Sitting of 12 February 1963

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  BRITISH RAILWAYS BILL (By Order)
    BRITISH WATERWAYS BILL (By Order)
    Second Reading deferred to Thursday, 21st February.
    LONDON COUNTY COUNCIL (IMPROVEMENTS) BILL (By Order)
    Second Reading deferred till Tuesday next.
    CLYDE NAVIGATION ORDER CORFIRMATION BILL
    Considered; to be read the Third time Tomorrow.
ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    North-East
    Mr. Pentlandasked the Chancellor of the Exchequer when he expects to put into effect his plans to strengthen the economic structure of the north-east region.
    The Chancellor of the Exchequer (Mr. Reginald Maudling): I would refer the hon. Member to the Answers given by my right hon. Friend, the Prime Minister, on 22nd January and 7th February in reply to Questions about the responsibilities of my noble Friend the Lord President of the Council.
    Mr. Pentland: But would not the right hon. Gentleman agree that the action which the Government are now taking is really a rescue operation in an attempt to ease the immediate unemployment problem in the North-East? As the right hon.
    1088
    Gentleman has this morning had consultations with the Prime Minister and Lord Hailsham, can he tell us what further action is contemplated by the Government for the North-East following Lord Hailsham's report on his visit to the region?
    Mr. Maudling: I think that we have done a good deal already, and our plans will unfold stage by stage.
    Mr. R. W. Elliott: Is my right hon. Friend aware that there is an appreciation in the area that any economic structure which is altered should be altered carefully, in that we have a major problem of major industries contracting? Is he further aware of the success thus far of his noble Friend the Lord President of the Council? Is my right hon. Friend also aware how well his noble Friend has been received in the area, and does he appreciate that, practically without exception, his appointment has been well and truly welcomed?
    Mr. Maudling: Yes, Sir.
    Mr. Popplewell: Is the right hon. Gentleman aware that people in the North-East welcome anything that the Government might do, but is he also aware that they look on Lord Hailsham's visit merely as something which might be postponing action by the Government? All the information that Lord Hailsham can possibly collect is already in the Government's archives. Representatives and deputations from this side of the House met the right hon. Gentleman when he was President of the Board of Trade and put to him all the information that Lord Hailsham is able to collect. Is he aware that the North-East looks for some definite action instead of just propaganda?
    Mr. Maudling: I assure the hon. Gentleman that anyone in the North-East who looks on my noble Friend's visit in that light totally under-estimates my noble Friend's capacities.

    Purchase Tax
    Mr. Milneasked the Chancellor of the Exchequer whether he will now remove the tax on sweets, soft drinks and kindred commodities.
    Mr. Loughlinasked the Chancellor of the Exchequer if he will now remove the tax on sweets and soft drinks.
    Mr. Dalyellasked the Chancellor of the Exchequer if he will consider abolishing Purchase Tax on soft drinks.
    Mr. Maudling: I cannot anticipate my Budget decisions.
    Mr. Milne: Is the right hon. Gentleman aware of the profound disappointment which that reply will give, in view of the fact that alterations have been made despite the forthcoming Budget? Will he recollect that when introducing this provision in his Budget speech his predecessor said that he expected some trouble on the home front, but he would brace himself to meet it, and that in bracing himself to meet it he was sacked by the Prime Minister in July? Will the right hon. Gentleman take steps to see that this tax is withdrawn?
    Mr. Maudling: I should not have thought that anyone would have expected changes in Purchase Tax between now and the Budget. If he does, he is very ill-informed.
    Mr. Loughlin: Does the right hon. Gentleman really think that the solvency of this country is dependent on, the taxation of children's pocket money? Will he recognise that there have been a number of closures of this type of factory, particularly those producing soft drinks, and will he give serious consideration to the matter at the time of his Budget?
    Mr. Maudling: Naturally I will consider all the facts put before me, but I do not think that to pick out one particular item of revenue and say, "Is this or is this not essential to the economy?" makes much sense.
    Mr. Dalyell: Will the right hon. Gentleman bear in mind that between July, August and September, 1961, and the same months of 1962 the volume of drink gallonage fell by 22·6 per cent.?
    Mr. Maudling: Yes, but if the hon. Gentleman looks back further he will find similar falls in previous years.
    Mr. J. Wells: Is my right hon. Friend aware that this tax has caused unemployment in the ice-cream industry and has had two bad effects on the farming community? First, the apple juice industry,
    1090
    which is in its infancy, has been very much penalised, to the detriment of agriculture. Secondly, is my right hon. Friend aware that the ice-cream provisions have had a very bad effect on the sales of dairy ice-cream?
    Mr. Maudling: I am not sure. There are many factors operating this year on the sales of soft drink and ice-cream. I would not accept that the tax was the dominant one.
    Mr. Milne: On a point of order. In view of the extremely unsatisfactory nature of that reply, I give notice that I shall raise the matter on the Adjournment.
    Mr. Dempseyasked the Chancellor of the Exchequer if he is aware that some sizes of school children's footwear are subject to Purchase Tax, while others are not; and if he will end this anomaly by abolishing Purchase Tax on such footwear.
    The Financial Secretary to the Treasury (Mr. Anthony Barber): The exemption applies to a range of footwear in sizes which on the average are suitable for children up to about the fourteenth birthday. Beyond this, children's and adult footwear cannot be satisfactorily distinguished, and I am afraid that it is therefore impossible to adopt the hon. Gentleman's suggestion.
    Mr. Dempsey: Is the Minister aware that the continuation of this tax creates an indefensible situation in that, due to physical reasons, younger girls are paying the tax on shoes while older girls are not? Would it not be wise to end this anomaly by ending this tax and, at the same time, help the manufacturing industry?
    Mr. Barber: The question of distinguishing children's clothing is not an easy one. It is, as the hon. Member has mentioned, not just a question of footwear. I can assure him that girls' dresses in particular have presented a difficult problem.
    Mr. Mitchison: In view of the unemployment in the boot and shoe industries, would it not be wise to end the Purchase Tax altogether on boots and shoes?
    Mr. Barber: That is another question.
    Mr. Dempseyasked the Chancellor of the Exchequer if he will abolish Purchase Tax on infant school girls' brief

    1091
    cases and thus end the anomaly whereby infant boys' school bags bear no Purchase Tax.
    Mr. Barber: The exemption is for schoolchildren's shoulder satchels and these are used by girls as well as boys. There was formerly a tax relief for brief cases and document cases, but this was withdrawn by Lord Amory in his 1958 Budget, because of the anomalies to which it gave rise. The same considerations are relevant today, and there is no prospect of the relief being restored.
    Mr. Dempsey: Is it not a scandal that many Scottish infant schoolgirls, who prefer taking briefcases to school, pay Purchase Tax on them, while infant boys who purchase school bags are totally relieved of Purchase Tax on them? Is not this an unjustifiable state of affairs about which the Government should do something?
    Mr. Barber: Until Lord Amory decided to change the position in his 1958 Budget, a certain number of companies were thriving on just such borderline cases as the hon. Member has mentioned. I do not think that we would be justified in reversing the position.
    Mr. Longden: Is my hon. Friend aware that it has not been unknown for girls to wear boys' bags?
    Mr. John Hallasked the Chancellor of the Exchequer to what extent the present estimate of the yield from 15 per cent. Purchase Tax on soft drinks differs from the estimate originally made.
    Mr. E. Johnsonasked the Chancellor of the Exchequer what was the yield from Purchase Tax on soft drinks from the date on which it came into force until the end of 1962 or any later convenient date.
    Mr. Maudling: The Budget estimate for the present financial year was £6¼ million. Receipts up to 31st December, 1962, amounted to about £5¼ million.
    Mr. Hall: Will not my right hon. Friend agree that this shows that there has been a drastic fall in the sales of soft drinks during the period? Does not this mean that there will be a very considerable depression in Schweppeshire unless he does something about it? Is
    1092
    he prepared to consider reducing, if not altogether removing, the Purchase Tax on soft drinks?
    Mr. Maudling: The sales of soft drinks fluctuate very much and my guess it that the weather has as much effect on sales as anything else. Taking the third quarter of 1962, the latest figures available, there was a big drop in 1962 compared with 1961 and an equally big drop in 1960 compared with 1959, so it probably is the weather.
    Mr. Johnson: Is my right hon Friend aware that some countries, including Canada and the United States, have found it necessary to abolish the tax on soft drinks because of its very serious effect on the industry? Is it not possible that the revenue which he would receive from Income Tax, Surtax and Profits Tax through profits made on soft drinks would outweigh the advantages which he might gain from Purchase Tax as sales are falling so considerably?
    Mr. Maudling: I should think that on the whole that is rather unlikely.
    The Earl of Dalkeith: Does my right hon. Friend appreciate that, taking the weather into account, reductions in the sales of soft drinks as a result of Purchase Tax have been so great that the employment of sixty people in a factory in my constituency is threatened? What is more, is he aware that if these people were unemployed and he had to pay them unemployment benefit, what he would have to pay out in unemployment benefit would be greater than his gain from Purchase Tax on the sales from this factory?
    Mr. Maudling: I am not sure that I accept my hon. Friend's estimate of the effect of Purchase Tax alone on the sale of soft drinks, but I should be glad to examine any evidence about particular cases in his constituency.
    Mr. W. Clarkasked the Chancellor of the Exchequer what would be the cost to the Exchequer if Purchase Tax were reduced from 25 per cent. to 15 per cent. on motor cycles, pedal cycles, mopeds and other mechanically-assisted cycles.
    Mr. Maudling: About £½ million in a full year.
    Mr. Clark: I thank my right hon. Friend for that reply. Does not he agree, however, that the motor cycle industry has achieved magnificent results in exports, having exported £26 million worth of its products, which represents well over half its production? Does he not further agree that this industry is working at about half its load capacity, and is suffering tremendously from the reduction in home sales? Finally, will not he urgently consider a reduction in Purchase Tax from 25 per cent. to 15 per cent., thus giving the same incentive to this industry as was recently given to the motor car industry?
    Mr. Maudling: I recognise the efficiency of this industry and the high quality of its products, but my hon. Friend will not expect me to comment on the question of future Purchase Tax rates.
    Mr. Manuelasked the Chancellor of the Exchequer what reply he made and what action he proposes to take, as a result of the letter sent to him by the Chairman of the Scottish Hosiery and Knitwear Manufacturers' Association suggesting the removal or reduction of Purchase Tax on knitted garments.
    Mr. Willisasked the Chancellor of the Exchequer what reply he has made to the representations of the Scottish Hosiery and Knitwear Manufacturers' Association concerning Purchase Tax on knitted outerwear.
    Mr. Maudling: I have told the Association that I have noted its representations, and shall bear them in mind. I cannot say any more at this stage.
    Mr. Manuel: Is the Chancellor of the Exchequer aware of the heavy unemployment and short-time working that exists in the Scottish knitwear industry? Is he further aware that a number of factories have closed down completely during the last year, and that the proposals made to the trade unions to freeze wages are being favourably considered by them? Will not he aid this industry, in order to boost home consumption, by abolishing Purchase Tax, thus giving the industry a chance to recover?
    Mr. Maudling: I will consider what the hon. Member says, together with the representations from the industry, but
    1094
    he will not expect me to say any more now.
    Mr. Willis: Will the Chancellor of the Exchequer bear in mind the fact that in the present state of Scottish economy we cannot afford to lose any more jobs?
    Mr. Maudling: Yes, certainly.
    Mr. Woodburn: Is the right hon. Gentleman aware that the woollen industry is suffering the further handicap of America's deliberately imposing quotas and restrictions on woollen imports? Is he further aware that the knitwear industry is our best dollar-earning industry in some parts of the country? Can he do something at the other end to see that these markets are not artificially closed to us, as well as helping with Purchase Tax?
    Mr. Maudling: This is an important matter, which is really one for my right hon. Friend the President of the Board of Trade, but I will discuss it with him.
    Mr. Spriggsasked the Chancellor of the Exchequer what representations he has received from bodies, other than those in the furniture industry, about Purchase Tax on furniture.
    Mr. Maudling: One, Sir, from the National Joint Council for the Glass Processing Industry about the Purchase Tax on mirrors.
    Mr. Spriggs: Is the right hon. Gentleman aware that there is a great danger of increasing the number of unemployed workers in this industry, especially if he insists upon retaining the Purchase Tax on furniture?
    Mr. Maudling: I am not sure that I accept that view of the prospects for the industry. I should have thought that one of the most important factors from that point of view has been the restoration of the "add-to" system of hire purchase that my right hon. Friend the President of the Board of Trade recently introduced.
    Mr. Sydney Irvingasked the Chancellor of the Exchequer if, in view of the injurious effects it is having on the industry, he will remove the Purchase Tax on leather goods.
    Mr. Maudling: I cannot anticipate my Budget decisions.
    Mr. Irving: Will the Chancellor of the Exchequer remember the special difficulties from which this industry suffers—difficulties which have recently caused contraction and unemployment in the industry—and also that the incidence of this tax places at an advantage goods manufactured from synthetic materials? In view of the fact that for many years the industry has also suffered from difficulties arising from import duties and unfair competition from abroad, will he give it special consideration in his Budget?
    Mr. Maudling: As the hon. Member is aware, I am in some difficulty in relation to all these Questions. It is the traditional difficulty of the Chancellor of the Exchequer. All that I can undertake to do is to consider with care all representations that I receive on this point, either from interested parties or from hon. Members.

    I.S.H.R.A. (Sale of Companies)
    Mr. Awberyasked the Chancellor of the Exchequer how many steel firms have been sold back recently to private combines; what was the price paid for them by the Government when they were taken over; and what were the amounts now received for them.
    Mr. Barber: On 16th January the Iron and Steel Holding and Realisation Agency announced that arrangements had been concluded for the sale to Iron and Steel Investments Ltd. of the entire issued share capitals of Bairds and Scottish Steel Ltd., John Baker and Bessemer Ltd., and Skinningrove Iron Company Ltd., together with a loan of £1,800,000 owned by Skinningrove Iron Company Ltd., to the Agency for a total consideration of £5·7 million. The compensation price for these three companies under the Iron and Steel Act, 1949, was £6·7 million.
    Mr. Awbery: Is the Financial Secretary aware that the enormous profits made by these private individuals on take-overs fall on the taxpayer? Is he further aware that nationalised industries are now succeeding so well that they are taking over private enterprise industries? Will he assist them in this process?
    Mr. Barber: I think that the hon. Gentleman is drawing a false conclusion. If he will look at the Annual Reports of the Agency he will find that other Agency transactions have shown a profit on the same basis. The latest Annual Report of the Agency shows an excess of realisations over book value.

    Finance Act, 1952 (Section 271)
    Mr. Fitchasked the Chancellor of the Exchequer if he will amend Section 271 (3) of the Finance Act, 1952, in order that a bakehouse attached to a retail shop shall be included as a building which ranks for tax allowance.
    Mr. Barber: I am afraid that I cannot anticipate my right hon. Friend's Budget Statement.
    Mr. Fitch: Does the Financial Secretary realise that the Act as it stands at present is ridiculous? Does he not regard a bakehouse attached to a retail shop as an industrial building? It is surely used for productive purposes and should be included within the meaning of the Act?
    Mr. Barber: I do not think so. I have considered this matter carefully, because the hon. Gentleman was kind enough to write to me and give me details of the case which he had in mind. For the reasons which I explained in my reply, I cannot accept what he says.

    Reports (Publication)
    Dr. Brayasked the Chancellor of the Exchequer what steps he is taking to speed up the publication of the Census of Production, Input Output tables, and the National Income and Expenditure blue book in view of increasing public interest and the availability of the technical means for rapid data processing.
    Mr. Barber: A larger computer has been ordered which is expected to speed up the preparation both of the results of the Census of Production and of the Input Output tables. The National Income and Expenditure Blue Book is built up from data drawn from a very wide variety of sources, some of which cannot be speeded up very much without loss of accuracy, but I would remind the hon. Member that preliminary figures

    1097
    for the main tables are already available in the White Paper published at the end of March each year.
    Dr. Bray: Is the Financial Secretary aware that it is necessary to give as well as to receive in the matter of information? If the Treasury took more active steps to spread the understanding and use of Government statistics in industry, it would get its returns back a great deal quicker and so be able to make them more useful to the Government and to the public.
    Mr. Barber: I entirely agree with the hon. Gentleman that it is most important to obtain this information as quickly as is humanly and mechanically possible, because the more up to date it is the more valuable it is. The date on which the information is available is governed mainly by the speed at which returns from individual firms are received, but I agree with the general intention behind the hon. Gentleman's Question.

    Fuel Crisis (Financial Loss)
    Mr. Shinwellasked the Chancellor of the Exchequer what estimate has been made by his Department of the total financial loss sustained by the nation as a result of the fuel crisis.
    Mr. Barber: The information needed to make a reliable estimate of this kind is not available.
    Mr. Shinwell: Can the Financial Secretary say whether the Government have any plans in contemplation to mitigate the severity, not of the weather, over which the Government obviously have no control, but of the effect of the weather?
    Mr. Barber: I would not wish to minimise the difficulties which have arisen, but we have no reason to suppose that any great loss in total national output has arisen as a result of the interruption of fuel supplies. It is perfectly true that a considerable loss of production in the construction industry has arisen as a result of the weather, but I can assure the right hon. Gentleman that all those concerned are very conscious of the need to do whatever is reasonably possible, bearing in mind the priorities, to avoid this sort of trouble.
    Mr. Shinwell: Does the Financial Secretary really mean that in relation to electricity generation and gas production
    1098
    the Government have no plans in contemplation with a view to preventing what happened recently?
    Mr. Barber: I could take up a good deal of the time of the House, which is impossible at Question Time, in explaining the matter to the right hon. Gentleman. I remind him that the Central Electricity Generating Board estimates that it would have cost £270 million to provide enough generating capacity to meet this winter's maximum estimated demand. A great deal is being done. For example, as an interim measure it plans to install 700 megawatts of gas turbines in 1964 and 1965, and a great deal of other work on the transmission system and distribution side is going on.

    Scotch Whisky (Excise Duty)
    Mr. Gresham Cookeasked the Chancellor of the Exchequer whether arrangements can now be made for persons enjoying diplomatic immunity in Great Britain to obtain Scotch whisky on the same duty basis as other alcoholic liquids.
    Mr. Maudling: Diplomatic privileges have never included freedom from excise duties, and a new extension of privilege would be unjustified.
    Mr. Gresham Cooke: Is my right hon. Friend aware that it is damaging to the Scotch whisky export effort if in foreign embassies in London foreign whiskies such as Bourbon and Rye are much cheaper than Scotch whisky? As he has been able to make an arrangement for the remission of Purchase Tax on motor cars for diplomats, would it not be possible to do the same for whisky? Is my right hon. Friend further aware that in no less than eight countries, including Canada, Norway and France, home-grown spirits are available free of excise duty to embassies in those countries?
    Mr. Maudling: I have sufficient confidence in the quality of the Scottish product to believe that tasting the alternative should confirm people in their preference for Scotch. As my hon. Friend knows, motor cars are a very special case. By and large it is unwise to extend these diplomatic privileges, unless a very strong case is made.
    Mr. Stodart: Can my hon. Friend give the House any idea as to what amount

    1099
    of duty he would lose if he granted this concession? Is not this a case of possibly cutting off one's nose, since it would be an extraordinarily good sales point if Scotch whisky were available in embassies at this concession rate?
    Mr. Maudling: I doubt whether supplying it to embassies at the suggested concession rate would have a great effect on sales. I cannot give an estimate of the loss involved directly. I do not know how far this process might spread to other articles and other claims.

    Economic Forecasting Methods
    Dr. Brayasked the Chancellor of the Exchequer whether, in view of the increased public interest and understanding of the difficulties and importance of economic forecasting, he will publish a full description of the short-term economic forecasting methods now used by the Treasury, together with a comparison of forecasts and the out-turn of events in recent years, similar to the assessment of forecasts published by the National Institute of Economic and Social Research in May, 1961, a copy of which has been sent to him.
    Mr. Maudling: A study of economic forecasting methods in member countries is now being undertaken by the Organisation for Economic Co-operation and Development and I will consider in this context the desirability of publishing a general description of the methods adopted in this country. As regards the second part of the Question, I have nothing to add to the Answer given to the hon. Member on 2nd August, 1962.
    Dr. Bray: Is the Chancellor of the Exchequer aware that there would be very widespread interest in the publication of the full contribution made by the Treasury to the O.E.C.D. discussion as well as in any O.E.C.D. report which is finally produced?
    Mr. Maudling: I will certainly bear that in mind. This is the sort of work in which the O.E.C.D. does some very useful things indeed.

    Government Departments (Writing Paper)
    Mr. David Jamesasked the Chancellor of the Exchequer whether he will ensure, for greater convenience of hon.
    1100
    Members, that all writing paper of all Government Departments carries a printed telephone number and printed private office extension number as well as the address.
    Mr. Barber: It is already the practice to print Departmental telephone numbers on all notepaper printed for general Departmental use.
    So far as Ministers and senior officials are concerned, this is a matter for the discretion of the user. The several extensions of Ministers' private offices are well known to the Departmental switchboard operators.
    In order to oblige my hon. Friend, I am having the next batch of my own notepaper printed with the telephone number of the Treasury which, for his information meanwhile, is WHItehall 1234.
    Mr. James: I thank the Financial Secretary for that reply. Will he bear in mind in setting an example to his colleagues in the Government that by no means all hon. Members can remember the telephone numbers of all Ministers, and that in these days of rapid change there is a surprising number of switchboard operators who do not even recognise the names of Ministers or their Parliamentary Secretaries?
    Mr. Barber: I am sure that the extreme difficulties which are facing my hon. Friend will be noted by my colleagues in the Government.

    Research and Development Expenditure and Productivity
    Mr. Boydenasked the Chancellor of the Exchequer if he will arrange for a study of the relationship between the growth of research and development expenditure and productivity as recommended by the Advisory Council on Scientific Policy in Command Paper No. 1920.
    Mr. Barber: This is an important and complex field of inquiry to which the National Economic Development Council has decided to devote early attention in its work on the means to faster economic growth.
    Mr. Boyden: Could the Financial Secretary say how much staff the Council has devoted to this and how soon we can expect to receive an interim report?
    Mr. Barber: I am afraid that I cannot answer that supplementary question. I think that this is very much a matter for the N.E.D.C. and, as I said in my original Answer, the N.E.D.C. intends to devote early attention to it.
    Mr. Mitchison: Is the hon. Gentleman aware that this is a matter which involves Government responsibility, too, and that there is a certain urgency about it in present conditions?
    Mr. Barber: Yes, Sir. This, I would suggest, is perhaps why the proportion of the gross national product spent on research and development has continued to rise in the last few years.

    Richard Thomas and Baldwins and Whitehead Iron and Steel
    Sir G. Nabarroasked the Chancellor of the Exchequer, in view of the fact that the State-owned steel company Richard Thomas and Baldwins Limited has succeeded in its take-over bid for Whitehead Iron and Steel, and of the fact that Richard Thomas and Baldwins Limited already owes the Government £135 million, if he will make a further statement on Her Majesty's Government's policy about the denationalisation of the steel industry.
    Mr. Maudling: It remains the intention of Her Majesty's Government to complete the denationalisation of the steel industry.
    Sir G. Nabarro: Is the Chancellor aware that the recent extension of nationalisation following the acquisition of Whitehead's has been greeted with dismay by all Conservatives in the country? Can my right hon. Friend give us an assurance that his statement of pious intention this afternoon, which has been repeated in the House a hundred times over in the last eleven years, will lead to the completion of denationalisation in this Parliament?
    Mr. Maudling: I do not agree that the R.T.B. affair has been greeted with dismay generally. I think that people have recognised that as Stewarts & Lloyds made a take-over bid to take over an important R.T.B. customer, the Government were right to authorise R.T.B. to counterbid on commercial grounds. Had we not done so, serious damage would have been done to R.T.B. and the prospects of denationalisation.
    Mr. Morris: Would it not have been better, once the decision was reached in the national interest for R.T.B. to take over Whitehead's, for the Government to have taken over Whitehead's as a great act of public ownership and so to have saved R.T.B. the huge sums which must be paid on the Stock Exchange?
    Mr. Maudling: I do not agree. Stewarts & Lloyds was equally entitled to bid for a company which it thought would be useful for its industrial group. We followed the principle that the nationalised industries should be able to defend themselves on commercial lines and by the normal commercial methods.
    Sir J. Vaughan-Morgan: Is it not a matter for consideration whether the powers of the President of the Board of Trade to intervene in take-over bids are adequate?
    Mr. Mandling: That is a much wider question.
    Mr. Strauss: Does not the logic of recent events point in exactly the opposite direction to that suggested by the hon. Member for Kidderminster (Sir G. Nabarro)? Does not the Chancellor agree that whether it is desirable in the national interest that Whitehead's should be integrated with Richard Thomas & Baldwins or any other firm is a purely technical matter which should be considered on technical considerations only, quite exclusive of competitive take-over bids which are clumsy and extravagant? Does not the right hon. Gentleman realise that technical considerations can be the prime consideration only when all the major steel firms are under unified ownership under national control?
    Mr. Maudling: I do not agree at all. The thing goes much deeper. The Government have no desire to see the ownership of R.T.B. extended further, but, faced with the situation with which R.T.B. was faced—the obvious threat of damage—we had to allow it to defend itself.
    Mr. Wadeasked the Chancellor of the Exchequer if he will make a statement on the present situation following the offer made by Richard Thomas and Baldwins for shares in the Whitehead Iron and Steel Company.
    Mr. Mandling: On 1st February Richard Thomas & Baldwins Ltd. indicated their intention to make an unconditional offer to purchase the issued share capital of the Whitehead Iron and Steel Co. Ltd., not already owned by them at a price of 85s. 3d. per ordinary share of £1 each payable in cash. I understand that formal offer documents are being posted today.
    Mr. Wade: Apart from the inconsistencies referred to by the hon. Member for Kidderminster (Sir G. Nabarro), are there not still wider issues involved? Is it satisfactory that the outcome of a take-over bid—a battle of this nature involving important questions of public interest—should be solely dependent on the amount of the bribe which the respective competitors could offer to the shareholders of the firm to be taken over? Does that still represent Government policy, however important the merger or take-over may be?
    Mr. Maudling: I am surprised to hear a representative of the Liberal Party, a believer in the market economy, describing a bid as a bribe.
    Sir G. Nabarro: Does my right hon. Friend recognise that the price offered by Richard Thomas & Baldwins, at 85s. 3d. per share, was not only an uncommercial figure but one which would ultimately involve the taxpayers in a further heavy loss, and that there is an important matter of political principle clearly involved?
    Mr. Maudling: I do not agree at all. If one considers the amount of profit that would have been lost to R.T.B. if it had lost its contract or connection with Whitehead's, it would have been a much bigger loss to the taxpayer than the money involved in making this good investment.
    Mr. Jay: Is not this whole rather sordid story a strong additional reason for the public ownership of the whole steel industry?
    Mr. Maudling: No, Sir. If anything, this is a strong additional reason for getting on with denationalisation.
    Sir G. Nabarroasked the Chancellor of the Exchequer what was the total investment of State money in the steel industry, as at 1st February, 1963, includ-
    1104
    ing the two remaining nationalised firms of Richard Thomas and Baldwins Ltd., and Whitehead Iron and Steel Co. Ltd., and the £135 million owed to the Iron and Steel Holding and Realisation Agency by the former; what was the comparable figure of investment of State money at the commencement of steel denationalisation in 1952; and, having regard to steel output at a current rate of 21 million tons annually, out of a capacity of 29 million tons, what steps Her Majesty's Government are taking to increase the profitability of the State steel sector of the industry, prior to completion of denationalisation.
    Mr. Maudling: The book value to the Iron and Steel Holding and Realisation Agency of its investments and obligations on 13th July, 1953, was £364 million. The corresponding figure on 1st February, 1963, was £126 million, of which £96 million related to securities in and loans to Richard Thomas and Baldwins Ltd. In addition, my right hon. Friend the Minister of Power has lent £70 million towards the cost of development by Richard Thomas and Baldwins Ltd. at Newport and has undertaken to lend up to £50 million to Colvilles Ltd., towards the new strip mill at Ravenscraig. Her Majesty's Government look to the Board of Richard Thomas and Baldwins, acting on commercial lines, to do everything possible to increase the profitability of the firm.
    Sir G. Nabarro: What estimate has my right hon. Friend made recently as to the occupancy of production of the steel industry in the next twelve months? Does he not realise that it is grossly uneconomic to operate an industry of this kind, with the huge capital investment in modern plant which is entailed, at somewhere about 70 per cent. of the maximum load factor, which is all it has been doing in the last twelve months?
    Mr. Maudling: Ideas about the potential load factor in the steel industry in relation to the economics of the industry have changed in the last few years. There are immense differences between the heavy end and the light end of the industry. However, in either case the measures which I have taken recently, including the cut in Purchase Tax on motor cars and the bigger depreciation allowances, should be of great benefit to the steel industry.
    Mr. Grimond: Will the right hon. Gentleman confirm that this exercise in nationalisation has cost the taxpayer some £4½ million, that the Whitehead Company was denationalised for some £4½ million and renationalised at a cost of nearly £10 million?
    Mr. Maudling: The right hon. Gentleman's figures are not right. Whitehead's was sold originally at £3½4 million and since then £3½6 million additional profits have been ploughed back into the company and the latest purchase price was in the neighbourhood of £10 million. The point I made earlier—I believe that the right hon. Gentleman was not present—was that by making this bid Richard Thomas and Baldwins protected an outlet for its products which in terms of profit margins was very important to it.
    Mr. Callaghan: Does not this show how stupid it was to sell the thing off in the first place?
    Mr. Maudling: No, but it shows that if people make bids for other people's customers, they must expect to meet some resistance.

    University Expenditure (Research)
    Mr. Warbeyasked the Chancellor of the Exchequer if he is aware of the small proportion of Government-assisted university expenditure devoted to research and study in the fields of world government and supra-national relations, compared with that devoted to study of war strategy technique and research related to weapon development; and if he will make direct grants to universities specifically earmarked for study of, and research into, the former subjects.
    Mr. Barber: The emphasis on particular subjects for study and research in universities is for the universities themselves to decide.
    Mr. Warbey: I am aware of that and, after all, the Government give direct grants. Would not the hon. Gentleman agree that it would be a bad thing if the British universities were to follow the American example of allowing themselves to be drawn in in a big way into the war game, breeding a new race of so-called "defence intellectuals"? Would it not be better for the Government to promote, in matters over which they can
    1106
    legitimately exercise influence, more important studies into the growth of the institutions of world community?
    Mr. Barber: I think that the hon. Member has misunderstood completely the situation in the United Kingdom. The fact is that by far the greater part of research into weapons is carried out under the heading of Government defence expenditure. I am not aware of any figures showing the extent to which such research is financed by universities with U.G.C. grants, but I would expect it to be minimal and, possibly, non-existent.
    Mr. G. M. Thomson: Is the hon. Gentleman aware that one of his predecessors gave me a sympathetic Answer to a similar Question some time ago and said that he would await with interest any proposals put to the Government by the University Grants Committee and the university authorities? has the university world responded to that suggestion, which could be useful for research into world government and allied subjects?
    Mr. Barber: That is another question. This Question is concerned with expenditure
    "devoted to study of war strategy technique and research related to weapon development."
    Mr. Speaker: Question No. 16—Mr. Dempsey.
    Mr. Warbey: On a point of order. Is it in order for the Financial Secretary to read out one part of a Question, ignoring the first part altogether, as he has just done in his reply to my supplementary question?
    Mr. Speaker: There is nothing out of order if a Minister does not answer at all. That follows from the fact that I cannot make him answer.

    Fuel Oil (Public Service Vehicles)
    Mr. Frank Allaunasked the Chancellor of the Exchequer what representations he has received regarding the reduction or removal of the 275 per cent. tax on fuel oil used by public service vehicles; and if he will consider these when preparing his Budget.
    Mr. Maudling: I have received representations from the Joint Fuel Tax Committee for the Passenger Road Transport

    1107
    Industry and from a number of individual passenger transport undertakings. I will certainly consider them.
    Mr. Allaun: Will the Chancellor of the Exchequer bear in mind that, although slashing the tax on motor cars, the Government have in contrast raised the tax on fuel for buses, which are the poor man's motor car, by 3d. a gallon to the figure of 2s. 9d. a gallon, which I understand to mean about 2¾d. per bus-mile? Is not this unfair and will it not worsen the existing car congestion on the roads?
    Mr. Maudling: I shall certainly take this point into account, but obviously I cannot make any comment on it.
    Mr. More: Will my right hon. Friend remember that it is on the rural bus services that this tax presses most hardly? In view of the Government's failure to implement any of the recommendations of the Jack Committee, will he give urgent attention to possible repeal of this tax?
    Mr. Maudling: The point about the rural buses has certainly been urged upon me.

    New Industries (Tax Incentives)
    Mr. Stratton Millsasked the Chancellor of the Exchequer if he will invite the National Economic Development Council to examine the desirability and practicality of granting special tax incentives to new industries in specially selected areas of high and persistent unemployment.
    Mr. Maudling: The National Economic Development Council will consider all ways of increasing employment in these areas.
    Mr. Stratton Mills: Can my right hon. Friend confirm that some such scheme of this type would not necessarily conflict with our international obligations?
    Mr. Maudling: I cannot think of any international obligations which would be involved. Generally speaking, international treaties, including the Treaty of Rome, make provision for special assistance for special areas.
    Mr. Gordon Walker: Is the N.E.D.C. now to take over the function of formulating a Budget and proposing tax changes
    1108
    and the rest of it? If so, what is left for the right hon. Gentleman to do?
    Mr. Mandling: I was asked whether I would invite the Council to consider this. I said that it would consider it. It wants to consider everything affecting economic growth and I have no intention of stopping it.

    Exports
    Sir C. Osborneasked the Chancellor of the Exchequer, in view of the fact that British industrial costs have risen less than those of overseas competitors, why United Kingdom exports have fallen by so much in the second half of 1962; and if he will make a statement.
    Mr. Maudling: Exports were higher in the second half of last year than the first, but no longer expanding. They respond quickly to changes in demand overseas, and there is little doubt that the growth of production in the main industrial countries slowed down after the middle of 1962.
    Sir C. Osborne: Since our exports have undoubtedly slowed down, does the Chancellor of the Exchequer think that tax exports incentives are possible, and does he agree with them?
    Mr. Maudling: That is a rather wide question to answer at Question Time, but I can confirm that our obligations not to introduce subsidies in the form of taxes are contained not only in the G.A.T.T. but in the O.E.C.D. Agreement and the E.F.T.A. Agreement. It would be very unwise to start breaking those agreements.

    Industrial Equipment (Modernisation)
    Sir C. Osborneasked the Chancellor of the Exchequer, in view of the fact that the American industrial worker has three times more machine power available and therefore produces twice as much as the British worker, if he will take steps to encourage further the modernisation of British industrial equipment to increase British competitiveness; and if he will make a statement.
    Mr. Maudling: On 5th November last I announced substantial improvements in the capital and depreciation

    1109
    allowances for tax purposes for expenditure on new industrial equipment incurred after that date. This should represent a powerful encouragement to modernisation.
    Sir C. Osborne: Besides the extra aid which has been given and for which industry is grateful, does not my right hon. Friend think that it would be better to help further with the widespread modernisation of industrial equipment rather than that skilled men should be idle?
    Mr. Maudling: At all times I look for ways of encouraging further investment in modern equipment and I would be grateful for any suggestions.

    Private Health Insurance Premiums (Tax)
    Mr. David Jamesasked the Chancellor of the Exchequer whether he will allow premiums for private health insurance to rate for relief of tax in the same way as do premiums for private pensions.
    Mr. Barber: I have noted the suggestion but I cannot anticipate my right hon. Friend's Budget statement.
    Mr. James: Is my hon. Friend aware that in modern conditions more and more people would like to paddle their own canoes but are given no encouragement whatever? The National Health Service would benefit if the load on it were reduced.
    Mr. Barber: I am sure that my right hon. Friend will bear in mind what has been said, but I would point out that relief is given in respect of premiums paid for private pensions because the benefits which the payer is to receive must emerge in taxable form. The benefits paid under private health insurance schemes are not taxable in the normal way.
    Mr. K. Robinson: Will the Minister also consider the position whereby firms pay collective premiums for sickness insurance for their executives, which apparently rank for tax relief? Does he think that this anomaly is justified?
    Mr. Barber: That is another aspect of the matter which I am sure my right hon. Friend will bear in mind.
    Mr. Denis Howell: Will the hon. Gentleman also bear in mind the fact that these private insurance schemes can operate successfully only because they allow priority use of hospital equipment for private patients or, alternatively—or additionally—because they encourage taking away from the hospital service nurses who are badly needed in that service? On those two grounds, is not this suggestion anti-social?
    Mr. Barber: The hon. Member will realise that this is a matter for the Budget, and he will not expect me to comment on it.

    SCOTTISH ECONOMY
    Mr. W. Hamiltonasked the Prime Minister if he is yet in a position to make a statement on his plans to give assistance to the Scottish economy.
    The Prime Minister (Mr. Harold Macmillan): The steps already taken by the Government were described by my right hon. Friend the Minister of Labour in the debate on unemployment and economic policy which took place on 4th February. As he then said, other measures will be announced as decisions are reached.
    Mr. Hamilton: Did not the right hon. Gentleman himself state recently that he would make a set of proposals based on the sensible suggestion made by the Scottish T.U.C.? Does not he yet realise the seriousness of the situation that has been produced by the Government? Cannot he now announce the acceptance, in principle, of the idea of a coal-fired generating station and the removal of the threat of tolls on the Forth Road Bridge?
    The Prime Minister: A number of proposals are being made, and announcements have been made from time to time. That will continue to be so. The announcement about the Tay Bridge was made the other day. Additional sums of money are being spent on roads, electricity distribution, hospitals, schools and other services. As for the electric power station, the first part of which is to be in commission in 1969, I am hoping that it will soon be possible—when the report of the consultants has been received—to make a definite announcement.
    Mr. T. Fraser: Is the Prime Minister aware that the argument is not that we should construct a coal-fired station to be commissioned by 1969 in order to satisfy Scottish needs, but, rather, that a stimulus to the Scottish economy would be provided if the Government were now to decide to go ahead with the construction of such a station to supply the electricity needs of the South—in other words, to ensure that Scotland exports electricity rather than people?
    The Prime Minister: Various considerations have to be borne in mind. One of the main purposes, apart from the general need to expand electricity supply—and I take the hon. Member's point about adding to the grid, as well as dealing with the immediate local needs —was to be able to exploit a coalfield which was particularly suitable for this and, perhaps, for no other purpose.

    JUNIOR MINISTERS (SALARIES AND STATUS)
    Mr. A. Robertsasked the Prime Minister if he will take steps to raise the salaries and status of junior Ministers in Her Majesty's Government.
    The Prime Minister: The status of junior Ministers cannot be considered solely in relation to their salaries. If the hon. Member will let me know more precisely what he has in mind, I will consider it.
    Mr. Roberts: Is not the Prime Minister prepared to take cognisance of the view held by many of his hon. Friends? Does not he realise that the whole situation should receive serious consideration, without his asking me to submit any further information?
    The Prime Minister: The question of Ministerial salaries is dealt with from time to time. I always have this matter under consideration. I thought that the hon. Member might have had some other purpose in mind in regard to the status of junior Ministers—that is to say, their functions. We are always trying to extend the amount of work which can be delegated to Ministers of State and Parliamentary Secretaries.
    Mr. Gresham Cooke: Is my right. hon Friend aware that it is apparently the
    1112
    practice in some Departments to regard the Parliamentary Secretary as junior to the most senior civil servants? Is not that rather bad for Parliament? Quite apart from their salaries, which no doubt ought to be raised, should it not be made clear that all Ministers are senior to civil servants, and that Parliamentary Secretaries should be deputy Ministers to the chief Minister?
    The Prime Minister: Perhaps my hon. Friend will let me know more about this matter, because I did not know that that was the practice today. I know that it was the practice of certain Departments in the old days—especially the Foreign Office, where the Permanent Secretary ranked second to the Secretary of State, and took charge in his absence. That has been changed by the appointment of Ministers of State. I did not know that it operated in any other Departments, although I remember that it did so operate when I belonged to the trade union of Parliamentary Secretaries, and I remembering protesting against it.

    PRIME MINISTER AND PRESIDENT DE GAULLE (CONVERSATIONS)
    Mr. Mayhewasked the Prime Minister if he is aware that General de Gaulle has stated that proposals for Franco-British co-operation in nuclear weapons were put forward at the Rambouillet meeting in December; and if he will explain these proposals in greater detail.
    Mr. A. Lewisasked the Prime Minister whether he is aware that the French President has disclosed details of the conservations held with him last December, respecting the British Government's attitude towards the French nuclear strike force; and whether, in view of this, he will now publish an account of those discussions.
    Mr. Rankinasked the Prime Minister whether he will issue as a White Paper the conversations he had at Rambouillet with President de Gaulle, in view of recent statements by the French President.
    Mr. A. Hendersonasked the Prime Minister whether, in view of the statement by President de Gaulle that

    1113
    Her Majesty's Government supported the creation of an independent European nuclear force in his conversations at Rambouillet in December, he will now publish the substance of those conversations in detail.
    Q.12. Mr. P. Noel-Bakerasked the Prime Minister whether, following the statement made by President de Gaulle, he will make a statement clarifying what he said in his recent conversation with the President about the retention by Her Majesty's Government of an independent nuclear force.
    The Prime Minister: No, Sir. After my discussions with President de Gaulle at Rambouillet a joint agreed communiqué was issued.
    Mr. Mayhew: Is the Prime Minister aware that statements have been attributed to the French President, and not denied by him, that at Rambouillet proposals for a joint Franco-British deterrent independent of the United States were discussed? In the right hon. Gentleman's own interests, in justice to him because he has been unfairly treated by President de Gaulle, will he not deny that such a discussion took place?
    The Prime Minister: No, Sir. I made my position perfectly clear in the defence debate.
    Mr. RankinIs it not the case that in the communiqué issued after the Rambouillet talks there was no indication of any disagreement between the right hon. Gentleman and the President? Is it not also the case that it was only when the right hon. Gentleman went to Nassau and made a defence agreement which included France without her consent that political differences arose? Is it not also the case that it was to those political differences that the Lord Privy Seal referred when he said that the Common Market negotiations had crashed for political reasons?
    The Prime Minister: No, Sir. That is not the case. This was one of many conflicting reasons but it was not so. In my discussion with President de Gaulle I made quite clear my views, both upon what we call the interdependent concept and upon independence.
    Mr. Rankin: On a point of order, Mr. Speaker. Is it in order for the Prime
    1114
    Minister to reply with a comprehensive answer to three points, one of which, dealing with the communiqué after Rambouillet, is contradicted by his answer?
    Mr. Speaker: The hon. Gentleman may find it convenient to test the matter by considering whether or no I have any power to compel the Prime Minister to answer in any way.
    Mr. Henderson: Has the attention of the Government been drawn to the widely reported statement alleged to have been made by President de Gaulle to the effect that the Prime Minister had indicated that he was in favour of an independent European deterrent? Will the right hon. Gentleman take this opportunity, in any event, of reaffirming that this country's policy is to support an interdependent relationship on the basis of equal partnership within N.A.T.O.?
    The Prime Minister: President de Gaulle has himself called attention to a warning about so-called statements of his private conversations. Perhaps that was to correct some statement that had been made. I made clear to him exactly the same position which I tried to explain in the defence debate in this House the other day.
    This was that the British Government's view of the nuclear deterrent was that it should be interdependent in the sense that it was, for broad purposes, part of the alliance but with the right reserved to every sovereign State for its ultimate use in the necessities of national need. I thought that that position was perfectly clear. These principles were carried out in the Nassau Agreement.
    Mr. Noel-Baker: Is it not now impossible to regard this conversation between the President of France and the Prime Minister as private, in view of the statements made by French deputies reporting the President, an official statement by the French Prime Minister, and statements by official spokesmen in this country? In view of the great importance of what passed between him and the President for our defence policy, our disarmament policy and for the non-dissemination of nuclear weapons, will the right hon. Gentleman issue a White Paper stating exactly what he and the President said?
    The Prime Minister: No, Sir. I think that would be quite improper. I dealt

    1115
    with the matter as necessary in the defence debate in addition to the communiqué, and President de Gaulle himself has issued a warning against regarding as authoritative statements attributed to him.

    TRADE WITH U.S.S.R.
    Mr. Rankinasked the Prime Minister if he will hold conversations with President Khrushchev with a view to promoting trade with Russia, consequent on the failure of Great Britain to gain entry to the Common Market.
    The Prime Minister: No, Sir. Our Five-Year Trade Agreement provides a satisfactory framework for the development of Anglo-Soviet commerce.
    Mr. Rankin: May I take it that while the right hon. Gentleman rejects the suggestion about meeting Mr. Khrushchev he agrees with the need to promote more trade with Russia? Will he give particular attention to the proposals which are now being made from Russia to give shipbuilding orders to this country in return for our taking crude oil? Will he give favourable consideration to this proposal?
    The Prime Minister: Of course, we are trying to expand Anglo-Russian trade by every appropriate means and, indeed, it has considerably increased in recent years. Imports from Russia were £59 million in 1958 and £84 million last year. Exports to Russia have almost doubled, from £23 million to £43 million. One of the problems is payment, to which the hon. Gentleman has drawn attention. There are other Questions on this to my right hon. Friend the President of the Board of Trade and I should prefer not to anticipate his answer.
    Mr. P. Williams: Will my right hon. Friend agree that there is still considerable scope for further increasing our trade with Russia by a considerable amount? Will he give an undertaking that the Government will resist any political pressure to prevent us taking Russian oil in exchange?
    The Prime Minister: Yes, Sir. This is a matter for considerable thought but there is no question that we must make a decision on what seems to us, on broad
    1116
    commercial grounds, to be best for Britain.
    Mr. Skeet: Will my right hon. Friend bear in mind that Russia is dumping oil on the world market at 1½ dollars a barrel while charging her satellite countries over 3 dollars a barrel? Why should the free world take this oil when already it is faced with a saturated market?
    The Prime Minister: I should prefer not to deal with that question separately. It is complicated. My right hon. Friend the President of the Board of Trade will be making a statement about it.

    MALTA DOCKYARD
    Mr. G. Thomasasked the Prime Minister what representations he has received from Malta concerning the dockyard situation there and whether he will make a statement.
    The Prime Minister: None, Sir. My right hon. Friend the Secretary of State for the Colonies will be making a statement tomorrow or on Thursday.
    Mr. Thomas: Is the right hon. Gentleman aware that the Government's handling of this problem and their treatment of the George Cross Island are creating very much concern? Is he further aware that it is regarded as a breach of an honourable undertaking that the Government are now throwing in jeopardy the employment of people in Malta? Will he undertake that the American Bethlehem Steel interest will not take the place of the Government's interest in this matter?
    The Prime Minister: Perhaps the hon. Gentleman will be willing to await the statement which my right hon. Friend the Secretary of State for the Colonies will make either tomorrow or Thursday.
    Mr. Wall: May we have an assurance that whatever action Her Majesty's Government decide to take will be with the knowledge and support of the Maltese Government?
    The Prime Minister: Yes, Sir. My right hon. Friend has been in close touch with the Maltese Government throughout, and the Minister of State went to Malta to consult them on this matter.
    Mr. Awbery: Is the Prime Minister aware that during the last day or two there have been profound changes in Malta? Is he aware that it has been reported that the Maltese Government are now to take over the dockyard from Messrs. Bailey's? As this is such a fundamental change affecting Malta very considerably, will the right hon. Gentleman make an early statement?
    The Prime Minister: My right hon. Friend hopes to make a statement on that question and other matters tomorrow or Thursday.

    CORNWALL
    Mr. Haymanasked the Prime Minister whether he will now make an official visit to Cornwall to study its special economic difficulties, with a view to early action.
    The Prime Minister: No, Sir. I hope that the measures now being taken to stimulate the economy generally will help to solve the economic difficulties of Cornwall. Meanwhile, my right hon. Friend the President of the Board of Trade is doing everything possible to encourage more industrial development there.
    Mr. Hayman: Is the Prime Minister aware that unemployment has increased in west Cornwall since his unofficial visit on 30th November, that west Cornwall has had more persistent unemployment than any other part of Britain, and that uncertainty about the future of the main railway line through Cornwall is causing a good deal of anxiety? Will he give an assurance that the main line from Plymouth to Penzance at least will be retained?
    The Prime Minister: That is a rather different question. As regards the problems of Cornwall, many parts of the county are covered by the Local Employment Act, and I am informed that about 1,000 jobs are now in process of being produced by means of it.

ORDERS OF THE DAY
  CONSOLIDATED FUND BILL
  Considered in Committee; reported, without Amendment; read the Third time and passed.

EUROPEAN ECONOMIC COMMUNITY (BRUSSELS NEGOTIATIONS)
Order read for resuming adjourned debate on Amendment to Question [11th February]:
That this House expresses its full confidence in the determination and ability of Her Majesty's Government to deal with the political and economic situation arising from the breakdown of the Brussels negotiations.—[The Prime Minister.]
Which Amendment was, to leave out from "House" to the end of the Question and to add instead thereof:
"has no confidence in the ability of Her Majesty's Government to formulate or to carry through a programme which would bring about the necessary changes in our policies for international trade and for economic and political co-operation; and does not believe that it has the capacity to arouse in Great Britain the sense of urgency and national purpose so necessary to meet the situation created by the breakdown in the negotiations in Brussels".— [Mr. H. Wilson.]
Question again proposed, That the words proposed to be left out stand part of the Question.
3.32 p.m.
Mr. James Callaghan: I am not sure that hon. Members were fully attending to the words in the name of the Prime Minister which you read from the Order Paper, Mr. Speaker. Perhaps they should be repeated.
"That this House expresses its full confidence in the determination and ability of Her Majesty's Government to deal with the political and economic situation"—
Hon. Members: Hear, hear.
Mr. Callaghan: At least, I got a louder cheer when I read it than the Prime Minister got when he sat down yesterday. Perhaps I make it sound as though right hon. and hon. Members opposite are determined, as though they have some life in them. But, my goodness, after the day we endured yesterday, with the Prime Minister's speech at the begining and the funeral ode at the end from

1119
the Secretary of State for Commonwealth Relations, I cannot help wondering. The Secretary of State for Commonwealth Relations certainly felt deeply about the failure, and he conveyed the depth of his feelings to the House in the speech which he made.
The Secretary of State for Commonwealth Relations has, of course, been associated with many ill-starred ventures. Despite the massive nuclear deterrent strategy with which the right hon. Gentleman was associated, we are asked still to feel full confidence in him, in his determination and in his ability. We are asked still to feel full confidence in him after his ventures into Central Africa. We are asked still to feel full confidence in him after the way in which he messed up the negotiations in Malta. Now, as one of the columnists said in the papers this morning, the right hon. Gentleman is an embittered Common Marketeer.
I put it to the right hon. Gentleman that he should consider seriously whether he ought to resign as Secretary of State for Commonwealth Relations. I do not believe that he has ever, except in one speech which I heard him make on the subject of South Africa, felt about the Commonwealth the sentiments which unite most of us in the House. The Prime Minister was discussing at Question Time the possibility of raising the status of junior Ministers. One way in which he could do it would be by inviting the right hon. Gentleman to employ his talents in some other Department and promoting the Under-Secretary of State for the Colonies. In that way we should get someone—I hope that I am not embarrassing the hon. Gentleman—who speaks about the Commonwealth as though he really meant it. The present Secretary of State for Commonwealth Relations never does, and he should seriously consider whether he is doing the right job.
It is important that we should have the right Minister in his job if we are now to turn round and reverse our policies. I do not know whether we are to do that. After listening to the Prime Minister, I was undecided about whether he wished to resurrect the dead or was, in fact, turning to new and hopeful policies. He gave no indication in his manner or his approach that he was intending to do the latter. He seemed to
1120
be glancing nostalgically back over his shoulder the whole time. We cannot have a country which is divided in its leadership in this sense. If the Prime Minister still believes that we must do our best to get into Europe on the basis we were trying to get in on before, the alternative policies which he was laying down will fail. They will fail because his heart is not in them.
The Prime Minister could have done a greater service to this country yesterday if he had told us clearly that he is not ready to go into the Common Market on the terms which were agreed so far, but that he is prepared to associate with Europe on terms which are more consistent with our national interest as well as with the national interest of a great many other countries with which we have trading relationships today.
I find a great contrast between the attitude of a number of leading European statesmen when they are concerned with their interests and the attitude of the Prime Minister when he is concerned with this country's interests. I have no reason personally to have any feelings for the Prime Minister except those of friendship. I say that advisedly. But I must say that it would be difficult to imagine President de Gaulle or, perhaps, even Dr. Adenauer going to the country on the basis of coining a phrase such as—If I may put it in unidiomatic French—"Moi, je suis content, Jack." To show that I have it idiomatically right as well, perhaps I should say "Ça me va bien, merci". I did not have the education which the right hon. Gentleman enjoyed, but I have done my best to remedy the lack since.
I was depressed, as I think many hon. Members were, by the Prime Minister and, even more, by the Secretary of State for Commonwealth Relations. But let us try to set out some sort of balance sheet of where we stand at this turning point in our fortunes. Exports are critical for our health. This is agreed on both sides. It is one of the standard sermons which come out when no one can think of a different peroration. [An HON. MEMBER: "A good one."] It is a good one, I agree. But sermons oft repeated tend to lose their first sting. [HON. MEMBERS: "Hear, hear."] I promise the House that I shall do my best to avoid falling into that error.
What does the breakdown of the Common Market negotiations mean to Britain

1121
in terms of our world trade? Eighty-four per cent. of our world trade is unaffected by the breakdown of negotiations. Eighty-four per cent. of our trade will still depend on whether we can still sell goods at competitive prices, whether they are of the right design, whether the quality is good enough to compete with others, and, perhaps as important as anything else, whether we can provide the after-sales service.
Sixteen per cent. of our trade is affected by what has happened in Europe, but that 16 per cent. will not vanish. It will not, of course, grow as rapidly as the right hon. Gentleman and others—all of us, indeed—hoped that it would. The rate is bound to slow down. We shall have greater difficulties in getting over the tariff barriers, but, as we all know, our trade in Europe was growing, and there is no reason why it should not continue to grow even with the handicap of the tariff barrier over which we shall now have to jump.
Some work has been done on the effect of the tariff changes on flows of trade in manufactures, and I should like to convey to the House what I understand the conclusions to be. Had we entered the Common Market, imports into this country would have risen, initially, more than our exports to the Community. Now it will be harder to export to the European Common Market, and the tariff reductions with the Free Trade Association will also come into effect. It is estimated that the net result is that imports from the Free Trade Association will rise as fast as exports to it, mainly because we are a relatively high-tariff country.
The size of the immediate loss, and this I want to get across to the House—I only wish that the Prime Minister had done that yesterday—is small. The total loss resulting from all the changes that will take place as a result of the Free Trade Association negotiations and all the losses that would have taken place if we had entered the Common Market, can be made good in 1963 by additional exports of under £100 million. That is the short-term effect. Our total exports amount to about £3,800 million a year, and they grew last year at the rate of about 3 per cent. That would mean putting up our export rate by another 1 per cent., or 1½ per cent.
1122
Is anyone telling me it is such a tragedy —I do not comment on whether or not it was right—that we cannot make up a loss of exports of £100 million? If the Government believe that, and come here with their funeral garb arrayed upon them and tell us that there is no alternative, and how tragic the whole thing is, they should not be in office, because clearly this problem is well within our grasp.
If we take the measures which are necessary, of course we can increase our exports. I do not say, and I do not want right hon. Gentlemen to misunderstand me, that it would not be easier if we were in the Common Market. Of course it would be, but we are not in, and the question is: what do we do now? I believe that it is quite within our compass to tackle the problem, and that not only is it within our compass but in our national interest to do so, and to get on better terms with our own economy and our own strength before negotiations are resumed.
I find fault, too, with the Government's approach, which has been instinct through every report we have had, that linking Britain with the Common Market countries is a matter of all advantage to us and none to them. It is a matter of very great advantage to the Common Market countries, too. If a link is not established—and this, in my view, is the case for a link—there will be the danger of a grave and growing split between the Common Market countries and the rest of the world, and that will be as much against the interest of the Common Market countries as it will be against the interests of the rest of the world.
We have never played this card in this way. It is not as though we had all the time—the Lord Privy Seal laughs; maybe he has taken a different attitude in the negotiations, but the impression that the Government have given publicly to someone like myself is that they have been on their knees.
Our task, and the Prime Minister said this in a half-hearted way yesterday, is to place our full weight behind the Kennedy round of tariff negotiations under the G.A.T.T. I think that we shall be up against great difficulties. In the same way, in the short run, it may appear to the Common Market countries that the Common tariff is the only symbol that unites them because, politically, they have reacted against some of the events that

1123
have surrounded the breakdown in our negotiations. It may, therefore, be more difficult for us to secure the lowering of tariffs that it is in our interests we should try to get, but we must place our full weight behind these negotiations when they start, and the United States, ourselves and the Commonwealth should be battering at the common tariff surrounding the Common Market countries.
It is a hopeful sign that instead of the product-by-product basis of negotiation and argument, we shall be discussing the tariff reductions across the board. It will make things easier in some ways, although I do not under-rate the difficulty we may have with the protectionism of United States industries as well as the protectionism of our own industries. The Government should seriously consider how we can ameliorate the very grave difficulties that will be felt by some of our own industries if we do pursue, as I suppose we shall—and it is in our interests and those of the world—the path of lower tariffs.
I should like to see the Government paying some attention to what can be done to ease the burden on some of our traditional industries at the same time as we go into this round of negotiations, because it would be a tragedy if, because of protectionism in American industry, or in our own industry, either President Kennedy's Government or our own were to find their own position undermined as the result of local pressure at home.
The story of agriculture of one of out and out protectionism, whether it be in Britain, in the United States, or in the Common Market. It is true, as, I think, was said in yesterday's debate—which, apart from one or two notable exceptions, I must say that I found extremely interesting and informative—that this is, and seems to be, endemic in all advanced industrial countries. There is no doubt that we seem to regard agriculture as an exclusively domestic matter quite unaffected by foreign trade considerations. I believe that the world, and especially the advanced countries, must try to break away from the habit of looking at their own agricultural systems. The Common Market is encouraging a system of subsidised exports at the expense of traditional exporting countries, and that was one of the grave objections I had to the system that was being negotiated.
1124
For the moment, the world has been spared that—and so, I may say, has the British housewife. World food exporters, both those in the Commonwealth and those outside it, have been spared the crisis that would undoubtedly have been precipitated, had other arrangements not been made, once we got into the Common Market. Now we can take advantage of the breakdown—and I am looking for the advantages coming from that breakdown rather than weeping about what has happened. I can understand the depth of feeling there is on the Government Front Bench, but it is our job to look at what can be done about the current situation.
I gather from the Prime Minister that we shall start soon with negotiations, but we must remember that the countries concerned are not only the advanced industrial countries like the United States, Canada, Australia and New Zealand, but also some of the less advanced countries that are outside the tropical zones and whose balance-of-payments position is very much affected by what happens to their traditional food exports. I am relieved, to put it at its lowest, that at least they are not to be faced with a breakdown at a very delicate moment in world trade when we might—though I trust not—be going into a downward spiral of world trade. That would be an additional handicap to put on the backs of those countries—and I speak of the less advanced countries—which are less well able to bear such a burden.
It is sometimes assumed that it is only the consumer countries that have an interest in stable commodity prices, but both the developing countries and the consumer countries have an interest in securing commodity agreements, and I was glad to hear the Prime Minister say that the Government believe that there is something to be done here. I am sure that many of my hon. Friends recall the attacks that used to be made on the Labour Government, ten or twelve years ago, when we were trying to follow a similar policy. But they learn, these right hon. and hon. Members opposite, even though they learn late, and even though it costs the country a lot while they are learning.
Now we are coming to a system which was advocated a long time ago and which was successful. If we do not come back to this, the alternative for this country,

