Sitting of 23 May 1963

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  MINISTRY OF HOUSING AND LOCAL GOVERNMENT PROVISIONAL ORDER (LEEDS) BILL
  Read a Second time and committed.
ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    Higher Education (Robbins Committee's Report)
    Miss Quennellasked the Chancellor of the Exchequer when he expects the Robbins Committee to make its Report on Higher Education.
    The Chief Secretary to the Treasury and Paymaster-General (Mr. John Boyd-Carpenter): We hope to receive the Report towards the end of the summer.
    Miss Quennell: I thank my right hon. Friend for that reply, which is more encouraging than the reply that he gave me last time. Will he impress upon this Committee the anxiety with which all educationists await the publication of its Report, and do everything he can to ensure that we receive it this summer?
    Mr. Boyd-Carpenter: I am sure that the Committee and its chairman are well aware of the anxiety of all of us to receive its Report. On the other hand, the House will be aware that this is one of the most important Reports affecting educational matters that will ever have been produced. An enormous amount of work is being done on it, and I am certain that it would be very wrong to try to hurry it up.
    Sir T. Beamish: In view of the great importance of this question, can my
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    right hon. Friend say whether there will be sufficient time between the receipt of the Report and the opening of Parliament for legislation to be foreshadowed in the Queen's Speech?
    Mr. Boyd-Carpenter: I am afraid that I cannot go so far as that. It certainly will not be possible for publication to take place until the Summer Recess.

    Income Tax (Schedule E)
    Wingfield Digbyasked the Chancellor of the Exchequer how much of the £235 million deductions for expenses under Schedule E for 1961–62 related to Dorset, and how much related to the south-west of England.
    Mr. Boyd-Carpenter: I am afraid that this information is not available.
    Mr. Digby: Would it not be true to say that these tax concessions, like so many others, benefit only those living in the cities, and bear little relationship to life in the countryside and small towns?
    Mr. Boyd-Carpenter: I would not say that. The Answer that I shall give to a later Question may in some measure reassure my hon. Friend on that point.

    Wages, Salaries and Dividends
    Mr. Ridleyasked the Chancellor of the Exchequer by how much, as a percentage, in real terms wages and salaries on the one hand and dividends on the other have risen between 1938 and the present day.
    Mr. Boyd-Carpenter: Between 1938 and 1962 total wages and salaries rose by 443 per cent. and total gross ordinary dividends by 226 per cent. The latter figure has been adjusted to exclude dividends paid in 1938 by companies subsequently nationalised. The corresponding increases, in real terms, as measured by the consumers' price index, were 79 per cent. for wages and salaries and 8 per cent. for ordinary dividends.
    Mr. Ridley: In view of the fact that those are very striking figures, will my right hon. Friend give them the maximum publicity? Will he further bear in mind, when considering the rather unfair distinction in the tax law between earned

    609
    and unearned income, what considerable disadvantages drawers of dividends start with?
    Mr. Boyd-Carpenter: The latter part of my hon. Friend's supplementary question raises rather wider issues than I can deal with at Question Time, although we may have an opportunity for a discussion of this sort of thing later on today. On the first part of the question, it is important that all the facts of the matter should be known, and my hon. Friend's initiative in putting down a Question has been very helpful.
    Mr. Callaghan: Since it is important that all the facts ought to be known, can we be given some of the facts about the amount of capital distributions, bonus shares and various other devices which have been employed for the last 10 years with the object of avoiding the payment of Income Tax by companies, and also to disguise the real increase in dividends? Are not these figures so striking as to cause very grave doubts about their validity? Is not the Chief Secretary really a little frightened to pretend that the increases are in this proportion, when everybody knows that the increases that have gone to shareholders are far greater than those figures show?
    Mr. Boyd-Carpenter: The figures I have given are the official figures, and they are true. I am surprised that the hon. Gentleman, apparently, likes them so little that he tries to denigrate them. If he would be good enough to put down a Question, I will endeavour to give him answers on all the facts available. Whether he will like them, I do not know.

    Galleries and Museums
    Mr. Boydenasked the Chancellor of the Exchequer on how many occasions in the last three years grants for the National Art Collections and Museums have had to be drawn on the Civil Contingencies Fund owing to inadequate annual purchase allocations being available to these Galleries and Museums.
    Mr. Boyd-Carpenter: The Civil Contingencies. Fund was used 10 times in the three years ended 31st March, 1963, for special grants or advances for the purchase of particular works of art which
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    unexpectedly became available. This has of course nothing to do with the adequacy or otherwise of the regular purchase grants.
    Mr. Boyden: Is not it in fact becoming a habit? Why should the Treasury equate the purchase of pictures for our national collections with hurricanes, floods and other disasters? Would not it be better if there were an adequate fund so that the collections did not have to depend on an emergency fund in this way?
    Mr. Boyd-Carpenter: I do not think that the hon. Gentleman can have understood my Answer. There is a regular purchase grant to deal with the ordinary level of purchases. This fund covers the purchase of particular works of art. The works of art covered by these 10 grants represent an example of very striking pictures coming on to the market unexpectedly. It is sometime possible to help by the use of the Civil Contingencies Fund and to seize the opportunity, afforded by such works of art coming on to the market, to buy them.
    Mr. Grimond: Is the Chief Secretary aware that a celebrated Scottish collection of pictures, the Cargill Collection, is coming on to the market? I do not expect an answer today, but will the right hon. Gentleman consider making a special grant for Scottish galleries to acquire some of the pictures?
    Mr. Boyd-Carpenter: If an application is made, it will, of course, be considered; but I am sure the right hon. Gentleman will agree that that does not arise out of this Question.
    Mr. Ridley: Can my right hon. Friend detail the very large increase which has taken place in the annual purchase grants in the last three years? Is he aware that many hon. Members on this side of the House are grateful and appreciative of the generous way in which he has handled the special grants in difficult circumstances?
    Mr. Boyd-Carpenter: I am obliged to my hon. Friend. If he would care to put down a Question I will certainly circulate the details for which he asks.
    Mr. Boydenasked the Chancellor of the Exchequer why the Estimate for

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    1963–64 for Grants for the Arts, Vote VIII, 16, S, contains only £10,000 for assistance to local museums in schemes of mutual co-operation when his Standing Commission on Museums and Galleries recommended a sum of £100,000 per year.
    Mr. Boyd-Carpenter: I would refer the hon. Gentleman to the reply given by my hon. Friend the Economic Secretary to my hon. Friend the Member for Exeter (Mr. Dudley Williams) on 19th March.
    Mr. Boyden: Is the right hon. Gentleman aware that this scheme has been going for about six years and one of the reasons why it lags is inadequate central support? How much longer will it go on dragging before he gets the scheme thoroughly organised over the whole of the country?
    Mr. Boyd-Carpenter: The hon. Gentleman related his question to the interesting Report of the Standing Commission. As he will see if he studies the Answer to which I have referred him, that was received only at the end of last year and published in March. It is under consideration in connection, no doubt, with next year's Estimates.

    National Incomes Commission (Cost)
    Mr. Lawsonasked the Chancellor of the Exchequer the estimated total cost of the functioning of the National Incomes Commission for the financial year 1963–64; and what amount of this sum will be members' salaries.
    Mr. Boyd-Carpenter: £74,000 excluding accommodation and stationery, figures for which are not separately available. Of this £29,000 is for members' salaries.
    Mr. Lawson: Does not the right hon. Gentleman consider that, instead of this sum of money coming out of the public purse, it ought to come out of the coffers of the Conservative Party?
    Mr. Boyd-Carpenter: No, Sir; and I do not think that people outside who —whatever their views on particular issues—realise the crucial importance to our future of an incomes policy, will grudge this relatively small amount.

    National Incomes Commission(Report)
    Mr. Smallasked the Chancellor of the Exchequer if he will make a state-
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    ment on the recommendations of the National Incomes Commission in their report on the Scottish Plumbers' and the Scottish Builders' Agreements of 1962, Command Paper No. 1994.
    Mr. W. Hamiltonasked the Chancellor of the Exchequer what action he intends to take on the Report of the National Incomes Commission, Command Paper No. 1994;and if he will make a statement.
    Mr. Boyd-Carpenter: I think that we are indebted to the Commission for setting out so clearly and authoritatively its findings and recommendations, with its reasons, on the issues before it. Although the Report is concerned primarily with the Scottish plumbers' and builders' agreements which were under examination, it contains much which is of value in a wider context. I am sure that it can usefully be studied by all who are concerned with the determination of incomes and prices as they affect the national interest.
    Mr. Small: Is the Chief Secretary aware that the case for the Scottish plumbers and their hours was freely negotiated between the trade unions and the employers, and does he think it wise to use the National Incomes Commission in respect of matters which have been adjusted in a forward-looking manner between the employers and the trade unions?
    Mr. Boyd-Carpenter: If the hon. Gentleman studies the Report, he will see that it was well worth obtaining. I share his regret that the trade unions did not exercise their right to put their case to the Commission.
    Mr. Hamilton: Can the right hon. Gentleman say why the Chancellor of the Exchequer referred this matter to the National Incomes Commission in the first instance? Can he tell the House why he expects that workers whose highest average earnings, according to Appendix F of the Report, amount to £15 8s. a week would accept any definition of the national interest from a Commission whose chairman is getting £240 a week for doing the job?
    Mr. Boyd-Carpenter: This case was referred because, clearly, it comes within the class of case contemplated in the White Paper of November, 1962, as approved by Parliament. I think that the

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    Report indicates very clearly the value of that reference in the light of the very helpful recommendations obtained. I do not think that the hon. Gentleman's reference to the salary of the distinguished chairman is helpful or relevant.
    Mr. Callaghan: Does not the Chief Secretary realise that this is a very expensive way of getting an essay on wages and hours which has been made available in other forms by a number of other bodies on previous occasions? As he has now answered by hon. Friend's question about what action he proposes to take, may I ask the right hon. Gentleman whether he will advise the Chancellor of the Exchequer that the sooner he abolishes this Commission—if he really wants to get an incomes policy working —the more likely he is to achieve that?
    Mr. Boyd-Carpenter: One must remember the immense importance which, as I know the hon. Gentleman will agree, attaches to the proper development of an incomes policy in this country. I think that upon reflection the hon. Gentleman will agree that a contribution of this kind was well worth obtaining.
    Mr. Callaghan: Is the right hon. Gentleman aware that in my view this Commission makes absolutely no contribution at all to the securing of a national incomes policy, that it is nothing but an irritant and that the Chancellor would be well advised to abolish it?
    Mr. Boyd-Carpenter: I note the hon. Gentleman's view. But I am bound to say that I think that in this, as in so many other respects, he is in a conspicuous minority.
    Mr. Manuelasked the Chancellor of the Exchequer the nature of the representations he has received from the building trade operatives in Scotland following the publication of the National Incomes Commission Report, Command Paper No. 1994; and what was the nature of his reply.
    Mr. Boyd-Carpenter: No such representations have been received. The question of a reply does not therefore arise.
    Mr. Manuel: Is the right hon. Gentleman aware that representations will be coming forward? Is he aware that the
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    decision of the Chancellor of the Exchequer to refer this matter to the National Incomes Commission has roused deep resentment in the Scottish building industry, and that there is no doubt about that? Is he further aware that the accident rate in this industry is greater than in any other? Did the Chancellor give sufficient consideration to this before making the reference, and would not the right hon. Gentleman agree that there are many activities in this country which the Commission might explore before coming to the question of workers' wages and hours which have been freely arrived at after negotiation?
    Mr. Boyd-Carpenter: If representations are coming forward in the future, they will be answered in the future. I cannot anticipate them. I do not believe that the interests or feelings of anybody could, or should, be hurt by an impartial analysis of the facts.
    Mr. Gourlayasked the Chancellor of the Exchequer if he will publish in the OFFICIAL REPORT the two tables on profits in the construction industry supplied by Her Majesty's Government to the National incomes Commission and referred to in paragraph 161 of the Commission's Report.
    The Economic Secretary to the Treasury (Mr. Edward du Cann): Yes, Sir.
    Mr. Gourlay: What steps does the Economic Secretary propose to take to enforce the 3½ per cent. limit on profits when he restricts increases in workers' wages to 3½per cent. per annum?
    Mr. du Cann: There is another Question on that subject to which we shall come in a few moments. If the hon. Member will be patient, he will get the answer then.
    Following is the information:
    Note on Table N.
    INCOME OF PUBLIC QUOTED COMPANIES
    The Board of Trade compiles, on a standardised basis, aggregated accounts of public companies whose shares are quoted on a United Kingdom stock exchange and which are mainly engaged in manufacturing, construction, distribution and certain other services in the United Kingdom. Table N, derived from the statistics, shows for the years 1954 to 1961, gross income as a percentage

    615
    of gross assets of companies in the construction industries, with comparative figures for all companies included in the analysis. The percentage return on capital employed varies very widely from company to company, and even between industries there is considerable variation, as the table shows.
    Over the years 1954 to 1960 the number of companies whose accounts were analysed and which were classified to construction varied between 67 in 1959 and 55 in 1954. The 1961 figures relate only to companies with assets

    TABLE N

    PUBLIC QUOTED COMPANIES

    Company income as percentage of Assets, 1954–1961

    Construction

    Dividend and Interest Payments(c)

    Year

    Gross Assets (a)£

    Gross Income(b)£

    Income as percentage of Assets

    £

    As percentage of Assets

    All quoted Companies Income as percentage of Assets

    Highest percentage return on Assets (industry in brackets)

    Lowest percentage return on Assets (industry in brackets)

    (excluding Construction

    1954

    98,662

    23,628

    23·9

    4,415

    4·5

    18·1

    22·6 (Electrical Engineering and Goods)

    14·3 (Tobacco)

    1955

    112,379

    24,526

    21·8

    4,760

    4·2

    17·9

    21·7 (Electrical Engineering and Goods)

    13·6 (Tobacco)

    1956

    127,482

    27,643

    21·7

    5,137

    4·0

    16·9

    21·0 (Metal Goods)

    14·3 (Tobacco)

    1957

    143,131

    30,024

    21·0

    5,922

    4·1

    16·1

    20·5 (Metal Goods)

    13·1(Textiles)

    1958

    159,780

    31,603

    19·8

    6,509

    4·1

    15·2

    18·3 (Metal Goods)

    9·7 (Textiles)

    1959

    177,034

    31,950

    18·0

    7,167

    4·0

    15·9

    19·1 (Vehicles)

    13·1 (Textiles)

    1960

    193,765

    31,273

    16·1

    7,659

    4·0

    16·0

    19·4 (Retail Distribution)

    13·3 (Textiles)

    1960(d)

    168,910

    28,401

    16·8

    6,693

    4·0

    16·0

    19·6 (Retail Distribution

    10·1 (Leather, leather goods and fur)

    1961(e)

    185,296

    30,029

    16·2

    7,220

    3·9

    14·2

    19·2 (Miscellaneous Services)

    8·5 (Ship-building and Marine Engineering)

    NOTES

    (a) Gross assets are fixed assets before deduction of depreciation, plus total current assets, less total current liabilities and provisions, except provisions for future tax. Changes in value of fixed assets arising from re-valuations have been eliminated as far as possible

    (b) Gross income is trading profits (after deducting directors' fees and emoluments, pensions to past directors, superannuation payments, compensation for loss of office, auditors' fees etc.) and other income (from investments and other sources) before allowing for depreciation and other provisions, plus prior year adjustments, other than tax.

    (c) Income tax deducted by companies from payments of dividends is treated as falling not on the companies but on the recipients of dividends. Hence dividends are gross before deduction of tax.

    (d) Figures for 1954–1960 relate to all quoted companies; those for 1960–61 relate only to companies with net assets of £0·5 million or more.

    (e) 1962 figures will be available at the end of February, 1963.

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    of over £0·5 million and the accounts of 50 construction companies were analysed in that year; of these 7 had a registered office in Scotland.
    1962 figures will be available at the end of February, 1963.
    Notes on the method of compiling the figures and on their limitations appear in Economic Trends in April, 1962, the Board of Trade Journal, 7th December, 1962, and the Ministry of Labour's Statistics on Incomes, Prices, Employment and Production.

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    TABLE P

    PROFITS AS PERCENTAGES OF TURNOVER (a)

    Great Britain

    Percentages

    1956–57

    1957–58

    1958–59

    1959–60 (b)

    Industry

    Gross

    Net

    Gross

    Net

    Gross

    Net

    Gross

    Net

    Building and Contracting

    7·0

    5·6

    6·8

    5·0

    7·1

    5·1

    6·4

    4·4

    Treatment of non-metalli-ferous mining products other than coal (including most building materials)

    13·9

    10·7

    12·9

    9·4

    12·9

    9·1

    14·5

    10·4

    Mining and Quarrying other than coal

    19·4

    13·7

    18·6

    12·6

    18·7

    12·0

    20·5

    13·2

    Chemicals

    10·7

    7·7

    11·3

    8·2

    13·2

    8·

    14·6

    10·1

    Iron and Steel

    12·1

    7·7

    11·5

    8·2

    11·6

    8·2

    11·5

    7·1

    Shipbuilding

    9·1

    7·8

    9·5

    8·1

    8·4

    6·6

    9·5

    6·9

    Electrical Engineering

    11·7

    9·5

    12·3

    9·6

    11·2

    8·2

    12·6

    9·5

    NOTES:

    Gross Trading Profit less capital allowances equals net trading profit.

    (a) Extraction from Report of Board of Inland Revenue.

    (b) Confidential until end January—then published.

    National Incomes Commission (Doctors' Pay Award)
    Mr. W. Hamiltonasked the Chancellor of the Exchequer if he will refer to the National Incomes Commission the question of the recent pay award to doctors.
    Mr. Boyd-Carpenter: No, Sir.
    Mr. Hamilton: Why not?
    Mr. Boyd-Carpenter: For the reasons already very clearly explained in the White Paper laid last November.
    Mr. Hamilton: Is the right hon. Gentleman aware that these doctors got a very much greater increase than that for which the Scottish plumbers were asking, and yet the claim of the Scottish plumbers was referred to the National Incomes Commission? Is he aware that the 16 per cent. given to the doctors over three years represents more than 7 per cent. per annum, which is more than twice what the Chancellor of the Exchequer regards as in the national interest? Is this the way the right hon. Gentleman and the Government hope to get general acceptance of a national incomes policy, when there is such a great difference between the treatment of doctors and Scottish plumbers?
    Mr. Boyd-Carpenter: If the hon. Gentleman studies the Report of the Review Body on the remuneration of doctors, he
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    will see, first, that it recommended that these proposals should run for at least three years. Secondly, it explicitly took account of changes taking place before the beginning of that period; and therefore the figure recommended—which is actually 14 per cent.—is spread over a number of years.

    Profits
    Mr. Rossasked the Chancellor of the Exchequer if he will take steps to ensure that profits do not exceed an annual increase of 3½ per cent.
    Mr. Ross: I should point out that the word "distributed" should come before the word "profits" in the Question.
    Mr. du Cann: I think that rather alters the sense of the Question, but the Answer to the one on the Order Paper is that my right hon. Friend the Prime Minister gave an undertaking in this House on 26th July last that
    "the Government will, by fiscal or any other appropriate means, restrain any undue growth in aggregate profits which might follow from restraint in wages and salaries."—[OFFICIAL. REPORT, 26th July, 1962; Vol. 663, 1763]
    The National Incomes Commission is required to have regard to this pledge and to report from time to time on the need, if any, for corrective action.
    Mr. Ross: Surely if we want to get acceptance of this policy there must be

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    a sense of justice and fair play in respect of all forms of income. Any glance at any of our financial newspapers will show that ½ per cent. is certainly not regarded as applicable to them by many companies which are presently declaring very considerable increases in dividends. I have a list to which I could refer the hon. Member.
    Mr. du Cann: I agree completely with what the hon. Member said in the first part of his supplementary question. As a matter of fact, ever since 1958 gross trading profits of companies increased at an average annual rate of 3½ per cent., which is precisely the figure commended by the hon. Member, and I do not see any need to take the suggested action.
    Mr. Ross: The Question is not concerned with gross profits but with the growth of income by distributed profits, and the increase in the last 10 years has been over 160 per cent.
    Mr. du Cann: The hon. Member will appreciate that there is some difficulty here because he is now asking a question somewhat different from that which appears on the Order Paper. If he will be good enough to table a fresh Question, I shall do my best to answer it.

    Income from Rents
    Mr. Willisasked the Chancellor of the Exchequer if he will take steps to ensure that income from rents does not exceed an annual rate of 3½ per cent.
    Mr. Willis: The Question should refer to an "annual increase".
    Mr. du Cann: For the second time I shall do my best to answer. The Answer to the Question appearing on the Order Paper is: No, Sir. But I accept that it would be wrong if rental income—or indeed any other form of personal income —were to rise excessively in relation to the growth of the economy.
    Mr. Willis: If the hon. Gentleman appreciates that it would be wrong for a larger increase to take place in income from rents than 3½ per cent., surely there is an obligation on the Government to do something about it? Otherwise, the whole of the business the Government are going through is a piece of nonsense.
    Mr. du Cann: I do not art the moment see any need for corrective action. It
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    should be remembered that rent accounts for only 5 per cent. of total domestic incomes today compared with 9½ per cent. before the war. If there has been some increase in recent years, that is entirely due to the fact that rents have been artificially kept down for a very long time.
    Mr. Callaghan: How does the hon. Gentleman reconcile that answer with his previous Answer? Is he not aware that since the new index was constructed, on 16th January, 1962, the increase in rents, which forms part of the retail price index, has been over 5 per cent.? How does he reconcile that with his view that it should not exceed an increase of 3· per cent? Will he take some action or does he want us to conclude that the Government's policy is to let prices go up and to keep wages down?
    Mr. du Cann: The Government's policy is nothing of the sort, as the hon. Member knows very well that the figures show.

    Purchase Tax (Self-Lift Chairs)
    15. Mr. Walkerasked the Chancellor of the Exchequer whether he will exempt from Purchase Tax self-lift chairs purchased by persons who could obtain medical evidence of the need for such chairs.
    Mr. du Cann: No, Sir. It is a general principle that Purchase Tax liability depends on the character of an article and not on its intended use in an individual case.
    Mr. Walker: Is my hon. Friend aware that that is a very disappointing reply, particularly as these chairs are used almost exclusively by old people in homes and hospitals? Can he give further consideration to this matter?
    Mr. du Cann: I will certainly look at the matter again as my hon. Friend asks, but I have already been into it with a great deal of care. He will recall that he has had substantial correspondence on the matter with the Treasury. He will, therefore, perhaps appreciate why the situation must remain as it is.
    Mr. Mitchison: Who does the Treasury think use self-lift chairs other than invalids?
    Mr. du Cann: It is not suggested that anyone else does. The point is that in the case of some of these chairs the self-lifting device would cost less than the amount of Purchase Tax, and if the regulations were changed there would be substantial scope for avoidance. It is in order to protect the Revenue that the current rates are kept.

    Machine Tools (Design)
    Mr. Dalyellasked the Chancellor of the Exchequer how many courses are being held on the design of machine tools in higher educational institutions.
    Mr. Boyd-Carpenter: The Manchester College of Science and Technology provides a diploma course in machine tool technology and design; it also provides a course in machine tool technology leading the degree of Master of Technical Science. In addition, there are many other full-time courses elsewhere in higher education, which deal primarily or substantially with machine tool technology. I am circulating a note about
    these in the OFFICIAL REPORT.
    Following is the information:
    Courses including Machine Tool Technology

    Fruit Juice (Purchase Tax)
    Mr. J. Wellsasked the Chancellor of the Exchequer if he will remove the Excise duty on fruit juice where the fruit content is over 40 per cent., and in particular on blackcurrant juice.
    Mr. du Cann: I assume my hon. Friend is referring to Purchase Tax. The Answer is "No, Sir".
    Mr. Wells: Will my hon. Friend look at this matter again, because the Purchase Tax on all fruit juices is having a very harmful effect on the horticultural industry and serious repercussions in many parts of the country, particularly among smaller members of the farming community?
    Mr. du Cann: I recognise the special interest and knowledge of my hon. Friend in this matter. It is good to see that sales are recovering somewhat, but I am afraid I must tell my hon. Friend frankly that this decision must stand.
    Mr. Bence: Will the hon. Gentleman take action immediately, because the rapid increase in the price of sugar is making the position of manufacturers of fruit juices and soft drinks almost impossible? It is imperative that the Purchase Tax on these fruit juices should be removed because of the cost of sugar.
    Mr. du Cann: I refer the hon. Member to a Written Answer I gave on the subject yesterday.

    Credit Unions (Restrictions)
    Mr. Dempseyasked the Chancellor of the Exchequer if he will take steps to increase the limit which at present applies to the sums which may be invested in credit unions.
    Mr. du Cann: I know of no general restrictions on credit unions of the kind to which the hon. Member refers.
    Mr. Dempsey: Is the Minister aware that a group of responsible individuals in Coatbridge led by people who have associations with the credit unions from the Colonies, and from Canada and America, have attempted to establish such an organisation, but they were assured by the Treasury that the maximum imposition for an individual subscriber is £50; and, as a result, this inhibits the development of the scheme? Is the hon. Gentleman aware that the purpose of the scheme is to lend for housing improvements at an interest rate of from 1 per cent. to 2 per cent.? Is not that something to be desired? Will the hon. Gentleman look at the matter again?
    Mr. du Cann: I am happy to answer the final part of that supplementary question in the affirmative. If the hon. Member writes to me giving full details of what he has in mind, I shall do my best to help him, but the point at the moment is that we cannot be clear what he has in mind. I repeat that I shall be very ready to help him if he lets me know what he wants.
    Mr. Dempsey: Is the Minister aware that I wrote to him? Is he further aware that I gave him an illustration of the scheme and of the effect of this imposition which the Treasury insists upon, which must be abolished?
    Mr. du Cann: No, Sir. I am not aware that the hon. Member has written to me, or I should not have given the Answer I gave. As he has brought the matter to my attention, I shall, of course, look into it.

    India (Aid)
    Mr. Prenticeasked the Chancellor of the Exchequer whether he will make a further statement on economic aid for India; and what position has been reached in the discussions on this subject by the consortium of powers providing this aid.
    Mr. Boyd-Carpenter: The question of the possibility of further economic aid for India is under discussion, and the Consortium of donor countries will meet again in Paris on 4th June. The House will be well aware of the heavy commitments we in this country have already undertaken in respect of both military and civil aid for India.
    Mr. Prentice: Will the right hon. Gentleman confirm or deny—I hope he will deny—reports which have appeared in the Press during the past few days that we intend to reduce the economic aid because of the increased military aid?
    Mr. Speaker: Order The form of that question is a little out of order. One may not ask a Minister to confirm or deny reports in the Press for which the Minister is not responsible. Perhaps the hon. Member can turn the question round in some way.
    Mr. Prentice: I apologise, Mr. Speaker. Will the right hon. Gentleman say whether it is the Government's intention
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    to increase or decrease economic aid to India? Does he agree that in the present situation it is urgent to increase economic aid, nor least for strategic reasons?
    Mr. Boyd-Carpenter: I cannot go further about economic aid than my main Answer, which includes the statement that the members of the Consortium are meeting on 4th June.
    Mr. Callaghan: Does not the right hon. Gentleman realise that it would be regarded as extremely unsatisfactory if the Government said that they must do a bargain with India, and that, because we have supplied increased military aid, we shall have to decrease the amount of economic aid? Is he aware that if he takes that view Members on both sides of the House will find themselves in disagreement with the Government?
    Mr. Boyd-Carpenter: The hon. Member's question consists of two hypotheses. I feel no necessity to comment on either of them.

    Fishermen's Boats and Gear
    Mr. Emrys Hughesasked the Chancellor of the Exchequer what communication he has recently received from the Secretary of the Clyde Fishermen's Association on the question of fishermen's boats and gear being considered mobile equipment for the purposes of taxation; and what was the nature of his reply.
    Mr. Boyd-Carpenter: My right hon. Friend received a letter from this Association on this subject and a reply has been sent on his behalf. This explains the objections to this proposal on the lines of what was said by my hon. Friend the Financial Secretary in reply to an Amendment on Tuesday.
    Mr. Emrys Hughes: Is the Minister aware that the lack of understanding and sympathy shown in this correspondence is calculated to make every fisherman on the Clyde seasick?
    Mr. Boyd-Carpenter: That is, indeed, putting it very high.
    Mr. Hector Hughes: Is the rule which the right hon. Gentleman has just adumbrated to apply to all fishermen, including those in north-east Scotland, or is it an invidious practice relating only to the Clyde fishermen? How much does

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    the right hon. Gentleman expect to raise by this means? Does he realise that it is an imposition on the fishing community, which is already hard hit?
    Mr. Boyd-Carpenter: I did not adurnbrate any rule whether with respect to the Clyde or with respect to the North-East Coast. The hon. and learned Member spoke of an imposition. What we were discussing was a very generous tax allowance made in the Finance Bill.

    Save The Children Fund
    Mr. Masonasked the Chancellor of the Exchequer if he is aware that the £226,000 granted to the Save the Children Fund from the Lord Mayor of London's Hungarian Refugee Appeal Fund was given on the understanding that it was to help Hungarian refugee children in Austria; what was the nature of the undertaking received by his Department before consent was granted to transfer this money abroad; and, in view of the fact that none of it has been used for that purpose, if he will not allow any more exchange control applications by this organisation.
    Mr. du Cann: All I can add to my Written Answer on 30th April to my hon. Friend tie Member for Bournemouth, West (Mr. Eden) is that any further applications would, as in the case of all bona fide charitable organisations, require to be supported by a satisfactory assurance that the funds will be put to a genuine charitable use.
    Mr. Mason: Many charges are being made against the Save the Children Fund by the Direct Aid to the Refugees in Europe on the ground that it has misappropriated funds, and that £226,000 has not been used for the care of Hungarian refugee children. Is the hon. Gentleman aware that these charges, and counter-charges by the Save the Children Fund against D.A.R.E., are causing immense harm to both these charitable organisations and many others and that many people are losing faith in these charities? Does he not feel that there ought to be an inquiry to clear up the matter once and for all?
    Mr. du Cann: I think that the important part of the hon. Member's supplementary question relates to the point that there appear to be two sides to this matter.
    Dr. Stross: Is the Minister aware that the Save the Children Fund is one of the most reputable organisations in this country or anywhere? Having served it myself for the last 13 or 14 years, I assure my hon. Friend the Member for Barnsley (Mr. Mason) that I shall be glad to give him details so that he will know in future that some of this information is quite wrong.
    Mr. du Cann: The hon. Member has been good enough to illustrate my point.

    RHODESIA AND NYASALAND

      Chrome
      Mr. Biggs-Davisonasked the First Secretary of State what requests have been received from the Federal Government of Rhodesia and Nyasaland for representations to be made in Washington on behalf of the Federal Government about the purchase of Soviet chrome sold at less than the cost of production and delivery, so undercutting Rhodesian chrome.
      The First Secretary of State (Mr. R. A. Butler): The Federal Government made known to us their concern over trends in the international trade in chrome and have recently requested any assistance we can give them.
      Mr. Biggs-Davison: Will the Government make strong representations about this? Does not my right hon. Friend think that this action on the part of the United States reveals a grave defect in the Western Alliance?
      Mr. Butler: No, Sir. The subject of this chrome is now being discussed in two international bodies, of which the United States is a member. They are, therefore, aware of our views. We are taking part in these discussions.
      Mr. Fernyhough: Will the right hon. Gentleman say whether the Government still believe in competition or do not believe in it?
      Mr. Butler: We certainly believe in competition. We also believe in the vital nature of the sales of chrome to the Federation.

    CENTRAL AFRICA

      Federation
      Sir T. Mooreasked the First Secretary of State whether it has been decided to abolish the Central African Federation; and what are his proposals in regard to the formation of an alternative association with similar ideals.
      Mr. R. A. Butler: I have nothing further to add to my statements of 1st April and 21st May.
      Sir T. Moore: As far as I remember, these were about forthcoming conversations which were to take place with the various members of the Federation. During these conversations, negotiations, or whatever they may be, will my right hon. Friend try to make sure that the new Association, or whatever it may be, will embody the multi-racial ideals and the safeguards which Sir Roy Welensky applied to the Federation?
      Mr. Butler: As I said in my statement a day or two ago, we hope to organise a conference to consider both the dissolution of the Federation and the future, and we shall certainly attempt to maintain and to perpetuate all the best things which the Federation was able to achieve.
      Mr. Mason: How long will it take to unscramble Nyasaland from the Federation? In view of the fact that the right hon. Gentleman has given Northern Rhodesia the right to secede, may I ask when he expects that to be complete? Will he keep in mind the desire of many hon. Members, and members of the Central African Federation, that there should be a continuing economic alliance, particularly having in mind the Central African Economic Council, which will be to the benefit of all the people concerned in those countries?
      Mr. Butler: I cannot give an exact date in answer to the question about Nyasaland. Work is proceeding—namely, the transfer of functions and all the organisation of the future of the debt, assets and liabilities and so on. That is making quite satisfactory progress. In respect of Northern Rhodesia and Southern Rhodesia, we count more on the forthcoming conference. I accept what the hon. Member said about the importance
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      of maintaining economic ties in view of the great achievements of these two territories together in the past.

    HOME DEPARTMENT

      Sheep Stealing
      Mr. Kitsonasked the Secretary of State for the Home Department how many convictions there have been in England and Wales for sheep stealing over the last three years.
      The Joint Under-Secretary of State to the Home Department (Miss Mervyn Pike): I regret that separate statistics for sheep stealing in England and Wales are not available. The numbers of persons convicted of larceny of horses, cattle and sheep under Sections 3 and 4 of the Larceny Act, 1916, were 48 in 1959, 36 in 1960 and 62 in 1961.
      Mr. Kitson: Does my hon. Friend appreciate that the penalties for sheep stealing are very often lighter than those imposed for poaching? Has not the time come to revise these penalties? Does she not appreciate that there is a great number of undetected cases which the police ought to make a greater attempt to detect because the situation is getting rather out of hand, particularly in the uplands in the Dales?
      Miss Pike: I appreciate the seriousness of this problem in the Dales and in parts of Leicestershire, but I remind my hon. Friend that the maximum penalty for sheep stealing is 14 years' imprisonment.

      Death Certificate (Issue)
      Mr. K. Robinsonasked the Secretary of State for the Home Department what study he has made of the report of a committee of the British Medical Association relating to death certificates, postmortem examinations and kindred matters, a copy of which has been sent to him; and if he will now introduce amending legislation which will, inter alia, require a doctor to examine the body before issuing a death certificate.
      The Joint Under-Secretary of State to the Home Department (Mr. C. M. Woodhouse): I understand that the report referred to has been prepared by a committee of the Association and is awaiting

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      consideration by the Council. When my right hon. Friend receives it he will of course consider its recommendations in consultation with my right hon. Friends the Minister of Health and the Secretary of State for Scotland.
      Mr. Robinson: Is the hon. Gentleman aware that there has been a good deal of concern for some time because doctors are not required to examine bodies before giving death certificates and that there is a reluctance to accept the argument that this would place too great a burden on the medical profession? Now that the medical profession seems to be coming round to the idea, will he give the matter consideration when he gets the report?
      Mr. Woodhouse: I am aware of this concern, because we have seen the Report although, despite the assertion in the Question, we had to go out and buy it for ourselves. As I indicated in the original reply, many of the matters which are covered are the responsibility of other Departments. This matter falls to my right hon. Friend the Minister of Health, but I will convey the hon. Member's point to him.
      Mr. Kershaw: Will my hon. Friend look into this rather carefully because on many occasions relatives of those who have died in hospital have been very distressed as to whether a post mortem should or should not have been ordered? The situation is not satisfactory.
      Mr. Woodhouse: I assure my hon. Friend that the matter will be very carefully looked into, but as I indicated, some of the recommendations are the responsibility of other Departments.

      Judges' Rules (Review)
      Mr. Fletcher askedthe Secretary of State for the Home Department whether the Lord Chief Justice and his colleagues have now completed the review of the operation of the Judges' Rules referred to them in March, 1961; and if he will publish their Report.
      The Secretary of State for the Home Department (Mr. Henry Brooke): I am informed that progress is being made with the review and that any revised Rules will in due course be published and brought to the attention of the police and others concerned.
      Mr. Fletcher: I thank the right hon. Gentleman for that reply. Is he aware that there is a great deal of concern in some quarters that the Judges' Rules are not being observed as they should be? Is it not desirable that, since this point has been under review for over two years, the Lord Chief Justice and his colleagues should be asked to produce the Report without further delay?
      Mr. Brooke: The hon. Member will appreciate that this is not a matter wholly in my hands; but I know that it is hoped that they will be ready to present their Report by the end of the year.

      Legal Proceedings Against Justices and Clerks (Working Party's Report)
      Mr. C. Royleasked the Secretary of State for the Home Department if he has been able to give consideration to the Report of the Working Party on the Expenses of Legal Proceedings Against Justices and Clerks; if legislation is to be introduced; and if he will make a statement.
      Mr. Brooke: The Government accept in principle the recommendations of the Working Party and will introduce legislation to give effect to them when opportunity offers.
      Mr. Royle: While accepting that reply with sincere thanks, may I ask the right hon. Gentleman if he will treat this matter with urgency in the light of some recent cases?

      Jury System (Committee)
      Sir B. Jannerasked the Secretary of State for the Home Department whether he has now heard from the persons invited to serve on the committee for inquiring into the jury system; whether he will state the names of those appointed to the Committee; and whether he will ask the Committee to report within a maximum period of one year.
      Mr. Brooke: I will, with permission, circulate the list of members of the Committee in the OFFICIAL REPORT. I am grateful to them for accepting my invitation to serve. I am sure that the Committee will produce its report as soon as possible; I do not think it would be

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      right to ask it to do so by a particular date.
      Sir B. Janner: Is the right hon. Gentleman aware that his remarks mean that this may be delayed for years? Is he prepared, in the meantime, to support a Measure if it is introduced to deal with the obvious anomalies which now exist?
      Mr. Brooke: I have appointed such an excellent Committee that I am sure that it will not take years over this important job.
      Following is the list:

      Chief Enahoro
      Mrs. Castleasked the Secretary of State for the Home Department whether he will state the precise terms of the assurance he received from the Prime Minister of Nigeria on 11th March regarding the admission to Nigeria of counsel for the defence of Chief Enahoro; and whether he was then or at any other material time given to understand that particular counsel would be refused entry to Nigeria.
      Mr. Brooke: The assurance I received from the Prime Minister of Nigeria was in the terms which I communicated to the House on 14th March, namely, that the undertaking which had been given to the Divisional Court and the Appeal Committee of the House of Lords on behalf of the Nigerian Government meant that, if the Chief Justice of Nigeria gave his certificate for a named English barrister to appear for Chief Enahoro, the Nigerian Government would not refuse that barrister entry to Nigeria merely because he was going to represent Enahoro, and that they would not refuse him entry unless in his particular case there were other and good reasons.
      From the outset I connected the form of this assurance in my mind with the publicly known facts that last year,
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      though they were not going there to defend Enahoro, the hon. and learned Member for Ipswich (Mr. D. Foot) had been expelled from Nigeria and Mr. Gratiaen had been refused admission to the country; and the Nigerian Government then disclosed to me in confidence that they would admit any other British counsel to defend Enahoro, but not either of these two gentlemen.
      Mrs. Castle: Is it not a fact that the Home Secretary has deliberately withheld this information from the House? Is it not also a fact that in his affidavit to the Divisional Court on 25th April he led the court to believe that completely satisfactory assurances had been received by him from the Prime Minister of Nigeria on 11th March which would ensure that Chief Enahoro would be allowed the counsel of his choice and that no barrier would be put in the way of his counsel entering Nigeria? Is he aware that if he had not given the Divisional Court that deliberate impression it might well have been that the court would have allowed Chief Enahoro's application for relief under the Fugitive Offenders Act? Has the right hon. Gentleman not once again been guilty of duplicity, and ought he not to resign his office?
      Mr. Speaker: The last expression in all that must be withdrawn.
      Mrs. Castle: On your instruction, Mr. Speaker, I will withdraw the word "duplicity"—but I repeat that the right hon. Gentleman ought to resign his office.
      Mr. Brooke: The hon. Lady is mistaken in the allegations she makes. The undertaking in the first instance was given not to me but to the Divisional Court and, therefore, the Divisional Court was well aware of it. The matter was further clarified before the Appeal Committee of the House of Lords. I could not possibly have known at the time whether Chief Enahoro would wish for a British or Nigerian barrister to defend him. The essential point which I did know was that if he could have any British or Nigerian lawyer, except two, to defend him he could be certain of being very ably defended.
      Mr. H. Wilson: Is the right hon. Gentleman aware that there has been no more flagrant case of the misleading of this House in recent years? Is he aware

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      not only of the quotation that has been given of his own from HANSARD, but that the Attorney-General said in these terms in the House:
      "…they should be assured that he should have the counsel of his choice from all those qualified to appear."—[OFFICIAL REPORT, 21st March, 1963; Vol. 674, c. 678.]
      There was no clarification made by the Attorney-General. Is the right hon. Gentleman aware that the House was given a clear and specific undertaking by the Attorney-General, who did not wriggle at all in this matter, as we are now told that the Home Secretary did? Is the right hon. Gentleman further aware that in his affidavit to the court, having referred to the doubts expressed by the court he said:
      "…questions had been asked in the Appeal Committee of the House of Lords about the form and effect of this undertaking…I received…an assurance of a satisfactory character from the Prime Minister of Nigeria."
      Is he aware that what he has told us this afternoon is a direct denial of the impression he gave to the House and the court? If the right hon. Gentleman knew at that time that my hon. and learned Friend the Member for Ipswich (Mr. D. Foot) would not be allowed to go, why did he not tell the House at that time? Why did he mislead both the House and the court, and does he think that he would have got his proceedings through the House had he been honest with hon. Members?
      Mr. Brooke: No, Sir; I misled no one, and the assurance to which I referred in that affidavit was an assurance which had already been explained to the House and which had not been challenged when I explained it—an assurance which had originally been given to the Divisional Court and the Appeal Committee of the House of Lords, and it seemed to them to be satisfactory.
      Lieut.-Colonel Cordeaux: Is not my right hon. Friend aware that the hon. and learned Member for Ipswich conducted the case of Chief Enahoro in this country during the whole period and that, therefore, it must surely have been obvious that that hon. and learned Gentleman would have been the one whom Chief Enahoro would have wished to conduct his defence? Is my right hon. Friend really telling us, therefore, that he had no idea who Chief Enahoro would wish to choose to represent him?
      Mr. Brooke: It certainly was not for me to ask, and I would remind my hon. and gallant Friend that the Lord Chief Justice himself in these proceedings said:
      "I quite appreciate that this applicant may not want counsel from this country; it would be quite wrong to ask him today whether he did".
      Mr. H. Wilson: But did not the right hon. Gentleman himself last week refer, in somewhat improper circumstances, to my hon. and learned Friend the Member for Ipswich—it is within the recollection of the House—as "Chief Enahoro's counsel"? Did he not himself use that phrase, so was it not perfectly obvious, even to him, that my hon. and learned Friend was at that time and would be likely to be the counsel? This next point must be put to the right hon. Gentleman and he will find it difficult to acquit himself of this charge. Is he aware that statements have appeared referring to a conversation between himself and a learned judge about this case? Would the right hon. Gentleman say whether there have been any conversations between himself and a learned judge and, if there have, may we have a full report on them?
      Mr. Brooke: No, Sir. I know of no such conversations. In regard to the right hon. Member's earlier question, I referred to the hon. and learned Member for Ipswich as Chief Enahoro's counsel because anyone who followed these proceedings would have known that he was his counsel—[HON. MEMBERS: "Oh."] at the time when the assurance was given in court to the Lord Chief Justice and, indeed, in those very proceedings Mr. Gratiaen was specifically mentioned; so all these matters were matters of public knowledge.
      Mr. Grimond: Is the right hon. Gentleman really saying that he knew all the time that the counsel whom Chief Enahoro would want would be the hon. and learned Member for Ipswich and that, in spite of that, he did not make it crystal clear to the House that he was precisely the counsel Chief Enahoro would not be allowed to have? The right hon. Gentleman must surely have realised that it was exactly with this point that the House was concerned and, considering that this whole matter arose over a very unfortunate misunderstanding under which Chief Enahoro came to this country at all,

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      would it not have been much better for the right hon. Gentleman to have made it crystal clear that this undertaking was of no value about the counsel most directly concerned? Has the right hon. Gentleman made representations to the Nigerian Government that the hon. and learned Member for Ipswich should be allowed to defend him?
      Mr. Brooke: As to the latter part of the right hon. Gentleman's supplementary question, there is a Question on the Order Paper to one of my right hon. Friends. On the former point, I knew, and the whole world knew, that the hon. and learned Member for Ipswich had acted for Chief Enahoro in his case before the Divisional Court, but neither the Lord Chief Justice nor I could know what barrister Chief Enahoro would wish for—[HON. MEMBERS: "Oh."]—whether British or Nigerian, if he were returned— [Interruption.]—to Nigeria. Indeed, the right hon. Member for Orkney and Shetland (Mr. Grimond) seems to have changed his view, because on 21st March he said in the House:
      "I am puzzled"—
      referring to me:
      "…why he attaches such importance to the fact that a barrister from this country should be able to represent Chief Enahoro".— [OFFICIAL REPORT, 21st March, 1963; Vol. 674 c. 604.]
      Several Hon. Members rose—
      Mr. Speaker: Order. It is quite clear that we cannot have a debate on this matter in the middle of Question Time.
      Mr. H. Wilson: On a point of order—
      Mr. Speaker: Perhaps we may have one more supplementary question.
      Mr. Grimond: Does not the Home Secretary appreciate that there are two points—
      Mr. Wilson: Mr. Speaker—
      Mr. Speaker: There is now utter confusion, as a result, no doubt, of my trying to pay what was perhaps undue favour to the Leader of the Opposition.
      Mr. Wilson: I rose on a point of order, Mr. Speaker.
      Mr. Speaker: I beg the right hon. Gentleman's pardon.
      Mr. Wilson: I did not wish to pursue the matter with a further question, Mr. Speaker, but when you said that there could be a further question I naturally sat down. The point of order is that the House will wish to pursue the matter further next week, on a Motion of censure on the conduct of the right hon. Gentleman.

      TRUNK ROAD, LANARKSHIRE (PEDESTRIANS)
      Miss Herbisonasked the Prime Minister if he will appoint a committee to inquire into the means of alleviating danger to pedestrians whose homes are situated in close proximity to a trunk road; and if he will ensure that such a committee will examine the need to eliminate the danger to pedestrians at Moodiesburn, Lanarkshire.
      The First Secretary of State (Mr. R. A. Butler): I have been asked to reply.
      No, Sir. This is a matter which can only be dealt with satisfactorily in the light of local conditions where the danger may arise.
      Miss Herbison: Is the right hon. Gentleman aware of the very grave dangers in this part of Lanarkshire mentioned in my Question? Is he also aware that his right hon. Friend the Secretary of State for Scotland will neither erect an overhead bridge nor construct an underway path for the thousands of families living in the area? Finally, is he aware that there have been many fatal accidents on this road, with its very fast-moving traffic? If he will not set up a committee, will he use his influence with the Secretary of State for Scotland to provide some safe means by which these people can cross the road?
      Mr. Butler: I have acquainted myself with the problems that affect this area, and the accidents that have occurred. I have also studied the correspondence between my right hon. Friend the Secretary of State and the hon. Lady. I can only say that the matter is now in the hands of the Lanarkshire County Council, which will make positive proposals to deal with the matter. I will certainly speak with my right hon. Friend the Secretary of State for Scotland with a view to forwarding suggestions.

      NUCLEAR TESTS
      Mr. A. Hendersonasked the Prime Minister whether, following the recent exchange of letters between President Kennedy, Mr. Khrushchev and himself, it is now intended to hold a Foreign Ministers Conference at Geneva on the problem of banning nuclear tests.
      Mr. Prenticeasked the Prime Minister if Her Majesty's Government will now make new proposals to break the deadlock in the negotiations for a nuclear test ban treaty.
      Mrs. Butlerasked the Prime Minister what recent discussion he has had with President Kennedy about steps which can be taken to prevent further deterioration in the nuclear test ban position, and, in particular, the acceptance of Russian proposals for three on-site inspections annually.
      Mr. Allaunasked the Prime Minister if, in view of the latest evidence that any significant series of nuclear test explosions would be almost impossible to conceal, he will now ask President Kennedy to agree to the Soviet proposal for a test-ban treaty including three on-site inspections annually and three automatic detection posts.
      Mr. R. A. Butler: I have been asked to reply.
      President Kennedy and my right hon. Friend have made a new approach to Mr. Khrushchev. His reply was received only recently, and is still under study. Any statement by me would therefore be premature at present.
      Mr. Henderson: Will the First Secretary convey to the Prime Minister the suggestions we should like to make from this side of the House? First of all, in view of the continued deadlock, is it not time that the Foreign Ministers took over these negotiations at the Geneva Conference? Secondly, could we not bring to an end this interminable argument about the number of on-site inspections each year, and propose a longer term of years—say, five or six—and relate the number of on-site inspections to that term of years? Could we not have an entirely different approach with a view to ending this deadlock?
      Mr. Butler: The initiative has been taken to reply to Mr. Khrushchev, and I will certainly convey the constructive ideas of the right hon. and learned Gentleman to my right hon. Friend.
      Mr. Prentice: Is the right hon. Gentleman aware that the conversations that took place at Chequers on Saturday gave rise to some expectation that there might be an initiative to propose a compromise on the number of on-site inspections? Would the right hon. Gentleman agree that, if this is to be done, there is an urgency about it before some major new series of tests begins on either side?
      Mr. Butler: This matter was discussed at Chequers very fully, and that has resulted in further collaboration between my right hon. Friend and the President of the United States. It is hoped that something will come of this initiative.
      Mrs. Butler: Does not the right hon. Gentleman think that the acceptance by the Russians of the principle of inspection was a major concession which ought to be reciprocated by the West? Is he aware that many people feel that this insistence on a few additional annual inspections is intolerable hair-splitting, in view of the unimaginable consequences that will follow failure to get a test ban? Has the Prime Minister urged President Kennedy to take a personal initiative to try to secure agreement?
      Mr. Butler: The problem is that the scientific advice we receive is that the Russian proposal for three on-site inspections annually would still be inadequate. That is a matter of opinion, but that is the advice we receive. There is no obstruction. We are trying to proceed on a new initiative in the matter.
      Mr. Frank Allaun: Has not the right hon. Gentleman seen the evidence given last month by American scientists that the risk of an undetected test is minute? Does he agree with that? Whatever that risk, is it not smaller than the risk of the alternative, which is a complete breakdown of the talks and the arms race getting completely out of control?
      Mr. Butler: We have been into this question of undetected tests, but I must

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      say that our scientific advice is that it is very difficult to accept the view expressed by the hon. Member for Salford, East (Mr. Frank Allaun).
      Mr. P. Noel-Baker: Did the Prime Minister and President Kennedy offer in their letter to meet Mr. Khrushchev? Does the First Secretary recall that in their letter to Mr. Khrushchev in February, 1962, they said that they would be ready at any time to go to Geneva to break the deadlock?
      Mr. Butler: I am not at liberty to explain or to expound the contents of the recent initiative, as I said in my original reply, but I think that any possibility of a meeting must be held in mind in view of the extreme seriousness of the issue.

      SECRETARY OF STATE FOR THE COLONIES
      Mr. Healeyasked the Prime Minister whether, in view of the growing number of urgent colonial problems, in British Guiana and elsewhere, requiring attention and decisions, he will now appoint a separate Secretary of State for the Colonies.
      Mr. R. A. Butler: I have been asked to reply.
      I would refer the hon. Member to the Answer which my right hon. Friend gave him on 22nd November last.
      Mr. Healey: Is the First Secretary aware that there are now a large number of urgent, and even dangerous, colonial problems that have been waiting in vain for the attention of the Commonwealth and Colonial Secretary; in particular, a grave danger of complete breakdown of public order in British Guiana which could impose serious strains on the British strategic reserve? In view of the valuable precedent set by the appointment of the First Secretary of State to look after the problems of Central Africa, will the right hon. Gentleman ask his right hon. Friend the Prime Minister to appoint a separate Secretary of State to deal with colonial questions, so that these territories may now receive the attention they need, and deserve?
      Mr. Butler: While I am aware of the position in British Guiana, and of the
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      difficulties arising in other parts of the world, I am authorised by my right hon. Friend the Prime Minister to say that he has complete confidence in the handling of these matters by my right hon. Friend the Commonwealth and Colonial Secretary. Therefore, the reply that I must give to the hon. Gentleman is the same as he was given before by the Prime Minister.
      Mr. H. Wilson: Does not the right hon. Gentleman realise that that is just what worries us? Is he aware that there has been no Ministerial decision on the problems of British Guiana for the last month; that it is impossible to get the Secretary of State to give his attention to the question at all, and that the need for a visit to British Guiana by a Minister of high standing is very urgent indeed if we are not to face a very serious crisis there? Will the First Secretary arrange either that a senior Minister goes to British Guiana, with a policy to carry out, or, failing that, that a delegation goes from this House, with one or two senior Members from both sides, to examine this very critical situation?
      Mr. Butler: We must be governed in our attitude to British Guiana by the realisation that it is internally self-governing, but in view of the seriousness of the situation there, and in view of the fact that the general strike began on 20th April and that a state of emergency was proclaimed on 8th May, I will undertake to discuss any constructive suggestions with my right hon. Friends concerned.

      FIRST SECRETARY OF STATE (SPEECH)
      Mr. A. Lewisasked the Prime Minister whether the public speech made by the First Secretary of State on 15th May at the British Engineers Association lunch, making reference to future tax cuts, represents the policy of Her Majesty's Government.
      Mr. R. A. Butler: I have been asked to reply.
      I did not in fact forecast further tax cuts. What I did was to reaffirm the Government's intention to take whatever steps are necessary to secure the expansion of the economy. In emphasising this resolve my remarks certainly

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      represented the policy of Her Majesty's Government which has repeatedly been made clear.
      Mr. Lewis: Did the First Secretary of State advise those at the luncheon of the fact that the Chancellor of the Exchequer at the time of the last General Election also introduced tax cuts just before the election and when the Tory Government came back they put those taxes back with interest? If the right hon. Gentleman did not do that, will he remind the people of the country now?
      Mr. Butler: I made no such observations at the luncheon. I simply reminded my hearers that there are powers, which are referred to in the recent Budget, which are available for dealing with difficulties in the economy at any time. We have still problems in the North-East and other regions and it is our determination to maintain an active control of the economy.
      Mr. Shinwell: Are there not going to be any further tax cuts?
      Mr. Butler: No such statement has been made by me or anybody else.
      Mr. Callaghan: Whatever the First Secretary of State said, did he obtain the consent of the Chancellor of the Exchequer? Was his statement made with the Chancellor's approval, as it appeared in the Press? Secondly, is the right hon. Gentleman aware that, with the rises in prices which have taken place over the last eighteen months, any decrease of Purchase Tax which is less than 10 per cent. will do no more than put prices back where they were then?
      Mr. Butler: I have no observations to make on the latter part of the supplementary question. As to the first part, the Chancellor of the Exchequer and I work in perfect harmony.

BUSINESS OF THE HOUSE
Mr. H. Wilson: May I ask the Leader of the House to state the business of the House for next week.
The Chancellor of the Duchy of Lancaster (Mr. lain Macleod): Yes. Sir. The business for next week will be as follows:
MONDAY, 27TH MAY—Finance Bill.
Further progress in Committee.
TUESDAY, 28TH MAY—Remaining stages of the Television Bill.
WEDNESDAY, 29TH MAY—Private Members' Motions until seven o'clock.
Finance Bill.
Further progress on the Committee stage, which it is hoped to complete on THURSDAY, 30TH MAY.
FRIDAY, 31ST MAY—It will be proposed that the House should rise for the Whit-sun Adjournment, until MONDAY, 17TH JUNE.
Mr. H. Wilson: First, is the right hon. Gentleman aware that although we will facilitate, as far as it is reasonable, progress on the Television Bill, there cannot be any guarantee that the proceedings will be completed in that one day?
Secondly, will the right hon. Gentleman now take account of the fact, in planning next week's business, that tonight we shall table a Motion of censure on the Home Secretary in respect of his gross misleading of the House?
Thirdly, may I ask the right hon. Gentleman about the possibility of a statement next week in view of the fact that Ministers, at private meetings upstairs, have been giving information about proposed dockyard cuts?
Sir K. Pickthorn: How does the right hon. Gentleman know?
Mr. Wilson: Nothing done by this Government fails to get into the Press within the hour.
In view of this highly improper leakage to certain hon. Members, is the right hon. Gentleman aware that there is a general desire in the House that a full statement should be made to the House and the country so that people in these areas can be informed? Will the right hon. Gentleman therefore give an undertaking that a statement will be made on this question during the course of next week's business?
Mr. Macleod: First, on the Television Bill, I understand, of course, that it is the usual position that there cannot be any guarantee, but no doubt those in charge of the Bill on both sides of the House will consult as we go along. We will see what progress is made.

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The third point which the Leader of the Opposition made is a matter which I shall be discussing with my noble Friend and the Civil Lord. I cannot give an undertaking, in the sense that the right hon. Gentleman asks for, but I will see that the point is considered.
On the right hon. Gentleman's second point, I heard the exchange that took place on Question No. 40 and the announcement of the Leader of the Opposition. I should like to make a short business statement tomorrow at eleven o'clock in the light of that announcement and its effect upon next week's business. We would, of course, wish to take up at once the quite unwarranted attack which the right hon. Gentleman has made on my right hon. Friend.
Sir D. Walker-Smith: Is my hon. Friend in a position to add to the information which he gave last week in answer to my hon. Friend the Member for Chigwell (Mr. Biggs-Davison) about the possibilities of a debate on Commonwealth trade and the G.A.T.T.? Is he aware that there is on the Order Paper a Motion on this matter, standing in my name and in the names of a large number of my right hon. and how Friends?
[That this House, mindful of the importance of maintaining and strengthening the economic links of the Commonwealth, particularly having regard to the position created by the breakdown of the Common Market negotiations, calls upon Her Majesty's Government to raise at the forthcoming General Agreement on Tariffs and Trade conference, and at the meeting of Commonwealth Trade Ministers prior thereto, the desirability of an amendment of the General Agreement on Tariffs and Trade, so as to remove obstacles to the expansion of Commonwealth trade and to the formulation of a policy that will assist home and Commonwealth agriculture without unnecessary cost to the Exchequer.]
Mr. Macleod: Only to the extent that immediately following the business question on which we are now embarked, my right hon. Friend the President of the Board of Trade will be making a statement on the G.A.T.T. negotiations and, as I said last week, we can consider future events in the light of that.
Mr. Grimond: Can the right hon. Gentleman tell us whether it is the Government's intention to amend the Customs regulations as they affect sugar? Is not the high price of sugar to a large extent due to the technical difficulty in the re-export preventing the Commonwealth Sugar Agreement working?
Mr. Macleod: As the right hon. Gentleman will recall, my right hon. Friend the Secretary of State for Scotland made some reference to this last night in his winding-up speech. I am not ready yet to go beyond that, but if necessary a statement will be made to the House.
Mr. Webster: Can my right hon. Friend say when we shall have a debate on the Rochdale Report?
Mr. Macleod: I hope reasonably soon after we have returned from the Recess.
Mr. Mendelson: Can the right hon. Gentleman give the House some information about the timing of the debate on the Ottawa Conference and the discussions on the reorganisation of N.A.T.O. nuclear weapons? Does he not think that a debate has now become very urgent in view of the confusion in which the Minister of State, Foreign Office, left the House and the country the other day when he answered Questions?
Mr. Macleod: Unquestionably, this is an urgent matter, but, clearly, there is no opportunity to discuss it before Whitsun. I gave an undertaking to the Leader of the Opposition last week, on business questions, that we would discuss the possibility of a debate which would embrace this matter, presumably fairly soon after we have returned.
Sir G. Nicholson: Would my right hon. Friend say whether, before the House is actually asked to debate a Statutory Instrument, it shall be informed whether or not it has been passed by the Select Committee on Statutory Instruments? I do not mean before it is put on the Order Paper, but before the House is asked to discuss it. Should not the Select Committee's Report be properly laid on the Table before such a discussion takes place?
Mr. Macleod: I should like to consider that point. I think that it has more repercussions than my hon. Friend

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suggests. He is quite right that if any question were raised such an Order would not be taken until the point raised by the Select Committee had been disposed of. But it is common form to announce that, subject to no point being raised such an order will be taken. Perhaps my hon. Friend will be good enough to discuss with me the technical aspects of what he is suggesting.
Mr. A. Roberts: Has the attention of the right hon. Gentleman been drawn to a Motion in my name, and supported by many of my hon. Friends, on the supply of two-seater cars for disabled people?
[That this House, believing that similar disability whether arising from war service, industrial employment or other causes, should be assured of equal treatment, calls upon the Government forthwith to provide two-seater cars for paraplegics and other persons now qualifying for tricycles under the National Health Scheme.]
Is the right hon. Gentleman aware that if the Government are in any doubt on this matter we should be allowed some time to debate this very human problem?
Mr. Macleod: I have, of course, studied the Motion. This matter could have been raised in the recent discussions we had on a number of Ministry of Health Votes. As for the future, I take note of what the hon. Member has said.
Mr. Ronald Bell: Is my right hon. Friend aware of the general desire for a debate on Welsh affairs on Monday, 17th June?
Miss Herbison: The Leader of the House will be aware that yesterday the Law Reform (Succession, etc.) (Scotland) Bill was read the First time. As this is a long and complicated Bill, can the right hon. Gentleman give us any idea of a timetable for it? Do the Government expect, even with the best cooperation from us on this side of the House, to get the Bill through by the end of the Session?
Secondly, what help will we on this side of the House have on this complicated legal Bill, since we have no Law Officers to help us in the House?
Mr. Macleod: I am sorry that I was slow to catch up with the suggestion that
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we should have a discussion on Welsh affairs on the first day when we return after the Recess. No doubt if that is a Supply day the Opposition will take note of it, and I do not suppose that there will be violent competition for that day.
On the point raised by the hon. Lady the Member for Lanarkshire, North (Miss Herbison), I agree that it is extremely late to introduce such an important Bill. When the hon. Lady uses the word "timetable", we are not using it in the traditional guillotine sense, but in the sense of whether it is possible for the Bill to go through both Houses before the first day or so of August. Frankly, that is unlikely. I have no wish to try to push it through, but I think that because this is such an important Bill it is right to bring it forward so that it can be seen and discussed. If it is possible to pass it into law this Session so much the better. If not, we would have to take it and complete its progress next Session.
Miss Herbison: Does not that prove that the mere presenting of the Bill is a piece of propaganda, the bringing forward of something which the Leader of the House knows can never be put on the Statute Book this Session?
Mr. Speaker: Regardless of anxieties of a nationalistic kind or otherwise, we must confine the time for business questions to business.
Mr. J. Griffiths: When the Leader of the House is considering what time will be devoted to Welsh affairs, will he ensure that he is not unduly influenced by the hon. Member for Buckinghamshire, South (Mr. R. Bell), who was the Member for a Welsh constituency for two months and was then contemptuously ejected?
Mr. H. Wilson: While the Leader of the House is thinking out an answer to that, will he, so that there is no suggestion of a precedent being created, correct the answer which he gave a few moments ago when he suggested that the Opposition might wish to use a Supply day for a debate on Welsh affairs? Does not he recollect that the day for Welsh affairs is a day allocated to Wales as of right and that it does not depend upon Supply days? Will he be very careful not to affront the feelings of hon. Members who feel very strongly on this subject?
Mr. Macleod: There is no answer to the point made by the right hon. Member for Llanelly (Mr. J. Griffiths). I concede the point straight away; it was a pleasant jest.
In answer to the Leader of the Opposition, I must ask him not to take everything quite so seriously.
Mr. Wade: Will the proposed Bill relating to reform of the House of Lords be introduced before the Whitsun Recess?
Mr. Macleod: Yes, Sir, I hope so. All the decisions on principle and policy have been taken, as I have announced to the House. The only difficulty is a purely technical drafting one. I hope that it will be possible to present the Bill before Whitsun.
Mr. Snow: Has the attention of the Leader of the House been drawn to the publication in yesterday's newspapers of a news item that the first lists of stations to be closed under the Beeching plan have now been communicated to the transport users consultative committees? Since this affects hon. Members, and since there is only six weeks' notice before an actual closure can take place, can the right hon. Gentleman help hon. Members in being informed of the details of the proposals?
Mr. Macleod: I can only help, I think, not in the context of next week's business but in my capacity as Leader of the House. I will see whether there is any way in which I can help hon. Members by discussing the point, if, indeed, it be true—I have no personal knowledge of it—with my right hon. Friend.
Mr. Marsh: Does the right hon. Gentleman recall the recent short debate, which ended in some confusion, about a constituency for Mr. Speaker? In view of the fact that my Bill was supported by hon. and right hon. Members on both sides, does the Leader of the House intend to give time for a debate on the subject, or does he think that it might be possible and logical to leave it over until next Session?
Mr. Macleod: No, Sir. This is a difficult problem on which, as the hon. Gentleman has good reason to know, contrary views are held. I have no state-
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ment to make about time to discuss it or about whether it might be more appropriate, perhaps, for a Select Committee or a suitable body to consider it. It is a matter which I am studying.
Mr. Pavitt: On a rather narrower question affecting the railways, can the Leader of the House say whether the Minister of Transport will make a statement next week about the possible closure of the Broad Street-Richmond line? Is the right hon. Gentleman aware that, in spite of the opportunity which the Minister had to make a statement in the Adjournment debate last Friday, there have been Press reports that this line has been reprieved? Is it not consistent with the dignity of the House that such statements should be made here?
Mr. Macleod: Obviously, it would not be right to leap to assumptions before one has definite knowledge. I have had no indication of such a statement. I will inquire whether what the hon. Gentleman says is correct.
Mr. Popplewell: Further to the question asked by my hon. Friend the Member for Lichfield and Tamworth (Mr. Snow), will the Leader of the House consider introducing a short Measure to ensure that, before any branch lines are closed, Orders are introduced, under either the negative or the affirmative Resolution procedure, so that the House may discuss closures before they take place but after they have been considered by the transport users consultative committees?
Mr. Speaker: That is very wide of next week's business. It is a matter for legislation or policy.
Captain Orr: Can my right hon. Friend say when the ecclesiastical jurisdiction Measure is to come forward?
Mr. Macleod: No, Sir. As my hon. and gallant Friend knows, this is not Government business. Notice is given in the ordinary way. We should merely try, if we possibly could, to take it at a day and time convenient to the House. It will certainly be some time after Whitsun.
Mr. Hector Hughes: Will the Leader of the House reconsider his decision about the Law Reform (Succession, etc.) (Scotland) Bill, which is much wanted? It is a very good Bill. There is a great

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demand for it, particularly in Scotland. Will he see that it is taken before the Recess?
Mr. Macleod: In some respects, what the hon. and learned Gentleman says is a little contradictory of what was said a few minutes ago by the hon. Lady the Member for Lanarkshire, North (Miss Herbison). I think that it is an advantage, particularly in a complicated legal matter, to have a Bill such as this produced and discussed. Of course, there are doubts about its future progress, but I have given my answer about that in response to the hon. Lady's question earlier.
Mr. Ronald Bell: At some time during next week's business, will my right hon. Friend find time to tell the right hon. Member for Llanelly (Mr. J. Griffiths) that Newport is in England?
Mr. Speaker: This is the time for business questions, not badinage.

