrument for securing unemployment, as a result of employers' seeking to minimise the number of 4s. a week they would have to pay—4s. a week less tax, of course.
And so, to conclude, notwithstanding what has been said of a different order and character, I still submit that our economy is in a precarious condition and we are entitled to ask the Government to say, through the voice of the noble Earl, Lord Dundee, what they propose to do to tackle this problem. We ask them to approach it and tackle it in the spirit and in the conception of modern economic thought, and not in the conception of those surviving thoughts of the Manchester School which prevailed so much between the two wars. What are they proposing to do? Are they going to wait until the next crisis blows up, until the vagabond money starts to go back to its owners or to some other destination where interest rates are higher, or what do they propose to do? We hope that the noble Earl will be able to give us some relief from the contemplation of this serious situation.
7.22 p.m.
THE EARL OF DUNDEE: My Lords, for two and a half years now I have had the pleasure of replying to the noble Lord, Lord Pethick-Lawrence, in our debates on economics and on finance. His criticisms of the Government are always fair, reasonable and consistent. Although I do not agree with all he says, I always learn a lot from listening to the noble Lord. Last year the noble Lord told your Lordships that in trying to prevent inflation we ought not to depend so heavily or so exclusively as we had been doing on monetary methods—that is to say, bank rate, the special deposits rule and hire purchase control—but that we ought to follow the advice of the Radcliffe Report by using non-monetary methods at the same time.
We have since then tried to do something to follow the noble Lord's advice. I did not expect that he would wholeheartedly approve of the manner in which we have done it. Last year he told us that at one moment we had let

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our chariot horses run riot and the next moment pulled them up with a terrible jerk; now that we have tried to arrange things a little better he says we are walking round the golf course with our opponent, putting him off the stroke with loud boos, or rather with the uncertainty of whether we are about to boo when he is making a putt. We will try again next year, having listened carefully to what the noble Lord said this afternoon, and I hope we may be a little more successful. Meanwhile I am grateful to him for the qualified approval which he has given to these, as he called them, optional taxes for the purpose of controlling the economy, and we will go on doing our best to listen to his advice, even though we may sometimes do it in a clumsy and inefficient manner.
I was glad to hear the noble Lord, Lord Latham, say that we ought energetically to pursue co-operative measures with Germany and other of our neighbours through the International Monetary Fund in order to remove temporary imbalances in foreign exchange accounts. I entirely agree with him on that. And I was also glad to hear him acknowledge the readiness which Germany has recently shown to co-operate with her allies in mitigating this source of economic difficulty, Which may affect all the countries in the free world. I shall not try to compete at this late time of night with the slightly bilious exercise in Party polemics with which the noble Lord presented us, but I must strongly refute his suggestion that the Government, and the Party which supports it, are not enthusiastically keen on full employment. On the contrary, full employment is one of the basic parts of our economic policy and it will certainly continue to be one of its chief objectives.
May I try to summarise very quickly and as objectively as I can the main outline of what has been happening in 1960 and 1961 in regard to production, in regard to investment, in regard to purchasing power and in regard to our export trade, which I think are the points on which your Lordships have all shown the greatest amount of interest this afternoon? I think your Lordships are generally familiar with the position already. Since April, 1960, industrial production, which had gone up by 12 per cent. in the preceding fifteen months, has remained about the same, but there
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has been very little slack in our economy. When the motor trade had a temporary setback last year the demand for labour in other trades was so pressing that the motor manufacturers kept on their redundant labour on short time, which seems to have been justified by the event, because since January there has been a very sharp reduction in short time; it is now down to very small proportions. If the surplus operatives had been paid off last year it may well be that most of them would have got permanent jobs elsewhere and it might not have been possible to re-engage them.
