Sitting of 3 April 1963

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
MESSAGE FROM THE QUEEN

  TOWN AND COUNTRY PLANNING
  The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
  I have received your Address praying that the Location of Offices Bureau Order 1963 be made in the form of the draft laid before your House.
  I will comply with your request.

PRIVATE BUSINESS
  MINISTRY OF HOUSING AND LOCAL GOVERNMENT PROVISIONAL ORDER (BOLTON) BILL
  Read the Third time and passed.
ORAL ANSWERS TO QUESTIONS
  MINISTRY OF DEFENCE

    N.A.T.O. Forces (Sergeant Missile)
    Mr. Frank Allaunasked the Minister of Defence what plans have been made for the deployment of the Sergeant missile by the North Atlantic Treaty Organisation forces.
    The Minister of Defence (Mr. Peter Thorneycroft): This information is confidential to N.A.T.O.
    Mr. Allaun: As Germany is now buying these missiles from America and has had technicians training there, will the Minister tell the House to what extent German troops are in control of these missile sites in Europe?
    Mr. Thorneycroft: That is quite a different question. The Question asked for the deployment of these missiles, which is a confidential matter.

    Land, Petersfield
    Miss Quennellasked the Minister of Defence the total acreage of land retained by all three Services in the constituency of Petersfield.
    Mr. Thorneycroft: A total of 7,293 acres.
    Miss Quennell: Does my right hon. Friend keep his extensive estates under review?
    Mr. Thorneycroft: If my hon. Friend would like to see me about the details, I should be happy to meet her.

    Malta (Polaris Submarine Base)
    Mr. Brockwayasked the Minister of Defence what discussions have taken place with the Government of the United States of America regarding the establishment of a Polaris submarine base in the waters of Malta; and what information has been given to the Government of Malta on this matter.
    Mr. Thorneycroft: None, Sir.
    Mr. Brockway: While welcoming that reply, may I ask the right hon. Gentleman whether he has seen the statement from Washington this week that American Polaris submarines are to be stationed in the Mediterranean? Will he give us an assurance that they will not be anchored at Malta without the consent of its Government and Parliament?
    Mr. Speaker: That supplementary question is out of order, because the Minister is not responsible for that statement.

    Services (Reorganisation)
    Mr. Wingfield Digbyasked the Minister of Defence whether, under his scheme for a reorganisation of the Services, each of the three chiefs of staff is to retain the right of direct access to the Cabinet.
    Mr. Thorneycroft: The position of the chiefs of staff in fulfilling their traditional duty as professional military advisers to the Government is defined in paragraphs 5 and 17 of the 1958 White Paper on Central Defence Organisation (Cmd. 476). As was made clear in recent defence debates no change is contemplated in this respect.
    Mr. Healey: Is the Minister of Defence aware that many hon. Members on both sides of the House feel that this reorganisation will seriously weaken the effective political control of the three Services if the individual Service Ministers are downgraded in their status while the heads of the Services retain the right of access to the Cabinet even without consulting the Minister of Defence?
    Mr. Thorneycroft: Clearly, any effective reorganisation of the central organisation of defence was bound to have a marked effect on the political control of the three Services.
    Mr. Healey: It weakens it.
    Mr. Wingfield Digbyasked the Minister of Defence whether, under his scheme for a reorganisation of the Services, it is now proposed to abolish the Board of Admiralty, the Army Council and the Air Force Council.
    Commander Keransasked the Minister of Defence what consideration he is giving to the co-ordination of the intelligence departments of the Admiralty, War Office and Air Ministry in the new defence structure, in order to ensure reductions in present staffs.
    Mr. Dempseyasked the Minister of Defence what estimates he has now made of the reduction in manpower and the financial savings that will result from the proposed reorganisation of the defence departments.
    Mr. Thorneycroft: As I have told the House, the details of the reorganisation are being worked out and I hope to place them before the House later in the summer. The proposals then will cover the various matters raised in these Questions, but I should prefer not to make any statement on them in the meantime.
    Mr. Digby: Before deciding on a system of complete uniformity will my right hon. Friend bear in mind the advantages of the Board system as it has worked in the Admiralty, which differs considerably from that of the Army Council system in the War Office? Before deciding on uniformity, will he hesitate to destroy a system that has worked very well throughout the years?
    Mr. Thorneycroft: I am well aware of the distinctive features of the
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    Admiralty, and I will bear these and all other relevant considerations in mind.
    Mr. Dempsey: Would not the Minister of Defence agree that by employing the techniques of applied accountancy he should be able to give the House a general idea as to what savings in finance and manpower could be accumulated until such time as he makes his precise statement?
    Mr. Thorneycroft: There will be ample opportunities for discussing that at a time when we can see the whole picture.
    Mr. Paget: Is it not really pretty scandalous to come forward with schemes of this sort without having thought out such elementary considerations as this or without having really considered whether the Services are to be controlled by the political Ministers or by irresponsible chiefs of staff, as apparently is now considered?
    Mr. Thorneycroft: If the hon. and learned Gentleman considers the matter, I think that he will realise that all these matters would require very careful and detailed discussion with large numbers of people, which would certainly become public, and that therefore there is some advantage in announcing decisions in principle in advance of the discussions.
    Mr. Shinwell: As the right hon. Gentleman has not yet made up his mind, would he object if some hon. Members helped him to make up his mind on this very important matter of the reorganisation of defence? Does he realise that, if he retains the Board of Admiralty, the Army Council and the Air Force Council in their present form, the reorganisation of defence will be just a façade?
    Mr. Thorneycroft: I would not object in the slightest. Indeed, the advice and counsel of this House are of inestimable value in a reorganisation of this character.

    Services, Malta (Run-down)
    Mr. Wallasked the Minister of Defence whether he will consider recasting the planned services run-down in Malta.
    Mr. Thorneycroft: In working out the plans for the run-down in Malta as in

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    other places we have to consider primarily the needs of the Services. Within the framework dictated by Service requirements we have naturally done all we can to create the least possible hardship locally.
    Mr. Wall: As my right hon. Friend knows, the Governor recently made a speech saying that, in spite of increased industrialisation, by 1967 one-quarter of the population might be out of work and one-fifth of the national revenue fallen away. Will not my right hon. Friend consider phasing the run-down over ten years instead of five?
    Mr. Thorneycroft: The Services have much to be grateful for to Malta, and if there should be changes in our deployment which would have the effect of assisting the Maltese economy I should welcome them.
    Mr. Awbery: Is the right hon. Gentleman aware of the serious position which will arise as a result of the run-down of the three Services in Malta? Will he consult the other Ministers with a view to finding alternative employment for the men who will become redundant as the run-down of the Services takes place?
    Mr. Thorneycroft: I am in close consultation with my right hon. Friend, though I think that the latter question is not for me.

    N.A.T.O. (V-bomber Force)
    Mr. Healeyasked the Minister of Defence which authority in the North Atlantic Treaty Organisation will command the British V-bombers assigned by Her Majesty's Government to the North Atlantic Treaty Organisation.
    Mr. Thorneycroft: The command and other arrangements for the nuclear force of which these aircraft will form part are matters for N.A.T.O. as a whole and are still under discussion.
    Mr. Healey: Can the Minister of Defence confirm that until this date no purely N.A.T.O. authority has had any strategic nuclear weapons at its command? Does he not agree that the use in certain ways of the V-bomber force could automatically involve the whole world in total global thermo-nuclear war? Is it not, therefore, a very extraordinary thing that Her Majesty's Government
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    should have decided to assign these bombers to N.A.T.O. without first finding out what authority in N.A.T.O. is going to control the use of these bombers?
    Mr. Thorneycroft: We should be agreeable to these being put under the command of SACEUR, but it is right and proper that I should defer any announcement about details of command and control until N.A.T.O., which is, after all, an alliance, has had an opportunity of considering these matters.
    Mr. Kershaw: Is it not a fact that N.A.T.O. has had tactical nuclear weapons under its command for some time? Is it not also a fact that the impact on the ground of tactical nuclear weapons is not so very different from the strategic weapons which are now being referred to?
    Mr. Thorneycroft: My lion. Friend is, of course, quite right. The injudicious use of nuclear weapons of any kind could involve the world in total destruction.

    TSR2 Aircraft
    Mr. Croninasked the Minister of Defence what part the TSR2 aircraft is intended to play as part of the British or North Atlantic Treaty Organisation strategic nuclear deterrent.
    Mr. Thorneycroft: The TSR2 is capable of both a conventional and a nuclear role. The question of whether it is strategic must depend upon the nature of the target attacked. Some of the aircraft will no doubt be offered for assignment to N.A.T.O. on suitable terms.
    Mr. Cronin: Could the Minister of Defence state definitely whether this aircraft could reach the capital of a potential aggressor without refuelling and return? Could he do this for two reasons—first, to increase the deterrent effect of the aircraft, and, secondly, to reassure the public as to the authenticity of the Government's very recent claim that this is indeed a strategic nuclear bomber?
    Mr. Thorneycroft: The aircraft could clearly be used in a strategic role, but I would say nothing which would give an indication of its precise range.

    N.A.T.O. (Multilateral Force)
    Mr. Wallasked the Minister of Defence what conclusions he has reached as a result of his examination of the proposed North Atlantic Treaty Organisation multilateral Polaris surface force regarding its military advantages; what degree of British participation is now planned; how it is proposed that the force will be controlled; and under what legal authority it is proposed that discipline will be enforced.
    Mr. Thorneycroft: I refer my hon. Friend to my replies, and that of the Civil Lord of the Admiralty, of 27th March.
    Mr. Wall: Does not my right hon. Friend agree that, while there may be political advantages in this idea, there must be very few military advantages in having ships crewed by men of different nations? Would he not agree that this might be a very expensive form of deterrent?
    Mr. Thorneycroft: I will bear in mind these and all other considerations which have been put in question and answer and debates on these subjects.
    Mr. Croninasked the Minister of Defence if he will now give details of the proposed composition of the crews of the vessels of the North Atlantic Treaty Organisation multilateral force now under consideration.
    Mr. Thorneycroft: British ships will be manned by British crews. The proposal for a mixed-manned component is being studied in N.A.T.O. and no decision on it has yet been taken.
    Mr. Cronin: Will the Minister indicate whether the authenticating officers who fire the missiles will be of mixed nationalities and, in that context, will he bear in mind the undesirable consequences of any German fingers being on the buttons which fire the missiles?
    Mr. Thorneycroft: All these matters will be borne in mind in the consideration which N.A.T.O. is giving to this topic.
    Mr. P. Williams: Will my right hon. Friend give an undertaking that he will keep his mind open on this matter of
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    multi-racial crews, providing one thing—that at the end of the day he rejects the idea?
    Mr. Thorneycroft: I think that it is better to consider things before one either accepts or rejects them.

    Tactical Nuclear Weapons
    Mr. Harold Daviesasked the Minister of Defence if he will define a tactical nuclear weapon.
    Mr. Thorneycroft: One that is directed at a tactical target.
    Mr. Davies: Is the right hon. Gentleman aware that when General Sir Richard Gale was acting as chairman of a series of responsible lectures on strategic concepts he himself said that, when he was deputy allied leader in Europe, he tried to get a definition of a tactical nuclear weapon and—
    "Neither from my own country, nor from the United States of America, did I get any"
    Hon. Members: Reading.
    Mr. Speaker: Order. Verbatim quotations from such sources are out of order in questions.
    Mr. Davies: It was not a quotation direct, Mr. Speaker. I omitted many of the words. Does the Minister now think that he has helped the general in defining a tactical weapon in those absurd words?
    Mr. Thorneycroft: I have made a fairly brief contribution to the point.
    Mr. M. Foot: Have we got any, and do they work?
    Mr. Thorneycroft: Yes, we have a fairly voluminous supply of tactical nuclear weapons.
    Mr. P. Noel-Baker: Does the Minister agree that the use of the word "tactical" about any nuclear weapon of the 10 kiloton or larger range, which is what we have, is very dangerous and self-deceiving?
    Mr. Thorneycroft: I have some sympathy with that point of view. I think that it is quite erroneous to talk about tactical weapons as though they were some sort of modern artillery. These are weapons of really devastating power.

    Defence Commitments
    Mr. Harold Daviesasked the Minister of Defence to what extent it remains the policy of Her Majesty's Government, in view of the danger of retarding the nation's economic development, to retain, as essential for British defence policy, each of the following commitments, namely, those in Hong Kong, Singapore and Malaya, the Middle East, Kenya, Aden and the Persian Gulf, Malta, Cyprus, North Africa, West Germany and Berlin, the Atlantic naval force, the strategic reserve in the United Kingdom, the garrison in the Caribbean and missions to foreign and Commonwealth forces, together with the British contribution to the Western nuclear deterrent; and to what extent this policy has been changed in the past four years in respect of each commitment.
    Mr. Thorneycroft: To the extent necessary at any time to defend British interests.
    Mr. Davies: Is the right hon. Gentleman distinguishing between British interests, economic and manufacturing, and British focal points of power? Is he aware that while our commitments have risen from 5s. 1d. per week per person when the party opposite came into power to 13s. 1d. now, these areas are defined by John Connell, who knows something about the subject, as "a rag-bag of contradictions"?
    Mr. Thorneycroft: It is not my purpose to distinguish between any of these things, but simply to say that the job of the Ministry of Defence is to serve British interests in whichever part of the world we are called upon to do so.
    Mr. Rankin: Could the right hon. Gentleman—[Interruption.]
    Mr. Speaker: Order. We are now discussing commitments.
    Mr. Rankin: —tell me how we would deploy our defence policy in Hong Kong when the water supply in Victoria Island is insufficient and on the mainland it is under the control of the Chinese?
    Mr. Thorneycroft: This is, no doubt, one of the problems involved, but if the hon. Member wants to put down specific Questions about specific places he will no doubt do so.

    Costs
    Mr. Emrys Hughesasked the Minister of Defence how much defence costs per person per week.
    Mr. Thorneycroft: In the 1963–64 Estimates defence will cost 13s. 5d. per person per week.
    Mr. Hughes: As an ex-Chancellor of the Exchequer, has the right hon. Gentleman no sympathy with the present Chancellor? Since he has presented a bill for £300 million more than was presented to him when he was Chancellor, does he not think that he should appear today not in a tile hat but in a white sheet?
    Mr. Thorneycroft: I think that a country which spends on average 18s. 1d. per person per week on drink and tobacco might spend 13s. 5d. for its defences.
    Mr. Healey: Can the right hon. Gentleman say whether he still holds to the view expressed when he resigned from his Treasury post some years ago that we would never get an effective return for our tremendous defence expenditure so long as we tried to maintain both a full-scale nuclear capacity and adequate conventional forces?
    Mr. Thorneycroft: I hesitate to ask the hon. Gentleman to read my resignation speech as a whole, but he will see, if he does, that in it I referred to what we spend upon ourselves in softer living as well as on our defences.

    Expenditure
    Mr. Emrys Hughesasked the Minister of Defence if he will conduct a further review of expenditure on defence with a view to its reduction.
    Mr. Thorneycroft: The cost of our defences is related to the extent of our commitments and I see no immediate prospect of their being reduced.
    Mr. Hughes: Will the Minister consider inviting Dr. Beeching to examine the costs in his Department to see if his axe might work there?
    Mr. Thorneycroft: I already have quite considerable assistance from the hon. Member himself.

  ROYAL NAVY

    H.M. Submarine "Valiant"
    Commander Courtneyasked the Civil Lord of the Admiralty when he anticipates that Messrs. Vickers will commence three-shift working on Her Majesty's Submarine "Valiant".
    The Civil Lord of the Admiralty (Mr. C. Ian Orr-Ewing): The building of "Valiant" is at present up to schedule. Messrs. Vickers inform me that six trade groups operated a three-shift system during the construction of "Dreadnought" and they anticipate that these six groups and others will operate shift working at the appropriate time on the building programme for "Valiant" and other nuclear submarines.
    Commander Courtney: While congratulating my hon. Friend on that really excellent news, may I ask whether he can confirm, first, that three-shift working will be extended to the second Polaris yard and, secondly, that three-shift working will enable him to cut about one year off the building time for Polaris submarines as compared with the Americans?
    Mr. Orr-Ewing: When we inquired of the shipbuilders we asked them about their capability for round the clock working and pointed out that it would be required and that the willingness of the firms and unions to accept this would be considered before placing the order. I cannot give an undertaking on the second point raised by my hon. and gallant Friend, but I can say that we will certainly build these as quickly as we possibly can, with the co-operation of the trade unions.

    Hunter-Killer Submarines
    Commander Courtneyasked the Civil Lord of the Admiralty if the intended building programme of British Polaris submarines will prejudice the fulfilment of the S.S.K. hunter-killer submarine requirement which is necessary for the protection of British shipping throughout the world.
    Mr. C. Ian Orr-Ewing: In the short term I am afraid there must be some prejudice to that programme, but thereafter it will be open to Her Majesty's Govern-
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    ment to make new decisions about the rate at which nuclear hunter-killers should be built.
    Commander Courtney: Would my hon. Friend agree that this is a contradiction of his right hon. Friend's undertaking that the Royal Navy's conventional forces would not be sacrificed to the nuclear commitment? Is it a question of money or of building facilities? If it is the latter, would my right hon. Friend look again at the question of giving an order for a few S.S.K.s to one of the Royal Dockyards?
    Mr. Orr-Ewing: It is not a question, in the long run, of building facilities. I am sure that these could be achieved, manned and trained. It is, firstly, a question of finance; and I do not think that this contradicts my right hon. Friend's views. In the long run I am sure that we will make up the three hunter-killer submarines which we will lose in the short term.
    Mr. Willis: Is the hon. Gentleman not aware of what his right hon. Friend the Minister of Defence said? He said that other naval decisions would have to be taken on their merits and not in accordance with the Polaris programme. Is this not a case where the Polaris programme is definitely holding up the naval programme?
    Mr. Orr-Ewing: I have agreed that in the short term we shall lose three hunter-killer submarines. At the same time, we are going ahead with conventional submarines which will give first-class service in the Fleet. There will be 35 in the operational fleet and 12 modern ones in the reserve; and this should be of tremendous use in the next 20 years.

    Obsolescent Ships and Boats
    Mr. Milneasked the Civil Lord of the Admiralty if he will make a statement on the methods of disposing of obsolescent ships and boats.
    Mr. C. Ian Orr-Ewing: I assume that the hon. Member is referring to ex-R.N. whalers, or similar boats, surplus to the Navy's need.
    As the hon. Member is aware, they are first offered to the Combined Cadet Force and to the Sea Cadet Corps

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    because the Admiralty accepts a responsibility for providing them with naval training equipment and they are a valuable source of recruitment to the Royal Navy. Any left over are offered first to the Sea Scouts and then to the Ministry of Education for allocation to schools.
    Mr. Milne: Is the hon. Gentleman aware of the grave disquiet felt in many parts of the country about the method of his Department's allocation of these ships and boats and the manner in which they are allowed to lie around in certain places and depots when they could be of immense value to many educational organisations? Will he look into this matter more closely than he has done in the past?
    Mr. Orr-Ewing: We certainly want to make use of any available boats. If the hon. Member will draw my attention to those he has in mind, I will have the matter examined carefully and sympathetically.

    Hydrofoil Design
    Mr. Gresham Cookeasked the Civil Lord of the Admiralty what progress is being made in research into hydrofoil design; and whether orders are being placed for prototype hydrofoil craft for the Royal Navy.
    Mr. C. Ian Orr-Ewing: The Royal Navy has not commissioned any current United Kingdom research into hydrofoil craft, or ordered any prototypes. We prefer to develop the hovercraft which in our view offers greater versatility and promise in possible naval roles. However, I understand that the Ship Division of the National Physical Laboratory is now actively engaged on behalf of the Royal Canadian Navy in the second stage of an extensive investigation into the hydrodynamic design of a large hydrofoil ship.
    Mr. Gresham Cooke: Is my hon. Friend aware that Russia, America and Italy are running hydrofoil craft which can do 50 knots? Could not these be suitable for ships' tenders in this country? Could not the British Navy purchase one for a few thousand pounds? If these experiments were successful might not, say, the Royal Barge run on hydrofoil as an experiment?
    Mr. Orr-Ewing: We are certainly watching the development of the hydrofoil but, as I said, the versatility of the ground effect machine, or hovercraft, has special attractions for us.

    Wasp Helicopter
    Mr. Willisasked the Civil Lord of the Admiralty when it is expected to complete full tests of the Wasp helicopter; and when the five commissioned Tribal class frigates will be equipped with this aircraft.
    Mr. C. Ian Orr-Ewing: We expect to complete flying and service trials of the Wasp helicopter in time to permit embarkation of some of these aircraft this year. The date at which a particular Leander or Tribal class frigate will receive her helicopter will be determined by the priorities then ruling.
    Mr. Willis: Is it not rather deplorable that these ships should have been commissioned and sent out to their stations without their most important weapons? What is the Admiralty doing to get a move on with this?
    Mr. Orr-Ewing: I would remind the hon. Gentleman that these ships are equipped with the three-barrelled antisubmarine mortar, and we are very anxious to get on with the equipping of the same ships with the Wasp, but it would have been very rash, and financially wasteful, if we had placed the production order before overcoming the production difficulties of the helicopter.
    Mr. Willis: When will these five ships be fitted with the Wasp?
    Mr. Orr-Ewing: I think that we have to wait to see where the ships are at the time, but we hope to have numbers of Wasps in our operational fleet by the end of this year. But it would be folly to send a Wasp to, perhaps, the Persian Gulf if we wanted it to play a more important role in N.A.T.O. in the West.

    Dockyard, Rosyth (Nuclear Submarines)
    Mr. Willisasked the Civil Lord of the Admiralty how many additional men will be required at Rosyth by the end of 1963 for the work which will be necessary to prepare this dockyard for the refitting and refuelling of nuclear submarines.
    Mr. C. Ian Orr-Ewing: As I said in my written reply of 15th March to the hon. Member for Dunfermline Burghs (Dr. A. Thompson), it is too early to be precise about the timing of manpower increases at Rosyth. We shall, however, start to increase the dockyard labour force as soon as we can recruit suitable craftsmen, and a small number of staff, when they have received training in nuclear work, will be appointed to Rosyth dockyard to plan the facilities required.
    Mr. Willis: Are we to understand from what the Civil Lord previously said about this refitting depot that it would be necessary whether we proceeded with the Polaris or no?
    Mr. Orr-Ewing: Yes, Sir.
    Mr. Stodart: Can my hon. Friend say whether he has been taking in a sufficient number of apprentices locally in recent years to enable the Royal Navy to build up a local labour force?
    Mr. Orr-Ewing: Yes, Sir. In the last five years we have increased our apprentice intake from 71 to 98, to 145, to 167 and, this year, to 190. I am sure that this will pay a worth-while dividend, not only in the training of young men but in the dockyard as well.

    Clyde (Ship Construction)
    Mr. Millanasked the Civil Lord of the Admiralty how many naval ships are to be built on the Clyde in the year 1963–64; how many will be started in the next six months; and what will be the estimated cost of them when completed.
    Mr. C. Ian Orr-Ewing: The Clyde is already building an assault ship, a 6,000-ton guided missile destroyer, six frigates and two Oberon class submarines. Four Clyde firms are invited to tender for the two fleet replenishment ships awaiting order and, as I announced in the Estimates Debate, one of the three firms with whom we are discussing the Polaris submarine building programme is at Greenock.
    We normally announce our shipbuilding plans as we are ready to go to tender for particular vessels, and we shall follow this practice during the year.
    Mr. Millan: In view of the employment position on the Clyde, is it not
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    possible to bring forward some of these orders a little, and so provide more work now?
    Mr. Orr-Ewing: We are examining this position. The total orders on the Clyde are £57 million for naval vessels, of which £40 million actually goes to the firms on the Clyde, so they have a very worth-while contribution to make, and are making a worth-while contribution to the Navy.
    Dr. Dickson Mabon: Does the hon. Gentleman agree that on the Clyde there should be built at least one nuclear-propelled vessel in the near future?
    Mr. Orr-Ewing: There are rival claims between Merseyside and Clyde-side, as the hon. Gentleman knows.

    Scottish Shipyards
    Mr. Rossasked the Civil Lord of the Admiralty how much of the £241 millions to be spent in 1963–64 on new ships will be spent in Scottish shipyards; and what will be the estimated employment arising.
    Mr. Ross: The Question should read as referring to £241 million to be spent on new ships to be started.
    Mr. C. Ian Orr-Ewing: Well, that takes away part of my Answer.
    As I said in the Estimates debate, the figure of £241 million is not the provision for this year's building programme, but the estimated cost of completing over several years the new naval vessels on which some expenditure will start during 1963–64.
    Mr. Willis: Can the Civil Lord give some indication of what vessels this very large sum includes?
    Mr. Orr-Ewing: It certainly includes Polaris submarines, and there is a very small amount in far a possible aircraft carrier because, as I have said, this sum covers all ships in our plan on which there might be any expenditure in the coming year.
    Mr. Lawsonasked the Civil Lord of the Admiralty how much of the increased expenditure on naval vessels in the next financial year will be spent in

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    Scottish shipyards; and how much new work will be started in the next nine months.
    Mr. C. Ian Orr-Ewing: The success of Scottish shipyards in securing tenders in competition with firms elsewhere will govern the expenditure on new orders in 1963–64. Scottish firms suitably equipped will, of course, be given an opportunity to tender.
    Mr. Lawson: Will the Minister bear in mind that the Scottish shipbuilding industry, generally, accounts for about 40 per cent. of United Kingdom ships built in any particular year? Will he further bear in mind that we have in Scotland virtually none of the new industries? Would he see that a disproportionately heavy amount of this type of building comes to Scotland?
    Mr. Orr-Ewing: Yes, Sir.

    Shipbuilding (Contracts)
    Mr. Smallasked the Civil Lord of the Admiralty what consideration is given to the unemployment situation when placing contracts for new naval vessels; and to what extent this consideration has weighed in the placing of contracts for new vessels to be laid down in the next financial year.
    Mr. C. Ian Orr-Ewing: Our procedure ensures that all areas of high unemployment are given the opportunity to win contracts for naval construction. As most of the warship builders are already in the development districts, most of the contracts for the building of warships go to areas of high unemployment.
    Mr. Small: Will the hon. Gentleman recognise that the livelihood of many men in the areas of high unemployment depends on this work? Is he aware that we shall watch acutely the distribution of the orders? Can he state the total value of shipbuilding orders at present?
    Mr. Orr-Ewing: The total value of shipbuilding orders is £215 million, of which £150 million is spent actually with the shipbuilders themselves. I am aware of the other point, and I should like to say that it is not a matter only of shipbuilding. For instance, the Royal Navy has placed contracts in Scotland totalling £15 million for N.A.T.O. sites being constructed in Scotland, and we give much
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    other substantial support in our naval establishments, like the establishment at Lossiemouth.
    Miss Harvie Anderson: Will my hon. Friend emphasise the need to improve efficiency and timing?
    Mr. Orr-Ewing: Yes, Sir.

    Royal Naval College, Greenwich
    Mr Reynoldsasked the Civil Lord of the Admiralty how many students have been enrolled for the first year of the three year degree course for electrical engineering at the Royal Naval College, Greenwich, September 1963.
    Mr. C. Ian Orr-Ewing: About four probationary assistant electrical engineers will be enrolled this summer. Negotiations are still proceeding for the addition of other Government trainees to this course.
    Mr. Reynolds: Does the Civil Lord realise that his Answer means that there are eight or nine vacancies for this course, and that we cannot afford to waste such places? There is no security problem in having ordinary graduates in Greenwich when, at Greenwich, there are foreign officers, some having taken courses in Iron Curtain countries.
    Mr. Orr-Ewing: I am aware of these facts. We are finalising arrangements for an additional eight Royal Navy scientific personnel to take this course, and we hope to secure that in September.
    Mr. Reynoldsasked the Civil Lord of the Admiralty how many students are at present taking courses at the Royal Naval College, Greenwich.
    Mr. C. Ian Orr-Ewing: Two hundred and forty-eight.
    Mr. Reynolds: Does the Civil Lord realise that, if properly used, the facilities at Greenwich are capable of coping with just over twice that number of students, and that there is therefore a terrific wastage there? Is he aware that many of those being trained there could be trained at Manadon, and Greenwich put to far better use as a university?
    Mr. Orr-Ewing: I would not agree with the hon. Gentleman. My figures show that 330 would fill the accommodation at Greenwich unless further classrooms were

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    built and, if we did have to remove this course, very heavy capital expenditure would be incurred elsewhere, and it would, of course, interrupt a very important training programme.

  BRITISH ARMY

    Belgian Machine Gun (Manufacture)
    Mr. Benceasked the Secretary of State for War what steps he is taking to enable Scottish industry to manufacture under licence the Belgian machine gun now being purchased from Belgium for Her Majesty's Forces.
    The Secretary of State for War (Mr. John Profumo): None, Sir. Our small arms production is concentrated at the Royal Small Arms Factory, Enfield, where the bulk of the Army's requirement for the general purpose machine gun is being made.
    Mr. Bence: I am amazed by that Answer. Is the right hon. Gentleman aware that his right hon. Friends are advocating the placing of Government work in development districts, and that the Burgh of Clydebank is in a development district? At one time we had a Royal Ordnance factory there. Is he aware that 3,000 jobs were taken out of Clydebank? Is it not his duty in equipping British troops to place orders in Clydebank for Swedish, Belgian and Italian guns in order to bring these jobs back to Clydebank?
    Mr. Profumo: This is a Belgian gun which is having to be made here under licence. Not enough are being made to divide the order, and the prime order must go to the Royal Ordnance factory.

    Royal Army Pay Corps (Electronic Computer Organisation)
    Mr. Bellengerasked the Secretary of State for War whether the electronic computer organisation set up by the Royal Army Pay Corps is being utilised by all three defence services.
    Mr. Profumo: No, Sir. The existing facilities at Worthy Down are sufficient only for the requirements of the Army.
    Mr. Wade: Is the Secretary of State able to say what financial savings have
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    been achieved by the use of the electronic computer organisation?
    Mr. Profumo: Not yet—it is too early—but it is being an extremely great success.

    Royal Ordnance Factory, Woolwich (Apprentices)
    Mr. Mayhewasked the Secretary of State for War why he has halted apprentice intake at Royal Ordnance Factory, Woolwich.
    Mr. Doddsasked the Secretary of State for War if he is aware of concern arising from the decision to close down the apprentices training school at Woolwich when this will take effect; and, in view of the need for expansion of training centres for young people, what is being done to utilise the equipment and staff.
    Mr. Profumo: No decision has been taken to close down the First Year Apprentice Training Shop at the Royal Ordnance Factory, Woolwich. All that I have decided to do at present is to suspend the normal intake of new apprentices for one year.
    About 150 apprentices are already under training at the factory. As the number of craftsmen available to train them is being reduced, a new intake of apprentices next September would overload the apprentice training capacity of the factory.
    Mr. Mayhew: Why did the Minister not wait for the result of the inquiry which he set up before he took this serious step? Is not this an extremely bad time at which to close down even temporarily any apprentice training establishment? Is the right hon. Gentleman not setting a very bad example to private enterprise?
    Mr. Profumo: It has been closed only to one year's intake and when the inquiry is finished we will decide on its future. I had to do this, otherwise we would have overloaded the percentage in terms of people being trained compared with the number of craftsmen available. I am consulting my right hon. Friend the Minister of Labour to see whether there is any other way we could do this.
    Mr. Dodds: While I am aware that no decision has been taken to close down

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    the establishment, may I ask whether the right hon. Gentleman appreciates that in a town which is suffering so badly from creeping paralysis as a result of decisions taken by the Government this seems very ominous? Can the right hon. Gentleman, therefore, give an undertaking that this valuable equipment and the highly skilled staff will not become redundant in any circumstances?
    Mr. Profumo: I do not think that I can add to what I have said about the consultations which I am having with my right hon. Friend the Minister of Labour, or indeed add to what my right hon. Friend said about the general situation when he answered a Question two days ago.
    Mr. Mayhew: What is to happen to the pre-apprenticeship learners employed at the Arsenal? Can the right hon. Gentleman give an assurance that if they miss the chance of training there they will not be denied it elsewhere in Government service?
    Mr. Profumo: I am looking into all these matters at present.
    Mr. Dodds: Owing to the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest opportunity.

    Unit Transport and Alanbrooke Hall
    Mr. Pagetasked the Secretary of State for War (1) what disciplinary action has been taken as a result of failures to comply with War Office instructions that unit transport should be made available to the Royal Army Service Corps on days when it was not required for operational or training purposes;
    (2) why the advice of the Minister of Education and the University Grants Committee was not sought before building the Alanbrooke Hall at the Stall College.
    Mr. Profumo: No disciplinary action has been taken.
    These are matters which the Comptroller and Auditor General has drawn to the attention of the Committee on Public Accounts in his Report on the Army Appropriation Account for
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    1961–62. I understand that the Committee is going to examine these questions and will be asking my officials to give evidence on them. It would be contrary to custom for me to anticipate the Committee's inquiries by saying anything now.

  SCOTLAND

    Mathematics and Science Teachers
    Mr. Hannanasked the Secretary of State for Scotland if, in view of the grave shortage of mathematics and science teachers, he will extend to them the same favourable conditions in the appointment of principals as obtains in the appointment of classics principals.
    The Secretary of State for Scotland (Mr. Michael Noble): I am at present re-examining the provisions regarding these and other posts of responsibility.

    Courts, Glasgow
    Mr. Hannanasked the Secretary of State for Scotland if he will consult with the appropriate authorities with a view to introducing legislation to establish in Glasgow permanent sittings of the Court of Session and the Court of Justiciary.
    Mr. Noble: The High Court of Justiciary already sits in Glasgow as required. I do not think that there is any need to contemplate a change in the arrangements for the Court of Session.
    Mr. Hannan: Is not the right hon. Gentleman aware of the congestion at the Glasgow courts, and will he look into the matter?
    Mr. Noble: I am aware of the congestion at the Glasgow courts, but the problem of whether the Court of Session should sit in Glasgow seems to me to be a different one from that of the congestion of the ordinary courts.

    Teachers' Salaries
    Sir T. Mooreasked the Secretary of State for Scotland what reply he has sent to the headmasters of Belmont High School and St. Margaret's High School, Ayr, in response to their letter of 5th March about teachers' salaries in Ayrshire.
    Mr. Noble: My hon. Friend will have had the letter which I sent to him on the subject on 26th March.
    Sir T. Moore: Yes, Sir, that is quite true, but will my right hon. Friend bear it mind that there is a great deal of concern among the teaching profession in Scotland at this refusal of the authorities to appoint deputy head teachers in secondary schools? Will my right hon. Friend do his best to persuade the authorities?
    Mr. Noble: I know that my hon. Friend appreciates that the appointment of deputy head teachers is in the discretion of the education authorities. Accordingly, it is not open to me to intervene.
    Mr. Emrys Hughes: In view of the fact that so many people have come here today specially to hear Scottish Questions, could not the right hon. Gentleman give more satisfactory Answers?

    Electricity Board for Scotland
    Mr. Hendryasked the Secretary of State for Scotland when he will give a decision on whether there will in future be one Electricity Board for Scotland.
    Mr. Noble: While I appreciate that an early announcement is desirable, I regret that I cannot at present say when this will be possible.
    Mr. Hendry: Will my right hon. Friend consider whether he can possibly speed up his answer to the Question in view of the amount of misleading and ill-informed propaganda sent to hon. Members by "Aims of Industry" and similar organisations?
    Mr. Noble: I will, of course, try to speed up my decision, but this must not be at the expense of looking carefully at the very complicated problems involved.
    Mr. Woodburn: Is the right hon. Gentleman aware that many of us do not want him to make such a decision and have one Electricity Board for Scotland? Is he aware that we are almost convinced at the moment, unless evidence emerges to the contrary, that it would be much better to preserve the North of Scotland Hydro-Electric Board?
    Mr. Noble: I am aware that this view is held not only by the right hon. Gentleman but by many others in the House.
    Mr. John MacLeod: Is my right hon. Friend aware that authoritative opinion in the north of Scotland is against amalgamation? Why cannot this Board, which has done so much for the Highlands of Scotland, retain its independence?
    Mr. Noble: I am certainly aware of what my hon. Friend says, but the problem is not purely one for the Highlands. It is one for Scotland and it is in balancing these matters that I have to take a decision.
    Mr. Ross: Surely the right hon. Gentleman has had the report before him for many months. Is he aware that this is bound to create an unsettling feeling? Will the right hon. Gentleman show himself to be as sensitive to the real needs of the people of Scotland as hitherto he has shown himself sensitive to the propaganda of "Aims of Industry"?
    Mr. Noble: Yes, Sir.

    Salmon (Committee's Report)
    Mr. Wolrige-Gordonasked the Secretary of State for Scotland when the Hunter Committee on Salmon is now expected to report.
    Mr. Noble: I understand that the Committee cannot yet forecast the date of its report but it has given priority to the question of drift-net fishing for salmon and is considering whether it is possible to make an interim report on that subject.
    Mr. Wolrige-Gordon: Is my hon. Friend aware that this is a matter of considerable urgency for the inshore fishermen of Scotland? Can he, therefore, undertake to implement the findings of the Hunter Report as quickly as possible?
    Mr. Noble: I am aware of the inshore fishermen's interest in this matter. I am also aware that Lord Hunter is doing his best to speed up an interim report on this aspect of the whole inquiry, but I think that it is not likely that that interim Report will be available very soon.

    School Leavers, Buckhaven and Wemyss
    Mr. Gourlayasked the Secretary of State for Scotland when he received a letter from the Braehead School Parent-Teachers' Association regarding unemployment among school leavers in the

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    Buckhaven and Wemyss areas; what was the nature of his reply; and if he will make a statement.
    Mr. Noble: The letter was received on 18th March, and I am sending the hon. Member a copy of my Department's reply. I understand from my right hon. Friend the Minister of Labour that the number of school leavers registered for employment in the Wemyss area has fallen from 116 to 61 in the last month, and that the Youth Employment Service will continue to do everything possible to find suitable employment for those still seeking work.
    Mr. Gourlay: Is the right hon. Gentleman not aware of the irony of the situation when in National Productivity Year there are still 319 school leavers in Fife, including the Buckhaven and Wemyss areas, who are denied the opportunity of increasing the productivity of the country? When is the right hon. Gentleman going to do something about it?
    Mr. Noble: As far as this problem is concerned with industrial development, it is one for my right hon. Friend the President of the Board of Trade. I am only too well aware of the problem. I know that the employment of school leavers is a matter of concern. A number of full-time pre-employment courses is already available in technical colleges in Buckhaven and elsewhere. Any further proposals which the Fife Education Authority puts to me will certainly receive my careful consideration.
    Mr. Manuel: Will not the right hon. Gentleman recognise that he needs to view this matter with urgency? Is he aware of the bad psychological effect on many schoolchildren when they leave school and are unable to get work and feel that they are not wanted in our society? Will the right hon. Gentleman press on with some solution?
    Mr. Noble: I am certainly aware of the urgency. The figures which I have quoted in the Answer are not good enough, but at least they are a good start.

    Unemployment, Aberdeen
    Mr. Hector Hughesasked the Secretary of State for Scotland when he received from Aberdeen Trades Council its letter of 4th March, 1963, expressing
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    concerned at the increasing unemployment in the engineering establishments in Aberdeen, and suggesting amongst other remedies the recommencement of hydroelectric building work, on lines recommended by the Mackenzie Committee Report, and of other similar public projects; what steps he will take to solve the relevant problems of unemployment; and what reply he has sent or intends to send to that letter.
    Mr. Noble: I have not received any such letter, but I have ascertained that the hon. and learned Member sent the letter he received to the Board of Trade. I have been in touch with my right hon. Friend about it and have now written to the hon. and learned Member.
    Mr. Hughes: Does the right hon. Gentleman realise that he cannot pretend that he does not know of the vast unemployment in Aberdeen? Is it not time that he formulated some constructive plans to absorb the unemployment there? When will the right hon. Gentleman do something?
    Mr. Noble: As the hon. and learned Gentleman knows, some of the things which have been announced in the last month or two are specifically for Aberdeen.

    Aberdeen Educational College (Demonstration School)
    Mr. Hector Hughesasked the Secretary of State for Scotland why he proposes to close the demonstration school of Aberdeen Educational College; and what he proposes to substitute for it.
    Mr. Noble: I refer the hon. and gallant Member to the Answer I gave him on 27th March.
    Mr. Hughes: Does the Secretary of State realise that the Principal of Aberdeen University and other distinguished teachers in Aberdeen are against the closing of this demonstration school and that they regard it as wasteful? Will he reconsider the matter and allow the college to continue the good work it has been doing over the years?
    Mr. Noble: I am aware that there are people in Aberdeen who think that this demonstration school should go on. But the decision is one primarily for the authority itself in Aberdeen, and I think that in this case it is right.
    Mr. Hendry: Is my right hon. Friend aware that a great many people in the north-east of Scotland are grateful to him for the very prompt action he has taken in that part of the world to increase the supply of teachers and they have great confidence in the action he is taking to provide training in teaching practice in other schools in the area?
    Mr. Noble: I thank my hon. Friend for that. The education authority in Aberdeen is probably the best staffed in Scotland, and I hope that it will remain so.

    Land (Ownership)
    Mr. Rankinasked the Secretary of State for Scotland whether he will take the steps necessary to enable him to issue as soon as possible a report on the present ownership of land in Scotland, in view of the fact that the last one was made in 1874.
    Mr. Noble: I am not clear that any useful purpose would be served by preparing a report of this kind.
    Mr. Rankin: Even if it is of no interest to the Secretary of State, does not he realise that it would be of interest to many other Scotsmen to know who owns Scotland? Does he not know that many changes in land ownership have taken place since 1874 at prices which are very shocking and which have affected the whole redevelopment of Scotland? Will he reconsider the matter?
    Mr. Noble: I realise that there are many people in Scotland who might be interested in the compilation of a report of this sort, but the work to produce it would be colossal and I cannot see that it would meet any useful purpose whatever except interest.
    Mr. Woodburn: Is the right hon. Gentleman aware that he himself is the biggest land owner in Scotland?
    Mr. Noble: Alas, yes.
    Mr. Rankin: In view of the entirely unsatisfactory nature of the Answer, I beg to give notice that I shall raise the matter at the earliest opportunity.

    Building Land (Price)
    Mr. Hoyasked the Secretary of State for Scotland what action he is taking to control the price of building land in Scotland.
    Mr. Noble: It is the Government's policy to encourage local planning authorities to ensure that enough land is allocated for development in the right places. This is the most constructive course.
    Mr. Hoy: Does not the right hon. Gentleman know that, within the last fortnight, there has been in Edinburgh a sale of building land at an exorbitant price, and that this sort of thing makes it impossible for municipalities or the private builder to provide housing at reasonable prices? Will he take positive action to put a stop to this racket?
    Mr. Noble: One should not draw conclusions from one particular case. Over the past few years, there has been no noticeable increase in the price of land in Scotland. In fact, the cost of land is rather less than 5 per cent. of the cost of housing.

    Geriatric Patients, Edinburgh
    Mr. Hoyasked the Secretary of State for Scotland how many geriatric beds will be provided by the extension to Liberton Hospital; and how many persons are at present on the waiting list in Edinburgh.
    Mr. Noble: One hundred and eighty-four and 430 respectively.
    Mr. Hoy: Is the Secretary of State aware that the plight of these geriatric patients is rapidly reaching scandalous proportions? Since there are so many on the waiting lists, can he take some action to speed up the provision of beds for this class of patient?
    Mr. Noble: I agree that the situation is urgent. As I said in my reply to the hon. Gentleman on 27th March, the regional board is already urgently considering how more beds for geriatric patients can be provided. It is hoped to provide about 150 additional beds for these patients by the autumn of this year.

    Highlands (Road Transport)
    Mr. Rankinasked the Secretary of State for Scotland, having regard to paragraph 103 of the Report on Transport Services in the Highlands and Islands, what steps he is taking to ensure that the Highland road system will be able to

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    catch up with the development of road transport and to fill the vacuum left by contraction of rail transport.
    Mr. Noble: To meet the growing needs of road transport, the Government are providing more than £2½ million a year for the construction or improvement of Highland roads. I am considering what special needs may arise from rail closures and how we might meet them.
    Mr. Rankin: Does the Secretary of State realise that the sum of money which he mentioned is described in the Report as being utterly inadequate for the creation of the necessary roads in the north of Scotland? Does not he know that, if the Beeching Report is implemented, more than double that sum will be required? Will he consider the matter of road development in the light not only of present needs but of potential demand?
    Mr. Noble: The hon. Gentleman is quite right in saying that, if the Beeching Report is agreed and if the closures are carried out, as he suggests, the amount of money available for the roads is certainly not enough to provide adequate transport services in some areas. It has been made very clear by my right hon. Friend the Minister of Transport and by myself that adequate roads are a precondition of closing some of these lines.
    Mr. Ross: Will the Secretary of State make clear that the last word in respect of rail closures in Scotland, be it North or South, rests not with him but with the Minister of Transport?
    Mr. Noble: Technically, it rests with him, but, as he has said, he will consult me before any closures are made. As the hon. Gentleman knows, the decision in this and the other matters will reflect the unity of the Cabinet, not the division.

    Cumbernauld New Town
    Mr. McInnesasked the Secretary of State for Scotland if he will institute an inquiry into why Cumbernauld New Town Corporation has only built an average of 276 houses per annum since the new town was designated in 1956; and if he will indicate to the new tows corporation that this output is making little contribution to Glasgow's overspill of 100,000 families.
    Mr. Noble: No, Sir. The development corporation is surmounting the difficulties which delayed progress in its early years, and output is rising steadily. In 1962, 556 houses were completed, and 1,279 houses are at present under construction.
    Mr. McInnes: Is the right hon. Gentleman aware that even the increased output reached recently will in no way help to solve the enormous problem of the overspill of 100,000 families? Five hundred houses per annum are not enough. We want 5,000.
    Mr. Noble: We certainly need more than 500, and this year we shall get them; but I am not satisfied, nor is the development corporation, even with the existing speed-up. We aim to do much better in future.
    Mr. Bence: Is the right hon. Gentleman aware that not only do we want a faster rate of house building in Cumbernauld New Town, but we want some new industries as well or it will be a dormitory town only?
    Mr. Noble: I am sure that these will follow.

    Girls (Day Release)
    Mr. Lawsonasked the Secretary of State for Scotland what was the number in Scotland of girls under 18 years of age being given day release from employment for further education at the latest available date; and what percentage of girls under 18 years of age in employment this number represents.
    Mr. Noble: In session 1961–62 the number was 3,226, representing 3·8 per cent. of those in insured employment.
    Mr. Lawson: Is not the right hon. Gentleman ashamed of this figure? Is it not a dreadful reproach on the employers in Scotland? Will he see that something far better than this is done in future?
    Mr. Noble: I am not ashamed of the figure, but I am not by any means satisfied with it. As the hon. Gentleman says, there are some employers in Scotland who are not as enthusiastic about training their young girls as they should be, perhaps because they fear early marriage. I do not agree with this view. I will do everything I can to encourage a better figure.

BALLOTS FOR NOTICES OF MOTIONS
  Commonwealth Administration and Co-operation (Machinery)
  Mr. Wall: I beg to give notice that on Friday, 26th April, I shall call attention to the need for improved methods and organisation of Commonwealth co-operation, consultation and administration, and move a Resolution.
  Construction Industries (Efficiency)
  Mr. Prior: I beg to give notice that on Friday, 26th April, I shall call attention to the need for improving efficiency in the construction industries, and move a Resolution.
  Press and Mass Communication
  Mr. Robert Cooke: I beg to give notice that on Friday, 26th April, I shall call attention to the present state of the Press and other means of mass communication, and move a Resolution.
ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee.
  [Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

  BUDGET STATEMENT
  3.32 p.m.
  The Chancellor of the Exchequer (Mr. Reginald Maudling): I hope that the Committee will bear with me if, for reasons which I will explain, I depart to some extent from the conventional pattern of the Budget statement. It has become customary not to announce tax changes until some way through the speech. The Budget statement has also continued to be influenced by what Aneurin Bevan once described as the conventions of a pastoral society, which regarded the Budget solely as an annual set of accounts, and treated tax changes as incidental to the presentation of these accounts.
  The purpose of the Budget has, of course, for some time now been universally recognised as being far wider than this. The issues with which any Chancellor must deal cover our whole economy, and any tax changes should be incidental to these wider issues. Nor, as a matter of practice, is there any reason why tax changes should not be announced at the beginning of the statement.
  I must as usual present the annual Exchequer figures and we must provide for the annual renewal of Income Tax, I regret to say. But the drawback of the conventional pattern is the danger of confusing necessary annual details and statements with the broad economic picture, and the tendency for tax changes, large and small, to be jumbled together at the end of the speech. To my mind, this can obscure the main theme and purpose of a Budget, which should be crystal clear.
  The theme of this Budget is expansion: expansion without inflation, expansion that can be sustained. Of the need for economic expansion, there can be little question. If we are to play our full part in this dangerous world, if we are to build for our own people the standard of life they desire,

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  if we are to increase our aid to the peoples of Africa and Asia who still count in shillings what we count in pounds, then we must have more rapid and more steady economic expansion.
  The purpose of the Budget can also be clearly stated: it is to do the Government's part in achieving the rate of growth broadly described as the 4 per cent, target, which we have already accepted in the National Economic Development Council.
  I am confident myself that this is not only a desirable target, but also one that can be attained, and attained without any strain upon our currency, if we as a nation have the will to achieve it. Indeed, I would go further. Not only is it untrue that expansion and a strong pound need conflict: in fact, the two depend upon one another. Sound expansion without inflation will not weaken sterling, but strengthen it.
  I stress that this is a task for the whole nation. Of course, the Government have primary responsibility; of course, we must take the initiative. But Government policy alone cannot achieve the objective. We must have the cooperation of management and of unions in bringing British industry up to the peak of efficiency and in assuring the stability of incomes, and, therefore, of costs, which is quite essential if we are to win the exports upon which this rate of growth depends. This co-operation we seek not by appeals, but by action, action that will pave the way for a joint effort.
  The purpose of the Budget is, therefore, to do the Government's share towards this target of a 4 per cent. rate of growth in the confident belief that as the Government set the lead so management and unions as well will join in a national drive to achieve a national objective.
  These are the reasons why I intend to depart from the conventional pattern of a Budget statement. I propose before coming to the main theme, which I have just described, to deal with a number of matters small and large, including a number of tax changes. They must be dealt with in this Budget, and some of them are very important, but these items are extraneous to the main theme, which is economic expansion.

  BUDGET STATEMENT

    EXCHEQUER OUT-TURN, 1962–63
    I begin with a brief description of the Exchequer out-turn last year. The main details are shown in the first three tables of the Blue Paper.
    Total revenue last year was £6,794 million; that is, about £4 million below the estimate. Expenditure above the line came out at £6,441 million. £76 million above the Budget estimate. The whole of this increase was in the field of Supply expenditure. The result above the line was a surplus of £353 million, that is, £80 million less than the Budget estimate.
    Net payments below the line, at £419 million, were £88 million less than expected. The cost of the additional release of post-war credits was more than offset by a fall in Exchequer lending, mainly to the nationalised industries. Thus the overall deficit was £66 million, a decrease of £8 million on my predecessor's estimate of £74 million.
    One element in the financing of this deficit is, of course, borrowing from the public, and the Committee will like to know that £180 million was contributed by National Savings. The total of National Savings remaining invested has increased by £300 million. These figures are considerably higher than for 1961–62. For this most satisfactory achievement I am sure that the Committee will wish to join me in thanking the many voluntary workers in the National Savings movement led by Lord Mackintosh.
    The new Defence Bonds are already on sale and the new Savings Certificates will be on sale next month. The gap in the sale of certificates has been unavoidable. It has caused some difficulties for voluntary workers, which I regret. Lord Mackintosh, with whom I have worked closely throughout, joins me in emphasising that the need for large and regular National Savings is as great as ever. We are confident that the new securities will help the National Savings Movement in its valuable work, particularly for the small saver.
    My predecessor announced that this year's Finance Bill would contain provisions to bring to an end Schedule A Income Tax on owner-occupiers of residential property, but that it would

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    depend on revenue considerations whether this could be done in one year. I was happy to inherit this undertaking, for I have never believed that Schedule A as a tax on the occupation of houses, rather than on profits drawn from owning them, is justifiable.
    I propose now to abolish Schedule A altogether. In the case of owner-occupiers of residential property, I propose that Schedule A shall be brought to an end in one operation this year. They will not be asked to pay again. For this purpose, the term "owner-occupier" will include not only freeholders, but all those, including leaseholders, who at present pay tax on what is called "beneficial occupation". There will, however, have to be special provisions to cover long leaseholders who pay ground rents, those who pay feu duties, employees who enjoy beneficial occupation as an emolument and other marginal cases.
    The same rule will apply to all nonresidential owner-occupied property, including business premises, farms, sports-club grounds, and so on.
    In the case of properties owned and let for a profit, I propose to substitute for Schedule A a system of direct taxation of rents, including ground rents, and other income arising from property. Due allowance will be made for the actual expenses of maintenance, insurance, management, etc. In simple terms, profits from property ownership will be calculated like other business profits.
    This particular reform cannot for practical reasons come into effect this year. For 1963–64, the existing system of a charge under Schedule A on the annual value together with a charge on "excess rents" under Schedule D, will continue to apply to rented property. The legislation dealing with the new system will, however, be included in the Finance Bill, and the new system will come into effect from the year 1964–65.
    The new charge will have to cover not only rents but other forms of consideration for the use of property. In particular, there will have to be a specific charge on future premiums for leases graduated on a scale according to the length of the lease, and this charge will operate from 1963–64, as a counterpart to the abolition of Schedule A on rental values in excess of the rent paid.
    Where an owner occupied residence formed part of an estate which was managed as a unit in 1962–63, the owner may elect to retain the benefit of the existing practice under which the maintenance expenditure on the residence can be taken into account in fixing the liability on the estate, on condition that the current annual value of the residence is also brought into account. I include this provision to avoid the danger that these taxpayers might be worse off as a result of the abolition of Schedule A. There will be appropriate transitional provisions.
    As a corollary to the Schedule A changes, I propose that Schedule B on amenity lands shall be abolished. I shall also be introducing certain provisions relating to the tax treatment of commercial woodlands. Royalties from quarries of sand and gravel, sandpits, gravel pits and brickfields will be subject to deduction of tax at source in the same way as other mineral royalties.
    I am also introducing a provision, to take effect this year, for treating members of approved housing co-operative associations in the same way as owner-occupiers.
    Owner-occupiers, who at present pay their Schedule A tax direct on 1st January, will cease to pay as from 1st January, 1964, except in some cases as regards tax on feu duties and ground rents. They will have no Schedule A bill on that day. Those whose Schedule A liability is taken into account in their Pay-As-You-Earn coding will see the effect on their P.A.Y.E. deductions on the first pay day after 5th July.
    The cost of these changes will be about £35 million in 1963–64 and of the order of £48 million in a full year.

    LAND TAX
    The abolition of Schedule A calls in question the future of the old Land Tax which is collected along with it. It now yields only £200,000 a year from some 80,000 or 90,000 assessments. I have, therefore, decided to abolish it with effect from 25th March, 1963, the end of the last land tax year. No redemption payment will be due on land which changes hands after that date.
    HOME BREWING OF BEER
    There is one other agreeable consequence. Under the present law, people who brew beer either for their own consumption or, in the case of farmers, for consumption by their workpeople are required to take out an Excise licence and, in some cases, to pay duty based on the Schedule A valuation. The amount of revenue involved is very small indeed, and is probably less than the cost of collection. The abolition of the Schedule A valuation system provides a convenient opportunity for getting rid of these licences. So the private citizen will have the same freedom to brew beer as he already has to make wine.
    I come now to a number of minor tax changes, some in the field of Customs, some in the field of tax Inland Revenue.
    MINOR TAX CHANGES

      E.F.T.A. IMPORT DUTIES
      First, some changes affecting certain of the duties charged on imports from our partners in the European Free Trade Association.
      Under the Stockholm Treaty we must, by 1965, eliminate the protective element in the revenue duties charged on certain goods coming from other countries of the E.F.T.A. Last year, my predecessor made a start in this direction by introducing reduced rates of E.F.T.A. duties for certain goods. As the E.F.T.A. timetable for the reduction of protective tariffs generally has been accelerated, it is right that we should take parallel action in reducing the protective elements in the revenue duties. I therefore propose as from tomorrow to make reductions in favour of our E.F.T.A. partners of roughly the same magnitude and in the same duties as was done last year.

      MATCH DUTY
      I intend to introduce certain improvements in the control and collection of the match duty operative from 1st September next.

      TOBACCO DEALERS' LICENCES
      I also propose to abolish the system of Excise licences for the sale of tobacco. The purpose of these licences is not to produce revenue—they cost only £1 for
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      a four-year period and yield about £100,000 a year—but to assist in the control of the Tobacco Duty. I am now satisfied that they can be dispensed with without risk to the revenue: and I do not think that their retention on non-revenue grounds could be justified. The work of issuing licences is not inconsiderable and abolition will accordingly give a useful administrative saving.
      Since there are about 400,000 outlets for the sale of tobacco—about one for every 50 smokers—abolition of licensing could not be expected to lead to any increase in total sales; nor is any appreciable change in the pattern of trade likely. There is, therefore, no question of this decision interfering in any way with the Government's campaign to make people aware of the dangers of smoking, particularly as a cause of lung cancer.