G.A.T.T. (MINISTERIAL MEETING)
The President of the Board of Trade (Mr. F. J. Erroll): With permission, Mr. Speaker, I would like to give the House an account of the meeting of Ministers of the Contracting Parties to the G.A.T.T. which has just ended in Geneva. The purpose of this meeting was to consider measures for increasing world trade under three distinct but related heads:

1. the trade of less-developed countries;

2. trade in agricultural products; and

3. the reduction of tariffs and other barriers to trade.

We had the advantage of useful preliminary talks with the Commonwealth.
Under the first head, the meeting adopted, though with reserves on the part of the E.E.C. and their Associates, a programme of action for expanding the trade of less-developed countries. It approved the establishment of an Action Committee to secure early progress and to consider further measures to promote the trade of these countries. Meanwhile, as an earnest of our intentions, we and the E.E.C. are working on the details of
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arrangements for suspending our tariffs on tea and tropical hardwoods.
Under the second head—agriculture—it was agreed to reconvene the Special Groups on cereals and meat to negotiate arrangements for these commodities, and to set up a similar group on dairy products. Rules and methods for dealing with agriculture in the negotiations have still to be worked out.
Under the third head, we reached agreement on a statement of principles to govern the trade and tariff negotiations which are to begin in May, 1964. These will embrace tariff and non-tariff barriers to trade both in manufactures and in agricultural and primary products. A committee will work out a plan for the negotiations and supervise their conduct. It is to produce its plan by 1st August of this year.
As regards tariffs, the object will be to make a substantial cut across the board with a minimum of exceptions. As a general rule the cuts will be of equal depth, though in special cases where differences in the levels of national tariffs have significant effects on trade, special rules are to be devised. The Government's intention will be to obtain equivalent advantages for our exports in return for reductions in our own tariff. We shall not, however, expect to receive reciprocity from less-developed countries.
These arrangements, which were not agreed without difficulty, will allow the preparations for the trade negotiations to proceed with the prospect of a substantial reduction in barriers to trade of all kinds. Much detailed work remains to be done, but a good start has been made. Her Majesty's Government will continue to do their utmost to ensure a successful outcome of this great and imaginative undertaking which holds so much promise for the increased prosperity alike of the industrial nations, the agricultural producers and the developing countries.
Mr. Callaghan: First, when the President of the Board of Trade refers to suspending our tariffs on tea, to what duties is he referring?
Secondly, with regard to the Action Committee, do I take it from what he said that the next few months will be taken up in preparing a plan to decide

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how we shall start the negotiations that we hope will begin at some time after 1st August?
Thirdly, has the right hon. Gentleman any idea yet when we can expect to see some practical results? What timetable is likely to be set?
Fourthly, what has the right hon. Gentleman in mind for increasing the purchasing power of the under-developed countries, either through commodity agreements or in some other way, so that the flow of trade will not dry up?
Finally, while we are all glad that the right hon. Gentleman has got over the initial hurdle and that the negotiations have not broken up before they have started, as seemed likely at one stage, and while we want international solutions to the problem, may I ask the Government, through him, not to get into the position in relation to these negotiations that we got into in the earlier Brussels negotiations—having a breakdown without alternative plans being ready?
Would he not think it worth while having a study group to examine the effects of the G.A.T.T. on the position of the Commonwealth and the underdeveloped countries in particular and starting studies now so that in the event of a calamitous failure of the negotiations we can be ready to embark on other courses of action which will be appropriate to our position?
Mr. Erroll: I will try to answer the points raised by the hon. Gentleman in the order in which he put them.
The tariff on tea is the tariff we impose on non-Commonwealth supplies in order to provide Commonwealth suppliers with a preference.
The Action Committee is that in respect of the action programme which was put forward by the less-developed countries and which was generally approved by the G.A.T.T. This programme is being referred to its own Action Committee. The other committee to which I referred, which will be drawing up its plan by 1st August, is dealing with the rules for the negotiations on tariffs as distinct from the items in the action programme. There are two separate committees.
It is impossible at this stage to say when we shall see practical results,
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because not only is it an immensely involved and intricate subject but we have still to agree the rules under which the negotiations shall proceed. But we are hopeful that, if the rules are agreed, the full tariff negotiation will be able to begin on 1st May next year, which is the earliest date on which the Americans can take part. Thereafter, progress can be measured only as we go along.
With regard to the Brussels negotiations and their breakdown, we are not in the same position here, of course. We are one of the Contracting Parties to the G.A.T.T., and I do not think that we need consider, at any rate at this stage, what would be the likelihood of a breakdown in the negotiations, which are of a long-term nature and also cover a number of different fields. It would be very unlikely that there would be a general breakdown. But where the matter concerns particularly the Commonwealth countries, we are, of course, in very close touch with Commonwealth Trade Ministers, following upon the successful two-day meeting of such Ministers in London. Some of the under-developed countries not in the Commonwealth told me afterwards that they appreciated the lead which Britain had given at the G.A.T.T.
Mr. Turton: Under the second heading of the marketing of agricultural produce, can my right hon. Friend say whether our policy in this respect met with the complete approval of Canada, Australia and New Zealand, and, if that was the case, can he tell us whether there will now be close Commonwealth consultation so that we can get an agreed plan from the Commonwealth before the next stage in the proceedings?
Mr. Erroll: Agriculture was, of course, discussed at the meeting of Commonwealth Trade Ministers in London, over which I presided, and I think that the general view was that our proposals were sound, although they did not commit themselves fully because at that stage we ourselves were not able to put forward our own proposals in sufficient detail. Our proposals were well received in the G.A.T.T. generally and resulted in the special groups, which I mentioned in my statement, being set up forthwith to go into the details of the negotiations. We shall, of course, keep in the closest touch

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with the three Commonwealth countries which my right hon. Friend mentioned.
Mr. Grimond: May I ask the President of the Board of Trade two questions? First, can he say something about the significance to the producer countries of the arrangements for suspending tariffs on tea and tropical hardwoods? Is it not the case that many countries impose an internal duty on tea? Have they agreed to reduce or suspend it? Also, what is the significance of the suspension of the tariff on hardwood?
Secondly, does the fact that the special groups are empowered to negotiate arrangements in respect of meat and cereals mean that they are empowered to conclude commodity agreements, or have we not got as far as that?
Mr. Erroll: Where there is a tariff in respect of tea or hardwood, its elimination will, of course, be a help. Revenue duties are a separate item in the action programme, on which certain countries which have high revenue duties made certain reservations.
It is too early to say how far the special groups can go. They would have no power to impose any international agreements, because all these matters are done by the consent of the Contracting Parties. But we certainly hope to use the two special groups as far as we can in the evolution of the agricultural policy announced by my right hon. Friend the Minister of Agriculture yesterday afternoon.
Mr. Russell: Will my right hon. Friend explain how the elimination of the tariff on tea by this country will help India and Ceylon? Did he have any consultation with the Governments of those two countries before agreeing to it?
Mr. Erroll: I am glad to tell my hon. Friend that I had consultations with the two countries. The advantage to India and Ceylon is that it gives them improved access into the markets of third countries, more than they could hope to get by the natural increase in tea drinking in this country. Therefore, it is of net benefit to them.
Mr. Warbey: Would the right hon. Gentleman agree that the essential outcome of the conference is that the actual playing of the Kennedy Round is
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deferred until the end of the decade and that when it is played it will probably be only a nine-hole one?
Mr. Erroll: No, Sir. I think that the Kennedy Round has a good chance of making progress. If the hon. Gentleman had studied the subject more carefully, he would have seen that it will not be a nine-hole one and will not take until the end of the decade.
Mr. Hirst: In congratulating my right hon. Friend upon the more hopeful trends secured at Geneva than at one time we thought possible, may I ask him to bear in mind the point of view of British industry about the possible dangers in cuts across the board applied percentage-wise in the light of the fact that in countries which have very high tariffs—100 per cent., and so on—the 50 per cent. cut may still leave a very high degree of protection and that in countries of low tariffs, such as in ours, the 50 per cent, cut will be of real significance.
Mr. Erroll: The Contracting Parties agreed that the essential thing to go for was an across-the-board cut whereby those tariffs which were highest would come down by the greatest amount. This was one of the points which took up a great deal of time of the Ministers concerned. It was recognised that there were certain cases where there were substantial tariff disparities between contracting parties and that where these could have a significant effect on trade they could be made the subject of special treatment. This is one of the matters which the trade negotiating committee will examine with a view to working out rules to keep to a strictly limited number of exceptions.
Mr. Snow: While one must not be pessimistic in any sense of the word, does the right hon. Gentleman accept that the general proposals themselves do not guarantee an increase in exports for this country? Has he taken the opportunity of discussing the growing apprehension about the unavailability of international credit, sometimes referred to as liquidity?
Mr. Erroll: International liquidity was not discussed in plenary session. I fully agree with the hon. Gentleman that this

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meeting will not of itself increase trade. It will be a long haul. But we have taken a necessary first step.
Mr. Leavey: With regard to the across-the-board proposal and the principle which has been apparently accepted, my right hon. Friend stated that Her Majesty's Government and others will not press for reciprocity from the less-developed countries. I do not expect my right hon. Friend to go into detail, but can he give some general indication of what the Government have in mind about the position of the cotton textile industry, having regard to the fact that 40 per cent. of our home market is already taken by imports, a substantial proportion of which come from the less-developed countries from whom reciprocity is not to be requested?
Mr. Erroll: I am grateful to my hon. Friend for not expecting me to reply in detail to the very important point that he has raised. However, a large proportion of the imported textiles from the less-developed countries come from the Commonwealth countries and such imports are already free of any tariff. There is, therefore, no question of giving them a cut in tariff because none exists.
Several Hon. Members rose—
Mr. Speaker: Order. We must exercise sufficient self-restraint to enable us to get to the Orders of the Day, which the Clerk will now read.

ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee [Progress 21st May].
  [Sir WILLIAM ANSTRUTHER-GRAY the Chair]

  FINANCE BILL

    Clause 42.—(CO-OPERATIVE HOUSING ASSOCIATIONS.)
    Question proposed, That the Clause stand part of the Bill.
    4.3 p.m.
    Mr. G. R. Mitchison: May we be told by the Government the object of the Clause? I think that I can see it.
    The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. F. V. Corfield): The Clause provides relief from tax for cooperative housing associations approved under the Clause by the Minister of Housing and Local Government, the Secretary of State for Scotland or the Minister of Health and Local Government for Northern Ireland, as the case may be. It provides, in effect, that associations are to be treated as collective owner-occupiers—that is, they will not be liable to tax on rents which they receive from their members, and interest paid by the association is to be treated as paid by the members in shares proportionate to their rents.
    The relief, therefore, is twofold. In the first place, the association will not be charged with Income Tax or Profits Tax on the rents which it receives from its members. In the second place, each member will be allowed relief where appropriate on as much of the interest paid by the association as is attributable to the property which he occupies. The association, of course, remains liable to tax in the ordinary way on income from invested funds and will be treated as itself paying any interest attributable to unlet properties. The basis of the scheme is complete mutuality between membership and tenancy.
    Mr. Mitchison: I am obliged to the hon. Gentleman for that explanation. This seems to remedy a foolish part of the law, and in that spirit we are glad

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    to accept it, noting that there is a hypothetical rent in the middle of it.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.
    Schedule 8 agreed to.

    Clause 43.—(OVERSEAS TRADE CORPORATIONS: HOLDING COMPANIES.)
    Sir John Barlow: I beg to move, in page 46, line 44, at the end to add:
    (2) Section 23(1) of the Finance Act 1957 shall also apply so that the same results shall follow in respect of a subsidiary company not resident in the United Kingdom but trading wholly outside the United Kingdom, as would now follow if the trade of that company was carried on by a company resident in the United Kingdom, and section 35 of the said Act shall apply in respect of dividends from a subsidiary company as defined above as it now does to the overseas trading income; and the provisions of Schedules 5 and 6 shall apply accordingly.
    It will be remembered that the idea of the overseas trade corporations was started about six years ago. At that time it was obvious that this was entirely new legislation for the Treasury, and, plainly, it had to be very careful to see how it would work. For that reason, it was rather circumscribed, and it must be regarded as a pilot scheme. It was for companies registered in the United Kingdom with branches abroad, and it did not cover non-resident subsidiaries which were abroad or in this country.
    The result was that the overseas trade corporation experiment as intended by the Royal Commission on Taxation, namely, that it should apply to all businesses outside the United Kingdom, was not achieved. In view of the experience of the last six years, I suggest that the time has arrived when this extension could be made.
    The Treasury has great experience of these companies—I believe that they number 836—and, obviously, it can see fairly easily how any further extension would work. If this extension were allowed, it would help very much our balance of payments, and it would help the transfer of funds from one part of the Commonwealth to another, which is not provided for at present.
    If my right hon. Friend the Chancellor of the Exchequer has any criticism of this suggestion, it may be that there is a
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    risk of tax avoidance. Since the cost of the overseas trade corporation companies has been much lower than was originally estimated, and in view of the great knowledge and experience about these companies which the Treasury has gained, I believe that there is very little risk of that.
    As I have said, it is probable that this Amendment will help the flow of funds from one Commonwealth country to another and will also encourage non-sterling companies to register in this country and carry on business, which will be of great benefit to this country and to the Commonwealth countries involved.
    Mr. Stanley R. McMaster: I support the Amendment, which has been so admirably moved by my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow). I do not wish to repeat the argument which he has clearly and lucidly adduced, but I should like to add one point.
    The fear of any loss through tax avoidance as a result of accepting the Amendment should be counterbalanced by the fact that many overseas trade corporations face competition from similar companies which are resident in other European countries, where they have a greater advantage than British overseas trade corporations.
    To accept the Amendment would help to put them on an equal footing with such companies which are registered, particularly, in France, Germany and Italy. It would be of considerable advantage to them if their foreign subsidiaries could transfer their profits from one overseas country to another and would help to build up British interests abroad, which must be to the long-term benefit of this country.
    The Financial Secretary to the Treasury (Mr. Anthony Barber): It is not easy for those who have not followed our debates in previous years to appreciate the significance of this Amendment. I think that my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow), who introduced it, has set out clearly what he has in mind. I should like to assure him that, although the Amendment appeared on the Notice Paper only a couple of days ago, this was one of the aspects of the overseas trade corporation scheme which my right hon.

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    Friend considered before reaching his conclusions about the Budget.
    As my hon. Friend will realise, the principal object of the overseas trade corporation scheme was to meet the complaint that the high rates of United Kingdom tax made it difficult for United Kingdom resident companies trading overseas to compete with local companies or with companies resident in third countries which paid tax at a lower rate or got some form of special tax relief.
    While the scheme was designed mainly to give relief to trading companies, it also gives certain relief to holding companies. A United Kingdom company which does not itself carry on any trade, but which is the parent of one or more trading overseas trade corporations, can, subject to certain conditions, itself qualify as an overseas trade corporation, and, if it does, it is exempt from Income Tax and Profits Tax on any dividend from a subsidiary overseas trade corporation and can, without becoming liable, use such a dividend to finance, by grant or by loan, another subsidiary overseas trade corporation.
    This covers the point in the case of resident companies switching between one subsidiary company and another through the medium of the parent company, which, I understand, from the two speeches to which we have listened, it is desired to extend to the case of those subsidiary companies which are not resident in the United Kingdom.
    There are a number of points that I could make about the Amendment, but I do not think that my hon. Friend would wish me to go into details about drafting, and I need not remind the Committee of the object, because it has been so clearly and briefly put by my hon. Friend.
    My hon. Friend may or may not know that we have had discussions with industry about proposals similar to that which is embodied in the Amendment. We asked the representatives of industry who met us to discuss these proposals, whether they could furnish us with any actual example of cases where desirable development in an overseas territory had been held up because of the absence of what might be called the overseas trade corporation switching facilities to which I have referred. They were not able to provide us with any such examples,
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    although it does not necessarily follow that there is none.
    They referred to cases in which money was left in the country of origin when it might have been more usefully employed elsewhere. But that is not quite the same thing. I am not saying for one moment that there are not considerable arguments in favour of what my hon. Friend has put forward, and he will recall that we have discussed much the same point in previous years.
    A further matter to which I should draw the attention of the Committee is that the tax at issue in the case envisaged by my hon. Friend is not the full extent of the United Kingdom taxation on dividends received by United Kingdom companies, because in the ordinary way these funds will have borne tax in the country in which they have been earned, and double taxation relief would be available to the parent company. In many cases the tax at issue may not be more than a small percentage of the funds being transferred.
    4.15 p.m.
    Before this Amendment appeared on the Notice Paper, we considered the whole of the overseas trade corporation scheme, including this aspect. I must regretfully tell my hon. Friend that, in our view, the arguments against these proposals have lost none of their weight. In the first place, the whole object of the overseas trade corporation scheme is to benefit a resident company. The retention by companies operating overseas of their United Kingdom residence benefits this country in a number of ways which are quite unconnected with taxation. I can give my hon. Friend examples if he wishes, but I hope that it will suffice to say that it was one of the merits claimed for the scheme that it would help to prevent the migration of United Kingdom companies to other countries.
    Secondly, I should like to remind the Committee that the non-resident company of which my hon. Friend is speaking is not by the overseas trade corporation scheme made any worse off than it was before and still has certain tax advantages as compared with the overseas trade corporation. For example, it is not liable to Profits Tax on its investment income whether arising in this country or overseas. It is not liable to Income Tax on overseas investment income or on income from War Loan and

    661
    certain other British Government securities.
    The overseas trade corporation, on the other hand, is liable to Income Tax and Profits Tax on the whole of its investment income. Moreover, distributions made by non-resident companies on liquidation constitute capital receipts in the hands of shareholders and are not liable to United Kingdom tax. Distributions on liquidation by overseas trade corporations, on the other hand, so far as they come out of exempt trading profits and do not represent the repayment of the original capital, are chargeable to Income Tax in the hands of the liquidator.
    My hon. Friend referred to the fact that the admission of non-resident subsidiaries might involve some risk of tax avoidance. It is true to say that for any scheme offering adequate safeguards, which would be necessary if we were to do as my hon. Friend suggests, the legislation would be very complicated indeed. I was reminded before I came into the Chamber that my right hon. Friend the Chancellor of the Exchequer, when he was Paymaster-General, in 1959, spoke about the point which my hon. Friend has raised again this afternoon and dealt at some length with the difficulty of preventing avoidance.
    I think, from what little I know of the details of the subject matter, that my hon. Friend has probably got a point in saying that, from the experience which we have gained over the years, it would be easier now to deal with the anti-avoidance provisions than when the scheme was introduced. I hope from what I have said that the Committee will appreciate that that is not the only point on which we feel considerable doubt in connection with this proposal.
    I assure my hon. Friend that his suggestion, which would, of course, involve a basic change in the overseas trade corporation scheme, was carefully considered before my right hon. Friend framed his Budget proposals and we have looked at it again since his Amendment appeared on the Notice Paper. But I fear that I cannot advise the Committee to accept the principle which my hon. Friend seeks, and I hope that on that account he will not press his Amendment. If that were not enough, I would remind my hon. Friend, without
    662
    troubling him with the details, that I hope he will accept it from me that his Amendment is not in any event adequate to deal with the avoidance problem which my hon. Friend frankly admitted would have to be dealt with and which is inherent in the proposal about which he has spoken.
    Sir J. Barlow: In view of my hon. Friend's explanation—which is not entirely satisfactory, but I appreciate some of the difficulties—I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Question proposed, That the Clause stand part of the Bill.
    Mr. Mitchison: I am sorry, but I must ask the Government again to be so good as to explain, first, why the original proviso was put into Section 23 of the Finance Act, 1957, and secondly, what change of circumstances has now caused the Government to recommend its removal. Will they, at the same time, indicate the financial effect of the proposed removal?
    Mr. Barber: As the /ion. and learned Member will appreciate, the Clause is of limited application. I explained its purpose on Second Reading. Suffice it to say that the object is to abolish a rule which is set out in Section 23 of the 1957 Act and which, in effect, denies the status of an overseas trade corporation to certain holding companies.
    The Clause is the substance of a provision to meet a point which has been made by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens). Under the 1957 Act, a United Kingdom company can, in certain circumstances, with which we are all familiar, qualify as an overseas trade corporation. If it qualifies, it is freed from Profits Tax on the profits of its trade and it is not required to pay Income Tax on them either as long as they are withheld from distribution.
    A company with a trade of its own can enjoy overseas trade corporation status even when it possesses one or more subsidiaries in the United Kingdom which are not themselves overseas trade corporations. To prevent such a parent company from using the trading profits, which are exempted in its hand while undistributed, for the purpose of financing

    663
    either through loans or grants the operations of a subsidiary carrying on a trade within the United Kingdom, the 1957 Act contains a safeguarding provision which imposes liability on an overseas trade corporation in respect of exempt trading income advanced by way of loans or grant to any associated company which is not itself an overseas trade corporation.
    A company which has no trade of its own can also secure recognition as an overseas corporation if it has one or more subsidiaries which are trading as overseas trade corporations. The proviso to Section 23(1) of the 1957 Act, to which the hon. and learned Member for Kettering (Mr. Mitchison) has referred, disqualifies a holding company if it possesses any subsidiary which is resident in the United Kingdom but which is not itself an overseas trade corporation.
    The hon. and learned Gentleman asked why the proviso was originally inserted in the 1957 Act. It was inserted as a long-stop to prevent avoidance of taxation. If the provisions which impose tax on the making of a loan or grant to an associated company, to which I referred a few moments ago, are adequate, there is no need for the long-stop. When the overseas trade corporation scheme was first devised, those at the Treasury at that time thought that it would be sensible to err on the side of safety and did not feel that we could safely dispense with the proviso, to which exception has been taken on a number of occasions since.
    Mr. Mitchison: By whom was exception taken?
    Mr. Barber: By those in industry. I was coming on to explain that there may well be circumstances which force an overseas trade corporation to cease trading, with the result that its own loss of status would bring disqualification upon the parent as a result of the operation of the proviso.
    The danger can best be illustrated if one considers a trading subsidiary which, under threat of, say, expropriation in an overseas territory, has no prudent course open to it but to dispose of its trade to local interests. If the subsidiary ceased to trade, it would thereby bring disqualification on the parent com-
    664
    pany, which would become liable to tax forthwith on the entire undistributed balance of the exempt trading income, including dividends, from all its overseas trade corporation subsidiaries which it had enjoyed since it first qualified as an overseas trade corporation. It will be apparent to everybody that whatever might be the rights and wrongs of dispensing with the proviso, this would have serious financial consequences for the parent company concerned.
    Originally, we thought it necessary to include the proviso because we felt that unless we did so, there would be dangers of unscrupulous people seeking to avoid tax. Since then, we have had more experience of the working of the scheme and we have reached the conclusion that the existing provision—[Interruption.] I do not know why the hon. Member for Cardiff, South-East (Mr. Callaghan) shakes his head. He was away all last week. He comes back and immediately says, "No, no, no."
    We have considered this matter carefully. My right hon. Friend would certainly not have dispensed with the proviso unless he was satisfied that the existing provisions and the way the scheme had worked out were adequate. We have reached the conclusion that the existing provisions without automatic disqualification in such a case are adequate.
    I hope that for the reasons I have given the Committee will agree that the Clause is reasonable and will go quite a long way to prevent companies which otherwise might in all innocence be faced with serious financial penalties from being put in that position.
    Mr. Mitchison: Will the hon. Gentleman answer my question about the financial effect?
    Mr. Barber: I am advised that the result is not so much to sacrifice revenue, but to relieve those engaged in overseas business from the necessity of so arranging their affairs as to avoid falling into a particular taxation pitfall. Consequently, there will be no significant effect upon the Exchequer.
    Mr. Mitchison: As we remember, this proviso was put in as a safeguarding provision against tax avoidance. When the original proposals contained in the

    665
    1957 Finance Act were before the Committee, we from this side pointed out again and again that those proposals were full of opportunities, so it seemed to us, for tax avoidance. In this case, to the best of my recollection—and I have referred to the debates at the time—the Treasury included this long-stop on their own without being obliged to do it. It was a long-stop of general application. It was what should and what should not be a very privileged body, an overseas trade corporation.
    The balls, or some of them, have, no doubt, been stopped, but the Treasury is in no position to tell us which were stopped by the long-stop and which by the wicket-keeper. Therefore, we have no indication of how effective the wicketkeeper has been or whether it is wise to remove the long-stop.
    I do not want to go into the matter in great detail, but, when we are given the instance which the Financial Secretary has put before us, I do not see the great hardship that is indicated. The companies concerned have had the benefit of an exceptional concession that was given to them under certain conditions in the Act. We were told, rightly, that they could have made provisions which would have saved them any trouble in the event indicated. All that the Government's proposal does is to prevent them from taking the trouble to make the necessary provisions.
    We are told that there will not be any revenue effect. That depends, however, upon who stops the bowling—and it remains to be seen. There are so many —I do not know whether to call them balls or wides; I would almost have said side slips, but I do not think those are bowled. So many funny things are going on in connection with overseas trade corporations that not only were we justified in our objections at the time, but they arose out of the recommendations of the Royal Commission.
    4.30 p.m.
    Those recommendations were very cautious and limited. They were dissented to by a minority of the Royal Commission at the time. They did not deal with the question of subsidiaries, which is far the most difficult part of all this. I should have thought that, if the Treasury felt that there was some reason
    666
    for making special provision for the particular circumstances the hon. Gentleman has indicated, it was not a case of removing the long-stop, but of making some other and more appropriate provision for what is required.
    If the hon. Gentleman expects us to support this Clause when the object is to remove a tax avoidance provision, to widen the scope of an arrangement we have always regarded with a great deal of criticism, we shall have to disappoint him on this occasion.
    Mr. Barber: I am sure that, in fairness, the hon. and learned Gentleman will agree that, if the other provisions in the scheme to which I referred earlier are adequate to deal with the matter—in other words, those provisions which impose tax on the making of a loan or grant to an associated company—he will be the first person to say that we need not have the proviso which it is now sought to remove from the 1957 Act.
    If it turns out, contrary to our expectations, that the proviso is needed after all, I am sure that I can give an assurance to the Committee, on behalf of my right hon. Friend, that we will deal with the matter. Of course, in view of what the hon. and learned Gentleman has said, we will keep the matter under review, but we would not have taken this step unless we really thought it a fair thing to do and that we had sufficient safeguards in the original legislation.
    Mr. Mitchison: We are anxious to save time on this matter. All we wish to say is that we prefer the Treasury when it is trying to safeguard against evasions, as it was in 1957, to the Treasury of 1963, which, apparently, is trying to save taxpayers a certain amount of trouble in arranging their affairs.
    Sir J. Barlow: I welcome this Clause and regard it as a long-lost friend—so long-lost that it has almost been forgotten. In June, 1957, the then Economic Secretary, turning down this proposal, said that it
    "…raises extremely complex…points… my right hon. Friend… is studying this matter with full sympathy…we are giving this very complex and difficult problem sympathetic consideration."—[OFFICIAL REPORT, 26th June, 1957; Vol. 572, c, 308.]
    It has been hidden in the archives for six years, so it is all the more welcome

    667
    now. I hope that the principle of the Amendment which I have just failed to get adopted, will not be lost sight of for the next six years.
    Mr. Geoffrey Stevens: I am grateful to my right hon. Friend the Chancellor for accepting the proposals on this very valuable point which my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) and I have been hammering away at all this time. I believe that the removal of this long-stop will enable British trade to do more business overseas, and that will be a good thing for all of us. I am glad that he has done it this time.
    But one point puzzles me. If it is right in May, 1963, that this potential cause of disqualification should be removed, would it not have been equally right, after all, in 1957? The Clause as drawn has no retrospective effect. If it is right today, surely the Clause should be redrafted to have effect back to 1957.
    Mr. Barber: I think that there would be grave objections to doing as my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) suggests. It would certainly lead to very serious practical difficulties. The treatment for both Income Tax and Profits Tax purposes of a holding company qualifying as an overseas trade corporation is quite different from that of a non-overseas trade corporation holding company. If we were to do as my hon. Friend suggests, it would be necessary to revise the whole of these companies' liabilities in the past six years.
    I do not want to get too far into this, but the matter does not even rest there. The holding companies in question may well have made distribution of profits by way of dividends during these six years on the basis that they were not overseas trade corporations, and the recipients of those distributions will quite properly have been assessed to tax on the assumption that that basis was correct. If we were now to make this Clause retrospective, obviously different tax consequences for those who have received dividends would ensue. There would be grave practical difficulties, apart from the question of principle, involved in doing as my hon. Friend suggests.
    Mr. James Callaghan: This is not good enough. The whole question of overseas trade corporations, after six years' experience, needs reviewing in detail to see how far this system is profitable to Britain. Profitability was its justification originally. We need much more information. As far as I can see, these things are all available even when money is remitted back to this country. I believe that a great deal of this money will not qualify and return to this country. For this reason, I am very much against any extension of this nature.
    I believe that the hon. Member for Portsmouth, Langstone (Mr. Stevens) is leaving the House at the next election. We shall be very sorry to see him go. He has always brought a great deal of dignified learning and knowledge to our discussions on taxation. But perhaps it is because he is leaving us, and is considering this purely from the point of view of what he believes to be right in the circumstances, that he does not understand why it is being done in 1963 but could not be done in 1957, according to the Government. The simple explanation is that there is an election coming. Whether it be expansion of corporations or remission of Stamp Duty-—
    The Chairman: Order. I hope that the hon. Gentleman will not go further. We are discussing whether Clause 43 should stand part of the Bill.
    Mr. Callaghan: I am discussing the reasons for introducing this provision, Sir William. The question was asked why it was introduced, and I was giving the answer.
    It was introduced to sweeten the City and get a few more subscriptions to Tory Party funds. It makes nice women of a number of companies who have been arranging their affairs not illegally, but not with that degree of purity we would like to see. We all know that. This provision is designed to further Tory Party funds, and as we have no wish to assist them to get more money, we will divide against this Clause.
    Mr. McMaster: I rise to say how much I disagree with the remarks made by the hon. Member for Cardiff, South-East (Mr. Callaghan). There are many ways in which this country can be

    669
    benefited by this provision in addition to the direct remission of money from trading subsidiaries abroad. Not only can their profits be used by other businesses abroad ordering goods from Britain, but, also, British interests are extended and, therefore, when such companies, and others, a re buying capital equipment the money is much better spent here than in some of our foreign competitors. That is just one reason why I support this extension of the rule, which was introduced six years ago.
    I return to the point I made earlier. Many of our trading competitors are much more generous with their overseas trading corporations than this country has been heretofore. I support this extension and I should like the Government to reconsider the original Amendment in the hope that, as with the Amendment introduced by my hon. Friends six years ago, in time it will he accepted by the Government, because it is to the benefit of this country to build up its overseas trading interests.
    Mr. J. T. Price: I am not so much concerned with the academic arguments advanced in favour of the proposed change as with the practical effect. I remind the Committee that in the debates on the 1957 Finance Act I had a considerable argument with the then Financial Secretary to the Treasury, now the right hon. Gentleman the Minister of Health, who, in reply to my observations about relief given to overseas trade corporations, said that it would
    make a valuable contribution to the balance of payments and replenish some of the losses otherwise suffered by adverse conditions of trade.
    In fact, exactly the opposite has occurred. During that argument, I asked one or two questions which were germane to the issue and are even more germane now. What purpose is served in the country's economic performance if capital invested in overseas trade corporations does not provide work for British workers, or return to the parent company in Britain the profits earned, if any, by those operations overseas?
    These are weighty considerations. Last year, to check what had happened, I put some Questions to Treasury Ministers—I will not weary the Committee with the references—to elicit what losses had been suffered by the Treasury as a result of the loss of the overseas trade corporation Clause. I was told that in 1961 it was £16 million and about £11 million in 1960 and figures of that order for other years. That does not support the proposal to extend these powers and I think that my right hon. and hon. Friends are right to insist that this is a matter of principle upon which the Government have not made their case and that we should register our protest in the Division Lobby.
    Question put, That the Clause stand part of the Bill: —
    The Committee divided: Ayes 193, Noes 128.

    Division No.121.]

    AYES

    [4.43 p.m.

    Allason, James

    Butler, Rt. Hn. R.A. (Saffron Walden)

    Finlay, Graeme

    Arbuthnot, John

    Carr, Robert (Mitcham)

    Fletcher-Cooke, Charles

    Atkins, Humphrey

    Chichester-Clark, R.

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

    Awdry, Daniel (Chippenharm)

    Clark, Henry (Antrim, N.)

    Fraser, Ian (Plymouth, Sutton)

    Balniel, Lord

    Clark, William (Nottingham, S.)

    Galbraith, Hon. T. G. D.

    Barber, Anthony

    Cleaver, Leonard

    Gammons, Lady

    Barlow, Sir John

    Cooper-Key, Sir Neill

    Gardner, Edward

    Barter, John

    Cordeaux, Lt.-Col. J. K.

    Glyn, Sir Richard (Dorset, N.)

    Batsford, Brian

    Corfield, F. V.

    Goodhew, Victor

    Beamish, Col. Sir Tufton

    Coulson, Michael

    Grant-Ferris, R.

    Bell, Ronald

    Courtney, Cdr. Anthony

    Grimond, Rt. Hon. J.

    Bennett, Dr. Reginald (Cos & Fhm)

    Craddock, Sir Beresford (Spelthorne)

    Grosvenor, Lt.-Col. R. G.

    Berkeley, Humphry

    Critchley, Julian

    Gurden, Harold

    Biffen, John

    Crosthwaite-Eyre, Col. Sir Oliver

    Hail, John (Wycombe)

    Biggs-Davison, John

    Curran, Charles

    Hamilton, Michael (Wellingborough)

    Bingham, R. M.

    d'Avigdor-Goldsmid, Sir Henry

    Harrison, Brian (Maldon)

    Bishop, F. P.

    Digby, Simon Wingfield

    Harrison, Col. Sir Harwood (Eye)

    Black, Sir Cyril

    Donaldson, Cmdr. C. E. M.

    Harvey, Sir Arthur Vere (Maccleef'd)

    Bossom, Hon. Clive

    Drayson, G. B.

    Heald, Rt. Hon. Sir Lionel

    Bowen, Roderic (Cardigan)

    du Cann, Edward

    Henderson, John (Cathcart)

    Boyd-Carpenter, Rt. Hon. John

    Duncan, Sir William

    Hiley, Joseph

    Boyle, Rt. Hon. Sir Edward

    Eiliot, Capt. Walter (Carshalton)

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

    Brown, Alan (Tottenham)

    Emmet, Hon. Mrs. Evelyn

    Hill, Mrs. Eveline (Wythenshawe)

    Bullard, Denys

    Errington Sir Eric

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

    Bullus, Wing Commander Eric

    Farey-Jones, F. W.

    Hirst, Geoffrey

    Burden, F. A.

    Fell, Anthony

    Holland, Philip

    Hopkins, Alan

    Marshall, Douglas

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

    Hornby, R. P.

    Marten, Neil

    Smithers, Peter

    Hornsby-Smith, Rt. Hon. Dame P.

    Matthews, Gordon (Meriden)

    Smyth, Rt. Hon. Brig. Sir John

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

    Mawby, Ray

    Spearman, Sir Alexander

    Howard, John (Southampton, Test)

    Maxwell-Hyslop, R. J.

    Stevens, Geoffrey

    Hughes Hallett, Vice-Admiral John

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

    Steward, Harold (Stockport, S.)

    Hughes-Young, Michael

    Mills, Stratton

    Studholme, Sir Henry

    Hurd, Sir Anthony

    Morgan, William

    Talbot, John E.

    Hutchison, Michael Clark

    Morrison, John

    Tapsell, Peter

    James, David

    Nabarro, Sir Gerald

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

    Jenkins, Robert (Dulwich)

    Nicholson, Sir Godfrey

    Teeling, Sir William

    Johnson, Dr. Donald (Carlisle)

    Nugent, Rt. Hon. Sir Richard

    Temple, John M.

    Johnson Smith, Geoffrey

    Orr, Capt. L. P. S.

    Thatcher, Mrs. Margaret

    Jones, Rt. Hn. Aubrey (Hall Green)

    Page, Graham (Crosby)

    Thompson, Sir Kenneth (Walton)

    Kaberry, Sir Donald

    Page, John (Harrow, West)

    Thompson, Sir Richard (Croydon, S.)

    Kerr, Sir Hamilton

    Pannell, Norman (Kirkdale)

    Thorpe, Jeremy

    Kershaw, Anthony

    Pearson, Frank (Clitheroe)

    Touche, Rt. Hon. Sir Gordon

    Kirk, Peter

    Peel, John

    Turner, Colin

    Kitson, Timothy

    Pickthorn, Sir Kenneth

    Turton, Rt. Hon. R. H.

    Lagden, Godfrey

    Pitman, Sir James

    Tweedsmuir,Lady

    Lancaster, Col. C. G.

    Pitt, Dame Edith

    Vaughan-Morgan, Rt. Hon. Sir, John

    Leavey, J. A,

    Pott, Percivall

    Leburn, Gilmour

    Price, David (Eastleigh)

    Vickers, Miss Joan

    Legge-Bourke, Sir Harry

    Prior, J. M. L.

    Wade, Donald

    Linstead, Sir Hugh

    Prior-Palmer, Brig. Sir Otho

    Wakefield, Sir Wavell

    Longbottom, Charles

    Proudfoot, Wilfred

    Walder, David

    Loveys, Walter H.

    Pym, Francis

    Walker, Peter

    Lubbock, Eric

    Quennell, Miss J. M.

    Walker-Smith, Rt. Hon. Sir Derek

    Lucas, Sir Jocelyn

    Rawlinson, Sir Peter

    Ward, Dame Irene

    Lucas-Tooth, Sir Hugh

    Redmayne, Rt. Hon. Martin

    Williams, Dudley (Exeter)

    McAdden, Sir Stephen

    Rees, Hugh

    Williams, Paul (Sunderland, S.)

    McLaren, Martin

    Rees-Davies, W. R.

    Wilson, Geoffrey (Truro)

    Maclay, Rt. Hon. John

    Renton, Rt. Hon. David

    Wise, A. R.

    Maclean,SirFitzroy(Bute&N.Ayrs)

    Ridley, Hon. Nicholas

    Woodhouse, C. M.

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

    Ridsdale, Julian

    Woollam, John

    McMaster, Stanley R.

    Robson Brown, Sir William

    Worsley, Marcus

    Macpherson, Rt. Hn. Niall(Dumfries)

    Russell, Ronald

    Maltland, Sir John

    Sharpies, Richard

    TELLERS FOR THE AYES:

    Marlowe, Anthony

    Shaw, M.

    Mr. Gordon Campbell and

    Marples, Rt. Hon. Ernest

    Skeet, T. H. H.

    Mr. MacArthur.

    NOES

    Albu, Austen

    Hale, Leslie (Oldham, W.)

    Morris, John

    Allaun, Frank (Salford, E.)

    Hannan, William

    Moyle, Arthur

    Allen, Scholefield (Crewe)

    Harper, Joseph

    Neal, Harold

    Awbery, Stan (Bristol, Central)

    Hart, Mrs. Judith

    Noel-Baker, Francis (Swindon)

    Bence, Cyril

    Hayman, F. H.

    Oram, A. E.

    Bennett, J. (Glasgow, Bridgeton)

    Healey, Denis

    Pannell, Charles (Leeds, W.)

    Benson, Sir George

    Henderson, Rt. Hn.Arthur(RwiyRegis)

    Pavitt, Laurence

    Blackburn, F.

    Herbison, Miss Margaret

    Peart, Frederick

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

    Holman, Percy

    Popplewell, Ernest

    Boyden, James

    Houghton, Douglas

    Prentice, R. E.

    Braddock, Mrs. E. M.

    Hoy, James H.

    Price, J. T. (Westhoughton)

    Bray, Dr. Jeremy

    Hughes, Cledwyn (Anglesey)

    Probert, Arthur

    Butler, Mrs. Joyce (Wood Green)

    Hughes, Emrys (S. Ayrshire)

    Pursey, Cmdr. Harry

    Callaghan, James

    Hughes, Hector (Aberdeen, N.)

    Randall, Harry

    Carmichael, Neil

    Hunter, A. E.

    Rankin, John

    Castle, Mrs. Barbara

    Irving, Sydney (Dartford)

    Reynolds, G. W.

    Cliffe, Michael

    Janner, Sir Barnett

    Roberts, Goronwy (Caernarvon)

    Collick, Percy

    Jeger, George

    Robertson, John (Paisley)

    Corbet, Mrs. Freda

    Jenkins, Roy (Stechford)

    Robinson, Kenneth (St. Pancras, N.)

    Cronin, John

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

    Ross, William

    Crosland, Anthony

    Jones, Dan (Burnley)

    Royle, Charles (Salford, West)

    Cullen, Mrs. Alice

    Jones, Elwyn (West Ham, S.)

    Shinwell, Rt. Hon, E.

    Cullen,, Mrs. Alice

    Kelley, Richard

    Silverman, Julius (Aston)

    Darling, George

    Kenyon, Clifford

    Skeffington, Arthur

    Deer, George

    Key, Rt. Hon. C. W.

    Small, William

    Dempsey, James

    King, Dr. Horace

    Snow, Julian

    Diamond, John

    Lawson, George

    Soskice, Rt. Hon. Sir Frank

    Dodds, Norman

    Lewis, Arthur (West Ham, N.)

    Spriggs, Leslie

    Ede, Rt. Hon. C.

    Mabon, Dr. J. Dickson

    Steele, Thomas

    Edwards, Rt. Hon. Ness (Caerphilly)

    MacColl, James

    Stewart, Michael (Fulham)

    Edwards, Walter (Stepney)

    McInnes, James

    Stonehouse, John

    Fernyhough, E.

    McKay, John (Wallsend)

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

    Foot, Dingle (Ipswich)

    McLeavy, Frank

    Stross, Dr. Barnett(Stoke-on-Trent,C.)

    Foot, Michael (Ebbw Vale)

    MacPherson, Malcolm (Stirling)

    Swingter, Stephen

    Forman, J. C.

    Mallalieu, E. L. (Brigg)

    Thomas, George (Cardiff, W.)

    Fraser, Thomas (Hamilton)

    Manuel, Archie

    Tomney, Frank

    Galpern, Sir Myer

    Marsh, Richard

    Warbey, William

    George, LadyMeganLloyd(Crmrthn)

    Mayhew, Christopher

    Wells, William (Walsall, N.)

    Ginsburg, David

    Mendelson, J. J.

    Willey, Frederick

    Gordon Walker, Rt. Hon. P. C.

    Millian, Bruce

    Williams, D. J. (Neath)

    Grey, Charles

    Mitchison, G. R.

    Williams, Ll. (Abertillery)

    672

    673

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

    Wyatt, Woodrow

    TELLERS FOR THE NOES:

    Wilson, Rt Hon. Harold (Huytod)

    Yates, Victor (Ladywood)

    Mr. Redhead and Mr. McCann.

    Woof, Robert

    Clause 44.—(AMENDMENT OF S. 130 OF ACT OF 1952 (CESSATIONS))
    Question proposed, That the Clause stand part of the Bill.
    Mr. John Diamond: I rise to save the Committee's time, having regard to the fact that the Financial Secretary gave us a clear and lucid explanation of the purpose of this Clause during the Second Reading of the Bill. He made it clear how this Clause was to be distinguished from the Clause we have just passed. He said:
    "…I should say that the main object of the proposal is to limit the opportunities for avoidance."—[OFFICIAL REPORT, 6th May, 1963, Vol. 677, c. 53.]
    We understand and accept that, but immediately we are prompted to ask why it has taken so long for the Government to introduce this Clause. What I seek to do is to ask the Government two or three relevant questions.
    This anti-avoidance provision, which we welcome up to a point, has been needed for a long time. From this side of the Committee we have many times made the case that these closing and opening provisions of a business were opportunities for tax avoidance, and that these should be stopped. Indeed, we have suggested methods by which they should be stopped, namely, that the assessments should be transferred from the previous year basis to the actual basis, and in this we have the support of distinguished bodies outside the House.
    The Clause refers to the Income Tax Act, 1952, but the provisions which are being altered go back further than that. My first question, therefore, is: why has it taken the Government so long to deal with a Clause in respect of which there has been tax avoidance, bearing in mind that that tax avoidance has been brought to their attention time and time again by my right hon. and hon. Friends?
    My next question is to ask the Government why, while they were tackling this problem, they did not go the whole hog? Why, instead of this adjustment which merely covers two years of the commencing years of a company's business, and merely has the effect of taxing the profits of the business on the basis of
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    the actual profits earned during those years, they did not go the whole hog and so adjust our taxation system that a company or a trader would pay tax on the profits actually earned during the lifetime of his business by being taxed on the profits?
    What could be more just than that a trader should pay tax on the profits he makes, instead of on the profits he is deemed to make? What could be more just? What could be more equitable? I shall not go further and ask what could be more simple, because I recognise that there are perhaps one or two minor complications, but once we cross the bridge the matter would be straightforward for all time. The Government must recognise that we are moving more and more towards taxing profits on an actual basis, rather than on a previous year basis. Indeed—and I refer to it only shortly—the provision for substituting tax on rents for Schedule A Tax has been based on tax on actual rents received or earned as opposed to a notional figure, albeit that this may mean several readjustments and reassessments.
    My third question is to ask why "1964–65" appears in the second line of the Clause? In short, why is it necessary for the Government to delay a whole year in closing this gap, once they have recognised that it exists and needs to be closed? Why is it that in recent years the Government have adopted the attitude of waving a red flag and blowing a whistle as hard as they can to show when they are proposing to apply tax avoidance measures? Why must we give an extra year's warning that anybody who seeks to continue the advantage which has been open to him for avoiding tax through manipulating in the closing years will be able to do so for a further year?
    If the Economic Secretary says, in reply to my questions, "If the Opposition feel so keenly on these matters, why is it that they did not table specific Amendments to deal with the point about 1964–65 and the limitation of two years as opposed to going further?", I have a clear answer, which is a point of substantial complaint. The Financial Resolution on this was drawn so tightly—we

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    cannot debate it now, but perhaps I can refer to it—that it has been impossible to table Amendments on which to base a debate.
    The Government have shown through their Financial Resolution that they are afraid to discuss the matter. What are they afraid of? Have they no confidence, no belief, in what they are putting forward? If this is not the reason, why should they tie us down so that we cannot put down Amendments to vary 1964–65? Why was it necessary to put 1964–65 in the Financial Resolution? We would have preferred to debate the separate matters and express our views on them.
    All that we can do is to give a grudging welcome to the Clause which moves a step, but only a step, in the right direction, and this after years of delay and of prodding by my right hon. and hon. Friends.
    The Economic Secretary to the Treasury (Mr. Edward du Cann): I am grateful for any welcome, even if it is only grudging, because, to quote the hon. Member for Gloucester (Mr. Diamond), this Clause is a step in the right direction. I agree with the hon. Gentleman's general opinion of this Clause. It is not a tremendous reform. I would not wish to pretend that it is, but it is, as he said, a step in the right direction.
    The whole object of the Clause is to mitigate loss of revenue by the exploitation of the rules governing the assessment of trading and professional profits when a trade or profession ceases or is treated for tax purposes as ceasing. Because of his great experience the hon. Gentleman will know of the commencing rules and the cessation rules, and he will know—indeed he has emphasised the point—that there has been substantial trouble over this matter for quite a long time.
    5.0 p.m.
    In reply to the hon. Member's general complaint about tardiness, I hope that he will think it right to conclude that we have at least been progressing in the matter, in the sense that in 1954 we took specific action which cleared up some of the trouble. I do not suggest that no trouble remains, but we have taken some action, and this is a further piece of
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    action that we are taking in that progression.
    The hon. Member asked how much further we were going, and why we had not gone further this time. I agree that the general aim must be to clear up the position entirely. As to the question of delay, I refer the hon. Member to the Budget speech of my right hon. Friend when he said:
    "The Inland Revenue is examining with the outside experts the possibilities of bringing taxation of company profits for Income Tax on to an accounts basis, as it is already for Profits Tax, which will remove many of the complications and anomalies that are inherent in the present provisions dealing with the opening and closing years of a business and give rise to so many difficulties".—[OFFICIAL REPORT, 3rd April, 1963; Vol. 674, c. 466.]
    The hon. Member said that he thought that these difficulties were minor ones. That is not quite fair. They can be very serious. I have spoken of progress. My right hon. Friend foreshadowed consultations, and they are now taking place, so we are not delaying in that regard.
    The hon. Member may ask why we are not legislating without consultation. He probably knows the answer to that better than I could give it to him. Any provisions made in a very serious, wide-ranging and most important matter of this sort must be generally acceptable to the people with whom we are dealing. I am not talking of those who may set out deliberately to defraud the Inland Revenue, but about the great mass of honourable people who are engaged in trade and industry.
    I am sure that the hon. Member would agree that any system which seeks to provide for the taxation of these people must be one which is not only fair, but is seen to be fair—a system which is workable, practical, sound and sensible. I hope that the hon. Member will agree that in those circumstances it must be right that we should have these consultations, and base any future action that we may think it appropriate to take upon the results of those consultations.
    In any event, I can go further and say that when we have a body of experience such as we so plainly have in the kind of bodies with which the hon. Member is so familiar, it is advantageous to the Inland Revenue to have the benefit of their advice and experience.
    Mr. Diamond: The hon. Member suggested that I might not be in support of consultations taking place. Of course, I am in support of consultations. But I can see no reason why consultations should not have immediately followed the Act of 1954, which was passed nine years ago. Have the Government been engaged in consultations over those nine years? He said that it is right to take note of the views of bodies with which I am familiar. The Institute of Chartered Accountants has been making representations concerning a change to an actual basis for four or five years.
    Mr. du Cann: I understand what the hon. Member is saying, and he is making a fair debating point, but he must agree that he seems to be suggesting that legislation on this subject is almost a matter of sitting down in front of a desk with a piece of paper and a pen and writing it. It is by no means as simple as that. He seemed to gloss over the complications and difficulties of the matter. This is an extraordinarily complex matter. Be that as it may, the past is past. The fact is that action is being taken now, and discussions are being carried on now.
    The hon. Member's third question related to retrospection. If the change were to be made for assessments in 1963–64 it could affect assessments for 1961–62, and this could be criticised as being retrospective. It was with that point in mind that the Government decided to effect some sort of compromise.
    I am grateful to the hon. Member for saying that the Clause has his support, even though he would like it to go further. I am glad to know, by inference at any rate, that he agrees that this is a useful and forward-looking proposal.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.

    Clause 45.—(ACCOMMODATION OCCUPIED BY HOLDER OF OFFICE OR EMPLOYMENT.)
    Question proposed, That the Clause stand part of the Bill.
    Mr. Barber: I want to clear up one point about which there seems to have been some misunderstanding. The Com-
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    mittee will recall that at an earlier stage I explained the general purpose of the Clause, and referred to it on a number of occasions when we were discussing Schedule 7.
    I want to make it clear that the charge will extend only to people who are in law occupiers. This term excludes an employee who is required to live where he does for the proper performance of the duties of his employment, because such an employee is no more than a representative occupier—that is, he is on the premises merely as representing his employer. His employer is regarded by the law as the true occupier.
    Representative occupiers have not been taxed in the past under Schedule A on the value of their occupation, and they will not be taxed under the Clause. We have considered whether, in order to make the position clearer, we should set out in the Clause some description of what is ment by representative occupiers who are not covered by the Clause.
    The difficulty, as the hon. and learned Member for Kettering (Mr. Mitchison) will appreciate, is that the distinction between the occupier, who is within this Clause, and the so-called representative occupier, who is outside it, rests on a long line of decided cases in which the courts have said that the term "occupier", in relation both to Income Tax and to rating, does not include the person who lives in accommodation because he is required under the terms of his employment to live there for the proper performance of the duties of his employment. Where this condition is All-filled he lives on the premises merely as a representative of his employer, and the true occupier is the employer.
    Persons who have been held by the courts to be representative occupiers, and so to be outside the Clause, include the police superintendent who is required to live in a house adjoining and belonging to a police station, the bank manager who is required to live on the premises, the Methodist minister, who is required to live in a manse provided by the circuit, and the colliery manager who is required to live in company premises near the pit head. Other persons excluded by the Inland Revenue are caretakers, some school masters who are obliged to live on the job, and farm workers living in tied cottages.

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    The important point is that in this Bill there is no change whatsoever in the principles which govern the question whether a person is an occupier proper or a so-called representative occupier. The principles which will apply on this point after the passing of this Bill are the same as those which have applied hitherto for the purposes of Schedule A. It was because I had received a number of letters from hon. Members on this point, and because they thought that there was some extension of or change in the distinction between an occupier and a representative occupier, that I thought that it would be helpful to say, on this occasion, that that is not so.
    Mr. Douglas Houghton: The Committee is obliged to the Financial Secretary for that explanation. It sets at rest some of the doubts and anxieties which have been expressed by hon. Members on both sides of the Committee. Perhaps he will clear up a little later—or immediately, if he cares to do so—the position of police officers. He mentioned the case of the police superintendent who is required to live in a house adjoining a police station. There are many police officers who, while not required to occupy a house adjoining a police station, are nevertheless required to occupy a house provided by the police authorities. We should like an assurance that such representative occupiers, as they are described, will not be caught by Clause 45.
    I was interested in the references to and definitions of occupiers which do not appear in the Clause and to those which are exempted by the Clause. The Clause deals with certain types of occupier without clearing up any doubts about other kinds of occupier. When we were discussing Schedule 7 I said something about Clause 45 being an anti-avoidance Clause as much as anything else, and the Financial Secretary said that he did not think he could go as far as that. But it seems clear that a lot of people have been occupying accommodation made available to them by their employers and have neither paid tax on the amenity value of the accommodation nor paid more for it than the tax on the actual Schedule A valuation.
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    During the Second Reading debate the Financial Secretary explained that those who pay no rent are nevertheless required to pay Schedule A tax. Since they have no rent from which to deduct the tax, the burden of that tax fell on them. Even if it did, it was good value for money. They paid only the Schedule A tax and not the full rent for the accommodation. Nor were they taxed on the full value of the accommodation. So there has been a great deal of untaxed amenity value here in one way or another.
    There are a number of employers who, when officers are transferred or otherwise, offer accommodation on different terms to employees. Presumably that type of accommodation, in which the officers are not required to live, will come within the terms of Clause 45. The Financial Secretary referred to people required to live in the premises for the proper performance of their duties. A police officer could be required to live in certain accommodation in order to be in a particular place and available for the purposes of his duty in a more convenient manner, and would presumably, therefore, be exempt from the provisions of Clause 45. The Parliamentary Secretary can clear up that point.
    Subsection (3) deals with the definition of "being available" to a person, and the Parliamentary Secretary has just explained that the Clause will deal only with those who are occupiers. Is this watertight? I do not know. There are some queer goings on in the hidden world of business and commerce, and one comes across cases where directors and executives seem to have facilities for the occupation of accommodation which, I suppose, could be regarded as available to them. But it might not be regarded as accommodation which they are required to occupy for the proper performance of their duties. If a managing director, for example, is asked by his firm—required by his firm, if hon. Members wish—as part of the conditions of his contract to occupy a luxury flat in the West End of London in order to be on the spot to entertain business guests and to present a certain posture of prestige and affluence to the community at large, does that requirement turn him into a representative occupier? I think that the Financial Secretary must have

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    enough material at his disposal to answer, and I am sure that he is adequately briefed to throw more light on this matter for the benefit of the Committee.
    5.15 p.m.
    Now that we are on this point, the dog may as well gnaw this bone and get the most out of it. The opportunities are few and far between. When we wish to put down new Clauses or Amendments with this sort of object in view, we are harassed by the Standing Orders or rules that we cannot put down things which will impose, directly or indirectly, a charge upon the citizen. So when we do get something which will achieve something along the lines that we wish we may be forgiven for pursuing the matter as far as seems right and proper. I hope that the Financial Secretary will be able to give an assurance.
    We have disposed of Schedule 7. I was fully in agreement with what the Schedule proposes to do in relation to this Clause. The explanation by the Financial Secretary during the Second Reading debate seemed to suggest that this had been done because Schedule A was being abolished. But it seems to me that there was a case for doing something on these lines long before Schedule A was abolished. Since there is now no Schedule A in the background for the purpose of assessing the value of this accommodation, it is necessary to recreate in this special connection that elusive person the "hypothetical tenant". We have chased the hypothetical rent all round the houses. My hon. Friend the Member for Dunbartonshire, East (Mr. Bence) has pursued the hypothetical tenant with his hypothetical rent into a great and infinite variety of hypothetical situations, and we are not encouraging my hon. Friend to try to do the same kind of thing again this afternoon.
    I think that Schedule 7 is right in this connection, that we should erect a value under current letting conditions, current values, in order to apply it to Clause 45. We can no longer apply Schedule A. It has gone, and something has to be put in its place. I think that we are reassured on subsection (6) which will stop a person hiding behind his wife's occupation in order to avoid the consequences of this Clause. I shall have to take sub-
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    section (3) and the definition of being available to as being the best which could be done with the definition which is, of course, fundamental to the application of the Clause.
    I have given a blessing to Clause 45, for which the Financial Secretary will be grateful. We should like to know that it does exclude persons who surely ought to be excluded, and we hope that it will catch the people who ought to be caught.
    I am glad that the Financial Secretary gave an explanation before it was necessary for me to rise to ask for one. Earlier I rebuked the occupants of the Treasury Bench for becoming slovenly and said that when a Clause came along it was their duty to explain what the Clause was about. I rather thought that the Treasury Bench was slipping. was about to say that perhaps we could get some understanding of the rules in this matter.
    We do not ask a Treasury Minister to rise and explain a Clause when we know what it means, although we may ask him to explain a Clause when we want to lay a snare for the Minister, as in the case of my hon. and learned Friend the Member for Kettering (Mr. Mitchison) on Clause 43. [An HON. MEMBER: "Oh dear."] Well, he fell into something, did he not? We thought there was a genuine tax relief being given, but we found it was merely making honest people of those who had been avoiding the tax far some years past. That certainly was a revelation. It followed the Government's well-known policy of when they are unable to enforce the law to change the law so as to remove further opportunities for breaking it. That is what they did with regard to betting, and one day they will do it with regard to the speed limit. They have done it in connection with Income Tax. The assurances for which we ask can no doubt be given both as to exemptions and those to be included under the Clause.
    Mr. Graham Page: I hesitate to rise to comment in case I should qualify as one of the dogs of whom the hon. Member for Sowerby (Mr. Houghton) spoke, or as one of the snares referred to in relation to the hon. and learned Member for Kettering (Mr. Mitchison). Although I must humbly congratulate my hon. Friend the

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    Economic Secretary on the admirable summary of the law he gave, unfortunately the General Commissioners, the Special Commissioners and the judges are not apt to read speeches made by my hon. Friend in this Committee. Although he may have set out the law very fully and ably, I should have thought it better to state it in the Clause itself.
    There must surely be a reasonable definition of a service tenant as opposed to an occupier. We find again and again in the law a distinction is made between the two, but that does not mean that the service tenant is not an occupier. That is where the confusion arises in the wording of this Clause. It speaks of "the occupier", a phrase which is comprehensive of the service tenant, the person who is in a house by reason of his employment. On a first reading one would have thought it included many of those categories which my hon. Friend excluded.
    I should have hoped that some words could have been put into the Clause to make perfectly clear who are caught by it and who are not caught. I can think of instances which my hon. Friend has not mentioned, such as the brewery manager. There are many such as those on whom the hon. Member for Sowerby touched. There are directors of companies who have show houses for the purpose of entertaining. I do not say that is wrong. It is a form of advertisement, a form of sales promotion; but where do we class them under this Clause?
    My second question on the Clause is about annual values. I shall not go back to the discussion on the Seventh Schedule, but it is important in this connection to know how the man who is to be taxed under this Clause shall know what the figure of annual value is. At present he knows the Schedule A value, but the only clue he has in this Clause is that annual value is to be determined in accordance with the Seventh Schedule. By whom and when will it be determined? How will he know the figure? When does his taxation under this Clause commence? From what date does it start, and when does it come into effect against P.A.Y.E.?
    This is against Schedule E, and it will he puzzling to the man coming within the Clause when he is called upon to pay
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    a substantial amount of increased tax because, whereas he was allowed Schedule A, it will now be annual value, which will be three or four times as much as the previous figure. He will want to know from when that is to start, when he will know definitely what the figure is, and when it will be taken into account against his P.A.Y.E.
    Mr. Cyril Bence: I have a question to ask in respect of this Clause. I was about to ask two questions, but one of them has now been answered. I was going to ask about the lighthouse keeper, but I now understand that he would be in the same position as a janitor. I want to ask, first, about the "representative occupier" and the adding of his emolument to his income because he lives in a house which is part of the job he has taken.
    In the development districts, local authorities provide houses for key workers in some industries. This happens particularly when a company takes a factory in a development district in Scotland. The company gets into touch with the local authority which provides a dozen or twenty houses for key workers. Workers occupy those houses because they are taking jobs as key workers. This happens in my constituency. The annual rent of many of these houses is lower than the annual gross value. Those men cannot be said to be "representative occupiers" because the houses are owned by the local authority and they are not representatives of the local authority. The houses are not owned by the company employing those workers. Can those workers be caught by this Clause?
    A skilled worker may go from a Rootes factory in Birmingham to a factory at Linwood and the local authority provides a house, but the rent is lower than the gross annual value. Can the Revenue add the rent because that is a house which goes with the job? This worried me when I first read the Clause. I wondered whether a man in that position would be caught by it. In the industrial belt of Scotland and in the North-East there are thousands of key workers in that position. The houses are not tied houses because they do not belong to the companies employing the workers.