1125
if its export trade is to prosper, the alternative to good and stable prices and long-term agreements, is either soft loans or even giving away our exports. There is no alternative if we wish to develop our own trade.
May I say a word about semi-manufactures? This country—I say this for the Government—has taken the problem seriously. There is no doubt, perhaps because of political considerations, perhaps because of the links with the Commonwealth, that we have taken a good share of the semi-manufactures that have come from the developing countries. It is easy to say that this must be done. It is much more difficult to get it done. But the Government must press the problem. Once again, it is in the interests of the developed countries as of the developing countries that their semi-manufactures should be allowed to enter the traditional developed markets.
I know that it means awkward short-term adjustments for the advanced industrial nations. But it is in their interests. This question is not confined to textiles. It is becoming a growing problem in many other fields and we must be prepared to shift production in this country from consumer goods of that nature to consumer durables and capital goods. I can find good in the breakdown of these negotiations because in many ways I believe that it removes the danger which we face, which was shared by Ministers and by civil servants, of becoming immersed in regional trade agreements. We were putting our energies the whole time into Europe when there were far more things to be done in other countries.
I know that I shall not command universal support when I say that some of the Common Market countries' policies seemed to me to savour of claustrophobia. I am glad that the fresh wind of world trade may start to blow more freely, because I am certain it is in the interests of this country and the world as a whole that it should do so. In certain quarters—certainly, after listening yesterday to the speech of the Secretary of State for Commonwealth Relations one would think so—it would seem to be unpopular to believe in the virtue of trade with the Commonwealth.
1126
But everyone who has visited the Commonwealth comes back with the same story about the natural advantages which we possess in this country. Men who have been educated here, and have their parents here, frequently live with their families in the Commonwealth countries. Anyone who has been in countries of the Commonwealth knows that the people there turn to us and say, "We want to buy British. Of course we should like to buy British. But you cannot supply us at the right price and at the time we want"—[HON. MEMBERS: "Oh."] Is anyone seriously saying that that is not a fact?
Sir Cyril Osborne Sir Cyril Osborne (Louth) rose—
Mr. Callaghan: The hon. Member for Louth (Sir C. Osborne) interrupted one of my hon. Friends three times yesterday and then made his own speech. Why does not the hon. Gentleman give someone else a chance?
Mr. Kenneth Lewis: Surely the hon. Gentleman must know of occasions when the Commonwealth has got into difficulties. Frequently Commonwealth countries have cut down on, or stopped altogether, the quotas of manufactures from this country. While the Commonwealth countries may not necessarily be blamed, those are the facts of life, and the hon. Gentleman knows them perfectly well.
Mr. Callaghan: That, if I may say so, is a different point from the point which I am now making. It is a point with which we can deal on a different occasion.
I am astonished if it is denied by anyone that there is increasing trade among the Commonwealth countries and that this is being taken by Germans, by Italians and by Japanese—by everybody but Britain. Our share of this trade is falling and what I am saying to the House —surely this cannot be argued—is that if this additional trade is there, we have more advantages than any other nation in trying to get it. I do not see how that can be disputed.
If the hon. Member for Rutland and Stamford (Mr. K. Lewis) will excuse me, I shall not deal with the point which he raised now, as to do so would take me from my theme, which will be—
Mr. Geoffrey Hirst: Oh.
Mr. Callaghan: The hon. Gentleman need not snigger. I have plenty of other things yet to say.
There was a very interesting proposal by Mr. S. C. Leslie in the Statist last week. He called for a Commonwealth Export Council to be set up as a counterpart to the European Export Council. The European Export Council has done -excellent work. I think that Sir William MacFadzen and his colleagues have served Britain well. If we are working on this policy—as I hope—to get a better posture and better treatment, so that we do not look like an overweight, rather flabby heavyweight boxer, why should not a similar piece of machinery be set up for the Commonwealth?
I have only one text around which I wish to range my remarks. I believe that our influence in the world, our policies in the world, our alliances in the world and the attitude of the rest of the world to us, will rest on one simple fact, and that is our economic strength at home. They will not rest on peevish gestures, such as we have seen recently, or upon whether we possess Polaris. They will not rest on the pictures of Beefeaters which are now bestrewn across journals and magazines They will rest on the economic strength here, and for that reason I should like to devote the rest of my speech to that proposition.
The Prime Minister said—the right hon. Gentleman was right and I agree with him, he often says these things, but we do not have any conviction that action will follow—that the most urgent need is to expand industrial production in this country. Ernest Bevin said it many years ago—"Give me 10 million tons of coal and I will give you a foreign policy"—and of course, he was right. It is right today. If we could have the exports—[Laughter.] Why should hon. Gentlemen opposite laugh at the failure of this country?
Mr. Stan Awbery: Because they are ignorant.
Mr. Callaghan: Is it because they think it better to score party political points than to try to fact the situation?
The Prime Minister said—here, I wish to differ from the right hon. Gentleman because I believe that he has got his priorities wrong—that a vital condition
1128
is to adopt and make effective in practice a reasonable incomes policy. The right hon. Gentleman said that everything rested on this. I will claim this much for myself, that over the last eighteen months I have spent as much time as anybody in this House or outside not only in negotiating wage agreements but also in discussing with economists, trade unionists and employers the basis of an incomes policy; and I will return to this in a moment because I want to face the question.
I say to the Prime Minister that I believe his emphasis is wrong. We do not start with a wages policy. I use the term "wages policy". We can call it an incomes policy to disguise reality if we like, but when it comes down to rock bottom it is a wages policy that people are talking about. We do not start with that, and that has been the mistake of the Government all the way through, ever since that horrible day in July, 1961, when the former Chancellor of the Exchequer tore down the collective bargaining system without substituting anything in its place.
The need is recognised. I find that practically no one who accepts the position dissents from the need for a wages policy. The question is: how are we to get it? I will tell the Government this —they never seem to recognise it. It will result only from the general context of the Government's social and economic policies and their acceptance by the nation as being fair and reasonable. I will return to this later. My conviction is—and this was referred to by my right hon. Friend the Member for Huyton (Mr. H. Wilson) yesterday—that we want to start from a national industrial development plan. It is respectable for me to say this, because Mr. Paul Chambers said it in my constituency ten days ago, so I do not even get any jeers from hon. Members on the Government benches when I say it. This is where we should start.
I believe that we have a task to make British industry "age", to make it efficient and responsive to changing world demands by switching the emphasis to industries which demand highly technical skill. The first way that we will do this is by organising the collection of facts about industry—enough of them and in good time. We need to be able to compare the efficiency of firms

1129
in industry, their export performance, their costs, their profit margins and their potential expansion. I said this to some industrialists who came to talk to me the other day. I believe that they think that there will be a Labour Government next time. They said,"People will not give you that information." I said, "That is exactly what some trade unionists tell me when I ask them for a national incomes policy".
If industrialists start off on this basis we shall never get a national incomes policy and we shall never have real, steady and permanent expansion in industry. Everyone must give up some cherished beliefs; everyone must give up something. Therefore, I have no hesitation in saying that if we were the Government we would ask for the support of the Opposition in telling their friends that if they want Britain to succeed they must be prepared to make sacrifices in their own cherished freedom.
It is necessary to organise the collection of facts in the regions, in Scotland and in Wales. Industrialists need to forecast their skilled manpower requirements and to foresee the decline in industries. They need to take account of the public service requirements, the need for retraining and the drift of industry into and out of the regions. A great deal of this can be done on a regional basis. I referred to this in the recent debate on unemployment. I am sure that if we have planning along these lines with industry and the great regions of this country co-operating we shall have the beginning—it is only the beginning—of a policy for real expansion.
It is necessary to call in the employers, trade unions and skilled economists from the beginning and to ask their advice. The Government should place their information before them and should build up their plan with them. They should work out their targets together. This is the precursor to a wages policy. The Government must be ready to associate those who have to operate the policy with the antecedent decision which will determine whether they are ready to consider it or not. In this way we shall have a picture of Britain as it is and a picture of Britain as it could be. That is the start.
1130
It would then be for the Government to make their own policy decisions—on exports, on social priorities, whether housing, hospitals, roads, or whatever it may be and on investment and its appropriate level. The trade unions and the employers are bound to have views about these matters. We cannot limit their view about what is right in a wages policy because the level of investment influences what is available for wages and the level of profits influences what is available for distribution elsewhere. That is why the attitude to wages will depend on the Government's attitude to social and economic policies. If the Government will only realise this, we shall be on the way to a sensible economic policy. Both sides of industry must be associated with the making of the plan right up to the decision which the Government must take.
The Government must make it clear that the purpose of the wages policy is not to restrain wages or to restrain increases in living standards, but to keep prices down. Indeed, that is its main function. Therefore, the Government's policy must have equal concern with the level of prices, the level of dividends and the level of rents and with monopolies. All these things must come under review and must be examined by the people concerned with them.
Our tax system needs to be revised. This artificial distinction between income and capital must go. The six months' capital gains tax was just another gimmick. It is as much a gimmick as the Government's nuclear-powered ship, which was announced by the Prime Minister yesterday—something stuffed into a speech to get a headline in some quarter or another. It is no use right hon. and hon. Members opposite looking aghast. When I was at the Admiralty, in 1950, we were discussing a nuclear-powered merchant ship. Unless I miss my guess a former Civil Lord, the hon. Member for Dorset, West (Mr. Wingfield Digby), was associated with those discussions. Yet not until 1959 did the Government place the contract. In 1961, they cancelled the contract. Now, at the beginning of 1963, the Prime Minister comes up with this "great new advance". The Americans already have the "Savannah" at sea. The Russians have had the "Lenin" in Arctic waters for years.

1131
Yet here we are, the greatest shipbuilding nation in the world, with the Prime Minister, to divert criticism, trying to get a headline out of our new nuclear ship.
The capital gains tax was much the same sort of gimmick and it is time that it went. I should be willing to reduce tax on earnings—and if it would attract hon. Members opposite, I should reduce tax on high earnings—if I could get permission to tax capital and wealth as well. This would be one way of getting a measure of equality and of encouraging earnings and those who wish to move ahead.
Against this background it would be possible, in my view, to agree with the trade unions on a general level of increase in wages which would be a real gain in standards, but would not involve a rise in prices—a kind of Plimsoll mark below which the boat should not be loaded with the various types of cargo which make it up. I have seen various detailed mechanisms at work. Skilled economists and others have produced very clever schemes showing how it is possible to evaluate jobs, to police breakdowns and to deal with wage drift. From such experience as I have had in wage negotiations and from the conversations that I have had, I do not believe that any of these things would work. The pay pause, of course, was a catastrophe and the National Incomes Commission is doomed to failure.
I will tell the Government what I think they should work for. I hope that they will do this. If they do not, we shall do it. First, there must be long-term agreements extending over periods of two or three years. I am glad to see that the Confederation of Shipbuilding and Engineering Unions and employers are working out a scheme along these lines. Secondly—and this will be very difficult —we must work to encourage the unions to take a general view of the problems of their workers and their move forward instead of a particular view. It is easy to take the general view on National Insurance or safety precaution matters, but it is very difficult to get an individual union to stand back when it sees another union moving forward.
But this is what they do in Sweden, although I know that the problem is different there. To all of us engaged in
1132
British trade unionism it is an astonishing feature of the Swedish system that a miner may be ready to say, "I will not take this increase this year so that the metal workers, the nurses, the public servants, or whoever it may be, shall get it". This is a striking feature of trade unionism which considers the workers as a whole. I should like to see us move towards this, and, given the leadership and the national will, we can. Alterations of rates to simplify wage structures or recruitment for unattractive or expanding industries and other considerations must be taken into account on a national basis.
I now come to an obvious point. The Government should abolish the National Incomes Commission before it gets them into deeper trouble and should set up in its place an industrial tribunal to which both sides can go and to which both sides can take the other. But the Government should keep out of it. I believe that this would be a much better means of tackling this problem than by having a National Incomes Commission which has no respect from one side and which is regarded as derisory by the other.
Again, I go back to what was said by Ernest Bevin, and I do not mind saying so. One of the things he was strongest on was the need to honour agreements on both sides. I believe that there has been a great weakening in this by both sides, employers as well as trade unionists on the shop floor. There is no basis for industrial discipline or for a real expansion of our industry unless agreements which are made are honoured and brought to an end only in accordance with the machinery which set them up.
The next point I make is to encourage the Government to make agreements on the basis of long-term comparability with the wage rates in the case of their own public servants. I believe that that would be an advantage. Public servants comprise 20 per cent. to 25 per cent. of the total employees. This would have an influence in other fields. This does not deal with wage drift which arises on the factory floor. I know of no means of dealing with that other than in a Communist or Fascist way. We cannot do that there; at any rate we cannot start there.
Nor does what I have said deal with the policing of breakdowns arising from

1133
the "rogue elephant" employer or trade unionist who breaks through an agreement. We cannot get there to start, so we have to start where we can. I believe that there are things which can be done because this is a problem which is recognised as something which has to be tackled. It is recognised as a problem which is holding up expansion and putting up prices unnecessarily. In the general recognition given to the social and economic background and framework of Government policies there will be a willingness on the part of those in industry to play their part, but we must not rely on exhortation.
Trade union leaders can do some exhortation at annual conferences and it might have some influence on the delegates, but delegates are the only people who hear it. It is on the shop floor in the factory that the real decisions to press for claims is taken. Exhortation is not enough. One has to have a policy which is clearly designed to be in the interests of the workers on the shop floor and in the factory, and which can be seen to be in their interests. Then one can ask the trade union leaders for confidence because they will know that they are serving the interests of their members as well as the interests of the nation. I deny the assumption constantly implicit in Government policies that the interests of the workers in the factories are contrary to those of the nation as a whole, and that if they are put in their proper context they will not be accepted as the same.
I have a number of suggestions about how to get stability in home policy. I do not know whether we shall hear the Chancellor's plans tonight, but I shall run over these suggestions because this is an occasion on which to examine what is wrong and see how we can put it right. Over-emphasis on monetary policy as a means of control has been one of the weaknesses of Government policy over the last few years. They have been doing too much too late.
The Chancellor is in danger of this at the moment. I am not saying that he has done it. That will rather depend on what he does in the Budget. If we have a give-away Budget—it will depend on what he does—there will be a very great danger once again of his doing too much too late, putting the engines
1134
into reverse at the time when the economy is moving in the opposite direction already. Then there would be great danger. If he is considering the future of the country, I ask him not to yield to his colleagues in the Cabinet to try to get a quick win for himself and his right hon. Friends.
Over-attachment to control of investment as a means of getting growth operates too lumpily and at the wrong period of the cycle. The Government should use consumption more as a regulator. It acts more quickly. What about the P.A.Y.E.? Why not use the regulator of P.A.Y.E.? I give the idea to the Chancellor. These ideas take about ten years to get through, so I am confident that we shall have to do it and the present Chancellor will not. Never mind, I put these ideas out to get them considered.
What about monopolies? We have not heard a word about that yet, but how can we take seriously a Government who refuse to deal with some of the scandals of monopoly in the country at the present time? One big company with a complete monopoly was investigated by the Monopolies Commission. I asked a Question about it last November, because recommendations had been made by the Commission. The Commission found that the prices of the company, to use the words of the Commission, were "unjustifiably high." The Commission went on to recommend that a review of the company's prices should take place at intervals of two, or at the most three, years.
I asked the President of the Board of Trade what was being done and I got the reply:
"There is nothing in the … undertakings which provides for the company's prices to be approved by the Board of Trade."
Naturally, I got a little angry and I was rather expletive. In reply to a supplementary question, I got the answer:
"it was not accepted by the then President of the Board of Trade that the Board of Trade should control prices …"—[OFFICIAL REPORT, 27th November, 1962; Vol. 668, c. 193.]
of this company. This was in the face of a finding that the company's prices were "unjustifiably high" and a recommendation that the prices should be reviewed at intervals of two or three years. The Board of Trade flatly refused to take any action in respect of

1135
this monopoly. I quote that as an example. This runs throughout other fields. Does the President of the Board of Trade wish to intervene? Perhaps he would like to correct me.
The President of the Board of Trade (Mr. F. J. Erroll): I wish only to say that we took other action. It is not correct, 'therefore, to say that we took no action.
Mr. Callaghan: The right hon. Gentleman says that he took other action. In fact, he took no other action. The plain truth about this company is that its prices are unjustifiably high. My Question was prompted some years after the investigation of a complaint of a further increase in prices, a complaint made by the consumers of this company's products in South Wales. The right hon. Gentleman has taken no action at all either to control the profits or prices despite recommendations made by the Monopolies Commission. I shall not linger on this case, but I should like to go on to talk about tax reforms.
Before doing that, there is one other subject on which I should like to say a few words, but tax reforms are most important. We have talked about it long enough, but nothing has been done about separating personal Income Tax from the profits of companies, but if we got it translated into action I do not believe that that would be enough. I recommend the right hon. Gentleman to read an interesting lecture by Mr. Turvey, of the London School of Economics. The President of the Board of Trade may get some interesting ideas from it.
We ought to have a word or two about sterling, because it is of vital importance to the future of this country. It was argued, I think with some force, that entry to the Common Market would have given us backing for sterling as a reserve currency because of the large growth in the reserve currencies of those countries, but we would also have suffered strain from a higher import bill as well as the strain from the import and export of capital. We might have had additional American capital coming in, but additional British capital would be going out.
Sterling today is vulnerable. We must always recall, and not be frightened of discussing, the fact that sterling is vulnerable and will remain vulnerable so
1136
long as we have such a low level of reserves to finance the world's trade. It is vulnerable because we combine domestic trading with overseas balances. The effect of this, as is well known to the Prime Minister and the Chancellor of the Exchequer, is the constant risk of interference with our domestic expansion.
There has been a post-war failure over eighteen years, for which the Government must bear major responsibility, either to build up our reserves or to disentangle domestic sterling from banking and trading sterling. In a crisis, the City of London and the Chancellor of the Exchequer always put the banks' customers first—by which I mean Britain's customers—even though this has meant, as it did particularly in 1957, holding up British domestic expansion.
At present, both the United Kingdom and the United States are running deficits on their balance of payments. The Europeans are running surpluses. We have a common interest with the United States in this field that is not yet recognised fully by the United States, but which must be the responsibility of the Chancellor of the Exchequer to try to bring home. We need to transform sterling—indeed, the key currency system as a whole—so that every major nation has a share in supporting and supplying the world's international liquidity. We cannot afford balance of payment problems, because they interfere with our expansion.
What steps should, and could, the Chancellor take? He tried—I congratulate him on his effort, as I did in September—at the International Monetary Fund, but he did not get far, because the Americans expected and wished us to enter the Common Market and they were not ready to discuss the future of sterling in the context in which we would soon be mixed up with European currencies in any event.
The things at which the Chancellor should aim are, first, a unified interest-rate policy. I know that it will be difficult to isolate long-term from short-term rates, but every effort should be made to stop short-term money flowing across the exchanges. A unified interest-rate policy would obviously be a means of achieving this. We have heard renewed interest in the Organisation for Economic Co-operation and Development. This is a subject which should be taken up

1137
urgently by the Government so that we may safeguard our own expansionist policies as well as increasing world liquidity.
Next, exchange controls. If movements of capital hamper growth, exchange controls may be necessary and should be faced. Already, there are signs of one or two of our companies moving their capital across to Europe because of the breakdown in negotiations. It would be extremely unfortunate if the unemployed were to feel that capital was fleeing out of the country because of that aspect of the matter.
The Government and the Chancellor should tell companies that in the present state of affairs, they would be behaving in a way that would make for greater economic difficulties for the country, certainly in the short term, if any capital flees to Europe until the situation settles down. If they do not respond to that appeal, the Chancellor must be ready to take other action.
Next, growth of currency swap arrangements and more definite arrangements for short-term loans in times of crisis. There is every reason why the £ and the dollar should support each other, but there is need for a multilateral approach. I want these steps to lead to a genuine multilateral organisation in which I would hope to see each member depositing a proportion of his resources with the central body.
I have tried to discuss Britain's economic position. I do not believe that I have yet mentioned President de Gaulle. [HON. MEMBERS: "Yes, at the beginning."] I forgot. At least, he has not been a central theme running through what I had to say. Most of us believe that our salvation lies to a great extent in our own hands. I believe that the attitude of other countries to us, our attitude to them and our strength in the world depend upon what we do about these problems. We can have all sorts of gimmicks, arrangements and alliances, but unless we get this right they will all fail.
My opinions on relationships with Europe or with the United States are worth no more—but I hope no less—than those of any other hon. Member; that is not the field which I have been commissioned to study. When, however,
1138
Hugh Gaitskell asked me, about eighteen months ago, when my right hon. Friend the Member for Huyton went on to foreign affairs, to look after economic and financial affairs, I was delighted to do it because I believed that this is the whole key to the revitalisation and modernisation of Britain.
Once we get our economic and domestic arrangements right, once we follow social policies that will command the support and the overwhelming agreement of the nation, I have no doubt that the country can make what arrangements it pleases with its allies and that they will be delighted to make arrangements with us. It is ridiculous nonsense to talk about 52 million people being unable, because of certain technological developments, to do a great deal of these things. It may be true of the Concord—possibly, there are one or two things like that—but they are marginal in one sense. We have a great future as a nation. I only wish that we could have heard that from the Prime Minister yesterday.
4.26 p.m.
The Lord Privy Seal (Mr. Edward Heath): On 10th October, 1961, I opened negotiations in Paris with the European Economic Community. In the reply which the Community made to my statement, the spokesman welcomed the statement which I had made and said that everyone sincerely hoped that the negotiations would be carried through to success. At six o'clock on 29th January, 1963, the chairman of the conference said that he was forced to record the fact, with great regret, that the member States of the Community were prevented from continuing the negotiations. I should like to tell the House what led up to this situation.
The hon. Member for Cardiff, South-East (Mr. Callaghan) has devoted the greater part of his speech to the future. Before I come to the lessons of the negotiations and to future policy, I should like to tell the House about the situation in Brussels in January. After the Commonwealth Prime Ministers' meeting we all recognised thas this was the last stage of the negotiations. We put forward proposals for speeding up the meetings and they were accepted. Everybody in Brussels foresaw that exactly as in July and August there had been a long meeting, so, at the end of this stage, another prolonged meeting would be necessary, at

1139
which we could survey the picture as a whole and reach the final settlements.
Shortly before Christmas, the two meetings in January were arranged. Their object, as everybody recognised, was to break the back of what remained. We had all been moving individual items into the position where that could be done. As a preliminary to the meeting, I had the usual contacts with all the delegations, including the French delegation in Paris. Let me now say what remained to be done.
The right hon. Member for Huyton (Mr. H. Wilson)—I am sorry that he has now left the Chamber—and the right hon. Member for Smethwick (Mr. Gordon Walker) both said yesterday that we were trying to create the myth that we were on the point of settling the remaining issues when the negotiations were broken up. There is no myth. The view that these negotiations could be settled reasonably in a comparatively short time was, and is, held by the five other countries in the Community and also by the Commission. They know full well the negotiating position of the United Kingdom and of their own Governments. [An HON. MEMBER: "Surrender."] The right hon. Member for Smethwick is fond of bandying the word "surrender" about the Chamber. It makes no sense whatever in the terms of the negotiations. Shortly, I shall tell him why.
Mr. J. J. Mendelson: The right hon. Gentleman has asserted that the other five countries shared his view about the conference being near to success. Does the Chancellor of the Federal Republic of Germany share that view?
Mr. Heath: The Government of the Federal Republic of Germany certainly share that view and it was Herr Schroeder who took the lead in putting forward this view in Brussels.
Let me, then, deal with the items which remained to be settled. First of all, on domestic agriculture there were the transitional arrangements and on these a great deal of work had been done before Christmas and during the Christmas Recess by the Mansholt Committee, on which the right hon. Gentleman the Minister of Agriculture was playing a
1140
very large part. The situation had been clarified and it was quite apparent that compromises were possible.
Secondly, the supplementary provisions for agriculture. The right hon. Member for Huyton said yesterday that the whole of the permanent arrangements for agriculture had to be settled. That is completely untrue. We had accepted the common agricultural policy and put forward supplementary proposals, namely, intervention in the special regulations for pigmeat and eggs, but these were discussed in the Mansholt Committee and the situation was clearly seen there.
Thirdly, there was the question of horticulture and on this, as I said last night, in interrupting the right hon. Member for Smethwick, there had been a great deal of discussion by working parties, officials and Ministers. The issues are quite clear—they were issues of timing, of the transitional period and of the arrangements for the continuation of tariffs and for grading.
The second item which we had to deal with was the completion of the agreement on temperate foodstuffs which included the infra-Community preference, on which the Community was going to make a further proposal to us, and the subject of New Zealand. I wish to make it plain that it has always been necessary to negotiate the arrangements for New Zealand because they could only be negotiated when it was seen what would happen to the products in which New Zealand was interested, in order that the special arrangements could be completed.
The third item was outstanding tariffs. Here, some 30 items remain and at that meeting I brought them together so that they could be considered across the board. When the Treaty of Rome was signed the Six themselves had 68 items unsettled which were put into the G list. In relation to that ours is a comparatively small number.
The other questions were the institutional arrangements and one or two smaller but still important questions such as Hong Kong and the Federation. The hon. Member for Huyton referred to the question of the African countries. That had already been settled and it remained for the countries to make their

1141
application if they wished to do so. He also referred to the Sugar Agreement; that had already been extended to 1970 and sugar would take its place in the common agricultural policy when we became members and we would have had our full rights there.
The remaining items were beef and veal, of our products, and rice and the financial regulation. On none of these had the Community itself got a position and, therefore, we could not negotiate. If they were not to be settled before the conclusion of the negotiations then, obviously, there had to be a participation arrangement in which our rights would be fully safeguarded. That, too, was known.
The last item mentioned by the hon. Member for Smethwick was that of E.F.T.A.
Mr. Frederick Peart: Is it not a fact that the Government were quite prepared to jettison completely the main safeguards of the 1947 and the 1957 Acts and to accept fully the agricultural policy, even by 1970?
Mr. Heath: Really, the fatuous expressions used by the hon. Gentleman. I wish to describe later what is involved in going into an economic community.
Mr. Peart: Absolute surrender.
Mr. Heath: I now come to the question of E.F.T.A., to which the right hon. Gentleman referred yesterday. We have always made our position clear about E.F.T.A. in the negotiations, and it is on the record for anybody to see. The only point I wish to make is that it was quite possible for us to conclude our negotiations before other countries in E.F.T.A. concluded theirs, because the undertaking was that once they were all concluded they would come into operation on the same date. It is impossible to carry on seven negotiations of this kind simultaneously and bring them to a conclusion at the same time. Therefore, we would have been able to conclude our negotiations and to bring them into operation at the same time.
When we came to our first meeting in January we began to make progress. The Community put to us the proposal for the drafting of the necessary documents and a working party was set up. Then the Community said that they could accept
1142
the proposals we had made about the institutions. The right hon. Gentleman the Member for Huyton said yesterday that he was completely unable to accept this, that he did not in any way accept
"a total collapse of what should have been our position on voting rights and on the extent of the veto."—[OFFICIAL REPORT, 11th February, 1963; Vol. 671, c. 964.]
I completely fail to understand what he means by this. The proposal on institutions which we put forward was that the principle behind the Treaty of Rome that qualified majorities should be two-thirds should be continued in the enlarged Community. The right hon. Gentleman and his hon. Friends seemed to take the view that the blocking power should remain one large and one small country regardless of the fact that the Community had been enlarged. It has never been the intention of the E.F.T.A. countries that they should try to maintain a veto in the enlarged community as a whole. Therefore, I cannot accept the argument that our institutional proposals were bad ones.
The Mansholt Committee completed its report and it was presented to the full conference. At this point I said if suitable transitional arrangements could be obtained we would accept 31st December, 1969, as the end of the transition period, provided that horticulture was exempt from that. I would ask the hon. Gentleman the Member for Workington (Mr. Peart) whether he would not consider these matters on their merits and ask himself whether British agriculture could not have made this change by 1969, because I believe it could.
Following this a compromise began on the particular items with which we were dealing in the transitional period. The next day we met we made proposals dealing with tariffs right across the board and the conference began shaping its decisions, but on the Thursday the leader of the French delegation intervened and asked for the suspension of the negotiations.
I hope that I have demonstrated to the House that the items which remained to be settled were important, but that, viewed in principle, the greater part of the work had already been done on them and that if the will had been there those negotiations could have been brought to a successful conclusion.

1143
Let me now turn to the reasons given for interrupting the negotiations. They have been given at the Press conference in Paris, in the French Assembly, in the Brussels conference itself, and on television. When one analyses these reasons one sees that some are fundamental. One is that this country is an island—that cannot be denied—and that it has what is said to be a different background from some other European countries. That is a matter for dispute, but the answer to all of these fundamental points is surely this: that they were exactly the same when we began the negotiations.
There has been no change during the course of the negotiations, but they certainly fly in the face of the Treaty of Rome itself, which, in it preamble, says:
"Determined to establish the foundations of an ever closer union among the European peoples."
It then goes on, in Article 237:
"Any European State may apply to become a member of the Community… The conditions of admission and the adjustments to this Treaty necessitated by it shall be the subject of an agreement between the Member States and the applicant State…"
Let me turn now to the actual reasons for asking that the negotiations should be suspended. First, it is said that we have not accepted the Treaty of Rome. This has become a parrot cry, unworthy of intelligent men. Article 237, which I have just quoted, says that the conditions of admission shall be the subject of an agreement, which obviously has to be negotiated. Therefore, any special arrangements had to be negotiated on the basis of the Treaty itself.
We accepted the Treaty on 10th October, 1961. Not only did we accept the Treaty, but we accepted all the protocols—the protocol which allows East German trade to be counted as West German trade, the protocol which excluded Luxembourg agriculture until 1970, and the protocol which was specially put in for France. Their balance of payments position was so weak when they signed the Treaty of Rome that it was necessary to maintain their export aids and their charges on imports. We accepted all these protocols. We had no dispute with them. We say that they were justified, and we believe that they were right. We
1144
accepted the Treaty of Rome, and it is pointless for anyone to go on saying that this is the cause of the breakdown.
It was said that we had not accepted the common external tariff, but we accepted this on 10th October. We did not ask for it to be averaged, as we were entitled to do. We accepted the rates. We put in a small number of applications for changes, and when the negotiations were suspended some 30 items were left, but there were difficulties over only four of them.
It is said that we accepted a common agricultural policy, but not the agricultural policy. When I made that statement in Paris there was no common agricultural policy, and I said, therefore, that I would accept a common agricultural policy, reserving the right to negotiate on it. When the common agricultural policy began to be formed, we accepted that with the supplementary points which I have mentioned, which, we believed, could improve the regulations as they were. But is there anything very strange in proposing intervention in those two regulations when intervention already exists in the regulations for cereals?
It has also been said that we would have tried to maintain our present world system and combine it with the Community system. That is quite untrue. As Dr. Mansholt has explained, we had accepted the whole of the mechanism of the Community itself during the transitional period and the Common Market period.
Then it is said that this is a developing club, and that it is very difficult, therefore, for us to join, but this was the position in 1961. Does this mean that no new member can join until 1970, the end of the transitional period, and is it not therefore strange that full membership should have been offered to Denmark a month ago in Paris?
It is said that we made no serious progress in the autumn. We had, in fact, covered a large amount of Commonwealth items, alternative arrangements for association, Aden, Malta, the High Commission Territories; we had dealt with Article 234; we had had discussions about E.F.T.A., tariff movements, processed foodstuffs, and done the groundwork on transitional arrangements for agriculture.
It is said that we had done nothing on aluminium. On aluminium, lead, and

1145
zinc, the Community had no position to put forward for negotiation. It is said that we had done nothing on three agricultural regulations. The Community itself had no position. We were, therefore, not able to negotiate on them.
It is said that we had done nothing about the political undertakings in the financial regulation. These political undertakings, if they exist, had never been presented to us when we were awaiting a further position from the Community on the financial regulation.
Finally, it is said that we had not made the position clear over E.F.T.A. At the last meeting but one before Christmas, which I reported to the House, it was stated by the Community that as regards E.F.T.A. it foresaw that if our negotiations were successful Norway and Denmark could speedily follow. The Community went on to say that it could not foresee the end of the negotiations with the other four members of E.F.T.A. by the end of 1963. We therefore agreed that no decision could be reached on this at the moment, and that we would have to wait and see how the negotiations went.
Our position about E.F.T.A. has always been absolutely clear It has been quite plain to the Community that we should apply the common external tariff to all other countries other than those who were members of, or associated with, the Community or for whom special arrangements were made in the negotiations.
Mr. Gordon Walker: Is not the right hon. Gentleman now admitting that we could not have come to a final decision until 1964 when we would know what had happened to the E.F.T.A. neutrals, and that, therefore, it is not true that the whole thing was on the point of settlement, as he has been arguing for the greater part of his speech so far?
Mr. Heath: I nave been trying to explain that the negotiations could have been brought to a conclusion. The Prime Minister said yesterday, and I said in Brussels, that we were on the point of reaching a conclusion to the negotiations. I did not say that we were on the point of going into the Community.
Mr. Gordon Walker: Ah.
Mr. Heath: "Ah", says the right hon. Gentleman. At last he understands. I am deeply moved to think that after 16½ months of negotiation we have reached the stage at which the right hon. Gentleman understands the E.F.T.A. position.
Mr. Gordon Walker: We for our part are glad that for the first time the right hon. Gentleman has admitted it.
Mr. Heath: So, with the intervention of the French Foreign Minister, we came to the end of these negotiations.
The right hon. Member for Huyton has often said that we entered into these negotiations to deal with a particular period of economic weakness. Lest he try to make another myth out of this point, I want to deal with it, because it has a bearing on the future of our relationships with the Community with which he dealt at some length yesterday.
This phase of the negotiations began in July, 1960. It began when this House passed a Motion which was very similar to the wording, I think quite unconsciously, of the hon. Member for Cardiff, South-East. The Motion was:
"That this House recognises the need for political and economic unity in Europe, and would welcome the conclusion of suitable arrangements to that end, satisfactory to all the Governments concerned."
The hon. Member for Cardiff, South-East said this afternoon that he thought it was essential to find an arrangement between the economic groupings in Europe to achieve economic unity. I do not differ from him in that, but following on that my right hon. Friend the Prime Minister, in August—that Motion was passed in July, when my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) made a very distinguished and well-remembered speech—went to Bonn, where a communique was issued in which Chancellor Adenauer and the Prime Minister
"agreed that it is essential in the interests of European unity that a solution should be found of the problems arising from the existence of two economic groups in Europe. They undertook to study, in co-operation with their respective partners"—
that was E.F.T.A. for our part, and the Community for their part—
"all possible solutions of these problems, and to exchange ideas."

1147
This process therefore began in July, 1960, and was continued until 29th January last, and it was not a decision which was suddendly taken in the economic circumstances of July, 1961.
The meeting at Bonn was followed by a series of bilateral discussions with the German, French, Italian and Benelux Governments, and what emerged from these discussions was this, and it is very important for the future. What emerged was that a group arrangement between the Community and E.F.T.A. was entirely unacceptable to the Community. The right hon. Gentleman yesterday suggested that we should consider a group arrangement between E.F.T.A. and the Community. What I am telling him is that this was examined more than two years ago and found unacceptable to the Community. He suggested that the Community should join E.F.T.A. as a single member. This, too, was examined at the same time and found unacceptable to the Community.
Mr. Harold Wilson: Then.
Mr. Heath: It was found unacceptable then, and I believe it to be unacceptable today. There has never been a suggestion in these discussions that the Community would accept a free trade area arrangement, a group arrangement, with E.F.T.A., or itself becoming a member of E.F.T.A.
What emerged was that each E.F.T.A. country could enter into its own relationship with the Community, and the fourth thing which emerged clearly from the bilateral discussions was that, if we were prepared to apply for negotiation for full membership, the difficulties previously encountered in the free trade area negotiations would disappear, and in that context we discussed the problem of the Commonwealth and of British agriculture.
This attitude was further endorsed by the speech of the French Foreign Minister, at Strasbourg, in 1961. He said that the idea of creating a free trade area appeared to have been abandoned, and he obviously approved of that. He went on to say:
"… we ourselves have always said that the Common Market was and would remain open for any other European country to join if they wished. We still believe that for some people at least this is a worthwhile prospect and probably the only satisfactory solution. We
1148
still hope that there will be a change of mind in certain quarters whence the response has so far invariably been negative."
Obviously, an indirect reference to the United Kingdom itself.
So it is important to remember for the future that the Community has shown no desire and still shows no desire for a free trade area arrangement, or for the Six to join E.F.T.A., or for group arrangements between the two organisations. In this, I hope that the right hon. Gentleman and his hon. Friends, and, indeed, the whole House, will be realistic. We can never get our relations with Europe right unless we are realistic about what the Community is prepared to do and what it is not prepared to do.
Mr. H. Wilson: The right hon. Gentleman does not seem to have been very realistic about what the Community, at the end of the day, was prepared to do after eighteen months of negotiation. We understand his bitter feelings about this. He has shown great restraint. However, is it not a fact that the negotiations of the last eighteen months were all directed to one end, namely, of Britain going in? Naturally, all alternative propositions would be rejected.
The right hon. Gentleman has been travelling on one bus in one direction. Now that that bus has broken down, should he not look again at things which might have been rejected two years ago, or three years ago, or four years ago, to see whether there might not be a willingness to accept them—he may think as a second best, but at any rate better than the present outlook?
Mr. Heath: I quite appreciate the right hon. Gentleman's point. I hope that I was not showing any bitterness. I was merely stating this as a matter of fact.
Mr. H. Wilson: I did not mean that the right hon. Gentleman was showing bitterness, with us, but with them.
Mr. Heath: I hope that I am not showing any bitterness with them, because that is the view they have expressed.
I want to come later to the question of alternative arrangements and say something to the House about it. Before I do so, I should like now to indicate some conclusions from these negotiations. First, I believe that it was

1149
absolutely right to embark upon these negotiations. Yesterday, the right hon. Member for Huyton tried to discount this. I believe that for the reasons I have given—because of the preliminary investigations we made, for the political reasons which the hon. Member for Cardiff, South-East has completely ignored, and for economic reasons—it was right to enter into them. I would have thought that recent events have demonstrated more clearly than anything else the political importance of our endeavouring to become members of the European Economic Community.
The second conclusion about which want to say a few words is this. I believe that there is still in the minds of right hon. Members opposite a fundamental misunderstanding of the nature of the European Economic Community. What they entirely fail to appreciate, as far as I can understand, is that this is a Community based on a Treaty which is itself a Customs union, which believes in the Treaty and believes in the Customs union and is going to maintain both. Therefore, if one enters into negotiations with the Community one is entering into them for membership of a Community based on a Treaty which is a Customs union.
Mr. H. Wilson: And the agricultural policy.
Mr. Heath: Yes, and the agricultural policy, because that is the policy of the Community.
When considering the approach which one makes to the Community, it must be remembered that we did not go into the negotiations to change it from a Customs union. We did not go into the negotiations to wreck the Treaty of Rome. We went into the negotiations to endeavour to make suitable arrangements for the special interests of the Commonwealth and agriculture. That was the purpose of these negotiations.
Therefore, the right hon. Gentleman's phrases—"surrender" and "continuous concessions"—bear no relevance to a negotiation which is about becoming a member of a particular organisation. If the right hon. Gentleman applies to join an organisation and says that he proposes to stand by the rules, does he therefore say that he has made a surrender or an abject concession? It is a completely
1150
false approach to the whole problem of negotiating with the Community.
Mr. H. Wilson: Since the right hon. Gentleman, in his 10th October, 1961, speech, had no intention at all of accepting a final settlement for the Commonwealth, which he looked like accepting when the negotiations finally broke down, since at that time he had no idea of the crippling restrictions which would be forced on this country and the Commonwealth by an agricultural programme which, as he said, he could not have accepted then because he did not know what it was going to be, surely he is wrong now in saying that to have accepted the principle of the Treaty of Rome automatically involved accepting everything he has since accepted? His big mistake, as we told him at the time, was the acceptance of the agricultural programme, with all that it meant for the Commonwealth.
Mr. Heath: The right hon. Gentleman may argue that it was wrong to accept it. What I am saying is that if one is to become a member of a community the obligation is to accept the organisation of that community, except where one is able to negotiate special arrangements. This is what we have been doing. [Interruption.] If the right hon. Gentleman wishes to discuss the Commonwealth arrangements I will go on to that question now, because I think the House might well be reminded of what we have achieved in these negotiations in the way of special arrangements.
We reached agreement aver the whole field of economic union with the Community without difficulty. In agriculture, we were able to negotiate the additional factors of the Annual Review and the long-term assurance. For the Commonwealth, we were able to negotiate association for Africa, the Caribbean and the Dependencies. For the Asian Commonwealth, we were able to negotiate special arrangements of a very comprehensive kind. For Canada, Australia and New Zealand we were able to negotiate the whole complex for temperate foodstuffs which I have described frequently to the House. In addition, we were able to negotiate the special undertaking concerning New Zealand. Those were all special arrangements, in addition to which there were Malta, the High Commission Territories, Aden, and so on.

1151
Last night, the right hon. Member for Smethwick said that we had broken our pledges to the Commonwealth. I challenge him openly on that point. There is no pledge we have given to the Commonwealth in these negotiations which has been in any way broken.
Mr. H. Wilson: Pledges were given and they have been broken.
Mr. Heath: The pledges we have given to the Commonwealth are to protect their special interests. The right hon. Gentleman has constantly gone back to 1957, 1958 and 1959. Those were not pledges in these negotiations. They were pledges concerned with the free trade area negotiations, which was an entirely different conception.
Mr. H. Wilson: The right hon. Gentleman is quite wrong. The 1959 pledge was the one on which the Conservatives fought the General Election. They cannot wriggle out of this. I quoted all these pledges. They are on the record—in HANSARD, 8th November. The right hon. Gentleman had better look them up. They were made by the Prime Minister and by the present Chancellor of the Exchequer. If the right hon. Gentleman is now saying that the decision to enter into negotiations meant that these had been repudiated, we should have been told that when they went into negotiation.
The right hon. Gentleman knows that the Prime Minister gave as a reason for not wanting to go into the Common Market his insistence that we should allow free entry to Commonwealth agricultural products. The Chancellor of the Exchequer said, "We cannot get rid of Commonwealth Preference". Will the right hon. Gentleman tell us when those pledges were repudiated before the ngotiations began?
Mr. Heath: The Prime Minister's pledge, when he explained that, was during the Free Trade Area negotiations, and the right hon. Gentleman knows that perfectly well. In August, 1961, the House authorised us to go into negotiation with a Customs union. In the statement I made in Paris on 10th October I said that free entry would not be possible. The right hon. Member for Smethwick, yesterday, also said that we had undermined the interests of the Commonwealth in these negotiations. There is
1152
no justification for that statement in what we had negotiated in Brussels.
The next conclusion I want to mention to the House is the impact of the negotiations on the Community.
Mr. George Brown Mr. George Brown (Belper) rose—
Mr. Heath: No, I have given way so very much.
Mr. G. Brown: I think that the right hon. Gentleman should hear me.
Hon. Members: Sit down.
Mr. G. Brown: I am sorry, but I have to deal with this later. It would be useful to us both to know that we are talking about the same thing. The Lord Privy Seal said that he was authorised in 1961 by the House to go into a Customs union.
Mr. Heath: Into negotiation.
Mr. G. Brown: No. In fact, the right hon. Gentleman seemed to me to say that he was authorised to go into a Customs union. This will show hon. Members opposite why it is important to clear the matter up. As I understand it, the Prime Minister in August, 1961, asked only for authority to negotiate to see whether a basis for negotiation existed.
Mr. Peter Kirk: No.
Mr. G. Brown: I have sent for the quotation, so the hon. Gentleman had better be careful.
Mr. Heath: I said that we were authorised to enter into negotiations with the European Economic Community. That was the position. [HON. MEMBERS: "When?"] On the basis of the Resolution of the House of Commons and the House of Lords.
I would now like to say a word about the impact of all this on the Community itself. It is a fact that the Community, after these negotiations, will not be the same again, not only because of the way in which the negotiations were broken off but because of the impact of the arrangements we made on the Community; those for the reasonable price levels, reasonable outlets, world commodity agreements, comprehensive agreements and agricultural reviews and assurances. Many of these may not come to pass, but their impact has been made and will remain.

1153
The next point to remember is that, for our part, we learned much about Community policy which is not in the Treaty of Rome or the regulations. The one particular thing to which I wish to call attention is this. The Community is fully prepared to have special and preferential arrangements towards the underdeveloped and developing countries of the world; and those we were able to negotiate to a large degree. The Community has decided as a matter of policy that it will not discriminate against the remaining countries of the world. This, therefore, was the problem which always faced us regarding Canada, Australia and New Zealand after the end of the transitional period. This argument was always fully and fairly put—that three highly-developed countries with standards of living above those of any European country or the United Kingdom were not entitled in a multilateral system of world trade to have preferential arrangements continuing after the transitional period. That was one of the most important items of policy we met at Brussels during the negotiations.
I turn now to the form of the negotiations. It was between the Six Governments, the Commission and ourselves. We understood the reason for this, but it was not a very happy arrangement. At times we got away from it. At the time of real negotiation there were seven Governments around the table—and the same applied in the Mansholt Committee. I believe that the same procedure would have worked well in the last stage.
We often discuss speed in the House of Commons. On every occasion the British delegation took upon itself the onus of pressing for the negotiations to move forward, commensurate with thoroughness, and we were able to achieve a considerable amount. In this connection, I would like to comment briefly on two things. The machinery in Whitehall and in the delegation, which was a new creation for this purpose, worked extraordinarily well, but even more important, the consultation which went on continuously in Brussels and London, with the Commonwealth and E.F.T.A. countries, worked most successfully. I can recall only one slip over one item in the whole of the negotiations and I believe that it is because that consultation worked so efficiently with all these countries that
1154
there has been no damage to the Commonwealth or to E.F.T.A. Indeed, I believe that we have come closer together in the course of these negotiations.
What about our own part? To obtain these special arrangements it was necessary to justify each item on its merits. We were negotiating with people who were looking at hard economic facts in a very realistic way—a salutary process which deserves to be continued. In particular, we had to apply it to individual items of Commonwealth trade and agriculture and it gave us an insight into the strength and weaknesses of our trading pattern and agricultural structure.
It is interesting to note the view of industry over these past two years. It started with many fears about many industries. It has now changed, not only to the general desire to enter the Common Market but to a deep anxiety that we should go in, with the realisation that the people who would have had difficulties would have been the marginal firms in particular industries. It was there that greater efficiency was required. In one or two places in agriculture a major effort would have been required, but I believe that it could have been achieved.
The next point I wish to make concerns the work of the Commission and this has been much discussed. It took a major part in the first stage, very little in the second and a prominent part in the last. It has a place in our modern technological society which is not just administrative. It has a major task to play in the putting forward of proposals. The power of decision rests with the Ministers and there is no doubt that more democratic control is required, and the Community is well alive to that fact. But the machinery was created for positive action in a modern technological world, no longer a world of the nineteenth century—of liberal administration and nongovernmental interference—but a world requiring creative, positive action based on a full knowledge of the facts, razor-edge analysis and constructive thought. Whatever one may say about the Commission, it is a notable attempt to deal with the problems of a changing world.
The last conclusion to be drawn from the negotiations is this. In making this application to enter the negotiations we

1155
were prepared to face up to the need for change in almost every aspect of our national life. We examined the whole basis of our policies and looked at all the assumptions on which they stood. The right hon. Member for Huyton and the right hon. Member for Smethwick yesterday said that we must have confidence in ourselves. They were the first to undermine that confidence in ourselves in the negotiations. [HON. MEMBERS: "No."] Yes, it was hon. Members apposite who played on fears and said that we would be outwitted by the other members of the Community. They made demands for complete and absolute safeguards on every item of our national life, not only now but for ever.
When the members of the Community heard this and heard hon. Members opposite talking about us being a great Power they thought that this was incompatible. In fact, they expected us to use a great deal of influence. They knew that we could do so. They wanted us to and in those negotiations, had we succeeded, we would have been able to use our influence in the Community for the good of the Community.
I now turn to the present position. We recognise that the way to full membership is at present barred. It is a great loss to the Community countries as well. The Five countries recognise that, but it is also a loss to France, and they recognise that their farmers will not be able now to obtain a share of the British market. They recognise, too, that the likelihood of getting world commodity agreements at good prices in cereals is much less. This was fully recognised throughout the negotiations.
The question asked was whether there could be some other relationship short of full membership. No alternative arrangements have been offered to us by the Community and it does not lie in the hands of one country to offer that. In particular, the French Government have never discussed this question with us, either privately or in the negotiations. They have never explained what President de Gaulle meant by "association", but they mentioned it to many other people as long ago as last spring. We recognised it then as a kite being flown to see whether we were prepared to accept just the economic arrangements,
1156
so that it could be said that we had no genuine interest in the political union of Europe. I have often explained our reasons, both the political and the economic ones. Those criteria were always before us during the negotiations and any alternative must be judged against those criteria; political and economic.
Some hon. Members have talked of association; broadly speaking, the position is this. Full membership gives one all one's rights in all the activities of the Community. As an associate one does not have such rights. One tries to use one's influence and these facts must be weighed in the balance if or when any alternative arrangement is put forward. I do not wish to go further into the details of this, but I think that we agree on three things.
First, if there is to be any alternative arrangement, whatever it may be, it must come from the whole Community. Secondly, it cannot involve another long set of negotiations; and that point was made by the Opposition Front Bench yesterday. Thirdly, the good faith of all those in the negotiations must be demonstrated from the beginning. The will to succeed must be there, as apparently it was not there in our negotiations for full membership. If any alternative is put forward in this way then, of course, it is bound to receive consideration.
What of future developments of another kind? The right hon. Gentleman the Leader—[Laughter.]—the right hon. Gentleman the Member for Huyton castigated my right hon. Friend yesterday for, as he said, not putting forward any alternative proposals. But what happened when he himself came to that point? He did not propose any alternatives. What he said was:
"What we are really discussing today is not a packaged alternative to the Common Market, but a plan for the future of Britain…"—[OFFICIAL REPORT, 11th February, 1963; Vol. 671, c. 967.]
The right hon. Gentleman put forward a list of countries with which we could trade—incidentally, the list was already known to us—and various other minor proposals.
Surely the important point is that we continue to develop trade on a multilateral basis. Everything that the hon. Member for Cardiff, South-East said confirms that the basis for our trade should

1157
be multilateral agreements. I know that some of my hon. Friends do not agree with this and would like to see increased development of a preferential area, but that is not the basis on which our trade has been developing since the war. It is interesting to note that whereas, in 1938, our exports and re-exports covered less than 60 per cent. of the cost of our imports, in 1955, under multilateral trading arrangements, they covered 75 per cent., and by 1962 88 per cent. That is in the multilateral trading world.
We have been asked to play our full part in the Kennedy Round. Of course, we shall do that. I did not quite understand the right hon. Gentleman's point about everyone sitting on one side of the table with the Community on the other. Surely the confrontation is bound to be between the United States and the Community, because they are the two major economic forces, and we play our part in addition—and the Commonwealth, of course. It would have been a better balance if we and the E.F.T.A. countries had become members of the Community —Norway and Denmark; but that has not come about.
I want to say one word about the effect of the Kennedy Round. It has never been our intention, although this has been said in European capitals, that Europe should be swamped by American goods or American goods dumped in Europe as a result of action taken under the Kennedy Round. There must be a fair balance. I do not wish to deal with trade in other parts of the world and the Commonwealth, because that was dealt with by my right hon. Friend the Prime Minister and my right hon. Friend the Secretary of State for Commonwealth Relations yesterday, but I want now to deal with E.F.T.A. and with the E.E.C. in particular.
Mr. Philip Noel-Baker: Before the right hon. Gentleman leaves the subject of the Kennedy Round, he should not imply that we shall not take our full part in all these negotiations. Is it not a fact that as an exporting and importing nation we are much more important than the United States?
Mr. Heath: I am afraid that the right hon. Gentleman has missed my remarks. Of course we will play our full part in the Kennedy Round, but the two main
1158
groups are bound to be the United States and the Community.
Mr. P. Noel-Baker: Why?
Mr. Heath: Because of their size and their tariff structures. But that does not alter the fact that we shall play our full part.
I turn now to E.F.T.A. The right hon. Member for Huyton said that we should strengthen the links in E.F.T.A., but he did not explain what that meant.
Mr. H. Wilson: The right hon. Gentleman knows perfectly well.
Mr. Heath: I do not. It was a metaphorical description which seemed to bear no relation to reality.
I will tell the right hon. Gentleman what we should do in E.F.T.A. It is to expand the trade among E.F.T.A. countries and to build it up on the basis of the Stockholm Convention. British industrialists have never taken full advantage of the E.F.T.A. markets because of the lure of the Common Market itself, and it is now time that they did.
Mr. H. Wilson: What about the Commonwealth?
Mr. Heath: I had said that as my right hon. Friend has already dealt with the Commonwealth, I propose to deal with E.F.T.A. and the E.E.C.
At the E.F.T.A. meeting, we can discuss this development of trade. I hope that at least we shall continue to keep pace with the Community in tariff changes. I recognise, too, that Denmark and Norway will want to discuss agriculture and fisheries at these meetings and we have an understanding of the difficulties of these two countries. I believe, too, that there should be a greater appreciation in the E.F.T.A. countries themselves and not only in the United States, where it exists, of the opportunities available for trade there.
We must also recognise that, as a result of the break-up of the Brussels negotiations, businessmen will not gain the advantages of an immense home market, nor—and this was the point which was overlooked by the right hon. Gentleman—the advantages of certainty in that very large market. Therefore, the effort required will be all the greater.

1159
I come to the question of our future relations with Europe. The European Economic Community will remain the largest and strongest grouping in Europe. It has sustained a severe blow to its confidence, but it will continue to develop according to its plan. Our desire has always been to join wholeheartedly in the building of a wider Europe and to do nothing to obstruct it, and this attitude will continue to govern our policy. We start with all the important assets which we gained in the negotiations. We have to keep open and enlarge the channels of communication and consultation and we shall seek to co-ordinate our policies with the Community as far as possible.
In the economic field, we shall expand and strengthen the permanent mission to the European Communities, not only with the Foreign Office element, but also with representatives from other Whitehall Departments. We shall maintain close contact with them, enabling both the Community and ourselves to take account of each other's interests. Secondly, we shall make more intensive use of bilateral machinery. Already, Anglo-German, Anglo-Italian and Anglo-French machinery exists. Thirdly, I hope that firms and trade associations in this country will strengthen and develop their contacts with the Commission and with their opposite numbers in Europe. Not only will that help exports, but it will help to safeguard our interests in the developing Community.
On the political side, since the breakup we have discussed political co-operation with the majority of members in the Community and they agree that it is urgent that there should be closer political arrangements between us. I described the Europe we would like to see in my speech to Western European Union in April, last year—strong and stable, a more equal partnership in N.A.T.O. with the United States, outward looking, associated with all its former friends and territories. We wanted to strengthen Europe, not to make it lose its distinctive European characteristics, but to enable it to play its part in the West as a whole.
The right hon. Gentleman asked how this should be done. He proposed a conference of the heads of all the European countries, and he brought in
1160
Yugoslavia, but missed out Spain. I am not arguing, but perhaps the right hon. Gentleman will not describe it as "all" the European countries. What are they to do when they meet? For many of them it would be embarrassing, for neutral countries who never wish to take part in general political cooperation.
However, where I do agree with him is that we can use O.E.C.D., not, as he seemed to suggest, on the political side, but on the economic side. This is not an original suggestion, of course.
We have begun to examine with our friends the question of the machinery to be used for political co-operation and I agree with the right hon. Gentleman that the first forum must be N.A.T.O. However, consultation in N.A.T.O. does not exclude a full measure of agreement between those in Europe who think alike on these questions.
At the W.E.U. meeting I said that a general view of European defence might emerge in a wider Europe. That is still our view. During the last few weeks the Nassau Agreement and the work which is now in train to give effect to that agreement have strengthened the Atlantic Alliance by giving it a nuclear capacity for the first time. They have also strengthened the European voice in the Alliance since N.A.T.O. forces are to be targetted in accordance with N.A.T.O. requirements.
Whatever is said elsewhere, the policy of Nassau is certainly not in contradiction with our European policy. Indeed, the Nassau Agreement has been warmly welcomed by the majority of our allies in Europe.
Side by side with N.A.T.O., we have other European organisations, exclusively European, of which we are members. Western European Union is the only formal point of political consultation between all seven Powers recently engaged in the Brussels talks.
There is much to be said for maintaining our relations with our friends through an existing organisation. I see that Dr. Schroeder, in the Bundestag last week, took the view that if there were to be a meeting in Western European Union it should be to seek more progress than could be achieved by bilateral talks. With that I agree. I believe that W.E.U. can

1161
contribute positively to the present situation. But we should also make use of all the opportunities available, including the Council of Europe for cultural matters. Our attitude is widely reciprocated in Europe. We are encouraged by this, and we shall do everything possible to move closer to the European countries and to work with them to create the sort of Europe that we want to see.
To sum up. The work on which we have been engaged, and in which we have been trying to get a wider unity in Europe between the Community and E.F.T.A. countries, with far-reaching connections with the Commonwealth and the associated States, has had an immense appeal for our people. Why should that have been so? It is because it seemed to them, in some way—with all its imperfections—to be looking towards a better society in Europe as a whole, because it seemed to be working for something which was bigger than themselves and, above all, because it gave them a sense of purpose.
Of course there have been divisions in the country. There have been many honourable opponents, and there have been others who, alas, have played upon the people's natural fears of change. They have played upon these fears and upon old national hatreds. But it has been the great debate of modem times, and the debate will continue, because the relationships between ourselves and Europe are bound to be of the greatest concern both to ourselves and to the Continent.
What the House has been discussing is what our sense of purpose is today. Many have spoken of the need for this, but few have ventured to define it. The hon. Member for Pembroke (Mr. Donnelly), however, in a speech which I admired, did endeavour to do so. Our purpose must be to develop the potentialities we have along the lines that we have been discussing in this debate and to do so with determination, with clear thinking and with far-sightedness—to strip away pretence, and to live up to the standards of our own integrity. That must be our purpose in the phase which is now opening before us.
Right hon. Gentlemen opposite say that after the breakdown in Brussels Her Majesty's Government cannot tackle this task. In fact, the reverse is the case. We can do it the better, knowing that we did everything possible to achieve success in
1162
the venture on which we embarked in Brussels. We have nothing with which to reproach ourselves. It was through no fault of ours that the venture was brought to nought. Thus we can go forward, with a clear heart and mind, and with determination and ability, to deal with the tasks which lie ahead.
5.23 p.m.
Mr. Austen Albu: Both sides of the House will agree with the Lord Privy Seal that this has been perhaps the greatest political debate in modern times—a debate which, as he said, is still continuing, and will probably continue for the rest of most of our lifetimes. We can also probably agree that the right hon. Gentleman made a brave attempt, with his usual clarity, to defend the negotiations that he has been conducting and the position of Her Majesty's Government.
If the Government are to blame for the situation in which they now find themselves I suggest that it is because they rushed into these negotiations without diplomatic preparation, and with all the appearance of entering them not as a matter of policy but for the sake of expediency and, almost, in desperation.
I agree that my party may have missed a great opportunity some years ago. Possibly we failed to realise the growing public opinion in Europe for European unity and, particularly, the degree of success that would come in the economic recovery of the European countries, based as it was—to an extent which we did not all recognise—on a high degree of purposive planning in most if not all countries. I changed my own mind about this question when I realised the essentially pragmatic nature of the Community which had been set up. In fact the Community is so pragmatic that its advance will now be delayed by the action of one man.
As has been said by hon. Members on both sides of the House, the end of the negotiations is not the end of our relationship with Europe. I believe that Europe will remain the area of the world which, in the future, will have the most direct effect upon our lives, and in which the policies of this country can have the most direct political effect. It may be that the giant Powers which now dominate the world with their nuclear weapons will be influenced by the combined opinions of a group of nations, but

1163
they are hardly likely to take seriously the opinion of any one of that group.
I also agree that the Commonwealth is not an alternative to the European Economic Community, because all the political tendencies of the Commonwealth are towards a loosening rather than a strengthening of the ties between its members. This tendency exists for well understood historical reasons. Those who are in the minority, which perhaps on occasions exercise some influence—generally back benchers who are Privy Councillors —who believe that there is some future in a sort of Commonwealth free trade area, or in any sort of free trade area within a group of such nations, fail to understand that a policy of free trade is not one for developing countries. Such countries must maintain for themselves the right to protect their growing industries.
This consideration applies to the vast majority of the people of the Commonwealth, and to every single Commonwealth country, whether its standard of living is above or below our own. Even countries like Australia and Canada, whose standards of living are above ours —although I am sometimes not sure about Australia—will continue to protect their industries until they have built up a much larger industrial structure than at present.
But the main danger of the present situation is not an economic one; it is a political one. At present, all the signs are that the main objectives of policy in both the United States of America and the Soviet Union are to prevent the use of nuclear weapons. We must all welcome this, as a first priority in foreign policy, without any feelings of hurt pride, because it inevitably takes place over our heads with ourselves playing only a minor part.
I wonder whether hon. Members have read the remarkable article in last week's L'Expresse by Mr. Servan-Schreiber. He used to be generally considered to be anti-American, and his newspaper to be a neutralist newspaper. But Mr. Servan-Schreiber writes that the slogan "Yankee Go Home" is now an out-dated expression of both the Stalinists, on the one hand, and the reactionaries of "Algérie Francaise", on the other; that any further development of these anti-American policies, especially in France—
1164
the policies now being pursued by President de Gaulle—can only encourage a resurgence of isolationism in the United States before any agreement has been reached with the Soviet Union, and that this would be nothing but disastrous for Europe and the whole world.
Although any movement towards isolationism would be resisted by the present Administration in the United States, such developments in Europe are undoubtedly of great danger for us and the rest of the world. The idea that Western Europe can be defended without the United States, now or in the foreseeable future, is completely and absolutely ridiculous.
It is, therefore, extremely important —and this is nothing new; practically every hon. Member has mentioned it—that we should maintain the closest ties with Europe, centred, as it largely is, round the European Community, so as to maintain the unity of Europe and to assist Europe and all our friends there who wish to maintain an outward-looking policy, and the Western Alliance. But as my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said in a memorable speech, our influence in Europe, as in the world, is entirely in proportion to our economic strength.
I am not ashamed, as my hon. Friend indicated that he was not, towards the end of his speech, of appearing to be a materialist. I do not like questions of national economic revival being expressed in moral terms. There is a great deal to be said for moral attitudes towards the distribution of the product, but not much to be said for a moral attitude in its generation. In a democratic, industrial country like this, liberal, outward-looking and generous policies are possible only on the basis of economic expansion.
Economic stagnation or contraction only lead to bitterness between groups, xenophobia and racial prejudice, and to every decent worth-while project, such as better hospitals, the regeneration of our cities, the building of a national theatre, higher old-age pensions, enlarged universities and better education, being held down because we have not the money.
In such circumstances all we get is bitterness and frustration the sort of xenophobic mood which one felt in the country in the week after Suez. That is

1165
a mood which I never want to feel in our country again, but it is one which might return if we had another round of economic stagnation or contraction. That is the recipe for national decline. National morale is dependent on a feeling of national purpose, which, in present conditions, is inseparable from economic expansion. This does not mean just giving people more money to spend, for that neither stimulates their feeling of national purpose nor does anything to stop the underlying sickness of our economy.
My hon. Friend started his speech—and I am glad that he did so—by emphasising what most hon. Members have been saying, that the basic problem is increasing exports or reducing dependence on imports. I presume that there is nothing much more to be done about the latter without lowering our standard of living. Therefore, the question basically is: how can we increase exports? It seems a dreadfully mundane question, but so much hangs upon it. Indeed, our whole future hangs on it. I am, therefore, not ashamed to come to some more detailed matters
First, are the Government doing all they can in the short term? For instance, there is the question of terms of credit. I have always been sceptical about greatly extending credit terms. If one has not a surplus one cannot lend money, and extended credit is a form of lending money to people who are buying one's goods. But if the future of our export trade is increasingly to be in capital goods, as I believe it will be, then something more will have to be done.
After all, after a few years of extended credit terms the payments will begin to balance out any adverse factor caused immediately in the balance of payments. Are the Government satisfied that the banks are providing adequate services for exporters of capital goods? Are they prepared to discount bills sufficiently far in advance? I am told by manufacturers that this is not the case at the moment.
I doubt whether the banking system or the Government have faced up to the changing nature of our exports—from consumer goods, for which credit terms can reasonably be short, to capital goods for which the credit terms must inevitably be longer. The Government should find out whether it is
1166
necessary to set up alternative sources of finance if the banks are unwilling to provide them. This is quite apart from the credit insurance made available through the Export Credits Guarantee Department.
Reference has been made to the rather disturbing reports of the Government's attitude to trade with Russia and Eastern Europe. This is not only a question of credit facilities, but of the strategic list, which may well need looking at again. Industrialists believe that other Western European countries are less restrictive in their behaviour in this than we are. For instance, there is the wish of the Soviet Union to place orders for £20 million of ships, which is bound up with the question of whether this order should be bargained for by increasing the oil quota. Obviously, we must look at the economics of this type of deal. Have they been fully examined? I admit that they are complicated.
What are the present limits on the size of ships which can be built for Russia? According to the last report of Lloyd's Register of merchant shipbuilding, Denmark, West Germany, Italy and Japan together had 105,000 tons of ships building for registration in countries not named in the list. Named countries are all non-East European countries, and I presume, therefore, that the non-named countries are mostly Eastern European. We had none building. Why? Is it the case that other countries in Western Europe are not observing the rules which we insist that our shipbuilders should observe?
Now that the Common Market negotiations are temporarily delayed we must certainly try—again, I repeat what almost every other hon. Member has said in this debate—to get increased liberalisation of world trade. This will take some time. As my hon. Friend warned, we are not necessarily, despite the Kennedy Round, going to get very far with the United States. It is still a very protectionist country. There are not many signs that countries which still have very high tariffs will do much to reduce them except after hard bargaining, and we ourselves must engage in hard bargaining. We are not in a position to launch a free trade campaign of our own.