Making every allowance for conditions in the development districts, it is undoubtedly true to say in Great Britain there is an overall shortage of labour, especially skilled labour. During these last twelve months, since April, 1960, wages per head have increased by 5½ per cent. unaccompanied by any rise in production. As a result of that, prices have already begun to rise. In the Economic Survey the December figure increase of 1¾ per cent. was quoted. Now it is 2·7 per cent. higher than it was a year ago. And the inflationary wage-price spiral which was stopped three years ago in 1958, and which has been the curse of our economy since the war, now shows signs of beginning its evil movement again. At the same time investment has happily increased a great deal.
Manufacturing investment was 20 per cent. higher in 1960 than in 1959, and in 1961 it is expected to be 30 per cent. greater than in 1960, or rather, I should say, the investment demand will be 30 per cent. greater. Whether there will be quite enough materials and labour available to satisfy this demand in a year may be doubtful, but anyhow manufacturing investment in 1961 will be running at the highest rate which is physically possible. This growing investment will lead in time to increased production; indeed, we expect some increase this year. But meanwhile, domestic spending power is running dangerously ahead of production and, as we know from all our experience since the war, that is likely to cause lengthening delivery dates and rising prices, with adverse consequences to our exports.

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As for the volume of our exports, they actually increased in 1960 by£200 million—£3,530 million compared with £3,330 million in 1959. The year 1959 was a boom year in world trade, whereas in 1960 a recession in world trade began about the middle of the year, and it has not quite ended yet. But, in spite of that, if you take the quarterly figures for each quarter of 1960, our exports were greater than for the corresponding quarter of 1959, and this trend is continuing in 1961. The export figures for the first quarter of the present year are £927 million, compared with £915 million in the first quarter of 1960 and £783 million in the first quarter of 1959.
At first sight those figures seem good, but I think your Lordships understand why we are dissatisfied with them. One reason is that some of our competitors in Western Europe and Eastern Asia are doing better. Another reason is that this great volume in exports, although it is growing so fast, is not great enough to pay for our rising standards of domestic consumption, which require large imports of consumption goods; for our capital investment programme, which needs some imports of capital goods; for our defence commitments overseas which, as I think the noble Lord, Lord Grantchester, pointed out, are a heavy drain on our foreign exchange account unbalanced by any receipts; and finally, for our large commitments of aid to under-developed countries, partly in gifts which are not requited at all, and partly in loans which cannot be repaid for a long time.
I am speaking here entirely of Government aid. My noble friend Lord Amory mentioned our growing volume of private investments abroad. That is quite true; but of course, some of that private investment may earn a return much more quickly. If you take these two items, Government aid to under-developed countries and our overseas defence commitments, and add them together, they come to considerably more than our trade deficit for last year. Without them, it may well be that we should be adding substantially to our reserves. I am sure your Lordships will all agree that we cannot contract out of our obligations for the defence of the free world, although
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it is quite reasonable that we should ask other countries which are not incurring similar unrequited expenditure overseas to do something to redress the imbalance in the foreign exchange accounts which is bound to result from it. I am sure your Lordships would equally agree that it would be a tragedy if we had to stop giving Government economic aid to those countries to whom we have taught political freedom but most of whose people, compared with ourselves, are still in a condition of great poverty. If we want to go on paying so much, as we have to do, for overseas defence and also to help the Commonwealth, we must earn more foreign exchange by our exports than we earned in 1960, even although 1960 was a record year for exports in all history.
I think there is no reason why the full and satisfactory discharge of our responsibilities to the free world and to the Commonwealth should not be accompanied by a gradual rise in our own domestic consumption. But if the rise in consumption is so fast that it outstrips the capacity of our economy to supply the demand created by the increased spending power, then we can neither give help to our weaker friends nor shall we be able indefinitely to go on paying for our own high standard of domestic consumption which so many people are far too apt to look on as if it were secure and established for all time.
When Lord Boothby was young, excessive domestic spending power was usually checked either by an automatic gold standard or by someone like Mr. Montagu Norman, who was not a politician and was not responsible to Parliament. When that happened it nearly always resulted in under-production and unemployment. Now that we have abandoned these old regulators it is the responsibility of every Government—that is, the responsibility of us politicians—to keep prices stable as well as we can without frustrating sound economic growth, and I do not think that any of us has a right to be dogmatic about the best way to do it. We can try to do it by physical controls, or by monetary controls, or by fiscal controls, or by a combination of any two or all three of them.