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    They are not tied in the same way as 10, Downing Street, 11, Downing Street, or Chequers. Is the annual value of 10, Downing Street added to the Prime Ministers salary as an emolument? I do not know if that is so, but in this case there are public properties and the annual valuation cannot be fixed on normal principles because the houses are not free for letting. It is an annual value arrived at by discussion and agreement. Under the Scottish Rating and Valuation Act agreements are made in respect of domestic properties. This is done in the case of lighthouses. I remember a debate on this in Scottish Grand Committee, and debates on these things in that Committee are always very interesting. We had a long debate on Scottish lighthouses. What is the gross annual value of a residence attached to a lighthouse? It is not free to be let to anyone. Who would want to live in a lighthouse except a lighthouse keeper?
    Many properties, although they do not belong to the employer, go with the job. I saw a man recently who had been provided with a house which did not belong to his employer but which had been provided for a worker coming into the job he held. What is the position of a man who is living in a house provided for him as a result of taking a job but not provided by his employer'? Sometimes he pays no rent; it is paid by his employer. Alternatively, if it is a local authority house the rent which he pays may be lower than the gross annual value of the house. Would the difference be added to his emoluments from his employers?
    5.30 p.m.
    Mr. McMaster: I am grateful to my hon. Friend for his help but I should like to raise with him a matter arising from the strictly legal definition which is always given to these words when they are interpreted in the courts. As has been said, judges are apt not to read our debates. I am concerned with the strict use of the word "occupier" in law. What happens if a person simply uses the premises but does not qualify as an occupier at law? Would it not be wise to look again at the Clause and if necessary to move an Amendment on Report to deal with the situation in which the person using the premises is not an
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    occupier but is getting a benefit from the premises and therefore may be subject to tax?
    Mr. Barber: May I reply first to my hon. Friend the Member for Belfast, East (Mr. McMaster)? The provisions of the Clause make no change whatever in the definition of an occupier, and I have not had brought to my attention any circumstances which would warrant any change. If my hon. Friend has any point in mind and he would like to contact me about it, I will look into it. But it was not the purpose, and it is not the effect, of the Clause to make any change in the definition of an occupier.
    The hon. Member for Sowerby asked me, in particular, about the position of a police officer living in accommodation provided for him by the police force but not necessarily part of a police station. In normal circumstances, if the house were connected to a police station, I think that he would be a representative occupier. But if it is merely an ordinary dwelling which is provided for him by the police authority, the situation may be different.
    For reasons which the hon. Member appreciates, it is difficult to be precise about particular cases without knowing the full circumstances. The word "occupier" to which this Clause refers does not include a person who lives in accommodation because he is required under the terms of his employment to live there for the proper performance of the duties of his employment. Those are the words which the hon. Member repeated. But the system would be wide open to avoidance if the obligations were not those which arose from the nature of the particular person's duties, and an arbitrary instruction by the employer is not in itself sufficient, I come back to what I said previously—that the Clause makes no change whatever in the principles which govern the question whether the person is an occupier proper or whether he is a so-called representative occupier.
    Mr. Mitchison: Am I right in understanding that people who have lived in a house previously in conditions which did not make them liable to tax will remain not liable to tax?
    Mr. Barber: Unless I have the precise circumstances given to me I am not

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    sure exactly how it works out in every case which is covered by the anti-avoidance provisions in Sections 161 and 162 of the Income Tax Act, 1962. They deal, broadly speaking, with the position of directors and others with incomes over £2,000 a year, but in the normal case this will apply to the person who hitherto paid Schedule A on a house which was provided for him by his employer either rent free or an an economic rent. In future he will pay under Schedule E in accordance with the provisions of Schedule 7 of the Bill.
    This is fair, because an employee who is provided with a house rent-free or at an uneconomic rent in reality has it as an emolument of his employment, and it is reasonable to tax it. Some employees are provided with a house rent free if one is available. Others, where a house is not available, receive additional salary in lieu of a provision of a house. It is surely right that they should receive broadly the same tax treatment.
    Mr. Mitchison: In view of what my hon. Friend the Member for Sowerby (Mr. Houghton) said, I assure the hon. Member that there is no trap in my question. I recognise that this is a very difficult matter. But I understood him to say that no person who had occupied a house and had not been liable to pay tax on it before would become liable to pay tax on it by reason of the Clause. The instance which he gave about Schedule A conforms to that, because tax has been paid before in a different form. But if I am wrong in that assumption, I wish that the hon. Member would explain exactly what he means.
    Mr. Barber: I know of no case in which a person who previously did not pay Schedule A would under this Clause pay tax under Schedule E, other than probably certain people who previously did not pay tax under Schedule A but were assessed to tax under Schedule E under the anti-avoidance provisions which were introduced to deal with directors and others with incomes over £2,000 a year. They previously paid tax under Schedule E. It is difficult to answer off the cuff, but I think that they will now be governed by this Clause, which is also concerned with Schedule E. That is why I could not answer the hon. and learned Gentleman precisely.
    Mr. Callaghan: I am consultant to the Police Federation. What the hon. Member said could be contradictory. Policemen do not pay tax under Schedule A at the moment because they are required to live in houses provided by the police authority, but a number of those houses are not attached to police stations. They are nevertheless required to live there and can be transferred from one to another. I understood the hon. Member to say earlier that in those circumstances they might be assessed under Schedule E because the houses are not attached to police stations.
    Mr. Barber: I am sorry if, with a desire to be as accurate as possible and not to mislead the Committee or those outside, I did not give the hon. Gentleman the right impression. It does not follow that, because a person does not live, as it were, on the site where he works or carries out his duties, he cannot be a representative occupier and thus be outside the ambit of the Clause. It is not sufficient for an employer merely to give an arbitrary instruction—a police authority to a police officer—that he must live in a particular house if living in it is not connected with his duties. He must have to live there for the proper performance of his duties. I understood the hon. Member for Cardiff, South-East (Mr. Callaghan) to say that in the past a police officer had been exempt from Schedule A, presumably on the ground that he was a representative occupier.
    Mr. Callaghan: There is no intention to alter the present conditions of service of the police to the operation of the Clause?
    Mr. Barber: I am sure that that will not be the case. I can certainly give that assurance to the hon. Member.
    The hon. Member for Sowerby said that I had given the impression that this provision had been introduced as a consequence of the abolition of Schedule A and he thought that this was not the right impression for me to have given. There is a strong connection between the operation of Schedule A and the Clause. Had Schedule A not been abolished there would have been a at current prices, and the result would revaluation of all the properties involved, have been much the same as this charge

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    under Schedule E. It is because there is to be no revaluation—because Schedule A has gone—that it has been necessary to make this provision.
    My hon. Friend the Member for Crosby (Mr. Graham Page) and my hon. Friend the Member for Belfast, East raised a number of points. They both thought that I had made what was a clear statement of the law concerning occupiers proper and representative occupiers. My hon. Friend the Member for Crosby pointed out that the courts and Special Commissioners would not be able to read or take note of what I had said. I think that any efficient solicitor, like my hon. Friend, would draw attention to the case law on this point; and since my statement was based on that law the result, I hope, would be the same.
    My hon. Friend the Member for Crosby asked from which date the provision would operate. The answer is from 6th April, for the year 1963–64 onwards. He also asked how the taxpayer would know what valuation was put on his property for the purposes of Clause 45. The answer, broadly speaking, is that he would find this out from the notice of assessment. I have not been able to ascertain the details of the provisions for appeal, but I can assure my hon. Friend that they exist and that they would be broadly analogous to the sort of rights which a person would have of appeal against a Schedule A valuation.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.
    Clauses 46 to 48 ordered to stand part of the Bill.

    Clause 49.—(EXTENSION OF EXEMPTION FOR SMALL ESTATES.)
    Mr. Mitchison: I beg to move, in page 50, line I, to leave out "ten thousand" and insert "twelve thousand five hundred".
    I think that it would be convenient for the Committee if we could at the same time discuss the following Amendment, in page 50 leave out lines 5 to 9 and add:

    "Not exceeding £10,000

    Nil

    Exceeding £10,000 and not exceeding £11,000

    2

    Exceeding £11,000 and not exceeding £12,500

    4".

    The Temporary Chairman (Sir Herbert Butcher): If that is satisfactory to the Committee.
    5.45 p.m.
    Mr. Mitchison: The Amendment is designed to go one step further in this respect than the Government have already gone. It concerns the exemption from Estate Duty in favour of small estates—a duty which has lasted for a great many years and which, hitherto, has ranged up to £4,000. The Government would increase the exemption up to £5,000 and make the appropriate alterations at the bottom of the scale to hitch it on, so to speak, to the existing table, but we propose, faithfully following an interjection made by my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) in the Budget debate, to raise the £5,000 to £10,000 and, again, to make the appropriate changes at the bottom of the scale. The substantial point is that we wish to increase the exemption to £10,000 in respect of the existing £4,000 or the Government's £5,000.
    I find from my experience in my constituency—and I have no doubt that other hon. Members find the same—that there are many cases nowadays where a middling or small estate—and we are talking about that kind of property now —consists largely of a house in which the family has lived. I suspect that the real reason why the Government have introduced their change—and I do not wish to quarrel with them over it, although it does not go as far as we would wish—is the increasing value of houses throughout the country, particularly in the towns.
    I need not elaborate upon this, for we all know about the rise in the prices of houses. They have gone up at a very rapid rate and to a considerable extent. Where one used to pay so much for a house one must now pay three times as much, certainly in the large towns. This has particularly affected the type of house in which the typical small man lives; a house of a moderate size, saleable under present conditions and very much favoured at the moment for good or ill as a result of the Government's failure to arrange for sufficient houses to let. I will not develop this argument at length. We are debating the Finance Bill and not the Government's housing policy. We

    691
    all know that the effect of recent legislation has been to oblige more and more people to buy houses. We can argue about whether or not that is an advantage another time. The result of it, one might say, has been to steady the market, although it has really pushed up prices considerably. This is substantially the point behind the Amendment.
    I hope that no one will put forward the time-honoured and totally untrue argument that the Labour Party has any objection to owner-occupiers. Indeed, we on this side of the Committee have done more for them in the past than hon. Members opposite. [HON. MEMBERS: "Oh."] We always get those sort of noises made by hon. Members opposite when this is said, but it is we who introduced the improvements. However, for present purposes these remarks are off the mark. Perhaps it was my fault for trailing my coat a little.
    We are really considering the question of small estates, but with the principle of my remarks in view. The value of money has changed and the result has been that what appears to be worth so much in terms of spending nowadays probably corresponds to about one-third of that sum years ago. I will leave the matter as vague as that. The increase from £4,000 to £5,000 is all right as far as it goes, but it does not go far enough to meet the needs of the situation. It is, therefore, not just in a sort of huckstering spirit of who can offer most, but in the real belief that more ought to be done in these cases, that I move this Amendment.
    Judging from the figures we have been given of the effect of the Government's Amendment, the cost will be substantial but hardly prohibitive, and if anyone intends to make nasty comparisons, I can only say—just wait until we come to the cost of the concession on stamps. Again, if we are to be told that this is really too much at once, I think that this is a case where the enlargements of the limit of exemption have fallen behind the sheer rapidity in the rise, in this case, of house prices, and that it is time that we caught up with what has happened. So it is mainly on the ground of the rise in the cost of house property—and there are numerous cases where by far the
    692
    largest part of the estate takes that form —that this Amendment has been put down.
    I would add that where one has an estate that substantially consists of nothing but a house, it may be very difficult to raise the money to pay Estate Duty. I do not say that it will be impossible, but it may make things much harder. I am trying to put what I believe to be a reasonable and fair case in as quiet and reasonable a way as I possibly can and, once again, I assure the Financial Secretary that I am laying no traps for him, but merely trying to keep him up to date.
    Mr. Donald Wade: I support the Amendment, or at least the intention behind it. It is true that this staggering increase in the value of house property, particularly in London and the South-East, can have serious effects on an estate consisting mainly of a house and not other substantial assets. Two or three sisters may live together, having no great savings, and die one after the other in a comparatively short time. In such a case, there are no special provisions for exemption as there are, I think, in the case of husband and wife. If that estate consists mainly of a house, the house simply must be sold to pay the Estate Duty. That is the problem we have to face.
    Mr. Bruce Millan: While I support the Amendment, I cannot do so with great enthusiasm if it is to be considered in isolation. There is a very strong argument for removing the lower rates of Estate Duty, but T would prefer that to be done as part of a very much more radical reform of the duty as a whole. With Estate Duty, as with a number of other taxes—but with Estate Duty more than any other—we have the rather absurd position of high nominal rates of tax, on the one hand, but very much lower effective rates of tax, on the other. That is an extremely unsatisfactory position, and gives us the worst of all worlds.
    From the present Government's point of view, that is probably not a bad thing. Pointing to rates of Estate Duty that go up to no less than 80 per cent., they can say, "Look how we tax capital. Look how radical we are in the distribution of capital." They can use that

    693
    argument particularly when the complaint may be made that we do not have a capital gains tax, because they can then say that we do not need a capital gains tax or anything else because we have these high rates of Estate Duty.
    It is true that we do have high rates of Estate Duty, but the simple fact is that those high rates have made very little impact on the distribution of wealth. Wealth is still remarkably unequally distributed, as one can see by reference to the Estate Duty statistics. About 2 per cent. of the estates passing in any one year comprise about 50 per cent. of the capital involved—
    The Temporary Chairman (Sir Herbert Butcher): The hon. Member is going somewhat wide of the Amendment before the Committee.
    Mr. Millan: I am only relating this to the Amendment, Sir Herbert. If you will be good enough to be patient for a moment more you will probably see that my argument is relevant.
    While we have this high rate at the top end of the scale we have, at the other end, low rates, which we are now amending by the Government's Clause, resulting in the bringing into Estate Duty of large numbers of small estates. I estimate that probably 40,000 estates of up to £10,000 are falling into Estate Duty annually out of a total of, perhaps, 65,000. That large number of small estates clutters up the Revenue in its administration of the whole of Estate Duty.
    There is, therefore, very strong argument for removing them from the duty altogether, and allowing the Revenue to get on with what ought to be its proper job of looking after the administration of Estate Duty on the much larger estates. We clutter up our administration with all these small estates, but do not effectively tax the much larger estates.
    Even if the yield of taxation were to be exactly the same, I would much rather we had more rates for Estate Duty, and very much more effective rates. That would involve a new look at the whole question—
    The Temporary Chairman: I would rather the hon. Gentleman did not pursue that argument at this moment.
    Mr. Millan: The trouble with this Amendment is that while it tackles the problem at the lower end of the scale, it does absolutely nothing about tackling it at the higher end. While I would have no objection at all to the kind of remission proposed by the Amendment —which, I understand, would cost about £10 million—my support would be much more enthusiastic if I thought that, at the same time, we were to do something very much more effective about Estate Duty, taken as a whole, than is at present the case.
    There is no sign at all in the kind of minor reform the Government make in Clause 49 that they have the slightest intention of doing that. For that reason, I can give the Amendment only the most qualified kind of support.
    Mr. Graham Page: It should not be thought that silence on the back benches on this side of the Committee implies that we are not very anxious to see further reductions in Estate Duty. This Clause is another step made by the Government towards relieving small estates of duty. It is another instalment, as it were, and the Amendment is a rather Oliver Twist Amendment, asking for more. Both sides of the Committee would be pleased to see greater relief given to the smaller estates whenever the Chancellor finds he has the money to devote to this purpose.
    The hon. Member for Huddersfield, West (Mr. Wade) mentioned three sisters. One does not need to go as far as that. I have an example of two sisters living very simply and yet, because they died within a short time of one another, their very small estates became liable to duty. The more we can relieve these sort of estates from duty, the better. There are tragic circumstances where several members of a family die about the same time and the Estate Duty accumulates. I should have thought that the figure in the Amendment is too low once the Chancellor can find the funds to do this. I hope that we shall continue this process of relieving small estates from Estate Duty, and for that reason I welcome the Clause.
    6.0 p.m.
    Mr. J. T. Price: I rise to express my own scepticism along with that already expressed by my hon. Friend the Member

    695
    for Glasgow, Craigton (Mr. Millan). I am prepared to concede that the case for the genuine small estate has been most reasonably and temperately made out by my hon. and learned Friend the Member for Kettering (Mr. Mitchison). We all recognise that many people who live in their own houses may have insurance policies or an annuity by way of superannuation which is transferable to next-of-kin in the case of widows and which is assessed for Estate Duty on its capital value.
    I would not stand in the way of relief being granted to a genuine successor to a small estate where otherwise there would be hardship. We are all familiar with the family left with a little property in bricks and mortar, but with no income in the way of liquid assets to go with it, but, quite seriously, I look at the question like my hon. Friend the Member for Craigton in expressing a sceptical view of the Amendment. I am prepared to support it for the reasons given, and if the resources can be found to meet it, that would be very desirable.
    We are, however, all sufficiently sophisticated to know that although high rates of Estate Duty are chargeable at the upper end of the scale—for example a 40 per cent. rate at about £50,000, and an 80 per cent. rate for the tycoons who are in the millionaire class—people who have large estates make arrangements for their successors to avoid as much imposition of Estate Duty as possible. There are all kinds of covenants—
    The Temporary Chairman: Order. The Amendment does not deal with covenants.
    Mr. Price: I am sorry, Sir Herbert. I want to keep strictly in order, but this Amendment is related to the whole scale of Estate Duty.
    There are only three categories of duty in the Amendment, but surely the logic of it, which we on this side of the Committee may live to regret, is that it may give encouragement to the Conservative Party in the future to tamper with the upper range of Estate Duty. If that happens, we shall have something to say. I do not believe that receipts from Estate Duty are anywhere near in true relation to the totality of the estates. The total global Estate Duty does not bear any
    696
    relationship to the increased prosperity of the wealthy classes in this country. If I may say so without offence, and with the greatest good will to everybody in the Committee, I am being strictly liberal in this. I make no party "crack" about it. The whole spectrum of Estate Duty—
    The Temporary Chairman: Order. We are dealing only with the Amendment which is before the Committee.
    Mr. Price: In that case, I will keep off the spectrum, Sir Herbert. After having no doubt wearied the Committee by this dissertation, I would say, in conclusion, that while I support the Amendment, because I think that in the genuine case it will do good, overall I am critical of it because it may open the door to other things.
    Mr. Barber: In view of what the hon. Member for Westhoughton (Mr. J. T. Price) has just said, I rise with the best of intentions to do what I can to answer the debate. I am sure that we all listened with interest to the hon. Member for Glasgow, Craigton (Mr. Millan) who, in two-and-a-half minutes, managed to mention Estate Duty, an inheritance tax, a wealth tax and a capital gains tax. I doubt, Sir Herbert, with you in the Chair, whether I shall follow the hon. Member in that respect.
    The Amendments are simple in effect. They would replace the proposal contained in the Clause for increasing the Estate Duty exemption limit with proposals of a wider character. Under the Clause, the exemption limit is to be raised from £4,000 to £5,000, with consequential adjustments. The Amendments would raise the limit to £10,000 with other adjustments. The question at issue is simple. My hon. Friend the Member for Crosby (Mr. Graham Page) referred rightly to what had been done in the past. I remind the Committee that this is the third occasion in the last nine years when the Conservative Government have raised the exemption limit. In 1954, it was raised from £2,000 to £3,000. Last year, it was raised from £3,000 to £4,000, and now, again, my right hon. Friend proposes to raise it to £5,000.
    As the hon. and learned Member for Kettering (Mr. Mitchison) reminded us, when my right hon. Friend was

    697
    announcing this additional step in his Budget statement, the hon. Member for Cardiff, South-East (Mr. Callaghan) took the somewhat unusual course of intervening to inform the Committee that he regarded the move as trifling. This seems to me a somewhat odd comment to come from the Opposition. In the first place, we should remember that after raising the exemptlon limit in 1946 the Labour Government never bothered with it again during the whole of their period of office.
    The cost of the Labour Government's action in 1946 was only £500,000 more than the proposal of my right hon. Friend, which the hon. Member for Cardiff, South-East now calls trifling. The hon. Member, of course, may have something far from trifling in mind, because on that one and only occasion when the Labour Government raised the exemption limit they increased the Estate Duty to yield an additional £20 million. That may be the sort of thing that the hon. Members for Westhoughton and Craigton have in mind.
    There is a second reason why it is odd to describe this proposal as trifling, and think that this would please the hon. Member for Craigton. My right hon. Friend's proposal would free altogether from Estate Duty one-fifth of all estates at present paying Estate Duty. In addition, another quarter would receive additional benefits from a reduction in the rates. I agree, of course, that it would he attractive to do what is suggested in the Amendments. Obviously, it is something that would be welcomed throughout the country, but it would cost 1:8½ million in a full year and we have
    to consider whether relief, costing about £8 million to £9 million in Estate Duty, should have this further priority beyond that proposed by my right hon. Friend this year, unless, of course, one were introducing a wealth tax to tax the very same people while they were alive.
    My right hon. Friend has taken what I think the whole Committee will agree is a useful step forward in exempting the one-fifth of all estates which pay duty and benefiting another quarter. While I appreciate the points which have been made by hon. Members opposite, and though I hope that, in the future, we may be able to carry on with the good work which has been done by successive Chancellors in the past few years, I cannot advise the Committee to go further this year and I must therefore, ask that these Amendments be rejected.
    Mr. Mitchison: I always know when the Government are in difficulties. They begin not by defending their own case, but by selecting, in a very selective fashion, certain facts from the past. There is one which they always omit, the last war. We were in power quite soon after it.
    As to the cost of what we suggest, I will not repeat the figures. The cost of the Stamp Duty concessions is four or five times what is asked for here, and what we propose is a far more necessary step in a far more necessary direction.
    Question put, That "ten thousand" stand part of the Clause:—
    The Committee divided: Ayes 191, Noes 131.

    Division No. 122.]

    AYES

    [6.10 p.m.

    Allason, James

    Boyle, At. Hon. Sir Edward

    Courtney, Cdr. Anthony

    Arbuthnot, John

    Braine, Bernard

    Craddock, Sir Beresford (Spelthorne)

    Atkins, Humphrey

    Brewis, John

    Critchley, Julian

    Awdry, Daniel (Chippenham)

    Brooman-White, R.

    Crowder, F. P.

    Balniel, Lord

    Brown, Alan (Tottenham)

    Curran, Charles

    Barber, Anthony

    Bullus, Wing Commander Eric

    Currie, G. B. H.

    Barlow, Sir John

    Burden, F. A.

    d'Avigdor-Goldsmid, Sir Henry

    Barter, John

    Butler, Rt. Hn. R. A. (Saffron Walden)

    Digby, Simon Wingfield

    Batsford, Brian

    Carr, Compton (Barons Court)

    Drayson, G. B.

    Baxter, Sir Beverley (Southgate)

    Carr, Robert (Mitcham)

    du Cann, Edward

    Beamish, Col. Sir Tufton

    Chichester-Clark, R.

    Duncan, Sir James

    Bell, Ronald

    Clark, Henry (Antrim, N.)

    Elliot, Capt. Walter (Carshalton)

    Bennett, Dr. Reginald (Cos & Fhm)

    Clark, William (Nottingham, S.)

    Emmet, Hon. Mrs. Evelyn

    Berkeley, Humphry

    Clarke, Brig. Terence(Portsmth, W.)

    Errington, Sir Eric

    Biffen, John,

    Cleaver, Leonard

    Farey-Jones, F. W.

    Biggs-Davison, John

    Cooke, Robert

    Fell, Anthony

    Bingham, R. M.

    Cooper, A. E.

    Finlay, Graeme

    Bishop, F. P.

    Cooper-Key, Sir Neill

    Fletcher-Cooke, Charles

    Black, Sir Cyril

    Cordeaux, Lt.-Col. J. K.

    Galbraith, Hon. T. G. D.

    Bourne-Arton, A.

    Corfield, F. V.

    Gammans, Lady

    Boyd-Carpenter, Rt. Hon. John

    Coulson, Michael

    Gardner, Edward

    Glyn, Sir Richard (Dorset, N.)

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

    Renton, Rt. Hon. David

    Goodhew, Victor

    Longbottom, Charles

    Ridley, Hon. Nicholas

    Grant-Ferris, R.

    Longden, Gilbert

    Robson Brown, Sir William

    Gresham Cooke, R.

    Loveys, Walter H.

    Roots, William

    Grosvenor, Lt.-Col. R. G.

    Lucas, Sir Jocelyn

    Russell, Ronald

    Gurden, Harold

    Lucas-Tooth, Sir Hugh

    Sharples, Richard

    Hall, John (Wycombe)

    MacArthur, Ian

    Shaw, M.

    Hamilton, Michael (Wellingborough)

    McLaren, Martin

    Skeet, T. H. H.

    Harrison, Brian (Maldon)

    Maclay, Rt. Hon. John

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

    Harrison, Col. Sir Harwood (Eye)

    Maolean,Sir Fitzroy(Bute&N.Ayrs)

    Smyth, Rt. Hon. Brig. Sir John

    Harvey, Sir Arthur vere (Macclesf'd)

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

    Spearman, Sir Alexander

    Harvey, John (Walthamstow, E.)

    MacLeod, John (Ross & Cromarty

    Stevens, Geoffrey

    Hastings, Stephen

    McMaster, Stanley R.

    Steward, Harold (Stockport, S.)

    Henderson, John (Cathcart)

    Macpherson, Rt. Hn. Niall(Dumfries)

    Studholme, Sir Henry

    Hiley, Joseph

    Maitland, Sir John

    Tapsell, Peter

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

    Marples, Rt. Hon. Ernest

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

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

    Marshall, Douglas

    Teeling, Sir William

    Hirst, Geoffrey

    Matthews, Gordon (Meriden)

    Temple, John M.

    Holland, Philip

    Mawby, Ray

    Thatcher, Mrs. Margaret

    Hope, Rt. Hon. Lord John

    Maxwell-Hyslop, R. J.

    Thompson, Sir Richard (Croydon, S.)

    Hopkins, Alan

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

    Thornton-Kemsley, Sir Colin

    Hornby, R. P.

    Mills, Stratton

    Touche, Rt. Hon. Sir Gordon

    Hornsby-Smith, Rt. Hon. Dame P.

    Mlscampbell, Norman

    Turner, Colin

    Hughes Hallett, Vice-Admiral John

    Morgan, William

    Turton, Rt. Hon. R. H.

    Hughes-Young, Michael

    Morrison, John

    Tweedsmulr, Lady

    Hutchison, Michael Clark

    Nabarro, Sir Gerald

    van Straubenzee, W. R.

    James, David

    Heave, Alrey

    Vane, W. M. F.

    Jenkins, Robert (Dulwich)

    Page, John (Harrow, West)

    Vickers, Miss Joan

    Johnson, Dr. Donald (Carlisle)

    Page, Graham (Crosby)

    wakefield, Sir Waveli

    Johnson, Eric (Blackley)

    Pannell, Norman (Kirkdale)

    Walder, David

    Johnson Smith, Geoffrey

    Pearson, Frank (Clitheroe)

    Walker, Peter

    Jones, Arthur (Northants, S.)

    Peel, John

    Walker-Smith, Rt. Hon. Sir Derek

    Jones, Rt. Hon. Aubrey (Hall Green)

    Percival, Ian

    Ward, Dame Irene

    Kaberry, Sir Donald

    Plckthorn, Sir Kenneth

    Williams, Dudley (Exeter)

    Kerans, Cdr. J. S.

    Pitman, Sir James

    Williams, Paul (Sunderland, S.)

    Kerr, Sir Hamilton

    Pitt, Dame Edith

    Wilson, Geoffrey (Truro)

    Kershaw, Anthony

    Powell, Rt. Hon. J. Enoch

    Wise, A. R.

    Kirk, Peter

    Price, David (Eastlelgh)

    Woodhouse, C. M.

    Lagden, Godfrey

    Prior, J. M. L.

    Woollam, John

    Lancaster, Col. C. G.

    Pym, Francis

    Worsley, Marcus

    Leavey, J. A.

    Rawlinson, Sir Peter

    Leburn, Gilmour

    Redmayne, Rt. Hon. Martin

    TELLERS FOR THE AYES:

    Legge-Bourke, Sir Harry

    Rees, Hugh

    Mr. Ian Fraser and

    Linstead, Sir Hugh

    Rees-Davies, W. R.

    Mr. Gordon Campbell.

    NOES

    Albu, Austen

    Gordon Walker, Rt. Hon. P. C.

    McKay, John (Wallsend)

    Allaun, Frank (Salford, E.)

    Grey, Charles

    McLeavy, Frank

    Allen, Scholefield (Crewe)

    Griffiths, Rt. Hon. James (Llanelly)

    Mallalieu, E. L. (Brigg)

    Bence, Cyril

    Grimond, Rt. Hon. J.

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

    Bennett, J. (Glasgow, Bridgeton)

    Hale, Leslie (Oldham, W.)

    Manuel, Archie

    Benson, Sir George

    Hannan, William

    Marsh, Richard

    Blackburn, F.

    Harper, Joseph

    Mayhew, Christopher

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

    Hart, Mrs. Judith

    Mendelson, J. J.

    Boyden, James

    Hayman, F. H.

    Millan, Bruce

    Bray, Dr. Jeremy

    Healey, Denis

    Mitchison, G. R.

    Brown, Rt. Hon. George (Beiper)

    Henderson,Rt.Hn.Arthur(RwlyRegis)

    Morris, John

    Callaghan, James

    Herbison, Miss Margaret

    Moyle, Arthur

    Carmichael, Neil

    Hilton, A. V.

    Neal, Harold

    Castle, Mrs. Barbara

    Holman, Percy

    Noel-Baker, Francis (Swindon)

    Chapman, Donald

    Houghton, Douglas

    Oram, A, E.

    Collick, Percy

    Hughes, Emrys (S. Ayrshire)

    Paget, R. T.

    Cronin, John

    Hughes, Hector (Aberdeen, N.)

    Pannell, Charles (Leeds, W.)

    Crosland, Anthony

    Hunter, A. E.

    Parker, John

    Crossman, R. H. S.

    Irvine, A. J. (Edge Hill)

    Popplewell, Ernest

    Cullen, Mrs. Alice

    Irving Sydney (Dartford)

    Prentice, R. E.

    Dalyell, Tam

    Jeger, George

    Price, J. T. (Westhoughton)

    Darling, George

    Johnson, Carol (Lewisham, S.)

    Probert, Arthur

    Dempsey, James

    Jones, Dan (Burnley)

    Pursey, Cmdr. Harry

    Diamond, John

    Jones, Elwyn (West Ham, S.)

    Randall, Harry

    Dodds, Norman

    Kenyon, Clifford

    Reynolds, G. W.

    Donnelly, Desmond

    Key, Rt. Hon. C. W.

    Roberts, Goronwy (Caernarvon)

    Ede, Rt. Hon. C.

    King, Dr. Horace

    Robertson, John (Paisley)

    Edwards, Waiter (Stepney)

    Lawson, George

    Robinson, Kenneth (St. Pancras, N.)

    Fernyhough, E.

    Ledger, Ron

    Ross, William

    Fletcher, Eric

    Lee, Frederick (Newton)

    Royle, Charles (Salford, West)

    Foot, Dingle (Ipswich)

    Lee, Miss Jennie (Cannock)

    Shinwell, Rt. Hon. E.

    Forman, J. C.

    Lewis, Arthur (West Ham, N.)

    Silverman, Julius (Aston)

    Fraser, Thomas (Hamilton)

    Lubbock, Eric

    Silverman, Sydney (Nelson)

    Galpern, Sir Myer

    Mahon, Or. J. Dickson

    Skeffington, Arthur

    George,LadyMeganLioyd(Crmthn)

    MacColl, James

    Small, William

    Gooch, E. G.

    McInnes, James

    Soskice, Rt. Hon. Sir Frank

    700

    701

    Steele, Thomas

    Wade, Donald

    Wilson, Rt. Hon. Harold (Huyton)

    Stewart, Michael (Fulham)

    Warbey, William

    Woof, Robert

    Stonehouse, John

    Wells, William (Walsall, N.)

    Wyatt, Woodrow

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

    White, Mrs. Eirene

    Yates, Victor (Ladywood)

    Swingler, Stephen

    Wilkins, W. A.

    Zilliacus, K.

    Thomas, George (Cardiff, W.)

    Willey, Frederick

    Thompson, Dr. Alan (Dunfermline)

    Williams. D. J. (Neath)

    TELLERS FOR THE NOES:

    Thorpe, Jeremy

    Williams, W. T. (Warrington)

    Mr. McCann and Mr. Redhead.

    Tomney, Frank

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

    Question proposed, That the Clause stand part of the Bill.
    Mr. Norman Pannell: I speak briefly to the Clause because, in past years, I have strongly urged that concessions should be made for the smaller estates. Although I welcome the concessions made in this Clause, I do not think that they go far enough. Particularly do I welcome the exemption of estates up to £5,000. That is a matter of simple justice. I did not support the last Amendment because I felt that to give exemption to estates up to £10,000 would give disproportionate relief to. them and, in view of the cost involved, would limit the opportunity of making concessions in other directions which I have in mind.
    What I feel is particularly anomalous is the comparatively high rate of duty charged on estates between £8,000 and £17,500. In effect, the Clause affects only estates up to £8,000—
    The Temporary Chairman: Order. The hon. Gentleman is getting away from the Question, "That the Clause stand part of the Bill".
    Mr. Pannell: In supporting the Clause, am I permitted to urge the Chancellor of the Exchequer to make concessions concerning estates in the higher ranges?
    The Temporary Chairman: That is exactly what I told the hon. Gentleman he should not do.
    Mr. Pannell: Then that limits my speech rather more than I had expected, Sir Herbert. If I am not allowed even to express the hope that my right hon. Friend will take account of the next stages next year, I can say nothing further.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.

    Clause 50.—(GIFTS IN CONSIDERATION OF MARRIAGE.)
    Question proposed, That the Clause stand part of the Bill.
    Mr. Houghton: This is the moment to ask the Treasury Minister to tell us a little more about this Clause. It was referred to by the Chancellor of the Exchequer in his Budget speech, and it was referred to briefly by the Financial Secretary in his Second Reading speech. I think that the Committee would like to know a little more about these queer goings on in the world of wealth and affluence.
    It looks as though it has been possible for a father, on the marriage of his daughter, not only to make a gift inter vivos to her on the occasion of her marriage, but to distribute gifts all round the family. If, unfortunately, he died within the five-year limit, not only was the gift to the daughter exempted from Estate Duty, but the gifts to the rest of the family were similarly exempted. Perhaps the Financial Secretary will tell us how much he knows about this matter.
    We know that there was a judgment of the courts which, no doubt prompted the Chancellor of the Exchequer to introduce the Clause before this method of tax avoidance went any further. Perhaps the case which was the subject of the proceedings was the only case known to the Inland Revenue where this happened, or, at least, where exemption was claimed and granted. It might conceivably be that this practice had been followed in other cases, but that when it was claimed that these gifts inter vivos should be exempted from Estate Duty and the Revenue refused exemption the matter was not further pressed, in which case there would be no loss to the Revenue.
    The Clause defines not the state of marriage, but what the Chancellor of the Exchequer and the Financial Secretary have called "the marriage consideration". It seems that the Clause will limit the exemption of gifts inter vivos in the circumstances which I have described where the gift is given to
    "the parties to the marriage, issue of the marriage, or a wife or husband of any such issue".

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    That is going rather wide. There is provision for
    "a subsequent wife or husband of a party to the marriage or any issue of a subsequent marriage of either parry".
    That takes the matter further. It is not only in consideration of the first marriage, but it can be in consideration of the second, and not only in consideration of the first marriage, but in consideration of the issue of the second. It is not only in consideration of the issue of the marriage. It can be a wife or husband of the issue of the marriage. In fact, it can be Uncle Tom Cobley and all.
    The only thing which the Clause stops is the distribution of gifts by a generous parent to brothers and sisters, aunts and uncles and all sorts of other people who are not getting married at that moment so that there is no marriage consideration. What other consideration there may be is irrelevant. One has to get married in order to be part of the marriage consideration under the Clause. Previously, one had not. A gift could be made on a marriage consideration to a relative who had already declared that under no circumstances would he get married. How ridiculous can things become before the law is altered to make sense of this sort of arrangement?
    Incidentally, I have omitted to say that not only the marriage consideration of those getting married, the issue of those getting married, the wife or husband of the issue of those getting married, but persons legitimated by marriage can apparently come within the scope of this exemption.
    This raises the whole question of gifts inter vivos and the widespread avoidance of Estate Duty which people are enabled to practise. Although there is this limitation, if people have the prescience to make their dispositions when they are in reasonable health and vigour and can hope to live more than five years, they can dispose of very large sums to relatives, not only on the marriage consideration but on other considerations. too.
    All that the Clause deals with is the estate caught by the time limit on gifts inter vivos and which provides the exemption of this kind of gift inter vivos, which is a gift on consideration of marriage which, as I said, is spread so widely
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    that it almost reaches the ends of the earth. It seems that a generous benefactor, on the occasion of the marriage of his daughter, could distribute gifts round the country and that they would all be regarded as gifts in consideration of marriage unless the law were changed. We welcome the change in the law, but whether it goes far enough is another matter.
    6.30 p.m.
    I know that those who advise rich people are very cynical about the willingness of rich people to dispose of their wealth for the purpose of avoiding Estate Duty. It seems that when one has money it gives power, but when one disposes of it one loses that power; one cannot keep one's relatives as affectionate as one would like them to be when one has given the money away to them while one is still alive. They may become indifferent towards one. They may sit on the "boodle" and lose their natural love and affection for their parents. It is said that tyrannous parents who are determined to have the love and affection of their family on the lowest mercenary grounds retain it by not doing anything which would enable them to avoid Estate Duty.
    There are others. I have one case particularly in mind where, as a matter of principle and civic duty, people will not indulge in practices which lead to the avoidance of Estate Duty. They feel that the law is the law, their obligations are what they are, that it is their duty to fulfil them, and that they will not take any advantage. That is very noble of them in a wicked world of avoiders and evaders, scrimshankers and all the rest who are willing to rob the Exchequer hen roost on the slightest provocation.
    This Clause is a puny thing. It looks as if it is shutting the door on perhaps only one case, though others may follow. I think that the Chancellor might have considered removing entirely the exemption in connection with gifts inter vivos on the marriage consideration. After all, why should there be any specal treatment of a gift inter vivos on the occasion of the marriage of one's son or daughter? What is there exceptional about that in modern conditions which make a special claim upon the sympathy of the Chancellor.
    The days of marriage settlements are past, except in the small and exclusive

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    circle of those who have a corner in the national wealth. It is a very small number of people who have it. They are well enough off to manage without it. The gifts that are given to children on marriage should run the same risk as gifts to other members of the family. They are mostly marrying into money, not for money. They marry for love—but money with it—and I cannot shed any tears for people who may be caught by a Clause of this kind. Nothing that the Financial Secretary will say will wring the withers of my hon. and right hon. Friends.
    I can only say that I pour the utmost scorn upon all the apparatus of avoidance in the matter of Estate Duty. The Chancellor is touching only one corner of it, one in which he should clearly do something, but I doubt whether the scandals of this case are any worse than many more which the Chancellor is not touching at all.
    Mr. Eric Johnson: I do not pretend to have the knowledge of the hon. Member for Sowerby (Mr. Houghton) on these matters, but I have no quarrel with this Clause. I understand that its purpose is to withdraw exemption from Estate Duty from such far-reaching settlements as were possible under Section 59 of the Finance Act, 1910, but to retain exemption for settlements made to benefit only parties to a marriage and their children.
    I should have thought that in these days, when adopted children are, in general, treated as equal with natural-born children, the marriage settlement which is drawn in such a way that the adopted children of the parties can benefit should not in itself be sufficient to make that settlement lose its exemption, as it seems to me it would, under the terms of the Clause.
    I cannot believe that it is the intention of my right hon. Friend or the desire of the Committee, when we bear in mind all the legislation passed by Parliament in recent years to help adopted children and to see that they are no worse treated than natural-born children, that we should then turn round and make a settlement which excludes an adopted child from getting this exemption.
    An Amendment was put down in the name of my hon. Friend the Member
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    for Portsmouth, Langstone (Mr. Stevens) and myself which was intended to remedy what seems to be a defect in the Clause. I hope that my right hon. Friend will look at it again and perhaps put right this apparently small defect at a later stage.
    Mr. Graham Page: I have no objection to the definitions in subsection (1), but subsection (2) states:
    "A disposition made by either party to a marriage on or in contemplation of the marriage shall be treated for estate duty purposes as a gift."
    Then there is a full stop.
    I do not know whether it means as a gift in consideration of marriage or as a gift which is not in consideration of marriage. At present, as the law stands, marriage is a good consideration for the transfer of property if not valuable consideration. But the transfer of property on marriage or in contemplation of marriage is never a gift because there is consideration for it.
    This Clause is a major alteration in the law, in saying something which any lawyer in the Committee at the moment learned in his student days—that marriage is good consideration. Now, in a subsection to this Clause, we are making a major alteration in the law; at least I think we are, but where the full stop comes leaves me in doubt. I do not know whether we are told that it is just a gift, or that it is not a gift. Is it a gift in consideration of marriage, or is it not a gift in consideration of marriage?
    The importance, of course, is this: if we exclude settlements on marriage by either party to the marriage from being treated as a gift inter vivos which gets exemption, we are taking a very major step. We are telling the parties to a marriage, an engaged couple, one of whom may wish to settle property on the other, "You do not get any Estate Duty benefit out of doing it".
    My second point I will not ask my hon. Friend to answer at once, because it is a rather technical one, but I want to put it on the record. Subsection (4) states:
    "This section shall not apply where the disposition was made before the 4th April, 1963."
    Does disposition mean the instrument by which, for example, the settlement is

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    made, or does it mean perhaps the exercise of a power of appointment given by the settlement, or does it mean an event on which property passes under some terms of the settlement? It may be that the settlement was made before 4th April, 1963, but it gave power of appointment of some persons under the settlement. Does disposition mean the actual instrument which first created the settlement, or may it apply to the occasion on which property passes under the settlement?
    Mr. Barber: To deal, first, with the points raised by my hon. Friend the Member for Crosby (Mr. Graham Page), he referred to subsection (2), which provides that a disposition made by a person on the occasion of his marriage shall be treated for estate duty purposes as a gift.
    My hon. Friend is right in saying that this is a change in the law. It has not hitherto been thought to be the law, but in view of the House of Lords decision, to which the hon. Member for Sowerby (Mr. Houghton) referred, there is the danger that gifts to strangers made by a person in contemplation of his marriage would not be regarded as gifts within the meaning of the taxing provisions and would, consequently, escape duty on the person's death within five years of the date of the gift. The subsection eliminates this danger.
    Gifts made on the donor's own marriage will, of course, depend for exemption on satisfying the terms of subsection (1).
    Mr. Graham Page: Am I right, therefore, in understanding that a gift by one party to the marriage or contemplated marriage to the other party does not come within the subsection and that it is only if one party who is about to marry gives away property to a third party that it conies within the subsection?
    Mr. J. T. Price: We should send for, the Attorney-General.
    Mr. Barber: I am not sure whether I can give my hon. Friend an answer "off the cuff."
    Mr. Price: On a point of order. May I suggest, Sir Robert, that when these fundamental questions are being submitted to the Treasury Bench we ought
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    to have the Attorney-General present to answer them? No Law Officer of the Crown is present.
    The Deputy-Chairman (Sir Robert Grimston): That is not a point of order.
    Mr. Barber: Having thus been given an opportunity to consider the matter, my hon. Friend will, I think, find if he looks at the wording that the case which he has in mind is brought within the scope of subsection (2) by the words of the subsection but then would be taken out again by subsection (1). [Laughter.] If I am right, my hon. Friend need not be particularly concerned on that score. I shall have to give my hon. Friend a rather dusty answer also to his other question. He asked the meaning of "disposition" for these purposes. I am not sure, but I think that somewhere in the Income Tax Acts it is defined. Perhaps I can write to my hon. Friend about it.
    As the hon. Member for Sowerby said, the Clause is not concerned with the general rules about gifts inter vivos. It covers a narrow point and it simply closes a particular loophole in the Estate Duty law relating to gifts made in consideration of marriage, a loophole which was revealed by the House of Lords in the case of the Commissioners of Inland Revenue and Lord Rennell. The decision by the House of Lords was given on 13th March and, therefore, on this occasion, the Opposition will agree that we have acted swiftly.
    At least, the general rule has always been that a gift inter vivos is liable to Estate Duty if the donor dies within a specified period—namely, five years—of making the gift. By Section 59 of the Finance (1909–10) Act, 1910, gifts which are made in consideration of marriage were exempted. The Clause covers gifts made otherwise than on the donor's own marriage, because dispositions made by a person in consideration of his own marriage were never treated as gifts within the meaning of the provisions imposing Estate Duty on gifts made within a fixed period before death.
    Until the case came before the House of Lords, there was never any uncertainty about the sort of gift that the marriage exemption was intended to cover. It was an exemption which might broadly

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    be called wedding presents and for marriage settlements made on persons within the marriage consideration, as it is put —that is to say, the intended spouses and the issue of the marriage. As the hon. Member for Sowerby has pointed out, the decision opens a wide door to avoidance. According to the judgment of the House of Lords, a wealthy man on his deathbed has only to look round to find somebody about to be married. It need not necessarily be a member of his family, and it will bring tears to the hon. Member's eyes to know that he need not even be a friend.
    All he has to do is to include that person in a discretionary trust otherwise consisting of his own children and the settlement will escape duty on his death even though, at the end of the day, little benefit might go outside the senior's family. The Clause undoes the effect of the House of Lords decision by restating the exemption in the shape in which it has always been applied.
    6.45 p.m.
    My hon. Friend the Member for Manchester, Blackley (Mr. E. Johnson) raised a point about the possible inclusion in subsection (3) of a reference to adopted children as well as persons legitimated by a marriage. As I understood it, my hon. Friend's suggestion would permit exemption where a settlement conferred benefits on a child who had been adopted by one of the parties to the marriage before the marriage which is the subject of the settlement. The trouble is that such a child is no more within the marriage consideration than a child of a former marriage of one of the parties to the marriage.
    A child legitimated by a marriage is different in that he is a child of both the spouses and can, therefore, be reasonably treated as a child of the marriage. It has occurred to me—because although my hon. Friend's Amendment has not been called, I considered the matter after he had put it down—that there might be a case for including in the class of permitted beneficiaries a child who is adopted after the marriage. It would, of course, be somewhat unusual for a marriage settlement to include provision for such children, except, perhaps, when the parties to a marriage know or think that they will not be able to have children themselves and they intend to adopt children.
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    However, in this limited sense, it may be that my hon. Friend has raised a point of substance. We have gone a stage forward by referring in subsection (3) to persons who are legitimated. That is something which, the Scots would say, is outwith the House of Lords decision. We have done that which on social grounds is right. It may be that in the limited sense in which I have described it we could do something to meet the point raised by my hon. Friend. If we can, I am sure that it would be the wish of the Committee to do it.
    Mr. J. T. Price: I fully understand that in the Clause the Government are seeking to stop one of the leaks which has been discovered in existing legislation. Whilst my hon. Friend the Member for Sowerby (Mr. Houghton) has poured righteous scorn in his own inimitable fashion, which we have all enjoyed, nevertheless for every hole which is stopped up may Allah be praised.
    Every year when we come to these debates, we find that an elaborate, ingenious, nefarious device has been discovered which somebody in the Treasury recommends should no longer be permitted. When talking about Estate Duty, however, the biggest leak of all—and it is linked with the Clause—is an assumption on the part of all those who engage in these highly academic arguments of great finesse about inter vivos, covenants, and so on. What we always forget is that the very obligation upon a trustee or an executor of a will to give proper information to the Treasury is itself something which involves self-assessment.
    There are many quite considerable estates where the original owner dies intestate and his next-of-kin have to go to the estate office to get letters of administration. Who is to discover all the history of these inter vivos gifts going back for five years? Ordinary householders and many businessmen do not keep proper books of accountancy. There are professional friends of mine in this Committee who wish that they kept proper books because they would probably get more work in their own professions if they did. But it is blithely assumed by the Treasury that if it stops up odds and ends of abuse it is dealing with the evasion of Estate Duty. It is not.
    The Deputy-Chairman: Order. The hon. Gentleman is getting a little wide of the Clause. We cannot deal with general evasion or avoidance of Estate Duty under this Clause.
    Mr. Price: I am obliged to you for reminding me, Sir Robert. I do not wish to go beyond the rules of order.
    I am not so sophisticated as some of my colleagues. We are asked to agree to a Clause which does not stop some kind of Budget leak—[Laughter.] I am not saying that in any ulterior way, for I do not want to refer to past history. I will use the correct terminology and say that this is an attempt to stop an abuse in financial regulations, and I want to know what is being done to see that the main stream of our legislation is observed.
    The Deputy-Chairman: Order. That is just what the hon. Gentleman cannot ask.
    Mr. Price: I am obliged. I have finished what I have to say and I would like an answer to my question.
    Mr. Mitchison: I congratulate the Government on what they have avoided. There were appalling prospects. This was a case in which three Law Lords decided one way and two the other. Out of the three, two gave reasons which were not entirely shared by the third. It is, therefore, one of those very clear cases in which every court will be bound by the reasons for the decision of the House of Lords, but will be in some difficulty in ascertaining precisely what those reasons were. That is what a Scottish judge once observed as an "infirmity of our judgment".
    In this case, the most vivid illustration was given by Lord Radcliffe. It was a dissenting judgment, but it provided a nice description. Lord Radcliffe said:
    "There is no difficulty in stating what the deceased had achieved by this disposition. He had transferred a considerable fortune from his own resources to the ownership of the trustees selected by him to be held and applied by them for the benefit of his family in general, a phrase that includes all his children, all their descendants and their future husbands and wives; and the allocation of it between those persons or lines of descent was entirely at the mercy of the trustees, present or future."
    The result is that people might be benefited who were descendants, however
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    remote, of the testator, and all this in consideration of marriage.
    What brought me to my feet was a casual and rather frightening remark made by my hon. Friend the Member for Westhoughton (Mr. J. T. Price), who observed—and I do not know what promoted it in that particular connection "by Allah". This opens up appalling possibilities. There was a potentate in West Africa, called the Sultan of Foa, who had one hundred wives. He had to. Now, these emerging countries very often adopt the English law and revenue practice. I shudder, therefore, to think how much Estate Duty might have been avoided by the Sultan in consideration of even one of his numerous marriages.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.
    Clause 51 ordered to stand part of the Bill.

    Clause 52.—(REDUCED DUTY ON CONVEYANCE OR TRANSFER ON SALE.)
    Mr. Wade: I beg to move, in page 52, line 7, to leave out from "be" to end of subsection (1) and to insert "nil".
    The effect of the Amendment is to abolish Stamp Duty on conveyances and transfers of sales. I welcome the Chancellor's proposal so far as it goes. Stamp Duty, which was raised to 2 per cent. in 1947, is being reduced by the Bill to I per cent., and it is also proposed that the ceiling of exemption of Stamp Duty on house purchase should be raised from £3,500 to £4,500. That is a step in the right direction.
    In his Budget speech, the Chancellor gave his reasons for his proposal, and they might well apply to the case for abolition. He said, referring to the old, higher rate of duty:
    "It drives business, and, therefore, invisible earnings, from London. It is a strong disincentive to investment in Britain by people in other countries. It discourages investment in productive industry, not least by the small investor. It tends to raise the cost of issuing capital."—[OFFICIAL REPORT, 3rd April, 1963; Vol. 675, c. 488.]
    This argument could well be deployed as a case for the abolition of Stamp Duty. There is a particularly strong case so far as transfers of stocks and shares are concerned. For the sake of simplicity

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    in drafting, I have not made a distinction between conveyances of property and transfers of stocks and shares, my main purpose being to draw attention to the Stamp Duty of transfers.
    The only comment I make on the conveyancing of property is this: as I have said, I welcome the Chancellor's proposal as far as it goes but there has been a very great rise in the prices of houses, particularly in London and the South-East. Many people are now paying more than £4,500 for a house. Therefore, if the duty were not abolished I would be in favour of at least raising the exemption limit.
    When one considers transfers, there are other factors to take into account. There is a tremendous number of transfers each year. A good deal of time is wasted over stamping of documents and it involves a certain amount of delay. There must be a considerable waste of manpower. It is also a very antiquated method of raising revenue. There is the observation by Professor Neumark, chairman of the Fiscal and Financial Committee of the E.E.C. reported in the Financial Times of 24th November, 1962. The report in the newspaper began:
    "Company officials concerned primarily with tax matters considered problems of tax harmonisation in the E.E.C. and the likely effect of harmonisation upon the British tax system…".
    This was a report of a two-day conference on taxation and the Common Market, which was held in London.?
    7.0 p.m.
    Dealing with an investigation into the aspects of some particular taxes, Professor Neumark was reported as saying:
    "in some cases taxes which, though in terms of their relative share in the overall tax revenue seemed to be of minor importance only, might, because of their possible negative repercussions on economic transactions within a Common Market, need a close examination as to whether their harmonisation was useful or even necessary."
    He referred to Stamp Duty and went on:
    "All, or nearly all, of these duties originated in times long past when, on the one hand, income and wealth, particularly the more mobile kinds of assets and the produce from them, were not yet taxed in an effective and adequate way by taxes on income and net value, and where, on the other hand, a general turnover tax was still unknown.
    Even apart from the necessities of a Common Market these duties should, in my opinion, be abolished as fast as possible."
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    I am anxious that we should not be behind the Common Market in tax reform. I would rather see this country ahead of the Western European countries and that is a very strong argument for considering the case for the abolition of Stamp Duty on transfers.
    The cost of collection must be considerable. I do not put that forward as a major argument, but it appears to me that the cost of collection in terms of a percentage of gross receipts must be going up. I have examined the figures in Appendix 7, Stamp Duty, on page 282 of the Report of Inland Revenue for the year ending 31st March, 1962. I do not propose to quote the figures, but I have calculated that the cost of collection expressed as a percentage of gross receipts has gone up by about 25 per cent. in the year 1961–62 as compared with 1960–61.
    Presumably, if the duty is to be reduced from 2 per cent. to 1 per cent., the cost of collection as compared with the amount collected will go up considerably more than it did between 1961–62 and the previous tax year. Furthermore, there must be a fair amount of expenditure, certainly of time, by those who are responsible for the payment of Stamp Duty and go to the Stamp Duty office to pay it. That is a factor which must be taken into account.
    As anyone who has given any thought to this subject knows, a good deal of time and ingenuity is expended in avoiding Stamp Duty. It has been said that it is not so much what one does as the way in which one does it that is taxed. I have with me an interesting brief from the Liberal Research Department which, at considerable length, sets out ways in which Stamp Duty can be avoided. [Laughter.] It is avoided, not evaded; it is perfectly legitimate.
    I congratulate those who have prepared the document. They have given a great deal of care and trouble to it, but I do not propose to quote from it. I do not think that it is tile proper duty of Members of Parliament to advertise methods of avoiding duty, however legitimate they may be. But this is evidence of the complexity of this duty. One has only to study Clauses 53 to 58 and the Amendments which the Chancellor proposes to them, after consultations with the City, to recognise how complex it is.

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    A great deal of time is expended not so much in paying the duty as in finding ways of avoiding payment.
    No doubt there will be reference to the cost of what I suggest.
    Mr. F. P. Crowder: On a point of order. I am very interested in this document to which the hon. Member for Huddersfield, West (Mr. Wade) has referred. Am I right in saying that if, in a speech, an hon. Member refers the Committee to a document, the Committee is entitled to a sight of that document, be it in the Library or elsewhere, that there must be disclosure as in a court, where, if a document is referred to, it is exhibited? The hon. Member cannot have it both ways. The Committee must know what is in that document if he is to mention it.
    The Deputy-Chairman: The rule applies only to State documents, not to private documents.
    Mr. Wade: The hon. Member for Ruislip-Northwood (Mr. Crowder) made an ingenious point, but it has no substance.
    No doubt we shall be told what would be the cost of abolishing Stamp Duty. It would be out of order for me to suggest alternative methods of raising taxation, or to put forward major tax reforms. My object is to bring to the Committee's attention the whole issue of this rather antequated Stamp Duty and to urge the Chancellor to adopt a more radical approach than merely reducing it.
    What is the Chancellor's intention? Does he accept the necessity of this method of raising revenue? Has he any objection to it in principle? Is it the intention merely to reduce it from 2 per cent. to 1 per cent.—a reduction which I welcome as far as it goes—or is this a step towards the abolition and more radical reform, which I would certainly welcome?
    Mr. Barber: As the hon. Member for Huddersfield, West (Mr. Wade) said, the purpose of his Amendment is to abolish Stamp Duty on conveyances and transfers instead of merely reducing it from 2 per cent. to I per cent., as proposed by my right hon. Friend. This was an objective to which the hon. Member
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    referred during Second Reading. Those of us on this side of the Committee, and clearly hon. Members of the Liberal Party, also, agree that the rate of 2 per cent. imposed by Lord Dalton is too high for these times. A 2 per cent. rate of duty is substantially higher than that of any other country in Europe or North America. As the hon. Member reminded us, my right hon. Friend has already told us that it tends to drive business, and, therefore, invisible earnings, from London.
    The simple question raised by the hon. Member is how far we should go. It can hardly be for me to commit my right hon. Friend or anybody else to action which may be taken on future occasions. Here we are concerned only with the proposals this year. My right hon. Friend's proposals to reduce the rate of duty to 1 per cent. will cost £16 million in the current year and £25 million in a full year. If to that one adds the cost of reducing the duty on conveyancing property, other than stocks and shares, those figures are increased to £24 million and £36 million.
    The hon. Member's proposal is attractive, but at least it can now be said that the transfer duty at 1 per cent. will no longer be seriously out of step with the corresponding duties in many other countires. In France, for example, there is a duty of 0·6 per cent. imposed on both buyer and seller in the case of shares for cash, which is 1·2 per cent. in all, and in West Germany the normal rate of duty on transfers is 0·25 per cent., but there is a special duty of 2·5 per cent. which is levied on the first issue of shares.
    The reduction of Stamp Duty on the transfer of houses and land is, as the Committee will recognise, an important aspect of the Government's policy in encouraging home ownership. There is no point in reducing Stamp Duty on transfers if the houses are not being built for private owners to buy. I was a little surprised to hear the hon. and learned Member for Kettering (Mr. Mitchison) say on another Clause, an hour or two ago, that the Labour Government had done more for owner-occupiers than we have. One only has to consider the remarkably contrasting figures. In 1951, only 11½ per cent. of the houses built were for private owners. Last year, about 60 per cent.

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    were for private owners, which is quite an achievement.
    Mr. Mitchison: I am not sure how far this is in order, Sir Robert, but I want to answer what has been put to me and no more. The hon. Gentleman, as usual, forgets the circumstances of the war. If he went back and looked at them he would find that there was a need in those days for rented houses which was even greater than it is now. What the Government have done is, no doubt, to increase the percentage of owner-occupied houses but only at the cost of depriving young married couples of the rented houses which they ought to have.
    The Deputy-Chairman: The hon. Gentleman was entitled to introduce the illustration which he did, but I think that it has now gone far enough.
    Mr. Barber: All I can say, Sir Robert, is that, naturally, I bow to your observation.
    It is, at any rate, because of the general desire of all hon. Members in the Committee to encourage people to live in their own homes that on three occasions since we have been in office the Government have reduced Stamp Duty on conveyances at the bottom of the scale. Now my right hon. Friend is proposing again to raise the exemption limit and at the same time cut the general rate from 2 per cent. to 1 per cent. In future, no duty will be payable on houses costing up to £4,500, and on houses costing between £4,500 and £6,000 the duty will be only ½ per cent. As for the more expensive—
    Mr. Mitchison: The hon. Gentleman is talking about houses. As two-thirds of the concession goes in favour of transactions in stocks and shares, would he say something about public benefits from that part of the reduction?
    Mr. Barber: I thought that I had done so earlier. I started to quote what the Chancellor said in the Budget debate. I did not want to pursue that because I thought that hon. Members were familiar with what he said. But I certainly could not sum it up better than he put it. I wont on to explain that, certainly at the rate of 2 per cent., the transfer duty on stocks and shares was very significantly higher than in the case of most of our
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    competitors in Europe and also, I think, the United States and Canada.
    I should have thought that it was certainly right, for all the economic and financial reasons which I should have thought would appeal to all hon. Members in the Committee, to try to bring ourselves more into line with our competitors in that way and also to make it easier for our industry to raise capital, which is, after all, a prerequisite of increasing growth—which, again, is something that we all want. If there is any particular point on transfer duty on stocks and shares, I should be happy to answer the hon. and learned Gentleman.
    To complete what I was saying about the duty in respect of houses, for the more expensive houses, those over £6,000, the rate will be reduced to 1 per cent.
    The Liberal Party wants to go further and help the purchasers of the more expensive houses, those costing more than £6,000 in particular, by abolishing the duty altogether. I must ask hon. Members in all seriousness whether they are really in favour of the complete abolition at this time of the duty on conveyances and transfers, bearing in mind the cost to which the hon. Member for Huddersfield, West very fairly referred. The cost of my right hon. Friend's proposals will be £36 million in a full year. Consequently the cost of the Liberal Party's proposals would be double that—more than £70 million a year—and I simply cannot believe that, in the !light of my right hon. Friend's proposal to halve the duty and the other major remissions of taxation which have been made this year, it would be right to do as the hon. Gentleman suggests and go further this year.
    Therefore, I hope that the hon. Member will, on reflection, feel that this is not an occasion when he should press his Amendment to a Division.
    Amendment negatived.
    7.15 p.m.
    Mr. Diamond: I beg to move, in page 52, line 31, at the beginning to insert:
    "subsection (6) of section 34 of the Finance Act 1958 (which imposes on the duty chargeable on a conveyance, transfer or letting to a charity an upper limit of 10s. for every £50 or fraction of £50 consideration) shall have effect with the substitution for the reference to 10s. of a reference to 5s.: but, save as aforesaid,".

