Sitting of 29 April 1964

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  MERSEY RIVER BILL
  Read the Third time and passed.
  SAINT PAUL, PORTMAN SQUARE, SAINT MARYLEBONE BILL [Lords] (By Order)
  Second Reading deferred till Wednesday next.
  MACDUFF HARBOUR ORDER CONFIRMATION
  Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act 1936, relating to Macduff Harbour (to be proceeded with under section 7 of the Act), presented by Mr. Noble (under section 7 of the Act); and ordered to be considered upon Tuesday next and to be printed. [Bill 134.]
ORAL ANSWERS TO QUESTIONS
  SCOTLAND

    Scottish Examination Board (University Representatives)
    Mr. Lawsonasked the Secretary of State for Scotland when he expects the Scottish universities to appoint their eight representatives to the Scottish Examination Board.
    The Secretary of State for Scotland (Mr. Michael Noble): The list given in my answer to the hon. Member for Galloway (Mr. Brewis) on 23rd April includes all the members.
    Mr. Lawson: Will the right hon. Gentleman say whether the universities of Scotland were invited to nominate more than eight members, and, if not, can he say whether they were really
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    appointed by him, or whether they appointed themselves?
    Mr. Noble: The universities indicated to me that they would like to consult together with a view to providing me with an agreed list. It seemed that that was appropriate, but it was understood that if for any reason I wished to ask the universities to reconsider the composition of their list, they would do so.
    Mr. Lawson: I am therefore correct in assuming that they appointed themselves.
    Mr. Noble: The hon. Gentleman is not correct in assuming that. They were submitted to me, and I appointed them.

    Houses (Replacement)
    Mr. W. Hamiltonasked the Secretary of State for Scotland what is the estimated number of houses in Scotland which have an estimated life of less than 15 years; and what is the annual rate of replacement of such houses.
    Mr. Noble: I have no information on which to base such an estimate. The current rate of replacement is about 13,000 a year, and this will increase as the rate of new building increases.
    Mr. Hamilton: Is the right hon. Gentleman aware that there are many thousands of these houses in existence, to the knowledge of hon. Members on both sides of the House, and that some of the worst are in the Prime Minister's constituency? In Kinross there are houses with holes in the walls and holes in the floors. They are being held up by wallpaper almost, but the Prime Minister does nothing about them. Can the right hon. Gentleman give an undertaking that these houses will be cleared within ten years?
    Mr. Noble: As I have said before, I see no reason why all the houses outside the main concentrations—and particularly Glasgow—should not be cleared within 10 years.

    Burnfoot Bridge, Airdrie
    Mr. Dempseyasked the Secretary of State for Scotland if he is aware of the dangerous and dilapidated condition of Burnfoot Bridge, Airdrie; and if he will authorise the start of a new improvement scheme and give a date for it.
    Mr. Noble: If later this year British Railways close the line under Burnfoot Bridge, Airdrie, as I understand they plan to do, I shall be prepared to approve the town council's proposals for removing the bridge and rebuilding the road on level ground as soon as the necessary preparations can be completed.
    Mr. Dempsey: I am grateful to the right hon. Gentleman for the letter that he sent me explaining his attitude in detail, but may I ask whether he will do his utmost to try to iron out these difficulties in view of the dilapidated condition of the structure and the dangerous condition of the bridge? Will he also bear in mind that the obsolete road surface, namely, ancient railway sleepers, is out of date and makes this scheme inevitably urgent?
    Mr. Noble: As soon as the railways have given their final decision, I shall do all that I can to help the local authority and the hon. Gentleman.

    Police (Capbands)
    Mr. Dempseyasked the Secretary of State for Scotland if he will introduce legislation to ensure that only policemen are entitled to wear diced capbands.
    Mr. Noble: No, Sir. Existing legislation, together with the common law, is already adequate to prevent anyone wearing articles of police uniform for an unlawful purpose.
    Mr. Dempsey: May I ask the right hon. Gentleman whether he is aware that that Answer will, to a great extent, be welcomed, because the wearing of the diced cap distinguishes policemen from other types of uniformed people? Will the right hon. Gentleman ensure that policemen have the exclusive right to wear this band on their caps in the interests of preserving law and order in their communities?
    Mr. Noble: Yes, Sir.
    Mr. Hendry: Will my right hon. Friend do everything in his power to ensure that nothing is done to prevent the wearing of the diced cap by The Argyll and Sutherland Highlanders which is a souvenir of the part that they played as the Thin Red Line at the Battle of Balaclava?
    Mr. Noble: I think that that is rather a different question.