      TELEVISION LICENCE EXCISE DUTY
      I have decided to abolish the £1 Television Licence Excise Duty, which was imposed in 1957—though, as I shall explain, this will not affect the cost to the viewer. The B.B.C. now faces a steep rise in the cost of its home services—principally for the provision of its second television service. This can, as a result of abolishing the duty, be met without an increase in the cost of the television licence to the viewer in the immediate future, which would otherwise be inevitable.
      The abolition will be effective from 1st October next. The cost in the present financial year will be £7¾ million, and in a full year approximately £13 million. The viewer will then pay a £4 licence fee instead of £3, plus £1 duty, as at present.
      The change in the basic licence fee—though, I repeat, no change in the amount actually paid by the viewer—will require new regulations under the Wireless Telegraphy Act, 1949, and these my right hon. Friend the Postmaster-General will be laying in due course. Since the proceeds of licence revenue are paid to the B.B.C. through the Broadcasting Vote, a Supplementary Estimate for that Vote will be presented in due course.

      THE REGULATOR
      I turn now to the regulator. I propose to extend for a further year the power enabling the Treasury to operate

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      the Customs regulator, that is to say, the power to raise or lower certain indirect taxes. When the regulator was originally introduced in 1961, there was general agreement on both sides of the Committee that there should be adequate Parliamentary control over its use; and that was provided by the exceptional measure of making all regulator Orders subject to affirmative Resolution, not within the usual 28 sitting days, but within 21 calendar days. That means of course, in practice, that a regulator Order could not be made during most of the Summer Recess unless the House were recalled, and to that extent it reduces its flexibility.
      This seems a necessary provision when any question of increasing taxation is involved, but the arguments are much less compelling in relation to a possible reduction. I propose, therefore, to seek the agreement of the House in the Finance Bill for making reductions, and only reductions, subject to affirmative Resolution within 21 sitting days—increases remaining subject to affirmative Resolution within 21 calendar days.

      INCOME TAX
      I come now from those Customs points to some points affecting Inland Revenue. The Finance Bill will give effect to two proposals I have already announced, namely, to make it clear that tax is chargeable on the increased payments from United Kingdom funds that form part of the pensions of certain non-resident civilians who were formerly in Indian Government service; and, secondly, to increase the income limit for purposes of the dependent relative allowance from £155 to £180 to take account of the recently authorised increases in standard National Insurance pensions.
      I would also like to give advance notice of a change in the child allowance provisions to operate from 1964–65. It has long been a source of complaint that when a child's income exceeds the income limit, by however small an amount, the child allowance is wholly lost to the parent. To meet this situation I propose in such cases that the child allowance shall not be lost but shall be reduced, pound for pound, by the excess of the child's income over the income limit.
      In practice, this provision will impose a large additional work burden on the Inland Revenue, and in view of its other current commitments it cannot be faced this year, but, as I have said, the legislation will be in this year's Finance Bill, and the new tapering will operate for the year 1964–65. A special procedure Resolution will be required to permit the inclusion in the Bill of a provision which will take effect in a future year.

      EXPENSIVE MOTOR CARS
      I turn now to a point relating to motor cars. The 1961 Finance Act limits tax allowances for business cars to those appropriate to a car costing £2,000. This restriction, which I fully supported at the time, and which, in principle, seems to me justifiable, has in practice been more severe in its effects on top quality cars than had been expected. It is argued, for example, that a businessman can have three new cars costing £2,000 each in six years and get the full depreciation allowed, but that if he buys a car for about £6,000 and keeps it for six years he gets an allowance based only on £2,000.
      I think that there is force in this contention. I am also concerned about the position of the Rolls-Royce car and other quality British cars, whose prestige has a great significance for British engineering exports throughout the world. I therefore propose to introduce a new system whereby the allowance for a car in the first year, when it qualifies, will be limited to £1,100, which is the present first year's limit for cars costing £2,000 and over. In succeeding years the allowances will be limited to a figure of £500. If and when the point is reached at which the allowance would be lower than £500, it will be given in full.
      The broad effect will be to restrict the allowances for expensive cars in the early years, but the restriction will diminish as time goes by, and the businessman who keeps his £6,000 car for eight years will, in the end, have, broadly, his full depreciation allowed. But it will no longer be possible, as it was before 1961, to get tax relief straight away on over half the cost of these expensive cars. I think that this scheme will preserve the basic

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      purpose of my predecessor's original proposals, but will remove a real anomaly.

      ESTATE DUTY
      Now I have something to say on Estate Duty. Last year, as the Committee will remember, the exemption limit was raised from £3,000 to £4,000. This year I propose to raise it to £5,000, with appropriate adjustments in the rates for estates just over that amount. Altogether about 12,000 estates will be exempted from duty and another 17,000 will get some relief—if the hon. Member for Cardiff, South-East (Mr. Callaghan) does not like it he can vote against it when the time comes.
      Mr. James Callaghan: The only point I was trying to make to the right hon. Gentleman was that it would cost him only £8 million if he relieved all estates up to £10,000. Instead of making a trifling concession like this, why not do the thing properly?
      Mr. Maudling: The band between £8,000 and £20,000 seems to be getting rather narrow.
      The change will take effect in the case of deaths occurring after today.
      I propose to make one other Estate Duty change which, though minor in itself, will, I believe, be generally welcomed. Under a provision introduced in 1951 there is an Estate Duty exemption in favour of buildings of outstanding historic or architectural interest given or bequeathed to non-profit-making bodies to secure their preservation for the public benefit. I propose to extend this exemption to land of outstanding natural interest which is given or bequeathed to bodies such as nature conservancy trusts.

      MINERAL DEPLETION
      During last year's Finance Bill debates there was considerable support for the proposal that tax allowances should be granted to mineral operators in respect of sums laid out on the purchase of mineral-bearing land or rights to work minerals. I have decided to treat these minerals as stock in trade by giving an allowance in respect of United Kingdom minerals purchased for lump sums that are worked after today, whether acquired in the past or the future. The total allowances will not, of course, exceed the capital amount paid less any residual
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      value, or, in the case of minerals acquired in the past, a due proportion of that amount corresponding to the future extractions. There will have to be detailed provisions in the Finance Bill to safeguard the Revenue against excessive allowances, and it will now be discussing the scheme with representatives of the industries concerned.

      GUARANTEED 2¾ PER CENT. LAND STOCK
      It will be necessary to include provision in the Finance Bill for the redemption of guaranteed 2¾ per cent. Land Stock, 1921, or after, the sinking fund for which will be full in the coming year. The original terms of issue provided that redemption was to be at such time as Parliament might direct.

      PROVISIONS AGAINST AVOIDANCE
      I might mention here that I have two proposals designed to protect the Revenue, both of them arising out of recent decisions of the courts. First, Estate Duty. Gifts made in consideration of marriage are exempt from the normal five-year rule. There is no doubt that this exemption was intended to apply only to gifts made to persons within the marriage consideration, that is, the parties to the marriage and their issue; but it now appears that other members of the family can be benefited at the same time without the exemption being forfeited. I propose to limit the relief to gifts made to persons within the marriage consideration. The same point arises in relation to Stamp Duty. The second proposal relates to the ad valorem Stamp Duty on mortgages and other securities. An easy way has been discovered of avoiding this duty, and I propose to introduce legislation to block it. Neither of these proposals will be retrospective.
      The cost of all the minor tax changes I have mentioned will be £10 million in 1963–64 and £26 million in a full year. These figures include the effect of abolishing the Television Licence Excise Duty.

    TAXATION OF GAMBLING
    I turn now to the question of gambling. As the Committee will be aware, my hon. Friend the Financial Secretary said last year that a review would be made of the whole field of gambling, and accordingly,

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    I asked the Customs and Excise to study the practical problems involved. Experience of the past, and particularly that of my right hon. predecessor the Member for Woodford (Sir W. Churchill), clearly enjoins on any prudent Chancellor the need for great caution in this field. Yet it is one that cannot properly be ignored. There are two reasons for this.
    First, there is a growing feeling, which I share, that gambling is a form of expenditure which should contribute towards the rising cost of social and other Government expenditure. The extension of betting, and the development of new varieties of gaming, have lent strength to this feeling. Secondly, the present system whereby some forms of gambling are taxed while others are not is clearly unsatisfactory. I have, therefore, been looking at the whole field with the purpose of discovering a general system of taxing gambling which will be both fair and effective.
    The studies we have made to date have brought out the many difficulties. In the first place, the amount actually spent on betting is far less than figures often quoted. These represent the total turnover, which is many times higher than the net expenditure. No one can say with any certainty what is the total turnover on commercially organised betting still less on gaming, but figures in the region of £700 million a year or more have been suggested. Most of this money, however, is returned as winnings which may in turn be restaked over and over again. The net expenditure on betting, that is, the amount of money by which the betting public is out of pocket, is very much smaller than the turnover: it is probably not much more than £100 million a year.
    Then there are the great practical difficulties involved in establishing a form of taxation in the field of gambling which can be properly enforced. What weighs even more with me, however, are the considerable social issues involved. The recent legislation has cleaned up the scandals associated with illegal bookmaking, and it would be very serious if this process were reversed. Finally, the levy system in support of the horse-racing industry is still in its early days, and, as the figures recently published show, it is far from fully effective as yet.
    I have, therefore, concluded that I need to make much wider studies of the practical and social issues involved than has been possible so far, before I can, with confidence, recommend to the Committee a new tax on gambling which would be fair, effective and socially desirable. Meanwhile, because we have as yet no adequate information about the extent and nature of gaming, I propose that the Customs and Excise should compile a register of all gaming institutions, including in this those often very profitable machines known as one-arm bandits. With this information I should be in a position to judge the practical considerations involved in taxing gaming as part of a comprehensive approach to the taxation of the whole field of gambling.

    TAX REFORM AND SIMPLIFICATION
    I turn now to the questions of tax reform and simplification. In the various proposals I have to lay before the Committee I have borne in mind the need for tax simplification. Schedule A, I think, is a good example. To my mind, this simplification should be a continuous process.
    My predecessor referred to the question of amalgamating Income Tax and Profits Tax into a single corporation tax. The Inland Revenue have discussed a scheme for this purpose on a confidential basis with certain experts drawn from outside bodies. As the Committee may well be aware already, these discussions have led to the advice from industry that schemes which have been considered for the amalgamation of the two taxes are not satisfactory.
    I accept this advice, but I am sure there are improvements that can be made in the Income Tax code for companies, and I should like to find a common basis for assessment for Income Tax and Profits Tax. The Inland Revenue is examining with the outside experts the possibilities of bringing taxation of company profits for Income Tax on to an accounts basis, as it is already for Profits Tax, which will remove many of the complications and anomalies that are inherent in the present provisions dealing with the opening and closing years of a business and give rise to so many difficulties.
    In the meantime, I must propose some amendments to the law in this field to prevent widespread avoidance in relation to the closing years of a trade or profession.
    Another proposal that is very topical at the moment is the introduction of a turnover tax, or an added-value tax of a kind that is common on the Continent. Supporters of this tax argue that it provides what is called a built-in incentive for exports, Whatever case there may be on other grounds for broadening the base of indirect taxation, I have never been convinced that the substitution of an added-value tax, either for Profits Tax or for Purchase Tax, would provide, in practice, an effective incentive to exports in the sense of an opportunity or encouragement to our manufacturers to sell their goods abroad more competitively than they do at present. It would certainly not increase the return on export sales: the encouragement to export would arise only from reducing the return in the home market if the manufacturer did not pass on the tax to the consumer, which seems to me unlikely.
    I recognise, however, that many people do believe that a tax of this character would strengthen our economy. Neither I, nor my advisers, would claim for Whitehall a monopoly of knowledge in these matters. Much would depend on how businessmen would react to such new arrangements; on this point there is room for considerable controversy.
    I have, therefore, decided to ask Mr. Gordon Richardson, Chairman of J. Henry Schroder, Wagg and Company, who was a member of the recent Jenkins Committee on Company Law, to conduct an investigation into the practical effects of instituting in this country a turnover tax on the pattern generally known in Western Europe, either in addition to existing taxation, or in substitution either for the Purchase Tax or Profits Tax or both.
    This investigation, in which the Inland Revenue and the Customs and Excise will fully participate, will be carried out urgently and will enable the full facts of this controversy, which I do not think are yet widely known, to be made available for public discussion and for the formulation of policy.

    MAIN THEME
    I turn now to the main theme of this Budget: expansion without inflation and the achievement of the 4 per cent. growth target. Before deciding what measures the Government should take to this end we must analyse the present state of the economy, and the prospects for the economy and for the Exchequer in the coming financial year.
    MAIN THEME

      STATE OF THE ECONOMY
      In the first half of 1962, there was a brisk rise in demand and output. Exports rose by 5 per cent. between the fourth quarter of 1961 and the second quarter of 1962, and industrial production by the middle of the year had more than regained the ground lost in the second half of 1961. At the same time, the action taken in July, 1961, had secured a substantial improvement in our balance of payments and there was no doubt that the economy was more competitive and costs more firmly under control than they had been for some time.
      In the second half of the year the trend changed. There was a slowing down of the growth of world production and trade. This reflected itself in our exports, which stopped rising, thus removing the main force which had been supporting the increase in activity at home. Unemployment, which had not fallen with the increase in production in the first half of the year, began to rise at a much faster rate, and it seems likely that continuing pressure on costs and prices led manufacturers to greater economy in the use of manpower. Finally, the severe winter after Christmas led to a very large addition to the total of unemployed.
      In the autumn and winter a number of measures were introduced both to relax restriction of credit and to stimulate the economy. Some of these measures, such as the release of post-war credits and the substantial Purchase Tax cuts, are already taking effect, as can be seen particularly in the demand for motor cars. Others, such as the improvement in the capital allowances, take longer to produce their full effect.

      ECONOMIC PROSPECTS
      The position we have now reached is one where there is substantial underemployment of resources, but where costs

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      have been held stable in relation to those of our competitors. A projection of the existing trends can give us some indication of where our economy would be heading if no changes were made in the Budget, though there are inevitably great uncertainties about any such projections.
      The prospects for world trade as a whole are that it will increase at a much slower pace in 1963 than in recent years. This is bound to be reflected in our exports of goods over the year. Exports of services have been doing rather better lately and may continue to do well in 1963.
      At home, fixed investment, which, broadly speaking, has been running nearly level in total in the last twelve months, may begin to grow again in the course of the year. Within the total, public sector expenditure has been rising and the rise is likely to accelerate; in the private sector the fall in investment in manufacturing seems likely to continue but may slow down, while in housing and some of the service industries there could be a change to a definitely rising trend.
      The construction industries are likely to be very heavily loaded this year, in consequence of the increases in public investment already announced, and the load will, of course, be further increased for a good many months to come by the backlog of work delayed in the winter.
      Real personal incomes have been rising, though less in 1962 than was originally expected, and some further rise could reasonably be looked for in the year to come without any more tax changes being made today. Increased National Insurance benefits and the reduction of prices through lower Purchase Tax play a part here. With rising personal income there should be a moderate growth of personal consumption.
      Public consumption, in real terms, has risen in the last two years at a rate of about 4 per cent. a year, and must be expected to continue rising at about the same rate. The forecast of trend is, of course, consistent with the picture presented by the Estimates, to which I shall refer in more detail later.
      Finally, there is the element, always a very difficult one to forecast, of investment in stocks. We have recently had a fairly low rate of stock accumulation,
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      and it would seem reasonable to allow for an increase rather than a decrease during the coming year. But there is no reason to think that the present ratio between stocks and output is such as to call for a large-scale stock accumulation.
      The outlook for demand as a whole suggests that there will be a rise in national output this year, but it would be unlikely to reach 4 per cent. over the whole year, nor would it be as vigorous as our economy can sustain. I repeat that this is a forecast of what would happen if there were no changes in the Budget.

      EXTERNAL POSITION
      At this stage, I must say something about the external position and the future of sterling. We can reasonably hope for some continued improvement in our current balance this year. On the other hand, we must expect that our long-term capital outflow will also tend to increase. The needs of other countries for economic aid are rising. In the last two years we have experienced a substantial inflow of capital in conditions which are not likely to be repeated this year. The change on the capital side might, therefore, well offset any improvement on current payments. But, as shown by the figures for 1962 which were published last Thursday, the underlying position from which we start is much sounder than has sometimes been realised.
      I absolutely reject the proposition that a vigorous economy and a strong position for sterling are incompatible. A healthy expansion based on increasing efficiency and control of costs is the key to the strength of sterling. Of course, if expansion leads to inflation and to rising costs, then it cannot be sustained, both for external and for internal reasons. So long, however, as we can keep our costs steady and competitive, I am convinced that our basic strength is such that we shall have no need to be deflected by external factors from a policy of modernising and expanding our economy.
      It is, of course, possible that in the early stages of a programme of more vigorous expansion, imports may rise faster than exports. But the pace at which imports are likely to rise with expansion is frequently over-estimated because there is normally a lag in the building up of stocks to correspond to

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      higher levels of output. Moreover, in so far as there is a stocking up movement related to expansion, in effect the building up of working capital, then I think that it is perfectly reasonable and sensible to finance such a movement out of our reserves or out of our borrowing facilities in the International Monetary Fund and elsewhere.
      This is surely what these various facilities exist for. It is wrong to use reserves or borrowing facilities to boost up an internal position which is unsound because costs, prices and incomes have got out of hand. But it is equally unsound to refuse to use reserves and borrowing facilities for the purposes for which they exist, namely, to deal with temporary situations and prevent temporary difficulties obstructing the proper long-term development of the economy.
      Sterling is subject to many influences. As an international currency it is to some extent open to the shifting currents of world trade and payments, and to political developments. But we must always distinguish between the intrinsic strength of sterling, which is what is most important, and temporary movements of confidence. So long as our economy is sound and our position competitive, the intrinsic strength of sterling must be great. We may face short-term fluctuations of one kind or another, but we have substantial resources available to meet them.
      In addition to our first-line gold and dollar reserves, we have a stand-by arrangement with the I.M.F. which permits us quick access to 1 billion dollars of external finance—and this is only part of our Fund drawing rights, which total nearly 2½ billion dollars. And in saying this I have taken no credit for the dollar securities we own, which naturally fluctuate in value, but average around 1 billion dollars.
      These are all large, tangible assets which we have available. In addition, there is the intangible asset of the developing co-operation between countries of the free world in tackling monetary problems, not least in dealing with speculative attacks against particular currencies. The Committee will, of course, be aware that at times during the past two months or so sterling has been subject to speculative pressure of this kind.
      We have, therefore, called upon the support available to us from other central banks, which has been willingly given. In all, 250 million dollars have been advanced to us during the months of February and March, and these borrowings have, of course, been reflected in the published figures of the change in our gold and convertible currency reserves for the two months. I have no doubt that what we have done is wise. Short-term capital movements one way or the other do not add to or detract from the economic strength of the country. The effect of recent movements has been that we have temporarily exchanged obligations to central banks for obligations to a wide variety of other holders of sterling.

      BUDGET JUDGMENT
      I have weighed up very carefully the various factors. On the one hand, we have spare capacity and present trends of demand do not seem strong enough to ensure of themselves a full enough employment of our resources in the coming year. Our capacity to produce would be rising about as fast as demand.
      On the other hand, there is the great uncertainty in any forecast of the main components of demand. And it is likely that action, taken now will produce much of its effect after a lapse of time during which conditions, particularly external conditions, may change quite considerably. Changes in the spending or borrowing habits of the public, for example, can make a big difference to our forecasts. If the public vary by as little as 1 per cent. the proportion of their income they save, the amount involved is £200 million. And in many of the other factors I have mentioned the margin of error in the most careful calculations is large.
      It is, therefore, the inevitable conclusion that in trying to reach a decision about the amount of additional demand that can safely be released, we must regard all calculations to which I have referred as no more than pointers; the final decision must be an act of judgment. The conclusion I have reached is that tax concessions in the current year of the order of about £250 million are required to stimulate the economy if we are to realise our target of vigorous expansion without a return to inflation.

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      But it is not simply a matter of deciding on a sum of money and then devising ways of spending it. The measures themselves are as important as the total. I have, therefore, worked out on this basis a series of measures which are together designed to promote our target of growth without inflation.

      EXCHEQUER PROSPECTS 1963–64
      To illustrate the consequences of such measures for the Exchequer in the coming year I shall give the Committee first the Exchequer figures for 1963–64 on the basis of the present tax rates.
      On the basis of existing taxation, Inland Revenue duties are expected to yield £3,990 million. Customs and Excise duties are estimated at £2,740 million. I expect £160 million from motor vehicle duties and £218 million from other revenue. Total revenue is, therefore, estimated at £7,108 million, or £314 million more than last year's receipts.
      Coming to expenditure, the Consolidated Fund services are expected to require £790 million, an increase of £37 million on last year's estimate. The bulk of this increase is on the net provision for National Debt interest: last year there were large interest receipts under the arrangements for winding up the British Transport Commission.
      The Estimates of Supply expenditure for 1963–64 total £6,139 million, which is an increase of £527 million, or 9·4 per cent. over last year's Budget Estimate. This is much the largest increase, both in absolute and in proportionate terms, in any year since 1951–52.
      The increases are widely spread. They are analysed in the Financial Secretary's Memorandum. The Committee will have noted that grants to local authorities are up by 11·5 per cent., from £950 million to £1,059 million—a not inconsiderable additional contribution to their growing expenditure.
      Supply expenditure as a whole is now about the same, as a proportion of gross national product, as it was ten years ago. In the current economic situation, I am able to accommodate this expenditure. But this must not be allowed to obscure the true significance of the present trend of expenditure which arises solely from the working out of existing policies, and poses problems for the future which the
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      Committee must weigh with great care. Any proposals which involve additional expenditure particularly of a recurrent nature must still be subject to the most stringent tests in the light of the burden already laid on our economy.
      This gives a total of £6,929 million for estimated expenditure this year above the line. With total revenue at £7,108 million, there would, on the basis of existing taxation, be a surplus above the line of £179 million compared with last year's estimate of £433 million and a realised surplus of £353 million.
      The estimates for below-the-line receipts and payments have been published in the recent White Paper. I need only remind the Committee that net payments are expected to be £597 million, or £178 million more than last year's outturn.
      Thus the prospective overall deficit, or net borrowing requirement of the Budget in the coming year, would be £418 million, compared with last year's estimate of £74 million and the actual deficit of £66 million.
      The Committee will see reflected in these figures the effect of the measures already taken both to stimulate public expenditure and to reduce taxation. They will also see that tax concessions of the order I have suggested will produce an above-the-line deficit.

      SIGNIFICANCE OF THE LINE
      It is important that the significance of this should not be misunderstood here or abroad. The line which now divides our Budget accounts is confusing, chiefly because people think that it corresponds with the accounting distinction between current and capital expenditure. My predecessor referred to this in his Budget speeches and I am glad to be able to tell the Committee that soon after the Recess we shall be laying a White Paper on a possible basis for the reform of the Exchequer accounts. It is intended at this stage as a basis for public discussion of this complicated matter.
      In the meantime, I would point out that the line divides expenditure not according to its economic character, but according to the nature of the Government's borrowing powers. For below-the-line payments the Government have specific powers to borrow, while if we

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      think it right to borrow for above-the-line expenditure we must turn, as we shall be doing this year, to our general borrowing powers. In other words the line has significance for our Parliamentary procedures, but none for the impact of the Budget on the economy.
      There is rather more significance in the overall deficit. With my proposals this will approach £700 million—a figure which, though large, is less, both absolutely and in relation to the national income, than was budgeted for in 1959. But this figure, though it is the starting point for Exchequer financing and debt management, must not be taken as a measure of the Government's needs from the market in the coming year. As the Committee knows, there are other public funds from which the Exchequer can and does borrow, and other sources, such as National Savings, to which it can turn, before resorting to the market.
      The main point is that in framing my Budget I have had to form a view on the probable development of demand in the economy as a whole and have judged that there is likely to be a margin of resources available which can and should be brought into use by tax concessions. Such a judgment must be based on an analysis of the kind I gave the Committee a little while ago; it cannot be done by inspection of the Exchequer figures alone.

      INCOMES POLICY
      The measures that I now propose to outline are designed to achieve our growth target of 4 per cent. a year without inflation. Clearly, there must be two elements in them: measures designed to increase our productive capacity and our efficiency; and measures designed to ensure that the level of demand is high enough to cause the necessary growth of production, but not so high as to cause a return to inflation.
      The key to any judgment upon the level of demand is clearly incomes policy. This simple fact cannot be stated too often; expansion and incomes policy are entirely interdependent. The extent to which I can safely stimulate demand now depends upon the movement of other factors that affect costs and prices: by far the greatest of these is the level of personal incomes.
      If we wish to see a more rapid rate of growth, then we must accept the principles and practice of an incomes policy. It is sometimes said that we are facing here the classic problem of the chicken and the egg. Without expansion we cannot have an incomes policy, without an incomes policy we cannot have expansion.
      I accept that this is the problem; but we must solve it. I accept that this is the situation; but we must now break out of it. We can break out only by launching deliberately on a policy of expansion and inviting those who have responsibility in management and unions to join with us not only in the prospects, but also in the necessary conditions of a policy of expansion. The country cannot achieve success, nor can "stop-go" policies be avoided, if this compact cannot be made between the three main partners in our economic life.
      I will be more specific on the incomes policy. It is true to say that based on experience to date an annual rate of increase of 2 to 2½ per cent. in money incomes is the most that can be expected without outstripping productivity and so putting up prices. The figure appropriate to a 4 per cent. growth rate, as the National Economic Development Office document has illustrated, is about 3 to 3½ per cent. on the average.
      Acceptance of the 4 per cent. target involves, therefore, in my judgment, acceptance of the 3 to 3½ per cent. figure for incomes generally. For the nation as a whole the increase of incomes must be no more: it need be no less if we firmly intend together to achieve our target. Acceptance of this fact must be part of a concerted national effort.

      EXPORTS
      We can see this fact most clearly in the context of exports. The attainment of a 4 per cent. growth rate needs an even greater increase in our exports. This is a formidable task, but I am confident that it will be within the capacity of a vigorously expanding British economy.
      I will not deal at length with the problem of exports, or with the various measures of Government assistance to exporters, as the President of the Board

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      of Trade will speak on this subject tomorrow if he catches your eye, Sir William. But the main conditions of a successful export drive are clearly a general expansion of world trade, an international trading system which gives opportunities for the export of manufactures, and British goods that are competitive in price, quality and date of delivery.
      I have already described the large reserves available to sterling, but I shall continue to pursue international agreement on further additions to world liquidity that would not throw undue strain on the key currencies—and I welcome new allies. We will certainly play our full part in the Kennedy round of tariff discussions, to which we attach great importance.
      In a world where expanding trade and fair rules of competition present growing opportunities to British exporters, our problem can be solved if we keep our economy competitive and enterprising. The spare capacity now available is such that expansion can take place without diverting goods from exports and, indeed, in many cases—the motor industry is an example—a more buoyant home market should provide a basis for lower unit costs, more competitive export prices, and so for higher exports. Growth, change and stable costs, at which I am aiming in this Budget, are the only recipe for success in expanding our export trade.

    MODERNISATION, EFFICIENCY, COSTS—HUMAN PROBLEMS

      MANPOWER
      I now have to turn to the measures I have to lay before the Committee for promoting our target of 4 per cent. rate of growth. In dealing with the problems of expansion I turn, first, to its human aspect. It is the availability of manpower, and especially of skilled manpower, that sets the limit to our capacity to increase production. We need more skilled men and we need to increase the speed at which men can acquire new skills and tackle new tasks. What we must provide is the facilities for training and the will to use them when provided.
      Clearly, this calls for concerted effort by Government, unions and employers: Government to give the lead and to
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      provide financial and material help; employers to help with the means of training and to give their men the opportunity and a proper reward for the effort involved; and unions to sweep aside restrictions, to encourage men to train and to support more rational wage structures with due allowance for skill.
      We will do our part in this. My right hon. Friend the Minister of Labour has put forward comprehensive proposals for the establishment of industrial training boards. I am prepared to see a significant Government contribution to the cost of these which should be added to what is contributed by industry. I have provisionally allocated up to £10 million for this purpose as a start. We will double the facilities in Government training centres and over a half of the increase here is to be in Scotland and the north of England. This will mean extra expenditure on running costs of perhaps £3 million per year and once-and-for-all expenditure of about the same order on equipment. I look to management and to unions to respond to this Government lead.
      Next, I turn to the problem of redundancy. Growth, as we know, means change. More rapid growth means more rapid change. As some industries grow, others must contract. But the corollary of this is that the community must treat fairly those whose skills and special training become in consequence no longer required in their former occupations or industries. Proper provision for redundancy is, therefore, of vital importance for economic growth. The problem is complicated, and many possible approaches have been suggested.
      For our part, the Government intend to tackle this problem vigorously in consultation with both sides of industry in the next few months, with a view to the publication of proposals and, if necessary, the introduction of legislation in the autumn. I intend, in particular, to examine whether there are any possible changes in the Income Tax system that could help in the establishment of effective redundancy schemes.
      For the longer term any Chancellor of the Exchequer is bound to be impressed by the great effort which is being devoted to the expansion of education, upon which our economic strength will depend. Total public expenditure on education in

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      1963–64 will be about 10 per cent. up on last year and it is moving up towards £1,300 million. Expenditure from public funds on universities, including awards to students, has risen from £36 million in 1952–53 to an estimated level of about £140 million in the coming financial year. This is a formidable figure when related to a university population which is now 117,000, and it represents a remarkable rate of growth. Expenditure on education is the most rapidly developing feature of the whole public outlay.

      REGIONAL PROBLEMS
      I have been talking of the need to make full use of our national resources of manpower in the economic context. There is one aspect of this problem that is of particular urgency because it has a human as well as an economic significance. I refer to the problem of regional unemployment.
      No one can doubt the intense human reasons for making further efforts to cope with the problem of regional unemployment. At the same time, however, the need for progress here should not be underestimated in the context of economic growth. It will not be possible to run this country at its full potential on a steady basis so long as full employment in Scotland and the North-East and Ulster mean overfull employment and serious shortages of labour in the Midlands and the South. The need for further progress with the problems of regional unemployment is, therefore, both social and economic, and the Government have decided on a number of major measures in this field, which I will now explain to the Committee.
      First, measures involving further public outlay. The Committee are aware that we have been considering the level of the Government grant to local authorities for expenditure on the clearance and rehabilitation of derelict sites in development districts. At present, the grant is 50 per cent. with a ceiling of 75 per cent. when rate deficiency grant is attracted.
      This, clearly, is not enough, and I have decided on increases to 85 per cent. and 95 per cent. respectively for all tenders approved in the next nine months. As a result, I hope that a substantial amount of new work will be undertaken quickly in the development districts of a kind
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      that will make a lasting and important contribution to the rehabilitation of the districts and thereby to their attractiveness to future industrial expansion.
      In Scotland, we have agreed to make a loan to Messrs. Wiggins Teape to finance the construction of an important pulp and paper mill at Fort William. The details will be announced tomorrow by my right hon. Friend the President of the Board of Trade, who will introduce the necessary legislation. The mill will provide a most valuable complement to the work of the Forestry Commission in the area, and I am confident that it will help with the establishment of a thriving community there.
      Turning to the North-East, we have decided to make a loan to the Tees Conservancy Commissioners to enable them to complete a major scheme of development known as Lackenby Dock, which will provide valuable additional facilities for ocean-going ships. Details will be announced in due course by my right hon. Friend the Minister of Transport. This is a very necessary part of the plans to strengthen the whole economy of the North-East on which my noble Friend the Lord President of the Council is now engaged.

      REGIONAL PROBLEMS

        AID FROM SURPLUS CAPACITY
        I announced on 17th December that the Government were prepared to agree to an additional £10 million of aid to under-developed countries, provided that this additional aid could be linked with spare productive capacity in this country. It seemed sensible that we should try to link the needs of the under-developed countries with idle productive resources in this country. The Committee may like to know what success we have had in this attempt.
        As was announced on 11th March, the first proposal to come to fruition was the making of a loan to Ghana to cover the cost of two ships to be built in the North-East. The loan was for rather more than £2 million, and the order will give employment to some hundreds of men for about eighteen months.
        Since the announcement about ships for Ghana, and indeed within the last few days, further loans have been arranged. We have agreed to make a loan of £3½ million to India, over and above the aid

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        that we had previously contemplated, to cover the cost of steel plates and other steel products of which the Indians stand in great need both for development and maintenance.
        We have also agreed in principle to make a loan of £2 million to Pakistan to buy sugar machinery, and further loans totalling about £2 million to the East African Common Services Organisation for purchase of diesel locomotives and wagon ferries.
        Apart from these proposals which have now been successfully arranged, we are considering a number of others; and, in addition, we are trying to ensure, wherever possible, that aid under our existing commitments is linked with surplus capacity.

        LOCAL EMPLOYMENT ACT
        So much for further public outlay for the benefit of the development districts. I now turn to the question of inducing firms to establish themselves or to expand in these areas.
        In my view, the Local Employment Act has shown itself to be an instrument well designed for its purpose and has worked very successfully. I have a certain paternal interest, and I still think it is true. It has been represented from many quarters that it could be made still better—[HON. MEMBERS: "Hear, hear."] that is what I propose to do—if enterprises considering setting up or expanding in development districts could be given in advance some more precise indication of the financial benefits that would be available to them.
        The Government have decided to meet this point by introducing standard grants of 25 per cent. of the cost of buildings and 10 per cent. of the cost of plant and machinery. My right hon. Friend the President of the Board of Trade, who will give further details when he speaks tomorrow, intends to introduce amending legislation as soon as possible.

        TAX INCENTIVES
        The measures will, I am confident, be of great assistance to the development districts. But they are still not enough. I have, therefore, been looking at the question of using the tax system.
        The problems involved here, as I am sure the Committee is aware, are very serious, both in principle and in terms of administration. The integrity of our tax system depends very much upon its being fair to all concerned, and upon the avoidance of discrimination. Moreover, special regional rates of, say, Profits Tax or Purchase Tax are, on practical grounds, impossible.
        Nevertheless, I have come to the conclusion that it is possible to introduce a system of special tax allowances for plant installed in areas of high unemployment. They will be available not only to incoming firms, but also to existing firms in these areas. They will, therefore, contribute to improving the industrial tone of the districts as a whole and I believe that this is the right way to tackle the problem.
        The system I have chosen is one that will allow industrialists to write off their capital equipment at any rate they choose, a system which I will describe as "free depreciation". This is an entirely new departure. For the country as a whole the cost might well be prohibitive. If businessmen generally took advantage of such a provision to write off as much as possible of their new investment in the first year, the cost to the Revenue might run into many hundreds of millions of pounds. But where the areas of high unemployment are concerned, I think that it is right, as I have said in the past, to take risks that could not be justified if they were applied throughout the whole country.
        I therefore propose to introduce in the areas of high unemployment this system of free depreciation for new plant and machinery.
        The effect can be summarised in this way. The businessman making an investment in these qualifying areas can write off for tax purposes the expenditure he incurs after today on new plant and machinery at any rate he chooses. He need not, therefore, pay a penny piece of taxation until he has written off his entire investment in new plant and machinery, plus the 30 per cent. investment allowance. It seems to me that this should be a very formidable incentive indeed to investment in these districts.
        Because it is so formidable, some special considerations arise. I shall have

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        to define both the limits of the plant involved and the areas involved very carefully. The scheme will only apply to new plant and machinery used in productive industry, not to that used in distributive trades or in services. It will not apply to mobile items, such as lorries that can be readily moved to another area. If plant and machinery which is allowed to qualify is moved elsewhere, then the extra allowances will have to be recouped.
        The cost this year will be negligible, but it may be about £25 million next year and might rise to a maximum of £45 million in 1966–67.
        For the areas, I propose to take the development districts in Great Britain, as they now stand, and the whole of Northern Ireland. The principle of "free depreciation" is not the same as that of the assistance under the Local Employment Act. One is to encourage the expansion and modernisation of plant by all industrial undertakings in or coming to the area; the other is to encourage specific projects to provide employment. I regard these principles not as overlapping, but as complementary.
        It seems logical to use the same districts for "free depreciation" as for the Local Employment Act. When an area is scheduled as a development district, all industrial firms in the area will become eligible for "free depreciation"; and when the area ceases to be a development district new purchases of plant and machinery will no longer be eligible for "free depreciation".
        I must emphasise that the combination of this tax incentive and the new standard benefits will provide great advantages for any firm in a development district or moving to one. The greater the assistance given to special districts, the greater will be the differentiation between those inside and those just outside the boundary. This is inevitable. But if the scheme is to succeed the boundaries must be clearly established and then firmly accepted, and I invite the co-operation of the Committee in meeting this necessary condition.
        By this combination of new measures—the further public outlay on capital works, the new standard benefits to be announced in detail tomorrow, and this new, and I think revolutionary, principle of tax
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        Incentive—we are making a series of major moves to tackle the problem of local employment. The extent and nature of our decisions shows clearly our determination to solve this problem, and our appreciation of its importance, both for the society and for the economy of the country.

      MODERNISATION, EFFICIENCY, COSTS—INDUSTRIAL PROBLEMS
      I have been dealing with the human element in a growth programme. I turn now to some of the problems of a more industrial character: the basic industries and the need for private industry to invest, to export, and to increase efficiency.
      MODERNISATION, EFFICIENCY, COSTS—INDUSTRIAL PROBLEMS

        TRANSPORT
        First, two basic industries and services—transport and energy.
        I would emphasise to the Committee the importance of Dr. Beeching's proposals for the rationalisation of the freight services, with the great potentialities of lower transport costs which these present, and the elimination of clearly uneconomic passenger services. This is important to the Exchequer, for it is the practical route to a great reduction in the bill for transport subsidies, which is now nearly £150 million. But it is crucial for industry, and to the growth of the national economy.
        In another sector of the transport industry much in need of modernisation, the ports, my right hon. Friend the Minister of Transport has announced the Government's intention to proceed on the lines proposed by the Rochdale Committee.
        On roads, the Government's long-term programme is pushing ahead, and the Vote is up by £21 million to £172 million.

        ENERGY
        Turning to energy, the electricity industry's investment will increase this year by £114 million. The gas industry is in a period of technological transformation, and its investment is up by £13 million. These developments are reflected in a large increase in Exchequer advances. Provided that these industries are achieving their agreed financial objectives, I regard these Exchequer advances as the equivalent in nationalised industry of the

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        increase in capital of profitable and expanding private industrial undertakings. In other words, they are a necessary part of economic growth.
        The powers to make Exchequer advances to the gas and electricity industries expire at the end of August, and I shall be moving a special procedure Resolution to enable these powers to be renewed in the Finance Bill.
        I turn now to coal, which provides about 70 per cent. of our energy supplies—and its share in the fuelling of British industry is even greater. Coal prices will be the main element in our fuel costs for many years to come. Last July, my right hon. Friend the Minister of Power announced the Coal Board's policies for reshaping the industry and making it competitive. The Committee will recall that for the five years up to 1962 the industry incurred losses and in 1961 we had to legislate to provide temporarily for deficit financing.
        The new policies are proving effective. Last year, there was a record improvement in productivity, which increased by about 8 per cent., and a fall in total costs of production per ton. Proceeds per ton of coal sold are falling, partly as a result of the changing pattern of sales and partly as a result of more competitive selling which the new circumstances make possible. In 1962, the industry made a small profit, and Lord Robens tells me that this year it has a very good prospect of achieving its financial target.
        Against this background I considered whether to reduce the duty on fuel oil. I have been pressed to remove this duty to lower industrial costs. I cannot consider this solely from a revenue point of view, but must take into account the widest long-term economic interests.
        To remove the duty now would change the terms of competition against coal and in favour of oil. This would help certain industries, notably cement, steel and parts of the chemical industry, which are heavy users of fuel oil. The Coal Board would no doubt try to meet the extra competition and to compensate itself by raising other prices wherever it could do so commercially. And I am sure that we should have to accept the prospect that the industry would be pushed back into deficit, and that we should need to legislate again to give financial assistance.
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        The public would have to pay, either as consumer or as taxpayer. Even more seriously, the setback to the industry would inevitably undermine its growing confidence and threaten to disrupt the plan for redeployment of manpower and to frustrate the policies upon which we and the Board are relying for the future.
        I have to decide whether the quick reductions in the costs of certain industries which would result from the removal of the duty would outweigh both the immediate damage to the coal industry and the risk of disrupting and even preventing the long-term recovery of the full competitive efficiency of the industry. The issue is not between a policy which reduces costs to industry and one that does not. If the duty is left unchanged this year, Lord Robens is confident that, with production costs continuing to fall, he will be able to make price reductions to certain sections of consumers during 1963.
        My judgment is that the decisive consideration from the national point of view is that of the long-term competitive power of the coal industry. I have, therefore, decided that the time is not yet ripe to reduce the duty.

        INDUSTRIAL LIGHT OILS
        There is one other aspect of oil duty, that on light oils used as raw materials, or as solvents or preservatives, or for similar purposes, in industrial processes, The duty of 2s. 9d. a gallon on industrial light oils imposes a special additional burden on a number of industries which happen to use oil in the actual manufacture of their products, one which many of their overseas competitors do not have to carry. I accept in principle the claim for some form of duty relief for industrial light oils. I do not propose, however, to ask the Committee to agree to a Resolution on this subject today, because the method of giving relief requires further consideration.
        Customs and Excise will at once begin discussions about this with the industries concerned and with the oil companies. They are bound to be technical and complex; but rather than proceed in a piecemeal way, I would prefer to deal with the case for relief as a whole, and I see no reason why legislation which substantially meets the case should not be introduced next year.
        This relief will represent a useful reduction in costs in a number of industrial processes. When fully operative it is expected to reduce the burden on costs of production by up to £10 million a year.
        I also propose to make certain minor improvements in the administration of the duties on hydrocarbon oils, to take account of technical developments.

        MANUFACTURING INDUSTRY
        I turn now to manufacturing industry generally. For a programme of more rapid growth two things are needed: first, a higher level of investment; and, secondly, a better use of our resources, both present and future. I think that there is sometimes a tendency to overestimate the relative importance of the first and underestimate the possibilities of the second. The amount that could be achieved, and achieved rapidly, by better management and better deployment of our resources, and more rapid use of modern techniques may be very much larger than at present we suspect. But here responsibility must rest very much upon management and unions: management to search out new machinery and new methods, labour to encourage their introduction.
        The responsibility of the Government lies particularly in the field of encouraging investment, both by making it more profitable to invest and by helping to ensure the flow of funds for investment. In this field, the Government are doing, and will do, their part, as I intend to demonstrate, and we shall look to management and labour to do their part, also.

        CAPITAL ALLOWANCES
        I announced last November major improvements in the capital allowances designed to encourage new investment in industry. The Finance Bill will put these into effect. They include, as the Committee is aware, increases in the investment allowances, substantial acceleration of the annual allowances for heavy plant, and a new tax deal for scientific research. For technical reasons this last item has a separate Resolution.
        Taken together, these increased investment allowances and the new minimum rate of 15 per cent. for plant and
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        machinery will be of immense benefit to British industry. The depreciation allowances now available to British industry compare favourably with any of their competitors in the Western world. Effectively, 100 per cent. of the cost of plant and machinery can be written off in seven years and then there is still 30 per cent. to come.
        In addition to these changes, which I announced last November, I propose now to make some further improvements. I will simplify the depreciation code by fixing only two higher annual rates for new plant and machinery, namely, 20 per cent. and 25 per cent., according to the expected life. Where plant already qualifies for more than 25 per cent, the existing higher rate will be preserved. This will both improve and simplify the position so far as plant and machinery is concerned.
        Turning to new industrial buildings and structures, it has been represented to me that the present system of a 2 per cent. annual allowance corresponding to an assumed life of 50 years is unrealistic. I accept this argument and I propose, therefore, as regards expenditure on new industrial buildings becoming due and payable after 5th November last year, to double the annual rate from 2 per cent. to 4 per cent.
        The cost to the Exchequer of all these changes is only £11 million this year, but it will rise to about £130 million by 1966–67. This is the measure of their importance to British industry.

      STAMP DUTY
      It is one thing to encourage the investment of capital by increased capital allowances. The other side of the coin—perhaps equally important—is to encourage the provision of the savings to finance this investment. It is also essential to remove the existing disabilities to increasing our invisible earnings.
      The Stamp Duty on stock transfers and on house conveyances was doubled in 1947. I am convinced that this was a mistake. The 2 per cent. rate of duty is substantially higher than in any other country in Europe or North America and has many unfortunate effects. It drives business, and therefore invisible earnings, from London. It is a strong

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      disincentive to investment in Britain by people in other countries. It discourages investment in productive industry, not least by the small investor. It tends to raise the cost of issuing capital.
      And in the field of house property, despite various reliefs given in the past especially for purchase of small houses, Stamp Duty certainly increases the cost of buying a house, obtaining a mortgage, or buying a lease, and so adds to the difficulties of moving from place to place and from job to job. I am, therefore, satisfied that this level of Stamp Duty is a disincentive to increasing our invisible income, an obstacle to growth and a hindrance to the full development of our economy.
      I therefore propose to restore the duty on transfers and conveyances to the original level of 1 per cent. I also propose to raise the exemption from Stamp Duty for house purchase from £3,500 to £4,500. A number of other duties which were doubled in 1947 will also be halved, for example, the duties on mortgages and leases. Full details will be given in the White Paper.
      I propose to make changes in the rules affecting bearer securities to help to improve our invisible earnings. These securities have always been attractive to foreign investors. I intend to remove the ban on them that at present exists under the Exchange Control Act, and to take other necessary measures such as restoration of the right to exchange Government stock into bearer where this right originally existed.
      As a result of the reduction I have just announced in the transfer duty, the existing rates on bearer securities of 6 per cent. and 4 per cent. will be reduced to 3 per cent. and 2 per cent.
      I propose, at the same time, to deal with a number of anomalies in this field. In particular, provision will be made in the Finance Bill to alter the existing basis for the calculation of duty on bearer from nominal to market value. Without this change it would be very profitable to convert into bearer form registered securities whose market value is well in excess of nominal value. By changing the law I shall prevent the loss of revenue, and, at the same time, avoid giving an encouragement of an artificial character to the conversion of registered into bearer securities.
      The cost of all these Stamp Duty changes, which will take effect from 1st August, will be about £27 million in the current year and £40 million in a full year.

      INCOME TAX CHANGES
      I have now described a series of measures designed to remove obstacles to growth and to encourage the development of our national resources, both human and material. These are the foundations of long-term growth. The cost of all the tax changes I have so far announced amounts to £83 million this year. On the Budget judgment that I explained to the Committee, this clearly leaves room for a further large impetus to demand this year to take up the existing slack in the economy.
      I have decided to concentrate this further relief in the field of direct taxation, as this is the method best calculated both to stimulate the economy and to encourage individual effort. At the same time, in view of the importance of incomes policy to our plans for expansion without inflation, I have framed the reductions in such a way as to spread the benefits as evenly as possible over the whole range of incomes, while giving particular attention to those with family responsibilities or other special claims.
      The reliefs will be concentrated on individuals. Companies will gain a great deal from the capital allowances I have already described; indeed, the annual benefit to companies will rise over the next four years to as much as £165 million a year. I do not think that the rate to which the tax on company profits has been reduced is generally understood. People often talk as if all companies actually paid a rate of nearly 54 per cent. of their commercial profits. But, in fact, no industrial company could pay tax at such a rate unless it failed to buy a single piece of new equipment in the course of a year for any purpose, including replacement. The effect of the investment allowances is that the average rate of taxation on industrial profits will not now exceed 48 per cent.
      Taxpayers who, quite recently, were subject to Surtax on earned income beginning at a little over £2,000, have just benefited, and in my opinion rightly,

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      from the substantial reduction in Surtax made by my predecessor.
      The increases in social service benefits that are now becoming effective represent for their recipients one of the biggest improvements ever made.
      In these circumstances, I conclude that this year the purposes of economic expansion and, in particular, the essential needs of incomes policy can best be served by a series of changes in the Income Tax structure involving the allowances and the reduced rates of tax. By this method I can distribute the benefit as widely as possible. Of any reduction in the standard rate, 32 per cent. would go to companies. So far as individuals are concerned, the standard rate has become something of a misnomer. With the present allowance for earned income no one pays tax at 7s. 9d. in the £ on any earnings under £5,000. For the family man with two children the effective overall rate of tax on earnings—including both Income Tax and Surtax—does not reach 7s. 9d. until he is making £10,000 a year.
      The changes I shall explain to the Committee will involve remissions of £186 million this year and £240 million in a full year, 42 per cent. of which will accrue to those earning below £1,000 a year and 50 per cent. to those earning between £1,000 and £2,000 a year. While, in most cases, the benefit in absolute terms will be higher at higher levels of income, which is both inevitable and just with any reduction of direct taxation, proportionately the benefits that I will propose will be greatest in the lower ranges of income.

      INCOME TAX CHANGES
        NATIONAL INSURANCE CONTRIBUTIONS
        First, one change that is the consequence of recent legislation. National Insurance contributions are soon to be increased, and I propose to raise the fiat standard adult employees allowance from £18 to £22 to take account of the pension element in the increase. All adult employees, other than women who have opted not to pay their insurance contributions, will get an increased allowance of £4 and there will be appropriate increases for the other classes affected. As so many people are involved, these changes will cost no less than £19 million this year and £24 million in a full year.
        AGE EXEMPTION
        At present, a single person aged 65 or over is exempt from Income Tax if his income does not exceed £300 and a married couple of whom one is 65 or over are exempt up to an income of £480. I propose that these limits shall be increased to £325 for single persons and £520 for married couples.

        AGE RELIEF
        Age relief applies where the taxpayer or his wife is aged 65 or over and his total income is not more than £800 and it gives the equivalent of earned income relief to investment income. I think that it is appropriate to extend this relief for elderly persons with modest investment incomes, and I propose that the income limit for age relief shall be increased from £800 to £900.
        Mr. Callaghan: I proposed this last year, when the right hon. Gentleman voted against it.
        Mr. Maudling: I am glad that the hon. Member approves of this change.
        I may add for the benefit of the hon. Gentleman, who so kindly intervened, that £900 a year at current rates of interest on National Savings represents an investment of £20,000.

        SMALL INCOME RELIEF
        The small income relief similarly gives the equivalent of earned income relief to investment income if the taxpayer is under 65 and his total income does not exceed £400. I propose that it shall go up from £400 to £450.

        INCOME TAX GRADUATION
        I turn now to the general range of Income Tax payers. I think that my main effort should be directed to improving the position of married people, particularly those with children.
        First, some changes at the bottom of the Income Tax scale. At present, the starting point for liability to Income Tax is about £200 for a single person and £330 for a married couple without children, that is, nearly £4 a week and £6 10s. a week respectively. That seems to be too low under modern conditions. For example, no one would wish to tax the war

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        widow of a private soldier who, under the new arrangements, will receive £234 a year.
        To raise the starting point simply by making sizeable increases in the single and married allowances would be very expensive and would distort the pattern of relief which should be given. I propose, therefore, to couple increases in these allowances with adjustments in the present reduced rate bands.
        The effect of the present reduced rates is that the first £60 of taxable income is taxed at 1s. 9d. in the £ and then there are two bands of £150 each taxed at 4s. 3d. and 6s. 3d. respectively. It is only after paying tax on the first £360 of taxable income that the standard rate applies.
        My proposal for raising the starting point and giving some relief higher up is to abolish the 1s. 9d. band. In place of the present 4s. 3d. and 6s. 3d. bands I propose to substitute one of £100 at 4s. and one of £200 at 6s. The abolition of the lowest band will be effected by raising single and married allowances by £60. The effect of this and of the alterations in the reduced rate bands is that those who pay only at 1s. 9d. in the £ will cease to pay at all. But the full benefit will not be carried all the way up the scale.
        The proposals I have just described will absorb rather less than half of the sum I mentioned. The major part I propose to devote to improving the relative position of families by increasing by £20 the difference between the single and the married allowances and by raising all the child allowances by £15. There will also be an increase in the child income limit from its present figure of £100 to £115.
        I should now summarise the changes which I have outlined. I propose that the single allowance should go up by £60 from £140 to £200, the married allowance by £80 from £240 to £320 and that all the child allowances should be increased by £15. The 1s. 9d. reduced rate disappears and the three reduced rates are replaced by one of 4s. on £100 and one of 6s. on the next £200.
        The effect of my proposals as a whole is to give relief to all existing Income Tax payers on a scale that proportionately gives greatest benefit at the lower levels. As incomes rise the benefits become greater for the family man, which, I
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        believe, will generally be regarded as right. I will give some practical examples of the effect of these proposals.
        At the average level of earnings of the ordinary man in employment, now £840, the effect will be a benefit for a single man of £5 11s., for a married man with no children £13 6s. and for a married man with two small children £17 15s.
        For a married man with two small children, at £700 a year, his present tax of £10 17s. is abolished; at £800 a year it falls from £27 8s. to £10 1s.; at £1,000 from £71 9s. to £51 15s.; and at £1,500 from £219 0s. to £194 0s. At £20,000 a year, and at present rates of Surtax, the full benefit in 1964–65 will be £51 19s.
        A reduction of 3d. in the standard rate would have given the married man with two small children no benefit at all at £1,000 a year and only about £4 at £1,500 a year.
        Full details are available in the Financial Statement. It will be seen from this that there will also be some relief for investment income, which as a result of the improvement in small income relief will be most valuable around the level of £500 a year investment income.
        The effect of all my proposals is to exempt from tax about 3¾ million people.
        All these changes will involve the preparation of new P.A.Y.E. tax tables and the Inland Revenue will have to do a lot of work in recoding tax payers for P.A.Y.E. The new scale of allowances and reliefs will be brought into operation for P.A.Y.E. on the first pay day after 5th July.

      SUMMARY
      In total, the changes in taxation I have announced will reduce revenue receipts by £269 million in 1963–64. Before Budget changes the accounts, as I have explained, show a surplus above the line of £179 million. The tax changes which I propose will, therefore, convert this into a deficit of £90 million. The net borrowing requirement will be increased from £418 million to £687 million.

      BUDGET RESOLUTIONS
      As the Committee is now receiving the Resolutions, I should like to mention a small change that I am making

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      this year. In the past, what is known as the Incidental Charges Resolution has listed in more or less detail the proposals for tax concessions that might create an incidental charge. This practice has had the effect of ruling out of order further proposals not mentioned in the Resolution if they were judged to impose, in exceptional circumstances, an incidental charge.
      The examination of Amendments to the Finance Bill to decide whether or not they imposed an incidental charge occupied a good deal of time, and as we all remember, would-be movers of Amendments and new Clauses have often felt frustrated by technicalities which had not been foreseen. This year, I am asking the Committee to approve an Incidental Charges Resolution that covers any provision designed in general to afford relief from taxation, and I hope that this change will be welcomed as a useful simplification of our procedures.
      As I said at the beginning, the proposals I have laid before the Committee this afternoon are designed to achieve our purpose of expansion without inflation. They are designed to do the share of the Government in achieving the target of a 4 per cent. annual rate of growth. I have framed my proposals in a rather unusual form because I wished to put them forward as a coherent unit with each individual change finding its logical place in the whole picture. I hope that I have succeeded.
      I end by impressing, once again, that Government policy alone cannot ensure success. There is need for a common effort led by Government, management and unions. I think that I can claim that today we are doing the Government's share. That has been my purpose.

      1. SURCHARGES AND REBATES IN RESPECT OF REVENUE DUTIES
      Motion made,
      That the period after which orders under section 9 of the Finance Act, 1961, may not be made or continue in force shall be extended till the end of August 1964.—[Mr. Maudling.]
      The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions).
      Question agreed to.
      The CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

      2. SPIRITS (CUSTOMS)
      Motion made, and Question,
      That as from 4th April 1963 the duties of customs chargeable on imported spirits other than perfumed spirits shall in the case of spirits of Convention area origin (within the meaning of the European Free Trade Association Act 1960) be charged as if the rates specified in Table I in Schedule 1 to the Finance Act 1962 were amended—

      (a) by substituting a rate of £15 13s. 8d. for the rate of £15 15s. 4d. (the rate per gallon for liqueurs, cordials, mixtures and other preparations in bottle, entered in such manner as to indicate that the strength is not to be tested); and

      (b) by substituting a rate of £11 12s. 3d. for the rate of £11 13s. 6d. (the rate per proof gallon for other imported spirits not being perfumed spirits).

      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]
      put and agreed to.

      3. BEER (CUSTOMS)
      Motion made, and Question,
      That as from 4th April 1963 the duties of customs and drawbacks of those duties chargeable or allowable on beer (other than black beer of an original gravity of 1200 degrees or more) shall in the case of beer of Convention area origin (within the meaning of the European Free Trade Association Act 1960) be charged or allowed as if the rates specified in Schedule 2 to the Finance Act 1962 were amended—

      (a) by substituting a rate of £6 3s. 5d. for the rate of £6 13s. 5d. (the rate of duty per 36 gallons); and

      (b) by substituting a rate of £6 3s. 2d. for the rate of £6 13s. 2d. (the rate of drawback per 36 gallons).

      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]
      put and agreed to.

      4. TOBACCO (CUSTOMS)
      Motion made, and Question,
      That as from 4th April 1963 the duties of customs chargeable on tobacco (other than unmanufactured tobacco) shall in the case of tobacco of Convention area origin (within the meaning of the European Free Trade Association Act 1960) be charged as if the rates per

      497
      pound specified in Table I in Schedule 4 to the Finance Act 1962 were amended by substituting for a rate specified in the second column of the following Table the corresponding rate specified in the third column thereof.

      TABLE

      Description of Tobacco

      Present Convention rate (per pound)

      New Convention rate (per pound)

      £

      s.

      d.

      £

      s.

      d.

      Tobacco manufactured, viz.—

      Cigars

      3

      19

      4

      3

      17

      10⅛

      Cigarettes

      3

      15

      2½

      3

      14

      0

      Cavendish or Negrohead

      3

      14

      3

      3

      13

      1½

      Other manufactured tobacco (not being Cavendish or Negro-head manufactured in bond)

      3

      12

      8

      3

      11

      8

      Snuff and snuff work (including tobacco dust or powder and ground tobacco)—

      Containing more than 13 lbs. of moisture in every 100 lbs. weight thereof

      3

      11

      11½

      3

      11

      0⅜

      Containing not more than 13 lbs. of moisture in every 100 lbs. weight thereof

      3

      14

      3

      3

      13

      1½

      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]
      put and agreed to.