1167
In the meantime, we must not be debarred from using perhaps unorthodox methods of encouraging the growth of exports. We must look at the problems of exchange rates and the sterling area. We must also look at the temporary use of import controls if necessary, although I would dislike that intensely. As my hon. Friend said, we must look again at the problem of capital exports. Now that the negotiations have broken down, we certainly cannot allow firms to transfer their manufacture from this country to Europe.
I believe that we may well have invested too much money abroad in recent years. It would have been better invested in this country so that the full return on our manufactured goods could have come here instead of the restricted profits one can generally transfer from a plant in another country. If we had any surplus on the current account of our balance of payments it would be better used to finance longer-term credit for British exports than for financing factories built in other countries by British firms.
The longer-term problem, however, is particularly tied up with the redevelopment of some of our older industrial areas and the need for regional planning to supplement national planning, which, we hope, will be based on the N.E.D.C. Part of our policy must be to make use of the natural advantages of each particular region.
For instance, this country has practically no factory more than 80 miles from the sea. This is an enormous advantage compared with many other industrial countries, many of whose factories are hundreds of miles from the sea. We should take advantage of this fact, as of the skilled labour and cheap fuel available in some areas. We must plan the redevelopment of these areas on scientific lines—for instance, by ensuring that our transport system provides the cheapest method of sending goods overseas, by the combined planning of our road, rail and port systems, which should also take in shipbuilding and consideration of the handling of goods in ships.
But the new factories to be built in these regions, and which they require if they are to play their part in our economic recovery, must be those in the growth industries based on research and development. I draw the House's attention to a very interesting maiden speech made by
1168
Lord Todd in another place. He is chairman of the Advisory Council on Scientific Policy. In a debate on the Scottish economy, Lord Todd pointed out that the establishment of satellite factories of firms whose research and development is located elsewhere is not the way to revive an area of traditional industries such as Scotland. The same applies to factories making consumer goods for highly competitive markets. If these areas are to be revived, and if the revival is to be securely founded, it must be done on the basis of technologically advancing industries.
I do not exclude the modernisation of some of the older industries, such as heavy engineering and shipbuilding. But the figures given by Lord Todd show that industry will not change by itself. The Government must either persuade new industries to come in or themselves establish new industries based on research and development. I suggest that we should look for some sort of extension of the National Research and Development Corporation into the field of manufacturing.
The problem of getting firms to move into these areas is one which needs more scientific investigation, investigation by the methods of the social sciences. The regional planning boards which ought to exist, but which so far do not, should be supported not only by economic research but also by operational research closely associated with the local offices of the Government Departments concerned. Operational research teams should work with the firms which are being persuaded to come to these areas, finding out the obstacles and helping them to overcome the problems and difficulties which prevent their doing so willingly.
All this requires a far more scientific approach to economic and regional planning that we have had so far or we see any sign of having. In my opinion—as hon. Members know, this is a personal, prejudiced view which I hold—we are unlikely to get this until the scientist and the technologist plays in our civil Departments a part as important as the one he plays already in our defence Departments.
These may seem rather mundane matters against the canvas of world politics which has been the background to this debate, but, as my hon. Friend

1169
said, the influence of this country will be proportional to its economic strength. "Selling Britain" in Europe or elsewhere by high-powered advertising is both undignified and a waste of money, so long as the rest of the world believes that we suffer from what is called, I regret to say, the "English disease", the main symptoms of which are lethargy and conservatism. A new sense of purpose is needed in this country to start our economic revival, and we are unlikely to get either sense of purpose or revival from this Government.
5.42 p.m.
Mr. Geoffrey Lloyd: I entirely agree with what the hon. Member for Edmonton (Mr. Albu) said about the overwhelming importance of securing a good rate of national economic expansion on a broad front. As I see it, this means, in the immediate future, a wholehearted commitment by the Government and the country to making a success of the National Economic Development Council's growth plan of 4 per cent. per annum.
As hon. Members will agree, this rate will be very difficult to attain. It is twice the actual growth rate per annum achieved since the war, and it will stand or fall on our success in achieving the export target which is part of the plan. The export target itself, at about 5½ per cent. or a little more, is double what we have, in fact, achieved in recent years. Of course, if we had joined the Common Market and had a free run in a big market of about 170 million people, the job might have been easier. As the hon. Member for Cardiff, South-East (Mr. Callaghan) said, it will now be a good deal more difficult.
The Midlands are one of our big exporting areas. I have been in touch with some of the big exporting industries since the breakdown of the negotiations. There is no doubt that there is profound disappointment felt among them. Many have been preparing for going into the Common Market for a couple of years or so. Some had developed new products. Some had set up selling organisations in Europe which are actually operating today.
The hon. Member for Cardiff, South-East will be pleased to know that the present intention is to go ahead. They
1170
mean to "have a go". They mean to try to jump over the Common Market barrier, even when it starts to rise in some of our best markets, for instance, in Germany. Nevertheless, our industrialists will have to work very hard indeed to reach the export target and so make the growth plan as a whole possible.
I was very glad to hear what the Prime Minister said yesterday about the possibility of finding export incentives. I am sure that it will not be easy to do so, as he himself indicated, but it would be worth a great deal to us as a nation if we could find a sound and effective method of giving fiscal encouragement to exporters. I ask the Government, therefore, to search vigorously for tax changes which would encourage exports and, in particular, I ask them to consider seriously a proposal which is the result of just such a search by a number of hon. Members on this side of the House, under the chairmanship of my hon. Friend the Member for Somerset, North (Sir E. Leather). It is that we should introduce in this country the so-called added value tax, or turnover tax, giving a rebate of tax in respect of goods exported.
This plan has two great advantages. First, it is not just a bright idea. It is a tax actually operating in France, and it has been recommended by the Fiscal and Financial Committee of the Common Market Commission, under Professor Neumark, for general introduction throughout the European Economic Community. The second great advantage is that the giving of a rebate of such a tax in respect of exports does not contravene the G.A.T.T. or our other international trade obligations.
I will sketch briefly how the scheme works. As we proceed from the raw material, the value added by the operations of each firm is shown clearly on the invoice, and so is the tax. When the final stage is reached, and the article is ready for sale, the businessman has to consider the tax alternatives before him. They are these. If he sells on the home market, he has to pay tax on the final value he himself has added to the article. If he exports it, he himself pays no tax, and, moreover, he is able to reclaim the total tax previously paid on all the earlier processes of manufacture.

1171
I will not weary the House with details, but hon. Members will see that this scheme provides a distinct differential financial advantage in favour of exporting. This is all the more important because selling abroad is nearly always more expensive than selling at home and, very often, small profit margins have to be accepted.
Mr. Callaghan: All these taxes, including this kind of cascade tax, have their disadvantages as well as advantages. One of the economic consequences of such a tax is vertical integration where there is no economic necessity for it. I hope that the right hon. Gentleman will not tie himself to this tax, but will ask the Treasury to look at other types of tax which could be even more effective.
Mr. Lloyd: If I may say so, the hon. Gentleman has not understood my proposal. This is not the cascade type of tax as practised in Germany. In fact, that type of tax was specifically rejected by Professor Neumark and his committee of the Common Market Commission in favour of the French added value tax, one of the advantages of which is that it does not have the defect to which the hon. Gentleman has rightly called attention in the cascade tax.
There are two proposed variants of the added value tax for this country. One approach assumes that the tax would be substituted for the Purchase Tax and would be levied at a rate of, say, 5 per cent. In this form, it would pervade the economy more widely than does the Purchase Tax and, although at a lower rate, would produce more revenue. The second approach assumes that the tax would be substituted for the Profits Tax and be levied at a lower rate, say, 21½ per cent.
I do not propose to examine these variations in detail because the arguments are intricate and would be more appropriate to a purely financial debate. Nor do I want to exaggerate the case for the turnover tax. No one tax scheme is likely to prove a panacea. It is the combined incidence of the various taxes which fall upon the exporting business which is the most important feature of all.
Here I should draw attention to the strong body of opinion, including the
1172
F.B.I., which holds that exporting would be helped if there were a shift of the burden of taxation from direct to indirect taxes, especially if these taxes were subject to rebate for exports. I hope that my right hon. Friend the Chancellor of the Exchequer will examine this case very carefully, and judge it strictly from the point of view of its possible contribution to our export efforts. It is in this context that I ask him to consider also the turnover tax and its attendant export rebate.
About one thing I am quite sure, and it is that if we find, after thorough investigation, that this is a sound and effective export incentive, no considerations of administrative convenience should be allowed to stand in the way of its adoption—
Mr. Gilbert Longden: Has my right hon. Friend or anyone else made any calculation of the additional numbers of Inland Revenue staff necessary for the operation of this tax?
Mr. Lloyd: No. That is important, but I would hold that if administration could be held to a reasonable proportion, and there was a really practicable export incentive, it would be well worth while.
I should like to refer to the interesting and blunt statements made by the hon. Member for Cardiff, South-East about the incomes policy, and what he bluntly called a wages policy. The hon. Member, of course, speaks with the authority of a trade union leader, and I approach the subject with considerable diffidence. My only excuse for doing so is that, as some hon. Members may know, the Mines Department and the Ministry of Power, because of its origin under the original Lloyd George scheme, performs the function of the Ministry of Labour for the mining industry, and I have had an opportunity to meet a number of famous trade union leaders.
It is recognised throughout the House and the country that the subject to which the hon. Gentleman referred is one of the fundamental matters that will decide whether we succeed in, as the hon. Member for Pembroke (Mr. Donnelly) said, modernising our economy in the way we all want. We all know the difficulties involved, but it is as well that we should start by recognising other people's difficulties, and I think that many of those

1173
who propose some all-embracing formula to solve this problem in particular forget the position and the difficulties in which the trade union leaders are placed.
We have to remember that these men are the professional representatives of their members, and that it is their duty to look after the interests of their members. They can often guide and influence, but they are responsible to their members. Incidentally, most of them are elected, and we all know what they means. It is, therefore, very important that we should recognise their difficulties—as, indeed, I hope that they, in turn, recognise the difficulties of the employers under the stern discipline of the competitive system.
I was, therefore, particularly interested this afternoon when the hon. Gentleman brought forward a very important practical suggestion. As I must confess it had been my intention to make it myself, I was delighted to hear him do so. The hon. Gentleman thought that the practical method of progress in this matter was to go for longer-term settlements. That may seem to some people to be a relatively unimportant piece of progress, but it is not.
If we could get back to the longer-term settlements like that, for example, recently made in the electricity industry—running for three years, and incorporating within it a provision for a reasonable annual increase, and also a let-out in case the cost of living rises, but otherwise a binding agreement—accepted by both sides, we might make a practical advance. We would be doing something that is not against the philosophy and policy of the trade union movement because, in fact, longer-term settlements were accepted as an object of trade union policy before the war.
That could help us in our progress towards the modernisation of our economy, and avoid the price increases that would wreck our chances in the export markets. It would certainly be very important from the practical point of view to employers and industrialists, because one of their most important needs is the ability to quote firm prices, and longer-term wage settlements would help very much in that respect.
5.55 p.m.
Mr. Julian Snow: The right hon. Member for Sutton Coldfield (Mr. G. Lloyd) touched
1174
on a fundamental issue when he referred to a fiscal incentive to aid exports. What bothers me is that this matter has recently been raised several times in the House. I was reading a debate that took place on 30th May last, which I did not attend but in which my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) participated, in which the Government undertook to examine this question most urgently. Yet here we are, still discussing it, and still, apparently, no nearer to a solution.
I will not conceal from the House that I am extremely sad that the Common Market negotiations failed, and I feel that we are probably in for a pretty thin time during the next two years. My hon. Friend the Member for Cardiff, South-East said this afternoon that the Government will have to take steps—if they remain in power long enough, which is doubtful; and certainly we shall have to take steps when we come to office—to prevent the transfer of capital to Europe that may be undertaken by companies in this country that wish to hedge against the increased tariff barriers with which, sooner or later, we are bound to be confronted.
The sorry thing is that these transfers of capital, or the disposal of licensing agreements, have in too many cases already taken place, with the result that whether new factories or branch factories have already been established by British companies in Europe or whether licensing arrangements have been made on behalf of British companies to function in Europe, the work to he done on the production of the goods in question is work that has been lost to this country and, in the light of the present unemployment figures, it is work we can ill afford to lose. I understand that the Government are acting on the advice that, allowing for the extra unemployment caused by the recent bad weather, there is a hard core monthly increase in unemployment of 20,000 a month. That being so, every step has to be taken to try to stop the rot, let alone to seek the alternative to the Common Market entry.
I believe that we are in for a period of quite a number of bilateral trade agreements, since it seems to be quite impossible for any large-scale improvement in our exports to be achieved

1175
quickly by taking advantage of an amended Trade Expansion Act, or any increase of East-West trade, or any increase in Commonwealth trade. I regard much of the discussion we have so far had in this debate about the Commonwealth as wildly sentimental. The idea seems to be retained in the minds of the public, aided and abetted by certain organs of the Press and what I will call the anti-Market lobby on both sides of the House of Commons, that the Commonwealth as a whole is still economically viable.
That is the impression in the public mind, but it is a false impression, and is based on an absolute ignoring of the economic facts of life. Year by year we see, if not hesitation, at any rate excuses being found for non-attendance at the Commonwealth Prime Ministers' conference. Almost monthly we see evidence that countries of the Commonwealth, whether they have achieved independent status, Dominion status or are still dependent territories, looking at their economic future in terms of nationalism. In my judgment, it would be absolutely wrong for us to continue to think in terms of Commonwealth conferences which would produce a common policy outside the general provisions either of G.A.T.T. or O.E.C.D.
Mr. Brian Harrison: While I agree in part with the thesis of the hon. Gentleman about the Commonwealth countries, surely it would be extremely stupid not to investigate this line.
Mr. Snow: I do not know what the hon. Gentleman means by "this line".
Mr. Harrison: The line of Commonwealth trade, and to have conferences of Trade Ministers.
Mr. Snow: I do not at all disagree with a conference of Commonwealth Trade Ministers. I am pleading that we should be realistic about this and realise that they are not talking in terms of sentimentality inspired by an old type close-knit Commonwealth, but in terms of nations looking after their own interests. Since I think that the hon. Member for Maldon (Mr. B. Harrison) hails from Australia, may I tell him this—Australia is one of the greatest protectionist elements within the Common-
1176
wealth. In my constituency there is a company which produces specialised forms of tape and fabric binding. This company has to pay a higher tariff to get its goods into Australia than into the Common Market at the present time. How can we still believe in Commonwealth sentimentality under such circumstances? I am not blaming the Commonwealth countries. But I believe that when we discuss matters we should not jeopardise our chances of success by thinking in sentimental terms which are long out-of-date.
While these negotiations with the Common Market have been going on, countries like Australia and Canada have been negotiating bulk contracts for wheat with China, a trade pattern which I consider highly desirable. But those countries are not looking to help us but to their own national interests, and who shall blame them? I should have thought that we might consider whether we can pick up something from the Continent and the industrial organisation as it seems to be developed in such countries as France. Why is it that ever since the Labour Party went out of office, and indeed even before, nationalisation, for instance, has been a matter for everyday criticism and niggling by the Press and by hon. Members opposite? That is not the case in other countries where there are successful nationalised industries. I cannot in this matter see any successful achievement of an amalgamation between nationalised industries and private enterprise in this country such as exists in France.
One of the things which has become so apparent over the years since the party opposite has been in office is its utter neglect of small business. Time after time we hear speeches made by hon. Members opposite on behalf of large-scale industry. But do we ever hear anyone talking about the small business man? I have asked questions time after time of the Board of Trade concerning the statistics relating to small industries. I have been told that the collection of the information asked for would be too expensive, or that it was not at the disposal of the Board of Trade. Yet the mainspring of our industry is the small business man. In my judgment, the party opposite has

1177
sacrificed its historic rôle in this respect recently because now its paymasters are among those people in heavy industry who are afraid of being nationalised.
Why cannot we achieve some sort of organisation whereby small productive engineering firms, for example may have a share of the world's business? We might think in terms of some form of British export commission which could act on behalf of the thousands of small enterprises by receiving large orders, marshalling them and farming them out, and delivering as one organisation, taking account of the publicity and credit and banking requirements and of co-ordination of production. In my judgment, it is only in this way that we shall use the energy and inspiration of small business.
Mr. William Yates: I have never heard a criticism from this side of the House of any form of pari-Statal organisation like those in Italy or France to help small businesses.
Mr. Snow: I am sorry, I did not catch what the hon. Gentleman said.
Mr. Yates: I was saying that I have never heard a criticism on this side of the House against any form of pari-Statal organisation—that is Government helping small businessmen—as they do in France or Italy.
Mr. Snow: I wish that that kindly inspiration had been evidenced in speeches to which I have listened over all these years. But, in my judgment, it has been absent.
I am saying that if we could coordinate the efforts of small industries in this country we might make considerable progress. I do not believe—certainly outside the special areas of this country —that there is a real requirement for a vast number of Industrial Development Certificates to be provided. The real requirement is to mop up the unused capacity in hundreds of existing factories up and down the land. I challenge any hon. Member to go to his constituency and be unable to find a live, up-to-date, modern factory without any surplus capacity. That is the tragedy of the present situation
I wish to ask two questions of the Government about the curious way in
1178
which they go about trying to obtain more export trade. It will be recalled that two or three months ago the Government invited the Vice-Minister of Trade of the People's Republic of China to visit this country. Then there occurred the dispute between India and China and at two or three days' notice the visit of the Vice-Minister was cancelled. Of course, we had to support India in this matter. But we should also have recognised how important is the whole question of "face" in China. It seems to me that here was an invaluable opportunity not just to discuss trade, but to let the Chinese know, in such a way that they would not lose face, exactly where we stood on the Indian question. Thereby we should have gained not only their respect in the matter but enhanced the trading possibilities. It seems incomprehensible to me that action should have been taken in the way it was.
Why cannot we do a little more to make use of new ideas to achieve exports with Government backing? I reported to the Minister of State, Board of Trade, on the visit to Tunis recently of a Japanese floating trade fair—a ship. I reported that this ship had arrived at the port of Tunis. It was a vessel of under 13,000 tons designed for the purpose. Invitations to attend the exhibition were distributed most efficiently. I met the captain of a small fishing vessel who had received an invitation. In this ship the Japanese exhibited a whole range of their industries, from heavy industry through electronics and radio, and so on, down to small manufactures.
The Minister of State informed me that the Board of Trade knew about this floating exhibition. The idea had been put out to British industry but had not appealed to British industrialists. I was not satisfied with this, and I made inquiries and obtained further details about these Japanese exhibition ships. I found that in recent years no fewer than four of these ships had been sent from Japan to Central and South America, to the Mediterranean and to South-East Asia. The ships are designed to act either as floating exhibitions or for use for emigration or ordinary cargo purposes. I am advised that there is a basic staff to took after maintenance and so forth and that the technical staff fly from port of call to port of call. The financing is done on a 50–50 basis by the Japanese

1179
Government and individual members of the floating fair association. We must think of new ways of exporting our goods. We read in the local Press of new small nations like Tunisia signing contracts with Italy, Germany and Sweden, and, now and again, like a little bit of manna from Heaven, we see a mention of Great Britain.
I will tell the House a story about Tunis, which buys more from this country than we buy from it. The other day a technician came from Tunis charged, I understand, with the task of establishing contact with architects and designers who would work out a steel plant for that country. This was being negotiated when he became aware of the availability on the British market of extremely cheap women's clothing, and he placed on behalf of his country, which is involved in a certain amount of collective economy purchasing, an order for a vast quantity of women's clothing which is now on its way to that country. This order was secured casually and without any forethought or idea by our manufacturers that there was this potential. This is the sort of thing into which the Government might look.
Take the staffing of the commercial elements in our embassies and trade commissioners' offices abroad. Cannot we do with fewer Service attaches and many more commercial attaches? These days many countries are thinking of having defence attaches. With the transfer of military, naval and Service responsibility generally to N.A.T.O. and to other international organisations where we have vast staffs, cannot these gentlemen, who do a good job according to their briefs, be usefully replaced by commercially-trained attaches or secretaries who will go into the market and try to secure orders, because this country needs customers like it has never needed them before?
I conclude by asking the House to consider this matter. In our endeavour to find new markets, we must kill off some of our sacred cows. We must think of new ideas. We must realise that the Commonwealth is a vast market, whether it is made up of old white dominions or newer emerging territories, or countries which have not always been in the Commonwealth which have purchasing power. The worst possible service we could do
1180
ourselves, to put it in the least generous way, would be if we conspired to depress the commodity prices of the raw materials which those countries produce. If we cannot help them, in this matter we shall in the end cut our own economic throats.
6.13 p.m.
Mr. R. H. Turton: The hon. Member for Litchfield and Tamworth (Mr. Snow) made a rather lugubrious remark when he said that we were looking forward to a rather thin time. On the other hand, he and, I think, every other speaker today, with possibly one exception, have looked forward and not backward. Yesterday I felt at times as though I was attending a funeral service. There was so much talk of the body which was dead but which must not be buried. This is surely the wrong attitude on which to found a new international policy. I take no exception to the very full account of the last illness given by my right hon. Friend the Lord Privy Seal. No one could have been more able in his care of the patient, the negotiations, than my right hon. Friend. All of us, whether we agree or disagree with him, admire the way in which he carried out those negotiations. However, I think that we should now look ahead and not backward.
As the House knows, I have never been able to see how this country could merge with the Community on terms which were satisfactory to the Commonwealth, to E.F.T.A. and to British agriculture. I thought that that was quite impossible. But now that we are at the end of the negotiations we have a really great opportunity.
I wish to concentrate on four points in dealing with the future for this country. The Times leader on the moral crisis was right. The two best speeches that we had yesterday were those of my hon. Friend the Member for Cambridge (Sir H. Kerr) and the hon. Member for Pembroke (Mr. Donnelly), who spoke to the same effect. We are now attacking this problem about eighteen months later than we might have done because of the negotiations. Thanks to my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), we have one advantage. We have the National Economic Development Council which has made its first

1181
announcement that we should aim at a 4 per cent. rate of growth.
We should follow this up. This is not a matter for party politics. It is not a matter for management on one side or labour on the other, and here I agree with what the hon. Member for Cardiff, South-East (Mr. Callaghan) said earlier. This is a great opportunity. This is the time when we should call a round table conference of both management and labour to discuss the implications of a 4 per cent. growth rate. People in this country, irrespective of their party, are feeling that bad labour relations and the sabotaging of productivity by extremists cannot be tolerated. A round table conference could do much good by inquiring into all the obstacles to growth and seeing whether legislation is required to remove them. So much for the moral side.
Secondly, we must expand our trade with the Commonwealth and with E.F.T.A. I welcome what my right hon. Friend the Prime Minister said yesterday. I am sure that it is right to start not with a Prime Minister's conference but with a conference of trade Ministers. I beg the hon. Member for Litchfield and Tam-worth to realise that this is not wild sentimentalism but hard material facts of trade. During the eighteen months of negotiations, Commonwealth preferences have been in jeopardy, and, rightly, the Commonwealth has looked for alternative markets. That was absolutely inescapable. It is right that Australia should look for markets in China and Japan.
Yet, notwithstanding this switchover in trade, our exports to the Commonwealth and E.F.T.A. preferential areas last year amounted to £2,000 million, and our exports to the Six Common Market countries amounted to £770 million, a ratio of three to one. That is why it is vital that this country should expand—or extend, as my right hon. Friend the Prime Minister said—our exports to the Commonwealth. What many hon. Members forget is that, in trading with the Commonwealth, preferences make a tremendous difference. The system of preference, which was started long before the coming into being of the bilateral agreements at Ottawa, has helped our trade.
Since I believe that there will be shortly Australian-British trade negotiations, I should like to refer to
1182
Australia's record and to deal with figures for 1960–61. In that year, our exports to Australia amounted to £A341 million. Australia sent to us exports amounting to £A232 million, a balance in our favour of £A109 million. Of our exports to Australia two-thirds entered duty free, 85 per cent. received some sort of preference, and the preference averaged 10 per cent. Of Australia's exports to us, 55 per cent. received a preference averaging 9 per cent. Those are the facts of the trade. Those who malign or minimise the value of Commonwealth trade, as I think the hon. Member for Lichfield and Tam-worth might have been interpreted as doing, should remember those facts.
How are we to help? Quite clearly we can help only if we can take more from the Commonwealth. We shall not be able to sell more to the Commonwealth—because these are developing countries—unless we can take more from the Commonwealth. Equally, we have to realise that one of the effects of the breakdown of these negotiations is to demonstrate that the Community is an inward-looking protectionist body which will make it more difficult for the Commonwealth to sell to Europe. In consequence, we and the E.F.T.A. countries must do what we can to remedy that state of affairs.
Can we take more? I have been examining our imports of food and comparing last year with ten years ago. Looking at the figures, it seems that in those ten years a considerable part of our market for food which we used to get from the Commonwealth has gone to foreign countries. Take the case of cereals. In 1952 55 per cent. of our cereal imports came from the Commonwealth. Last year that figure had dropped to 36 per cent. In 1952 48 per cent. of our meat came from the Commonwealth; last year it was 31 per cent. Our imports of butter were 62 per cent. from the Commonwealth in 1952 and 56 per cent. last year. In fruit and vegetables we imported 35 per cent, in 1952 and 25 per cent. last year.
Clearly we ought to remedy the switch which there has been in the last ten years. Last night my right hon. Friend

1183
the Secretary of State for Commonwealth Relations said that it is the expansion of British agriculture which has caused this switch, but that is not so. The switch has been from the Commonwealth to foreign countries.
Mr. John Mackie: Has the right hon. Member taken into consideration the tremendous amount of imports of maize, fruit and so forth which we used to get from South Africa when it was in the Commonwealth?
Mr. Turton: That might possibly have had a marginal effect on cereals, but it would not have had any effect on meat or vegetables or butter. There was, in fact, not a great difference in the switch caused by that change, but there has been a very large switch comparing ten years ago with last year. My right hon. Friend said that this was all due to British agriculture, but that is not so. Butter was New Zealand's greatest export from pre-war days to today, but there has been an increase of less than 1 million cwt. in home production, whereas she usually exports to us 4½ million or 5 million cwt. a year. We should remember that we are eating more.
How are we to put this right? I was very worried when my right hon. Friend the Lord Privy Seal said that bilateral arrangements are out. I think the argument for the revision of G.A.T.T.—which was put extremely ably by my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) yesterday—is completely non-rebuttable. G.A.T.T. may have been perfectly all right in 1947. It was devised for the postwar trading pattern, but directly we have the rise of common markets and free trade areas, G.A.T.T., with the most-favoured nation clause, if operated, precludes any world-wide reductions of tariffs. We want to try to get reduced tariffs and to reduce them reciprocally, which means that countries or groups of countries should be allowed to reduce tariffs without that spreading across the world, because it is the most-favoured nation clause which will prevent such operations as the Kennedy Round being very successful at present.
The second point which arising from this question of expanding Commonwealth trade is the danger of dislocation of trade through balance of payment
1184
crises. I ask the Government in their consideration and talks with the trade Ministers to consider whether the time has not come to establish a Commonwealth payments union on the lines of the European Payments Union which has been so successful. If we had such a union I believe it would solve many of the trading difficulties we have had in the Commonwealth, especially with New Zealand, through her having balance of payment problems. While on this point I also suggest, as another hon. Member suggested, that now we have a European Export Council and the Western Hemisphere Export Council, surely the time has come to have a Commonwealth export council to boost trade in the Common-wealth.
Turning from the Commonwealth, my third point is on domestic agricultural policy. I should like the Chancellor of the Exchequer, who I gather is to reply to the debate tonight, to make quite clear what the Prime Minister was alluding to when he talked about ending the open-ended commitment in agricultural policy. As I see it, an agricultural policy that does not deal with the question of imports and give the guarantee without any question of any control of imports is bound to be unduly expensive to the taxpayer. I think there is an unanswerable case for dealing properly with the problem of dumping and subsidised imports. That is the more necessary because under the Common Market agricultural policy which we have all been studying so studiously in the last few weeks, one thing with which this country will be faced is the threat of a large quantity of subsidised exports from French agriculture, subsidised by the European Agricultural Commission.
At the moment our anti-dumping legislation is not satisfactory to deal with agricultural commodities. I beg the Government to devise a system of adequate dumping deterrents in the interests both of the taxpayer and of British agriculture as well as the long-term interests of the Commonwealth.
The fourth and final point to which I draw attention is the problem of primary producers and the problem of emerging countries with developing manufacturing industries. It is clear that if we pour in aid and there is at the same time a radical fall in the prices of primary produce, the whole of the aid will be wasted.

1185
This point was made yesterday from the benches opposite. For this reason, I was delighted to hear my right hon. Friend the Prime Minister again endorse the policy of commodity agreements.
We must, however, go rather further. We must try now to get all industrial countries to remove obstacles against the manufactures of primary producing countries. If we believe in developing world progress, I do not see how we could advance loans to a country such as India and, at the same time, raise obstacles against the export of the manufactures that India needs to sell for the servicing of her loans. I regard this as one of the biggest problems of today.
We have been reading in all the reports from the G.A.T.T. year by year that the rich countries are growing richer and the poor countries poorer. Whether we are in the Common Market or outside it, unless that trend can be halted, the world will reach economic chaos. It is in this direction that Britain's most important rôle lies.
I believe that our rôle is to be the link between the industrial countries and the developing countries. That is the meaning of the Commonwealth, of the Union Jack. It is what our influence throughout the world has meant. Of course, Mr. Dean Acheson was perfectly right in suggesting that our rôle had to some extent changed. Nevertheless, if that remains our main rôle, I do not. believe that there is a more important one in the twentieth century. Equally, having that rôle, it would be impossible for us to enter a tight, protectionist inward-looking European community.
My right hon. Friends were quite right to specify their safeguards and to say that we had to retain that rôle. The rôle was quite well described when President de Gaulle said
"England is insular, she is maritime, she is linked through her exchanges, her markets, her supply lines to the most diverse and often the most distant countries."
That sums up our position. It also sums up the reason why the negotiations broke down.
Let us not look back in anger on those facts of life and the facts arising from our rôle. We have a great opportunity, but it requires inspired leadership. It
1186
also requires great determination from the people. This is something above all party politics. It is something that Members of Parliament, on both sides, have to teach the people of England, that this opportunity will only lead to success if in our interdependence we are ready as a people to make sacrifices. The hon. Member for Pembroke was perfectly right in that. Our interdependence is not across the Channel, not across the Atlantic Ocean, but throughout the world. For that, there must be a readiness to accept priorities that are often in favour of people in the Commonwealth and not necesarily of our own material prosperity at home.
If we can teach that lesson, I am certain that the sacrifices will be well worth while, because by that means we will be raising the standard of living of millions of people throughout the world and making a contribution towards the peace of the world.
6.36 p.m.
Mr. John Stonehouse: As a persistent critic of the Lord Privy Seal, I congratulate the right hon. Gentleman on the energy with which he pursued the negotiations. I understand his great chagrin that they have been brought to an end. The right hon. Gentleman was, however, misguided in his enthusiasm. It is a great pity that his tremendous energy during the last 18 months was not applied in a more constructive direction.
The whole Tory Administration stands condemned on two counts. The first is that they applied to join the European Economic Community on what were bound to be humiliating terms. As the Chancellor of the Exchequer said in the House of Commons after the last election, the Treaty of Rome would be unacceptable both to this House and to opinion in the United Kingdom. The Government's policy was thoroughly wrong and the Conservative Party has only itself to blame that the negotiations have failed.
The Government also stand condemned because during the long period of negotiations they made no preparation for an alternative if the negotiations broke down. Time after time we have asked the Ministers concerned what arrangements were being made in case the negotiations broke down. We were told that there was no need for this and that all energies had to be spent on bringing the Common

1187
Market negotiations to a successful conclusion. That was misguided. Alternative arrangements should at least have been discussed between the officials concerned so that the opportunity that arises from the breakdown of the negotiations would not leave the Ministers in this state of indecision and unpreparedness.
I believe that the Conservative Party, and Ministers particularly concerned, decided to enter Europe because they were appalled by the enormity of the economic failure for which they had been responsible in the United Kingdom. They thought that their decision to enter Europe was a way out and would divert the attention of public opinion to Europe. With everybody's gaze upon the negotiations in Brussels, Paris, Bonn and elsewhere, people would forget what was going on here at home. The Government hoped by skilful propaganda to make this out to be a progressive move on the part of the great adventurers, the pioneers in the new development of Europe, towards the breaking down of sovereignty and creating new world understanding.
Those of us who advised caution, who said that the European Economic Community was not all that it was cracked up to be, who said that there was danger that it would be inward-looking and restrictive in outlook, were called Little Englanders. Scorn was poured upon us. Now, however, we have been proved to be right. The European Community is a tight, protectionist community that is selfish, interested in protecting industrial producers against the primary producers, interested in safeguarding inefficient agriculture and putting up tariff walls against low-cost food produced elsewhere in the world, interested in protecting textile manufacture in Europe as against the lower cost manufactures of India and elsewhere. We were right. But this selfish outlook in Europe was clothed in a fantasy of progressive idealism. Help to the under-developed areas was advocated as though this was the genuine interest of the Community, but in fact as has been shown in the detailed negotiations, all that Community is prepared to give to the newly developed States is worth little. In fact they are not even going to be given the means of servicing the loans which they would obtain.
1188
I think the Tory Party looked to Europe because of the psychological impact of the collapse of the Empire. The Commonwealth seemed to be disintegrating. Many members of the Commonwealth said and did things of which the Mother Country did not approve; so the Tory Party turned against the Empire and the Commonwealth and looked to a new association in Europe to get away from this psychological shock of seeing a new Commonwealth growing up which they themselves did not understand. They also resented the evolution of colonial countries towards independence; the Tory Party were aghast indeed that this development which has gone on in the last few years. They look to Europe to build up a psychological barrier against this emergence in the colonial world.
There are some Conservatives whom I would absolve from blame in this, but the Tory Party as a whole has this outlook. It is one of the reasons why it changed almost overnight from being a sentimental Empire party into a pro-Europe party. The Administration which this country has suffered in the last ten years is, therefore, to be blamed for wasting an enormous amount of time and opportunities to put our own house in order. The energy which has been expended on negotiations in Europe could have been spent on building up our economic relations with the rest of the world, and in particular the Commonwealth trade connection. We should have been in a very much stronger position today had that been done.
General de Gaulle decided eventually to veto our efforts because many Europeans were shaken by the hypocrisy with which this country, and in particular the Conservative Party—but it is not confined to that party—approached these negotiations. I have myself heard in Paris, Strasbourg and elsewhere, where I have attended European assemblies, the reaction of members of the E.E.C. when they found that we wanted to keep links with E.F.T.A., with the Commonwealth and with the rest of the world. They were shaken that we wanted to keep these links in any form at all, because they had the impression from the speeches which had been made by the Lord Privy Seal and others concerned in the negotiations that we were accepting wholeheartedly political union in Europe and

1189
that we would not expect to keep our Commonwealth ties. I have heard from the mouths of speakers from the Netherlands, as well as from France, Belgium and Germany, that the Commonwealth had been dismissed as a psychological problem.
Members of the European Economic Community do not understand the importance, politically as well as economically, of the Commonwealth ties to this country, and I feel that the Lord Privy Seal and his colleagues have tailed to make this clear in Europe.
We have given the impression in Europe that we would accept the union but we are not honest about it in Britain. So many Ministers, when asked in this House as well as in the country whether we would accept the political integration of Europe, just avoided the question. They never told the British public exactly what was involved in our application to join Europe. No wonder the Europeans were exasperated when they could see that we were being hypocritical in our approach.
I also find in the replies which we have had today in the House, particularly on the guarantees to our E.F.T.A. partners, a good deal of evasion. We are told that the guarantees to the E.F.T.A. States were simply that we would not go into the Common Market until their position had been satisfied. The negotiations would be completed, but we would wait until the actual implementation of the decision to go into the Common Market until every one of the E.F.T.A. countries had made satisfactory arrangements.
That does not tie up with other questions and answers we have had in this House. Time and time again, we have asked for a guarantee that we would have a general election before going into Europe. We have always had that question fobbed off. Yet if the Lord Privy Seal is sincere in his guarantee that all the E.F.T.A. countries would be safeguarded before we actually went into Europe it is quite obvious that it would not have been achieved until the end of 1964 or the beginning of 1965, even assuming the negotiations went along smoothly. There would have been adequate time for a general election, and I believe it would have been necessary, quite apart from these negotiations, for an election to have been held.
1190
This is another sign of the hypocrisy of the Tory Party. They go into Europe and say that we are making our application and that we accept the Treaty of Rome, but Europeans at the Western European Union and the Council of Europe and elsewhere have expressed to me the view that they know very well the Tory Party does not have a mandate for this action. No wonder they have no respect for it.
At the last General Election it was not in the Conservative Party's manifesto. The only reference was to industrial free trade. There was no reference to joining Europe. Indeed, after the election the Chancellor of the Exchequer and other Ministers stood up in the House and condemned the Economic European Community—
Mr. David Webster: Could the hon. Gentleman give an instance of one single treaty which was signed after receiving a mandate from the country at a general election?
Mr. Stonehouse: This goes far further than any normal treaty which we have negotiated in the past. This is in fact a jettisoning of our soverignty over a whole range of our responsibilities. This House would itself he turned from a law-making body into an administrative organ of the European Community. We would become a sort of county council administering the United Kingdom part of the E.E.C. because the major decisions would he made by the European Commission and by the European Parliament if adequate powers of supervision had been given to it.
This application to join the Common Market and the acceptance of the Treaty of Rome went much further than any treaty which this country have ever signed in the past, and it would have been quite wrong for the Conservative Party, even with its majority of 100 in this House, to have taken Britain into the Common Market without an adequate mandate from the country.
Mr. F. M. Bennett: If the hon. Gentleman is right that we could not have managed to complete this arrangement until the end of 1964, then, on his argument, we would have had to have an election before then, in which case the second part of his argument falls.
Mr. Stonehouse: I am demonstrating that the Ministers concerned have been hypocritical about this because they have given Europeans the impression that we could go into the Common Market fairly soon; that there would have been no need for any delay. They should have been honest with them, and with us, and said that we could not join Europe until there had been a General Election in this country, and until they had a clear mandate to join. That sort of honesty would have earned much more respect for this country in Europe than has been earned by the evasive way in which the negotiations have been conducted.
It is a great pity that all this country's eggs have been put into one basket during the last eighteen months. We have neglected oportunities elsewhere because the attention of the Ministers concerned has been directed to this one aim. I believe that we now have to take advantage of the fact that the negotiations have failed. There are many advantages which we can gain because this application has now quite clearly failed. I believe that it is essential at the outset to withdraw the application so that we can destroy the myth which is still being fostered in some quarters that there is still an opportunity for us to join, that if we are good boys, if we behave ourselves, and if perhaps General de Gaulle is replaced by somebody else, eventually we can get into the Common Market.
I think that it would be foolish to behave in that way. It would mean that there would still be indecision in this country with regard to investments and so on. It would mean that we would approach the task of negotiating new arrangements with the Commonwealth and elsewhere with a certain reluctance, hoping perhaps that eventually we would get into Europe. I hope, therefore, that it will be made quite clear that we are allowing our application to lapse, that we are not expecting it to be furthered, that we wish the E.E.C. well, and that we are not going to try to break into their club again.
I believe that only in that way shall we establish a strength and firmness which will be good for the E.E.C. as it will be for us, because with that firmness we shall be able to negotiate arrangements for trade with the E.E.C. which will give us many of the advantages which we would
1192
have obtained in terms of trade if we had gone in, as well as giving much better opportunities to Commonwealth exporters both to this country and to Europe.
One of the advantages which we now have, but which we would not have had if we had gone into the Common Market, is that food prices can be kept low. It is apparent that if we had gone in the price of food in this country would have risen considerably. Take only one example, the price of wheat. The British market price is about £20 a ton, but it was expected that by 1970 the price would jump to between the French price of £34 and the German price of £41. What a dramatic increase that would have been, and it would have affected the price of other foodstuffs in this country, apart from considerably increasing the price of bread.
Again, we would have had to accept French dairy produce in place of New Zealand produce. We would have had to accept more expensive fruit in place of the cheaper fruit which we import from elsewhere. All this would have made for higher prices in food and led to increased wage demands which would have considerably weakened our competitive position. I think, therefore, that we must retain our policy for the importation of cheaper food from the Commonwealth, and thus give ourselves a competitive edge over European producers.
I think it has also the advantage that we can now engage in State planning without overall direction from the Community. This matter was the subject of some discussion and dispute, but there is no doubt that if we had gone into Europe we would have given a great deal of our planning powers to the Commission, and we would correspondingly have given away some of our own opportunities to plan here. I think that we must now take advantage of the fact that we are completely free to plan our own resources without worrying about what the E.E.C. or the Commission may think.
The question of Commonwealth trade development has been dealt with during the debate, and I will not go over this in detail. I think, however, that we now have many opportunities of increasing our trade with Commonwealth countries. Consider India for instance. In 1961 we exported £152 milion worth of goods to that country. In 1962 we exported £116 million worth, a drop of £36 million, but

1193
Indian imports as a whole went up. They were buying goods elsewhere. We have lost opportunities in India, and I think that we should now attempt to get those back. India, with a population of 400 million, has a tremendous potential market especially if they can be helped to break through their subsistence level to a reasonable standard of life.
Australia, even with the uncertainty caused by Britain's application to join the Common Market, increased its purchases from us from £202 million in 1961 to £229 million last year, an increase of £27 million. There is, therefore, considerable scope there as well.
New Zealand imported £124 million worth of goods from us in 1961. This is a tremendous figure when one remembers that it has a population of only 2½ million. One New Zealander buys as much from us as 20 Germans and 30 Frenchmen. There is not quite so much scope there to increase our trade, but those figures show the kind of export figures we can achieve in proportion to the population if we go about things in the right way. This is an example of what could be achieved, for instance, in Australia.
I think that the good suggestions which were made during the debate concerning the development of Commonwealth trade must be closely examined, and of course overall world trade must be increased and attention paid to the suggestions made by the National Farmers Union, and other bodies, with regard to world commodity agreements to ensure stability.
I also think that we must prepare for effective participation in the United Nations world trade conference which is due to be held next year. I think, too, that the action of the Forward Britain Movement in calling a conference to discuss the economic problems arising from Britain's failure to join the Common Market and to call attention to the need for world trade discussions, a conference which is to be held next month, should be applauded and supported so that we can pay attention to the constructive alternatives which we must consider in view of the failure of these negotiations.
The Conservative Party, having vacillated from its antagonism to Europe to all-out enthusiasm for it, and now having been rebuffed in the way it has, has shown its instability, and has shown, not only
1194
through Ministers like the Secretary of State for Commonwealth Relations, but as a party its inability to serve the people of this country. It has not only been inefficient, but wrong and misguided in its policy. It has been hypocritical to the European Community and to the electorate here. I believe that it has outstayed its welcome and the sooner we have a General Election to get rid of this Government the better it will be for this country.
6.59 p.m.
Mr. H. A. Price: I am one of those who favoured our joining the Common Market, not so much because I was dazzled by the economic prospects, but because I did not much like the look of the economic consequences of staying out. That decision has now been made: we are out. I do not take the view that that need necessarily be a bad thing. In fact, in the end it might prove to be, like the Great Fire of London, a blessing in disguise.
Whether we had gone in or not, in the end the basic problem is the same. Had we gone in, the markets of Europe would have been open to us, but our home market would have been equally wide open to them. To have taken advantage of the opportunity and to have protected ourselves against the danger, we would have needed the maximum efficiency and the greatest possible imagination and adaptability from our industry.
Now we are not in, the situation is roughly the same. It is true that our home market will be protected from European imports, but we have to face in the other markets of the world exports from a large and expanding European economy, which, based upon enormous and growing consumption, will be able to export at little more than run-on costs. Again, the solution for us is the same—maximum efficiency and the greatest possible inventiveness and ingenuity in our home industry. It is to some aspects of this problem that I propose to direct my remarks.
It has been said that the door into Europe has been slammed in our face, but not locked, bolted and barred. This may be true, but I cannot think that it would be wise to allow ourselves at such a time to divert our energies from the immediate problem. Industry in this country has

1195
already suffered from the delays and uncertainties of the long-drawn out negotiations. To prolong that uncertainty further could do nothing but harm. We have been holding our breath too long already. While we must bear in mind the possibility that one day, maybe, we shall be able to get in, we must now concentrate on the certainty that at the moment we are out.
There has been a positive flood of what I will call conventional suggestions as to what we should do about it—expand Commonwealth trade; greater co-operation with E.F.T.A.; talks with America; the liberalisation of trade; the reduction of tariff barriers, and so on. Let no one think that I minimise the contribution that these can make. However, if we delude ourselves into thinking that the complete solution lies there, we shall be making the greatest mistake of all. It is rather like a man taking an aspirin to cure a headache which is caused by eye strain. We shall be treating the symptom and not the basic cause.
All these measures lead in the same direction. In or out of the Common Market, liberalise trade as much as you like, reduce tariff barriers as much as you like, in the end we must have a home industry which is capable of meeting world competition and beating it on equal terms. This has always been so, but for too long now we have allowed ourselves to forget it.
My right hon. Friend the Prime Minister has often been criticised for something he said four or five years ago, that we had been having it so good. I cannot think why. It seemed to me to be a simple statement of truth. But note what he did not say. He did not say that we have never had it so easy. The truth of the matter is that we had been having it good and easy, but that could not last. We can go on having it good. We can see to that. But we cannot go on having it easy. The cruel world outside will see to that.
The problem now is to revitalise our industry and, as my right hon. Friend the Minister of Labour said so rightly a few days ago, this is a problem for the whole nation. In the end, whether we succeed or not depends upon the 22 million or so men and women employed in industry at all levels. The
1196
Government cannot do it. The most the Government can do is to create a climate in which those 22 million people are willing to do it and conditions in which they are able to do it.
There are many things the Government can do towards that end. Many of them come under the heading of fiscal measures, and I propose to leave those almost entirely to those of my hon. Friends who are expert in these subjects. I ask hon. Members to note that I say "almost entirely", because there is one thing I want to say on this aspect. I was very glad to hear the Prime Minister say yesterday that thought was being given to the question of export incentives. I had intended to say something on this topic.
We have just lost an order for a Norwegian liner, estimated at between £5 million and £6 million. I have my criticisms of the British shipbuilding industry, but it cannot be blamed for this one. The order went to France, which is hardly surprising, since the price was subsidised by a French Government subsidy amounting to £900,000. I have said that British industry must be prepared to meet and beat competition on equal terms. If it were possible in words, I would underline the words "on equal terms" three times in red. These cannot be called "equal terms". I believe that if the British shipbuilding industry will pull up its socks it can meet and beat foreign competition on equal terms, but it cannot beat the French shipbuilding industry plus the French Government. It will need the help of the British Government to do that.
Whether it be done directly in the form of subsidies or by some other fiscal device does not really matter in the end, so long as it is effective. However, it means that the British taxpayer will have to foot that bill. I submit that the British taxpayer is entitled, in return for the help which I think he will have to give to the shipbuilding and ship-repairing industries, to expect that those industries will render themselves efficient by the elimination of many of the harmful restrictive practices which have bedevilled the industry for so long.
Mr. Richard Marsh: Would the hon. Gentleman accept that

1197
the British taxpayer, if he puts up the money, should also be entitled to some control over these industries and the way they spend the money?
Mr. Price: It depends what the hon. Gentleman means by "control".
Mr. Marsh: Effective control.
Mr. Price: If the hon. Gentleman means control in the Socialist sense, I say, "No." If he means what I am saying now, that the taxpayer is entitled to receive in return for that money the maximum efficiency of which the industry is capable, I agree. I am referring in particular—I make no apology for it—to the malpractices and the restrictive practices which have bedeviled the industry for so long.
Mr. William Warbey Mr. William Warbey (Ashfield) rose—
Mr. Price: Not again. Let me finish this part of my argument, anyway.
If the shipbuilding industry in the North-East and elsewhere wants to know why it has been having such a thin time lately, I suggest it sees what is happening in shipbuilding yards on the Continent. If the ship-repairers in Falmouth and Liverpool want to see where the tankers have gone which they should be repairing, but are not, I suggest that they visit the tanker repair yards in Palermo. The truth of the matter is that they are allowing the Continental workers to work them out of a job.
Mr. Warbey: The hon. Member has referred to restrictive practices in the shipbuilding industry. Does he recall the words of his right hon. Friend the Minister of Transport, who said some time ago that after he had considered the matter, and had studied shipbuilding methods on the Continent, what was wrong with our shipbuilding industry was that our shipbuilders were neglecting to modernise their plant, methods and lay-out?
Mr. Price: I have not the slightest doubt that that would make some contribution. I am certainly not blaming it all on to restrictive practices. I am merely finalising what I have said and making it clear that if the British taxpayer is to provide subsidies or other aids he is entitled to the maximum efficiency. We all know that we have certainly not been getting it to date.
1198
So far, I have mentioned only the shipbuilding industry as an obvious example, but we all know that my remarks apply equally to other industries, including the docks, the building industry and an industry with which I am closely connected, the printing industry. It runs throughout industry throughout the land.
So far, we have followed a policy of leaving these problems to the trade unions and employers. That course has been too slow. It has achieved some results, but not enough, and I suggest that if we are effectively to face the problems before us we need to move much more quickly.
The time has come for the Government to intervene. The time is here when someone, perhaps the Minister of Labour, should draw up a catalogue of the most damaging restrictive practices in the most vulnerable industries, publish them, ridicule them, debunk them and then, perhaps, we will get action from the employers and trade unions.
I doubt whether many people realise just how much damage unofficial strikes have been doing. I wish to give a few examples from a report prepared by the London Chamber of Commerce on the consequences of the unofficial strike of tally clerks, just over two years ago. I suggest that every hon. Member obtains a copy and reads this document. It has been assembled on the basis of replies received from more than 1,000 members of the London Chamber of Commerce. I do not have time to give the entire list of cases mentioned, or quote the entire document. The House would not want me to, so I will merely quote a few examples.
It states that 196 vesels were diverted to Continental and other ports and that 125 sailed without being worked or having been only incompletely laden or discharged. The cost of each ship lying in port was £250 to £350 a day. The Port of London Authority lost £400,000 in dues alone. A quarter of the shipping companies, members of the London General Shipowners' Society, lost £1,300,000. The cost of the strike to a firm importing grain was £20,000, £12,000 to a timber importer and £12,000 to a meat importer—and this is only what I would call the domestic problem.
The most important damage was done to our export trade and the following

1199
are a few of the experiences of members of the London Chamber of Commerce. Six orders from South America were cancelled, £4,000 worth of frozen fish was cancelled, goods destined for Malaya and Burma for Christmas were cancelled, £5,000 worth of goods for Canada were cancelled, an order for weighing machinery was cancelled and placed with a German firm instead, orders were diverted from Canada to Austria; the list goes on and on. I have time to mention only a few of them.
Orders worth millions of pounds were lost to this country, many of them permanently. Sometimes the damage done can be repaired, sometimes it is permanent. Let us remember that this is a problem in which just a few men have held the nation to ransom in defiance of their own leaders. The policy so far has been to leave these matters to the trade unions, but I submit that the time has come when the Government must intervene. The trade union movement has suffered and its reputation today is much lower than it was when I first entered politics. The Government have a duty to protect the nation against the damage caused by irresponsible minorities of whatever kind.
I say that the Government should now deal with this problem. A magnificent opportunity exists for this to be done by way of what is being called the "workers' charter." By it workers are to have contracts of service, and I applaud that.
Mr. Marsh: Who else does?
Mr. Price: I do not know. I am giving my views and I hope that the hon. Member for Greenwich (Mr. Marsh) will have an opportunity of doing the same.
However, contracts work both ways. There are two parties to each. If the workers are to have the benefits of service contracts they must accept the responsibilities, too. If the employers are to be prosecuted for breach of contract, so should workers and, in my humble submission, support of an unofficial strike—the withdrawal of labour except in support of an official strike—should be defined as a breach of contract. I hope that that view will be accepted by the Government.
In Britain, we have long recognised the right of the worker to withhold his
1200
labour in support of an official strike. But what about the right of the worker not to withhold it if he does not want to? We all know that, generally speaking, strikes are decided by a show of hands. We equally know, if we are honest about it, that all too often many of those hands are raised unwillingly because the owner of the hand fears the consequences if he does not raise it.
It used to be argued that secret ballots were impracticable. I used to accept that argument, but I do not accept it now, It was disproved less than a year ago by, I think, the Confederation of Engineering Unions when, with 22 unions represented, a secret ballot was found practicable. After all, are the Opposition electing their new leader by a show of hands? Of course not. They are doing it by secret ballot, and quite rightly.
Mr. Marsh: How does the hon. Gentleman's party choose his?
Mr. Price: I was supporting such a method and was suggesting that it should be applied to strike action.
I now turn to what I consider to be probably the most important consideration of all, and I hope that I shall carry some hon. Members opposite with me. The most important issue facing us in the next year or two is likely to be that of leadership. If we are to solve the problems with which we are faced and achieve the maximum efficiency which is essential we must carry with us the 22 million people who are working in industry. We must explain to them with absolute clarity what the problems are, how we propose to tackle them and how they can help.
I represent a constituency which contains a substantial working-class population. Very few of them really understand the problems with which we are faced and very few of those who do think it has anything to do with them. They think that it is a matter for the Government. The reason for this is obvious. If a lawyer speaks to a layman in legal phraseology, he is not understood; if a doctor speaks to a layman in medical jargon, he is not understood; when a politician or an economist speaks to a layman in political or economic jargon, he is in danger of sharing the same fate. Yet that is exactly what we do all too