The simplest means of physical control, the most direct way of getting at

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what we want, would of course be Government regulation of all wages and salaries. But in a free country, in time of peace, that is not possible. I have often said, and I think my noble friend Lord Amory would agree, that this Government would be perfectly willing again to use any of the physical controls which were gradually abandoned in the 1950s, if we found the situation required it. We have no dogmatic prejudice.against them. The only reason why we do not use them is that, in present circumstances, we think they would do more harm than good.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: Oh! But surely, if I may just interrupt, the kind of controls that the Government have imposed from time to time—the "Stop" and "Go" type, as my noble friend referred to them—
THE EARL OF DUNDEE: I am talking about physical controls; the noble Viscount is talking about monetary controls.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: You have not put on any physical controls. You say it would have been worse; but the highest factor for our imbalance, as was mentioned by the noble Lord, Lord Grantchester, to-day, is the cost of what we all want to see maintained, our contribution to the defence of the free world. We are now contributing such a small amount in actual forces to the defence of the free world, with an enormous increase in their cost. In the whole of my Parliamentary life I have never seen such a situation. It all stems from the lack of proper economic control of the nation's finances.
THE EARL OF DUNDEE: My Lords, all I am trying to point out is that there are different methods of controlling the economy which can be used either singly or together. I am saying that the only reason why we are not using physical controls at the present time is that we think they would do more harm than good. That seems to me to be a perfectly good reason for not imposing them.
A year or two ago some of our critics were telling us that we ought to introduce building licences again. Others were saying that we ought to impose a more selective control of imports; or that we should revive the powers of the
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Capital Issues Committee, which are at present in abeyance. I have heard very little or nothing about these proposals in the last twelve months or so, and I am not sure whether the Party opposite think they would be desirable at the present moment or not. The interruption of the noble Viscount leads me to think that perhaps they do. But nothing has been said about them in either House for a long time and they have not been advocated by a single speaker in our debate this afternoon. I should have thought that if the noble Viscount thinks they are so important and desirable, someone speaking on behalf of his Party might have said so in our debate.
However, until this year monetary controls, through the banks and hire purchase companies, have been our chief instrument, but not our only one. Last year my noble friend Lord Amory increased both tobacco duty and profits tax—he will correct me if I am wrong —not, I think, primarily to raise revenue, but with the purpose of moderating spending power. One difficulty which, of course, we always had in using the fiscal weapon has been that when you have (as both the noble Lords, Lord Grantchester and Lord Lucas of Chilworth, pointed out) such a very high rate of taxation as we have here—I think that Lord Lucas of Chilworth said it was 37 per cent. including local rates; 37 per cent. of the gross national product, that is—that does not leave you an awful lot of room in which to manœuvre.
But this year the present Chancellor of the Exchequer, in view of the grave danger of some inflation, has gone a great deal further than my noble friend Lord Amory did last year. He has budgeted for a surplus of £500 million above the line, compared with Lord Amory's £360 million last year. In addition, he is asking for authority to use these two new regulators, one the 10 per cent. variation, which can be either up or down, in Customs and Excise, and purchase tax; and the other the payroll tax. Neither of these can be brought in until the Finance Bill has received the Royal Assent, which is usually somewhere towards the end of July. After that they need not be applied at all; they need not be applied, if they are applied, to the full extent; and they need

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not be applied for more than a limited number of months. But, on the assumption that they were applied to the fullest extent for a period of twelve months, they would each produce an estimated yield of £200 million. That should be added to the £500 million above-the-line surplus in the Budget. That is the extent to which we are asking for, at the moment, optional powers to reduce consumption in this country and so to prevent inflation.
LORD LATHAM: You cannot have the £200 million—not all of it—because that is subject to tax.