      5. MECHANICAL LIGHTERS (CUSTOMS)
      Motion made, and Question,
      That as from 4th April, 1963, the duty of customs charged on mechanical lighters by section 6 of the Finance Act, 1928, shall in the case of mechanical lighters of Convention area origin (within the meaning of the European Free Trade Association Act, 1960) be charged at the rate of 6s. 0d. or, in the case of a gas lighter, at the rate of 4s. 0d.
      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Maudling.]
      put and agreed to.

      6. MATCHES (CUSTOMS AND EXCISE)
      Motion made and Question,
      That—

      (a) as from 4th April, 1963, the duties of customs charged on matches by section 4 of the Finance Act, 1951, shall in the case of matches of Convention area origin (within the meaning of the Euro-
      498
      pean Free Trade Association Act, 1960) be charged at rates equal to the rates of duties of excise charged on matches by that section; and

      (b) as from 1st September, 1963, the duties of customs and excise charged on matches by that section shall be charged at the same rates for matches in containers holding not more than 30 matches as are charged by that section for matches in containers holding more than 30 matches; and

      (c) as from 1st September, 1963, the duties of excise charged on matches by that section shall, instead of being charged on matches manufactured in the United Kingdom, be charged on matches sent out from the premises of a manufacturer of matches.

      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Maudling.]
      put and agreed to.

      7. CUSTOMS AND EXCISE (GOODS CONVEYED BY PIPE-LINE)
      Motion made, and Question,
      That provision shall be made for securing that, in certain cases where goods chargeable with a duty of customs or excise are conveyed by a pipe-line, the duty shall be paid by the owner of the line.—[Mr. Maudling.]
      put and agreed to.

      8. INCOME TAX (CHARGE AND RATES FOR 1963–64)
      Motion made, and Question,
      That income tax for the year 1963–64 shall he charged at the standard rate of 7s. 9d. in the pound, and, in the case of an individual whose total income exceeds £2,000, at such higher rates in respect of the excess as Parliament may hereafter determine.
      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Maudling.]
      put and agreed to.

      9. INCOME TAX (SURTAX RATES FOR 1962–63)
      Motion made, and Question,
      That income tax for the year 1962–63 shall be charged, in the case of an individual whose total income exceeded £2,000, at the same higher rates in respect of the excess as were charged for the year 1961–62.
      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Maudling.]
      put and agreed to.

      10. INCOME TAX (PERSONAL ETC. RELIEFS)
      Motion made, and Question,
      That—

      (a) the personal reliefs under section 210 of the Income Tax Act 1952 be increased by substituting £320 for £240 in subsection (1) (a) (married) and £200 for £140 in subsection (1) (b) (single), and in subsection (2) (wife's earned income relief) for £140 there be substituted £200;

      (b) in section 211 (2) and (3) of that Act for £800 (maximum income qualifying for full old age relief) there be substituted £900;

      (c) the child allowance under section 212 of that Act be increased by substituting £165, £140 and £115 respectively for the amounts of £150 (children over sixteen), £125 (children between eleven and sixteen), and £100 (children not over eleven) in subsection (1A), and the £100 specified in subsection (4) (maximum income of child if claimant not to be disqualified for relief) be increased to £115;

      (d) the amounts of £230 and £155 (total income of dependent' relative) specified for the purposes of section 216 of the said Act be each increased by £25;

      (e) the following Table be substituted for the Table set out in section 220 (1) of the said Act (reduced rate relief):—

      TABLE

      Where the relevant amount—

      does not exceed £100

      a deduction equal to 3s. 9d. for each pound of the relevant amount.

      does exceed £100, but does not exceed £300

      the same deduction as if the relevant amount were £100, plus 1s. 9d. for each pound of the relevant amount in excess of £100.

      exceeds £300

      the same deduction as if the relevant amount were £300;

      (f) in section 15 of the Finance Act 1952 (small income relief) for £400 in subsection (1) (maximum income for full relief) and in subsection (2) (marginal relief) there be substituted £450, and for £550 (limit for marginal relief) in subsection (2) there be substituted £680;
      (g) in section 13 of the Finance Act 1957 (relief for persons over sixty-five with small incomes) subsection (1) (a) (i) be amended by substituting for £300 (maximum iincome for full relief to a single man) £325, subsection (1) (a) (ii) be amended by substituting for £480 (maximum income for full relief to a married man) £520, and subsection (1) (b) (marginal relief) be amended correspondingly;
      (h) Schedule 3 to the Finance Act 1960 (relief for National Insurance contributions) be amended by increasing—

      (i) the amount specified in paragraphs 1, 3 (a) and 5 (a) of the Table set out in Part I of the Schedule by £4,

      500

      (ii) the amounts specified in paragraphs 3 (b) and 5 (b) of the Table by £3.

      (iii) the remaining amounts specified in the Table by £2, and

      (iv) each of the amounts of £5 specified in paragraph 2 of Part II to the Schedule by £2;

      Provided that the amounts of tax deductible or repayable under section 157 (pay as you earn) of the Income Tax Act 1952 before 6th July, 1963, shall be the same as if no such changes had been made as are above provided, but this provision shall not prevent the resulting over deductions and under repayments from being adjusted subsequently by means of diminished deductions or increased repayments under that section or, if need be, by an assessment.
      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]
      put and agreed to.

      11. INCOME TAX (PAY AS YOU EARN: ALTERATIONS CONNECTED WITH EXONERATION OF OWNER-OCCUPIERS FROM SCHEDULE A)
      Motion made, and Question,
      That, in connection with the removal from the charge to income tax of the occupier's beneficial interest in land in the United Kingdom, the necessary consequential alterations be made in the amounts of tax deductible or repayable under section 157 (pay as you earn) of the Income Tax Act 1952:
      Provided that the amounts of tax so deductible or repayable before 6th July 1963 shall be the same as if no alterations had been required, the alterations being made by adjusting subsequent deductions or repayments or, if need be, by an assessment.
      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]
      put and agreed to.

      12. INCOME TAX (MISCELLANEOUS PRO VISIONS CONNECTED WITH EXONERA TION OF OWNER-OCCUPIERS FROM SCHEDULE A, AND OTHER PROVISIONS RELATING TO LAND)
      Motion made, and Question,
      That it is expedient to authorise such charges to income tax as arise from provisions connected with the removal from the charge to tax of the occupier's beneficial interest in land in the United Kingdom and other provisions relating to land, and in particular from—

      (a) the restriction of claims under section 101 of the Income Tax Act 1952 (maintenance claims);

      501

      (b) provision in respect of the payment of premiums and of other transactions relevant to the amount of rent, or which can be carried out as an alternative to the charging of premiums or the letting of land, and for extending in relation to transactions in land the provisions of Chapter IV of Part XVIII of the said Act of 1952;

      (c) provision for the collection of outstanding tax under Schedule A;

      (d) provision as to woodlands;

      (e) the disallowance of deductions in respect of the annual value of land occupied for the purposes of a trade, profession or vocation, and amendments as to what amounts are to be treated as consideration for the grant of a tenancy, and what as rent, in computing the profits or gains of a trade of dealing in land.—[Mr. Maudling.]

      put and agreed to.

      13. INCOME TAX (QUARRIES OF SAND OR GRAVEL ETC.)
      Motion made, and Question,
      That, so long as tax is chargeable under Schedule A, the concerns specified in the proviso to paragraph 1 of Schedule A (mining and other concerns the profits of which are charged under Case I of Schedule D) shall include quarries of sand or gravel, sandpits, gravelpits and brickfields.
      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]
      put and agreed to.

      14. INCOME TAX (SCIENTIFIC RESEARCH ALLOWANCES)
      Motion made, and Question,
      That it is expedient to amend the provisions applying on the sale or destruction of an asset in respect of which a deduction has been made under Section 336 of the Income Tax Act 1952 in charging the profits or gains of a trade.—[Mr. Maudling.]
      put and agreed to.

      15. INCOME TAX (CAPITAL ALLOWANCES, ETC., FOR VEHICLES)
      Motion made, and Question,
      That it is expedient to amend the provisions of Sections 23 to 27 of the Finance Act 1961.—[Mr. Maudling.]
      put and agreed to.

      16. INCOME TAX (CO-OPERATIVE HOUSING ASSOCIATIONS)
      Motion made, and Question,
      That interest and other annual payments falling within Section 177 of the Income Tax Act 1952 (payments payable subject to deduction of tax) which are payable by certain
      502
      approved housing associations be treated for tax purposes as payable severally by the member in specified proportions.—[Mr. Maudling.]
      put and agreed to.

      17. INCOME TAX (PREMISES PROVIDED FOR HOLDERS OF OFFICES OR EMPLOYMENTS)
      Motion made, and Question,
      That provision be made for including in emoluments chargeable under Schedule F. an amount in respect of premises occupied by, or by the wife or husband of, the holder of an office or employment (including any person who is a director within the meaning of Section 163 (1) of the Income Tax Act 1952) at no rent or a rent less than the annual value.—[Mr. Maudling.]
      put and agreed to.

      18. INCOME TAX (DISCONTINUANCE OF TRADES, ETC.)
      Motion made, and Question.
      That where a trade, profession or vocation is permanently discontinued in 1964–65 or any subsequent year of assessment income tax for the two years of assessment immediately preceding shall in certain cases be charged by reference to the profits or gains of those years, and the provisions of the Income Tax Acts relating to the charging of tax where there is a discontinuance shall be amended accordingly.—[Mr. Maudling.]
      put and agreed to.

      19. INCOME TAX (DIVIDENDS ON BONDS TO BEARER)
      Motion made, and Question,
      That profits arising from certain public revenue dividends mentioned in Schedule C, being dividends paid by means of coupons in respect of bonds or certificates to hearer, be charged under the relevant paragraph of that Schedule, and not under Case III of Schedule D, whatever the amount of the half-yearly payments.—[Mr. Maudling.]
      put and agreed to.

      20. INCOME TAX (INDIA, PAKISTAN AND BURMA PENSIONS)
      Motion made, and Question,
      That the exemption from Income Tax conferred by Section 40 (1) of the Finance Act 1956 in respect of a pension which is paid under the authority of the Pensions (India Pakistan and Burma) Act 1955 shall not apply to so much of any such pension as is paid by virtue of the application to the pension of the Pensions (Increase) Act 1959 or the Pensions (Increase) Act 1962.
      And it is hereby declared that it is expedient in the public interest that this Resolution

      503
      should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]
      put and agreed to.

      21. GIFTS IN CONSIDERATION OF MARRIAGE (ESTATE DUTY AND STAMP DUTIES)
      Motion made, and Question,
      That provision be made, for the purposes of estate duty and stamp duties, for restricting the exemption from duty of gifts made in consideration of marriage and for treating dispositions made on or in contemplation of marriage by either of the parties thereto as gifts.—[Mr. Maudling.]
      put and agreed to.

      22. ESTATE DUTY (VALUATION BY REFERENCE TO SCHEDULE A VALUE OF LAND).
      Motion made, and Question,
      That any provision of the enactments relating to estate duty which provides for any value to be restricted by reference to the annual value of land for purposes of income tax under Schedule A shall cease to have effect.—[Mr. Maudling.]
      put and agreed to.

      23. STAMP DUTIES (SECURITIES FOR ANNUITIES ETC.)
      Motion made, and Question,
      That further provision he made with respect to the stamp duty chargeable on securities for annuities or sums of money at stated periods or for the payment or repayment of money.—[Mr. Maudling.]
      put and agreed to.

      24. STAMP DUTIES (MARKETABLE SECURITIES ETC.)
      Motion made, and Question,
      That further provision be made with respect to the stamp duties chargeable in respect of, or on the transfer of,—

      (a) marketable securities;

      (b) share warrants, stock certificates to bearer, instruments to which section 6 of the Finance Act 1899 applies and other similar certificates and instruments;

      (c) securities and stock of Commonwealth governments;

      and that section 44 of the Finance Act 1944 be repealed.—[Mr. Maudling.]
      put and agreed to.

      25. STAMP DUTIES (LEASES)
      Motion made, and Question,
      That it is expedient to authorise charges to stamp duty arising from—

      (a) any provision for treating as a lease for a definite term any lease granted for a
      504
      fixed term and thereafter until determined, and for construing section 75 of the Stamp Act 1891 accordingly;

      (b) any provision relating to the duty chargeable under paragraph (2) (a) of the heading "Lease or Tack" in Schedule 1 to that Act.—[Mr. Maudling.]

      put and agreed to.

      26. INCIDENTAL AND CONSEQUENTIAL CHARGES (INCOME TAX, ESTATE DUTY AND STAMP DUTIES).
      Motion made, and Question,
      That it is expedient to authorise any incidental or consequential charges to income tax, estate duty or stamp duties which may arise from provisions designed in general to afford relief from taxation.—[Mr. Maudling.]
      put and agreed to.

      27. PROFITS TAX (MISCELLANEOUS CHARGES)
      Motion made, and Question,
      That it is expedient to authorise charges to the profits tax which arise from provisions for that tax corresponding with amendments of the law relating to income tax or are incidental to or consequential on such amendments.—[Mr. Maudling.]
      put and agreed to.

      28. REDEMPTION OF GUARANTEED LAND STOCK
      Motion made, and Question,
      That, in connection with the redemption of any stock created under the Purchase of Land (Ireland) Act 1891, any part of the Sinking Fund established under that Act which is not applied in the redemption of the stock may be paid into the Exchequer.—[Mr. Maudling.]
      put and agreed to.

      29. AMENDMENT OF THE LAW
      Motion made, and Question proposed,
      That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description or for all goods to which any of the several rates of tax at present applies.—[Mr. Maudling.]
      5.22 p.m.
      Mr. Harold Wilson: It is traditional that the first speech after the moving of the Budget Resolutions should be devoted to the courtesy of congratulating the Chancellor on the manner in which he has presented his Budget to the Committee. I think I can certainly say today that this is no empty ceremony.

      505
      Quite apart from the contents, on which I shall have a word or two to say in a moment, the whole Committee will agree in complimenting the Chancellor on the very clear way in which he presented the Budget and held the attention of the Committee throughout.
      I was perhaps in a better position than many to test him on this—if I may be permitted a personal note—having not been to bed all night and having had very little sleep. If the Chancellor's speech had been a little dull, even for a little time, while he was addressing us, I would have gone off to sleep, but I can say that I gave my full attention to the Chancellor and he held the full attention of everyone in the Committee.
      I think the breach of precedent which he said he would make, the departure from traditional policy, was in general for the convenience of the Committee. Although we may want to think about it a little in future, I believe that in general the Committee preferred this to the lengthy exercise of putting time on until the markets had closed and then giving us all the real proposals the Chancellor is to make, all the guts of his proposals, in a mad rush at the end in a way in which the Committee cannot properly absorb. I think the change was right. Some of his minor tax reliefs obviously will be welcomed, and also his statement that we are to have a White Paper dealing with a new form of Budget accounts. I think the Chancellor is quite right to be doing that.
      The Chancellor told us that the theme of his Budget is expansion. We welcome those words from him, that the theme is expansion. They were exactly the same words which were used exactly four years ago by one of his predecessors—not last year, not in 1961, emphatically not in 1961, not in 1960, when taxes were increased just after the last election, but four years ago, in 1959. The emphasis then was on expansion, and it is again today. Again it is the same theme, which we heard, not in 1958, 1957, and 1956 when the present Prime Minister was Chancellor, but in 1955. Then the theme of the right hon. Gentleman the present First Secretary of State was expansion, because, of course, expansion for hon. Members opposite is not a continuing philosophy. It is a quadrennial inspiration animated by factors other than purely economic ones.
      506
      I well remember in 1959 the then Chancellor of the Exchequer saying that not only he but the whole of the Treasury Bench were expansionists. We were deeply moved at the time; we welcomed it. I remember making some remarks about the technical character of the mass baptism we were witnessing. But where were these expansionists in 1960, in April, 1961, or in the "Little Budget" brought in by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) in July, 1961? The plain fact is that today the present level of unemployment, the fact that for three years our production has barely increased at all and the continuing failure to keep up with all our main trading rivals in the matter of industrial expansion, are the result of the Government's failure to follow expansion programmes and policies once the 1959 Budget had done its political work.
      So our criticism is certainly not that the Government have been expansionist this year in the Budget—we welcome it. Our criticism is that for three years past they have held back expansion deliberately as part of their fiscal policy. It has been quite deliberate that an overcautious policy should be followed year after year so that the right hon. Gentleman should be able this year to hand out something in the Budget this afternoon. It is not merely that we can say this looking back. I think we can claim in every detail that we said this would happen. This was the theme of our debate on 18th July, 1961, when we said that this was the policy which would be followed and that the Budget of 1963 would bring in a glorious financial bonanza. I think we can claim that as long ago as May, 1958, this four-year electoral cycle was the policy of the Government.
      If the Chancellor is right to do today what he has done, for example, for the unemployment areas, for example, for the general motive of stimulating the economy—I think he is right to do these things today—we might ask why it was not done last year? Can any lion. Member suggest a real reason why if the economy was so weak last year and is so strong this year that we can afford to do it this year but could not afford to do it last year? It will he obvious that if these Measures are as effective for dealing with unemployment as the right hon.

      507
      Gentleman hopes they would have been just as effective a year ago in preventing unemployment as in curing it.
      Many hon. Members will not judge the Budget on detailed tax changes, to which I shall turn in a moment, but on the size of the hand-out. It might be interesting to show the Committee the way in which the pattern of hand-outs has been followed in the last ten years. In 1954 there was a net hand-out of £5·8 million. In 1955 the hand-out was £155½ million. That was the first Budget of 1955. After the election, of course, we had an autumn Budget, in which the hand-out was minus £113 million—£113 million was clawed back very largely—[An HON. MEMBER: "What about the 1951 Budget?"] No one could accuse us of having an election Budget in 1951. But in 1955, £113 million was clawed back from those who had the benefit in April. Then in 1956, the election over, and with a new Chancellor, the Budget was colourless. It was a total hand-out of only £1·6 million. That was about 100th of what it had been a year earlier. In 1957 theer was a hand-out of £11·7 million, mostly in respect of overseas trading corporations. In 1958 there was a hand-out of £9·7 million, and, of course in 1959 the tremendous hand-out of £320 million.
      Of course, that was 1959, and some of my cynical hon. Friends thought that it had something to do with an election. But, of course, it had not. It was due to the conversion of the Government Front Bench to the principles of expansion, and in 1960 the Government showed how lasting was their conversion by having a hand-out of, again, minus £72 million. Six months after the election they took net £72 million off the taxpayer. In 1961, £110 million was taken away by the right hon. and learned Member for Wirral, and I am not dealing here with all that the right hon. and learned Gentleman did in the course of the following year. I think that in 1962 the figure was about £9 million taken away. It was nearly neutral last year. In 1963 we are having a net hand-out of £250 million. The quadrennial pattern is being preserved.
      If we take all the Budgets for the years 1954 to 1962 we find that the net
      508
      reductions in tax liabilities in those nine Budgets amounted to £457 million. The whole of this was given in 1955 and 1959. Indeed, what was then given exceeded that figure. The Government gave in those two Budgets out of the nine in those years a net hand-out of £515 million and spent the other seven Budgets clawing it back. If we bring in the 1963 Budget, then for the ten years we have a net concession of £707 million, and the amounts given away in 1955, 1959 and 1963, the magic years, add up to £765 million. The remaining seven Budgets out of the ten in that period have produced net increases in taxation.
      I thought this might help the Committee to understand the economic motivation that we have been having in these matters. Of course, the Chancellor is right to reflate. I think that should be said absolutely clearly. But, of course, he or his predecessor should never have deflated to the point where this amount of reflation was necessary. Last year, for example, my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) made as his main criticism of the Budget of 1962 the fact that it was too deflationary, and so it has proved. If we had had a steady expansion year by year this would have meant not only a higher standard of living and a bigger contribution to the under-developed areas, but a higher standing for us in the world. The stop-go economy has lost us not only a great deal of worth but a great deal of influence in the world.
      The National Economic Development Council now recommends a 4 per cent. increase per annum. If the Government had made that their target twelve years ago, and stuck to it, we should have increased the national output by £3,400 million more than has actually been achieved. Because of the Government's failure to maintain a steady increase in production and because of this timid holding down of the economy for three years out of four, the nation's production today is £3,400 million a year less than it would have been if the N.E.D.C. target had been followed over that period.
      Nevertheless, however late and however precarious some of us may regard the nature of the right hon. Gentleman's conversion, we welcome his support for the principle of expansion. May I say that I welcome the very heavy concentration in

      509
      the early part of his speech and in some of his proposals on measures to get industry moving again and to encourage investment in industry? As I say, we must ask the right hon. Gentleman why, if it is right this year to do this, it was not done last year so that the unemployment we are now having would not have developed into a great deal of hardship, and certainly unemployment areas would have been avoided.
      I am glad the right hon. Gentleman said that expanding production and a strong £ go together. I am glad that he has come round to this view. Of course, the £ a year ago was at least as strong as it is today, and if it is safe to embark on this expansionist programme today in order to reduce unemployment, why was it not safe to do it a year ago? As I say, the £ was at least as strong then, and some say stronger than at present. However, I am very glad that the right hon. Gentleman has said that in his view expansion is the road to a strong £ and is not incompatible with it.
      We on this side of the Committee have said that in the House year after year, and what we said on this point was rejected by Chancellor after Chancellor opposite. From the Prime Minister onwards, we were told that the £ would be endangered unless we cut down production and held it down, and that we were trying to do too much. That was the theme of every Chancellor until today's speech by the right hon. Gentleman. But I am not suggesting that the present Chancellor is of a different category from his predecessors, because I remember him arguing this in the most sophisticated manner in every financial and Budget debate which we had between 1955 and 1961, or even 1962.
      It is clear—indeed I should have thought it obvious—at least to say that it is the restrictionist, the sluggish economy, the economy where we have factories and plants working below capacity, a situation such as that which puts up costs and endangers sterling. It is when we have a booming economy—not inflation—growing all the time that we have the factories necesary to produce the strong £. I am glad that the Chancellor agrees with that.
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      On what the right hon. Gentleman said about world liquidity, and I thank him for welcoming new allies to this campaign of his, if he will turn to HANSARD for 26th November, 1959—he had better check this; I have not had a chance to look it up, but I am willing to chance my arm on it—he will find that in the debate on the Radcliffe Report we on this side of the Committee put forward very much what he has put forward in the so-called "Maudling Plan"—and a great deal more—in our terms for world liquidity. As I say, we welcome these new allies and we also welcome the right hon. Gentleman's conversion to what we said two years and more ago on incomes policy.
      The right hon. Gentleman says that we must always relate incomes policy to production, but two years ago the Government's policy was to restrict production and then to tailor the wages system to fit a contracting economy and to use some brutal means to enforce that policy. We welcome also the right hon. Gentleman's conversion—and I want the Committee to understand that I do not underrate at all the importance of all this—to proposals which we made long ago for linking aid to underdeveloped countries to the unemployment problems of this country, and also his conversion to—and it is wonderful what a couple of by-elections will do—and his acceptance of our view that the Local Employment Act was a dead loss, as my hon. Friends have been saying over the past two or three years.
      We also very much welcome his acceptance of the principle of a discriminatory tax relief for industry going to development areas. We voted for it last year and in previous years. The Chancellor went into the Division Lobby against it. So did all hon. Members opposite, who cheered him when he made the announcement today, including the hon. Member for Esher (Sir W. Robson Brown), who, when he heard it, shouted "Brilliant". Obviously the hon. Member was so overcome by the novelty of the proposal that he has not come back to us.
      I also welcome very much the Chancellor's idea of writing off the full extent of expenditure by a businessman in these development areas. This is the system

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      first introduced in Sweden, as the Chancellor knows. I think that with all modesty we can say that we have pressed for it year after year. That is on the record. I think that I know past Budget debates and speeches sufficiently well to be prepared to accept challenges on this. I would not make this statement unless I were prepared to have a substantial wager with the President of the Board of Trade about finding the necessary chapter and verse.
      All these things we welcome, but I ask again, why were they not done before? If they are so essential for the unemployment areas—and we welcome them as a significant contribution—why were they not done in 1959? Why were they not done in 1962 so that the tragedy of the unemployment areas of the last year could have been avoided?
      Before I sit down, I have a few comments to make on detailed items. The House would not expect me today to go over all the detailed proposals, and it would not be in accordance with the tradition of the House for me to do so. If he catches the eye of the Chair tomorrow, my hon. Friend the Member for Cardiff, South-East will spend a great deal more time dealing with these things. May I refer to one or two?
      We support what the Chancellor announced today about Schedule A. We have often gone into the Division Lobby in support of this proposal, and we have had some rather odd company with us on some occasions. We have been there at any rate in support of a modified form of what the Chancellor has done.
      We welcome the statement in his speech about the tapering of the child allowance. My hon. Friend tomorrow will deal with the restoration of allowances for Rolls-Royce cars and similar cars. I find it a little difficult so soon after the Chancellor's speech to see how this proposal fits into his incomes policy, because there is no doubt who will be cheering this concession. He suggested that it would be the Rolls-Royce workers. I admit that I have never known a Tory Chancellor lack a respectably sounding excuse for a piece of cheerful aid for a limited number of people. We had an example on the Surtax concession three years ago. It was said that it would produce incentives and increase production and exports. In
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      fact, production has not increased since then and exports have increased less than in almost any other country in the world. We always hear these respectable reasons.
      But the Chancellor should recognise that restoring the full fiscal allowance means at the end, stripped of all hypocrisy, that more expensive cars will be running around the country at the Chancellor's expense for the benefit of individuals. This money comes out of the public purse, out of the taxpayer. Yet when my hon. Friends and I go to the Chancellor or the Minister of Health for an allocation of a few dozen invalid cars for paraplegic ex-miners or to extend the provision of cars to some disabled ex-Service men, we are told that the country would be bankrupt if this concession were made. But all the money comes out of the same national pool.
      Mr. Grant-Ferris: Does the right hon. Gentleman realise that this concession will bring a tremendous advantage to my constituents in Nantwich and also to those of his hon. and learned Friend the Member for Crewe (Mr. Scholefield Allen)? Is he aware that there will be great rejoicing in Crewe and Nantwich?
      Mr. Wilson: I have dealt with that point. It was fully made two years ago, but I do not remember a substantial number of hon. Members voting against the proposal two years ago when exactly the same argument was put by hon. Members on both sides of the House.
      The President of the Board of Trade (Mr. F. J. Erroll): Why did not the right hon. Gentleman vote against it today?
      Mr. George Thomas: Be quiet.
      Mr. Wilson: The right hon. Gentleman will not be disappointed when he sees the Amendments which we put down to the Finance Bill after we have had our usual quick consultation.
      The right hon. Gentleman also referred to gambling. We note that he is to examine this matter further and that he feels that whatever is done would have to cover the rest of the gambling field. At the moment gambling taxation is somewhat selective. He might consider this point: if he were to go for gambling and speculation, why not make his predecessor's capital gains tax really effective

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      and make a proper job of the tax on gambling? If he did this there might be a lot of feeling in all parts of the House that if we were able to tax speculative deals effectively there might be a case for following up the good which the Chancellor has done today in getting rid of the Stamp Duties altogether. It would, I think, be possible to do that and to deal with the problem of investors, if at the same time we were able to deal much more adequately and effectively with the problem of capital gains.
      The right hon. Gentleman has not come round to the T.V.A. turnover tax. It is a rather odd proposal to invite one accountant to go away and to think about it. After all, he has had about two years to be thinking about it himself. It seems rather odd to have spent two years since we mad: this proposal in the debate on 26th July, 1961 and then to tell us, after all this time, that he has turned it down but will ask some independent accountant to look at it. On his own argument there might have been a case for setting up a high-powered Committee representative of tax experts and industry, because the point which he left uncertain was what the reaction of industry would be to it. I do not think that a one-man inquiry is the way to do it, and I should have thought that the Chancellor would set up an appropriate departmental committee to find this out.
      Mr. Maudling: He is a prominent merchant banker, one of the younger leading bankers, and he will have others to help him. I chose him because he will have knowledge of the reactions of business to a scheme of this kind.
      Mr. Wilson: I thought that there would be a few people in the right hon. Gentleman's Department in the last few years who also knew a bit about it, just as does Mr. Gordon Richardson. If I am wrong about that, the Chancellor ought, I think, to have set up a full-dress departmental tax committee to look at the question.
      Finally, I come to the Income Tax concessions announced by the Chancellor at the end of his speech. Not only do we welcome these proposals but I think that we can all claim that we forecast that they would be in the Budget. Anyone who read a report of my speech at Macclesfield a fortnight ago saw that I forecast that this is what the Chancellor would do.
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      We felt that it was right and we said so at the time. When the Chancellor has to decide in direct taxation between a cut in the standard rate, on the one hand, and handling it by means of these allowances, on the other hand, we remember that four years ago the Chancellor said that it was the turn of the standard rate. If that were so, than this was the turn of these allowances. We very much welcome the Chancellor's decision.
      Once again we must ask why it was rejected last year. Every hon. Member who waved his Order Paper this afternoon when the Chancellor made this proposal voted against the same proposals last year when they were moved from this side of the House. If they want to be fair about it, the Committee will recollect that the central theme of the criticism of the Budget by my hon. Friend the Member for Cardiff, South-East a year ago, the central theme of the proposals which he pushed more than anything else in the Budget debate, the Finance Bill debate and the Amendments to the Finance Bill, was the suggestion that if we wanted to get production moving up and if we wanted to get justice in the fiscal system, we should make an attack on the problems of these allowances and exemptions and take about 3 million to 4 million people out of the field of Income Tax. That was put from this side of the Committee, and the Chancellor of the Exchequer, the Leader of the House, and all the rest of them who have been cheering this afternoon voted it down. Even though a year late, even though much good could have been done a year earlier, we welcome the proposals the Chancellor of the Exchequer has made.
      In general, as I have said, we welcome the fact that the right hon. Gentleman has decided to have a reflationary, an expansionary, Budget. We only regret that he has been so long coming to it. We welcome the fact that a substantial part of the Budget deals with industrial expansion, aid for capital allowances, and things of that kind. In the field of direct taxation, we welcome what the Chancellor has done in the respects I have just discussed. Our criticism is that this ought to have been done before. Our criticism is that once again it bears all the marks of a cleverly planned and cleverly thought out election strategy.
      5.50 p.m.
      Mr. Eric Johnson: This is not the first time I have had the honour of being the first from this side of the Committee to congratulate the Chancellor of the Exchequer on the presentation of his Budget. I do this with particular pleasure, because I recall that the first debate on a Finance Bill that I ever heard was in 1952 and my right hon. Friend was then drafted from the office of Parliamentary Secretary to the Ministry of Civil Aviation, as it then was, to the Treasury to take part in the debates on the Finance Bill. I remember thinking at that time, as I expect many who heard him thought, that there spoke a future Chancellor of the Exchequer. I wish it was always as easy to make correct forecasts.
      The new method of presenting the Budget is a good one. I must confess, as somebody who listened to what was, after all, a long speech, that it seemed to be a little more difficult to take it in when presented in the new way. Perhaps that is something we will get used to. I am sure that it is absolutely the right way to do it.
      I found the content of it very difficult to quarrel with, as indeed did the Leader of the Opposition. Never before have I heard a Leader of the Opposition so complimentary about a speech by a Tory Chancellor of the Exchequer. I do not think that the Leader of the Opposition found any way in which he could criticise it, except that he seemed to think that it was rather too good, and he attributed this to the fact that he thought that there might be a General Election coming this year. I would only say to the right hon. Gentleman, if he were here, "You ain't seen nothing yet", because in my view there will not be a General Election until after one more Budget. If this is a good one and if we run true to the form which the right hon. Gentleman attributes to us, what are we going to get next time? It will be a very good one indeed.
      Everyone would agree that the task facing the Chancellor of the Exchequer today was mainly how to increase our exports and deal with the problem of our having a great deal of under-utilised capacity in industry. If we can solve the problem of using that capacity, we
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      will go a long way to solving the problem of unemployment. Therefore, I do not think that any one would disagree with my right hon. Friend's statement that what we need is to expand both demand and production. The right aim is the one my right hon. Friend has set himself of a 4 per cent. increase without inflation.
      I believe that in the past the Government have done a great deal more than they have been given credit for to deal with the unemployment areas. Today some splendid measures have been announced. We can look forward with a good deal of confidence to a very considerable improvement in the difficult areas. I was going to suggest to my right hon. Friend that prehaps it was not enough to build new factories and make loans to people to build factories in bad areas, unless they knew that when they went there they would be able to produce profitably. I thought that the Chancellor of the Exchequer might have to give some relief of taxation to make that possible. That is precisely what he has done. These other suggestions about public housing are excellent. As the right hon. Gentleman pointed out, the loans to underdeveloped countries to help them to buy from us are tremendously important.
      There is one form of taxation to which I do not think my right hon. Friend referred. That is the Profits Tax. I have spoken about this tax on several occasions. I have had fairly lengthy correspondence with my hon. Friend the Financial Secretary to the Treasury on the desirability of taxing undistributed profits at a lower rate than those which are distributed in dividends. I know that my hon. Friend does not agree with me. I believe that many other people disagree with me.
      I believe that a lower tax on undistributed profits would help our exports. Apart from anything else, industries hoping to compete successfully in the overseas market must be equipped with the best possible and the most up-to-date plant. The cost of new plant and its need obviously vary a great deal from one industry to another. In 1962 about half our exports consisted of iron and steel, machinery, road vehicles, and aircraft. These are all industries which use very expensive plant and in which there is a

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      great deal of competition, and the plant has to be kept up to date at a high cost. If the cost is high, it necessitates ploughing back a great deal of the profits to keep the plant in the best possible order. It seems to me to follow from this that a reduction in the rate of tax on undistributed profits would enable such industries to do more to finance themselves and keep themselves efficient. They would be able to use more of their own resources. The Committee will have noticed that the industries I have mentioned are those on which we rely to do so much of our export trade. They need most to keep up to date. I therefore believe that a reduction in the Profits Tax would help them and enable them to bring down prices. There is a strong case for this.
      I had hoped that my right hon. Friend would see his way to reducing the tax on fuel oil used in industry. On the other hand, I accept his reasons for not doing so, at any rate at present. I still think that there is some case for abolishing the surcharge and perhaps going even further on the fuel oil used for road transport. The cost of fuel used in heavy goods vehicles is very heavy indeed. It is bound to have an effect on the delivered price of manufactured goods. It is not only the journey from the factory to the final sales point that the goods have to make by transport. Many classes of goods make many road journeys before they get to the final factory which makes them and from which they are delivered to the ultimate buyer, or to the port if they are for export. On each of those journeys tax must be paid at a heavy rate on the fuel used. If it could be reduced it would do much to bring down the cost of goods generally and help to reduce the cost of living.
      Another important aspect of the tax on fuel is its serious effect on the cost of operating public service vehicles. If Dr. Beeching's recommendations on the railways are brought into effect it is clear that more bus routes will come into operation to replace the branch lines which are closed. This should lead to a greater demand for buses, including an increased demand on bus routes which are at present unremunerative. If the unremunerative services are to be operated the people operating them must be given the chance of making a profit or they
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      will not run them. One way of making this possible would be to reduce their costs by bringing down the tax on the fuel their vehicles consume. This would be much superior to giving a subsidy.
      With the present high rate of fuel tax many rural bus routes are faced with diminishing receipts and, in some cases, gradual losses. This would have been an opportune time for my right hon. Friend to have reduced the tax on fuel used by public service vehicles. It is estimated that the cost of the tax adds about 10 per cent. to the cost of operating a bus. Manchester Corporation had to pay £581,488 in duty on fuel last year. In the last five years the Corporation has paid £2,783,000 in this form of taxation; a lot of money. If the tax were reduced it would make it easier to maintain the existing bus services and expand them where necessary in the thinly populated rural areas. Lower bus running costs would lead to lower fares and more passengers and in large cities it would mean some easement of the burden borne by the ratepayers.
      Considering the Budget as a whole, I am perhaps most pleased at something my right hon. Friend has not done. I feared that he might have succumbed to the temptation to have a tax on gambling, and I congratulate him sincerely on the decision he has made. Not everyone may agree with me, but I can assure them that there are sound reasons for the decision my right hon. Friend has made. In this connection, he gave the figures more honestly than I have ever heard them given before and those figures clearly showed the amount of money that changes hands. My right hon. Friend pointed out the effects of such a tax.
      After the 1960 Betting and Gaming Act, which made cash betting off-the-course legal and established betting offices, Parliament decided that it would be right to introduce a Betting Levy Act by which betting would make a contribution to horse racing. My right hon Friend the First Secretary, then the Home Secretary, said in his Second Reading Speech on that Measure, when commending the levy:
      "The justification for it is the need to provide the machinery by which a great national sport and a national industry can be prevented from getting into trouble or declining."

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      He said that if, as a result of the Measure, public support for horse racing could be maintained and increased, its purpose would succeed. He went on to speak of the importance of maintaining our position and said:
      "… it is in the national interest that our prestige and, indeed, our pre-eminence in the breeding and racing of bloodstock should be maintained."—[OFFICIAL REPORT, 5th December, 1960; Vol. 631, c. 877–8.]
      My right hon. Friend might have added that the racing and horse-breeding industry provides a great deal of employment and earns a substantial amount in exports.
      Had my right hon. Friend introduced a tax on bets on horse racing today it would have meant that less would have been available for the present levy which is designed to assist this industry; a levy which comes out of bookmakers' profits. I will not labour this point and I appreciate that the Chancellor said that he was guided to some extent by the experience of my right hon. Friend the Member for Woodford (Sir W. Churchill) when he introduced the 1926 betting tax and had to repeal it in 1929. It is worth noting that on that occasion my right hon. Friend the Member for Woodford said:
      "… there is one of the new taxes for which I am responsible which has been a failure, which, indeed, has been a fiasco, and which obviously has caused more trouble than it is worth. I mean, of course, the duty on betting."
      I am glad that my right hon. Friend has seen the red light and has not followed the line taken by my right hon. Friend the Member for Woodford in 1926.
      A gambling tax of this sort would have undone what was achieved by the Betting Act. It would have brought back the street bookmakers. Nobody need think that all betting offices are gold mines. I know that some of them are profitable, but a very large number of small bookmakers in Manchester who were street bookmakers before are finding it extremely difficult to make both ends meet. Had a new tax been placed on them they might not have been out of business but they certainly would have gone out of their betting shops. They would have gone underground again, as they were in the past. As my right hon.
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      Friend the Member for Woodford said of the honest bookmaker:
      "The very fact that he has paid the tax has placed him at an invidious disadvantage compared with more slippery and unsubstantial rivals."—[OFFICIAL REPORT, 15th April, 1929; Vol. 227, c. 49.]
      Mr. R. T. Paget: Is not the hon. Gentleman describing exactly the process we anticipated—that the big boys are swallowing up the little ones? Did we not say not so long ago that the big boys would make a packet out of it and would swallow up the little ones?
      Mr. Johnson: I grant that many of the big bookmakers are doing well. Nevertheless, the little ones are not being swallowed up. They are struggling on, they know nothing else, because this is their livelihood and, as I said, they would go underground before being swallowed up should the occasion arise.
      I am opposed to increasing the taxes on horse racing in any way. The bookmakers are already contributing about £10 million to the Exchequer in Profits Tax and Income Tax. This does not mean, however, that I am opposed to every form of tax on gambling. The Chancellor was absolutely right to undertake to go into the whole question of gambling taxation, because I consider that some of it is less desirable—I suppose that some people would say that all gambling is undesirable—and cannot be held in any way to be in the national interest.
      Football pools already make a substantial contribution to the revenue and are paying enough. The dog tracks also contribute a great deal through the duty borne by the totalisator and bookmakers. But there are other forms of gaming, ranging from bingo to chemin de fer which appear to get away with it altogether. I have no information as to the amount the Treasury benefits from Income Tax and Profits Tax paid by those who operate clubs which run these entertainments. It may be a little difficult for the Treasury to make a lot of money out of them, but I cannot help thinking that the motives of those who run gambling clubs and so on are not wholly philanthropic.
      I am not suggesting that it is wrong to indulge in these forms of gambling, but I do not think that anyone would claim that they are important in the

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      national interest. Nor do I think that anyone believes that the people concerned should not make a special contribution to the Revenue. As I understand the position now, it is perfectly legal to play any game of chance so long as it is carried on as an activity of a club and that if, apart from the annual subscription to the club, the only other payment made is a sum, agreed before the game, to take part in it. It might be worth my right hon. Friend's while to look at the possibility of registering and licensing these clubs, and it might also be possible to take a certain percentage of the charge made for taking part in the game. Obviously, we cannot tax the stake, but we could tax that charge.
      If my right hon. Friend wants to fortify the Revenue at the expense of those who indulge in gambling—looking on it either as a rosy road to riches or merely as an existing pleasure—I would remind him of the saying, "If you can't lick 'em, join 'em." If he cannot get the money out of them in this way, he should go in for the business himself. I do not suggest that he should appear on the rails at Ascot with the Chief Secretary as his clerk—and my hon. Friend the Economic Secretary, judging from his rather inscrutable appearance, might make an admirable croupier. I do not go as far as to suggest that, but there are ways in which money might be made out of this tendency towards gambling.
      Strictly speaking, the purchase of Premium Bonds is a form of gambling, the stake being represented by the interest foregone. If the prizes were increased, more bonds would be sold, and it might also be possible to allow a person to hold more than is permissible at present. That is a good way of getting in money, and it could be made more attractive.
      Another means of raising revenue would be a State lottery. I know that this suggestion has been made before and has always been rejected, but a State lottery is far the least painful method of handing over one's money to the Treasury, because there is a reasonable chance of getting more back. I am sure that a State lottery would command widespread support. It would be a real money maker, especially if it were laid down that a percentage of the
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      proceeds had to be devoted to some cause of which everyone approved, such as the hospitals. People would flock to buy the lottery tickets.
      These lotteries have an enormous success in other countries; Ireland's excellent hospitals benefit largely from the State lottery held there. Such a lottery would not only meet with a very favourable response here, but would attract vast sums of money from all over the world, and sonic of the proceeds could be used to reduce the burden of our own rates and taxes. I hope that when my right hon. Friend is reviewing the other aspects of gambling, he will give some thought to that suggestion.
      My right hon. Friend said that his purpose is expansion without inflation, and his Budget will largely be judged by the extent to which it creates a climate favourable to the attainment of those two objectives. To me—and, evidently, to the Leader of the Opposition—it is a very hard Budget to fault. It is a very able and remarkable Budget. My right hon. Friend may not have done all that I should have liked done but, on the other hand, he has not done something that I greatly feared. He has provided the country with just about the right mixture for the present very difficult times, and we can look forward with some confidence to a great surge forward in our economy. I think that he will attain his objective of expansion at the rate of 4 per cent. without inflation this year and continue it in the years ahead.
      6.15 p.m.
      Mr. Ellis Smith: The country's economic situation is such that I should be justified in making a denunciatory speech. Instead, I want to be analytically constructive, and to ask certain questions about our financial and economic situation.
      This is the twenty-eighth Budget statement to which I have listened. It is still a financial and economic statement, and that is a fundamental mistake for which I believe some of my right hon. Friends were responsible. The issues are too fundamental, too great, to be considered in one debate: they justify two separate debates. We have listened to a closely-reasoned case, concisely stated and put in the most simple language. Those who are greatest use the most simple language. The Chancellor took approximately 110

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      minutes and, as my right hon. Friend the Leader of the Opposition has already said, it was so interesting that no one went to sleep.
      The right hon. Gentleman said that the theme of this Budget is economic expansion without inflation; and that if we attain the national objective which is the basis of the Budget it will mean a 4 per cent. rate of growth. I welcome that theme, but, meantime, the people have been betrayed, and have paid a terrible price because in the past our national policy has not contained this theme.
      The Chancellor spoke of the uncertainty resulting from investment in stocks, but why not control or regulate investment in stocks in order to minimise the uncertainty that all students of economic affairs agree that it produces? I contend very strongly that this has been one of the great causes in the past, especially at certain times, of our balance-of-payments problem. A number of proposals for dealing with this problem can be found in the Library.
      The Chancellor spoke of the problem of exports and reduction of export prices. We readily agree with that. He then made a great admission about the need for proper provision for dealing with redundancy, about which I shall have something to say. The right hon. Gentleman also outlined a number of proposed changes to deal with regional unemployment. We welcome most of these proposals, although in my view, and in the view of large numbers of people outside this Chamber for whom I am speaking, there are other areas which are suffering just as much as those which the Chancellor mentioned. The right hon. Gentleman proposed a tax incentive for certain areas defined by the application of the Local Employment Act. We welcome that within the limits of the right hon. Gentleman's statement, but those limits should be widened. Later I shall produce concrete evidence to prove the need for that widening.
      As one who, apart from membership of the House of Commons, has been employed entirely in the manufacturing industry, I welcome the Chancellor's proposals to improve its position. These proposals should have been made years ago. All political parties should have contributed towards this end, because we
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      know that the country depends on exports now more than ever before. It is the manufacturing industry that produces these exports, and the men and management in the industry make the greatest contribution towards keeping life going in the country. It was time that the manufacturing industry received more consideration of the kind which the Chancellor is now proposing to give it. The right hon. Gentleman also touched briefly on concessions made to encourage new industrial building. Those of us who live in industrial areas, like Lancashire and North Staffordshire, know the need for these and we welcome the proposals.
      Each General Election has produced new promises, and in each new Parliament there have been betrayals of those promises. After having lived through two world wars, and after hearing these promises made during the wars, and as one who still lives among the men whose representatives marched last week to the Palace of Westminster, I welcome the Chancellor's new theme. I must remind him and the Committee, however, of how promises made during the two world wars, and especially during the last war, have been betrayed. If the Chancellor's present theme had been the theme of all Parliaments since the end of the last war, the country today would have been in a far stronger economic position.
      I should like to put on record some considerations in support of the theme, while at the same time showing and emphasising that it has not been followed during the past seventeen years. We need to be reminded that throughout the last war the country committed itself to maintaining full employment when peace came. This became one of the war aims of the Coalition Government. It was reinforced in the Beveridge Report and it was accepted by all political parties. It was accepted also by the International Labour Office and by the United Nations, and it was applied for a few years by the Labour Government. Now we have about 700,000 unemployed, which means that if we include their wives and children there must be about 1½ million people now suffering the effects of unemployment. This is a terrible indictment of the mismanagement of our affairs during the past seventeen years. It is because I recognise that at last a fundamental change

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      has been made that I welcome the Chancellor's statement.
      I hope that this will be the beginning of a new road which we shall travel towards the restoration of full employment. I hope that at the same time the Government will put the rest of their policies in harmony with the Chancellor's theme today. If we are to have the best out of this new theme it will mean that when our representatives attend the United Nations and the International Labour Office in Geneva they must support not the reactionary elements but proposals which will be in harmony with the Chancellor's aims. This is not Utopian. It is a very practical proposition. It is in the interest of the world, and of Britain in particular, because the interests of our country now coincide with the world's interests.
      I was very pleased in listening to the Chancellor's speech to note this new thread running through it. As I listened I hoped that it was the beginning of a great change which we on this side of the Committee will have to watch minutely in view of the fact that the people are increasingly placing their confidence in the ideas represented on our side. The restoration of full employment and later its maintenance should now be our common objective. We ought now to make our contributions towards seeing that this policy is applied. Full employment is the national and natural heritage of our people. They saved our country twice in two world wars, and the country owes them a decent standard of living and the opportunity to use their capacities to earn that living.
      When we have 700,000 unemployed there is an obligation on the Chancellor to see that every unemployed man is paid at least 30s. a week in addition to the unemployment benefit, that his wife is paid another 30s., and each child is paid a proportionate increase so that the unemployed shall not be expected to manage on National Insurance benefit only. Since all parties committed themselves during the war to the aim of maintaining full employment, those who are unemployed through no fault of their own should receive the sums I have mentioned as a right, in addition to National Insurance benefit, to enable them to live decently until full employment is restored.
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      I was very pleased with certain observations made by the Chancellor. They reminded me that what needs saying strongly is that there is no production Santa Klaus in Whitehall, or in offices or in any part of the City of London. It is on industry, and on manufacturing industry in particular, that the country must rely more than ever. This must be stressed in this Chamber in order not only that the Chancellor should do justice to it but that all hon. and right hon. Members should have their attention drawn to it.
      I am fortified in the plea I make since I have in mind what has happened at the International Labour Office in Geneva. At conferences there, our representatives have, very often, not been associated with proposals for the advancement of humanity but have been associated with reactionary proposals. I hope that whoever is to represent us there in future will remember what they owe to our people and will keep all that they do in harmony with the new theme which the Chancellor introduced today and with the principle of restoring full employment. In this country, we shall need a policy of real planning. We shall need a national investment board in order that our financial resources may be investel in industry and wherever the best benefits from the national point of view can be obtained.
      Several times, the Chancellor rightly stressed the need for the Government to give a lead, and he asked for the co-operation of the whole country in achieving his objective. I wholeheartedly support that, but the logic of what he said is that we now need a Ministry of Production and Economic Development in order that the right hon. Gentleman's new theme can find expression in the country in an organised way. I readily accept the proposal made by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) last weekend that there should be a Commonwealth economic development and trading corporation, or something of that kind. I do not know why we have left it so long. This is something on which we all ought to be united if we want, as we do, to obtain the best results for our country in particular and for the Commonwealth in general.
      One thing to emerge from the Second World War has been the international

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      expression of our desire for the advancement of mankind and the improvement of standards of life. The first United Nations trade and employment conference was held in London, and a later United Nations conference in Havana laid the ground for the eventual coming of the G.A.T.T. In Torquay, in one of the most beautiful parts of this country, there are trees planted in the name of all the countries attending the international conference there where the G.A.T.T. was born.
      Yet, in spite of the pursuit of a progressive policy at the United Nations and at the International Labour Office, we have, very often, sat back and not taken the initiative. For this reason, too, I welcome the Chancellor's initiative today. However, as I have said, if the logic of it is to be followed, it must find expression also at the International Labour Office and the United Nations.
      Under the inspiration of the International Labour Office, the United Nations Havana Charter declared that national trade and employment targets should be set so that
      "Each nation shall take action designed to achieve and maintain full and productive employment and large and steadily growing demand within its own territory through measures appropriate to its political, economic and social institutions;
      "Member nations shall seek to avoid measures which would have the effect of creating balance of payments difficulties for other countries."
      This is a theme which we should have been applying since that conference, which was held, if I remember aright, about fifteen years ago. Today, the Chancellor, who is responsible not only for financial affairs but for basic economic policy in Britain, has at last shown that we can put ourselves in harmony with the proposals of the United Nations.
      It seems that in war, when every one of us is wanted, these great aims can be considered, but that when the danger is over there can be 700,000 unemployed. This is why I am making the kind of speech I am today. I could easily have been one of them. I have been fortunate in life. I have had an opportunity to represent my fellows and maintain their confidence. As a result, after many years, I am still able to sit in the House of Commons, privileged to represent the
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      people to whom I belong. I cannot sit here with a smirk on my face like some hon. Members. These are matters which affect our people deeply. This is why I was associated with the 7,000 who marched down here last Tuesday.
      The International Labour Office at Geneva, with this country represented, issued in 1944 the following statement which has been reaffirmed at Geneva conferences each year since:
      "All human beings, irrespective of race, creed or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity;
      "the attainment of the conditions in which this shall be possible must constitute the central aim of national and international policy;
      "all national and international policies and measures, in particular those of an economic and financial character, should be judged in this light and accepted only in so far as they may be held to promote and not to hinder this fundamental objective."
      In the light of those aims expressed at the International Labour Office, I welcome the new theme outlined by the Chancellor. It does not go anywhere near as far as I should like, but I am sufficiently a realist to know that, if only a short step is taken, it should be encouraged in the hope that one's fellow countrymen will demand more.
      In 1940, the Conservatives were completely discredited in this country. It was obvious, with the way things were going, that we should lose the war. As a result, the most constructive and progressive element in the British community began to express its will. There was growing uneasiness among the trade union movement outside and a popular demand that action should be taken. The Conservatives had kept out of office for more than ten years the giant who used to sit in the corner seat of the Front Bench below the gangway and had to be satisfied with making critical speeches.
      Sir Harmar Nicholls: My right hon. Friend still sits there.
      Mr. Ellis Smith: Yes, he still sits there. He was a giant. His record is that of a giant. But the Tories kept him out of office for ten years.
      As a result of the organised working class outside reflecting itself in the House of Commons and in Committees upstairs and behind the scenes, a situation was produced which brought about a change

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      from a Conservative Government to a win-the-war Coalition Government, and the giant, the right hon. Member for Woodford (Sir W. Churchill), was made Prime Minister. It was we who made him Prime Minister, who sustained him for some time, and who cheered him when he came in. The Conservative benches looked like a cemetery; one would have thought that all was dead.
      As a result of that policy, we can use our democratic rights and we can all make our contributions in this Committee. Just as we nearly lost the war because of the way in which it was being conducted, over the past few years there was a danger of losing our economic future unless there was a fundamental change. I have paid tribute to the concise manner in which the Chancellor of the Exchequer spoke for 110 minutes. He held the Committee right to the end, and that is a great tribute to him. It is not only an intellectual strain but a physical strain for a man to do that, and he deserves credit for the competent manner in which he did it.
      I therefore hope that this is the beginning of a change which, much though we are opposed to the Conservative Party politically, will gradually reflect itself in improvements in the country. I hope that when we have the opportunity of forming the Government our relatively young men who become Ministers will bear in mind that it is no easy course to row for Labour Ministers to act as real Labour Ministers. I hope that they will remember who has given them their confidence. I hope that they will remember what they owe to the people who built up this party and will remember all the promises which they have made. I trust that they will use their courage, understanding and capabilities in order to save this country and to enable it to make a greater contribution in world affairs and towards improving the standard of living of our people. If they can do that, we shall see the beginning of a change which will be in harmony with the theme running through the Chancellor's speech this afternoon.
      6.42 p.m.
      Mr. Dudley Smith: It is always a pleasure to follow in debate the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) who is my namesake, because he speaks
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      with such sincerity, moderation and good sense. I subscribe to many of the feelings which he has expressed this afternoon. I am afraid that I am not in his position of having had experience of over 20 Budgets.
      Mr. Ellis Smith: Twenty-eight.
      Mr. Smith: In my limited experience, this is the fourth Budget which I have had the pleasure of hearing, and it is by far the best that I have heard. I believe that it is an expansionist and able Budget and is extremely realistic.
      I welcome this Budget particularly, because I think that it will help the young married person who is making his way in the world and will provide him with an incentive. This applies particularly to the young married person who is fulfilling his duty to society by founding a family. In my constituency, as in many others, there is a great proportion of young professional people who are on low salary incomes but who are making their way in the world, are founding their families and have very great financial responsibilities. I am sure that they will be pleased at the news that my right hon. Friend gave this afternoon.
      I think that a change in allowances is so much fairer than a change in the standard rate of tax. Many of these people will also benefit from the abolition of Schedule A via their pay packets in July, because at present they pay Schedule A via P.A.Y.E. My right hon. Friend's announcement this afternoon will give them an additional boost in due course.
      As one who has campaigned about it consistently, both before coming to the House of Commons and since, I do not disguise my pleasure about the abolition of Schedule A at one fell swoop. I am not alone in this. Many of my hon. Friends have campaigned for its end for many years. I have always felt that it was an unfair and iniquitous tax, and I am pleased to see it go, particularly as it affects owner-occupiers. My party has stood for the owner-occupier over the years, and I believe that the abolition of this tax will be of material help to him. It is in the interests of the country that owner-occupation should be encouraged.
      I think that it is a realistic step, too, to raise the Estate Duty limit to £5,000,

      531
      because this will aid the family of limited means which is often left in difficult circumstances through the death of the breadwinner. It does not require much effort today to accumulate an estate of £5,000, if one is earning any money at all. Therefore, what my right hon. Friend has proposed is a step in the right direction.
      In addition, younger married people and those who propose to get married will benefit considerably from the exemption of Stamp Duty on houses up to £4,500. Again, this is a very good move in the right direction.
      At the other end of the scale, elderly people will benefit from the raising of the exemption level. Elderly people recently have had a tremendous boost in their pensions—for the fifth time running under this Government—and my right hon. Friend's proposal will aid them over the earnings rule.
      As my right hon. Friend said in his very fine statement this afternoon, the Budget will give relief to all taxpayers but chiefly to those on the lower levels. Despite the somewhat carping criticism of the Leader of the Opposition, I should have thought that it was well in line with the progressive reduction of direct taxation which has been going on in the lifetime of this Government over the last 11 or 12 years. No one could fault the Government's record in what they have done with regard to direct taxation.
      The criticisms which I should like to make are necessarily somewhat muted because of the general excellence of the Budget, but I must say that I am sorry that my right hon. Friend has not tapped the rather rich vein of gambling, and I remain somewhat unconvinced by his 'arguments about it. I should have thought that this was a lucrative source of additional revenue. A gambling tax would not hurt anyone in particular and certainly would not be penal. I would not for a moment seek to challenge the figures which my right hon. Friend produced about the net amount remaining after winnings are paid, but one has only to go by any betting shop—and I speak as a non-gambler—and see the people packed to the doors every time that there is a race meeting on, to realise that tremendous sums of money must be changing hands. I was amazed to hear the
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      figures which my right hon. Friend gave this afternoon. I am pleased that he will consider this matter further. I hope that in due course we shall have a tax on gambling. It is desirable, fair and just.
      I should have used the revenue to be obtained from a betting tax for the relief of fuel duty. This would have made a very material contribution to stabilising the cost of living. Here is another possibility which my right hon. Friend has missed, although I subscribe to the overall pattern of the Budget. Fuel tax is very high, and there is scope for reducing it. The cost of petrol is particularly high. There may well be another Budget in the lifetime of this Parliament, despite what was said by the right hon. Member for Huyton (Mr. H. Wilson). If there is, and if my right hon. Friend manages to keep the economy on an even keel, which I am sure he will do, perhaps he will consider both the question of a betting tax and the relief of fuel tax.
      Undoubtedly, as time goes on, my right hon. Friend will bear more and more in mind the need for expansionist measures. In doing this, I urge him very much to consider a particular hobby-horse of mine and of many of my hon. Friends and about which we are very worried. I refer to the question of raising the Exchequer contribution to local revenue. I am sorry that in his admirable speech my right hon. Friend made only one oblique reference to the rising cost of local government services. He mentioned the education service, which is, of course, by far the most costly of them all. I believe that a general move could be made to transfer more of the burden of education to the national Exchequer.
      In 1950 we were spending between £200 million to £300 million per year on education. Today, as we heard from the Chancellor, this expenditure is approaching £1,300 million a year. This creates a tremendous imbalance, and it must eventually be corrected. This is not a political matter. It is something which would affect any political party which happened to be in power. In many cases local authorities are spending about two-thirds of all their revenue purely on education services.
      I beg a progressive and enlightened Chancellor, such as the one we have, to look at the matter before local taxation—that is really what local rates amount