    719
    The Amendment deals with a very simple point which I am sure the Government will be prepared to accept. So short is the point that I am not armed with a long research department's brief, as the Liberal spokesman was on how to avoid tax. Indeed, the research department at Transport House would not dream of getting out a brief of that kind. In Transport House circles everybody is very conscious of his union responsibilities, and every member leaves these matters to the union or professional association which is most suitably equipped to carry out the task.
    The Chief Secretary to the Treasury and Paymaster-General (Mr. John Boyd-Carpenter): This has resolved a problem which has puzzled many of us—what the Liberal Party research department really spends its time doing.
    Mr. Diamond: The Amendment needs very little argument, because it is plain on the surface what it seeks to do. The figures are very straightforward. The case before the Clause was introduced was that Stamp Duty on transfers and conveyances of the kind referred to—that is, the majority of them—was at the rate of £2 per cent. and it is now being reduced to £1 per cent.—that is. by half.
    Equally, it was the case that when Stamp Duty was at the rate of £2 per tent. those transfers and conveyances Which took place to charities were at the rate of 1 per cent.—a half. All that the Amendment seeks to do is to maintain that differentiation, with slight benefit in favour of charities, of 50 per cent., thereby making the Stamp Duty for transfers to charities at the rate of ½ per cent. instead of the proposed 1 per cent.
    The arithmetic is as straightforward as may be. The principle does not need arguing because it is one which has been accepted by the Government; it is implicit in existing legislation. Therefore, I believe that there can be no good reason for my detaining the Committee. I merely add that we hold very clear and strong views on this matter, and we hope and believe that the Government will share our view that the benefit in favour of charities ought to be maintained.
    Mr. du Cann: The hon. Gentleman the Member for Gloucester (Mr. Diamond),
    720
    in pressing his Amendment, did not seek to argue that the Government's proposals in general to reduce Stamp Duty were bad and had something about them which adversely affected the position of charities. He argued simply that under existing legislation charities have a special position which he is anxious to preserve. I entirely understand that.
    The purpose of the Amendments—because there is another one in Schedule 12 which is, no doubt, consequential upon this one—is to halve the rate of Stamp Duty chargeable on conveyances and transfers to charities, and in respect of premiums on leases to charities, that is to say, to reduce it from 1 per cent. to ½ per cent. The general intention of Part IV of the Bill is to restore the duties to their pre-1947 level. Thus, while the normal rate of duty on conveyances and transfers is to be reduced from 2 per cent. to 1 per cent., that on conveyances and transfers to charities remains unchanged at 1 per cent. Consequently, the discrimination in favour of charities, which has dated from 1947, disappears.
    It may be helpful to point out—and I want merely to be helpful—that the Amendments contain two errors of drafting. The reference in subsection (6) to Section 34 is left in the air, in that that Section has been repealed. That is a minor technical point.
    Mr. Mitchison: I do not understand that. There is no proposal here to introduce a new subsection (6). Perhaps the hon. Member will make his objections a little clearer. They are not clear at present.
    Mr. du Cann: I am sorry if I did not explain them appropriately. There is a proposal to introduce a substantial amount of wording into the Clause. The reference to subsection (6) of Section 34 would be left in the air.
    The second point is that while the Amendment halves the duty in respect of premiums in leases it appears to leave unchanged the duty charged in respect of rents under such leases, which since 1947 has also been half that charged on other leases. I take it that that was not what the hon. Member had in mind, but that he wished to reduce the duty both on premiums and on rents.
    Those difficulties are not important. I merely point them out to be helpful.

    721
    The real difficulty is that these Amendments are open to objection on grounds of principle, for the Stamp Acts do not contain any general relief from Stamp Duty in respect of charities. Stamp Duties are taxes on documents, or on the transactions to which the documents give effect, and are measured by reference to the character and magnitude of the transactions, and not in general by the status of the persons concerned. This principle is well illustrated by the relief for small transactions in property other than stocks and marketable securities, for the relief depends solely on the nature and size of the transaction, and takes no account of whether the person who will bear the duty is rich or poor.
    A direct tax like Income Tax can look at the ability of the person to pay, but Stamp Duties are like Customs and Excise duties and Purchase Tax, in looking at the thing rather than the person and charging a common rate of tax regardless of the circumstances of the person who will ultimately bear the burden of the tax. That is the principle of the matter.
    On the other hand, if the hon. Member should say—as I feel he is likely to say, because it was implicit in everything he said in moving the Amendment—that principle is one thing and heart is another, I want to go on to talk about matters of the heart. There is no question but that charities derive substantial benefit in other ways, even if they do not obtain it, or are not likely to obtain it, from the Bill.
    In respect of Income Tax—which I have already suggested is the proper medium for graduation—charities are already most generously treated, since they enjoy complete exemption. I only wish that many others of us might say the same thing. Secondly, they are also exempt from local rates, to the extent of 50 per cent.
    Mr. Mitchison: Is the Clause concerned with local rates?
    Mr. du Cann: It is not, but it is fair to argue, in reply to the powerful case advanced by the hon. Member, that our tax laws already contain substantial benefits in favour of charities, and the relief proposed in respect of Stamp Duty would be very small by comparison with the reliefs which charities already enjoy.
    722
    I want to explain why charities were put in a specially favoured position under the 1947 Act. A good deal had happened in 1947, which leads one to suppose that the circumstances at that time were wholly exceptional. Charities then complained that their expenses had risen steeply at the same time that their investment income had dropped. They also complained—and I make no political point about it; I am concerned only to retail the facts—that they had suffered severely as a result of nationalisation. They complained, further, that their benefactors had been discouraged by the legislation of 1946, under which payments under deeds of covenant were no longer allowable for Surtax—a point which was extremely strongly put.
    Lastly, they complained that some charities—and we must remember that this was not long after the war—had had their premises requisitioned or compulsorily acquired, and had had to find other accommodation, which had made added difficulties for them. I am arguing that the circumstances which put charities into a special position in 1947 do not now apply as they did then.
    An added benefit has taken place since then. The Committee will be aware that we have recently passed the Trustee Investment Act, which has extended substantially the powers of charities to invest. This is no doubt a matter which has been of some benefit to them and is likely to benefit them increasingly as time goes on. They pressed hard for this concession.
    To sum up: it is true that the cost of the relief would probably be small. It is impossible to estimate it exactly. If I could give the hon. Member a figure I would do so. It is not likely to be great. But I suggest that the types of reasons why charities were put into a favoured position in 1947 do not now apply to the same extent. All that is happening in this legislation is that duties in general are being reduced, and that the privileged position of charities is disappearing. It is sad that discrimination should go, but l do not imagine that the charities themselves would feel envious—for envy is not a charitable thing to express.
    I am sure that charities will agree that it is right to reduce Stamp Duties in general, and that they would be happy

    723
    if the duties were reduced further. Nobody would disagree with them about that. But for the reasons that I have expressed, although I have some sympathy with the case advanced by the hon. Member, it is not possible to bow to it and to accept the Amendment.
    7.30 p.m.
    Mr. Diamond: I know from past experience that if anybody on the Government side can make a good case out of nothing it is the Economic Secretary. His arguments are always marshalled with cogency and courtesy, and are always put over with a smile. We know that when a case as poor and as feeble as that which we have just listened to comes from him there is no answer to the Amendment that we are pressing, and which we shall continue to press.
    The Economic Secretary began by referring to two minor, very technical defects in the drafting of the Amendment. We were grateful to him for that and had he left the matter there we would have been quite happy to see what we could do to make the necessary adjustments on Report—and then the will of the Committee could have prevailed. Instead the hon. Gentleman went on to try to argue that the Amendment should not be accepted. "Look how well charities are being treated," he said, "in terms of Income Tax benefits, rating, and so on". He followed that by saying that it was not right that charities should be
    well treated. It was right in 1947, but it is not right today, he tried to make out.
    The hon. Gentleman cannot have it both ways. There is a simple situation here. We are not seeking, and I did not attempt to seek when moving the Amendment, to prove the case for it. That case has been accepted by the House of Commons since 1947 and for sixteen years charities have enjoyed preferential treatment for Stamp Duty and have generally been in a privileged position on most aspects of local and national taxation.
    The Government's refusal to accept the Amendment is singling out charities for unsatisfactory treatment and my hon. Friends and I are not convinced that there is the slightest argument in support of that refusal. There is no argument on cost, for the Economic Secretary agreed that the cost was likely to be negligible. There is no argument on the grounds of the lack of administrative machinery, for that machinery already exists. The Stock Exchange works quite happily and differentiates between transfers when charities are involved. Charities have had this and other advantages for many years. We insist that there should be a similar and continuing advantage in this respect—an advantage which charities have enjoyed for sixteen years—and we shall put our views to the test.
    Question put, That those words be there inserted:—
    The Committee divided: Ayes 112, Noes 163.

    Division No. 123.]

    AYES

    [7.32.p.m.

    Albu, Austen

    Edwards, Walter (Stepney)

    Jenkins, Roy (Stechford)

    Allaun, Frank (Salford, E.)

    Fernyhough, E.

    Johnson, Carol (Lewisham, S.)

    Allen, Scholefield (Crewe)

    Fletcher, Eric

    Jones, Elwyn (West Ham, S.)

    Bence, Cyril

    Foot, Dingle (Ipswich)

    Kenyon, Clifford

    Bennett, J. (Glasgow, Bridgeton)

    Forman, J. C.

    Key, Rt. Hon. C. W.

    Benson, Sir George

    Fraser, Thomas (Hamilton)

    King, Dr. Horace

    Blackburn, F.

    Gordon Walker, Rt. Hon. P. C,

    Lawson, George

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

    Griffiths, Rt. Hon. James (Llanelly)

    Ledger, Ron

    Boyden, James

    Grimond, Rt. Hon. J.

    Lee, Miss Jennie (Cannock)

    Bray, Dr. Jeremy

    Hale, Leslie (Oldham, W.)

    Lewis, Arthur (West Ham, N.)

    Brown, Rt. Hon. George (Belper)

    Hamilton, William (West Fife)

    Lubbock, Eric

    Callaghan, James

    Hannan, William

    Mabon, Dr. J. Dickson

    Carmichael, Neil

    Harper, Joseph

    McInnes, James

    Castle, Mrs. Barbara

    Hayman, F. H.

    McKay, John (Wallsend)

    Chapman, Donald

    Henderson,Rt.Hn.Arthur(RwlyRegis)

    McLeavy, Frank

    Collick, Percy

    Herbison, Miss Margaret

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

    Corbet, Mrs. Freda

    Hilton, A. V.

    Manuel, Archie

    Cronin, John

    Holman, Percy

    Marsh, Richard

    Crosland, Anthony

    Houghton, Douglas

    Mayhew, Christopher

    Crossman, R. H. S.

    Hughes, Emrys (S. Ayrshire)

    Millan, Bruce

    Dalyell, Tam

    Hughes, Hector (Aberdeen, N.)

    Mitchison, G. R.

    Darling, George

    Hunter, A. E.

    Morris, John

    Diamond, John

    Irvine, A. J. (Edge Hill)

    Moyle, Arthur

    Ede, Rt. Hon. C.

    Irving, Sydney (Dartford)

    Neal, Harold

    Dodds, Norman

    Janner, Sir Barnett

    Oram, A. E.

    Donnelly, Desmond

    Jeger, George

    Pannell, Charles (Leeds, W.)

    Parker, John

    Royle, Charles (Salford, West)

    Thompson, Dr. Alan (Dunfermline)

    Prentice, R. E.

    Shinwell, Rt. Hon. E.

    Thorpe, Jeremy

    Price, J. T. (Westhoughton)

    Silverman, Sydney (Nelson)

    Tomney, Frank

    Pursey, Cmdr. Harry

    Skeffington, Arthur

    Wade, Donald

    Randall, Harry

    Small, William

    Warbey, William

    Rankin, John

    Soskice, Rt. Hon. Sir Frank

    Wells, William (Walsall, N.)

    Redhead, E. C.

    Steele, Thomas

    Williams, D. J. (Heath)

    Reynolds, G. W.

    Stewart, Michael (Fulham)

    Williams, W. T. (Warrington)

    Roberts, Goronwy (Caernarvon)

    Stonehouse, John

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

    Robertson, John (Paisley)

    Swingler, Stephen

    Zilliacus, K.

    Robinson, Kenneth (St. Pancras, N.)

    Taverne, D.

    Ross, William

    Thomas, George (Cardiff, W.)

    TELLERS FOR THE AYES:

    Mr. McCann and Mr. Grey

    NOES

    Allason, James

    Fraser, Ian (Plymouth, Sutton)

    Page, John (Harrow, West)

    Arbuthnot, John

    Gammans, Lady

    Pearson, Frank (Clitheroe)

    Atkins, Humphrey

    Gardner, Edward

    Percival, Ian

    Awdry, Daniel (Chippenham)

    Glyn, Sir Richard (Dorset, N.)

    Pickthorn, Sir Kenneth

    Balniel, Lord

    Goodhew, Victor

    Powell, Rt. Hon. J. Enoch

    Barber, Anthony

    Gresham Cooke, R.

    Price, David (Eastleigh)

    Batsford, Brian

    Grosvenor, Lt.-Col. R. G.

    Prior, J. M. L.

    Baxter, Sir Beverley (Southgate)

    Gurden, Harold

    Pym, Francis

    Bell, Ronald

    Hall, John (Wycombe)

    Rawlinson, Sir Peter

    Bennett, Dr. Reginald (Cos & Fhm)

    Hamilton, Michael (Wellingborough)

    Redmayne, Rt. Hon. Martin

    Berkeley, Humphry

    Harris, Reader (Heston)

    Rees, Hugh

    Biffen, John

    Harrison, Brian (Maldon)

    Renton, Rt. Hon. David

    Bingham, R. M.

    Harrison, Col. Sir Harwood (Eye)

    Ridley, Hon. Nicholas

    Birch, Rt. Hon. Nigel

    Harvey, John (Walthamstow, E.)

    Ridsdale, Julian

    Bishop, F. P.

    Hastings, Stephen

    Robson Brown, Sir William

    Black, Sir Cyril

    Hiley, Joseph

    Roots, William

    Bourne-Arton, A.

    Holland, Philip

    Russell, Ronald

    Boyd-Carpenter, Rt. Hon. John

    Hope, Rt. Hon. Lord John

    Sharples, Richard

    Boyle, Rt. Hon. Sir Edward

    Hornby, R, P.

    Shaw, M.

    Braine, Bernard

    Hornsby-Smith, Rt. Hon. Dame P.

    Skeet, T. H. H.

    Brewis, John

    Hughes Hallett, Vice-Admiral John

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

    Brooman-White, R.

    Hughes.Young, Michael

    Smyth, Rt. Hon. Brig. Sir John

    Brown, Alan (Tottenham)

    Hutchison, Michael Clark

    Spearman, Sir Alexander

    Buck, Antony

    James, David

    Stevens, Geoffrey

    Bulius, Wing Commander Eric

    Jenkins, Robert (Dulwich)

    Steward, Harold (Stockport, S.)

    Burden, F. A.

    Johnson, Dr. Donald (Carlisle)

    Studholme, Sir Henry

    Campbell, Gordon (Moray & Nairn)

    Johnson, Eric (Blackley)

    Tapsell, Peter

    Carr, Compton (Barons Court)

    Johnson Smith, Geoffrey

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

    Chichester-Clark, R.

    Jones, Arthur (Northants, S.)

    Teeling, Sir William

    Clark, Henry (Antrim, N.)

    Kerr, Sir Hamilton

    Thatcher, Mrs. Margaret

    Clark, William (Nottingham S.)

    Kirk, Peter

    Thompson, Sir Richard (Croydon, S.)

    Cleaver, Leonard

    Lancaster, Col. C. G.

    Thornton-Kemsley, Sir Colin

    Cooper, A. E.

    Langford-Holt, Sir John

    Touche, Rt. Hon. Sir Gordon

    Cooper-Key, Sir Neill

    Leavey, J. A.

    Turton, Rt. Hon. R. H.

    Cordeaux, Lt.-Col. J. K.

    Leburn, Arthur

    Tweedsmuir, Lady

    Cordle, John

    Linstead, Sir Hugh

    van Straubenzee, W. R.

    Corfield, F. V.

    Longden, Gilbert

    Vane, W. M. F.

    Coulson, Michael

    Loveya, Walter H.

    Wakefield, Sir Wavell

    Craddock, Sir Beresford (Speithorne)

    Lucas, Sir Jocelyn

    Walder, sir Wavell

    Crawley, Aidan

    Lucas-Tooth, Sir Hugh

    Walker, David

    Critchley, Julian

    MacArthur, Ian

    Walker, Peter

    Crowder, F. P.

    McLaren, Martin

    Walker-Smith, Fit. Hon. Sir Derek

    Curran, Charles

    Maclean,SirFitzroy(Bute&N.Ayrs)

    Ward, Dame Irene

    Currie, G. B. H.

    MacLeod, John (Ross & Cromarty)

    Whitelaw, William

    d'Avigdor-Goldsmid, Sir Henry

    McMaster, Stanley R.

    Williams, Dudley (Exeter)

    Digby, Simon Wingfield

    Marshall, Douglas

    Williams, Paul (Sunderland, S.)

    Doughty, Charles

    Marten, Neil

    Wilson, Geoffrey (Truro)

    du Cann, Edward

    Matthews, Gordon Meriden)

    Wise, A. R.

    Duncan, Sir James

    Mawby, Ray

    Wolrige-Gordon, Patrick

    Elliot, Capt. Walter (Carshalton)

    Maxwell-Hyslop, R. J.

    Woodhouse, C. M.

    Emery, Peter

    Mills, Stratton

    Woollam, John

    Emmet, Hon. Mrs. Evelyn

    Mlscampbeil, Norman

    Worsley, Marcus

    Errington, Sir Eric

    Montgomery, Fergus

    Farr, John

    Morgan, William

    TELLERS FOR THE NOES:

    Finlay, Graeme

    Morrison, John

    Mr. J. E. B. Hill and Mr. Peel.

    Fletcher-Cooke, Charles

    Nabarro, Sir Gerald

    Question proposed, That the Clause stand part of the Bill.
    Mr. Anthony Crosland: I should like to make a few brief remarks, not on the whole of this Clause, but only on that part of it which halves the Stamp Duty on Stock Exchange transactions. We
    726
    on this side of the Committee do not oppose the part which deals with house property transfer, or those parts related to the Ninth Schedule which deal with small investments, but that part of the Clause which reduces Stamp Duty from 2 per cent. to 1 per cent. on the bulk of ordinary Stock Exchange transactions.

    727
    Those who heard my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) addressing the Committee on Clause 43 will agree that his return from Washington has served both to lower the political temperature of our debates and substantially to raise their intellectual level. I do not wish to fall below the high standard he sets, so I say at once that this Clause is an indefensible sop to the property-owning supporters of the Conservative Party. But the serious difference between Clause 43 and this Clause is that, whereas my hon. Friend was voicing merely a suspicion of a Clause which involved only quite small amounts of money, in this case we are voicing a certainty about a Clause in which large sums of money are involved.
    The Chancellor, rightly or wrongly, used to be described as a Tory progressive, one of the group of young Butlerites alleged to be on the Left-wing of the party opposite. If this is true, I am very surprised that he has chosen to put this Clause into the Bill. In doing so, whether or not he has been faithful to ordinary Tory principle, I do not know, but he has certainly been unfaithful to the principles of Tory democracy.
    One of the things which the Chancellor may have forgotten is that the first Chancellor to suggest a Stamp Duty of any kind on shares was Lord Randolph Churchill in the famous Budget which he prepared for 1878–79 but never introduced because he resigned between preparing the Budget and the date of its presentation. He could, therefore, be said to be partly responsible for the fact that we have a Stamp Duty on anything connected with securities. Perhaps it is not surprising that the present Chancellor did not attempt to do what Lord Randolph Churchill did, because his biographer, the right hon. Member for Woodford (Sir W. Churchill), had this to say of him:
    "He laboured to transfer the burdens, so far as possible, from comforts to luxuries and from necessities to pleasures. He applied much more closely than his predecessors that fundamental principle of democratic finance—the adjusting of taxation to the citizen's ability to pay."
    That is a principle which finds little expression in the Clause we are discussing.
    7.45 p.m.
    Mr. Emrys Hughes: Is it not true that Lord Randolph Churchill took up a much stronger attitude on the war Estimates and resigned rather than agree to them?
    Mr. Crosland: That was a very good precedent which my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) consistently follows. It was an objection to Navy Estimates which caused Lord Randolph Churchill to resign.
    I should like briefly to consider the reasons given by the Chancellor for his actions in this case. They were given in the Budget debate, as reported at column 492 of the OFFICIAL REPORT,and have already been quoted by the spokesman of the Liberal Party, who characteristically not only approved of the Clause but wanted to give double the amount of money to this class. That is a rather curious reflection on the Liberal principles. They are certainly not radical Liberal principles.
    The Chancellor, in his Budget speech, stated as his first argument for this concession, what also was quoted by the hon. Member for Huddersfield, West (Mr. Wade), that the 2 per cent. rate of duty was substantially higher than that in any other country in Europe or in North America. It is certainly true that it was higher here than in those countries, but the whole point is that, unlike most of those countries, we have no capital gains tax. To consider Stamp Duty in isolation, without considering the question of a capital gains tax, is to get the whole matter out of perspective.
    The justification for the 1947 increase from 1 per cent. to 2 per cent. was that we in this country, unlike many other countries, did not have a tax on capital gains. At that time, Mr. Dalton, who doubled the Stamp Duty rate, decided against the capital gains tax, rightly or wrongly, on the ground that the Inland Revenue was extremely understaffed so soon after the war and would not be able to cope with it. Therefore, this was a partial substitute for a capital gains tax because, obviously, it fell very largely on the same class of persons. To say that our Stamp Duty rate is higher than that of other countries when

    729
    they have and we do not have a capital gains tax is, therefore, to give a false impression.
    The Clause will largely benefit the very class of property-owners who are extremely lightly treated by our tax system. We not only do not have a capital gains tax but we have no wealth tax, despite the suggestions of N.E.D,C., and we have a form of Estate Duty which, to put it mildly, is easily avoided. The taxation borne by the property-owning classes is exceptionally low relative to the taxation borne by the receiver of earned income. So I do not find anything very convincing in the Chancellor's first argument.
    His second argument was even more curious. He said:
    "It discourages investment in productive industry."—[OFFICIAL REPORT, 3rd April, 1963; Vol. 675, c. 489.]
    That is a most remarkable statement on which I hope the Economic Secretary will comment.
    Does the Chancellor really believe that industrialists over the last decade or so have been unwilling to invest because of a 2 per cent. Stamp Duty, or that they have been willing to invest but could not obtain the finance because of a 2 per cent. Stamp Duty? In this Committee and outside there has been endless discussion on the fact that investment has not been higher, but among the 150 reasons I have heard and seen advanced I have never heard the suggestion that the 2 per cent. Stamp Duty is the reason. It is nonsensical to suppose that if one thinks of the investment position of the typical firm over the last few years. To put the matter in the light most favourable to the Government, until a year ago, at any rate, we have had a considerable increase in investment in this country. As a proportion of the national income, it has gone up from 16 per cent. to 19 per cent., and done so perfectly happily still with a 2 per cent. Stamp Duty. No one can advance the suggestion that investment has been kept low because of the present Stamp Duty.
    I suppose that the Chancellor could have used an ingenious argument. The right hon. Gentleman could have said, in theory, that the fact of having a Stamp Duty which falls mainly on switching, on the transfer of existing securities,
    730
    increased the cost of transactions to the point where very much less switching occurred so that turnover was reduced. and that this had the effect, when new issues were made, of reducing the amount available for taking them up. To put the matter crudely, new issues would have to rely solely on new money and would not have access to the money derived from the sale of old securities.
    That case would be purely theoretical. No one can say that investment in this country has been held back in the last ten years by the difficulty of placing new issues. That may or may not have been the case for a few years after the war, but it has certainly not been the case for many years past. Therefore, that argument, again, will not stand up to examination.
    The Chancellor's next argument in his Budget statement was a throw-away reference to the small investor. But the 2 per cent. Stamp Duty has little indeed to do with the small investor, who will not be significantly affected by the halving of the rate. Small investors are dealt with quite separately in Schedule 9, but, quite apart from that, the small investor is not significantly concerned with a Stamp Duty that falls primarily on switching.
    The small investor is not typically the person who, once he has moved into the Stock Exchange, is constantly buying and selling securities. In any event, if he is, he ought not to be. It may be right to encourage the small investor, but not to encourage the small investor who then imagines that he can make money by constantly dealing in securities. Ideally, one wants that person to be a stable investor.
    It is certainly the case that far more than 90 per cent. of the switching that will be facilitated and cheapened by this reduction is not done, and would not be done in any circumstances, by the small investor. In other words, 90 per cent. of this concession will go to the large investor. I therefore do not think that this halving of the Stamp Duty can he treated as a serious concession to the small investor.
    The Chancellor's last argument was concerned with the balance of payments. He said, and it has been repeated by the hon. Member for Huddersfield, West, that this will encourage people in other

    731
    countries to invest in Britain. His exact words were that the 2 per cent. Stamp Duty
    "…is a strong disincentive to investment in Britain by people in other countries."—[OFFICIAL REPORT, 3rd April, 1963; Vol. 675, c. 488.]
    That seems to me to be an extremely dubious argument. I doubt whether the halving of the duty will make more than a marginal difference to investment from abroad, but, even conceding that it will, we had better start considering whether we want a great deal more portfolio investment in Great Britain.
    Hon. Members on both sides of the Committee—with, perhaps, the exception of some of my hon. Friends—would certainly say that they wanted to encourage direct investment by American firms in British productive industry —that is, American firms setting up subsidiaries in Britain. All the evidence is that that tends to increase the efficiency of the existing British industry. Further, that kind of investment from abroad is stable investment, not volatile, and I personally welcome it. I have done so in the past and will continue to do so.
    That is not what the Chancellor is talking about. He is talking about portfolio investment from, say, the United States of America or the Continent of Europe. It seems very doubtful whether we want to rely much more on this type of investment to strengthen our balance-of-payments position. Portfolio investment is inevitably volatile, and our balance of payments is already vulnerable enough to speculation without increasing that vulnerability. If every time Wall Street is in a bearish mood and London is in a bullish mood, these funds should come into the country and, in the reverse mood, the funds flow back to Wall Street, this will simply increase the kind of speculative movement on capital account that I should have thought every hon. Member would have wanted to avoid.
    In any case, even if we did want much more portfolio investment, it cannot be maintained that we must reduce Stamp Duty in order to get it. We know from the Government's own figures in the Economic Report, published just before the Budget, that both in 1961 and 1962
    732
    we had a very large inflow of portfolio investment—very much greater than in the previous years—even with a 2 per cent. Stamp Duty. Again, therefore, it seems that that argument will not stand up to examination. First, we can show that we have already had a considerable increase in this investment even with a 2 per cent. Stamp Duty and, more seriously, we should not lean too heavily on this kind of investment.
    Another reason is that we are always trying to improve our balance of payments by seeking to get the capital account right, so distracting attention from what should be the Government's No. 1 objective, and the objective of all of us, which is to get our current account right—to get the balance of exports and imports right. There is no simple way of getting out of balance of payment crises.
    Therefore, while we welcome the reduction of the Duty on house transfers and the concessions to small investors which are given separately in Schedule 9, we are very strongly opposed to what is the major part of this Clause—the reduction of the 2 per cent. Stamp Duty on the transfer of securities It is that reduction that accounts for by far the greater part of the cost of the Clause, and £16 million in the first year and £25 million in a full year are going to that part of the public, excluding small investors, who invest on the Stock Exchange. They constitute, perhaps, 3 per cent. of the population—the wealthiest group in the country. There is no reason why they should be given this large concession. This is the most indefensible Clause in the Bill, and we should have the greatest pleasure in voting against it if it were confined to this one item.
    Mr. Maurice Macmillan: I should like to take exactly the opposite line to that taken by the hon. Member for Grimsby (Mr. Crosland), particularly in reference to the small investor. I apologise for doing so at this stage. It is due to an error which, I understand, has been shared by other hon. Members, in putting down an Amendment to Clause 54 thinking that it would achieve my objective, which is to pursue here as well as outside the campaign to encourage and facilitate the ownership of ordinary shares by small savers and new investors.

    733
    I must, first, thank my right hon. Friends and hon. Friends on the Treasury Bench for going as far as they have in reducing the Stamp Duty on share -transfers by 1 per cent. I hope that they will not think me ungrateful in wishing that they could have gone the whole hog. My hon. Friend the Financial Secretary, in answer to a Parliamentary Question gave the cost of that, and quoted other figures this afternoon. It is a lot of money, but I think that it was an American Minister to the French Republic who, in 1797, said, "They can provide millions for defence but not one damn penny for the tribute." My right hon. Friend has gone a little further than that —to 1 per cent.—but I could have wished for more.
    Even my right hon. Friend's priorities in giving tax concessions make it impossible for him now to give us more, perhaps he can give an assurance that, in future, he will first keep in mind a further reduction in, or the abolition of, Stamp Duty and, in addition, do something particularly for the small investor under Schedule 9, having regard to the fact that at the moment the level that he pays up to £100 is, on occasion, slightly above, rather than where I think it ought to be, slightly below that of the rate widely in force.
    8.0 p.m.
    Could my hon. Friend say anything this evening about how far it may be possible in future to treat the small saver and investor in a similar way to the smaller dealers in property? I think that this applies particularly to a person who is investing for the first time in industry, and especially perhaps to those investing collectively through investment clubs. From what knowledge I have of them, there would seem to be quite a number who invest through the Stock Exchange about £100 a month regularly, month after month.
    The hon. Member for Grimsby appears to regard all people who wish to make profits on the Stock Exchange as rich. The Wider Share Ownership Council made a survey, under Dr. Mark Abrams —admittedly, it was a fairly small sample —and I should like to tell the hon. Member for Grimsby that three-quarters of the sample did own shares, including a large number who owned £500 worth or less. They expressed the attraction to
    734
    them of owning shares as capital gains, profits, making money or gambling. The hon. Gentleman may deplore that intention. But why take that high moral tone and allow it to the rich, but forbid to the poor? I take the slightly different point of view. I get upset when I walk down the street, as I did yesterday, and see "Investment Office" written up over a building, and find that it is, in fact, a betting shop.
    Mr. Crosland: Would the hon. Gentleman and his council really encourage the investor with less than £500 capital, as opposed to investing in a unit trust or an investment trust, to do a great deal of switching from one share to another? If so, it is indefensible.
    Mr. Macmillan: I would not suggest that it should he encouraged. The Wider Share Ownership Council makes clear that in its view it is very dangerous for anyone to invest in anything which may lose its value temporarily, unless the investor is prepared to leave his money in that investment sufficiently long to obviate the need to withdraw the money at a disadvantage.
    But I do not see why the hon. Member for Grimsby must take such a strong moral line about the activities of the small investor. I am anxious that the small investor should have the same chance and freedom to invest his money where he likes and that the concessions which he obtains from taxation as a small investor—which I should be out of order were I to attempt to pursue further—should be the same wherever he may make his investment.
    There is one other point which I should like to make and which I hope that I shall not be out of order in pursuing. It relates to the question of who, in fact, pays the Stamp Duty. By practice, but for no other reason, it is paid by the purchaser of the shares. I think that it might prove helpful were the practice to be changed and the Stamp Duty paid by the vendor. This would relieve from the burden of paying Stamp Duty the person investing for the first time, and it would, indeed, meet the point made by the hon. Member for Grimsby, because if the investor did not transfer he would not pay at all.
    I believe that it is not a question on which it is possible to legislate, since the

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    Government, or the Treasury takes the view that it does not matter who pays it so long as the stamp is put on the document—
    Mr. Callaghan: A typical Treasury attitude.
    Mr. Macmillan: If we could have an assurance on some of these points, some hon. Members who have been anxious, almost for years now, to abolish Stamp Duty would be able to add to the gratitude we already feel for the hon. Gentleman and his hon. Friends a sense of hope for the future.
    Mr. R. Gresham Cooke: I wish to support and to thank the Chancellor and other Treasury Ministers for what they have done to reduce the Stamp Duty. I consider it to be one of the wisest steps taken in the Bill. It seems to me that it must surely be in the interests of everyone to widen the pool of investment and the number of investors. If British industry is to grow it has, from time to time, to go to its own shareholders for more money and, also, it tries to attract new shareholders. Therefore, the wider the pool of investment and the greater the number of potential shareholders, the greater the amount of money which will be available for industry for expansion in the future. One of the disincentives—
    Mr. J. T. Price: Is the hon. Member seriously suggesting that the mere transferring of a block of shares in a company is necessarily adding anything to the finances of the company? The increment gained, or the loss sustained in the transfer, does not reflect itself in the central finances of the company.
    Mr. Gresham Cooke: I am saying that suppose a fairly small company has 2,000 investors, and another 500 come in and pay £50 or £100 each, the company will have 2,500 investors. That is widening the pool of investment and making it easier for the company to raise more money from its shareholders, as it has to do from time to time in order to expand.
    I dislike the argument advanced by the hon. Member for Grimsby (Mr. Crosland) that this is helping only 3 per cent. of the nation. I think that that gives a totally false impression of the
    736
    investors of the country. The large investors today are the pension funds, the insurance funds, and all the pension societies run by industry and by trade unions, and so on. When one breaks that dawn among pension holders and insurance fund holders, one finds that far from 3 per cent. of the nation owning British industry, the figure is about 30 per cent.
    I welcome the Clause. I think that it will have a further advantage, as was said by the Chancellor in his Budget speech. The Stock Exchange is the only one which suffered under the disability of a 2 per cent. Stamp Duty. That has kept foreign investors from our shores. Despite what hon. Members opposite say, we wish to attract foreign investors in portfolios. It makes our capital larger and more valuable to the Treasury, and our balance of payments larger. On that ground alone, I should have thought that we were well justified in reducing the Stamp Duty from 2 per cent. to I per cent.
    Therefore, I do not agree with what has been said by hon. Members opposite. I believe that this is one of the best steps taken by the Government to make British industry more democratic even than it is today.
    Mr. du Cann: We always expect an intellectual and an engaging speech from the hon. Member for Grimsby (Mr. Crosland) and we are never disappointed —at any rate, never in my experience. None the less, one should never give a left hand without giving a right hand, and I fault the hon. Gentleman's speech on several practical counts which I hope to specify.
    The hon. Gentleman seemed to me to read into the speech of my right hon. Friend, and his Budget statement, inferences which were not there. He discussed at least one point which my right hon. Friend never made. He put up an argument on the subject of new issues and proceeded to demolish it to his own great satisfaction. I am bound to say that I agree with a great deal of what he said. But that was not one of the positive reasons why my right hon. Friend brought forward this proposal in the first place.
    Mr. Crosland: It was a better reason.
    Mr. du Cann: The hon. Gentleman says that it was a better reason than that advanced by my right hon. Friend. That is untypically modest of the hon. Gentleman, if I may say so.
    The hon. Gentleman said a certain amount about the wealth tax. It amuses me to note that he cannot get to his feet without mentioning the wealth tax. He is very enamoured of this development. The hon. Member for Cardiff, South-East (Mr. Callaghan) the hon. Member for Gloucester (Mr. Diamond) and the hon. Member for Grimsby—this unholy trinity —all say to me with one voice, "Neddy". One passing reference to a wealth tax in the N.E.D.C. Report, to the effect that it may
    "have some relevance in the taxation of growth",
    Is hardly. I should have thought, unqualified enthusiasm.
    The N.E.D.C. may well have mentioned the wealth tax casually, but that is not necessarily a strong recommendation for it. There is a great deal of opposition to the idea of a wealth tax, a substantial body of opinion which feels that such a tax would be a substantial penalty on enterprise.
    I am one of those who agree with that opinion. But the hon. Member did not say whether the Labour Party would put the rate of Stamp Ditty up again. I do not know whether they are shy in advance of a General Election, but it is surprising that we have no Amendment on the Notice Paper to alter the situation if he thought that that were an appropriate thing to do.
    It was particularly noticeable that the hon. Gentleman did not quarrel with a number of points which my right hon. Friend made. One was the claim that the 2 per cent. level to which Stamp Duty was lifted in 1947 by the late Lord Dalton was substantially higher than that in any other European or North American country. That is a fact, and the reduction has brought us more into line. My hon. Friend the Member for Halifax (Mr. Maurice Macmillan) wants us to go still further, while being good enough to acknowledge that we have already gone some way.
    It is worth quoting the other European rates. In France, it is 0·6 per cent. on both buyer and seller—a commentary on
    738
    the point made by my hon. Friend the Member for Halifax—making a total of 1·2 per cent. We are, therefore, cheaper than France. In Western Germany, it is ¼ per cent. In Belgium, it is 0·3 per cent. on both seller and buyer, making 0·6 per cent. In America and in Canada, there is a very small Federal tax. It is fair, therefore, to claim that we have come down very much nearer to the European and North American rates, though there is still undoubtedly some way to go. What has been entirely clear is that with that rate at 2 per cent. our stock market has been at a substantial disadvantage by comparison with others.
    The hon. Member for Grimsby discussed at some length whether we wanted portfolio investment in the United Kingdom. I agree with him that this requires looking at with a great deal of care, for it is a two-edged matter. We all acknowledge that. I have no doubt about it, nor has anybody else who has considered these matters carefully. It may or may not be right to encourage portfolio investment in the United Kingdom.
    The hon. Member said that overseas investment in productive industry was probably a good thing. Again, I agree, although I think that a limit should possibly be set to that—and I note that he agrees with me on that point. What we want is to see the markets of securities in London, and there is no doubt that this high level of Stamp Duty has been a great deterrent. In practice, that is a matter of fact, and there is no gainsaying it. There is no question that foreigners, on the whole, have been reluctant to deal in the United Kingdom market while the level of Stamp Duty has been as high as 2 per cent.
    The hon. Member for Grimsby suggested, I do not think seriously, that it was perhaps my right hon. Friend's intention to put everything in our balance of payments right by this single stroke. That is not so. It is a marginal matter, it is true, but it seems to me to be important. I do not think that it is right to look at the Stamp Duty in isolation. I do not wish to trespass beyond the rules of order, but may I draw attention to a later Clause, which we shall discuss in full, which deals with the facilitation of bearer issues and also to a Measure to which the chairman of the Stock Exchange

    739
    referred at his annual meeting yesterday—the Stock Transfer Bill.
    These measures and others are bound to have an effect in improving the market facilities in London, and I believe that to be highly desirable and appropriate. It is important to remember that the Stamp Duty reduction should not be considered in isolation.
    Mr. J. T. Price: I was interested in the hon. Member's reference to the Stock Transfer Bill, which he is using to support his argument. It has not yet been considered by the House.
    Mr. Gresham Cooke: It has had a Second Reading.
    8.15 p.m.
    Mr. Price: Only in the formal sense. It went to another place and comes back to Committee in this House next Wednesday. I am a member of the Standing Committee. If the hon. Member intends to quote this legislation in support of his argument, he should bear in mind that when it was considered in another place it was first considered as an administrative Measure to do away with much of the form filling and elaborate documentation which stockbrokers said were hampering them. It was only when it went into Committee in another place that noble Lords there strongly pressed the Government to abolish the Stamp Duty altogether and to put the cornerstone, as it were, on the Stock Transfer Bill. It is rather rich for him to argue this administrative Measure when the impelling force came from another place in the debate on 21st March, the OFFICIAL REPORT of which I have read.
    Mr. Diamond: Does my hon. Friend mean rich in the singular or riches in the plural?
    Mr. Price: I was speaking euphemistically. We usually regard the other place as a bit rich, in any case.
    The Temporary Chairman (Mr. W. R. Williams): Order. I think that any reference to anything which is not in the Clause should be very sketchy indeed.
    Mr. du Cann: You are entirely right, Mr. Williams. What I was anxious to do was to put the matter in its context.
    The hon. Member is right that on Wednesday a number of us will no doubt
    740
    be upstairs discussing a Measure which, I think, you would prefer me not to mention again. That is surely a good and desirable thing. It is an administrative matter, but we must look at these matters in context, and it is a good thing that the market facilities are being improved.
    The hon. Member for Grimsby and my hon. Friend the Member for Halifax referred to Schedule 9, in which the steps are improved. I gather that this was warmly welcomed by the hon. Member for Grimsby, and I think that he was entirely right to do so, for the previous scale was in my opinion totally unsatisfactory. I have argued against it in the House and in many other places in the past.
    To take an extreme example to illustrate the point, on a purchase consideration of £25 ls. one could pay Stamp Duty almost at the rate of 4 per cent. This was intolerable. My hon. Friend the Member for Halifax says that these steps are much improved, but suggests that later we might look at them again and endeavour to find a less steep graduation, bearing in mind even that in the Schedule we have reduced the steepness of the steps. I am bound to tell him clearly that there are certain practical difficulties in the way of doing that. If we introduce too great a number of steps there are bound to be delays in the stamping process. It seemed to us that the proper thing was to devise a number of steps which mitigated the difficulties which I have illustrated by that extreme example and, at the same time, did not result in any delay in dealing with the stamping processes. That is the reason for our coping with the matter in that way.
    The hon. Member for Grimsby spoke about large investors, and he represented to the Committee, I think, on the whole, mistakenly, that the reduction in duty would be largely a matter of benefit to large private investors. I do not believe that to be the case, and I should like to say a word about the growth of share ownership.
    My hon. Friend the Member for Halifax is chairman of the Wider Share Ownership Council, of which my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) is also a distinguished office holder. The Council has made a survey, admittedly, as my hon. Friend

    741
    said, on the basis of a fairly small sample, but which I believe to be accurate, which indicates that there must be about 3,500,000 shareholders in the United Kingdom. That is a very substantial number of individuals.
    The chairman of the Stock Exchange, speaking in Liverpool a short time ago, and almost quoting an American Stock Exchange survey, said that he believed that at least another 500,000 people were on the threshold of investment. I imagine that that suggestion is correct. The Inland Revenue, in its 105th Report, dated January, 1963, stated that the number of ordinary shareholders alone rose by 130,000 between 1960 and 1961. The current rate of increase seems to be about 10,000 a month.
    Mr. Callaghan: Persons or holdings?
    Mr. du Cann: Persons.
    There are believed to be 1,200 investment clubs in the United Kingdom, to which my hon. Friend has also referred. Nearly all the clubs are believed to have about 20 members. The growth of these clubs is a remarkable social phenomenon. The total annual investment comes to about £1 million, not an insubstantial sum when one reflects that probably five years ago there were certainly not 100 clubs in the United Kingdom and probably not even 20. In the unit trust field there are about 1 million investors, whereas five years ago, to my certain knowledge, there were not more than 250,000. These unit trusts are taking increasingly large sums on a regular basis in amounts of 10s. or 5s.
    There may be a number of rich people who own shares. Some of them may have large holdings, but, nevertheless, the facts seem to show conclusively that there is a very strong trend towards wider share ownership. For instance, I.C.I. has about 410,000 ordinary shareholders, Shell has 275,000, and of the 32,000 ordinary shareholders in Rolls-Royce, 65 per cent. hold under 300 shares. Seventy per cent. of the 110,000 ordinary shareholders in B.M.C. hold 1,000 shares. There are about 100,000 ordinary shareholders in Woolworths, of whom 30 per cent. have holdings of less than £500 in value. These are individual personal shareholdings.
    On the other hand—and my hon. Friend the Member for Twickenham
    742
    made the point though he did not mention the figure—about two out of three adults in the United Kingdom are indirect investors through subscriptions and contributions to institutional investors. Pension funds, large industrial companies and other organisations, insurance companies, and even the trade unions, which have started their own unit trust, friendly and charitable societies, and so on, hold about half of all the securities quoted on the Stock Exchange.
    The hon. Member for Grimsby is right when he says that, in general, the benefit of this concession will go to the large investor. This is inevitable, but the fact that so many millions of our citizens are indirectly interested in these institutional investors illustrates that they should eventually get the advantage. It illustrates a further point. It seems to me, and I hope that the Committee will think it right, that the proportions of small holdings which I have quoted, bearing in mind the figures for institutional holdings, are even more striking than they appear at first sight.
    Mr. J. T. Price: The hon. Gentleman is now taking refuge in generalities. While I fully understand the significance of all these institutional investors, nevertheless I prefer to see this proposition set out in the Committee in the form of figures. The only figures which the hon. Gentleman has quoted relate to investment clubs, of which there are large numbers. He says that they produce about £l million in investment each year, which is quite a substantial sum. But we should look at the cost of this concession of a 1 per cent. reduction in the duty. It is about £25 million and, therefore, this refers to a total investment of £2,500 million. In the light of that £2,500 million, which will attract this concession, I suggest that the small investors are a mere drop in the ocean and that the main benefit will clearly go to the large investors.
    Mr. du Cann: With respect to the hon. Member, either he has not entirely followed my argument, or, alternatively, I have not made my remarks as clear as I should have liked them to have been. The hon. Member's interjection inevitably gives a misleading impression to the Committee of what I said. I said, "Look at the trend. It is remarkable and extraordinarily clear. It is one of the most

    743
    remarkable social phenomena of our time, particularly in relation to investment clubs. That movement may be small, but look at the totality of it."
    My hon. Friend the Member for Halifax spoke about the future. He will not expect me to be specific about that tonight. It would be fair to say that there can be no reason in principle for not reducing or abolishing stamp duties excepting in so far as they are revenue producers and, taken at the level at which they endure, they are not an interference with the market. It is claimed that they have been. British securities, for example, are being treated in Paris at present because it is cheaper there than it has been in London. This is absurd.
    Mr. Callaghan: Why not?
    Mr. du Cann: While I am very much in favour of competition, I am not in favour of British institutions and traders being put at a competitive disadvantage for any reason. That is why I am glad to see this Stamp Duty reduced.
    I said earlier, and not at any length, for reasons of order, that this Stamp Duty matter cannot be considered in isolation. I have laid emphasis on the need to create, maintain, develop and exploit the market in London. I am clear that the whole Committee would think that to be a desirable thing to do, but I think that it is right to say that the Government can do only so much and that the reduction of Stamp Duty, or the passage of the Bill which we shall be discussing shortly, are only a part of the whole scene.
    There are practical people involved who have to do their part. There are companies which have a strong obligation, as The Times pointed out clearly today, to modernise their procedures. We have to examine every aspect of this matter. We have to make certain that the machinery of brokerage charges is at an appropriate level in comparison with what others charge.
    Be that as it may, I am convinced that this reduction in the duty is thoroughly beneficial to the country as a whole. It must be if it gives London a better opportunity to fulfil its responsibilities. I believe that the capital markets in Europe and in America are
    744
    not a patch on London and that London has an unrivalled opportunity to become the financial capital of the world. We have superb facilities, which are being improved. There is outstanding knowledge and expertise in the City of London and I hope very much that those who are active in these fields in the City will not fail, in the national interest, to seize this opportunity with both hands.
    8.30 p.m.
    Mr. Callaghan: We have heard a very interesting speech from the Economic Secretary, a speech in which I caught echoes of previous speeches he has made from other parts of the House. He is very fortunate in being able to translate into practice from the Front Bench some of the things he has asked for when speaking on the back benches. Not all of us are so fortunate. Some of us have to watch hon. and right hon. Members opposite translating our views into practice, but the hon. Gentleman has had the opportunity of doing it with his own.
    The hon. Gentleman has told us of the very great growth of shareholding, of the way shares are held, the pensions funds, the substantial increase in the number of I.C.I. shareholders, the 3½ million investors, and so on. He said that over the past few years—I quoted his words—the trend has been remarkable.
    What is the need for the Clause? If we are getting this growth in shareholding, if it is so widely spread, if the trend is remarkable, why are we spending another £25 million in a full year? If the hon. Gentleman is looking about for reliefs, if he wants a way of spending £25 million, my hon. Friends can suggest plenty of ways of giving away another £25 million. Next week, he will be resisting Amendments asking for relief for the blind. He will be resisting Amendments asking for relief for the disabled. This Government can never find the money to give a car to a man disabled in industry. Yet, despite the remarkable trend and the growth in shareholding to which the hon. Gentleman points with a great deal of satisfaction—I do not dissent from that —he says that we must give away another £25 million in this fashion.
    The hon. Gentleman's speech was really the most devastating argument against the Clause which I have heard. With due

    745
    deference to my hon. Friend the Member for Grimsby (Mr. Crosland), who made one of his usually attractive speeches—apart from a personal attack upon me—I thought that the Economic Secretary made an even more powerful case against the Clause than did my hon. Friend. There can be no justification for doing it if there is this remarkable trend in the growth of shareholding.
    The simple truth—I come back to it, agreeing with what was said by my hon. Friend the Member for Grimsby—is that this is a gift to the City in election year in order to pacify Lord Ritchie and offer a sop to the Stock Exchange That is all it is. We know what it is for, and, incidentally, it is no less blatant for being concealed behind a number of specious arguments, however attractively presented.
    I must join issue with the hon. Gentleman in what he says about the City of London. There is often a tendency to confuse the interests of the City of London with the interests of Britain. The two are not necessarily synonymous. When they are synonymous, I am in favour of the City of London performing its functions with the maximum efficiency and the maximum profit to the British balance of payments. But, in my view it is the balance of payments which counts, not the City of London. I have yet to be persuaded by all the arguments advanced by the hon. Gentleman and others who desire to make the City of London a very great financial capital again that this will bring about the long-term strengthening of the balance of payments. Yet it is only the strengthening of the balance of payments which matters. Neither the interests of the City nor the interests of anybody else matter apart from that.
    My own view is that this country and sterling could very well be stronger. not weaker, if we had strong capital markets in other parts of Europe, if the German stock market were not so thin in stock as it is today, so that we did not have such fluctuations as occurred last week, and if the French Bourse had more stock to offer and more capital to hold. I do not share the view that, so long as sterling is as unprotected as it is today, it is our duty to attract and try to cope with more capital from other countries before we can secure protection for our own industry here.
    746
    The two things are not synonymous, and I beg the hon. Gentleman to think carefully before he, with the City, goes on attracting new capital to this country which can retreat as quickly as it comes. Certainly, this applies to portfolio investment and much more to short-term investment. One of the best things the hon. Gentleman could do would be to bend his very acute mind to getting an equalisation in short-term interest rates which would offset at least a certain amount of the fluctuations in the exchange.
    We are really talking about a myth if we automatically believe in, and we all bow down to, as before the sacred calf, the interests of the City of London, imagining that they are necessarily the interests of the British balance of payments. The two can be in direct contradiction. This ought to be recognised and said clearly.
    What I am saying is not an attack on the City of London, although, clearly, I cannot hope for many votes there. It is an attempt to put the matter in proportion. We ought always to keep it in proportion. There have been occasions during the 1950s when the interests of the City of London were diametrically opposed to the interests of British industry. So, unlike the hon. Gentleman, my thoughts turn in the other direction, in the direction of strengthening sterling and our balance of payments by taking some of the strain off sterling through building up the capital market in other parts of Europe. I believe that this would be more in our long-term interest because we do not have, and cannot have in the future, the domination of world trade which we had in the past.
    The major point made by the hon. Member for Halifax (Mr. Maurice Macmillan) related to the small investor. The hon. Gentleman is a great expert in these matters, but I wonder whether his researches show how often the small investor switches. My hon. Friend the Member for Grimsby made this point. He is actively against encouraging small investors to switch, and so, I gather, is the hon. Member for Halifax. But surely the small investor—say, the widow with perhaps £1,500 or £2,000 split up among three or four investments —does not switch investments. The small investor leaves them where they are, sometimes for bad as well as good.

    747
    It is not these people who will get the advantage from this Clause. It is the investor who constantly hops in and out of I.C.I., out of equities into gilt-edged, from gilt-edged back into short-term loans, hopping around, making a quick dollar or a quick £, who will benefit from this Clause. That is why I thought the hon. Gentleman's case for the small investor was misconceived. Small investors will not get an advantage except on the occasion of the initial investment. Apart from that, I believe that they will do very little moving.
    Mr. W. Clark: I am interested in what the hon. Gentleman says about this hopping in and out. With a capital gains tax, there is no hopping round, at least until after six months. If an investor makes a profit in he is caught by the captial gains tax. The hon. Gentleman must accept this.
    Mr. Callaghan: I hope that the hon. Gentleman will not get into trouble with his Front Bench, because we do not have a capital gains tax. What we have is a speculative gains levy, or something like that. I was rebuked last year for calling it a capital gains tax. I think that the then Chancellor of the Exchequer was right in rebuking me. We have not a capital gains tax, and that is one of the criticisms. I am not sure that there is a case for a Stamp Duty if we have a proper capital gains tax.
    I will make the hon. Gentleman an offer: would he like to swop his Stamp Duty for the capital gains tax? There is no case for the hon. Gentleman offering us comparisons
    with the Stamp Duty rate in Belgium, because Belgium has a capital gains tax. That is the alternative. It is no use the hon. Gentleman talking about the United States, because there is no Stamp Duty in the United States, but there is a substantial capital gains tax.
    I object, and have objected all the time, to our picking up—I know that we must do it for the purposes of this Commit. tee—these taxes in isolation and making individual comparisons with other countries, as though we are telling the whole story. My belief is that the whole tax system has a lot of fungus on it. It was designed by William Pitt to beat the French in 1798, and I am not sure whether it is suitable to beat President de
    748
    Gaulle in 1963. The whole tax system needs looking at—the wealth tax, capital gains tax, Stamp Duty. We may want to reduce some and increase others. Estate Duty is something that we want to look at.
    The hon. Gentleman does not convince me, and I do not think that he convinces many other hon. Members, when he tells us what is the rate of Stamp Duty in Belgium, America, France and elsewhere without bringing into play the other forces and imposts that those who are purchasing shares in those countries have to bear. If this were to stand in isolation in the Clause, we would undoubtedly vote against it. But because it is in a miscellaneous group which will benefit the home owner and those purchasing houses, we would not want to vote against the Clause. But we express our opposition to what the Government are doing in this Clause, and on Report we will have an opportunity to single out and focus attention on this Clause and will be able to register our view on it.
    Mr. McMaster: I do not wish to detain the Committee at this late hour, but I am prompted by the speech of the hon. Member for Cardiff, South-East (Mr. Callaghan) to add one point in what has been a very important debate. The £25 million which is involved here has been criticised as being a gift to the City and as not in the long-term interests of this country. I venture to suggest that there are two important points which have been entirely neglected.
    I applaud the reduction in tax, but agree with my hon. Friend the Member for Halifax (Mr. Maurice Macmillan) that it would have been much better if this tax had disappeared entirely. Basically, it discourages investment. I cannot agree with what has been said from the benches opposite about transfers of shares not encouraging investment as a whole. It is because there is a free transfer of shares that the market is good and people are willing to invest. It is because people invest in this country that we have our present capital equipment.
    It has often been said in debates in this Chamber that we lag behind our competitors abroad in the amount that we are prepared to invest. Every step that we take to encourage investment is a step for the long-term benefit of this country.

    749
    Another aspect of this is that is so far as the small saver invests and does not spend, he leaves a surplus of consumer goods to be exported. The point was made by hon. Members opposite that the Chancellor of the Exchequer should take steps aimed at improving our balance of payments. This is a step which must help to improve our balance of payments, because in so far as it encourages investment, it puts more pressure on exports.
    Speaking as a Member for a Northern Ireland constitutency, I say that we must have more investment if we are to reduce the level of unemployment in areas of heavy unemployment. Therefore, I applaud this proposal, and I hope that some of the investment which results will be channelled to those areas where it is most needed.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.
    Clause 53 ordered to stand part of the Bill.
    Schedule 9 agreed to.
    Clauses 54 and 55 ordered to stand part of the Bill.

    Clause 56.—(STAMP DUTY ON BEARER INSTRUMENTS.)
    Mr. du Cann: I beg to move, in page 54. line 23, to leave out from beginning to the end of line 36 and to insert:

    (1) Inland bearer instrument (other than deposit certificate for overseas stock).

    Duty of an amount equal to three times the transfer duty.

    (2) Overseas bearer instrument (other than deposit certificate for overseas stock or bearer instrument by usage).

    Duty of an amount equal to twice the transfer duty.

    (3) Instrument excepted from paragraph (I) or (2) of this heading.

    Duty of 6d. for every £25 or part of £25 of the market value.

    (4) Inland or overseas bearer instrument given in substitution for a like instrument duly stamped ad valorem (whether under this heading or not).

    Duty of 6d.

    I think that it might be for the convenience of the Committee if we discussed with this Amendment a number of other Amendments, Mr. Williams.
    The Temporary Chairman: Yes, it might be convenient to the Committee to discuss with this Amendment the next six Amendments in the name of the hon.
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    Member for Nottingham, South (Mr. W. Clark), and the Government Amendments, which deal with the same subject.
    Mr. du Cann: I suggest, Mr. Williams, that among that splendid collection of Amendments, we might also discuss the Amendment in page 55, line 27.
    The Temporary Chairman: Yes, I think that the more we have together the better we shall get along.
    Mr. du Cann: I am sure that the Committee will be extremely grateful to you, Mr. Williams, for your kindness in suggesting that we should discuss all these Amendments together. They are a little complicated; indeed, this whole section of the Bill is a little complicated. I shall do my best to explain them concisely and clearly, and I hope that I shall satisfy the Committee in both those respects.
    8.45 p.m.
    I hope that I may be allowed to say a short word on the subject of the Clause, simply to put the Amendments into context. As the Committee knows, its chief purpose is to halve the current rates of duty on bearer instruments. Its second purpose is to base the duty, where appropriate, on market value rather than on nominal values. This is especially important in the case of no par value shares which have no nominal value and on which, therefore, there can be no duty. In so far as overseas no par value shares have been liable for United Kingdom duty —of course, there have been overseas no par value shares when such shares have been impossible in the United Kingdom —they have escaped duty altogether. The last purpose of the Clause is to consolidate and redefine the law.
    My right hon. Friend the Chancellor of the Exchequer has seen fit to table a number of Amendments which I hope my hon. Friend the Member for Nottingham, South (Mr. W. Clark) and my hon. Friend the Member for Halifax (Mr. Maurice Macmillan) will feel entirely meet the spirit of what they were intending to achieve.
    The Amendments reduce the duty on overseas bearer instruments by usage and deposit certificates to bearer for overseas stock. I ought, perhaps, to attempt shortly to define those categories. Bearer instruments by usage are, in the main,

    751
    American and Canadian share certificates which are registered in what are known as marking names—that is, a limited number of names—and they pass by endorsement; they do not pass by reregistration. They are, in fact, bearer instruments by usage. The term is, perhaps, self-explanatory.
    European deposit receipts arise in circumstances when, for example, a bank owns stock registered in its name and issues receipts against those stock certificates which it may hold to individuals who may wish to participate to a greater or less extent in the total holding. At least, the purpose of the Amendment is to reduce the duty on overseas bearer instruments by usage and on deposit certificates to bearer for overseas stock to 6d. for every £25 of the market value of the stock—that is, broadly one-tenth of 1 per cent. of market value. I hope that my hon. Friends, in particular, will appreciate that we have, so to speak, restored the status quo ante of the Bill. I shall be more particular presently as to our reasons for so doing.
    The Amendments also reduce to 6d. the duty on a bearer instrument issued in substitution for an original bearer which was duly stamped ad valorem. I should like to explain by way of example circumstances which might arise in which that would require to be done. I will put it in the simplest terms. In the old days, a bearer certificate would be issued with coupons attached. Those coupons would probably be small pieces of paper which would entitle the holder upon presentation to payment of a dividend distribution. The Committee is probably familiar with this procedure.
    When the number of pieces of paper ran out, owing to the passage of time, the holder of the bearer certificate would be invited by advertisement to appear at the Registrar's and exchange his certificate for a new one with, attached to it a new series of coupons or, if not to exchange it for a new certificate, simply to obtain a new issue of coupons. Generally, those coupons would last a long time and exchanges were not frequent.
    Today, that is not always the case. I uderstand that the coupons are getting larger and larger until they are almost
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    in the form of cheques, and there is nothing rare nowadays in bearer certificates with coupons attached lasting for only four or five years in camparison with the twenty or thirty years that was more usual in other circumstances. [Interruption.] As the hon. and learned Member for Kettering (Mr. Mitchison) says, it is hard on shoe leather; and that, at least, is good for British business.
    There are two more general matters with which the Amendments deal. I promised that I would say something about our reason for seeking to amend the original provision in the Bill. The Committee will understand that our original proposals envisaged, so to speak, two increases in duty. The first was an increase from one-tenth of 1 per cent. to 1 per cent., and the second was that the basis of valuation would be altered from nominal value to market value.
    But in almost every case—invariably so in the case of no par value shares—market value is above nominal value. There would thus in effect, have been two increases—the first from one-tenth of l per cent. to 1 per cent. and the other by altering the basis of valuation. Strong representations have been made to the Government that the effect of a swingeing increase of duty of this sort—it is very large in context—must militate against what we hope to see as a result of this Clause—though with the qualification made by the hon. Member for Cardiff, South-East (Mr. Callaghan)— namely, further development of a capital market in London.
    Indeed it has been represented to us that the volume of business which is currently done in American, Canadian and other overseas stocks in London would altogether disappear. Furthermore, other items of earnings accruing to our balance of payments, and acting as a convenience also—namely, the establishment of marking names and the like—would be seriously affected as well.
    As I attempted to say in an earlier discussion, the virtue of the stamp duties proposed is that they are cheap to collect and do not constitute a serious drag on the transactions to which they relate.