    Cumbernauld (Transport Facilities)
    Mr. Benceasked the Secretary of State for Scotland what consideration he has given to the provision of new transport facilities between Cumbernauld New Town and Glasgow.
    Mr. Noble: My Department is in touch both with the new town corporation and with British Railways on this subject. Meanwhile the frequency of the railway service has been increased for a trial period.
    Mr. Bence: Has the right hon. Gentleman considered the construction of a line to link Airdrie with the Queen Street electric line, so that an electric train service could be brought into the new town of Cumbernauld, linking it up with Queen Street?
    Mr. Noble: I understand that the Development Corporation has asked the Railways Board to examine this arrangement, and I hope that it will be successful.

    Scottish Development Department
    Mr. Benceasked the Secretary of State for Scotland what expansion has taken place in the Scottish Development Department since January, 1963.
    Mr. Noble: The strength of the Department increased from 642 at 1st January, 1963, to 690 at 1st April, 1964.
    Mr. Bence: Are we to take it from that Answer that the Scottish Development Department will immediately set up plans to implement the development of the central area of Scotland, so that we can show some initiative before developments in the South-East take away more of our population?
    Mr. Noble: The increases of staff have been made largely because of the extra work which these plans for Central Scotland have necessitated.
    Mr. Ross: Is the right hon. Gentleman satisfied that we have adequate qualified staff to deal with the increased work that is necessary? Is it not the case that since the issue of the Central Scotland plan we have been promised

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    that studies will be carried out in all the other areas as well? Have we sufficient people to do that?
    Mr. Noble: I can tell the hon. Member that I am happy about the position. Of the additional staff that we took on last year—numbering 48—17 are professional and technical officers, of whom six have qualifications in planning and economic research. In the course of the present financial year we expect to recruit another 25 professional and technical staff. I think that this will be adequate.

    Special School Admissions, Lanarkshire
    Miss Herbisonasked the Secretary of State for Scotland how many children are awaiting admission to a special school for the physically or mentally handicapped in Lanarkshire and Scotland.
    Mr. Noble: Four hundred and forty-eight mentally handicapped children, including 36 in Lanarkshire, and 19 physically handicapped children, none of whom is in Lanarkshire, are awaiting admission to special schools. Most of these children will be admitted at the beginning of session 1964–65.
    Miss Herbison: Is the Secretary of State aware that these children, who are either physically or mentally handicapped, suffer grave disabilities and then have the further disability of not having any type of education at all? Can he say why there are over 400 in Scotland at the present? Can he assure us that they will be found places at the beginning of the session?
    Mr. Noble: Like the hon. Lady, I regret that there should be any. But 448 is approximately 5 per cent. of the total, and we have plans for speeding up the provision of these schools as fast as buildings and suitable teachers can be got. I believe that all these children will be admitted at the beginning of the session.

    Clean Cattle Exports
    Mr. Gourlayasked the Secretary of State for Scotland how many clean home-bred and Irish cattle have been exported to Europe since 1st March, 1964, to the latest available date.
    Mr. Noble: Between 1st March and 20th April, 1964, 1,375 clean cattle were exported to the European mainland from Scottish ports. No distinction is made in the export statistics between homebred and Irish cattle.
    Mr. Gourlay: Does the right hon. Gentleman realise that this is a substantial increase over the two months January and February, during which period about 740 cattle were exported, and in respect of which about £10,000 in subsidies had been paid, at a time when there was a great shortage of beef in Scotland, thus putting up prices to the housewives? Does not he think that it is scandalous for farmers to receive subsidies while meat contractors are permitted at the same time to export cattle? Does he intend to take steps to stop this practice?
    Mr. Noble: I do not agree with him that this sort of export—although it has risen considerably since I last answered a Question by him on the subject—has a material effect on prices. It is only 1·5 per cent. of the total supplies. As he may realise, it is very difficult to blame the farmers for this, because the meat passes from one hand to another and the person who exports it may be very far removed from the farmer.
    Mr. Clark Hutchison: Will my right hon. Friend support the Bill, which is being brought in by my hon. Friend the Member for King's Lynn (Mr. Bullard), to prevent the export of cattle for slaughter? I strongly support the Bill.
    Mr. Noble: That is a rather different question, which I should like to discuss with my hon. Friend at some time.
    Mr. Gourlay: Surely it is a matter of principle and not of degree. Is it not wrong that the British taxpayer should subsidise beef which is exported so that people on the Continent may get cheaper beef? On this ground alone will he take steps to prevent the export of this cattle?
    Mr. Noble: It can work the other way, as the hon. Member will realise. The Exchequer may save considerable amounts in deficiency payments if there