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      to—gets right out of hand. We must all agree that local authority expenditure will continue to climb as the years go by. My right hon. Friend should encourage the Government to have an inquiry into additional and alternative sources of revenue, and he could also well consider a fairer distribution of the general rate burden. The Government are not to blame for the situation which has arisen. There have been vastly expanded services over the last 10 years, and as a result of the improvements the rating system has become somewhat overburdened.
      It would be churlish of me, however, to make more than a passing criticism of this more than good Budget. The lessons to be learnt from the statement that we heard today are that we must bear in mind the figure of 4 per cent. the whole time, which is the growth target—and is realistic; we must also watch continuously the inflationary trends which are likely to come in an economy like ours which is always running along a knife edge; and we must organise competition and provide incentives to expansion.
      I am sure that in the country as a whole the Budget will be welcomed because it provides incentives, because it provides an opportunity for industry to get on the move again particularly in the areas which have been seriously affected, and because it provides a boost for a very valuable and important sector of the community, namely, those young people who are beginning to make their way in the world and desperately need help at perhaps the most expensive period of their lives—when they have young children.
      Last weekend a Sunday newspaper said in a headline "Has Reg the Edge?". Having heard the Chancellor this afternoon, I would say that he has not only the edge but also the vision and the determination to carry through his Budget and conduct the Government's financial policy in a satisfactory and admirable way.
      6.53 p.m.
      Mr. Ron Ledger: I do not want to delay the Committee too long because I think that the way in which the Chancellor has presented the Budget suggests that, as most of us would want him to do it, he has considered the general position with regard to unemployment to
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      the satisfaction of most of us. We have our own constituency problems, but I think we should all have preferred him to deal with the matter in the way he did.
      Many congratulations have been offered to the Chancellor upon the way he presented the Budget, but I cannot believe that hon. Members opposite or, indeed, my hon. Friends are really surprised at the sort of Budget which he presented. The Leader of the Opposition made the strong point that this is, after all, the fourth year in which successive Chancellors have presented very good Budgets. In any case, I think that a great deal of what has been said about the value of the Budget to young people is not quite as good as it sounds. After all, we have recently had announced some increases in Post Office charges which are not inconsiderable, there have been increases in National Health contributions, and, if Dr. Beeching has his way, there will be a considerable increase in fares. Therefore, all the announcements made in the past few weeks tend to balance to some degree any benefits the Chancellor has given. Nevertheless, I welcome what he has done and the way in which he has distuributed what has been available.
      That brings me to the constituency point that I want to raise. During the past few years it has become the habit in Budgets to give help to selected industries. Recently the motor car industry gained considerably from concessions made by the Chancellor. In my constituency I have really very little industry; what there is is mostly light industry and it is varied. But one of the largest industries there is furniture, and during the past year two factories have been closed.
      I should have thought that the Chancellor would have given some thought to this industry in which a considerable amount of short-time working is occurring in the country. Nearly a quarter of the factories are working only two or three days a week and while they are working the employees are underemployed. A survey made of the facts in the London area by the National Union of Furniture Trade Operatives showed that half the factories producing furniture in the London area are working with considerably reduced personnel and

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      almost all the remainder are working on short-time. I should have thought that in this respect it might have been possible to give even greater help to young people starting out in married life. They might have had not only tax concessions but very considerable help from the Chancellor in furnishing their homes, which is in any case difficult enough today because of the cost.
      I would point out to the hon. Member for Brentford and Chiswick (Mr. D. Smith) that the major part of the increase in the cost of new houses today has been the result of Government policies during the past years, and I think that the Chancellor might have given a little thought to people who are purchasing houses. Consequently, I do not think it would be right to say that everybody will jump for joy at the Chancellor's proposals. Certainly I, as one of the Chancellor's constituents, am not convinced that I ought to change my Opinion and vote for him at the next General Election.
      I have a very strong feeling that the Chancellor has been very genuine in the way he has distributed the money available, but the whole thing is spoilt by the fact that there is nothing that he has done today which was not necessary a year or two ago. Had he introduced these measures then, we should have given him far greater support and—although we shall no doubt support the proposals he made today—with a great deal more enthusiasm. We should then have been able to avoid the unemployment which has come about during the past two years.
      My final point is on light hydrocarbon oil used in manufacturing. The Chancellor said that he would ask the Customs and Excise to look into the matter, presumably to see how these oils could be distinguished from other fuel oils in order to exempt them from some or all of the tax. It is rather strange for the Chancellor to say this, because Amendments have been tabled to Finance Bills during the past few years on this subject and the matter has been discussed at length, and normally Chancellors have replied that the concession could not be afforded because it would amount to about £9 million a year. I wonder whether on this occasion the Chancellor has simply given another excuse because
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      he does not want again to say that we cannot afford it, for that would be difficult in view of the fact that he has decided to distribute so much money. It may be because of that that he now says that he will ask the Customs and Excise to look into the matter. I believe that the Customs and Excise has been the stumbling block previously in suggesting that it was difficult to distinguish between the oils used in manufacturing and those used for transport purposes.
      All I say is that it is grossly unfair to our manufacturers who use these oils that countries which are in competition with us have the advantage that they can produce their goods with a much cheaper raw material. In this respect we are at a disadvantage. We are also at a considerable disadvantage in exporting. I had an opportunity of visiting a factory in my constituency where they produce polish, and I was astonished to find that 70 per cent. of the content of polish of any kind is made up of light hydrocarbon oil. So it is a considerable cost in the production of polish and, of course, the duty would make a considerable difference to the production costs and to the competitiveness of such firms.
      The Economic Secretary to the Treasury (Mr. Edward du Cann): I just want to reassure the hon. Gentleman on this point. He may know that I myself saw the deputation from the industry on this very point and the argument he is making is most certainly accepted. Particularly I want to reassure him that it is definitely our intention to abolish this duty, but it is a complicated matter, as he knows from his experience, and that is the only reason why it cannot be done at once.
      Mr. Ledger: If I have done nothing else I have at least got this reassurance which will, in turn, reassure the industry. I feel it must be raised again in Committee on the Finance Bill. This will give considerable benefit to the industry and will add considerably to its ability to export.
      I say frankly that it was rather extraordinary to find that polish, which we do not think of as all that important, was exported last year to the value, I believe, of nearly £3 million. It seems incredible, but it shows that the industry is making its contribution to our

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      export drive, and I feel that relief from duty will enable it to compete even more.
      Having raised these points, which, as I say, are constituency points, I must say again that if the Budget speech was a very interesting one, and very well put by the Chancellor, I hope that during the debates which follow we can be convinced just a little that it is not a prelude to a big election fight but that this is a genuine move to try to put the country back on its feet. We shall need a lot of convincing that what it is necessary to do today was not just as necessary two years ago. We feel very strongly that the Government had all the power they needed and just the same majority to put these proposals through two years ago and could have done so had they wished.
      7.2 p.m.
      Mr. A. E. Cooper: I do not intend to go into all the economic arguments about why the Government did not do two years ago what is being done today. I know it is a revolutionary thought, but times do change, and circumstances two years ago were really quite different from those which obtain in the country, and, indeed, internationally, today.
      Two years ago we had a situation of not only full employment but over-full employment in practically every part of the country with the possible exception of parts of Scotland. I think that two years ago unemployment in this country was running at round about 2 per cent., and if what is being done today had been done then it surely would have caused a most inflationary situation which would have made the unemployment we have unfortunately suffered this winter pale into insignificance.
      Hon. and right hon. Gentlemen opposite must really remember all the time that it does not matter what party is in power, this country depends for its very livelihood on one raw material only-coal. Everything else we have to bring into this country. We can feed ourselves for only half the year, and if we pep up domestic consumption in this country beyond reasonable limits we shall increase our import bill and if it is not matched by substantial increases in
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      exports we shall run into very serious balance of payments problems. In this day and age, after ail that has gone on before the war, during the war and since the war, that any hon. Member of this Committee should have to state these basic facts seems an extraordinary thing, when they really should be the ABC of the political life of this country. It is high time that we stopped trying to make political capital out of something which it is in all our interests to try to understand.
      Many things which have happened in these last few years have themselves brought about some of the problems which we have today. Hon. and right hon. Gentlemen opposite for years have been pressing for more and more industrial investment in all spheres of activity in this country. All right. So that is exactly what we have had. Many thousands of millions of pounds of investment in industry has taken place over the last few years.
      Mr. E. G. Willis: Not in Scotland.
      Mr. Cooper: This investment has resulted in more up-to-date machinery, greater automation and mechanisation, meaning less actual manpower to use those machines, and these are some of the problems we have to work through. It is no use the right hon. Gentleman the Leader of the Opposition coming back from America and making the sort of speech which he made today, complaining that he did not sleep last night. Frankly, from what he said today, we should have benefited much more if he had had a few hours' sleep. He certainly did not make any sort of positive contribution to our affairs.
      Unfortunately, it is all in pattern with hon. and right hon. Gentlemen opposite at the present time. Take, for example, last evening in this Chamber. The hon. Member for Fulham (Mr. M. Stewart), no doubt on the authority of the right hon. Gentleman, said, "If we get back to power at the next election within a year we will reform local government in London." He did not say how. He did not make any positive proposals. No doubt he says to himself, "Well, we will think of something on the day, but at the moment we have not got any proposals to offer, but we will reform all local government."

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      The day before the hon. Member for Coventry, East (Mr. Crossman) and the right hon. Member for Belper (Mr. G. Brown) introduced a great insurance scheme which is going to remove poverty from the people. Was there any suggestion how that is to be paid for, any suggestion of the cost? Not one iota. What does the hon. Member for Coventry, East say when he talks about this? To quote his own words, he said:
      "The last time I introduced a scheme like this the Tories shot it to pieces and we are not going to let that happen again."
      There again, no doubt, some time in the future, just about the time of an election, the Labour Party will come up with some sort of vague plan which it will hope will get the party by the electorate. It failed last time and it will fail again.
      Mr. Willis: Wishful thinking by the hon. Member.
      Mr. Cooper: Take the National Health Service. I can remember people in the Labour Party telling the electors, "Of course, we brought in the National Health Service. We thought this up. We started the thing going and our estimates were first-class. We told the country when we introduced the scheme it would cost £150 million." To show how accurate were their estimates, today it costs £1,000 million. So we are told that is because of the way the wicked Tories have destroyed the National Health Scheme. This is the sort of nonsense which we get from the right hon. Gentleman and his hon. Friends day after day and month after month and that is the way in which they hope they will govern the affairs of this country—if they are given the opportunity.
      The right hon. Gentleman this afternoon twitted my right hon. Friend the Chancellor with this "sudden" concession to under-developed countries and said, "Two years ago we in the Labour Party enjoined this sort of thing upon the Chancellor." One or two hon. Gentlemen, I notice, are nodding their heads sagely. I made the first speech on this subject three years ago in a Whitsun Adjournment debate, which was replied to by the then Economic Secretary to the Treasury. I am very glad to see that there are hon. Gentlemen opposite who have suddenly become converted to the idea that we ought to do something for the under-developed territories.
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      I compliment my right hon. Friend on his Budget which, without wishing to use exaggerated language, I think was the most imaginative Budget that we have had for many years, especially in its particularisation of areas for special tax concessions. I do not recall this being done before except with regard to individual industries such as the shipping industry, but here we have whole areas which are to be considered for special reliefs. This is a remarkable transformation in our approach to taxation, and I think that my right hon. Friend ought to be congratulated on it.
      Very much of what is happening today would not have been possible had it not been for the firm approach to our economic problems which was adopted by my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd). There is no doubt that forcing on the country the fact that an incomes policy was essential, that some sort of development programme was vital and that we could only have increased incomes out of what we earned, brought a great deal of unpopularity to the Government. But this was, nevertheless, the right policy to pursue, and it is because we now have the situation in which the trade unions and members of the community recognise these basic facts that my right hon. Friend is able to do what he has done. We have set up N.E.D.C. and N.I.C. and I am convinced that one day the Labour Party, who criticise and laugh at this Development Council, will be forced to accept that it, or some refinement of it, is vital if we are to get together and work together to bring our country through the difficulties which face us.
      I thank my right hon. Friend for his promise with regard to light oils, and here I must declare an interest. This is something for which I have been working for many years. This tax has been a great burden to the chemical industry ever since it was introduced. I assure the hon. Member for Romford (Mr. Ledger) that there are technical problems which make it difficult to deal with this in one fell swoop. These technical difficulties are concerned with the specific gravity of the material and its flashpoint.
      These difficulties arose because of the way in which the tax was originally introduced, but it should be possible very

      541
      quickly for the Customs and the Treasury to bring in some relief, because we have reached the farcical position that British industry, because of this tax, cannot compete in this country with imported goods. I repeat that this is a farcical situation, and my only criticism of my right hon. Friend and his predecessors is that this position has not been appreciated before now, and that action has not been taken to deal with it.
      Although I understand the reasons for it, I am sorry that it has not been possible to make any concession with regard to fuel oil. I should have thought that it would have been possible to make a reduction in the tax on oil used for transport. My right hon. Friend this afternoon used the argument that he did not wish to interfere with the development of the coal industry—and, of course, everybody subscribes to that as a policy—but however much one develops the coal industry, one cannot drive buses on coal, and surely it would have been possible to have a differential tax which would have given public transport the benefit of fuel oil at a lower cost? This would have helped to lower the cost of transporting goods by road and to stabilise bus fares, without being in any way inflationary.
      I come next to the question of exports, and I suppose we must recognise that in the long term the Budget will be judged by its effect on our efforts in the export trade, because only by increasing our exports can we provide the wherewithal to buy raw materials and thus increase domestic consumption. My right hon. Friend has made some useful concessions, but it is not only to tax concessions that we should look for assistance in our export trade. I am severely critical of the Board of Trade and its assistance, or, as I like to think, lack of assistance, to exporters.
      There does not seem to be sufficient dynamism in the Board of Trade. I have asked many Questions on this subject, and I have never been satisfied about the general standard of ability of commercial councillors or trade commissioners who are under the control of the Foreign Office. That is not to say that the gentlemen who undertake these duties are men of below average ability. They are not, but, whether we like it or not, the fact is that the average commercial
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      councillor or trade commissioner regards this job as the first or second step in the ladder to a diplomatic career, and I have always believed that the men for these jobs should be chosen from the higher levels of industry and paid a substantial salary to do them. They should be responsible for looking after the interests of British industry in the countries to which they are posted. They should be responsible to the ambassador or whoever is our representative there only from the point of view of discipline. Let us not be under any illusion. It is only by the development of our export trade that we shall live and prosper, and it is only by getting an adequate service from our officials overseas that British industry can be properly served.
      Secondly, I am not happy about the statistics which we receive either from the Treasury or from the Board of Trade. Generally speaking, they are behind time to the extent of several months, and often industry is given information which has been so overtaken by events that wrong policies are pursued. Although I agreed with the Budget presented by my right hon. and learned Friend the Member for Wirral last year, it could be said that had he had really up-to-date statistical information some of the policies which he carried through would not have been carried through, that other policies would have been produced and that we might have found ourselves in a different position towards the middle of last year. I should therefore like my right hon. Friend to consider the whole question of Government statistics, particularly in so far as they relate to industry.
      I have three substantial companies in my constituency—the Plessey Company Ltd., Ilford Ltd. and Howards of Ilford Ltd. They all have great achievements to their credit in the export field. They have achieved great things in the face of the most energetic competition from companies all over the world. One of these companies is exceedingly prosperous and is doing more and more trade each year. This expansion can be carried out if management and unions work together in an effort to achieve the results which we all know can be obtained.
      The future for this country is great. The indecision of the last eighteen months, arising from the Common Market discussions, is now behind us. We

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      have to stand on our own two feet to earn our living in a hard world, and I believe that the brains and skill in this country will enable us to do that. I think that my right hon. Friend has introduced a Budget which will go down as one of the great turning points in the economic and social history of this country, and the interesting thing is that the speeches which we have heard from the other side of the Committee have been favourable to my right hon. Friend.
      7.21 p.m.
      Mr. R. E. Winterbottom: The hon. Member for Ilford, South (Mr. Cooper) is right when he argues that Britain's future lies in the success of her export trade. There is a future for Great Britain. I cannot see it under the present Government, but nevertheless I believe that to be the case. It is only when the hon. Gentleman starts criticising the Labour Party—which seems to be a characteristic of most of his speeches—and says that the Labour Party will come out with some great plan presumably to "kid" the public that I part company from him.
      If I wanted to argue about the Chancellor's speech today along those lines, I could say that hardly a newspaper in the country has not prophesied that in this Budget there would be something in the nature of a big "give-away" by the Tory Party to check its waning fortunes. But I am not going to do that. I am going to congratulate the Chancellor on an excellent Budget statement. I think that it is the best statement that I have heard from a Chancellor of the Exchequer since I first came to the House, and there are certain things which I particularly like.
      In common with many of my hon. Friends, I like the reduction in Income Tax. I like the abolition of the Schedule A tax. I like what the Chancellor has done in regard to Stamp Duty. But, having said that, I want to add that liking all these things does not mean that I think they are right. It is possible to like something that has been done and yet question the wisdom of doing it. This question may be asked of a Budget that gives away practically the whole of last year's surplus. It can be fairly said that that is not a wise Budget in view of our present economic condition.
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      The Chancellor must realise that this country is losing in the export race, referred to by the hon. Member for Ilford, South. Over the past few years we have not reached the average increase in production that the Chancellor referred to as being the basis of his Budget statement today. We are losing to almost every one of the heavily industrialised countries in the world. It is questionable whether it is wise to use the previous surplus as a "give-away" when future circumstances may prove that it was not warranted. Although I must admit that the Chancellor's statement is probably the best that I have ever heard from a Chancellor, I do not think that it is possible to put a new patch on an old coat. The problem with which the Chancellor has been dealing in this Budget is exactly the same as that which, over the past few years, has caused grievous unemployment. He has been co-responsible for the contraction policy of the Government that has created heavy unemployment in some parts of the country. He has been a member of a Government who have pursued a policy of dear money, to the detriment of industrial development in the depressed areas.
      In some ways I welcome the Chancellor's statement, but if it is put in its proper perspective I must question whether it is a wise Budget for these days, especially with heavy unemployment. The tax concessions really do nothing to narrow the gap between the rich and the poor—an operation which should be a cardinal principle of British economic justice.
      I now want to refer to some of the specific items in the Budget. One of the main proposals of the Chancellor is to allow certain percentages for capital development and new plant and machinery in the depressed areas. I agree with the Chancellor that many districts not yet scheduled as depressed areas are almost cheek by jowl with depressed areas. They will not be affected by this capital depreciation concession. In Lancashire, for example, Liverpool is scheduled as a depressed area. Any industry in Liverpool will benefit from this concession, but other districts in Lancashire which are almost as hard-hit as Liverpool and are not yet scheduled as depressed areas will not

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      benefit. Difficulties may arise between districts which, although similarly affected by unemployment, are given different treatment under the proposals of the Chancellor.
      Many of my hon. Friends will welcome this concession by the Chancellor. It must be remembered that capital depreciation is a business asset. Considering the matter from that angle, I cannot criticise the proposal. In the long run it is possible that it will do some good, if only a limited amount, to depressed areas. I question whether this concession has come quickly enough to correct the imbalance that is now existing between the depressed areas of the North and the more prosperous areas of the South.
      I do not object to capital depreciation allowances, but I question whether this concession now will be as valuable to industry as it would have been had it been made just over twelve months ago. It would have been better for the Chancellor to have corrected the imbalance between the North and the South which has been responsible for employers seeking location for new industries in the South.
      What attracts a man to bring industry to the South-East when there is land available in the North, Lancashire, Yorkshire, Durham, Tyneside, Tees-side, Scotland, and Northern Ireland? Why does he come to the South? In almost everything that matters to the man who is deciding whether his business will prosper in the South as against the North, the advantages are in the South. There are cultural values in the south-east area. There are good theatres and the best actors and actresses who will not go to the North because the people there cannot afford to pay for them. The subsidies which the Chancellor gives to the South are £900,000 as against £300,000 in total to the Midlands, Scotland, the North, Northern Ireland and Wales. Every hospital bed in the north of England costs less, and has to cost less, than every bed in London. I could go through the whole list of amenities and provisions in the South that ultimately make an attractive picture to the man who is planning his industry.
      If the Chancellor tackled this problem from that point of view, results might be much better than they will be by
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      giving this concession to capital development, valuable though it may be in the course of time. I would tell the Chancellor, who argues that the basis of his Budget is one of expansion, that expansion is not always achieved by providing new machinery for capital development. This country at present could make 30 million tons of crude steel. The factories are there and the machines are there. It has the most modern and up-to-date machinery in the world.
      Steel is now the best barometer of the economic prosperity or failure of Britain. Once it was coal; now it is steel. What are we doing with that capacity to make 30 million tons of steel? We have the machines and the men. The machines are partially unemployed and some of the men are totally unemployed. Last year we used 20·6 million tons of crude steel when we could have produced 28 million tons. That was less than it was the year before. It was less than it was in the year when the present Prime Minister came to office. It is true to say that if steel is the barometer of the success or failure of the British economy there has been a diminution in the British economy ever since the Prime Minister took office.
      It is not always a case of subsidising new machines but rather of so regulating and influencing the affairs of the country that work is found for its people and directing industry to the places where there is absence of work. In this way we can build up industry that not only provides for the home trade but which can, with the encouragement of tad Government, cater for the export trade of which the hon. Member for Ilford, spoke.
      This is the paradox of the situation. It is the great service industries of this country that we nationalised and which we want to be the basis for the development of goods both for the home market and the overseas market—those industries that we thought would be able to supply all industries, whether private or public in this country, in order to build up the prosperity on which we base our conception of full employment—that are today being so denuded of Government help, and, indeed, so directed by Government decree that out of the ordinary yearly revenue received by way of the goods that they sell an abnormal

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      amount has to be given to capital development.
      In the case of electricity, it is 58½ per cent., and in the case of the Post Office something over 60 per cent. Those industries, with Government help, run as many hon. Members opposite run their own industries, with a proper balance between revenue and Government loans at cheap rates, could have done much to provide the necessary work in the depressed areas.
      Although I appreciate the rather wonderful speech made by the Chancellor and the challenge that was contained in almost everything he said, I do not believe that his proposals will provide the prosperity that will place Britain one again in the forefront of the industrial nations of the world, help us to meet world competition in terms of equality and give employment to our people.
      7.40 p.m.
      Mr. Stratton Mills: The hon. Member for Sheffield, Bright-side (Mr. Winterbottom) dealt vividly with the problems in the areas of unemployment in the north of England similar to those we have had in Northern Ireland for many years. I do not agree with much that the hon. Gentleman said, but there are several points on which one might find common ground with him. Later in my speech I propose to discuss the problems of areas of unemployment and, with the permission of the Committee, I will deal with the hon. Member's points then.
      The atmosphere in the Chamber after the Chancellor has made his speech is always very special. There is a tremendous build-up to the speech and then after he has departed, hon. Members who are left find that the experience of speaking in an almost empty Chamber is quite unique. There are many days in the year when there are few hon. Members in the Chamber at a given time. But after the Budget speech there is a special atmosphere. There is the advantage that if an hon. Member mislays his notes other hon. Members tend to be tolerant because they realise that the hon. Member who is speaking has been constructing his speech as he sat listening to the Budget statement.
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      I was glad to note that all hon. Members opposite who have spoken have, in broad terms, given a welcome to the Budget statement and have said that they regard it as a necessary Budget at this time. I wonder how rare have been the occasions in the last 18 years when there has not been a Division on one of the Resolutions put to the Committee after the Chancellor's statement. I welcome the Budget, but I will not bore the Committee by detailing all the points to which I extend a specific welcome. I certainly welcome the tone of my right hon. Friend's statement. I consider that it was the tone of his statement rather than any specific item which commended it to most hon. Members.
      The theme of growth without inflation will be widely welcomed. It is easy to use that phrase, but is it possible to achieve that aim? What will be the annual rate of inflation from following such a policy? How soon will it be before we have a balance of payments crisis? I do not wish to be unduly pessimistic, but these matters represent a definite risk which any Chancellor has to take in pursuing a policy such as has been advocated. I am convinced that it is worth taking that risk and certainly those in the areas where the rate of unemployment is high believe strongly that the risk is worth taking.
      One problem with which I wish to deal, and which concerns our whole approach as a country, is the future of the sterling area. I am not an economist, but I am passing on to the Committee the views which have been expressed by Mr. Andrew Shonfield in an excellent book on British economic policy since the war. Mr. Shonfield puts the point forcibly and convincingly that the rôle of the sterling area has changed since the war. Formerly we were a deposit bank. Now we have become an investment bank. Generally speaking, the old Commonwealth countries are debtors and the fast-developing countries in the Commonwealth are creditors. It may be argued that those countries should spend more of their accumulated wealth on developing themselves. This is gradually taking place and the new developing Commonwealth countries are starting to abandon the practice of leaving large sterling balances in London. Thus, the whole rôle of the sterling area will be altered.

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      The considerable potential strain put upon our balance of payments by the withdrawal of funds from the sterling area has been one of the main causes of the economic crises since the war. One hears the argument that on balance the City of London benefits from our rôle as banker for the sterling area. I wish to quote to the Committee what Mr. Shonfield says about this. He argues that what was in the past a substantial benefit to the City of London from our rôle as banker for the sterling area has now become marginal. He writes:
      "All told, the loss might, therefore, be of the order of £40 million. But that would still leave over two-thirds of the total estimated £125 million of foreign exchange earnings of the City of London intact. The amount lost in the course of putting some armour on the pound sterling and withdrawing the country from a number of activities, which render its economic life intolerably exposed to international pressures, is about 1 per cent. of Britain's annual income from the export of goods and services."
      As I said earlier I do not claim to be dogmatic on the subject. I am merely putting to the Committee views in this book and which appeared to me convincing. I do not believe that it would be possible for us to have a policy of growth without inflation, and without balance of payments crises, unless and until there is a radical reform of the whole rôle of the sterling area; though this is one of the ideas in politics, like deflation, which is almost a dirty word. I feel there is a strong case for a study to be made by the Treasury of the whole rôle of the sterling area.
      I wish to turn now to a subject which has nothing to do with the rôle of the sterling area but relates to the effect of the Budget proposals on young married people. I cannot help feeling that, from the point of view of young married people, there is something a little disappointing in the speech of the Chancellor. In the first year of marriage young people experience considerable financial strain, and particularly now that they are marrying at a younger age. They are faced with the expense of putting a deposit on a house and meeting the cost of furniture and carpets. Many people have argued the case for a reduction in Purchase Tax and similar schemes, but I should like to see a scheme which would provide, in addition to those reliefs that a certain amount of the income of
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      the couple would be exempt from tax for the first year of their married life, or perhaps for the first and second years, as a form of additional marriage allowance. This scheme might be an inducement to matrimonial happiness if it could be granted only in the first year of the first marriage.
      Mr. Simon Mahon: Why only in the first year?
      Mr. Stratton Mills: The hon. Gentleman asks why only the first year. The idea would be that it was a special allowance to help people getting married and it might be given for the first and second years, but my point is that it would be a special help to those young people getting married.
      Mr. T. H. H. Skeet: Marriage allowances have gone up very substantially, not only for the first year but for all succeeding years.
      Mr. Stratton Mills: I appreciate that, but my point is that there is something to be said for having a special allowance of which one could get the benefit in the first and second year of marriage especially to help to meet these extra expenses.
      I turn to what the Chancellor said about areas of high unemployment. I wish to emphasise that what he said will be widely welcomed in all areas of high unemployment in Britain. Every bit as important as the special measures he announced was his statement of his aim to provide growth and get the economy moving. Both those things will be widely felt. Above all, it has been shown by the Chancellor's speech that there is substantial new thinking on the Treasury Bench about how to help areas of high unemployment. The approach goes beyond the Distribution of Industry Act into a more positive sphere and I certainly welcome that advance.
      It was said some months ago that £10 million aid to undeveloped areas will be tied to products from areas of high unemployment. That is to be welcomed, but I have not yet heard an announcement of any products from Northern Ireland being included in the scheme. I hope that it will be possible for the Treasury to say that products from Northern Ireland are to be included. Not only from the employment point of view should we like to be associated, but we think this a very worthy idea and we should like

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      to be linked with the scheme on those grounds also.
      The central part of what the Chancellor said in this field was the free depreciation scheme for writing off equipment and fixed plant at the will of a company. This will be a very complicated scheme, and I confess that the detailed difficulties and advantages will be such that most of us who are not accountants will be able to appreciate only when we see the Economist at the weekend or the Financial Times tomorrow. Looking at the proposals for the first time, it seems from the point of view of Northern Ireland to be a most welcome and imaginative measure, probably much more imaginative than anything which has been put forward by the Government to deal with areas of high unemployment since the time when I entered the House in 1959. I have long been convinced that we have gone as far as possible with inducements under the Distribution of Industry Act and corresponding measures in Northern Ireland, and if we are to make further progress it was essential that there should be some form of taxation incentive.
      My colleagues for Northern Ireland constituencies and I put forward a similar scheme to the Prime Minister when we saw him in January and to the Chancellor when we saw him before Christmas. We put it in a memorandum which I had the honour of preparing on behalf of my colleagues to the Hall Committee on Northern Ireland's economy. In that Report, dealing with the whole field of tax differentials between areas, the Treasury experts argued most convincingly that there were great problems and administrative difficulties in giving special tax incentives to areas of high unemployment. I am glad that those have been overcome. This is a revolutionary break through. It is the first time that the principle of tax relief for special areas has been conceded. I can assure my right hon. Friend that it will be widely welcomed and much appreciated.
      Mr. Cyril Bence: We have enunciated that principle from this side of the Committee for years.
      Mr. Stratton Mills: I believe that it will be an effective measure and, spread over the years, it will do much to help areas of unemployment in getting their economy moving once again.
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      This is a well-balanced Budget. The right emphasis has been put on incentives. Above all, it is a fair Budget. It is fair between areas of high unemployment and areas of prosperity. It is fair between high income groups and low income groups. It shows a way ahead which I think our party can follow and which will be widely welcomed throughout the country.
      7.56 p.m.
      Mr. Dan Jones: I do not join with other right hon. and hon. Members in congratulating the Chancellor of the Exchequer today. I want to say precisely why. During the years I have admired his ability—that was evident today when he produced his Budget—but I feel entitled to say that there is a difference between ability and a degree of social and political morality.
      In December last year I heard the Chancellor say in the debate on un-employment that if he had to choose between inflation and expansion, which we on this side of the Committee then advocated, he would come down against inflation. For that reason he did not support the measures we advanced at that time. That was only a few months ago. As a consequence, one is driven to ask why the Chancellor has come forward today with a completely different line of thinking.
      Can we accept that this is because there is a new morality in the Tory Party, or is it because hon. Members opposite want to boost their own party fortunes? One is entitled to pose that question. I have such a regard for the Chancellor's undoubted ability that I choose the latter and suggest that he was seeking to boost the morale of his party rather than the economy of the nation. I cannot subscribe to the thinking that what he clearly wishes to do today he did not see in December last year could be done then. The Chancellor is far too wise a man ever to make a faux pas of that description.
      Like all other hon. Members, I should like to sit back and think this Budget out in more precise terms, but there are certain aspects of it which even now appear to be such that the Chancellor ought to think about them again. I believe I am right in saying that he said this was an expansionist Budget—we all agree with him that it is—and this expansion was based on the co-operation

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      of employers and trade unions. We ought to note his words very closely. He did not say "the continued co-operation of the trade unions". He left the impression—certainly in my mind—that what he is seeking now has not been forthcoming from the trade unions. By making that inference he was most un-kind to British work people.
      I have a set of figures which the Chancellor might well study. Incidentally, they are drawn from The Times. They are quite relevant to this period for they were published on 5th January. The Times article, referring to the effort and efficiency of United Kingdom and European workers, said that the average Briton produces goods worth £506 per annum, the average West German produces goods worth £493 per annum, the average Belgian produces goods worth £504 per annum, the average Frenchman produces goods worth £489 per annum, the average Dutchman produces goods worth £378 per annum and the average Italian produces goods worth £253 per annum.
      Because of these figures and because of this source—The Times is a most reputable and dependable journal—one comes to the conclusion that the British workers are playing a full part and that it might have been better had the Chancellor given these people a pat on the back rather than say that his plans now depend on their co-operation. The truth is that that co-operation has already been forthcoming.
      Nevertheless, I was particularly pleased with the Chancellor's apparent desire, which I assume will be supported by the Government, to expand our technical training. This appeals to me very much because in the end it does not matter how we juggle with figures; unless we produce goods at the right price at the right time, of the right quality and with the right selling agency, all the figures will fall into disrepute. For that reason I say that I heartily subscribe to the Chancellor's plans in this respect.
      But, again, I find myself at variance with the Chancellor. It was in 1958 that I led a deputation to the Chancellor asking him to reconsider the closing of a factory in Wales. He was then President of the Board of Trade. The factory pro-
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      duced machine tools. I was particularly attracted to it because, apart from a sprinkling of good, skilled engineers, a large proportion of the staff were disabled miners who were earning a good living and making a fair contribution to the nation's economy. That factory closed down, and the present Chancellor said that it had closed down because there had been no demand in the country for the machine tools which these people produced.
      I want to draw the Committee's attention to what happened, because the figures disturb me. In 1959 we were importing 351,671 cwt. of machine tools at a cost of £16,526,441. This was about the time that I was told that there was no demand for the goods produced by these people—men who were sound economic units and were making a solid contribution to the nation's economy—and at a time when the Chancellor, as President of the Board of Trade, told me that the factory must close down because the demand did not exist.
      I ask you, Mr. Thomas, to keep those figures in mind and to come with me to 1962. We find that the import of machine tools has risen to 573,539 cwt.
      Mr. Skeet: What was this firm producing and what type of machine tools were being imported?
      Mr. Jones: If the hon. Member permits me to continue I will come to that point. Having spent some twenty years in the engineering industry, I claim to know the relevance of these figures.
      The hon. Member was not quite fair. I wanted to quote the increase in the cost to the nation, and if he thinks about these things he will be as interested in the figures as I am. The increase was from £16,526,441 to £32,257,385. This was almost double, and it was after a time at which I had been clearly told by the man who will undoubtedly earn the plaudits of the nation, both for his ability and for his social and political morality, that there was no demand for these machine tools. Is it to be wondered that, with this experience in mind, I cannot altogether join in the hallelujahs. While I still say that the man undoubtedly has considerable ability, I cannot possibly associate myself with all these hallelujahs.

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      The unemployment position in the North worries us and is apparently now worrying the Government. If I heard the Chancellor correctly, he spoke of the removal of old buildings and used the term "dereliction". I heartily applaud the removal of old buildings, which is certainly necessary. He said that the benefit from this much overdue reform would be felt by Scotland, the North-East, Northern Ireland and other areas which are scheduled as development areas. I want to put in a word for the north-east Lancashire belt. These areas have a very high level of unemployment. Heaven knows, they have enough ugly buildings which need to be removed in order to make way for much better social as well as industrial facilities in order to attract new industries.
      If I understood the Chancellor correctly, we shall not be included in his proposal. I therefore hope that he will think this out again and will include areas of high unemployment whether scheduled or not. If he does not, I am afraid that these areas will suffer an injustice. I hope that he will remember that it is not only a question of removing ugly buildings and that he will spend more millions on roads and hospitals in the North, for both are vital in the belt to which I have referred.
      May I ask the Economic Secretary seriously to consider a point concerning the spending of perhaps £200,000 to great social and economic advantage? In the area to which I have referred, Questions to Ministers have revealed that there is a greater number of disabled people than in many areas. I therefore ask the Economic Secretary to see whether it is possible for us to have an industrial rehabilitation unit placed in the belt. I can assure him that information which I have obtained from Questions shows that the nearest unit is Aintree, in Liverpool This does not serve the area in question because the distance is too great. In most cases these people are very seriously disabled, but they would respond to the provision of facilities in this area if they had to travel up to a few miles. There are those who have said that one judges a nation by the way in which the nation treats its old people. This might be a fair yardstick to apply in this respect. I ask the Chancellor seriously to con-
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      sider this point when he is cringing under the hallelujahs which will be poured on him for his Herculean effort today.
      The Chancellor of the Exchequer—quite correctly in my view—placed great emphasis on exports. Anyone who did not agree with the right hon. Gentleman on this point would be extremely foolish. We are nothing if we are not a manufacturing nation. Our ability to manufacture depends entirely on our ability to buy raw materials in the world market. We must always remember that raw materials have to be paid for. In short, we earn our living in the world.
      In addition, could not the Chancellor of the Exchequer consider selective imports? Again I speak for my own part of the country—Lancashire. I do not apologise for doing so. I have said these things before, and I shall continue to say them as long as I am privileged to come here. There is a vitally important industry there which since 1959 has been almost desolated by what I describe as the foolish economic policies of the present Government, who carried out a vast amount of rationalisation, spent millions of pounds of public money, and as a consequence allowed the industry to stagnate. The owners of some factories lent themselves to this scheme and spent hundreds of thousands of pounds on machines, but today they are idle. If that is sound economics, I am a Dutchman. These are the economics of a madhouse. The Government encourage people to buy machines and then let them remain idle.
      If the Government are sincere in their concern for the North-East, of which Lancashire is an integral part, they should consider selective imports of cotton textile goods. Anyone who is prepared to study the matter knows that this country buys about 30 per cent. of its consumption from abroad. In this respect we are dissimilar from the United States and any European country which is, like ourselves, dependent to some degree upon the cotton and textile industry. The United States imports only about 6 per cent. For Europe the figure is 2½ per cent. to 3 per cent. I do not advocate that we get down to those levels.
      After all, we have our Commonwealth arrangements which we should be prepared to honour. However, a cut of 10

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      per cent. would be permissible and would be a tremendous help. I am inspired to make these remarks because at the Commonwealth Parliamentary Association annual meeting at Lagos in October of last year I raised with Commonwealth Members of Parliament and Commonwealth Ministers the question of the Lancashire textile industry. I speak the truth to the Committee when I say that when I told these friends that as a result of our imports one of Lancashire's industries was rapidly stagnating they would not believe me. They thought that I was guilty of exaggeration. They told me definitely that that was more than they would expect from anyone.
      I am keen for Commonwealth trade. However, if charity is a fine human trait, it is no less fine in economics and industry than it is in human relations. We take a very dim view of the fact that a man can be solicitous to the woman next door and beat his own wife.
      I cannot bring myself to join in these hallelujahs, because there are certain defects in the Budget. I hope that as a result of my brief contribution some of the defects which affect the people I am proud to represent will be put right.
      8.15 p.m.
      Mr. T. H. H. Skeet: The hon. Member for Burnley (Mr. D. Jones) always makes a very genuine speech and speaks with considerable feeling. As he said, my right hon. Friend the Chancellor of the Exchequer said that he wanted the active co-operation of all sides of industry, including the trade unions. This is absolutely indispensable. Unless we have the support of the trade unions and every side of industry, this country's future, whether chartered or otherwise, will go by the board, as the hon. Member appreciates.
      This is an expansionist Budget based on the assumption that all parts of the country will co-operate. I have one anxiety. This Budget will obviously be a very popular one in the country, but will it be construed by the public as in fact a stimulus, as denoting a need to get down to hard work to ensure that the country comes out on top of its very great difficulties?
      The Report of the National Economic Development Council lays down the
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      prospects for us between now and 1966. There is a certain amount of crystal gazing in this, because paragraph 321 contains this rather unique assessment:
      "Any temporary worsening of the balance of payments for these or other reasons should prove manageable provided the rise in money incomes and prices can be sufficiently restrained and our competitive position improved, and provided economic and political developments in the rest of the world are not unfavourable."
      Nothing could be filled with more provisos. The statement really is that, if all goes well, we will be in a satisfactory position in the United Kingdom.
      My right hon. Friend the Chancellor of the Exchequer recognised that the position of sterling is sound. We have been through some very trying times. In the correspondence columns of The Times, the Financial Times, and elsewhere, some writers have indicated that the £ should be devalued. I think we should say here and now that that would lead to a breach of faith. It would not be the right course for this country to take. The right hon. Member for Huyton (Mr. H. Wilson) stood at the Dispatch Box and said that this is the Government which gave money away. In the period when his party formed the Government up to 1951, they gave little money away. In fact, they called money in and devalued the £ in September, 1949 Then the Labour Party gave way to the Conservatives to take over in 1951.
      Mr. D. Jones Mr. D. Jones rose—
      Mr. Skeet: When I have finished I will be able to give way to the hon Member.
      Several Hon. Members Several Hon. Members rose—
      Mr. Skeet: I will give way as soon as I have finished my little assault on this point.
      We have been brought into the situation following a particular set of circumstances. Certain restrictions were imposed and the £ was devalued in September, 1949—which I am not advocating; and I will explain why later. Thereupon, the reins of Government had to be handed over to the Conservatives. In the course of the years while the Conservatives have been in power they have faced up to an important principle. Money has been allowed to fruitify in the pockets of the people. This year's Budget, therefore, is

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      catered to meet a situation which, as the right hon. Member for Huyton indicated earlier, calls for a reflationary Budget.
      Mr. D. Jones: The hon. Member has referred to the Labour Government of 1945 to 1951 and the fact that we devalued the £ at that time. The hon. Member, like so many of his hon. Friends, will not remember what the right hon. Gentleman the Member for Woodford (Sir W. Churchill) said in 1945 about us being a bankrupt nation. It is much more difficult to adjust the economy in those conditions compared with the situation which exists today. I hope that the hon. Member will bear that in mind.
      Mr. Skeet: If we were a bankrupt nation it was an extraordinary way for the Government to have attempted to get us out of our difficulties by nationalising more industries.
      Mr. Bence: The hon. Member is making an interesting point and he rightly says that the Conservative Government of 1951 pursued a policy of allowing money to fructify in the pockets of the people. Would he care to say what the value of the £ was in 1951, while the money was fructifying, and what it is today?
      Mr. Skeet: I can only guess, but I think that it has gone down in value progressively since 1945. If the hon. Member studies the diagrams provided by The Times each year he will see that it has been going down progressively.
      The average man has been receiving more all the time. The man in industry is much better off today than he was in years gone by, even with the present value of the £, and there has been a general redistribution in this context. I agree that people on fixed incomes have perhaps not been as well off as the average man in the street—the steel worker and those employed in the manufacturing industries.
      As to devaluing the £, no policy could be more ill-advised for the United Kingdom than to follow such a course. It has been recommended by several writers in the national Press. While it might temporarily assist our exports it would make our imports much more expensive and, as we know from previous experience, we would be much
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      worse off in five or six years' time. The repayment of international loans would become more onerous, and for all these reasons such a policy must be considered extremely carefully.
      I appreciate that my right hon. Friend usually has difficulties over sterling later in the year. He faces a certain amount of speculative activity now. The movement of short-term currency over the European and New York exchanges is causing the trouble. Nevertheless, Government machinery for dealing with these matters is much more satisfactory today than it was 10 or 15 years ago. Today we have the right to call upon a standby-credit of 1,000 million dollars from the International Monetary Fund. There is also the Basle machinery whereby the central bankers of Europe agree to stockpile sterling which may be funded against I.M.F. loans. There are other devices, including the bilateral "swap" arrangements between a number of countries and this, too, can be utilised to support our currency.
      For all these reasons we can afford to move ahead, with adequate backing to our currency. Devaluation is not requisite—on the assumption, that is, that we are prepared to work hard and increase our exports in the time available to us. It would be extremely ill-advised if we did not utilise the effect of the Budget to get ahead.
      I have one criticism at this stage. My right hon. Friend said that he had studied turnover taxes but was not convinced that they would provide a stimulus for exports. For this reason, he said, he intends to refer the matters to Gordon Richardson, who is, I believe, a merchant banker. This means that others will be considering this important matter. I gather that my right hon. Friend has indicated that he would like an urgent answer.
      I should have thought that we have already had quite a lot of correspondence in City journals on this topic. If the main emphasis of the Budget is expansion—and we can only get that if we expand our exports—it is one thing to provide incentives on the home front and to our industries, but it is quite another to persuade them to export. It is worth bearing in mind that the TVA tax is one of the many turnover taxes at present used in Europe. Western

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      Germany, Italy, France, Holland and Belgium all have their own variants of the turnover tax, and one would have thought that with all this experience my right hon. Friend would be convinced of its value.
      I dare say that my hon. Friend the Economic Secretary, who has had a great deal of experience in the City, may already be persuaded that this system could be brought into being, although he may have difficulties with the Treasury, which does not appreciate change. The Treasury may say, "We would have to get rid of Profits Tax", but the N.E.D.C., which investigated this tax and issued a number of reports—only some of which have been published—indicated that we would need a TVA tax of about 2 per cent. to replace the present Profits Tax, and that if we were to replace Purchase Tax we would need a TVA tax of about 5 per cent.
      The whole question is, does it provide any incentive to the exporter? The French, Italian or German exporter will tell us that, quite apart from the psychological impact, this tax provides that spur because he knows that when he exports his goods he will get a rebate from his Government of the accumulated tax paid. In Western Germany there is a fixed rate of rebate, namely, 6·68 per cent., and the actual turnover tax imposed is a variable figure ranging up to about 4 per cent. In France, the exporter will get back a great deal of the added value tax that is accumulated over the period of production, which other people pay; he, at the end, will receive it. In Italy, he will receive back about 3½ per cent. or 4 per cent.
      When we have the turnover tax operating in at least four or five European countries in which exporters find it a particular incentive, it is difficult to understand the Chancellor of the Exchequer saying today that he wants a little more experience of this matter. Further, when we find that the Common Market countries have decided to harmonise turnover taxes on France's TVA system, I should have thought that the evidence was overwhelming.
      Hon. Members will appreciate that it is one thing to have a Budget and to provide an incentive, but the next thing is to try to get the country off the ground and persuade people that it is important
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      to export. My right hon. Friend has said that foreign investment is important. In this connection we should recognise that United States firms in the United Kingdom account for over 24 per cent. of our exports to the United States of America. American companies resident here also account for a very large proportion of our manufacturing exports. These are material factors, and I am very glad that the Chancellor is doing his utmost to attract investors to the United Kingdom, and to make full use of this facility in the plan to 1966.
      How delighted I am to hear of the cancellation of Schedule A—that will help the man who has just got married—and whatever hon. Members opposite may say of my right hon. Friend's proposals, all they have to do is to examine the Financial Statement. From that they will learn that before the Budget a married couple with one child and an earned income of £800 per annum paid tax of £54 1s. 4d., which will now fall to £39 11s. 4d.—
      Mr. Harold Davies: We can read those figures.
      Mr. Skeet: But it is only right that the nation should read them, and it is right, too, that I should draw attention to one or two very significant points.
      Hon. Members are prepared to say that there is a General Election in the offing when there is not, but they are not prepared to say that this is a good Budget —[Interruption.] The hon. Member for Burnley was rather doubtful about its value.
      Mr. Harold Davies: Some of us are even more doubtful.
      Mr. Skeet: In the case of a married couple with three children not over 11 years of age the amount of tax paid on £1,000 earnings was £40. Now it has fallen to £18 3s. 1d. In other words, throughout England, Scotland and Wales people will be better off, and because of the increased social insurance payments which will be made many others also will be better off as a result of the consideration shown by the Government.
      As for the major problem of unemployment which we have to face, the Chancellor has introduced proposals which are novel, radical and, in certain ways, particularly modest.
      Mr. Bence: Too late.
      Mr. Skeet: My right hon. Friend, as I was about to say, has introduced proposals to enable an industrialist to write off at his own choice almost 100 per cent. of plant before he starts to pay tax. All that hon. Members opposite can say is, "It is too late", but at no time did they suggest a proposal of this kind.
      Mr. Bence: We have been at it for years.
      Mr. Skeet: We have been hearing this afternoon that the party opposite has been at this for a long time—since 1066, I presume.
      Two things are to be considered. First, we must get the unemployment rate down. We have every confidence that we shall bring it down to below 500,000 by the end of the year.
      Mr. Bence: Who got it up?
      Mr. Skeet: We do not succeed in our purposes simply because we get the unemployment rate down. We must also get our export rate up. Therefore, we must have the machinery and tackle to do that. Fortunately, the Government have contrived the N.E.D.C., and I dare say that hon. Members opposite will say that that was thought of many moons ago, but it is not the case. The Government have brought the N.E.D.C. into operation. I hope that it will be supported throughout the country.
      Mr. John Biffen: It was under my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) rather than the present Chancellor of the Exchequer that the N.E.D.C. came into being.
      Mr. John Rankin: A private quarel.
      Mr. Skeet: Anyway, it was a Conservative Chancellor who brought the N.E.D.C. into existence and that body has laid down proposals for the next five or six years which will give an idea of which way the country is going.
      Mr. John McCann: We know.
      Mr. Skeet: The Council has indicated 17 important industries which are likely to lead to expansion, among them machine tools, chemicals and motor car manufacture. The first thing for the public to realise is the course which we have to
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      take. The second is the importance of going in that direction, and the third the necessity of having an incentive to move in the right direction. I think that the Chancellor, therefore, is to be congratulated on the timing of his operations, on the method of putting them into effect, and on the moderation which he has shown at all times.
      8.37 p.m.
      Mr. Harold Davies: I am hungry. I have been sitting here for a long time. I do not want to quote figures which everybody can read tomorrow morning. I want to proceed by the Socratic method. First, was this a good Budget? Secondly, was it delivered ably? We know the Chancellor of the Exchequer, and, of course, it was ably delivered. If it were not, the right hon. Gentleman should not be Chancellor.
      How was the right hon. Gentleman able to give away this money? It was because the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) got sacked for accumulating it at a time when the party opposite did not know whether it wanted a "stop" policy or a "go" policy. Now we have the elementary and puerile statement made that we want to reduce unemployment. As my hon. Friend the Member for Dunbartonshire, East (Mr. Bence) asked, who got it up?
      Mr. Bence: That lot over there, and where are they?
      Mr. Davies: Yes.
      Mr. Bence: They did it.
      Mr. Davies: Look, my hon. Friend, is this a duet? A tenor and baritone duet, as I think somebody is suggesting?
      Let us get a bit of commonsense into the discussion. The Tories are now claiming that they are wonderful people because they are solving the problem of unemployment. They have been in power for twelve years. They have been giving us the facts all mixed up. We heard another misrepresentation a little while ago. As the right hon. Member for Woodford (Sir W. Churchill) said, this nation emerged bankrupt from the greatest war in the history of mankind. Yet still the childish accusation is made that we on this side did not do miracles after that ghastly war.
      Mr. Skeet Mr. Skeet rose—
      Mr. Davies: No. I am giving way to nobody. I did not interrupt anyone tonight. I want to speak for only about ten minutes, but I want my speech to be effective.
      Now, the next question. Is this a Budget full of genius? Of course not. Every newspaper, every financial paper, national and international, from the Wall Street Journal to the Financial Times and the Economist, has been talking about these things and making suggestions.
      We are grateful, of course, for some of the Chancellor's proposals, but how will the young married couple be helped because Schedule A has gone? Ninety per cent. of young married couples cannot afford the capital to buy a house at all; they cannot afford the deposit. A Chancellor preparing a really constructive and imaginative Budget might have put aside in the pockets of the Treasury £25 million or so to help young people who want to be property-owning democrats.
      Mr. Skeet: The number of home owners has been going up.
      Mr. Davies: Is the hon. Member interrupting again?
      Mr. Skeet: Will the hon. Gentleman give way?
      Mr. Davies: No, I am not giving way.
      The Temporary Chairman (Mr. George Thomas): Order.
      Mr. Davies: I shall not give way because I know the kind of questions the hon. Gentleman will ask.
      The whole point is that if some such sum as £25 million—call it £X—were put aside to help young people, they could be encouraged to become property-owning democrats. The right hon. and learned Member for Wirral found the money. This would have been a stimulus to the building industry and would have given a proper sense of dignity to young married people who are now waiting without homes of their own because of the Rent Act and because local authorities cannot build, first, because of the Rent Act and, second, because of high interest rates.
      This is where we could have had both realism and imaginative approach in the Budget. The Chancellor talks about helping society. One of the most dastardly
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      sins against society today is the extortionate, crippling, thieving robbery of land values. Yet nothing has been done.
      I cannot understand what is the matter with half of my party, saying that it was a brilliant speech by the Chancellor of the Exchequer. The right hon. Gentleman could not do anything else with the money on the eve of a General Election but give some of it away. If he really wanted to help society, he could do something about site values, because this is one of the greatest evils today. Yet nothing whatever is done or suggested.
      Now, another question. We have had a brilliant dissertation on aid to underdeveloped countries. Then we had a pompous declaration from the hon. Member for Ilford, South (Mr. Cooper)—I could not interrupt him because it was so childish—who said that he was the first in the House to talk about it. Good heavens! I remember studying Professor McMahon Ball's article on aid to the under-developed areas and making speeches in the House fifteen or sixteen years ago on the problem of economic aid.
      Let us have the facts right. I will repeat them again. We were scoffed at for stressing them years ago. What is the crucial economic fact about aid to the under-developed areas? If we lend £5 million to Malaya, and on the London market tomorrow night the price of rubber drops by ld. a lb., that £5 million will be wiped out in a moment. The point is that unless there is stability in the price of under-privileged man's raw materials, such as rubber, cocoa, tin, copra and other things, economic aid from America and the Western world, or from anybody else, does not mean a thing. I will not develop that any more. One could speak for hours on it.
      May I bore the Committee for a moment by making a short quotation? The National Institute of Economic and Social Research interviewed 140 companies in December, and the result of that is this—and the House and my party should mark it:
      "The most significant conclusion to emerge from the inquiry is the small extent to which unemployment among workers from the industries covered is likely to be alleviated by any growth in output. The engineering companies estimate that they could increase production by 10 per cent. before they would need to recruit any more workers, while a

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      25 per cent. rise in production could be achieved if the labour force were increased by only 10 per cent."
      That is a point which my hon. Friend the Member for Burnley (Mr. D. Jones) touched on. It goes on:
      "Among the vehicle companies interviewed, the potential for increased productivity is even greater, Output could … be expanded by 15 per cent, with the present labour force and by as much as 40 per cent. with only a 7 per cent."
      increase in the labour force. Those figures illustrate my point.
      Man is suddenly confronted with a fact which was beginning to emerge in the early days of the Industrial Revolution. With the present magnificent automative methods of production, we are confronted with the fact that we have to plan. This is why I am a Socialist. It is not possible under the old competitive system to have full employment in the age of electronics and automation without some form of central planning. Today's Budget was a planner's Budget, and that is why I pay tribute to parts of it.
      Mr. Rankin: Parts of it?
      Mr. Davies: I said "parts of it", and I repeat it—parts of it.
      Mr. Bence: It is like the curate's egg—good in parts.
      Mr. Davies: Hon. Members opposite are forced to accept things which they have scoffed at for the last thirty years. We were scoffed at for saying that there had to be some public ownership. The social furniture of the railways is absolutely necessary. The fact is emerging that private enterprise cannot work without coming to the Government with the begging bowl and saying, "If you want us to support the North-East Coast, give us £50 million". They squirm about subsidies to council house dwellers, the under-privileged, and then smile when it is proposed to give £130 million towards manufacturers and industrialists. I do not begrudge it, because we are forced to do it. Industry today is not big enough to stand capital development without the Government being behind it. Why do not the Government admit it? [Laughter.] The hon. Member for Willesden, East (Mr. Skeet) must be a complete ignoramus for scoffing at that.
      Mr. Skeet: Give way.
      Mr. Davies: I cannot give way. Why should I?
      Mr. Skeet: Then do not give way.
      Mr. Davies: The hon. Gentleman should not make such silly remarks. This is a fact of our history—that it is not possible to make private enterprise work today without the taxpayer putting money into the capital investment bowl.
      Mr. McCann: National assistance.
      Mr. Davies: The paradox is this. The Chancellor of the Exchequer admitted today that £150 million paid out to keep the railways going was a terrible price to pay; he would have to cut it. He is not prepared to pay £150 million for the social furniture which we call the railways—and they are not Beeching's railways but the nation's railways. He told us what he proposed to give to industry to encourage it to provide employment in certain areas. Yet the railways will have 70,000 men out of work or redundant in a couple of years' time and maybe 150,000 in a few years' time. That is the idiocy of it. It is absolutely crazy. If we are to take industry to these places, are we to run their goods on the roads? How are places to be developed in the North-East when north of Leeds there are no railways?
      It is time the Labour Party took over. If we do not do so quickly, the greatness that was Britain will be finished. The only way the Conservative Party can hope to gain a General Election now is by admitting that industry must be planned and that the old acquisitive society and the rough winds of competition do not work in this twentieth century world.
      No Government today, unless there is international co-operation, can control such things as the value of the £ and the sterling balances, which at one time I spent a long while trying to study and understand. All these questions are outside the control of any British Government or any one Government. This brings me to the point made by the Leader of the Opposition. What we want is a world economic conference to look at the problems of the raw materials of under-privileged man in relation to the automated production of technological man. I hope that the Government—all credit to them if they do—will take the initiative in the coming year of calling together a world conference to study the massive problems facing man in the twentieth century automation age.