1201
often. If we want them to do what they must do, we must explain to them in words of one syllable what the problems, the considerations and the solutions are.
There was one man who could do this to perfection. "What sort of people do they think we are?" he cried. I am sure that the House will remember the reaction: heads went up, shoulders went back, chests went out and there was a grim smile on every face. Nine words; ten syllables; but they inspired a nation. I wonder what the response would have been if, instead, he had said, "To what classification of the genus homo sapiens do they consider we most closely approximate?" The question does not need answering. This is a very important factor in finding the answer to the problems which we face. Revitalise industry; inspire the nation; that is what we have to do; wake 'em up and get 'em cracking.
Where is the man who can do this? It is obvious to me that he is not sitting among the political pigmies of the Opposition. The question I ask myself is whether he is sitting here below me. If he is, now is the time for him to reveal himself and go into action. If he is not, we must find him and find him quickly.
7.22 p.m.
Mr. Richard Marsh: This has been an unusual debate if for no other reason than that most of us, some weeks ago, would have thought that it would have been a very important debate, charged with drama and emotion, because it marked the end of what the Prime Minister claimed was to be the great historical adventure of the century.
But it was also made important by the speech of the hon. Member for Lewisham, West (Mr. H. A. Price). His was a speech which should be printed and circulated as widely as possible as a warning to all that there are dangers in a popular democracy and a warning of the sort of thing that can happen. In parts, it was one of the most irresponsible speeches which I have ever heard. When he dealt with industrial relations, which we would both agree to be of extreme and crucial importance, had the Minister of Labour been present he would probably have broken his heart to find that he had such colleagues behind him.
The hon. Member finished with a rhetorical flourish, "Is there a leader
1202
among us on the Government Front Bench?" This was no more than a flourish, because without the presence of Lord Salisbury nobody would be in a position to give him an answer. That is one of the fundamental differences between the two sides of the House.
The hon. Member's spew' was a classic example of what is wrong with the country economically and industrially. He accepts, as we all now accept, that although the last General Election was fought on the slogan "You've never had it so good"—and we all remember the stirring call made by the Prime Minister to the moral fibre of the country when he said on television that the good old British £ was stronger than ever before—we subsequently learned that there was a balance of payments deficit of €.500 million—what he and so many others have had to do is to seek a scapegoat. They say, "It was not our fault", and the hon. Member conjures up the classic red herring of the wicked strikers pushing Britain over the precipice into economic ruin.
It has been said many times by right hon. Gentlemen representing the Ministry of Labour that the dangers in overseas markets of exaggerating the effect of strikes in this country are incalculable. It is absurd for hon. Members opposite deliberately to exaggerate the effect of strike action on our trade, because every one of our overseas competitors has a vested interest in seeing that such statements get the maximum publicity.
I ask the hon. Member seriously to consider the facts and the comparison with other countries and then to cease making speeches of that sort. No one would want to justify strikes. They do enormous damage to the people involved in them. They leave an enormous residue of mistrust and damage in the industry concerned, but it is also absurd to lose sight of the fact that while, in a free society, some strikes and industrial disputes are inevitable, the number in this country is smaller than that in almost every one of our competitors.
Mr. Farey-Jones: To a large extent I agree with what the hon. Member has said, but how would he relate his last few sentences to the recent electrical hold-up during the cold period? Did that do enormous harm to industry, or did it not; were the shop stewards who were

1203
responsible, and who were led by Mr. Doyle, working in the national interest, or sabotaging the interests of the nation as a whole? Would the hon. Member care to comment on that?
Mr. Marsh: Yes, I will not dodge that one. The recent unofficial strike in the electrical industry at the time it took place was monstrous and I would not attempt for a moment to defend it. But in a free society disputes of this type are inevitable. There is only one way out and that is to make the penalties so high when people withdraw their labour unofficially that everyone is terrified of doing it. That is something which neither the hon. Member nor I would accept. If it is accepted that there must be some disputes in a free society, we then have to consider how Britain's performance compares with that of other countries and to what extent our bad economic showing is conditioned by industrial disputes or by other factors.
Mr. H. A. Price: Does not the hon. Member agree that we should differentiate between official and unofficial strikes?
Mr. Marsh: I cannot see how one can differentiate between official and unofficial strikes. The effects of an industrial dispute on the economy are no less because it is sanctioned by the national executive of the union than when it is unofficial. There have been attempts in many countries to make unofficial strikes illegal, but the effect is that every union involved in the industry concerned with a dispute is forced deliberately to exacerbate relations between employees and employers to the maximum in order to make sure that it gets a vote in favour of the dispute.
Let me put some simple facts to the hon. Member. The French have lost more time through industrial disputes than we have. So have the Italians and the Japanese and the Canadians. The United States of America has had about five times more time lost in disputes than we have. Every country within the Common Market has had faster rates of wage increase than has this country. Every country within the Common Market, with the exception of Western Germany which has roughly the same number, works shorter hours than we do. The same sort of thing applies to holidays.
1204
Our position is not so much worse than that of other countries because of industrial disputes. Many times there has been quoted the classic answer of the simple fact of the calendar that every seven years Christmas falls on a Wednesday and Boxing Day on a Thursday. Every time that happens, statistics show that Britain loses more time from men taking the Friday off to make up the week than through industrial disputes in any year since 1926, which was the year of the General Strike. If strikes do so much damage as is alleged, Britain's economy would grind to a monotonous halt every seven years merely because Christmas Day came on a Wednesday. Let us lose the idea that the problem which faces the British economy is the result of the activities of Mr. Charles Doyle and a group of unofficial strikers, or some other factor over which we have no control.
Mr. K. Zilliacus: Perhaps the House will recall Lord Chandos's declaration that
"In 1958 increased productivity is not within the power, granted that it is within the will, of the work-people. It is the function of capital investment and of management. Increased productivity can be gained only by reducing the effort of the operative, by reducing the sweat and toil, and not, as in former times, by increasing them."
Mr. Marsh: I am happy to be unreservedly grateful to my hon. Friend for his support.
We all agree that one of the big arguments for entering the Common Market arose out of the appalling economic performance of this country. We were told that we faced many economic difficulties, and that we had to get into the Common Market to overcome them.
I know more about the shipbuilding industry than about other industries. Recently, I was in Morocco, talking to the Minister of Shipping and Commerce about an order placed by the Moroccan Government for five small ships. They were very small ships, but they were orders. Those orders have not gone to this country. I asked why, and the Minister said, "Because no British firm tendered for them." This was at a time of massive unemployment in the shipyards, and lack of production.
I was surprised to hear this, so I asked, at the British Consulate, in Casablanca, whether this was so. I was told that it

1205
was not only so, but that they had been checking up about it and I was further told that the Board of Trade had conducted an inquiry. It had gone to one of our big shipbuilding firms and asked why it had not tendered, and the firm had said that it did not know that the order was open to tenders. It was then asked, "Are not you on the Board of Trade's special list?" to which it had replied, "What is the Board of Trade's special list?" Experiences of this type can be found over and over again. One of our problems in exports is that we are not competing with our competitors in the fight for orders.
This is not something that the French, Germans and Italians will settle for us. That is one of the points that people missed in their scramble to get into the Common Market. Our competitors have a vested interest in Britain's poor economic performance. In shipbuilding there are things which the Government can do.
I do not believe that an expansion of East-West trade is an answer to our economic problems. There are severe limitations upon the extension of such trade, for many reasons. None the less, it is all grist to the mill, and we are not in a position to ignore the possibilities that may open up to us. But if we are to look at the East European markets at all we must be prepared, because of currency problems, to barter and to accept barter deals.
Recently, one of our shipping companies lost a Russian order to a Norwegian firm. We lost it because the Russians wanted to pay in machine tools. The Norwegians had Government assistance in the distribution of these tools, but the British firms had no Government assistance, and they could not afford to take the order because the responsibility for distributing the goods was too much for them. If we are to go in for bartering on a proper basis, Government support must be given.
The right hon. Member for Thirsk and Malton (Mr. Turton) said that we ought not to look back. If he means that we should not indulge in criticisms of the past for the sake of making a point, I agree. There is no point in this. We have had eighteen months of abortive negotiations, and that is now water under the bridge. But one problem that most of us face is that we still do not know
1206
exactly what is the Government's attitude to the E.E.C. They seem to be talking as though there has been a temporary lull or setback in the negotiations.
If that is so, they had better make up their mind rapidly whether we are trying to get into the Common Market or whether we are not. The one thing that has done enormous damage is the fact that, at a time when we needed economic growth, British industry has stood still for eighteen months, wondering whether we were going into the Common Market or keeping out.
My view is that it would be a mistake to go in, both for economic and political reasons, but, whether we go in or stay out, nothing can be worse than the uncertainty which our industries have faced for the last eighteen months. It is no good for a succession of Ministers coyly to hint that although, at the moment, negotiations have broken down, we might at some time in the not too distant future reopen them, and try to get in again. If we do that, we shall be faced once again with all the same problems.
I was opposed to the idea of our entry into the Six, and I should be opposed in the future, on the basis of anything like the Community in its present attitude and form. There are fundamental differences of opinion between their approach and ours. It is not merely the question of trade, and I am glad to know that the hon. Member for Lewisham, West accepts this. We were told that the markets of Europe would be thrown open to us, and that we would be able to sell our manufactured products to the Germans, the Italians and the French. But we must remember that they would have had free entry into British markets.
I am not sure that our industry is sufficiently competitive to be able to meet that challenge. In any event, the benefits that we would have derived from the European market, as compared with those that the Continental countries would have derived from the British markets, would have been marginal. It is very much a question of balance. It was a question not of economics, but of the fundamental differences of opinion between the Six and most hon. Members on both sides of the House.
Hon. Members opposite have tried to develop the myth that the only thing

1207
that has gone wrong is that a septuagenarian soldier has suddenly pursued a policy of his own and has stopped us going into Europe. The Prime Minister, adopting the Edwardian attitude of a man leading a great nation in this time of need, has left President de Gaulle in no doubt that Princess Margaret will not have tea with him. That was an absurd thing to do. But it is even more absurd to believe that the attitude of the French is merely the attitude of de Gaulle, or that the attitude of de Gaulle is not the basic attitude of the peoples of the Six. De Gaulle inherited the French attitude after Suez. From that time onwards it became clear that the French Government were committed to trying to build themselves up as an independent force, and to build Europe up as an independent military and economic force.
Those who believe that the source of our troubles is merely President de Gaulle must follow up with the argument—as some hon. Members have been hinting—that on the death of de Gaulle, which cannot be too far off—[Laughter.] That is a legitimate point to make. I was recently talking to two Germans, and I said "Chancellor Adenauer cannot live for ever", to which they replied, "What authority have you for making a statement like that?". It is sometimes essential to make the point that they cannot all be immortal.
Mr. H. A. Price: When the hon. Member spoke to those two Germans was he speaking in double-Deutsch?
Mr. Marsh: I was merely ascertaining their opinion. But it follows that if we accept that our problems stem only from de Gaulle, with the death of de Gaulle this country could again begin to try to obtain membership of the Six, on the ground that the major obstacle to its entry has been taken away. But nineteen months before de Gaulle came to power the present attitude of trying to remove American influence from Europe was already under way. It had been started by a well-known Socialist, M. Guy Mollet, and it became the policy of M. Felix Gaillard under the Fourth Republic. Before de Gaulle ever came to power this attitude had become the basis of French policy, and the basis of much European policy.
1208
It is also true—though it should not be exaggerated because the other five Governments make sympathetic noises to us—that much of the Brussels bureaucracy was very much opposed to any attempt to change the central direction of the Commission. This is very important, because I think that a large number of hon. Members on both sides of the House would accept that we could not enter the Community unless its attitudes were fundamentally changed.
Indeed, some of my hon. Friends, as well as some hon. Members opposite, seemed to see British entry as a sort of extension of nineteenth-century colonialism. We are virtually to take the Six over and change their direction and fundamental attitudes, so that the Community would be acceptable to us. There is no possibility politically of achieving that, so we had better look elsewhere.
In what directions should we look? The first essential is that while it is necessary to get as many international agreements and connections as we can, this does not mean, as my right hon. Friend the Member for Battersea, North (Mr. Jay) once said, that we must sign any presented to us. I do not think, as he also pointed out, that we should join the Pan-African movement, or sign the Warsaw Pact. But we should reach any agreement that we can.
Basically, however, we cannot get a good agreement in any international treaty until this country is economically viable, is able to fight its own battles and is worth while admitting into partnership. We cannot go into such negotiations on the basis of Ministerial statements that we cannot afford to stay out of the organisation. I think that right hon. Gentlemen opposite were genuinely worried by the dangerous position of the British economy, but the moment they said that there was no alternative to British membership economically they could not negotiate from strength with the Six. To avoid having to accept poor terms it is essential that we build up our economy.
Obviously, there are many methods in which that can be done, but I do not want to develop that theme except to say that the part of the speech by my hon. Friend the Member for Cardiff, South-East dealing with industrial relations was one of major importance,

1209
because the big failure of the country's economy is its inability to plan ahead. One cannot plan ahead in any economy unless one can include wage planning and wage movement within that wider plan.
I do not suggest, and nor did my hon. Friend, that this is an easy thing to achieve, but I do say that until a Government can solve the problem of persuading organised labour to accept and to co-operate in long-term economic planning, no Government can solve the economic problems of the country.
I believe that it is possible to achieve this on the basis of the proposals put forward by my hon. Friend. One can argue whether it is right or wrong, but I think that there are certain trusts and confidences that trade unions have with some hon. Members on this side of the House, for historical reasons, which may make the task easier for a Labour Government.
Mr. Martin Maddan: I sympathise with a great deal of what the hon. Gentleman is saying, but does he not agree that we should not read too much into these trusts and confidences of which he speaks, in the light of Sir Stafford Cripps's wage freeze?
Mr. Marsh: I have never believed that the problems between union leaders and Labour Party Ministers would be solved by one rousing chorus of the "Red Flag" and an exchange of party cards, but I do believe that the only way of achieving success in linking wage negotiations with long-term economic planning lies in the ability of union leaders to accept that they are being treated fairly by the Government of the day. I do not believe that we can pass an Act of Parliament to deal with this by legislation. Nor do I suggest that this is an easy problem to tackle. But the prerequisite of a real incomes policy is the belief of the unions that they will be treated fairly.
In a society such as this, in which organised labour represents nearly half the working population and is potentially more powerful than the Government— that, too, is something we must accept —unless this relationship exists, the job cannot be done. I do not say that it can be done simply by having a Labour Government instead of a Conservative Government, and I think that my hon.
1210
Friend, who made it clear that he is, as one of the people who, in the next few months, will be landed with this problem, aware of it. [Laughter.] Members opposite should read the Gallup poll published in the Daily Telegraph today. If they think that the prospect is unlikely then they are even worse mathematicians than politicians.
We must recognise that this country has to stand or fall by its own efforts. There is no easy way out by entry in the Community. There is no easy way out by saying that our problems will be solved by trading exclusively with the Commonwealth. That argument has always been put up and shot down by the fanatical pro-Common Marketeers. But it is one which I have never heard put by the anti-Marketeers.
I have attended meetings with anti-Marketeers, some of whom were quite extraordinary company. At none of these meetings did I ever hear anyone suggesting that our way out was to depend on Commonwealth trade. No one thinks that that is possible. All we have to depend on is our ability to trade with a lot of other countries.
If the breakdown of these negotiations shows that we cannot depend on others to help us out, then we shall do ourselves a great deal of good by learning the lesson. But if, on the other hand, we keep ourselves to the hope that in a few years time we may be able to go back to the negotiations and that ultimately somehow or other someone else will help us out, Britain will inevitably become but a third-class economic Power.
7.48 p.m
The Earl of DalkeithI could not agree with the hon. Member for Greenwich (Mr. Marsh) when he spoke disapprovingly of the speech of my hon. Friend the Member for Lewisham, West (Mr. H. A. Price), for I believe that the hon. Gentleman made one of the most constructive speeches in the debate. If I wanted someone to address my constituents on the subject of the excellence of trade unions and industrial relations under a Tory Government, I should ask the hon. Gentleman for Greenwich (Mr. Marsh) because he gave a most spirited praise to industrial relations in our country at present in relation to other nations. I am very sorry that he is not dissatisfied that they are not

1211
better than they are, even though they are better than among our competitors. I myself would like to see them a good deal better.
In these two days we have heard many speeches, large parts of them devoted to suggestions many of which have already been announced as part of the Government's policy. Surprisingly enough, a great many of these suggestions have come from hon. Members opposite, including the right hon. Member for Huyton (Mr. H. Wilson). A great deal of time has also been spent in wringing our hands and looking back, and while it is right that my right hon. Friend the Lord Privy Seal should have treated us to a factual account of what took place, I think that a great deal of time can be wasted by looking backwards too much, unless there are lessons we can learn as a result of the negotiations.
We have to try to answer the question of where we go from here. We can do this best by keeping our priorities right. In the first place, whether we like it or not, we must accept that the cold war is likely to go on for quite a long time to come. The Communists have the great advantage of being in one large geographical group, one big political and economic unit, with one boss. We know that the challenge of the future will be more and more a challenge of economics. It will be coupled, of course, with ideals, but mainly it will be an economic challenge.
The great obstacle in the West is nationalism, the besetting sin of all the Western nations. Europe itself counts for precious little. The United States by itself counts for precious little. Britain and the Commonwealth by themselves count for precious little. The key to the future solution of our problems lies in interdependence.
Different people have different ideas about what is meant by interdependence. President de Gaulle's idea is, perhaps, a little different from ours. My own belief is that interdependence can be either political or economic, but I am certain that political interdependence must flow from economic interdependence. I do not see how one can force it the other way. Political interdependence is something which comes naturally out of the economic necessity for interdependence.
1212
Now that our first flush of disappointment at the failure of the Common Market negotiations is over, it is no use going on castigating President de Gaulle. We must try to understand him so that we may produce a closer alliance in some different form in the future. Only by understanding him shall we achieve better co-operation. I should like to remind President de Gaulle that at one time there was an old alliance between Scotland and France which was highly successful. When he indulges in diatribes about the Anglo-Saxons, he should, perhaps, be reminded that the United Kingdom today is, largely, run by Scotsmen, and there is no reason why we should not have the same sort of alliance that we used to have.
We must make the best of things now and find some new form of association. The wedding is off, but, to adopt the words which the newspapers so often use in speaking of film stars, there is no reason why we should not be just good friends. I think that we can do a great deal within these limitations.
We can do a great deal in collaboration with Germany in the future. Germany is one of the great economic pillars of the Common Market. We should consolidate the friendship which she has shown to us during the closing phases of the Common Market negotiations. Above all, let us remember that one of the things which we mean by interdependence is having our businesses and factories in one another's countries. This should be encouraged in every possible way, whether one is a member of the other organisation or not. At the same time, we must keep in mind that there is likely to be quite a run of industries from this country into Europe in an effort to get the benefit of the European market. This is a problem which the Government should face at once, and, if possible, they should have some sort of agreement with each member country of the Six whereby, for every factory which we build in their countries, they build a factory in this country employing an equal number of people. Otherwise, the difficulty of improving our employment situation in this country will be aggravated.
It would be very healthy for East-West relations if we could have not only more by way of trade with Russia but a chance

1213
to plant some of our businesses, factories or business bases behind the Iron Curtain. At the same time, it would be very nice to think that the Russians could unbend sufficiently to break away from their old idea of everything having to be run by the State and if they, too, could have some of their industries in our country.
Hon. Members have spoken about putting our own house in order. We have learned some lessons from the Brussels negotiations about our weaknesses. Some of them have been high-lighted. We have also, I think, learned a great many lessons in the course of our intensive conferences and talks with the Commonwealth countries. These should have led to a good deal of new understanding about how we can trade with each other in the future.
I criticise those who, in a sort of cloud-cuckoo world, pretend that the Commonwealth is the answer to all our problems. I absolve the hon. Member for Greenwich from any such criticism because he agreed that the solution to our problems did not lie only in that direction, but there have been hon. Members who thought that the Commonwealth was the one source of prosperity for us in the future. The hon. Member for Wednesbury (Mr. Stonehouse) criticised the Government for not having concentrated more time and attention upon improving Commonwealth relations and trade in the last eighteen months, but he rather destroyed his own argument by then quoting the latest trade figures which showed that we had been selling more to Australia and buying more back from Australia in the last year, than we had in previous years.
It is clear that the Commonwealth countries are, largely, the countries which we have been teaching to produce what we produce in this country. It is only natural that they will wish to continue to protect themselves against our factories. Therefore, we cannot aim at once at having a free trading partnership with them, with a particularly low tariff. They are all protectionist-minded and, however much we should like to see tariffs come down, it is not something which they would accept.
In order to put our own house in order, there is one thing we must tackle with a great sense of urgency. I do not see how this country can be politically or economically competitive in the world
1214
unless the whole nation is fully employed. We simply cannot afford, quite apart from the human problems, to have a wastage of manpower in great chunks of our country which varies between 3 and 8 per cent. We cannot afford to continue to spend in Scotland alone £9½ million, as we did last year, on unemployment benefits, that is, £9½ million paid to people to do nothing.
The Local Employment Act has been tried. As a result of our experience with it, and as a result of experience in our general economic situation during the past three or four years, the solution is becoming somewhat clearer. The Local Employment Act has done very well in helping isolated pockets of unemployment, but it has not begun to tackle the big regional problems. During the past eight years, there has been a pattern of alternate boom and recession. I am sure the Government will do their best to control these ups and downs, although I do not believe that it will ever be possible to have complete economic steadiness for any length of time because there are outside forces and pressures in the world which makes recessions and booms inevitable.
The trouble is that, whenever the country reaches a state of economic boom, this is the moment when we run into inflationary danger, and it is just at the time when the south of England is reaching the inflationary peak that the Scottish region is beginning to get on its feet. I do not see how we can cope with this situation unless we introduce fiscal discrimination. This is the only way by which we can stimulate the whole of the northern area and stimulate the whole economy of Scotland instead of just fiddling about with small pockets of unemployment.
I would be churlish not to recognise what my right hon. Friend the Chancellor of the Exchequer has already done to stimulate the economy by way of special deposits, repayment of post-war credits, allowances for industrial developments, reduction in Purchase Tax on motor cars, and so on. They will all help, but I am a little afraid that they will hasten the day when, once more, we approach the near-inflation line when he will have to reintroduce credit squeezes to damp down the economy. There are difficulties in these ideas about

1215
new forms of taxation made on a geographical basis, and I am quite sure that the Treasury officials will fight as hard as they can against them, but I can assure the Chancellor that there are several of us who will give him every support in the battle.
We are living in an age of facts, figures and statistics. We are all a little too apt to judge the state of a nation by the member of houses with television aerials rather than by the human beings inside them. The people of our tiny island have made a tremendous impact on the world solely because of their enormous strength of character, and it is on that character that our ability to thrive in the future depends. It is therefore worth urging the Government to pay as much attention as possible to the psychological aspect of Government.
There have been great changes in the country in the last few years. We have had the introduction of more and more automation, as a result of which millions of people daily gaze at thousands of objects going slowly past them. We must think of their psychological approach to life. There has also been the introduction of the Welfare State which, while it is unthinkable that it should ever be dismantled, has had a profound effect on people's thinking—the "What do I get for nothing?" idea.—[HON. MEMBERS: "Oh."]
Some people have been able to speak more eloquently than I can on the subject of the Welfare State, so I will quote just one sentence from Henry Fearon's Horder Memorial Essay for 1961, in which he says:
"For what the Welfare State has done is to pamper the worst characteristics within us —all those things which previous ages have condemned or frowned upon, and which the Church and State have tried desperately to eradicate on the national character"—
Mr. Marsh: The hon. Member will find similar sentiments in the 1834 Report of the Poor Law Commissioners.
The Earl of Dalkeith: We must recognise the problems that accompany changes like this and, through the Government, help people as much as possible to avoid the pitfalls that go with this sort of novelty in our lives. The Government have shown that they are taking the psychological approach by the intro
1216
duction of the Contracts of Employment Bill, but there is much else that can be done.
This is "National Productivity Year", and although I was delighted to hear on the B.B.C. yesterday an exultant voice announcing that triplets had been born to an Ayrshire cow by a Charollais bull —an excellent example of Anglo-French relations—I cannot help thinking that we should at present be concentrating more on a "National Sense of Purpose Year".
I could not help smiling when I saw that the Amendment on the Order Paper calling for
"… a sense of urgency and national purpose…"
came from the Labour Party. I cannot help feeling that the man most qualified in the country to rouse us is none other than my right hon. Friend the Prime Minister, when he chooses to do it. I am sure that his words, accompanied by the tune of "Land of Hope and Glory" would be a good deal more effective than the rabble-rousing nattering of the party opposite to the accompaniment of "The Red Flag".
Mr. Emrys Hughes: Does not the noble Earl think that the Ayrshire cow is more productive than the Prime Minister?
8.5 p.m.
Mr. William Baxter: I do not wish exactly to follow the lines of the speech we have heard from the noble Lord the Member for Edinburgh, North (The Earl of Dalkeith), but I would suggest that some ex-Ministers of the Crown might have been prepared to put their names to the Opposition's Amendment. During the last eighteen months I have attended a number of debates on whether or not we should join the Common Market, but I have rarely heard an ex-Minister speaking in favour or praise of the Cabinet as at present constituted.
Yesterday, the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) made some criticism and spoke in a very flowery manner about what our future actions should be. Today, the right hon. Member for Thirsk and Malton (Mr. Turton) made a most able and likeable speech, and one to which

1217
I could subscribe almost 100 per cent., but was nevertheless somewhat critical of the Government. It seems that the Prime Minister hypnotises members of the Cabinet with his watchful eye and that only when out of office do they give very much better performances and express themselves more ably and in a more understandable manner. The moral of the story might be taken to heart by the members of the present Cabinet. The right hon. and learned Member for Hertfordshire, East referred to great leaders of the past. He spoke of Chatham and Churchill, but the omission he made was that he did not introduce the name of the present Prime Minister. Has he lost faith in the man who gave him an office of State?
As one who originally voted against the Government entering the Common Market negotiations, I think that I have a right and a duty to express my point of view. Very many people have spoken since that occasion when twelve of us voted against the opening of those negotiations and many have since expressed quite forcibly and freely their complete opposition to our entering the Community. Therefore, it is not only my colleagues and friends on the Opposition Front Bench but many hon. Members opposite who have come off the fence and have decided that to go into the Common Market would not be very good for the country.
Nevertheless, no one can deny that the whole nation has been disappointed and feels that it has been let down. By the actions of the present Government, the country has been put into the most humiliating position it has ever been in. But can we expect anything more from the present Government? I do not think that we have the right to do so. If we look back at their actions over the years we note that successive Tory Governments have been good at only one thing—procrastination. Not only procrastination, but they have not been able to make decisions. Apparently they were never able to bring in a proper plan for the industrial well-being of the country, and they have never made any real progress to put this country into the concept of a modern society.
There is no question, even after the Prime Minister's speech, that agriculturists will be reassured about its future.
1218
For a number of years there has been a growing feeling of uncertainty among agriculturists. I listened with respect to the Prime Minister, but I did not hear him present any tangible solution to this problem, other than to the effect that he proposed to cut down subsidies. That would be a difficult thing to do, and the right hon. Gentleman will have to be careful about the road which he seeks to travel.
Consider the problems of coal, of oil and of steel and power. Have this Government brought into being a comprehensive policy in respect of these things? The answer must be, "No". Consider the question of unemployment. No one can but agree that the state of affairs is deplorable. The noble Lord the Member for Edinburgh, North rightly said that this country cannot afford almost 1 million people unemployed. Consider the position of industry. We must all recognise that its future is most uncertain.
This Government, and Tory Governments since 1951, have enjoyed one great asset—the ability to coin a slick phrase. They have been able to work a confidence trick on the electors. Before there was a decision to negotiate to enter the Common Market we had phrases such as, "You never had it so good"—"The wind of change"—"Set the people free". And we were told that the standard of living of our people would be doubled within twenty years. We recall that shortly after the Tory Government came to power in 1951 there was propaganda in favour of this country becoming closely associated with America. Many people thought that we should become a State of America. While this propaganda was going on people became convinced that we had never had it so good and we would continue to have it so in the years ahead, and so the idea of becoming closely associated with America went out of the window.
Only about four years ago there was propaganda to the effect that the present Chancellor of the Exchequer was anxious to obtain a special agreement with the Common Market countries. But that idea fell through. What did we do in retaliation? We started negotiations and eventually created E.F.T.A. That mad idea could, in my opinion, result in a sensible agreement only if it was used at some time in the future as a bargaining

1219
counter by the Government to secure a good and sensible agreement with the Common Market countries.
I have said in the House before that if the E.F.T.A. agreement is not superseded by other agreements, certain of our basic industries will feel the draught in the years ahead. I will mention one upon which the Scottish economy depends to a great extent, namely, the paper industry. This industry depends on wood pulp from Canada and the Scandinavian countries, and also upon esparto grass from Africa. I make bold to say that it would be much more economical for the Scandinavian countries to produce paper and dump it in Britain than to supply the raw material to be made into pulp and used in the paper works in this country. The paper industry in Scotland has received considerable tariff assistance, amounting in terms of £'s a year to roughly £7 million. With a labour force of 19,000 people this Scottish industry will grind to a halt once the doors are fully opened under the terms of E.F.T.A. and new mills get started in the Scandinavian countries.
When the Americans pressed Britain to join the Common Market—there is no doubt that this happened 18 months ago —the Government discovered that E.F.T.A., instead of being an asset, was a millstone around their neck. Why did the Government attempt the impossible? Why did they attempt to go into the Common Market, accept the terms of the Treaty of Rome, still keep the Commonwealth, be true to E.F.T.A. and safeguard the agricultural interests of this country? That is the "fifty-dollar question".
I will remind hon. Members of the attitude of the Prime Minister when he addressed this House on the subject of entering the Common Market. He spoke of the economic benefits which would result. But the right hon. Gentleman did not then realise that in attempting to secure those economic benefits he was getting on to a slippery slope. But he began to realize—and it has been the burden of speeches made from the Government Front Bench—that we should not be able to accept only the economic advantages which would result from going into the Common Market. We should have to accept the political implications also. In simple terms it meant that the economic integration of Britain with the
1220
Common Market countries would have to become a reality, with all the political consequences which would follow.
Furthermore, agreements connected with the Commonwealth could be only of a temporary nature and gradually the Commonwealth as such would cease to exist. It is true that in any case the character of the Commonwealth would have to alter with the passage of time. But the present concept of the Commonwealth was not compatible with the idea of joining the Common Market. No one who has the least interest in the agricultural industry can be unaware that over the years the Conservative Party has always been prepared to sacrifice the interests of agriculture in favour of the interests of the industrialists. That cannot be refuted by any hon. Member. Right down our chequered industrial history agriculture has been sacrificed for industrial development. I need not say who introduced the Agriculture Acts of 1931 and 1947, but the present Government have introduced very few Acts of any consequence since.
Not only would all these things have to be done if we went into the Common Market, but the agreement which we have made with E.F.T.A. would have to go overboard. The many obligations which the Government have taken upon themselves would have to go. America wanted Britain to become part of Europe, because she wanted to keep the N.A.T.O. Alliance in being. N.A.T.O. had to become a political force backed up by a so-called independent nuclear deterrent controlled by the American Government. Because of that fundamental fact we were being forced to go into Europe—not for economical reasons, nor even for political reasons, but merely in order that a N.A.T.O. nuclear force could be built up.
But, as the national bard of Scotland said,
"The best laid schemes o' mice and men Gang aft a-gley."
De Gaulle made it abundantly clear that he wants an independent Europe. In that, although it might not be very important, he has my support. But his desire to make Europe a nuclear force can never have my support because that is the act of stupidity. De Gaulle learned a lesson from Cuba, but it apparently has not been learned by our Government. It

1221
was a warning and lesson to France which de Gaulle has not forgotten and will never forget. He knows that it would be suicidal for France to put herself in the position of being dependent on the decisions of a power such as America or, for that matter, a power such as Russia. That would be the maddest thing, and this is one of the greatest mistakes that has been made by the Government. They have become so dependent on America for their so-called defence that if a war had broken out over Cuba there is no doubt that this country would have been in the first line of that conflict. If the Government do not learn this lesson quickly, the danger to our country is great.
I listened with great interest and pleasure to my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan). He made an excellent speech, giving us ideas about what this country should do in future. I should like to devote a few minutes to that subject. I agree that we need leadership, but it is impossible to get it from this Government. I have never heard anything like the two speeches that we had from the Government Front Bench yesterday. The speech of the Secretary of State for Commonwealth Relations and Secretary of State for the Colonies was a disgrace. He quoted my right hon. Friend the Member for Huyton (Mr. H. Wilson) as saying that we should keep an open mind. There is no doubt that the Minister's mind was exceedingly open: there did not appear to be anything in it.
What should we do? Hon. Members have a great responsibility. Since I came into Parliament, I have seen great wastage of time and energy, even in this assembly, and before we ask others to put their house in order we should put ours in order. I cannot see a modern democracy working on the basis of the horse and buggy period. The whole question of our Parliamentary procedure should be altered drastically. I would go so far as to say that we would be well served by half of the Members present now and let the rest go in order that they might do some good honest work.
I say with the greatest respect that if we do not put our own house in order the future of Britain will not be shaped in the manner that we want. The whole nation—employer and employee—must
1222
be brought to realise that the future greatness and prosperity of us all depends on a wide and virile industry and that any industry which is not playing its full part is not doing what the nation expects it to do.
Old ideologies must go out the window. We need a three-way partnership in industry between the Government, industrialists and workers. Old ideas must be altered and new ideas and new conceptions introduced. Great mistakes have been made in the past. Since the war, we have seen the practice of monopoly growing in our midst. We have seen industries growing in magnitude. Whenever a monopoly is created, be it in Government or private business, they add considerably to their overheads. One of the great problems of industry is that because of the lush years of the past it has added to the overheads to such an extent that it has priced itself out of the competitive market.
I have been taking stock of the overheads in my own industry. I was speaking to a member of a large industry the other day. This man belonged to a large undertaking in this country which was in the news not long ago. He told me that the overheads of his industry were 600 per cent. This is absolutely fantastic and disgraceful.
Not only must the Government realise this. Parkinson's Law works very effectively also in Government offices. I was chairman of a large hospital board before I came to this House. That was before the regional boards were brought into being. There was an old man there, a part-time worker who did clerical work. A new employee was appointed to his position and started at £350 a year. Two hospitals were joined tinder the new scheme and today that man is getting a salary of £3,000-odd and has a staff of almost fifty. This is fantastic and disgraceful. Responsibility lies on the shoulders of the Government to see that it is altered at the earliest possible moment.
Public money should be and must be used for the good of the people and of the nation. To what better purpose could public money be put than the industry of the nation? All the social services and all the improvements in our way of life depend on first-class and expanding industries of the country. Three

1223
things are required at the moment. There should be a complete survey of all industry in the land to see what the buildings are like, what the plants are like and what are the potentialities of growth. It should be used to find the interest which various industries have in the export market and whether that can be expanded. That survey should be made as quickly as possible.
Secondly, there should be co-ordination of all the scientific knowledge and development in the country under the control of one organisation working in unison with the universities. That should give impetus and show the need for expanding the small industries on which the nation so much depends. Another thing which is often forgotten is that there is a council for art in conjunction with universities. That could be directed to be used to get the best possible ideas in modern design. If we looked at what is done by the small nation, Denmark, we would see what is required in this respect.
I beg the Chancellor of the Exchequer to forget the spying and the secret diplomacy going on through the world in our embassies. This is not the time to find out what statesmen are thinking. They would be better employed in finding how much trade and commerce could take place with other countries. I respectfully suggest that there should be an encyclopædia provided in this country listing the needs and requirements of all the nations of the world so that industrialists, without any trouble, could get all necessary information about markets which they can use. I deplore the fact that when I went to some of our embassies on the continent, I found that the person responsible there for trade with Britain had never been in my native country. He was representing trade and commerce for my nation and he had not the foggiest idea of what was going on there.
Hon. Members on both sides of the House have said that N.A.T.O. is a permanent part of the nation's life. I have heard that often, but if that is the mind of hon. Members on both sides it is indeed a great tragedy. There may have been some justification in the past for N.A.T.O. being born, but it can never be looked upon as sacrosanct
1224
or as a permanent part of our lives. It can only be a stepping stone to a bigger conception. It would be foolish for any hon. Member to look on these military alliances, whether N.A.T.O. or others of that nature, as anything but a stepping stone to a bigger idea.
Two great issues present themselves in this debate. One is trade and commerce, whether we go into the Common Market or not. Interwoven with that is the N.A.T.O. Alliance and the peace of the world. They are two great issues which mankind, irrespective of political convictions, must look at in an unbiased way. If I had been speaking in the Canadian House of Commons I should have had my words echoed by the Conservative section of that assembly, and especially by the Canadian Prime Minister, who has been diametrically opposed to the conception of the Common Market and to nuclear arms being provided for his country. He would be no different from me in this respect although he is a Right-winger and I am called a Left-winger.
We have to get these ideas out of our minds, for there is little time to think of stupid phrases about Left and Right when these great issues are before us. They are great issues to which we have to make up our minds just as we shall have to answer on the great Day of Judgment. Do not be fobbed off by party Whips, but decide far yourselves whether the road we are travelling is the road for peace and prosperity of this country. I should like to see the Prime Minister changing his Cabinet immediately He would do well to put Roy Thomson in charge of the Foreign Office.
I have probably overstayed my welcome, but great issues face the country and the world. I ask and implore every hon. Member to transgress party allegiances. Let hon. Members come to conclusions on these two issues, as they would do on the great Day of Judgment, deciding them on whether they are interests of the country and of the world and forgetting the interests of their party.
8.36 p.m.
Mr. Robert Mathew: The hon. Member for West Stirlingshire (Mr. Baxter) will not expect me to follow him

1225
into the backwaters of party political controversy, or to comment on his stimulating suggestions on Cabinet reconstruction. Nor can I share his obvious satisfaction that one door to European unity has, for the moment at least, been closed.
It is a matter of regret that the Opposition should have tabled a censure Amendment, because it has led a number of hon. Members opposite to make what I can describe only as good General Election campaign speeches. The House of Commons has a duty at this grave moment, both politically and economically, which demands great decisions, challenging and at the same time stimulating—decisions in the economic field calling, as so many hon. Members have done, for a complete reinvigoration of industry and of business life, calling for the complete reform of our commercial and industrial life and for the reform of methods and, at the same time, offering us a political challenge in the free world, where we must take the initiative.
Therefore, this debate should be concerned with sending a message to the people of the country that we are possessed of an overwhelming sense of urgency and of challenge at this moment, which can be compared in the political and economic spheres with the military danger and challenge which faced us in 1940.
In one of the less endearing passages of his speech, the right hon. Member for Huyton (Mr. H. Wilson) referred to the Government being hack to square one. That is a complete misreading of the international situation. In the first place, the action of the President of the French Republic has changed all the rules of the game and probably the game itself. There is no question of going back to square one. The whole foreign affairs scene has changed as a result of President de Gaulle's decision to threaten the use of the veto in the European Economic Community.
Contrary to what some hon. Members opposite have said, Western Europe, during the last eighteen months, has come to realise the sincerity of this country's European policy. It was only in the early days that Continental statesmen and politicians were suspicious of the sincerity of this country, implying that we were coming in with all sorts
1226
of conditions for the Commonwealth, and so on, to break down what had already been achieved in the E.E.C. I was surprised to hear the hon. Member for Wednesbury (Mr. Stonehouse) suggest that Continental statesmen were still saying that the derogations, the special conditions for which we were asking, were unacceptable, because every single Foreign Secretary of the Five has spoken with regret at what has happened and suggested that the negotiations could have come to a successful conclusion if political action had not been taken by the President of France.
Secondly, the President of the French Republic has created a rift in the Western Alliance which, if action is not taken now to close the alliance, can be extremely menacing, and this is the first time that the rift has actually been seen to be opening wide before our eyes. This is a menacing situation, and perhaps one of the greatest moments of danger since 1945.
Thirdly, the E.E.C. itself has received a blow from which it may not recover, at any rate in the political sphere. Certainly, the Benelux countries and Italy will never again have the same faith in any purely E.E.C. political arrangement. That, I think, has gone for ever as a result of the action of the President of the French Republic.
The Benelux countries, Holland in particular, and Italy, believe in a political future in Europe based on partnership, on equality of the States, and on interdependence, but that concept does not come into the ideas of the present French Government. The truth is that because the Government of the United Kingdom believed in a liberal European solution, a gradual step by step move forward towards a genuine liberal European unity, a real unity, and because President de Gaulle did not believe in that, we were the better Europeans, because we believed in a Europe which could be realised, whereas General de Gaulle believes in a Europe which belongs to a past age, which is narrow, nationalistic, and nineteenth century.
That view is understandable. That view is logical, but is does not belong to 1963. It does not belong to the interdependent conception of the free world which is the only hope the world has for peace, menaced as it is by the growing and lasting

1227
strength of the Kremlin today, and tomorrow the certainty of a great military and political threat from Mao Tse-tung in the forbidden city. This is the world situation. General de Gaulle says that we were not realistic. Nothing could be less than realistic to think in terms of Europe independent of America in the military sphere, or, indeed, of America herself independent of her allies, against that background of military menace.
I have always thought that the political consequences of the failure of the negotiations would be greater than the economic, and, as we have heard today in speech after speech, it is clear that the economic consequences, if we do not face the challenge squarely, are grave enough in themselves.
In the political sphere there is a growing recognition in Western Europe of what we had to bring to European unity. What we had to bring, above all, was the reality of parliamentary democracy, the experience that we in the House of Commons have had over hundreds of years. This played some part in the way events went. The hon. Member for Greenwich (Mr. Marsh) said that we were all imagining things when we thought that we would change the spirit of the Community. If this country had gone into the E.E.C., and with us the Irish and the Scandinavian countries, with their sound democratic and Parliamentary tradition, I am firmly convinced that the members of this House who went to the European Parliament would not have been there very long before they had established Parliamentary control.
I have never feared the danger of the Continental idea of the huge bureaucracy, the danger of the Commission, about which so many enemies of the European idea have spoken in the last twelve months. Those of us, including the hon. Member for Wednesbury, who have served in European assemblies have noticed that there is one thing that the British do better and are respected for in Europe, and that is running Parliamentary institutions. Basic to the whole of our politcal life in this country for very many years indeed has been the principle of Parliamentary control.
It would have been a very short time before the British with their allies from the north of Europe who we would have
1228
taken into the E.E.C. would have established that principle. I have heard leading Dutch statesmen say openly in European assemblies and in international committees that for political reasons alone they wished to see us come in with the Danes, the Norwegians and the Irish so that proper Parliamentary control could be established and real teeth put into the European Parliament of the Six.
There is a very deep sense of frustration in Western Europe. Therefore, the challenge is the political vacuum which now exists as regards the future political unity of Europe. The initiative, in the words of the hon. Member for Devon, North (Mr. Thorpe) yesterday, is with us, and it is an initiative that we must seize. I believe that all the nations in the Six, other than the French, and the other nations in Western Europe who wish to see some concert of the free nations of Europe, some form of political co-operation in Europe, will now look to us. This is an opportunity we must not turn aside. We have been rebuffed by the Six, but we have not been rebuffed by democratic Europe.
On the economic side, many nostrums have been advocated including, as the hon. Member for West Stirlingshire said, turning out Members of Parliament to do what he described as a proper job of work. I am convinced that if the country can be made conscious of the sense of urgency which has arisen in this debate we can meet the challenge in the economic field without any qualms whatsoever. What we cannot do is allow the two great enemies—complacency and inaction—to drive us back to a position of treading water and waiting for something to come along. Micawberism in the economic sphere could now be fatal to this country. The moment is dangerous, but it is every bit as stimulating as some of the great challenges in our history.
Not only must we consider expanding trade within the existing Commonwealth organisation—including our Commonwealth Trading Treaties and E.F.T.A.— but we must look dynamically towards new markets in North America, Canada and other areas where there are untapped opportunities for British industry. That task must be faced with resolution and I would like to see teams from the Board of Trade and of businessmen looking at

1229
these opportunities because I believe that they have never been examined seriously by industry in this country. The same applies to the Far East—Japan, in particular—to South America and Eastern Europe. A dynamic approach now would open up markets which have never been contemplated before by British industry. This should be done especially now; in this supreme hour of need to increase our exports.
If the House of Commons can make the jolt felt throughout the country we will have nothing to fear. The only thing we have to fear is complacency, the "It-will-be-all-right-in-the-end" and "I-told-you-so"-ism, and so on. I particularly welcome the Government's attitude to Europe. We know that this door towards European unity is closed, but other doors are open. They must remain open. Whereas we should take the initiative on the political side we will have to reserve the maximum independence of action on the economic side. Of course we want to see the multilateral reduction of tariffs, the success of the Kennedy Round, and so on, but in view of what has happened —our rejection by one country of the Six —we have the right to look at every foreign trade agreement we have.
I recall the suggestion made by my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) yesterday to the effect that amendments of G.A.T.T. should be considered by the whole Commonwealth. We all know the practical difficulties involved, but with real resolution and concerted action by the Commonwealth as a whole I am certain that we could achieve something along those lines. We must tell Europe that, economically, we are reserving our position and that we feel that we have the right to look at all our international treaty obligations with the closest scrutiny. Above all, we must have a vigorous European policy because it is only on the basis of the maximum European unity that the Atlantic Alliance will survive. The present policy of France, if it is not checked by British political leadership in Europe, can destroy the prospects of European unity and, at the same time, damage the Western Alliance. Britain must use all her influence to lead Europe back to a stable, responsible and outward-looking policy.
8.54 p.m.
Mr. George Brown: The speech of the hon. Member for Honiton (Mr. Mathew) reflects the sort of speeches we have heard all through the debate. Apart from the Government Front Bench, there has been in every part of the House an understanding that what we have been conducting is an inquiry into one of the gravest matters with which this country has been concerned. We are faced with the questions, "Where do we go from here?" and "What happens now?".
I have listened to most of the debate and have heard speeches from both sides of the House. All of them, like that of the hon. Member for Honiton, have been gravely concerned about this matter; all of them, that is, except the Ministerial speeches that we have heard. Because I have a great regard for the Chancellor of the Exchequer, who is to follow me, I hope that his speech will be more nearly addressed to the gravity which all our people outside feel about the situation at the moment than have any of those which we have heard from his colleagues so far.
The best definition of what the debate is about occurred in a leader in The Times on Monday, and I should like to make a short quotation from it. After an introductory passage, it said that the debate was about
"Britain's place in the world, her way of life, her standard of living, her influence, and her purpose."
It is not about who went wrong and where and when. It is about our way of life, our purpose and our place in the world. Measured against that, I ask hon. Members on both sides of the House whether they do not agree with me that the speeches which we have had from the Prime Minister and from other Ministers who have supported him have been miserably inadequate. They have not been addressed to that at all.
The conclusion I draw from their speeches is that they literally do not have a clue about where we go from here. They are totally obsessed with what has happened, totally obsessed with their failure, desperately anxious to prove that it was not because of them that it went wrong. But they have no idea of what happens from here on.
Here I should like to say a word about the Lord Privy Seal. I have no doubt, nor is there any doubt anywhere in the

1231
House, that he conducted the operations in Brussels as a very good tactical commander, given his references, his orders, his instructions. I doubt whether anybody else on the Government Front Bench could have done it half so well. But the problem has not been the tactical conduct of the battle. That is why the right hon. Gentleman went wrong today—he was so anxious to prove that, tactically, the battle had been conducted properly. But what went wrong was the strategy.
I wonder whether the right hon. Gentleman would not agree with me—he will not do it here publicly, of course, but perhaps in the darkness of the night— [Laughter.] Well, between him and me it is perfectly safe; it is all right; it is not my problem, anyway; I do not know about the right hon. Gentleman. Anyway, some time when we are not on view, would he not agree with me that the real problem which he had to suffer was the strategist, the man in charge of the strategy, the man who was dealing with General de Gaulle? Was not that where it all went wrong? The right hon. Gentleman did his best with the tactics, but somebody higher up muddled the whole strategy. I feel that in fairness to the right hon. Gentleman we ought to understand that.
When I say that the Government do not have a clue about where to go from here, in a way it is not surprising. They have tried almost everything that they can try. The Chancellor of the Exchequer is identified with a tremendous effort to make a go of E.F.T.A. While trying to make a go of E.F.T.A., inevitably perhaps, he had to declare that E.E.C. was an absolute impossibility for this country. He is on record, as are some of his colleagues, as saying that at that time.
But then the right hon. Gentleman failed—I am not saying that it was his fault—to make a go of E.F.T.A. He and his colleagues then swallowed all their words of that time and turned to E.E.C. In the course of trying to make a go of E.E.C., they declared again and again that we had no alternative. They did this to build up a head of steam behind their application, and they failed. I am not saying whether it was or was not their fault, but they failed at that, too. They have now failed twice, and in each case they have said that the other course would not do.
1232
On top of that, they have shown the Commonwealth, as they have shown the members of E.F.T.A., that to get there they were prepared to sell them short. They are, therefore, left with literally nowhere to turn without running into the very distrust that they have themselves created. Given this situation, which has been the one clearly overlaying every Ministerial speech, they are unable to summon Britain to action at this moment because they have nowhere to which they can summon it.
They are bewildered men; they are exhausted men, and they are desperately awash. They have been humiliated time after time, in a fashion that leaders of this country have not had to tolerate for 1,000 years. [HON. MEMBERS: "Oh."] Yes—a slap in the face in Paris, the order of the boot in Brussels, and a kick in the Bahamas just to make sure. Their only reply was to stop Princess Margaret going to Paris to raise funds for the British Hospital there. Only the most supine time-server could vote confidence in them after that.
The mood of the nation is quite different. Our people have sustained and resented every humiliation that the Prime Minister has suffered. But our people, unlike the Prime Minister and his colleagues, do not want to reply in the manner of one old man being rude to another old man about who led whom up the garden at Rambouillet. Our people want action to restore Britain's strength. They want to restore our place in the world and they do not believe that it cannot be done.
We have a working population of over 20 million people. They are equal to the best in the world. We have great industrial capacity. We have scientists who are coveted, appealed to and attracted all over the world. Yet none of these magnificent resources today is being anywhere nearly fully employed in this country. At the moment, Britain's great need—as the right hon. Member for Thirsk and Malton (Mr. Turton) said, in a speech that I much admired—is for inspired leadership. It is that and that alone that can put things right.
We must stop harking back to Brussels, which is all that any Minister, from the Prime Minister onwards, has yet done.

1233
We must give up this futile hope that Italy or Luxembourg can make General de Gaulle change his mind. Above all, we must stop messing about—as the Prime Minister so dangerously did yesterday—and angling for Dr. Adenauer to come to our aid. That way, the way which the Prime Minister chose yesterday, lies only yet more humiliation for our proud country. Let me tell Ministers if they do not understand it. Britain is "fed up" at being pushed around as we have been under their Administration for so long.
I have listened to most of this debate and there seem to be three main requirements for British policy now. First, a realistic and tough plan for industrial development, re-equipment and redeployment here at home. Secondly, an ability to co-operate with, and to obtain co-operation from, other nations which, like us, are now deeply worried about where they go from here. Thirdly, a capacity to summon from our people the mood and the will to accept and to undertake the necessary consequences of such a programme. It is our submission, borne out by their own speeches, that all these three principles are clearly beyond either the grasp or the competence of members of this Administration.
At the end of this great debate, let me look briefly at each of these principles. Yesterday, my right hon. Friend the Member for Huyton (Mr. H. Wilson) and today my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) spelt out in detail and with great clarity—for they both excel in this field—the plans that might well be followed, that should be followed, to put this country back on its feet. They are plans to achieve expansion at home and to achieve the loosening of the channels of international trade.
I shall not repeat those plans now. Anyone, who did not hear their great speeches can read them in HANSARD. We shall restate these plans again and again in the country during the weeks ahead. They represent, despite the jeers of right hon. Gentlemen opposite, who have nothing to offer of their own, a blueprint for action.
I say one thing about them, however. There is one issue above all that Ministers have not faced. That is that we
1234
must make a decision about our overriding priority. We consider that the overriding priority now must go to expansion. There are other dangers and other problems involved in expansion. The right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) gave overriding priority to one of the dangers and he was wrong. The present Chancellor is so terrified of picking between the dangers that he is not willing to pick a priority at all.
If he decides, as we think he should, that the overriding priority must be expansion, then it is easier to see the way ahead. The blueprint we have submitted offers a lead to which industrialists—and I have met many of them recently—management and labour can respond. Every one of my Conservative industrial friends tells me that the thing they are gravely lacking at the moment is a lead to which they can respond.
Our plans offer a way through for other nations of the Commonwealth and of E.F.T.A. as well, for they have their trade problems just as we have. They offer an assurance to the President of the United States that if he presses on with his bold initiative of liberalising and lowering the barriers to international trade he can expect support from a British strong enough to give it and to stand up to the consequences of giving it.
It is no use the present Prime Minister going to Camp David, or to Washington, and offering support to the President, because the President, whom I know, too, knows very well that at the moment we are in no position to live up to the protestations of support which the Prime Minister may offer. By any definition, the Administration in the United States is a good one. It is an Administration willing to do things which no previous Administration has been willing to do. We ought to put ourselves in a position to support, reinforce and help it because we do not know, the American electoral system being what it is, what may follow it later.
The House will have noted, although there have, of course, been the usual jeers when we put them forward, that, so far as any plans have been discussed during this debate, they have been our plans. It is easy for the Government to jeer at the Opposition's plans, but there has not been a single alternative from any

1235
of the three Ministers, who spoke for very nearly three hours between them. They did not put forward an alternative plan, yet they are the men with responsibility for the nation.
Behind the economic problems there are human factors to be taken into account. We must rid ourselves of the legacy of ill will, doubt and suspicion which has been left throughout the world by the Government and, especially, the personal actions of the Prime Minister during the past two years. It is pointless for the Lord Privy Seal indignantly to deny, as he did today, that we were preparing to sell E.F.T.A. short in going into the Common Market.
It is ridiculous because, if the Prime Minister really meant what he said on television, and repeated in the House, that that brutal Frenchman—I am using his words—torpedoed the negotiations because they were on the point of success, it must follow that the Government were prepared to welsh on their pledges. [An HON. MEMBER: "Nonsense:"] I was hoping that somebody would say "Nonsense", but the Prime Minister was too wily, and he has now told the Lord Privy Seal to be quiet. I am not surprised.
I draw the Prime Minister's attention to the document which has been deposited by the Belgian Government in the Belgian Parliament. It was quoted extensively by The Times last Monday. If it is inaccurate, we shall be very glad if the Prime Minister will prepare a similar paper for this House, giving us what he thinks the situation is. I ask right hon. and hon. Members to read what is said in the Belgian document. It sets out the concessions which we had made at the point when the brutal Frenchman prevented us from going in.
According to this Belgian document, we had agreed to apply the Market's common external tariff, immediately on becoming a member, on 95 per cent. of imports from third countries, the remaining 5 per cent. being made up of aluminium, lead, zinc and newsprint. Hon. Members can work out for themselves which of the Dominions were covered by that.
We had accepted the principle and the mechanisms—I emphasise that—of the common agricultural policy and the regulations which the Six had agreed on.
1236
We had accepted the new association agreement between the Common Market and the 18 African States. We had admitted that the E.F.T.A. and the Common Market were incompatible and had expressed the hope that this problem would be solved.
I now turn to the Prime Minister's statement to the House on 31st July, 1961. Let the Lord Privy Seal work out whether it matches what I have just stated. In answer to my late right hon. Friend, the then Leader of the Opposition, the Prime Minister said:
"Of course, we have always made it clear that unless we can get terms satisfactory to British agriculture, satisfactory to our E.F.T.A. partners … or satisfactory to the Commonweath interests, well, then, this agreement cannot be made."—[OFFICIAL REPORT, 31st July, 1961; Vol. 645, c. 933.]
Are those satisfactory to any single one of them?
The Prime Minister grins, other Ministers grin, but let them look behind them to those representing agricultural interests. Let them go to any representative of the agricultural interests in England and ask him whether that was satisfactory to them. I will come back to the Commonwealth in a moment, and we will find out why the Prime Minister is afraid to have, unable to have, a Commonwealth Prime Minister's conference.
The Government have, in fact, cheated on the undertakings that the Prime Minister gave. He can laugh them off, but other people do not. We now have, Britain now has—and this is the problem that faces any Government here—to repair our relations with our E.F.T.A. partners. We have to develop greater trade arrangements with them. We have to seek to expand the area of E.F.T.A. It is easy for the Prime Minister to say "Terrible", but, unhappily, whatever he has in his mind is not in keeping with what people in this country or outside it are thinking. This is the problem. Those whom the gods intend to destroy they first drive mad—and the Prime Minister is very nearly there.
This is not the moment to play that kind of politics. The job that the nation needs today requires at the head of affairs here new men, men who are untainted with the duplicity, with the deception and the double-dealing that are now universally regarded as the hallmark of this Administration and of the Prime Minister.

1237
There is a similar, urgent job to be done on Commonwealth relations. Of course, the Prime Minister cannot call a Commonwealth Prime Ministers' conference. Which Commonwealth Prime Minister would be likely to come here again while the right hon. Gentleman and the Secretary of State for Commonwealth Relations are still in their present offices —after the experience they had last time, after the inspired Press stories, when they had to go home and issue papers in their own Parliaments to try to bring out the truth of what, in fact, happens when they meet these Ministers?
Yet it is an urgent necessity to have a Prime Ministers' conference if the obstacles to Commonwealth trade are to be overcome, and if the production of the industrialised members of the Commonwealth is to be geared not only to their own demands, but, much more importantly, to the demands of the underdeveloped parts of the Commonwealth. A Prime Ministers' conference is an urgent necessity if we are to solve the problems of financing trade between the under developed and developed members of the Commonwealth. Free gifts are not the answer, either for the people who give them or for those who receive them. Somehow or other we have to solve the financing problem. The fact that the Government are unable to take this particular urgent action is, I submit, another major disqualification for office at this critical time.
There is one other primary danger ahead. In doing all this—if, indeed, we can—we must avoid adding a new major trade division to the political division that already exists in Europe. It would be disastrous to split the Western forces in Europe on trade grounds when we have the East-West political division in Europe. Yet I say this. By the reckless policy, which the Prime Minister is currently following, of an insult a day to France, this is precisely the risk that he is running. Do not let the House underestimate the possible consequences of what the Prime Minister is doing. He is in an ugly mood. He is kicking out all round, and I beg the House to understand that N.A.T.O. could easily be the ultimate casualty of the policy which he is now pursuing.
When I heard the Prime Minister yesterday, as another instalment of the insult-a-day policy, rebuking France for
1238
defaulting on her N.A.T.O. obligations in relation to her naval and air forces, I remembered his own personal responsibility for the fact that, not only now but long before, Britain has been failing to carry out her own solemn obligations to N.A.T.O. And I am bound to say that I felt ill and I wondered why he was not. We were the first to welsh. We have been welshing for years and Britain is, unhappily, responsible in the end for the decisions that Ministers make. When the Prime Minister was Minister of Defence he was the first man to start the policy of pulling back on the solemn obligation which his then Prime Minister entered into, and we have been doing it ever since. We are doing it now, so it does not lie in his mouth to attack the President of France.
Our relations with France must be restored. President de Gaulle may go on acting in a way which we do not like. He may go on preventing things from developing in ways that would better suit our purpose. But we still have to live in the world as it is, and with the statesmen that it contains. We cannot make our foreign, our defence, or our trade policies contingent on liking particular nations or statesmen. I wish that we had been able to get into the E.E.C. I should still like to see the day come when we can get in. But the essential conditions are not available to us today. So let us maintain as much trade as we can with the area. Let us maintain the best relations we can with the area. Let us co-operate where we can in other fields and stop this ridiculous recriminating battle across the ether and via Parliament.
Finally, let me state my third requirement. We must change the mood at home. We must tell the people plainly that the bingo age is over. It is an age for which the Prime Minister, again, bears a heavy responsibility. If the right hon. Gentleman is ever remembered as a Chancellor what will it be for?—the introduction of the lottery. And in their hearts our people know that the bingo age is over. [An HON. MEMBER: "That is what the right hon. Gentleman lives on."] I am very content that that observation should be on the record. The hon. Member should not be making that kind of silly point.