THE EARL OF DUNDEE: Yes; in so far as it was subject to tax. And another qualification, of course, is that that part of it which falls upon Government employees would be paid by the Government. But they are both very powerful weapons in reducing excess spending power in the country as a whole.
My Lords, the object of taking this power, together with the Budget surplus, is that if industry should pay more than is desirable in dividends, wages, salaries, or any other way in which purchasing power may be increased, the Chancellor of the Exchequer can then quickly take back some of this purchasing power with the object of preventing inflation. As my noble friend Lord Melchett said, this will, of course, continue together with the former monetary controls, although, as your Lordships will remember, the hire purchase restrictions were somewhat moderated a short time ago and the bank rate has been brought down to 5 per cent. However, it is still high, even for these times. The special deposits, of course, are still continuing.
With regard to the measures necessary to stimulate exports and to do something about the international credit base, we have already had two most excellent debates on these two subjects, one on a Motion by my noble friend Lord Bess-borough and another on a Motion by my noble friend Lord Boothby. I have nothing to add to what I said on behalf of the Government on those two occasions. But I was most interested to hear from Lord Boothby that the debates appear to have interested somebody else outside your Lordships' House.
I have listened carefully to all the criticisms which your Lordships have
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made. On the two proposed regulators I note that there have been no, or scarcely any, criticisms of number one, compared with the criticisms of number two—that is, the payroll tax—which is what we might have expected, I think. My right honourable friend the Chancellor of the Exchequer has conceded that it is not in its present form a perfect instrument and if it is continued next year it will need to be revised. But, imperfect though it is, he thinks it is necessary to have the power to use it this year in case of need. He thinks that an imperfect instrument for this purpose may be better than none at all. I have also noted your Lordships' criticisms on the various ordinary taxes: television advertising, oil, and the further increase in profits tax. I shall say nothing about these now. We shall no doubt have an opportunity of debating the Finance Bill in July and those proposals are now being debated in Committee in another place, whose unconscionable loquacity has already deprived us all of one week of the Whitsun holidays, and I sincerely hope it will not be emulated by your Lordships.
I am grateful to my noble friend Lord Amory for his speech, which he made almost entirely in favour of the Government's policy. My noble friend compared himself to a cook who has retired and who wishes to be as nice as possible about his successor's masterpieces, although his own concoctions were sometimes treated with rather faint praise. My noble friend may perhaps remember the observation of Saki:
"She was a good cook, as cooks go; and as cooks go, she went."
We are all sorry that my noble friend went so soon; we should have liked him to have a very much longer term of office. But, my Lords, people who live in the same house as a retired cook sometimes get gratuitously much more delicious things to eat than she ever made in her professional days for her employers; and that is a privilege which your Lordships all now enjoy.
My Lords, I do not think—or, at least, I rather doubt—whether the economic problems which are exercising us all at the present time will ever be entirely solved in our lifetime, because it seems to me that the conditions which create them, one of which is full employment,

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are continuing conditions and we want those conditions in many respects to continue. I would suggest that, while we must not take a light view of the grave consequences which might follow failure to deal with these problems, it is at least better to have to deal with difficulties which are created by growing prosperity and full employment rather than difficulties which are created by poverty, unemployment and under-production. It is preferable to wrestle with the problems of prosperity than with those of adversity.
My noble friend Lord Melchett, in, if I may say so, a very interesting and useful speech, suggested that there might be a wages policy by general agreement throughout industry. We cannot, of course, have a wages policy imposed by law—or, at least, in my opinion we can never have a wages policy imposed by law. That would be unthinkable. But I was glad to hear his advocacy of a sort of agreed wages policy among different sections of industry, if only industry could arrive at some convention by which, in general, money would not be paid out in excess of our increase in production. That would relieve us of a great many difficulties indeed, and it would be a very fine thing. I do not know how far an idea of that sort is practicable. What we all agree, I think, is that we ought to have a steady rise in real wages and, I would also say, a rise in profits. I think they are both good things; but neither of them should be allowed to get ahead of our earning capacity, otherwise, they will defeat their own object, especially in a country like ours, which depends so much upon its foreign trade. But so long as there is no such practical agreement, any Government, from whatever Party it may be formed, must fulfil its responsibilities and its duties, as we intend to do, in protecting the value of our currency and the future security of our economic life.