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    We are entirely satisfied, from the representations made to us, that the second of these descriptions would certainly not apply if our original proposal stood. What is worse perhaps—it has also been made clear to us—and it bears out particularly what the hon. Member for Cardiff, South-East has said, with much of which I agree, that it would lead to business being diverted into other channels and that would be bad for our balance of payments.
    In the circumstances, therefore, the Chancellor decided to put the rate of duty on overseas bearer instruments back to the old rate of one-tenth of 1 per cent. with the difference that, whereas under the existing law this rate is applied to nominal value, it will in future be applied to market value. That is the correct course to take. In some cases, the Stamp Duty payable will be considerably more than in the past, but in relation to the total value of the transactions it is plain that the burden will be very much lighter. I do not think that it will have the bad effect on the market in the United Kingdom which our original proposal would have done.
    I think that is all I have to say on the subject of the main Amendment, but it would be appropriate to point out that the other Amendments in the name of my right hon. Friend are almost entirely drafting and consequential on the one I have moved. I was delighted today to see that the responsible commentators in The Guardian, The Times, and the Financial Times use almost the same phrase as the chairman of the Stock Exchange on this. He said:
    "These Amendments will allay our anxiety."
    It has never been our intention to interfere with sound and successful business, and I am very pleased to make that clear.
    Mr. William Clark: May I say to my hon. Friend the Economic Secretary how grateful I am that he has at least accepted the main Amendment, except that he has changed it from nominal value to market value? There is one question which I should like to ask and which concerns the position of the London market when it arranges a loan abroad with British securities which would possibly never be used in this country. It should not be impossible for the London market to
    754
    arrange loans abroad in foreign markets with British securities without being burdened with Stamp Duty. I do not ask for an answer to this immediately but I should like my hon. Friend to consider it.
    In subsection (4) of my hon. Friend's Amendment, the words are:
    "Inland or overseas bearer instrument given in substitution for a like instrument duly stamped…."
    I wonder whether that wording is sufficient, because there might be a substitution of part of a bearer security. I have worked out wording which I put on the record for the consideration of my hon. Friend. I would have thought that instead of "like instrument", one should say "like instrument or otherwise replacing in whole or in part one or more like instruments which have been duly stamped", and so on. Perhaps my hon. Friend will look at that.
    I think that the feeling in the London market about the Government Amendment has been extremely favourable. I do not want to join issue with the hon. Member for Cardiff, South-East (Mr. Callaghan), but I think that it is somewhat naive to think that the London market attracts only hot money, if I may put it in jargon. The more that foreign investors come into the London market, the more help there is for our invisibles, shipping and insurance, and so on. No Government should do anything to drive any of that business away by increasing Stamp Duty and the like.
    I suggest that Stamp Duty, not only in this case, but generally, can act as a deterrent to the foreign investor, and that when we are considering Stamp Duty on transfers it is well to remember that we are not considering short-term money, but securities in the industry of this country which do not affect our balance of payments because the foreigner cannot immediately take out his money as he can with short-term loans. There is some confusion in the country, if not in the Committee, about the hot money invested in this country. If the foreigner invests in shares, in securities, the adverse effect which that may have on our balance of payments is not as much as people may say.
    I thought that I should say to my hon. Friend how delighted I am that at least

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    one of the Amendments has been accepted. I regret that we have gone over to market value. I would have thought that, administratively anyway, nominal value might have been better. I take the point about the no par value shares, but I would have thought that even in this country the day would come when we would have no par value shares; but it would be out of order to go into that now.
    Mr. Diamond: This is an interesting series of Amendments which deal with some of the problems which have been raised previously, but I would not wish to broaden this into a discussion of the kind we had on the last Clause if only because I thought that what my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said was cogent, compelling and included everything worth saying on the subject and would be very useful as our brief and almost as our Bible in these matters. Nothing I can say would add to that.
    I was very interested to hear the Economic Secretary refer to the weight of Stamp Duty. He avoided saying that on the previous Clause and kept it for this. He said that Stamp Duty was a very good kind of tax and did not bear heavily on or clog the activity to which it was attached.
    Mr. du Cann: If I did not say it, I meant to say it.
    Mr. Diamond: That is an extraordinary statement from the Government Front Bench. The hon. Gentleman did not say it and did not say anything like it. What he said—and if he will reread the words of his speech he will find it perfectly clear —was that Stamp Duty, as we know and as we have been saying and as my hon. Friend the Member for Cardiff, South-East said very forcibly on the previous Clause, is the kind of duty which is welcome to the Revenue because it produces revenue and because, on share transfers, it does not stop shares being transferred. In fact, the whole of his argument on the previous Clause was to this effect.
    9.0 p.m.
    I do not want to delay any more on that. I want now to turn to the rather more technical points involved in the Clause and the Amendments. We recog-
    756
    nise the wisdom of the Government in switching from a nominal to a market basis. I heard what the hon. Member for Nottingham, South (Mr. W. Clark) said, but, with deference, I do not think he is right. I believe that the Government are right in making the switch. We shall be very wary indeed about any comments made or pressure applied to the Government to introduce no par value shares. To the other part of it we have no objection whatsoever. This part, however, is rather technical. They are bearer shares, or virtually so, and, as the Economic Secretary explained, the Canadian and American shares to which he referred are virtually bearer shares which pass not simply by delivery but by delivery and endorsement and are nearly in the same category as bearer shares. I am grateful to the Economic Secretary for not suggesting that they were ejusdem generis, a phrase that we too often hear in this Chamber.
    We have hesitations about bearer shares. I want to make that absolutely clear. We think that bearer instruments are the kind which can be used by those who seek to avoid their proper tax liability. In this sense we do not wish to encourage inland bearer instruments. The way to deal with tax avoidance is not by Stamp Duty or by any of the methods adopted in the Clause. Therefore, in welcoming, or accepting, the Government Amendment we want to make it perfectly clear that we are not favouring or encouraging the growth of inland bearer instruments. These are mainly what are referred to in reference to giving benefit to overseas bearer instruments and enabling fair competition to take place. That is not in any sense contradictory to what my hon. Friend the Member for Cardiff, South-East said on a previous Clause. That is an entirely different matter. In so far as this is limited purely to assisting in that purpose, we have no wish to prevent the Government from getting the Amendment.
    Mr. du Cann: I should like, in courtesy, to reply to the questions that I have been asked by my hon. Friend the Member for Nottingham, South (Mr. W. Clark) and to make two comments simply on what the hon. Member for Gloucester (Mr. Diamond) has said. I should also like, very shortly, to say a further word for the record on the very

    757
    large series of Amendments that we are discussing and to give an explanation to the Committee.
    Replying to my hon. Friend the Member for Nottingham, South, the first question that he asked was highly technical, and I am not certain that I followed him entirely. What I thought he was interested in was the question of the liability of a United Kingdom company to pay United Kingdom Stamp Duty at bearer rates on issues of stock even if the issues were made abroad. I think that was his point.
    Mr. W. Clark: Yes.
    Mr. du Cann: I am glad that I followed my hon. Friend and could define it accurately. I can tell him that we will most certainly look into the matter.
    My hon. Friend also raised the question of subsection (4) of the Amendment. I am bound to tell him that we think the wording is adequate. We have considered i t with very great care. On the other hand, he was kind enough to make a new suggestion and put the wording on the record, and we will certainly look at that.
    The third point raised by my hon. Friend was the question of no par value shares. The hon. Member for Gloucester referred to this, and this will be my first comment to him. I note that my hon. Friend is in favour and that the hon. Member for Gloucester has, on the whole, reservations. I suppose that the truth of the matter is that we shall have to await the debate on Jenkins—my views on this subject are known—and I think we shall have an opportunity to debate it, not that this is a matter for me, before very long. If I may make a joke of it, I always felt that I was one of the few people in England who was able to get away with the introduction of no par value shares, but I will not pursue that too far.
    Secondly, the hon. Member for Gloucester warned us about the danger of inland bearer instruments. I dare say that he was right to do so, from a practical point of view. There are complications over the whole field, of which we are only too well aware. But he went on to make the point that we were here talking, on the whole, about overseas bearers. That is an entirely different kettle of fish.
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    In discussing the plethora of Amendments I thought it appropriate not to go an for too long, and not to refer to the other Amendments. I merely make the point that if the Committee approves the purposes that we are discussing in relation to the other Amendments, these, although dealing with another Clause, are relative to the earlier ones, in that they provide the machinery therefor.
    Amendment agreed to.
    Mr. du Cann: I beg to move, in page 54, line 37, to leave out "EXEMPTION" and to insert "EXEMPTIONS"
    The Temporary Chairman: With this Amendment we can take the Government Amendments in page 54, line 40, and in page 56, line 2.
    Mr. du Cann: That would certainly meet my convenience, Mr. Williams, and I think that it would be for the general convenience of the Committee. These Amendments deal with related matters. I can explain the point fairly shortly. We are concerned to clarify the position of allotment letters and other similar documents.
    Certain doubts about the position of allotment letters and their liability for duty have been expressed. The Committee may remember the remarks which my hon. and learned Friend the Financial Secretary made during the Second Reading debate:
    "I should make one point clear. There is no intention that Stamp Duty should be imposed on new issues or rights issues and allotment letters of British companies."—[OFFICIAL REPORT, 6th May, 1963: Vol. 676, c. 56.]
    Although it is true to say that the position under the Bill as originally drafted was not entirely clear, the Amendments make it clear that such instruments as allotment letters are exempt from duty under the Clause where their life is limited to six months or less, but where their life exceeds six months they are chargeable.
    We considered the question of the time limit very carefully. This is an extremely important matter. There are some ordinary limits to the life of allotment letters in any case. One might relate to the administration arrangements of companies, and another, in appropriate cases, to the requirements of the London Stock

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    Exchange, but it seemed to us that it was not satisfactory to rely upon those limitations alone. It is possible to envisage a situation where an entirely new class of bearer instrument might develop, if some fixed limit were not set. We considered that a period of six months would be best as a condition of exemption from duty. It is long enough to cover all the ordinary purposes for which allotment letters are normally available.
    Having said those few explanatory words, I hope that the Committee will feel that they are logical and sensible. The other Amendments with which we are dealing are entirely consequential.
    Mr. Diamond: We share with the Economic Secretary the view that these matters should be made clear and, to that extent, this series of Amendments makes even clearer the content of the Clause as it stands.
    It is difficult for my hon. Friends and I to express an opinion on the question of the six months. I should have thought that such a period was verging on the long side for a bearer of allotment, and so on. Might this period not be beyond the normal practice? However, this is a somewhat minor matter upon which we would not have sufficient experience to express a valuable contribution.
    I am unable to understand how it comes about that this series of Amendments comes before us so late in our consideration of the Bill. We are, once again, in the position about which we complained a short while ago. On Second Reading, the Chancellor made it absolutely clear that this matter was to be considered and that, if necessary, Amendments would be put down. I apologise for referring to this again, because the Financial Secretary's apology on the last occasion was so full that no one but a "heel" would refer to it again. That is why it was so full, I suppose. Nevertheless, I must at least record the fact that this is not the first occasion on which the Government have thought fit, despite the fact that the matter was due for consideration, to table Amendments not at the last possible moment, but at a very late stage.
    As far as I am aware, this group of Amendments was tabled during the last
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    few days. They are not actually starred, but they might have been had we started out consideration of the Bill only a day earlier. It is not helpful to the Committee that this habit should develop; that the Government should keep their Amendments until the last possible moment and, therefore, ensure that no one but the Government are aware of what the Amendments are driving at. By doing this, the debate is restricted and made more difficult.
    The Government must not assume that simply because their distinguished representatives have nothing to do all day except read briefs explaining in detail what Amendments are all about that every other hon. Member, busy lawyers and solicitors perhaps, have nothing else to do but grab at the Order Notice Paper first thing in the morning and ask themselves, "What new Amendments have the Government put down today?"—and spend the rest of the day investigating what they are all about.
    Many hon. Members have other duties —political ones, of course—in Parliament and elsewhere. It is not always possible for them to give the exclusive attention needed to obtain a full explanation of some Amendment. I think that I have said enough on this score. I do not wish to rub it in unduly and I am sure that the Economic Secretary will not find it necessary to repeat the words he used on the previous occasion.
    It would be helpful to us all if, in future, a series of Amendments in the name of the Government were put down in a way and at a time when all hon. Members could have a reasonable opportunity of considering them.
    Amendment agreed to.
    Further Amendments made: In line 40, at end insert:
    2. Bearer letter of allotment, bearer letter of fights, scrip, scrip certificate to bearer or other similar instrument to bearer where the letter, scrip, certificate or instrument is required to be surrendered not later than six months after issue.
    3. Renounceable letter of allotment, letter of rights or other similar instrument where the rights under the letter or instrument are renounceable not later than six months after the issue of the letter or instrument.
    In page 55, line 17, at end insert:
    (iii) any deposit certificate to bearer.
    In line 24 leave out "(iii)" and insert "(iv)".
    In line 25, at end insert:
    (c) "deposit certificate" means an instrument acknowledging the deposit of stock and entitling the bearer to rights (whether expressed as units or otherwise) in or in relation to the stock deposited or equivalent stock; and "deposit certificate for overseas stock" means a deposit certificate in respect of stock of any one company or body of persons not being such a company or body as is mentioned in paragraph (a) above.
    In line 27, leave out "(iii)" and insert "(iv)".
    In page 56, line 2, after "stock". insert:
    "and any right to an allotment of or to subscribe for stock ".—[Mr. du Cann.]

    Clause 57.—(PAYMENT OF DUTY.)
    9.15 p.m.
    Mr. du Cann: I beg to move, in page 55, line 22, to leave out from "duty" to the end of line 26 and to insert:
    "chargeable by virtue of paragraph (b) above on the transfer of stock shall be chargeable only where duty would be chargeable under or by reference to the heading 'Conveyance or Transfer on sale' in Schedule 1 to the Stamp Act 1891 if the transfer were effected by an instrument not being a bearer instrument".
    I hope to be able to explain this somewhat technical matter simply and rationally. The whole object of making this Amendment is to give effect to what was our original intention. The original drafting of the Clause was faulty. The proviso in the Bill as it stands deals with bearers by usage only. It should deal with all classes of bearers. It catches cases in respect of which duty should not be paid. That, as I am sure the Committee will understand, is unintentional.
    I shall give one specific example. The Committee will know that if Mr. A sells or gives a share to Mr. B, full transfer duty is payable. I am speaking of registered securities. That is reasonable, and that is how the system works. If, on the other hand, Mr. B or bank B is holding the stock as nominee for Mr. A on the transfer from one name to the other it is entirely a nominal matter and nominal duty is paid. There can be other transfers of that sort in respect of which nominal duty is paid, for example, from the executors of a deceased person to a beneficiary under his will, which are perfectly proper and
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    reasonable transactions where it would be quite proper for transfer duty not to be paid.
    It would be wrong for the whole load of bearer issue to follow on a transaction of that sort which is not a transfer of beneficial ownership in the ordinary sense of the term. It is the intention of this proviso to exclude these bearer stocks, both bearers by usage as originally drafted and all these, from such a situation.
    Mr. Mitchison: I wish to thank the Economic Secretary and to say that we see no objection to this.
    Amendment agreed to.
    Further Amendment made: In page 57. line 14, leave out from "is" to "stamped" in line 15 and insert "not duly".—[Mr. du Cann.]
    Mr. du Cann: I beg to move, in page 57, line 19, after "cent.", to insert "per annum".
    As a matter of courtesy, I should explain to the Committee that this is a drafting Amendment. The words we are proposing to put in were accidentally left out.
    Amendment agreed to.
    Further Amendment made: In page 57, line 29, after "valorem", insert:
    "or with a stamp indicating that it is chargeable under paragraph (4) of the said heading and with the duty specified in that paragraph".—[Mr. du Cann.]
    Clause, as amended, ordered to stand part of the Bill.

    Clause 58.—(ASCERTAINMENT OF MARKET VALUE.)
    Question proposed, That the Clause stand part of the Bill.
    Mr. Mitchison: This Clause is intended for the ascertainment of the market value for the purposes of the stamp. In paragraph (1, a) we read,
    "Where the stock was offered for public subscription within twelve months before the issue of the instrument, the amount subscribed for the stock;"
    Is that the right way to ascertain market values?
    On the Stock Exchange we have what are called placings, and the result of placings always seems to me that a lucky

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    few get the stock a good deal cheaper than anybody else. The market value of that stock might well be a good deal higher than the amount subscribed for the stock within a period of twelve months before that.
    Mr. du Cann: I am interested in the point raised by the hon. and learned Member for Kettering (Mr. Mitchison), and I will consider it more fully. I suggest that there is a difference between paragraph (a) and paragraph (b). I am saying this without the deep consideration which the point certainly will have, but public subscription does not necessarily coincide with quotation, and that may well be the answer to the point. The placing would presumably be under paragraph (b) rather than under paragraph (a), but I should be very happy to look at the point. In determining the market value, the object is to get the market value and not an artificially low price. I will pursue the hon. and learned Member's question with that very much in mind.
    Mr. Mitchison: That does not quite meet the point. I dare say the hon. Member is right and that it will come under paragraph (b), but that paragraph refers to
    "the value of the stock on the first day within one month after the issue of the instrument on which sock of that description is dealt in on a Stock Exchange in the United Kingdom…"
    With these placings, what usually happens is that stock is dealt in at a price higher than that at which it is placed, and that price then, at any rate for a short period, rises quite sharply. We have had a number of instances lately. If I remember rightly, the last time this kind of thing arose in connection with a Finance Bill debate some stuff called ready-mixed concrete—which had nothing to do with the heads of Treasury Ministers, but which was stock—had recently been placed on the Stock Exchange and bad had a remarkable and rapid advance in value. In fact, one had to become Chancellor of the Exchequer before one could look at it.
    Mr. du Cann: I am almost speechless after that extremely happily phrased insult which the hon. and learned Member so gaily threw at us. For once in
    764
    my life I was a little ahead of him. I took the second point which he made while he was in process of making the first. I will have a good look at it.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.
    Clauses 59 and 60 ordered to stand part of the Bill.

    Clause 61.—(GIFTS IN CONSIDERATION OF MARRIAGE.)
    Question proposed, That the Clause stand part of the Bill.
    Mr. Mitchison: We are supposing that this transfers to this particular sphere what I might call the Sultan of Foa principle, or the Courtauld principle, which we considered in connection with an earlier Clause. This may have nothing whatever to do with the Sultan of Foa Case, or the Courtauld case. May we be informed?
    Mr. Barber: The hon. and learned Member for Kettering (Mr. Mitchison) is quite right. This Clause contains a Stamp Duty provision corresponding to the Estate Duty provision in Clause 50. It provides, except in so far as goods would qualify under Clause 50, for gifts made in consideration of a marriage qualifying for the relief from Stamp Duty.
    Perhaps I may say that I overheard the hon. and learned Gentleman saying a moment ago, very quietly, to his hon. Friend the Member for Sowerby (Mr. Houghton), "Come on, Douglas, it is your turn." The last time I heard a whisper from him to his hon. Friend, I think that I heard him say of myself, when I was dealing with a previous Clause "I think that he has missed a line out of his brief".
    Mr. Graham Page: I do not like to intervene in this back-chat across the Floor of the Committee. But I do not feel at all happy about what has been said by my hon. Friend. I return to what I said on a previous occasion in connection with the Stamp Duty liability. It seems to me that it is making a marriage settlement subject to conveyance duty rather than a voluntary settlement by gift. If it is going to do this to a settlement by the parties to a

    765
    marriage, I think that it is grossly unfair. It is certainly altering the law with regard to gifts and making marriage no longer a good consideration.
    Any settlement of a marriage will be a conveyance and liable to conveyance duty. If that is so, I feel that it ought to be stated far more clearly, rather than hidden in the rather unintelligible language of Clause 61. It was only in a few words that my hon. Friend put this to the Committee, but it is a major change in the law.
    Mr. Barber: Perhaps I may elaborate what I said a few moments ago.
    Under Section 74 of the Finance (1909–1910) Act, 1910, voluntary dispositions inter vivos that is gifts—including the conveyance of property to the trustees of a settlement—are charged to ad valorem duty on their market value at the normal rate of 2 per cent., which has now been reduced to 1 per cent. There is, however, an exception for gifts made in consideration of marriage. The decision in the Courtauld case could therefore be invoked for the avoidance of Stamp Duty as well as Estate Duty on property given away on the occasion of a marriage to persons not within the marriage consideration—using the phrase in the way I did when we considered Clause 50.
    All that this Clause does, in the same way as with Clause 50, is to put the matter broadly in the position in which it was assumed to be by everybody before that case was decided by the House of Lords. If the Committee comes to the conclusion as with Clause 50 that this is, in the circumstances, a reasonable thing to do, as the same considerations apply with regard to the Stamp Duty exemption, I hope that the Committee will take the same view here.
    9.30 p.m.
    Mr. Houghton: For the last hour I have been absolutely mesmerised by this Clause. I knew that it fell to me, as a matter of duty, to make any suitable comments about it from this side of the Committee, or to ask any reasonable question about it. I came to the conclusion that I understood it completely. I thought that it was perfectly proper, as a link with Clause 45, and I think that when a Member on these benches in charge of
    766
    a Clause chooses, in his judgment, to remain silent, it ill becomes one of his colleagues to get up and say something. However, since the ball has started rolling, I cannot sit in my place and let it be thought that my silence is some form of Front Bench delinquency.
    I think it perfectly right that a transfer not in consideration of marriage within the law of Estate Duty should have a beneficial rate of Stamp Duty, which is what the Clause is about. Not only did I think that I understood the Clause, but I was attracted by it, because it is one of the four shortest Clauses in the Bill, which is another especial merit. As I see the Chief Secretary in his place, I might perhaps say that he seems to have had a much easier time on the Bill than I have.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.

    Clause 62.—(MISCELLANEOUS EXEMPTIONS.)
    Mr. du Cann: I beg to move, in page 59, line 39, at the beginning to insert:
    (1) Any instrument which is exempt from duty under the heading set out in section 56(1) of this Act by virtue of exemption 3 in that heading or would be so exempt if it were otherwise chargeable under that heading shall be exempt from stamp duty under or by reference to the heading "Conveyance or Transfer on sale" in Schedule I to the Stamp Act 1891.
    It will be within the recollection of the Committee that when we were discussing the Amendments in Clause 56, page 54, line 37, in page 54, line 40, and in page 56, line 2, we discussed the position of allotment letters. This Amendment is a follow-up to those Amendments. This new subsection—which, I hope, will find favour with the Committee—clarifies the position as regards the liability to transfer duty on renounce-able allotment letters.
    As I earlier had the opportunity, for which I am grateful, to explain the position of allotment letters and the Committee was then good enough to accept our suggestions, I hope that it will similarly accept this point, which is consequential upon those three Amendments.
    Amendment agreed to.
    Clause, as amended, ordered to stand part of the Bill.
    Clause 63 ordered to stand part of the Bill.

    Clause 64.—(ABOLITION OF LAND TAX.)
    Question proposed, That the Clause stand part of the Bill.
    Mr. Houghton: The Committee will expect me to utter my customary lamentations on the abolition of any form of taxation, but I do not think that we should pass, as a matter of form, the abolition of a tax which dates back to 1692, and which was the forerunner of our Income Tax system.
    The yield from land tax has been falling in recent years because of the exoneration of small amounts and the compulsory redemptions that have been taking place under earlier legislation. I suppose that the Committee thought that land tax would be left to peter out, because of the compulsory redemption of the tax, accompanied by the transfers taking place after 1950—that if we waited long enough it would disappear of its own accord. I suppose, too, that those who have redeemed their land tax in recent years may feel that they have been a little hardly done by. When we pay a price to redeem a tax, and then find that other people have it abolished without fee or payment, there is a feeling of comparative grievance.
    The yield in 1961-62 was L191,000, but that of itself does not justify abolishing a tax. Schedule B should have been abolished years ago on the basis of the small yield, yet it has lasted until now. I think that I could claim to have put down on the Order Paper on the Finance Bill more new Clauses abolishing Schedule B than any other hon. Member, but I have never had the good fortune to have that new Clause called on any Finance Bill for the last 15 years. Then, lo and behold, the Chancellor of the Exchequer sticks it in his Finance Bill. This is the sort of grievance that the Opposition have to endure.
    Now we find the land tax going. Here, we are not only abolishing the land tax but we are abolishing one of the pranks played on the new recruit in the Inland Revenue on All Fools Day. When I
    768
    entered the Inland Revenue many years ago, on 1st April I was told to go down to the collector to pick up the land tax additionals. There is no such thing as additional assessments for land tax, as the Committee will understand, so that was one of the fruitless errands on which one was sent on 1st April in those days. Now it can never happen again. It is like the new recruit to the Army being sent out to whitewash the "Last Post".
    Here it goes, and the Land Tax Commissioners with it, and the Clerk to the Land Tax Commissioners—these ancient functionaries. We should say farewell to them in a spirit of thanksgiving for all the work they have done for Chancellors of the Exchequer in the past. Where would the State have been today without the land tax since 1692? We could never have got through the Napoleonic wars and might have been a province of France for the last 100 years or more.
    I think that this is an occasion, and for the sake of £191,000 a year the Chancellor is scrubbing out of our taxation system an impost of great antiquity, of modest proportions, easy to collect, and of great sentimental interest to anyone engaged in the field of taxation. I was giving a lecture this morning to a distinguished body of visitors from overseas. In the course of comments on what I had said, one gentleman from overseas said, "The speaker seems to be very enthusiastic about taxation for its own sake". Well, when one has been connected with the Inland Revenue for 30 years, naturally one regards taxation as one's business, and one is bound to have great affection for different branches of one's business.
    After all, the proportion of tax which a collector collects is of great interest to him as well as to his head office, because that is an index of the success of his business. I do not think that we should lightly abolish forms of taxation which have engaged the attention of successive generations of Inland Revenue officials. However, there it is. Another "Goodbye". Two "Goodbyes" in one Bill. I am bound to say that I sit down under the stress of great emotion.
    Mr. Robert Mathew: I cannot join in the lamentations of the hon. Member for Sowerby (Mr. Houghton) at the passing of his professional and traditional friend. I greet with pleasure any

    769
    abatement of taxation, and the disappearance of this historic tax, which is now outworn, is much to be welcomed.
    To revert to a point which the hon. Gentleman mentioned rather casually, the Clause will, it seems to me, lead to some inequity. I refer to subsection (3) and the question of land tax, which has already been redeemed where the land has changed hands since 1949 and the new owner, at some time between 1949 and 25th March this year, has had to redeem the land tax on his property at a sum equal to twenty-five times the annual tax. Under the Clause, the liability remains. The money has already been paid. There will, therefore, be two classes of taxpayer over the dividing line who will be treated differently.
    I concede at once that, when changes in taxation of this kind occur, it is necessary to draw a line somewhere, and there will always be some difference in luck between different people, according to where the line falls. In this case, I submit, the result is unduly harsh and rigid. Twenty-five times the annual tax can, in certain cases, be a very large sum. I ask my right hon. Friend to look at the matter again. Cannot the rigid harshness between the lucky and the unlucky—that is what it is—be mitigated? Is it possible to make the change by a phased operation so that those who have still a major part of the twenty-five years left to run at 25th March will be entitled to a remission?
    There are, I believe, a number of cases where the inequity will be obvious. There is no very large sum involved because the tax is outworn and is bringing in very little in 1963. It is inequitable that the mere chance of time should entail that one class of owner has had to meet the tax liability in full whereas another gets off scot-free and will never have to pay at all.
    No doubt, there will be drafting and administrative difficulties in what I suggest, but it is the duty of the Government in taxation matters to go out of their way to be fair as between citizens whose basic tax liability was identical before an arbitrary date. I ask my right hon. Friend to make the necessary adjustment on Report.
    Mr. Wade: I welcome the abolition of the tax. It accords with my views on the radical reform of taxation and the
    770
    abolition of unnecessary and antiquated taxes. After listening to the sorrowful speech of the hon. Member for Sowerby (Mr. Houghton), which almost brought tears to our eyes, I wonder whether the spokesman of the Treasury can inform us to what extent the change will give rise to reduancy in the Department of Inland Revenue. If the answer is satisfactory, it may reduce somewhat the hon. Gentleman's grief.
    9.45 p.m.
    Colonel Sir Harwood Harrison: I congratulate my right hon. Friend on removing this pernicious and, to my mind, unfair tax on a certain section of our population. I was surprised to hear the words of the hon. Member for Huddersfield, West (Mr. Wade). When I saw the large number of two of the Liberal Party in the Committee, I thought that they had, perhaps, come to oppose the Clause since, as I remember, a famous Chancellor of the Exchequer, afterwards the Prime Minister, of the Liberal Party, over fifty years ago, was very keen on land taxes.
    Mr. Jeremy Thorpe: That was very different.
    Sir H. Harrison: That is typical of the Liberal Party. It never sticks to any principles.
    I do not think the hon. Member for Sowerby (Mr. Houghton) need be so tearful about the passing of this tax, because it was his own Government which got a great deal more out of these taxpayers by the Act of 1949.
    The point that I wish particularly to put to my hon. Friend the Financial Secretary for elucidation was this. In choosing the date on which this tax ends as 24th March, I presume that it is clear that in any change of property on 25th March, I963—and many properties are sold on Lady Day—the people concerned will not have to redeem the tax. I have had one or two letters on this point. It is difficult to fix this date, but, as far as I can see, I think that my right hon. Friend has done the fair thing. I add my plea to that of my hon. Friend the Member for Honiton (Mr. Mathew).
    Mr. Barber: Perhaps I can deal, first, with the points made by my hon. Friend the Member for Honiton (Mr. Mathew)

    771
    and my hon. and gallant Friend the Member for Eye (Sir H. Harrison). My hon. and gallant Friend is correct in thinking that the land tax will be abolished as from 24th March this year, which is the end of the land tax year 1962–63.
    The point which my hon. Friend the Member for Honiton raised, which was echoed by my hon. and gallant Friend the Member for Eye, was considered by the Chancellor of the Exchequer before he announced this proposal in his Budget speech. We recognised that immediately we decided to abolish the land tax altogether there would inevitably be some disappointment as between those who fell on one side or the other of the date which we chose for abolition.
    It is specifically laid down in subsection (3) that the Clause is not to
    "affect any compulsory redemption"
    under the relevant Clause
    "where the date on which the property became liable to redemption"
    fell on or before 24th March this year. That subsection was included in the Clause to make the position quite clear beyond argument to everyone concerned. In fact, in strict law, I think that it is probably unnecessary, because there is nothing in subsection (1) which removes the liability to compulsory redemption in these cases.
    As my hon. Friend so fairly said, whenever the law is changed to remove a liability, the change may operate from a fixed date, and, whatever date one chooses, there are bound to be people whose cases fall just on the wrong side of it and who think that they should have had the benefit of the change. To put the operative date back for a week, a month, or even six months would not remove grievances of this kind. It would merely transfer them to a different set of people.
    It would have been impossible simply to provide that outstanding redemptions should not be collected because this would merely have been penalising the prompt payer in favour of the dilatory payer. I assure my hon. Friend that we considered the point which he raised most carefully. If it were a novel point which my right hon. Friend has not con-
    772
    sidered in relation to the Budget, obviously it would be right for me to say that we would think about it again, but I know my hon. Friend and my hon. and gallant Friend well enough to realise that they would prefer me, on a matter like this, to be perfectly frank and to tell them that we were faced with this very problem and gave it our consideration before the change was announced, and that we came to the conclusion that it was impossible to deal with the matter in any other way.
    The hon. Member for Sowerby (Mr. Houghton) referred to the fact that the land tax is a remnant of an old tax which, I think he said, was instituted in England in 1692. In fact, I think that I am right in saying that it existed rather earlier in Scotland. In 1798, Mr. Pitt stabilised the charges on land and enabled land owners to redeem for a capital sum. Since then the value of this tax has dwindled. I have the figures here, but I do not want to spoil the hon. Gentleman's evening further by rubbing in the details of what has been happening to this tax over the years. Suffice it to say that we have now abolished it with effect from 25th March.
    The hon. Member for Huddersfield, West (Mr. Wade) asked about redundancy which might arise as a result of this Measure. I think that with the additional work which the Inland Revenue has to do, this is unlikely to occur. The hon. Member himself referred, I thought somewhat regretfully, to the possible administrative savings which will occur as a result of this, and he will, I think, be interested to know that in these days of affluence, and, to some extent, inflation, there are five clerks to the Land Tax Commissioners who are not also clerks to the General Commissioners. I am told that they are paid at rates from £100 downwards. These gentleman will, from 1st October this year, cease to receive that remuneration.
    I sympathise very much with the feelings of the hon. Member for Sowerby. I have rarely been so upset by a speech from the Opposition Front Bench.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.

    Clause 65.—(PROFITS TAX PROVISIONS IN CONNECTION WITH PART II OF THIS ACT.)
    Question proposed, That the Clause stand part of the Bill.
    Mr. Mitchison: On this side, we have been carefully through the provisions of the Clause. They appear to us simply to adapt for the purposes of Profits Tax previous provisions in the Bill and, therefore, we see no objection to the Clause.
    Mr. du Cann: I would simply confirm that the hon. and learned Gentleman's appreciation of the situation is, as so often, entirely correct.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.

    Clause 66.—(EXCHEQUER ADVANCES UNDER FINANCE ACT, 1956, s. 42.)
    Question proposed, That the Clause stand part of the Bill.
    Mr. Mitchison: This is rather a different matter. This Clause continues until the end of August, 1965, certain borrowing powers of the electricity and gas authorities, subject to limitations mentioned in subsection (1)(a) and the provisions afterwards provide for Orders fixing maximum amounts beyond the end of August, 1964, and for affirmative procedure to apply to those Orders.
    The terms of the Clause are perfectly clear. The reason for it and the relation of it to the present position are not so clear. I notice that in his Budget statement the Chancellor simply said:
    "The powers to make Exchequer advances to the gas and electricity industries expire at the end of August, and I shall be moving a special procedure Resolution"—
    and that was done—
    "to enable these powers to be renewed in the Finance Bill."—[OFFICIAL REPORT, 3rd April, 1963; Vol. 675, c. 485.]
    That is really all we know about it. It contains no explanation about the amount, and while I do not want in any way to discourage any eloquence on the Government Front Bench, we on this side of the Committee would like shortly to hear how this figure has been arrived at and how it compares with the present figures. We do not wish to discuss it now, but in the light of what is said to
    774
    consider whether we should not revert to it at a later stage of the Bill—it might be a question of Recommittal or on Report, I am not sure which—but I think that a statement from the Government would give us material to consider. On the Second Reading of the Bill all that was said about these provisions was simply a reference back to the Budget statement.
    Mr. Boyd-Carpenter: The hon. and learned Member, no doubt by a slip of the tongue, said that the Clause extended the borrowing powers of the gas and electricity industries. That is not so, because, as the hon. and learned Member will recall, those borrowing powers are laid down in separate legislation generally related to the nationalised industry concerned.
    The Clause gives to the Exchequer power to lend up to the limit of the extent that those industries are by that other legislation empowered to borrow. The Clause is an extension in the case of those two industries of the powers contained originally in Section 42 of the 1956 Finance Act as extended by Section 78 of the 1960 Act.
    The earlier Clauses cover lending to the other nationalised industries, but as opportunity has offered with the presentation of borrowing powers legislation on behalf of those industries there has in recent years been incorporated also the related lending power of the Exchequer. We have, therefore, narrowed down the provisions necessary in a Finance Bill to the gas and electricity industries. The Clause proposes to extend those lending powers for two years.
    As the hon. and learned Gentleman has noted, there is, first, a power to increase the total lending, including that already lent, to the figure of £3,280 million by August, 1964, and to extend it further by Statutory Instrument, subject to the affirmative Resolution procedure, in the following year. The figure for the period to August, 1964, is based on the fact that the existing lending is likely to be about £2,834 million by the time the powers expire in August this year. The difference between that figure and the £3,280 million is a reasonable estimate of the requirements over that period of the gas and electricity industries, all within the borrowing powers already authorised by Parliament.

    775
    For the further year, a Statutory Instrument will be necessary. The Statutory Instrument procedure is probably the better, but, as the hon. and learned Member will appreciate, there would not be time between the Royal Assent to the Bill and August of this year, however optimistic we may be about the progress of the Bill, to lay a Statutory Instrument.
    The purpose is, therefore, as regards these two industries, simply to enable the Exchequer to lend in respect of sums that those industries are already empowered by Parliament to borrow, and the Clause is substantially in the form, related now to these two industries, of the 1960 Act.
    Mr. Mitchison: We would like to consider what the right hon. Gentleman has said. It was, as he said, a slip of the tongue if I put it round the wrong way. Borrowing by the industries and lending by the Treasury are two sides of the same thing. I understand the right hon. Gentleman to assure the Committee that the sum of £3,280 million, which is the limit which appears in the Clause, is a limit already authorised from the borrowing end by other legislation.
    Mr. Boyd-Carpenter indicated assent.
    Mr. Mitchison: Let us for the moment leave it at that.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.
    Clause 67 ordered to stand part of the Bill.

    Clause 68.—(REDEMPTION OF GUARANTEED LAND STOCK.)
    Question proposed, That the Clause stand part of the Bill.
    Mr. Mitchison: I rise only to say I am surprised that my hon. Friend the Member for Sowerby (Mr. Houghton) does not say anything about the redemption of guaranteed land stock. This seems to me to be the financial occasion recalling the past, in some cases the vivid and lively past, and certainly it should not pass without a word—which will take us, with the next Clause, just about up to ten o'clock.
    Mr. du Cann: I do not know whether that was supposed to be a hint for a short explanation—
    Mr. Mitchison indicated dissent.
    Mr. du Cann: If it was not, I will sit down promptly.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.
    Clause 69 ordered to stand part of the Bill.
    10.0 p.m.
    Mr. Boyd-Carpenter: I beg to move,
    That the Chairman do report Progress and ask leave to sit again.
    Although, by the hours now kept in another place, we are at a very early stage of the evening, there are, I think, two cogent reasons why we should at this stage suspend our deliberations until next week.
    The first is that we shall be coming now to the new Clauses, and I think that it would be to the convenience of the Committee to start fresh on them next week. The second is that we have already, during the course of the Bill, totally abolished two taxes, and I think that if we were to subject the emotional stability of the hon. Member for Sowerby (Mr. Houghton) to another strain after that, we should be taking wholesale liberties with a very precious constitution.
    Question put and agreed to.
    Committee report Progress; to sit again Tomorrow.

  POLARIS SUBMARINE BASE, SCOTLAND
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Rees.]
  10.1 p.m.
  Mr. Emrys Hughes: I wish to call attention to the proposals for the new Polaris submarine base in the west of Scotland, contained in the statement made by the then Civil Lord of the Admiralty on 24th April. That statement was very brief and contained references to the expenditure of a considerable sum of money. It was the swansong of the hon. Member for Hendon, North (Mr. C. Ian Orr-Ewing) as Civil Lord, after six and a half years in that office; but it was a very expensive one.
  The hon. Gentleman spoke for about five minutes, at the rate of £5 million a

  777
  minute. Now he has departed to take up, I understand, the chairmanship of two business concerns which are subsidiaries of American companies, and is thus continuing in business what he did so faithfully at the Admiralty.
  I asked him a lot of questions during his term at the Admiralty and usually received an answer. He owes me a debt of gratitude because originally this Adjournment would have taken place at 3.30 a.m. following an intricate Scottish debate in which my hon. Friends the Members for Kilmarnock (Mr. Ross) and Edinburgh, East (Mr. Willis) were greatly interested. But I saved him those hours of suffering by postponing it. That was the only occasion, I think, that he mentioned me in his prayers.
  Now we have a new Civil Lord, whom we welcome, but with a certain amount of sympathy. The job is not one for which there must be a rush among members of the Government. I do not know how the hon. Gentleman felt when he entered his office for the first time. I suppose as he went through the ante-room and looked at the desk on which, I understand, there is a bronze plate saying,
  "Here Mr. Vassall worked for six years",
  he was looked upon with considerable suspicion by the gentleman whose duty it is to look after security. They must have said, "What is this problem? Is this new occupant of the office a security risk?" I hope that the hon. Gentleman satisfied those gentlemen and that there is nothing dark in his past. I hope that he has not been studying Karl Marx, or the works of my right hon. Friend the Member for Easington (Mr. Shinwell) on any occasion, or anything else to make them think that he has any subtle indirect connection with the Communist Party.
  I should like him to give us some more details than were given in the statement about the new base in Scotland. The Polaris base has been the subject of considerable controversy ever since the Americans were established at Holy Loch. We understood that there was considerable co-operation between the Admiralty and the Americans. The Loch has become busier and busier and the base has become one of the busiest outposts in the west of Scotland. We were told that it was not a base but a depot, and that it was not a danger to the west of Scotland because the real base was in America.
  778
  Now we are to have a real base and two posts at which there are two different lots of submarines, one American, operating from Holy Loch, and the other British, operating from Arrochar, not far away. We are told that the American submarines are going into action and that Holy Loch will be busier and busier because the submarines are to go to the Mediterranean where there is not a country which is prepared to take them. It appears that we are the only people who are enthusiastic about having American Polaris submarines operating from our territory.
  When the American Polaris submarines arrived, we were told of their tremendous destructive power. We were told that one could carry enough missiles to destroy at least a dozen cities of the U.S.S.R. As time goes on and before the British base is ready, presumably there will be 40 of these American submarines patrolling the seas with tremendous destructive power in the event of a nuclear war.
  Why do we want another lot of destructive power? Why are we going to this considerable expenditure in addition to the American Polaris base? If we are working in co-operation with the Americans, is there any justification for what is called the development of the independent deterrent? I do not believe that there is any such justification. I believe that this sudden decision by the Prime Minister will involve us in the expenditure of a very large sum of public money. It was badly thought out and we are now beginning to have the first instalment of the Bill which is to be about £25 million.
  When the Prime Minister comes to Scotland, he talks about his connection with the Highlands. I would not be averse to a cairn memorial for the Prime Minister, but when it comes to a base costing £25 million, I think that we are entitled to draw the line. Overlooking the sea at Oban there is a building called McCaig's Folly. I believe that the new base near Arrochar will ultimately be known as "Macmillan's Folly".
  What are the Admiralty to do about the labour for this base? We were told in the statement that the base would involve a great deal of constructional work. The Ministry of Public Building and Works is to put its squads into operation and they are to undertake

  779
  public works amounting to a large sum of money. That is about the cost of 12,000 houses, and we need more houses in Scotland.
  Whichever way one looks at this, it is a diversion of constructional activity from the things we really need in Scotland—houses, schools, hospitals, and the factories that we need to put our Scottish economy on a sound foundation. The Minister may shake his head, but I cannot see any other possibility. The men concerned on the project will be making something of concrete and stone, and at present we need all forms of labour—manual, skilled and administrative—in order to combat Scotland's social problems. We need far more money to be spent on the things to which I have referred than on this so-called independent nuclear deterrent.
  When the statement was made in the House hon. Members opposite said, "Oh, yes, this means work for Scotland." That is the bait. There is a serious unemployment problem at present, and the Government expect us to jump and wave our hands with delight at anything offered in which work is part of the programme. We appreciate that any kind of work is acceptable to the unemployed rather than that they should have no income at all. Even if it were proposed to take a lump out of Ben Lomond and put it in the Loch, that would be work; but from the point of view of a real building-up of our economy, we might as well put a bit of Ben Lomond in the Loch as spend this money on the base.
  The Clyde area has a serious problem causing a great deal of unemployment at present. During the last fortnight we have seen in the newspapers notices about ships which could have been built in the Clyde being built in Japan. Also, ships built in the Clyde have been taken away to be overhauled and refitted in Holland. Other orders which might have gone to the Clyde have gone to Sweden.
  It is true that a great deal of naval building is going on in the Clyde. But this other activity is devoted to something which cannot contribute to a really fundamental solution of the Scottish shipbuilding problem. At the same time, our competitors are building ships and are able to modernise their shipyards. While
  780
  the project gives Admiralty work, it is only short-term work and the skills which are going into the Polaris submarine base and these other activities will ultimately and inevitably lead to an unemployment problem in Scotland which will leave the shipbuilding industry derelict. It will create a tremendous unemployment problem in four or five years' time. Consequently, I hope that the Minister will not say "The project brings some kind of work to Scotland and so is justified".
  There are other questions I want to ask. We are told that the work on the project requires so much security that the American system of positive vetting is to be applied to the workers likely to be employed. What is this likely to lead to on Clydeside? There we have a healthy tradition of trade unionism. It is likely that some of those who may want jobs on the project have at some time or other been militant shop stewards or even connected with the Communist Party. Then they will be positively vetted according to some American security plan.
  This project will lead to a considerable amount of industrial trouble. It will not be a good scheme for absorbing unemployment and will not help us to build up the kind of industry that we need. It will present a tremendous problem to the west of Scotland. In the event of nuclear war it will make that part of Scotland the most dangerous place to live in in the world. If nuclear war were to start, and rockets and hydrogen bombs were dropped, inevitably it would be wiped out.
  That is a reality, because in war a base means a bomb. Just as we bombed German submarine bases in the last war, inevitably, if the Russians see the possibility of these nuclear submarines going around the coast of Russia and being in a position to destroy Moscow or Leningrad or other Russian cities, the Russian megaton bombs will descend on the places from which those submarines come.
  It is nonsense to talk about this being a defensive operation. It is part of a political improvisation by the Prime Minister in a moment of difficulty with his defence programme. It is a shortsighted development, and we are moving towards something which, from the point of view of expenditure, may prove to be the bottomless pit.
  10.16 p.m.
  The Civil Lord of the Admiralty (Mr. John Hay): The hon. Gentleman the Member for South Ayrshire (Mr. Hughes), in his customary inimitable style, opened by congratulating me on my new office with a somewhat backhanded compliment. He suggested that those who are concerned with security in the Admiralty might look at me rather askance when T came in and wonder whether I was a security risk. Whatever look they may have given me, I wonder what look they would give the hon. Member if he took up the same post.
  His views on the general question of nuclear disarmament are well known, and I hope that he will forgive me if I do not traverse all the ground that he covered tonight. I look forward to doing so on another occasion. I want to say something about the Polaris programme, because this Adjournment debate gives me an opportunity which has not so far been given in this House to do so.
  First, I remind the House what a major effort this programme represents. Few people realise—and until I got to grips with it I did not realise—how big these nuclear submarines will be. The boats which carry the Polaris weapon are nearly twice as big as any other British submarine ever built. Indeed, they are bigger than many pre-war cruisers, and will displace over 7,000 tons. Even if they were surface vessels they would represent a sizeable shipbuilding commitment.
  There has been much ill-considered and even alarmist criticism of the Polaris programme, much of which has stemmed from a lack of appreciation and—dare I say it—a refusal to acknowledge the basic facts relating to the value of this system as a deterrent to possible aggression. The nuclear submarine is not—as some defence commentators, from the depths of their armchairs, have assured us—just an improved submarine. It is the first true submarine. It is a vessel which is completely unfettered by the need to surface for very long periods of time, and whose underwater endurance is virtually unlimited. From time to time the right hon. Member for Belper (Mr. G. Brown), the right hon. Member for Smethwick (Mr. Gordon Walker) and the hon. Member for Leeds, East (Mr. Healey) have said that the system is obsolescent. This is twaddle. The nuclear submarine, with
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  its speed, operating depth and freedom to evade, has an ability to remain undetected which is unmatched by any system yet devised by man. No antisubmarine break-through can be foreseen, and we expect Polaris submarines to remain virtually invulnerable for many years to come.
  From time to time there have been knowing references to the possible development of anti-missile missiles. Let me assure the House that the problems of anti-missile defence are immensely greater that those of the attacker, and they can be aggravated by the use of decoys. Even if a proportion of the Polaris missiles should be destroyed, an enemy would be unable to rely on avoiding an unacceptable level of damage to his own territory. I fully realise that this applies to the entire concept of deterrence by means of long-range missiles with nuclear warheads. But Polaris submarines have the added and unique advantage of being able to launch their missiles from variable positions which are quite unknown to the enemy. It is not the case, as was suggested by the hon. Member for South Ayrshire, that in the event of a war against the Soviet Union our Polaris submarines would be operating only off the Russian coast. The whole wide world would be their ground, because Polaris submarines operate invisible to the eye and invisible to radar beneath the sea which covers three-quarters of the earth's surface. They combine the advantages of land-based ballistic missiles with the flexibility of air launched missiles and they have the disadvantages of neither.
  Mr. Archie Manuel: Is the hon. Gentleman suggesting that this is the ultimate deterrent?
  Mr. Hay: No, Sir, I am not. Because I think it unlikely in the history of mankind, until such time as we are able to achieve a lasting peace, that anyone will find the ultimate deterrent But I would say, and I believe this to be true, that with this weapon we are coming very close indeed to the ultimate deterrent.
  In considering the best way to provide support for the Polaris force we had to place emphasis on the operational requirements and then, given this, on economy. The House will be aware that the basic operational requirements are that

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  the base should be near deep water; that navigational access shall be easy; that is shall be accessible by land and sea for logistic purposes; and that its associated armament depot shall be no more than a short distance away by sea.
  We had to take into account other important factors, such as the distance from the refitting base and the provision of amenities and recreational facilities for the submarine crews when they return to harbour after their long submerged patrols. Of all possible sites—and we were at great pains to consider the claims of all locations including island sites—
  Mr. Manuel: Ireland?
  Mr. Hay: No, island sites—not Ireland.
  We finally came to the conclusion that Faslane not only offered the greatest operational advantages, but also met the many other important requirements which I have mentioned.
  I have already said that while the operational requirements must be met, we are also concerned to get an economic solution. For example, there is no doubt that we would get the maximum operational flexibility by using a depot ship as the base for the Polaris force, just as the Americans are doing at Holy Loch, and we considered this. But it would not be economic. A depot ship would still require the backing of the armament depot and would also need some limited but essential shore support. We are satisfied that we can get all the operational flexibility we need for operation in the N.A.T.O. theatre from the shore base at Faslane at the least expense in terms of both money and naval manpower.
  The House will perhaps be interested to know that our provisional estimates of the cost of the Polaris programme—the hon. Member spoke of money—indicate that the annual cost of a force of four boats and all their support including refuelling costs and based on a spread of the capital cost over 20 years, is likely to be about 3 per cent. of the annual defence budget. I suggest to the House that this is not a heavy bill for running a deterrent force—
  Mr. Willis: It is £60 million.
  Mr. Hay: —particularly one which will be flexible, invisible and virtually invulnerable. In fact it is an exception to the rule that the best must invariably be the most expensive. The submarine is, and always has been, an extremely economical weapon. In terms of manpower we reckon to need about 400 civilians, including 200 locally recruited, to run the base and the armament depot. There will be around 1,700 officers and ratings stationed at the base to man the boats on a two-crew basis, which of course we must have to get maximum operational time at sea.
  As to the base itself, the periodical refits of the boats, as has already been announced, will be carried out at Rosyth, where the nuclear hunter-killer submarines will also refit. There will be, of course, also a certain amount of maintenance work which will have to be carried out on the Polaris submarines during the turn-round time at Faslane between patrols. The operating schedule for the Polaris submarines is a tight one, and the operating base will in consequence be largely self-contained for maintenance purposes, but Rosyth is near enough to give overland support to the base if this should be necessary at any time.
  The missiles themselves will be maintained and stored in the armament depot at Coulport; they will not be in the submarine during refit and docking periods at Rosyth and will not be handled either there or at the operating base. Although British crews will be highly trained and will have had practical missile firing experience in their own submarines before proceeding on patrol, these live firings will not take place in the confined waters round the United Kingdom. The launching system will be tested on occasion in exercise areas at sea, but this will be using inert test vehicles.
  I do not propose to cover some of the other points which the hon. Member asked about because I feel that they go somewhat wider than the actual subject of the debate, but at one stage in his speech he went into the question of whether we were wasting resources by proposing the construction of this base. Apart from the building of the submarines, almost the whole of the Polaris programme is to be carried out in Scotland. Construction of the operating base

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  at Faslane to meet the needs of the Polaris submarines and building the armament depot at Coulport will together be one of the largest capital schemes in Scotland for some years. They will cost between £12 million and £15 million for construction work alone and can be reckoned to provide, at the peak, employment for 1,000 workmen.
  It will not be the case that the men who will be called upon to carry out this construction will automatically be lost to other forms of construction particularly of housing, schools or hospitals or other important pieces of social equipment in that area of Scotland because, I am advised, much of the construction will be of a technical nature and of a civil engineering character rather than a building character. We do not expect, therefore, to use quite the same sort of labour as is used, for example, on house or school building. Moreover, it has to be borne in mind that there have been complaints for some time about the level of unemployment in south-western Scotland. I think, therefore, that this particular injection of activity and money which we are making in this area would not altogether come amiss.
  Mr. Tam Dalyell: Some of us tell our constituents that, given a choice between building and servicing Polaris and being unemployed, we would rather see them unemployed.
  Mr. Hay: I am sure that that remark, which perhaps the hon. Member may come to regret—
  Mr. Dalyell: I have said it in my constituency.
  Mr. Hay:—will be taken note of in the proper quarters. I am sure that some of my hon. Friends will wish to make sure that it is widely disseminated. This is not a case of our trying to undertake an activity which is contrary to the best interests of this country. As I tried to show in the opening remarks I made to the House this evening, this is intended to give this country a means of defence, one of the most powerful means of defence that is known to man at present, and certainly the most powerful this country has ever employed or ever possessed. That, I should have thought, taking things by and large, was not an activity which should be rejected and despised by the people of this country, whether in Scotland or elsewhere.
  Of course, if the world were perfect we should be only too glad to devote our resources to more productive things, but it does not lie only with us to decide the world in which we live. We can do our best, but we cannot always succeed. I believe that this programme is a major contribution to the peace of the world, and I hope we shall continue to have the support of the House as a whole for this undertaking
  Question put and agreed to.
  Adourned accordingly at twenty-nine minutes to Eleven o'clock.

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

AFTER-CARE OF PRISONERS
2.35 p.m.
LORD STONHAM: 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 when they will publish the report of the Home Office's Advisory Committee on the After-Care of Prisoners.]
THE MINISTER OF STATE, HOME OFFICE (EARL JELLICOE): My Lords, the Sub-Committee of the Advisory Council on the Treatment of Offenders, which has been reviewing the organisation of after-care, has recently completed its report. The report will be considered in the near future by the full Council, who will submit their views to my right honourable friend. I regret that I cannot at present say when the report will be published.
LORD STONHAM: My Lords, does that mean that the noble Earl hopes that the report may be published in the next few weeks? Is he aware that we are extremely concerned about the present situation? As I pointed out and he agreed last week, of even the small amount spent on after-care it is costing £1 to spend 5s. These matters urgently need consideration and the Committee have been sitting for a very long time.
EARL JELLICOE: I wish to reaffirm what I said to the noble Lord the other day on this question and assure him that my right honourable friend attaches the greatest importance to this matter; but, of course, he cannot publish this report until he has received it, and it is not possible for him to receive it until the full Council has itself considered it. I do not
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think that the full Council will be able to meet to consider this report finally until the month of July.

ACCOMMODATION FOR HOMELESS PEOPLE
LORD STONHAM: 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 what plans they have for the provision of lodging accommodation for homeless people, to replace the reception centres for casuals which were closed under the National Health Act and, in particular, if they propose to provide in various parts of the country, hostels for the temporary accommodation for homeless ex-prisoners.]
EARL JELLICOE: My Lords, the noble Lord is misinformed about the closure of reception centres. The National Assistance Board are required by Section 17 of the National Assistance Act, 1948, to maintain reception centres for the provision of temporary board and lodging for persons without a settled way of living. I understand that at the present time there are 25 such centres, with a total accommodation for 2,000 persons, and that in recent years the number of persons sleeping in reception centres each night has fluctuated between 1,100 and 1,500.
My right honourable friend the Home Secretary is expecting a report on the Organisation of After-Care from his Advisory Council on the Treatment of Offenders and will consider carefully any recommendations the Council may make about the provision of lodgings for discharged prisoners.
My right honourable friend the Secretary of State for Scotland is considering recommendations made in the Scottish Advisory Council's report on the organisation of after-care in Scotland, which was published on April 1. One of these recommendations was that voluntary organisations should be given financial assistance in providing hostel accommodation for discharged prisoners.
LORD STONHAM: My Lords, is the noble Earl aware that I have in my hand

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a new report by the Devon Discharged Prisoners' Aid Society, which says that in the West of England 16 centres have been closed, and that there are no casualty wards left and only two small lodging houses and one Salvation Army hostel in the whole of the six South-Western counties? Is he further aware that this year a number of ex-prisoners died from exposure because it was impossible for them to find lodgings? If I send him this report, will he undertake to go carefully into it? Because it seems to me that his information is at fault.
EARL JELLICOE: My Lords, I have no reason to believe that my information is at fault, but, of course, I will look carefully into any matters which the noble Lord brings to my attention.

PURCHASE OF POLARIS MISSILES
LORD KENNET: 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 whether the Nassau Agreement and its subsidiary annexes and correspondence give them the right to buy Polaris missiles from the United States in replacement of those which may have been fired in the supreme national interest.]
THE FIRST LORD OF THE ADMIRALTY (LORD CARRINGTON): My Lords, the Nassau Statement includes the words:
" The President and the Prime Minister agreed that the United States will make available on a continuing basis Polaris missiles (less warheads) for British submarines".
Article III.1 of the Polaris Sales Agreement states that
" The Government of the United States shall provide Polaris missiles (less warheads), equipment, and supporting services of such types and marks and in such quantities as the Government of the United Kingdom may from time to time require".

MR. RUSK AND THE NASSAU STATEMENT
LORD KENNET: 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 what are the "reasons" and "elements" referred to in Mr. Rusk's letter of 6th April to Sir David Ormsby Gore, published in the Commons OFFICIAL REPORT for 25th April, where he writes:
" The possibility has been discussed that for reasons beyond the control and decision of either Government one or more elements of the plan contained in the [Nassau] Statement, apart from the provision of Polaris missiles and support facilities, might prove incapable of fulfilment ",
and goes on to confirm that such an event would not release the United States from its undertaking to sell the Polaris missiles to Her Majesty's Government.]
LORD CARRINGTON: My Lords, the Nassau statement was concerned not only with the provision of Polaris missiles to the United Kingdom, but with
" the development of new and closer arrangements for the organisation and control of strategic Western defence ".
These are the "elements" referred to. The phrase "reasons beyond the control or decision of either Government" was intended to cover circumstances which could not be foreseen and which therefore cannot be specified.

BUSINESS OF THE HOUSE
EARL ST. ALDWYN: My Lords, I should like to inform your Lordships that it is hoped to rise for the Whitsun Recess at the close of business on Thursday, May 30, until Monday, June 17.
I should further like to inform your Lordships that my noble friend Lord Derwent will be making a statement upon GATT at a suitable moment after 3.30 o'clock.
On behalf of my noble friend the Lord President of the Council, I beg to move the Motion standing in his name on the Order Paper.
Moved, That leave be given to advance the Report stage of the Weights and Measures Bill (now standing for Tuesday the 18th of June next) to Monday the 17th of June next.—(Earl St. Aldwyn.)
LORD MORRISON OF LAMBETH: My Lords, could the noble Earl tell us why the resumption of the House is at an unusual date? I agree that it is arguable how long the Whitsun Recess should be, but in my day in another place it was as usual to have a fortnight and a little more, which I think is very desirable, because Members of Parliament are liable to be short-tempered in June unless we give them a good holiday at Whitsun. Can the noble Earl tell us why we are meeting on the Monday instead of the Tuesday, which is customary after all our Recesses? Can he tell us precisely why he wants this extra day? Is there anything terribly urgent in the public interest that should bring us back a day earlier?
EARL ST. ALDWYN: My Lords, Members of the other place are also returning on the Monday and it is normal for us to return on the same day. As the noble Lord is aware, we have a great deal of business to get through, and if the other place returns on Monday it seems very right and proper that we should do so in order that we should complete our business.
LORD MORRISON OF LAM BETH: My Lords, the noble Earl, if I may say so, is not being quite frank with the House. I suggest that the other House is meeting on Monday because noble Lords opposite want us to meet on Monday. There will not be trouble in the other House, because there is usually a row there on the ground that the Recess is too long. Most of the Members who urge that it be shorter hope to God that the Government will stand firm and keep it long!But it is not the meeting of the other House that has had any effect, though, of course, we ought to meet if the other House des. Why have the Government been taking steps whereby this House shall meet a day earlier? After all, the House has been working pretty hard, and I think that some noble Lords will miss the full week-end which enables them to stay over until Monday before they return to London. Why is the noble Earl doing it?
EARL ST. ALDWYN: My Lords, I have some sympathy with the noble Lord. I, too, should prefer to return on the Tuesday. I can assure him that I made no representations to the other House that they should come back on the Monday to suit us. They wish it, and it happens to suit us as well.
LORD MORRISON OF LAMBETH: My Lords, why does the noble Earl not tell us why it suits us? It does not suit me, for example. Why is he not forthcoming, and why does he not tell the House frankly that we are meeting a day earlier so that he has larger facilities to push this widely unpopular and horrible London Government Bill down our throats? Come on, now; be a man and admit it!
LORD STONHAM: My Lords, with regard to the Weights and Measures Bill, can the noble Earl give an assurance that on the two days concerned there will be adequate time for discussion on the Report stage without its taking us too late in the day? In other words, can he give an assurance that there will not be any other major items of Business on those two days?
EARL ST. ALDWYN: My Lords, on Monday the 17th the Weights and Measures Bill will undoubtedly be first Business. It is followed by two Scottish Bills. I understand that they are not likely to take long, and, in any case, they will be coming on after the House has been discussing the Weights and Measures Bill. So far as the Tuesday is concerned, I will look into the position to make sure there is sufficient time for the Weights and Measures Bill.
LORD HUGHES: My Lords, the last time there was a Scottish measure before your Lordships' House I objected because there was a proposal to put it off until the next day. If it will help to meet my noble friend's point, I shall be quite happy for this measure to be taken on the Tuesday.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I think we must have something firmer on this. For example, on the Tuesday I think we ought to insist that the Weights and Measures be the first Business again, as it is to be on the Monday. I do not think we have discussed that point through the

423
usual channels. I agree with the arrangement for Monday, and I think it should be the arrangement for Tuesday, too.
EARL ST. ALDWYN: My Lords, perhaps we can continue the discussion through the usual channels.
EARL ALEXANDER OF HILLSBOROUGH: Very well.
On Question, Motion agreed to.