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      It seems that we have a good "horse" now. An outsider won the Grand National. Perhaps our "outsider" will be the next Prime Minister on his performance. Maybe his performance was on the back of the right hon. and learned Member for Wirral, but if it has done Britain good, we do not mind. The people must come before politics or party.
      8.48 p.m.
      Mr. John Howard: I shall not follow the hon. Member for Leek (Mr. Harold Davies) too closely. At the outset I want to say that I regarded my right hon. Friend's Budget as one which certainly rose to the occasion, and judging by the speeches made since, that seems to have been generally accepted. It was also a workmanlike Budget in its approach to the problems which had to be accepted as its framework.
      We have heard a number of criticisms. Some hon. Members opposite have said that there has been a big "give-away", and the right hon. Member for Huyton (Mr. H. Wilson) referred to a "bonanza" Budget. I do not think either term really describes the Budget. Certainly, Schedule A has been abolished. It was a hang-over from the old days of easy tax collection by levying an artificial rental on any piece of property. Both sides of the House have for some time been pressing for its abolition, and we are now very pleased to bury it in this Budget. There has been an incentive to property owning. I do not agree with what has been said about young married people. I feel that many young married people who are buying their houses today will be encouraged by the abolition of Schedule A, which will reduce their annual outgoings.
      The "give-away", if such it is, covers a very wide field. No particular income group has had a very large reduction in overall taxation. In fact, I feel that my right hon. Friend has spread the reliefs extraordinarily fairly. I was delighted to see that he gave further relief to the aged both by means of increasing the allowances for single and married people over 65 and by increasing the limit of age relief so as to allow income from savings up to £900 to be regarded as earned income. Another incentive to someone
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      buying a house or intending to save is the reduction in Stamp Duty from 2 per cent. to 1 per cent. and the raising of the level of the house purchase price below which there is exemption from the duty.
      In my view, the Budget was set against the problem of increasing our exports and the problem of reducing unemployment. Those two objectives march hand in hand. To conquer unemployment and to increase exports we need further expansion, and hitherto one of the barriers to economic growth has been the unrealistically high level of taxes. My right hon. Friend this afternoon was at some pains to point out that although 53¾ per cent. was the nominal rate of taxation, in fact, when investment allowances were taken into account—and most heavy industry is able to make full use of those investment allowances—the rate had been effectively reduced to something around 48 per cent., a point which I think is well worth noting by industry, and, indeed, by the general public, when viewing taxes as a whole. After all, it also underlines the fact that the State has a share in profits to the tune of very nearly half and collects its share through taxation.
      We possibly looked for some positive help for exports through reducing costs, and the duty on light oils has been mentioned by a number of speakers. I should like to have seen some reduction there, but I take my right hon. Friend's point about the coal industry. It would be a great pity at this time when the coal industry is making such enormous efforts to get into the black, having earned a small profit this year, if we were to set it back and make it less competitive by encouraging the use of oil fuel at this moment.
      I am sorry, of course, that the tax on diesel oils was not reduced. This is something of a burden on those who travel by passenger transport, and the feeling is that perhaps bus fares might have been reduced had the tax on fuel oil come down in this Budget, but, again, I can appreciate that there are difficulties in segregating oil which is used for one purpose from similar oil used in another industry for a different purpose. I hope efforts will be made to devise some watertight scheme for making an allowance against fuel duty in appropriate cases.
      Mr. Charles Loughlin: I want to ask only one simple question, for I am going to touch upon this matter if I catch the eye of the Chair. Is there not a difference in the type of oil which is used in diesel transport and other oils used for industrial purposes?
      Mr. Howard: Oh, yes, I quite agree, but there is this overall picture of oil, particularly of the light hydrocarbon oil which, I gather, is rather difficult to isolate for one industry in particular. Earlier somebody—I think the hon. Member for Romford (Mr. Ledger)— referred to the use of light oils in the manufacture of polish, and, as I understood it, my hon. Friend the Economic Secretary intervened to say that in this instance efforts were being made to isolate this oil so that an allowance could be contemplated as soon as possible.
      The possibility of introducing a turnover tax should give us an incentive in the export field since that tax clearly would not apply to any product which was sent abroad. I cannot help remarking that the collection of a turnover tax will present something of a problem, and we must avoid burdening the small shopkeeper and the small trader with the provision of information which he is not geared to supply.
      Unless all retail sales are subject to a turnover tax, one can visualise the problem which will arise in a village store which sells everything from bread to fuel oil and whose only method of recording sales is ringing up the till as each customer comes in to pay his account. This type of trader will find it very difficult to analyse his sales and I hope that a burden of this sort will not be placed on him.
      Mr. Skeet: Is my hon. Friend referring to a sales tax or to a turnover tax? A sales tax is cumulative right through the production stage.
      Mr. Howard: I am talking of a turnover tax at the retail outlet.
      Dealing with unemployment, the hon. Member for Leek was critical of the allowances which my right hon. Friend announced this afternoon. The allowances, in fact, cover a wider range than those referred to by the hon. Gentleman, and to which he attributed an allowance of £150 million.
      Quite clearly some incentive is needed if industry is to move into the areas of
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      high unemployment and if industries already there are to expand in the way we hope they will. The two allowances proposed for the purchase of new plant or new buildings should be a decisive factor when firms are weighing up a site for any expansionist plan. A grant of 25 per cent. towards the cost of buildings, and 10 per cent. towards the cost of machinery, are material items in financing a new factory or new venture, and obviously the areas of high unemployment must be examined very closely before these allowances are waived aside in favour of building a factory or expanding existing works in the South-East.
      In this connection—and I hope that I understood my right hon. Friend correctly—one should make clear that the tax allowances on plant which are to be given in addition to these grants, the equivalent to about 30 per cent., also mean that anyone moving into these areas of high unemployment can write off the capital cost at any rate of depreciation he wishes. This, too, is a great advantage. If a new development is being taken up one never knows for how long it will be successful. The ability to write off the cost of an asset against the initial profits is valuable incentive. If businessmen have a new venture about whose ability to sustain its profitability they may have some doubts there is every good reason now why they should go into an area of high unemployment.
      The other week I asked a Question of my right hon. Friend in relation to an allowance against rates for those industries which moved into areas of high unemployment. I received a very curt answer, "No, Sir." It was thought not to be a very good idea. I am therefore pleased to see that a substitute for a rates allowance has been incorporated in the Budget, thus demonstrating that there is need to give positive financial encouragement if firms are to be persuaded to move into areas of high unemployment.
      Another point that was canvassed before the Budget was the question of stimulating consumer spending. The Chancellor is reasonably satisfied that this is already running at a sufficient level, and that the small concessions given in the Budget should provide the added spending power—and saving

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      power, for that matter—which is necessary.
      One item was of special interest to my constituency. I was pleased to hear my right hon. Friend's reference to the Rochdale Report, and his determination to press ahead with the modernisation and development of docks and ports. Southampton figures prominently in the Rochdale Report, which envisages a big future for it, based not only on the industrial area available within the perimeter of the town but also on its good fortune in having a deep-water port and nature's double tides, which give it a considerable advantage over ports elsewhere.
      The increase in the allowance for industrial structures should also benefit the shipbuilding industry. At present dry docks are subject only to a 2 per cent. flat allowance. For some years dry-dock owners have pressed successive Chancellors to give an increase in this allowance. The point is that no plant allowance attaches to the enormous hole that has to be dug in the ground to accommodate the dock, or to the concrete and brickwork which goes into the construction of a watertight Jock. The normal rate of machinery allowance is attributed only to machinery operating the dock gates, and so on. This increase from 2 per cent, to 4 per cent. in the allowance on the dock structure is a step in the right direction. It does not go as far as the ports which wish to attract dry docks desire, but it shows that the Chancellor realises the problem.
      In my constituency there are several firms interested in the extractive industries. If I understood my right hon. Friend's reference to these industries correctly, I gather that it is his intention to treat as stock-in-trade the cost of acquiring deposits relating only to minerals and not sand or gravel.
      The Financial Secretary to the Treasury (Mr. Anthony Barber): It includes sand and gravel.
      Mr. Howard: I am glad to hear my hon. Friend give that assurance. It will be a matter of some interest to operators in my constituency.
      Before the Budget, most professional bodies—certainly the accountancy bodies—submitted to the Chancellor
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      proposals relating to the reforms they would like to see included in the Finance Bill. In particular, they referred to the streamlining of administration and the ironing out of a number of inequalities. My right hon. Friend has gone some way towards meeting these proposals, but in most cases he has done no more than acknowledge the fact that various problems exist. He has expressed the need to set up a committee, perhaps even a one-man committee, to inquire into the way in which these problems should be dealt with.
      I have in mind particularly the amalgamation of Income Tax and Surtax. This seems to be an extraordinary relic from the days when the taxpayer did not wish the local inspector of taxes to know w hat his income was. He therefore exercised his right to send his return to the Special Commissioners, who also dealt with his income from the Surtax angle. Nowadays people are not shy about filling in their Income Tax returns. By proliferating these bodies there is a grave danger of errors occurring between the office of the Special Commissioners and the office of the inspector of taxes. In my Surtax assessments last year no less than eight errors emerged—nearly all resulting from information being slow to reach the Special Commissioners; but in one or two cases even emanating from simple errors in arithmetic which were perpetrated between the two departments.
      The question of Surtax directions in respect of profits of private companies needs attention, and hope that my right hon. Friend will give it urgent consideration. It is difficult for a private company to decide upon its future unless it makes applications for Surtax clearances every year. If there were a more general instruction that the Surtax Commissioners would have power to decide what was a reasonable distribution of profits, industry would be far happier. At present it matter of all or nothing. Either the whole of the profits assessable are subject to direction if not distributed or, alternatively, if the Revenue fails in its efforts to assess the whole of the profits then none of them is assessed. This seems to ignore the facts of the situation.
      The professional accountancy bodies have referred to capital allowances on motor cars. Arguments that the limit of motor car allowances should be abolished are not particularly popular

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      with hon. Members opposite. But it was rather ridiculous that there should be an artificial limit of £2,000 on the purchase price of a car. When my right hon. and learned Friend the Member for Wirral introduced this limit, he may have had in mind other considerations, but I think that most people who have to deal with the working of the tax system will agree that this limit is artificial and that it is as well to get rid of this fiction that a motor car should not cost more than £2,000.
      In common with most hon. Members, I received a call from the local bookmakers before the Budget. The burden of their problem was that they did not see how this tax could be fairly collected without putting registered and licensed bookmakers in a difficult position compared with unofficial bookmakers, who might be prepared not only to flout the betting laws but also to dodge any tax that my right hon. Friend might seek to obtain from them. Clearly, it is more difficult to collect the tax than was originally proposed. My own feeling is that we should endeavour to devise a method of collecting tax from all forms of gambling. But it is essential that the tax should be easy to collect and if the tax law cannot be enforced there is no point in trying to introduce it.
      In conclusion, let me refer to the regional unemployment problem. I think that everyone in the Committee is gravely disturbed about the level of unemployment in certain parts of the country and we are pleased to see that determined efforts are to be made to grapple with the problem by, for example, the clearance of sites. An amount of 85 per cent. to 95 per cent. is to be granted on tenders that are placed within the next nine months. I think that is an excellent way not only of dealing with decay in the centres of towns in some of the areas of the North-East but also of stimulating employment in those areas.
      The aid to certain countries of the Commonwealth, in Ghana, India and Pakistan, for example, should give a fillip to the expansion of exports, particularly in the areas which are heavily hit. We have heard of the two ships being built in the North-East for Ghana. That is a step in the right direction.
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      After all, £2 million is involved and this, in my view, is the right way to deal with aid to Commonwealth countries. Let us link the aid to the import of particular heavy industrial commodities which we can produce so admirably and which, moreover, are produced in the areas where unemployment is high.
      I hope that my right hon. Friend will consider tying loans of this sort to other types of expenditure. It is no use providing plant and machinery for countries such as Pakistan or India, or possibly East Africa, unless these countries are capable of handling it. I hope that fees for management consultants, consultant engineers and so on who are able to train people in these countries to use the capital goods imported from Britain will be covered under this system. It is so much more beneficial for the countries concerned if their own people can be trained by British management consultants or production engineers to develop their local skills and thus make the greatest use of capital equipment.
      I think that I have said enough to indicate that I regard this as an excellent and workmanlike Budget which will enable us to grapple with the twin problems of exports and unemployment.
      9.11 p.m.
      Mr. John Rankin: The Chancellor of the Exchequer has received so much praise that I feel it may not be good for him. We can overpraise politicians, particularly Front Bench politicians, and, in his own interests, I wish to qualify some of the things which have been said about the right hon. Gentleman.
      I can understand the reaction of the members of the Tory Party. Their reputation in the country at the moment is at its lowest. Their performance at elections has been disastrous. The deposits of Tory candidates have been endangered and even lost at recent by-elections, so that, naturally, when hon. Members opposite hear a Budget statement such as was made today in present political conditions, they spring from the depths of despair almost to the highest heights of optimism. I was reminded of the old saying:
      "The devil was sick, the devil a monk would be;
      The devil was well, the devil a monk he'd be".

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      That is not untrue of a great deal of the contents of promising Budgets which have been announced from the party opposite during the last twelve years. I am sure all hon. Members recall the Budget of 1955. Perhaps it was not quite so good as this one. But, nevertheless, it was promising. In the spring of that year the Budget gifts were announced. In the autumn, when those Budget proposals had served their purpose, the gifts were taken back, even down to the allowances on pots and pans, by means of another Budget. I hope that the same thing will not happen in respect of this Budget which has been introduced at just about the same date as the 1955 Budget. It went through the House with remarkable rapidity. The Finance Bill was almost rushed and the General Election followed in the month of May. One wonders if we are to see a similar performance on this occasion.
      I do not want to take up many of the points which have been made in this debate, but at least one was rather remarkable. It was made by an hon. Member opposite who said that one of the purposes of the Budget was to "get the country off the ground". I have never before heard an hon. Member opposite telling us so clearly that that is where the party opposite has brought Great Britain. As a result of twelve years of Tory rule we are right down on the ground.
      Mr. Bence: On our knees.
      Mr. Rankin: This Budget, which has inspired hon. Members opposite so much, is the instrument which is to lift us from the depth to which the Tory Party has reduced us. I have been thinking of a famous remark which Macbeth delivered as he walked that famous castle in Inverness on a notable occasion. I agree that this is an adaptation to bring it up to date. I do not know whether or not he was thinking of the Tories or whether there were Tories in those days, but "Their promises are void of substance." That has been true of many of the promises we have heard from this Government in the past.
      The Chancellor said that his purpose today was to cover the whole economy. That is not my purpose tonight because at least two of my lion. Friends would like to get into the debate after I have finished. The Chancellor also declared
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      his theme as being expansion without inflation. I am certain he realised when he said it that, if he manages this, it will be a considerable achievement. In order to achieve what his Budget proposes, he places two demands on those who are to benefit. They have first to spend in order to create the demand at purchasing level which will start the machine moving more rapidly than it has done over the twelve years in which the party opposite has been in power. At the same time they must save to enable the Chancellor to borrow to pay for the benefits which are to come from the Budget. Those two aims are in some respects contradictory. It will be interesting to see how they work out during the year, assuming that the year is worked out under the present Government.
      The Chancellor went on to say that it will also be the purpose of this Budget to increase our invisibles. With that aim, of course, I do not disagree, but it is remarkable because from 1952 up to 1961 our invisibles steadily declined from £443 million to £61 minion. During all those years the Tory Government produced only one Budget which had a current balance. But when invisible earnings were taken into consideration, they produced Budgets which had an overall balance. I take it that one of their big purposes is to arrest the decline in invisible earnings and then to build them up.
      Having made those general observations, I want to deal with a matter which concerns not only my own division but also every shipbuilding area in Great Britain. I had hoped that we should hear a little more about shipbuilding in view of the fact that the Chancellor emphasised the need for exports. He referred to the two ships from Ghana, but I think that he might have indicated his own attitude a little more dearly on shipbuilding. I accept that he is to take some expert into consultation before he reaches a decision, but in shipbuilding we have waited a long time to see an increase in the numbers employed and in the output of ships. It is a pity,
      I feel, that this matter should be referred to consultation with an expert—of whom I know nothing.
      I was arrested by a passage in yesterday's Glasgow Herald which referred to the fact that the launching output for the first quarter of the year is the lowest in Scotland since the war. The

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      Clyde yards have launched only nine ships of 42,000 tons and the east of Scotland yards have launched three ships of about 2,300 tons. Last year at this time the combined output was 91,500 tons. This is only one year in twelve years of decline, and within that one year there has been a distressing slump in production. As a consequence, six Clyde shipyards or ships engine works have either become casualties of the present recession in the industry or have merged with other firms. For example, this week—I think on Monday—we saw the launching of the last ship under the flag of William Hamilton and Co., at Port Glasgow; shipbuilders for over seventy years on Clydeside.
      Much the same is going on all over the shipbuilding areas of the country. On Clydeside closures are taking place, as well as streamlining, integration, rationalisation or whatever hon. Members call it, together with modernisation in production which keeps this country in line with the best shipyards in the world. Despite these changes there has been a decline, arid unemployment remains. Mr. James Lenaghan, the managing director of Fairfield Shipbuilding Company in my division, points out in the Steel Review that the British merchant fleet of over 5,000 ships, totalling 21,500,000 tons, includes 1,280 ships of 2,380,000 tons which are 20 years old or more. He goes on to make this proposal:
      "This seems to be an opportune time seriously to consider a national scrap and build policy and the replacement of older types of naval ships."
      Then he makes this other interesting suggestion, to which I hope that the Financial Secretary will pay very serious attention:
      "Shipowners too should be discouraged in their own interests from selling their old ships abroad for continued trading,"
      because that is detrimental to the best interests of shipping and shipbuilding in Great Britain. These are the words of a very distinguished shipbuilder, one who has risen from the bench to the top level in the industry.
      I welcome what he says, because when I suggested a policy of scrap and build five years ago it received a somewhat cool welcome. Nowadays it appears to be widely accepted as a policy which, if
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      applied, would revive an industry which badly needs to be stimulated and encouraged. It should be remembered that the building of passenger ships is not merely a case of building ships. Shipbuilding means stimulation to the furniture and furnishing industry. It means equipment of all kinds for bedrooms, dining rooms, recreation rooms, and so on, all on a large scale.
      I quote from the leading article in The Times of 3rd January of this year:
      "The shipbuilding order book has shrunk since the boom years from £7 million to £2 million and the labour force has shrunk from 125,000 to about 85,000."
      The Times goes on to say:
      "The short-term outlook for the yards is grim."
      I hope that the Financial Secretary will impress this on his right hon. Friend. Indeed, in Scotland it has been found necessary to continue industrial derating for shipbuilding yards, and indeed, for all industry, until 1966.
      Nobody quarrels with the main reason which has been given for the decline in shipbuilding. It is accepted. We recognise the problem which has been created by surplus world capacity, but that is not a reason for inaction on the part of the Government. Much of the expansion abroad has been due to subsidies and the other forms of State aid given to shipbuilding in countries which never before had a shipbuilding industry; not that we grudge them that. They are entitled to have a shipbuilding industry. I suppose it is the whole process of capitalism, the system in which right hon. and hon. Members opposite believe, that our consumers are continually turning into competitors. As Tory hon. Members believe in that system, it is they who should provide the remedy.
      A notable but unfortunate development for Britain in the last two or three months has been the disappearance from the order books, for the first time in many years, of orders for passenger liners. The commissioning of the "Northern Star" last summer left our shipbuilding industry without a single contract for a major passenger liner. As we know, the contract which preceded that, for the Norske Amerika liner, was snatched from us because the French Government intervened at the last moment and gave £500,000 in aid to the French industry. Because of that we lost an order worth £7 million.

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      We are told that the shipbuilding industry is dependent on British shipowners for 80 per cent. of its ouptut. We should note, however, that the industry is well equipped to undertake export work. One wonders, in this connection, what help the industry has been receiving from British Government sources abroad in seeking these orders. If time permitted I would like to have developed another aspect of this problem of trade with other countries. I would have gone into the question of the amount of assistance given by the Government to other industry in its endeavour to conduct business overseas, since this sort of help is not very evident. The fact that the Government have not formulated any definite policy for the shipbuilding industry is a serious condemnation of their apathetic attitude.
      If the Government do not have a policy for the industry, one has been put before them now. The industry is declining each year, despite its own efforts, and the idea of scrapping ships over a certain age and replacing them by modern, up-to-date liners has been suggested. If the Government are in an economically expansive mood they should provide the money to carry out a policy to expand the British shipbuilding industry. If they did this it would help our export drive, and, in the long run, I believe that the success of the Budget will depend on the success of our export drive.
      Mr. Loughlin: While appreciating that my hon. Friend is entitled to speak for as long as he likes, has he forgotten the comment he made at the beginning of his remarks when he said that be intended to be generous to his hon. Friends and make a short speech?
      Mr. Rankin: My hon. Friend has chosen to lengthen it—
      Mr. Loughlin: No, no.
      Mr. Rankin: Those who want to be helped must first help themselves, and the most helpful contribution my hon. Friend could have made to my speech would have been to remain in his place and let me finish, as I propose to do.
      I was saying to the Economic Secretary that we must sell more, and we must get into markets that so far have been ignored. The hon. Gentleman
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      knows the markets to which I refer. We must rule out political pressures in the export trade—and such political pressures have been put upon us. And the sooner the Government get down to providing a clearly-formulated policy for shipbuilding, the better it will be for Great Britain.
      9.36 p.m.
      Mrs. Eveline Hill: It would be remiss of me not to congratulate my right hon. Friend the Chancellor on his very businesslike Budget, presented in what I thought to be a very businesslike and straightforward way. It was clear that he had given an enormous amount of thought to helping as many people as he possibly could. Not even those of us who live in areas where unemployment figures are not so high could quarrel at all with the steps he has taken, or is taking, to help areas of high unemployment. It is right that it should be so, for the very simple reason that we live by industry and, if industry is not in good shape, none of the other benefits we would like, none of the other benefits of the Welfare State, are possible.
      I know that many of my constituents will be delighted that Schedule A has been abolished. I have received many complaints from them about it—they have all felt it to be an iniquitous imposition. Its abolition will please many people. I am glad, too, that allowances have been raised, as a result of which many people with children, and even with quite high incomes, will perhaps pay no tax at all, or very little. These are things that will help many people who are not receiving any other tax benefit.
      One thing that occurs to me is that this is not what one might call a housewife's Budget. There is no mention in it of the housewife, as such, but I hope that husbands will pass on some part of these helpful additional allowances so that the housewife, too, may participate in what is being meted out.
      If I have one very great regret it is that the fuel oil tax has not been done away with, or reduced. That would indeed help the housewife, and I am quite certain that my own local authority, running its big transport department, will be very disappointed that my right hon. Friend has not been able to do something about this tax. Perhaps, however, all is

      583
      not lost, and that we may in a fairly short time be able to look for help in this direction.
      It is usual for people when everything is not just going to their liking to say that "they" should do something. If "they" happen to be the Government, they are doing something with this Budget. The Government can but try to make the climate right for everything to progress; after that it is up to all of us—hon. Members, managements, workers, trade unionists, everyone down to the office boy—to play our part. If we all pull our weight with the measures presented today, I do not think that we can fail to progress. I do not think that I need answer the scorn of some hon. Members opposite for the Chancellor's motives, because I do not think that with this Budget there need be a General Election.
      9.40 p.m.
      Mr. Cyril Bence: I agree with much of what the hon. Lady the Member for Manchester, Wythenshawe (Mrs. Hill) said about everything being dependent upon the cooperation of all sections of society. We on this side of the Committee have been saying this for many years, and I am sure that many hon. Members opposite expect co-operation from all members of society, whatever party is in power. It is the duty of everyone to co-operate as far as is reasonable in decisions made by the Government. If people do not like those decisions, they must try to get rid of the Government by voting for the party of their choice at the next election.
      I was disappointed with the Budget speech. It was good to hear the Chancellor say that he was concerned not only with the planning of the economy and the redistribution of industry, which are both desirable objects, but also to give taxation relief with justice to all sections of the community. It has always been the proud boast of my party that we use the taxation system to redress discrepancies in the purchasing power of the people, but today 7 million taxpayers get no relief at all from the Budget. They are the people on the lowest incomes. It is true that they pay no Income Tax, but every time they go shopping they pay tax. These are the sick, the maimed, the unemployed, the low-income groups, the labouring classes, the 7 million to 8 million good honest working people who pay
      584
      no Income Tax. Many of them have large families. It is true that those receive family allowances, but they pay tax on everything they buy with the exception of children's clothing.
      Mr. Geoffrey Wilson: Did not my right hon. Friend the Chancellor of the Exchequer point out that a section of this class have received recent relief by reason of increases in pensions and National Assistance?
      Mr. Bence: Let us get this perfectly clear. The increases given in the last review were justified by the Minister of Pensions as bringing pensions to the same relationship that had existed earlier, in the last two or three years. The increases did not improve the relative position of the average income level and the pensions. They were simple increases, because these figures had slipped behind. Surely that argument cannot be used twice over.
      Mr. Barber: If the hon. Member will look it up, he will find that the last increase was an increase greater than the increase in average industrial earnings, and greater than the increase in the cost of living.
      Mr. Charles A. Howell: And paid for by contributions.
      Mr. Bence: The Financial Secretary says that these increases were greater than the increase in average net incomes during the same period. This may be true in certain cases, but I do not think that it is true throughout, because the 2 million to 3 million people who are on National Assistance have their award from the Board reduced by the amount of the increase so that on average their income, I believe, is only 2s. higher than it was before. If the increase results in an overall improvement, this is not true for the 2 million people for whom National Assistance has been reduced. There are several sets of figures. In one case what the hon. Gentleman suggests is true, but it may not be true in others.
      But let us not forget indirect taxation. We often hear loose talk about there being millions of people who pay no taxes. It is just not true. They may not pay Income Tax, but they pay indirect taxes.

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      I was surprised to hear the Chancellor say that this is an expansionist Budget and then go on to explain some of the things he may have to do as a result of it. One thing he told us—I do not quarrel with it, but I think that it should be on record because there is nothing in the evening papers about it—was that he has taken the necessary measures to arrange through the International Monetary Fund and the central banks so that, if we get into trouble with the £ as a result of expansion, we shall be able to borrow all over the world to support the £. Furthermore, if he finds that the £400 million being given away is too much, he will set up an inquiry into the impact of a turnover tax. This, I presume, will be with a view to clawing back the money, as has been done before. That is what it looks like to me. The ground is being prepared by the right hon. Gentleman in case he has made a mistake. If the Government are successful at the next election, there will be the inquiry under Mr. Gordon Richardson into the system of a turnover tax so that they can get the money back.
      We are to have an inquiry into a possible tax on gambling. I am very worried about this. When the Postmaster-General introduced his proposals a few days ago, I thought it shocking that the economy of the Post Office could suddenly be upset and almost completely shattered by two months of cold weather and the suspension of football. If everyone becomes conscious of the dangers of smoking and the temperance movement is more successful in its campaign against alcoholic drink so that everyone stops smoking and drinking, the Chancellor will be in such a precarious position that there will only be suicide, resignation or emigration for him. I really do not know what has happened to our country's finances. When I hear talk of a gambling tax and think of what happened after a bit of cold weather and its terrible consequences for the Post Office, I am very alarmed about the state of our economy.
      Here is something else not mentioned in any of the evening papers today. The National Debt has increased during the past 12 months at the rate of £3 million a day. It has gone up by £1,182 million. This is a staggering thought. It is now £29,856 million. We cannot do all kinds of things for the sick, the injured and
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      people with the lowest incomes, yet we have a National Debt like that. It is quite beyond me. We shall have to have a new set of arithmetical symbols because the figures are becoming so astronomical. When I was a boy, I little dreamt that I should live to see the day when the National Debt would be £29,856 million. One cannot imagine such a sum of money. How much is it? The situation is fantastic, and I wonder where it is to end. The Chancellor says that he has had a successful year. He is able to give away £400 million. Yet in the past year the National Debt has increased by £1,182 million. This seems to me to be peculiar economics or I must be very old-fashioned. It is disgraceful for the Chancellor of the Exchequer to talk about a very successful year in these circumstances.
      Mr. Barber: The figure is £269 million, not £400 million.
      Mr. Bence: That is right. I am sorry. The figure is £269 million in taxation relief. However, as one of my hon. Friends says, what is a couple of hundred million in a National Debt of £29,856 million? This could have made a nice gift for the unemployed of the country.
      I conclude by supporting what my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) said about shipbuilding. I am surprised that there is nothing in the Budget to give any encouragement to the shipbuilding industry or to merchant shipping. If any industry in this country has suffered from all sorts of international injustices, it is the British shipbuilding and merchant shipping industry. If ever an industry deserves something from its Government and its people it is the British Mercantile Marine and shipbuilding. There are very few shipyards in Britain which are below the standards of shipyards abroad.
      British seamanship and British ships are as good as ever they were, yet the shipping industry suffers from the prestige nationalism of other countries which must have their own yards and build their own ships. This' is a status symbol, like the Rolls-Royce of the board of directors. The same thing applies to aircraft. The jet aircraft has become a status symbol. Unless a country has its air service, shipbuilding yards and merchant vessels it is non-U.

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      The British shipbuilding industry has suffered badly from this state of affairs. It has to face the competition of subsidised airlines and subsidised research.
      Mr. Peter Walker: I am following the hon. Gentleman's argument with interest, but I hope that he has noticed that my right hon. Friend the Chancellor of the Exchequer has taken advantage of the feeling in other countries by saying that loans would be made available to, for example, Ghana, to purchase ships in this country, thus assisting the shibuilding industry.
      Mr. Bence: That is right, and it is very desirable. It is in keeping with the campaign of my hon. Friend the Member for West Lothian (Mr. Dalyell). Since he was returned to the House of Commons, he has waged an intensive campaign by putting Questions to the Prime Minister and others to link the scheduled areas with the development areas. His intensive work seems to have borne fruit. We should be very grateful to my hon. Friend, because he has fought a lone, long and strong battle. I am sure that the hon. Member for Worcester (Mr. Walker) realises what a grand job my hon. Friend has done in the short time he has been a Member of Parliament. This shows how desirable it is to have young, energetic men with creative ideas like my hon. Friend in the House of Commons. I am glad that the hon. Gentleman has mentioned that point because the Clyde could benefit from my hon. Friend's initiative.
      I am very disappointed that certain industries in Scotland have not received some Purchase Tax relief in order to encourage them and to help young married couples. I refer to industries like the furniture industry and the floor covering industry. A linoleum factory in Kirkcaldy is to close and will not make any more linoleum. The furniture industry in Dundee is in a very sorry plight.
      In my constituency there is a sewing machine industry, and it would have been greatly helped if Purchase Tax could have been removed from sewing machines. This would have helped not only the high income groups, although I do not suppose that people with £10,000 a year would bother to buy sewing machines, and I suppose that the
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      Purchase Tax on furniture would not mean anything to them either. But this sort of thing means a great deal to people on low incomes. A sewing machine is a great asset to a young married couple on a low income scale. Also, Purchase Tax removal would have been very desirable.
      Mr. Loughlin: Is my hon. Friend aware that the furniture trade at the moment is in a very parlous state? There is serious concern whether there is not likely to be a rapid deterioration in its employment situation.
      Mr. Bence: I am grateful to my hon. Friend, and I am sure the Committee is, for bringing into the discussion such a fact about the furniture trade. I believe that the same thing is true in English constituencies. There is a winding down of the industry through sales difficulties. In Scotland the effect has been very bad.
      In the small burgh of Milngavie in my constituency soft drinks are manufactured. The Parliamentary Secretary to the Ministry of Labour knows the place very well. These are first-class soft drinks, far better than the hard drinks sold around the country, but there is a tax on them, which is very bad. In such a small place such an industry provides very pleasant employment for 60 or 70 or perhaps 100 persons in a small factory. Much of the labour is female, and it is useful employment, with good wages and good conditions, near the homes of the workers. It is very desirable and healthy employment. It is a pity that such an industry should be affected by the imposition of Purchase Tax.
      The Chancellor had here a glorious opportunity in that he felt that he could safely reduce taxation. It is unfortunate that he could not have made some gesture to the seven or eight million families whose income is so low that they pay no Income Tax. It was highly desirable that he should have given some relief from Purchase Tax.
      I congratulate the Chancellor on at last coming to the conclusion that we must have different fiscal policies for different parts of the country. I always thought it was nonsense to have a fixed investment charge for all parts of the country while one area might be prosperous and another depressed. We in

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      Scotland are delighted that the Chancellor has introduced a new fiscal policy which vie have advocated for ten years. The Chancellor has seen that we were right in our approach.
      The only thing I am sorry about is the danger that if the Conservative Party gets back to power it may use the turnover tax investigation to claw all this back, bringing in a little deflation because of the new stimulating pressure in the Midlands and the South. As a result of that pressure, it may apply a universal tax on the country again to draw back the purchasing power, which will affect Scotland in common with other parts. We shall then start to slide back again. I am worried that the people, after the experience of the last ten years, accepting the Budget as an expansion Budget, will feel secure that expansion will continue, and will not return to power the party which will be determined to maintain the impetus of the expansion and not use the turnover tax or gambling tax to claw it all back again.
      Whereupon Motion made, and Question, That the Chairman do report Progress and ask leave to sit again.—[Mr. Peel]—put and agreed to.
      Report of Resolutions to be received Tomorrow.
      Committee also report Progress; to sit again Tomorrow.

EMPLOYMENT, BOOTLE (LITTLEWOODS POOLS LTD.)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peel.]
10.0 p.m.
Mr. Simon Mahon: I am very happy to be able to set the statement which I wish to make this evening against the background of what I think was the very important statement made by the right hon. Gentleman the Chancellor of the Exchequer today. During his able and eloquent speech, in which many useful measures were introduced, he said that it would be proper to provide for redundancy in society and it was necessary to do this for sound economic growth. I think that is pretty well what he said. I set my statement this evening against that of the Chancellor and I also set it against the Contracts of Employment Bill which was introduced in December, 1962,
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and presented by the Minister of Labour supported by the right hon. Gentleman the Prime Minister and many other right hon. Gentlemen. That Bill is to
"Require a minimum period of notice to terminate the employment of those who have been employed for a qualifying period, to provide for matters connected with the giving of the notice, and to require employers to give written particulars of terms of employment."
There is a firm in my constituency called Littlewoods Pools. I think I should say that the directors are Mr. Cecil Moores, Mr. Nigel Moores, Mr. L. Brierley Jones, and the executive director, Mr. A. A. George. I say that so that we shall not be mixing that firm up with Littlewoods Mail Order Stores.
These people are big employers on Merseyside. On 5th March this year at 4.40 in the afternoon a notice over a broadcast system was given out to 1,000 people. Out of the 1,000 people 850 were dismissed by the end of the notice. This was a most peremptory action, and I want to say as little about that as possible because I am rather embittered by it but I want to discuss the method of dismissal, the effect of the dismissal, and the future prospects of employment of those people who were dismissed in such a manner.
I described this, when I heard about it in the first instance as being archaic, ruthless and impersonal. I have had no reason to change my mind in the slightest degree. I feel that my description was not an over-statement in any shape or form. What I asked myself was, was this decision by this firm to sack 850 people in such an impersonal way a move of desperation? Was it made in desperation? Was it calculated? If it was a move made in desperation it was rather stupid, and if it was calculated, it was rather heinous.
What happened on this day? One would have thought that the first people who would have been notified would have been the Ministry of Labour. The Parliamentary Secretary knows my constituency very well indeed. He also knows that on the afternoon in question his manager at the local employment exchange was not told that 850 people were about to be dismissed. The Only people who were alerted were the police and the special investigation branch of Littlewoods organisation. Members of this branch were brought in from other

591
Littlewoods works and hidden inside the building in question until 4.40 p.m., until the split second when the announcement was made that these people were to be dismissed, and then they swooped on the girls—this is no exaggeration—who barely had time to get their coats on, and ushered them out of the building.
The statement issued by the firm said that those who had been employed for more than 20 years would be kept on in the firm's employment. Those who had been there for up to 20 years would be reimbursed on the following scale: those with one year's continuous service would get one week's pay; those with two years' service would receive two weeks' pay; those with three to five years' service would receive three weeks' pay; those with six to nine years' service would receive four weeks' pay; and those with 10 to 19 years 11 months and 29 days' service would be rewarded for such loyal service with five weeks' pay.
There was a complete lack of discrimination. People who had been there for 19 years and 11 months were sacked with the same lack of consideration as those who had been there for 10 months. This firm has seven other buildings on Merseyside, and I pointed out to the firm that it ought to have adopted a fairer policy. I said that what Mr. Moores had said in reply to my complaint was
" … no answer to the indiscriminate dismissal of 800 people in Bootle. Obviously if Mr. Moores and his firm found themselves in trouble of any kind which necessitated reduction of personnel, surely that could have been spread over the whole of Merseyside and other parts of the country and not been kept to one building in Bootle where we have the heaviest unemployment in the area."
The people employed at this place were widows, people whose husbands were sick, people who were married to war pensioners, and others in similar circumstances, but they were all dismissed with the same lack of consideration and given this most inadequate compensation. Is Littlewoods the only firm which found itself in trouble? What did the other pools firms do? They spread the load more evenly. If they had to dismiss people, they did so in a far more humane, just, and generous way.
Mr. Speaker: Order. I am listening to the hon. Member with great interest, but I do not for the moment follow where
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the Ministerial responsibility is alleged to exist here. Perhaps the hon. Gentleman would be good enough to bear that in mind.
Mr. Mahon: I thank you for your indulgence, Mr. Speaker, but I am trying to get to the point. This action by the firm more than doubled the already high unemployment figure in the Merseyside area. I have already referred to the Contracts of Employment Bill which seeks to bring in minimum standards of notice to be given to people who become redundant. Not one minute's notice, or even one second's notice, was given to these girls before they were sacked. I am grateful to you, Mr. Speaker, for allowing me to make that point.
On the day this dismissal occurred we had 3,041 men, 158 boys, 584 women and 106 girls unemployed in Bootle, bringing the total of unemployed persons to 3,889. That is the alarming fact. In those circumstances I ask the Minister what possibility there is of bringing into my constituency work which can take the place of the great loss that has been suffered. The number of vacancies on the register is very small, and our unemployment figure is growing all the time.
Much hardship has been caused by these dismissals and others. In some homes four or five people were sacked at one time. There is no need for me to embellish the point. Bootle Corporation is trying to bring in as many jobs as possible, but the peremptory action taken by Littlewoods nullifies all that the Corporation and the Government are trying to do. Much money has been spent by the Corporation in trying to create work, and the Minister has given us a great deal of help. I am also grateful for the concessions made in the Budget this afternoon. They should prove very helpful to our development district, especially the allowances, and the more attractive provisions that have been made to persuade industrialists to come to our part of the world—an area which, at the moment, is not the most attractive from the point of view of living standards.
I do not wish to moralise about the dismissal of these people, but the question of gambling has been discussed today, and if the Minister is considering what sort of industries could be directed into our area I hope that he will accept that

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we would rather not have any of the more ephemeral industries of the sort that we have had to rely upon in the past. We find that industries such as Littlewoods are like candyfloss. They are sordid, and their managements tend to be feudal. We would rather see these great premises used for more responsible and dignified purposes.
What has happened in Littlewoods is having a great effect upon Ministerial responsibility for maintaining peace in industry. The Minister knows that the question of casualisation in the docks is occupying much of his time. Many of the sacked girls are the daughters of dockers and ship-workers. The question of industrial relations extends over a wide field, and happenings of the kind to which I have referred can have a great effect all over Merseyside.
You have been very kind in allowing me a wide margin of latitude, Mr. Speaker, and I do not wish to say much more about this affair, which distresses me very much. I merely express the hope that the Minister, and the other Ministers responsible for these matters, will bear in mind that Bootle cannot provide work for its children. Bootle has 84,000 people, 21,000 of whom are under 15 years of age. That is why these sudden dismissals are so bad. The Ministry was given no prior notice, and it cannot possibly have planned to avoid increased unemployment. Firms like Littlewoods give themselves a social and industrial absolution. How can we hope to create a properly planned economy, with the Government, the trade unions and the workers working together, if some people give themselves this absolution? This matter has caused a great deal of trouble in my town.
I should like to quote from a letter that I have received from a lady who was employed in this firm. I am sure that the Minister will find it of interest. This girl had to write anonymously. She says:
"The reason being that I am employed by Littlewoods and the employment situation being as it is on Merseyside, I cannot afford the luxury of principles."
That is the situation we get. This is an old phrase. We heard it said 30 years ago.
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I was pleased to hear the Chancellor say that he had to take social and other considerations into account before he could make a decision on gambling. We are tired of relying on this sort of industry for our living. We are hard-working people on Merseyside. We are appealing to the Government to give us more work to do, and to let us develop some of the land that we own outside our area. We do not like our people being put into the undignified position that they have been put into by Mr. Cecil Moores and his colleagues in this sordid gambling empire.
I hope that efforts will be made to get a better type of work for our people to do. It would be better for our town, it would be better for our people, and it would be more rewarding to the country. It would satisfy the conscience of many people who are worried about the growth of gambling empires on Merseyside. It is becoming a major headache. We have chemin de fer, roulette, betting shops, and pools. We want less of them and a greater development of our natural industries. I appeal to the Minister to do all that he can to help us to reduce unemployment.
10.17 p.m.
Sir Stephen McAdden: I hope that the hon. Member for Bootle (Mr. Mahon), with whom I have a very good personal relationship, will forgive me when I say that I think that he has overstated his case. It is rather late in the day to talk about the sordid, ephemeral business of gambling on Merseyside when for years Merseyside has been very grateful that thousands of people have been employed by Littlewoods, Vernons and others. Their jobs have not been poorly paid. No one would suggest that they were not good employers of labour.
It may well be that in this instance he is able to argue a point with which, presumably, the Parliamentary Secretary will deal, but to suggest that this is a matter that ought to be brought to the attention of the House as something that Merseyside does not want is flying in the face of the history of what has gone on there. So far as I know, the hon. Member for Bootle has never previously made a complaint about the people of Bootle or the people of Liverpool being employed in a particular industry which he does not like.
Mr. Mahon: Will the hon. Member say something about the actual dismissal at a moment's notice of these people and justify that?
Sir S. McAdden: It is not my job to justify anybody about anything. All that I am attempting to do is to draw the hon. Gentleman's attention to the fact that this is not something which sprang up overnight. People have been employed in Bootle and in Liverpool in this form of business for years without any protest whatever from the hon. Gentleman. It is not my purpose to comment on the facts of the case. The hon. Gentleman has made his case and I have no doubt that the Parliamentary Secretary will make his. Let us not exaggerate things. Do not let us get emotional, and talk about gambling being an ephemeral or sordid business. It happens that this form of gambling is subject to a 33 per cent. tax.
Mr. Malcolm MacMillan: That does not make it into a virtue.
Sir S. McAdden: I do not say that it does. But it is subject to that form of taxation. If this firm finds itself in difficulties, presumably it has to take some step to extricate itself.
I promised to speak for only two minutes. I like to keep my promises. All I wished to do was to rebuke the hon. Member for Bootle for having taken his case so far. I hope that that will not impair what has always been a friendly relationship between us. But I think that the hon. Gentleman overstated his case.
Mr. Mahon: I cannot understand the hon. Gentleman's interest.
10.21 p.m.
The Parliamentary Secretary to the Ministry of Labour (Mr. William Whitelaw): I wish to say straight away that I fully appreciate the reason why the hon. Member for Bootle (Mr. Mahon) chose to raise this subject. We all realise the personal problems which redundancy of any sort is likely to create for those affected, and I certainly share the hon. Gentleman's concern—as I know does my hon. Friend the Member for Southend, East (Sir S. McAdden)—that everything possible should be done to reduce the redundancy to a minimum.
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Before dealing with some of the points made by the hon. Member, I think it right that I should set out the essential facts. I understand that on 5th March the employees at the Bootle branch of Littlewoods at Irlam Road were informed over the Tannoy system that the branch would close on that day. This branch, which is one of five in the Merseyside area, had a total of 1,041 employees, of whom all but 83 were females. The firm offered alternative work at other branches to the 83 males and 128 female staff with over 20 years' service. The remainder were discharged.
The hon. Member for Bootle has stressed that it was particularly unfortunate that this redundancy occurred at a time when unemployment on Merseyside was at a high level. I fully accept the seriousness of the present situation which is indicated by the figures. In March of this year 2,632 people were registered as unemployed at the Bootle employment exchange and of these 829 were females, compared with a figure of 1,689, of whom 433 were females, in March of last year. I have no wish to play down the importance of these figures or the seriousness of the unemployment situation on Merseyside as a whole. But even in these circumstances no one should criticise the firm for closing a branch if, in its commercial judgment, it considered that necessary. This must be a matter within the discretion of the firm. At the Ministry of Labour we have to accept the position and then do everything we can to find work for those made redundant.
I wish now to consider this aspect of the problem. Since the closure of the branch 574 of the 850 women declared redundant registered at employment exchanges on Merseyside, the greater proportion of them at Bootle. Undoubtedly some of the remainder have found work on their own. Others have not registered, perhaps because of illness or for some other reason. Of the 574 who registered 66 have been found work by our local officers and 39 have found their own employment, making a total of 105 now back at work, but leaving, alas, 469 still registered as unemployed.
I do not want to mislead the House, or the hon. Member for Bootle about the prospect of finding alternative work for these people. The figures of unemployed which I gave earlier make clear that the

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prospect of finding work is not good. This is particularly true of clerical workers, and I understand that most of the women declared redundant by Little-woods have special clerical skills which would not be of great value to other employers in the area. I can assure the hon. Member for Bootle that our officers at Bootie and elsewhere on Merseyside are doing everything in their power to find work for these people, and will continue to do so—
Mr. Mahon Mr. Mahon rose—
Mr. Whitelaw: I am sorry, but I must get on. I cannot give way to the hon. Gentleman.
Littlewoods have themselves told us that those made redundant will have priority for vacancies in the firm's mail order business.
The hon. Member rightly drew attention to the need for more jobs in the Merseyside area. I quite accept that. Merseyside is a development district and so can qualify for aid under the Local Employment Act. There is undoubtedly a need for further industrial expansion on Merseyside as a whole. As the Chancellor of the Exchequer indicated this afternoon, the Government are anxious to see such expansion take place. I am grateful to the hon. Member for the generous manner in which he acknowledged the value of my right hon. Friend's measures.
Perhaps I may be allowed to touch briefly on the particular remarks made by the hon. Member about industrial expansion in the Bootle area. First there is the future of the premises in Irlam Road. He raised that question when he came to see the Parliamentary Secretary to the Board of Trade and me. My hon. Friend undertook to see whether there was anything the Board of Trade could do to help. It has offered its services to the firm should it wish for assistance in finding an industrial tenant, but, as I think the hon. Member knows, the firm is unable to say at this stage what it wishes to do with the premises. I assure him, however, that the Board of Trade will keep a careful watch on the situation and will be very willing to offer any assistance it can.
The hon. Member also mentioned the anxiety in Bootle that it should be pos-
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sible to find room locally for some industrial expansion and so create more jobs. He knows that his suggestion would involve some alterations to the proposals made by Lancashire County Council for the Merseyside green belt. These proposals are being considered by my right hon. Friend the Minister of Housing and Local Government in the light of the regional studies which are being made of Merseyside's land needs. I can do no more this evening than undertake to see that the hon. Member's remarks are brought to the notice of my right hon. Friend the Minister.
The hon. Member also criticised the way in which the firm handled this redundancy. When he came to see me last month, I undertook to arrange a meeting between the firm's representatives and one of our Ministry's industrial relations officers. The firm agreed to this and a meeting took place almost at once on 13th March. We have had the benefit of a full report from the official concerned which has been most helpful to me in preparing my remarks for this debate. I understand that the first intimation given to the workers was an announcement over the loudspeaker system on the afternoon of the day on which the whole branch closed down. The local employment exchange was given no more notice of redundancy than were the workers. Apparently it has always been the practice of all branches of this firm that workers to be dismissed are discharged, given payment in lieu of notice and never retained to work out their notice on the job.
I understand that the firm adopted this policy because of the nature of the work in which great accuracy and integrity is required from the employees. The firm takes the view that in those circumstances there would be a risk if it engaged in prior consultations about redundancy or gave advance notification to the workers concerned or to the local office of the Ministry of Labour. For similar reasons it did not feel able to continue to employ workers under notice. It may be that there are special considerations because of the nature of operations at Littlewoods. Even so, I am bound to say that the announcement of redundancies over the loudspeaker system seems to have been unfortunate. Surely it would have been better to

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give the staff an explanation face to face or to convey the information in a personal communication to this effect.
It also seems a pity that the actual redundancy terms were not better understood by the employees. Misunderstandings could have been avoided if the firm's redundancy terms had been made known in advance to the workers, or at least conveyed to them in writing rather than announced to a stunned audience over a loudspeaker. This is all the more important because in fact reasonable payments were being given. I feel sure that if these details had been fully appreciated in advance, there would have been less feeling of shock and distress at the time of the announcement.
The hon. Member and others have suggested that the firm could well have spread the redundancies over several of its branches in the area instead of closing down one complete branch and
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thus cause less hardship. I understand that the firm takes the view that it redundancy were spread it would have been compelled to have discharged even more staff to achieve the necessary safeguard.
I think it only right to point out that this case raises a general point of some importance. It emphasises the value of the Contracts of Employment Bill introduced by my right hon. Friend. I entirely acknowledge the hon. Member's tribute to its importance. It emphasises the urgency and importance of improving our arrangements for handling redundancy generally. This, of course, is the Government's—
The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at half-past Ten o'clock.

SCOTLAND
  Highland Hydro-Electric Development
  Highland Hydro-Electric Development
  Western Isles
  Western Isles
  Red Deer Commission
  Red Deer Commission
TRANSPORT
  Hall Committee (Report)
  Hall Committee (Report)
  Channel Link
  Channel Link
  Driving Licences
  Driving Licences
ROADS
  Mablethorpe-Louth Road
  Mablethorpe-Louth Road
  Old People's Home, Flax Burton (Traffic Sign)
  Old People's Home, Flax Burton (Traffic Sign)
  Accidents
  Accidents
SHIPPING
  Flag Discrimination
  Flag Discrimination
  Car Ferries (Caravans)
  Car Ferries (Caravans)
EDUCATION
  School Building, Newcastle
  School Building, Newcastle
  East Sussex
  East Sussex
  Technical Colleges (Teachers' Salaries)
  Technical Colleges (Teachers' Salaries)
  GERMANY (NUCLEAR WEAPONS)
  GERMANY (NUCLEAR WEAPONS)
HOUSING
  Sheffield
  Sheffield
LOCAL GOVERNMENT
  Hove (County Borough Status)
  Hove (County Borough Status)
  General Grant Services
  General Grant Services
AGRICULTURE, FISHERIES AND FOOD
  E.F.T.A. (Fish Imports)
  E.F.T.A. (Fish Imports)
  Hill Sheep Subsidy
  Hill Sheep Subsidy
MINISTRY OF DEFENCE
  Services (Reorganisation)
  Services (Reorganisation)
  Defence Budget
  Defence Budget
HOSPITALS
  Maternity Beds, Greater London
  Maternity Beds, Greater London
MINISTRY OF HEALTH
  Water Supplies (Fluoridation)
  Water Supplies (Fluoridation)
PENSIONS AND NATIONAL INSURANCE
  Overseas Pensioners
  Overseas Pensioners
TELEPHONE SERVICE
  Trunk Revenue
  Trunk Revenue
POST OFFICE
  North Dorset (Mail)
  North Dorset (Mail)
SCIENCE
  Uranium
  Uranium
TRADE AND COMMERCE
  Gateshead
  Gateshead
BRITISH ARMY
  Small Arms Ammunition
  Small Arms Ammunition
  Royal Ordnance Factories
  Royal Ordnance Factories

Preamble
The House met at half past two of the clock, The LORD AILWYN on the Woolsack.
Prayers—Read by the Lord Bishop of Lichfield

MEAT SUPPLIES AND PRICES
2.35 p.m.
BARONESS BURTON OF COVENTRY: 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 there have been any further exchanges of view between the National Farmers' Union and the Ministry of Agriculture concerning meat supplies and the availability, to the Union, of more detailed information on the retail prices of meat than already supplied.]
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (LORD ST. OSWALD): My Lords, there have been no further exchanges. The request made by the National Farmers' Union related to information on meat prices that would be comparable as between farm and shop. The Union were informed in mid-February that the individual price quotations collected by the Ministry of Labour were not sufficiently representative and reliable to enable comparisons of this kind to be made, nor proof against misleading inferences. Though naturally disappointed at the outcome, I am sure the unions now appreciate the considerable technical difficulties involved.
BARONESS BURTON OF COVENTRY: My Lords, am I to understand from that Answer that the National Farmers' Union realise that we are not going to get any further on this matter with the Ministry of Agriculture?
LORD ST. OSWALD: My Lords, I am not sure whether that observation was in the form of a supplementary question. I did not hear the first words.
BARONESS BURTON OF COVENTRY: I am sorry. I did say, I think, "Am I to understand from that…".
LORD ST. OSWALD: My Lords, what I hope was clear from my reply was that the National Farmers' Union understand the difficulties of producing the figures they have requested.
LORD SHEPHERD: My Lords, would the noble Lord not agree that it would be a good idea if my noble friend were to suggest that the magazine Which? should consider this matter and provide the information that Her Majesty's Government obviously are not prepared to give?
LORD HAWKE: My Lords, would my noble friend agree that it would be a good idea if, to allay public anxiety on the price of meat, Her Majesty's Government published the weekly or monthly prices of meat which are collected by the Ministry of Labour in order to compile the cost-of-living index figure?
LORD ST. OSWALD: My Lords, those are the figures which I said were not sufficiently representative, or proof against misleading inferences, for us to publish them with that end in view.
LORD STONHAM: My Lords, if the noble Lord says that those figures are not representative and are misleading, how can they possibly be incorporated in the cost-of-living index, which guides the salaries and wages of millions of people in this country? That is exactly what he said. Is that what he means?
LORD ST. OSWALD: They are collected, as the noble Lord himself has pointed out, for a different purpose.
BARONESS SUMMERSKILL: My Lords, as I understand that a special cost-of-living index is being compiled for the old-age pensioners, could the noble Lord tell us which cuts of meat are to be related to that cost-of-living index?
LORD ST. OSWALD: Not without notice, I am afraid.
LORD STONHAM: Is the noble Lord aware that his noble friend Lord Jellicoe said in the House on Monday that food, including meat, which cost 13s. wholesale was sold retail at 30s. 9d. Can the noble Lord say whether on meat that is the average on-cost from wholesale to retail?
LORD ST. OSWALD: My Lords, I do not think the noble Lord, Lord Stonham, considers that that arises from the original Question.

COST OF ROADWORKS TO REPLACE RAIL
2.40 p.m.
LORD STONHAM: 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 what will be the capital cost of the provision of new roads and improvements to existing roads, which will be necessary for the safe transit of the additional public service road vehicles and goods vehicles which will be using the roads, if the recommendations in the report The Reshaping of British Railways are fully implemented.]
THE PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD CHESHAM): My Lords, the Ministry of Transport's divisional road engineers are considering what improvements to roads may be necessary if the Railways Board's full proposals are put into effect. Not until that is done will it be possible to make a first tentative estimate of the possible capital cost.
LORD STONHAM: My Lords, I am most grateful for that Answer. May I then ask the noble Lord whether his right honourable friend will give an assurance that he will give no decision with regard to any branch line closure until the cost of necessary road improvements is known, so that they can be balanced against the prospective saving on the line closure?
LORD CHESHAM: My Lords, my right honourable friend has already said certain things to that effect.
LORD HAWKE: My Lords, is it not a fact that in certain parts of the country, notably Sussex and Suffolk, Wales and the North of England, the cost of road improvements will be so prohibitive as to make it quite impossible to withdraw railway services in favour of buses?
LORD CHESHAM: That is a matter to be ascertained and, as my right honourable friend has said, taken into consideration.
LORD STONHAM: My Lords, will the noble Lord bear in mind that the Transport Users' Consultative Committees, to whom within two months proposals may be submitted, can judge on grounds of hardship only? In regard to one case in Dr. Beeching's Report on the saving by a line closure of £8,000, local people say that the road proposals will cost a quarter of a million pounds. They are the kinds of consideration which the T.U.C.C. cannot know of and they must be disclosed to the public first.
LORD CHESHAM: That is right. That, again, is the reason why my right honourable friend said that the final decision lay with him in the light of all such matters.

CLYWEDOG RESERVOIR JOINT AUTHORITY BILL [H.L.]
2.43 p.m.
THE DEPUTY CHAIRMAN OF COMMITTEES (LORD AIREDALE): My Lords, on behalf of the Lord Chairman, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a—(Lord Airedale.)
LORD OGMORE: My Lords, I wish to say just a few words on this Bill—I shall not keep your Lordships long—as a certain point of principle arises on it. On February 28 I raised a question by way of an Instruction to the Committee. This Instruction was not accepted, but we had a lively and interesting debate and, I think, one which was well worth while. The point at issue arises over Clause 33 of the Bill, which provided for permission to the authority to pay ex gratia any person a sum of money
"as they think fit towards any loss, or in respect of any personal hardship, which, in their opinion, he sustains, or is put to, by reason of his having to quit the land."
The Select Committee considered this matter, and after hearing evidence, and argument of counsel on both sides, came to a decision on the lines requested in my Instruction. The new Clause 33 now reads as follows:
"(1) The Authority shall pay to any person displaced from any land acquired under this Act such sum as will be equal to the loss or expense which such person sustains or is put to by reason of his having to quit the land and by reason of any personal hardship which he sustains.