7.52 p.m.
LORD PETITICK-LAWRENCE: My Lords, I am sure I shall fulfil the wishes of those noble Lords still present if I do not make any long reply to the debate. I will say only this in the first place: that
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I thank all those who have taken part in this discussion. I think that, between us, one and another, we have found a great many points in common. We have discussed a very large number of difficult questions with good temper and with some good results. And so far as that is concerned, I am happy to have been able to initiate this debate.
With regard to the speech of the noble Earl who has just sat down, I should like to say only this. He is such a very accurate man that I feel sure that, when I read carefully what he has said, I shall find his figures are correct, but I confess I could not follow them. It seemed to me, offhand, if I understood him aright, that he said something in his figures that I could not accept. Apart from that, I do not necessarily agree with all his points—and he would not expect me to. He did, however, make a challenge, and I should like to answer that. I do not want to run away. He said that he had heard no one in this debate advocate what he called physical means of control which differed from the plans of the Government in the shape of the hank rate and other things. The fact that we have not talked about that to-day is because I have talked about that matter a very great number of times previously, and I certainly did not want to weary your Lordships. But I do not want it to be said that my King Charles's bead is the bank rate. That would not be true. It is, I think, on occasions, worth while dealing with that subject, and I did mention it to-day. Further, of course, as the noble Viscount who sits behind the noble Earl knows quite well, I am a very great opponent of inflation and, therefore, if I say that the method which the Government are using for inflation is not a suitable one, I must obviously have views as to how it should be done otherwise. But at this later hour, certainly, there is not the opportunity to deal with that. Therefore, I shall simply say that I have greatly enjoyed the debate. I enjoyed the speeches of both the noble Earl and of the noble Viscount who sits behind him, and of others. I now ask leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

PRIVATE STREET WORKS BILL
7.55 p.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(Viscount Alexander of Hillsborough.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MERTHYR in the Chair.]
Clause 1 agreed to.
Clause 2 [Amendment as to liability of frontagers in respect of street works in part of private street]:
LORD TEYNHAM LORD TEYNHAM moved to add to the clause.
"() Where planning permission is given either for the erection of a private dwelling or industrial premises on an unadopted road, which is in the opinion of the Minister of Transport unsuitable to carry the existing traffic, the street works authority must exercise their powers to take over the road in accordance with Part IX of the Highways Act, 1959."
The noble Lord said: The object of this Amendment is to ensure that a local authority must take over an unadopted road before giving further planning permission if, in the opinion of the Minister of Transport, the road is already unable to carry existing traffic. There are many cases in the country where unadopted roads are in an appalling and dangerous state and quite unsuitable to carry any traffic at all. In Worthing, for instance, the local paper, the Worthing Herald, has produced a very good survey, illustrated by photographs and headed, "The Scandal of the Town's Unmade Roads." I would open it to your Lordships to show the scandal of these unadopted roads: they are really in a most appalling state. Yet there are cases where local authorities continue to give planning permission for the erection of more houses and more industrial premises on these very dangerous roads.
As your Lordships are aware, the whole matter is governed by the Public Health Act, 1875, and the Private Street Works Act, 1892, consolidated, I think, in the Highways Act, 1959. But the fact remains that the local authority have a discretion—I repeat, "a discretion"—under these Acts as to when they should exercise their power to take over these roads. The result is that in many cases
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nothing has been done for this class of roads for many years. They go from bad to worse; more buildings are erected; traffic increases and the roads become quite unusable. As I said during the Second Reading of this Bill, the matter is one of the scandals of modern times, and I am determined to try to put it right. It is true that only a small minority of people and industry are concerned in this matter, but surely it is right that they should receive justice where justice is certainly due. It may be that my Amendment, as drafted, is quiet unsuitable, and that this particular Bill is not perhaps the best vehicle to deal with the matter. I shall certainly be quite ready to listen to the views of the Minister who is to reply on behalf of Her Majesty's Government, but I certainly do not propose to let the matter drop. I beg to move.