1239
I want our people to know what the Prime Minister is thinking of at this critical moment. Let him tell our people, or get out and let somebody else tell our people, that we now need a new economic policy which will involve priorities and selective concentration in terms of work to be done and places where the work is to be done. They need to be told frankly that from here on social value, social urgency and social need will determine the projects which will be undertaken and the services which will be developed rather than the profitability of those projects or those services.
Unlike some hon. Members opposite, people outside, in their hearts, understand this. They already know, for example, that the railways cannot be discarded in the fashion that Dr. Beeching and the Minister of Transport have tried to arrange, for the very reason that I have given—that their social need is so much greater and outweighs the question of profitability. The Government should be telling management at this time what its tasks are and should be calling on it to face its own weaknesses and inefficiencies —and they are many. But given a clear national need, given Government support and adequate consultation, I declare my belief that it will respond, and then we must be equally open and blunt with the trade unions, too. [Interruption.] That is exactly the thing which makes the whole operation so difficult while hon. Members opposite are in power.
We must take the trade unions fully into consultation from the outset. We must assure them that their negotiating and arbitration machinery will again be free. We must set the industrial and economic facts before them. We must demonstrate that the costs and rewards of the programme will be fairly apportioned. If this is done—and, hitherto, it has not been done—we can get the trade unions to participate in a genuine incomes policy and we can fairly ask them to face their own problems. There are problems of inter-union relationships. There are problems about the proper apportionment of functions and authority within each union. These problems they should face. They can and would face them if the other things which I have mentioned were first done.
1240
I believe that the nation is "fed up to the back teeth" with the way that things have gone these last few years. We can blame whom we like for it. I believe that the nation wants to plan ahead for 1970 and is barely interested in what has happened between 1957 and now. The nation has no taste for elaborately contrived Edwardian lethargic poses. I am sure that the nation does not want to be regarded anywhere in the world as in need of baling out. I believe that today it would take strong, determined leadership.
Two weeks ago, speaking in the country, I challenged the Prime Minister, after what he had to say at Liverpool, to put the matter to the test. Yesterday, my right hon. Friend the Member for Huyton repeated the call. Go to the country, give the people the choice. We are ready and we are prepared to face the test. Are the Government?
9.30 p.m.
The Chancellor of the Exchequer (Mr. Reginald Maudling): The right hon. Member for Belper (Mr. G. Brown) said, quite rightly, that in the course of the speeches of his right hon. Friend the Member for Huyton (Mr. H. Wilson) and his hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) many positive proposals were made, to which I intend to refer. He certainly himself went a long way towards restoring the average, for we had no positive proposals from him. If he wanted to help in this situation, I doubt whether he was really well advised to offer the British Government a short sermon—I think that was his phrase— on the Commonwealth and N.A.T.O. That was as unwise as it was untrue.
He said that my right hon. Friend the Prime Minister is afraid to call a Commonwealth Prime Ministers' Conference. That is describable only as unmitigated nonsense. The Prime Minister knows like the Prime Ministers of Australia and New Zealand that problems are not solved by calling conferences such as the party opposite seems to think. The right hon. Member talked once again about the E.F.T.A. pledge, which the right hon. Member for Smethwick (Mr. Gordon Walker) so distorted last night. I resent this very much. I had something to do with the

1241
founding of that and with the undertaking which was given, that when we had done our negotiations with the Six it was our intention that all the E.F.T.A. countries' problems would be solved simultaneously, an undertaking from which we have never in any way departed.
It does no good to this country, nor to our E.F.T.A. partners, to suggest the opposite. I dare say the right hon. Member for Smethwick did not mean to distort this matter, but he just did not understand. When the penny dropped this afternoon what a clang there was. Then the right hon. Member for Belper said, do not add new major trade divisions to the Western world. What does he think we have been trying to do for the last few years, to create divisions or avoid divisions? Are we creating divisions in the trading system of the Western world? Good heavens, has he hardly understood a thing that has happened in the last two years?
He talked about building up N.A.T.O. He is right; of course he is right. I do not know if he listened to the speeches of some of his hon. Friends today. Perhaps they are not his hon. Friends, but certainly some of the speeches from the other side of the Chamber did not suggest that the strength of N.A.T.O. was the main thought which was in the forefront of the minds of some hon. Members opposite.
In turning to the needs for action at present, he talked first about an industrial plan—a word we have heard very often. He described the proposals of the right hon. Member for Huyton and the hon. Member for Cardiff, South-East as a blueprint. Certainly they made many proposals, but I think that when we analyse them we shall find that so far as they were practical proposals they have already been adopted by the Government. [HON. MEMBERS: "Oh."] We shall run through some of them and see. I noticed during the speech of the right hon. Member for Huyton that time and time again the unusual phrase was used, "as the Prime Minister said this afternoon". That was about the sensible proposals.
The right hon. Member for Belper said that at the moment we want overriding priority for expansion. I think those words "overriding priority" extremely dangerous. "Overriding priority" is one
1242
thing, but I remember the right hon. Member for Huyton years ago saying an extremely good thing, namely, that above all things, we must place the strength of sterling. I hope the right hon. Member for Belper agrees with that. In this conflict which overrides which? I noticed, rather to my surprise, that the hon. Member for Cardiff, South-East today said that I might have done too much.
Mr. Callaghan: I said there was some danger.
Mr. Maudling: The hon. Member said there was some danger that I might do too much. I shall remember that when the next Budget comes. Of course, the hon. Member is right. There is always a danger of any Chancellor of the Exchequer doing too much. The judgments on these matters are exceedingly difficult.
I assure the hon. Gentleman, however, of one thing. If I do not think that the economy can stand it, I will not put more money into it than it can afford. Equally, if the economy can stand more stimulation I will not he frightened of being accused by the right hon. Gentleman of being popular.
The issues which we have been discussing in these two days are serious. I do not share the view of some right hon. and hon. Members who have a feeling of relief at the situation which we have reached. Nor do I agree with the right hon. Member for Smethwick that the nation is facing a very grave situation. That is just not true. [HON. MEMBERS "Oh."] We are facing a great disappointment, but not a disaster. It can only be turned into a disaster by our own folly or weakness. The sort of speech that we have just heard is an example of that.
We have seen a new stage in the continuing struggle to establish this country's new position in a rapidly changing world. The world scene is changing with the evolution of the super-Powers and the enormous military predominance of the United States. The Commonwealth is changing with industrialisation overseas, with the new political situation and the new diversity of the Commonwealth, which adds so much to its strength. Europe has been changing with the drive towards integration. Within these

1243
changes, we must remember, as my hon. Friend the Member for Cambridge (Sir H. Kerr) said yesterday and as my right hon. Friend the Member for Woodford (Sir W. Churchill) once said, that our foreign policy and attitude must be based upon the three intersecting circles—the United States, the Commonwealth and Europe—all of which are essential to us.
In our relations with Europe in recent years and in the future, we must always base ourselves upon that principle. The O.E.E.C. was an enormous strength to Europe because it contained the United States and Canada as well as European countries and because it was reconcilable with Commonwealth trade. The O.E.E.C. led to reduction of tariffs and the establishment of the European Payments Union. On top of that, there came the new development of the Treaty of Rome with the advance towards the complete abolition of tariffs among European countries and a completely new portent of political significance because of all that it meant to the relations between France and Germany, and of economic significance because of the possibility of a division of Europe.
It was against that background that we supported originally the idea of the free trade area. It was not designed, as the hon. Member for Devon, North (Mr. Thorpe) suggested yesterday, to undermine the Common Market, because it was agreed to by all the countries of the Common Market before the Treaty of Rome was ratified. Both Dr. Adenauer and the French Government agreed explicitly with us on ratification to form a free trade area. Then, the negotiations failed because the French Government decided that they could not continue with them. After that, we established the E.F.T.A., partly because any expansion of freedom of trade is valuable and partly to prevent a further disintegration of Western Europe and to provide a basis for a reconciliation and a full European system. We made our bid to join the European Economic Community because we believed that it could be done without vital damage either to the Commonwealth or to E.F.T.A. and because we believed, in the situation that had developed, that the strength of Britain was fundamental to the strength of the Commonwealth and that the strength of Britain would be greater
1244
within the Community than it would be outside it.
That attempt, too, like the previous one, has been defeated at the eleventh hour, but who can say that we were wrong to try? I am not clear where the Opposition stand. Do they think that we were wrong to try to form in Europe this vision which so many people of good will and imagination have had? If they consider that we were right to try, do they think that anyone could have tried harder and more successfully than my right hon. Friend the Lord Privy Seal? Their complaint against him has not been that he tried inadequately. They have complained that he tried too hard.
This collapse of the negotiations is, I am sure, not permanent. The whole logic of history means that we must see developing in the long run a united Europe within an Atlantic Community, and as science compresses our globe more and more, and as the Chinese millions storm across the Eastern world, more and more the world will see the folly of Europe being disunited.
We have reached a definite stage. One road is closed. We have now some certainty of a kind that is of importance to British industry. We must not undermine that, nor of course would we reject sensible, practical, ideas that may be put to us, but we must for the time being at any rate plan on the basis that we are not becoming members of the European Community.
I turn now to the plans we must make and the things we must do. What we want is not new policies, because our policies have been right, and no one in the party opposite can gainsay that to aim at a single European system, to aim at the maximum freedom of world trade, can be other than the right policy for this country. What we need in the new situation are new measures in a new spirit, and it is about these that I shall talk.
There are things that we would have to do whether or not we joined the Community, and there are others which now present themselves in a new light, new possibilities, and new requirements, in the light of the failure of the negotiations.
First, what we must do in any case is common ground. As the hon. Gentlemen the Member for Cardiff, South-East

1245
said, we must redouble our export effort. I think perhaps that the assessment of our export problem has been a little underestimated by some right hon. Gentlemen opposite, for example the right hon. Member for Huyton. It is not enough to think of the other markets that we have throughout the world and the fact that 84 per cent. of our trade throughout the world is not affected by the Common Market. What we must not forget is that we are facing across the Channel a giant new competitor with an economy on the scale of the United States, but with a wage level not three times ours but about the same level as our own. It is bound to make its position felt, and we must not underestimate it.
We shall be faced throughout the world with a new and very powerful competitor against whom we must stand. That means, above all, that in fighting for our export trade we must hold down our costs. This theme has run through a number of speeches, for example that of my hon. Friend the Member for Louth (Sir C. Osborne), who rightly and continuously reminds the House of the need for exports, and the importance of containing costs as the only sound basis for an export trade.
Then, as many hon. Members have said, we must work with other countries to stimulate the level of world trade in present conditions. For example, the O.E.C.D. is an organisation in which much important work can be done. Mention was made this afternoon of concerting monetary policies. There is a lot in this. We are all learning in the Western world that it is easier to expand together than for one country to expand at the expense of another. In O.E.C.D., with the presence of the United States and Canada, we have an effective instrument for concerting economic policies and advancing together towards expansion.
International liquidity was mentioned. Here, too, I think that the change in the situation with the ending of the Brussels negotiations re-emphasises once again the importance of the possessors of the two key currencies, sterling and dollar, working together to ensure that the liquidity of the world's financial system is adequate, without imposing on the key currencies themselves burdens
1246
they are not fit to carry, and which it is not right to impose on them.
Then, as everyone has said, we must persist with the Kennedy Round. I think it would be unwise to assume that this will move too quickly. There are many complications. It is in itself a very bold concept, and the bolder the concept the more practical difficulties that faint hearts in many countries may throw in the way. We certainly made quite clear our support for the United States Administration. Mr. Herter was good enough to come to London recently at my invitation. I took the opportunity of stressing to him with my right hon. Friend the President of the Board of Trade our determination to work with the United States as vigorously as we can to ensure that this round of tariff reductions is made as rapid, as effective, and as widespread as it possibly can be.
There has been much mention of commodity agreements. This point has featured in many speeches. This is not a new policy for us. Tin, sugar, cocoa, coffee, wheat—there are many international commodity agreements in which we have taken part, and in many cases we have taken a lead in them. However, it is not a thing which this country can do alone. We cannot carry the weight of the world commodity market on our shoulders. We cannot have an effective scheme, unless the bulk of the world producers and the bulk of the world consumers are in that scheme.
Frequent reference has been made to bulk contracts. I have no objection of doctrine to bulk contracts, though I fear that in practice they might often finish up with our carrying the burden of higher than world prices. It is dangerous for this country, particularly in this new situation, to carry higher prices for commodities than our competitors. [Interruption.] I quite agree that with sugar it is a burden which this country carries, and rightly and gladly carries, for the benefit of the Commonwealth.
Then we want all possible additional aids to exports, improving the Board of Trade services, and strengthening and expanding our credits. Anyone who looks at the matter objectively will realise that our system of export credits is the best of any in the Western world. I am prepared to push the length of credit and the terms

1247
we give to the extreme we can, but there are limits. There are international obligations. We are not over-scrupulous about international obligations. [HON, MEMBERS: "Hear, hear.") We believe in interpreting them. We believe in carrying them out fully, but in accordance with what we are obliged to do. I am often told that we are the mugs and that everyone else cheats in these matters. This is just not true. [Laughter.] The truth is that these obligations are observed by all the member countries and it would be no good for us or anybody else to try to break up these agreements.
I turn now to consider the gains and the losses that result from the failure of these negotiations. First, let me look at the gains. The two main gains that occur to us from the failure of these negotiations are, first, that we retain freedom of commercial and agricultural policy, and, secondly, that we retain our preferential position in the Commonwealth and in the E.F.T.A. We have heard a good deal about the E.F.T.A. situation. The buying power of our E.F.T.A. partners is very considerable, but I want to say something about our trade with the Commonwealth.
It is said by many people that the United Kingdom's share of Commonwealth trade has contracted and that preferences have fallen. This was inevitable. Our share of Commonwealth trade was extremely high in many cases. The share remains high and the preferences remain important. In Canada, Australia and New Zealand, as my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) pointed out, 80 per cent. to 90 per cent. of our sales get a preference averaging from 10 per cent. to 15 per cent. It is important to have early discussions with these countries in particular about the new situation which has arisen. A single Commonwealth system, I think it is generally agreed, is impossible. Nor could the preferences be increased in accordance with the terms of the G.A.T.T., and I do not think that the Commonwealth as a whole has any desire to disturb the present arrangements under the G.A.T.T.
However, if the preferences cannot be increased in present circumstances, is it not possible to cease the erosion of them which has taken place over recent years?
1248
I believe that there are many practical ways in which we and the various Commonwealth countries can help one another. We must look at our level and methods of agricultural protection from the point of view of being as helpful as we can to our Commonwealth partners. Equally, they must look at the levels and methods of their industrial protection from the point of view of being as helpful as they can to us. We are entitled to protect our agriculture, just as they are entitled to protect their industry. We should, therefore, cooperate in these things to be as helpful to one another as we can.
I have heard some people suggest that the Commonwealth expects to take everything but give nothing. There are examples in which Commonwealth countries have caused difficulties to our trade, but such a description of our trade would be wholly unfair. We certainly cannot expect the Commonwealth countries to abandon the protection they give to their industries any more than they can expect us to abandon the protection we give to our agriculture. The essential thing is that they should import as much as possible, and this is precisely what they are doing. Despite quotas and tariffs, the Commonwealth countries are importing the maximum they possibly can—and this is our opportunity to seize, with the preferences we have, as much trade as possible.
I sometimes think that British industry tends to take the Commonwealth a little bit for granted. People think of the things they used to sell twenty years ago and which they cannot sell now because those countries are making them. But as the old markets disappear new ones emerge and the new ones are bigger than the old. It is said that the Commonwealth countries are less attractive as markets because they are industrialising themselves. What nonsense that is. The more they industrialise themselves, the better the market they become. What could be a better market for this country in ten or twenty years' time than, for example, an industrialised India?
We must recognise both the erosion of preferences that has taken place and the opportunities which remain. In this connection, the losses we have suffered from being excluded from the European Community may be described basically as three. Firstly, losing the opportunity

1249
of tariff-free entry to the growing market of the Community, secondly, losing the new competition and wider industrial base which would arise from membership and, thirdly, our position regarding incoming and outgoing investment has been considerably changed.
Concerning the market itself, it has been rightly said that we are selling an increased amount of goods over the tariff barrier. This will not, on balance, be increased against us. But many firms are selling goods at small profits, or even at a loss, doing so with the prospect before them of increased trade. But we should not under-estimate how great will have to be the efforts of our businessmen to sustain what they have been doing recently.
Then the question of competition and the basis of a wider market. With the absence of this new competition from Europe we must do more to stimulate new competition in our industry. On the other hand, we must be realistic about this. If our market is to be a smaller one than the market of our competitors, the structure of our industry must be such as to reflect the comparative size of our market. With a smaller market and faced with modern industrial competition, too many firms cannot share it. We mast strive against monopolies but, on the other hand, look upon mergers, consolidation and the growth of firms in a number of industries on the basis of what is practical and not the other way round.
We must make it clear that we welcome American investment with open arms and there can be no doubt that such investment has brought great benefit to many parts of this country, particularly the development districts such as Scotland. As for outgoing investment, we must be sensible and not clamp down on it. It would be very silly in a fit of emotion to say that we should stop British industry from investing in Europe, for that not only brings us investment on its own but can facilitate the development of our own exports in assembly, and the manufacture of components. We can and should invest in Europe to the extent limited only by our balance of payments and the strength of our reserves. There need be no basic conflict between investment in this country and investment in Europe. Investment in this country should be limited only by our physical
1250
resources; investment in Europe should be limited only by the availability of foreign exchange to finance it. It would be a very retrograde and short-sighted step to take this occasion of the failure of,the Brussels negotiations to cut down on the sort of investments—I agree that we must be selective—which in the long run will strengthen the economy of this country both in invisible income and the prospects of visible exports.
All the discussions of plans and possibilities have been based on the principle that essentially the efficiency of our own economy is fundamental to all that we are trying to do. The efforts which we must introduce for expansion, for redoubled expansion, without inflation add more than ever to the significance of the National Economic Development Council. I have heard many suggestions this afternoon about co-operation among Government, unions and employers to plan and work out ideas.
This is precisely what N.E.D.C. has been doing since my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) my predecessor established it. The Council—[Interruption.] If hon. Members opposite laugh at N.E.D.C. they will not find that the trade unions do. It is doing precisely what the hon. Member for Cardiff. South-East said should be done. It will be working on plans and targets for industry, discussing the problems and discussing the obstacles to growth before decisions are made.
The hon. Member said that decisions were made by the Government, but it is not only the Government. The Government have decisions to make in questions like taxation, tariff policy, monopoly policy, expenditure on education, expenditure on roads and so on.—[HON. MEMBERS: "And the pay pause."]—and the pay pause and an incomes policy as well. Surely one lesson which even the right hon. Member for Huyton should have learned in the last few years is that we cannot have expansion without a great increase in exports, that we cannot have an increase in exports unless we hold our costs steady, that we cannot hold our costs steady unless we have an effective incomes policy. Surely that lesson has been learned.
Of course an incomes policy holds good for all sorts of incomes. It is not just a question of singling out wages. I know

1251
that wages are the largest single element. [Interruption.] It is no good hon. Members opposite saying that N.E.D.C. will work and N.I.C. will not. It is no good agreeing with the general principles of N.E.D.C. without having some machine to make them work in practice. The trouble with hon. Members opposite is that they produce the most wonderful sentiments about what should happen and the most wonderful principles and the most wonderful theories, but when we produce practical machinery to make them work, they reject it every time.
The Amendment calls for necessary changes in our policy. In so far as the party opposite has produced suggestions for the changes, they have been impracticable, and have been shown to be im-
practicable. This is a situation not of crisis, not of disaster, but of challenge which cannot be met by the party opposite whose sole idea—[Interruption.] I know that the right hon. Member for Belper usually follows the principle of "Anything you can say, I can shout louder," but this has not been an occasion for shouting. This has been an occasion for assessment, an occasion for setting out policies. The Government have made it perfectly clear that the policies which we are pursuing are those which the country needs.
Question put, That the words proposed to be left out stand part of the Question: —
The House divided: Ayes 333. Noes 227.

Division No. 48.]

AYES

[10.0 p.m.

Agnew, Sir Peter

Cleaver, Leonard

Gower, Raymond

Aitken, W. T.

Cole, Norman

Grant-Ferris, R.

Allan, Robert (Paddington, S.)

Cooke, Robert

Green, Alan

Allason, James

Cooper, A. E.

Gresham Cooke, R.

Amery, Rt. Han. Julian

Cordeaux, Lt.-Col. J. K.

Grosvenor, Lt-Col. R. G.

Arbuthnot, John

Corfield, F. V.

Gurden, Harold

Ashton, Sir Hubert

Costain, A. P.

Hall, John (Wycombe)

Atkins, Humphrey

Coulson, Michael

Hamilton, Michael (Wellingborough)

Awdry, Daniel (Chippenham)

Courtney, Cdr. Anthony

Hare, Rt, Hon. John

Balniel, Lord

Craddock, Sir Beresford (Spelthome)

Harris, Frederic (Croydon, N.W.)

Barber, Anthony

Crawley, Aidan

Harris, Reader (Heston)

Barlow, Sir John

Crosthwaite-Eyre, Col. Sir Oliver

Harrison, Brian (Maldon)

Barter, John

Crowder, F. P.

Harrison, Col, Sir Harwood (Eye)

Batsford, Brian

Cunningham, Knox

Harvey, Sir Arthur Vere (Macclesf'd)

Beamish, Col. Sir Tufton

Curran, Charles

Harvey, John (Walthamstow, E.)

Bell, Ronald

Currie, G. B. H.

Harvie Anderson, Miss

Bennett, F. M. (Torquay)

Dalkeith, Earl of

Hastings, Stephen

Bennett, Dr. Reginald (GOB & Fhm)

d'Avigdor-Goldsmid, Sir Henrv

Hay, John

Berkeley, Humphry

Deedes, Rt. Hon. W. F.

Heald, Rt. Hon. Sir Lionel

Bevins, Rt. Hon. Reginald

Digby, Simon Wingfield

Heath, Rt. Hon. Edward

Bidgood, John C.

Donaldson, Cmdr. C. E. M.

Henderson, John (Cathcart)

Biffen, John

Drayson, G. B.

Hendry, Forbes

Biggs-Davison, John

du Cann, Edward

Hicks Beach, Maj. W.

Bingham, R. M.

Duncan, Sir James

Hill, Dr. Rt. Hon. Charles (Luton)

Birch, Rt. Hon. Nigel

Duthie, Sir William

Hill, Mrs. Eveline (Wythenshawe)

Bishop, F. P.

Eden, John

Hill, J. E. B. (S. Norfolk)

Black, Sir Cyril

Elliot, Capt. Walter (Carshalton)

Hirst, Geoffrey

Bossom, Hon. Clive

Elliott,R.W.(Nwcastle-upon-Tyne,N.)

Hobson, Sir John

Bourne-Arton, A.

Emery, Peter

Hocking, Philip N.

Box, Donald

Emmett, Hon. Mrs. Evelyn

Holland, Philip

Boyd-Carpenter, Rt. Hon. John

Errington, Sir Eric

Hollingworth, John

Boyle, Rt. Hon. Sir Edward

Erroll, Rt. Hon. F. J.

Hope, Rt. Hon. Lord John

Braine, Bernard

Farey-Jones, F. W.

Hopkins, Alan

Brewis, John

Farr, John

Hornby, R. p.

Bromley-Davenport,Lt.-Col.SirWalter

Fell, Anthony

Horneby-Smith, Rt. Hon. Dame P.

Brooke, Rt. Hon. Henry

Fisher, Nigel

Howard, Hon. C. R (St. Ives)

Brooman-White, R.

Fletcher-Cooke, Charles

Howard, John (Southampton, Test)

Brown, Alan (Tottenham)

Forrest, George

Hughes Hallett, Vice-Admiral John

Bryan, Paul

Foster, John

Hughes-Young, Michael

Buck, Antony

Fraser,Rt.Hn.Hugh(Stafrord&Stone)

Hulbert, Sir Norman

Bullard, Denys

Fraser, Ian (Plymouth, Sutton)

Hurd, Sir Anthony

Bullus, Wing Commander Erie

Freeth, Denzil

Hutchison, Michael Clark

Burden, F. A.

Galbralth, Hon. T. G. D.

Iremonger, T. L.

Butcher, Sir Herbert

Gammans, Lady

Irvine, Bryant Godman (Rye)

Campbell, Sir David (Belfast, S.)

Gardner, Edward

Jackson, John

Campbell, Gordon (Moray & Nairn)

George, J. C. (Pollok)

James, David

Carr, Compton (Barons Court)

Gibson-Watt, David

Jenkins, Robert (Dulwich)

Carr, Robert (Mitcham)

Gilmour, Ian (Norfolk Central)

Johnson, Dr. Donald (Carlisle)

Cary, Sir Robert

Gilmour, Sir John (East Fife)

Johnson, Eric (Blackley)

Channon, H. P. G.

Glyn, Dr. Alan (Ciapham)

Jones, Arthur (Northants, S)

Chataway, Christopher

Glyn, Sir Richard (Dorset, N.)

Joseph, Rt. Hon. Sir Keith

Clark, Henry (Antrim, N.)

Goodhart, Philip

Kaberry, Sir Donald

Clark, William (Nottingham, S.)

Goodhew, Victor

Kerans, Cdr. J. S.

Clarke, Brig. Terence (Portsmth,w.)

Gough, Frederick

Kerby, Capt. Henry

Kerr, Sir Hamilton

Nugent, Rt. Hon. Sir Richard

Stevens, Geoffrey

Kershaw, Anthony

Orr-Ewing, C. Ian

Steward, Harold (Stockport, S.)

Kimball, Marcus

Osborn, John (Hallam)

Stodart, J. A.

Kirk, Peter

Osborne, Sir Cyril (Louth)

Stoddart-Scott, Col. Sir Malcolm

Lambton, Viscount

Page, Graham (Crosby)

Storey, Sir Samuel

Lancaster, Col. C. G.

Page, John (Harrow, West)

Studholme, Sir Henry

Leather, Sir Edwin

Pannell, Norman (Kirkdale)

Summers, Sir Spencer

Leavey, J. A.

Partridge, E.

Talbot, John E.

Leburn, Gilmour

Pearson, Frank (Clltheroe)

Tapsell, Peter

Legge-Bourke, Sir Harry

Peel, John

Taylor, Sir Charles (Eastbourne)

Lewis, Kenneth (Rutland)

Percival, Ian

Taylor, Edwin (Bolton, E.)

Lilley, F. J. P.

Peyton, John

Taylor, Frank (M'ch'st'r, Moss Side)

Lindsay, Sir Martin

Pickthorn, Sir Kenneth

Taylor, Sir William (Bradford, N.)

Linstead, Sir Hugh

Pike, Miss Mervyn

Teeling, Sir William

Litchfield, Capt. John

Pilkington, Sir Richard

Temple, John M.

Lloyd,Rt.Hn.Geoffrey (Sut'nC'dfield)

Pitman, Sir James

Thatcher, Mrs. Margaret

Lloyd, Rt. Hon. Selwyn (Wirral)

Pitt, Dame Edith

Thomas, Sir Leslie (Canterbury)

Longbottom, Charles

Pott, Percivall

Thomas, Peter (Conway)

Longden, Gilbert

Powell, Rt. Hon. J. Enoch

Thompson, Sir Kenneth (Walton)

Loveys, Walter H.

Price, David (Eastleigh)

Thorneycroft, Rt. Hon, Peter

Lucas, Sir Jocelyn

Price, H. A. (Lewisham, W.)

Thornton-Kemsley, Sir Colin

Lucas-Tooth, Sir Hugh

Prior, J. M. L.

Tiley, Arthur (Bradford, W.)

McAdden, Sir Stephen

Prior-Palmer, Brig. Sir Otho

Tilney, John (Wavertree)

MacArthur, Ian

Profumo, Rt. Hon. John

Touche, Rt. Hon. Sir Gordon

McLaren, Martin

Proudfoot, Wilfred

Turner, Colin

Maclay, Rt, Hon. John

Pym, Frances

Turton, Rt. Hon. R. H.

Maclean,SirFitzroy(ButB&N.Ayrs)

Quennell, Miss J. M.

Tweedsmuir, Lady

McLean, Neil (Inverness)

Ramsden, James

van Straubenzee, W. R.

Macleod, Rt. Hn. Iain (Enfield, W.)

Rawlinson, Sir Peter

Vane, W. M. F.

MacLeod, John (Ross & Cromarty)

Redmayne, Rt. Hon. Martin

Vaughan-Morgan, Rt. Hon. Sir John

McMaster, Stanley R.

Rees, Hugh

Vickers, Miss Joan

Macmillan,Rt,Hn.Harold(Bromley)

Rees-Davies, W. R.

Vosper, Rt. Hon. Dennis

Macmillan, Maurice (Hallfax)

Renton, Rt. Hon. David

Wakefield, Sir Wavell

Macpherson, Rt. Hn. Niall (Dumfries)

Ridley, Hon, Nicholas

Walder, David

Maddan, Martin

Ridsdale, Julian

walker, Peter

Maginnis, John E.

Rippon, Rt. Hon. Geoffrey

Walker-Smith, Rt. Hon. Sir Derek

Maitland, Sir John

Roberts, Sir Peter (Heeley)

Wall, Patrick

Markham, Major Sir Frank

Robertson, Sir D. (C'thn's & S'th'ld)

Watkinson, Rt. Hon. Harold

Marples, Rt. Hon. Ernest

Robinson, Rt. Hn. Sir R. (B'pool, S.)

Marshall, Douglas

Robson Brown, Sir William

Webster, David

Marten, Neil

Rodgers, John (Sevenoaks)

Wells, John (Maidstone)

Mathew, Robert (Honlton)

Ropner, Col. Sir Leonard

Whitelaw, William

Matthews, Gordon (Meriden)

Royle, Anthony (Richmond, Surrey)

Williams, Dudley (Exeter)

Maudling, Rt. Hon. Reginald

Russell, Ronald

Williams, Paul (Sunderland, S.)

Mawby, Ray

St. Clair, M.

Wills, Sir Gerald (Bridgwater)

Maxwell-Hyslop, R. J.

Sandys, Rt. Hon, Duncan

Wilson, Geoffrey (Truro)

Maydon, Lt.-Cmdr. S. L. C.

Scott-Hopkins, James

Wise, A. R.

Mills, Stratton

Seymour, Leslie

Wolrige-Gordon, Patrick

Miscampbell, Norman

Sharpies, Richard

Wood, Rt. Hon. Richard

Montgomery, Fergus

Shaw, M.

Woodhouse, C. M.

Moore, Sir Thomas (Ayr)

Shepherd, William

Woodnutt, Mark

More, Jasper (Ludlow)

Skeet, T. H. H.

Woollam, John

Morgan, William

Smith, Dudley (Br'ntf'd & Chiswick)

Worsley, Marcus

Morrison, John

Smithers, peter

Yates, William (The Wrekin)

Nabarro, Sir Gerald

Smyth, Rt. Hon. Brig. Sir John

Neave, Airey

Soames, Rt. Hon. Christopher

TELLERS FOR THE AYES:

Nicholls, Sir Harmar

Spearman, Sir Alexander

Mr. Chichester-Clark and

Nicholson, Sir Godfrey

Speir, Rupert

Mr. Finlay.

Noble, Rt. Hon. Michael

Stanley, Hon. Richard

NOES

Abse, Leo

Bray, Dr. Jeremy

Delargy, Hugh

Ainsley, William

Brockway, A. Fenner

Dempsey, James

Albu, Austen

Brough ton, Dr. A. D. D.

Diamond, John

Allaun, Frank (Salford, E.)

Brown, Rt. Hon. George (Helper)

Dodds, Norman

Allen, Scholefield (Crewe)

Butler, Herbert (Hackney, C.)

Donnelly, Desmond

Awbery, Stan (Bristol, Central)

Butler, Mrs. Joyce (Wood Green)

Driberg, Tom

Bacon, Miss Alice

Callaghan, James

Dugdale, Rt. Hon. John

Baird, John

Carmichael, Neil

Ede, Rt. Hon. C.

Barnett, Guy

Chapman, Donald

Edelman, Maurice

Baxter, William (Stirlingshire, W.)

Cliffe, Michael

Edwards, Rt. Hon. Ness (Caerphilly)

Beaney, Alan

Collick, Percy

Edwards, Robert (Bilston)

Bence, Cyril

Corbet,Mrs. Freda

Edwards, Waltor (Stepney)

Bennett, J. (Glasgow, Bridgeton)

Craddock, George (Bradford, S.)

Evans, Albert

Benson, Sir George

Crosland, Anthony

Finch, Harold

Blackburn, F.

Crossman, R. H. S.

Fitch, Alan

Blyton, William

Cullen, Mrs. Alice

Fletcher, Eric

Boardman, H.

Dalyell, Tam

Foot, Dingle (Ipswich)

Bottomley, Rt. Hon. A. G.

Darling, George

Foot, Michael (Ebbw Vale)

Bowden, Rt. Hn, H. W.(Leice, S.W.)

Davies.G. Elfed (Rhondda, E.)

Forman, J. c.

Bowles, Frank

Davies, Harold (Leek)

Fraser, Thomas (Hamilton)

Boyden, James

Davies, Ifor (Gower)

Calpern, Sir Myer

Braddock, Mrs. E. M.

Davies, S. O. (Merthyr)

Cinsburg, David

Bradley, Tom

Deer, George

Gooch, E. G.

1254

1255

Gordon Walker, Rt. Hon. P. C.

MacColl, James

Robinson, Kenneth (St. Pancras, N.)

Greenwood, Anthony

MacDermott, Niall

Rodgers, W. T. (Stockton)

Grey, Charles

McInnes, James

Ross, William

Griffiths, David (Rother Valley)

McKay, John (Wallsend)

Shinwell, Rt. Hon. E.

Griffiths, Rt. Hon. James (Llanetly)

Mackie, John (Enfield, East)

Silverman, Julius (Aston)

Griffiths, W. (Exchange)

McLeavy, Frank

Silverman, Sydney (Nelson)

Gunter, Ray

MacMillan, Malcolm (Western Isles)

Skeffington, Arthur

Hale, Leslie (Oldham, W.)

MacPherson, Malcolm (Stirling)

Slater, Mrs. Harriet (Stoke, N.)

Hamilton, William (West Fife)

Mahon, Simon

Slater, Joseph (Sedgefield)

Hannan, William

Mallalieu, E. L. (Brigg)

Small, William

Harper, Joseph

Mallalieu, J.P.W. (Huddersfield, E.)

Smith, Ellis (Stoke, S.)

Hart, Mrs. Judith

Manuel, Archie

Snow, Julian

Hayman, F. H.

Mapp, Charles

Sorensen, R, W.

Healey, Denis

Marsh, Richard

Soskice, Rt. Hon. Sir Frank

Henderson, Rt. Hn. Arthur (Rwly Regis)

Mason, Roy

Spriggs, Leslie

Herbison, Miss Margaret

Mayhew, Christopher

Steele, Thomas

Hewitson, Capt. M.

Mellish, R. J.

Stewart, Michael (Fulham)

Hill, J. (Midlothian)

Mendelson, J. J.

Stonehouse, John

Hilton, A. V.

Millan, Bruce

Stones, William

Holman, Percy

Milne, Edward

Strauss, Rt. Hn. G. R. (Vauxhall)

Houghton, Douglas

Mitchison, G. R.

Swain, Thomas

Howell, Charles A. (Perry Barr)

Monslow, Walter

Swingler, Stephen

Howell, Denis (Small Heath)

Moody, A. S.

Taverne, D.

Hoy, James H.

Morris, John

Taylor, Bernard (Mansfield)

Hughes, Cledwyn (Anglesey)

Moyle, Arthur

Thomas, George (Cardiff, W.)

Hughes, Emrys (S. Ayrshire)

Neal, Harold

Thompson, Dr. Alan (Dunfermline)

Hughes, Hector (Aberden, N.)

Noel-Baker, Francis (Swindon)

Thomson, G. M. (Dundee, E.)

Hunter, A. E.

Noel-Baker, Rt. Hn. Phllip (Derby, S.)

Thornton, Ernest

Hynd, H. (Accrington)

Oliver, G. H.

Tomney, Frank

Irvine, A. J. (Edge Hill)

Oram, A. E.

Wainwright, Edwin

Irving, Sydney (Dartford)

Oswald, Thomas

Warbey, William

Janner, Sir Barnett

Padley, W. E.

Weitzman, David

Jay, Rt. Hon. Douglas

Pannell, Charles (Leeds, W.)

Wells, William (Walsall, N.)

Jeger, George

Pargiter, G. A.

White, Mrs. Eirene

Jenkins, Roy (Stechford)

Parker, John

Whitlock, William

Johnson, Carol (Lewisham, S.)

Parkin, B. T.

Wigg, George

Jones, Rt. Hn. A. Creech(Wakefield)

Pavitt, Laurence

Wilkins, W. A.

Jones, Dan (Burnley)

Pearson, Arthur (Pontypridd)

Willey, Frederick

Jones, Elwyn (West Ham, S.)

Peart, Frederick

Williams, D. J. (Neath)

Jones, J. Idwal (Wrexham)

Pentland, Norman

Williams, Ll. (Abertillery)

Jones, T. W. (Merioneth)

Plummer, Sir Leslie

Williams, W, R. (Openshaw)

Kelley, Richard

Popplewell, Ernest

Williams, W. T. (Warrington)

Kenyon, Clifford

Prentice, R. E.

Willis, E. G. (Edinburgh, E.)

Key, Rt. Hon. C. W.

Price, J. T. (Westhoughton)

Wilson, Rt. Hon. Harold (Huyton)

King, Dr. Horace

Probert, Arthur

Winterbottom, R. E.

Ledger, Ron

Proctor, W. T.

Woodburn, Rt. Hon. A.

Lee, Frederick (Newton)

Pursey, Cmdr. Harry

Woof, Robert

Lee, Miss Jennie (Cannock)

Rankin, John

Wyatt, Woodrow

Lever, Harold (cheetham)

Reid, William

Yates, Victor (Ladywood)

Lever, L. M. (Ardwick)

Reynolds, G. W.

Zilliacus, K.

Lewis, Arthur (West Ham, N.)

Rhodes, H.

Loughlin, Charles

Roberts, Albert (Normanton)

TELLERS FOR THE NOES:

Mabon, Dr. J. Dickson

Roberts, Goronwy (Caernarvon)

Mr. Short and Mr. Redhead.

McCann, John

Robertson, John (Paisley)

Main Question put:—
The House divided: Ayes 330, Noes 227.

Division No. 49.]

AYES

[10.13 p.m.

Agnew, Sir Peter

Bingham, R. M.

Carr, Compton (Barons Court)

Aitken, W. T.

Birch, Rt. Hon. Nigel

Carr, Robert (Mitcham)

Allan, Robert (Paddington, S,)

Bishop, F. P.

Cary, Sir Robert

Allason, James

Black, Sir Cyril

Channon, H. P. G.

Amery, Rt. Hon. Julian

Bossom, Hon. Clive

Chataway, Christopher

Arbuthnot, John

Bourne-Arton, A.

Clark, Henry (Antrim, N.)

Ashton, Sir Hubert

Box, Donald

Clark, William (Nottingham, S.)

Atkins, Humphrey

Boyd-Carpenter, Rt. Hon. John

Clarke, Brig, Terence(Portsmth, w.)

Awdry, Daniel (Chippenham)

Boyle, Rt. Hon. Sir Edward

Cleaver, Leonard

Balniel, Lord

Braine, Bernard

Cole, Norman

Barber, Anthony

Brewis, John

Cooke, Robert

Barlow, Sir John

Bromley-Davenport, Lt.-Col. Sir Walter

Cooper, A. E.

Barter, John

Brooke, Rt. Hon. Henry

Cordeaux, Lt.-Col. J. K.

Batsford, Brian

Brooman-White, R.

Corfield, F. V.

Beamish, Col. Sir Tufton

Brown, Alan (Tottenham)

Costain, A. P.

Bell, Ronald

Bryan, Paul

Coulson, Michael

Bennett, F. M. (Torquay)

Buck, Antony

Courtney, Cdr. Anthony

Bennett, Dr. Reginald (Gos & Fhm)

Bullard, Denys

Craddock, Sir Beresford (Spelthorne)

Berkeley, Humphry

Bullus, Wing Commander Eric

Crawley, Aidan

Bevins, Rt. Hon. Reginald

Burden, F. A.

Crosthwaite-Eyre, Cot. Sir Oliver

Bidgood, John C.

Butcher, Sir Herbert

Crowder, F. P.

Biffen, John

Campbell, Sir David (Belfast, S.)

Cunningham, Knox

Biggs-Davison, John

Campbell, Gordon (Moray & Nairn)

Curran, Charles

Currie, G. B. H.

Johnson, Eric (Blackley)

Price, David (Eastleigh)

Dalkeith, Earl of

Jones, Arthur (Northants, S)

Price, H. A. (Lewisham, W.)

d'Avigdor-Goldsmid, Sir Henry

Joseph, Rt. Hon. Sir Keith

Prior, J. M. L.

Deedes, Rt. Hon. w. F.

Kaberry, Sir Donald

Prior-Palmer, Brig. Sir Otho

Digby, Simon Wingfield

Kerans, Cdr. J. S.

profumo, Rt. Hon. John

Donaldson, Cmdr. C. E. M.

Kerby, Capt. Henry

Proudfoot, Wilfred

Drayson, G. B.

Kerr, Sir Hamilton

Pym, Francis

du Cann, Edward

Kershaw, Anthony

Quennell, Miss J. M.

Duncan, Sir James

Kimball, Marcus

Ramsden, James

Duthie, Sir William

Kirk, Peter

Rawlinson, Sir Peter

Eden, John

Lambton, Viscount

Redmayne, Rt. Hon. Martin

Elliot, Capt. Walter (Carshalton)

Lancaster, Col. C. G.

Rees, Hugh

Elliott, R. W. (Nwcaste-upon-Tyne, N.)

Leather, Sir Edwin

Rees-Davies, W. R.

Emery, Peter

Leavey, J. A.

Renton, Rt. Hon. David

Emmet, Hon. Mrs. Evelyn

Leburn, Gilmour

Ridley, Hon. Nicholas

Errington, Sir Eric

Legge-Bourke, Sir Harry

Ridsdale, Julian

Erroll, Rt. Hon. F. J.

Lewie, Kenneth (Rutland)

Rippon, Rt. Hon. Geoffrey

Farey-Jones, F. W.

Lilley, F. J. P.

Roberts, Sir Peter (Heeley)

Farr, John

Lindsay, Sir Martin

Robertson, Sir D. (C'thn's & S'th'ld)

Fisher, Nigel

Linstead, Sir Hugh

Robinson, Rt. Hn. Sir R. (B'pool, S.)

Fletcher-Cooks, Charles

Litchfield, Capt. John

Robson Brown, Sir William

Forrest, George

Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield)

Rodgers, John (Sevenoaks)

Foster, John

Lloyd, Rt. Hon. Selwyn (Wirral)

Ropner, Col. Sir Leonard

Fraser, Rt. Hn. Hugh (Stafford&Stone)

Longbottom, Charles

Royle, Anthony (Richmond, Surrey)

Fraser, Ian (Plymouth, Sutton)

Longden, Gilbert

Russell, Ronald

Freeth, Denzil

Loveys, Walter H.

St. Clair, M.

Galbraith, Hon. T. G. D.

Lucas, Sir Jocelyn

Sandys, Rt. Hon. Duncan

Gammans, Lady

Lucas-Tooth, Sir Hugh

Scott-Hopkins, James

Gardner, Edward

McAdden, Sir Stephen

Seymour, Leslie

George, J. C. (Pollok)

MacArthur, Ian

Sharples, Richard

Gibson-Watt, David

McLaren, Martin

Shaw, M.

Gilmour, Ian (Norfolk Central)

Maclay, Rt. Hon. John

Shepherd, William

Gilmour, Sir John (East Fife)

Maclean, Sir Fitzroy (Bute&N, Ayrs)

Skeet, T. H. H.

Glyn, Dr. Alan (Clapham)

McLean, Neil (Inverness)

Smith, Dudley (Br'ntf'd & Chiswick)

Glyn, Sir Richard (Dorset, N.)

Macleod, Rt. Hn. Iain (Enfield, W.)

Smithers, Peter

Goodhart, Phllip

MacLeod, John (Ross & Cromarty)

Smyth, Rt. Hon. Brig. Sir John

Goodhew, Victor

McMaster, Stanley R.

Soames, Rt. Hon. Christopher

Gough, Frederick

Macmillan, Rt. Hn. Harold (Bromley)

Spearman, Sir Alexander

Gower, Raymond

Macmillan, Maurice (Halifax)

Speir, Rupert

Grant-Ferris, R.

Macpherson, Rt. Hn. Niall (Dumfrles)

Stanley, Hon. Richard

Green, Alan

Maddan, Martin

Stevens Geoffrey

Gresham Cooke, R.

Maginnis, John E.

Steward, Harold (Stockport, S.)

Grosvenor, Lt.-Col. R. G.

Maitland, Sir John

Stodart, J. A.

Gurden, Harold

Markham, Major Sir Frank

Stoddart-Scott, Col. Sir Malcolm

Hall, John (Wycombe)

Marples, Rt. Hon. Ernest

Storey, Sir Samuel

Hamilton, Michael (Wellingborough)

Marshall, Douglas

Studholme, Sir Henry

Hare, Rt. Hon, John

Marten, Neil

Summers, Sir Spencer

Harris, Frederic (Croydon, N.W.)

Mathew, Robert (Honlton)

Talbot, John E.

Harris, Reader (Heston)

Matthews, Gordon (Meriden)

Tapsell, Peter

Harrison, Brian (Maldon)

Maudling, Rt. Hon. Reginald

Taylor, Sir Charles (Eastbourne)

Harrison, Col. Sir Harwood (Eye)

Mawby, Ray

Taylor, Edwin (Bolton, E.)

Harvey, Sir Arthur Vere (Macclesf'd)

Maxwell-Hyslop R. J.

Taylor, Frank (M'ch'st'r, Moss Side)

Harvey, John (Walthamstow, E.)

Maydon, Lt.-Cmdr. S L. C

Taylor, Sir William (Bradford, N.)

Harvie Anderson, Miss

Mills, Stratton

Teeling, Sir William

Hastings, Stephen

Temple, John M.

Hay, John

Miscampbell, Norman

Thatcher, Mrs. Margaret

Heald, Rt. Hon. Sir Lionel

Montgomery, Fergus

Thomas, Sir Leslie (Canterbury)

Heath, Rt. Hon. Edward

Moore, Sir Thomas (Ayr)

Thomas, Peter (Conway)

Henderson, John (Cathcart)

More, Jasper (Ludlow)

Hendry, Forbes

Morgan, William

Thompson, Sir Kenneth (Walton)

Hicks Beach, Maj. W.

Morrison, John

Thorneycroft, Rt. Hon. Peter

Hill, Dr. Rt. Hon. Charles (Luton)

Nabarro, Sir Gerald

Thornton-Kemsley, Sir Colin

Hill, Mrs. Eveline (Wythenshawe)

Neave, Airey

Tiley, Arthur (Bradford, W.)

Hill, J. E. B. (S. Norfolk)

Nicholls, Sir Harmar

Tilney, John (Wavertree)

Hirst, Geoffrey

Nicholson, Sir Godfrey

Touche, Rt. Hon. Sir Gordon

Hobson, Sir John

Noble, Rt. Hon. Michael

Turner, Colin

Hocking, Philip N.

Nugent, Rt. Hon. Sir Richard

Turton, Rt. Hon. R. H.

Holland, Philip

Orr-Ewing, C. Ian

Tweedsmuir, Lady

Hollingworth, John

Osborn, John (Hallam)

van Straubenzee, W. R.

Hope, Rt. Hon. Lord John

Osborne, Sir Cyril (Louth)

Vane, W. M. F.

Hopkins, Alan

Page, Graham (Crosby)

Vaughan-Morgan, Rt. Hon, Sir John

Hornby, R. P.

Page, John (Harrow, West)

Vickers, Miss Joan

Hornsby-Smith, Rt. Hon. Dame P.

Panned, Norman (Kirkdale)

Vosper, Rt. Hon. Dennis

Howard, Hon. G. R. (St. Ives)

Partridge, E.

Wakefield, Sir Wavell

Howard, John (Southampton, Test)

Pearson, Frank (Clitheroe)

Walder, David

Hughes Haliett, Vice-Admiral John

Peel, John

Walker, Peter

Hughes-Young, Michael

Percival, Ian

Walker-Smith, Rt. Hon. Sir Derek

Hulbert, Sir Norman

Peyton, John

Wall, Patrick

Hurts, Sir Anthony

Pickthorn, Sir Kenneth

Watkinson, Rt. Hon. Harold

Hutchison, Michael Clark

Pike, Miss Mervyn

Webster, David

Iremonger, T, L.

Pilkington, Sir Richard

Wells, John (Maidstone)

Irvine, Bryant Godman (Rye)

Pitman, Sir James

Whitelaw, William

James, David

Pitt, Dame Edith

Williams, Dudley (Exeter)

Jenkins, Robert (Dulwich)

Pott, Pereivall

Wills, Sir Gerald (Bridgwater)

Johnson, Dr. Donald (Carlisle)

Powell, Rt. Hon. J. Enoch

Wilson, Geoffrey (Truro)

1258

1259

Wise, A. R.

Woodnutt, Mark

Wolrige-Gordon, Patrick

Woollam, John

TELLERS FOR THE AYES:

Wood, Rt. Hon. Richard

Worsley, Marcus

Mr. Chichester-Clark and

Woodhouse, C. M.

Yates, William (The Wrekin)

Mr. Finlay.

NOES

Abse, Leo

Griffiths, Rt. Hon. James (Llanelly)

Morris, John

Ainsley, William

Griffiths, W. (Exchange)

Moyle, Arthur

Albu, Austen

Gunter, Ray

Neal, Harold

Allaun, Frank (Salford, E.)

Hale, Leslie (Oldham, W.)

Noel-Baker, Francis (Swindon)

Allen, Scholefield (Crewe)

Hamilton, William (West Fife)

Noel-Baker, Rt. Hn. Philip (Derby, S.)

Awbery, Stan (Bristol, Central)

Hannan, William

Oliver, G. H.

Bacon, Miss Alice

Harper, Joseph

Oram, A. E.

Baird, John

Hart, Mrs. Judith

Oswald, Thomas

Barnett, Guy

Hayman, F. H.

Padley, W. E.

Baxter, William (Stirlingshire, W.)

Healey, Denis

Pannell, Charles (Leeds, W.)

Beaney, Alan

Henderson, Rt. Hn. Arthur (Rwly Regis)

Pargiter, G. A.

Bence, Cyril

Herbison, Miss Margaret

Parker, John

Bennett, J. (Glasgow, Bridgeton)

Hewitson, Capt. M.

Parkin, B. T.

Benson, Sir George

Hill, J. (Midlothian)

Pavitt, Laurence

Blackburn, F.

Hilton, A. V.

Pearson, Arthur (Pontypridd)

Blyton, William

Holman, Percy

Peart, Frederick

Boardman, H.

Houghton, Doug'as

Pentland, Norman

Bottomley, Rt. Hon. A. G.

Howell, Charles A. (Perry Barr)

Plummer, Sir Leslie

Bowden, Rt. Hn. H. W.(Leics, S.W.)

Howell, Denis (Small Heath)

Popplewell, Ernest

Bowies, Frank

Hoy, James H.

Prentice, R. E.

Boyden, James

Hughes, Cledwyn (Anglesey)

Price, J. T. (Westhoughton)

Braddock, Mrs. E. M.

Hughes, Emrys (S. Ayrshire)

Probert, Arthur

Bradley, Tom

Hughes, Hector (Aberdeen, N.)

Proctor, W. T.

Bray, Dr. Jeremy

Hunter, A. E.

Pursey, Cmdr. Harry

Brockway, A. Fenner

Hynd, H. (Accrington)

Rankin, John

Broughton, Dr. A. D. D.

Irvine, A. J. (Edge Hill)

Reid, William

Brown, Rt. Hon. George (Belper)

Irving, Sydney (Dartford)

Reynolds, G. W.

Butler, Herbert (Hackney, C.)

Janner, Sir Barnett

Rhodes, H.

Butler, Mrs. Joyce (Wood Green)

Jay, Rt. Hon. Douglas

Roberts, Albert (Normanton)

Callaghan, James

Jeger, George

Roberts, Goronwy (Caernarvon)

Carmichael, Neil

Jenkins, Roy (Stechford)

Robertson, John (Paisley)

Chapman, Donald

Johnson, Carol (Lewisham, S.)

Robinson, Kenneth (St. Pancras, N.)

Cliffe, Michael

Jones, Rt. Hn. A. Creech (Wakefield)

Rodgers, W. T. (Stockton)

Collick, Percy

Jones, Dan (Burnley)

Ross, William

Corbet, Mrs. Freda

Jones, Elwyn (West Ham, S.)

Silverman, Julius (Aston)

Craddock, George (Bradford, S.)

Jones, J. Idwal (Wrexham)

Silverman, Sydney (Nelson)

Crosland, Anthony

Jones, T. W. (Merioneth)

Skeffington, Arthur

Crossman, R, H. S.

Kelley, Richard

Slater, Mrs. Harriet (Stoke, N.)

Cullen, Mrs. Alice

Kenyon, Clifford

Slater, Joseph (Sedgefield)

Dalyell, Tam

Key, Rt. Hon, C. W.

Small, William

Darling, George

King, Dr. Horace

Smith, Ellils (Stoke, S.)

Davies, G. Elfed (Rhondda, E.)

Ledger, Ron

Snow, Julian

Davies, Harold (Leek)

Lee, Frederick (Newton)

Sorensen, R. W.

Davies, Ifor (Gower)

Lee, Miss Jennie (Cannock)

Soskice, Rt. Hon. Sir Frank

Davies, S. O. (Merthyr)

Leaver, Harold (Cheetham)

Spriggs, Leslie

Deer, George

Lever, L. M. (Ardwick)

Steele, Thomas

Delargy, Hugh

Lewis, Arthur (West Ham, N.)

Stewart, Michael (Fulham)

Dempsey, James

Loughlin, Charles

Stonehouse, John

Diamond, John

Mabon, Dr. J. Dickson

Stones, William

Dodds, Norman

McCann, John

Strauss, Rt. Hn. G. R. (Vauxhall)

Donnelly, Desmond

MacColl, James

Swain, Thomas

Driberg, Tom

MacDermot, Niall

Swingler, Stephen

Dugdale, Rt. Hon. John

McInnes, James

Taverns, D.

Ede, Rt. Hon. C.

McKay, John (Wallsend)

Taylor, Bernard (Mansfield)

Edelman, Maurice

Mackie, John (Enfield, East)

Thomas, George (Cardiff, W.)

Edwards, Rt. Hon, Ness (Caerphilly)

McLeavy, Frank

Thompson, Dr. Alan (Dunfermline)

Edwards, Robert (Bllston)

MacMillan, Malcolm (Western Isles)

Thomson, G. M. (Dundee, E.)

Edwards, Walter (stepney)

MacPherson, Malcolm (Stirling)

Thornton, Ernest

Evans, Albert

Mahon, Simon

Tomney, Frank

Finch, Harold

Mallalieu, E. L, (Brigg)

Wainwright, Edwin

Fitch, Alan

Mallalieu, J.P. W.(Huddersfield, E.)

Warbey, William

Fletcher, Erie

Manuel, Archie

Weitzman, David

Foot, Dingle (Ipswich)

Mapp, Charles

Wells, William (Walsall, N.)

Foot, Michael (Ebbw Vale)

Marsh, Richard

White, Mrs. Eirene

Forman, J. C.

Mason, Roy

Whitlock, William

Fraser, Thomas (Hamilton)

Mayhew, Christopher

Wigg, George

Galpern, Sir Myer

Mellish, R. J.

Wilkins, W. A.

Ginsburg, David

Mendelson, J. J.

Willey, Frederick

Gooch, E, G.

Millan, Bruce

Williams, D. J. (Neath)

Gordon Walker, Rt. Hon. P. c.

Milne, Edward

Williams, Ll. (Abertillery)

Greenwood, Anthony

Mitchison, G. R.

Williams, W. R. (Openshaw)

Grey, Charles

Monslow, Walter

Williams, W, T. (Warrington)

Griffiths, David (Bother Valley)

Moody, A. S.

Willis, E. G. (Edinburgh, E.)

1260

1261

Wilson, Rt. Hon. Harold (Huyton)

Wyatt, Woodrow

Winterbottom, R. E.

Yates, Victor (Ladywood)

TELLERS FOR THE NOES:

Woodburn, Rt. Hon. A.

Zilliacus, K.

Mr. Short and Mr. Redhead.