LONDON GOVERNMENT BILL
2.45 p.m.
Order of the Day for the House to be again in Committee read.
Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to. House in Committee accordingly.
[The LORD MERTHYR in the Chair.]
Clause 35 agreed to.
Clause 36 [Expenditure on sewerage]:
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD HASTINGS): This Amendment is to cover the case where the whole or part of a London borough or county district is drained ultimately to a main sewer or sewage disposal works of the Greater London Council and the borough or district or part of it so drained is, therefore, part of the Greater London Council's sewerage area, yet the main sewer serving the borough district or the part of it in question remains vested in the council of the borough or district. This should arise as only a temporary state of affairs, because it would be the duty of the Greater London Council under Clause 35 to vest the main sewer in themselves not later than April 1, 1970 (I would refer noble Lords to subsection (5)); but while it remains vested in the council of the borough or district, it seems right that their responsibility for it should be taken into account as indicated in the new subsection. I beg to move.
Amendment moved—
Page 54, line 21, at end insert—
(" (4) The Greater London Council shall reimburse to the council of a London borough
424
or county district any expenses (including an appropriate proportion of administrative expenses) agreed by the two councils, or in default of agreement determined by the Minister, to have been reasonably incurred by the borough or district council in the discharge of their functions in connection with a main sewer which is vested in the borough or district council and primarily serves the sewerage area of the Greater London Council, and any sums reimbursed by the Greater London Council under this subsection shall be treated as expenses incurred by the Council in the discharge of their functions relating to sewerage and sewage disposal.").—(Lord Hastings.)
LORD SHEPHERD: May I ask the noble Lord whether there is any special financial arrangement involved in the proposal?
LORD HASTINGS: Not specially. It merely says that the Greater London Council shall reimburse to the councils of the London borough or district any expense which they agree between themselves in this respect. If they cannot agree, then the Minister will arbitrate on it.
On Question, Amendment agreed to.
Clause 36, as amended, agreed to.
Clause 37 [Application of enactments relating to sewerage and sewage disposal]:
LORD HASTINGS LORD HASTINGS moved to leave out subsection (1). The noble Lord said: Amendments 158AB to 158AI are all consequential on the following Amendments in Clause 39, and perhaps it would be for your Lordships' convenience, if it is in order, to speak to Amendments Nos. 158J and 158K at the same time. The intention of these Amendments has always been that the new sewerage code will apply to substantially the whole area drained by the Greater London Council's sewers and sewage disposal works. The Amendments to Clause 39 provide that the sewerage area of the Greater London Council shall itself be an area defined by Order of the Minister. The first Order is to be made to come into force on April 1, 1965, and subsequent Orders redefining the area as occasion may require. The Amendments, therefore, do away with the need to refer separately to the original part of the sewerage area and the area where the new code is in force. Part V of the Bill need refer only to one area, the sewerage area of the Greater London Council, where the new code will automatically apply. The effect of Part V of the Bill will remain

425
substantially the same, but it is thought that these Amendments considerably improve and simplify the drafting. This is a rather complicated and technical matter, but the Amendments are really a method of cutting out unnecessary verbiage and clarifying the meaning of the clause. I beg to move.
Amendment moved—
Page 54, line 22, leave out subsection (1).—(Lord Hastings.)
On Question, Amendment agreed to.
Amendment moved—
Page 54, line 39, leave out (" in which this subsection is in force ").—(Lord Hastings.)
On Question, Amendment agreed to.
Amendment moved—
Page 55, line 2, leave out (" in which this subsection is in force").—(Lord Hastings.)
On Question, Amendment agreed to.
Amendment moved—
Page 55, line 4, leave out (" the said parts of ").—(Lord Hastings.)
On Question, Amendment agreed to.
Amendment moved—
Page 55, line 11, leave out (" those parts of ").—(Lord Hastings.)
On Question, Amendment agreed to.
Amendment moved—
Page 55, line 13, leave out from (" London ") to (" as ") in line 14-and insert (" outside the sewerage area of the Greater London Council ").—(Lord Hastings.)
On Question, Amendment agreed to.
Amendment moved—
Page 55, line 25, leave out from first (" the ") to end of line 27 and insert (" sewerage area of the Greater London Council ").—(Lord Hastings.)
On Question, Amendment agreed to.
Amendment moved—
Page 55, line 28, leave out subsections (6) to (8).—(Lord Hastings.)
On Question, Amendment agreed to.
Clause 37, as amended, agreed to.
Clause 38 agreed to.
Clause 39 [Supplementary provisions relating to sewerage]:
LORD HASTINGS: I beg to move this Amendment formally.
Amendment moved—
Page 57, line 10, at end insert (" an area defined by an order made by the Minister as being ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: I beg to move.
Amendment moved—
Page 57, line 23, at end insert—
(" (2) An order under subsection (1)(b) of this section defining the sewerage area of the Greater London Council as constituted on 1st April 1965 shall be made so as to come into force on that date and subsequent orders redefining that area shall be made thereunder as occasion may require.
(3) The Greater London Council shall keep, together with the documents relating to the business of the Council, a map or other document showing the extent for the time being of their sewerage area, and that map or other document shall be open to inspection by members of the public.").—(Lord Hastings.)
On Question, Amendment agreed to.
Clause 39, as amended, agreed to.
Clause 40 [General application of Public Health Acts]:
On Question, Whether Clause 40 shall stand part of the Bill?
LORD SHEPHERD: I wish to raise a point of which I have given notice to the Minister in regard to this clause. It concerns responsibility for providing public mortuaries. This is a subject of which I have no personal experience, and I raise it merely in view of certain information which has been passed to me during the last two days. Unfortunately, I have not had time to put down a suitable Amendment to meet the concern that is felt in responsible circles. If I were to put down an Amendment, the object would be to remove the responsibility for the provision of public mortuaries from the boroughs to the Greater London Council.
I think it is right to say that when this Bill was first before Parliament the Government had in mind that these public mortuaries should be within the province of the Greater London Council, but at some time they changed their minds. Therefore, I hope that the Government will be able to give us some of the reasons for this change. The present position is that the boroughs provide the public mortuaries in the Greater London area. Their condition varies, of course, from borough to borough, but there are many which are unsatisfactory. The purpose of these mortuaries is two-fold. First, it is

427
to provide, where the home conditions are not suitable, a temporary resting place for a dead body prior to burial. I understand that this requirement is slowly disappearing, mainly due to the fact that the undertakers are now providing private chapels.
The main reason why I am bringing this subject before the Committee is because of the other function of these mortuaries—an important one, I would suggest: that of receiving bodies, on the instruction of a coroner, in order that a coroner's autopsy may take place, and providing the right type of accommodation for such an autopsy. I think the Committee would accept that, for whatever purpose a public mortuary is provided, the conditions within it should provide dignity for the deceased person. We have a fairly complicated position. In the first instance, a coroner is appointed by the Home Office, and the London County Council—and, I suppose, in future the Greater London Council—will have the responsibility of providing coroners' courts. Where, for various reasons, a body comes within the province of a coroner, it becomes the property of the coroner until he signs the certificate handing the body back to the family. The coroner controls the court and the offices. He orders the autopsy, and pays the pathologist the fee required for the duty performed. I think it is right to say that the total expense of this service is paid for at present by the London County Council, and presumably in the future will be paid by the Greater London Council. It is also true that the coroner decides where the body should be taken should an autopsy be necessary.
The letter of which I came in possession, and which is the reason for raising this matter, came from Dr. Francis Camp, one of the leading pathologists in this country. His description of the position in the public mortuaries in London is very disturbing. He writes:
" Briefly the present position is now unsatisfactory and also in many cases extravagant and inefficient, and in my view is leading to working conditions for the employees which I would have thought were intolerable; and in some cases the employees are inadequately paid although this position varies from borough to borough."
Some boroughs, in order to overcome their difficulties, provide this joint public
428
accommodation, but there are others who try to carry on—perhaps they are forced to do so simply because other boroughs are not prepared to join forces with them. I think it will be accepted that it is important that adequate and proper accommodation should be provided for the person in his last moment's before being buried.
I think it would also be accepted, when one considers the need, as was very much emphasised in a recent conference in London of leading pathologists, that there should be an adequate type of accommodation, not only for the pathologist, but for all those who are employed in providing this service. On the occasion of that conference there were many scathing comments made on the type of facilities available. In fact, if my memory is right, one of the pathologists went so far as to say that there may be quite a number of crimes of murder taking place in which a pathologist is not aware of what has occurred mainly due to the lack of facilities and certainly the lack of training of experts in the matter.
I understand that some of the working conditions that exist in these mortuaries is one of the reasons why pathologists are difficult to obtain. I believe that if this service is as bad as I am led to believe, or as poor as I think some will generally accept it is, we should try to make a strong improvement in the conditions. Therefore, I think we have to ask ourselves whether the boroughs can provide the desired type of service and accommodation. It is true that the boroughs, as envisaged in this Bill, will be larger and stronger, but whether these boroughs themselves will be able to provide the facilities which this very important service requires is doubtful.
The advice that I have received, and I have taken it, is that it would be far better for this responsibility to be passed over to the Greater London Council. It is suggested that this type of service can best be provided on a county basis. I know that perhaps the noble Lord, Lord Hastings, will say that there are other boroughs throughout the country who themselves provide this service, but, as the noble Lord well knows, while we recognise that some boroughs are able to do it, we are trying to see an improvement, and if we have the instrument of

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obtaining improvements, and it lies within the Greater Loudon Council, we should see that it is provided. I cannot believe that the borough councils, who are being given tremendous responsibilities and duties under this Bill, would in any way raise objections if this service were taken away from them and given to the Greater London Council.
This Amendment, as I have been advised, to bring the public mortuaries up to the required standard with the proper equipment and employees, may be quite an expensive undertaking and some boroughs may be reluctant to provide it. Some have been reluctant. Therefore, I rather take the view, from the facts I have been given, that it would be well that this very important service be passed over to the Greater London Council, and then they can make their plans on a county basis and not on a borough basis. I do not know whether the noble Lord can, at this stage, respond to the points I have made, but, if he cannot, perhaps he would consider them, and the many others that are available, between now and the Report stage.
LORD HASTINGS: If I may respond very briefly to the speech of the noble Lord, Lord Shepherd, the situation is a little curious and perhaps I should explain it to the Committee. As the Bill stands outside the L.C.C. area Section 198 of the Public Health Act, 1936, applies, and it says that:
" A local authority or a parish council may, and if required by the Minister shall, provide
" (a) a mortuary…;
" (b) a post-mortem room;"
and that section I refer to is one of the provisions made by Clause 40 of the Bill without modification to London borough councils. When the Bill was introduced into another place there was a provision, I think, effecting the transfer to the London County Council that the noble Lord wishes to see put: into Schedule XI. Then, an Amendment, which was passed, was put forward there deleting it.
LORD SHEPHERD: May I get this right? It was the Government's original undertaking that this would be Greater London Council's responsibility?
LORD HASTINGS: It was put into the Bill in that sense but, apparently, there had been informal consultations with
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representatives of some of the outer boroughs and the B.M.C.—only informal, I am not making a great point about this—and they appeared to object. That is the situation in the Bill at the moment.
I have listened to what the noble Lord has said. He has made a case, I think, and we feel that it would be a rather curious thing to do to put the London borough councils on a lower level than local authorities and even parish councils in the rest of the country who are dealing with efficiency with this matter. But, there again, I realise that the arguments about big conurbations, and so on, do not make the comparison absolutely accurate, and I think we should like a little more time to study the implications of it, and take it up from where the noble Lord has suggested, because there seems to me a little confusion in the first place by putting this into the Bill and then taking it out. I think if we could consider it a little more than we have, I could undertake to inform the noble Lord before the Report stage what our intentions are.
LORD SHEPHERD: I am most grateful for the noble Lord's reply, and may I put this to him? It is not only a question of consultations with the boroughs, although that, of course, is important. But I think there should be close consultation with the other interested parties, the pathologists, perhaps the coroners, and the like. These are the people, not merely the boroughs, who have to operate the service. Therefore, I should hope that the conversations they will have will not be limited to the boroughs but will go outside it to the professions.
On Question, Clause 40 agreed to.
Clause 41 [Port health authority for Port of London]:
3.8 p.m.
LORD SHEPHERD LORD SHEPHERD moved, in subsection (1), to leave out "Common" and to insert "Greater London". The noble Lord said: The purpose of this Amendment is to explore the position in which the Government have continued with the responsibility of the Corporation of the City of London as the port health authority. The noble and learned Lord, the Lord Chancellor, has described this as a Bill which is to take us through the century so far as

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local government is concerned. Therefore, I think it is right, if that is the case—and it may not be the case, it depends on what change there may be at the next General Election—that we should consider the very important aspect of the port health authority for London.
According to my researches, prior to 1872 the responsibility for health in the port rested with the officers of Her Majesty's Customs, but the conditions were so chaotic during their administration that the Government, in a sort of desperation at the time, felt it necessary to appoint a local authority to deal with this important problem. To the best of my knowledge they decided that the City of London was the only local authority that was in a position to provide this essential service and, perhaps quite rightly, that they should look to the City of London, since its wealth and importance rested so largely on the Port of London with its shipping and insurance. As I understand it, in 1936 the Act which laid this responsibility upon the City became law and the City became the real authority for this duty. It may well be that the City (and I think this is recognised) has provided a first-class public health service in the port. But that is not necessarily a reason why this, in some ways, peculiar position, should continue. In fact, the Government themselves have been quite happy to abolish the London County Council, even though it is recognised as having provided a first-class service to the London community.
One must look at the area involved. I believe, that in the West it goes as far as Teddington, in Surrey, and, going West reaches right down into the River Medway. It is a very large area, embracing practically the whole of the Greater London area. It is bounded by the Thames, in the case of Surrey, and also in Essex. This raises the point of whether the City of London, seeing that we are now dealing with the local government of Greater London throughout the century, should retain its present powers. I think there is a considerable case for saying that the Greater London Council, since its area is so much involved, should become the port health authority, or at least should be in a position to sit jointly with the City of London to see
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that the services are developed, as they no doubt will have to be, with the march of time and the increased importance of the London Docks.
I fully recognise that the City of London have provided a first-class service. But since the City of London no longer provide the service out of their own rates (they are receiving a grant from the Government, I think, to the extent of 50 per cent. of the cost) the question of who shall pay is not a very great one. In my view, there is a considerable case either for transferring fall responsibility to the Greater London Council or for having a joint board of the City and the Greater London Council to see that this very important service should develop and be maintained. I beg to move.
Amendment moved—
Page 58, lane 34, leave out (" Common ") and insert (" Greater London ").—(Lord Shepherd.)
THE PARLIAMENTARY SECRETARY, MINISTRY OF HEALTH (LORD NEWTON): As the noble Lord, Lord Shepherd, has said, the City Corporation have been the port health authority for the Port of London since 1872. I am afraid that I did not inquire as to why it happened at that date, but the noble Lord evidently did, and I am not in a position to argue as to the reason. The position to-day is that the City Corporation have a large and experienced staff of medical officers and port health inspectors, and rodent inspectors as they are nowadays called. The port medical officer is also medical officer of health for the City in respect of its functions as sanitary authority under the Public Health Acts. About 15,000 ships which visit the port annually are inspected, and over the years the City has built up a high reputation in the world of port health; in fact, the Royal Commission said in their Report that they were satisfied that the functions of the port health authority for the Port of London were at present being carried out efficiently and economically by the Corporation of the City of London and they saw no reason to recommend any change in this arrangement. The Government have not had any hesitation in accepting that recommendation.
The noble Lord, Lord Shepherd, mentioned the size of the area for which the

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port health authority are responsible. I would suggest to him that it is not really incongruous that an authority of the City should be port health authority for the whole of the territory of the port, which runs from Teddington to Sheppey, and that it would riot be more appropriate that the Greater London Council should be the authority. The port area does, in fact, go far beyond the boundaries even of the Greater London Council.
Port health functions have invariably been conferred upon authorities or joint committees of authorities which are also sanitary authorities for the purpose of the Public Health Acts. This is not just a matter of chance but one of function. Port health authorities perform much the same functions in relation to ships in harbours, docks and so on, as sanitary authorities do in relation to the land areas under their control. The port health authorities also have certain other functions that can arise only in ports. For example, duties under the many regulations, such as the Public Health (Imported Food) Regulations, dealing with the fitness of imported food. In many ports the same staff are employed on port health and sanitary authority functions. In London the volume of shipping entering the port is so great that the port health work justifies a whole-time staff; but even so the service benefits from the fact that the City is also the sanitary authority. In the City there is a single committee, a single Medical Officer of Health to run both services. The inspection of meat at Smithfield Market is carried out by the City's public health inspectors, and the fact that these officers work to the same standards and under the same medical officer of health as the port health inspectors, who inspect meat imported by ships, simplifies the work of both the inspectorates and makes easier the job of following up any doubtful consignment. On the other hand, the Greater London Council will be a new authority with no related functions in the field of public health, and few of its members could be expected to have knowledge or experience of the problems of administering port health.
The main objection, in the Government's view, to the noble Lord's Amendment is the success with which port health authority functions have been
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carried out over the past 90 years by the City authorities. The noble Lord recognised that they have done a very good job; in fact, the Port Health Authority for London is one of the most progressive and forward-looking in the whole country.
LORD SHEPHERD: So was the London County Council.
LORD NEWTON: We are not talking about the London County Council at the moment. As well as its routine duties, the Port Health Authority has been most enterprising in research. For instance, it is at present engaged on a long-term study of the bacteriological condition of imported food, and it has been active in demonstrating port health techniques to students and visitors from many foreign countries and the Commonwealth, and over the years it has built up particularly happy relationships with the Port of London Authority.
These are a group of functions—I do not think there is any disagreement about this—which are being carried out efficiently, I might say very efficiently, by the City Corporation. They are not functions in any way related to the functions of the Greater London Council under the Bill, and I do not believe that there is any good reason at all to justify making any changes in the present constitution of the port health authority; and I do not think, either, that there would be any advantage in transferring its functions. The noble Lord, Lord Shepherd, I thought, moved his Amendment fairly and reasonably, but there seems to me to be a case for saying that this job has been done so long and so well, as the Royal Commission themselves said, that there is no point in changing it.
LORD MORRISON OF LAMBETH: There seems to be no logic in the mind of the Parliamentary Secretary at all. He says that the City has been doing this work since 1870 something—
LORD NEWTON: Since 1872.
LORD MORRISON OF LAMBETH: About 90 years ago. The London County Council was born in 1889 under the Local Government Act, 1888. But when we consider the London County Council the Government say, "Do not be so stuffy. This is an old authority. It has existed for 70 years and you must be ready to

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change." The City has existed since 1300 and something and the port sanitary authority, for some reason or other, since 1872. Therefore, when the Government say, as they repeatedly do, with the Royal Commission, that the London County Council is a most efficient authority and has been such, and then the Minister comes along and says that it is a most efficient authority and therefore because it is most efficient there is no need to make a change, he abandons the argument about the length of age by which it exceeds the London County Council by nearly twenty years and falls back on the point that the City is the best port sanitary authority. I cannot pronounce on that because I do not know enough about the work of the City to do it.
The noble Lord says that the City authority is a sanitary authority. Well, it is a sanitary authority for a square mile, for a population of about 5,000. It is a tin-pot authority as a sanitary authority. On that reasoning, you might as well make the Woolwich Borough Council, or the Greenwich Borough Council, or the Poplar Borough Council the port sanitary authority, because they are sanitary authorities with larger responsibilities in that field than is the Corporation of London. The truth is that the Government are being partial; they have their favourites in the local government sphere and, above all, they are anxious to cut London up. Therefore, they defend anything that is liable to limit the powers of the Greater London Council and, on the other hand, defend anything that will preserve all the powers of the City of London.
I object to an authority covering a square mile being an important authority right along the Thames, I think from the Nore to Teddington or something like it. It is utterly illogical and absurd, and I cannot see why the Greater London Council should not do this job. Even if this is not a public health authority in the ordinary way, what does that matter? They can easily, and soon, learn the job and, if Parliament so decided, the City Corporation would aid them in learning the job. They might even take over these inspectors from the City; I think probably they would. Therefore the service would not suffer. But it really
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is absurd in this matter that the City should have functions extending many miles outside the City area. There are other functions of the City that affect London as well, like the Central Criminal Court and the markets. This I think is a clear case for the Greater London Council.
The noble Lord says that the Greater London area does not spread so far towards the mouth of the river or up river. That is true; but it extends many times further than the area of the City Corporation. So this is another aspect of the utter illogicality of the Government's determination to be a friend of the City and other authorities, and to belittle and limit the powers of the Greater London Council. After all, the Greater London Council is far nearer to the whole of the Port of London area than is the City. I can see nothing here, except the Government's affection for the Conservative square mile of the City of London and their basic, obstinate, continuous dislike of the Greater London Council, which they have felt they must bring into existence but with a desire to make its powers as near as possible to those of the old metropolitan Board of Works. I hope that we shall press this Amendment.
LORD REA: I should like to support the noble Lord, Lord Shepherd, in this suggestion. I am afraid I do not support altogether the noble Lord, Lord Morrison of Lambeth, because I have not this criticism of the City of London Corporation which he has. It seems to me from what I have heard from both sides that a most efficient job will obviously be done by whatever authority takes it on. The area is so wide, as the noble Lord, Lord Shepherd, said. Perhaps through a slip of the tongue, he took us through from Teddington West all the way to the Medway, which is about 24,000 miles. I think if he took us the other way it would be little nearer the point. At any rate this area seems to be one which would be more appropriately looked after by the larger body than by the smaller body, without the slightest reflection on the City of London Corporation on what they have done so excellently in the past.
LORD OGMORE: May I add just one word to the remarks of my noble Leader?

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I entirely agree with what he has said. I think it is ridiculous that an authority comprising the area of the Square Mile should handle this wide area, and obviously it is quite inappropriate that they should do so. As I see it, the whole object of the Bill is that we have the wider regional authority and then there are a number of lesser authorities comprising the various boroughs; and this is the sort of activity and authority jurisdiction which should come under the wider authority. But I have another objection, and it is my objection to the present franchise of the City of London. However well they may have done it in the past, I think that was because they had a chief medical officer from the City of Cardiff who had been properly trained in the capital of Wales, where of course the electorate is based on the adult suffrage of the population as a whole and not on a fancy franchise comprised of people who buy themselves the right to vote for various officers of the Corporation. Furthermore, if you go to the City you find there people who say they are members of the needle-workers' or the needle-sharpeners' guild, or the saddlers' guild or the spurmakers' guild, but none of them has anything to do with needle-sharpening or saddlery or spurmaking; they are nothing whatever to do with it. I think that to give any more authority, or even to give the same sort of authority, at this particular time, when we are looking into the whole future of London, to a Corporation, based on that absurd fallacy that the present Corporation is, would be quite wrong. I think the Government have spoilt this perfectly good Bill, which I support in principle—I do not agree there with the noble Lord, Lord Morrison of Lambeth. They have ruined this Bill by keeping this ridiculous anachronism, the present City of London, as a borough. They should, as the noble Lord, Lord Morrison of Lambeth, said, have joined it up to the City of Westminster. For that reason, as well as the reason put forward by my noble Leader, I strongly urge your Lordships to support this Amendment.
LORD MORRISON OF LAMBETH: I intervene only to utter one sentence. I am grateful for the support of the noble Lords, Lord Rea and Lord Ogmore. Lord Rea did not quite agree with my speech. That, I understand. What I said about the City was, I assure him, really
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quite gentle and mild stuff compared with what the general body of Liberals, especially in London, said about that ancient Corporation at the early part of the century.
LORD WILMOT OF SELMESTON: Before we leave this particular clause, am I to understand that the Bill, which is most complicated here, seeks to endow the City of London Corporation with similar powers to those to be enjoyed by the new boroughs? If so, I think some defence for such a strange proposal should be forthcoming from the Government.
LORD NEWTON: I think the point that was raised by the noble Lord, Lord Wilmot of Selmeston, is much wider than that which is raised by Lord Shepherd's Amendment. I do not think it is much good my saying anything more about this. Your Lordships have variously taken up your positions on the City, and even if I were the Archangel Gabriel I should not succeed in convincing the noble Lord, Lord Morrison of Lambeth, that the Government's intentions were honourable.
LORD MORRISON OF LAMBETH: That would be a bit hard on the Archange!
LORD SHEPHERD: While my noble friend, Lord Morrison of Lambeth may have used this Amendment for his quite genuine comments on the City of London, which he is fully entitled to make and in which his Liberal friends immediately joined, the purpose of this Amendment goes wider. I put it down not as an attack on the City of London, because I recognise the service that they have provided. All I am saying—and this is the purpose of my Amendment—is that since one is setting up the Greater London authority, and since for the most part the London port will be within the area of the Greater London Council, it seems to me 100 per cent, logical that you then should place this important responsibility on the authority which is responsible for this wide area. The issue is as simple as that.
LORD WILMOT OF SELMESTON: Before we pass from this matter, I should like to say this, because, in all seriousness, it is an important point. The City of London is a most picturesque and valuable historical survival, and I, for

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one, would be the last to suggest that it should be abolished in the march of progress; but to endow it with the wide powers which are to be enjoyed by these new boroughs is surely to misunderstand both the history and the function of the City. It would have been much better if a special case were made for the City of London as to the enjoyment of certain historical powers and functions—which could easily have been done; and the day-to-day
Clause 41 agreed to.
Clause 42 agreed to.
Clause 43 [Modifications of London Building Acts]:
LORD WILMOT OF SELMESTON LORD WILMOT OF SELMESTON moved, in subsection (1), after "Act" where the word occurs the second time to insert: "and to subsection (7) of this section ". The noble Lord said: The Amendments to this clause which
utilitarian requirements of a modern borough could be secured by joining the city to a neighbouring borough for that purpose. I do not think it is widely realised that the city is being elevated by this Bill into a super borough.
3.32 p.m.
On Question, Whether the said Amendment (No. 158A) shall be agreed to?
Their Lordships divided: Contents, 33; Not-Contents, 72.

CONTENTS

Addison, V.

Inman, L.

St. Davids, V.

Airedale, L.

Kennet, L.

Shepherd, L.

Alexander of Hillsborough, E.

Latham, L.

Silkin, L.

Attlee, E.

Lawson, L.

Sinha, L.

Baldwin of Bewdley, E.

Lincoln, L. Bp.

Stonham, L.

Burden, L. [Teller.]

Listowel, E.

Summerskill, B.

Champion, L.

Longford, E.

Walston, L.

Crook, L.

Lucan, E. [Teller.]

Williams, L.

Harvey of Tasburgh, L.

Morrison of Lambeth, L.

Wilmot of Selmeston, L.

Henderson, L.

Ogmore, L.

Wise, L.

Hughes, L.

Rea, L.

Wootton of Abinger, B.

NOT-CONTENTS

Ailwyn, L.

Denham, L.

Margesson, V.

Albemarle, E.

Derwent, L.

Massereene and Ferrard, V.

Alexander of Tunis, E.

Devonshire, D.

Merrivale, L.

Amherst of Hackney, L.

Dilhorne. L. (L. Chancellor.)

Mersey, V.

Ampthill, L.

Dudley, E.

Mills, V.

Atholl, D.

Effingham, E.

Milverton, L.

Balfour of Inchrye, L.

Elliot of Harwood, B.

Molson, L.

Beauchamp, E.

Ferrers, E.

Monsell, V.

Bethell, L.

Freyberg, L.

Montgomery of Alamein, V.

Bossom, L.

Geddes, L.

Newton, L.

Boston, L.

Goschen, V. [Teller.]

Perth, E.

Braye, L.

Grenfell, L.

St. Aldwyn, E. [Teller]

Buchan, E.

Hailsham, V. (L. President.)

St. Oswald, L.

Carrington, L.

Hanworth, V.

Salisbury, M.

Cawley, L.

Hastings, L.

Salter, L.

Chesham, L.

Hayter, L.

Saltoun, L.

Cholmondeley, M.

Howe, E.

Soulbury, V.

Clwyd, L.

Jellicoe, E.

Spens, L.

Conesford, L.

Jessel, L.

Strathcarron, L.

Congleton, L.

Long, V.

Suffield, L.

Coutanche, L.

Lothian, M.

Swinton, E.

Cranbrook, E.

Mabane, L.

Wellington, D.

Craven, E.

MacAndrew, L.

Willingdon, M.

De La Warr, E.

Mansfield, E.

Wolverton, L.

Resolved in the negative, and Amendment disagreed to accordingly.

were put down in names of some of my noble friends and myself have, I gather, been accepted by the Government, and perhaps they will allow me to congratulate them on seeing the wisdom of the courses we suggested. It means that the procedure for the revision of the naming of London streets is a matter which, to avoid duplication and confusion to citizens, fire brigades and ambulances, must be continuously kept under review. These matters have long been the care of the London County Council, and I have myself for some years in the past

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sat on these committees. I am glad to see that the Government see the wisdom of allowing the central authority to retain these powers over the whole area.
There remains, however, one matter which is covered by Amendment 161. This is a very complicated point, but I will try to explain it—perhaps the Government will correct me if I go wrong. As I understand it, the London Building Acts, which are administered by the central authority—at present the London County Council—include provisions for the procedures in those cases where people wish to build with projections beyond the permitted building line. The procedures for dealing with these projections—bay windows are one case in point—beyond the general line were properly dealt with in the building code which had legal authority under the London Building Acts.
As the Bill is now drafted, I am advised that this matter falls outside the normal procedure of the building code, and the Government have seen in this case also the wisdom of the Amendments which we have suggested. So much so, that they have sought to discuss the matter with the London County Council, to see how the Bill can best be amended so that the code will be continued. However, I gather that, so far, the technical difficulties have defeated them. Unless they can find a way of bringing the appropriate provision into conformity with those applicable to the rest of the code, it will be a very great nuisance to people who seek to build beyond lines approved. Instead of a wide range of practices being approved generally, in the form of a code, each separate case will have to be the subject of some sort of representation and appeal. In these circumstances, it would be very helpful to all concerned if the Government would give some explanation of what they propose to do and, in addition, confirm what I believe to be correct and what I have said: that the point of Amendment No. 159 has been accepted by the Government and embodied in their own Amendments. I beg to move.
Amendment moved—
Page 60, line 15, after (" Act ") insert the said words.—(Lord Wilmot of Selmeston.)
LORD HASTINGS: The noble Lord, Lord Wilmot of Selmeston, has put me into rather a difficult position, because he
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has managed to move so many Amendments at once that I have great difficulty in replying. But, to make the situation clear, I should point out he is not strictly right in saying that we accept his Amendments. It is true that we have put down other Amendments.
LORD WILMOT OF SELMESTON: I think the Minister has misunderstood me. I do not blame him—it is rather complicated. The only Amendment I discussed was No. 161. It is not now necessary to press No. 159, because the Government have embodied that in the clause.
THE CHAIRMAN OF COMMITTEES (LORD MERTHYR): The Amendment called was No. 159. That is the Amendment before the Committee at the moment.
LORD HASTINGS: That is the difficulty. We have not reached No. 161. We shall get to it. But, if the noble Lord would allow me to reply to the first part, which is No. 159, which relates to the naming of streets, it is quite true that by the Government's Amendment No. 159A we are accepting that part. We have put it in the draftsman's words; and so the power for street naming will be exercised over the whole of Greater London by the Greater London Council. Amendments Nos. 159B, 159C, 160A, 160E and 161A are all consequential on that particular change; and if I might therefore move 159A, we shall reach the others in due course.
On Question, Amendment negatived.
LORD HASTINGS: I have just spoken to this Amendment. I beg to move.
Amendment moved—
Page 60, line 17, leave out from first ("and ") to second (" and ") in line 21 and insert (" Part II of the Act of 1939 and any regulations thereunder and any other relevant provisions of the London Building Acts which relate to the said Part II shall, notwithstanding anything in section 4 of the Act of 1930, extend to the outer London boroughs; and

(a) the Greater London Council shall have the functions of the London County Council under all the aforementioned provisions; and

(b) the councils of the inner London boroughs and, in the case of provisions which extend to the outer London boroughs, the councils of the outer London boroughs shall have the functions of metropolitan boroughs under the said provisions.

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(2) In accordance with the foregoing subsection, in the relevant provisions of the London Building Acts.")—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: I beg to move.
Amendment moved—
Page 60, line 26, leave out from (" council ") to (" that ") in line 33 and insert (" there shall be substituted references to the Greater London Council, except that for references to instruments of any description made by, or resolutions of, the London county council there shall be substituted references to instruments of that description made by, or resolutions of ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: I beg to move.
Amendment moved—
Page 60, line 34, at end insert—
(" (bb) for references to the council of a metropolitan borough there shall be substituted references to the council of an inner London borough or in the case of a provision which extends to the outer London boroughs, references to the council of any London borough, and references to a local authority shall be construed accordingly ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: This is substantially a drafting Amendment, just to make clear that references to the London Building Acts mean the Acts of 1930, 1935, and 1939, and do not extend to the other Acts mentioned in subsection (5) of this clause. I beg to move.
Amendment moved—
Page 60, line 38, leave out from (" to ") to (" other ") in line 39 and insert (" the Act of 1930, 1935 or 1939 ").—(Lord Hastings.)
On Question, Amendment agreed to.
EARL JELLICOE: This Amendment to Clause 43 is a paving Amendment for the Government Amendments to Clause 50, Amendments Nos. 187 and 191. There is another linked Amendment in Schedule 7, Amendment No. 288. They give effect to an undertaking given by the Government on the Report stage in another place that responsibility for the licensing of stores of petroleum spirit will be placed upon the Greater London Council instead of upon the councils of the London boroughs as the Bill stands. I should like to suggest that we might agree to this paving Amendment without prejudice. In that event, if the Committee decide
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not to make the Amendments to Clause 50 in the form in which they are set out on the Order Paper, we could perhaps reconsider subsection (2) of Clause 38 at a later date.
Amendment moved—
Page 60, line 43, leave out subsection (2).—(Earl Jellicoe.)
LORD WILMOT OF SELMESTON: I think the Minister's proposal can be agreed to.
On Question, Amendment agreed to.
House resumed.

GENERAL AGREEMENT ON TARIFFS AND TRADE
3.52 p.m.
THE MINISTER OF STATE, BOARD OF TRADE (LORD DERWENT): My Lords, a statement has been made by my right honourable friend the President of the Board of Trade in another place and I should like to repeat that statement in his own words:
" I should like to give the House an account of the meeting of Ministers of the Contracting Parties to the G.A.T.T. which has just ended in Geneva. The purpose of this meeting was to consider measures for increasing world trade under three distinct but related heads—

1. the trade of less-developed countries;

2. trade in agricultural products; and

3. the reduction of tariffs and other barriers to trade.

" We had the advantage of useful preliminary talks with the Commonwealth.
" Under the first head, the meeting adopted, though with reserves on the part of the E.E.C. and their Associates, a programme of action for expanding the trade of less-developed countries. It approved the establishment of an Action Committee to secure early progress and to consider further measures to promote the trade of these countries. Meanwhile, as an earnest of our intentions, we and the E.E.C. are working on the details of arrangements for suspending our tariffs on tea and tropical hardwoods.

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" Under the second head—agriculture—it was agreed to re-convene the Special Groups on cereals and meat to negotiate arrangements for these commodities, and to set up a similar group on dairy products. Rules and methods for dealing with agriculture in the negotiations have still to be worked out.
" Under the third head, we reached agreement on a statement of principles to govern the trade and tariff negotiations which are to begin in May, 1964. These will embrace tariff and non-tariff barriers to trade both in manufactures and in agricultural and primary products. A committee will work out a plan for the negotiations and supervise their conduct. It is to produce its plan by August 1st of this year.
" As regards tariffs, the object will be to make a substantial cut across the board with a minimum of exceptions. As a general rule the cuts will be of equal depth, though in special cases where differences in the level of national tariffs have significant effects on trade, special rules are to be devised. The Government's intention will be to obtain equivalent advantages for our exports in return for reductions in our own tariff. We shall not, however, expect to receive reciprocity from less-developed countries.
" These arrangements, which were not agreed without difficulty, will allow the preparations for the trade negotiations to proceed with the prospect of a substantial reduction in barriers to trade of all kinds. Much detailed work remains to be done, but a good start has been made. Her Majesty's Government will continue to do their utmost to ensure a successful outcome of this great and imaginative undertaking which holds so much promise for the increased prosperity alike of the industrial nations, the agricultural producers and the developing countries."
3.57 p.m.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I am obliged to the noble Lord for the statement. There may be some promise in this, but it seems to me that there may also be some danger. The British Farmer, in the last published issue, has pointed out in a headline that "Imports are wrong." I
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do not say that they mean that in every respect; but they say that imports are wrong when home production is restricted. If it had been possible—it may not have been possible in the circumstances of an international conference—we should have liked to have a rather more detailed statement than that made this afternoon. I agree that the statement covered a very wide field and talks about subjects that had to be dealt with in another sense, but I see that some proposals are to be ready by August 1—about which time Parliament will have risen—and apparently negotiations are to be resumed before Parliament meets again. So I am rather dissatisfied in that respect.
From an individual view—it may be one way or the other—the subject is so important that it would almost have been better to have a debate on it before we went any further. I do not see quite enough detail in this statement for the kind of debate I should like. Nevertheless, the position seems to me to be not very satisfactory at the moment. One welcomes the statement with regard to getting into touch with the Commonwealth; but I think it was one of the Conservative Members in your Lordships' House the other day who said that in these cases we ought to get some reciprocity. I hope it will be possible to have a food policy as between the Commonwealth and ourselves; but I am not altogether so happy about the rest of the Statement.
LORD DERWENT: I think the noble Earl has not quite understood this rather lengthy statement. Nothing in the way of decisions will happen before Parliament reassembles. The Committee has been set up and the negotiations are beginning in May, 1964. The Committee to run them is to work out its plan how to do it by August 1. That is what I think the noble Earl did not understand.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I am obliged to the noble Lord. What I am nervous about is how far we are committed on any individual matter upon which some statement apparently has been agreed—though (and I quote) "with difficulty". If there has been some success in the matter I do not wish to detract from it;

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but I want to get this matter clearly understood by Parliament and by the country as a whole.
LORD DERWENT: That can be done, my Lords.
LORD REA: It is rather a long and complicated statement and I should like to follow up the hint given by the noble Earl the Leader of the Opposition that it might be a suitable subject for debate. I should like to give it a much warmer welcome from these Benches than it received from those on my left. We are delighted to see that the Conservative Party, after 60 years, is taking up the flag of Free Trade and the reduction of trade barriers; and we note that they are adding Liberalism and Free Trade to their programme as a plank in their election platform.
LORD DERWENT: I am grateful to the noble Lord. This is not a one-sided free trade we are talking about.
THE EARL OF SWINTON: My Lords, I ask the noble Lord two questions. May I take it that nothing has been done in Geneva that in any way prejudices the power of the Minister of Agriculture and the Government to go ahead with the policy announced by the Minister of Agriculture yesterday? The second question I would ask is this. The negotiations will start in 1964 and, we hope, will reach a successful conclusion. In the meantime, I take it that other countries will not go and suddenly raise tariffs which may prejudice the 1964 negotiations. Is there any arrangement or understanding about a general standstill pending the 1964 negotiations?
LORD DERWENT: My Lords, I find it a little difficult to answer the second of my noble friend's questions. But I think that we are fairly safe. The countries concerned, including the E.E.C. countries, have agreed on this policy to reduce tariffs and there seems little likelihood, when they have come to this agreement, of any of them raising tariffs first. I think that that would be rather a lot to expect them to do. As regards the first question, nothing has been settled so far that will prejudice any statement made by my right honourable friend the Minister of Agriculture.
LORD WILMOT OF SELMESTON: My Lords, I think that noble Lords on
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all sides of the House are anxious to be assured that the Government will not commit themselves to any policy before this matter has been discussed in this House. It is impossible to appreciate now the full meaning of a complicated statement of this kind. For instance, there is the effect of what has now been said on the possibility of reciprocal trade agreements with other parts of the Commonwealth, which many noble Lords and others think highly desirable. I do not think it possible, from a reading of the statement, to gain any indication whether it helps or hampers that objective. And with the Kennedy round, we really do not know what the Government's policy is. I think that it would be of great help if the Government would say that they would have a debate in Government time at an early date.
LORD DERWENT: Whether a debate takes place is a matter for the usual channels, but Government policy is already settled so far as this is concerned. It is the intention to come to an agreement, if it is possible, for a general reduction of tariffs.
LORD OGMORE: My Lords, in welcoming this statement of the Government's intention, may I particularly welcome that portion which refers to trade with underdeveloped or less developed countries, and say how glad I am that immediately, without any other negotiations, we are proposing to suspend the tariffs on tea and tropical hardwoods? Could the noble Lord give any indication of any other tropical products for which similar arrangements may be made?
LORD DERWENT: My Lords, we are still working on the actual details, with the E.E.C., in regard to tea and tropical hardwoods. We have agreed in principle, but the actual details are not yet settled. I cannot give any other specific details, because discussions are going on, but we are not waiting until 1964.
LORD MORRISON OF LAMBETH: My Lords, the noble Lord, Lord Derwent, said that the question of a debate is a matter for the usual channels. I suggest that is wrong. It is a question for the House and for the Leader of the House, and would it not be better if he put it that he could not give a clear answer at the moment but that perhaps this might

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be explored through the usual channels? I have the greatest respect for the usual channels, but we do not want to elevate them into the position of deciding whether or not the House may have a debate. That would let them get away with it.
LORD DERWENT: My Lords, whatever else it is, it is not something for me to decide.
LORD MORRISON OF LAMBETH: My Lords, it is not to be decided by the usual channels. The noble Lord surely knows that. I agree that it is not for him to decide. The polite way to put it is that perhaps the matter may be explored through the usual channels. May I suggest that he makes that modest amendment out of respect to the House as an institution?
THE EARL OF LISTOWEL: My Lords, with the noble Lord, Lord Ogmore, I welcome the agreement in principle about the removal of tariffs on tea and tropical hardwoods. I should like to ask the noble Lord this question. Will Her Majesty's Government, in the course of these negotiations, try to persuade, not only the countries in the European Economic Community but also the American Administration to reduce and, if possible, to remove tariffs against a number of other tropical products which do not seriously compete with home produced articles?
LORD DERWENT: My Lords, I am afraid that I cannot satisfy my noble cousin. I should not like to go further than I have gone so far.

LONDON GOVERNMENT BILL
4.6 p.m.
House again in Committee.
LORD HASTINGS: This Amendment is consequential on making the Greater London Council the authority for naming streets. It has the effect of allowing the Council to spread over the whole of the Greater London area the expenses incurred thereby. I beg to move.
Amendment moved—
Page 61, line 9, after (" Acts ") insert (" which do not extend to the outer London boroughs ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: This Amendment is drafting. I beg to move.
Amendment moved—
Page 61, line 30, at end insert (" and references to the Acts of 1930, 1935 and 1939 shall be construed as references respectively to the London Building Act 1930, the London Building Act (Amendment) Act 1935 and the London Building Acts (Amendment) Act 1939 ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: This is a drafting Amendment. I beg to move.
Amendment moved—
Page 61, line 33, leave out (" London Building Act ") and insert (" the Act of ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: This is a drafting Amendment. I beg to move.
Amendment moved—
Page 61, line 35, leave out (" London Building Acts (Amendment) Act ") and insert (" Act of ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: This Amendment is consequential. I beg to move.
Amendment moved—
Page 61, line 37, leave out (" Part II and ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD WILMOT OF SELMESTON: This Amendment in the name of my noble friends and myself has been met, in so far as it refers to Part II of the London Building Acts (Amendment) Act, by the Government Amendments which have just been passed. But the question of Section 131 remains outstanding. This is the section which deals with projections, which I had to apologise for raising at the wrong time. We had the right thing said at the wrong time, and I do not think that I need repeat the right thing. It is important that a procedure which has long worked very well should not be torn apart by the way in which the Bill is now drafted. I think that the Government are somewhat anxious about this also, because they have tried to come to some arrangement with the L.C.C. about it and it would be very helpful if the Minister could tell us where we have got to now. What is desired to be done

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is to keep the code dealing with projections—that is to say, shop fronts, windows and various things that project beyond the building line—in being and not to tear it up. I beg to move.
Amendment moved—
Page 61, line 37, leave out (" Part II and Sections 128 to 131 ") and insert (" sections 128 to 130 ").—(Lord Wilmot of Selmeston.)
LORD HASTINGS: This is a complicated and purely technical subject, but I will do my best to explain it to the noble Lord, Lord Wilmot of Selmeston, and to the members of the Committee. As the noble Lord said, Section 131 of the London Building Acts (Amendment) Act, 1939, allows certain types of projection, provided they do not exceed defined sizes, to be constructed beyond the building lines without specific permission. The noble Lord would like to see that regulation, which the L.C.C. operates successfully, continued. We should have no objection to that if it were possible to do it under existing legislation after the passing of this Bill. The difficulty is that we cannot take this section of the 1939 Act separately from Part III of the earlier 1930 London Building Act, which contains a number of provisions on building frontages and says that no building or structure shall be erected or brought forward beyond "the general line of buildings" without the L.C.C.'s permission and the "general line" is defined where necessary by the L.C.C.
The difficulty is that Section 131 is, as we have heard, a relaxation of Part III of the 1930 Act, and Part III of the 1930 Act is being repealed on the extension of the general law of highways to the whole of Greater London. Then we come to the Highways Act, 1959, which contains its own provisions on building lines, and therefore it is necessary to consider whether the relaxation given by Section 131 of the London Building Acts (Amendment) Act, 1939, could be fitted into the different requirements on building lines contained in the Highway Act—that is to say, different from Part III of the 1930 Act. Under the Highways Act. 1959, there is a much more comprehensive treatment of building lines, and it provides for no fewer than four different kinds in Sections 72 to 75 of that Act. We have four possible building lines
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under the general legislation, and it is possible for more than one to apply at the same time in the same street. Therefore, as a practical proposition, it is impossible to apply a general relaxation such as under Section 131 to differing lines in the same street without getting special permission, because one would not really know from which line Section 131 was to give an exception. That is the whole difficulty.
Really, why we are not accepting this part of the noble Lord's Amendment and erasing Section 131 from the Bill is that we shall be losing the present provision which gives automatic permission in certain cases. Permission can still be obtained, or will be able to be obtained, but special application will have to be made to the highway authority, whoever the highway authority may be in that particular case. That is how the position stands after discussion of the matter with the L.C.C. They have been informed that we cannot see our way out of this difficulty for the reasons I have given.
LORD WILMOT OF SELMESTON: I am sure we are all indebted to the noble Lord for making dark places clear, and I congratulate him on his speech. He has, as I understand it, clearly set out the position and in doing so has made a moving appeal, in my opinion, for a codification of the London building laws. This is one small part of them. Heaven help the poor citizen who wants to know what kind of building he is entitled to put up!There is no way of finding out which any ordinary man can turn to, and even the experts spend much time and money making up their minds. Perhaps between now and the Report stage some attention will be given to a comprehensive new clause which will embrace this matter and clear it. Heaven help us if it makes it even more complicated!It is long overdue, in my view, that the London building procedures should be codified and clarified, and I hope that what we have done today may lead in that direction. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD HASTINGS: This is a consequential Amendment to Amendment No. 159A. I beg to move.
Amendment moved—
Page 61, line 37, leave out ("London Building Acts (Amendment) Act ") and insert (" and 156 of the Act of ").—(Lord Hastings.)
On Question, Amendment agreed to.
Clause 43, as amended, agreed to.
Clause 44 agreed to.
Schedule 9 [Modification and re-enactment as from 1st April 1965 of enactments relating to sewerage and drainage]:
4.18 p.m.
LORD CROOK LORD CROOK moved, after paragraph 2, to insert:
" 3.—Nothing in this Act, or in any other enactment, shall be deemed to render unlawful the continuation by the Greater London Council of a discharge from a sewer, pumping station or sewage disposal works vested in them by virtue of section 35 of this Act in any case where that discharge was lawfully being made prior to 1st April 1965 by a county council. Authority or Board referred to in subsection (1) of the said section 35."
The noble Lord said: I beg to move this Amendment on behalf of my noble friends and myself. It is an Amendment which refers back to an Act part of which is being repealed by this Bill—I refer to Section 28(1)(a) of the Public Health (London) Act 1936. In this Act there is an implied power to discharge sewage into the River Thames where it is not reasonably practicable to avoid such discharge. The sewers in the County of London, as some of your Lordships are aware, are combined sewers; that is to say, they receive storm water as well as sewage. It would be quite impracticable to have sewers of such size that the huge volume of flow in times of storm could be carried to the outfall works at Barking and Erith. In order to prevent flooding, the sewers are, and must be, relieved of flow in excess of the capacity by means of gravity outfalls, or by pumping, into the River Thames. It would also be out of the range of practicability to construct a new series of foul and storm water sewers in London.
The 60 separate storm flows to the River in the present London County Council area must, therefore, of necessity, contain sewage (although, let it be said, considerably diluted) and it follows that the right to discharge sewage must, in the opinion of the London County Council—and this is a view which we share—
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continue. Unless, however, an Amendment is made on the lines that I am proposing on behalf of noble Lords on this side of the House, such a discharge could be rendered unlawful, and so would discharges from the outfalls at Barking and Erith. These, researches with the London County Council show, would be under the provisions of Sections 30, 31 and 331 of the Public Health Act, 1936, which will apply to the whole of Greater London by virtue of the Bill.
When the Act of 1936, to which I have referred, was passed, a special saving was included in Section 336 for the then existing powers and duties of the Middlesex County Council as a sewerage and sew age disposal authority. There is, in our view, an unquestionable need for a comparable saving to secure the continued operation of this highly complex sewerage system in London so that what happens may not be declared or rendered unlawful. Your Lordships will probably know, with respect to London, that this system has grown under the authority of special London enactments, and it cannot suitably be brought under the general law in all respects on all matters.
The Minister of Housing and Local Government agreed in Standing Committee in another place to look into the legal aspects of this point more closely, and then to put down an Amendment if necessary. The Amendment now proposed has been drafted by the London County Council—in the absence of an Amendment from the Government—in such a way as they think and we think will be as unobjectionable as possible. What it seeks to do is merely to retain for the G.L.C. the existing powers to discharge effluent and storm water without, however, pronouncing in any way on what those powers are. The London County Council inform us that they attach great importance to this point, and they suggest that the Government should face up to the fact that the discharges in question will almost certainly become unlawful if the provisions of the Public Health Act, 1936, are applied to the Greater London Council in the manner which is at the moment proposed in the Bill.
We learn from our researches that if, in consequence of the situation, the Greater London Council closed, or was ordered by the court to close, storm water outlets, a dangerous degree of

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flooding would take place in several parts of London in times of storm. We understand that many basement properties would be particularly seriously affected. We have had enough past experience of what storm damage and flooding can do. These powers ought to be left, and I hope the Government will be able to announce in the speech of the Minister that they are ready to accept this rather carefully phrased Amendment of the London County Council, aimed at securing agreement. I beg to move.
Amendment moved—
Page 161, line 32, at end insert the said paragraph.—(Lord Crook.)
LORD HASTINGS: This again is a rather complicated and technical subject. The noble Lord has referred to the Public Health Act, 1936, and to a special provision of it, in Section 30, among others, which says:
" Nothing in this Part of this Act shall authorise a local authority to construct or use any public or other sewer, or any drain or outfall, for the purpose of conveying foul water into any natural or artificial stream…until the water has been so treated as not to affect prejudicially the purity and quality…"
I think that is the section the noble Lord is worrying about. Of course, under the general law, there is always an absolute prohibition against causing a nuisance in the exercise of sewerage powers to which the London County Council itself is subject, as are all other authorities throughout the country. It is this specific clause which is causing noble Lords anxiety.
We feel that this is not such a strong point as it may be made out to be. Storm water overflowing might contravene Section 30 of the Act which I have just quoted, and might make the Greater London Council liable to legal proceedings by the Attorney General for breach of that section. I do not think it could be subject to legal proceedings by anybody else. That would be done under claims for damage under the general law, to which all these authorities are in any case subject. Therefore, we feel, there is no risk that the Attorney General would, in practice, institute proceedings in respect of a storm water discharge by the Greater London Council which was clearly accidental and not due to
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their negligence in carrying out their duties, since it is fully recognised that sewers cannot be constructed large enough to take any overflow as a result of the storm. That is, in fact, what the storm water overflows are for, so that the sewers need not be of an unnecessary size.
So, for all practical purposes it seems that, as the Bill stands, the Greater London Council will not be under any greater liability in respect of their sewage discharges than, for instance, the London County Council are now. In respect of the saving clause which the noble Lord mentioned, I am informed that the Middlesex saving in the 1936 Act is being repealed. It applied to specific powers of discharge, and there is no further need for it.
To continue with the argument, we feel that storm overflows are obviously varied in size and character but they are not by any means bound to break the law. I do not think any provision which appears to accept that they are bound to break the law, and that it is inevitable that they will cause pollution, is to be encouraged. We feel that special protection is neither necessary nor desirable, and I would suggest to noble Lords that their anxieties are not really well founded, and that it is better to bring the Greater London Council into conformity with the rest of the country in respect of storm water outflows, on the ground that it is unnecessary for them to have special protection.
LORD SHEPHERD: That really is an extraordinary speech—extraordinary because the noble Lord obviously has not taken into account (if he has received it, or has asked for) the advice of the engineers. My understanding is this. The main sewage canals through London flow from West to East, and they are so constructed that they can take six times the dry-weather flow. But it is well recognised that a big storm can raise that flow—if the sewage drain is big enough—30, and sometimes even 100 times. It is quite possible, in fact, it is not uncommon, that a big storm takes place in London and that the overflow has to be brought into effect.
The noble Lord then said that he saw no reason why, in the case of London, the position should be any different from that in different parts of the country.
LORD HASTINGS: I said legally.
LORD SHEPHERD: I will come to the legal point, but we have to look at the factual point. In the case of Leicester, which the noble Lord quoted, this is not such a large built-up area, and if there is a heavy rainfall much of the water can be absorbed naturally into the ground. This is because the area there is not so solidly built-up as is London, where artificial drainage is necessary for the dispersing of our water. Therefore, the comparison of what is possible by local authorities in Leicester, Glasgow, and so on, with London is quite irrelevant. The position is that the Greater London Council (the London County Council as it now is) definitely must use the overflow and, regrettably, allow sewage to seep into the river.
The noble Lord then said that he did not think that the new authority would be in a worse position legally than is the L.C.C. to-day. I would refer him to the Public Health Act, 1936, which requires the London County Council to prevent sewage from passing into the Thames, "as far as practicable". These words are well-known to the noble Lord. They are words that we have to insert from time to time, because we well know that there are circumstances when the law of responsibility cannot be applied but this has always been brought in to relieve the authority in the event of legal proceedings. As I understand it, under this Bill it will become unlawful (the noble Lord will not quibble at that, I hope) for the Council to permit any sewage to enter the River Thames. Am I or am I not right that it is unlawful?
LORD HASTINGS: It could be considered unlawful.
LORD SHEPHERD: We cannot quibble; it is either lawful or unlawful.
LORD HASTINGS: As in the rest of the country.
LORD SHEPHERD: It is unlawful in the rest of the country. Their circumstances are quite different; the pressure on their drains is not so great. Here we recognise that the Council will from time to time have to permit the seepage of sewage into the Thames. The alternative would be the flooding of sewage into the streets or basements of houses.
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That is the case. Is it not a fact, therefore, that we have a clear case? The noble Lord smiles, but this is a very serious matter.
It is quite wrong for this Committee to recognise that if the Council places sewage into the Thames it is breaking the law. If we recognise that, is it right that we should let these words continue, recognising that the authority will have no option but to break the law, to permit sewage to enter the Thames, or, as an alternative, to allow it to seep on to the streets? It seems to me completely ridiculous for the Government to take their attitude on this matter. Is it right that we should put an authority into a position that they break the law and that the Government are prepared that they should break the law? It is right? Of course it is not. Therefore, I hope my noble friend will press this matter.
LORD HASTINGS: We are not really arguing or disagreeing at all about whether sewage will or will not be discharged through these storm-water outflows. We are arguing purely on a legal point.
LORD SHEPHERD: Yes.
LORD HASTINGS: Noble Lords should, I think, realise that the L.C.C. has agreed that the only greater risk the Greater London Council may be under is of an action by the Attorney General for breach of Statute, and we are sure that this is only a theoretical possibility.
LORD SHEPHERD: No; it is a certainty.
LORD WILMOT OF SELMESTON: I do not think we can leave a matter of this importance in this most unsatisfactory state. Here, in the vital matter of the treatment of London's sewage, the new Greater London Council is put in a position, to use the words of the legal advice which they have sought, that the Council
" will, from the moment of its creation, be faced in storm conditions with the choice of either breaking the law or of shutting its storm overflows and creating the dangerous flooding of the sewers of London ".
Is it right that Parliament should deliberately place the new Greater London Council in the position that either they will have to break the law, and deal

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with the storm water and sewage in the only practical way, or they will have to force it through manholes, and through houses and basements, which is the alternative? I do not think it can be left like this; and if it is a legal point, surely we ought to have the Government's Law Officers here or, the Lord Chancellor to tell us just what the position is. I cannot believe that the noble and learned Lord, the Lord Chancellor would lend his authority deliberately and knowingly to put the Greater London Council in this impossible legal position.
EARL ALEXANDER OF HILLSBOROUGH: The Lord Chancellor ought to be here.
LORD WILMOT or SELMESTON: I agree; I think the noble and learned Lord the Lord Chancellor should be asked to attend the House and give us the benefit of his advice, because the whole legal position of the Greater London Council is involved, and I think it is of the utmost importance. The Council will lose the protection which it now enjoys under Section 28 of the Public Health Act, 1936, which requires the Council to prevent sewage from pasing into the Thames only "as far as practicable"—and that would seem to me a very reasonable provision—and they will have become, instead, subject to additional restrictions under Section 30 of the Public Health Act, 1936, which prevents them from constructing or using any sewer or outfall for the purpose of conveying foul water into any stream or watercourse. In the opinion of the Council's own advisers, as I have said, this will mean, unless the Government are prepared to accept the Amendment which has now been moved, or some Amendment to the same effect, that the Council will have the choice, to put it very simply, of breaking the law or poisoning everyone. It seems to me that we cannot leave the matter in that state, and that the view of the noble and learned Lord the Lord Chancellor should be placed before the Committee.
4.38 p.m.
LORD MORRISON OF LAMBETH: I beg to move that the debate be now adjourned in order to enjoy the presence and the benefit of the advice of the noble and learned Lord the Lord Chancellor. This is really monstrous. The
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Minister of State, Home Office, and the Parliamentary Secretary, Ministry of Housing and Local Government, have had a very heavy burden to deal with, and I think they have done their best. But it is curious that the Lord Chancellor introduced the Bill—he is the Minister in charge of the Bill—and that about all he has done up to now has been to attack the Opposition for doing its Parliamentary duty and to threaten us; but when wanted, he is not here. We have no Attorney General or Solicitor General in this House, and I think therefore (although, no doubt, the Lord Chancellor may have had reasons for being away, but he has been away most of the time), as a matter of gravity, both to him and to the House as a whole, the Committee ought to adjourn pending the presence of the noble and learned Lord the Lord Chancellor.
LORD CROOK: I beg to move that the House do now resume.
Moved, That the House do now resume.—(Lord Crook.)
LORD HASTINGS: I think in the circumstances, rather than continuing the detailed argument, which I could have done, I should say that it is quite clear that noble Lords opposite would like authoritative legal advice on this matter. Perhaps in the circumstances it would suit the convenience of your Lordships if I were to ask my noble and learned friend to consider this matter possibly between now and Report stage.
LORD MORRISON OF LAMBETH: The Lord Chancellor is the Minister in charge of the Bill; he brought it in. I cannot believe the noble and learned Lord the Lord Chancellor would have brought in a Bill unless he understood it. Therefore he must be ready to answer this legal point, and I think he should do so now.
THE LORD CHANCELLOR (LORD DILHORNE): I am perfectly ready to answer any legal point of which I am apprised, but I am afraid that, owing to my temporary absence, I am not apprised of this point. The noble Lord says I should have been here. He always reflects on those who are absent. I have been here a great deal.
LORD WILMOT OF SELMESTON: Perhaps I may put the point on which we asked for the noble and learned Lord's

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view. May I say at once that there was no direct or implied disrespect to the noble Lord, Lord Hastings, who has given his careful attention to this matter with the utmost courtesy and clarity; but we cannot expect him to give the authoritative legal view of the Government on a Bill which was introduced by the Lord Chancellor. The point is this. It is on Amendment No. 167, Schedule 9. We are advised that the legal opinion tendered to the London County Council by their legal advisers is that unless Amendment 167, or something like it, is accepted, the Greater London Council will from the moment of its creation be faced in storm-water conditions with this choice: either they break the law—because they have lost the protection of the escape clause in the Public Health Act, 1936, and they will now become liable to the restrictions of Section 30—or they must close the outlets which let the water into the river, and let it find its way through sewers into basements, up manholes and drains, and create a poisonous situation in London. It is upon the point whether they will be breaking the law that we seek the Lord Chancellor's views.
THE LORD CHANCELLOR: I gather from what the noble Lord says that he has received legal advice with regard to this question.
LORD WILMOT OF SELMESTON: I said the London County Council received legal advice, of which they apprised us.
THE LORD CHANCELLOR: I was condensing it somewhat shortly. I imagined that that was what had happened. I gather the matter has also been considered by those responsible for giving legal advice to Her Majesty's Government on questions of this sort, and I am told the advice is that the choice is not between breaking the law and shutting the overflows. I do not think it would be right for me, in view of the legal advice which has been given upon this, to express an opinion "off the cuff" with regard to it. I should have thought myself that the chances of any legal proceedings ensuing were extremely remote, because at the moment I think they would have to be instituted by the Attorney General. But, however that may be, one obviously does not want to set an example of law-breaking by the London County Council or otherwise. If
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the position is as the noble Lord has said, it should be covered in the Bill. I should like to have an opportunity of giving further consideration to it. It does not emerge clearly from the Amendment. Therefore, if the noble Lord would like to withdraw this Amendment I will certainly give it further consideration.
LORD CROOK: I am sure we are all obliged to the noble and learned Lord for returning to give some advice to the Committee. We are very appreciative of what he has had to say. On the other hand, it does not do anything to remove the disturbed minds we have had. It means, since he has helped us so much, that we cannot go on with the Motion that the House do now resume, which Motion I ask the leave of the Committee to withdraw; after which I expect the Committee to accept our advice to go into the Division Lobby on the original Amendment.
Motion, by leave, withdrawn.
LORD SHEPHERD: I understand that the noble and learned Lord, the Lord Chancellor, gave a firm undertaking that this matter would be looked at.
THE LORD CHANCELLOR: I was not aware of the moving of the Motion, That the House do now resume. I thought Amendment No. 167 had been moved. My undertaking related to Amendment No. 167, and I should certainly like to look at the question; and it was on that basis I invited the noble Lord to withdraw the Amendment. It will not stop him from putting it down on Report stage. If there is really serious ground for thinking the law is as the noble Lord has been advised, I should certainly like to see our intentions made clearer, because I do not think the position ought to remain that a great authority such as the Greater London Council is going to be, should be faced with any such choice.
LORD CROOK: In those circumstances I have obviously no option but to accept the offer of the noble and learned Lord and reserve our position at Report stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD HASTINGS: This is a drafting Amendment. I beg to move.
Amendment moved—
Page 164, line 17, leave out from (" In ") to (" shall ") in line 18 and insert (" section 30 the reference to Part II of the Public Health Act 1936, and in section 31 the reference to the foregoing provisions of the said Part II ").—(Lord Hastings.)
LORD SHEPHERD: Can the noble Lord say to what it is a drafting Amendment?
LORD HASTINGS: It corrects a slight inaccuracy. That is all.
LORD SHEPHERD: I think the Committee is entitled to know what the inaccuracy is. There may be a major change slipping through without our knowledge.
THE LORD CHANCELLOR: I think it right to say—it was certainly so in the other place—that when a Minister says an Amendment is drafting, that is, in my experience, almost invariably accepted. I think the noble Lord, Lord Morrison of Lambeth, would accept that that is the practice. I have never known either Party in office say an Amendment is drafting when it is not. If the noble Lord really wants the technicalities of drafting explained on this particular proposal, I am sure my noble friend will do so.
LORD SHEPHERD: I was not suggesting any impropriety at all. It was being moved as a drafting Amendment and I was asking what it affected, purely for information. If the noble Lord, Lord Hastings, is not in a position to reply, I shall be happy to leave it and look at it and perhaps have consultations. I merely asked, as I think I am entitled to, the effect of the Amendment.
On Question, Amendment agreed to.
LORD CROOK LORD CROOK moved, after paragraph 18, to insert:
" 19. Section 330 shall not apply in the sewerage area of the Greater London Council.
20. Section 333 shall not apply—

(a) in so much of the sewerage area of the Greater London Council as is situate in any inner London borough, the City or the Temples; or

(b) in any other part of that area as respects works to which paragraph 4(1) of Part III of this Schedule applies."