Amendment moved—
Page 2, line 26, at end insert the said subsection.—(Lord Teynham.)
VISCOUNT ALEXANDER OF HILLS-BOROUGH: I am very much indebted to the noble Lord, Lord Teynham, for being brief on this matter, concerning which he said something to us on the Second Reading of the Bill. He knows quite well that we are trying to remove an anomaly which, from the very nature of his own observations, is something which ought to be removed in the interests of those people who are concerned in the making up of unadopted roads. In a great city which I used to represent in the other place we have had a great experience of unadopted streets, and I am sorry to hear about the difficulties that the noble Lord has illustrated from Worthing. Apparently they have the wrong political policy operating in that particular Conservative town: whereas a great deal has been done to remove many of the difficulties by what has now been for, almost, 30 years the Labour-controlled Council in the City of Sheffield. In this case the Council is moving, with the support of all Parties, including both the Labour and the Conservative members of it, to correct this particular anomaly. I would not try to make a political argument with the noble Lord, Lord Teynham, except to agree with him that this is not the Bill in which he should try to get major Amendments of the kind he has suggested. What I want

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to see is this Bill passed to remove the anomaly which has arisen since the passing of the 1959 Act.
8.0 p.m.
EARL JELLICOE: I think we are all very conscious of the deep interest of my noble friend Lord Teynham in this matter. Nevertheless, I would suggest that your Lordships should perhaps resist his first Amendment this evening. I say that on a number of grounds. The first is that I think he has painted possibly an unduly drastic picture of the present position. There are black spots, but they are being removed, or are planned to be removed, very quickly.
I might point out to him something of which I am sure he is well aware; that nowadays new streets are usually made up by estate developers to a standard in which the local authority will adopt them. Or, alternatively, under the advance payments code the developer pays or secures a sum estimated to cover the eventual cost to the local authority of making up the street. Thus, the 54,000 existing private streets are very largely a legacy of the past. I do not think we want to argue where the fault lies in the past, but they are a legacy of the past. In my remarks on Second Reading of the Bill, I said that local authorities planned to make up 24,000 of them in the next ten years, covering 2,600 miles of the 6,000 miles which they cover. That means that within ten years nearly half of the residual problem should be dealt with.
The second reason why I ask your Lordships to resist my noble friend's Amendment is that it will, I feel, in certain instances take the decision whether or not private streets should be made up out of the hands of the people on the spot, in whose hands it now resides. It is possible that some local authorities may not be pressing ahead as fast as some of your Lordships would like, but I do not think that is the general picture. May I take a rather random example or two? Bradford's ten-year programme amounts, I think, to over £1,500,000. Sheffield's programme amounts to £630,000. Canvey Island (I do not know who controls it) has a five-year programme amounting to over £1 million. And poor Worthing Rural, which I think was referred to by my noble friend, has a programme for
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ten years amounting to £466,000. I cite these rather random examples merely to show that local authorities are pressing ahead with this matter. Indeed, some ratepayers may feel they are pressing ahead, in certain instances, too fast. Be that as it may, the Government very firmly hold the view that the question of making up private streets is essentially a local one, and that it is right to leave to local people proper discretion in this matter.
The final reason why I should ask your Lordships to resist my noble friend's Amendment is that it does hitch a very important change of principle on to a modest little Bill designed to put right what is, so far as I know, a purely local anomaly created by the Highways Act, 1959. For these reasons, I hope that my noble friend will agree to withdraw his Amendment, having ventilated this point this evening.