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"(2) Any difference as to any sum payable tinder the foregoing subsection shall be determined by a single arbitrator to be agreed upon between the parties to the difference or in default of such agreement appointed by the President of the Royal Institution of Chartered Surveyors."
I rise to-day to thank the noble Lord, the Lord Chairman of the Committee, and the noble Lords who were members of the Committee, for the action which they took. It would have been a considerable hardship if they had not substituted this clause which has now been inserted in the Bill. This provision constitutes a considerable precedent, and in regard to both this particular Bill and any future Bill which affects land compulsorily acquired for any purpose, such as the one in this Bill, will be of great benefit to those who are to be dispossessed. Once more, on behalf of the farmers of Montgomeryshire who are to be affected, I thank the noble Lords.
LORD AIREDALE: My Lords, I am obliged to the noble Lord for those kind words, and I will see that they are drawn to the attention of the Lord Chairman of Committees and also to the Chairman and members of the Select Committee.
On Question, Bill read 3a and passed, and sent to the Commons.

LONDON GOVERNMENT BILL
Brought from the Commons; read 1a and to be printed.
House adjourned during pleasure, and resumed by the Lord Chancellor.

LOCATION OF OFFICES BUREAU ORDER 1963
2.46 p.m.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD HASTINGS): My Lords, the purpose of this Order in Council is to set up the Location of Offices Bureau in accordance with the intentions expressed in paragraphs 28 to 31 of the White Paper on London, that is to say, Cmnd. 1952, entitled London: Employment: Housing: Land. The activities of the Bureau will take two main forms. It will use every possible means to bring to the notice of firms which are already established in Central London, or which
534
are thinking of opening offices there, the advantages of decentralising office employment. Secondly, it will act as an information centre for firms thinking of moving out of London. It will collect information about possible destinations, and conditions there—the availability of office space and staff, communications, housing, costs, and so on. The aim will be to give employers easy access to all the information they need to reach a decision about a move and to enable them to plan it. In order to collect this information and keep it up to date, the Bureau will, of course, keep in the closest touch with Government Departments, local authorities, New Towns, and transport authorities.
The Bureau will have no success if advice it gives to firms is unrealistic and out of touch with the practical problems of business. That is why, subject to approval of the Order, my right honourable friend is inviting Mr. E. J. Sturgess, C.B.E., to be the first Chairman of the Bureau. Mr. Sturgess has recently retired after a long career in business; he was the Chief Engineer of Shell, and subsequently Resident Manager of their Training College. My right honourable friend also proposes shortly to appoint two other members of the Bureau, who also will bring commercial experience to the body. The Bureau will have a small administrative and publicity staff, mostly seconded from the Civil Service. It will also have an office in Central London. This is essential because one of its most important tasks will be to maintain close and continuing contacts with firms in the central area. That, briefly, outlines the purposes and shape of the Location and Offices Bureau. If noble Lords wish any further information, I shall be glad to give it in so far as possible. I beg to move.
Moved, That an humble Address be presented to Her Majesty praying that the Location of Offices Bureau Order 1963 be made in the form of the draft laid before this House on 21st March last.—(Lord Hastings.)
LORD SILKIN: My Lords, this Order has been before the Special Orders Committee, who have warned us
"That in their opinion the provisions of the Order raise important questions of policy and principle:
"That the Order is not founded on precedent:

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"That, in the opinion of the Committee, the Order cannot be passed by the House without special attention.…"
For this reason I do not think it necessary to apologise to the House for acceding to the advice given by the Special Orders Committee and giving this Order the attention and scrutiny which they recommend.
My first point is that this Order is made in pursuance of Section 8 (2) of the Minister of Town and Country Planning Act, 1943. This was a war-time Act, the main purpose of which was to set up the Ministry of Town and Country Planning and to appoint a Minister, and Section 8 gives one of the powers that were conferred upon this Minister. We have to bear in mind that to-day there is no Minister of Town and Country Planning, and the Act of 1943 has gone completely into disuse. It has not in terms been repealed, but in practice it has been superseded by various other Acts of Parliament relating to town and country planning, leading up to the Consolidation Act of 1962. In fact there is no Minister of Town and Country Planning; even the name has disappeared. The functions are being carried out by the Minister of Housing and Local Government.
Therefore, I think it is a little slick of the Government to use the powers conferred in this Act, which was passed for a totally different purpose—for the purpose of establishing the Minister—to set up this Committee. I do not want to make too much of it. The Government are entitled to be a little slick if they want to be, I suppose. And I am not challenging their legal right to make this Order. I do not know whether, as a result of the history of the 1943 Act which has gone completely out of use, they are still entitled to make use of this particular section. It is not on that ground that I am primarily raising the matter.
I have grave doubts as to the merits of this Order. In the first place, there is the proliferation of committees. All of us in this House and in another place have challenged from time to time the need for the creation of additional committees for functions which it is the duty of the various Government Departments and the local authorities to carry out. In this particular case it is clearly
536
the duty of the local authorities, the local planning authorities, to advise applicants for permission to use offices, or people who want to build new offices where they can go if they are not permitted to go to the particular area to which they desire to go. That is clearly their function, and it has been emphasised over and over again by various Ministers. It is also the duty of the Ministry itself to advise people which are the areas to which they can go. There is really no doubt as to which are those areas. I should not have thought that it needed the advice of a specially created committee to advise people where they can go if they cannot go to London.
I doubt very much whether such a committee can serve any purpose at all. For one thing, it will have the effect of establishing one new office in Central London, which is the very thing it is the purpose of the Government to avoid. It is also going to employ, according to the Minister, between 10 and 20 people. It will be a fairly substantial office with four directors—the Chairman, the Deputy Chairman and two others. I imagine that that office itself will be of a substantial order. But if this committee is going to carry out the functions which the noble Lord said it would, it could not possibly do it with the staff that the Minister in another place mentioned; that is, between 10 and 20. It will need a far bigger staff. Apart from the clerical staff there will be a staff which will carry out research and investigations. They will have to go round the country looking at areas, I imagine, and seeing where offices would be available. In effect they would have the job of estate agents. I can visualise this office, if it is going to do anything, increasing and increasing according to Parkinson's Law, until it has not 10 or 20 staff but something three or four times that size.
The whole of it, in my view, is quite unnecessary. It is a job which the local authorities, local planning authorities, can do quite well, and are doing. Certainly, the London County Council are very willing to give advice, and we are dealing with London. The whole purpose of this is to decentralise office accommodation in London. The London County Council are fully equipped to give this advice and in fact do so. They

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are well informed as to what is going on in the New Towns and in other places, and it seems to me wholly unnecessary to create a special body to carry out research which is within the knowledge of the London County Council themselves.
Secondly, I very much fear that it might get in the way of the planning functions of the planning authority. It might feel that it has itself to advise on planning applications. That would be wholly wrong because each application must be considered on its merits. The Minister has ample power to call in important applications, which in fact he exercises from time to time, and there is a right of appeal to the Minister which is freely exercised, too. There is a danger that this committee may get in the way of this well-established machinery, and jeopardise the right of the individual to have his case considered on its merits and to have the right of appeal.
The noble Lord has said nothing about the remuneration of these people. Obviously an office in Central London is going to be a fairly costly thing, if he can find one. Also, the remuneration of four individuals of the kind he has described will be quite considerable. It does seem to me that it is a wholly unjustifiable expense and, as I said at the outset, a proliferation of machinery which is quite unnecessary. It is not the practice in this House to vote against Orders, and I realise that in another place this Order was given a rather cool acquiescence. But I do feel, with the knowledge I have of this subject and following the thought I have been able to give to it, that the Minister might be well advised to give this matter further thought before he asks the House to approve it.
THE MARQUESS OF WILLINGDON: My Lords, I am sure the Minister is well aware that this service is already being handled, and being handled very well, entirely voluntarily, by the Industry Location Service run by Humphreys and Glasgow. Further, I hope that before the Minister advises firms to move out of London he will come to some very definite arrangement with the telephone authorities, because strangely enough, the very evening after the Special Orders Committee reviewed this Order, there was a long article by an insurance company secretary who moved out to Croydon. He
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said that they had had the most tremendous difficulty and spent most of their time dialling 100 without getting any answer, and that STD was not expected in Croydon for another two or three years.
Furthermore, I have the privilege to be associated with a firm which has many factories outside London, and the costs of telephones are of a colossal order; the last rise was in the neighbourhood of £30,000. Finally, before the Minister considers putting this into practice, will he remember that our telephone costs are rising? In the United States the telephone costs, for some reason, are reducing all the time. I believe that in the United States a trans-continental call costs only one dollar for three minutes. Will the Minister also bear in mind the question of road communications?
LORD HASTINGS: My Lords, I am not surprised that the noble Lord opposite should have paid special attention to this Order in Council, which the Report of the Special Orders Committee in fact asked the House to do, but I hope I can explain satisfactorily most of the points he brought up. In the first place, on the question of powers, although not disputing the legality of the proposal, the noble Lord somewhat doubts how these powers devolve upon my right honourable friend and how he can reasonably use them since they were originally part of the Minister of Town and Country Planning Act, 1943. As he pointed out, this is in consequence of the Orders in Council made under the Ministers of the Crown (Transfer of Functions) Act, 1946, when the Minister of Town and Country Planning took the style and title of Minister of Housing and Local Government, and also the powers. That is the purely legal aspect of the matter.
As for being somewhat "slick", to use the noble Lord's word, in so far as we are using that old Act for purposes for which, according to the noble Lord, it was not intended, I do not think I can accept that statement as a matter of fact, because the purpose for which the original Act was intended was to help the Minister in the exercise of his functions in relation to the use and development of land in England and Wales. We claim that this is precisely what the setting up of a Location of Offices Bureau is doing. It is true that there is no precedent for such an Order; and that this is the first

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exercise of this power to set up a Commission, but I do not think that the only purpose of the original Act was, as the noble Lord suggested, to set up a new Ministry of Town and Country Planning. I believe that at that time there were other ideas in mind which have in fact been implemented since—for example, the setting up of the National Parks Commission and the Central Land Board. But instead of using that Act for bringing that Commission and Board into existence, special legislation was introduced; because, of course, the parks themselves were established at the same time, and there was a whole series of financial arrangements, including grants in aid, which made special legislation necessary.
The same position occurred with the Central Land Board, which was set up under the Town and Country Planning Act, 1947. To take a more recent example, I might refer to the New Towns Commission. There again, special legislation was desirable, in view of the transfer of assets from the New Town Corporation. So it is a purely fortuitous circumstance that this is the first occasion on which this particular power, contained in the 1943 Act, has been used.
Turning now to the merits of the Order, the noble Lord suggested that this was an unnecessary proliferation of committees. In respect of the cost, I can tell him at once that there is authorisation for £50,000 for this Bureau, a sum which, in the circumstances, is not excessive.
LORD SILKIN: Is £50,000 the initial capital expenditure or the annual expenditure, or what is it?
LORD HASTINGS: It is £50,000 for the first year, for the administrative expenses and also for publicity, because one of its chief objects, of course, is to bring about as much publicity as possible. I think I must now draw the noble Lord's attention to the White Paper on London. Of course, we have not debated this White Paper since it was published in February, less than two months ago, but there is set out quite clearly the very difficult problem of offices in London. This is really only one part of a three-legged policy which the Government are pursing. One is to get Government offices themselves, and head-
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quarters staff of civil servants, moved out of London in so far as it is possible—and I might remind noble Lords that Sir Gilbert Flemming has been appointed to look into that matter and report as soon as possible.
The second, and most important, is the Bill which is now going through, and has nearly gone through, another place, the Town and Country Planning Bill, to modify the Third Schedule to the 1947 Act; and in respect of compensation to limit the allowance for development to 10 per cent. of floor space so as to make for more effective control. The third part of the policy is to do everything in our power to persuade people who already have offices in London to leave, in order to get a better distribution of offices on the periphery of London; and to prevent, if possible, people coming in to take up office space in central London when it is not absolutely necessary. Therefore, it should be seen, and must be seen, I think, in that light as part of the general policy, and as only one part which reinforces the other objectives.
I think it is made quite clear in the White Paper the extent to which office accommodation is increasing, and the congestion which this has already brought about, and is likely to bring about, if nothing is done to check it; and it is certainly the Government's contention that if this Order and the other parts of the Government's policy are not pushed forward vigorously, the cost will be far in excess of the £50,000 which we are proposing to spend in order to help to put things right: it will add up, probably, to several millions of pounds a year. When you think of traffic congestion, the road improvements that would have to be made and the expensive capital cost of transport and of all sorts of suburban railways, not to mention the man-hours lost in travelling, we feel that the expenditure of £50,000 a year far outweighs any slight disadvantage there may seem to be in setting up this Bureau in the centre of London itself. We feel that, if we do not do that, the effects will cost us millions, and not a few thousands.
As for the argument that there is no need to advise, because the local authorities are performing this job, I would suggest that their advice is given only on a very small scale, and that there is need for some sort of central information

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bureau, and that the staff proposed will be quite adequate to carry out the work. The Bureau will collect and collate information from local authorities, including the London County Council—although, of course, this policy is not related to London alone: we hope that offices will go well outside London and not merely on the periphery. In some exceptional cases, perhaps we may get them to go to the North-East, or to Scotland—certainly far out of London. In most cases, it will probably be within reach of London; but it could well be into expanding towns and New Towns, and beyond the periphery. We feel that there must be a liaison between all the local authorities and the people required to move. It is difficult for them to discover exactly where to go; and that is a task with which we feel this staff could perfectly well and very efficiently cope.
There is another point of importance here. The noble Lord spoke about the necessity for research. It is necessary to know why people will not move out of London and why, among firms of the same category and nature, some will move and some will not. There is a great need for further detailed information of this nature, especially as to the sort of requirements that they insist upon in return for moving. I can believe that one of the reasons would relate to the telephone service available in the area. That is a point I will bring to the attention of my right honourable friend and to the Department concerned; and information can be gathered at the Location of Offices Bureau about that. Such research would probably be done, not by increasing or overworking the staff of twenty or thirty, but by requesting some specialised research unit to do it on behalf of the Bureau.
There is no question of this Bureau's getting in the way (to use the noble Lord's own words) of the planning authorities. It will have nothing to do with planning, planning permission or planning appeals; and nothing to do, either, with estate agents. The Bureau will not act as estate agents. Once advice has been given, it is up to the firm in question to get in touch with the areas which seem to them most hopeful and which fulfil their demands most adequately and they will be given fullest details to plan the move. I do not think my noble friend Lord Willingdon's
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comparison with the private office called, I think, the Industrial Locations Office in Glasgow is at all comparable.
THE MARQUESS OF WILLINGDON: It is not in Glasgow: it is a very famous organisation with the name "Glasgow."
LORD HASTINGS: I am sorry. It operates—I do not know where.
THE MARQUESS OF WILLINGDON: My Lords, it has a head office in London and many offices all over the world.
LORD HASTINGS: It is a private information bureau but it is for industrial information and its job is quite different from that to be carried out by this Offices Bureau. I hope now, with that explanation, that noble Lords will feel that this is part of a coherent Government policy which is necessary. It is not a waste of money, and we shall, in fact, save a great deal of money and time by setting up this office.
LORD HAWKE: My Lords, the policy of this body is highly laudable and commends itself to every quarter, but whether the right medium has been used and whether the name of the body, as a Bureau, is slightly ominous, I do not know. Can the noble Lord promise that it will at least lay before the House quarterly reports as to whether it has success in its task?
LORD HASTINGS: My Lords, there is a clause about annual accounts. It must produce annual accounts and my right honourable friend will call for an annual report. There are no arrangements for laying quarterly reports before the House, but I will bring the point to my right honourable friend's attention. I do not say it could be done.
LORD HAWKE: My Lords, can it be arranged by Question and Answer once a quarter?
LORD LATHAM: My Lords, would the noble Lord say whether an enquirer at the Bureau would be told that the principal cause of difficulty in London is the successive repeals by former Tory Governments of the provisions of the Act of 1947?
LORD HASTINGS: I think the firms would be more interested in finding suitable offices than in inquiring into past policy.
LORD JESSEL: My Lords, my noble friend said the initial cost for the first year was £50,000. Later on he talked about an annual cost of £50,000.
LORD MORRISON OF LAMBETH: It starts at that figure and will go up. My Lords, it gets worse and worse. The noble Lord has referred to the White Paper published by the Ministry, London: Employment: Housing: Land. This shows that the Ministry of Housing and Local Government, even that not very competent Department, can publish a White Paper about the South-Eastern Region, Greater London, on its own. Hitherto it had held it was incompetent to do so because there were so many local authorities; therefore, it wanted a Greater London local authority. Well, they have published it; and the noble Lord says we have not yet discussed it. I suggest to him that before we come to this Order we ought to have, in Government time, a debate about this White Paper. Let us have that debate and consider afterwards whether this Order is necessary. Let the Government fix a time. If they publish an important White Paper, then they must expect to give us a day for a debate upon it.
This is a wasteful, bureaucratic, idiotic proposal. This is an extraordinary Department, this Ministry of Housing and Local Government. The planning authority for this business in the first instance, not the second, is the London County Council. The London County Council understand about distribution in London and beyond. Indeed, in so far as they have gone in for an expanding towns policy—which not quite the same as, but something of a similar nature to, New Towns—the London County Council has to know what London industries can be encouraged to do in the expanding towns so as to provide employment for the Londoners who are going to these expanding towns. They call them "exports", which is not a good term for people who move. The London County Council know about it; they know about the problem of offices in central London, which, I agree, is a real problem. The offices in central London are being added to too much. As my noble friend the Deputy Leader of the Opposition here said, this will be another office, established in the name of checking offices in central London. This Government are
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capable of anything; even of that. That is the first thing.
The London County Council know pretty well all about this; and what they do not know the Ministry of Housing and Local Government do know, or ought to know. They have the staff, and they have produced this White Paper. I have only just started reading it. So far as I have gone it is not a bad White Paper, though when I have finished reading it I may have other views! They have the staff who are studying this problem. I have always said that the duty of the Ministry of Housing and Local Government is to have ideas of their own about a regional plan; to check on the planning submitted by the planning authorities the county councils and the county boroughs; to suggest and, if necessary impose, modifications to fit them in with ministerial ideas of what ought to be regional planning. That is their job.
But they have said, in relation to the London Government Bill, that the last thing in the world they want to do is to interfere with local authorities; that they would prefer them to act without ministerial interference. But in the first place, this order is ministerial interference. It is putting a Committee between the Minister and the local authorities, who could have done the co-ordination and ultimately imposed a plan on the South-Eastern region.
What ought the Ministry to be doing? They have their experts and specialists, backed by an extraordinarily powerful higher Civil Service, which is probably the author of this particular proposal. The Minister ought to be competent enough to do this himself, but the Minister—Sir Keith Joseph—by bringing forward this Order, confesses that he is incompetent to do the job himself. And I would not be disposed to argue with him about it, because I do not think that he is particularly competent. He proposes to pass the buck, not to a Committee, but to a Bureau—let us give these things their right names. This is a Continental term, imported into our Anglo-Saxon dictionary at the behest of a patriotic Tory Government—if they are patriotic. So they are going to have a Bureau. And who will advise the Bureau?
LORD SHEPHERD: Shell.
LORD MORRISON OF LAMBETH: Very good. I must say that it is a startling thing that Shell has been brought into the chairmanship, and I suppose that all the others will be capitalist persons of some sort or another. This is an extraordinary committee, with a chairman and deputy and only two members of the rank and file. There is no mention of local government and no mention of labour, so far. Who will service the Bureau? Who will advise the Bureau?—the very same higher civil servants who advise the Minister. Oh!, it is a lovely thing.
BARONESS SUMMERSKILL: Jobs for the boys!
LORD MORRISON OF LAMBETH: I agree with my noble friend entirely, but these are Civil Service "boys", who have got jobs anyway. I will come to the other jobs later. I never like criticising civil servants, but I am getting increasingly fed up with the higher civil servants of the Ministry of Housing and Local Government. They will advise this Bureau, and if the Bureau did not exist, they would advise the Minister. So, at the end of the day, things come to much the same conclusion—except that, if the Minister gives an unpopular decision he can say, "Well, I was advised by the Bureau to do it, and having appointed these very able people, men"—I nearly said "and women" but I doubt if there will be a woman—
BARONESS SUMMERSKILL: There will not be one.
LORD MORRISON OF LAMBETH: I agree with the noble Baroness—"I could not easily sot aside their advice." And if their decision is popular, the Minister will say, "What a fine chap am I! "The truth is that the decision will be much the same, whether it has been reached by the Minister, on the advice of these able, higher, bureaucratically-minded civil servants, or whether it was given, on the same advice, by the Bureau itself. A first application goes to the local authority—in this case almost certainly the London County Council. If the Council say that they do not want so many offices and turn it down, there is an appeal to the Ministry of Housing and Local Government. Then, I suppose the Minister will obtain the advice of
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the Bureau. So there is this Bureau interposing itself between local self-government and a Minister of the Crown. And when it comes to Parliamentary accountability, and the Minister comes to answer, God knows who is going to be responsible!
This is an illogical, bureaucratic, pantomime proposition, and it ought to be stopped. But we have the tradition in this House that we do not interfere with delegated legislation, and as one who has been the author of delegated legislation I agree with your Lordships that we ought not to do so. But why the House of Commons, as the guardian of the public purse, did not interfere with this, I am at a complete loss to understand. Because these four persons on the Bureau can be paid. I thought that we had enough public spirit in our country for people to serve on a Government Committee for nothing. This week there was a discussion, on the merits of which I will not enter, about the Consumers' Council, the Chairman of which is to be paid. The members of the Council are not to be paid at all.
BARONESS SUMMERSKILL: They have changed their minds.
LORD MORRISON OF LAMBETH: I had better drop that. But in this case, the Goverment propose to pay the whole four remuneration, and if this is not a case of "jobs for the boys", I should like to know what is. There is no case for paying this Bureau anything at all. The Government are providing jobs probably for their friends or tools, whatever the case may be. This is a disgraceful business. It is a possible interference with local self-government, which the Government have sworn they do not want to do, and that is why they have brought in the London Government Bill. It is a possible obscuring of ministerial responsibility to Parliament. I sympathise with the noble Lord, Lord Hastings. He is a nice, inoffensive Minister. I am sorry to knock him about, but I am really knocking not him but this fellow above him. I sympathise with the noble Lord, and I suggest to him that he takes the Order away, holds it up until we have had a debate on the White Paper, and, having done that, resigns from office in the Ministry of Housing and Local Government.
3.27 p.m.
THE DUKE OF ATHOLL: My Lords, before the noble Lord replies to that charming speech from the noble Lord opposite, may I point out that paragraph 3 of this Order says:
"…including without prejudice to the generality of the foregoing the provision of information and publicity and the promotion of research."
So far as I can make out, this Order applies only to England and Wales—in fact, it says so at the top. Does this mean that the Bureau will be unable to give anyone any information or publicity of or promote research in Scotland? Because that would appear to militate against Scotland most unfairly, always presuming that this Bureau is going to do any good at all—which I strongly doubt.
LORD TAYLOR: My Lords, my noble friend has referred to this as a disgraceful business, and it really is extraordinary. There is an aspect of it which I do not think noble Lords have quite realised. This, in fact, is a piece of socialisation by Affirmative Order. I am not opposed to socialisation by Affirmative Order. This is the socialisation of the functions of estate agents—competitive socialisation.
Let me explain how it will work. A New Town which has built a block of offices at present goes to an estate agent and hires him to publicise its office block. This has happened in the case of numerous New Towns. I do not say that this is at all improper; it is just what happens. Under this Order, the New Town will simply have to inform the Bureau that it has built new office premises and will be delighted to have some tenants. Meanwhile, tenants will be applying to the Bureau and they will be allocated or offered the New Town premises which are available. The estate agents will have lost that business and lost the fees for their work. I do not object to this at all. I think it is an interesting and very useful precedent, which we shall certainly bear in mind in due course. I am not at all sure that noble Lords opposite ought not to be the ones who should be pressing the Government hardest to drop this ridiculous Order.
THE LORD CHANCELLOR (LORD DILHORNE): My Lords, I listened with the greatest interest to the speech of the noble Lord, Lord Morrison of Lambeth,
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and was delighted to hear him in such good form. It reminded me of many speeches that I heard him make in another place in years gone by. I pondered for a little as to what the cause of his being in this good form to-day might be, and I came to the conclusion that he could only be exhilarated by the thought of a good Conservative Budget.
LORD MORRISON OF LAMBETH: I never dreamt of it.
THE LORD CHANCELLOR: If I may come to the particular points about this Order, it is an occasion on which one could make comparatively heavy weather of a quite simple proposal. There are, I think, advantages, if an institution or bureau of this kind is going to be set up, in doing it under the exercise of statutory powers. The powers to constitute a body of this kind—and I am sure the noble Lord, Lord Silkin, will not deny this—are given by the Minister of Town and Country Planning Act, 1943.
Then the attack rather turned upon whether it was really any advantage to have a bureau of this kind. I would say to your Lordships, with great respect, that I should have thought it was a considerable advantage. It is really no argument to say that if someone goes to the London County Council he might get the same answer as, or possibly a different answer from, that which he would get if he went to this Bureau. It is really no answer to say that the individual company concerned might get the information desired by going to the Ministry of Housing and Local Government. The result of the constitution of this Bureau will be that there will be one organisation which will help people who desire advice on the location of their industry. I feel that this body can, and will, serve a useful purpose, in a more limited field, it is true, as do the Citizens' Advice Bureaux, which, after all, provide information which people can obtain elsewhere, if they know where to get it, whether it be from the L.C.C. or any Government Department. I would respectfully suggest to your Lordships that this proposal is a sound one, which will provide considerable assistance to those who are concerned with this problem, and, in particular, in the decentralisation of office accommodation. I am sure your Lordships all agree that everything that

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can be done should be done to assist to that end, and I am sure that the creation of a Bureau of this kind will help in that direction.
The question was raised whether this Bureau would have any advantages so far as Scotland is concerned. Well, I am not at all sure that any industry which is thinking of making its headquarters in London will be diverted by this body, or indeed by any other body, into making its headquarters north of the Border; but I certainly would not say it was ultra vires of this particular body to recommend such a course, if it thought it was desirable. We have had an entertaining, interesting and, up to this moment, if I may say so, enjoyable debate, and I, for my part, greatly enjoyed listening to the speech made by the noble Lord, Lord Morrison of Lambeth. But if one leaves joking on one side, I think it will be useful to have a body of this kind; and it is desirable, if you are going to have such a body, that it should be set up under some statutory powers. That is all that this Order does.
On Question, Motion agreed to: the said Address to be presented to Her Majesty by the Lords with White Staves.

AGRICULTURE (MISCELLANEOUS PROVISIONS) BILL
3.35 p.m.
Report of Amendments received (according to Order).
Clause 14 [Protection of farm animals exposed for sale]:
LORD ST. OSWALD LORD ST. OSWALD moved to add to the clause:
"or awaiting removal after being exposed for sale".
The noble Lord said: My Lords, I beg to move the Amendment to Clause 14 standing in my name on the Marshalled List. During our Second Reading debate last month the noble Lord, Lord Champion, welcomed the introduction of Clause 14 of the Bill, which, as I then explained, will enable my right honourable friend to ensure some minimum standard of comfort and treatment of farm animals while they are exposed for sale. When this clause was debated in another place some doubts were expressed about the adequacy of its wording, since it covers only the period while the animals
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are exposed for sale, and there may be occasions when, due to lack of transport or for other reasons, animals remain in the market for some time after sale. In general, we should not expect calves, dairy cows or pigs, the animals most likely to suffer from exposure, to be moved from the sale pens while awaiting collection. Normally, therefore, we believe they will be adequately protected for the whole of the time they are in the market by any regulation made for their physical protection before sale.
However, my right honourable friend agreed to have another look at this point. The further inquiries we have made confirm that the clause, as drafted, would be sufficient in the great majority of cases; but clearly it might happen that animals needing protection might after sale be moved to other accommodation of lower standard to await collection. We are anxious that by such movements inside market premises animals should not lose the protection of the regulations we aim to make, and we do not wish the purpose of the clause to be in any way weakened. I therefore submit this Amendment for your Lordships' approval, so that the clause will clearly and specifically give the Minister power to make market regulations covering the whole of the time that animals are exposed for sale and while they are in a market awaiting collection. I beg to move.
Amendment moved—
Page 10, line 47, at end insert the said words.—(Lord St. Oswald.)
LORD CHAMPION: My Lords, I am sure noble Lords on this side wholly welcome this tightening up of the provisions of the Bill in this respect, and I should like to thank the noble Lord for looking at the matter and bringing forward this Amendment. I support it.
On Question, Amendment agreed to.
Clause 16 [Fees]:
THE DUKE OF ATHOLL THE DUKE OF ATHOLL moved to add to subsection (4):
"Notwithstanding the above, the maximum fee which shall be charged under section 2 (1) or section 3 (1) of the Horse Breeding Act, 1958, for such licence or permit to keep a stallion of a recognised native breed of pony shall be three guineas.
For the purposes of this section a pony of any of the following breeds shall be deemed

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to be of a recognised native breed:—Connemara, Dale, Dartmoor, Exmoor, Highland, New Forest, Shetland, Welsh."
The noble Duke said: My Lords, on the Committee stage of the Bill I moved a general Amendment to Clause 16 to limit the fees set out at the bottom of the table, and in particular to limit the fees chargeable on all pony stallions. This Amendment is slightly more limiting still, in that it includes only pony stallions of the native breeds of this country, because, on reconsidering the matter, I feel that the owners of stallions such as Arabs and small thoroughbreds can probably well afford to pay the full economic fee which the Ministry of Agriculture propose to charge.
In this clause the Government are trying to enable future Ministers to vary the fees more or less according to the actual cost of inspections and of issuing the licences or permits. At the moment, these fees are fixed under the Horse Breeding Act, 1958, and produce, I believe, about 5 per cent. of the actual cost of the inspections and of issuing the licences or permits. I agree with my noble friend that this means that there is far too big a subsidy, and the cost of the licences or permits should be raised. However, I am exceedingly nervous about the amount proposed to bring it on to a fully or almost fully economic basis.
My noble friend said in the Committee stage that the Government were considering making certain alterations in the procedure which would reduce costs. I should like to know what these alterations are. One of them, I imagine, is that once a stallion has reached the age of say, 10 or 12, it would no longer be subject to the periodic inspection, under the theory that any hereditary disease it was going to show it would have shown already by that age. I think there is a great deal to be said for that idea, although there are people who feel one should go on inspecting stallions so long as they are serving mares.
Secondly, presumably the Government propose reducing the number of inspections. I am slightly nervous about this, as I feel that a stallion could easily develop hereditary disease during the course of a year, and it would be a pity if an economy were made in this way and risks taken by doing this. I should therefore be interested to know exactly what
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simplifications in procedure the Government are proposing to make, and how much of the present cost, which is in the neighbourhood of £20 to £22 per licence, they expect to be able to save. I have worked out some figures, and for the purposes of this argument I am going to presume that the Government will be able to save 50 per cent. of that cost, and that therefore it is likely that they will charge a fee somewhere in the region of 10 guineas. This may be too high, in which case, of course, the figures will be more in favour of their argument than in my favour. If, on the other hand, it is too low, they will be even more in my favour. I must remind your Lordships that we shall have no control at all over what the final fee will be, because it is going to be controlled by Order in Council subject to a Negative Resolution in another place.
First, I should like to point out that the Horse Breeding Act was passed only in 1958. I believe it is a Consolidation Act, but it does not say so in the Title, and I think many people feel, or have felt in the past, that the one guinea fixed by the Act of 1958 was likely to last for some time. I personally think it was a pity that this sum was not reviewed when that Act was passed, and it might have been raised gradually then, as I am sure it will come as a shock to many people to find out the amount it is likely to be raised by in this Bill. So far my arguments have applied to all classes of horse breeders who I feel may be aggrieved by the radical raising of the cost of a licence or permit by this Bill.
I should like to produce my particular arguments why I think the owners of native pony breeds should be subject to this rather low maximum. It is partly a question of geography, and partly one of mathematics. Native pony stallions very often stand in remote areas, and serve an extremely limited number of mares each year. The cost of transporting these mares any further would be justified neither by the value of the service, nor by the value of the subsequent foal. These stallions are also comparatively cheap to keep, and in these rural areas the cost of transport is high, and the difficulties of transport often quite considerable. It is, therefore, a convenience for a large number of

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farmers and people interested in pony breeding to have a stallion which they can use available reasonably locally. The fact that it is a stallion which has been licensed makes sure, of course, that they are using a suitable stallion and one which is likely to improve the breed.
Many of these stallions serve as few as seven mares a year and their owners, in some cases, charge as little as two guineas. But let us take a slightly less extreme example and consider the stallion who serves ten mares a year, and whose owner charges five guineas for each service. A rise in its licensing fee of ten guineas would reduce its income, or would increase its cost as related to the total income that it fetches to its owner, by 20 per cent.; that is to say, ten guineas on 50 guineas; and a would mean raising its fee equally by 20 per cent. in order to recoup its costs. If we take the case of a moderate thoroughbred who serves 40 mares or so each year at 48 guineas—and this, I can assure your Lordships, is a very low fee for a thoroughbred—this would have the effect of increasing the cost of this particular animal by one half of 1 per cent., or five shillings per mare, a sum hardly worth recouping. Even if we take the travelling premium stallion, whose fee is usually in the neighbourhood of 10 guineas, he at least serves 40 to 50 mares a year and, therefore, the cost of the extra fee would be spread over a far greater number of mares, and his increase would work out at about only 2 per cent. That, I think, is the mathematical case for keeping the fees of the native pony stallions at a low figure of three guineas.
I should also think, from my own experience, and from facts which have been collected by the Highland Pony Society, that if the fee were increased beyond three guineas many stallions which at the moment were licensed would be either unlicensed or castrated. This would be a great pity. We want to improve the breed, and to do this we want to have every stallion licensed, and try to encourage every owner to have his stallion licensed. At the moment, you are allowed to keep a stallion in its own native area without a licence, provided that you do not show it or do not advertise it in any way at all. I am not quite sure whether
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this means that it may serve only mares who belong to the same owner, or that if you came along with your mare and said, "Please may I make use of your stallion?" its owner would be permitted to allow it to serve outside mares. But he certainly would not be allowed to show it at the local shows, or to parade it around the country, which I think everyone will agree is one of the attractions of these shows.
I should also like to know the answer to two or three questions. How often will these stallions be inspected? Will a fee be charged each time the stallion is inspected, or every year; or only when the original licence or permit is issued? I believe that these questions are important. I should also like to ask by whom the stallions will be inspected. Most people are against having the livestock officer present at inspections. They feel that it is unreasonable to expect any man to be able to judge stallions, bulls and boars of all the many breeds. Some think that it might be left to the veterinary surgeon, in which case you would get an animal which was at least fit—no one would say how high class it was, but at least it would be fit and have no hereditary diseases. Others think that members of the judges' panel of the particular breed should accompany the veterinary surgeon, in order to give their opinion of the class of the animal concerned. I should therefore like to know by whom these inspections are going to take place. I also wonder whom the Ministry of Agriculture have consulted in drawing up this clause, and whom they will consult when they fix the fees. So far, the National Pony Society, which represents the vast majority of the owners of pony stallions in this country have not been consulted; and that seems very strange.
Finally, at the Committee stage of this Bill my noble friend said [OFFICIAL REPORT, Vol. 247 (No. 57), col. 1046.]:
"I understand that the service fees for pony stallions range from 5 to 50 guineas, set against values between 50 and 600 guineas, which compares with service fees for thoroughbreds ranging from 20 to 200 guineas. set against values between 200 and 2,000 guineas."
I find it difficult to believe that he means that; for, except for his minimum figure for pony stallions, I think that there is no correct figure there. On his minimum

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figure, he might have said 2 guineas, but I am quite prepared to go with him in saying that the serious breeders all charge 5 guineas.
I have taken figures of the ponies advertised in the National Pony Society Review and the Horse and Hound (which, for obvious reasons, tend to be the best ponies in the country), and the maximum at which any of them is advertised is 20 guineas. There are three, all told, at that figure, and there are four more advertised at 15 guineas; otherwise they are all advertised at a lesser figure. If you take the average fee over all the native pony breeds, it works out at 10 guineas; and if you exclude the elite of the native pony breeds, which are the Welsh and the Dartmoor ponies, the average fee charged by the stallion owners, works out as low as 7½ guineas. If the fee for a licence or a permit is to be increased by from 5 to 10 guineas, this will be a severe inroad into their income (or, perhaps a better way of putting it, a severe extra piece of expenditure) and I feel that they will not be able to afford it.
He also said that the value of the ponies was between 50 and 600 guineas. I think that 600 guineas is on the high side. I should be very pleased to know of any pony other than a fully-trained polo pony, which is worth 600 guineas. However, I will not argue that point. But when he says that the service fee for thoroughbreds ranged from 20 to 200 guineas, that I simply will not accept at all. There are very few thoroughbreds below 48 guineas and quite a number between 500 and 600 guineas; and set against values of between 200 and 2,000 guineas, I doubt whether there is any thoroughbred stallion worth as little as 200 guineas. If there is, its owner certainly ought not to be allowed to keep it. Two thousand guineas seems to me an extraordinarily low maximum when we read of horses being syndicated for a quarter-of-a-million pounds. In my view, these figures were most misleading, and I should like the noble Lord to explain where he got them, or from whom he understood them. If this is the sort of standard of advice that his officers are giving him, I have no confidence in their setting a fair figure for pony stallions. I beg to move.
Amendment moved—
Page 11, line 50, at end insert the said paragraphs.4—(The Duke of Atholl.)
THE MARQUESS OF WILLINGDON:My Lords, all pony breeders obviously are very deeply grateful to the noble Duke for the great trouble he has taken with this Amendment. I support it up to the hilt. There is only one rather small correction which I think it would be wise to make; that is, that an Arab is a horse and not a pony. It would only be a small Arab or thoroughbred which could serve a pony.
3.55 p.m.
LORD ST. OSWALD: My Lords, I recognise that the purpose of this Amendment is to safeguard the owners of pony stallions from the prospect of a heavy increase in licensing fees. At the Committee stage my noble friend suggested that this might be as great as 20 guineas, compared to the present 1 guinea. He has now brought down his estimate to a rise of 10 guineas. Though I cannot accept his Amendment—because this would prevent us from covering the costs we incur—I think I can reassure him upon the order of the increase which is in prospect.
If we were to maintain our present stallion licensing procedures, and to set out to cover their full cost in the initial fee for a licensing application, we should certainly have to make a very substantial increase in the fee. But our present costs are high because it has been our practice to reinspect licensed stallions annually. This is more than we are obliged to do under the Horse Breeding Act, and we find that the re-inspections lead to revocation of a licence only once in every 200 cases. In view of this we propose to discontinue the routine reinspections and to reinspect in only two classes of case: first, where a permit has been issued in place of a licence because of doubt about a stallion's suitability at the time of the first inspection, we shall reinspect for a licence upon expiry of the permit; and, secondly, we shall continue to reinspect wherever doubts arise about the fitness of a licensed stallion. These changes are a good deal more far-reaching than my noble friend had supposed we might have in mind. We shall be prepared to receive representations

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from responsible organisations or individuals, such as horse and pony societies or veterinary surgeons, upon the desirability of reinspecting in any particular cases where doubts exist about such a stallion.
We are not reducing the number of stallions inspected in the first place and thus incurring the risks that my noble friend feared. All the same, this simplification in procedures, to which I referred briefly at the Committee stage, will effect a substantial saving in costs. While I cannot give a firm undertaking at this stage, we are hoping that it will enable us to cover our costs through a fee, for each first inspection of any stallion, of 5 guineas; that is to say, a rise of 4 guineas, and not of 10 as he had supposed. In answer to another question he put, we have no power to charge separately for the reinspections, and the only way in which we could cover our stallion licensing costs, while charging less than our costs for pony stallions, would be (and I should like him to bear this in mind) by charging more than our costs for other stallions. This is something we have undertaken not to do in fixing the sire licensing fees.
In regard to another point raised by my noble friend I would remind him that many pony stallions—including, I think, those he had in mind, such as mountain and moorland ponies, which are not travelled—are already exempt from licensing in their native districts, and they will remain exempt. To the best of my belief they are not restricted to servicing mares of the same owner. I had never supposed that they were, but I should not like to lay down the law on this point.
THE DUKE OF ATHOLL: My Lords, may I ask my noble friend a question? I think I am right in saying that these ponies may not be advertised; and, so far as I can gather from the Act, one of the conditions is that they should be virtually running wild—I agree that that is an exaggeration: they can be running in a field. But surely this is going to make it very difficult for people with a mare to choose a suitable stallion.
LORD ST. OSWALD: My Lords, I am afraid that I am not able to answer my noble friend on those finer points. My understanding is that, so far as horses are concerned, the more expensive thoroughbreds are not travelled, and are thus not
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subject, and will not be subject, to licensing; but, as regards the advertising aspect of it and how they are to be kept, I am afraid that I am not informed on that. He asked how the stallions would be inspected. The answer is that they will be inspected by experienced veterinary surgeons.
During the Committee stage my noble friend Lord Willingdon and my noble friend who has moved this Amendment doubted whether the figure of 50 guineas I mentioned in the debate was a realistic figure as a service fee for a pony stallion. Both my noble friends were fully justified in calling this into question, and I am grateful that they did so, for it gives me an opportunity of correcting my earlier figure and of confirming that the figures I gave were very much on the high side. In fact, my information now is that one stallion is standing at 25 guineas, some more at 20 and the remainder at lower figures. In order to arrive at these conclusions and figures the Ministry has consulted the principal horse societies, including the British Horse Society, who speak for the pony societies as well as others. So far as I am aware, the figure of 50 guineas was the only inaccurate figure I gave, and I apologise to my noble friend and the House for misleading them.
I think I have gone quite a long way to settle the doubts and anxieties of my noble friend and I hope he will find what I have said reassuring. Since he referred on Committee stage and again on this occasion to the relatively short lapse of time since the 1958 Horse Breeding Act, in which the fee of one guinea is set, I ought perhaps to stress that the 1958 Act only consolidated earlier legislation, so that its details did not come under review. The licensing fee for a pony stallion has in fact been one guinea ever since 1921, as has that for other licensed stallions, so that we have not five but over 40 years of change in money values to contend with. The licensing fee is paid only once in a stallion's career; our purpose is only to meet the costs of the services provided; and even in the case of pony stallions the first one or two stud fees will more than cover it. I trust that in the light of these explanations and assurances my noble friend will be prepared to withdraw his Amendment.
THE DUKE OF ATHOLL: My Lords, I am still not at all happy about this. I

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am, of course, delighted to hear my noble friend thinks the maximum will be five guineas, but I do not like the way he is doing it at all. I think it is exceedingly dangerous to have only one inspection of a stallion, early on in its life, which is, I gather, the intention. I myself once owned a stallion which was quite rightly failed at a subsequent inspection for ring-bone, which apparently had not materialised at the first inspection. I think this is a most dangerous procedure. I also do not like the idea of encouraging more people to have non-inspected stallions because they run in their own particular country and are not travelled. I could never make out what the technical definition of travelling a stallion is. It seems to me that we should aim, as in all our livestock, to have more, and not less, inspection, and I seriously wonder whether the Government are pursuing the right policy here. It seems to me they are saving very little money by pursuing this policy, and they might land themselves in quite a lot of trouble in the long run.
LORD ST. OSWALD: My Lords, if I might speak again with the leave of the House, I think my noble friend has overlooked the point I made earlier, that the only way in which we could cover the costs on pony stallions, which we have undertaken to do, without charging a reasonable fee, would be to charge more than the costs for other stallions, which we have in turn undertaken not to do
On Question, Amendment negatived.
4.5 p.m.
LORD CHAMPION LORD CHAMPION moved, after Clause 19 to insert the following new clause:
Notices to quit
". In Section twenty-five of the Agricultural Holdings Act, 1948 (which relates to the giving and withholding of consents by the Agricultural Land Tribunal to the operation of notices to quit agricultural holdings) there shall be inserted after the words 'notice to quit' in the proviso to subsection (1), the following words—'(not being a notice to quit as to which the landlord has specified in his application for their consent that the carrying out of the purpose for which he proposes to terminate the tenancy is desirable for the purposes of the enactments relating to smallholdings)'".
The noble Lord said: My Lords, I am moving this Amendment on behalf of my noble friend Lord Lindgren. Unfortunately, he cannot be present here
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to-day so it falls to me to do it in his stead. The desirability of this Amendment was brought to his attention by the County Councils Association. The facts, as I understand them, are these: county councils are charged under the 1947 Agriculture Act with the duty of providing smallholdings for letting to persons with the idea of enabling them to become farmers on their own account. Those county councils are also charged with the task of managing their smallholdings in accordance with the rules of good estate management. In carrying out these duties, clearly it is necessary from time to time for the county councils to dispossess the tenants to whom they have let their smallholdings. The procedure for such dispossession is set out in the 1948 Agricultural Holdings Act, as amended by Section 3 of the Act of 1958.
The procedure provides that where a tenant objects to the notice to quit, the notice shall not be effective until the Agricultural Land Tribunal are, among other things, satisfied that the purpose for which possession is required by the landlord is desirable for the purposes of the enactments relating to smallholdings or allotments. But there is an overriding proviso, and that is that the Tribunal shall withhold consent to operation of the notice if, in all the circumstances, it would appear to them that a fair and reasonable landlord would not insist upon possession. It is to this proviso that the County Councils Association objects, because they say that a "fair and reasonable landlord", referred to in the proviso, might not be the same hypothetical individual as a fair and reasonable smallholding authority, principally, of course, because their interests in the land and its use are not the same.
On the one hand there is the private landlord, who might reasonably be supposed to be concerned with securing an adequate financial return from his land. On the other hand there are the county councils, the smallholdings authorities, who are obliged, in addition to having in mind the private landlord's considerations to ensure good husbandry, to consider their duty under the Act of 1947 and the underlying purpose for which that Act provided. The clash, as I see it, between what a private landlord might fairly and reasonably do and what a smallholdings authority is expected to do under the 1947 Act is set out in a

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statement on a recent case. It is as follows:
"A case occurred in West Suffolk where although the county council convinced the Agricultural Land Tribunal that the operation of the notice to quirt was desirable for the purposes of the enactments relating to small holdings, the Tribunal refused their consent under the proviso. In this case the tenant ran a haulage business in addition to farming the holding, and while the county council recognised that there was nothing improper or unusual in this, it was clearly a matter of degree, and in their view the tenant's haulage business had increased to such an extent that it could no longer be said that his possession of the land was for the purpose of enabling him to become a farmer on his own account. His chief livelihood was derived not from the land but from the haulage business. The Tribunal agreed, but nevertheless held that a fair and reasonable landlord would not in all the circumstances have insisted upon possession."
These smallholdings are provided out of public money for the express purpose of enabling persons with farming experience to become farmers on their own account. I am sure it was never the intention of Parliament to provide public money for a base for a haulage business, or any business other than farming. I have said this many times in going about the country and talking about agriculture: these smallholdings were intended to be the first step on the ladder of promotion from being a farm worker to becoming a farmer. For that express purpose they were set up under the Act of 1947 and carried on by subsequent Acts, and I think the intention was a good and sound one.
These considerations ought always to be borne in mind by the smallholdings authorities. They are not. Many Members of this House are members of such county councils and discharge their duties under this Act responsibly. I would say that, in the main, county councils never do anything other than carry out their duties in relation to the tenant, and of course to the nation—they never do other than act responsibly. It seems to me that the county councils ought to be given this Amendment to enable them properly to discharge the functions that have been laid upon them by Parliament, and I hope that the Minister will be able to give me a favourable reply. I beg to move the Amendment standing in the name of Lord Lindgren.
Amendment moved—
After Clause 19, insert the said new clause.—(Lord Champion.)
THE EARL OF MANSFIELD: My Lords, the noble Lord has put forward a proposition that county councils should be enabled to treat smallholdings more severely than any good private landlord could, or would, seek to do. Surely the whole question at issue would be this: in this particular case, was the smallholding being neglected as the result of the ancillary occupation of the occupant? If it was, then the county council have a case. But as has been shown so often in crofts in Scotland, it is extremely difficult for the landholder to get a decent living unless he has some ancillary occupation. I should loathe for the principle to be accepted in your Lordships' House that simply because a person has a smallholding or a croft and has some other occupation which enables him to make a better livelihood but which, at the same time, does not impair his capabilities as a farmer, he should be ejected from his smallholding.
4.13 p.m.
LORD ST. OSWALD: My Lords, the noble Lord, Lord Champion, has presented his case as cogently as it could be presented—the case for the smallholdings authority who wish to regain possession of a smallholding because the existing occupier is, in their opinion, insufficiently capable of managing it or, as I understand, because he has used the farming ladder—I think this was the implication of the noble Lord—has managed it to such advantage that he is now able to step on to better things. I would always far rather meet the wishes of the noble Lord, Lord Champion, than refuse them. On this occasion I am not going to be able to do so.
It is not a new suggestion that we should give to smallholdings authorities in these circumstances special powers going beyond those available to private landlords (as was pointed out by my noble friend Lord Mansfield) while removing safeguards from smallholders which are enjoyed by tenants of other landlords. We have heard this argument before, and I am afraid we still do not find it necessary to carry out what is suggested. Section 25 (1) of the Agricultural Holdings Act, 1948, as amended, requires the Agricultural Land Tribunal to consent to the operation of a notice to quit if they are satisfied, inter alia, that the land is required for smallholdings purposes. The proviso

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to this clause—it is this proviso which the noble Lord and his colleague seek to amend—requires the Tribunal to withhold consent if it appears to them that a fair and reasonable landlord would not insist on possession. The opposite case was presented also by the noble Lord, Lord Champion, most fairly, and the proposed Amendment would exclude from the scope of this proviso those cases where a notice to quit has been served because the land is required for statutory smallholdings purposes but not for all the other purposes for which the Agricultural Land Tribunal may give its consent. In effect, it seeks to put smallholdings authorities outside the scope of the moral principles which are laid down in this proviso. The noble Lord recognised this, and gave reasons why he thought this should be done.
When the Agriculture Bill, 1958, was under consideration, we gave special thought to this point and concluded that there was really no need to give this special dispensation in favour of smallholdings authorities. We felt then, and we still feel, that in taking into account all the circumstances of the case, as they are required to do by the proviso, the Tribunal, in deciding what a fair and reasonable landlord would do, would give due weight to the smallholdings authority's statutory duties.
Noble Lords will appreciate that a smallholdings authority, like any other landlord, can avail itself of the other provisions of Section 25 (1) of the Act. They can apply for the Tribunal's consent to terminate a tenancy in the interests of good husbandry or sound estate management. This should deal with the cases where the tenant is inefficient or where it is desired to remodel any smallholding in the interests of sound estate management. It is true that the Act does not provide specifically for the case where a tenant is too successful and where the authority may wish to take advantage of paragraph (c) to obtain possession of the smallholding for someone who needs it more. However, as I have said, I am sure that in those circumstances the Tribunal would take account of the fact that they were not dealing with the ordinary landlord but with a statutory smallholdings authority whose responsibilities to their tenants have to be
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balanced with their statutory duty to provide smallholdings.
It would, I suggest, be contrary to the spirit of the Act, and to the spirit of Section 25 in particular, if we differentiated against one class of tenant in this way. In practice, we should be completely depriving him, and him alone, of the safeguard which is contained in this proviso. The safeguard is simply that in the view of the Agricultural Land Tribunal any action taken in terminating his tenancy is such as a fair and reasonable landlord would take, having regard to all the circumstances.
In asking me to reply to one section of his speech the noble Lord will appreciate that it would be quite wrong for me to enter into discussion on the merits of specific cases, or of a specific case. My right honourable friend has no authority over the Tribunal, which is a judicial body appointed by the Lord Chancellor. We have, however, been keeping records of the cases in which smallholdings authorities have applied to the Tribunal for consent to give notices to quit. Only eight cases have been heard since the 1958 Act came into force, and in five of those cases consent was given—five out of eight. That is not an unfavourable ratio. As I say, I am sorry not to meet the noble Lord's wishes; but we have given a great deal of thought to this matter, and I would ask him to withdraw his Amendment, in view of the fact that we cannot accept it.
LORD CHAMPION: My Lords, I am bound to admit that I did not personally strongly support this Amendment, but, coming from the County Councils' Association, I thought that it might have a short run. I accept completely the noble Lord's answer, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 22 [Allowances to persons displaced from agricultural land]:
4.20 p.m.
LORD GRENFELL LORD GRENFELL moved, in subsection (1), to leave out "may pay to him such" and insert "shall pay to him a". The noble Lord said: My Lords, I fully realise, first of all, that this Amendment, with Amendments Nos. 5, 6 and 7, are far-reaching, in that they would be an extension of the law as it

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now stands, but I am convinced that there is a really good case for them. A short time ago I was a member of the Select Committee on the Clywedog Reservoir Joint Authority Bill, of which Committee the noble Lord, Lord Ogmore, spoke so generously earlier this afternoon. Evidence put before us convinced us that there was a real case for an Amendment such as this in that Bill, and it was duly inserted.
The purpose of the Bill was to give sanction to inundate the Clywedog Valley for the purposes of making a reservoir. I would suggest to your Lordships that such will be the demand for water in the future that this may not be an isolated case; furthermore, the taking of agricultural land for different reasons will also he necessary. The inhabitants of that Valley are, in most cases, hill farmers who will lose, in part or in whole, their livelihood by inundation. It is not my object to-day to argue the value of bottom land and hill land in the context of farming, because, not being a farmer, I am in no position to do so. My argument rests on the individuals concerned, whoever they may be, who are about to be dispossessed, and those who in future may be in similar circumstances for any reason.
In the case I have quoted the people concerned had for the most part lived a community life in the Valley for many years. In many cases this disruption of their life comes to them yin later years when it is hard to start up in new surroundings. In one case family circumstances made a move a really tragic event. I believe it will be understood in this House that any move not only costs money, but also causes a considerable amount of inconvenience. This is accepted if the move is voluntary, but surely if the move is compulsory those concerned are entitled to reasonable compensation for their move. I stress the word "reasonable", for, naturally, one would not expect extravagant demands, such as a move beyond these shores, to be considered.
The Bill states that the local authority may pay to him such allowance
"as they think fit towards his removal expenses and the loss which, in their opinion, he will sustain by reason of the resulting disturbance of his trade or business."
I cannot help feeling that this is a very one-sided proposition. Apart from the
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exceedingly permissive factors, I would ask your Lordships to decide what is reasonable. Again, it would appear that a local authority has this right to decide. In the reservoir case which I mentioned it appeared to me that even if they had had the chance many of the people concerned have been unable adequately to plead their case. In fact, I have a shrewd suspicion that some of them talked little but Welsh. It is for this reason I have put in the arbitration clause.
Surely dispossessed people who have not the means to brief counsel should have someone who is an independent arbitrator to whom they can tell their story. It is always pleaded by local councils that they intend to act generously, but do not let us forget that there is always the excuse of "the ratepayers' money". I hope I have said enough to show that this rather one-sided interpretation of equity in the Bill is not in the interests of justice to the displaced person, and that my Amendment is reasonable and should appeal to your Lordships. I understand that the "big guns" of the law are going to be turned on to me by my noble and learned friend on the Woolsack. I look forward to hearing what he has to say, and I trust he may see fit to agree to this Amendment. I beg to move.
Amendment moved—
Page 15, line 30, leave out ("may pay to him such") and insert ("shall pay to him a").—(Lord Grenfell).
4.25 p.m.
THE LORD CHANCELLOR: My Lords, I think it may be for the convenience of your Lordships if I reply straight away to the speech made by the noble Lord. This will not curtail the debate, but may assist your Lordships, and I hope you will permit me to take this course. The noble Lord, Lord Grenfell, has made a powerful plea in support of his Amendment. He described it as presenting a really good case. I am afraid I cannot agree with him about that. Indeed, I rather suspect that when the noble Lord moved this Amendment he did not do so with much hope that the Government would find it possible to accept it, and I trust he will not be greatly disappointed when I say the Government cannot accept it.
What is proposed is a major amendment of the law, and an amendment of

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the law which, if made, would benefit only the farming community. The National Farmers' Union, in their circular which they distributed to certain Members of your Lordships' House, including myself, in reference to this clause and the proposal put forward by the noble Lord, said:
"It is recognised that the present Bill is not a suitable medium for a major amendment of the law, and that any such amendment of the law must take account of the interests of other sections of the community, especially of small shopkeepers, who are also seriously affected by compulsory acquisition."
I submit that this Bill is indeed not a suitable medium for the proposed major amendment of the law, and I am glad to be able to pray in aid the support of the National Farmers' Union when I say that.
But I do not propose to rest on that alone, strong ground though it may be. I propose to submit to your Lordships that it would be wrong in principle to make this provision in the Bill mandatory, and I should like to put before your Lordships the present position in regard to the law. When the Town and Country Planning Bill of 1959 was before your Lordships it contained a clause, Clause 13, which gave an acquiring authority, acquiring on compulsory acquisition or by agreement in circumstances corresponding to such an acquisition, discretionary power to pay a person displaced from a house or other building on the land a reasonable allowance towards his expenses in moving therefrom; and to pay any person carrying on a trade or business in the house or building a reasonable allowance towards the loss which, in their opinion, he would sustain by reason of the disturbance. So your Lordships will see that that clause in the 1959 Bill proposed that the acquiring authority should have a discretionary power in relation to displacement from a house or other building and for payment of a reasonable amount.
When that Bill came before your Lordships' House, the noble Lord, Lord Coleraine, moved an Amendment to make it mandatory and not discretionary to make such payments; an Amendment which is in line with the Amendment now so ably moved by the noble Lord, Lord Grenfell. My noble friend the then Lord
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Chancellor, in replying to Lord Coleraine's Amendment, pointed out that an occupier of a house or business premises who has an interest for one year or more is entitled to notice to treat; that those who are entitled to notice to treat are, of course, entitled to compensation for the value of their interest in the land; that payment for the value of their interest in the land includes compensation for disturbance; and that compensation for disturbance, payable after notice to treat has been given, will include the removal expenses and any losses directly attributable to the disturbance by compulsory purchase. I am still talking about Section 13 of the 1959 Act, which, as I say, gave a discretionary power in addition to what was a compulsory obligation where notice to treat had to be served for the acquisition of an interest. This Section 13, as my noble friend pointed out, was intended to cover those who had no sufficient legal interest to entitle them to notice to treat.
My noble friend went on to say that in such cases the local authorities do not acquire the interest but merely serve notice to quit as landlords; and that to place a statutory obligation upon local authorities to pay compensation for removal expenses and for loss of business would be making an arbitrary distinction between private landlords, who can serve notice to quit without any such obligation, and local authorities in serving notice to quit. It would, of course, put a special burden on local authorities. I am reminding the House of the speech made by my noble friend the then Lord Chancellor. He then said that he did not see how such a distinction could be justified. My Lords, I must say that I find it difficult to see any justification for any such distinction. My noble friend also pointed out that discretionary powers, similar to those contained in Section 13 of the 1959 Act, also existed in the Housing and Town and Country Planning Acts and had been operated for many years, and that all that Section 13 proposed to give was a similar discretionary power when property was bought under powers other than those contained in these Acts. My Lords, in the light of this explanation the noble Lord, Lord Coleraine, withdrew his Amendment, a precedent which I hope I can commend to the noble Lord who moved this Amendment to-day.