The noble Lord said: On behalf of my noble friends on this side of the Committee, I beg to move Amendment 168. I ask leave of your Lordships to take in
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with that discussion, to save the time of the House, Amendment 169. These are very closely interrelated to another sewage problem. Section 29(2) of the Public Health (London) Act, 1936, to which reference has already been made, prevents the London County Council from executing any sewerage or draining works, as it says, on the banks, beds or shores of the River Thames, which may interfere with the navigation of the river, unless the Port of London Authority have given a certificate stating that they approve the plans and that the works will not interfere with navigation. Section 78 of the same Act requires the London County Council, or a metropolitan borough council, if concerned, before executing any sewerage or drainage works which will interfere with a railway or canal, to serve notices on the company concerned. It also provides for arbitration in cases of dispute.
These two sections will be repealed by this Bill as it now stands, and Section 333 of the Public Health Act, 1936, will apparently apply in their stead. That section requires the consent of a dock undertaking before a local authority executes any work
" in, across or under any dock, harbour, basin, wharf, quay or lock, or any land belonging thereto held or used by the undertaking".
It also requires the consent of the railway company before executing any works either along, across or under a railway. Consents are not to be unreasonably withheld, and provision is made for arbitration and compensation payments.
Your Lordships will note that both of the sections of the London Act which I have quoted refer to and use the one word "interference"; but the general Act requires consent, whether or not there is interference. Whether any particular work would or would not interfere with navigation or with the railway might well be open to technical argument. In practice, a certificate from the Port of London Authority has always been sought, and notice to a railway has always been given by the London County Council. Agreement on safety measures has again always been freely reached. After all, the safety of the workers and the interests of both parties are not separate issues; they really are one and the same. On the other hand, claims for easements and payments, and even that

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the railway engineers should supervise the work while proceeding, have had to be resisted by the London County Council.
Many sewers have been constructed under the present law in London, as the Government will, I am sure, agree. It is not at all obvious to us or to the London County Council why the powers of the Greater London Council in this connection should be more circumscribed than the powers of the present Council; or why the powers of the Railways Board should accordingly be increased. Even if it is considered that a railway undertaking should be in a position to demand payment as a condition of consent to a sewer going through their land, it is not obvious why they should have this advantage over any other bodies. It is, as those of us who know our London appreciate, almost impossible to construct any sewer in London without crossing a surface or underground railway. Usually, there are several crossings of different lines involved in any one job in sewer work, and if in future it is to be necessary to obtain all these consents before crossing a railway, the construction of sewers in London is bound to be delayed. Accordingly, these Amendments seek to retain the present London law in this connection and hold it to the Greater London Council. It is a law that has always worked satisfactorily, and is well understood by all the parties who have been concerned in the past.
In addition to the matters that I have dealt with so far, the first section of the first Amendment would prevent the application to the sewerage area of the Greater London Council of Section 330 of the Public Health Act, 1936. That section—no comparable provision exists at present in London—empowers railway companies, dock undertakings and land drainage authorities to alter sewers vested in a local authority by substituting equally effectual sewers—I emphasise the words "equally effectual sewers" because it does not state there that these must be equally effectual in the opinion of the local authority, though it is true that the matter can, in the ultimate, be referred to arbitration. Your Lordships do not need me to remind you that expert opinion is always liable to be divided on what is "equally effectual", and differing views may cause considerable trouble.
It seems wrong that a great body like the Greater London Council proposed to be set up under this Bill which, of all councils, will have at its service some of the most expert opinion in the country on sewerage matters, should not even have the right to approve any proposals for the alteration of its own sewers. As an example, inverted syphons might be likely to be proposed as a method of diverting a sewer, although in the case of many of London's existing sewers such a proposal would be resisted at present by the present London County Council. It would be resisted on a number of grounds, particularly that efficiency would be reduced and that the cost of maintenance would be considerably increased. It is considered by the London County Council—this is a view with which my noble friends on this side of the Committee agree—that the application of the section to which I have referred to London's vast, complex and interlocking drainage system could drastically affect the overall efficiency of the whole sewerage system of London. Therefore, we would strongly resist the application of Section 330.
When similar, but rather wider, Amendments were considered in Standing Committee in another place, the Parliamentary Secretary to the Ministry of Transport asked the Committee to give him the opportunity to consider the matter further. He suggested that, with a view to his taking steps at a later stage of this Bill to put down an Amendment containing the substance of what had been suggested, while at the same time securing reasonable uniformity. The Committee agreed to let the matter go. That is what has happened. He suggested that if he could be given a little more time to look at the matter again he hoped to be able to arrive at the satisfactory solution that many Members of the Committee wanted. In the absence of any Government Amendment, we have put down these Amendments on behalf of the London County Council. I beg to move them, and I hope that we may learn from the Government that they are ready to accept them, or, if not, that they will say they have their own equally effective Amendment which they propose to put forward on the next stage.
Amendment moved—
Page 165, line 19, at end insert the said paragraphs.—(Lord Crook.)
LORD CHESHAM: I am indebted to the noble Lord, Lord Crook, for having spoken to these two Amendments so clearly, and so fairly. He has really taken some pains to point out both sides of the argument, and therefore it is really unnecessary for me to say any more. It boils down to the fact that, on the one hand, there are the arguments in favour of uniformity in such matters throughout the country, and, on the other hand, the special considerations which undoubtedly exist in London. Briefly, those are the two factors.
The noble Lord referred to my honourable friend's undertaking in another place. The examination which he said he would undertake is partly, but not sufficiently, completed. What has happened is that there has been discussion with the Port of London Authority, and correspondence with the London Transport Board, the British Railways Board and the British Waterways Board, in order to establish their precise interests in the matter. The other part of the examination, which is a very important part, is consultation with the L.C.C. which has not yet happened, but I can tell your Lordships that the discussion with the L.C.C. together with the Ministry of Housing and Local Government and my own Department, as well as the various undertakers, has been arranged for May 28. I certainly hope that agreement in this matter can be reached before Report stage. I only want to say now that if as a result of that further consultaion there is a strong case for doing what the noble Lord, Lord Crook, advocated should be done the Government will most certainly look at it sympathetically and, if it seems appropriate, take action at the Report stage. Naturally, it will have to be a very good reason, but I can give the noble Lord that undertaking. I therefore hope, in view of what I have said, that he will be willing to withdraw his Amendments on this occasion.
LORD CROOK: I am obliged to the noble Lord for the reply which he has given me, and I thank him for the nice things which he has said. We are glad to learn that there are to be discussions
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with the L.C.C. in the course of the next week, and also to learn that discussions have already gone on. In all the circumstances, it would be wrong of me to press an Amendment of this kind at this stage. I shall look forward to learning from the noble Lord in due course what the Government's proposals are. I hope that those proposals will prove effective from our point of view, that they will be able to go on the Marshalled List for the Report stage, and that they will be acceptable to us. We shall be left in the position that, if we do not like it, then we can always move the adoption of some other words. I therefore ask your Lordships' permission to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD HASTINGS: It is not considered that the Greater London Council needs, or should have, quite such an overriding power to construct sewage disposal works as paragraph 1 of this Part of the Schedule appears to confer. The same considerations apply to their construction in London as elsewhere, and it is thought that the same provisions—those of Section 15 of the Public Health Act, 1936—should apply to the construction of sewage disposal works, as distinct from sewers, in London as elsewhere. This Amendment achieves this. I beg to move.
Amendment moved—
Page 165, line 29, leave out from (" sewer ") to end of line 30.—(Lord Hastings.)
On Question, Amendment agreed to.
5.4 p.m.
LORD HASTINGS LORD HASTINGS moved, in paragraph 1(2), to leave out "The foregoing sub-paragraph" and to substitute:
" Where the Greater London Council propose in the exercise of their powers under this paragraph to construct a sewer which will cross or interfere with any watercourse or works vested in, or under the control of, a land drainage authority other than the Council or the council of a London borough or county district, they shall before adopting plans for the construction of the sewer give notice of their proposals to that authority: and if that authority within twenty-eight days of the giving of the notice to them serve on the Greater London Council notice of objection to the proposals, the Council shall not proceed with the proposals unless all objections so made are withdrawn or the Minister after a local inquiry has approved the proposals with or without modification.
(3) Section 31(2) of the Land Drainage Act 1961 (which requires the consent of a river

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authority to the erection, alteration or repair of structures in, over or under watercourses) shall not apply to any work executed under this paragraph.
(4) The foregoing provisions of this paragraph ".
The noble Lord said: Under the Bill as it stands the Greater London Council are exempt from the provisions of Section 15(2) and (3) of the Public Health Act, 1936, which requires a sewerage authority proposing to construct a sewer that will
" cross or interfere with any watercourse or works vested in, or under the control of a land drainage authority "
to give notice to that authority, who may object to the proposals. Any dispute is to be settled by the Minister. It has been represented by the Kent and Essex River Boards that the Greater London Council ought to have the same obligations as other sewerage authorities, and this Amendment substantially achieves this. In effect, it applies the provisions of Section 15(2) and (3) of the 1936 Act to the Greater London Council. I beg to move.
Amendment moved—
Page 165, line 36, leave out (" The foregoing sub-paragraph ") and insert the said new words.—(Lord Hastings.)
LORD CROOK: I am bound to say, on the explanation given by the noble Lord, that this type of Amendment seems reasonable enough. On the other hand, the noble Lord has not mentioned in connection with this Amendment the very thing he mentioned on the last one: consultation with the Greater London Council to find what kind of views the present Council have on this matter. Whilst it is perfectly true that this is placing powers in the hands of the new Greater London Council, if it was sensible in regard to the question of interference with sewer passages, railways, canals or docks or quays to have talks with the P.L.A. and with the London County Council, would it not be a good idea to do so also on this matter? We do not want to oppose this Amendment, but if the noble Lord could give an undertaking of that kind and then take this Amendment away and come back on Report stage with another Amendment, it might be more advantageous.
LORD HASTINGS: I think that possibly the noble Lord has overlooked some words in the Amendment:
"…the Greater London Council propose in the exercise of their powers under this paragraph to construct a sewer which will cross…any watercourse or works vested in, or under the control of, a land drainage authority "—
them, and this is the important point:
" other than the Council or the council of a London borough or county district… ".
So that they are not going to be interfered with. It is only the people outside that district who have asked for the Greater London Council to be put under the same obligations as other sewerage authorities.
On Question, Amendment agreed to.
LORD HASTINGS: This Amendment is consequential on No. 168B. I beg to move.
Amendment moved—
Page 165, line 40, leave out from (" 1950 ") to end of line 43 and insert—
(" (5) Except where notice has to be given by the Greater London Council in pursuance of sub-paragraph (2) of this paragraph or of any requirement mentioned in sub-paragraph (4) thereof, no notice need be given by them of any exercise of the powers conferred by this paragraph.").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: This is a drafting Amendment. The Minister of Transport has taken on certain functions exercised by the Board of Trade at the time when the 1936 Act became law, and this Amendment puts right this minor error. I beg to move.
Amendment moved—
Page 167, line 4, leave out (" Board of Trade ") and insert (" Minister of Transport ").—(Lord Hastings.)
On Question, Amendment agreed to.
Schedule 9, as amended, agreed to.
Schedule 10 agreed to.
Schedule 11 [Modification and re-enactment as front 1st April 1965 of provisions of Public Health Acts]:
LORD HASTINGS: This Amendment is consequential on Amendment 159A. I beg to move.
Amendment moved—
Page 180, line 1, at end insert—
(" 2A. Sections 160 and 171 shall not apply to Greater London ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: This Amendment also is consequential. I beg to move.
Amendment moved—
Page 180, line 5, leave out paragraph 4.—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: This Amendment is again consequential on 159A. I beg to move.
Amendment moved—
Page 180, line 23, leave out (" 80 and 81 ") and insert (" 21 and 80 and so much of section 81 as relates to the Town Police Causes Act 1847 ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: This Amendment is similarly consequential on No. 159A. I beg to move.
Amendment moved—
Page 180, line 28, after (" 5 ") insert (" 17 to 19 ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS LORD HASTINGS moved, in paragraph 13(1), to leave out words after "perform the" down to and including "refuse whatsoever;" and to insert:
"following services throughout their district:—

(a) the services mentioned in section 72(1);

(b) the removal under section 73(1) of trade refuse of any kind whatsoever at the request of the occupier of premises; and

(c) the cleansing of streets under section 77(1)".

The noble Lord said: Paragraph 13 of this part of Schedule 11 says that it shall be the duty of the local authorities in the inner London area to undertake certain cleansing services which, throughout the rest of the country outside the London County Council area, become local authority functions only if the council undertakes to provide those services. The Amendment sets out in more detail exactly what those services are, and, in so doing, it makes two minor changes to the paragraph as drafted. First—and this is a matter of drafting—it makes it clear that trade refuse has to be collected by the authority only at the
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request of the occupier, and, secondly, it excludes the watering of streets from the obligatory functions of the local authorities.
Amendment moved—
Page 180, line 45, leave out from second (" the ") to (" and ") in line 3 on page 181, and insert the said new words.
On Question, Amendment agreed to.
LORD HASTINGS: This is consequential on the last Amendment.
Amendment moved—
Page 181, line 7, leave out ("services mentioned in those sections ") and insert (" said services ").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD HASTINGS: This is essentially a drafting Amendment to give full effect to the present paragraph 13(2) which it replaces. Sub-paragraph (2) seeks to preserve, for inner London, the present requirements as to refuse collection, which are rather more stringent in the L.C.C. area than in the rest of the country. I beg to move.
Amendment moved—
Page 181, line 8, leave out sub-paragraph (2) and insert—
(" (2) Section 72(2) shall not apply in relation to the removal of house refuse in Greater London other than the outer London boroughs, but the following provisions shall have effect therein instead:—

(a) the local authority shall appoint, and give sufficient notice of, the times for removing house refuse from premises within their district;

(b) where house refuse is not removed from any premises at the time appointed for those premises, the occupier of the premises may serve on the local authority a notice requiring the authority to remove the refuse;

(c) if the local authority fail, without reasonable excuse, to comply with the notice within the period of forty-eight hours beginning with the service thereof (exclusive of Sundays, Christmas Day, Good Friday, bank holidays and any day appointed for public thanksgiving or mourning), the occupier of the premises may recover summarily as a civil debt from the authority the sum of five shillings for every day during which the default continues after the expiration of that period.")—(Lord Hastings.)

On Question, Amendment agreed to.
LORD HASTINGS: Like the existing version of paragraph 14(1) of this part of Schedule 11, the amended version makes it clear that the Greater London Council shall be the sole authority for

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the disposal of refuse in Greater London. The change made by this Amendment is to allow the borough councils and the City, who will be responsible for the collection (as distinct from the disposal) of refuse, to install plant for sorting and baling waste paper where this is collected separately from other refuse. I beg to move.
Amendment moved—
Page 181, line 19, leave out sub-paragraph (1) and insert—
(" (1) The powers exercisable by a local authority under sections 74(2) and 76(1) shall be exercisable throughout Greater London by the Greater London Council to the exclusion of any other authority, except that the powers conferred by section 76(1)(c), so far as they relate to the provision of plant or apparatus for sorting and baling waste paper collected separately from other refuse, shall be exercisable concurrently by the authority collecting the paper and the Greater London Council; and

(a) any reference to a local authority in the said sections 74(2) and 76(1) shall be construed accordingly; and

(b) any reference to a local authority in section 76(3) so far as that subsection relates to material deposited in a place provided for the deposit of refuse shall be construed as a reference to the Greater London Council and not to any other authority.").—.(Lord Hastings.)

On Question, Amendment agreed to.
LORD HASTINGS: The London Borough Councils will have power to sell refuse (that is, salvage) under Section 76(2) of the Public Health Act, 1936, as applied by Clause 40(1) and (2). The Amendment makes it clear that their power to sell refuse is not restricted by paragraph 14(3), the previous Amendment about which we have just been talking. I beg to move.
Amendment moved—
Page 181, line 39, at end insert (" except any refuse sold by that authority under section 76(2).").—(Lord Hastings.)
On Question, Amendment agreed to.
LORD STONHAM LORD STONHAM moved, after paragraph 16, to insert:
" 17. Section 82 shall not apply to an inner London borough, the City or the Temples."
The noble Lord said: I hope it will suit your Lordships' convenience if I discuss with this Amendment also Amendments 171 and 173. In fact No. 173 is the main Amendment. Briefly, it seeks to give the Greater London Council powers to make by-laws as respects the inner London boroughs and the Temples, first, for
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prescribing the times for the removal or carriage by road or water of any offensive or noxious matter in or through the said boroughs or Temples, and for providing other safeguards; secondly, with respect to sanitary conveniences, ash-pits, cess-pools, incinerators and so on.
Important new refuse and drainage bylaws for London have recently been agreed between the London County Council and representatives of the metropolitan borough councils, following some twenty years of discussions, and these are now awaiting the formal approval of the Minister of Housing and Local Government. These by-laws have been made by the London County Council under the powers contained in Sections 84(2) and 107(1) of the Public Health (London) Act, 1936. They contain requirements as to the storage, removal and disposal of refuse and as to drainage. Some of the provisions of these by-laws, in effect, form part of the London Building Code which it will be the duty of the Greater London Council to administer in the inner London boroughs.
In the existing paragraph 3 of Part II of Schedule 11 which my Amendments seek to expand, this fact seems to have bean recognised because the powers of Section 107(1) of the 1936 Act are included in the by-law-making powers of the Greater London Council, which are to continue to have effect in inner London. In my Amendment No. 173, which is the main Amendment of the three we are now considering, we accordingly seek to extend these powers so as to incorporate the substance of so much of Section 84(2) of the Act of 1936 as it is considered necessary or desirable to re-enact.
So far as sub-paragraph (a) is concerned, it is obviously desirable that standard times and constructional requirements for vehicles should continue to apply in connection with the removal of refuse by road in inner London. This control is also important from the point of view of traffic management and uniformity. I think it will be perfectly obvious that this is essential if these arrangements are to be made, not only properly in the administrative sense but, so far as timing is concerned, in such a way as not to be offensive to the people of London.
The matters specified in sub-paragraph (b) merely re-enact the present paragraph 3, which contains the substance of Section 107(1) of the Act of 1936, to which I have referred; but there is the addition of the word "incinerators", which are at present regulated under the bylaw-making powers of Section 84(2). When this matter was discussed in Committee in another place the Minister of Housing and Local Government said [OFFICIAL REPORT, Commons, Standing Committe F, 5 March, 1963; col. 605]:
" The Greater London Council will, of course, inherit by-law-making powers under Section 107(1) of the Public Health (London) Act, 1936, and it is simply a question of whether those powers are as wide as those under Section 84(2)…which is being repealed. I will gladly undertake to discuss whether the powers being inherited by the Greater London Council are as wide as those they will not inherit, and make an alteration it it seems suitable."
Later on he undertook to look at the point about incinerators, and I notice that Amendment 174, which the noble Lord, Lord Hastings, will be moving later, covers that point. Therefore, he could argue that my sub-paragraph (b) is covered in an Amendment which he hopes the Committee will accept later; but although this meets the substance of that sub-paragraph, it certainly does not cover the very important matters referred to in sub-paragraph (a), which is set out in Amendment 173, about the times. I think it is clear that the Government do wish the Greater London Council to inherit powers that are sufficiently wide for the efficient administration of these important health functions, but in my submission they will not do so. The powers will not be wide enough—and certainly the London County Council do not think so—unless this Amendment is accepted. I am sure it would meet the general wishes that this point—quite an important one—should be adequately covered, and I therefore hope the Government will accept it. I beg to move.
Amendment moved—
Page 132, line 16, at end insert the said paragraph.—(Lord Stonham.)
5.22 p.m.
LORD HASTINGS: Paragraph 17(1) of this Part of the Schedule replaces Section 84(2)(a) of the Public Health (London)
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Act, 1936, and gives all the new London boroughs a permissive power to make by-laws under Section 82 of the Public Health Act, 1936 (not the London Act), to prevent nuisances arising from the carriage of offensive matter or liquid by water, as well as by road. The noble Lord's Amendment would preclude the inner London boroughs, the City and the Temples from making such by-laws. I think that possibly the noble Lord is worried—and he said so—particularly in regard to the timing of these operations; that different inner London authorities might impose different conditions, so that it would be difficult, perhaps impossible, for anybody to operate the services from central London conveniently, or to the satisfaction of the public. But, in point of fact, I do not think this is ever going to arise, even under the present arrangements. Of course, we are concerned only with the efficiency of the system.
The Ministry of Housing and Local Government have a model by-law under Section 82 of the Public Health Act which suggests certain conditions, including hours, and almost all authorities are very willing to accept this. Furthermore, all by-laws under this section require confirmation, and it will be a simple matter for my right honourable friend, when confirming these by-laws, to ensure that there is sufficient uniformity throughout the area to make the removal of such matter a simple and inoffensive operation. In those circumstances we feel that there is no particular justification for departing from the general scheme of the Bill: that the London boroughs should have the functions normally discharged by boroughs, and county boroughs in the provinces. In respect of the point the noble Lord made about incinerators, that, of course, is referring to the building codes, and will be looked after, as the noble Lord pointed out, in the Government's Amendment No. 174. I hope that, with that explanation, the noble Lord may feel that his anxieties are not well-founded.
LORD STONHAM: I am afraid that I do not agree with the noble Lord, and I find it difficult to agree that his arguments are well-founded. He has agreed with me that Amendment No. 174, which he will move later, meets the substance of part of my Amendment. Therefore, the noble Lord is conceding that in that

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particular it is necessary for the Greater London Council, and not the Minister, to approve model by-laws for the other boroughs. I find it very difficult, therefore, to understand why this much more cumbrous machinery should be set up—namely, that each inner London borough will study the Minister's by-laws, will mull over them and get out their own version, and will then send them to the Minister for his approval. And we have to hope that the timings will be all right, and that all the arrangements will be made in the early hours of the morning, or whatever times are decided, all over inner London, although in the area of several different boroughs—and in some of them transport will have to cross the boundaries of different boroughs, because they will not all be disposed of in the area in which they are collected.
Notwithstanding all this, the noble Lord suggests that that arrangement will achieve a result as satisfactory as one in which the Greater London Council makes all the by-laws. I do not for one moment think that the result will be as satisfactory. It is absolutely certain and self-evident that it will take much more time and be much more cumbrous, and that there will be much more chance of a difference in times and of a lack of uniformity. I cannot for the life of me see why this Amendment should not be accepted, because there cannot possibly be any difference between the noble Lord and myself on the objective.
We are agreed on that, and all we are disagreed about is the method of achieving it. He knows that it is quite demonstrable that the method he has suggested is much more cumbersome, and will take longer.
Therefore, unless there is some innate prejudice—and there has been a suggestion of that at other times—against giving the Greater London Council these powers, there is no reason for refusing this Amendment at all, and certainly we should not be prepared to withdraw it, unless, of course, the noble Lord agrees to have another look at it in the light of this discussion.
LORD HASTINGS: There is just the difference that the building codes, which we come to in a later Amendment, are really being left more or less as they are at the moment, because this comprehensive review, to which the noble Lord, Lord Wilmot of Selmeston, referred on a previous Amendment, is to be carried out, and we do not wish to disturb it meanwhile. In this case, though, we can go direct to the system we want to see at the very start; that is, to give the London boroughs the functions they should normally have.
5.29 p.m.
On Quesion, Whether the said Amendment (No. 170) shall be agreed to?
Their Lordships divided: Contents, 23; Not-Contents, 63.

CONTENTS

Addison, V.

Hughes, L.

Sinha, L.

Alexander of Hillsborough, E.

Inman, L.

Stonham, L.

Attlee, E.

Latham, L.

Summerskill, B.

Burden, L. [Teller.]

Lawson, L.

Walston, L.

Champion, L.

Longford, E.

Williams, L.

Crook, L.

Lucan, E. [Teller.]

Wilmot of Selmeston, L.

Faringdon, L.

Morrison of Lambeth, L.

Wise, L.

Henderson, L.

Shepherd, L.

NOT-CONTENTS

Ailwyn, L.

Clwyd, L.

Goschen, V. [Teller.]

Aldington, L.

Coleraine, L.

Grenfell, L.

Amherst of Hackney, L.

Colgrain, L.

Hailsham, V. (L.President.)

Ampthill, L.

Colville of Culross, V.

Hanworth, V.

Balfour of Inchrye, L.

Conies ford, L.

Harcourt, V.

Bethell, L.

Cranbrook, E.

Hastings, L.

Bossom, L.

Denham, L.

Hereford, V.

Boston, L.

Devonshire, D.

Howard of Glossop, L.

Braye, L.

Dilhorne, L. (L. Chancellor.)

Howe, E.

Brocket, L.

Dudley, E.

Jessel, L.

Buchan, E.

Ebbisham, L.

Long, V.

Carrington, L.

Elliot of Harwood, B.

Lothian, M.

Cawley, L.

Ferrers, E.

Luke, L.

Chesham, L.

Fraser of North Cape, L.

Mansfield, E.

Margesson, V.

Monk Bretton, L.

Saltoun, L.

Massereene and Ferrard, V.

Newton, L.

Soulbury, V.

Mersey, V.

Perth, E.

Suffield, L.

Mills, V.

Poulett, E.

Swinton, E.

Milverton, L.

Remnant, L.

Teynham, L.

Molson, L.

Rochdale, V.

Wellington, D.

Monck, V.

St. Aldwyn, E. [Teller.]

Wolverton, L.

On Question, Amendment agreed to.

BARONESS SUMMERSKILL: I beg to move the Amendment standing in my name. Noble Lords will recall that on the Second Reading of this Bill many of us addressed ourselves to certain aspects of the Bill in which we had a special interest. I was particularly impressed by the fact that the Government had brought a Bill to your Lordships' House which involved a transfer in a very limited period of the administration of the health services to the boroughs. Apart from your Lordships' knowledge of this Bill, I am sure that you will agree that public health in this country over the last, let us say, 25 years, has been enlarged in a manner which, so far as the administration is concerned, has impressed us all very much.
I shall deal with some of the details in a moment, but I am very disturbed by the thought that this important service in London, serving millions of Londoners, should be transferred in a period which I consider so short as to make it impossible to do it efficiently and with justice to the service; and I anticipate a dislocation. People afterwards may say, "I told you so. It went well." Public health is so detailed that nobody but those concerned with it who know the technicalities in terms of medicine involved would recognise that more time should be given to this important matter.
May I just refresh the memories of noble Lords? Under Clause 45, the local health authority for each London borough will be the council of the borough, and for the City the Common Council following upon the abolition of the London County Council. Let me remind the Committee also of the timing of this. The new authorities for Greater London will be elected, as to the Greater London Council in April, 1964, and as to the boroughs in May, 1964. Both will take over the local government services on April 1, 1965.
THE LORD CHANCELLOR: I am seeking to follow the noble Lady's argument,
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but I am wondering whether we are really on the right Amendment. I was under the impression that Amendment 171 was consequential on the Amendment we have just discussed dealing with the by-laws made under Section 82. Therefore, I wonder whether the noble Lady has not perhaps slipped into an error about this?
LORD HASTINGS: This Amendment is not much more than drafting, but I should like to explain it briefly. It takes out paragraph 24, as Sections 313 to 317 are already looked after under Clause 84(7), which was put into the Bill in another place. Section 314 refers to the port health authority for the Port of London, which will have its function assigned by an order under Clause 41(1) of this Bill. But there is a small part of Section 314—Section 113 of the Public Health (London) Act, 1891—which does not fall under either Clause 84 or Clause 41, and therefore must still be left in. I beg to move.
Amendment moved—
Page 183, line 20, leave out paragraph 24 and insert—
(" 24. No order shall be made under section 314 after the passing of this Act as respects the port health authority for the Port of London.").—(Lord Hastings.)
LORD HASTINGS: This Amendment is consequential upon Amendment No. 174. The sub-paragraph which we are leaving out is incorporated in paragraph 5 of Amendment No. 174. I beg to move.
Amendment moved—
Page 185, line 40, leave out sub-paragraph (3).—(Lord Hastings.)
LORD HASTINGS: This Amendment, referring to incinerators, has already been mentioned by the noble Lord, Lord Stonham. Following the debate in another place, the Government promised to consider whether any of the powers in Section 84(2) of the Public Health (London)

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Act, 1936, which is to be repealed, relating to the building of incinerators, should be preserved for the Greater London Council in respect of inner London. As the result of this examination, my right honourable friend is sure that the powers in Section 84(2) include power to deal with incinerators for the disposal of refuse. Therefore, the object of this Amendment is to enable the Greater London Council to inherit the powers to lay down in by-laws requirements for the construction and use of incinerators in inner London boroughs. I beg to move.
Amendment moved—
Page 185, line 50, leave out from (" 1965 ") to end of line 51 and insert:—
(" 4. The Greater London Council shall make byelaws with respect to the construction and use of incinerators for the disposal of refuse in the inner London boroughs, the City and the Temples, being incinerators which are, or are in the nature of, buildings or structures or which form part of a building or structure.
5. It shall be the duty of each local authority to enforce in their district any byelaws under paragraphs 2 to 4 of this Part of this Schedule which are in force in their distriot.").—(Lord Hastings.)
LORD STONHAM: We welcome this Amendment as giving something of what we asked for on the previous Amendment, but it is likely that we shall return to the other half at a later stage.
Schedule 11, as amended, agreed to.
Clause 45 [Local health authorities]:
5.45 p.m.
BARONESS SUMMERSKILL BARONESS SUMMERSKILL moved, in subsection (1), to leave out "subsection (3)" and to insert "subsections (3), (4) and (5)." The noble Baroness said: I was thinking with regard to my previous remarks that I must be suffering from auditory hallucinations. The noble Lord, the Deputy Chairman called me and I do not know why I should be blamed. I still think that the noble Lord, Lord Hastings, was at fault. Men, every one of them, look around for a woman to blame. I should like to thank the noble and learned Lord the Lord Chancellor for his kindness. I was surprised—or, rather, I was gratified—to find that he is following this Bill so closely that at least he of the noble Lords opposite was conscious of the fact that I was addressing myself to the wrong Amendment.
I will not weary the Committee by repeating what I have already said. For this transference of health services there will be less than 13 months from the inception of the 33 new authorities to the day on which they must begin to administer the services which are now the responsibility of some 100 authorities. The object of this Amendment, and of the other three dealing with this matter, is to provide that the Greater London Council shall assume responsibility for the local health services for the inner London boroughs and the City for a five-year period from April 1, 1964, and shall provide an adequate period during which the services to be run by the inner London boroughs and the City can progressively be delegated to them and the transfer completed by the end of that period.
I would recall that, when the Bill was discussed in another place, the case for school children was put to the Government. The Government had second thoughts and decided that for a period of five years they would allow education to be administered by the inner London boroughs. I am appealing here to noble Lords to reconsider this, to see whether the sick should not have the same consideration as they have given to school children. I think that here there is an unanswerable case. The enormity of the task can be grasped only when I tell your Lordships that these are the services that will have to be transferred in eleven months: child care in nurseries, health visiting, family planning, maternity and child welfare, chiropody, problem families including special case work services, recuperative holidays, domiciliary midwifery, home nursing, home help, mental health, tuberculosis after-care, B.S.G. vaccination, vaccination and inoculation.
May I illustrate the importance of this work and the details involved by explaining to your Lordships the midwifery service of London. I should think that this is perhaps the first time in the history of your Lordships' House that the midwifery service of London has been explained here in detail. It is something of which we should all be proud. Of course, as hospital treatment becomes more sought after, the service becomes more detailed. The running of the domiciliary midwifery service has never devolved on the seven divisional health

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officers of the L.C.C., for the reason that a small number of confinements are undertaken in many divisions and that one-third of all confinements in London are undertaken by eleven district nursing associations and ten hospitals. Moreover, some of the teaching hospitals have no defined practice.
May I summarise all this by saying that, since nobody can predict when a baby is going to be born, exactly in which month, or where—for example, an expectant mother may go to her mother's for her baby to be born—the L.C.C. say that this service should be centralised. With these various services that I have mentioned—the domiciliary midwifery service, the district nursing associations, the hospital service and so on—the work is allocated from a central point. So if a woman has to change her arrangements at the last moment (perhaps in one area there is a shortage of midwives), the centre can say: "Let us change the working area of the midwives from South of the Thames to North of the Thames". This is being done every day. As we have sat here, while I have been speaking for six minutes, six babies have been born—I suppose that a baby is born every minute. In order that there should be this efficient service, there must be some body at the heart of the organisation arranging the work of the midwives, discussing the matter with the hospitals and ensuring that these women suffer as little as possible. Of course, this has led to few midwives being directly employed by the Council in some divisions, with the result that relief arrangements for midwives have generally been planned on a basis wider than that of one division.
It is not news to your Lordships—because I have said it before standing at this Box—and it is not news to the country, that our midwives are grossly underpaid and grossly overworked. It is a job which calls for physical health, patience, steady nerves, endurance and capacity to get up in the middle of the night with a smile. For that I think we pay them something which equates possibily to what our dustmen get. For this reason, of course, there has been a passive revolt of the midwives. Time after time Ministers say: "After you have married, come back and work". This has always amused me, because at other times they
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will say that no married woman should work because she is taking a man's job. But when it comes to midwives, there is this constant appeal, because we have not enough of them. So this wonderful little group of women working in London, first South of the Thames and then North of the Thames, anywhere they are called to go, are invaluable.
The Government propose that this wonderful midwifery service should be put on a borough basis, a limited basis. And, somehow, they are going to do this with a limited number of midwives—and more will be needed when the service is put on a borough basis—within eleven months. For the sake of the mothers of London, if for nobody else, I ask the Government to pause and think about this. In speaking about the limited number, I would remind noble Lords that these women must have time off, and we need more of them so that they may have their weekly, monthly and annual leave, and sick leave. To secure that an adequate number of midwives are on call at times when they are not on duty, it has been necessary to bring midwives into self-supporting groups. This is how it is done. They have a group of eight or twelve midwives, and these relief arrangements probably account for the Council's ability to recruit sufficient midwives from all parts of London. But no guarantee can possibly be given that this situation could be maintained if the service were fragmented into twelve boroughs. And that, of course, is what is intended.
Moreover, central control has also been essential for coping with such matters as emergency calls at night and at weekends. Maintenance of a 24-hour supervision is essential in London, because the large floating population for whom last-minute arrangements have to be made bring frequent calls for assistance. These calls go on day and night, from doctors, police, ambulances and the general public. When this service is placed on a borough basis, I find it difficult to see how these midwives can be arranged in groups. And the group attracts the midwife, because she realises that she will be carefully looked after. I understand that only two maternity hospitals in London are aiming to limit bookings of maternity patients to define a catchment area which would not overlap other hospitals' catchment areas. This is a complication. It would

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be better for all maternity hospitals not to define a catchment area, and for them to operate as midwives operate and be prepared to take mothers from anywhere and to serve any district. Therefore, it is a complication, especially when an increasing number of hospitals are planning schemes for the maternity nursing at home of patients discharged forty-eight hours after delivery.
While noble Lords are listening with great sympathy to this case, I should like to talk about that aspect of midwifery to-day. I think it is deplorable that there is such a shortage of midwives and a shortage of maternity accommodation. We heard the Minister of Health on the radio last night telling the country that everything was well; yet the shortage is such that the women of London have to come out after their confinement forty-eight hours after delivery. Schemes of this kind will increase the turnover of maternity beds. That is the whole purpose. We are so short of beds that we have to introduce schemes of this kind. This facilitates booking in advance by hospitals of more mothers who now have to rely on the Emergency Bed Service for a bed after labour starts. Last year in London there were 2,162 women in labour who had nowhere to have their babies, and who had to telephone for emergency beds. What I am describing now is a service operated by the L.C.C. I fail to see how, in a London borough, a service of this kind which will meet such emergencies can possibly be introduced in eleven months.
The unique London position is illustrated by the fact that the estimated number of midwives needed for a reasonable domiciliary midwifery service in London (this is given by the Royal Commission on Local Government) is double the actual number employed in London. I think that makes my case. In no circumstances do I exaggerate; if anything, I am guilty of under-statement. The Royal Commission say that we want double the actual number employed in London. Now it is proposed to fragment the service. Where the midwives are to come from, I do not know. I suppose that what will happen is what always happens in this field where these women serve so selflessly, and where there is such an acute shortage that it is impossible to meet the needs, leading to the
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adoption of methods such as I have described, which means turning women out of hospital within forty-eight hours: I take it that we shall double their salaries. That, I suppose, is the only way of increasing the numbers at the moment, and to attract younger women in.
I have dwelt on the midwifery service in order to emphasise my point. The other service I want to talk about is the mental health service. With the exception of one borough, the metropolitan borough councils have never exercised responsibility for the mental health service. In the area of the administrative County, personal health services have been developed on a county basis, and facilities such as training centres, hostels for the mentally subnormal and for the mentally ill, hostels for infective tuberculous men and the recuperative holiday homes, are not available to the proposed new boroughs on any kind of geographical basis. Here, again, services are available for the mentally ill; and again one may say that in one area there will be people who suffer from some mental disability, and perhaps there may be more in another area. Once more I want to emphasise the importance of having somebody at the centre directing these people to these various hostels.
I have mentioned, for example, infective tuberculous men. No doubt noble Lords know that tuberculosis is now being found in much older men with chronic coughs, which the doctors have dismissed by saying, "He has a cough because he smokes too much." Now further examinations are being made, and we have found that there are in our midst a large number of infective tuberculous men. As a result, special hostels have been set up for them. We have not got these hostels in every borough, and therefore I believe we should postpone these arrangements for, let us say, five years, while we plan for these various groups.
Noble Lords may say, "Let us try." But, of course, we have tried before. This is not something new. I would remind noble Lords that we tried in 1930 and in 1948, when there was integration and not fragmentation; when the transfer to authorities already well-established meant that everybody felt

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confident that things would go well. But that was not the fact. There was tremendous difficulty about transferring these functions in 1930 and 1948; and if these stages under the proposals of the Bill are carried out to a timetable there will be a grave risk of a breakdown in the local health services in the inner London area. In the short time allowed under this Bill, eleven months, entirely new authorities would require to have ready for work a whole pattern of standing orders and committees. They would have to recruit and retain staff, without the advantages of central allocation and training establishments.
May I say this on the subject of recruiting and retaining staff? I put a specific question to the noble Lord, Lord Newton, the other day on the subject. I asked whether, in this whole field, he could tell me of one service, from the home-help to the more technically trained worker, where there was any redundancy. In the whole of these services that I described there is a shortage of workers of every kind; and so when the boroughs come along and advertise for people for all these various jobs—and they are not very pleasant jobs—where will they come from? Surely we should anticipate this legislation. Surely at this stage we should invite the boroughs to get their staff. We should invite them to make all the preparations and then, when the time is ready, make the transfers. I ask noble Lords to recognise that there should be a little marking time at this stage. Let us pause and consider the situation. If this work is to be undertaken efficiently, it should be recognised that it is of paramount importance that central control is maintained for an initial period. I beg to move.
Amendment moved—
Page 63, line 21, leave out (" subsection (3) ") and insert (" subsections (3), (4) and (5).").—(Baroness Summerskill.)
6.5 p.m.
LORD NEWTON: The purpose of the noble Baroness in moving these four Amendments is to provide more time for the inner London boroughs and the Common Council to assume the powers and duties of local health authorities. Under the Bill as it stands they will do
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so on April 1, 1965. What I want to try to do is to convince your Lordships that there is no real need to provide for a delay, as the noble Baroness thinks there is. It is implicit in these Amendments that all the London boroughs shall become local health authorities eventually: on that point there is nothing between the Bill as it stands and the Amendment. It is merely a question of when the inner London boroughs—and the inner London boroughs only—shall become the local health authorities, because these Amendments refer only to the inner London boroughs.
I suggest that there is no reason, so far as we can see, for distinguishing in this way between the inner and the outer London boroughs. Of course, a changeover of this size presents problems—I do not for one moment deny that. It would be surprising if such a change did not present problems. But the problems are essentially administrative ones, and do not affect the services as they are received and appreciated by the beneficiaries.
LORD SHEPHERD: Would the noble Lord include in "administrative" the sharing out of staff? Does he regard that as administrative?
LORD NEWTON: Yes; I would say that that was administration.
We feel that the new boroughs will be able to face these administrative problems and overcome them, and that there will be time enough for the necessary formal arrangements for transfers to be made between the election of the new borough councils in May, 1964, and April 1, 1965. Indeed, there is much preparatory work which can be done before the new borough councils come into existence. In fact, preliminary consultations with the present authorities about the problems of the transfer of health and welfare functions have begun, and outlines of the transfer can be worked out in discussions on the joint committees of existing authorities, including members appointed by the existing county councils which are provided for in Clause 83 of the Bill.
The London boroughs will be taking over the services as a going concern with all their premises, and with the skilled staff working in them. Clause 45(2) of

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the Bill places on each of the London boroughs, and the Common Council, a duty to continue to provide on and after April 1, 1965, local services—apart, of course, from the ambulance service—corresponding to those provided immediately before that date by the present local health authorities. The London boroughs are not required to introduce suddenly, on April 1, 1965, something different from what will exist on March 31, 1965. Nor are they required to produce new formal proposals for the running of the services on April 1. They will be able to frame them later, after they have had some experience of running the services under the existing approved proposals.
The development of the services on a true borough basis, with all that that implies for the authority's capital building programme and future plans is, I would suggest, a matter to be dealt with after, and not before, the changeover. The full range of personal health services (and we are talking about personal health services now) is not completely provided at present in each of the new London borough areas. But this is not a new problem. It is due in part to the fact that some of the health services—and I am thinking particularly of the mental health services—are still at a relatively early stage of development.
The problem in inner London will be similar to that of outer London and in other conurbations in the country. The answer to it lies in the local health authorities reaching agreement among themselves to sharing or other joint use of staff and premises as is necessary. This kind of arrangement for mutual aid has always been found useful in the National Health Service and, indeed, explicit provisions for it exist in Section 63 of the National Health Service Act, 1946, which enables a local health authority to permit its premises, furniture and equipment to be used by another local health authority on such terms as may be agreed. Clause 5(3) of this Bill supplements this power by giving London borough councils and the Common Council wide general powers to reach agreement with one another on the joint use of staffs, plant and equipment. Some specialist staff may hold joint appointments with more than one local authority or with a local authority of a hospital. Sharing of this kind is a
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recognised feature of the Health Service in many parts of this country to-day.
LORD MORRISON OF LAMBETH: Does the noble Lord think that these joint authority arrangements for mutual borrowing of staff, with all the possibilities of friction in the circumstances of a more or less continuous built-up area like London, is as well done with all these clumsy mutual arrangements as with having a straightforwardly-operated service that can be broken up within itself? Is it not a fact that it is silly to go on like this with boroughs going on jointly borrowing from each other? Is it not merely that the Government have such an utter prejudice against the Greater London Council.
LORD NEWTON: I know that the noble Lord, Lord Morrison of Lambeth, feels strongly about this and distrusts the Government's intentions and even their motives.
LORD MORRISON OF LAMBETH: I do.
LORD NEWTON: But I just do not agree with the noble Lord that the sharing arrangements will cause friction. They are common throughout this country today and they work well. That is why we are providing for them in this way in this Bill.
LORD SHEPHERD: Where is there a similar example in the country to what the noble Lord proposes?
LORD NEWTON: I could give the noble Lord, Lord Shepherd, a list of the sort of sharing arrangements which exist now.
LORD MORRISON OF LAMBETH: Tell us now.
LORD WILMOT OF SELMESTON: This is a very interesting point. If there is a comparable, huge, built-up area with services shared in this way we should like to know which one it is.
LORD NEWTON: The point is that the degree of development, shall we say, in the areas which co-operate with each other and have shared services is, quite honestly, immaterial.
LORD SHEPHERD: You just said that you are basing your case on practical experience.
LORD NEWTON: May I be allowed to continue with my argument? What I am saying is that throughout the country there are sharing arrangements for certain services which, because they are specialised services, cannot reasonably and do not need to be provided by each local health authority. That is the same in a wholly urban area or an area which is partly a town or a city and partly rural round about.
BARONESS SUMMERSKILL: May I ask the noble Lord about the midwifery service? He has spoken about the sharing. Could he just tell the Committee how a borough proposes to get a midwife? If the London County Council which now give these services find it difficult to get midwives, how are these twelve boroughs going to get them?
LORD NEWTON: That is quite another problem.
BARONESS SUMMERSKILL: It is not.
LORD NEWTON: If there is a shortage of midwives—and I would not agree with the noble Baroness when she stresses this so much; they have been coming along in increasing numbers every year; but, for the sake of argument, let us assume that there is a shortage—there will be a shortage irrespective of how the local authority health services are organised.
BARONESS SUMMERSKILL: Surely the noble Lord will agree with me that if there are twelve boroughs working as self-sufficient units they will take more midwives than the group of eight or six which the L.C.C. establish, which will go into these twelve boroughs.
LORD NEWTON: I do not think we had better go on arguing about this. The number of people at any one time in any one part of the country needing the services of midwives will not be affected by how the service is organised. The noble Baroness said in her speech that nobody can predict when a child is going to be born.
BARONESS SUMMERSKILL: That is the whole point. If you have a centralised service and a confinement is booked for a hospital (shall we say?) in the south of London or for a domiciliary midwife to undertake, and it just happens that the woman is a month premature and is visiting
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someone in the north of London, she telephones the L.C.C. and a midwife is then sent to her wherever she may be. So the noble Lord cannot really talk about this as an engineering feat or a piece of exact science. Having babies is something which has to be provided for by a central authority.
LORD NEWTON: We do not agree about this.
BARONESS SUMMERSKILL: You have never had a baby.
LORD NEWTON: We are in fact debating an Amendment the purpose of which is to distinguish the inner London boroughs from the outer London boroughs, and they will be approximately the same size whether inner or outer. What the noble Baroness does in her Amendment is to say that there will be a period of delay in inner London but not in outer London, and what I have partly been trying to do up to now is to suggest to the Committee that there is really no good reason for distinguishing between the two groups of boroughs. The noble Baroness is proposing a gradual process of delegation and transfer. I should like to suggest there is a danger that if that process were adopted then personal health and welfare services might be fragmented temporarily. What we want to see—and this is one of the arguments for the Bill—is that the administration of the health, welfare and children's services, housing and environmental health should all be concentrated in the hands of one authority, because we consider that it is within this sort of administrative framework that the domiciliary team can best develop, and that it would be a great pity to delay in any way the development of this vital concept of the domiciliary team.
There is a second disadvantage, as I see it, in these Amendments, that they will prolong still further, over quite a long transitional period of five years, the personal uncertainties about their future which many of the staff of these services may already be feeling. Thirdly, I think that to transfer gradually all the staff which would be necessary under these Amendments would have undesirable effects on the efficiency of the services. Staff, including headquarters staff in the health departments of the present authorities, should, in our judgment, go where they are needed at the outset and should

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go with full responsibility. If, to begin with, health functions were only delegated to the new boroughs and not fully transferred the Greater London Council would need a headquarters staff of its own through whom it could exercise its general responsibility for the services; and it would be known that such arrangements were temporary and that they could not last for more than five years. I should have thought that this would be a confusing situation which would operate against efficient administration as well as being very unsettling for the individual members of the staff concerned.
The Greater London Council will itself be a new body, whose members and officers, though with long experience of county council work, would still be settling down to work with one another to carry out the new body's functions. It would have only a temporary responsibility for the health services, apart from the ambulance service, and as caretaker it would have less incentive, in our judgment, than the, new boroughs to develop the services well and actively. We believe that a temporary arrangement, a mixture of upper-tier administration with a temporary period of gradual delegation over five years, as proposed, would not be in the interests of the best development of the services or of the staff who have to operate them. It is for those reasons I must advise the Committee they should not accept the noble Baroness's Amendment.
6.21 p.m.
LORD WILMOT OF SELMESTON: While we all thank the Minister for the painstaking attempt to defend what is proposed here, I cannot say that to me he has carried the slightest conviction. There are 33 new authorities called upon to provide this complex range of vital public services, all of which are working now, not wholly satisfactorily because they want more staffs, but with a degree of excellence which is admirable. The new authorities are not elected until April, 1964, and these new functions devolve upon them within a year. Everybody who knows about this problem, everybody who has had actual experience of the work and remembers the previous transfer of functions, will know that that is not enough. If it is not enough, the services will break down or partially breakdown, and if they do break down we
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have only to look at the list of things they purport to do to realise the horrible degree of hardship to which pregnant women, mentally ill people, sick people, children, all the most deserving and most needing of care, are going to be submitted. Why? Not because of any overriding, physical, compelling reasons, but because the Government will not now allow adequate time for the new arrangements to function. I think if the advice of the great authorities, such as the London County Council and other authorities, who have carried this heavy responsibility for so long, is to be wantonly disregarded on purely Civil Service reasons of better administration—
LORD SHEPHERD: It is not for Civil Service reasons.
LORD WILMOT OF SELMESTON: For bureaucratic or possibly political reasons. I do not like saying that, but some think they are political reasons. All these services are to be jeopardised, set back and crippled, and the Government will find it very hard to defend themselves to the country. I cannot believe it is not likely that a year hence the Government will be forced to come to Parliament to ask for time to delay the full operation of these provisions. I beg the Government now, at this time, to look at this all again, to consult with the great authorities whose services we have been enjoying, to think again and find time to redraft these clauses, so that there is time, at any rate, to do all we can do to see the services function.
LORD SHEPHERD: As I listened to the noble Lord, Lord Newton, my mind went back to the three aircraft that during the war defended Malta—"Faith", "Hope" and "Charity". Faith and hope appear to be the Government case, but the mantle of charity I think must fall on the Opposition for not attacking the Minister, as I think in many ways we should be entitled to do. My noble friend Lord Wilmot of Selmeston suggested that this was a Civil Service arrangement. I corrected him. I do not believe it is a Civil Service arrangement; it is a political arrangement, which we have said time and time again. I would ask the noble Lord, Lord Newton, this: has there been any consultation with the civil service of the local authorities as

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to whether the Government proposals could, in the time specified in this Bill, be carried out efficiently, and that in no way will the services to the community be detrimentally affected? Can the noble Lord say that? My information is that the officers of the local authorities are gravely concerned on how the provisions of this Bill will be implemented.
We are not dealing only with health. That is the subject we are dealing with this evening, but within the time specified in this Bill the local authorites will be called upon to take on many other duties. The resources of the boroughs will be strained. These men are merely human. They also have a private life. I believe, not only in justice to the community, but also in the interests of those who have to administer this Bill, the Government should take advantage of the Amendment that has been suggested by my noble friend. We do not suggest postponement for five years. What we have said, if my understanding of the Amendment is correct, is that the transfer of these powers shall be effected by five years, and that the local authorities, with the Greater London Council, will decide the time and the place for the transfer.
I said earlier that the Government's case rested on faith and hope. The Minister did not give one good example of how these provisions can be effected within twelve months. He said there were throughout the country regularly recognised examples. He then, on being challenged, said that there are special arrangements. What we are now dealing with are not special arrangements; they are occurrences that happen every day—as my noble friend Baroness Summerskill said, every minute and every hour. Therefore we must see, when we have the arrangements suggested by the Minister that boroughs will be able to share the facilities that are available, that those resources are being used to the maximum capacity right through the day, right through the week.
I believe that in the case of the midwives the resources, even of the strong borough, will be so strained that they will not be able, even if they are willing, and I believe they will be willing, in an emergency to come to the aid of the weaker borough. They would not have the staff or the facilities available. The
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noble Lord said he disagreed with my noble friend Lady Summerskill that there were insufficient midwives. The facts are clear. There is a grave shortage of midwives in London if we are to provide the right service to which the community is entitled. The noble Lord may contradict me. Let us have the figures. My information is that there is this weakness, that the midwives are very much overworked, and that they have great difficulty in responding to all the calls upon their time. I say to the Government, you are embarking on these proposals; you believe in them. If you go forward and have a serious breakdown of administration, the responsibility, the smear, will be on your name and your Party for ever.
6.30 p.m.
LORD WALSTON: The noble Lord has been trying to convince the Committee that it is more efficient for the midwifery services to be carried out in relatively small units rather than from the larger centralised units, as is at present the case. When he returns to his Ministry he will be reminded there, if he does not remember it already, that his own Ministry has, in the interests of the efficient carrying out of medical services, been amalgamating various hospital groups so that the smaller hospital groups become larger in the interests of efficiency. I think that if anybody challenged the noble Lord on that latter plan he would easily be able to defend himself, because, in spite of certain difficulties of administration and of grouping these hospitals together, with their local loyalties and personalities and so on, it is undoubtedly a far more efficient way of administering the Health Service, particularly with the shortage of staff from which all forms of medical service suffer. It is not surprising that he has found the greatest difficulty in coming here this afternoon and trying to persuade the Committee that the exact opposite is the case in this particular region of maternity and midwifery services in the London area, because it is manifestly against all the experience of people with any knowledge of administration of any kind whatsoever.
Why is it that in industry we see firms growing larger and larger? We do not see them splitting up in the interests of efficiency. We do not see

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people de-pooling their transport because they find it cheaper and they have available more cars and lorries. Of course that does not happen. We all know that, if you are short of any particular material (if I may refer to a midwife as material "), within reason the larger the unit you have the more efficient will be the use that you can make of that particular unit, either as a person or as a piece of machinery. The noble Lord, I believe, has some experience of agriculture. He would certainly agree with me that it is much easier to run a farm of 1,000 acres with five tractors, than to split that farm up into five groups each of 200 acres, with one tractor on each. That does not need any argument. How is it possible, then, for him to come along and try to persuade your Lordships that it is going to be more efficient to run this service when it is split up into a series of smaller units?
As is well known, we on this side of the Committee feel strongly that the whole concept behind this movement is bad and wrong. We could, I suppose, have been obstructive over the matter. We could either have said that we will oppose tooth and rail every single one of these proposals, with a point-blank counter-proposal opposite, negative; or we could have washed our hands of the matter and said: "This is the way you want it; get on, and do it the best way you can; and get out of your own mess when you have got into it, as undoubtedly you will." But we have not said that. Unhappily, and unwillingly, we have accepted tie fact that this Bill will, presumably, become law, and we are now doing our best, not for the sake of the Government but for the sake of the people who are going to suffer under these new regulations, to see that the inefficiencies and the hardships which undoubtedly and inevitably will stem from these proposals are reduced to the minimum.
For that reason, my noble friend has put forward this most modest and essentially reasonable proposal that time be given for this most difficult transition from the established to the new, something which is not automatically bad but is always difficult—a transition away from the larger centralised group to the smaller decentralised group; away from the method which, in each industry and in
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every walk of life, is universally accepted as being the best and most efficient, to the one which is universally accepted as being the worst and the least efficient. All we are asking is that time be given now so that that difficult transition can take place with the least possible dislocation to those people who are engaged in this essential servile, and with the least possible hardship to those who should be benefiting from it. I do not think that that is a great thing to ask. I think it is the least that we can possibly do. I sincerely hope that if the Government still remain adamant, still refuse to budge on this purely administrative and helpful Amendment, at least there will be sufficient noble Lords opposite who will support us, not in the interests of the London County Council, not in the interests of any particular Party, but solely in the interests of the women and of the midwives themselves.
6.36 p.m.
LORD MORRISON OF LAMBETH: I thought that perhaps one noble Lord opposite was going to rise to reply, but as that did not happen I should like to add some words to this debate, in the hope that then we shall have a further reply, although I know that there has already been one on behalf of the Government. This is a simple issue: whether all these services must forthwith, in April or May, 1965, whichever month it is, become the services of London borough councils, or whether, as under this Amendment, they should be put under the Greater London Council, with a transition period during which their functions will be exercised by the borough councils, in order that they can be organised in an enlightened and progressive way. Because otherwise the boroughs are going to find themselves suddenly landed with all these functions; their Committee system will not be properly operating; their standing orders will not have been properly made, and there will be considerable difficulties over administration. In fact, I think there is going to be such a lot of chaos in London local government under this Bill that, whoever wins the first local authority election stands a good chance of losing the second. I mean that. I do not know whether it will be a good thing to win that first election or not. But we cannot stop the Labour Party from trying to win; they

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are bound to try, and they have already had a great amount of success.
I said in the early stages that this Government was mad. That was before the Bill came before the House. I should like now to use a stronger word and still be in order. But they really are the last word! Here is the poor Minister, Lord Newton, having to speak for the Government. I do not know whether the Government have forced this policy on their advisers in the Department—I suppose in this case the Ministry of Health—or whether the Department, the higher civil servants in the Department, have, persuasively or otherwise, imposed this policy on the Government. Nobody really seems to be able to defend it. Either the Ministers have badly briefed the civil servants, or the civil servants have badly briefed the Ministers.
The Minister of Health last night appeared on television. He did not say anything about this. How wise he was! He said, more or less, "I will leave this to my poor Parliamentary Secretary in the Lords." He kept clear of it. He did not receive any question about the effect of the London Government Bill on the Health Service. He dodged it. Yet here was his chance to defend in public the destructive character of this Bill. Some of these services were offered for inclusion as metropolitan borough council services; some were not. I think the mental health service is really inappropriate for the London borough councils. So, I think, is the midwifery domiciliary services and probably the problem families, and maybe some other things as well. The Government have a prejudice against the present London County Council merely because it has a Labour majority and merely because the Government wish to gerrymander, which they are doing; it is true that they hate the London County Council because it has a Labour and Socialist majority. The Tory party think it is entitled to complete possession of the metropolis, not only the Common Council of this ancient City but the whole of it.
The curious thing is that when the Conservatives had a majority in the House of Commons—I am not talking about this place; they have always had
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a Conservative majority in this place, so far as I know, and as things are going they probably always will—and on the London County Council, nobody could stop them from conferring the new powers in nearly every case on the London County Council. They did not confer them on the metropolitan boroughs, because half of them or more were Labour while the County Council was Tory. Political bias again. As a matter of fact, when the Local Government Bill of 1929 was under consideration—that very great Bill for which Mr. Neville Chamberlain was responsible—I led a deputation of London Labour and municipal people and the London Labour Party executive to meet Mr. Neville Chamberlain. Far from this story that we are the enemies of the boroughs, which is not true, we urged the case then, in view of its individual and personal character—which, heaven knows, it was—of public outdoor assistance. If anything was individual and personal, it was that, as the poor souls have cause to remember, under Tory boards of guardians. We had a scheme whereby it could be administered under the metropolitan boroughs with appropriate provision for equalisation of the rates, so far as it was possible to get it. Mr. Neville Chamberlain rejected the suggestion. I am not wishing to be overcritical about his decision because there was something to be said for it. He did not want the borough councils to administer outdoor assistance and he insisted on transferring that function to the County Council.
Why are this Government walking around, saying they want the personal services to be under the borough councils when the history is that formerly when we had a Tory Government they said, "All power to County Hall"? If ever there was a personal service it was this outdoor relief, but the County Council managed it. They appointed a public assistance committee and then they cluttered themselves up with about 99 co-opted area committees and subcommittees, which in due course we removed and for which we substituted adjudicating officers with a policy settled by the Council but with a right of appeal by the applicant against the adjudicating officers, which enormously simplified the administration.

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We really are good at administration. We really know about local government, which is more than any of these Ministers do. The Lord Chancellor is afraid to come into Committee on this Bill that he introduced. The noble Viscount the Leader of the House is afraid, because he is funking it and he is leaving it to these poor souls, together with the Parliamentary Secretary to the Ministry of Transport earlier on, to take on the heat and burden of the day. I sympathise with them. They are having a rough time, and I apologise. We like to be kind to people, but what can we do? They are the only ones we have to shoot at. We cannot have the civil servants here, and therefore we must have a go al: these poor souls.
That administrative scheme worked until the National Assistance Act took over and it became a State function. I am not sure that this Amendment does not go too far.
SEVERAL NOBLE LORDS: Ah!
LORD MORRISON OF LAMBETH: I mean too far in the wrong direction, not in yours—well, a little bit in your direction. However, we are willing to compromise when it is necessary and therefore the provision is a five years' transitional period and then it goes to the London boroughs. On the whole we agree with this Amendment, but some of these services, at any rate, ought to go to the Greater London Council and stay there. Some of the health administration of the London County Council, in so far as it is doing health administration, is done directly from the centre, such as, I think, the midwifery service; but a lot of it is done from the nine divisional officers whereby one gets administrative decentralisation with sub-committees of the welfare committee sitting in areas of this sort, and thereby there is an appropriate decentralisation. It is not fair to assume that the London County Council is an over-centralised bureaucratic machine. It is not, and I am sure that the Greater London Council will be open to the same kind of considerations—perhaps even more so—because of its bigger area.
These provisions in the Bill are utter insanity; sheer, selfish, Party political obstinacy on the part of the Government, and history—especially the history of public health administration—will say
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some hard things about the Ministers who defended these provisions; and I hope that the Ministers here (the only ones I can talk to) will think of these things at night when they go to bed, and I hope that their consciences will allow them to sleep.
6.47 p.m.
LORD NEWTON: I certainly think about these things before I go to bed at night, and as a result of it I do sleep rather well. I thank the noble Lord, Lord Morrison of Lambeth, for his sympathy. He said that I am a poor soul; I may appear to be one, but I do not feel one. I am glad the noble Lord intervened, because the whole purport of his argument was to show that in his view the London boroughs should never at any time—
LORD MORRISON OF LAMBETH: No.
LORD NEWTON: Oh yes it was—should never at any time he made local health authorities. That was what the noble Lord, Lord Morrison of Lambeth, was arguing; and that is a point of view which I know he and many others hold.
LORD MORRISON OF LAMBETH: What point of view is that?
LORD NEWTON: The purport of the noble Lord's argument, as I listened to it, was that at no time should the inner London boroughs, or the outer London boroughs for that matter, become local health authorities.
LORD MORRISON OF LAMBETH: What are we to do with a noble Lord who talks like that? I have told the Committee before that the London County Council offered years ago to transfer to the metropolitan boroughs maternity and child welfare and some other services, and I said this afternoon that some of these services might be suitable for the local authorities and some better done by the Greater London Council. I want to be nice to the noble Lord, and I was considerate to him in what I said; but why does he get up and talk such sheer nonsense within about three minutes of the time I have been saying the exact opposite, and charge me with wanting to take over the health functions? It is not true.
LORD NEWTON: What I concluded from the noble Lord's remarks was that

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he did not think London boroughs should be local health authorities at any time. This Amendment does not provide for that: it provides that by November 1, 1970, the inner London boroughs shall be the local health authorities. What I was concerned to argue in my first speech was that if it is agreed that the London boroughs should become the local health authorities, it is better that they should become so at once; that they should take on responsibility for all the health and welfare services at the same time; and that if it is done piecemeal, gradually, there will be a danger of fragmentation of the various services, which cannot be a good thing. If the Committee believe, as I believe and as the Government believe, that it is desirable that all the personal services—that is to say, the health and welfare services, housing and education—should be exercised by the same authority because they are intimately related (because the housing conditions in which a child lives affect his ability to learn at school, because how he gets on at school affects his health and because how his health is cared for affects his ability to get on at school), then you are forced to the conclusion, as was the Royal Commission, that all these personal services should be administered by the same authority.
LORD SHEPHERD: If the noble Lord—
LORD NEWTON: No; I must be allowed to make one speech without being interrupted. If one believes these things, as we do, then I say now, as I said in my first speech, that it is desirable that the local authorities concerned should take them all on at once. May I repeat, as I said earlier, that the inner London boroughs will take on these services as a going concern from the London County Council, with all their premises as they are and with the skilled staff working in them. Discussions about the transfer are starting, because the London County Council is now cooperating in considering solutions to the problems of transfer, and there is good reason to expect that very good progress will be made from now on in identifying and solving the problems of transition. I can only say again, as I said in my first speech, that I have no doubt at all that
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it will be possible, between now and then, to make the necessary arrangements.
LORD SHEPHERD: I apologise for interrupting the noble Lord—he has been very good; he has taken it in very good part—but he said, if my hearing was correct, that health and education all play their part. Is that right? He said that the education of a child depends upon the health of the child. That is correct, I understand. We have never dissented from that. But what are the Government doing in regard to education? They have said, "We will not fragment it now; we will keep the inner boroughs together under a new education authority, under the Greater London Council."
LORD NEWTON: I talked about it for a great many hours on Tuesday afternoon and evening.
LORD SHEPHERD: But if the Government accept it in the case of education, why do they reject it completely out of hand here? Because there is undoubted concern among those who are going to be called upon to administer these services, the officers, whether they will be able efficiently to carry them on, with this break-up in such a short time. We do not ask for the change to wait for five years: we ask for a period within five years.
LORD WILMOT OF SELMESTON: I think it is most necessary that we think carefully before we finally part with this matter. I have supported these Amendments in the hope of getting some general improvement in the Bill, but the Bill, in my view, goes in some regards too far in the wrong direction. If one looks down this list of services one finds there are some that are pre-eminently suitable for central administration, and that is true of none more than the midwifery service, the maternity service and child welfare. Here is an elaborate pattern of midwifery, hospitals and one thing and another, all integrated and run by the central authority, and yet with local antenna; going out to where the service is needed. This kind of service is admitted in the Bill to be suitable for central administration.
Take, for instance, the service with which I was so long connected—the London Fire Service. Fires occur in all the different parts of the Greater London

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authority's area. But it is not proposed to fragment this service and to have it run as it used once to be, by small local borough authorities. It is retained as a centralised, integrated service, operating in the regions from the local stations. Surely, the same should be true of the maternity and child welfare services. They need a central control with immediate powers to transfer people as quickly as possible where they are wanted. Although at first sight it may seem to be a strange parallel, in fact the administrative problems are very similar. You maintain your services in the localities, you have a centralised administration, and you are able to give aid where it is wanted in the
Resolved in the negative and Amendment disagreed to accordingly.
7.6 p.m.
LORD STONHAM LORD STONHAM moved, in paragraph (1), to leave cut subsection (3) "and insert "subsections (3) and (4)". The noble Lord said: I beg to move Amendment No. 163A and I hope it will suit the Committee's convenience if I discuss with it Amendment No. 166A, which is in fact the main Amendment. During the debate we have just concluded the noble Lord, Lord Newton, reminded us, quite rightly, that in that Amendment we were asking merely that the services to which the Amendment referred should not go to the London
quickest possible time because you have someone in the centre to whom all know they can apply. I ask the Minister, before we part with this Amendment, to represent to the Government that further examination in detail of the very varied services which are at present maintained by the London County Council should be made and that they should be considered in their nature before they are broken down in this way.
7.0 p.m.
On Question, Whether the said Amendment (No. 163) shall be agreed to?
Their Lordships divided: Contents, 19; Not-Contents, 53.

CONTENTS

Alexander of Hillsborough, E.

Lawson, L.

Shepherd, L.

Archibald, L.

Listowel, E.

Stonham, L.

Attlee, E.

Longford, E.

Summerskill, B.

Burden, L. [Teller.]

Lucan, E. [Teller.]

Walston, L.

Champion, L.

Morrison of Lambeth, L.

Williams, L.