LORD TEYNHAM: I appreciate the remarks made by the noble Earl who has replied on behalf of Her Majesty's Government, but I cannot say that I am very pleased with them. I agree that perhaps this Bill is not the vehicle to deal with the matter, but I should like to return to it in another form later. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD TEYNHAM LORD TEYNHAM moved to add to the clause:
"() If the proportion of the rates received by a local authority from the ratepayers on an 'unadopted road' is equitable to the interest on the capital required to make up the road—with special reference to the Minister of Housing and Local Government's circular headed 'road research' No. 26—the local authority must take over the road at no charge to the ratepayers in the unadopted road affected."
The noble Lord said: This Amendment is linked to the previous one, but deals with the question of finance. At the present time, the local authorities have discretion to levy charges on householders and industries to cover the cost, or part of the cost, of making up an unadopted road. During the Second Reading of this Bill I pointed out that these charges could be levied on the unfortunate ratepayers who were living on an unadopted road when the road was taken over. The object of the Amendment is to ensure that ratepayers living on an unadopted road are not

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called upon to meet the cost if the proportion of rates received by the local authority is sufficient to meet the interest on the capital required to make up the road. It is, of course, true that not all the rates paid are applicable to roads. In many cases householders and industries have been paying rates for a great number of years and nothing has been done to improve their road conditions.
During the Second Reading debate on this Bill, the Minister who replied for Her Majesty's Government said—and I think he said it again to-night—that according to a recent survey there were 57,000 unadopted roads in this country.
EARL JELLICOE: Fifty-four thousand.
LORD TEYNHAM: I beg the noble Earl's pardon; 54,000. He also said that 27,000 of these roads are to be made up over the next ten years. Why ten years? Why not now? He further stated that the total cost would be around £75 million. But what he did not say to your Lordships was that the greater part of this sum would be extracted from the unfortunate ratepayers and would not be a charge on the local authority. In fact, the Urban District Councils' Association are not really averse to this payment, because only recently they issued a circular in which they said the councils were quite willing to increase their payments towards unadopted roads.
I hope the Minister who will reply this evening will not again put forward the argument that the value of a householder's property is reflected in the road charges which might be levied against him. Many householders have been in the same house for a great number of years—houses which were in fact bought by relatives many years ago—and therefore they are quite unaware that such a charge exists. That situation may lead to great hardship when the road is taken over. I understand that the Minister of Housing and Local Government recently carried out a survey of the working arrangements for the making up of unadopted roads, and came to the astonishing conclusion that there was no ground for any change in the law relating to them. I think he even went further and stated, in his reply to a Question put in another place, that there was no evidence of dissatisfaction or complaint against the present law. On the con-
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trary, I would say that there is every reason for a change in the law so that householders cannot be harshly treated, as the whole matter is left at the present time, as I said before, to the discretion of a local authority.
It may well be that my Amendment, as drafted, does not fully meet the case I have in mind, but I suggest that it does point out and make quite clear what the principle is. I certainly do not expect Her Majesty's Government to accept it in its present form, but I hope they will look at the whole matter a little more closely. I beg to move.
Amendment moved—
Page 2, line 26, at end insert—
("() If the proportion of the rates received by a local authority from the ratepayers on an 'unadopted road' is equitable to the interest on the capital required to make up the road—with special reference to the Minister of Housing and Local Government's circular headed 'road research' No. 26—the local authority must take over the road at no charge to the ratepayers in the unadopted road affected.")—(Lord Teynham.)
VISCOUNT ALEXANDER OF HILLSBOROUGH: Again I should like to thank the noble Lord, Lord Teynham, for being so brief, because this is the kind of Amendment that would otherwise entail quite long debate and discussion. I think it is also a matter which is perhaps better brought forward on a differently drawn Title to a Bill than the Bill before us. I may say, however, in reference to what the Minister, speaking for the Government side on Second Reading, said, that I see a great deal down in Essex, especially in the urban district in which I live, of the illustrations which could be brought to bear in support of the Minister's remarks.