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    are no gluts on the market. I realise that the situation does not apply at the moment, but the question has two sides.
    Sir J. Gilmour: Does my right hon. Friend agree that, with the shortage of world meat supplies, if we do not supply the meat somebody else will and that that will mean less meat coming into this country? Is not the hon. Member begging the question altogether?
    Mr. Noble: I find it difficult to understand why, at certain periods, getting the people on the Continent to realise what first-class meat we produce may not have useful results at other times.
    Mr. Ross: When farmers are demanding that they should be given more specific shares in the home market, and when we are paying subsidies and production grants and the rest, surely the home consumer is entitled to have the advantage of the other side of the bargain and see that the home market is provided?
    Mr. Noble: The hon. Member may not have noticed the answer that I gave to a supplementary question put by his hon. Friend. It is only 1·5 per cent. of the total.

    Central Fife (Road Communications)
    Mr. Gourlayasked the Secretary of State for Scotland what steps he is taking to stimulate the local authorities in the growth area of Central Fife to improve road communications to give speedier access to Turnhouse and Edinburgh, as stated in Command Paper No. 2188, in view of the need for such action to attract potential industrialists to the area.
    Mr. Noble: Following a meeting which my noble Friend the Minister of State had with local authorities in the Central Fife growth area, the detailed provision of services in the area is now being dealt with by joint teams of officials from the Central Departments and the local authorities. The road improvements south of the Forth, to which the White Paper refers, are being planned in detail by consulting engineers.
    Mr. Gourlay: The right hon. Gentleman has made no reference whatsoever to the road improvements which are
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    essential on the north side of the river. Does this mean that the Minister has no faith in his White Paper—A Programme for Development and Growth—in these areas? If this White Paper means anything it means that we are going to attract more industry to Glenrothes and other parts of Central Fife. Is it not, therefore, incumbent upon the right hon. Gentleman to see that the necessary road facilities are provided in the area? It is not the local authorities which require stimulation but the right hon. Gentleman's Department. When will he do something about it?
    Mr. Noble: We are doing a great deal of planning in respect of an additional road for Fife. The exact route which the hon. Member may be thinking about—which at least one section of Fife wants rather than the other route—is a matter for debate and consideration.

    River Esk (Bridge)
    Mr. Willisasked the Secretary of State for Scotland what steps are being taken to retain for general traffic needs the bridge being constructed over the River Esk to convey equipment to Cockenzie Power Station.
    Mr. Noble: At present none, Sir.
    Mr. Willis: Is not this quite scandalous? Is the right hon. Gentleman aware of the fact that the cost of this bridge is about £30,000 or £40,000; that it is on the route which was originally suggested as a by-pass for Musselburgh, and that it is used to relieve the shopping centre of Musselburgh from the considerable volume of heavy traffic that passes through it? Is it not a waste of public money if the bridge is not to be used for general needs?
    Mr. Noble: When the planning consent was given to the South of Scotland Electricity Board to construct the bridge it was on the condition—as I think the hon. Member knows—that it would be removed when it had served its purpose. This consent expires on 31st December, 1969, a considerable time ahead. If the bridge is to be retained the highway authority would have to acquire it, and an amendment of the Midlothian County Plan, providing a permanent crossing at this point, would be needed. As

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    such a proposal would come before me for a decision, I cannot comment on the merits of it at this time.
    Mr. Willis: Will not the right hon. Gentleman consult the Midlothian County Council on this matter? This is on a trunk road, which is the right hon. Gentleman's concern. Will he see whether this bridge could not be used to make a badly needed contribution to the solution of the traffic problem of Musselburgh?
    Mr. Noble: It could, but it is for the Midlothian County Council to put the case to me. In due course it would have to go through the proper planning procedure.
    Mr. J. Hill: Is the Minister aware that there is great disquiet in the Burgh of Musselburgh about this bridge? Is he aware that, as was said by my hon. Friend the Member for Edinburgh, East (Mr. Willis), there is a bottleneck now in Musselburgh and that this would go a long way to relieve it not only for heavy traffic but holiday and weekend traffic on a busy great north road?
    Mr. Noble: As I think the hon. Gentleman knows, when the suggestion for this bridge was first put forward a great many of the inhabitants of Mussel-burgh objected, and that is the reason why this method of keeping the bridge open until 31st December, 1969, was adopted. The objections were then withdrawn. If the conditions are to be changed we must go through the proper procedure.