Crook, L.

Shackleton, L.

Wilmot of Selmeston, L.

Henderson, L.

NOT-CONTENTS

Abinger, L.

Ellenborough, L.

Mersey, V.

Albemarle, E.

Elliot of Harwood, B.

Mills, V.

Amherst of Hackney, L.

Ferrers, E.

Milverton, L.

Ampthill, L.

Fraser of North Cape, L.

Molson, L.

Balfour of Burleigh, L.

Goschen, V. [Teller.]

Monck, V.

Bossom, L.

Hailsham, V. (L. President.)

Newton, L.

Boston, L.

Hanworth, V.

Remnant, L.

Boyd of Merton, V.

Harcourt, V.

Rochdale, V.

Brocket, L.

Hastings, L.

St. Aldwyn, E. [Teller.]

Chesham, L.

Hereford, V.

Soulbury, V.

Coleraine, L.

Hertford, M.

Suffield, L.

Conesford, L.

Howard of Glossop, L.

Swansea, L.

Cranbrook, E.

Howe, E.

Swinton, E.

Cullen of Ashbourne, L.

Ilford, L.

Teymham, L.

Danham, L.

Lloyd, L.

Tweedsmuir, L.

Derwent, L.

Lothian, M.

Wellington, D.

Dilhorne. L. (L. Chancellor.)

Margesson, V.

Wolverton, L.

Dudley, E.

Massereene and Ferrard, V.

boroughs for a period of five years but that eventually they should go to the inner London boroughs, even under our Amendment, just as they will with the Greater London boroughs now.
The Amendment I am moving now deals only with mental health services and it does not propose a limited period; it proposes that these mental health services should remain with the Greater London Council indefinitely. There is that very important difference. We feel very strongly that, whatever justification there could be for some of the services we have discussed going to the London boroughs, there can be no doubt at all that the mental health services must

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stay with the larger local authority if they are to be as good as they should be from the point of view of the people who make use of them; if they are to be administratively efficient; and if they are to be economic from the point of view of the taxpayer.
The mental health service in its present form is a new and developing service in the community. One of the main effects of the 1959 Mental Health Act is that people in very large numbers are coming out of the mental hospitals and into the community. Unfortunately, about 80 per cent. go back again rather too quickly; but that merely reinforces the argument now being put forward that this service would be greatly hampered by fragmentation among the inner London boroughs. The Report of the Royal Commission on Local Government in Greater London points out that while mental health is moving away from hospitals towards community care, that care must nevertheless be closely linked with the hospital services. The Report demonstrates the need for large authorities.
I will quote briefly from the Report:
" So many changes have taken place since 1948 in the medical and local aspects of the care of parsons suffering from mental disorders, and so many more are about to take place as the result of the 1959 Act, that it is difficult to assess the position of the local authorities. The trend, as in other fields, is away from hospitals towards community care, and much will depend on local authority co-operation in the transitional period. Local health authorities have had considerable experience in the care of mental defectives but little in the care of the mentally ill. In many areas welfare officers have also acted as "duly authorised officers" or mental welfare officers or both. The 1959 Act requires local authorities to appoint mental welfare officers with a wider range of duties, but this is likely to take a considerable time to achieve if they are to have suitable training.
" The expert medical staff required by the local authorities will best be secured by appointments of consultant psychiatrists jointly with the hospitals. For this reason, combined with the need for different types of residential units, training centres and day centres, it would seem to be desirable for mental health work that the local health authorities should not be too small or too numerous."
The noble Lord was talking about authorities sharing services. I did not on that occasion interrupt him, but the English counties came into my mind—Devon, for example—where all kinds of
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mental services, which we are now discussing in regard to the Greater London Council and London boroughs, are organised by the county council. If we go through England, we find that it is largely the position that the county councils provide this whole range of community services, with the exception of the major cities.
The Mental Health Act, 1959, did not generally alter the character of the service, except in the direction of the provision of residential places by local authorities. The old classification of persons of unsound mind and mental defectives went, and the mental health services are now charged with the care of the mentally subnormal and the mentally ill. In providing for the effective care of the mentally subnormal, it is essential that the hospitals and local authorities must work closely together. Difficulties are created when there are several local authorities in the catchment area of an individual mental hospital.
One of the big difficulties about the Bill is that in many cases the mental hospital will be nowhere near the borough which is its catchment area. Perhaps the noble Lord, Lord Newton, is aware that the catchment area for Long Grove Hospital, in Epsom, is in the East End of London, the boroughs of Shoreditch, Finsbury, Hackney, Stoke Newington and Poplar, which are 18 to 20 miles away. These boroughs will be in three of the new London boroughs. I would ask the noble Lord, Lord Newton, to deal with this specifically. How can these three boroughs deal efficiently with a mental health service when the catchment area is 25 miles from the hospital? People come back from hospital to these three boroughs, not a single one of which has the service to deal with them. It is all very well for the noble Lord to say, as he said earlier, that they will take over the premises and the staff. In some of the London boroughs, even some of the bigger boroughs, there are no premises and no staff at present. I think the noble Lord is aware that I am President of the Psychiatric Rehabilitation Association. With the help of the L.C.C., we have to find places for people, who come into the community from mental hospitals and still need continuing care. It is no use saying that the premises and staff are there, because they are not.
I am also much concerned about mentally subnormal children. Their number is small compared with the educationally normal, but it is a large number in the aggregate. When they are spread between all these boroughs, it is impossible, from the staff point of view, from the premises point of view and from the cost point of view, to have a proper service for all these young people. They have to be educated in small classes under the specialised care of a dedicated teacher, and if they make some progress they are passed on to a senior training centre. Eventually they are able to do jobs and take some sort of place in the community. The noble Lord is not going to tell me that any one of the boroughs which it is proposed to set up is going to have all these facilities within its confines. The noble Lord may say that they can be transferred, and transport will be provided. I will deal with that later, because there is no provision for transport. The new boroughs will attempt to put these things in watertight compartments, so as to find more and more money from the ratepayers and to get more grants in order to try to comply with the requirements of the law.
These boroughs cannot run a dozen or more different, complete services for all the varied needs of the mentally afflicted. Perhaps there are not more than 250 psychotic children in the whole of Greater London—thank God for that!—but how is it going to be possible for individual boroughs to set up a whole service to deal with the six or eight such children they have? Of course, they will not do so. They need the large-scale organisation of the L.C.C., which already has the facilities and is using them through its nine divisional officers. That is all I am asking for in this Amendment, and we are going to insist upon it, because it is of vital importance. People who know the service that is required—the parents of these children, their teachers and anyone who has had, as I have, years of experience in hospital administration—know that it cannot be provided by an authority in which the population is 170,000 to 250,000.
Another aspect which I want to put to the noble Lord is the question of emergency service for the mentally ill outside office hours and at week-ends. At the present time, the nine divisions
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of the L.C.C. run an emergency service on a rota. I think he will agree that it would be extremely wasteful for every borough to provide such a service, since it is clear, from the total number of calls over the whole county, that if each borough arranged for one officer to be on duty at night and over the week-end, he would be unemployed for the most part of his time.
It might be argued that the situation could be met by having staff on a rota on duty at their homes, so that they could be called, in much the same way as in hospitals at the week-ends we call on a radiographer. That is an unsatisfactory business, and it sometimes takes them six or seven hours to get there. These arrangements really never work satisfactorily. There are often long and inevitable delays. In a service which makes such heavy demands on the nervous energies of the staff, it is inadvisable to interfere in this way with their off-duty time. Apart from this, there are practical difficulties in applying a rota system to London, because few, if any, of the staff would be likely to reside within the borough boundaries, and this would make stand-by duty at home quite impracticable. Even if they resided in the area, the total number of mental health staff needed by any one borough would be so small that they would have to be on stand-by duty so often that their off-duty time would be seriously restricted. The net result, therefore, of the fragmentation of the service as indicated in the Bill would be that more officers would perforce be engaged on this work in order to provide a 24-hour coverage, and their community work would suffer.
Then, on the question of premises, up to the present time the distribution of premises, such as training centres and hostels, has depended on the availability of sites rather than on a precise estimate of demand in any particular area. So there are 9 junior centres, 8 centres for adult women, 4 centres for adult men and 3 industrial training centres for men that we now have. They are very unevenly distributed throughout the county. The noble Lord, Lord Newton, said: "The premises are already there. We shall take them over." But supposing out of 25 centres all told 12 are in the area of, say, two boroughs, which is the case

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supposing, as would be the case, that the boroughs have not each got one of the centres required; it would mean that some boroughs would have none of these facilities at all, and other boroughs would have more facilities and premises than they would actually need for the residents in their own borough. That would be the position, as I am sure the noble Lord knows. It would be no good saying that the facilities are there and ready to be taken over, because they could be taken over only in the areas where they are, which do not correspond with population or need.
The only way of really dealing with this matter satisfactorily is in the manner suggested in the Amendment. I heard my noble friend Baroness Summerskill make a strong and moving case with regard to the midwifery service, but I think the case for the mental health services to remain under the Greater London Council is stronger than any other that I can think of, because we are dealing with the most helpless members of the community, many of whom will need help of this kind throughout their lives. This is not a short spell or an emergency; it is something which has to be provided for all the time.
I hope that on this occasion we shall not get the kind of reply that we had before, however sincerely it was delivered. This is a service which cannot be fragmented. If it is, it will cause acute distress to the tens of thousands of mentally afflicted and mentally subnormal people who rely on us and whom we have in our care. I hope that the Government will not take such a tragic step, but if they do oppose these Amendments, I hope your Lordships will support me in the Division Lobby. I beg to move.
Amendment moved—
Page 63, line 21, leave out (" subsection (3) ") and insert (" subsections (3) and (4) ").—(Lord Stonham.)
THE LORD CHANCELLOR: This might be a good moment to adjourn until half-past eight. I beg to move that the House do adjourn during pleasure until that time.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended at twenty-six minutes past Seven o'clock and resumed at half-past Eight.]
8.30 p.m.
THE EARL OF LONGFORD: I was going to say that this is the smallest audience I have addressed in my seventeen years here. The noble Lord, Lord Latham, was with us, but now we have lost him. We have a total of seven. Whilst the last thing any one of us wishes to attempt is to filibuster, your Lordships will understand if perhaps for a moment or two I may be allowed to collect my thoughts so as not to waste my arguments. I was saying that this is about the smallest audience I could recall in my time in the House.
LORD SHEPHERD: It is the quality that really matters.
THE EARL OF LONGFORD: That is the nicest thing that has been said on this side during these days of arduous debate. It seems to me that we have reached a rather dangerous stage in these discussions where we produce arguments which are well premeditated and which are replied to by, in this case, the noble Lord, Lord Newton, also well furnished with ideas in advance, and then there is a vote and that takes a fairly predetermined form.
Where the handicapped children are concerned—and if I speak about them I will explain why I do so particularly, but this clause refers to the mentally disordered as well—I should hope that we feel there is a special case for looking at the matter, apart from what might be called the general period of noble Lords opposite. If I speak about the mentally subnormal as distinct from the mentally sick, who are also covered, it is because for some years—in fact until just the other day—I was Chairman of the National Society for Mentally Handicapped Children. It may be that others will speak of the mentally sick. I am proud to think that I was able to hand on the rôle of Chairman of the National Society to the noble Lord, Lord Stonham, who has worked in the hospital field for far longer than I have been concerned with the subnormal, and who put the case for this Amendment so powerfully and, I should have thought, irresistibly before we adjourned.
I believe that on one occasion (I cannot trace the occasion but perhaps some learned noble Lord opposite—the Lord Chancellor or somebody else—will tell

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me when it was) the great Edmund Burke made a very powerful speech, and at the end someone rose to support him, with the single comment, "I say ' Ditto ' to Mr. Burke." I do not quite know where that comes from, but I believe it is history. In a sense I should be inclined to make that sort of speech. It would, I am sure, be to the relief of the Committee. I would say "Ditto" to Lord Stonham; because all the main points were made by him with a great deal of strong feeling, in addition to the arguments. But I have some thoughts of my own after this period as Chairman of the National Society for Mentally Handicapped Children. Some of them overlap with those of the noble Lord, Lord Stonham, but I hope the Committee will allow me to speak from some personal experience.
I would submit to noble Lords that they are, in this Bill, proceeding on a theory—if they want to dignify it by the name of philosophy I cannot quarrel with them, but I think myself that that is more than justice. They have decided that it would be good for local government, in a rather abstract way, if the boroughs were made the primary unit. In a sense, no one in any of these arguments can prove or disprove a proposition of that sort, as you prove or disprove a proposition of geometry. We assert; noble Lords counter-assert; we reassert and they re-counter-assert. That is a general proposition. I challenge noble Lords opposite to produce any evidence—they failed to do so at Second Reading and during these particular discussions—to support the contention that any of these services would be better run by the boroughs.
There are two ways of looking at this question. You can say that the services might not be better but it would be good for the councillors or the community. Someone might say—and it must have been said in these arguments—that self-government is better than good government. Whether it is to be in that way, it seems to be part of the philosophy of noble Lords opposite. I myself would think that that was a very dangerous view to be applied to any of these services, and particularly dangerous, even if it were true, if applied to the services for the mentally handicapped, who, as we all know, cannot in any way help themselves.
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Just in passing—I must not make a Second Reading speech—I would say that there is no evidence at all for the view that local government in London has been less lively in the boroughs or in the centre than elsewhere. Noble Lords have not seriously tried to provide evidence to show that there is something decaying or moribund in the local boroughs or elsewhere. Even if it were generally true—which we certainly do not accept for a moment—that it would be good for local government, in some rather abstract way, that the services should be transferred to the boroughs, I do ask the noble Lord opposite, who I know is humane (I know that from the indulgence he extended to me when he was my pupil; that is a sign of great humanity), to consider and, if I may say so, to consider seriously before deciding that his job is simply to inform us what has been decided in advance as to whether or not the mentally handicapped—I am speaking about them, but really it is an argument which refers to the mentally disordered generally—have a strong case for special treatment. In other words, even if you are going to break up the L.C.C., which we regard as a crime, and transfer a wide range of functions to the boroughs, I would ask the noble Lord—and I particularly ask the Lord Chancellor because his position, of course, is a great deal more responsible as he is a member of the Cabinet and in charge of the Bill—to consider whether he must automatically decide, in a general transfer to the boroughs, that the mentally disordered should fall into the group who are to be transferred.
If I am asked how I would distinguish between the mentally handicapped, for example, and others who benefit from these various services which are rendered in different ways in London, I place one or two points in front of the noble Lord, Lord Newton. In the first place, they are the most helpless section of the community, as my noble friend Lord Stonham said. I have been concerned, as have other noble Lords, with many weak vessels: prisoners, young people, old and sick people of various sorts, but if there is one section which is absolutely helpless it is the mentally handicapped. It is a tragic thought that they can never speak for themselves. To take some of those who have been referred to in these discussions, such as the mentally ill, they

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may have a complete breakdown and be put for years in some kind of mental hospital, or what used to be called an asylum. When they come out they can write about it; and people have in fact written about experiences in mental hospitals. But nothing, of course, in the nature of things, has been or can be written by the mentally handicapped. They are the silent sector of the community. They are there. We must assume that we are doing what is best for them; we must, at any rate, assume that we are trying to do what is best for them. But they cannot tell us, even their parents cannot discover and cannot tell us, what is in their minds. There they are, the most helpless section.
I ask the noble Lord—and I say this without offensiveness, though that may creep in later, but I hope not; it certainly would not be personal offensiveness—whether he is prepared to experiment on these helpless people. When all is said and done, this is an experiment. Even the most audacious member of the Government would not come along and say it is perfectly obvious that the services under the Government's plan will be much better run than hitherto. No one is stupid enough to say that. These things are very uncertain, in the nature of things. At the best the noble Lord will hope they will be better run. He can hardly, I think, hope that they will be better run in the first few years, but his case must be that in the long run so much more local enthusiasm will be built up by transferring affairs to the boroughs that local government will be healthier and everything better. But I do not think the noble Lord will say that in the next few years the human services will be better. He cannot believe that. If he believed that, I should not pay him the high respect which I do.
We know the main arguments for this Bill are arguments about traffic and planning. It is hoped, after reorganising the whole area on these traffic and planning grounds—wrongly, even in that sphere, so we believe—that these human services will at any rate be no worse. That is, if I may say so, the intelligent defence put forward for the Government scheme. Even if that be true, which we do not
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accept, is he going to say that for reasons of traffic and planning he is going to experiment and conduct an act of vivisection on these mentally handicapped, the most helpless people in the community? I hope he will address himself to the particular case of the mentally handicapped and will not deal entirely with the issue on general grounds of promoting health or something like that. There are these handicapped people. They are the one section who will never be able to speak for themselves. Yet they are as precious in the sight of the Almighty as any of us.
There are other very important factors, some of which were touched on by my noble friend Lord Stonham. There is undoubtedly a revolutionary change going on. Whatever noble Lords do, whatever Ave do, a very great change is coming over the national treatment of the mentally afflicted, and it is a change for the better. Like all great human developments it contains elements of danger. In the first place, it stems from the idea of those who have laboured hardest in the field of healing that mental disorder should be placed on the same footing as physical disorder. That is where it all starts. But, following from that, it seems to me that thought raises its own problems. That is a clear irreducible gain, the conception of the removal of the stigma. There is the further thought that we must somehow supplant treatment in Government institutions by community care.
As I have said before in debates here, as indeed has my noble friend Lord Stonham, that idea, while it is an advance if properly handled, contains its own perils, because as long as the Government accept a certain responsibility, the Government can be attacked here and in another place and can be held responsible for what happens. But once you transfer the responsibility, under this idea of community care, to the community, while I think that should be a step forward you may be in fact endangering the children. I hope you will not, but you will be endangering the children unless the local authorities do as much as the Government are doing, and, in fact, much more, because they must do as much as the Government would have done as time passes and national wealth increases.

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So, when we talk of community care, this is an ambiguous phrase: it suggests the idea that all of us in the community are going to help—which is right, too—but in particular, of course, in this connection, it means that the local authorities will do things that would otherwise have been done by or would otherwise have fallen to the lot of the central Government. So this places a heavy responsibility on local authorities. This is a revolutionary development in the field of mental health for which, so far as I know, there is no counterpart in the other services. This provides another reason why one has to be particularly careful during this period of transition and inevitable experiments, whether noble Loris carry on those experiments to extreme lengths or not.
There is another consideration that I should like to place before the noble Lord, still hoping that he will accept the submission that this is a special case, or, at any rate—I do not say that there is no other case which is so strong—a case which has marked features of its own. If one looks at the Government plan for the future of health and the future of the community services, and if one looks at that booklet which has many excellent features, in so far as I have been able to give it proper attention (it was published not long ago) one finds that the calculations about the future for the mentally handicapped are extremely, and perhaps inevitably, vague. Nobody knows how many mentally handicapped there will be in a few years from now. I am talking of the country as a whole, but it applies also to London.
It is thought that, with the improvement in the various services, the number might be diminished. On the other hand, I hope that a great many people will be able to live who otherwise would have died; and many people perhaps will be discovered to be mentally handicapped who might otherwise have been hidden away. So no one has any idea how many there will be, or indeed, how they are to be treated. I think that is not an unfair statement if one looks at the Government long-term plan. In all the other features of the plan there is an element of certainty, in so far as there can be certainty in these human prophecies; but here it is really all left uncertain, and perhaps inevitably so. All
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that being so, does the noble Lord seriously consider that there are no stronger arguments here for holding his hand before conducting this particular transformation?
Let me now place another point before him. I am not going to say that this is a unique factor, although I cannot for the moment think of other examples which are quite so obvious. But as the noble Lord will have discovered in the course of his ministerial duties in his own Department, the differences of treatment, the differences of performance between the various local authorities, are quite staggering. I do not know whether that is as true of other services. I challenge the noble Lord to produce examples where the differences are as great as they are in dealing with the mentally handicapped. I have not come here with statistics, but there are readily available figures of those who are in training centres per thousand of the population, and the differences between one authority and another are fantastic. Our authority, East Sussex, was on the lowest rung, as the noble Lord, Lord Grenfell, was good enough to point out. Although that caused great irritation it was of great value. The noble Lord rendered great service in that respect and although I thought that I should he lynched in my own county, the net result is that they axe going ahead; and for the first time in East Sussex we look like getting something better in the way of services, especially as a result of the efforts of the noble Lord, Lord Grenfell, and to a lesser extent my own poor effort.
These discrepancies are an important factor in this discussion. They are far more material than they were in regard to education, which we were discussing yesterday, and, I should think, than they are in any other service. The noble Lord, Lord Stonham, has pointed out that the record of the London County Council and of Middlesex is splendid. That is not questioned. I am sure the noble Lord, Lord Grenfell, would not question that. It is not for me to say that it is the best record in the country. I am sure it is as good as any. It would be argumentative to say that it is the best. That is a controversial statement. It is certainly vastly better than the record of almost all the other authorities.

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Now the noble Lord comes along and tries to lay his hands on it. Of course, when I say that, he knows that I do not hold him personally responsible, except for the answer he is about to give us, and there he must accept responsibility. I do not hold him responsible for the murder. I regard him as a counsel for the defence who perhaps in some circumstances should refuse the brief, but no doubt the Lord Chancellor would tell us about the ethics of the Bar in that case. If the noble Lord is coming down to us and saying that there should be this transfer, he must recognise that he is breaking up a service which has a very high reputation and he is throwing it into the unknown. Whatever his theory and whatever some clever fellows in the Ministry may think, there has been no evidence whatever to suggest that it could possibly be better in the field of the mentally handicapped, and we are sure it would be worse.
Various attempts have been made by the Society, but I should hasten to say that when I was Chairman of the National Society until the other day, I abstained from any political connection with this because I thought they must make up their minds for themselves, and I am sure the noble Lord, Lord Stonham, will adopt that view. Certain efforts were made by the Society to obtain assurances, and, having seen the correspondence, I think it is fair to say that it was impossible to obtain assurances from the Government that the services conducted by the boroughs would be as good as they had been in the past. I am not sure that I blame the Government there. I am not sure that my friends in the National Society were not a little innocent to think that they could obtain such assurances. Perhaps it may be counted to the righteousness of the Government that they were candid. If this Amendment is carried, if it is accepted, as possibly it could be by the noble Lord, logically, without destroying the basis of his Bill, he and his Leader in the House, the noble and learned Lord the Lord Chancellor, will have shown a moral fibre which I do not deny them. It is possible that they will show it. If they do not show it here they will show it nowhere, because the case is overwhelming. I beg to support the noble Lord, Lord Stonham.
8.53 p.m.
LORD NEWTON: What these Amendments seek to do is to transfer to the Greater London Council responsibility for the functions of local health authorities in relation to the care and after-care of the mentally disordered in the area of inner London only. It does not concern outer boroughs, and once again I must start by pointing out, as I did when I replied to the noble Baroness, that I just cannot see that there is any reality in trying to distinguish between the inner and the outer London boroughs in this way. The other point I wish to make right from the start is that whether the noble Earl, Lord Longford, would call it a principle or a philosophy, it is nevertheless our view that it would be a mistake and a disaster to separate responsibility for mental health from the other parts of the local authority health, welfare and child care services.
THE EARL OF LONGFORD: Did the noble Lord say it was impossible to distinguish them?
LORD NEWTON: No, I said I thought it would be a mistake and a disaster to separate responsibility for mental health from the other parts of the local authority health, welfare and child care services. In his speech, the noble Lord, Lord Stonham, quoted paragraphs 613 and 614 of the Report of the Royal Commission, but he did not quote the last sentence of paragraph 614. The penultimate sentence of paragraph 614 ended like this:
"…it would seem to be desirable for mental health work that the local health authorities should not be too small or too numerous".
I think the noble Lord stopped there, but if he had read the next and last sentence of paragraph 614, he would have read this:
" On the other hand it is essential that the mental health service should be integrated with the other personal health services provided by the local authority."
That is the view of the Royal Commission, and it is our view.
LORD STONHAM: The reason why I did not quote that sentence was that it made such utter nonsense of all the arguments they had used previously, and if the noble Lord cares to read on after that paragraph he will see that the Royal Commission did not deign to give any

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reasons for this extraordinary conclusion they had reached.
LORD NEWTON: I am not complaining because the noble Lord did not read it out: I am merely pointing out that the Royal Commission did say that, and that it is a view that we accept. In fact, we really think it is the most important principle of all. Although the noble Earl, Lord Longford, said that this Amendment is acceptable, I am afraid it is for that reason that it is not—because we do think it would be wrong to separate these services.
THE EARL OF LONGFORD: May I—
LORD NEWTON: May I please reply to the noble Earl? I want to go on and say this to him. He said in his speech that we are in fact proposing an experiment, and he asked me whether the Government were prepared to experiment with mentally-handicapped children. It is in fact this Amendment which is proposing an experiment. It is proposing the experiment of divorcing responsibility for the care and after-care of the mentally-handicapped from responsibility for all the other health and welfare services. At the moment, everywhere in the country the responsibility for all those services rests upon the same authority. It does with the London County Council to-day.
THE EARL OF LONGFORD: Am I allowed to interrupt, or are we in church?
LORD NEWTON: Certainly.
THE EARL OF LONGFORD: I want only to put one point to the noble Lord, not to distract him from his flow, which I gather must not be interrupted. He is saying that we wish to bring this forward solely in relation to the L.C.C. area. That may well be the basis of a discussion, but if he is going to make a great deal of that argument I suppose that on Report stage he would consider sympathetically a suggestion of a wider character.
LORD NEWTON: The noble Earl is fully entitled to put down any Amendment he likes on Report, but what I was trying to do was to reply to his argument that the Government are proposing an experiment. What I wish to point out is that it is, in fact, this Amendment
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which proposes an experiment, because it is only in recent years, and especially since the passing of the Mental Health Act, that the barriers between mental health and the rest of the health services have begun to be broken down. This Amendment would be an obstacle, and a big obstacle, to further progress in this direction; and we believe, as the Royal Commission believed and said, that there should be the closest possible links between arrangements for the mental health and maternity and child care services, and services for the physically-handicapped and for the elderly.
Many mentally-handicapped children, and adults, too, are also physically-handicapped, and it is in the child welfare clinics of the local health authority that the signs of mental retardation may often be observed first. Advice to mothers on the care of mentally-handicapped children is often given best through the health visitors and the child welfare clinics. Services for elderly, mentally-infirm people are part of the general services for the elderly in many areas, and even where they are not they undoubtedly should be linked closely with them.
The basic social problems of mentally disordered persons and of their families living in the community have much in common with those of other handicapped groups and their families. Your Lordships may recall that the Younghusband Report looked forward to an integrated service of general social workers equipped to deal with a wide range, rather than a narrow range, of problems and working with highly qualified specialist officers such as psychiatric social workers. This is a long-term aim, as the Report recognised, but it would be wrong and against the interests of a good-quality service to patients to erect administrative barriers in any part of London to the eventual attainment of a unified cadre of social and welfare workers in London.
There ought not to be any such thing as a separate mental health service. The special needs of mentally disordered people of all kinds and ages should he met within an integrated personal health and welfare service which also meets needs which they share with the rest of the population—people who are not handicapped in the same way as they are. To meet the special needs of the

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mentally disordered in the local authorities, a health service with specially-trained staff and some special premises are necessary. These can be organised more efficiently and economically if the population served is fairly large. There is no doubt about that; nor is there dispute between us here. That is one of the reasons why the Government decided to make the London boroughs larger than was proposed by the Royal Commission in their Report. Even the smaller of the inner London boroughs will have a population of over 200,000. Each borough, whether an inner or outer London borough, will obviously need to employ at least one medical officer specialising in mental health and a staff of social workers, of psychiatric workers and, perhaps others not quite so well qualified, in order to ensure proper organisation and supervision for the training of students, and to have scope for leave for study purposes. These are still-growing services in London as anywhere else and, like other authorities throughout the country as a whole, the new boroughs, both in inner and outer London, will have to build up their staffs over the next ten years. Meanwhile, it may be suitable for some of the L.C.C.'s present senior medical officers with special experience of mental health to be employed by several of the new boroughs in a variety of capacities.
The noble Lord, Lord Stonham, said that there were too few handicapped children for each borough to provide a service for them. I think this is probably true of psychotic children—that is, children who are mentally ill—but they are cared for mainly by the hospitals. The London County Council has a centre for these children and they will certainly need to continue to serve several more boroughs in London. But handicapped children, on the other hand, those who are sometimes called subnormal, need, according to the Report—which is accepted in the Blue Book, Health and Welfare, to which the noble Earl, Lord Longford referred—approximately 0·4 training centre places per 1,000 population which is about 80 places for a population of 200,000. That works out, I think, at two centres at least in each borough. Of course, this is not yet provided in London; but this is the provision towards which the local
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authorities will have to work, and they would have to work towards that whether this Bill was before your Lordships' House or not.
LORD STONHAM: The noble Lord said that the number of psychotic children is not sufficiently large for separate units in boroughs and that they were mainly looked after in hospitals. That just is not true. Would the noble Lord care to mention any London hospital which has particular care of psychotic children and how many such children there are in the hospital?
LORD NEWTON: I certainly cannot give the noble Lord any answer to statements without notice. If he wants definite information on points like that, he must ask for it. Of course, training centres and residential hostels are not evenly distributed in the L.C.C. area and it would be necessary to make some of them serve a catchment area wider than a single borough until the time comes when every new borough can provide for its own needs. This situation also exists in outer London and it is a reflection of the present emerging state of the local authority mental health service throughout the country. It is not a flaw in the proposal to give these functions to the new borough councils throughout the London area.
When the Bill comes into operation there will be the same premises as before, serving the same total population, with plans for development which are set out in the Blue Book to which I referred and which are revised annually. It is a mistake, we believe, to suggest that services for the mentally disordered can be efficiently run only by an authority large enough to be self-sufficient in all respects. Neither in inner London nor in outer London need the boroughs work in total isolation from one another. Indeed, throughout the country as a whole, mutual aid is a feature of this form of health service, both as between one local authority and another and between local authorities and the hospitals. Staff and premises may be shared, wherever this may be found to be mutually beneficial. Our experience of the present local health authority in inner London, the L.C.C., is that both staff and, no doubt, members continue to be at the service of the

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inner London boroughs, and the Government are confident that the new London boroughs, as well as the boroughs in outer London, will do all that is necessary to develop their services to meet the needs of their populations.
The noble Lord, Lord Stonham, talked about difficulties presented by the location of some psychiatric hospitals. It is true that co-operation between the local authorities and the psychiatric hospitals in the London area is complicated by the fact that most, though not all, of them are on the outskirts of London. In spite of this, the staff of the hospitals have good links with the L.C.C. medical officers and their social workers, and there is no reason why this should not continue in the manner in which it does now. If some rearrangement of the hospital catchment areas would help in this respect, this is a question of administration which can be considered, and will be considered, if necessary. Incidentally, the plans for future development of hospital services will also ease this problem by providing more psychiatric beds in general hospitals within the London area itself.
The noble Earl, Lord Longford, referred to the National Society for Mentally Handicapped Children, of which he was Chairman until recently when he was succeeded by the noble Lord, Lord Stonham. I have the greatest respect for what they do and I had the pleasure not so long ago of seeing some of their work. I know that the Society take the view that the services for mentally handicapped children in London should be run by the Greater London Council in the inner London area, because the I.L.E.A. will be a special committee of it. The argument put forward, as I understand it, is that if the training centres of schools come under the same authority, that will make it easier for a child attending a training centre to move to a special school if he is found to be suitable for education in that school.
THE EARL OF LONGFORD: I should not think that was the only reason.
LORD NEWTON: Perhaps not; but that is the major reason which I think has been presented to us. The answer to that is that these children present primarily a health, rather than an educational problem, because the probability
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is that they will need the local health authority's supporting services throughout their lives and not only while they may be being educated in the school.
Moreover, the Bill makes provision in Clause 32 for the integration of the professional staff of the school health service and the other personal health services, and we discussed that at great length on Tuesday. The Education Act, 1944, as amended by the Mental Health Act, 1959, provides for appeal against any decision that a child is unsuitable for education, and for subsequent reassessment at the request of his parents or the local health authority. In all probability it would be the doctor acquainted with the child's development and progress in the training centre who would advise the I.L.E.A. on such occasions. So I do not think there is any reason to fear that any disadvantages will flow there.
Those are the reasons why I must advise your Lordships that this Amendment is unacceptable. As I said at the beginning, the main reason is that we are absolutely convinced that all the health services of the local health authority should be kept together in the interests of all the people who benefit from them. Because this Amendment would split them up and divide them, we think it is wrong.
9.13 p.m.
LORD SHEPHERD: My noble friend Lord Longford spoke of the silent sector of the community. Whereas in the previous debate there was slight bitterness and a biting debate—justifiable from our point of view, in that an existing service which has given great benefit to the community was being destroyed—in this case, as I am sure the noble Lord, Lord Grenfell, will agree, we are dealing with a relatively new side of medical attention and medical health. We on this side of the Committee would agree with the noble Lord, Lord Newton, that all sides of medicine, preventive or the other, whether clinical or mental, should be kept together.
We have fought bitterly on the previous Amendment to ensure that, so far as the inner London boroughs are concerned, the responsibility for that side for a period until it could be reasonably handed over to the boroughs, should remain with the Greater London Council. In the case of mental health, we are

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dealing with something rather different. It is a new science, and I think the noble Viscount the Leader of the House would agree that the problem of mental health cannot be divided as we divide children's illnesses, such as measles, scarlet fever and the like; there are many border cases. At the moment, doctors are only finding their way through a problem of which until recently there was little for them to understand, except that the child was not the same as others; but we hope that we shall move forward.
The first question I would put to the noble Lord, Lord Newton, and also to the noble Lord, Lord Grenfell, because he is concerned with this matter—I am not being unfair; the Party fight is over for the moment, and I hope it will keep out so far as this matter is concerned—is this: do you really believe that you can give the service, the opportunity, to these handicapped children, within the narrow confines of one, two or three boroughs? Or should you try to create an organism by which the maximum knowledge, the maximum information, the maximum science, instruments, research and the like, can be put on to the various sections of mental health? The noble Lord Lord Newton has again referred—and I will not attack him, but I must point it out—to the boroughs getting together. I do not believe that boroughs, when they are dealing with mental health of children, would say, "Well, that is your responsibility; we will have nothing to do with it." That is probably not so. But where you have these divisions you create an obstacle, an artificial barrier.
I look at medicine rather in the same way as in the old days of the knights fighting the dragon, where the doctors must go out and try to fight disease. Colour does not come into it; race and language do not come into it. They go out together to try to fight disease. I do not believe there should be barriers. That is one of the reasons why, on this particular subject, I think the Government are absolutely wrong to try to bring this artificial barrier of a borough of 200,000 or 300,000 persons between what may be an exciting new era, an exciting period of discovery of knowledge, and, above all else, the permeation of information and the use of information in dealing
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with children. It may well be that in the borough of Wandsworth a doctor may have a child who is handicapped, and somehow finds a little germ, a little bit of light. If he is in one organisation with its proper stream of information, that information may well go to the top and may well then be disseminated among all the other sides in the service.
I would ask the noble Lord, Lord Grenfell, with his knowledge of this subject, whether he really believes that this knowledge will go through from one borough to another with the same speed and the same conciseness. I rather feel that it will not. I would that it were not so. The noble Lord. Lord Newton, has made a great case on this Amendment and on the other, that our Amendment relates merely to the inner London area.
LORD NEWTON: So it does.
LORD SHEPHERD: The noble Lord must be fair in this respect. Here we are dealing with an existing unit, an area that has until the present time been administered as one county unit. It is one service; it has one head; it has one organism, and it has one ideal. In the outer boroughs it is different. Some were in the county of Surrey—and they are being drawn across. We are not trying, therefore, to create something in the new areas where the organism does not at present exist. What we wish to do is in this particular case to retain the present organism as a living body, with all the knowledge it has been able to garner and the experience that it has available for this silent sector of the community.
My noble friend Lord Longford suggested that the Government were committing an experiment. It could be an experiment. I am quite sure that the noble Lord, Lord Newton, would not wish to embark upon something which he believed to be wrong. But, of course, when a departure is made from what is already proved, it becomes an experiment. When the Government propose to depart from something which we know has worked and has been of service to the community and to embark on to something new, which is rather a mystery and perhaps offers a future, surely we must have more evidence as to whether the Government are right. They have

529
offered us little except faith and hope in their decisions. They can give us very little concrete evidence that what they are asking this Committee to approve is right or fair. I believe that there is a case to use the advantages, the skill, the dedication, of the officers that already administer within the inner boroughs, to use these known facts, these known persons, before embarking on something which may, in the Government's eye, appear a new horizon. But there are false horizons—we know that from our own experience—and I have a dreadful feeling that the one which the Government now sees is a very false horizon.
LORD GRENFELL: I know that I lack in eloquence, but I can speak with sincerity and I should like just to say a few words before we finish this debate. I have thought very carefully about this problem, and I am convinced that this Amendment, would mean that the inner London boroughs would come into a central control and the outer London boroughs would be on their own. As my noble friend Lord Longford said earlier on, I have spoken up in favour of some of the outer county councils, and to the detriment of others, but I believe that we have to open up into a new era. I have already said, quit e frankly, that I should prefer all the services to be under the Greater London Council; but if one does that one has to put the old, the young, every single service, under that Greater London Council. But I am prepared to accept the fact that the children and the adults (those of whom I am speaking, perhaps we may say, are still children) should become the responsibility of the Greater London boroughs. I shall be the first—and I know my noble friend Lord Stonham, who is now the Chairman of the society to which I belong, will be alongside me—to keep a very close eye on them. We will speak up for those who are doing well, and we will speak also of those who are not doing well. I think it would be a mistake to make divisions in Greater London: and I believe that this Amendment would not be the right solution. I trust that the future of this young and virile new understanding for the mentally handicapped will follow the right lines, and I will do all I can to see that it does.
LORD STONHAM: I am quite sure the noble Lord, Lord Grenfell, will do
530
all he can and that he will speak up; but I feel, and my noble friends feel, that the most important time to speak up is now when we are convinced that the Government are about to make a serious error which will affect the mentally handicapped and the mentally subnormal children; otherwise speaking up can be done only after the damage is done. My noble friend Lord Longford, to whom I am extremely grateful for an outstanding speech, said that Lord Newton was not personally responsible for the reply that he would make. I am quite sure the noble Lord, Lord Newton, would not agree with that, because in all these matters whenever we get up to speak in your Lordships' House we are all personally responsible for what we sax, and I think in a matter of this kind we are all acutely responsible not only for what we say but for the way in which we vote.
The noble Lord, Lord Newton, said, quite rightly, that in this Amendment we are dealing with inner London only, why should we not deal with the whole area to be covered by the Greater London authority? The reason is quite simple. Though I agree with the noble Lord, Lord Grenfell, I should prefer the whole thing to be under the Greater London Council. The reason is that the only county organisation which is at present dealing with the mentally afflicted on a county basis is the London County Council, and the purpose of this Amendment is to ensure that what is in existence and doing wonderful work shall not be destroyed. There is at the moment nothing to destroy outside the area of inner London in the sense of being on a county basis. So the noble Lord, Lord Newton, was not really on a point at all; he was not being fair on this.
LORD GRENFELL: May I interrupt the noble Lord? Surely the Middlesex County Council were dealing with it.
LORD STONHAM: Not in anything like the same organised degree. There are in many of the existing boroughs in the area of Middlesex services which do not exist in the inner London boroughs, the metropolitan boroughs, in the field of mental health, as the noble Lord is fully aware. The noble Lord, Lord Newton, said that we in our Amendment are proposing to divorce responsibility

531
for mental health from responsibility for all other health services. Just prior to my moving this Amendment my noble friend Lady Summerskill moved a somewhat similar Amendment in respect of all the health services, which the Government rejected. We are now putting this forward as a special case because we regard mental health and mental sub-normality as a special case.
The noble Lord, Lord Newton, said when I interrupted him that psychotic or autistic children are mainly cared for in hospitals. If I may say so with respect, that showed how much his information on this subject is divorced from reality. I interrupted and asked him to name the hospitals, the units in London, and he did not reply for the very good reason that he could not, and he could not get any help from the Officials' Box on that occasion because they could not answer either.
In 1951, when I was personally responsible in the South-West for 17,000 mentally afflicted and mentally subnormal people, I saw for the first time a psychotic child. I was so affected by that that I went to my friend the late Aneurin Bevan and said, "There is no unit for psychotic children in the whole of the West of England. We must have one". There is a unit now—and there was in 1952—for twenty psychotic children. I was astonished the other day to find that it is exceptional. It is famous as one of the few in the country. They do not exist. What the noble Lord, Lord Newton, is apparently not aware of is the extraordinary position of children of this kind. He has not talked to their parents; he does not know the tragedies. Apparently, he does not know that, with proper treatment, these extraordinary children—they call them "dream" children—can be—
LORD NEWTON: May I interrupt the noble Lord? Is he referring to the centre run by the London County Council for psychotic children? If so, I specifically referred to it in my speech and said that it will certainly be necessary for it to continue.
LORD STONHAM: The centre I referred to was in the West of England. It is called "Merryfield" and it is near Taunton. I referred to that centre merely
532
as being one of the few in the country. But even in the London County Council centre for psychotic children it is impossible to care for all, even the comparatively small number of such children. But the noble Lord has emphasised my point—he has referred to the one centre in the whole of the County of London, the whole of the area covered by the inner London boroughs. That centre is in one borough. It is not available, or will not be available, to other boroughs which are to be created, and they will not set up such centres.
I could go through the scale of mental sub-normality and mental affliction and mention a number of different special cases of this kind. I know that the noble Lord will not do it, but it would be idle for him to pretend that each of the inner London boroughs will set up a complete service for the mentally afflicted. He mentioned that he agreed that psychiatric hospitals are on the outside of London, but with the co-operation of the London County Council the link which existed between those hospitals—Claybury, Goodmayes, Long Grove—with their catchment areas far away in inner London, would continue. How can it continue when the Government are intent on destroying the London County Council? They are going to destroy it, whether it is right or wrong. The noble Lord then claims that co-operation will continue even after the London County Council has ceased to exist.
LORD NEWTON: Certainly.
LORD STONHAM: I cannot believe that in reason, and I am quite sure it is not going to be the case in fact. It is the unhappy truth. Please understand that we are not going to leave it here tonight, whichever way this Division goes. We are going to fight this through right to the very end, because we know we are right and because we know that we are fighting for people who cannot fight for themselves. That is the important thing. It does not matter about Civil Service answers and things of that kind. I saw the Report of the Royal Commission come along here, and I knew the exact sentence which was coming from the Box and which the noble Lord was going to provide. Of course I did. But I am not so foolish as to be impressed by a sentence like that, with no facts at the back of it.

533
Of course we know the facts of the situation, and of course we know that the proposals of the Government are, to a large extent, going to sacrifice these children and to some extent are going to sacrifice their parents; and if noble Lords opposite or in any part of the House are not aware of these things, then they should not vote against us on this issue. If they are aware of them, then they will vote for us, because we are all agreed that this is not a political matter. In
Clause 45 agreed to.
Clause 46 [Accommodation and welfare of disabled and old persons, et cetera]:
9.44 p.m.
THE EARL OF LONGFORD THE EARL OF LONGFORD moved in subsection (1) to leave out "The council of each London borough shall as respects the borough and the Common Council shall as respects the City", and to insert:
"(1) Subject to subsection (8) of this section, the Greater London Council as respects the area of the inner London boroughs and the City, and the council of each outer London borough as respects the area of the outer London boroughs, shall—".
The noble Earl said: With the leave of the Committee, I will not move Amendment No. 175, not because we do not stand by it but because it is really a paving Amendment; it leads on to Amendment No. 178. So I would ask leave not to
534
this matter we are fighting to continue a service which is essential to these unfortunate people, which is now in existence and which we believe will not be, and cannot be, carried on in anything like the same degree if it is broken up.
9.35 p.m.
On Question, Whether the said Amendment (No. 163A) shall be agreed to?
Their Lordships divided: Contents, 16; Not-Contents, 53.

CONTENTS

Archibald, L.

Lawson, L.

Shepherd, L.

Burden, L. [Teller.]

Listowel, E.

Stonham, L.

Crook, L.

Longford, E.

Strabolgi, L.

Henderson, L.

Lucan, E. [Teller.]

Summerskill, B.

Champion, L.

Morrison of Lambeth, L.

Walston, L.

Latham, L.

NOT-CONTENTS

Abinger, L.

Dilhome, L. (L. Chancellor.)

Lloyd, L.

Ailwyn, L.

Drogheda, E.

Lothian, M.

Albemarle, E.

Dundee, E.

Margesson, V.

Aldington, L.

Ellenborough, L.

Melchett, L.

Amherst of Hackney, L.

Elliot of Harwood, B.

Mills, V.

Ampthill, L.

Falmouth, V.

Monck, V.

Balfour of Burleigh, L.

Ferrers, E.

Newton, L.

Boston, L.

Fraser of North Cape, L.

Perth, E.

Boyd of Merton, V.

Goschen. V. [Teller.]

Poulett, E.

Carrington, L.

Grenfell, L.

Remnant, L.

Chesham, L.

Hailsham, V. (L. President.)

Rochdale, V.

Coleraine, L.

Harcouurt, V.

St. Aldwyn, E. [Teller.]

Conesford, L.

Hastings, L.

Swansea, L.

Cranbrook, E.

Hereford, V.

Tweedsmuir, L.

Cullen of Ashbourne, L.

llford, L.

Waleran, L.

Denham, L.

Jellicoe, E.

Wellington, D.

Derwent, L.

Jessel, L.

Wolverton, L.

Devonshire, D.

Lansdowne, M.

Resolved in the negative, and Amendment disagreed to accordingly.

move No. 175 at this stage, in order that the discussion should take place on No. 176. This Amendment, No. 176, covers a great many of our fellow citizens, and I am sure the Committee will not wish to dispose of it quickly. There are six Amendments which are concerned with the same issue. They arise at page 64, line 37; page 65, line 14; page 65, line 35; page 66, line 1, and page 66, line 14. I do not know that the Committee will be interested in the drafting aspect of it; but the object of this suggested Amendment is perfectly plain. It is to ensure that the Greater London Council shall assume responsibility for these various welfare services during a five-year period. It is hoped that during that time the services might be gradually delegated in an orderly fashion to the new authorities, and that the transfer would be completed by the end of that period. We believe that such an arrangement would be practicable and could be achieved

535
within the ambit of schemes submitted to and approved by the Minister from time to time.
I hope that the noble Lord, Lord Newton, will not argue that this is some concession on our part. If he likes, it is a withdrawal from the position which we should like to occupy, but a withdrawal under duress: it can be taken as a second-best arrangement, that the transfer should not take place for the five-year period. We should have preferred that it did not take place at all, but that does not mean that we should not consider this a great improvement on the actual proposal in the Bill. Perhaps we ought to glance for a moment at the heading of Clause 46, in order to know what we are talking about.
In the index to the Bill we see that Clause 46 is concerned with "Accommodation and welfare of disabled and old persons etc." "Et cetera" is a slightly inhuman term; but there are a number of people in difficulties who need assistance and are covered by this clause. They are the people with whom we are concerned under the general heading of welfare services. We suggest the services that the community is trying to provide for these people should be rendered for five years by the Greater London Council. We feel very strongly—and this will be no surprise to the noble Lord in view of our previous argument—that the fragmentation of the existing country-wide welfare service is likely to result in deterioration in the quality and extent of these services.
We are certain that that must be so in the years immediately ahead. We believe it will be so in the indefinite future, but it must be so in the years just in front of us. Even if we take the most optimistic view of the prospects; even if we assume the most willing co-operation between the authorities; whatever assumption is made about the new authorities and the Minister—whether of this Government or of another; but hardly of another because a Minister of another Party would be doing something more fundamental to put things right—one is faced with a number of fundamental problems if this clause in its present form becomes law. The noble Lord. Lord Newton—I was going to say that he was
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being deserted by all of his colleagues, but I see that they are doing a "Sidney-Newton" act and have brought him a glass of water—
LORD NEWTON: Can I offer the noble Earl some?
THE EARL OF LONGFORD: I will prove my confidence in the noble Lord by accepting it without claiming I might be safer with that on this side.
There are a number of topics here which we must cover. The questions of residential accommodation for old and handicapped people, of the allocation of councils' small and large homes among new authorities, present a serious problem. It is doubtful whether any allocation conducted under this Bill can have suitable regard to the different categories of residents the healthy old people, the physically infirm, the chronic sick, the senile aged, the blind and the sighted handicapped. I am sorry to use these expressions, but, as the noble Lord realises, there are the human beings behind the labels. Am I right in addressing the noble Lord, or is it the noble Earl who is going to reply?—I am not sure that the noble Lord does not deserve an Earldom, if he comes through this intact.
So far as we can see, there is no way of safeguarding the essential interests of the individuals under this fragmentation unless we set up some sort of central control or all-London controller. I do not know whether that is the idea of the noble Lord: some sort of controller to conduct allocation after fragmentation. I will give way to the noble Lord for a moment, for him to tell us whether that is correct.
LORD NEWTON: I think the noble Earl had better continue his speech.
THE EARL OF LONGFORD: I suppose that means the noble Lord does not know the answer. My noble friend Lord Morrison of Lambeth is a great deal more charitable than I am. He has just said that that is to be understood; but perhaps there is not an answer. But I am entitled to submit to the Committee that at this moment of time—9.53—the noble Lord does not know the answer to it. At 10.3, without assuming that I shall finish by 10.3, the answer may be available. But I put the question to the noble Lord:

537
is the allocation to be, effected by an all-powerful individual, a sort of local dictator, who is going to decide how people are going to be distributed between the different homes? It would seem that some arrangement of that kind will be necessary, and I must ask the noble Lord to deal with this seriously when he replies.
I do not suppose that he will exactly welcome a scheme of that kind. Yet how otherwise are these old people to be allocated between the various homes? Maybe in future some other system will be worked out; but in the first few years a person of that sort seems essential. We all know that when old people enter into a residential home and give up independent living there is a period of very painful adjustment. It is likely that the noble Lord has read Mr. Townsend's powerful book. I wonder whether, in fact, the future of old people who are not actually sick really lies in these homes. It may well be that they would be better off in the community, unless they are literally incapable of looking after themselves or have no relatives to help them. At any rate, when old people find themselves in residential homes there is this period of great strain and adjustment, and it would be intolerable if, in addition, they found themselves ordered about against their wishes, compelled to go from the home where they live into some other home, merely because it was administratively convenient in the view of this dictator, or because the borough in which they happened to be refined to be responsible for them.
I am sorry the noble Lord has not risen—he seemed to think that I was putting a sort of trap question, and that there was some dialectical trick in putting the question. But this question of how they are to be allocated affects the future of a large number of old people. Under the present arrangements, London's old people can be admitted to homes outside London, and old people living outside London can be admitted to homes inside London. I put this second question to the noble Lord: and I hope he will deal with it. Will these arrangements that are now made between the London authority and the areas outside continue in the future? Will the boroughs be expected to undertake the same sort
538
of arrangements? Supposing they were to take a more parochial view of the problem, would there be any force or any persuasion brought to bear on them? Perhaps the noble Lord will tell us how that can be achieved.
Then there are the homeless. I will not deal with them in any detail, not because theirs is not the most poignant of problems, but because an Amendment concerned especially with them is to be moved later by my noble friend Lord Walston. However, I should point out that the County Council provides temporary accommodation for some 1,000 homeless families, and the net accretion of new cases is at the rate of 14 families a week. This is obviously a problem of Greater London as a whole, rather than of individual boroughs. I will not say more about that, for the reason I have mentioned.
Leaving the old, I will come to those many classes of handicapped people under Section 29 of the National Assistance Act, 1948. The services rendered to these people are to be transferred to the new London boroughs. Again we are confident, not just for personal reasons but because of all our expert advice, apart from our own experience, that there will be a deterioration in these specialised services. Again, I say we are sure, so far as we can be sure of anything in this world, that the services will deteriorate over the next few years, and we believe that they will be either inferior in the indefinite future to what they have been or inferior to what they might be or might otherwise be.
I should like to say a word or two about home visiting and community care. The more important aspect of these services is their development away from home visiting only towards communities. I said earlier that the words "community care" can contain their own ambiguities and dangers, though it is a progressive concept. Here the work of the social rehabilitation centres provided by the council has been very valuable. Probably the most valuable individual service which can be rendered to handicapped people is the provision of social rehabilitation centres and transport to get them there and back. We have a special Amendment down on transport, but, in passing, I want to say a word about it. This provision of

539
centres and transport is part of the council's plan to bring the handicapped back into the life of the community. It is part of the plan to convince the handicapped that they can acquire personal skills. All this is vital, not only to enable them to render service to the community, but to help them to live a life as human beings.
There are thirteen such centres in London, as I am sure the noble Lord is aware, and others are planned, but, by the reallocation to the new centres, it would appear to be certain that some areas will be deficient in this provision and the service will fall short, at least for some time. Again, I pause to ask the noble Lord how he is going to make sure that these thirteen centres, which are certainly not arranged so as to fit thirteen boroughs, will in fact be appropriate for the new task. Perhaps he will deal with that when he comes to speak. As I said just now, a transport service must be provided to get people from their homes to the centres. At present, the Council has fourteen specially designed coaches, and three Utilibuses, and the total fleet may be expected to be nineteen coaches and seven buses by March 31, 1965. Is this fleet going to be divided among the new authorities? There must be occasions, if it is split up in that way, when the coaches will fail to arrive, and then there will be severe disappointment. I should like to ask the noble Lord how he proposes to deal with this fleet of coaches and buses which at present serve so well the interests of handicapped people.
Then there is something about which I have not personal knowledge, but I would place it before the Committee and the noble Lord—that is, the Court of Protection. In some 250 cases, an officer of the Council's Welfare Department has been appointed by the Court of Protection as receiver to manage the property belonging to a person incapable of managing his own affairs. The officer's expenses are defrayed by the Council. These powers will be transferred to the new London boroughs, but separate court orders will be necessary in every case to transfer the receivership to an officer of the new authority. This will all take time and cause a great deal of trouble and difficulty. So perhaps the noble Lord will
540
say something about the Court of Protection.
Then we come to the rehabilitation of the newly blind. For many years the only specialised service directed to the rehabilitation of the newly blind was provided by a voluntary organisation by means of residential courses at either Torquay or Bridgnorth. Experience showed, however, that a majority of London cases were unable or unwilling to leave their homes for several months for this purpose, and there were other difficulties. To meet this need, a three-monthly full-time non-residential rehabilitation course for newly blind persons was set up, and is now well-established in London. About 36 persons from all over London attend each course. I should be glad if the noble Lord would tell us whether he agrees that the London method has many advantages as compared with residential rehabilitation. Would he not agree that it would represent a serious deterioration in the services for the blind if this all-London service were to disappear at short notice?
There is another point with which I hope he will deal. Where will they go? Who will be responsible? Will they be split up, or will they be dealt with by some sort of co-ordination? I am bound to inform him that, unless he can provide a good explanation, most of us regard that as likely to prove a serious setback. We on this side are convinced—certainly the London County Council are; though we do not take it parrot-like from them—as are others who have looked into it, that a balanced and coherent devolution of the countywide welfare services to thirteen separate authorities cannot be achieved by March 31, 1965, without serious detriment to the services. When one talks about these services, it sounds as if one was concerned with some abstraction, or thinking of those who render the services—and they certainly deserve to be considered: but we are thinking primarily of the unjustified hardship to the old, homeless, handicapped and other people for whom the Council are under a statutory duty to provide.
The County Welfare Services have been organised during the last fourteen years since the passing of the National Assistance

541
Act on a county-wide basis. There has been practical experience of the complexity and difficulty of the transfer of functions which took place in 1930 and 1948, and in the time allowed by this Bill entirely new authorities would need to have a whole pattern working of standing orders, committee, departmental and establishment structures. They would have to recruit and retain staff, apparently without the advantages of central allocation of training arrangements. All that would, of course, involve a great revolution in the arrangements.
So I say to the noble Lord that this is not a case which can be disposed of by saying that there are boroughs of a certain size in some other parts of the country which seem to manage to provide these services. That is an issue which we have discussed more than once in this Committee in the last fortnight, and before that. But we are saying something additional, that here is something, if you like, which is not in direct conflict with the views of the noble Lord. We are saying, whatever opinion he and his colleagues have formed about the far distant future, that it would appear that the problems of the kind I have mentioned will for a number of years to come involve grave risk, to put them at their lowest, to these elderly and handicapped people. So the object of the proposed Amendment is to make sure that during the next few years at least the responsibilities for these services at least will be shouldered by those who have proved well able to bear them.
I apologise if I have taken a certain amount of time. I should like to repeat to the noble Lord that I have put a number of specific questions to him which I hope he will answer either this evening or on some other occasion; and I should like him to feel that behind all these administrative words we are deeply concerned about the future of these old and helpless people and that we are gravely anxious about their future. We believe that the noble Lord and his colleagues are likely to do them a great mischief but, at any rate, we do ask noble Lords opposite, without repudiating their philosophy, at least to take the practical step of trying to make sure over the next few years that the awkwardness and the dangers of the transition are reduced to the minimum. I beg to move.
Amendment moved—
Page 64, line 37, leave out from beginning to end of line 39 and insert the said words.—(The Earl of Longford.)
10.7 p.m.
LORD NEWTON: The effect of adopting these Amendments would be similar to that of the Amendments on Clause 45, relating to the health services, which were moved by the noble Baroness, Lady Summerskill, and which were discussed at considerable length. The general arguments against delegation and the eventual transfer, after a period of five years, apply to these Amendments as they did to the Amendments moved by the noble Baroness. Again, the implication of the Amendments is that there will be a distinction drawn between the inner and the outer London boroughs; and, as I have said before, we do not accept that there is any validity in this distinction. I must emphasise that the welfare services, as they exist in inner London at the moment, will be taken over as a going concern by the London boroughs, and those who benefit by these services will not be affected in any way. The old people will stay in the homes in which they are now living.
LORD LATHAM: Surely you cannot take them over as a going concern if you are going to split them up first?
LORD NEWTON: The premises will be there; the homes for the old people will still be there; and the old people will still be in them. There is an obligation on the London boroughs to take over and continue as they are the services which they will receive until they have produced their schemes for future development, have submitted them to my right honourable friend and have had them approved by him.
I would also emphasise that under Clause 5(3) of the Bill the new London boroughs will have very wide powers to make arrangements with one another for sharing the use of premises and staff, and so on, whenever this is necessary either on a temporary or a permanent basis, and I think the fact that these powers are there, and undoubtedly will be used, means that the difficulties which the noble Earl, Lord Longford, has envisaged will not in fact arise. After all, mutual aid between local authorities is a very well-recognised feature of the welfare services

543
as they exist to-day throughout the country.
LORD LATHAM: Can the noble Lord say how they can take over workshops for the blind?
LORD NEWTON: They will be taken over like anything else. It will be agreed either that one authority will be responsible or that several will have joint use of them, or that one will provide them on an agency basis for the others. There are several possibilities.
LORD LATHAM: Is the noble Lord saying that ad hoc bodies are to be brought into existence to deal with these things?
LORD NEWTON: Certainly, if necessary; there is ample provision in the Bill for that to happen.
We consider that the small homes for old people which will replace the former public assistance institutions in inner London should be sited where they are needed by the populations of the new boroughs which they will serve. And in our view the best way to ensure this in the future is to give responsibility to the new boroughs at the earliest possible date, not to put it off in the manner in which these Amendments require. As primarily housing authorities, which the London boroughs will be, their councils will be well placed to set aside sites for homes in areas of new development.
Where homes are small it is easier to group together residents with special needs and to create an atmosphere in which old people can grow older without losing their individual interests and their links with their friends and relatives. These homes will be built not simply to meet present needs but to serve the needs of old people in the later decades of the century, and it is therefore vital that they should be designed as soon as possible with an eye to the future; and we consider the people who will be responsible in the future should as quickly as possible get on with the job of drawing up plans.
As the noble Earl, Lord Longford, said, there are some homes in the London area and outside which cater for Londoners and others with special disabilities such as those who have
544
recently become blind and special classes of handicapped. The catchment area is not limited to the inner London area, and we certainly expect these highly specialised homes to continue to serve a much wider area than that of the boroughs in which they are situated. Social centres for the blind and social centres for the handicapped normally serve a relatively small area, and even in the counties social workers for the handicapped and home teachers for the blind normally work as part of the health and welfare domiciliary team based on an area office or divisional office. We think it is most important there should not be any obstacle in the way of this comprehensive team work by the domiciliary team being fragmented or disrupted in any way by piecemeal delegation, as proposed in these Amendments, or any other sort of division of responsibility. The transfer of these services to the boroughs will also have the advantage of concentrating responsibility for the handicapped in the same hands as responsibility for housing.
The difficulty of finding suitable houses and arranging for any special adaptations of houses that may be necessary may be a major problem for people with special handicaps. It is obviously a problem which can be more easily solved if a single authority is responsible for housing and welfare. In addition to having the disadvantages which I have already mentioned, this Amendment, if it were carried, would also mean there would not be the positive advantages of the provisions in the Bill as it now stands. Therefore I am unable to advise your Lordships to accept this Amendment.
THE EARL OF LONGFORD: With great respect to the noble Lord, I cannot feel that he has gone far to answer the specific questions I have put to him. It is clear, I think, that we will have to return to this matter in some form on the Report stage of the Bill, but it would be unhelpful to pursue it at this time of night; therefore, I wish to press it to a Division.
10.16 p.m.
On Question, Whether the said Amendment (No. 176) shall be agreed to?

Their Lordships divided: Contents, 14; Not-Contents, 49.

CONTENTS

Alexander of Hillsborough, E.

Lawson, L.

Shepherd, L. [Teller.]

Archibald, L.

Listowel, E.

Stonham, L.

Champion, L.

Longford, E.

Strabolgi, L.

Crook, L.

Lucan, E,[Teller.]

Walston, L.

Latham, L.

Morrison of Lambeth, L.

NOT-CONTENTS

Abingar, L.

Darwent, L.

Jellicoe, E.

Ailwyn, L.

Devonshire, D.

Jessel, L.

Albemarle, E.

Dilhorne, L. (L. Chancellor.)

Lloyd, L.

Aldington, L.

Drogheda, E.

Lothian, M.

Amherst of Hackney, L.

Dundee, E.

Margesson, V.

Ampthill, L

Effingham, E.

Melchett, L.

Balfour of Burleigh, L.

Elliot of Harwood, B.

Mills, V.

Boston, L.

Falmouth, V.

Moyne, L.

Boyd of Merton, V.

Ferrers, E.

Newton, L.

Carrington, L.

Fraser of North Cape, L.

Perth. E.

Chesham, L.

Goschen, V. [Teller.]

Remnant, L.

Coleraine, L.

Grenfell, L.

Rochdale, V.

Colville of Culross, V.

Hailsham, V. (L. President.)

St. Aldwyn, E. [Teller.]

Conesford, L.

Harcourt, V.

Tweedsmuir, L.

Crambrook, E.

Hastings, L.

Waleran, L.

Cullen of Ashbourne, L.

Ilford, L.

Wemyss, E.

Denham, L.

Resolved in the negative, and Amendment disagreed to accordingly.
THE LORD CHANCELLOR: I beg to move that the House do now resume—
LORD MORRISON OF LAMBETH: The most useful thing you have done to-day!
THE LORD CHANCELLOR: —because I think it a little unlikely that we shall be able to dispose of the next Amendment in five minutes.
Moved, that the House do now resume.—(The Lord Chancellor.)
On Question, Motion agreed to, and House resumed accordingly.

  MINISTER'S STATEMENT ON FLUORIDATION
  MINISTER'S STATEMENT ON FLUORIDATION
  MANAGEMENT EDUCATION
  MANAGEMENT EDUCATION
  IMPRISONMENT OF FIRST OFFENDERS
  IMPRISONMENT OF FIRST OFFENDERS