Woof, Robert

Resolved,
That this House expresses its full confidence Majesty's Government to deal with the political down of the Brussels negotiations.
in the determination and ability of Her and economic situation arising from the break-

TEACHING MACHINES
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Rees.]
10.25 p.m.
Mr. R. Gresham Cooke: Tonight, I wish to draw the attention of the House to a development which I am sure will be of considerable value to schools, to the whole teaching profession, to the Armed Services, to technical colleges, industry, the Commonwealth and to all those developing nations which have to teach their young people basic skills very quickly.
I believe that until recently the process of learning had not been scientifically examined in the sense of measuring deficiency or by way of experimental psychology. Perhaps one of the few human activities which would look the same to an ancient Greek if he arrived today in this century, as he did 2,000 years ago, would be the work in the school classroom, which has not altered very much since Plato's day.
A few years ago, some scientific investigations into the theory of instruction were started in America. They were sponsored by the Bell Telephone Company, which was interested in the spread of information and the theory of sending messages. The process of learning was also investigated at Harvard by the Department of Psychology under Professor Skinner. He studied the behaviour of pigeons and found that, provided they were fed at key points, they could soon be taught how to walk the figure of eight. From this and other studies he concluded that all living creatures, including man, provided they were encouraged promptly, could quickly learn new skills.
However, Professor Skinner's theory of learning is not universally accepted. Indeed, one of his pupils, Dr. Crowder, took a rather different view. Instead of giving every pupil, irrespective of his intelligence, the same intellectual diet, he advocated the construction of programmes of learning which would adapt themselves to the intelligence level and previous knowledge of various students. He therefore constructed "branching" types of programme which allowed more gifted pupils to go ahead quickly while making
1264
provision for the slower ones, given the necessary time, to achieve the same skiffs.
Step-by-Step learning, or, as it is called, linear learning and indeed "branching" learning, as the other side of it is called, fall under the head of what I am dealing with tonight, programme instruction, because they both depend on a programme to bring the learner through a series of graduated steps with the production of such effects as encourage the pupil to the next stage with certainty and simplicity.
This sounds similar to what every teacher is instinctively trying to do, but I think that the process has been explained, clarified and expanded by these American research workers. Anyhow, since the publication of this work in America, programme instruction, whether by the linear method of Professor Skinner or the branching method, has made great strides, and intensive studies have been carried out by schools, universities, research institutes and industrial establishments throughout America. I think that all have come to one conclusion, namely, that these things bring about drastic gains in learning speed and effectiveness.
Programmed instruction can, of course, be given either by a simplified step-by-step textbook or by a teaching machine. I do not claim to be an education expert, and all this might have passed me by had it not been for one of my constituents, Mr. Stanley Grundy, who has recently been developing a British teaching machine. I was so interested in what I was told and by what he showed me that I took a teaching machine home for the week-end to study industrial management, and I learned more in four hours from this machine than I had learned in twenty years of practice. I only wish I had had programme instruction in the subject twenty-five years ago!
A teaching machine often looks like a television set. It operates by means of a film, throwing some hundreds of frames, as they are called, or pictures, one by one on to a screen, and these frames are moved forward by pressing a button. After one has studied one frame, one is given a question and a choice of alternative answers, and if one chooses the wrong answer one is thrown back to the frame before or an explanation is given

1265
as to where one went wrong. If one gives the right answer one can go forward to the next frame.
Obviously, the intelligent pupil can move forward very quickly through hundreds of these frames or pictures. The slow pupil may conceivably have to go back. The errors in one's thinking are recorded on a counting machine which is made available to the teacher.
I am convinced that these machines have all sort of applications. For instance, already they have been used and tested in the Navy with three groups of ratings who were learning trigonometry, none of these ratings previously having any knowledge of the subject. One group of the naval ratings was taught by a qualified mathematical teacher, another by a programmed textbook and a third by a teaching machine. The results showed that the pupils learned 40 per cent. more quickly by machine than they did by the human teacher, and indeed more knowledge was retained by the ratings by this method than by the other methods.
That leads one to ask how we can make use of programmed instruction and teaching machines in this country. I think it is common ground in all quarters of the House that if we limit junior classes to 40 and senior classes to 30, the shortage of teachers in this country is in the neighbourhood of 50,000. Again, if the school-leaving age is raised to 16, the shortage of teachers will be higher still. These teaching machines can never replace teachers. In my view, they will be a tool of teachers, a friend of teachers, and will increase their power of imparting instruction.
I suppose that in a class of 40 children there are five very quick pupils, five very slow ones, and 30 about average. The machines could be used both by the slow and by the quick, leaving the teacher freer to concentrate on the majority of the class. Therefore, what one calls the teacher's productivity could be greatly increased by the use of teaching machines. In many technical colleges these machines could teach subjects such as electrical wiring and electronics, in the Armed Forces radar, and a host of technical subjects could be learned by means of them. In industry they could be used in apprenticeship, or by the Ministry of Labour
1266
for retraining people changing jobs. Of course, in the Commonwealth and developing nations they could be used to teach quickly basic information of a practical nature—and how greatly is all this needed.
The population of the world has increased by 500 million in the last decade, an enormous proportion of them being illiterate. If we are to increase production all over the world and teach people how to feed themselves, there has obviously got to be a great spread of learning throughout the world, and programmed instruction and these machines can help all that.
Of course, criticisms will be made of teaching machines. It will be said that they will make robots of us, but in my view they are only a more effective and more logical method of teaching. The content of the programme will still be under the authority of the teachers, and I believe that the programmes invite the student to discover things for himself, and therefore teach him to think.
They will never put teachers out of work, because the world, and our country in particular, is so short of teachers, and these machines must mainly be used under their supervision.
Machines cannot educate in the full sense of inculcating moral values. That will always be a task for the teachers, and the programmes will have to be constructed by the most skilled, careful and authoritative teachers, as they are the basis of all the methods.
But I believe that this programmed instruction and these teaching machines represent a great and useful development which can help to solve Britain's educational problems in the future, and I hope that my hon. Friend will be able to say he recognises that, and will say some encouraging words about their value and their future.
If he can do that, I should like to suggest that a grant might be made for further research into programmed learning and these teaching machines, and, further, that a circular might be sent to local authorities, designed to induce them to experiment with these two important developments.
I believe that we are on the edge of great changes in teaching methods and that guided aright programmed instruction and its concomitant, the teaching

1267
machine, can be one of the foremost weapons in our task to which we are committed, namely, the modernising of Britain.
10.36 p.m.
Mr. G. M. Thomson: I resist the temptation to say to the hon. Member for Twickenham (Mr. Gresham Cooke) that if the teaching machine taught him more about industrial management in four hours than he had learnt in twenty years it is perhaps more of a reflection on our process of industrial management than on the possibilities of the teaching machine.
The hon. Gentleman has performed a service in raising this subject on the Adjournment tonight. I say this because I was perhaps the first hon. Member to raise the possibilities of teaching machines in this House some time ago, and I hope that the Minister will respond to the plea of the hon. Gentleman that there should be a greater exploration of the possibilities of these methods of teaching, and that more money should be spent on research into what they can do.
I agree with the hon. Gentleman that there is, of course, no substitute for a good teacher, but these machines are not meant to be a substitute for a good teacher. They are meant to be an aid to him. I take the view that the need for educational expansion in this country and throughout the developing countries of the world as far ahead as we can see is so great that, no matter how successful we are in recruiting teachers and in giving them proper conditions of work, it is tremendously important to give them every possible aid of modern science to make use of new developments. I hope that the Minister will do what he can to encourage British firms to develop the kind of apparatus which goes with programmed instruction.
I think it is a pity in some ways that this idea has become associated with the convenient journalistic label which I have used, a teaching machine. This rather suggests a mechanical process replacing the educational process, but the machine is purely ancillary, though what lies behind it is as exciting as the development of the process of teaching. Skilled teachers are needed to develop the pro-
1268
grammes which are either put into textbooks or in machines of varying degrees of complexity.
I think that this development of programmed instruction has a particular relevance to the developing countries of the world, and perhaps to the developing countries of the Commonwealth for which we have a special responsibility. There is a desperate shortage of teachers in these countries. Their technical education, in which the teaching machines would be of special importance, is at a very low level of development, and I hope that something can be done to encourage the development of these new techniques in the newer countries of the Commonwealth.
But I hope that the Government will give sympathetic response to this subject. The Parliamentary Secretary's colleague in the Scottish Office was very sympathetic when this was raised with him in the House some time ago. The appalling thing is that we are prepared to spend more public money on research into things like whiter whitewash and stickier glue than we are on research into education. More money must be spent on education research in general, and these teaching programmes of instruction form one of the most useful ways of spending the money.
10.40 p.m.
Mr. Robert Cooke: I learnt more from people than from books during my long and expensive education, and I hope that my hon. Friend the Parliamentary Secretary will not be entirely sold on the idea that machines can be a substitute for people. It is a dangerous idea. But, having been a teacher, I can say that useful equipment can be of very great help, and I hope that my hon. Friend will manage to strike a correct balance between the personal approach, for which there is no substitute, and the provision of useful equipment for teachers, which could certainly be improved.
10.41 p.m.
The Parliamentary Secretary to the Ministry of Education (Mr. Christopher Chataway): It is intended as more than a conventional opening to an Adjournment debate when I say that I am grateful to my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) for

1269
raising this subject tonight. I am sure that the development we are discussing is going to be of great importance in education. I do not pretend to know how long it will be before programmed learning and teaching machines are able to make any substantial contribution, but I have no doubt that the development is here to stay. That conviction is reinforced by a few moments I spent playing wit) a teaching machine the other day. I came to understand the claim of the manufacturers that one of the attractions is that it appeals to the Las Vegas instinct in all of us. That was my experience.
If I sound a few notes of caution, I do not want to imply that there is any lack of interest by the Minister or the Department. On the contrary, we are very carefully studying this development and, wherever possible, stimulating progress in it. My hon. Friend the Member for Twickenham has explained very capably the difference between the linear type of programmed learning and the multiple choice variety, the one associated with Professor Skinner and the other with Dr. Crowder.
In the linear programme the items of instruction are small. The pupil writes his own response to the stimulus sometimes, but is more often required to supply a missing word or figure than answer a direct question. The aim is to lead him on gently so that in the end he is able to answer by himself with practically no mistakes. This sense of getting the answer right is held to be a valuable part of the reinforcement of his learning.
In the other programme, large units of instruction are presented followed by a question and a set of answers from which to choose. Under this method the pupil may choose the wrong answer. If he does he is provided with a further item of instruction explaining his mistake and referring him back to make a second choice, or, through a remedial sequence, on to the next stage of the main programme. One can have very sophisticated patterns of instruction here.
Research is still going on into the efficiency of the two methods and I think one should say that the results so far are rather inconclusive. The ideas behind programmed learning are clearly not revolutionary. Any teacher who has carefully planned the sequence of a
1270
lesson has employed the technique, but the history of programmed learning in the schools in the sense in which the phrase is here used has been only about ten years.
The advantage of the scheme over all other types of programmed learning is that it does enable the pupil to progress at his own pace, so that the slow pupil does not feel that the class is rushing on at a speed he cannot manage, and the fast pupil does not feel frustrated by being held back. These are the claims.
Nearly all the examples of programmed learning come from the United States, and nearly all the research has so far been clone there. A number of British firms are now in the field, but there is a shortage of programmes and, in particular, of thoroughly validated programmes. That, at the moment, is the big obstacle to progress. We particularly welcome, therefore, the work being undertaken by the Association for Programmed Learning—a professional body formed largely of practising teachers.
The importance of research was stressed by my hon. Friend. If I were to pick a quarrel with the remarks he has made this evening, it would be, perhaps, that he has overestimated the amount of research that has been done and perhaps exaggerated the results achieved. Most of the teaching machines and programmes at present are American, and most of the fundamental research into programmed learning has been done in the United States. The first significant research in this country was carried out in the Psychology Departments of Aberdeen and Sheffield Universities, with grants from the D.S.I.R. This research was directed mainly to the industrial application of programmed learning. The Aberdeen project, in fact, involved the training of papermakers, as no doubt the hon. Member for Dundee, East (Mr. G. M. Thomson) is aware. Within the last few months research into educational aspects of the subject has begun in the Department of Education in Sheffield.
My hon. Friend asked about grants from the Ministry of Education. I am glad to be able to tell him that the Ministry has promised a grant of about £12,000, over three years, to finance research into methods of using programmed learning in secondary school mathematics up to G.C.E. O level and,

1271
ultimately, A level. This work in Sheffield began only in October, 1962, and it is still too early to look for definite results, but it has aroused very widespread interest at home and abroad.
Mr. Tam Dalyell: Does the hon. Member consider that £4,000 a year is adequate to cover this important field?
Mr. Chataway: It is adequate for the work being undertaken at Sheffield, but we are also financing research of a rather less ambitious kind by the headmaster of a junior school in Leicestershire, working under the auspices of the Department of Education at Leicester University. The sum of £1,000 a year for three years has been offered to support research with simple linear machines and programmes suitable for use by primary school children, especially in arithmetic and reading. We are considering a project submitted by the Department of Education at Birmingham University, where the object is to assess the value of linear and multiple choice programmes and to investigate their application to different secondary school subjects.
In October, 1962, the Ministry asked all local education authorities, colleges of advanced technology and institutes of education what use they were making or planning to make of machines and programmes. The replies showed that progress has so far been fairly slow. Only about 20 authorities out of 146 had anything positive to report. Half a dozen of those are mounting experiments in this school year, mostly in primary schools, with machines usually of the linear variety, and programmes: experimental classes will be matched against control classes using conventional methods.
A number of other authorities reported experiments in training and technical colleges and, in one case, in schools for handicapped children. Three colleges of advanced technology and the College of Aeronautics at Cranfield are experimenting with machines, and in several institutes of education programmed learning is beginning to play a part in teaches training.
Many education authorities who had nothing definite to report in their own areas expressed a great deal of interest
1272
in the subject. They may have been held back by the shortage of suitable programmes to which I have referred, or by the cost of all but the simplest machines. The machine to which my hon. Friend referred costs well over £200 at the moment, though I think that it is welcome as the first British branching machine. They may also have been held back by uncertainty—which the research that I have described will, I hope, help in time to remove—about the best ways of using machines and programmes and the most appropriate subjects and age groups.
There is an urgent need, too, for some agreement to be reached on the form of presentation of the programmed material. At present, there are so many ways of presenting information—film, paper roll, card, folded paper, and so on—that possible purchasers of machines are deterred from buying because good programmes may not be usable on the machines they obtain. Of perhaps a hundred different types of machines on the market, there are hardly two that are capable of showing programmes devised for any other machine, and there is thus clearly a great need for standardisation.
Copies of the replies to the circular letter have been made available to the Educational Foundation for Visual Aids, whose experimental development unit, which is financed in part by the Ministry, is beginning to take an interest in the subject. The Foundation is in the process of setting up an informal committee whose function will be to consider in what way developments can best be stimulated. My right hon. Friend intends shortly to circulate to the local education authorities and others a summary of the information submitted in answer to this circular letter, together with a paper giving the Ministry's own current assessment of the situation.
I am sure that it is extremely important that it should be widely understood that nobody is claiming that the teaching machine is a device for doing away with the teacher. Quite clearly, it is no substitute for the teacher, and I think that my hon. Friend the Member for Bristol, West (Mr. Robert Cooke) can be assured on that score. No manufacturer of a machine pretends that it can be anything of the kind. It can exercise only a very few of a teacher's functions.

1273
Professor Skinner said in an article last October that no area of human activity has so stubbornly resisted technological progress as the classroom, and complained, as did my hon. Friend the Member for Twickenham that educators had made no change in their basic techniques of teaching for the last hundred years. Undoubtedly, there is some instinctive opposition to change of this kind, but / think that the House will agree that educationists would be right to proceed with some caution because, as I have tried to show, we are only at the beginning of a development, the ultimate possibilities of which we cannot foresee.
There is great need for more research. Experience so far has been mostly in industry and with older pupils in education. The value of teaching machines there, properly used, is probably fairly widely accepted, but what we need is, so to speak, a wholesale experiment in programmes, subjects, age, ability ranges, and in the actual machines. The immediate need, I suggest, is not so much
1274
machines as properly validated programmes produced by people who know the schools and colleges and the pupils.
I think, therefore, that at this stage I should be right to express an interest in this subject, to welcome the development that is going on, but to emphasise that it is possible at this stage of the development, both of programmed learning and of teaching machines, for people to buy textbooks and machines that are not properly validated, and so a certain amount of caution is required.
Mrs. Eirene White: Whilst absolutely accepting what the Parliamentary Secretary says about the need for a cautious approach—
The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at five minutes to Eleven o'clock.

NATIONAL FINANCE
  Purchase Tax
  Purchase Tax
  Incomes Policy
  Incomes Policy
  Treasury (Civil Servants)
  Treasury (Civil Servants)
  Treasury (Office Machinery)
  Treasury (Office Machinery)
  Industry, Northern Ireland
  Industry, Northern Ireland
  Universities
  Universities
  Derelict Sites (Clearance)
  Derelict Sites (Clearance)
  Overseas Aid (Ships)
  Overseas Aid (Ships)
  Public Ownership
  Public Ownership
  Leeds City Waterworks (Rateable Value)
  Leeds City Waterworks (Rateable Value)
  Local Authority Capital Expenditure
  Local Authority Capital Expenditure
  Royal Opera House, Covent Garden
  Royal Opera House, Covent Garden
  Trustee Savings Banks (Cheque Books)
  Trustee Savings Banks (Cheque Books)
  Pool Betting Duty and Bookmakers' Licence Duty
  Pool Betting Duty and Bookmakers' Licence Duty
  British Museum Reading Room
  British Museum Reading Room
  Fuel Oil, Scotland (Tax)
  Fuel Oil, Scotland (Tax)
  Inland Revenue Officers (Detached Duty Allowances)
  Inland Revenue Officers (Detached Duty Allowances)
  Civil Service Pensions (Widows)
  Civil Service Pensions (Widows)
  B.B.C. (Licence Revenue)
  B.B.C. (Licence Revenue)
TRADE AND COMMERCE
  Industrial Exhibitions, Peking
  Industrial Exhibitions, Peking
  Russian Earthenware and China (Quota)
  Russian Earthenware and China (Quota)
  Firms, Scotland (Sub-contracting)
  Firms, Scotland (Sub-contracting)
  Non-ferrous Scrap Metals
  Non-ferrous Scrap Metals
  Barnard Castle
  Barnard Castle
  Communist Countries
  Communist Countries
  Industrial Development Certificates
  Industrial Development Certificates
  Calders
  Calders
  Tariffs
  Tariffs
  Anglo-Japanese Commercial Treaty
  Anglo-Japanese Commercial Treaty
  Furniture Exhibition, Earl's Court
  Furniture Exhibition, Earl's Court
  Graving Dock, Greenock (Dredging Contract)
  Graving Dock, Greenock (Dredging Contract)
  East-West Trade
  East-West Trade
  Middle East and Venezuela
  Middle East and Venezuela
  Bolton
  Bolton
  Tees-side
  Tees-side
  Wrexham
  Wrexham
  Plastics and Rubber-Working Machinery
  Plastics and Rubber-Working Machinery
  Scotland
  Scotland
  Gas and Chemical Machinery
  Gas and Chemical Machinery
  Bideford and Torrington
  Bideford and Torrington
  Promotion of Trade and Efficiency (Expenditure)
  Promotion of Trade and Efficiency (Expenditure)
  Phthalic Anhydride
  Phthalic Anhydride
  Shipbuilding Orders and Russian Oil
  Shipbuilding Orders and Russian Oil
  Wool Textiles (United States Tariffs)
  Wool Textiles (United States Tariffs)
  Spanish Minister of Industry
  Spanish Minister of Industry
  General Agreement on Tariffs and Trade (Cereals)
  General Agreement on Tariffs and Trade (Cereals)
  Consumers' Council
  Consumers' Council
  Merseyside Development District
  Merseyside Development District
  Advance Factories (Steel)
  Advance Factories (Steel)
  Key Industry Duties
  Key Industry Duties
  Carcase Beef Imports
  Carcase Beef Imports
  Exports
  Exports
  Exports to Russia (Scottish Goods)
  Exports to Russia (Scottish Goods)
  Soviet Crude Oil
  Soviet Crude Oil
SWAZILAND
  Constitutional Conference
  Constitutional Conference
HONG KONG
  United Kingdom Trade
  United Kingdom Trade
BASUTOLAND
  Economic Development and Assistance
  Economic Development and Assistance
FIJI ISLANDS
  Per Capita Income
  Per Capita Income
  New Industries
  New Industries
ADEN
  Prisoners (Industrial Dispute Offences)
  Prisoners (Industrial Dispute Offences)
WEST INDIES
  Federal Government Assets and Services
  Federal Government Assets and Services
MALTA
  Dockyard
  Dockyard
  Minister of State (Visit)
  Minister of State (Visit)
NORTH BORNEO
  Co-operative Societies
  Co-operative Societies
NEW HEBRIDES
  British and French Commissioners
  British and French Commissioners
  External Affairs
  External Affairs
SINGAPORE
  Detained Persons
  Detained Persons
TRISTAN DA CUNHA
  Refugees (Return)
  Refugees (Return)
COLONIAL TERRITORIES
  Federation (Secession)
  Federation (Secession)
  Racial Discrimination
  Racial Discrimination
KENYA
  Constituencies
  Constituencies
PUBLIC BUILDING AND WORKS
  State House, Holborn
  State House, Holborn
  Post Office Property, Honiton
  Post Office Property, Honiton
WIRELESS AND TELEVISION
  Pay Television
  Pay Television
TELEPHONE SERVICE
  Installation Costs
  Installation Costs
  Dearne Valley
  Dearne Valley
  Bolton
  Bolton
SCIENCE
  Marine Nuclear Propulsion
  Marine Nuclear Propulsion
  Mental Illness
  Mental Illness
  Calder Hall and Chapelcross Atomic Power Stations
  Calder Hall and Chapelcross Atomic Power Stations
  Uranium Metal Fuel Elements
  Uranium Metal Fuel Elements
  Research Expenditure (Survey)
  Research Expenditure (Survey)
LOCAL GOVERNMENT
  Riverside Ward, Cardiff
  Riverside Ward, Cardiff
  Rating and Valuation
  Rating and Valuation
MINISTRY OF DEFENCE
  Chiefs of Staff (Advice)
  Chiefs of Staff (Advice)
RHODESIA AND NYASALAND
  Federal Constitution
  Federal Constitution
  PRINCESS MARGARET (PARIS VISIT)
  PRINCESS MARGARET (PARIS VISIT)
ROYAL NAVY
  Bailey (Malta) Limited
  Bailey (Malta) Limited
  North-East Shipyards (Contracts)
  North-East Shipyards (Contracts)
AGRICULTURE, FISHERIES AND FOOD
  Fireblight (Kent)
  Fireblight (Kent)
  F.A.O. (Foot-and-Mouth Disease)
  F.A.O. (Foot-and-Mouth Disease)
EDUCATION
  Building Programme, 1964–65
  Building Programme, 1964–65
MINISTRY OF HEALTH
  Invalid Carriages
  Invalid Carriages
  Prisoners (Employment)
  Prisoners (Employment)
HOME DEPARTMENT
  Approved Schools
  Approved Schools
EMPLOYMENT
  Inverurie
  Inverurie
  ARGENTINE (RAILWAY PENSIONERS)
  ARGENTINE (RAILWAY PENSIONERS)
PENSIONS AND NATIONAL INSURANCE
  Retirement Pensioners (National Assistance)
  Retirement Pensioners (National Assistance)
TECHNICAL CO-OPERATION
  Imperial College of Tropical Agriculture
  Imperial College of Tropical Agriculture
SCOTLAND
  North of Scotland Hydro-Electric Board
  North of Scotland Hydro-Electric Board
TRINIDAD
  Loan
  Loan
  British West Indian Airways
  British West Indian Airways
ROADS
  M.5 (Tewkesbury and Ross Spur Traffic)
  M.5 (Tewkesbury and Ross Spur Traffic)

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

THE CONSUMER COUNCIL
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 they are now in a position to announce the name of the Chairman of the Consumer Council and the terms of reference of the Council; if both will be announced together and if such announcement is not possible to-day, when it will be made.]
THE MINISTER OF STATE, BOARD OF TRADE (LORD DERWENT): My Lords, my right honourable friend is pressing on with the establishment of the Consumer Council as rapidly as possible. It is his intention to announce at the same time both the terms of reference of the Council and the name of the first Chairman. He is not in a position to do so at present, but hopes to be able to make an announcement in the fairly near future. I regret that I cannot give the House any more definite indication than this.
BARONESS BURTON OF COVENTRY: My Lords, while realising that the Minister is not responsible for that reply, may I ask him whether he is aware that it is practically seven months since the Government on July 26 announced their intention of setting up the Consumer Council? Does he not think that is a very long period, even for this Government?
LORD DERWENT: My Lords, I understand that nine months is the more usual period.
BARONESS BURTON OF COVENTRY: My Lords, may I ask the Minister whether
880
he realises that this long delay is doing a great disservice to the consumer movement, and whether he can suggest when it might be better to put down a Question which would be more productive?
LORD DERWENT: My Lords, my right honourable friend hopes to be able to make an announcement of these two things either in the spring, or in the early summer, at the latest. There are still certain points in connection with the terms of reference which are not quite settled, although I think they will be settled shortly. There is at the same time to be announced the name of the new Chairman. I am sorry I cannot do more at the moment.
BARONESS BURTON OF COVENTRY: My Lords, I am sorry to press the Minister on this particular point. Am I not right in assuming that an Answer given recently in another place was to the effect that the Consumer Council itself was expected to be working in the spring or early summer? Are we now to take it from the Minister's reply that we cannot expect even to be told the name of the Chairman and the terms of reference before we are given the names of the Consumer Council?
LORD DERWENT: It will be working as soon as it starts.
LORD MORRISON OF LAMBETH: My Lords, when the noble Lord says that the usual time is nine months rather than seven months, does he mean that it usually takes this Government nine months to do what most Governments could do in three months?
LORD DERWENT: I cannot imagine any Government appointing a Chairman and Council, when the individuals who have to be written to often require a good deal of time to make up their minds, in as quick a time as the noble Lord suggests.
LORD MORRISON OF LAMBETH: My Lords, the Question of my noble friend was with regard to the terms of reference and the Chairman. She did not ask for the names of the members of the Council. Will the noble Lord stick to the point? Does it take this Government nine months to do that, whereas most Governments could do it in three months? Come along, tell us. Stumped!
EARL ALEXANDER OF HILLSBOROUGH: My Lords, are we to take the noble Lord's silence as a measure of the state of tiredness of the Government?
BARONESS SUMMERSKILL: My Lords, in view of her great interest in the matter, may we take it that the noble Baroness, Lady Burton of Coventry, has been invited to serve on this Council? This is a serious question.
LORD CONESFORD: My Lords, could my noble friend throw any light on what is meant by the noble Baroness when she refers to the "consumer movement"?
BARONESS SUMMERSKILL: Could the noble Lord answer my question?
LORD DERWENT: The noble Baroness's question has nothing to do with the original Question.
BARONESS BURTON OF COVENTRY: My Lords, I am sorry, but I was rather tempted. I do not know whether it would be the custom for me, through the Minister opposite, to refer to the noble Lord who asked about the consumer movement. May I ask him whether he is aware that, if he looks back to the Hansard's when he held office in another place, he will find that I said a great deal about the consumer movement of this country?
THE LORD PRESIDENT OF THE COUNCIL AND MINISTER FOR SCIENCE (VISCOUNT HAILSHAM): My Lords, I think my noble friend is more concerned with the English language than the particular form in which he put his question.

THE KASHMIR PROBLEM AND ARMS ASSISTANCE
2.40 p.m.
LORD BARNBY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government, in connection with the supply of assistance to India in their current military situation—
882

(a) What advice, if any, has been given by them to the Government of India to resolve quickly the Kashmir problem;

(b) What is the current ratio of United Kingdom armament assistance to Pakistan and India respectively.]

THE MINISTER OF STATE, COMMONWEALTH RELATIONS OFFICE (THE DUKE OF DEVONSHIRE): My Lords, Her Majesty's Government have for many years urged both the Government of India and the Government of Pakistan to settle the Kashmir problem by mutual agreement. We have recently reiterated that advice, as my right honourable friend the Secretary of State for Commonwealth Relations explained in another place on December 3. The nature of the solution of the Kashmir problem is a matter for the Governments of India and Pakistan. As my noble friend will no doubt be aware, a series of talks have been held recently between the two Governments with the object of finding a joint acceptable solution to this problem and these talks are to be resumed next month. In answer to the second part of the Question, there is no predetermined ratio of any sort between arms men assistance to Pakistan and to India.
THE EARL OF LISTOWEL: My Lords, would the noble Duke make it clear that there is no connection whatever between the advice tendered by Her Majesty's Government, if asked for, about relations between Kashmir and India, and the supply of arms to India as the victim of Chinese aggression?
THE DUKE OF DEVONSHIRE: My Lords, I think I have made that perfectly clear. They are two entirely separate issues.
LORD OGMORE: My Lords, is the noble Duke correct when he says this is solely a matter for the Governments of India and Pakistan? Has not this master been before the United Nations for many years, and have not the United Nations actually got a force there at the moment? Would it not be more in line with India's claim to be one of the great peace-loving countries if she did far more than she has done in the past about settling this problem?
THE DUKE OF DEVONSHIRE: My Lords, that raises rather wider aspects, but I would stick to my guns when I

883
say that the British Government regard the matter of Kashmir as one to be settled between the two Governments of India and Pakistan.
LORD BARNBY: My Lords, arising out of the first reply, and in the interests of peace and in view of the forcible acquisition of Goa, may I ask: would it not be appropriate that Her Majesty's Government should accelerate a settlement of this unfortunate dispute by relating it in some way to the willingness to supply arms?
THE DUKE OF DEVONSHIRE: My Lords, I think I should make it quite clear to the House that the arms which have been recently given, or are to be given, to India are intended solely for use against China, and that is clearly understood by the Indian Government.

AID FOR DISTRESSED POLISH EX-SERVICEMEN
2.43 p.m.
LORD BARNBY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether, in connection with the recently announced increase of Service Pensions, this is to embrace payments as Pensions to Polish ex-combatants resident in this country, consideration for which was foreshadowed by a statement in this House on March 21, 1962.]
THE FIRST LORD OF THE ADMIRALTY (LORD CARRINGTON): My Lords, the arrangements which are being made to apply the provisions of the latest pensions increase measure to Service pensioners will not cover Polish ex-Servicemen. Very careful consideration was given last year to the possibility of granting pensions to the Poles. The Government decided that they could not justify this course, but that it would be right to offer some further measure of assistance to those of them who may be in distressed circumstances. A grant of £50,000, to be reviewed annually, has therefore been made available for this purpose as from January 1, 1963.
LORD BARNBY: My Lords, while thanking the noble Lord for his reply, is it to be understood, since these pro-
884
posals are based on cases of hardship, that even if the £50,000 should bring forward other serious cases of hardship the figure is rigidly to be restricted to that? May I also ask the noble Lord whether, in view of his own sympathetic consideration of this matter when it was debated in your Lordships' House last year, he can hold out any better hope of getting an amount larger than it is now?
LORD CARRINGTON: My Lords, we did, as the noble Lord says, have a debate on this subject in your Lordships' House last year, and it was largely due to the powerful speeches made by noble Lords, himself included, that the Government decided that a grant of £50,000 should be given. This started only on January 1, 1963, and I do not think there is any case for making an increase.
LORD HENDERSON: My Lords, would not the noble Lord agree with me that even this decision is rather mean considering the services rendered by the Poles during the last war on the side of the Allies?
LORD CARRINGTON: My Lords, we argued this question very fully and I do not think the noble Lord would expect me to agree with his supplementary. I think the £50,000 which the Government have granted goes a long way to meeting the case which was put by noble Lords in all quarters of the House.
LORD BARNBY: My Lords, could the noble Lord add to his reply some indication of the mechanism through which the cases and organisations were considered? It would be helpful, I think, if he could indicate this.
LORD CARRINGTON: My Lords, the grant is being administered by the British Legion.
LORD REA: My Lords, would the noble Lord agree that although this subject was debated at length considerable disappointment was expressed at the smallness of the figure? Could he give any hope of an increase in the future?
LORD CARRINGTON: My Lords, the noble Lord the Leader of the Liberal Party is wrong. There was no disappointment expressed at the figure during the debate. The £50,000 was granted largely as a result of the speeches made by the

885
noble Lords on all sides of the House during that debate, and it started only on January 1 this year.
LORD BARNBY: My Lords, I should like to voice my appreciation of the noble Lord's personal help in securing this aid for these unfortunate people who fought for us in the way they did during the war.

CENTRAL AFRICAN FEDERAL CONST1TUTION
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they are now in a position to publish the Report of the Steering Committee of the 1953 Conference on Federation, referred to by Sir Roy Welensky in his speech of December 19, 1962, in the Federal Assembly; and, if not, whether they agree with his assertion that a pledge was then given by Her Majesty's Government that no amendment would be made to the Federal Constitution without the consent of the Federal and Territorial Governments.]
THE LORD CHANCELLOR (LORD DILHORNE): My Lords, in answer to the noble Earl's Question, a White Paper dealing with this matter will be published to-morrow.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I am much obliged by the answer and am tempted to say that this has perhaps been expedited by the report in the London Times of the Belgian Parliament's action yesterday.

ABSENCES OF LEADER OF THE HOUSE
2.48 p.m.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I beg leave to ask the Question of which I have given Private Notice:
[To ask Her Majesty's Government whether they can now make a statement with regard to the arrangements which they consider should be made
886
with regard to the leadership of this House when the Leader of the House is away.]
VISCOUNT HAILSHAM: My Lords, may I say, first of all, that I was sorry that my tour in the North-East last week took me away from your Lordships' House during several important debates. Nevertheless, while I was, and, may I say, am, exceedingly grateful for the generous things—and they were generous—said by the noble Earl about myself, I was not entirely happy that he had raised that subject in my absence. My tour of the North-East had been extensively advertised in advance and I should have thought it was possible to raise the question either before my departure or after my return. But I am exceedingly grateful to him for giving me the opportunity of dealing with the matter to-day.
I think a Minister must always regard his responsibility to Parliament as his first and prime preoccupation. But my view is, and always has been, that the service of this House is best served by a Minister who has important outside responsibilities. Another place is, as we all know, often and rightly jealous of particular Portfolios. But, for what it is worth, I think that a Minister does give life and vigour to the debates here if he can give to the House at first, and not second, hand his experiences of a subject under discussion. For instance, I feel that even yesterday I was able, because of my tour, to do better than I otherwise would have done; and I understand that next week, when the House is to debate unemployment, I shall have an opportunity of delivering early in the debate a speech which I should have enjoyed making in any case but which I think will be helped enormously by the feeling and material that I was able to gather in the North-East.
My Lords, my predecessor, the present Foreign Secretary, was both Lord President of the Council and Commonwealth Secretary at the time of his Leadership of this House. He left Britain, I think, sometimes for weeks on end, and so far as I remember, his absence was not commented on adversely. Moreover, there have been long periods of time, for instance during the Government of which the noble Earl himself was an ornament—and so were several Members whom I see ranged on the Front Bench

887
opposite—when only three Cabinet Ministrs were available in the House; and, even more so, there was a period of more than three years when only two Cabinet Ministers were available in the House, the late Lord Jowitt, who was Lord Chancellor, and the late Lord Addison, who was Leader of the House and Lord Privy Seal. I am sure your Lordships will share my own wish that a fair proportion of Portfolios in a Government will be held by Members of your Lordships' House, and I feel certain there will be times in the future when such will be the case. Last week was a week in which both the Foreign Secretary and the Lord Chancellor were available. Nor did I feel any qualms that the leadership should be left to my noble friend Lord Dundee, who, I think I may say, is deeply loved by his colleagues and greatly respected by all Members of the House.
It only remains for me to say that, during a period of time, again there were only two members of the Cabinet in this House during the time of the Labour Government. I say that not by way of a reproach but simply by way of record. The noble Viscount, Lord Hall, was the Deputy Leader, as my noble friend is the Deputy Leader now, but he was not at that time a Cabinet Minister; he was First Lord of the Admiralty, and I think he gave very general satisfaction, so far as any member of that Government gave satisfaction to those on my side of the House; and indeed he is very deeply loved, I think, in all quarters. I do not think this is really a very good point, therefore, for the reasons I have given. The noble Earl can be quite sure that I will try to see that the service of the House is properly maintained and I shall be helped in it both by my two colleagues in the Government as and when they are available and by my noble friend Lord Dundee, who is the Deputy Leader, and my noble friend the First Lord of the Admiralty who is the Assistant Deputy Leader. I think that makes a much stronger team, if I may say so, than the House has had over a great part of its recent history.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I am obliged for the Answer given by the noble Viscount the Leader of the House. I appreciated the detail of it and I appreciated the reasonableness of it. On the
888
other hand, if I may speak of the time when the Labour Government were in office, I would point out that my noble friend Lord Hall was during part of the time First Lord of the Admiralty, but during part of the time he was Secretary of State for the Colonies. I am not quite sure whether he was in this House then. In any case we were in a pretty difficult time. Perhaps we ought not to have broken what had been a long tradition of the House; that is, that your Lordships' House is worthy of getting answers which can be backed on the spot by a member of the Cabinet. I pass no criticism of the noble Earl, Lord Dundee, who is, as I said the other day, a popular and acceptable figure in this House to all sides, but we appear now to be rather thin on the ground at what is also a very difficult time and I feel we ought to be able to have the necessary reply from a member of the Government when the noble Viscount the Leader is away on duty. I am not complaining about his being away; I complain simply about the risk of his being away more than most Leaders because of the variety of posts he has to work so hard to fulfil.
VISCOUNT HAILSHAM: My Lords, again I am very grateful to the noble Earl for the generous way in which he has handled me personally, and also for the reasonable tone of his supplementary question. I have had looked out (although I have mislaid it) the complete list of arrangements under the Labour Government. I am clear in my own mind that the noble Viscount, Lord Hall, was not a member of the Cabinet for a period of about three years as Deputy Leader. I must point out to the noble Earl that Questions can be asked of the Government and answered by members of the Cabinet, and are habitually answered by members of the Cabinet, on behalf of Her Majesty's Government, when they are not acting at the time as Leader, or Acting Leader, of the House.
Last week, as I have said, was a week in which both the Foreign Secretary and the Lord Chancellor were available for any questions which they were particularly suited, as members of the Cabinet, to answer; and I would feel on the whole that last week was not a particularly strong week if one were trying to found a case that this House was not being fully served from the Front Bench. I am,

889
of course, most concerned about this matter, as much as the noble Earl, and I shall try to see to it that the House does not suffer in any way but gains rather by any responsibilities that I may have. I am reminded that the noble Viscount, Lord Hall, was in the Cabinet as Secretary of State for the Colonies when he was in the House of Commons, and that when he became First Lord of the Admiralty he ceased to be in the Cabinet; that is when he came here.
LORD REA: My Lords, perhaps I may comment that as there are thirteen Ministers in the House to-day, I hope the noble Viscount the Leader of the House will not overdo it in either direction.
VISCOUNT HAILSHAM: I hope that thirteen will prove a very lucky number.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I should not like to think that the noble Viscount the Leader of the House felt I was guilty of discourtesy in raising the matter last week. I had discussed it with the Foreign Secretary when the matter was first considered by my colleagues and myself, and I also mentioned it to him informally when we met after he had come back on that occasion. No discourtesy was intended, but we thought we ought by then to have had some reply. The other thing I would say is this: as regards the work of the House of Lords now, which is often so very detailed, we have felt rather, since we lost Lord Mills, that we miss the additional Cabinet Minister who was so often ready to answer for his colleagues.
VISCOUNT HAILSHAM: My Lords, I was not imputing any discourtesy to the noble Earl; although it is true to say I knew this matter was in his mind, I did not know he was going to mention it during my tour. I should be the last to suggest that not one but all my colleagues ought not to be promoted to the Cabinet.

BATH CORPORATION BILL [H.L.]
Read 2a, and committed to a Select Committee.
FACTORY LANE WARRINGTON (LEVEL CROSSING) BILL [H.L.]
Read 2a, and referred to the Examiners.
FELIXSTOWE DOCK AND RAILWAY BILL [H.L.]
Read 2a, and referred to the Examiners.

PERSONAL BILLS COMMITTEE
THE CHAIRMAN OF COMMITTEES (LORD MERTHYR): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Viscount Gage be proposed to the House as a member of the Committee in the place of the Earl of Macclesfield, resigned.—(Lord Merthyr.)
On Question, Motion agreed to.

TOWYN TREWAN COMMON BILL
Read 3a (according to Order), and passed.

COMMONWEALTH SCHOLARSHIPS (AMENDMENT) BILL
House in Committee (according to Order).
House resumed: Bill reported without amendment: Report received.

WATER RESOURCES BILL [H.L.]
3.0 p.m.
THE MINISTER OF STATE, HOME OFFICE (EARL JELLICOE): My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(Earl Jellicoe.)
VISCOUNT COLVILLE OF CULROSS: My Lords, I should like your Lordships to forgive me for detaining you for one moment in order that I may make a personal statement at this stage. Your Lordships may recall that, on the Committee stage of this Bill, I moved a long and controversial Amendment about the amalgamation of the Wear and Tees River Board with that in the Northumberland area. During the course of making the case before your Lordships' Committee I quoted as being in support of what I was saying three water companies in the North-East of England. I have since been reproached for having misrepresented them. The water companies were the Sunderland and South Shields Water Company, the

891
Durham County Water Board and the Hartlepools Water Company. There is not an Amendment down at this stage of the Bill on the occasion of which I could mention this matter, and I therefore thought that I would ask your Lordships' permission to put this error right at this stage. I am told that those bodies are not in support of the case that I made and, since professional reputations and other matters of importance are at stake, I thought it right at this stage to clear the matter up.
On Question, Motion agreed to.
Clause 5 [Transfer to river authorities of functions of river boards]:
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD HASTINGS): My Lords, this Amendment does not make any alteration of substance, but is put down in view of the plea made by my noble friend Lord Colville of Culross during the Committee stage, that it should be made clear how river authorities will exercise functions relating to the prevention of pollution of rivers and streams. It is still necessary to keep the reference, now in paragraph (d), to
"… other statutory provision not contained in, or made or issued under, the Rivers Boards Act, 1948"
since river boards have functions to perform under other enactments, such as, for instance, the Pipe-Lines Act, 1962; and indeed some river authorities will also exercise functions which are being conferred on the river boards they succeed by local enactments—for example, the Kent River Authority will be a harbour authority. I beg to move.
Amendment moved—
Page 4, leave out lines 20 and 21 and insert—
("(c) the Rivers (Prevention of Pollution) Acts, 1951, to 1961, or
(d) any other statutory provision not contained in, or made or issued under, the River Boards Act, 1948").—(Lord Hastings.)
VISCOUNT COLVILLE OF CULROSS: My Lords, I am most grateful to my noble friend Lord Hastings for this Amendment. I hope I shall not be considered to be carping if I ask whether he would try to go further still. He made the point on Committee that he was trying to get as great a degree of
892
consolidation in this Bill as was possible, and I do understand that the powers referred to in paragraph (d) may be diverse. Nevertheless, the river boards have been in existence only since 1948, and I cannot believe that it would be impossible to put in some Schedule a list of the subsidiary enactments or Private Acts which have given specific powers to these river boards during this time. The point is that not only the river boards themselves, but other people who come into contact with them, will want to know what their powers are, and unless it appears in some fairly clear form in this Bill they will have to do a tremendous amount of research and may well miss the exact point that they are looking for. I ask my noble friend whether he can try to do a little more than he has already done.
LORD HASTINGS: My Lords, I will gladly undertake to have another look at this to see whether we can go a little further, but I am afraid that will hardly be possible in your Lordships' House; it will have to be in another place. However, we will have another look.
On Question, Amendment agreed to.
Clause 6:
Constitution of river authorities
6.—
(3) The remainder of the members of a river authority (other than additional members) shall consist of the following, that is to say—
(e) one or more members appointed by the Minister as being qualified in respect of industry other than agriculture.
3.6 p.m.
LORD LINDGREN LORD LINDGREN moved, after subsection (3) to insert:
"( ) Such number of members of a river authority as is sufficient to represent adequately the interests of statutory water undertakers shall, subject to the provisions of section (Statutory water undertakers members of river authorities) of this Act, be appointed by the statutory water undertakers whose limits of supply are wholly or partly comprised in the area of the river authority or who have the right to abstract water from a source of supply within the area of the authority."
The noble Lord said: My Lords, Amendment No. 4 is consequential upon Amendment No. 2, and if it suits

893
the convenience of your Lordships I would suggest that we might take them both together. The Amendments are almost identical to two that I moved during the Committee stage of the Bill. They seek to make provision for statutory water undertakers to have direct representation on the river authority. The noble Lord, Lord Hastings, dealt with the Amendments on Committee stage, and I do not think it is unfair to paraphrase his arguments by putting them into two groups: The first group was the case for representation of the water undertakers, and the second concerned the way the representatives were, in practice, to be appointed.
I would submit that the noble Lord, Lord Hastings, accepted the case for adequate representation of the public water supply, and he suggested that Clause 6 (3) (d) made provision for it. With the greatest respect, I would suggest that Clause 6 (3) (d) does not provide for representation of the statutory water undertaker; it provides for the appointment by the Minister of one or more members qualified in respect of public water supply; and "qualified" is defined as meaning
"having had experience of, and shown capacity in, or otherwise having special knowledge of, matters relating to that subject."
Therefore, it seems clear to me that if the Government accept the principle of representation, then something on the lines of the Amendments which I submitted on the Committee stage, and now re-submit, is required.
As to the method of appointment, the noble Lord, Lord Hastings said that the major difference between the Government's proposals and those that I submitted at the Committee stage was that the Government insisted that the Minister should appoint a representative, rather than that selection be left to the statutory water undertakers—that it was a question of selection by the Government rather than of nomination by the statutory water undertakers. The noble Lord said further that there was a fundamental difference between the county councils who have the right to appoint their own representatives, and the statutory water undertakers for whom the Minister does the selection.
Here I ought to declare an interest, being a member of one of the impor-
894
tant Home Counties county councils. The noble Lord said, quite rightly, that a county council represents all ratepayers, and that a county council, and through the county council all ratepayers, were forced to pay the precept to the river authority, whether or not it was to their direct benefit; but the water undertaker would be paying for a direct benefit. I submit that this is hardly a sound argument. It is no more true to say that no ratepayer gets a benefit from the work of the river authority than it is to say that every statutory water undertaker gets a direct benefit. Moreover, water undertakers will be no more able than ratepayers to refuse to pay the charges demanded by the river authority.
It was further stated by the noble Lord that if the statutory water undertakers were to elect their own representative, the Government would be in some difficulty in selecting the method of appointment. Again I would suggest that there is no real difficulty in laying down, by ministerial order, the machinery for appointment of a representative or representatives by a number of statutory water undertakers. This has been done before. Your Lordships will remember that the Kent Joint Advisory Water Committee Order, 1958 occupied a considerable amount of Committee time in this House and in another place. There is provision under that Order for statutory water undertakers in Kent to be represented on the Kent Joint Advisory Water Committee.
My Lords, the noble Lord, Lord Hastings, in the discussion on my previous Amendments, said that the proposal would interpose representatives of a statutory water undertaker between representatives of the ratepayers appointed by the county council and representatives of the taxpayer as appointed by the Government. Again, I would submit that this confirms my view that the members to be appointed by the Ministers are to be representatives of the taxpayers, and that an Amendment is necessary to make provision for representation of statutory water undertakers, which has been accepted in principle by the Government. It was further argued that if the water undertakers were given the privilege of appointing their own representatives, then a similar privilege would be claimed by the National Farmers' Union, the Federation of British

895
Industries and other interests. With the greatest respect, I would suggest that that argument is based much more on expediency than on logic, and that, in any event, the statutory water undertakers are in a special position, in that, like other abstracters, they are obliged to take water, whereas the farmer or the industrialist is not.
To sum up, if the Government accent the principle of representation of the statutory water undertakers some Amendment seems to be required to give effect to the principle. I would suggest, with respect, that no valid or practical reason has been adduced to show why statutory water undertakers should not appoint their own representatives. My Lords, I beg to move.
Amendment moved—
Page 4, line 36, at end insert the said subsection.—(Lord Lindgren.)
LORD SINCLAIR OF CLEEVE: My Lords, I should like briefly to support this Amendment, in so far as it seeks to recognise the fact that the special obligations imposed on the statutory water undertakings places them in a category different from other interests. I confess that I find it difficult to argue that the only way this can be recognised is to give them the right to appoint the members who are to represent the water supply interests. At the same time the phrase in this clause "qualified in respect of public water supply" does not necessarily mean qualified to represent the interests of the statutory water undertakers in general or those in the area in question. Experience of local conditions, and knowledge of the problems of the statutory water undertakers in the area in question, are clearly very important in this context.
The noble Lord, Lord Hastings, in Committee gave a specific assurance (column 375 of Hansard of December 6 last year) that statutory water undertakers in the area would be consulted when the appointment of a member or members to represent the water supply interests was being considered. Such an assurance is very welcome to the statutory water undertakers, and if a way could be found of writing that into the Bill, I feel that much of the substance of this Amendment would be secured, even though the logic of Lord Lindgren's argument might not be fully answered.
3.17 p.m.
LORD HASTINGS: My Lords, as the noble Lord, Lord Lindgren, said, these two Amendments were put down during the Committee stage—I think in precisely the same terms. We had a long argument and discussion upon them on that occasion. I must confess that I am a little surprised, and a little disappointed, that the noble Lord has felt it necessary to put them down again and re-argue the case. On this occasion he has slightly altered the emphasis of his case. For instance, he did not really refer to the Amendment, which asks the Government to let the statutory water undertaker decide how many representatives there would be on the river authority. Of course, that is completely looked after under Clause 3 (1) where, as a result of the statutory obligation to consult, the Government will constitute these river authorities in accordance with the relative importance of the various interests concerned, after agreeing those numbers with the statutory water undertakers, industry, agriculture, fisheries and so on. So that in respect of numbers, which he has overlooked on this occasion, although it forms part of his Amendment, the fact is that that aspect is already completely looked after in the Bill.
The noble Lord emphasised the question of representation under Clause 7, and still argued that his proposal was a very different thing from appointing people qualified in respect of public water supply. He was asking for direct representation of the statutory water undertakers, and, as the noble Lord, Lord Sinclair of Cleeve, has pointed out, it is in fact something slightly different. One point is that the Government are trying to get a balanced representation on these river authorities and they do not want people simply to represent specific interests. They want people, qualified by knowledge and experience so far as their particular area is concerned, who will operate as a team and help the river authority to perform its new functions really effectively. We still maintain that the only way to obtain this result is for appointment to be by the Minister himself, so that he can be free, without any prejudice or partiality, to choose the best individuals available. But he will do so only after consultation, as the noble Lord, Lord Sinclair of Cleeve, reminded us, with the interests concerned; and that

897
goes for agriculture, fisheries, land drainage and industry as well. We must stand on that, and we cannot agree that there is any case for special representation of statutory water undertakers compared to any other interest.
Another argument of the noble Lord, which he reiterated, was in respect of the finance. He has argued before and does so again now that, because the statutory water undertakers would be contributing very substantially to the new functions of the river authority, therefore they should be able to nominate their own representatives. But quite apart from the fact which he again mentioned, that I made this distinction between the local authorities who are representing the ratepayers, and the other interests who are paying for direct benefits to themselves, I think it is worth mentioning, and worth reminding the statutory water undertakers, that the very great bulk of their abstraction will be made pursuant to licences of right, with which no charge will be associated at the outset for several years; and that, even when charging schemes do come into force, they, above all people, are likely to enjoy a reduced rate of charge because of the contribution made by their works to the fulfilment of the purpose of the river authority in discharging its new function. That, of course, is allowed for under Clause 58, and there is no doubt that the statutory water undertakers will benefit greatly from that clause. So I do not think there is really a case for special representation which they can prove on grounds of finance relative to the contributions of other people.
Then we come to the last argument of the noble Lord, which was on this special position of the statutory water undertakers. Of course your Lordships will remember that this was really the first of a long series of Amendments which were based upon the fact that the statutory water undertakers have a special statutory obligation to provide supplies, particularly for domestic purposes. Therefore, even at this early stage of the proceedings, I think it is only fair to draw your Lordships' attention to a Government Amendment which is to follow Clause 93, in which this particular statutory obligation of the water undertakers is acknowledged. We shall have an opportunity to argue that case fully, not only
898
on the Government Amendment, but earlier than that—probably to-day—on another Amendment, that to Clause 29, by the noble Lord opposite. Therefore I do not propose to embark on that now. But I think that, from the point of view of the special position, that aspect is looked after either under the noble Lord's own Amendment or under a Government Amendment, which of course we prefer, and which we shall argue in due course. Therefore, I hope that the noble Lord will feel I have again made out my case adequately, and that he has had a fair answer. I trust that in the circumstances he will see his way to withdrawing this Amendment.
LORD LINDGREN: My Lords, I am sorry that the noble Lord, Lord Hastings, is surprised and disappointed, but one does feel that this is a matter of principle. After all, there is an argument on behalf of the Minister on the basis of the county council and county borough representatives, and the independent ministerial representatives, inasmuch as they represent two very large interests: the first, that of the ratepayer, and, the second, that of the taxpayer. But it is equally true that, so far as the statutory water undertakers are concerned, they are exceedingly large contributors to the resources of the river board, and upon the effective and efficient working of the river board the success of the water undertaker very largely depends.
While it is true that the noble Lord, Lord Hastings, has said that there will be consultation—and one appreciates that—the wording of the Bill is that the person shall be
"qualified as having had experience of, and shown capacity in, or otherwise as having special knowledge of, matters relating to"
water supply. I know some very admirable persons who are consultant water engineers, and many admirable persons who have been associated with the Ministry of Housing and Local Government in the past, who one could say are extremely well-qualified and extremely knowledgeable so far as water supply is concerned, but as regards actual experience of the functioning of a statutory water undertakers and of the administrative difficulties they have to face, they do not have the same direct knowledge or the same responsibility.

899
I think equally of a retired Army officer who has been abroad using his experience in the Royal Engineers or somewhere else to provide local water supplies. One does not think that that is the type of representation there ought to be. There is this difficult point. If the Government go to a group of statutory water undertakers and say, "Here we have Mr. X or Brigadier Y. We propose to put him on the authority as representing statutory water undertakers", it is extraordinarily difficult for a group of business people or local authorities associated with a statutory water undertaker to say, "This fellow does not really represent us and we are going to object to his being appointed." The most they can say is, "We do not think he really can represent us, but we are not going to object to his coming on to the authority. All we hope is that when he is here he will see our point of view and do the best he can for us." Therefore, I really do not think the Government have made their case. But in view of the position taken up by the Ministers in charge, there is really very little left for me to do other than to ask that the Amendment should be negatived. I certainly will not press it to a Division.
On Question, Amendment negatived.
3.28 p.m.
THE EARL OF ALBEMARLE THE EARL OF ALBEMARLE moved, in subsection (3) (e) to leave out "Minister" and insert "President of the Board of Trade". The noble Earl said: My Lords, as compared with the case of the statutory water undertakers, the case for appointing suitable members of a river authority to represent many different kinds of industry seems still stronger, because although the Minister of Housing and Local Government stands behind the statutory representatives (who, after all, were first in the field and have the duty of public supply), those who are going to be members representing various industries will have requirements for water which so far are greater than the total requirements of the statutory water undertakers. It seems to me that their case for having strong representations is greater and yet they have nobody at their back.
Since I put down this Amendment I have made many inquiries. I understand that the official position taken up is that
900
the Government are not in favour of my Amendment. But I would ask whether some formula could be found which would enable the Minister of Housing and Local Government to have (shall we say?) an advisory committee to look after the special desires and requirements of industry. I do not wish to embarrass the Government by pressing this Amendment, because I have found out officially that they do not see eye to eye with me. The last word I would say is: do the Government not think that there should be some formula, such as that the Federation of British Industries should be automatically represented? I beg to move this Amendment, because I want to hear what the Government have to say.
Amendment moved—
Page 5, line 5, leave out ("Minister") and insert ("President of the Board of Trade").—(The Earl of Albemarle.)
LORD HASTINGS: My Lords, as the noble Earl who has moved this Amendment has said, he realises the two Ministers concerned—that is to say, my right honourable friend the Minister of Housing and Local Government and also the President of the Board of Trade—have consulted about this matter. They have considered this particular point and still prefer that the provisions of the Bill should remain as they are. The reason is really that in the appointment concerned it is a question of appointing somebody not simply familiar with industry in general, but with industrial water problems in particular—and water affairs come quite clearly under the Ministry of Housing and Local Government, and not under the Board of Trade. Apart from that, the noble Earl has made the point that perhaps there could be some improvement within the Ministry of Housing itself, administratively speaking, in order to strengthen the water side which deals with industry. I think that was the point he was really trying to make. Without saying anything definite, I should like him to realise that we are looking at that particular aspect of the matter, and he can rest assured that the Ministry which I represent will make adequate provision to look after the interests of industrial water users.
LORD HAWKE: My Lords, I found my noble friend's answer reasonably convincing, but, at the same time, it seems to produce a certain anomaly in that in

901
Clause 8 he is not carrying out the precepts which he is laying down for Clause 6. There, in Clause 8, where there is any question of anybody wanting to sail boats on any of this water, the Minister of Transport himself appoints the member. Again, when there is any question of coal interests being involved—and presumably it is only coal interests qua water that are involved—the member is not appointed by his Minister but direct by the National Coal Board. I should have thought that the two arguments were inconsistent, and that if he accepts the premises which he has laid down in reply to my noble friend he ought to amend Clause 8 to have these members appointed by the Ministry of Housing and Local Government, too.
LORD HASTINGS: My Lords, I am not sure that I am entitled to reply again on Report stage.
LORD HAWKE: Yes, you are.
LORD HASTINGS: But, with the leave of the House, I would merely point out that the two cases which the noble Lord has mentioned refer to statutory authorities, and, of course, industry is not that.
THE EARL OF ALBEMARLE: With permission, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 11 [Maps of river authority areas]:
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (LORD ST. OSWALD): My Lords, this drafting Amendment has two purposes, which I will explain only briefly. The first part of the new subsection—that is, from the beginning down to the word "respectively" in the fifth line—removes any doubt as to whether a map prepared under the clause is a "document" within the meaning of the Documentary Evidence Act, 1868, as applied to the Minister of Housing and Local Government and the Minister of Agriculture, Fisheries and Food. The second part of the subsection—that is, from the words "and that Act" in the fifth line down to the end—provides that a map prepared by the Minister of Housing and Local Government and the Minister of Agriculture, Fisheries and Food jointly under subsection (1) of the clause can be proved by production of a copy certified by the appropriate officer
902
of either Ministry. My Lords, I beg to move.
Amendment moved—
Page 10, line 49, at end insert:
("(9) Any map sent to a river authority under this section shall be taken to be a document within the meaning of the Documentary Evidence Act 1868, as applied to the Minister and to the Minister of Agriculture, Fisheries and Food respectively; and that Act, as so applied, shall have effect in relation to any map sent under subsection (1) of this section as if it had been issued by each of those Ministers acting separately and not jointly.").—(Lord St. Oswald.)
On Question, Amendment agreed to.
Clause 12:
Establishment and principal functions of Water Resources Board
12.—
(2) The Water Resources Board shall be charged with the duty of advising river authorities with respect to the performance of their new functions, and of advising the Minister with respect to the performance of his functions under section 1 of the Water Act 1945, as extended by section 1 of this Act, and with respect to such other matters (if any) as may be referred to the Board by the Minister.
(3) Without prejudice to the last preceding subsection, it shall be the duty of the Water Resources Board—
(a) to consider in what way action needs to be taken for the purposes of conserving, re-distributing or otherwise augmenting water resources, either in England and Wales generally or in relation to any particular river authority area, and to give to the Minister (and, where the Board consider it appropriate, to other Ministers) and to river authorities the earliest possible notice of action which in the opinion of the Board will be needed for any of those purposes, together with such recommendations with respect thereto as may appear to the Board to be necessary or expedient;
(e) to encourage and assist river authorities in the formulation of such plans as the Board think necessary for augmenting water resources in a river authority area by transferring water from another river authority area;
3.35 p.m.
LORD JESSEL LORD JESSEL moved, in subsection (2), after "functions" (where that word first occurs), to insert—
"and in relation to their functions of river pollution with respect to the maintenance of the quality of the water"
The noble Lord said: My Lords, this is quite a short point. On the Committee stage of the Bill the noble Lord, Lord Champion, moved an Amendment

903
to charge the Water Resources Board with the duty of advising river authorities on all their functions, not just their new functions. In resisting the Amendment, my noble friend Lord Jellicoe expressed his conviction that it would be a mistake to require the Water Resources Board to advise the new authorities over the whole range of the river boards' existing functions. I can see the merits of this argument, and to-day I am not pressing for all that the noble Lord, Lord Champion, asked for on the Committee stage. I feel, however, that the question of pollution is one existing function which should come within the scope of the Board.
It is of interest to note that this function is in any case the duty of the Minister of Housing and Local Government. My noble friend Lord Jellicoe—and here I quote from Hansard of December 11, 1962, [Vol. 245 (No. 21) col. 602]—said:
"…that quality of water as well as quantity is an element in water conservation policy."
He felt, however, that there was no need to spell this out further in the Bill. My Lords, industry feels that this is a matter of some importance. If, as is generally conceded, quality is part of water conservation, then it must fall within the Therefore, having heard that, I should stress here that quality rather than purity for purity's sake is the important factor. So I think it would be appropriate for the Board to issue a policy statement on the principles to be observed by the river authorities in carrying out these functions. I suggest, therefore, that it would be much better if this duty were written into the Bill. I beg to move.
Amendment moved—
Page 11, line 7, after ("functions") insert ("and in relation to their functions of river pollution with respect to the maintenance of the quality of the water").—(Lord Jessel.)
EARL JELLICOE: My Lords, I should like straight away to assure my noble friend that we, of course, attach great importance to this question of the quality of water. We realise, in particular, that for industry the quality of this valuable product is often just as important as its quantity. In fact, if I may cap my noble friend's quotation, at our Committee stage I stated quite categorically,
904
in the column after that to which he referred:
"…we fully recognize—and here I come back to what I have just said—that the Board in discharging their conservation responsibilities must have regard to quality as well as quantity".
I am quite prepared to stand on those words.
Nevertheless, I cannot recommend your Lordships to accept my noble friend's Amendment, and for two reasons. In the first place, the Water Resources Board, if they were to discharge the duty this Amendment would lay upon them, would, I suggest, need to concern themselves with the day-to-day exercise by river authorities of their prevention of pollution powers—to interest themselves in individual applications for consent to discharge effluents. That is because anti-pollution work is essentially a matter of case work. It is true there is what is known as the Royal Commission standard, a dilution factor, but that is not an overall panacea. Each application for discharge of effluent must be dealt with on its own individual merits. The only way for the Water Resources Board effectively to advise would be by dealing with individual applications; and that is not the sort of job with which the Water Resources Board should properly be concerned. The Board should be concerned with the water quality as well as water quantity, but their concern should be overall and strategic, and they should not be required to exercise directly day-to-day supervision over the river authorities in their discharge of antipollution duties. If they were to do so there would be a clear risk of confusion between their advice activities and the exercise by my right honourable friend, the Minister of Housing's appellate function under the various river pollution Acts.
My second objection to the Amendment is the reference in it to the maintenance of the quality of water. The objective of the various pollution Acts is to secure an improvement in water quality and such improvements are being made. With many of our badly-polluted rivers the status quo is not nearly good enough. It would be wrong, therefore, to put the Board under a duty—as this Amendment would—to concern themselves only with the maintenance of water quality. I would readily grant that the