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Section 13 of the Town and Country Planning Act, 1959, is now Section 30 of the Land Compensation Act, 1961. The House will appreciate that this section applies only in relation to houses and other buildings, and the object of the clause in this Bill is to give the acquiring authorities similar discretionary powers in relation to land used for agriculture, if it is used for agriculture by way of a trade or business, and the person so using it is displaced. I hope that what I have said has made it clear that compensation is already paid under the existing law for the acquisition of an interest in land. The acquirer has to pay what the person being dispossessed is legally entitled to.
There may, however, be occasions when the occupier suffers, or thinks he has suffered, financial losses which do not flow from the possession of any legal interest which the occupier has, but flow from the fact that he has to leave the land. The law has recognised this possibility of additional loss in relation to houses or buildings in the Act passed in 1959. What we now propose is to extend this provision to land used for agriculture in the circumstances I have mentioned. At the present time the acquiring authority, where it has power to make such payments, has discretion to decide whether a payment should be made at all and, if a payment is made, what is a reasonable amount to pay.
I entirely agree that farmers are deserving of every sympathy, particularly at the present time after this hard winter. But it would not be right to put farmers in a special and unique position in this respect. If the power to pay is to remain discretionary, as I think it should—and the National Farmers' Union does not ask that it should be made otherwise in this Bill—then there is no room for arbitration. For, after all, you cannot arbitrate as to the extent of the discretionary payment. I would just say this, too, about the last of the Amendments that we are discussing. That proposes arbitration, but only if a difference arises in estimating the loss or expenses. It does not suggest arbitration on the question whether the loss or expenses alleged are the result of the disturbance. They may be only partly due to the disturbance, or not due to it at all, and
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in any event there may be very great difficulty in quantifying the loss.
My Lords, I hope that your Lordships do not mind my intervening at this stage to try to put the present proposal against the background of the existing law, which is, of course, that, on compulsory acquisition of an interest, payment for disturbance must be paid. This provision and the provision of the 1959 Act give the acquiring authority power, in the circumstances contemplated in this Bill where there is no legal interest acquired, and therefore where the provisions of the Lands Clauses Act do not bite, to pay compensation over and above that payable on the acquisition of a legal interest. I must say that I think it not only right but a good thing that the acquiring authority should have power to make discretionary payments over and above what they are legally obliged to pay in circumstances such as these. I do not myself believe that it would be right to make it mandatory to make such payments, and I certainly do not think that it would be right to make such payments mandatory in the particular field of agricultural land, when it is not and cannot be made mandatory (and I put this forward as an alternative argument) in relation to the compulsory acquisition of houses or buildings.
I do not think this is the occasion on which to debate the major issue—namely, whether the discretionary powers which acquiring authorities have had for so long should now be made mandatory; nor, my Lords, do I think that the noble Lord, Lord Grenfell, can pray in aid in support of his argument on this Bill what happened with regard to the Clywedog Reservoir Joint Authority Bill. What may happen on a Private Bill, between the Promoters of a Private Bill and the objectors, is one thing. But so far as the Government are concerned, we certainly, having considered this matter sympathetically and, as your Lordships will see, more than once—because it was considered in 1959—do not consider that this is the proper vehicle for making this particular change in the law. I myself see considerable valid objections to making a general change in relation to this discretionary power. What is in issue here, however, is the question whether the powers of the acquiring authorities in relation to farmers

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should be made mandatory when they remain discretionary in relation to all other classes of occupiers whose land is compulsorily acquired but where the compulsory acquisition takes place without the acquisition of any interest in the land occupied by those people. I think that that differential would be wrong, and I accordingly invite your Lordships not to accept these Amendments.
4.42 p.m.
EARL COWLEY: My Lords, I am delighted to be able to support the noble Lord, Lord Grenfell. This is the type of Amendment which has been resisted by successive Governments—Labour, Liberal, Whig and Tory—because it nibbles away at bureaucratic power and asserts the right of the citizen. The Petition of Right was resisted by the King, and before the Crown Proceedings Act if one was knocked down by a Post Office van one had to go with cap in hand, and relief was given as a matter of grace. Now, of course, it is a matter of right.
This particular Amendment has an interesting history, and to date it has succeeded in appearing in only one Private Bill—that is, the Liverpool Corporation Act, 1957. This Amendment has been fully argued in another place, and on behalf of the Government it was argued by my right honourable and learned friend Mr. Peter Rawlinson. I should like to state that I consider his arguments—and they have been repeated here to-day—without foundation. I would take them point by point—and this appears in the OFFICIAL REPORT, Standing Committee E, Agriculture (Miscellaneous Provisions) Bill, Tuesday, January 29, 1963, col. 344. The Solicitor General said:
"The Committee will recollect that the law of compensation which affects land other than agricultural land is at present contained in Section 30 of the Land Compensation Act, 1961, which followed Section 13 of the Town and Country Planning Act, 1959."
What my learned friend is saying is. "Please do not alter the law because it is something new". He went on to say:
"That provides, over and above the general principle of compensation, which I will turn to in a moment, that ex-gratia payments for disturbances can be made by authorities who are acquiring compulsorily, and because that permissive power was given that put the compulsorily acquiring authority into the same position as a private landlord who might in certain circumstances desire to make an eex-gratia payment as a result of a disturbance.
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I consider that this is a red herring. What my learned friend is suggesting is that there is a similar clause in the Landlord and Tenant Act. Of course, there is not.
My learned friend went on to say:
"The principle of this compensation is that a tenant who is displaced should receive full compensation due to him arising from the displacement which he has suffered and arising out of his legal interests in the land from which he has been displaced ".
This, my Lords, is a very fine, legal point. Do removal expenses and loss by disturbance flow from his legal interest in the land? It flows from his legal interest, but, of course, it is not part of the legal interest. It is a personal interest which does not pass with or form part of that interest. But that is not an argument why it should not be compensated.
My learned friend goes on:
"The effect of the Amendment would be to introduce an entirely new principle into our law with regard to compensation".
My Lords, that is not true. The law of special and general damages has been part of our law for many years, and we have been able, by right, to recover damages from a fellow citizen. What my learned friend is saying is that it is a new principle to recover, by right, special damages from a local or Government Department. The other argument put forward was:
"It creates a new principle and puts agricultural tenants into a better position than other tenants of other kinds of land …".
But agricultural tenants have been in a worse position since 1961, when the Land Compensation Act came into force, a period of two years. Will it now take two years to pass a further Act to bring the shopkeepers into line with the farmers?
Your Lordships might like to know that the President of the National Farmers' Union has, within the last few days, written again to the Minister of Agriculture to seek a meeting at high level to discuss a long memorandum which they submitted to the Minister, and to the Minister of Housing and Local Government, last June, stating the case for amending legislation on compensation on compulsory acquisition, the effect of which would be similar to that achieved by making Clause 22 mandatory.
THE EARL OF MANSFIELD: My Lords, the noble and learned Lord on the Woolsack has produced a series of arguments which are doubtless sound in law

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but which, I submit to your Lordships, are deplorable in equity. In the first place, the series of Amendments moved by the noble Lord, Lord Grenfell, does not make it mandatory that any payment should be made. What they do is to make it mandatory that the dispossessed farmer should have a right of appeal; and, in the event of his and the local authority's failure to agree upon an arbiter, one is to be provided by the President of the Royal Institution of Chartered Surveyors. Surely we can trust a member of that august body to give a judgment which would be fair to the local authority as well as to the farmer.
I submit, too, that the position of a farmer is entirely different from that of a mere householder inasmuch as, by his compulsory removal, he may suffer from considerable loss beyond that which is apparent from the start. He may well have to dispose of his sheep stock. Should a private landlord desire and be able to dispossess a tenant, it is nearly always for the purpose of resuming the land for agricultural purposes, either by himself or by a new tenant, in which case the incoming occupier, be he landlord or new tenant, would have to take over the sheep stock, paying a fair price for it. But should it be a local authority which is going to take over the land for the purpose of making a reservoir, there is every chance that the whole of his sheep stock would have to be removed. This would mean, in the one case, an outgoing tenant taking them with him to his new home, if he has obtained one, at very considerable expense; or, more probably, he would be obliged to put them on the market in circumstances of a forced sale, in which case, again, he might lose very considerably by so doing. A farmer's position, therefore, is quite different from that of a householder.
I cannot see any reason why this unfortunate outgoing tenant should not at least have the opportunity of having his case reviewed; and if his claim proves to be justifiable, then adequate payment should be allotted to him by an independent arbitrator. The position of the Government here is completely contradictory to the stand taken by them on the last Amendment moved by the noble Lord, Lord Champion. There it was accepted that local authorities should not be put into a position different from
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that of private landowners. Here apparently the principle is accepted that the local authority is to be put into this preferred position; and, despite what the noble Lord, Lord Champion, said, I would submit that the local authorities are a very mixed body, and while some would be only too willing to pay reasonable compensation others would, and will, stand on the letter of the law and say, "As we are not forced to pay a penny we are not going to pay". For that reason—though obviously this Amendment cannot be forced through in your Lordships' House to-day—I hope the Government will have second thoughts up to the point that they will consider whether some amendment of the law should not be made in some future Bill—it may be that it would be undesirable to make a major change in this one—so that what I can only regard as not only a possible but a probable cause of injustice to dispossessed farmers may be put right in the future.
LORD OGMORE: My Lords, I should like to congratulate the noble Lord, Lord Grenfell, on the very persuasive speech he made in support of the Amendment, and I would also thank the noble Earl, Lord Cowley, for the consideration he has given to this very important problem. Both noble Lords referred to the Clywedog Reservoir Bill, in which this particular case was argued in this House at some length. Nearly all speakers, all except the speaker for the Government and one other, were in favour of the proposed Amendment, or an Amendment on the lines of this one which would have a similar effect.
The noble Lord, Lord Grenfell, said that no doubt we should be getting other cases, and indeed there will be many other cases. In the newspapers to-day there is an account of a stormy meeting yesterday lasting three hours in Carmarthenshire in the Valley of the Gwendraeth. That is the next one that it is proposed to flood. In this case, it is not for a great English conurbation; it happens to be for the benefit of my own county next to it, Glamorgan. But the principle is the same, and we shall get many of these cases I am sure. The point is this: are people to be dispossessed being treated with justice?
In most of these cases, obviously, where land is taken for purposes of a reservoir,

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and also in other cases such as those for road widening, it means a great deal of dislocation to the farmer. It affects not only his life, his home, but his business. If any noble Lord goes along these new roads he will see farm houses on one side and arterial roads built right through the farmyards. It is an enormous interference with the farmer and with the work of the farm. In the case of a reservoir the whole of the farm goes, although it was occupied by a man and his family whose forbears may have been there for generations. He and his family must be uprooted and must look for somewhere else to go. In these days when farm land is so expensive, it is very often impossible. They then drift into the towns and it is the old story, on a small scale, of what happened about 150 years ago when the common lands were enclosed. You get landless people drifting into the towns. It is particularly unjust to the tenant farmer because he gets very little compensation at all: he gets little more than a year's rent. The freeholder at least gets the value of the land; but the tenant farmer gets very little and is in no way compensated for the removal.
THE LORD CHANCELLOR: If the tenant farmer is entitled to notice to treat, he is entitled to full compensation for disturbance; and I think the noble Lord should recognise that the farmer who is in occupation of the land, if he is entitled to notice to treat, will get compensation for disturbance of the kind indicated, without reliance on this clause.
LORD OGMORE: I will tell the noble and learned Lord what the farmer's entitlement is. His entitlement, under Section 34 of the Agricultural Holdings Act, is usually, as I said, one year's rent. In some cases it is possible for it to be greater; but in no case is it more than two years' rent. That is what we are talking about. He is entitled to compensation for disturbance under the Agricultural Holdings Act. I do not think it is enough; neither do the Government, because they have put in this clause in this Bill in order to permit the local authority, if it thinks fit, to give him more. They agree with me. I do not know why we are arguing. The Government and I agree that this is not sufficient.
THE LORD CHANCELLOR: If the noble Lord will give way I think I might
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make it clear. Under existing law, if the occupier is entitled to notice to treat he will get compensation for disturbance and that is more than one year's rent, or even two years' rent; and that applies to tenants. Some tenants will be entitled to notice to treat and some will not. Those entitled to notice to treat and having an interest in the land will get compensation for disturbance. This provision in this clause makes it possible to pay similar compensation for disturbance to those who have no interest in the land.
LORD HAWKE: My Lords, the noble and learned Lord would greatly enlighten some of us if he could say that the tenant farmer by reason of his entitlement to notice to quit and compensation will always be put in precisely the same position financially as he would have been if he had not been turned out; in other words, that the entire cost of getting a new farm, and so on, is met.
THE LORD CHANCELLOR: If the tenant farmer is entitled to notice to treat he will get full compensation for disturbance, including the costs of removal and the rest. It is full compensatory payment. This particular clause does not touch on the position of those entitled to notice to treat. It gives power to extend the same thing to those who have no interest, or entitlement to an interest, in the land.
LORD CROOK: My Lords, can the noble and learned Lord help some of the uneducated by telling us what "treat" means.
THE LORD CHANCELLOR: When you are in possession of a particular interest under the Lands Clauses Act (and speaking from memory, I think it is an interest for more than one year), the acquiring authority must give notice to treat. When you get notice to treat that invokes the whole of the Lands Clauses Act provisions, and you are entitled, as of right, to payment of compensation for what is acquired. The case law shows beyond doubt that the value of the interest is the value to the occupier; and in assessing that value the acquiring authority must take into account disturbance and expense that he will be put to by removing. That is covered. All this Bill seeks to cover in the case where there is no notice to

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treat is covered under the existing law where there is notice to treat. Of course I was speaking about notice to treat and not notice to quit. They are different things.
LORD CROOK: I thank the noble and learned Lord.
5.0 p.m.
LORD OGMORE: I do not know where we are now. As I understand it, notice can be given under the Agricultural Holdings Act (in which case there is usually a year's rent by way of compensation) or, if the authorities want the land earlier than the time allowed by that Act, they proceed under the Lands Clauses Act. The value then, as the noble and learned Lord said, is the truncated legal interest in the land. Here, again, it is usually no more than a year's rent, so that it does not matter whether the noble and learned Lord is right or I am about which Act it is. So far as the tenant farmer is concerned, it is no more than a year's rent.
To get back to the main issue, we want to see justice done. The noble and learned Lord the Lord Chancellor has objected to the Amendment for two reasons. First, he says that this is a major amendment of the law and one which applies only to the farming community; therefore, this Bill is not a suitable medium for an Amendment of that kind. He opposes it on the odd ground that if we amend this clause in an agricultural Act, it will not apply to shopkeepers. I take it that the noble Lord, Lord Grenfell, never thought it would apply to shopkeepers. The best thing the Government can do is to make it apply to shopkeepers by the same sort of provision we now suggest should be made for farmers. Why should farmers fail to have justice done to them because justice to shopkeepers cannot be done in this Bill? I suggest that it is the Government's duty in another Bill to deal with shopkeepers.
The noble and learned Lord also says it is wrong to make it mandatory in this Bill, on the odd ground that private landlords are not bound to make compensation of this type if they give notice to their tenants. This has nothing to do with private landlords or with giving notice to tenants. This is a case where a local authority want to acquire land. It is not a question of landlord and tenant
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at all, but of compulsory purchase, and the argument about private landlords does not seem to me to apply. In fact, the local authorities concerned may not be those in the district. That is one of the main points. In the case of both the Liverpool Bill and the Clywedog Reservoir Bill, with one or two exceptions, they are not local authorities in the area, but are miles and miles away from it. If we take authorities like Birmingham, Liverpool and Manchester, or smaller councils for that matter, they will feel, as one of the noble Earls opposite pointed out, that their first duty is to their own ratepayers.
As the noble Earl, Lord Mansfield, quite rightly said, not all local authorities are particularly generously minded. I never heard such a tribute as the noble Lord, Lord Champion, paid to them. Not all local authorities have haloes around their heads. Indeed, some of them are not particulary good authorities. If there is any kind of hardship, the terms of this Amendment will take care of it. The noble Earl, Lord Mansfield, made a very strong point when he said that under this Amendment the tenants are not going to get anything tangible; all they will have is the right, if they do not agree with the authority which is compulsorily acquiring their property, to go to arbitration, and what they get under arbitration is not more than they are entitled to, but just what they are entitled to. I think this is a very reasonable Amendment, in spite of what the noble and learned Lord on the Woolsack has said, and if it comes to a Division I ask your Lordships to support it.
LORD GRENFELL: My Lords, I am most grateful to the noble Lords who have spoken. I realise that the justice we are trying here to give to the farmers would place them ahead of the shopkeepers, but I do not think that what has been done is enough. Evidence has proved this conclusively. I think that we have talked this question out this afternoon, and that it would be wrong on my part to force this Amendment through the House to-day. Hence, I would ask my noble and learned friend to think carefully on this subject. Naturally, if we had got this Amendment, I should have looked forward to legislation for the shopkeepers as well. But I do not feel that it would be politic to put this through

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the House this afternoon, and I beg leave to withdraw the Amendment. May I also say that I shall not move Amendments Nos. 5, 6 and 7?
Amendment, by leave, withdrawn.
Clause 25:
Purchases of sugar from Republic of Ireland
25. The Sugar Board shall purchase such sugar, at such prices, as the Minister may from time to time direct for the purpose of fulfilling any agreement made by him after the passing of this Act for the purchase of sugar to be used as an ingredient of goods to be exported from the Republic of Ireland.
5.6 p.m.
LORD MERRIVALE LORD MERRIVALE moved, after "Minister" to insert:
"after consultation with such persons as in his opinion represent the interests of producers and refiners of sugar in the Commonwealth ".
The noble Lord said: My Lords, I have put down this Amendment in view of the lack of consultation by Her Majesty's Government with interested parties in this country—the sugar industry—when the question of an agreement between the Minister of Agriculture of Southern Ireland and the Minister of Agriculture, Fisheries and Food was first mooted. When one considers the Sugar Act, 1956, which provided for the establishment of a Sugar Board and made other provisions—for instance, in regard to the effects on the sugar industry of the importation of sugar and related goods—one sees that full and detailed discussions took place between the Ministry of Food and the refiners during the long gestation period of that Act.
But in regard to the draft Irish Sugar Agreement, which is also concerned with the importation of sugar and related goods, curiously enough, there was no prior consultation whatever. On the Third Reading of this Bill in another place, on February 19, the Parliamentary Secretary, Mr. Scott-Hopkins, made the rather puzzling remark [OFFICIAL REPORT, Commons, Vol. 672 (No. 61); cols. 389–390]:
"As far as consultation is concerned, we do not in the normal way consult with the trade interests before agreements are made. We consult with them after the agreements have been made. This is what happened in this case."
I must say that I find this a rather strange procedure and certainly not one which
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is conducive to encouraging the co-operation of the sugar industry with Her Majesty's Government.
In the case we are considering to-day, the industry was contacted on October 8, 1962, and, I understand, shown the draft Agreement. They raised objections as to its terms. On October 29—that is, only three weeks later—the British chargé d'Affaires, in Dublin was writing to the Irish Minister for Agriculture referring to the proposed arrangements for the purchase of sugar by our Minister of Agriculture, Fisheries and Food. Then only three days later—on November 1 last year—the Bill we are now considering was published, with the enabling clause, Clause 25. I therefore feel it is hardly surprising that Sir Ian Lyle, in his wisdom, with the knowledge that he has acquired over the years working in the industry, and as chairman of one of the largest firms in this country, Tate and Lyle, at the company's sixtieth annual general meeting this year, should have expressed disquiet at this lack of prior consultation.
Surely it is a little ludicrous to consult with trade interests after an agreement has been made, when, as is apparent in this case, it is quite impossible to alter any of the terms or provisions of the Agreement. Had prior consultation taken place, the industry would have been in a position—and would certainly have taken advantage of it—to point out the various disadvantages in the Agreement that are apparent to them. In this way, time and trouble would have been saved, and possibly, also, the arrangements could have been brought in more smoothly; a great deal of discussion to which your Lordships have been subjected might not have been necessary; and, what is probably much more important, the Government would have been assured of the full and complete co-operation of the industry.
But, as things are at the moment, after the passage of this Bill through another place and in this House up to to-day, there are still five main points in the Agreement against which the industry feels strongly. I do not propose to refer to them now, because they have already been mentioned on Second Reading and discussed on the Committee stage, and I am sure my noble friend Lord St. Oswald is well aware of these five main points where disagreement still exists. I

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feel that there are strong arguments in favour of prior consultation. I beg to move.
Amendment moved—
Page 18, line 35, after ("Minister'") insert the said words.—(Lord Merrivale.)
5.13 p.m.
LORD MILVERTON: My Lords, in rising to support this Amendment there are one or two things that I should like to say to supplement what has already been put before your Lordships by the noble Lord, Lord Merrivale. I was much impressed, as everybody must have been, by the powerful protest made by the chairman of Tate and Lyle at the annual general meeting last week against the methods which the Government have used. What he said was:
"The weight that refiners' interests carry with the Government is clearly indicated by the ruthless bulldozing of the Irish Agreement and the refusal of the Board of Trade to deal with flagrantly subsidised imports of foreign refiners."
I should like to supplement that comment by referring to the reply of the noble Lord who is in charge of the Bill in this House to some of the questions which remain still unanswered or not cleared up.
Referring, on March 25, to the alleged hurt to the Irish resulting from "the regime", as the pricing arrangements were called, he said [OFFICIAL REPORT, Vol. 248 (No. 60), col. 24]:
"As I think I have explained, all foreign countries were placed at this trading disadvantage—in fact all countries, all suppliers, were placed at this disadvantage—but compensation was made for Commonwealth suppliers. The similar compensation was not made for the Irish Republic."
That is only half a truth, and, as we all know, a half truth is sometimes worse than an untruth. The complete truth is this. Only signatories of the Commonwealth Sugar Agreement received compensation. Countries such as India and Canada, both of whom have sent sugar to this country, received no compensation. The Irish Republic, therefore, are not merely being treated as though they were any Commonwealth country; not merely as though they were any Commonwealth exporting country, such as India or Canada, but as though they were an exporting member of the Commonwealth Sugar Agreement. They are not exporters of sugar; they are not members of the Commonwealth; and they are not mem-
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bers of the Commonwealth Sugar Agreement.
One could comment also on what the noble Lord said in column 26. He there said:
"The plain truth is that sugar produced from Irish beet can seldom be competitive with that purchased in the world market."
Surely this supports our contention that in order to send sugar into Northern Ireland the Irish require a subsidy, and that they would not have been able to develop this trade in Northern Ireland without the "hole in the tariff", as the unfair advantage was called, which they enjoyed prior to 1962, and that they require the subsidy being arranged in the Irish Sugar Agreement in order to be able to maintain their successful competition with British refiners in Northern Ireland. Again, in column 27, the noble Lord said:
"In response to representations of the refiners, an Amendment was introduced by the Government so that the Minister could only direct the Board to buy sugar from the parties to the Commonwealth Sugar Agreement. We did not say then that there would never be circumstances in which Parliament would think it justifiable to extend by legislation the powers of the Sugar Board."
Surely that is a very weak (if "weak" is the right adjective) argument. It is very nearly equivalent to saying that the Minister at that time, Mr. Amory, I believe (as he then was), enticed the refiners into giving their undertakings and co-operating generally when the Amendment was introduced to limit the powers of the Board, while saying, at the same time, to himself, under his breath, "But I reserve the right, without consulting you, again to extend the powers of the Board when I want to." That is just what it amounted to.
This also, of course, omits the point that any such radical change of policy should have been openly acknowledged in separate legislation, and not submerged in a clause of this Miscellaneous Bill. No wonder that in another place the Minister of Agriculture, Fisheries and Food seems to have taken no part in the discussion over Clause 25. Indeed, he must have felt it embarrassing to have to acknowledge this foundling which was left on his doorstep where it had no right to be. I support the Amendment.
VISCOUNT MASSEREENE AND FERRARD: My Lords, I should also

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like to support the Amendment. As my noble friend Lord Milverton has said, it is a matter of extreme surprise that this clause came to be inserted in this Bill. I should have thought that separate legislation should have been enacted on this, because Her Majesty's Government are surely setting a dangerous precedent here by extending the power of the Sugar Board into an entirely new sphere. They are trading in a country which is not in the Commonwealth, and a country, therefore, over which the Ministry of Food has no control. I understand that in framing the 1957 Act—my noble friend Lord Merrivale called it the 1956 Act—the Government had the opinion of the sugar refiners; I understand they had long consultations with them, and the sugar refiners co-operated extremely well with the Government and went out of their way to bring the Sugar Act into being.
The Irish Agreement appears to cut completely across this. I think it is monstrous that United Kingdom sugar refiners cannot compete in the British Isles on equal terms with Ireland as regards sugar. I could perhaps understand this if Her Majesty's Government had a quid pro quo with the Eire Government to allow Northern Irish goods into the South of Ireland without import duty. But even if they had that quid pro quo they would have to compensate the British sugar refiners accordingly. This seems extremely unfair, and it means that we are handing the Eire Government a subsidy, at the expense of the British taxpayer, to compete in the North of Ireland. I really cannot stomach this, and I wholeheartedly support my noble friend's Amendment.
LORD ST. OSWALD: My Lords, on studying Hansard I am appalled to find how many columns are taken up by my dissertations on this clause, mainly in an attempt to answer my noble friends Lord Merrivale and Lord Milverton. To-day, we have a total of another seven Amendments, one of which raises a new point, set down by my two noble friends. I do not think the House would lightly forgive me if I were to make a speech upon each of them. I therefore propose to make yet one more principal speech promoting the clause as it stands, and then to answer any points of detail
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which may be raised by my noble friends on each individual Amendment, repeating myself as little as possible.
LORD HAWKE: My Lords, may I make a suggestion to my noble friend? If, instead of reading out his brief word for word, he could précis it into about six principal points, I think we could grasp it so much better.
LORD ST. OSWALD: My Lords, I have taken a certain amount of trouble to précis the points I want to make on the clause as a whole, and I do not think I can do better for my noble friend, or shorten it, while keeping it distinct, by departing from the brief which I have composed rather carefully myself. As I have said before, we regard this Agreement as beneficial to both countries—that is to say, our own country and the Irish Republic—and to the Commonwealth. It will provide, as I have shown, a new outlet which has been welcomed by Commonwealth sugar producers—I am still at a loss to understand why my noble friend Lord Milverton does not appreciate that. It is as a direct result of the discussions which led to the presentation of this draft Agreement that the Irish Sugar Company have purchased 15,000 tons of sugar from the West Indies, and this replaces foreign exports to the Irish Republic this year for the first time. The Irish Republic will purchase at least 5,000 tons from Commonwealth producers each year, and in many years they will buy much more—possibly as much as 25,000 tons.
This is also of value to British refiners, because the Agreement will remove their grievance that the export of refined sugar to Britain was covered by foreign imports. It is worth noting that the Irish Republic, like any other country which operates within a preference system for sugar, or any other commodity, is perfectly entitled to carry on trade in the way she has since the end of State trading in sugar in 1956, and for a very much longer period so far as the composite goods which are the subject of this clause are concerned.
As I have said in one of our earlier debates, if my noble friend is right and the trade cannot be maintained if based upon Commonwealth supplies of raw sugar or sugar beet grown in the Irish Republic, it is that much more difficult to understand why the Sugar Refiners

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Association take such a poor view of the draft Agreement. If my noble friend was wrong (as I suspect he was), and the export trade in refined sugar to Northern Ireland continues, it will be restricted by this Agreement to the significantly lower level of 10,500 tons. This is a restriction written into the Agreement to which he is objecting. It is difficult to see how the British refiners could fail to benefit from such a reduction which has been agreed to by the Irish Government. As I said when we last discussed this matter, it is difficult to see anyone who is better placed to benefit from a reduction in sugar exports from the Irish Republic.
I think perhaps, in view of Lord Merrivale's references to objections, the time has come to say that, in complaining of the disadvantages, none of the speakers has specified or described what disadvantage this Agreement will have for the refiners in this country. My noble friend has not done so to-day. He mentioned five points of disagreement, but he did not say how he expected British refiners in this country to suffer—
LORD MERRIVALE: My Lords, I am sorry to interrupt my noble friend, but would he like me to mention again the five points? I thought he knew them by heart. If he wishes me to outline the five points which the refiners have against the Agreement, I shall be only too pleased to do so. Is the noble Lord aware of them?
LORD ST. OSWALD: My Lords, what I have said is that we have not yet heard from either of the noble Lords how the British sugar refiners expect to suffer from this Agreement.
LORD MERRIVALE: My Lords, they are suffering—shall we say?—from the point of view that they are not keen that the British consumer should be asked to pay a subsidy to Ireland. They also believe that the Irish will be able to compete in areas which, up to 1956, had been served only by Greenock and Liverpool. They also feel that the Agreement does not make available an additional outlet to Commonwealth producers that could not be provided by other means. They also feel that it does nothing to alleviate the unemployment situation in the two areas which I have just mentioned, where the figures are above the national average. Also, they feel, as has been mentioned
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by my noble friend Lord Milverton, that the Agreement extends the powers of the Sugar Board absolutely in contravention of the spirit which was prevalent at the time of the passing of the Sugar Act.
LORD HAWKE: My Lords, I, at the same time, ask the noble Lord, whether we are going to consider the benefits that may or may not accrue to the British refiners—and he has given a figure of the limit which is going to be placed on Eire exports to Northern Ireland. Could he give the figures over the last five or six years, so that we could then understand?
LORD ST. OSWALD: In answer to the last question, imports into Northern Ireland last year were 13,000 tons; and noble Lords already in a previous stage of the Bill had drawn attention to the fact that this does not appear to them to be a very great reduction though it might be thought a noticeable one. But a point I made in an earlier stage of the Bill and which I dislike repeating is that there was virtually no reason why 13,000 tons should be the limit of imports from Southern Ireland into Northern Ireland. We have now restricted imports to 10,500 tons from the previous 13,000 tons, but also from a potentially far higher figure.
I listened with great care to my noble friend Lord Merrivale enumerating his five objections. It was not the five objections which I wanted him to catalogue again. I wished him to say which of those five objections entailed any sort of suffering for the sugar refiners of this country, and he has not done so.
LORD MILVERTON: My Lords, may I add one thing to Lord Merrivale's points? One of the main objections which I, among others in this House, have made was the price which the noble Lord contemplates paying to the Irish under this Agreement. If the British refiners were given a similar sum they could find room for far more Commonwealth sugar than would be produced by the Irish under this arrangement. What is more, they would not ask for any special arrangements in connection with it. What we have tried to find out, and what the noble Lord, if I may say so with respect, has not yet told us, is what this compensation is being paid for.
LORD ST. OSWALD: My Lords, I fear very much that my noble friend has not done me the honour of reading my

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speeches. I can very well understand that, because I do not like reading them myself. I have explained what this compensation is for. What it is intended to compensate is the £150,000 which the Irish Republic forfeited last year as a result of the arrangement made for which Commonwealth sugar exporting countries were compensated and they were not. This added up to about £150,000 in the course of last year, and looks like continuing at the same rate. The idea was that this compensation would approximate to that in future years, and so balance the loss which the Irish sugar refiners would suffer.
LORD MILVERTON: My Lords, may I be allowed to interrupt the noble Lord once more? That is what puzzles me. I think the noble Lord, Lord Hawke, summed it up in a sentence in a question in our last debate. He asked the noble Lord whether he understood him correctly that £150,000, or whatever the sum amounts to, is being paid as compensation to the Irish for the loss of a previous advantage to which they were not entitled.
LORD ST. OSWALD: I really am not going on with this point. I am quite prepared to debate with the noble Lord on whether or not they were entitled, but not at this moment. I have lost count of the number of times I have repeated this. The £150,000 was lost by the Irish in the course of last year's trading. The £150,000 which we estimated would accrue but which, in fact, will not accrue to the Irish Republic in the next year's trading was intended to compensate them, to balance out, next year's trading disadvantage, leaving behind on the books the £150,000 loss sustained in the course of last year's trading. I really hope I have made that clear.
I return now to the point I was discussing with my noble friend. He has certainly listed and catalogued the objections which the British sugar refiners have voiced to these arrangements, but he has not said how the British sugar refiners expect to suffer. We certainly do not consider that the Agreement will do anything but improve their circumstances, and I have been at pains to describe how we think those circumstances will improve. There is, in fact, no lack of proof that in the past we paid a proper regard
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to the need to protect the refiners' interests. The figures speak for themselves. Imports of refined sugar fell from about 200,000 tons in 1961 to about 100,000 tons in 1962, as a result of the changes in the sugar régime and import quotas, and this was brought about intentionally on behalf of the refining industry by the Government at that time.
Amendments Nos. 8 and 9 proposed by my noble friend Lord Merrivale deal with consultation about directions given under this clause, and further Parliamentary approval of the Irish Sugar Agreement. Of those two my noble friend has so far moved only Amendment No. 8, so it is that with which I am dealing now.
LORD MERRIVALE: My Lords, No. 9 does not deal with consultation; it deals with an Affirmative Resolution.
LORD ST. OSWALD: One refers to consultation, the other to Parliamentary approval. I gave an assurance on Committee stage that the House would be informed of any proposal to amend or extend the Agreement. My right honourable friend would naturally give the principal undertakings in the sugar industry in this country an opportunity to comment on any new proposals. I can also give my noble friend an assurance that before giving directions my right honourable friend would consult the Sugar Board and the representative organisations of the sugar industry in the United Kingdom. The interests of Commonwealth industries are the concern of the Governments of their countries and territories. They are, of course, interested in the sugar Agreement with the Irish Republic, and were informed of its terms at the end of the negotiations in the same way as the principal sugar undertakings in the United Kingdom were advised of the outcome of the discussions. I think that is as far as we are, or were, required to go, and I hope that my noble friend will not press his Amendment.
LORD MERRIVALE: My Lords, I must say that I find that a most unsatisfactory reply—and I say that in as humble and respectful way as possible. When the noble Lord says simply that an industry will be given opportunity to comment, that is about as vague a statement, I should have thought, as it could be. All we are asking by this Amendment is

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that Her Majesty's Government should be prepared to enter into consultation with members representing the interests of producers and refiners; and those members would be chosen by the Minister himself. Therefore, I find the last words of my noble friend most disappointing. He spent most of the time outlining what Her Majesty's Government saw as the advantages of the draft Agreement. It seems a shame that much of those advantages which are seen by Her Majesty's Government which should accrue to both countries cannot be appreciated by the sugar refiners in this country. I can only think that the advantages cannot be as great as Her Majesty's Government believe. I must say that I am most dissatisfied and disappointed with the reply of my noble friend.
On Question, Amendment negatived.
5.47 p.m.
LORD MERRIVALE LORD MERRIVALE moved to add to the clause:
"Provided that no agreement made after the passing of this Act and no modification or extension of such agreement shall have validity for the purposes of this section unless approved by Resolution of each House of Parliament."
The noble Lord said: My Lords, I beg to move Amendment No. 9 standing in my name on the Marshalled List. Apart from the fact that this Amendment is, I feel, fairly clear, I trust that it will also commend itself as being fairly reasonable; and I sincerely hope that it will commend itself to the noble Lord, Lord Morrison of Lambeth, for it would give him the opportunity for another charming speech such as we heard earlier on this afternoon.
As your Lordships are well aware, it is the duty of the Special Orders Committee to examine certain Orders which require an Affirmative Resolution or an Address to Her Majesty. The Committee do not report on the expediency of an Order, but give an opinion as to whether the Order raises questions of policy or principle; also whether it is founded on precedent. This point was mentioned this afternoon by the noble Lord, Lord Silkin, when we were considering the Location of Offices Bureau Order, 1963.
I think that your Lordships would agree that the draft Agreement does involve questions of policy and principle.
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On this question of precedent, might I suggest that there are certain common factors?
Consider, for instance, the Protocol for the prolongation of the international Agreement of May 6, 1937, regarding the regulation of production and marketing of sugar; that is, Command Paper 8437. Chapter 6 refers to the establishment of an International Sugar Council for the general administration of that agreement. On December 15, 1958, my noble friend Lord Lansdowne moved:
"That an humble Address be presented to Her Majesty praying that the International Sugar Council (Immunities and Privileges) Order, 1958, be made in the form of the draft laid before the House on November 26."
After debate that Motion was agreed to, and I feel that there is a certain similarity between that Motion and what the present Amendment is seeking to do regarding the present draft Agreement. Therefore, I feel that it is opportune that, before any Agreement such as we are considering to-day can be brought into operation, Parliament should be given an opportunity to discuss certain of its details. I think that your Lordships were told earlier this afternoon of the advantages of such a procedure. The fact, too, that such an Order as we had earlier to-day was not based on precedent did not stop your Lordships passing it. Therefore, feel that this method whereby Parliament has an opportunity of considering such Resolutions should commend itself to your Lordships with regard to such a draft Agreement. I beg leave to move this Amendment.
Amendment moved—
Page 18, line 38, at end insert the said proviso.—(Lord Merrivale.)
LORD MILVERTON: My Lords, I should like to support this Amendment. There is nothing that I have to add to what the noble Lord, Lord Merrivale, has already said, except that the course of this Bill through this House has sufficiently illustrated how grave is the need, when this sort of thing happens, to have some provision which would allow Parliament the opportunity of a proper discussion of a new principle, isolated from a mass of irrelevant other clauses.
5.53 p.m.
LORD ST. OSWALD: My Lords, the Irish Sugar Agreement, and not just the extension of the powers of the Sugar

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Board, has been the subject of debate at every stage on the passage of this Bill through both Houses of Parliament. Amendment No. 9 would provide for further debate. I should have thought it was clear that we consider that the Agreement will be a useful development to both countries and to the Commonwealth. It will not damage any United Kingdom interest and offers advantages which I have already described. We have already satisfied Parliament up to this late stage of the Bill as to these things, even if we have not satisfied my two noble friends. We see no reason why the Irish Sugar Agreement should be put under closer scrutiny than the Commonwealth Sugar Agreement itself or other subsidiary Agreements. Indeed, when the South Africa Bill was before the House last year with provision for the extension of the powers of the Sugar Board to purchase South African sugar, no change was made to provide for such a close scrutiny, and, in fact, no change was called for.
I cannot agree (if this is what my noble friend thinks) that there has been, or can be, any question of adding to the scope of directions to the Sugar Board without coming back to Parliament. We came back to Parliament for the South African adjustment last year, and we have come back to Parliament again now for powers to direct the Sugar Board to buy from Ireland. We think that this is all the scrutiny which Parliament should wish to have, and that it provides full safeguards for the matter in hand.
LORD MERRIVALE: My Lords, I do not propose to press this point. If the noble Lord, Her Majesty's Government and Parliament feel that sufficient scrutiny can be given, I am, of course, satisfied to leave it there. The only thing that I should like to say is that I am pleased that my noble friend has referred again to the South Africa Act, for I propose to mention it later. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
LORD MILVERTON LORD MILVERTON moved to add to the clause:
"Provided that any such agreement made before 31st December 1963 shall cease to be binding after three months (notwithstanding any provision to the contrary) if any losses of the Sugar Board under that agreement exceed the sum of £150,000 in any period of two successive accounting years."
The noble Lord said: My Lords, I beg to move the Amendment standing in my name. Clause 12 of the Anglo-Irish Sugar Agreement provides as follows:
"Period of Agreement. This Agreement shall commence on the date hereto and shall expire on the 31st January 1967, subject to the right of either of the parties hereto to request a review of the provisions of this Agreement and to give to the other, not later than 31st March in any year notice in writing of intention to terminate this Agreement on the 20th June next following the date of such notice."
The effect of the Agreement would be that if the working of the Agreement cost the Sugar Board more than £150,000 in any two successive years they would be obliged to give notice of its termination, since they would no longer have powers to implement it under Clause 25 of the Agriculture (Miscellaneous Provisions) Bill. Unless Her Majesty's Government contemplate unlimited liability, I suggest that this would be a reasonable Amendment.
Amendment moved—
Page 18, line 38, at end insert the said proviso.—(Lord Milverton.)
LORD ST. OSWALD: My Lords, my noble friend Lord Milverton has suggested that an Amendment is necessary to ensure that the Sugar Board's loss is kept within limits. We estimated that the loss on the refined sugar transaction under the Agreement would be £150,000 when the world price of raw sugar for the year was likely to be £25 per ton. This loss, as I explained rather earlier in this debate, would do no more than balance the additional surcharge which is accruing to the Sugar Board following the effect of our régime change on Irish exports. Raw sugar prices have not, in fact, been below about £20 per ton since the early days of the war; and even if this low price were to rule for a whole year the loss would not exceed £200,000. Thus, we feel that an effective limit is actually provided by the quantity of sugar purchased at a fixed price, and I do not feel that my noble friend's Amendment is in any way necessary.
LORD MILVERTON: My Lords, I thank the noble Lord for that reply, but I regard it as quite unsatisfactory, and I do not share his confidence that when the present boom in sugar prices has

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ended the losses may not exceed the amount. But I do not wish to press this matter any further, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD MILVERTON LORD MILVERTON moved to add to the clause:
"Provided that any such agreement made after 31st December, 1963, shall cease to be binding (notwithstanding any provision to the contrary) if and as soon as any losses of the Sugar Board under that agreement exceed the sum of £100,000 in any period of two successive accounting years."
The noble Lord said: My Lords, I beg to move the next Amendment standing in my name. Its effect would be to prevent Clause 25 from being used by a future Government to enable them to implement any kind of an Anglo-Irish Sugar Agreement in the future, whatever its cost to this country. When the Bill was presented to Parliament the Government's estimate was that the clause would cost, perhaps, £150,000 per year, but as has been pointed out, everything depends upon the price of sugar. The effect of the Amendment would be that if any subsequent Agreement were made which involved expenditure by this country of more than £100,000 in any two successive years, the Agreement would become null and void or, if not, that new legislation would have to be introduced to cover it.
Amendment moved—
Page 18, line 38, at end insert the said proviso.—(Lord Milverton.)
6.1 p.m.
LORD ST. OSWALD: My Lords, the second Amendment moved by my noble friend Lord Milverton would prejudice any modification of the Agreement after the end of this year, even if that change were to be to our advantage. In fact, damage was done to the Irish sugar trade to the tune of £150,000 a year at the beginning of 1962, and it is not possible to estimate what will be the cost of the assurance of a fixed price of £50 a ton for 10,000 tons of their beet sugar to Irish producers. It would be £150,000 if the world price of sugar averaged £25 in any year; £200,000 if it fell to the very low price of £20; £100,000 if the price were £30; and nothing if the price were £40. In fact, the price is now £62 per ton, and it is unlikely that anything will have to be paid this year. The cost to the Sugar Board will, in all likelihood, be nothing whatever this year, and the unfavourable
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balance to the Irish Republic will remain as it was, uncompensated. In view of these financial facts, we think that my noble friend's Amendment is not necessary and would be prejudicial to the intention behind this clause.
LORD MILVERTON: My Lords, I cannot express any satisfaction with the noble Lord's reply, because I do not believe in this myth of the £150,000 loss to the Irish company; but as the Government take this attitude I do not wish to press this Amendment any further, and beg leave to withdraw it.
Amendment, by leave, withdrawn.
LORD MERRIVALE LORD MERRIVALE moved to add to the clause:
"( ) This section shall be of no effect after 30th June 1967."
The noble Lord said: My Lords, during the Committee stage of this Bill, my noble friend Lord St. Oswald said that the powers of the Sugar Board were extended last year by legislation when dealing with the position which arose out of the withdrawal of South Africa from the Commonwealth. During the Second Reading of the South Africa Bill on April 12 your Lordships rightly expressed concern that the interests of Swaziland should be safeguarded. I would remind your Lordships that paragraph 5 of the Second Schedule to the South Africa Act empowers the Minister to implement the Agreement which was signed on May 29, 1962, between the United Kingdom Minister of Agriculture, Fisheries and Food and the South African Sugar Association.
Details of this Agreement may be seen in the Sugar Board's Annual Report up to the month of June, 1962. I should particularly like to draw the attention of my noble friend Lord St. Oswald to paragraph 2 of this Agreement, which is headed "Period of Contract". I should also like to draw his attention to the words of the noble and learned Viscount, the then Lord Chancellor, when on April 12 last year he said [OFFICIAL REPORT, Vol. 239, col. 637]:
"The Sugar Agreement is a bilateral trading agreement which is contractual, with a fixed term."
It was a fixed term of five years. What I am asking to-day is that this draft Agreement which we are now considering should also have a fixed term. Thus,

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if Her Majesty's Government feel that there is a certain similarity—and I believe there is, from what the noble Lord, Lord St. Oswald, said—between a country which was once part of the Commonwealth and another country not technically in the Commonwealth but which benefits from a certain Commonwealth preference, I would hope that my noble friend will concede that there are certain grounds for a similar type of agreement or contract to be made.
Finally, I would ask him very seriously to bear in mind the words of the then Lord Chancellor, again on April 12 last year, during the passage of the South Africa Bill, when he said in regard to the Sugar Agreement [col. 637]:
"It is obviously the sort of thing on which we ought to clear the ground, and I am only anxious to help."
I feel that in this case the ground has certainly not been cleared, and I only wish that my noble friend and his right honourable friend were more anxious to help. Therefore I beg to move this Amendment.
Amendment moved—
Page 18, line 38, at end insert the said subsection.—(Lord Merrivale.)
LORD ST. OSWALD: My Lords, this third Amendment moved by my noble friend Lord Merrivale would end the Agreement in 1967. What I have to say is, I fear, inevitably repetitive, and it was also challenged by my noble friend. The Agreement arises from a feature of the sugar régime, introduced in 1962, which damages Irish exporters to the tune of about £150,000 a year. This damage, which was not present under the conditions which governed the South African arrangement, will continue indefinitely and may well still be there in five years' time. It is not possible to say, therefore, how long the arrangements with the Irish should continue; nor is it fruitful to speculate about the circumstances obtaining when this Agreement expires. It may be appropriate then to extend the Agreement but that is not a matter which we feel should be settled now. I would therefore ask my noble friend to withdraw his Amendment.
LORD MERRIVALE: My Lords, the only interpretation I can put on my noble friend's words, which I find a little dis-
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quieting, is that it is expected by Her Majesty's Government that it might well be that the present damage to the Irish will go on indefinitely. It seems a very curious form of legislation that allows a draft Agreement to be provided which would enable the damage to go on for ever. I should have thought that the purpose of this draft Agreement was to alleviate any damage to the Irish company, if there was any damage. But I do not see at this stage any purpose in pressing this Amendment. I am very sorry that my noble friend would not agree that there was a certain similarity between this Agreement and the Agreement with South Africa. I should have thought that if in that case it could be for a fixed period, then if this draft Agreement had been satisfactorily drafted it also could have been for a fixed period. With those few remarks, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
6.10 p.m.
LORD MILVERTON: My Lords, this Amendment is surely one which the Government will at last accept. The international sugar agreement is not at present in force, but it can be renegotiated this year. In the past the United Kingdom Government and the Governments of members of the Commonwealth Sugar Agreement have been in favour of participating in this Agreement, by the terms of which producers undertake to limit their exports of sugar. If the United Kingdom follows past practice it will sign, perhaps this year, an international sugar agreement again. It will then not be possible as a signatory to the international agreement—to quote the phrase which has been used in relation to the Anglo-Irish Agreement—"to find new outlets for Commonwealth sugar", because the total outlets will be limited. The clause in the Irish Agreement, therefore, by which Ireland undertakes to import a minimum of 5.000 tons of Commonwealth sugar, will be of no benefit to producers. My Lords, I beg to move.
Amendment moved—
Page 18, line 38, at end insert—
("( ) If under any international sugar agreement a limit is imposed upon the total exports of Commonwealth sugar, then this section shall cease to have effect from the time when that limitation begins to operate.") —(Lord Milverton.)
LORD ST. OSWALD: My Lords, this Amendment moved by my noble friend contains the new point to which I referred at an earler stage, in that it calls attention to the effect of any new international sugar agreement. But the sugar consumed in this country comes almost entirely from the Commonwealth and from domestic producers. It is very hard for me to visualise, as my noble friend would like me to do, our acceptance of a new international agreement which would require us to cut back our imports from the Commonwealth. However, having followed my noble friend with some difficulty into these realms of imagination, I come up against one hard fact which I do not think he has taken into account: that the practice internationally in establishing quotas has always been to take account of firm existing outlets as one of the principal factors.
What this clause is doing is to enlarge the export performance of the Commonwealth sugar-producing countries, so that, even if such an international agreement as my noble friend visualises were to be negotiated, the Commonwealth would still be in a better position by this clause than without it. As my noble friend knows, the export quota provisions of the International Sugar Agreement of 1958 have been inoperative since the beginning of 1962. The increased outlet for Commonwealth supplies is therefore of real value, but there is no purpose in speculating about the outcome of any future negotiating conference to establish export quotas to apply for future years. I can only repeat to my noble friend that firm outlets as well as past performances are taken into account at negotiating conferences, so that in fact this clause will aid rather than place an obstacle in the path of his own wishes on this matter.
LORD MILVERTON: My Lords, I have listened to the noble Lord's replies on this sugar question with increasing amazement. I cannot accept the idea that these new outlets for Commonwealth sugar and so forth, which are going to be created under the Irish agreement, as has been said, would be taken as firmly established trade and so on. But it is no use for me to continue this argument. I do not accept any of the prophecies or the statements which the noble Lord has just made, and I think it would be difficult to
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get those who are experienced in the trade to accept them, either. But with those few comments, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD MILVERTON: My Lords, there is nothing more for me to do about this, than to invite somebody to read through the debates in this House on the Second Reading, the Committee stage and the Report stage, to realise that we are dealing with a Government who are quite impenitent and uncommunicative on the subject of Amendments. With those few unsolicited comments, I would say that I do not propose to move the final Amendment to leave out Clause 25.

OFFICES, SHOPS AND RAILWAY PREMISES BILL
Order of the Day for the House to be again in Committee read.
THE FIRST LORD OF THE ADMIRALTY (LORD CARRINGTON): My Lords, in view of the fact that we are to have another debate, which was due to start at six o'clock, I think it would probably be for the convenience of your Lordships if we continued the Committee stage to-morrow.
LORD SHEPHERD: My Lords, we on this side of the House agree with the proposal that has been made by the noble Lord, Lord Carrington. But, in the circumstances, may I ask the Government Chief Whip whether he can give us any statement on the Government's intentions as to the progress of this Bill?
EARL ST. ALDWYN: My Lords, it has been agreed through the usual channels that we should continue with the Committee stage of this Bill to-morrow after the Second Reading of the Protection of Depositors Bill; and that there should be a Dinner Adjournment and the Committee stage should be continued after Dinner. It will almost certainly be necessary to continue further on Monday, April 8, after the Second Reading of the Weights and Measures Bill; and, again, it will almost certainly be necessary to have a Dinner Adjournment and to continue after Dinner. I do not feel that it is desirable that I should go beyond those two dates at the present time. But I would impress upon your Lordships that

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it is important that we should make progress with this Bill and conclude this stage of it before Easter.
LORD SHEPHERD: My Lords, it is true that the proposals made by the Government Chief Whip have been agreed through the usual channels. I think it is also true, however—and perhaps I should say this on behalf of my friends who are going to take part in the remaining stages—that we agree under protest. For many of us—I am speaking for those who are taking part and who are not included in "the usual channels" —this is an onerous job. It is a very technical Bill, and to be called upon to sit late night after night, as we are going to be called upon to do, imposes severe hardship on those taking part. I would ask the Government when they make their programmes of business in future to consider the position not only of Ministers but also of those who come here voluntarily to give service to this House. There is a limit to the length we can go. Some of us sometimes think we are near the limit. But I would ask the noble Earl to consider that position carefully.
EARL ST. ALDWYN: My Lords, I appreciate a great deal of what the noble Lord has said. I think it would be not unfair to say that the Government have done their best to meet the Opposition on various stages of practically every Bill that has been through this House for a good many years now. I think the noble Lord would agree that, when the programme was discussed with the Opposition at an earlier stage, it was anticipated on both sides that the Committee stage would be a comparatively short one. It has become a long one through the desire of the Opposition to see that certain points are discussed—and it is very right and proper that they should be. But, with due respect, they must realise that if they wish to discuss them it does take time, and they really must be prepared to use the time that is available.
LORD LINDGREN: My Lords, I wish to add to the protest of my noble friend. The Government Chief Whip has quite rightly said that if we as an Opposition want to discuss this, then we should be prepared to take the necessary time to do it. But, after all, we have to make arrangements. Some of us have made
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arrangements—I speak personally—especially to travel some considerable distance to-day in order to be here for the Committee stage of the Bill. Now we are not going to have it. That is no fault of the Opposition: that is the fault of the Government in organising their Business. I am very glad to see a little revolt on the Government side of the House. I am all for this "fun and games" and for making it a little difficult for Ministers occasionally, whether it comes from that side or this; but, after all, the Opposition should not suffer because there has been a revolt on the Government side in regard to a preceding measure. The timetable ought to have been prepared a little better than it has been.
LORD AIREDALE: My Lords, did I understand the noble Earl to say in his original statement that the Government are very anxious to "make good progress" with this Committee stage before Easter? I think he did not go further than to say "make good progress".
EARL ST. ALDWYN: My Lords, with respect to the noble Lord, I said "to conclude".
Order of the Day discharged.

NORTHERN FRONTIER DISTRICT OF KENYA
6.22 p.m.
THE EARL OF LYTTON THE EARL OF LYTTON rose to call attention to that part of the statement on Kenya which relates to the Northern Frontier District, made by Her Majesty's Government on March 12 last; and to move for Papers. The noble Earl said: My Lords, I beg to move the Motion standing in my name. I am very grateful to the Government for giving me time, and on this day which, as it is Budget Day, is obviously a good day. The time of day is not so convenient; but, as the Daily Telegraph said to-day, I am in a difficult position as a Cross-Bencher representing a very little-known portion of our Commonwealth. I have to thank, in particular, the noble Marquess, Lord Lansdowne, for the help he has given me, notwithstanding the fact that when I went to him I made it plain that it was for the purpose of sharpening my spears to plunge into him.
My Lords, what is this all about? I should like to start with a summary. In

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a large portion of Kenya, which is approaching independence, having been our colony, the inhabitants have expressed a wish, after a period of separate autonomy, not under the Kenya Government, to secede to the Republic of Somalia, two parts of which were formerly colonies of ours and with the whole of which we have had intimate connections during the past twenty years.
In detail, the story starts with the Report of the Kenya Constitutional Conference of 1962, where this part of Kenya, called the Northern Frontier District, made known its views; where the leading political Parties, under Mr. Kenyatta and Mr. Ngala, in Nairobi declared their firm opposition to the secession of any part; and there was the undertaking by Her Majesty's Government to carry out an investigation in order to ascertain public opinion in the area. They said that this Commission would be appointed as soon as practicable so that its Report could be available and a decision on its findings taken by Her Majesty's Government before the Constitution for Kenya was brought into operation—I quote from paragraph 26 of the White Paper, Cmnd. 1700.
How, then, do I come into this, people may rightly ask? Am I representing the Somali Republic, the N.F.D. or what? Why do I come from my farm at the top of Porlock Hill in order to speak about this remote part of the Commonwealth? I should like to read to your Lordships a telegram I have received:
"Best wishes for your debate on April 3. B.B.C. television programme 'Panorama' Monday night will provide latest view from here. The leader in Scotsman dated March 13 sets out our position accurately".
That telegram is signed "Prime Minister". I need hardly say that he is not the right honourable Harold Macmillan, but the Prime Minister of the Somali Republic. Your Lordships will see that he has not asked me to do anything on his behalf. He has chosen a much greater man than myself—Mr. Richard Dimbleby, who has already made appropriate representations: he is merely wishing me good luck.
Why do I happen to be in touch with the Prime Minister of the Somali Republic at all? I should like to quote a letter, which is also from him, dated May 24 last year. He wrote:
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"Dear Lord Lytton,
"The admirable speech that you made in the House of Lords on May 15 during the debate on Kenya has been brought to my attention, and I hope you will not think it improper if I say that this is the first time, so far as I am aware, that the House of Lords has been given a lucid anti accurate account of Somali problems from one of its distinguished Members with practical experience of Somali needs and aspirations.
"I have also been touched and gratified to read the sympathetic comments about the N.F.D. which were made during the debate by the Lord Chancellor, the Marquess of Salisbury, the Earl of Listowel and by Lord Walston. I, too, share the hope that this will not be the last time that you speak in Parliament, and should you again contemplate a visit to East Africa will you please let me know and I shall be happy to invite you to our country as a guest of the Government so that you can see for yourself how democracy can be made to work in Africa."
That letter is signed by Dr. Shermarke. I shall be flying from Aden to Mogadishu, I hope, on May 13, when I hope that relations may have improved. I have also received a letter from a representative of the 20,000 Somalis in Aden thanking me for what I said in this House last May.
The idea of a Greater Somalia has been put forward by four eminent people at various times. First, there was Sir Charles Elliot, one of our greatest administrators in Kenya, about 1904. Then there was Mohammed Abdilla Hassan, commonly known as "The Mad Mullah", between 1899 and 1920. He is one of the greatest of the Somali poets. Then, the idea has been put forward by the Emperor of Ethiopia on a number of occasions, always with the intention of incorporating the entire Horn of Africa within the Ethiopian Empire. Finally, there was Mr. Ernest Bevin in 1946, and what he said is on record in Hansard. This idea, therefore, is not new.
Why is it mooted? I am producing a map. I know there were a few in the Office, but for the benefit of those without a map I want to describe what we are talking about. The Northern Frontier district is half Kenya. It is twice the size of England. It is virtually a desert. It is inhabited by one-thirtieth of the population. One-thirtieth of the population inhabit half the country, and nine-tenths of the population occupy one-fifth. That is not a sign of maldistribution, because one is desert and the other is well-watered Highlands. This desert is so poor and so unimportant that it is called a District only.