A great many houses are being built on unadopted places. The price which people are paying for the land, compared to the price of land sold within a building planned area where the roads are made up, is very considerable. On the other hand, if the road charges, when they arise out of the adoption of unadopted roads, were to fall on the local authority alone, it would be adding considerably to the capital value of the property but with the cost of the improvement being borne entirely by the public authority. I should like to warn the noble Lord, in fairness, that if

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this question comes up on another Bill, it will have to be carefully examined and debated. In the circumstances, I hope that he may follow the example he took on the first Amendment, and that having ventilated his opinion on the matter, he will not pursue it on this Bill.
EARL JELLICOE: I fear that I am not able to give my noble friend any more support for his second Amendment than I was able to give for his first. As we see it, this Amendment would require a street works authority, in certain circumstances, to make up and adopt a private street at the expense of the general ratepayers. This would represent a major departure from the long-established principle that the owners of property with a frontage to a private street are responsible for maintaining or making up that street. That is the position which has obtained in principle since 1835, and it is that position which my noble friend's Amendment would change, and change radically.
As I hinted in my remarks on the Second Reading of this Bill, I feel that your Lordships should resist this Amendment—for two primary reasons. The first derives from the survey, which we have talked about this evening, commissioned by my right honourable friend the Minister of Housing and Local Government. That survey was commissioned precisely to find out whether the existing arrangements do cause general or widespread hardship. The broad conclusion of this survey was that they do not. As a result, my right honourable friend decided that there were no grounds for any fundamental change in the existing arrangements and that the present law was flexible enough, if administered sympathetically, to avoid hardship or injustice. Moreover, as my noble friend knows, the Minister has more recently taken steps to bring to the notice of local authorities the various ways and means by which they can ease the lot of the frontager who may have special problems or difficulties.
Why has my right honourable friend decided against any fundamental change in the existing arrangements? I think that the basic reason can be simply stated. The present owners of property on those streets which have been con-
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structed since 1835 and have since been adopted—and that means by far the greater number of residential streets in nearly all our towns—have paid at some time or another, either directly or as a conscious or unconscious element in their purchase price, their share of the cost of making up those streets. Moreover, as a result of the Advanced Payments Code we can be pretty sure that the owners of nearly all property on streets constructed in future will also have to meet this liability. How then can one really justify granting, as it were, exemption to the owners of houses which front on the 54,000 streets which, some times quite fortuitously, have not yet been made up, when all other ratepayers have, or will have in one way or another, to accept this liability? I think that that covers the general position.
The second reason why I suggest to your Lordships that we should not agree to this Amendment is the same procedural one which I mentioned a moment ago. The Amendment proposed by my noble friend amounts to a basic change of principle. I hope that your Lordships will agree that this basic change is not warranted. Even if it were, however, I think that your Lordships—indeed, my noble friend has suggested the same—would feel that this little Bill is too light a vehicle to carry this heavy change of principle. Therefore, in the circumstances, I hope that my noble friend will be able to see his way to withdraw this Amendment, too. But in suggesting this to him I should like to make it clear that my right honourable friend will pay close attention to the arguments which have been advanced in your Lordships' House this evening, and in particular to those of my noble friend.
LORD TEYNHAM: I appreciate the remarks of the noble Earl who has replied for Her Majesty's Government. I could keep your Lordships a long time describing the many hard cases that have been put before me in recent weeks. I think that perhaps we might even one day arrive at a compromise. I can think of one compromise now: we could lay down that the minimum period for the repayment to a local authority of the cost of making up a road to frontagers should be 25 years. That would go a long way to meeting

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some of the cases of hardship. But as I said before, I hope to deal with this matter in another form, and therefore I now beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Remaining clause agreed to.
House resumed.
Bill reported without Amendment.
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of May 11), Bill read 3ª, and passed.

INDUSTRIAL AND PROVIDENT SOCIETIES BILL
Reported, with an Amendment.
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of May 11), Bi11 read 3a, and passed.

PLYMOUTH CORPORATLION (HARROWBEER AERODROME) BILL [H.L.]
Report from the Select Committee, That it is not expedient to proceed further with the Bill: read, and ordered to lie on the Table.
  OXFORD TRAFFIC INQUIRY
  OXFORD TRAFFIC INQUIRY