905
Board should have a locus standi in matters of water quality. I would submit, however, that this is better secured by the Amendment which I am just about to move than it is by my noble friend's Amendment.
If Amendment No. 7 is accepted, the Water Resources Board will—as I shall try to explain—need to concern themselves with matters of water quality and with matters of water pollution. My noble friend can be assured that where the Board consider action to improve the quality of water is necessary they will be able to say so. More important, if the Minister agrees with them, he will, under Clause 95 of this Bill, be able to make certain that the river authorities take the necessary action. Those are the reasons why, whilst being not unsympathetic to the purpose behind it, I cannot recommend that the Amendment be adopted by your Lordships.
LORD MOLSON: My Lords, we have listened to a very subtle argument from the Minister of State and I am bound to say that I am a little surprised that the Government are taking the view that they are. He has made it plain that he entirely agrees with the purpose that my noble friend, Lord Jessel, has in mind. He contemplates that, in their general strategic responsibilities, the Water Resources Board will, in fact, concern themselves with the quality of water. Therefore, having heard that, I would suppose he might be willing to accept the Amendment, or at any rate the spirit of the Amendment, with a view to providing for it to be spelt out in this Bill. The argument he has used against it is that if the Water Resources Board are directed specifically to deal with this matter from a strategic point of view they will find themselves obliged to deal with individual minor cases. Well, my Lords, the Government are advised by those who are concerned with the drafting of Bills, and we must, I suppose, assume that the purpose of my noble friend, Lord Jessel, will be achieved but that it is undesirable to incorporate it in words in the Bill. I must say I remain sceptical about it, but we must rely upon the Government's assurance.
LORD WILLIAMS OF BARNBURGH: I am rather pleased to learn that the noble Earl has turned down this Amendment. It would seem both remarkable and ridi-
906
culous, on the face of it, if one simply looked at it from this point of view. The existing river boards have been looking after pollution of water for the last twelve years. They therefore have become skilled operatives in dealing with pollution. If they have not, then they have missed the bus. But to invite the Water Resources Board, who have had no knowledge of or contact with polluted water or clean water, or cleaner water, to advise how to do it those who have been doing the job for twelve to fourteen years does seem rather ridiculous. The noble Lord who moved the Amendment may have something deeper and more profound in his mind than I can see; but if there is nothing deeper or more profound than the simple argument as to whether we should invite the Water Resources Board, with no knowledge of pollution, to advise those who have had twelve to fourteen years' experience of pollution, then I am sure the noble Earl is quite correct when he rejects this Amendment.
LORD JESSEL: My Lords, in spite of the unexpected and powerful support of my noble friend Lord Molson, I am going to withdraw this Amendment, because I am convinced by the noble Earl's argument. I shall be interested to hear what he has to say on his next Amendment, No. 7, which he assures me will partly cover the principle I have in mind. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
EARL JELLICOE EARL JELLICOE moved, in subsection (3) (a), after "resources" to insert:
"or of securing the proper use of water resources".
The noble Earl said: My Lords, this Amendment would amend paragraph (a) of Clause 12 (3) so that it would be the duty of the Water Resources Board
"to consider in what way action needs to be taken for the purpose of conserving, redistributing or otherwise augmenting water resources or of securing the proper use of water resources, either in England and Wales generally, or in relation to any particular river authority area,…".
This would bring this clause into line with Clause 4 which provides for a similar duty to be laid upon each river authority.
Two major results will flow from the inclusion of these words in Clause 12 (3), if your Lordships decide to include them. In the first place, it is

907
quite clear that securing the proper use of water must embrace securing economy in the use of water. Your Lordships will remember that my noble friend Lord Molson moved an Amendment at Committee, the purpose of which was to give the Board powers to advise the Minister on measures to ensure economy in the use of water. In my reply I accepted the view that economy in the use of water was an important aspect of water conservation; and my noble friend withdrew his proposed Amendment on my undertaking to consider the matter further. He has been kind enough to propose an Amendment to my Amendment now. In my view, noble Lords were quite right to stress the importance of this matter during our Committee stage; and I trust that this Amendment, which makes it clear that it will be the duty of the Board to consider measures leading to economy of the use of water, meets their point, despite my noble friend's further Amendment.
The second result which will flow from the inclusion of these words in Clause 12 (3) is that it will now be clearly open to the Board to concern themselves with questions relating to the quality of water resources. That is the point to which I referred in replying to my noble friend's Amendment just now. The words "securing the proper use of water resources" would clearly include the earmarking of resources of a particular quality for uses to which that quality of water was suited. May I give an example? It may be rather absurd, in a water deficiency area, for an industrialist to use potable water to wash down the backyard of his factory, since that water may be badly needed by domestic consumers. With that sort of consideration in mind, some statutory water undertakers now supply non-potable water to some, but not all, industrial consumers—in fact, too few. This is the sort of thing which, under Clause 4, my right honourable friend wants the Board to encourage and which, under Clause 12 (3) (a), as amended, the Water Resources Board, in its turn, should encourage the river authorities to encourage.
In Committee, I gave the reasons why we felt that my right honourable friend
908
the Minister of Housing and Local Government must retain the functions of the central authority under the Prevention of Pollution Acts, largely in the light of his appellate responsibilities in this field. Nonetheless, if this Amendment is adopted, it will be open to the Board to make such investigations as they think proper as regards water purity and thereby as regards water pollution. They will be able to bring to the notice of the river authorities and the Minister the results of such investigations, together with their recommendations for action—and given Clause 14 (1) (c) of this Bill, such recommendations will not, or need not, be merely platonic. In this context, I would also draw the attention of noble Lords to Amendment No. 20. Taken together, I suggest that these two Amendments will widen the scope of the Board's duties in relation to water pollution and purity, broadly speaking, in the way which noble Lords who took part in our Committee stage discussion on this point had in mind. I beg to move.
Amendment moved—
Page 11, line 16, after ("resources") insert ("or of securing the proper use of water resources").—(Earl Jellicoe.)
LORD MOLSON LORD MOLSON moved, as an Amendment to the Amendment, after "proper" to insert "and economic". The noble Lord said: My Lords, I beg to move my Amendment to the Amendment. Let me begin by expressing my gratitude, and that of my noble friends, to the Government for what they have done in the way of seeking to make it clear in this Bill that it will be one of the responsibilities of the Water Resources Board to consider economy. I have observed also the skill, and perhaps I might say economy in words, of the draftsman in seeking by the word "proper" to include the important point my noble friend Lord Jessel has recently made with the other point which I made about economy.
If I understand the idea of the Parliamentary draftsman, it is that the word "proper" here will include both the quality of water and the avoidance of any misuse of water. As we recognise, it also has the merit of elegance. The responsibilities imposed upon the Water Resources Board under this Amendment will be identical with those imposed under Clause 4 of the Bill upon the river authorities. However, I still ask the Government to accept the additional words "and

909
economic" because I think that it is extremely important, not only that the drafting shall be accurate, but also that the attention of the public and of the Water Resources Board should be drawn to the importance of economy.
I am not going to repeat what I said on Committee stage, but I would remind my noble friend the Minister of State that in the course of his reply he mentioned on three separate occasions how much importance the Government attach to reasonable economy in the use of water, and he has just given another example: that where there is a shortage of potable water industrialists should not use for industrial purposes water which is suitable for domestic purposes. I have again to say very much what I said on the previous Amendment. That is, that while I am reasonably satisfied that the Government, with the expert advice they command, are quite right in supposing that the word "proper" does include economy, I still think that there would be nothing lost, and much gained, if they were prepared to accept this Amendment to their Amendment, since it is thoroughly in accordance with the spirit of the speech which the Minister made on Committee stage.
As I see the noble Lord, Lord Williams of Barnburgh, apparently leaving the Chamber, I would say, in reply to his gentle criticism of my last observations upon this subject, that the Amendment that has now been moved does, I think, clear me of the charge he made. He suggested that it was unwise, unnecessary and undesirable that the Water Resources Board should be given any responsibility for the giving of advice to the river authorities on a matter with which they have dealt so well in the last fourteen or fifteen years. As has been made plain by my noble friend the Minister of State, under the Amendment which we are discussing the Water Resources Board should give advice to the river authorities upon the matter of the quality of water. Therefore, while thanking my noble friend for going so far as he has done, and making it quite plain that I should not think of trying to divide the House upon this matter, I would say to him that I hope, having gone so far, he can just go a little further and accept the two simple and innocuous, but I think valuable, words "and economic".
Amendment to Amendment moved—
After ("proper") insert ("and economic").—(Lord Molson.)
LORD CHORLEY: My Lords, I should like to add a word of support to the argument of the noble Lord who has just addressed the House. I agree with him that technically the Government Amendment covers this point, but sometimes it is very important to underline policy in an Act of Parliament, and my impression is that up and down the country a tremendous waste of water is going on. The more we do at headquarters (so to speak) to prevent this happening, the better; and I am sure that this is one way of doing it. My mind was very much brought to this matter some years ago, when I took part in an inquiry into a proposal to raise the level of a lake in the Lake District which is used as a reservoir. The proposal was being supported by a local authority already using water from this lake to a very substantial extent. In fact, they were just about the highest users of water in the country per head of population, yet they had no particular industry which called for water, and it was a puzzle to everybody why they should be taking this line.
We were advised by a water engineer of some eminence who was assisting us with our case that it was obvious to him, having had a look round, that their apparatus, which had been installed many years before, had not been brought up to date, and that in fact they were losing a great deal of the water they were already taking from this reservoir lake. He indicated that they could get all the extra water which they said they required by examining their pipes and seeing that the water did not leak away. That may seem a simple case; but we had interesting talks with this man, and he said that it was symptomatic of what was going on, to his knowledge, in many parts of England. It seems to me—and I hope it does to the noble Earl—important that the need for stopping this sort of thing should be emphasised in this important Bill. For that reason, I support the case made by the noble Lord, Lord Molson.
LORD HAWKE: My Lords, I think that my noble friend Lord Molson has a real point here, because by inserting these words one is strengthening the hands of the Water Resources Board when the

911
river authorities come to discuss schemes with them. In the drier parts of England we are short of precipitation. There are large parts of England where water supply could be considerably increased, but only at vast capital cost, and our capital resources are distinctly limited. I have been reminded in my local paper that there threatens to be a shortage in my part of the world next summer owing to wastage from burst pipes and so on. When the river authorities come to discuss the question of capital expenditure with the Water Resources Board, the Board will have their hand immensely strengthened if they can point out that by Statute they are given a duty to look after economy in water, as well as the proper use thereof.
4.3 p.m.
EARL JELLICOE: My Lords, my noble friend Lord Molson advised me that, having gone so far, I should perhaps go a little further. That, if I may say so, was rather improper advice, and also dangerous advice, both inside and outside this House, at times. But having said that, and having said that I should like to meet noble Lords who have spoken to this point, I am still, I confess, a little puzzled by this Amendment. I am puzzled, in the first place, by the use of the adjective "economic". Strictly, "economic", as I understand it, is the adjective of which the noun is "economics", but I gather that "economic" is sometimes used in the sense of "economical"; and the Concise Oxford Dictionary, which I consulted this morning, tells me that "economical", in its turn, is sometimes used in the sense of "economic". But whichever meaning we attach to this little word, I suggest that it is not really appropriate in this paragraph. The nice and economical, or economic, little word "proper" does, I submit, everything that is needed.
I argued just now in support of this Amendment why I think that is so, and I will not repeat the argument, save to say (and here I think I am repeating what my noble friend said) that it would embrace "economical" and, for that matter, "economic" My noble friend may well say: "Well, there is no harm in that, and there might be advantage in dotting the i's and crossing the t's here", which is the argument used, I
912
think, by the noble Lord, Lord Chorley. I think there is also a danger here, because if the words "and economic" were to be inserted after "proper" they would appear to have a restrictive, and I think possibly too restrictive, effect, limiting the Board to considering only those uses of water which are both proper and economic. The two may aften go together, of course; but there may be uses of water which are perfectly proper without being economic; and, indeed, there may be uses which are economic without being altogether proper. All in all, I would suggest that this Amendment to the Amendment is unnecessary, and also that it might have its possibly undesirable consequences. Therefore, I will be, at least at this stage, rather timid and not accept my noble friend's invitation to take that dangerous extra step further.
LORD MOLSON: My Lards, without being wholly convinced by the ingenious argument that has been put forward by my noble friend, and having said that I am deeply grateful to him for having gone so far and conceded the substance of what I asked for on the Committee stage, I beg leave to withdraw the further Amendment which I have moved.
Amendment to Amendment, by leave, withdrawn.
On Question, Amendment agreed to.
4.7 p.m.
LORD CONESFORD LORD CONESFORD moved to add to subsection (3) (e):
"or by using sea-waver and extracting the salt, or otherwise".
The noble Lord said: My Lords, when this clause was before us on the Committee stage a little over two months ago I raised a matter of some importance on the Question that the clause stand part. I drew the attention of noble Lords to the great and growing importance of obtaining an increase in our water supply by using sea water and extracting the salt. Admittedly, that will be a matter of great importance in the future, and I think the not very distant future. There was, I believe, general agreement on the importance of that matter, but the question was whether it was already adequately dealt with in the Bill. I pointed out that there was no express mention of it anywhere, but I admitted the possibility that obtaining fresh water from the sea might be covered by the

913
words to be found in lines 15 and 16 of page 11, "otherwise augmenting water resources". Nevertheless, I gave reasons for doubting whether those words were altogether sufficient and said it was desirable that the matter should be placed beyond all doubt.
My noble friend Lord Jellicoe, in a not unsympathetic reply on that occasion, promised that he would give the matter further consideration. He has fully carried out that promise, because, if I may refer by way of anticipation to it, noble Lords will find that Amendment No. 115 on the Marshalled List deals with this specific point. It deals with it by adding some words to the Interpretation Clause. Let me tell the House at once that I thank my noble friend for that Amendment, which we cannot discuss in advance but which I believe to be a good Amendment. The Amendment I am now putting forward is not an alternative to that one, but is, I suggest, a good addition to it. The Amendment which my noble friend will move when we come to Amendment No. 115 makes it quite clear that those words, "otherwise augmenting water resources", wherever they appear in the Bill, cover this use of salt water and extracting the salt.
So far so good. But I have two reasons why I should like the Amendment which I am now moving to be made in the present clause. I think it is rather undesirable that the Water Resources Board, when referring to the clause in the Bill which summarises their duties and functions, should find no mention at all of the use of sea water, and that it should be left without mention until one reaches about the hundredth page of the Bill. I should have thought it was desirable that in the first clause mentioning the functions and duties of the Water Resources Board there should be some reference to this topic. That is my first reason: the desire to incorporate quite early in the Bill an express mention of this use of sea water.
My second reason perhaps is equally important. If noble Lords will look at the existing words in Clause 12 (3) (e), they will find the only specific mention of what use is to be made of the duty of augmenting water supplies. It is perfectly true that subsection (3) is introduced by the words:
914
"without prejudice to the last preceding subsection, it shall be the duty of the Water Resources Board."
Then we come to the only paragraph dealing specifically with augmenting, paragraph (e), and that says:
"to encourage and assist river authorities in the formulation of such plans as the Board think necessary for augmenting water resources in a river authority area"—
so far so good; and then they add these words—
"by transferring water from another river authority area."
That is one method, but only one method. I think my noble friend will see the force of the argument that either there should be no restriction to one single method of augmenting—in which case those words should be omitted—or you should mention other methods as well, and that is what my present Amendment seeks to do. I propose to add to the words:
"by transferring water from another river authority area"
the words
"or by using sea water and extracting the salt, or otherwise".
I regard that as a useful mention in this clause of what we all, including the Minister, agree is a very important subject, instead of simply leaving it to the admirable Amendment which he proposes later to move in the Bill. My Amendment now is in no sense an alternative to that Amendment. I suggest it usefully supplements it. I beg to move.
Amendment moved—
Page 11, line 46, at end insert the said words.—(Lord Conesford.)
LORD WILLIAMS OF BARNBURGH: My Lords, I do not want to do anything less than the noble Lord, Lord Molson, desires—that is, to be economic in the use of words in this debate—but I should like to ask the noble Earl in charge of the Bill, and the noble Lord who moved the Amendment, whether, assuming those words were embodied in the Bill giving power to a river authority or a Water Resources Board to advise the river authority to start experimenting with the desalting of sea water, he would expect that to be done, if at all, by a single river board or a combination of all the 26 river boards, after indulging in a good deal of research? Perhaps the noble Earl can tell us exactly what the experience

915
has been of those on ships and other vessels who have been experimenting with the desalting of sea water. My information is that it is a very costly proceeding. It may ultimately be found to be necessary, but if such an undertaking is bound to be entered upon by any river board, or a number of combined river boards, then I think the Minister in charge of the Bill would have to give the power, with the appropriate restrictions in expenditure, before any single board or combination of hoards would enter on an operation of this description.
We all agree with the noble Lord that wherever our water supplies can be augmented where water is in short supply, then we ought to leave no water unturned, instead of no stone. In the meantime, perhaps the noble Earl will tell us what previous experiments have shown with regard to desalting of water in terms of expense, and whether he thinks that any river board ought to be encouraged to incur vast expenditure unless and until they know much more about it than appears to be known at the present moment.
LORD HAWKE: My Lords, at first sight my noble friend's Amendment may seem a trifle fantastic, but I do not believe it is in the least fantastic. I understand that the extraction of fresh water from the sea is a viable proposition in the drier lands such as the Persian Gulf. My impression is that the price has come down to comparatively few shillings per thousand gallons. That, of course, is based on cheap oil fuel. I do not think it is a question of individual experiments having to be made by any river authority. The experiments have all been done. It is a question of whether their needs are such to warrant the purchase and erection of this form of apparatus. In that case, I should think the Water Resources Board was the right body to advise them. I was going to ask my noble friend to give precisely the same information as was asked for by the noble Lord opposite—whether he has the latest figures about the cost of extraction, and which cities in the world are at the moment being supplied with water from the sea.
EARL JELLICOE: My Lords, I am obliged to my noble friend for having ventilated this matter in Committee and for having reverted to it now, since it
916
gives me the opportunity to say that, as is often but, unfortunately, not invariably the case, there is, I believe, no real difference between the Government and the noble Lord on this matter. For our part, we agree that the desalination—I use that word with a certain amount of reluctance, as I expect it will be sat upon very sharply by my noble friend—the desalting of salt water, whether it comes from the sea or underground, as a means of augmenting water resources, is certainly a matter which ought to be within the scope of both the Water Resources Board and the river authorities. As I made clear on Second Reading and again on Committee, we agree that this is an important matter and, of course, likely to become more important in the future.
I was asked by the noble Lord, Lord Williams of Barnburgh, and my noble friend Lord Hawke, whether I could give any details about the economics of the various processes. It would probably be imprudent for me to venture too far into this field, and what I should like to do is to refer my noble friends to an extremely interesting study of the whole matter which the Water Research Association have initiated and a report of which they have published. This gives a very comprehensive and extensive summary of the position. Broadly speaking, I think the conclusion is that at the present time these processes are economically viable only in the rather special circumstances of a very dry place like Kuwait, which not only is extremely dry but also has extremely cheap fuel immediately available.
LORD HAWKE: My Lords, may I interrupt my noble friend? Since making my few remarks I have been reminded that Guernsey has a plant of this nature, and I wondered whether he knew of the results there?
EARL JELLICOE: I was aware that there is a plant in Guernsey, but that, again, is a rather special case, as it is only there for the tourist overload, as it were, and not for the normal water supplies of Guernsey. I am speaking very much subject to correction, but I think the economics of the Guernsey plant run out at something like 15s. per thousand gallons, or something of that order, which is extremely high compared with the normal water supplies. I think it would be unwise of me to

917
venture too deeply into that field but I would, in reply to the noble Lord, Lord Williams of Barnburgh, merely say that experimental work of this sort could, of course, be assisted by the Water Resources Board under Clause 82 (b) of this Bill. It would not necessarily therefore fall entirely upon the river authority, if your Lordships were to accept my noble friend's Amendment.
But, having said that, I should like to draw your Lordships' attention to Amendment 115, to the Interpretation Clause of this Bill, which is Clause 117, whose beauties my noble friend has just unveiled to us. I know that probably I am trespassing and likely to be out of order in referring to that, but I hope I may be allowed to do so in the context of this Amendment, because Amendment 115 would have very much the same effect, we believe, as my noble friend's, and, since it is a Government. Amendment, he may not be altogether surprised to hear that I prefer this Amendment to his. I would also go on to say why I do not think it should be supplemented by his and why I prefer our Amendment. In the first place, it is self-supporting. My noble friend's Amendment, however, would not really stand up on its own.
LORD CONESFORD: My Lords, may I interrupt my noble friend? Possibly I can shorten this by saying that I also prefer it. If I had to choose between the two I should choose the Government Amendment, which has a more general application. The only point I think the House need trouble him about is why we cannot have mine as well.
EARL JELLICOE: My Lords, I think there are three possibilities here: to choose the noble Lord's Amendment alone, which I think we now need not; to choose the Government's Amendment alone; or to choose a combination of the two. I would suggest that there are two reasons why the second choice—the Government Amendment alone—would be the preferable one. The first reason is that my noble friend's Amendment is less comprehensive in that it covers only seawater, and therefore is not entirely preferable to Amendment 115, which is drafted so as to embrace brackish water in estuaries and saline water in underground strata. I think
918
it is important that those two other types of salt water should be included. My second reason is that I do not think that Clause 12 (3) is really the best place to have an Amendment of that sort. That clause was drafted to lay particular emphasis on the part to be played by the Water Resources Board in assisting river authorities to get together and formulate schemes for transfer of water, and it seemed to us a duty the responsibility for which the Water Resources Board were ideally equipped to discharge.
I do not think it would be right to single out schemes for treating salt water in a similar way. It would be far better to view this matter as one of the Board's general responsibilities, and that is how it would be viewed if and when Amendment 115 is accepted—and here I come back to what my noble friend has said. He said that unless his Amendment is accepted, if I understand him aright, we should not have in Clause 12 of the Bill any reference to augmenting water resources until we came to paragraph (e). In fact, we have a previous reference in paragraph (a) subsection (3) of that clause. The augmenting which comes there would be qualified by Amendment 115, and it is our view that it would be far better if the general responsibility for considering proposals for augmenting water resources, which would embrace desalination, came right at the start rather than be singled out in a not very appropriate place in paragraph (e). In short, I would suggest that our excellent Amendment gives my noble friend all, and indeed more than, he would obtain by his otherwise admirable Amendment, and I would suggest that it would be better if our Amendment were to stand alone, when we get to it, and not be supplemented by his more limited one.
LORD CONESFORD: My Lords, first, may I thank my noble friend Lord Hawke for supplementing so well the case for including something on this important matter in the clause? Let me just defend my drafting a little. It was never intended to be sufficient without the Government Amendment to the Interpretation Clause. I suspected that the Government would produce an Amendment to that clause and I suspected that the Parliamentary draftsman would produce something much better

919
than I could produce. But let me say at once that, had he failed to do so, I myself should have put down an Amendment to that Interpretation Clause. But to come to the particular Amendment that I have moved, my noble friend, in his criticism of my words, omits to give any effect whatever to my concluding words, "or otherwise", which would have covered, of course, those other cases apart from sea-water, that he mentioned. Nevertheless, he is quite right in saying that his Amendment, No. 115 in the Marshalled List, gives me substantially that for which I pleaded. In these circumstances, I do not think I should detain the House by pressing this further, and I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 13 [Constitution of Water Resources Board]:
EARL JELLICOE EARL JELLICOE moved, in subsection (1), to leave out "seven" and insert "eight". The noble Earl said: My Lords, the object of this Amendment is quite simple. It is to enable my right honourable friend the Minister of Housing and Local Government to appoint an amenity member to the Board without displacing any member from the Board and thus sacrificing any of the specialist knowledge and skills which I think we should like to see represented there. We consider that there is need for six such specialist skills, but we need an independent chairman. That means seven members of the Board. If we are to have an amenity member we shall need eight. Hence this Amendment. This Amendment is in fact one of a group of amenity Amendments to this Bill which we shall be moving. Whatever noble Lords may feel about the Government on other matters, I hope that they may feel able to agree that these Amendments demonstrate that we mean what we say when we say we really care that the amenity and natural beauty of the countryside are properly safeguarded in this Bill.
During our Committee stage I argued that the safeguards for amenity which we had already written into this Bill were, broadly speaking, adequate. I remain of that opinion. Nevertheless, having listened to the arguments which were
920
advanced during our Committee stage, we considered it right that these safeguards should be buttressed by three further provisions. The first is this Amendment. The second consists of a couple of Amendments, Nos. 18 and 19, relating to minimum acceptable flows. And the third is the important Amendment, No. 48, to Clause 52.
So far as the Board is concerned, this Amendment recognises that we are most likely to get the right answer if the amenity point of view is put at the formative stage of the Board's strategy for water resources and their development. The appointment of this amenity member to the Water Resources Board will in fact correspond to Sir William Holford's membership of the Central Electricity Generating Board and that of Mrs. Pauline Dower, Deputy Chairman of the National Parks Commission, on the British Waterways Board. During our Committee stage the noble Lord, Lord Hurcomb, whose expertise on these matters we recognise, said [OFFICIAL REPORT, Vol. 245 (No. 21), col. 559]:
"The point might perhaps be considered again in relation to the central authority. If there were someone who was able to bring these considerations prominently into account at the stage of approval or the shaping of a general plan, that might be another way of meeting the point."
That is the point which the noble Lord, Lord Chorley, was urging. I trust that both noble Lords will agree that this Amendment will in fact meet the point.
I wish to emphasise that we did not think it right to lay down in the Bill any particular qualifications for this amenity member of the Board or to require any particular consultations before his appointment. We can if necessary discuss this at greater length when we come in a moment to Lord Chorley's Amendment No. 11, if he wishes to move it. Here I would like merely to point out that no particular qualifications or particular form of consultation prior to appointment is laid down for the other members of the Board. If that is right for the other seven, we think it is right for the eighth. But clearly my right honourable friend will wish to obtain the best and most suitable man who happens to be available. Clearly he will wish to consult with the National Parks Commission, whose distinguished Chairman I am glad to see in his familiar place among the

921
Jacobins on the mountain. In sum, I wish to make one thing crystal clear, and that is that our aim will be to secure somebody of the top rank for this appointment and that there will be no question that the amenity member of the Board will be a sleeping partner on it. I would suggest that the appointment of this additional member to the Board represents an important additional safeguard to amenity in this Bill, and I have much pleasure in moving this particular Amendment.
Amendment moved—
Page 12, line 23, leave out ("seven") and insert ("eight").—(Earl Jellicoe.)
LORD CHORLEY: My Lords, I would express our very great appreciation of what the noble Earl has just said. I am sure it will give great encouragement to the whole of the amenities movement. This Amendment and the ones to which he has referred certainly carry us further than I think many of us expected he would go and they do in fact show how much we owe to him, I am sure, behind the scenes, for getting this most valuable amendment of the Bill. He has quoted a very wise remark of the noble Lord, Lord Hurcomb, who speaks with such intimate and long experience of these problems, on the importance of getting really expert advice and understanding of these problems at the earliest possible stage, and some of our Amendments which we put down on the Committee stage were directed to this particular point. I think this Amendment will certainly ensure that that is done and will enable a wise general supervision of the work of the river authorities, from the amenities point of view, to be carried through at headquarters. I do not want to take up time, but I can assure your Lordships and the noble Earl that this Amendment together with the other Amendments to which he has referred will go a great way towards meeting the points we were making and we are very thankful indeed for what he has done.
LORD HURCOMB: My Lords, I should also like to express my appreciation of the length to which the noble Earl has gone in meeting what I regarded as the very legitimate apprehensions of those interested in amenity in case the Bill were left as it was. It is true that I raised the point primarily in regard to the river authorities themselves. I quite recognise
922
the difficulties of adding to their numbers some members with special qualifications, and that is why I suggested that the point might be better met by dealing with the matter in the constitution of the Water Resources Board. I have an Amendment down later on dealing with a rather narrower point in regard to wild life, which I hope the noble Earl will also see his way to accept. I am sure, as the noble Lord, Lord Chorley, has just said, that the action he has taken will give great satisfaction to all those interested in conserving the beauty of our landscape and the extent of its natural life. There are criticisms of the form of the clause which is still in the Bill as Clause 93. All it does, it is true, is to require all the authorities concerned and the Minister himself to have regard to amenity and the considerations affecting wild life. I share the views of the noble Earl that that clause has considerable value. It would indeed ill become me to criticise either the purpose of the clause or its wording, because it is substantially the clause which I induced my noble friend Lord Mills to insert in his Electricity Bill some years ago. But it is true that all it says is that regard must be had to those considerations and account taken of them.
Many people regard that as weak. Indeed they are apt to quote a story current at the time of the Electricity Bill which I believe to be well founded. It is said that the legal advisers to some of the leading authorities concerned were told that they had not the remotest reason for objecting to the clause because it did not mean a thing. I do not think that is true. I think that every time your Lordships' House and Parliament itself place an injunction upon these authorities to have regard to these matters, they do not take that as meant in a purely perfunctory sense. I will not repeat the arguments I used on Committee stage. It makes a great deal of difference to have someone inside the body itself who not only understands the issues but sees that his colleagues take them into consideration at the right stage—and the right stage is, of course, the earliest possible stage when everything is still in a formative state and plans have not been precipitated into the rigid moulds and are so difficult to alter because any modification is apt to give rise to questions of prestige and therefore becomes

923
controversial. I am very much obliged to the noble Earl for the action he has now taken, which I think will have a real effect in securing a better atmosphere and will ensure that more regard is paid to those considerations than has been paid in too many planning decisions in the past.
EARL JELLICOE: My Lords, I should like to thank noble Lords for the welcome which they have given to this Amendment.
On Question, Amendment agreed to.
EARL JELLICOE EARL JELLICOE moved, after subsection (1), to insert:
"The members of the Board shall include at least one member appointed by the Minister as having special knowledge or experience of matters relating to the conservation and use of water resources in Wales."
The noble Earl said: My Lords, I am moving this Amendment as the result of an assurance which I gave the noble Lord, Lord Champion, on Committee. In the Amendment which the noble Lord then moved he made it clear that what he was seeking to ensure was that there should be a Welshman on the Board. For my part, I said that the Government agreed with him in principle about this and I invited Lord Champion to withdraw his Amendment so that we could see whether we could produce a suitable and watertight one of our own.
At Committee the noble Lord complained that I was twitting him about the drafting of his Amendment. I fear that he may now twit me about the drafting of ours. We all know what we want to write into the Bill here; that is, to ensure that at least one of the members of the Board should be a person of Welsh origin, with special knowledge or experience of matters relating to the conservation of the use of water resources in Wales. I think the noble Lord will agree that we have covered the question of special knowledge and experience quite adequately. He may, however, feel that we have provided not quite so adequately for the Welshness of this member. It has, in fact, not proved altogether easy to find a formula for this which is both suitable and watertight. For example references to "a Welshman" or to a member "drawn from Wales" would not be really satisfactory when we remember the large
924
number of persons born in Wales who now live outside the Principality.
The noble Lord, however, will remember that I have already given two assurances that the aim will be to secure a Welshman for this job. I am glad to repeat that assurance once again. In view of this threefold assurance, and given the wording of the Amendment, I hope that he will agree that it secures what we all want—namely, that on a Board which must clearly concern itself with the water resources of both England and Wales, Welsh opinion and experience should be adequately represented. I beg to move.
Amendment moved—
Page 12, line 25, at end insert the said subsection.—(Earl Jellicoe.)
LORD CHAMPION: My Lords, I do not propose to twit the noble Earl or the wording of his Amendment, because I am grateful to him for having produced an Amendment at all which goes some way to meeting my point. I do not regard this as a major Amendment. I cannot imagine for one moment that, when I get home this weekend the bands will be playing, that the harps will be plucked or that choirs will sing. Nevertheless, I regard this exercise as having some importance for Wales, particularly having regard to the special position of Wales in relation to water. I thank the noble Earl for having placed this Amendment on the Marshalled List.
On Question, Amendment agreed to.
LORD CHORLEY LORD CHORLEY had given notice of his intention to move an Amendment:
"( ) One member of the Board shall be appointed by the Minister after consulting the National Parks Commission."
The noble Lord said: My Lords, I put down this Amendment because, looking into the glass darkly, I failed to see that the noble Earl was going to provide us with a grand old-time amender's representative. In the circumstances, we have most adequately got what we have asked for, and I do not see any reason for moving this Amendment.
Clause 14 [Periodical surveys]:
LORD HASTINGS: My Lords, this Amendment arises from an undertaking I gave to my noble friend Lord Grenfell on the Committee stage. Normally a

925
period of 20 years will be required in respect of making forward surveys of water resources and water supply; but we do need flexibility so that the Water Resources Board can vary that period, if necessary or desirable. I beg to move.
Amendment moved—
Page 13, line 38, after ("resources") insert ("during the period of twenty years from the date on which the survey is completed or such longer or shorter period from that date as the Water Resources Board may in any particular case direct").—(Lord Hastings.)
On Question, Amendment agreed to.
Clause 17 [Gauges and records kept by other persons]:
LORD HASTINGS LORD HASTINGS moved, in subsection (1), to leave out paragraph (a) and insert—
"(a) shall give notice to the river authority of his proposal to instal the gauge, and shall not begin the work of installing it before the end of the period of three months beginning with the date of service of the notice or such shorter period as the river authority may in any particular case allow, and".
The noble Lord said: My Lords, this is an Amendment to meet, partly at any rate, an undertaking given on the Committee stage to the noble Lord, Lord Cawley. He was concerned about the installation of temporary guages. Here, we have made possible the installation of such gauges, by leave of the river authority, much earlier than the three-months period. What we have not yet been able to do is to go a little further. The noble Lord, Lord Cawley, was especially interested in temporary gauges put into streams for testing pollution. I also mentioned the problem of fishermen's gauges which are put in for testing the flow. It has not been possible to insert any greater detail in the Amendment at the moment. The problem is rather more difficult than we expected, especially in respect of gauges for testing pollution. But we are still studying this possibility; consultations are going on, and the point will be dealt with if at all practicable, at a later stage. Meanwhile, I ask your Lordships to accept this Amendment.
Amendment moved—
Page 16, line 35, leave out paragraph (a) and insert the said new paragraph.—(Lord Hastings.)
LORD CAWLEY: My Lords, I am most grateful to the noble Lord for having taken so much trouble with my
926
two Amendments. I hope he will be able to find some way to meet the second one at a later date. I think it would be disastrous if the river authority should hold up the obtaining of evidence, which in these cases is needed rapidly. It may be that the river authority would not hold another meeting for another fortnight, in which event there would be delay in granting authority. I think it is essential that the necessary authority should be given quickly.
On Question, Amendment agreed to.
Clause 19:
Minimum acceptable flows
19.—
(4) Before preparing so much of any draft statement under this section as relates to any particular inland water, the river authority shall consult—
LORD HASTINGS LORD HASTINGS moved, in subsection (4), after paragraph (a) to insert:
"(b) any other statutory water undertakers having the right to abstract water from any underground strata, where it appears to the river authority, having regard to the extent to which the level of wafer in those strata depends on the flow of that inland water, that the exercise of that right may be substantially affected by the draft statement in so far as it relates to that inland water."
The noble Lord said: My Lords, this Amendment has been put down as the result of a promise made to the noble Lord, Lord Lindgren, in Committee. Noble Lords will remember that we thought his Amendment rather too categorical and that we should have one in rather more general terms. On consideration, it seems that the only practical way of proceeding is to base consultation on the river authority's assessment of the situation. But of course, if, after this consultation, any statutory undertaker is dissatisfied with the river authority's statement, it will have an opportunity of seeking redress through the ordinary machinery for objection to the draft statement prescribed in Schedule 6. Nevertheless, we hope that the relationship between the river authority and statutory water undertakers will be close enough to take this sort of problem in its stride, particularly in the light of the new clause to follow Clause 93, to which I referred earlier. I hope that the

927
noble Lord will feel that this Amendment is adequate. I beg to move.
Amendment moved—
Page 18, line 18, at end insert the said paragraph.—(Lord Hastings.)
LORD LINDGREN: My Lords, I should first like to thank the noble Lord, Lord Hastings, for the Amendment which he has put down. It meets the points that I raised in the Amendment that I submitted on the Committee stage in regard to subsection (4). We are most appreciative of the Amendment and express our thanks.
On Question, Amendment agreed to.
LORD HASTINGS LORD HASTINGS moved, in subsection 4 (c), after "authority" to insert "harbour authority or conservancy authority". The noble Lord said: My Lords, this Amendment and No. 16 go together. Clause 19 (4) (c), as drafted, requires a river authority to consult any navigation authority having functions in regard to an inland water before preparing a draft statement of minimum acceptable flow. These two Amendments have the effect of adding a requirement to consult any harbour authority or conservancy authority having functions in relation to the inland water. These are the first of a series of Amendments designed to incorporate references to harbour authorities and conservancy authorities in those clauses where at present only navigation authorities are cited. I beg to move.
Amendment moved—
Page 18, line 22, after ("authority") insert the said new words.—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: My Lords, I beg to move No. 16.
Amendment moved—
Page 18, line 24, after ("authority") insert ("harbour authority or conservancy authority").—(Lord Hastings.)
On Question, Amendment agreed to.
4.51 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved to add to subsection (4):
"(e) any body of persons designated to them for this purpose by the Minister as being representative of a class of persons having the right to abstract water therefrom"
The noble Viscount said: My Lords, this is a point which I raised on the
928
Committee stage, and which my noble friend Lord St. Oswald conceded that I had argued carefully, thoughtfully and reasonably—though I am afraid also fruitlessly, so far as any Amendments to meet it are concerned.
In fixing the minimum acceptable flow the river authority, by Clause 19 (5), must have regard to the amount of water needed for
"agriculture, fishing, industry, navigation, water supply or other purposes."
To enable them to see that they have the right amount of water for all those uses, they are required to consult under subsection (4) with various people. They are to consult with the statutory water undertaker who is to deal with the water supply, with any internal drainage board—which is partly to do with agriculture—with the navigation authority, and with the Central Electricity Generating Board. I proposed in my Amendment on Committee stage, and I again propose it in the one which is now on the Marshalled List, that there should be a further requirement for the river authority to consult other bodies designated by the Minister. I have not suggested that any specific body should be so designated, or indeed that any body should be so designated; but simply that there should be power in the Minister to say, for example, that a group of industries in one particular river authority area should be consulted before the minimum acceptable flow is fixed. Indeed, there may be other bodies which come into the same category.
My noble friend rejected this argument, first, because he said that he wanted to restrict consultation to statutory bodies, which frankly I do not understand. Secondly, he said that in any case a sensible river authority would see that all the people I have in mind were consulted beforehand, and that most of the people I have in mind are already represented on the river authority itself. I do not understand that argument either. If we take the case of industry, it is true that in Clause 6 (3) (e) there is a requirement that one member or more than one should be appointed to the river board in respect of industry. So there will be one person, at any rate, on the river authority who knows about industry.
But my Lords, so are there on the river authority persons appointed in

929
respect of fisheries, land drainage, agriculture and water supply. That does not prevent my noble friend from requiring the river authority to consult the statutory water undertaker or the internal drainage board, despite their having their own members on the board; and in cases where there is a navigation problem there will also be a navigation member on the board under Clause 8. It does not seem to me that anybody is left, except the Central Electricity Generating Board, who does my noble friend any good at all on the argument he proposed to put forward. Why, therefore, not accede to this Amendment?
I think my noble friend accepted that it would be essential that the river authority should know what amount of water industry and other big users in their area of that river will require before they fix minimum acceptable flows. If these other people are to be consulted beforehand, why not give the Minister power to designate bodies to enable proper consultation to be carried out in time? I agree with what the noble Lord, Lord Chorley, said before; that what is really important in these cases is to get the full facts before the requisite body in good time, and not by means of objections or subsequent inquiries or other means which may come about after the decisions have been taken. That is not the time to do so. The time to do it is in consultation before the minimum accepted flow is fixed. I hope that my noble friend may be a little less adament on this occasion than he was before. I beg to move.
Amendment moved—
Page 18, line 26, at end insert the said new paragraph.—(Viscount Colville of Culross.)
LORD MERRIVALE: My Lords, I would add only a very few words in support of my noble friend Lord Colville of Culross. I feel that strong grounds exist for the acceptance by Her Majesty's Government of this Amendment, especially in respect of industry. My noble friend referred to the various organisations which had to be consulted beforehand, but I would especially mention the statutory water undertakers and also the Central Electricity Generating Board, to which organisations I propose to refer a little later. As my noble friend
930
very ably said, how can a river authority form a valid opinion of the minimum required flow better than by consulting beforehand major abstracters? I stress the words "major abstracters", because the Government may feel that one could not contact every body. But I feel that there are strong grounds for prior consultation with major abstracters. My contention is that industry is a major abstracter. As the noble Lord, Lord Fleck, stated on Second Reading, industry abstracts over 2,000 million gallons of water per day, a figure which he said (and I have no reason to doubt it) is at least as high as the amount taken by the statutory water undertakers.
My Lords, on the basis of quantity of water abstracted, over 2,000 million gallons a day is a high proportion of the amount of water which was on average abstracted daily during 1960 by Central Electricity Generating Board power stations for circulation purposes. These power stations required the use of 13,000 million gallons of water daily for England and Wales. I feel that industry's share is a very large proportion, if one bears in mind that out of that amount only 3,040 million gallons were taken from inland sources—that is, for direct cooling and for making up any loss by evaporation. I understand (this is only a very tentative figure, for one can only guess in these matters) that by 1970 industry will require in the region of 3,000 million gallons daily, whilst the Central Electricity Generating Board will require less water from inland sources for direct cooling; though it is estimated that in 1970 they will be requiring from all sources a figure around 20,000 million gallons per day.
So, my Lords, I feel that this shows to some extent that the demands of industry are increasing, and that the part they will have to play will be an increasing one. Therefore there are strong grounds for their being consulted beforehand with regard to this question of minimum flows required by the river authorities. In conclusion, I feel that the basis of quantity of abstractions is a valid yardstick by which one should estimate whether or not an organisation should be consulted beforehand.
LORD ST. OSWALD: My Lords, I should like to say at the outset that I appreciate as much as I appreciated

931
before what my noble friend Lord Colville of Culross has in mind; but also that I am convinced, and I hope to convince him and also my noble friend Lord Merrivale, that what we have provided in the Bill will afford ample means for consultation, both formal and informal, and will make for simple and efficient administration at the same time.
I invite noble Lords to consider first the purpose of statements of minimum acceptable flows. These will be in effect the starting points for the management and control of water resources. The minimum acceptable flow must, by virtue of Clause 19 (5)—that is to say, if Amendment No. 19 is accepted—be not less than the minimum which, in the opinion of the river authority, is needed for safeguarding the public health.
"and for meeting the requirements of existing lawful uses, whether for agriculture, fishing, industry, navigation, water supply or other purposes, and the requirements of land drainage".
It will be appreciated that future uses, and the future plans of industry and others, are irrelevant to the determination of minimum acceptable flow within this particular definition.
Noble Lords will also recollect that any person abstracting at the second appointed day—that is to say, when the river authorities begin to exercise their functions—who wishes to secure a licence of right, must apply during the initial period of three months following that day. By virtue of this provision in Clause 33, a river authority will have full details of all existing abstractions which need to be licensed. There will be no question, as I think my noble friend Lord Colville of Culross implied in Committee, and as my noble friend Lord Merrivale seemed to imply to-day, of the determination by a river authority of the minimum acceptable flow "without knowing what industry requires": or, for that matter, what any other class of licensed abstracter might require.
Your Lordships will know that Clause 19 (4) requires the river authority to consult other statutory bodies whose functions are affected by river flows, and it is plainly right that one statutory body should be required to consult another whose functions and interests touch upon its own, or whose experience and knowledge will clearly be of value to that river
932
authority. This consultation will take place before the draft statement is prepared—and quite properly, too, for the reasons mentioned—but we think it is unnecessary to require river authorities to consult individual abstracters or bodies representative of abstracters before the statement is first drafted. The river authority will be equipped with information about their abstracters and uses. In so far as further information will be useful, the river authority will be quite free to approach anyone it wishes. It seems clear to me that a river authority will wish to consult all manner of interests at various stages of the preparation of statements—and will do so—but there would be no advantage in requiring them to consult designated bodies of abstracters before they had something on which those bodies could usefully comment in a given instance.
I have studied my noble friend's point with great care, and I have listened again to-day to his argument, carefully, thoughtfully and reasonably expressed as ever. But I still cannot see how this mandatory consultation with diverse bodies would have any advantage over informal consultation in reducing the amount of objection to be disposed of at the formal stage. Representative groups do not necessarily cut out objections by individuals. But the argument which seems to me altogether convincing is that we can, I am sure, leave it to a river authority, composed as it is of persons knowledgeable in many interests, to display good sense in dealing with the abstracters in the, area, and in being ready to consult informally wherever this is the right course to adopt. I would add that the value of consultation will be reinforced in the minds of river authorities by their desire to do everything possible to avoid having their decisions upset following an objection to the Minister, and so to maintain public confidence and respect. My Lords, for those reasons I cannot feel that my noble friend's Amendment is either necessary or desirable, and I cannot invite the House to approve it.
VISCOUNT COLVILLE OF CULROSS: My Lords, my noble friend has said two things which disquiet me very much. The first of them is what I suspected: that a river authority would be very loath indeed to have its decision, once made, upset by the Minister on appeal. This

933
is exactly the reason why I suggested that these consultations should, in the first place, take place very widely before they ever came to any decision at all. The second thing which disquiets me even more—if I heard my noble friend aright—is that I thought he said that the idea of these consultations, or of the fixing of the minimum acceptable flow, had nothing whatever to do with the future plans for industry. Did my noble friend say that?
LORD ST. OSWALD: My Lords, what I said was in this context. The context, as my noble friend will recall, is "the requirements of existing lawful uses".
VISCOUNT COLVILLE OF CULROSS: Then if no account is going to be taken of future plans in industry, am I right in supposing that no account is going to be taken of future plans of statutory water undertakings, either? If so, what on earth is the object of consulting them? I do not understand my noble friend's answer at all. It seems to me that either we are going to have this thing threshed
EARL JELLICOE: My Lords, the effect of this Amendment is specifically to require the river authority to have regard to the natural beauty of the inland water for which a minimum acceptable flow is under consideration, and to the surroundings of that water. The need to do this was the point urged
934
out properly, with full consultation with all the people who are going to abstract water—admittedly, not on the basis of the most that they might possibly ever want, but at any rate with some eye to their future requirements, which is what I understood to be the point of bringing in the Central Electricity Generating Board, the statutory water undertakers and people of that sort—or, alternatively, there is no need whatever to have any consultation at all, because the statutory water undertakers' existing sources will also have licences of right, so, presumably, will those used by the Central Electricity Generating Board, and so will those used by industry. If my noble friend's contention is really what I think it is, I think that he should strike out this subsection altogether, because it seems to be quite otiose. I do not know whether the Rules of Order in this House will allow my noble friend to answer this, because I am really very worried about it.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided: Contents, 13; Not-Contents, 41.

CONTENTS

Albemarle, E.

Cromartie, E.

Merrivale, L. [Teller.]

Cawley, L.

Ebbisham, L.

Moyne, L.

Chorley, L.

Ferrier, L.

Sinclair of Cleeve, L.

Colville of Culross, V. [Teller.]

Lambert, V.

Somers, L.

Cowley, E.

NOT-CONTENTS

Alexander of Tunis, E.

Dundee, E.

Luke, L.

Ampthill, L.

Eccles, L.

MacAndrew, L.

Bossom, L.

Ferrers, E.

Massereene and Ferrard, V.

Boston, L.

Fortescue, E.

Milverton, L.

Chesham, L.

Freyberg, L.

Molson, L.

Clitheroe, L.

Goschen, V. [Teller.]

Newton, L.

Clwyd, L.

Hailsham, V. (L. President.)

Radnor, E.

Coleraine, L.

Hastings, L.

St. Oswald, L.

Conesford, L.

Hawke, L.

Soulbury, V.

Crathorne, L.

Horsbrugh, B.

Strathclyde, L.

Denham, L. [Teller.]

Hurcomb, L.

Stuart of Findhorn, V.

Derwent, L.

Ironside, L.

Swinton, E.

Devonshire, D.

Jellicoe, E.

Tenby, V.

Dilhorne, L. (L. Chancellor.)

Lothian, M.

Resolved in the negative, and Amendment disagreed to accordingly.

upon the Committee by my noble friend Lord Colville of Culross and the noble Lord, Lord Chorley. I then offered to put the words "amenity" or "beauty" into the text of this subsection without losing the word "character", which in our view is rightly there. I hope the noble Lords who are concerned about this matter will feel that, with the draftsman's help, we have now overcome the

935
semantic and philological problem with which we struggled here at our Committee stage. My Lords, I beg to move.
Amendment moved—
Page 18, line 30, leave out second ("and") and insert ("(and in particular, any natural beauty which the inland water and its surroundings may possess) and to").—(Earl Jellicoe.)
VISCOUNT COLVILLE OF CULROSS: My Lords, despite what has just occurred, I am still capable of feeling very grateful to my noble friend in this respect.
On Question, Amendment agreed to.
5.20 p.m.
EARL JELLICOE: My Lords, despite what has just occurred I am moving this Amendment to meet a related point on the general question of amenities. This Amendment is closely linked to the Amendment which your Lordships have just accepted. Its purpose is self-evident. It is to ensure that in proposing a minimum acceptable flow in a particular inland water, the river authority is not confined to the minimum which is necessary for safeguarding public health and for meeting the other requirements set out in the subsection. On the contrary, under the Amendment the river authority may fix a higher flow than those factors alone would demand. This may be necessary as a result of the view which the authority have formed of the character and natural beauty of the water and its surroundings. Like its predecessor, this Amendment is a relatively small one. But I trust your Lordships will agree that, taken together, these two Amendments reinforce the safeguards for beauty and amenity which we are writing into this Bill. I beg to move.
Amendment moved—
Page 18, line 31, after ("be") insert ("not less than").—(Earl Jellicoe.)
On Question, Amendment agreed to.
EARL JELLICOE: My Lords, the purpose of this Amendment is to emphasise that river authorities, and the Water Resources Board, will need to be concerned with water quality as well as with quantity. Obviously, if the quantity is rightly judged, the quality will be adequate also. However, we feel that
936
there is advantage in recognising in this clause that for some uses quality is just as important as quantity. These points were discussed earlier this afternoon. Your Lordships will recall that in Clause 4 it is laid down that part of the duty of a river authority is to take action to secure the proper use of water resources in their area. This Amendment reinforces that duty in relation to statements of minimum acceptable flows. Your Lordships will recall that earlier to-day you approved an Amendment which I moved—Amendment No. 7—the effect of which was to bring the quality of water specifically within the purview of the Water Resources Board. I think that it is likewise right to highlight the importance of water quality in the context of the statement of minimum acceptable flows. I beg to move.
Amendment moved—
Page 18, line 33. after ("meeting") insert (" (in respect both of quantity and quality of water)").—(Earl Jellicoe.)
On Question, Amendment agreed to.
EARL JELLICOE: My Lords, this is a drafting Amendment designed to pave the way for more substantial Amendments to Schedule 6 which have been put down following an undertaking I gave during the Committee stage to the noble Lord, Lord De Ramsey. There are a number of similar paving Amendments in the next two clauses: Amendments Nos. 20B, 20C, 20D, 20E, 26A and 26B. I think it might be convenient if your Lordships were to consider them together. I think it might also be convenient if we postponed our substantive discussion of all this until we come to Schedule 6. I realise that we might need to come back to this group of Amendments at Third Reading if we decide, after discussing the Amendments which we shall be proposing to the Sixth Schedule, that these Amendments need to be deleted or amended. I beg to move.
Amendment moved—
Page 18, line 39, after ("I") insert ("and, where applicable, Part IV").—(Earl Jellicoe.)
On Question, Amendment agreed to.
Clause 20 [Periodical review of minimum acceptable flows]:
EARL JELLICOE: My Lords, I beg to move this Amendment formally.
Amendment moved—
Page 19, line 22, after ("I") insert ("and, where applicable, Part IV").—(Earl Jellicoe.)
On Question, Amendment agreed to.
EARL JELLICOE: My Lords, I beg to move this Amendment formally.
Amendment moved—
Page 19, line 22, after ("II") insert ("and where applicable, Part IV").—(Earl Jellicoe.)
On Question, Amendment agreed to.
Clause 21 [Additional powers of Minister in relation to minimum acceptable flows]:
EARL JELLICOE: My Lords, I beg to move this Amendment formally.
Amendment moved—
Page 19, line 42, after ("III") insert ("and, where applicable, Part IV").—(Earl Jellicoe.)
On Question, Amendment agreed to.
EARL JELLICOE: My Lords, I beg to move.
Amendment moved—
Page 20, line 8, after ("III") insert ("and, where applicable, Part IV").—(Earl Jellicoe.)
On Question, Amendment agreed to.
Clause 22 [Measurement of level or volume instead of, or in addition to, flow]:
EARL JELLICOE: My Lords, this Amendment is little more than drafting and requires only a short explanation Clause 22 (1) makes provision for the measurement of the level or volume of an inland water instead of, or in addition to, the flow of that water in statements of minimum acceptable flows. Clause 21, however, deals with the preparation and the amendment to statements by the Water Resources Board and the Minister of Housing and Local Government respectively; and it is wrong that a river authority should be empowered to determine the action to be taken by the Minister or the Board under Clause 21. This Amendment deletes the reference to that clause in 22 (1). I beg to move.
Amendment moved—
Page 20, line 22, leave out ("to 21") and insert ("and 20").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: My Lords, this is a similar type of drafting Amendment. Any action of the Minister of
938
Housing and Local Government under Clause 21 (3) must be directed to amending the statement in the form in which it was made. This amendment secures this by including Clause 21 (3) among the provisions to which Clause 22 (2) applies. I beg to move.
Amendment moved—
Page 20, line 29, after second ("of") insert ("section 21 (3) and").—(Lord Hastings.)
On Question, Amendment agreed to.
5.28 p.m.
THE EARL OF LUCAN THE EARL OF LUCAN moved, after Clause 23 to insert the following new clause
Saving for British Waterways Board
". Notwithstanding anything in the last preceding section, nothing in this Act shall derogate from any right of the British Waterways Board—

(a) to draw water from any of its existing sources of supply; or

(b) to sell any of its water."