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It is not even a Province. The Province of which it is a part is so unimportant that it is not given a separate map in the Kenya atlas. The whole population is regarded as of such small account that it is not summarised in the main tribes in the Kenya Statistical Abstract of 1960. It is one of the poorest places that people have ever quarrelled about. There is the possibility of oil but I am certain that the quarrel is not about oil, in the sense that if there were no prospects of oil the quarrel would be there.
As regards the divisions of the people, the reports are all extremely confusing. The divisions which are most easily intelligible throughout Kenya are the non-negro, who occupy the Northern Frontier District almost exclusively and to the exclusion of almost everybody else. There are the Negroes, who are described in the map as either Bantu or (one tribe), Nilotic. There are then the classified mixtures between Negro and non-Negro. By the term "non-Negro" I am not suggesting anything whatever with any white in it at all. It is a means of getting away from these very confusing terms which are still very fluid. I think most people of my age when they were very young were told that all Negroes were descended from Ham, the son of Noah. Nowadays, the word "Hamitic" among experts excludes specifically all Negroes. Therefore, what can I do? I describe them as non-Negroes, but black and African. They are not Arabs, either. They are just non-Negro types who occupy the whole of the area of the horn of Ethiopia and the right bank of the Nile. How they got there and whether they are of European stock or came from the Caucasus, we do not yet know. But they are non-Negro and that is the principal characteristic; and the dividing line in East Africa between non-Negroes and others is the Northern Frontier District which is a most convenient boundary.
In this particular map, the non-Negro areas are shown in light blue and the others in different colours. I want to dismiss all the others, but I want to summarise the tribes. There are 36 Negro tribes shown on this map, 18 classified mixtures and 8 non-Negro or Hamitic tribes. May I say that of the classified mixtures, the Masai are the most famous of Negroes, people
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like the Luo, the Kikuyu and the Kamba. When we come to the non-Negroes, their two great divisions in Kenya, N.F.D., are the Somali and the Galla. Those two names are quite sufficient. A good deal of confusion in these Reports would have been eliminated if we could have had classifications better described. The majority of the people in the N.F.D. are Somali and a small proportion are Galla. Both Somali and Galla extend into Ethiopia.
The Sunday before last the Sunday Times described Ethiopia as an ancient Empire. That is totally incorrect. Ethiopia, within to-day's political boundaries, is, in a small part, the ancient Abyssinian Kingdoms of history, and, in a much larger part, the colonies conquered by the Emperor Melinek II, who was more or less a contemporary of Gladstone. The colonies are approximately the same age as our own. They are Somali and Galla. The only difference is that whereas we label our places as "colonies", the Ethiopians have described them as one Ethiopian people, and from time to time they say they are historically part of Ethiopia. That is not true. The Galla extend into Ethiopia, right up North of the capital (which is built on conquered territory after Melinek II acquired it) to Harrar. They number millions, of whom the few N.F.D. Galla are a part. There may be three-quarters of a million Somali within the Ethiopian boundaries to-day. Therefore, there is this international problem. I do not want to say anything about the aspirations of the Galla. My information is that they would be very happy with good government. But you will notice in the Report on the Northern Frontier District that nobody has suggested joining his cousins over the Ethiopian border.
I must apologise, my Lords, for a little hesitation from time to time because although everything has been provided for my convenience, a table has not. I appreciate that in this House a table is a status symbol and I have never been one to advance my status by one inch; but I find it a little difficult to handle my papers.
I have searched very hard for a really authoritative and responsible account of what a Somali is, and I have it in a reasonably brief space, published in

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New Society on 21st March, 1963. It is part of the editorial comment, and I have obtained the permission of the editor and the contributor whom I know and regard as a very knowledgeable person, who knows the Somali language and the Galla language, to quote it:
"The Somali people who live in the N.F.D. hardly differ at all, in any respect from their brothers in the Somali Republic or in Ethiopia. They speak the same language, and even the dialect variations do not correspond to the artificial frontiers imposed on them. The Ogaden people of the N.F.D. belong to the same clan as the Ogaden people in the Somali Republic and in the Ogaden region in Ethiopia
"The Somalis are all united further by the bond of Islam, which in spite of its Sunni orthodoxy has a characteristic national flavour and is dominated by the Sufi movement represented by religious fraternities which place particular emphasis on a mystic union with God through pious exercises, contemplation and good life.
"The Somali Sufis like other members of this movement venerate saints, some of whom are Arab and some Somali. These saints they share all over the Somali territories, and people make long journeys in pious pilgrimages. Some Somalis may travel hundreds of miles from different regions, across the political boundaries, to give homage to those whose supernatural intercession they may seek, at the sacred tombs."
In addition to that description by an expert, they have one name. Everywhere else, if you ask a man who he is he does not say, "I am a Kenyan" or, "I am a Galla"; he says, "I am an Orma" or, "I am a Turkana" or some such tribal name. The Somalis have one name for all their clans. And one language is broadcast to the whole of these people from this country, from Moscow and from Cairo.
The Galla, about whom I believe we know even less, are part of the Northern Frontier District, and as the District have addressed their memorandum to me and asked me to represent them, I must say what they are. This report continues:
"Among the inhabitants of the Northern Frontier District there is also a large group of Galla people—who are very much akin to Somalis both linguistically and ethnically. The structure of their language bears striking resemblance to Somali and shares with it some 25 per cent. of the vocabulary. In a similar position is the Rendille language.
"A large proportion of the Galla people, like the Somalis, are Muslims and thus have with them the common link of religion. Their pastoral way of life differs little from that of the Somalis and in fact much inter-marriage
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has taken place in some Somali clans, such as the Ajuran. Somali-Galla bilingualism is a very frequent phenomenon. The Somalis and the Galla taken together differ very sharply from the population of Kenya proper—both in language and customs.
"While Somali and Galla are closely related, and both belong to the so-called Cushitic branch of the Semitic-Hamitic family, they differ from such languages as Kikuyu or Luo as much as English does from Chinese; their values and ways of life differ so much that any integration could hardly seem possible."
In spite of the attempts at the Common Market, we still have our different races in Europe. We are far from putting the Chinese and the English into the same political compartment. We cannot even get the French in the same compartment. This non-negro limit is a very natural dividing line.
They are people who have, throughout their seventy centuries of recorded history, always dominated other Africans. I am sorry that so much of our Press says that they despise the Negro. In this country, have we not heard people talking of Dagoes, Wogs, Frogs, Wops and Bosche and in suchlike language of contempt for other races? Of course the same thing occurs in Africa. But when we want to know what is the attitude of a country, surely we look towards its responsible people. The Head of the Government of the Somali Republic has received as guests and given virtually a royal red-carpet reception to Mr. Jomo Kenyatta and Mr. Ronald Ngala, and until this unfortunate development occurred there was a desire on the part of the Somalis for federation, not with their Moslem kin but with Uganda and Kenya. That is off. Nevertheless, the authorities in Somalia have shown no disposition to display that contempt for the Negro of which they are continually accused in our Press.
How long have the Somalis been in the Northern Frontier District? I raise this matter because I am informed that Mr. Tom Mboya is saying that they have been there a very short time. So I have consulted the experts, including Sir Richard Turnbull, whose admirable little study of the Darod invasion he has lent me, and the more extended studies of Dr. I. M. Lewis, of Glasgow University, who has an article in the Guardian to-day. The first thing one can say about the Northern Frontier District is that, so far as

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one knows, no Negroes of Kenya have ever occupied it at all except for those who are there at present, and even those, a small tribe of Pokomo along the Tana River, were probably invaders themselves after the Somalis were there. There is a long and tangled history of Somali fighting Somali and Somali fighting Galla, with nevertheless alliances between Galla and Somali against other Galla and Somali.
Professor Lewis considers that Somalis were in the Northern Frontier District in full occupation three centuries ago and that the Darod, about whom Sir Richard Turnbull has written in such a scholarly way, are not the first arrivals but the last in a series of fluctuating situations in a struggle for water. These struggles over that primitive area were of a respectable kind, by which I mean that they were not raiding parties for women or slaves or just to kill, as many tribes did, but because unless the tribes had water they died, and that is the situation which has been fought out for centuries in this part of Africa. It would seem that no Ethiopians and no Negroes from the Highlands of Kenya could live in this desert country, nor do they want to. In the Ethiopian Army, especially to-day when such a large part of the army is there, it is regarded as very unpleasant to be stationed in the low desert countries. It is a curious thing that the Somalis have been frustrated from the Highlands of Kenya by us and from the Highlands of Ethiopia by the Portuguese in the 16th century. It seems that they have a kind of vocation for living in desert country with their camels, and in these conditions they are at their best. I do not think anybody wants this country. The quarrel is due to megalomania and one or two other things.
I should now like to refer to a letter sent me by the Colonial Office. I use it simply because it is so very conveniently expressed, telling me of the Commission having been appointed and of the persons appointed, and it says:
"Although considerable interest is shown by the people in the area in the work of the Commission, no untoward incidents have been reported and the security situation is satisfactory."
I do think that those people who have managed the desert for so long over an area twice the size of England, with just
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a handful of British administrators, deserve a word of thanks, when we decide to excite the desires of the people by talking of secession. They may come out and threaten what they will do, if their wishes are not granted, but with only a few administrators around, their discipline is complete. It has been a country where, as Sir Richard Turnbull said, we have not really governed; it has been run by half-a-dozen fellows with a particular look in their eyes.
At the end of this letter the Colonial Office say that the N.F.D. report would be received at the end of the year, and the decision whether it would be published would be given when it was received. That was November 20. On November 16 The Times published news from Nairobi dated the 15th—that is, five days before this letter from the Colonial Office—giving a summary of the Commission's findings, which subsequently proved to be quite accurate. I do not say this in any taunting sense to the Colonial Office. All I mean to indicate is that the Commission's work was done in the full light of day, with everybody saying what he thought, and I think this is a great tribute to the administrators out there that this could be possible. It could not happen in a great many countries. There are countries where people who expressed desires to secede would have been shot or disappeared afterwards. They would not have dared to do it. It is a wonderful thing that this could have been done, and I understand that the Press was there, reporting daily on the results of the barazas.
Now the Report of the Commission. The Commission received 40,000 people at their barazas, interviewed 134 delegations and received 106 written submissions. They did their work in extremely good time. They expressed themselves as satisfied, with one exception, that they had got the views of the people, and it reads like an honest and sincere document. Mr. Mboya contended that Somali opinion is divided (that is on page 17, paragraph 73 of this N.F.D. Commission Report). The Commission say:
"We did not in fact find any evidence of this in the N.F.D."
Here is their principal finding:
"The areas in which we found the people supporting Somali opinion are the biggest in total population and size and are in fact one.

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They extend from the Somali frontier to the Somali-Galla Line and beyond, to include the grazing lands of the Adjuran. We found that the people there almost unanimously favoured the secession from Kenya of the N.F.D., when Kenya attains independence, with the object of ultimately joining the Somali Republic, but they want the N.F.D. to have a period under British authority in which to build up its machinery of government so that it can join the Somali Republic as a self-governing unit."
I think that 86 per cent. of the whole N.F.D. area wants secession—and if it is not 86 per cent., will the Government say what it is? There are areas larger than the whole of England where you cannot find a single family that does not want it. The degree of unanimity is tremendous. It would be almost impossible to think of any other part of the world where there is such unanimity.
Incidentally, to go back a little, it is the contention of quite a number of people (you will have seen it in "Panorama", if you had been looking, and in the Scotsman) that Mr. Maudling, as Colonial Secretary, not only promised that there would be a decision on the findings, but gave it to be understood that it would be, as far as possible, in accordance with the findings, and that there would be a plebiscite in those areas where there is doubt. When he is available, and when he has rested after the Budget, perhaps he can be asked what he did say. I am not attacking Mr. Maudling. When I was out in Kenya, at the same time as he was, I noticed everywhere an instant and refreshing pleasure taken in his meetings with people. At once he was felt to be a helpful man. But what did he say?
It seems to me, from reading what is in these official statements about taking a decision on the findings of the Committee, that it was not intended that a decision should be "off"; it should be "on"; and it should be in accordance with, and not contrary to. That is what I think every single person everywhere thought. I thought it; it was thought in Kenya, and it was thought by the Somali Republic. I am talking here of those who get their news over the wireless. I should very much like to know what Mr. Maudling admits to having said; but as I presume that the Government will never tell me, I shall go on establishing what they have said, and that they have said "off" instead of "on".
In this connection, I should like to refer briefly to two other Reports, where they are relevant. There is, first, the Report, of the Regional Boundaries Commission [Cmnd. 1899], which says:
"Many delegations expressed the view "—
this is in other parts of Kenya and it shows the line on which they worked—
"that in fixing the regional boundaries it was of paramount importance that we should adhere to the existing provincial boundaries in preference to attempting to relate them to what might be said to be the wishes of the people."
That was the view expressed by some African delegations.
The Commission go on later to say:
"In many areas the wishes of the people bore no relation whatever to the existing provincial boundaries. In these cases we have done what we consider is reasonably practicable, treating the wishes of the people as the primary consideration, but at the same time adhering to existing boundaries wherever possible."
Surely that is the right and sensible thing to do, whether you are associating people together within a particular community or considering their desire to secede. That is what that Commission said. That Report has one defect: it does not tell you whether the Masai ever said they found it agreeable to be divided between two sovereign states, 60,000 in one and 40,000 in another. However, that is a small point.
The third Report is the Kenya Coastal Strip Report by the Commissioner—and he is referring to the African majority in the quotation:
"They insist upon the aspirations of the majority of the people in the strip being the decisive influence as to its future."
There, again, the wishes of the people determine what the African politicians of Kenya say they want. They make a claim to the Coastal Strip on the grounds of the wishes of the people. The Coastal Strip is the property of the Sultan of Zanzibar; no one has questioned it, and there are many people who would be willing that it should go on as such. Nevertheless, that is what the Commissioner said.
He sums up his conclusions and his findings as follows:
"…the only practical alternative is for the Coastal Strip to be integrated fully with the rest of Kenya. There are sound and cogent reasons why this should be so. (a) It meets the wishes of the majority of the inhabitants in the Coastal Strip…"

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That means that three Commissions have ascertained the wishes of the people, and it is implied that decisions will be taken on and in accordance with those wishes and not contrary to them.
The Government have implied that they have some duty to consult the Africans of Kenya on the question of whether the N.F.D. should secede or not. However, I will read what they say. When they are not concerned with the N.F.D. their expressions are quite different. Paragraph 4 of the Report to the Kenya Coastal Strip Conference, 1962, says:
"Sir James Robertson's recommendations are, of course, primarily a matter for the Sultan of Zanzibar"—
the owner—
"and the British Government"—
the tenant as it were; I speak in farming language.
"Nevertheless, any consideration of this matter must take account of the views of the inhabitants of the Coastal Strip"—
in other words, the inhabitants, plus those with legal title.
Nobody else has any duty to consult the African Ministers when they are going to receive something, but only when something is going to be taken away. Why were these two things not balanced together: the valuable Coastal Strip, with its port, its railway and its harbour, against this desert? One they are receiving and the other they should be willing to relinquish. No effort at all has been made to persuade them of the advantages of what is not theirs, and of the disadvantages of paying £300,000 a year to maintain a desert of unwilling subjects.
Somalis read all these reports. They are everywhere. They are intelligent people. There are 20,000 in Aden, and 1,500 or so in this country. They take a part in civilised life, and they know exactly what is going on. They have read all these things and the man in the street—or, in this case, in the desert—listening on his transistor set knows what it is all about. His hopes are raised that the wishes of the people are going to be granted. May I read in full a statement handed to me by the noble Marquess?—and I thank him for it. It was a statement given by the Colonial Secretary, in the wrong place, I submit, in Nairobi.
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To whom? I am not entirely sure. But it differs so radically from the statement made to Parliament that I think your Lordships should hear every word of it, in spite of its being half a page. Here it is:
"The Report of the Kenya Constitutional Conference of 1962 envisaged the appointment of a Commission to ascertain public opinion in the N.F.D. regarding the future of this area. in the light of likely course of the constitutional development of Kenya. It was stated that the decision on the Commission's findings would be taken by Her Majesty's Government before the introduction of the new Constitution to Kenya.—"
"would be" was the expression used—
"2.
The Commission presented its Report last December, and Her Majesty's Government have considered its conclusions. They have also noted the statement in the report of the Kenya Regional Boundaries Commission that. according to their terms of reference not restricting them to providing six regions, they would have considered it right to create an additional region, of the general Eastern part of the N.F.D., which is almost exclusively occupied by Somali and kindred peoples.
"3.
The Colonial Secretary has discussed this matter fully with the Governor of Kenya and with Ministers in Nairobi. He has also received two delegations, one representing those elements of the Kenya N.F.D. who advocate secession to the Somali Republic and others representing those who wish to remain part of Kenya."
Then comes Paragraph 4—and this is the vital paragraph. Here is the decision in six lines which differs from what is said in Parliament:
"Her Majesty's Government have now decided that as part of the constitutional arrangements for internal self-government in Kenya, the predominantly Somali areas referred to in the report of the Regional Boundaries Commission (comprising constituencies 20 to 24 inclusive (see footnote below)) should be formed into a separate seventh Region enjoying a status equal to that of the other Regions in Kenya ".
That is the decision. There is no qualifying remark attached to it whatsoever. It has the appearance of finality. You do not impose upon an internal Government an expensive and burdensome Region which you intend to remove from them before independence. It looks final.
Before I comment further I must read the last paragraph, paragraph (5).
"The creation of the new region will give to its inhabitants greater freedom in the management of their own affairs and more effective means of safeguarding their interests and maintaining their way of life."

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There is nothing else in the statement; other than the footnote. Imagine the inhabitants of Mogadishu, having been keyed up for months about this Commission, and the inhabitants of the N.F.D., all with their transistor sets and so on, and those who have not sets clamouring round those who have. How does this come out over the wireless? Surely this is a decision which was accepted by Mr. Kenyatta, Mr. Ngala, the Ethiopian Government, the N.F.D., the Somali public—not the Republic—as brutally final. That is the thing that is most objectionable about this whole proceeding—that the wrong decision was given by the wrong Minister in the wrong place. A decision of this importance should surely be made by the Foreign Secretary to Parliament, and not by the Colonial Secretary in Nairobi.
There is more to come. The next day, or the same day (I do not know which), there was a Press conference. Here I must again thank the noble Marquess for having handed me these papers: I should have had great trouble in obtaining them if he had not willingly let me have them, and they are his copies. Here is a report of the Press conference on the Colonial Secretary's statement—an extract from the East African Standard of March 19, 1963, a copy of which was made for me by the staff of the noble Marquess:
"One of the most difficult problems was that of the N.F.D., said Mr. Sandys.
"The report of the N.F.D. Commission showed there was an important clement which wanted to secede and unite with the Somali Republic. It showed equally that there was another important element which equally strongly wanted to remain part of Kenya.
"The British and Kenya Governments understood the Somali people's desire to express their own identity.
"But Kenya is a country which depends for its future on being able to show it is capable of providing a home in which people of different races can live honourably and amicably together, the Colonial Secretary added."
Under the heading "Own Identity", the paper goes on—and this is all a quotation of the Colonial Secretary's words:
"'It was because we recognised the desire of these people to express their own identity that we decided it would be right to create a seventh region which would embrace those elements in the N.F.D. which felt most strongly on these issues—those areas inhabited predominantly by Somali people.
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"'We are not so foolish as to imagine that the creation of the seventh region will be hailed by these people as providing complete satisfaction for all their hopes and wishes.
"' But I do trust it will be received and recognised by them as a sign of genuine and sincere good will on the part of not only the British Government but also the Kenya Government.'"
My Lords, there are some dreadful things about this statement. Why is it necessary to have all those 62 tribes? Would they be more difficult to assimilate with one less? Why are the Rendille omitted? I am not representing the Somali Government. I have been asked to represent the N.F.D. The Rendille are a substantial tribe of about 25,000. Why have their views been disregarded? It is true that the Commission and the Regional Boundaries Commission said that the Chiefs firmly wished to secede. But the N.F.D. Commission said that they were dressed more like Samburu or Masai; that they did not speak the Somali language; that they were not Moslems, and that they did not believe them. Why did not they believe them? If there is doubt about this, could it not be referred for further consideration? Surely what a man dresses like has nothing to do with the Commission's terms of reference. This has had to do with what people want to do; how they want to dispose of their future. Their religion has nothing to do with it; nor has their clothing.
Let me repeat what the Colonial Secretary said:
"We are not so foolish as to imagine that the creation of the seventh region will be hailed by these people as providing complete satisfaction for all their hopes and wishes…"
My Lords, it dashes every hope and wish. It is not a question of foolishness; it is sheer madness. It talks as if the creation of the seventh region were something of the order of an act described in Genesis. It is nothing of the kind. It is just drawing a line around people who are already there and have been there for donkey's years pursuing their way of life. There is nothing in it to indicate that any of the wishes they have expressed will be met. This N.F.D. Commission did not go to ascertain whether they wanted women's institutes; they went to discuss whether they wanted to secede or not. That was the problem. As the Commission might reasonably have been in doubt whether,

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notwithstanding the fact that secession was the primary issue, the Government would allow them to talk about it, they specifically asked and were told that they could. The noble Marquess, in a letter to me, has described the action of the Somali Government as "ill-advised", and I should like your Lordships to agree with me that it was not ill-advised but absolutely unavoidable.
Here is a letter from the Prime Minister at Mogadishu dated March 17. I should not think he had been to bed since the announcement was made.
"Dear Lord Lytton,
"You will have heard by now that my Government, with the support of Parliament, has been forced into breaking off diplomatic relations with Britain following Mr. Sandys' totally unacceptable and uncompromising policy statement about the N.F.D. on March 8".
March 8 is the date of the Nairobi statement.
"Spontaneous demonstrations of protest broke out in Mogadishu as soon as his announcement was heard over the radio. A week later a break of diplomatic relations between our two countries was sanctioned by Parliament. I regret the necessity for having to take this drastic step, but no other course was open to us in the circumstances. The assurance that we would be able to express our views at some later stage is of no value. Our views are well known to the British Government and were expressed formally in a Note on January 6 when we proposed a Conference".
Surely, that is a quite dignified and proper letter describing an absolutely unavoidable act. The whole of Mogadishu burst out in indignation when they heard this brutal statement of the Colonial Secretary coming over the radio.
Now I come to the statement made in Parliament, which again the noble Marquess has very kindly sent me, and I do appreciate it. I am a farmer; I have no clerk, no secretary and no typist, and the help I have had has been very useful to me, and I say it in all sincerity. The noble Marquess, knowing I was going to attack the Government, has, nevertheless, behaved to me like a friend.
"The other international problem"—
this is an extract from Hansard of March 12, and it is the Colonial Secretary speaking. He handles international problems like any Pooh Bah. It is not his business, and he has not done it well. He goes on [OFFICIAL REPORT, Commons, Vol. 673, col. 1177]:
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"I discussed the whole problem very frankly with Kenya Ministers. They felt strongly that, in the absence of a fully representative Government which could speak with authority for the people of Kenya, it would not be right, for the British Government on its own, to take an irrevocable step."
My Lords, I ask you to consider that they are delighted at an irrevocable step so long as it is a step in the direction which they desire. It is not irrevocability which they are indignant about; they are indignant about something which they do not want. They are delighted, and they think it is irrevocable, and Mr. Kenyatta has stated flatly that Mr. Sandys' statement in Nairobi
"is what goes with me not an inch."
In his statement made to Parliament there are two mingy qualifying clauses.
"In any case, it seemed reasonable to ask the Kenya Somalis to give a fair trial to the new Constitution."
Where is there any sign of a fair trial? A fair trial of what in the statement made in Nairobi?—that is the statement which he made, face to face with the Africans. He has given them a pledge, without qualification, which looks as if it was intended to be permanent and final.
Then in the statement to Parliament there is another safeguarding clause:
"We did not, of course, imagine that this would fully satisfy Somali aspirations, but, while not wishing to exclude future consideration of any methods of settling this problem, we did not think that at this juncture a more radical solution would be justified."
"While not wishing to exclude future consideration of any methods of settling this problem"—where is there any sign of that in the Press Conference of his decision at Nairobi? Was this forced on him by events which occurred later, or is there some division in the Cabinet with some opposing a Greater Somalia and others anxious for it to come about? I do not know. But I do suggest that the three statements taken together are responsible for the deplorable muddle and for the withdrawal of an Ambassador by a friend.
I have a copy—and this is one of the things which, if I press for Papers, I should wish to have—of a memorandum submitted to the Colonial Secretary in Nairobi by people who claim to represent the secessionists of the N.F.D., the three major Parties, who are all enumerated in the Commission's Report,

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and who comment, no doubt with a certain partisan tinge but with intelligence and responsibility, on the Report of the Commission, which in great part they praise, and question very intelligently why they are excluded. This is why I am here, as a Member of Parliament in the United Kingdom, believing that you would wish to know what the people of the Northern Frontier District of Kenya have said. That is why I am here. I am here also because of the other people in Kenya, riot excluding the negroes. I have had a letter from Mr. Tom Mboya, which I have read out in this House. I am not anti-Negro. I am in favour of uhuru for Kenya Africans, but not a trampling down of other people's uhuru.
I should like to draw your attention to the fact that among the signatories is the Vice-President of the Northern Provinces People's Progressive Party, Alex Kholkholle. I understand that he is a young man, aged perhaps 30, who was chosen as a boy by the Administration to be specially educated with several others in Nairobi. He came back and has plied the profession of teacher. He is a mild man who has never been associated with any Communist Youth League or violence of any sort. He is held in respect by the Administration, by the Somalis themselves and by the Rendille. He is a spokesman in particular for the Rendille, a tribe which is not Somali but which wishes to secede with the Somalis—and which the Commission have said they did not believe.
I have had handed to me scripts and other evidence which show that this gentleman has been banished from the N.F.D. and has been required to take up residence in Mombasa. Is it true? Is the result of presenting a memorandum to the Colonial Secretary in Nairobi when it is unpalatable, going to be the removal of people who have presented it? I do not know whether it is true. I am assured that it is so. I should like to ask the Government to tell us about Mr. Kholkholle and whether he has been removed. Perhaps he lost his temper and threw a spear at somebody. I do not know, and I should like to ask for this information, which I believe should be with noble Lords.
In The Times of March 23, noble Lords will see a report of the call to the Somalis to boycott the elections—the Somalis in
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the N.F.D., of course, and not the Somalis anywhere else. No doubt the Government have much more information about that than I have.
I now look at the Kenya Constitution —not the 300 pages but the smaller version, Cmnd. 1970.
"No person shall be qualified to be elected a member of the National Assembly if he is under any acknowledgement of allegiance to any foreign power or State."
Do you think that having found out what these people want, that they want to secede, having frustrated their desires, it is possible to get their co-operation in an Administration which requires at least an oath of loyalty to a Government from which they wish to secede? The noble Marquess suggested that people who wished for Scottish Home Rule have been electing Members of Parliament in this country. I cannot see the smallest analogy between those two things. But this is a legal matter. I heard the noble Viscount, Lord Hailsham, once say that you cannot communicate with the noble and learned Lord on the Woolsack except by Telstar. I should like to address my communication to Telstar. Is this not a bar constitutionally to their taking any part, and if they do take part will they not be perjurers? It seems to me that overnight 200,000 have been made traitors.
I should like to conclude these remarks by saying that this seems to me a shabby arrangement which has been made, which arises from this paragraph in the statement of the Colonial Secretary in another place. This is the significant paragraph:
"Even if we had wanted to do so"—
he does not seem to want it—
"it was clear that in these circumstances a decision by the British Government to secede this territory without the consent of Kenya Ministers would have provoked violent reactions throughout the country and would certainly have led both KANU and KADU to leave the Government."
I deplore this open admission that, of the two techniques which are employed against us by our subject peoples when they want freedom—the technique of Gandhi, on the one side, and the technique of Michael Collins, on the other—we should have publicly declared that, when threatened by both to repress freedom, we are unable to do what we know to be just. Justice, it seems to me, comes before peace, and unless peace is founded on justice it will not work. This is peace

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bought at too high a price, the price of throwing the children to the wolves. I beg to move for Papers.
7.23 p.m.
THE EARL OF LISTOWEL: My Lords, I am very glad that the noble Earl has drawn the attention of the Government this evening to the serious situation in the Northern Frontier District of Kenya, and that he was undeterred by the competition of a more popular subject in another place and the lateness of the hour at which the debate started here. Although I think, if I may say so, he put the Somali case with great clearness and competence, and that he spoke with much more first-hand experience of local conditions than Mr. Richard Dimbleby, at the same time I do not think he was altogether fair to Kenya. He spoke about the megalomania of Kenya and its attitude to the Northern Frontier District. Surely it is not megalomania to be somewhat reluctant to part with an area that amounts to about one-third of the total land area of one's country. This is very excusable, because the noble Earl was not making the Kenya case but the Somali case, and I dare say he felt he could leave the Kenya case quite safely to the noble Marquess who will reply to the debate.
There was one other point—perhaps it was mainly a matter of emphasis—on which I think I differed from him. He was mainly concerned about justice, and of course we are all concerned about justice. But I do not think he emphasised sufficiently the dangers of the present situation in this part of Kenya. To my mind, this is the most serious threat to peace in any part of Africa at the present time. As a Conservative Member of another place said after the Secretary of State made his statement there in March, a statement which was reiterated by the noble Marquess here, if we abandon Kenya without a settlement we shall be leaving a built-in cause of war between Kenya and Somalia. That was roughly what he said; I do not quote his precise words because it would not be proper Parliamentary procedure to do so.
It is surely the Government's responsibility to remove this cause of war before Kenya becomes independent. I hope that the Government will be able to assure
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us, in the reply which the noble Marquess will give to the debate, that they fully accept this responsibility. I cannot believe that the present Government, or any other British Government, would allow Kenya to be involved in an armed conflict with one of its neighbours after it becomes independent, especially when it will not even have the protection of British troops. But such is most likely to be the position, unless, of course, a settlement is reached in the meantime, when this country will no longer be responsible for the defence of Kenya.
I think we all want to be absolutely fair, and I would be the last person to underestimate the very great difficulties that confront the Government in dealing with the situation, because whatever they decide will be deeply resented by one of the two parties, and possibly by both. The Secretary of State's decision to make the Northern Frontier District an administrative region of Kenya, with considerable autonomy, like the other regions, resulted, of course, in the breaking off by the Republic of Somalia of diplomatic relations with this country. This is another point on which I differ from the noble Earl, Lord Lytton. For my part, I do not think that the British Government could have decided otherwise at that time, because the political future of Kenya was in the balance. I feel that this risk of bad relations with Somalia was a risk that had to be taken, and that the consequences of taking that risk had to be accepted.
I believe, too, that the Somalis have made a mistake in breaking off diplomatic relations with this country; and for the same reason as we were mistaken in breaking off diplomatic relations with the Yemen. Such diplomatic gestures injure both countries concerned. They are an example of cutting off your nose to spite your face. Just look at what has happened in the case of Somalia. Somalia has lost a subsidy of over £1 million a year from this country. Somalia is a very poor country indeed, as the noble Earl told us, and needs every penny of assistance it can get from outside. And we, the British, have lost the use of a most important broadcasting station that happens to be located in Somali territory. Both sides have suffered from

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this interruption of diplomatic relations. I hope that normal relations will be resumed as soon as possible, although I do not imagine that it will be possible until this dispute has been settled.
On the merits of the dispute I will say only this, and I will say what I have to say very briefly. It can hardly be denied, I think, that the noble Earl is absolutely right in claiming that the Somalis are a single people, with a common religion, common language, common way of life, who are racially distinct, being Hamitic, from their Bantu and Nilotic neighbours. These traditional characteristics of the Somalis give them a much stronger claim to self-determination than the many African tribes that are divided by boundaries between different African countries. I do not think that their claim can be refuted on the ground that they are making the same sort of claim as divided tribes in other parts of Africa.
May I remind your Lordships for a moment of an important matter to which the noble Earl, Lord Lytton referred?—the fact that it was Mr. Ernest Bevin, when he was Foreign Secretary, who put forward the idea of a Greater Somalia in the Horn of Africa as the best possible solution of the Somali problem after the war. This solution, unfortunately, was not accepted by other countries, and we are still facing the same problem to-day. If it had been possible to get agreement at that time, when we were administering the greater part of the Somali area, that would have been a happy settlement and it would have saved all the serious trouble which has arisen later on.
But this idea of a Greater Somalia was initially a recognition of the important fact that it is certainly not unreasonable of the Somalis, wherever they form a majority, to wish to live together as a single people in a national homeland. So long as this patriotic aim is tempered with self-restraint and is not marked by resort to violence or brute force, then I think no one who loves his own country can fail to respect others who cherish that thought. At the same time, it would be hard for anyone to imagine that it would be possible for the Government of Kenya to acknowledge the claim of the Somalis in the Northern Frontier District to secede. After all, the unity of their own country is at stake. It is a country that is
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in the making. How can they, with a stroke of the pen, sign away almost one-third of their territory?
There is another consideration which I think must be kept in mind when making an assessment of the point of view of the people of Kenya. Kenya is deeply divided, as we all realise, by tribal loyalties. That has been one of the greatest difficulties in forming a united nation of Kenya; and of course these tribal rivalries are bound to be sharpened by independence. That is one of the things that invariably happens in every African country. No Government of Kenya could risk the dismemberment of its own country by allowing the inhabitants of one part of that country to secede.
This fact surely places the responsibility fairly and squarely on the shoulders of Her Majesty's Government here. It is for the British Government to decide—and to decide while we still have the constitutional right to do so. And this right will, of course, cease when Kenya becomes independent. It must, therefore, be exercised in the near future, during the short period between self-government which begins after the approaching elections in Kenya, and the attainment of complete independence for which, of course, a date has not at present been fixed. I am quite certain that Parliament would not forgive any British Government for evading a decision of this immense importance for the future of Kenya and for the peace of Africa, by any strategy of delay. I am not suggesting that the Government will adopt a strategy of delay; but we all know from past experience how easy it is for a Government to burke a difficult position by finding excuses for procrastination.
A Commission has already been sent to the area. It is a Commission (from whose Report the noble Earl has quoted) to ascertain the facts and the state of public opinion in the Northern Frontier District; and I have no doubt that the noble Marquess will say a good deal more than the noble Earl said about the conclusions of this Commission, because it occurred to me that the noble Earl quoted most conveniently those parts of it which supported his point of view. But it seems fairly clear to the ordinary man who looks at this Report that the Eastern part of this area is predominantly

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Somali and wants to secede and go to Somaliland, whereas the more sparsely populated Western part would either be willing to stay in Kenya or has a divided opinion about its political future and political allegiance. Thus, the facts have been established, and there is no excuse at all for calling in the United Nations or the other African countries to examine them. That would be a delaying tactic.
Another delaying tactic would be to wait for acceptance of Her Majesty's Government's proposals by either or both Governments concerned. We could wait, I feel quite certain, until the end of time, and still the proposals would not be entirely satisfactory, either to the Government of Somalia or to the Government of Kenya. But I feel that there is some hope in the attitude that has been already adopted by the British Government in this matter. The Secretary of State has carefully left the door open by saying that the decision about making the Northern Frontier District an administrative Region, the seventh Region of Kenya, does not prejudge a final decision. It is, as it were, an interim decision. That, of course, gave great concern to the Government of Kenya, but it seems to me to have been a most reasonable thing to do.
We are not asking for a final decision from the noble Marquess this evening; that would be a little unreasonable. Nor are we asking for it before the elections have taken place in Kenya. But we are asking the Government to make up their mind before Kenya becomes independent, because that is the only possible moment for a decision to be taken. A policy of drift would be the most disastrous policy of all. Undoubtedly it would lead Kenya into bloodshed and violence, and would mar the really wonderful record of success we have had so far in starting off the British territories in Africa which have achieved independence, in harmony, both internally and with their neighbours. I am glad indeed that the noble Earl has given us an opportunity of discussing a matter of grave public importance, especially because I feel that we must urge the Government, before it is too late, to take a decision that will avoid strife in Kenya when the time comes.
7.39 p.m.
THE EARL OF HUNTINGDON: My Lords, I should like to say how grateful
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I think we all ought to be to the noble Earl who opened the debate and proposed this Motion for giving us a chance of discussing what is a most important, and, I think, possibly a menacing problem. We all appreciate that Her Majesty's Government are in a difficult situation, but I suggest to your Lordships that unless we see a policy change and some new steps taken, the results may be highly disastrous, not only for that part of Africa but for ourselves and for other parts of the world.
I have been in Kenya, although I have never had the good fortune to go into these districts of Somalia. However, I have known people well who are acquainted with them, and who know them thoroughly; and I have had many descriptions and details of the people who live there, of their habits, their customs and of the issue involved. It seems to me that fundamentally the issue is very simple, as has been pointed out by the noble Earl, Lord Lytton. It is that these Somalis, who are a different race from the rest in Kenya, a Hamitic nomadic race to whom the camel is all important, who live in a wild desert country and who are culturally, religiously and in every other way completely different from the other tribes in Kenya, do not want to be put under the Central Kenya Government. Rightly or wrongly, they do not like that Government; they have not a very high opinion of them—that is my information. They do not see why, because this district was originally, for administrative convenience, governed from Nairobi, when the great moment for freedom comes they should be put under people from whom they are completely different, whom they dislike and by whom they do not wish to be governed. That is really their case.
I think the noble Earl, Lord Lytton, said that Sir Charles Eliot, the first Governor of Kenya round about 1904–05, believed in a united Somalia. I should like to quote an extract from what Sir Charles Eliot said, which appeared in a letter to The Times quite recently. This was the opinion of our first Governor of Kenya in 1905. He said:
"If it were possible to detach the districts inhabited by Somalis it would be an excellent thing to form them into a separate government, as they are different in population, economic and physical conditions from the other provinces: but unfortunately they are too small to form a separate administration,

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and the adjoining Somali territories are not British."
In other words, his whole conception would have been a united Somaliland, but the fact that we did not have power in regard to the further territories made this impossible.
Now, of course, that particular drawback no longer exists, and there is nothing to stop Somalis in this district from being incorporated with the Somalia Republic. This is the position in which we find ourselves. The Republic of Somalia now has its own flag of five stars, one star of which, I am told. represents the North Frontier District. I do not know if this is so, but the fact which we ought to keep in mind, the important fact, quite apart from the rights and wrongs of this issue is that—and this is one thing that is quite certain—the Somalis will not accept and will not tolerate being under the Kenya Government. This may be regretted, it may be unfortunate, but it is a fact which we must recognise. We should also recognise that the Somalis are very fine people indeed. They are extremely good fighters and warriors, probably the best in Africa; they live in a wild desert country, which would be extremely difficult to subdue, and they are experts in guerrilla warfare.
I suggest that if the Government really agree to put the Somalis under the Kenya Administration we shall be leaving a terrible legacy to Kenya. There will be dragons' teeth that will rise up and produce warriors against the Kenya Government. It will put that Government in an impossible position. They almost certainly will not be able to subdue this very proud, gallant people. If they did, it would lead to their slaughter on a gigantic scale. Some people might think that Her Majesty's Government take the rather cynical view: "After all, we shall be out of it. The Africans have asked for this; let them have it and see what happens." I think, and hope, that that is not the view, but in any case until independence we are responsible, and if we stir up this wild, warlike people there will be infinite trouble. Already there has been a report in The Times of April 1 of trouble in Somalia in this district, in which a policeman was killed. That is probably only the beginning if we persist in what seems to them to be a betrayal of their rights and interests and the worst kind of provocation.
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What are we to do? Are we going to mount an expedition against these people? Are we going to kill these wretched people, people who have always been friendly to the British and respected us? I think that would be most unwise. Once fighting really started there there would be nothing to stop its spreading. I cannot believe that the Republic of Somalia would not come to the help of the Somali people. I am strongly of the opinion that Ethiopia would be fishing in troubled waters. I understand Ethiopia has never really accepted the frontier as being the best frontier between her and this province. Once this is allowed to get out of hand Egypt will probably come into it, possible backed by Russia, who are already very interested in Somalia and carrying out quite a lot of propaganda among the Somalis. If we do not look out—this may sound exaggerated, but I do not believe it is—we shall start another Korea there, with America, ourselves and perhaps the Kenya Government on the one side, and with Russia, Egypt and the Somalis on the other. I am sure that is the last thing any of us on any side of the House, or anywhere for that matter, would want to see. It is not an intangible danger, but a real menace which might happen at any time.
It is difficult to appreciate why Mr. Kenyatta and the other politicians in Kenya are so keen to have this province, because economically it is absolutely valueless. We have heard several times to-day that it consists of 30 per cent. of the territory, but it is just desert country. One has a very different situation in the Congo in relation to the small breakaway province of Katanga. Katanga is the richest province and the whole wealth of the Congo lies there; without it it would be difficult, if not impossible, for a Congolese Government to manage at all. It is strange, in a way, that the British Government sympathise with Katanga on the one side, and yet sympathise with the Kenya Government against the unfortunate Somalis on the other. It does not seem quite to carry out a consistent principle. In fact, the only reason these politicians of Kenya can want Somaliland is purely, as has been said, for prestige, and wanting to make a big show with this extra territory. I appreciate that Her Majesty's Government may think that it may make

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negotiations easier if they hand over these Somalis and that we shall get some sort of arrangement in Kenya, but I do not think it will make it much better, and there are too many dangers on the other side.
The only other consideration is the question of the settlers, who are in a difficult position. Whatever the rights and wrongs of the issue, we must all sympathise with the white settlers in Kenya, who are facing the change in government and are wondering what the relations will be and what their future will be. Nationalism, unfortunately, is a very heady wine, and I am afraid that some of the African leaders do not appreciate that never before have they needed the skill and knowledge which they will not have when they are independent; and that there are a great many white people, very well-wishing, who would place that skill at their disposal. The only thing any of us can hope for is that, once the great enthusiasm for freedom is satisfied, the Africans will begin to appreciate and to build up a society in which all races can exist happily side by side; and that the future of these settlers will not be quite as black as some of them fear it will be.
However, in any case, my Lords, I cannot believe that this bargain of handing over these Somalis will really affect these settlers or help them out. That is a question which will have to be decided historically. It will have to be worked out between the new Government of Kenya and the people living there. I hope that friendship will develop, and that a new kind of feeling will arise in Africa when she is free. But, my Lords, I do suggest that, even for those considerations of peace or of appeasement, we cannot hand over these unfortunate and proud people, the Somalis, to be under a Government they so much dislike.
7.52 p.m.
THE MINISTER OF STATE FOR COLONIAL AFFAIRS (THE MARQUESS OF LANSDOWNE): My Lords, the noble Earl, Lord Lytton, who moved this Motion, was good enough to say that I had helped him in supplying him with material. I was going to say that I thought he had made a well-documented speech. It is true that I did supply him with material and, of course, I was happy to do so, hoping that the noble Earl,
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through reading everything that I had available to give him, would draw the right conclusion. I must confess that I was a little disappointed that, as the noble Earl, Lord Listowel, pointed out, the noble Earl tended to use only such parts of the documents as fitted neatly into his own thesis. But perhaps that was not altogether to be unexpected. But I remember that the noble Earl, Lord Listowel, said that he considered that the primary concern of the noble Earl, Lord Lytton, was a concern for justice. Of course, one would not expect the noble Earl, Lord Lytton, to have any other concern. But I do put it to him, as indeed to the two noble Lords who have just sat down on the opposite Benches, that there were, and are, many, many difficult problems involved in this situation.
I think your Lordships will understand that it would be very unwise for me, and unhelpful for me, to enter into a detailed discussion of this matter; and I hope you will forgive me if I stick very rigidly to the words which I have written down in a speech which I prepared. The reason for this is that, despite the relative intimacy of the debate this evening, what I shall say will be scanned, of course, by people in the countries concerned, and it would be very distressing if, by some slip of the tongue, I were to give an impression which was incorrect; if I were to say something that might perhaps exacerbate a situation which is already in itself difficult. I am happy to be able to tell your Lordships that at the present time I think there is in Kenya far less tension than we have had for many months, and I hope that this is a situation which will continue and in fact progressively improve.
For the record—I hope I shall not be wearying your Lordships—I wish just to describe the situation as it is, and to give your Lordships a factual account of the situation. Many of your Lordships are already fully familiar with the situation, but I should like, for the record, in case it should go out from this House that perhaps there are some misunderstandings, to give the situation quite clearly, as I see it.
I must remind your Lordships that at the 1962 Constitutional Conference here in London, there were meetings between a representative group of the Conference and a Delegation from the

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Northern Frontier District. The Delegation asked that, before any further constitutional changes affecting Kenya were made, autonomy should be granted to the Northern Frontier District as a territory wholly independent of Kenya, in order that it might join in an act of union with the Somali Republic when Kenya became fully independent. By the Northern Frontier District, the Delegation meant all six sub-districts—namely, Mandera, Wajir, Garissa, Moyale, Marsabit and Isiolo. The Northern Frontier District Delegation was unanimous on this question. The representatives of KADU and KANU, however, were equally unanimous in their opposition to any measures which would lead to secession of any part of the Northern Frontier District; and they also claimed that the Somali delegation at the Lancaster House Conference was not truly representative of the inhabitants of the area.
The Secretary of State told the Conference that Her Majesty's Government had given very careful consideration to the views which had been put forward by the Delegation, and by KADU and KANU, and had come to the conclusion that an investigation should be undertaken in order to ascertain public opinion in the area regarding its future. The Secretary of State accordingly proposed to arrange for an independent Commission to be appointed with appropriate terms of reference, to investigate the matter and report to him. An assurance was given that the Commission would be appointed as soon as practicable so that its report could be available, and a decision on its findings taken by Her Majesty's Government, before the new Constitution for Kenya was brought into operation. Meanwhile, there would be no change in the status of the Northern Frontier District or in the arrangements for its administration.
There has been some misunderstanding about the assurance that a decision on the findings of the Commission would be taken before the new Constitution was introduced. The Somalis in Kenya and the Somali Government itself have claimed that Her Majesty's Government have failed to honour the undertakings given at the Lancaster House Conference. Their view is that, by incorporating the N.F.D. into the framework of that Con-
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stitution, Her Majesty's Government are guilty of a breach of the undertakings given at the Conference, and have prejudiced the final decision. The Somali view is based, I repeat, on a misunderstanding of what was decided at the Conference. This was that there would be a decision on the findings of the N.F.D. Commission; and no more than that. A further undertaking was given that until that decision had been taken no changes would be made in the status of the N.F.D., or in the arrangements for its administration. The decision in question is that which the Secretary of State announced in Nairobi on March 8, and which was referred to in the statement which I read in your Lordships' House on March 12. No changes in the arrangements for administering the area have been made.
As your Lordships will remember, we secured for this Northern Frontier District Commission the services of Major-General Bogert, a Canadian, and Mr. Onyiuke, Q.C., a Nigerian. We deliberately looked outside the British field so that the impartiality of the Commission could not be challenged. Their terms of reference were:
"To ascertain, and report on, public opinion in the Northern Frontier District (comprising the district's of Isiolo, Garissa, Mandera, Marsabit, Moyale and Wajir) regarding arrangements to be made for the future of the area in the light of the likely course of constitutional development in Kenya."
The Commission visited Kenya between October 13 and November 28 last, and they submitted their Report to the Secretary of State on December 7. Their Report, as your Lordships will remember, was published as a Command Paper, from which the noble Earl, Lord Lytton, has quoted.
In their Report, the Commissioners stated that they found that there were areas in the Northern Frontier District supporting Somali opinion, areas supporting Kenya opinion and areas where opinion was mixed or uncertain. The areas in which the Commission found the people supporting the Somali opinion extend from the Kenya-Somali Frontier to the Adjuran-Galla line, and embrace the three sub-districts of Mandera, Wajir and Garissa, less the area occupied by the Riverine people, who are Bantu, and the Orma, together with the Adjuran area of the Moyale sub-district. In this area the

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Commission found that the people almost unanimously favoured the secession from Kenya of the Northern Frontier District when Kenya attains independence, with the object of ultimately joining the Somali Republic. Further, the Commission also reported that the people in this area wanted the N.F.D. to have a period under British authority in which to build up its machinery of government, so that it could join the Somali Republic as a self-governing unit. Elsewhere in the Northern Frontier District the people either wished to remain in Kenya or opinion was divided or uncertain.
The Commission expressed the view that they had obtained a true picture of public opinion as to the future Government of the Northern Frontier District with the exception of the Rendille tribe, to which the noble Earl, Lord Lytton, referred. Now the Commission were careful to point out that they did not wish to imply that the Rendille necessarily supported a view opposite to the one they had put forward. The Commission wished to go on record as stating their honest view that they could not believe that these people, who have no direct contact with the Somalis, generally wished to join Somalia. I think I should add, my Lords, that I have asked for further information about this from the Governor, and he has reported to me that from his own knowledge and from his own inquiries his view now fully corroborates the view of the two gentlemen on the N.F.D. Commission. The findings of the N.F.D. Commission were substantiated, as the noble Earl, Lord Lytton, said, by the Regional Boundaries Commission which visited the area after the N.F.D. Commission. The Boundaries Commission made it clear in their Report that had their terms of reference allowed they would have considered it right to create a Region consisting of the areas almost exclusively occupied by the Somali and kindred people—namely, the areas which now actually comprise the seventh Region.
I agree with noble Lords who have spoken that the Somalis are a homogeneous people, people sharing a common culture, a common language, a common religion and a common way of life. It is natural that they should
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aspire to be joined together in one nation. The British Government nevertheless understand the arguments used by African political leaders in Kenya to justify their opposition to the cession of any territory within Kenya's present boundaries. They point out that the present boundaries of Kenya, as of many other countries in Africa, are purely artificial, and that it is not only along the boundary with the Somali Republic that peoples of the same stock are divided from one another by national boundaries. They consider that it is not for the Colonial Power to attempt to adjust, in the final phase before independence, the boundaries which were its own artificial creation, for they argue that once this process is begun there can be no telling where it might end. They go on to argue that this difficulty is particularly acute in Kenya, where centrifugal forces are already strong. There is, of course, much force in this argument, particularly where it is applied to nomadic peoples who seek grazing and water for their cattle over vast areas of land, and who have traditionally crossed and recrossed national boundaries in their search for the means of existence.
A further argument is that for various reasons the Northern Frontier District has always been administered differently from the rest of Kenya. This, of course, has been necessarily imposed by nature and geography, and for this reason the Somalis have never really been able to experience the benefits of being part of Kenya, and the Africans, for their part, have never been in a position to demonstrate this to them. African Ministers have gone to great lengths in the agreed Constitution to make provision to let the different parts of Kenya run their own affairs. As my right honourable friend has said, we have thought it only fair to give the Kenya Africans an opportunity to demonstrate their goodwill towards the inhabitants of the Somali districts—as, indeed, elsewhere in Kenya.
The Somalis do not appear to have appreciated the degree of autonomy which they will enjoy in their own Region. In the first place they will have their own Regional Assembly, with its President. The Regional Assembly will consist of members freely elected by the

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inhabitants of the area, and the President will be elected by the Regional Assembly members from among persons who are members or who are qualified to be members. This Assembly will be responsible for police and the maintenance of law and order in its Region, for day-to-day administration and for such matters as education and health. The Somalis, therefore, will have the direction of most of their own affairs. They will also he guaranteed under the Constitution their own sources of revenue as a matter of right and not as the Central Government may decide from time to time. They will also have direct responsibility for those matters which most closely affect the way of life of their own people—for example, the control of grazing areas and access to water. Their right to practise the Moslem religion will be safeguarded by the Bill of Rights and by the courts.
The British Government acknowledge the strength of the arguments on both sides, and cannot disregard the fact that they are deeply and, indeed, passionately held. British interests do not lie in exploiting them. In the long run, the interests of Great Britain, of Kenya and of the Somali Republic are the same—namely, that there should be peace, stability and prosperity throughout the area. My Lords, it would be a tragedy if anything were said or done in the heat of the moment, or from considerations of merely short-term advantage, to prejudice that ultimate objective.
I should like the noble Earl, Lord Listowel, to pay particular attention to what I am about to say. Of course, the British Government is directly responsible for trying to find a generally acceptable solution to this problem before Kenya becomes independent, when our direct responsibility will cease. We cannot seek solutions in a vacuum, and it is for this reason that we very much regret that the Somali Republic has broken off diplomatic relations with us. Present difficulties will be aggravated if any of those who are directly involved in this matter, including the British Government take up intransigent or uncompromising positions. There is a great need for a period of calm and reflection in which all concerned can let their emotions subside and consider coolly what course of action really is in
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their long-term interests. I told your Lordships at the outset that I thought it only right I should speak with the greatest care on this subject. I am sorry that I cannot have satisfied the noble Earl, Lord Lytton. I have not entered into detailed discussions with him and have not been able to reply to the one question he desired to make about the restriction of Mr. Kholkholle, but I will endeavour to ascertain the information for which he asked.
8.12 p.m.
THE EARL OF LYTTON: My Lords, I am extremely grateful for the care with which my protests have been received. This is a late hour, but, before I finish, I should just like to dwell on what may be one or two misunderstandings. I think the noble Earl, Lord Listowel, believed, perhaps from my excessive volubility, that I was attempting to say that the responsibility for decisions rested with the Kenya African Government; whereas he said that it rests fairly and squarely on Her Majesty's Government. I entirely agree, and if anything I said, when I was referring to megalomania, gave rise to a different impression, I would only say that I join with him in agreeing entirely that it is a matter for Her Majesty's Government to decide.
I also agree, in part, with what he said about never being able to get anything generally acceptable; but I agree with that with one proviso. I am pretty certain that the N.F.D. and the Kenya Ministers will never accept anything generally. Their attitude is intransigent. I believe that the attitude of the Somali Republic, whose interests I have not been arguing, is that they claim nothing; N.F.D. Somalis have claimed Somalia and others than Somali have wished to join them. So far as the people are Somalis, and only to that extent, Somalia supports their claim. I do not think Somalia is willing to say "No" to those who wish to come with them if it is certain that there is a solid and permanent desire. I am sure Somalia does not want a single man in the country who is hostile to it. They have no such aspirations. They are not imperialistic.
Why do Kenya politicians, the noble Earl, Lord Huntingdon, asked, want this barren country? True, it is half the land;

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but it is a tremendous liability. In ale other part of the country there are 4,080 primary schools; in this part there are eight. Welfare has not started. The Negroes will be the slaves of the non-Negroes if they assume responsibility in this part, as they have been for the best part of 70 centuries. They will perpetuate their slavery, working to provide welfare for people in the desert, who will demand it as a right.
One of the main reasons, apart from the personal relationships between Kenyatta and the Emperor of Ethiopia, are the doctrines of the Pan-African high command, which regards liberation of all Africa as its primary aim—liberation such as that of Algeria, South Africa and Rhodesia. Anything that detracts from that or imposes the slightest delay is, for the time being, a deviation from the doctrine of the Pan-African high command. That is why the Somalis for the present do not get a great deal of support hum other Africans in other territories, because the whole Pan-African picture depicts the enemy as the white man. Anything which distracts from that is regarded as faulty tactics in dealing with the European imperialists. Therefore, for the time being, Africans tolerate the black imperialists.
I was disappointed in the sense that I might have dimly hoped for a little more from the noble Marquess; but it is not really unexpected and in that sense not disappointing. He came with a speech prepared and, apart from about three words, it could have been delivered whether I had spoken or not. He has given his reasons and has almost apologised for having to do so, but that is what he has done. He has not gone into matters of detail with me nor joined issue in any one single instance. He read large passages of the kind which I quoted myself, without any sort of tying-up
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between the two, and, to that extent, I am disappointed. But it is late and very few people are here. I am grateful because I have been able to put my views, and I would end by saying this in regard to a remark by the noble Earl, Lord Listowel. I will quote an Indian proverb in connection with the Somalis:
"He who finds himself in the mouth of the lion will appeal for help even to the tiger."
My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

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