The noble Earl said: My Lords, this Amendment is for the purpose of eliciting information from the Government, and I will very briefly explain the object of it. As your Lordships know, canals draw their water from reservoirs or from rivers or other sources. They supply water for industry and agriculture and other purposes, a transaction from which they get an important part of their revenue and a part which is becoming more and more important in their finances. The Bowes Committee made a great point of this. The Government, we believe, accepted broadly the recommendation of that Committee in their White Paper (Command 676). I need only remind your Lordships that in 1957 the revenue from the sale of water was nearly £500,000 and I have little doubt that it has been increasing considerably since. That accrues to the British Waterways.
Now the Bill before us, in defining water resources, clearly lists all sources of water, including canals, reservoirs and rivers, and other sources from which the canals draw their water at present. Under the Bill the canal authorities would be unable to draw any water for their waterways without obtaining licences from the appropriate river authorities. It is clearly unthinkable that the canals that have just been reorganised, and from which the Government expect continued service, should be dependent on the good will of all the different river

939
authorities to keep their waterways going. Similarly, it is unthinkable that they should be prevented from selling water or allowing people to abstract water from their waterways on contract, and thus forfeit a sizeable part of their revenue. I cannot help thinking that the Government have had this in mind and are prepared to put Amendments into the Bill to cover it, but I should like to hear from them that that is so. I beg to move.
Amendment moved—
After Clause 23 insert the said new Clause.—(The Earl of Lucan.)
LORD ST. OSWALD: My Lords, the noble Earl is quite right in thinking that the Government have had this matter in mind, and I hope he will not wish to press his Amendment when I explain that although setting out to safeguard the rights of the British Waterways Board, it does not take into account two very necessary considerations. The first of these is the interest of the canal-side abstracter. He might hold a contract with the Waterways Board for the purchase of water from them but still be unable lawfully to abstract, because he had no licence from the river authority, or he might hold both documents and face double charges—one levied by the Waterways Board in relation to the contract and one by the river authority in relation to the licence. The second matter is that the Waterways Board own or manage certain rivers as well as canals, and may be in a position to sell water from them. The activities of the Board need to be suitably integrated with those of the river authorities in such cases.
The Government will be putting down an Amendment to introduce a new clause on Waterways Board matters after Clause 114. This will deal with both the matters mentioned above. It has, of course, been discussed with the Board, who are content with it. The noble Earl will be interested to know that the effect of the new clause will be to adapt the licensing and charging provisions of the Bill in relation to canals of the British Waterways Board, so that only the Board is entitled to apply for abstraction licences. Thus the normal charges will largely be waived in respect of such abstractions. The river authority will be licensed, as everywhere else, but only the Board will get new licences. Therefore, they will
940
sell water to their clients, who will pay only one charge—the Board's charge. There will be special provision for existing abstractions. I hope that after what I have said the noble Earl may feel it appropriate to withdraw his Amendment at this stage.
LORD AMULREEMy Lords, before the noble Earl withdraws his Amendment, may I ask him to try to retain one single word from his Amendment, the word "draw" in the first paragraph? In this Bill we have perpetually been told that we are going to "abstract" water. Could we not possibly come back to using the more reasonable term and say we are going to draw water, not abstract it? With all respect to the Civil Service, I am afraid that this is a real good bit of Civil Service journalese with which we might dispense, and we might again say "draw" water, which has a fine background to it.
VISCOUNT COLVILLE OF CULROSS: My Lords, what would be the abstracters in that case—drawers?
LORD AMULREE: My Lords, I think that we have a perfectly good precedent, if we read the words of the Bible.
THE EARL OF LUCAN: My Lords, there is something in the suggestion of my noble friend Lord Amulree. "Draw" is better than "abstract"; "drawer" is better than "abstracter" and "drawing" is better than "abstraction". I wish we had the noble Lord, Lord Conesford, with us, because he is our chief guardian of language. I am very glad to hear from the noble Lord, Lord St. Oswald, that we are to have an Amendment to cover this point. I hope that when it comes we shall find it fully satisfactory. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 24 [Exceptions from general restrictions]:
LORD HASTINGS: My Lords, this is an Amendment which we have put down at the request of my noble friend Lord Colville of Culross, whose name is also joined with ours in it though he put it down separately. It follows the wording which was suggested by my noble friend in Committee stage and makes the intention clearer. I beg to move.
Amendment moved—
Page 21, line 36, leave out ("the abstraction of any") and insert ("any abstraction of a")—(Lord Hastings.)
On Question, Amendment agreed to.
Clause 25 [Power to provide further exceptions]:
LORD HASTINGS: My Lords, Amendments Nos. 25 and 26 go together. Their effect is simply to make perfectly clear the purpose of an order under Clause 25. I beg to move.
Amendment moved—
Page 23, line 10, leave out ("in respect of") and insert ("excepting").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: My Lords, I beg to move the next Amendment.
Amendment moved—
Page 23, line 12, at end insert ("from the restriction").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: My Lords, this Amendment and the next are the Amendments already referred to by my noble friend Lord Jellicoe in connection with preparing the way for the new Sixth Schedule. I beg to move.
Amendment moved—
Page 23, line 2.5, after ("I") insert ("and, where applicable Part IV").—(Lord Hastings.)
On Question, Amendment agreed to.
EARL JELLICOE: My Lords, I beg to move this Amendment formally.
Amendment moved—
Page 23, leave out lines 33 to 37.—(Earl Jellicoe.)
On Question, Amendment agreed to.
Clause 28 [Publication of application for licence]:
LORD ST. OSWALD: My Lords, Amendments Nos. 27 and 28 are in line with Amendments Nos. 15 and 16, already mentioned by my noble friend Lord Hastings. I think that it may be for the convenience of the House if Nos. 27, 28 and 29 are taken together. Clause 28 (1) (b), as drafted, requires a copy of the notice of an application for a licence to abstract water to be served upon any navigation authority having
942
functions in relation to the inland water from which abstraction is proposed.
The effect of Amendments Nos. 27 and 28 is threefold. First, a reference is incorporated to any harbour authority or conservancy authority, as well as to any navigation authority having functions in relation to the inland water. Secondly, the obligation to serve notice on the navigation, harbour and conservancy authorities is confined to any such authorities having functions in relation to the inland water at any proposed point of abstraction. Thirdly, by way of carrying out the promise which I gave to the noble Lord, Lord de Ramsey, an applicant for a licence is required to serve notice of his application on any internal drainage board within whose district any proposed point of abstraction is situated. Consequentially, Amendment No. 29 is a purely drafting change in the definition of the term "relevant locality" and provides a definition of the term "proposed point of abstraction". I beg to move.
Amendment moved—
Page 25, line 12, after ("authority") insert ("harbour authority or conservancy authority").—(Lord St. Oswald.)
On Question, Amendment agreed to.
LORD ST. OSWALD: My Lords, I beg to move.
Amendment moved—
Page 25, line 13, at end insert ("at any proposed point of abstraction, and on any internal drainage board within whose district any proposed point of abstraction is situated").—(Lord St. Oswald.)
On Question, Amendment agreed to.
LORD ST. OSWALD: My Lords, I beg to move.
Amendment moved—
Page 25, leave out lines 31 and 32 and insert ("any proposed point of abstraction is situated, and 'proposed point of abstraction' means a place where a licence, if granted in accordance with the application, would authorise water to be abstracted").—(Lord St. Oswald.)
On Question, Amendment agreed to.
Clause 29 [Determination by river authority of application for licence]:
LORD LINDGREN LORD LINDGREN moved, after subsection (3), to insert:
"( ) Where the application is made by statutory water undertakers, the river authority shall

943
not refuse to grant a licence if the water is available and is required by the applicants for the purpose of meeting their statutory obligations in relation to water supply; and any dispute which may arise between the river authority and the applicants as to whether the water is available, or is required by the applicants for the purpose of meeting their said obligations, shall be settled by the Minister, who in the case of a dispute as to whether the water is available shall consult the Water Resources Board before reaching his decision."
The noble Lord said: My Lords, this again is an Amendment identical to one moved on the Committee stage. It seeks to place an obligation on the river authority to grant an application for a licence made by a statutory water undertaker if the water is available and required by the statutory water undertaker to meet its statutory obligations, and, in the event of there being any dispute, provides for the matter to be referred to the Minister for settlement. In the Committee discussions, the noble Lord, Lord Hastings, put forward three main arguments against the Amendment which was before the Committee. He claimed that the Amendment was contrary to the principle of the Bill, which was to place the control over water resources in the hands of the river authorities; and he agreed, of course, that the decisions of the river authority would be subject to appeal to the Minister. He further suggested that the Amendment ignored the duties placed upon the river authorities.
I submit that this Amendment is not against the principle of the Bill but, on the contrary, is required to complete the machinery of the Bill. The Bill gives the river authorities the necessary power to control the water resources in their respective areas, but, as I read it, it does not place any specific duties upon the river authorities to afford a supply of water. The statutory water undertaker, on the other hand, has the duty to afford supplies to the public. I would suggest that, as the Bill stands, the river authority will have the power without any duty, and a statutory water undertaker will have the duty without any power.
This Amendment seeks to provide the link which is necessary to complete the chain from the conservation works of the river authority to the consumer's tap. If the consumer can call upon the statutory water undertaker, then surely the statutory water undertaker must be able to call upon the authority. I
944
would agree that if, in practice, there is no shortage of water in the particular river basin, the obligation which the Amendment places on the river authority would create no problem. If, however, there is a shortage of water, the Amendment will ensure that priority is given to public water supplies; and in the event of a dispute, automatically the problem will go to the Minister, who, in the prescribed circumstances, will obtain the advice of the Water Resources Board.
The noble Lord, Lord Hastings, said that, in any event, where abstraction by statutory water undertakers would involve the construction of major works requiring the Minister's approval under the Water Act, 1945, the application for the licence was likely to be called in by the Minister under Clause 38. Clause 38 was not discussed on the Committee stage. That was not the fault of the Minister, of course, but of those of us who had the scrutiny of the Bill in our charge. I submit that it is desirable, if the noble Lord will do it, to give some clarification of the circumstances in which the Minister proposes to invoke Clause 38 and remove applications for licences from the jurisdiction of the river authority under Clause 29. If every abstraction by statutory water undertakers requiring works is to be dealt with by the Minister, then it seems to me, at least, that Clause 29, in practice, will be of far less importance than I have taken it to be.
The noble Lord, Lord Hastings, admitted that the claim of the statutory water undertakers for priority of treatment was well founded and was accepted by the Government in so far as the supplies of the statutory water undertakers were required for human consumption. But the noble Lord pointed out that the statutory water undertakers also supplied industry and agriculture, and that it would be wrong to put the industrialists or farmers taking water from the statutory water undertakers in a better position than the industrialists or farmers abstracting water from their own sources of supply. I do not think this argument against the Amendment is very sound. Any industrialist or farmer can require a supply of water from a statutory water undertaker, and, therefore, all have equal opportunity, if

945
they so desire, to get their supplies through the statutory water undertakers. The Water Act, 1945, however, establishes the order of priority by making the first duty of the statutory water undertaker to give a supply for domestic and public purposes; and, secondly, to give a supply for other than domestic purposes if the supply of domestic water is not affected. Thus, I would submit that the Amendment is sound in seeking to establish a priority for abstraction required to meet the statutory duties of the water undertaker, for that statutory duty is fixed under the Water Acts, and the Water Acts themselves would be the priority under which the statutory water undertaker operated.
Under a subsequent Amendment the noble Lord, Lord Hastings, admitting the point of the statutory duties of the statutory water undertakers and the difficulties that they may be placed in, agreed to consider putting down an Amendment at this stage. The noble Lord has placed an Amendment on the Paper, to which reference has already been made, as an addition after Clause 93. If that addition had been completely satisfactory, I would agree that there would have been no need to resubmit this Amendment to the House. But I do not think that the Amendment to which I have referred, and with which we shall be dealing later, meets the points I have raised, because it places no specific enforceable duty upon the river authority to give a licence to a statutory water undertaker. It places on the river authority a duty to have particular regard to the statutory duty of water undertakers to supply water for domestic services, only when the river authority is dealing with an application for the variation or revocation of a licence held by a statutory water undertaker. I would suggest that this implies that the duty of the statutory water undertaker is not to be taken into account in considering any other application for abstractions. It is this question of the balance between the priority for the abstraction for the statutory duty as compared with the other abstractions with which I am trying to deal in the Amendment, which I now move.
Amendment moved—
Page 26, line 5, at end insert the said subsection.—(Lord Lindgren.)
LORD SINCLAIR OF CLEEVE: My Lords, this Amendment enshrines a point
946
which is of great importance to statutory water undertakers. I think it goes further than that, in that it is important because it raises, as I see it, a point of principle. I hope I am in order, since the noble Lord, Lord Hastings, himself referred to it earlier this afternoon, in referring to Amendment No. 97, which the Government have suggested might be an answer to the Amendment now proposed. Incidentally, I share entirely the argument in the concluding words of the noble Lord, Lord Lindgren, about the conceivably restrictive effect that Amendment No. 97 might have. I do not think that is by any means the intention, but I believe that conceivably it might be restrictive.
We heard earlier this afternoon that the words "have regard to" may have some meaning, and that the words "have particular regard to" may have a shade more meaning. But they are very different from a straightforward instruction, and on this point surely there is a strong case for a straightforward instruction. The requirements of the statutory water undertakers to fulfil their statutory obligation for domestic and public supply are clearly of great importance. I sympathise with the Government in trying to avoid anything like an order of priorities in this Bill, but these statutory obligations are inescapable, and in so far as the statutory water undertakings can prove to the river authorities that such-and-such a quantity is specifically required to meet obligations for domestic and public supply, I think there is an unanswerable case for the licence being given to cover that quantity. I add the words "and public" to the word "domestic" which is used in the Government Amendment, because I think, in normal usage, "domestic" does not cover the requirements of public health—the supply of water for fire fighting purposes, and so on, which are normally held to be covered by the word "public." Therefore, I suggest the words "for domestic and public supply".
For these reasons, I strongly prefer a straightforward instruction such as is suggested in the Amendment to Clause 29, and not a vague instruction "to have particular regard to" later on in the Bill—a straightforward injunction to the river authority not to refuse a licence for such quantity as can be shown to be essential to meet the statutory obligations as I have

947
defined them. Accordingly, I strongly support the Amendment.
5.56 p.m.
LORD HASTINGS: My Lords, I am most grateful to the two noble Lords who have spoken for the reasoned, as well as reasonable, manner in which they have moved and supported this Amendment. As the noble Lord, Lord Sinclair of Cleeve, has said, it is an extremely difficult problem, and we have tried to meet the case made by the noble Lords during the Committee stage. As they realise, they have had some difficulty in closing the gap between our slightly different points of view. On the other hand, I am afraid that I cannot quite agree with the noble Lord, Lord Lindgren, when he said that his Amendment is not against the principle of the Bill. We still believe that it is contrary to the basic concept of the Bill and, incidentally, of the Report of the Proudman Committee, which is that there should be comprehensive and unified management of resources by river authorities, subject to a right of appeal to the Minister against the decisions of these authorities on application for licences.
The effect of the noble Lord's Amendment would be to reverse that situation: statutory water undertakings would have absolute priority for water where it was available, and if the river authority did not wish to grant the licence it would be the authority who would have to appeal to the Minister against the diktat of the statutory water undertakers. That would be putting an essential part of the Bill the wrong way round, and doing it only in respect of statutory water undertakers. The noble Lord is asking for this Amendment, of course, because of the need for statutory water undertakers to fulfil their statutory obligations. Therefore, he argues, their needs are more important than those of other people, and they must have priority over the other users.
This is the point, my Lords, where the Government part company with Lord Lindgren and Lord Sinclair of Cleeve, who has recognised the difficulty we have in inserting any such word as "priority" into the Bill. But we have put down this new clause, which requires a river authority to have "particular regard", which is at least stronger than just "having regard", to the statutory duty
948
of the water undertakers to supply water for domestic purposes in all those things done by the river authority in managing water resources which could affect the water undertakers' ability to discharge their duty, and which are not otherwise protected under the Bill. We think that this new clause is correctly placed. It has relevance over a wide range of the provisions of the Bill and is not limited, as is the noble Lord's own Amendment, which comes in Clause 29 and therefore applies only to application for licences. As I say, our Amendment ranges over the whole Bill, and when we come to it we shall see that it is preferable from that point of view.
The noble Lord asked a particular question in respect of Clause 38, and he will note that in Clause 38 the Minister can give a general direction to river authorities or direction in particular cases. I do not think we can assume that there would be a general direction to call in every case affecting statutory water undertakers, but I think it is likely that the Minister would call in an application for a licence where the water undertakers also require an order by him authorising acquisition of land or the erection of works in association with the abstraction. Another example where he might call it in would be a highly controversial scheme which affected amenities—a reservoir in an area of great natural beauty—and the Minister would wish to inform himself at first hand and to hold an open inquiry. Those are cases of the sort where Clause 38 would operate.
Perhaps noble Lords who support this Amendment have not quite appreciated what the effect could be, and I wish to put it to noble Lords that it could have a very awkward effect on the operations of this Bill and go much beyond what they themselves probably intend. This Amendment gives an unqualified priority to any demand voiced by statutory water undertakers for a supply to meet their statutory obligations. It says that if water is available the licence cannot be refused. Presumably that means that if there is water in the stream over and above the quantity required to meet the minimum acceptable flow and the protected rights under the Bill, then the statutory undertakers are to have the water for the asking. I think that is a fair assumption.
But suppose the Central Electricity Generating Board were to come to the

949
river authority and say that it is thinking of doubling a certain power plant with a consequent extra demand for cooling water beginning in two or three years' time. The river authority would take that into account in shaping its licensing policy so that it would have that water available when the demand came; and there might be other cases. The river authorities have to plan ahead; that is one of the main purposes of this Bill. But this piece of planning could be upset by the statutory water undertakers under this Amendment. They are to have the available water if they ask for it, and therefore they could pre-empt what is for them not only the cheapest source of supply—which it is perfectly reasonable for them to want to have—but also the most convenient source of supply. And this is really the most difficult point of all, because if the conditions laid down in this Amendment were fulfilled, then the licence would have to be issued irrespective of the proposed point of abstraction. Therefore it would be no good the Minister or the Water Resources Board making forward-looking plans to transfer the surplus water of a river to a drier part of the country. By the time the plan was ready to come into force the water might as a result of this Amendment have been demanded and taken by some statutory water undertaking.
Noble Lords will see that, as the result of this Amendment, determination of the source of supply and point of abstraction by statutory water undertakers would really rest with the water undertakers, not with the river authority, not even with the Water Resources Board, who are to plan all the future resources of the country, nor with the Minister. Therefore I must repeat that the effect of this Amendment is to deny or make impossible the system of comprehensive planning and management of water resources advocated by the Proudman Sub-Committee and embodied in this Bill, and which the Government quite rightly think is essential to the success of the whole Bill.
Furthermore, the Government think that Clause 29 is not the appropriate place for an Amendment designed to ensure the proper recognition of the statutory duty imposed upon water undertakers; and it is, of course, because of that statutory obligation that the noble Lord is moving this Amendment. This duty we think ought to be borne in mind in other
950
contexts than the consideration of application for licences by the water undertakers. This Amendment overlooks or, at any rate, ignores the duty placed upon river authorities by the Bill under Clause 14. The Government, on the other hand, have fully accepted the point urged by noble Lords that there should be some explicit reference to duties of statutory water undertakers, and in accordance with my undertaking at Committee stage we have put down Amendment No. 97 to deal with this point after Clause 93. We feel that the mere apprehension that river authorities may not appreciate the position of the statutory water undertakers does not justify this particular Amendment and all the results which would follow from it, all of which I have tried to outline and explain to noble Lords, and it is those results which make it impossible for us to accept this Amendment. I suggest to the House that the Government Amendment is to be preferred and that this Amendment should, for the reasons I have given, be rejected.
Finally, I would say that the future requires the closest collaboration between the river authorities and the statutory water undertakers, and I am quite sure, from what noble Lords interested in them have said and from their whole attitude, that the water undertakers intend to give this co-operation when the Bill takes effect. I hope also that noble Lords will give the Government credit for wishing to allay their fears and to meet them as far as we possibly can; but I am convinced that the proper basis for that co-operation is not this Amendment but the Government Amendment to follow Clause 93.
I do not think I want to argue that Amendment in the greatest detail even further, but I have outlined the reasons why I think it is preferable and why it covers a much wider field than the present suggested Amendment and will ensure that the position of the statutory water undertakers is safeguarded. I would simply say to noble Lords that we very much appreciate the point they are trying to get at and we regret that we cannot accept the Amendment in this form, but we sincerely believe that our own Amendment will look after their position and will ensure in practice, if not in theory on paper, that the sort of prior consideration—to put it that way without

951
calling it actual priority—that they are seeking will be granted to them as a result of the Government Amendment.
LORD LINDGREN: My Lords, first I would thank the noble Lord for the time, thought and attention that he has given to this problem, and say straight away that we accept the fact that the comprehensive and unified control of water resources is the job of the Bill and we support it to the full. The problem is that one tends perhaps to look at it from the point of view of the obligations that rest upon particular groups of persons and particularly statutory water undertakers. The point which the noble Lord himself raised in regard to the electricity works is just one of those things which causes a person or a group of persons, a statutory water undertaker, to have their doubts.
A statutory water undertaker has his statutory obligations, and the priorities of those obligations are set out in the 1945 Act. There is no obligation upon the river authorities to supply, as the noble Lord, Lord Hastings admitted, and they may have at the back of their mind the setting up of a generating station in two or three years' time. It is not unreasonable for the statutory water undertaker to have a fear that in periods of capital restriction a water board not wanting to incur considerable expenditure in advance of requirements may refuse to supply a statutory water undertaker in order that they may meet a commitment of a bulk supply to an industrial undertaking such as an electricity works. It is just that sort of thing that causes the problem. If there is—as most probably there will be, in 999 cases out of 1,000—the availability of the water and there is no question of the licence not being granted, then the occasion will not arise. But the problem arises where there is a conflict of interest, and a conflict of interest might arise not altogether at the river board's own desire; it may be because of Government action, restriction of capital expenditure and the rest. But in the light of what the noble Lord has said, and in the hope that it will work out in practice as he feels, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 31 [Effect of licence]:
LORD AMHERST OF HACKNEY LORD AMHERST OF HACKNEY moved to omit subsections (1) and (2) and to insert instead:
"(1) Subject to the following provisions of this section and section 54 (5), in any action brought in respect of the abstraction of water against any person who is for the time being the holder of a licence under this Act to abstract water, or who is the servant or agent of or otherwise acting under the authority of the holder of such licence, it shall be a defence for such person to prove that the water was abstracted in pursuance of the licence and in accordance with the conditions contained in it."
The noble Lord said: My Lords, this Amendment is an attempt to get over what seems to me a practical difficulty. Under Clause 31 (1) the holder of a licence cannot be sued provided he is abstracting water in accordance with the terms of that licence. The difficulty seems to be to know how anybody other than he himself is to prove whether or not he is abstracting water in accordance with the terms of the licence. Somebody down-stream suddenly finds that the level of water has fallen and thinks that the abstracter is probably abstracting too much water, but he has no access to the abstracter's gauges, no knowledge of the hours he is pumping, and all that sort of thing; it is almost impossible for him to prove his case.
What this Amendment does is to change the onus of proof. If the Government accept this Amendment, then the person downstream who finds that the level of the water has fallen can then start to sue the abstracter of water, but it would then be a complete defence for the abstracter to prove that he was in fact abstracting water within the terms of his licence. Presumably if this Bill is to mean anything at all there will have to be some method by which abstracters know how much they are abstracting, either by capacity of pumps or gauges; otherwise this Bill is meaningless. That is the point of the Amendment. If the noble Earl accepts it, there would be a consequential Amendment, my Amendment No. 54 of Clause 54 (4), to deal with the rights of people who sue during the preliminary period of this Bill. I beg to move.
Amendment moved—
Page 27, leave out from beginning of line 36, to end of line 7 on page 28 and insert the said new subsection.—(Lord Amherst of Hackney.)
EARL JELLICOE: My Lords, I am very grateful to my noble friend for his explanation of this Amendment. I thought when I first read it that he was aiming at the wider matter of Common Law rights which we discussed at some length during Committee, and in that event I should not have been able to give him much satisfaction. We think it important, indeed vital, to secure that so long as a licence holder complies with the terms of his licence he should either be immune from, or should have an absolute defence of, any action in respect of his abstraction or impounding. That principle was cardinal to the Proudman Report and is cardinal to this Bill. I see, however, that my noble friend is shooting at a more selective target. The aim of his Amendment, as I now understand it, is to transfer the burden of proof, putting it on the defendant, the abstracter, to prove that the challenged abstraction has been made in accordance with his licence. I am certainly not able to accept my noble friend's Amendment as it stands. I am advised that it is defective in detail. For example, the status of a person as a licence holder or servant or agent should be considered in relation to the time at which the challenged abstraction was made, not, as under this Amendment, at the time when the action is brought.
The last two lines of the Amendment are also wrong, I think, as they pick up phraseology which I shall be seeking to amend when we come to the next Amendment which I shall be moving. I should also mention that if we made this Amendment, or an Amendment along these lines, to Clause 31 (1) we should also have to consider making a parallel Amendment to Clause 37 (2), since that subsection makes similar provision as regards licences to obstruct or impede the flow of a river as this subsection does as regards licences to abstract or draw water. That said, I grant that my noble friend has given us food for thought here. I should very much like the chance of considering very carefully the points he has made. I should also like to reserve the possibility of our introducing a Government Amendment at a later stage, possibly at Third Reading, if there is time. With that assurance, I would invite my noble friend to withdraw his Amendment.
LORD AMHERST OF HACKNEY: I am grateful to my noble friend, and I will certainly withdraw this Amendment, on the assurance that he will look into it further.
Amendment, by leave, withdrawn.
EARL JELLICOE: My Lords, this Amendment has, I fear, a rather legalistic flavour. I am advised that the wording of Clause 31 as it stands might be taken to imply that compliance is required only with provisions in the licence regulating the abstraction. In fact there must be compliance with provisions which govern what is to be done after the water is abstracted—for example, about measurements to be taken, or the purposes for which it is to be used. The relevance of this example is shown by what my noble friend has said in moving his last Amendment. In short, this small Amendment somewhat tightens up the wording of the Bill here. I beg to move.
Amendment moved—
Page 28, line 3, leave out from ("and") to end of line 4 and insert ("the provisions of the licence are complied with").—(Earl Jellicoe.)
On Question, Amendment agreed to.
Clause 33 [Entitlement to licence of right]:
6.22 p.m.
LORD LINDGREN LORD LINDGREN moved, in subsection (1) (b), to leave out "such a source of supply" and insert "underground strata in a river authority area". The noble Lord said: My Lords, when we have finished with this Amendment, the Marshalled List may look a little less formidable; because, if your Lordships agree, Amendments Nos. 34, 35, 38, 47 and 52 can be dealt with together. They are all consequential, whether Amendment No. 33 is accepted or rejected.
Clause 33 (1) gives an entitlement to a licence of right to any person abstracting water under a statutory provision, and to any person abstracting at any time within a period of five years ending with the second appointed day. On the Committee stage I moved an Amendment which would have had the effect of preventing any persons from abstracting after the publication of the Bill. If they did abstract after the publication of the Bill they would not be able to claim a licence of right. In supporting that Amendment,

955
I argued that it would encourage the wholesale abstraction of water before the second appointed day, which might be two years hence, to enable a licence of right to be claimed when the new scheme came into operation.
The noble Earl, Lord Jellicoe, who advised the Committee against accepting the Amendment, admitted that there was a difficulty in establishing the period and that my proposal was perhaps attractive. But he suggested that the Amendment then before the Committee had two main defects. It was suggested that it would make it more difficult to obtain accurate evidence to establish the amount of water abstracted, which was to be the basis of the licence of right, and that it would prevent all legitimate development between the date of the Bill and the coming into operation of the new scheme. The second part of the noble Earl's objection was particularly valid, and I have tried to meet that in the new Amendments which we are now discussing, because they seek to prevent the wholesale abstraction of water merely for the purpose of obtaining a licence of right, and at the same time they are free from the defects which the noble Earl detected in the Amendments put forward on the Committee stage.
The new Amendments now before the House divide the abstractions into two classes: first of all, abstractions from underground, and, secondly, abstractions from surface water. The underground water has been brought under control by Section 14 of the Water Act, 1945. Where underground water has to be conserved the Minister will have made an order under Section 14, and no new abstraction can be made without a licence from the Minister. Thus, underground water which is abstracted under licence from the Minister will be abstracted by virtue of a statutory provision, and the abstracter will be entitled to a licence of right under Clause 33 (1) (a). The abstractions from underground water which are not at present controlled under Section 14 of the Water Act, 1945, will fall within Clause 33 (1) (b), and so again the abstracter will be entitled to a licence of right.
That leaves the problem of abstractions of surface water, and it is proposed to deal with this under a new paragraph which will become paragraph (c). This
956
provides that a licence of right may be obtained in respect of an abstraction at any time within the period of five years ending with the second appointed day. But if the abstraction commenced after the publication of the Bill (which, if my memory is right, was November 7, 1962) then, to qualify for a licence of right, the abstracter must obtain from the present river board a written statement that the board does not object to the abstraction. This suggestion follows the recommendation made in the Second Report of the Central Advisory Water Committee's Sub-Committee on the Growing Demand for Water. It was there suggested that, where it was necessary to introduce a temporary method of control, this should be entrusted to the existing river boards.
I submit that the Amendment would improve the Bill, because it would discourage wholesale abstractions of surface water merely for the purpose of obtaining a licence of right when the new scheme comes into operation. At the same time, it will permit legitimate development, because it will not interfere with the development of underground supplies and it will permit the development of surface supplies, subject to the control of the river board. I think that I have now met the perfectly valid objections which the noble Earl raised to the Amendments that I moved on the Committee stage, and I move the first in this series of Amendments in the hope that the noble Earl will be able to agree.
Amendment moved—
Page 30, line 20, leave out ("such a source of supply") and insert ("underground strata in a river authority area").—(Lord Lindgren.)
LORD HASTINGS: My Lords, the noble Lord is no doubt rather surprised that I am going to deal with his Amendment. To tell the truth, I am a little surprised myself, because it was only after it was agreed that I should take it that we discovered that the noble Earl had held a long disquisition on this subject on the Committee stage. My noble friend Lord Jellicoe is sorry that he is not replying to this Amendment, but I can assure the noble Lord opposite that the reply will not vary in any respect from what the noble Earl would have said. During the Committee stage, my noble friend explained at great length what the difficulties were. This

957
is really a problem of a balance of disadvantages, and it was made quite clear that the Government were only too willing to accept suggestions to see whether we could get over the difficulties which exist. Therefore, it was in no spirit of obstinacy or wish to have the doubtful pleasure of rejecting the noble Lord's Amendment, that his suggestion has been examined. But it is our duty to look very carefully at the suggestions to try to find out how in practice they are likely to operate.
The noble Lord has quite clearly divided those who abstract water from underground from those who abstract surface water. He is afraid that certain people may commence abstracting surface water unnecessarily and unfairly after November 7, 1962, and there is possibly some danger that in some cases this might happen. On the face of things the noble Lord's Amendment appears to provide a simple solution of the difficulty of fixing a qualifying period for licences of right which neither admits too readily the selfish abstracter who is concerned only to beat the gun to his private advantage, nor excludes too arbitrarily the abstracter who has some legitimate new development to pursue, which may be to the public interest.
First of all, my Lords, it seems to the Government that the river boards as they now exist are not well suited to dealing with the needs of a variety of abstracted, because they have had no experience in this field. The scope of the boards at the moment is hardly wide enough for the purpose proposed; nor do they at present operate in detail over all the waters which the Amendment would bring under their purview. At the moment they are concerned with land drainage on main rivers, prevention of pollution of rivers and streams, and administration of the Fisheries Acts. The constitution of the boards, their background, and their expertise are all reflections of those functions.
Even more important from the point of view of the river boards, if they were to take over this responsibility, would be the background against which they have to determine whether or not they object to an abstraction. What are to be the guiding principles to which they should have regard? What exactly are
958
they to protect? Presumably the criterion by which they would judge proposed abstractions would be whether or not those abstractions would cause undue depletion of the flow so as to damage other interests in it. If an abstraction can be shown either to be unlawful or to damage existing abstractions, the due process of the existing law can be invoked by any riparian proprietor and any damaging abstraction effectively stopped, thereby removing any question of a licence of right being granted. That is the first protection.
But, as was argued during the Committee stage, a river authority also has its protection under the Bill—it will not be defenceless against these people. There are the provisions of Clause 34 (3), the factors to which a river authority must have regard in determining the quantity to be licensed; then there is Clause 54 (5), which leaves the holders of licences of right of this sort open to challenge for three years. And there are also the provisions of Clauses 41 to 43, relating to revocation or variation of licences. With all those provisions on the statute book, the bogus applicant would not get very far.
My Lords, there are other difficulties which we can foresee. For instance, what is to be done if a would-be abstracter wishes to contest an objection raised by a river board to his proposal? Surely he cannot be put at a disadvantage by the river board, and he must have the right of appeal. As it stands, the Amendment would confer on the river board a power more drastic than the river authority itself is to have under the Bill, because the abstracter would not have any right of appeal. That is a further difficulty. Then, supposing a river board did not object, provided that the abstraction was subject to limitations on the quantity taken and the method whereby it was taken, how could such limitations be fixed? Would there be no right of objection to that, as there will under the Bill in regard to regular applications for licences, or revisions of them?
All in all, my Lords, it seems that the only answers to these questions are those contained in the Bill, and we think that the Amendment gives rise to more problems than it sets out to solve. We do not

959
suggest that the position is entirely satisfactory, but we feel that the balance of advantage lies with the Bill as it stands, rather than with these Amendments. Therefore, while sincerely thanking the noble Lord for his great effort to help to improve this particular clause, we feel that it will not perhaps achieve the effect for which he hoped. At the same time the Ministry of Housing are still studying this problem to see whether we can arrive at some solution. If any other suggestion which seems more acceptable is subsequently put forward, the Government will not refuse a change in the Bill if they can be convinced that some better arrangements than those in Clause 33 (1) can be made.
LORD LINDGREN: My Lords, I thank the noble Lord for that reply, particularly the last part of it. One appreciates that this is a difficult problem, and the noble Earl who took over the bowling on the previous occasion put his case very fairly and distinctly. No one wants to stop legitimate development. One reason for the first group of Amendments is that there are already some indications in some areas—I will not say over the whole country—of persons trying to stake a claim for a certificate of right by making the abstractions now.
The noble Lord, Lord Hastings, said that the river boards had not a great deal of experience in dealing with a number of abstracters. I hope that they will soon get that experience, and I hope that they will have even greater powers in the future. It is true that at the moment, when there is a water surplus, there are a number of underground abstractions which there ought not to be, and although it might cost a little money to take advantage of the surface water and let the underground supplies recoup themselves, I think it ought to be done and I think the river authorities ought to have the power to do it. But no doubt when the Water Resources Board is set up it will look at that point. In view of the fact that the noble Lord concluded his remarks by saying that the Government have still an open mind, if in fact a satisfactory form of words can be found, I will ask leave to withdraw the Amendment. Between now and the Third Reading we will look at the problem again to see whether we can find satisfactory words. And I am certain
960
that the noble Lord and his advisers will do the same.
Amendment, by leave, withdrawn.
Clause 34 [Licences of right for statutory users]:
LORD HASTINGS: My Lords, this drafting Amendment is linked with the following one. It provides simply for inserting a paragraph as a result of the Amendment which is to follow. I move it formally.
Amendment moved—
Page 32, line 1, after ("of") insert ("(a)").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: My Lords, this Amendment seeks to meet the substance of a criticism of Clause 34 (4), which was made by my noble friend Lord Walde-grave during the Committee stage. I acknowledged then that this subsection might be too restrictive in so far as it referred to plant installed or in process of installation but took no account of plant authorised of which the installation had not actually begun. This Amendment puts the situation right, so as to embrace that plant authorised but not yet begun. I beg to move.
Amendment moved—
Page 32, line 4, leave out ("not being works, machinery or apparatus") and insert ("or
(b) any other works, machinery or apparatus the construction or installation of which was authorised by the relevant statutory provision,
not being (in either case) works, machinery or apparatus provided or authorised to be").—(Lord Hastings.)
On Question, Amendment agreed to.
Clause 35 [Reference of applications to Minister]:
6.41 p.m.
LORD MERRIVALE LORD MERRIVALE moved to leave out Clause 35 and insert the following new clause—
"35.—(1) The provisions of this section shall have effect where an application under section 33 of this Act is made in a case falling within subsection (1) (b) of that section: and in this section—'the relevant period' shall mean the period of five years ending with the second appointed day or the period beginning with the date on which the applicant or his predecessors began to abstract water from the source of supply in question and ending with the second appointed day, whichever is the shorter.

961
(2) The provision made by the licence as to the quantity of water authorised to be abstracted shall be such as appear to the river authority to correspond as nearly as may be to the quantities referred to in paragraph (a) below having regard to such of the following matters as are applicable and are proved to the reasonable satisfaction of the river authority, that is to say—

(a) the quantities of water abstracted by the applicant or his predecessors from the source of supply in question during the relevant period;

(b) the seasons of the year during which those quantities of water, or the greater part of them, were so abstracted;

(c) the extent to which in the future it is intended that the water abstracted should be used for the same purposes as in the past;

(d) the extent to which works, machinery or apparatus were reasonably provided by the applicant or his predecessors in anticipation of future requirements.

(3) The provision made by the licence as to the quantity of water authorised to be abstracted shall be such as will not permit the abstraction of water in excess of the quantity shown to the reasonable satisfaction of the river authority to be capable of being abstracted by means of works, machinery or apparatus which were constructed or installed before the second appointed day, or were in the course of being constructed or installed on that day, not being works, machinery or apparatus provided for use only in the event of an accident or other emergency involving a total or partial failure of other works, machinery or apparatus."
The noble Lord said: My Lords, this Amendment is concerned with licences of right for non-statutory users. I sincerely hope that this Amendment will commend itself to your Lordships and to my noble friend Lord Jellicoe, for in its present modified form—that is, compared with the form it had when the noble Lord, Lord Fraser of Lonsdale, and myself moved it on Committee stage—I feel that it meets the main objections which were raised then by my noble friend Lord Jellicoe. For if I understood him aright, he was worried by the fact that our previous Amendment sought to make it compulsory for an abstracter to prove quantities previously taken, and that in many cases it would be difficult to do so as records may not have been kept.
Under subsection (2) of this Amendment which we are considering today, it is necessary only for the licence to provide for a quantity of water as appears to the river authority to correspond to quantities of water abstracted during the relevant period. There would seem to be flexibility here, especially when one bears in mind the provisions of Clause 42 which enable a river authority to revoke or vary
962
a licence. As Clause 35 now stands in the Bill—and it is rather complicated to understand, as one has to refer back to Clause 34 (3)—the quantity of water authorised to be abstracted shall be such as the river authority considers appropriate. To industry in particular, who in most cases have paid a consideration for these valuable rights appertaining to land—and by "consideration" I mean, for instance, that the cost of the land when there had been a question of setting up a factory was to that extent increased by the question of whether or not there was a ready availability of water—these are valuable rights which are due to them. Any reduction in these rights appears to industry in general to be a certain form of confiscation, and these arbitrary powers which are granted in the Bill to river authorities are therefore causing much concern.
The second main objection of my noble friend on December 17, was the exclusion of purpose for which the water was to be abstracted. I hope that my noble friend will be satisfied with the wording of subsection (2) (c), which I feel now satisfactorily covers the purpose for which the water has been extracted, as stated in the present Clause 35 (c), and the purpose for which water is intended to be extracted as stated in Clause 34 (3) (c). With those few remarks, and with the changes in this later version of this Amendment, I hope that my noble friend will be able to see his way to accepting at least the principle underlying this Amendment. I beg to move.
Amendment moved—
Leave out Clause 35 and insert the said new clause.—(Lord Merrivale.)
VISCOUNT COLVILLE OF CULROSS: My Lords, I am not sure that I can go all the way with my noble friend Lord Merrivale on his proposed clause, because I suppose there may be certain instances where one particular river authority cannot give to all the applicants for licences of right in their area exactly the same amount of water as has been previously drawn in the past by those would-be abstracters. It may be that there just is not enough water to go round.
On the other hand, with all the protection that is being put into this Bill for water undertakers and all sorts of other people who have statutory powers, I am beginning to think that industry, which is,

963
after all, such a very important segment of the community, is getting a slightly shabby deal in this Bill. It seems to me that there is nowhere in the Bill itself—although I have no doubt it may have been given on other occasions in speeches—any assurance that, even where there is enough water, they are going to get the same amount under their licence of right as they have hitherto been drawing. Of course, if that were to be a commonly accepted idea there would be a great outcry that confiscation for no purpose had been carried on without any compensation being given for it. So I hope that my noble friend Lord Jellicoe will be able to allay some of these very real fears that are going about, that people who have hitherto been drawing water, for which in some cases they originally paid, will now be curbed and not allowed to take the full amount they had before, even although there is plenty of it in the source from which they are drawing.
The other point on this clause is this. When my noble friend Lord Merrivale drew the clause to your Lordships' attention in Committee stage, I complained that I found the clause quite unintelligible. My noble friend Lord Jellicoe confessed that my complaint did not fall upon deaf ears, and that he also found it very difficult to understand. Since then, however, I am afraid that hidden persuaders have been at work, and my noble friend has now had explained to him what this clause does mean. I do, however, defy him to set out the meaning of this clause by itself without writing into the previous clause the amendments which are set out in inverted commas in this one. That being so, it seems to me ludicrous that the clause should stand as it is, and that it should not be redrafted so as to set out in perfectly clear English what it is intended to mean. I had no idea that my noble friend was not going to put down an Amendment in this respect; otherwise, I would have done so myself. I hope that he can give at any rate that promise.
6.50 p.m.
EARL JELLICOE: My Lords, there are three comments that I should like to make in replying to this Amendment. The first is that I fully recognise that since our Committee stage my noble friend has altered his draft clause in the light of
964
some, at least, of the criticisms which I advanced. As a result, I would say straight away that the draft clause strikes me as being far more satisfactory than it was when we discussed it in Committee. The second point I should like to make is that we fully accept that improvements are still needed to Clause 35—and, indeed, to the preceding clause, Clause 34. At the end of my reply during our Committee stage, I said that I should like to see whether any specific points made in our discussion then could be covered in the Amendments which the Government recognised were needed to these two clauses; and that remains the position.
As regards the last point, which my noble friend Lord Colville of Culross made with his customary "asperity", I would say only that, having wrestled with this clause myself, I happen to sympathise with him. I sympathise with his plea for a new clause set out in full, and not the sort of potpourri which is the present clause. Provided my noble friend Lord Merrivale will agree with the suggestion that I am shortly going to put to him, as and when we produce Government Amendments to these two clauses, I think (if my noble friend can contain his soul and patience until then) he will find that the new clause will in fact be set out in full.
The third point I wish to make is that I cannot at this stage this evening recommend to your Lordships that you should accept the new clause proposed by my noble friend Lord Merrivale. I do not wish to argue the case in detail, but the main point why I am unwilling to accept the clause now is, quite frankly, that we have yet to make up our mind fully regarding it ourselves. Clauses 34 and 35, in fact, which provide for the settlement of the provisions of licences of right for statutory and non-statutory abstracters, remain, in our view, one of the most difficult parts of the Bill. We have put down no Amendment making a fundamental alteration to the provisions of the clauses. This is not because we are unwilling to do so, or that we have reached the conclusion that no such change is warranted—rather the reverse: it is because we have yet to come to a firm view on the matters to which these two clauses relate.
Since the Committee stage of the Bill the points made then in discussion have

965
been given very careful consideration. There have been discussions between the officials of the Departments concerned and representatives of the interests most affected (the latest such discussions took place only a day or so ago), and we are still considering the points which have been made to us and examining the various ways in which Clauses 34 and 35 might be improved. May I just mention that I think that what my noble friend Lord Colville of Culross said about the fears of industry was perhaps somewhat exaggerated. I think that the certainty which in many respects this Bill will give the abstracter, the certainty of the protection of his rights, the certainty that conservation is being planned on a national and long-term scale, is a great gain for industry, as it is for the other interests affected. But, again, as regards the impact on industry of this particular clause, I would invite him and his noble friend to await our further consideration of this matter.
I therefore hope that my noble friend Lord Merrivale will not press his Amendment at this stage. I can assure him that we recognise the force of certain of the points which are embodied in his Amendment and which do not find their place in this Bill. I hope that he will not grudge us further time for the consideration of what is a very intricate item in the machinery which we are seeking to establish by this Bill—an item which must be capable of application to a very wide range of circumstances, in view of the great variety of abstracters who take water without specific statutory provision.
LORD MERRIVALE: My Lords, I should first like to thank my noble friend Lord Jellicoe for having promised that he will give further consideration to this question of amending Clause 35, and also Clause 34. I am also grateful to the noble Viscount, Lord Colville of Culross, for his qualified support. I had intended to take up one point which he made. I had made a note with regard to a possible Amendment to subsection (2) of the new clause which I am moving; but, as my noble friend Lord Jellicoe did not refer to that point at all, perhaps it would be better not to mention it this evening. I must say that I am delighted to hear that consultations with interested bodies are still taking place. May I take it
966
that there is hope for industry even now?
Finally, may I ask my noble friend Lord Jellicoe whether or not it is Her Majesty's Government's intention to move a new Clause 35 on Third Reading, which would give us an opportunity of expressing our views? Though no doubt they could be equally well, or better, expressed in another place, for those who have taken an interest in this matter in this House it would be nice to feel that the Government's new version of Clause 35 would be moved on Third Reading.
EARL JELLICOE: My Lords, I should naturally like to respond in as positive a manner as possible to my noble friend on this, but I feel I must be rather guarded. Bearing in mind the very careful consideration which noble Lords have given to this and other parts of this Bill, I should very much like to dot the i's and cross the t's, so far as these two clauses are concerned; but, in view of the time factor, I think it would be rash of me to tie myself down.
LORD MERRIVALE: My Lords, I beg leave, in the circumstances, to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 36 [General restriction on impounding works]:
LORD HASTINGS: My Lords, this is a drafting Amendment. What it does is to convert references to abstracting water into references to impounding water, and it is necessary to adapt Clause 26 (2) in the same way as has already been done in the Bill in Clause 37 (5). I beg to move.
Amendment moved—
Page 33, line 43, at end insert ("and in section 26 (2) of this Act the first and second references to abstracting water shall be construed as including references to obstructing or impeding the flow of an inland water by means of impounding works.").—(Lord Hastings.)
On Question, Amendment agreed to.
Clause 41 [Revocation or variation on application of holder of licence]:
LORD HASTINGS: My Lords, this is purely a drafting Amendment to correct an error. I beg to move.
Amendment moved—
Page 37, line 5, leave out ("section") and insert ("subsection").—(Lord Hastings.)
On Question, Amendment agreed to.
Clause 42 [Proposal by river authority to revoke or vary licence]:
LORD ST. OSWALD: My Lords, Amendments 42 and 43 are related and perhaps your Lordships would prefer to take them together. The purpose of these Amendments is similar to those in Clause 28 which have already been approved. Clause 42, as drafted, requires a copy of the notice of a proposal by a river authority to vary a licence to abstract water to be served upon any navigation authority having functions in relation to the inland water from which the licence authorises abstraction. The purpose of Amendments 42 and 43 is twofold. First, a reference is incorporated to any harbour authority or conservancy authority as well as to any navigation authority having functions in relation to the inland water; secondly, the obligation to serve notice on the navigation, harbour or conservancy authority is confined to any such authorities having functions in relation to the inland water at the point at which the licence as proposed to be varied would authorise abstraction or impounding of water. I beg to move.
Amendment moved—
Page 37, line 18, at end insert ("harbour authority or conservancy authority").—(Lord St. Oswald.)
On Question, Amendment agreed to.
LORD ST. OSWALD: My Lords, I beg to move this Amendment formally.
Amendment moved—
Page 37, line 19, at end insert ("at a place where the licence, if varied in accordance with the proposals, would authorise water to be abstracted or impounded").—JLord St. Oswald.)
On Question, Amendment agreed to.
7.2 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved, after Clause 45 to insert the following new clause—
Repayment of compensation
".—(1) Where any compensation has become payable under the last foregoing section, the river authority shall cause an entry to be made in a register kept by them for that purpose specifying the revocation or variation in respect of which the compensation became payable, the land to which such compensation relates and the amount of the compensation.
(2) The river authority shall send to the council of the county or county borough in which the land is situate a copy of any entry made in the register under the last foregoing subsection, and any such entry shall be registered in the register of local land charges, in such manner as may be prescribed by rules made for the purposes of this section under section 15 (6) of the Land Charges Act 1925, by the proper officer of the council of the county or the county borough, as the case may be.
(3) If at any time subsequent to the making of an entry in the register under subsection (1) of this section a person applies for a licence to abstract water for use on any land in respect of which such entry has been made, the river authority shall, if they grant the licence, require the applicant to repay to them the relevant part of the amount of compensation entered in the register in respect of that land.
(4) In the foregoing subsection the expression 'the relevant part of the amount of compensation' means so much of the amount specified by the entry in the register relating to the land concerned as the river authority shall determine to be proper having regard to—

(a) the terms of the revocation or variation which gave rise to the compensation, including any quantity of water the abstraction of which thereby became unlawful,

(b) the terms of the new licence granted to the applicant including the quantity of water thereby authorised to be abstracted,

(c) the area and use of the land or any part thereof to which the revocation or variation and the new licence respectively relate, and

(d) any other material considerations:

Provided that any dispute concerning the amount of a repayment which falls to be made under this section shall be referred to and determined by the Lands Tribunal."
The noble Viscount said: My Lords, I can assure your Lordships that no note of asperity will creep in as I move this Amendment. I must confess I have been most unjust if it has done heretofore because my noble friend has been most disarming and has met a large number of my points in Committee by means of concrete Amendments or promises of Amendments to come. This, however, is intended to be no more than a suggestion. The Bill at present provides that where a licence is revoked, then, rightly, the person who held the licence shall receive the commensurate compensation. It occurred to me to wonder whether this might not, on occasions, result in a certain amount of wrong if, after the licence had been revoked and compensation paid, the

969
same person or a subsequent owner of the same land in respect of which the water under the revoked licence was used, later got another licence from the river authority to use more water. In this case he would not only have got compensation but his water as well.
These circumstances do occur in the realm of town planning, and it has been laid down in the Town and Country Planning Act that where a person's planning permission is revoked and his land loses its value thereby, he will receive compensation from the local planning authority for his loss, but if he or a successor to the land subsequently gets permission to develop that land he will have to pay back the requisite amount of compensation he received. This is only fair, and it seems to me that something of the same nature should be put into this Bill. If it were not, then the river authority might, in the first place, be unwilling to revoke licences at all, because they would have to pay compensation with no chance of getting it back again. If they did pay compensation for a revoked licence and were not able to get it back and a new source of water became available to them, they might think the person who had received the compensation should go down to the end of the queue of people applying for a part of that new source of water.
If the compensation were not to be repaid on the granting of a new licence it would not in the end be the river authority who would lose by it but all the other people who contribute to the water resources account of the river authorities; that is, all the others who use water in that river authority's area. Some people might think this an obnoxious clause. I am not sure it may not be something that fairness requires. Certainly, it is not without precedent in other not dissimilar fields. My noble friend may say I have drafted badly or that I have left out many serious considerations. I have attempted to think of all the matters which would arise, such as land being subdivided, but there may be other technical snags I have not thought of which make the whole proposition quite impossible. However, I should be glad to hear my noble friend's answer. I beg to move.
Amendment moved—
After Clause 45, insert the said new clause.—(Viscount Colville of Culross.)
EARL JELLICOE: My Lords, I can assure my noble friend that no note of asperity will creep into my reply. I am less certain whether much sense will creep in because I find this deep water indeed. But I am grateful to the noble Lord for bringing the matter to our attention and I can assure him that, although I am going to be bleakly negative in my reply, we will give careful attention to the arguments with which he has supported his Amendment. I think he rested his case for this clause on two main arguments. The first, as I understood it, was that the river authority might hesitate to revoke a licence where it properly should, perhaps choosing instead to revoke others or to do nothing at all. I think that fear is rather misplaced. In the first place, if a river authority can be shown to be dodging the issue in the hope of avoiding payment of compensation, it will leave itself open to a direction by the Minister under Clause 95 (1) or, in even more extreme cases, to default proceedings under Clause 96. Secondly, if there is a strong case for revocation or variation, in the public interest, of a licence, the Minister will be prepared to consider exercising his powers under Clause 49 (2) and indemnifying the river authority all or part of any compensation which might become payable.
The second main argument on which, I think, the noble Lord rested his case for the clause is what I will call the "end of the queue" argument. I think that here, again, my noble friend's fears are somewhat exaggerated because this argument overlooks an applicant's right of appeal to the Minister against the refusal of a licence under Clause 39 of the Bill. If water is available, then unless a river authority can show good reason to the contrary, the presumption must be that an applicant cannot be refused merely because at an earlier date he or his predecessor were compensated for the revocation of the licence. That would be manifestly unfair. I feel, therefore, that so far as those two arguments are concerned, on which a large part of my noble friend's case rests, the fears on which they are based may be misplaced.
My noble friend went on to say he was open to the retort by whoever was going to reply that perhaps his clause had not been very well drafted. I think that, as one would expect, it has been

971
extremely expertly drafted. Nevertheless, there are defects in it. I do not want to make minor points here, but I would single out two defects which I think are important. The first is that no distinction is made between compensation for abortive expenditure, under Clause 45 (1) (a), and for depreciation in value of an interest, under paragraph (b). It would be most unfair, we think, to require repayment of compensation for abortive expenditure and such repayment is expressly excluded from recovery under the planning code.
Secondly, no provision is made for repayment to the Minister of any contribution made by him under Clause 49 (2), again something which is expressly provided for in the planning code. There is another objection. We consider that subsection (4) is much too vague, would be likely to give rise to all manner of disputes, and would be extremely difficult to operate in practice. I think that I have said enough to show why we could not recommend your Lordships to accept this new clause as at present drafted; but, having said that, I would express my appreciation to my noble friend for airing this issue, and assure him again that what he has said will receive our careful consideration.
VISCOUNT COLVILLE OF CULROSS: My Lords, I am very much obliged to my noble friend. I accept the points that he has made in criticism of the clause. After all, it was only a venture. The third argument which I used is perhaps the most powerful consideration, and it was one on which he did not comment. It was that compensation would be payable out of public money contributed by other users of water in the area and it was not so much a case of the river authority as of other people paying it. To that degree I feel that there may be something to be said for repayments, either to the river authority or to the Minister. Nevertheless, I shall be very content to leave it to the consideration of Her Majesty's Government, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 46 [Revocation or variation of authorisation to impound under alternative statutory provision]:
7.14 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved, after subsection (2), to insert:
("( ) Where the undertakers or the river authority propose to revoke or vary the terms of the relevant authorisation under sections 41 or 42 of this Act as applied by this section, any person whose rights under the statutory provision which constitutes or includes the relevant authorisation are proposed to be affected shall have the like right to refer the proposed revocation or variation to the Minister as is conferred under section 42 (5) of this Act on the holder of a licence, and upon any such reference section 43 of this Act shall apply thereto with the necessary modifications.")
The noble Viscount said: My Lords, I am afraid that this is a very complicated Amendment. It is one which on Committee stage I attempted to raise wrongly under Clause 115 of the Bill. I believe this is the right place. The point is this. Under certain Private Acts or Orders under the Water Act, various bodies or authorities have been given permission to set up works like reservoirs, subject to allowing what is known as "compensation water" to flow down the river beyond the reservoir. That is to say, they are allowed to block up the stream, provided they allow a certain amount of water to go through the weir or dam so that there will be some water remaining in the river below it at all times or at certain times of the day.
In many of these Private Statutes or Orders, there has been specific provision written in by Parliament for the protection of the rights of people—riparian owners, mill owners or people who have fisheries or run boats, or something like that. Clause 46 of the Bill provides the machinery by which this sort of Private Act or Order can be varied or revoked by a river authority on the request of the statutory body which has the benefit of it and whose Act it is, in exactly the same way as if it had been a licence under this Bill. There is a provision by which, if a local authority proposes to vary or revoke the licence, the person who has the benefit of the Act, if he does not like the proposal, may refer the matter to the Minister, who will decide, if necessary, after a local inquiry.
However, there is little in the Bill as it is at present drafted dealing with the rights of the third party—that is to say, the person for whose benefit the special

973
provision was written into the Private Act or Order. He may find that the local authority and the undertakers (as they are called in this particular clause) have got together and proposed something which radically alters the rights which were given and specifically protected by Parliament. Yet there is no power for him to refer the matter to the Minister or, if it is referred to the Minister by the river authority because the undertaker objects to their proposal, for him to be heard when the local inquiry is held.
I think that this is quite specific, because Clause 43 is incorporated in the whole of this exercise, and subsection (2) says:
"… the Minister may … cause a local inquiry to be held or afford to the holder of the licence and the river authority an opportunity of appearing before, and being heard by, a person appointed by the Minister for the purpose."
I think that it would be very difficult for the third party who has these rights to appear and be heard on that occasion. Therefore, by means of a remarkable piece of jargon, I have attempted to incorporate some means of getting the third party heard and of getting the Minister to act as an arbitrator when it is proposed to take away these rights. There are many technical difficulties in this subject, and to some degree, I think, they are already covered by the Bill as it stands; but I am not satisfied that the situation is fully met, and I hope that something may be done to do away with a position which I am sure is wrong. I beg to move.
Amendment moved—
Page 40, line 34, at end insert the said new subsection.—(Viscount Colville of Culross.)
LORD HASTINGS: My Lords, the noble Viscount has explained his very difficult Amendment with great clarity. Fortunately, my reply can be extremely brief. It is quite true that the relevant authorisations contained in the alternative statutory provisions may well be embodied in several different local enactments, each containing protective provisions and each affecting the other. It is because of the complexity of some of these provisions that the arrangements in Clause 46 were included in the Bill. My noble friend is specially concerned, and
974
quite rightly, with the rights of third parties. Of course, we cannot compromise on the principle of Clause 46, because we hold that it is essential for the proper management of our water resources that these old enactments relating to compensation water should be subject to revision. However, my noble friend has shown grounds for having another look at the detailed provisions of this complicated clause, and if he is prepared to withdraw his Amendment he can rest assured that the matter will be re-examined.
VISCOUNT COLVILLE OF CULROSS: My Lords, I am very much obliged to my noble friend. I do not in the least want to upset the principle of the clause. It is simply a matter of having these people heard in the right quarters. I gladly accept my noble friend's assurance, and beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 47 [Penalties]:
7.18 p.m.
EARL JELLICOE EARL JELLICOE moved, after "Act" to insert:
"or who (in circumstances not constituting such a contravention) does not comply with a condition or requirement imposed by the provisions (as for the time being in force) of a licence under this Act of which he is the holder."
The noble Earl said: My Lords, this is a simple Amendment, which we consider necessary if the provisions of Part IV of the Bill are to be properly enforced. At present, where the holder of a licence abstracts or impounds water within the terms of his licence but fails to comply with a requirement of the licence it is not clear, as the clause stands, that he has contravened Clause 23 (1), 23 (2) or 36 (1), as the case may be. This Amendment clears up this point by making such a failure to comply an offence.
The provision is necessary when we remember that there will be some conditions in a licence which do not relate only to the actual abstraction or impounding of water but also to ancillary matters like the maintenance of reading or measuring devices. Such conditions may well be important and must, in our opinion, be backed up by adequate sanctions.
This Amendment, therefore, closes what has seemed to us to be a gap in the Bill as at present drafted. I beg to move.
Amendment moved—
Page 40, line 42, after "Act" insert the said words—(Earl Jellicoe).
On Question, Amendment agreed to.
Clause 52 [General regulations relating to licences]:
EARL JELLICOE EARL JELLICOE moved, after subsection (2) to insert:
"( ) Without prejudice to the generality of the last preceding subsection, provision shall be made by regulations under this Act for securing that in such circumstances as may be prescribed, being circumstances in which it appears to the Minister that applications for licences under this Act, other than licences of right, would be of special concern to National Park planning authorities,—

(a) notice of any such application will be given to such one or more National Park planning authorities as may be determined in accordance with the regulations;

(b) the matters to which the river authority or the Minister, as the case may be, is to have regard in dealing with the application will include any representations made by any such National Park planning authority within such period and in such manner as may be prescribed; and

(c) on any appeal against the decision on the application, notice of the appeal will be served on any National Park planning authority who made representations falling within the last preceding paragraph, and, in determining the appeal, the Minister will take account of any further representations made by such an authority within such period and in such manner as may be prescribed.

In this subsection 'National Park planning authority' means a local planning authority whose area consists of or includes the whole or part of a National Park."
The noble Earl said: My Lords, this Amendment stems from an undertaking which I gave to the noble Lord, Lord Chorley, during our Committee stage when we were discussing an Amendment which he had moved. I then said (and my quotation is from Vol. 245 (No. 21) col. 579 of the OFFICIAL REPORT):
"So far as the National Parks are concerned, I should be very glad to consider whether an arrangement could be worked out, for inclusion in the Bill, to secure that certain classes of applications for licences under the Bill, thought to involve particular risk to amenity, might in National Park areas be brought specially to the notice of the local planning authority concerned by the river authority."
I think the purpose of the new subsection is pretty clear, and I submit that it meets the undertaking which I then gave to the noble Lord. I beg to move.
Amendment moved—
Page 44, line 7, at end insert the said subsection.—(Earl Jellicoe.)
LORD LINDGREN: My Lords, as no doubt the noble Earl noticed, my noble friend Lord Chorley came into the Chamber a little while ago, but has gone out again. I am certain that he appreciates the Amendment which has been put down. It does meet the position. I see that my noble friend has now returned.
LORD CHORLEY: My Lords, perhaps I might intervene, as one of the small group of amenity members who are particularly interested in this problem, to thank the noble Earl for putting down this Amendment, which goes the whole way to meeting the point that we were endeavouring to make on Committee stage (perhaps that is a little exaggeration), because it does protect the particular point in respect of the areas where National Parks are in existence. We were trying, at the same time, to see to it that the local authorities were represented by members of their planning committees, and this, of course, is a wider point than that relating to the National Parks.
The noble Earl, in replying on Committee stage, said he felt that in actual practice local authorities were almost bound to appoint members of their planning committees on these occasions, and I think there is a great deal of wisdom in that remark. But it has occurred to us, in discussing the speech made by the noble Earl on that occasion, that it might be possible for the Minister, in one of these advisory circulars which he issues from time to time, and which no doubt will follow on the passing of this Act, to indicate to local authorities that this would be the wise way of proceeding. If the noble Earl could see his way to looking at it from that point of view, and would perhaps pass this suggestion on to his right honourable friend, we should be grateful.
EARL JELLICOE: My Lords, I am grateful to the noble Lord for his remarks, and shall be glad to bring his last suggestion to the attention of my right honourable friend.
On Question, Amendment agreed to.
EARL JELLICOE: My Lords, this Amendment is purely drafting and consequential upon the Amendment which your Lordships have just approved. I beg to move.
Amendment moved—
Page 44, line 11, leave out ("(3)") and insert ("(4)").—(Earl Jellicoe.)
On Question, Amendment agreed to.
Clause 54 [Transitional provisions for purposes of Part IV]:
EARL JELLICOE: My Lords, this, too, is a drafting Amendment. The immediately following Amendment, No. 51, is consequential upon it, and I think it may be convenient if we take the two together. I beg to move.
Amendment moved—
Page 45, line 17, leave out from ("the") to ("shall") in line 18 and insert ("following provisions of this Part of this Act, that is to say—

(a) if the application is for a licence to abstract water, other than a licence of right, sections 23, 31 and 47 of this Act;

(b) if the application is for a licence of right, those sections and section 26 of this Act; and

(c) if the application is for a licence to obstruct or impede the flow of an inland water by means of impounding works, section 36, subsections (1) and (2) of section 37 and section 47 of this Act.")—(Earl Jellicoe.)

On Question, Amendment agreed to.
Amendment moved—
Page 45, line 22, leave out subsection (2).—(Earl Jellicoe.)
On Question, Amendment agreed to.
EARL JELLICOE EARL JELLICOE moved, in subsection (5), after "Act" where it first occurs, to insert:
"or an application for a licence of right has before the end of the initial period been made by a person as being so entitled and has not been disposed of".
The noble Earl said: My Lords, this is a minor Amendment to repair an omis-
978
sion in Clause 54 (5). The effect of this subsection as it stands is that an abstracter who obtains a licence of right on the strength of an abstraction made otherwise than by virtue of a statutory provision—a Clause 33 (1) (b) abstraction—is not thereby made immune from action until the end of three years from the second appointed day. This provision should clearly also apply to the Clause 54 (5) abstraction, an abstraction which may be continued after the end of the initial period if an application for a licence was made before then and the application is still outstanding—that is to say, has not been disposed of, under the Clause 54 (7) provision. This Amendment provides accordingly. I beg to move.
Amendment moved—
Page 45, line 45, after ("Act") insert the said words.—(Earl Jellicoe.)
On Question, Amendment agreed to.
EARL JELLICOE: My Lords, we agreed that we should terminate our proceedings on the Bill at this hour this evening, and as we have reached the end of Part IV of the Bill, I think this is a convenient moment to stop. I should like to thank noble Lords for their economic use of words in dealing with the various Amendments which we have disposed of in the course of the afternoon. I beg to move that further proceedings be adjourned.
Moved, That further proceedings be adjourned.—(Earl Jellicoe.)
On Question, Motion agreed to.
House adjourned at twenty-seven minutes past seven o'clock.