    River Esk (Pollution)
    Mr. Willisasked the Secretary of State for Scotland what progress has now been made in the purification of the River Esk, Midlothian.
    Mr. Noble: There is now very little pollution from sewage. Industrial discharges are still giving considerable trouble, but the Lothians River Purification Board hopes that additional plant installed by the paper mills will reduce substantially pollution from these sources.
    Mr. Willis: Is the Secretary of State aware that his answer is practically the same as the answer which I received two years ago? Of course, the sewerage
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    scheme undertaken by public authorities has contributed to the clearing of the river, but is he aware that it is still in a very bad condition? Is he satisfied that the river purification boards have sufficient powers to clear it?
    Mr. Noble: I think the hon. Gentleman at leant acknowledges that the part of the problem relating to sewage has been considerably improved. As I am sure he realises, it would be very easy to clear the whole of the problem by closing down the paper mills, but I am equally certain that is not what the hon. Gentleman would want.

    Dalkeith-Lauder Road
    Mr. J. Hillasked the Secretary of State for Scotland if he is aware that there have been two fatal accidents on the Dalkeith-Lauder road since the speed limit was increased from 30 miles per hour to 40 miles per hour; and what steps he is taking to make this road safer for pedestrians.
    Mr. Noble: Yes, Sir. The hon. Member has had a letter explaining the circumstances in which the 30 miles per hour limit is being restored while the possibility of a pedestrian subway is being investigated.
    Mr. Hill: It is true that I received the letter, and I congratulate the right hon. Gentleman's hon. Friend on his initiative in taking the steps which he has taken to solve this very dangerous problem. Is the Secretary of State aware that I can only regret that he did not accept this advice twelve months ago, in which case these two lives might well have been saved?
    Mr. Noble: I accept the tragedy of these two cases. All I can say to the hon. Gentleman is that no evidence has been produced to me or, I think, to anyone else that these two deaths were in any way connected with the speed of the vehicles concerned.

    Economic Development
    Mr. W. Hamiltonasked the Secretary of State for Scotland what representations he has received from local authorities and other bodies concerning the effects of the proposals contained

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    in the plan for South-East England on economic development in Scotland; and what reply he has sent.
    Mr. Noble: Stirling County Council has sent me a copy of a resolution it adopted on this subject, and Fife County Council a copy of one adopted at a meeting of Fife local authorities. I have drawn their attention to the clear assurances already contained in the White Paper on South-East England that the proper development of the South-East will be carried out without prejudicing growth in other parts of the country.
    Mr. Hamilton: How can the right hon. Gentleman possibly give that kind of guarantee? Is not it the case that to the extent that the South-East plan goes forward the attractiveness of the South-East must be increased regarding industrial development and that it is a cumulating process? Is he aware that to that extent the fortunes of Scotland must be adversely affected, if the plan goes through? Is not it the case that the plan provides for immigration, presumably from Scotland and other parts, and to that extent the hon. Gentleman accepts that we cannot do much about the present situation?
    Mr. Noble: I think that the hon. Gentleman is being much too defeatist. At the same time we are doing our very best in Scotland—the Government, local authorities and others—greatly to increase the attractiveness of Scotland for industrialists. We shall have a clear period of six or seven years ahead. It is true that the South-East Study accepts that there will be some migration from Scotland, though most will be from overseas and from other places. This is in accordance with the figures which the White Paper for Central Scotland lays down as our target.
    Mr. Hamilton: Has not the right hon. Gentleman, today or yesterday, received a Report from the Scottish Council condemning the plan for Scotland as it stands? If in the meanwhile, and while we are seeking to implement the provisions in the White Paper, the plan for South-East England is going ahead, clearly the comparative disadvantages for Scotland will increase.
    Mr. Noble: That assumes that we do nothing in the next seven years in Scot-
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    land, and that is an assumption which I do not accept.
    Mr. Ross: The assumption in the South-East plan is that we are to do very little. Did the right hon Gentleman know about the plan? If he knew about it, has he made any representations? Is he aware that there is an implicit slur on his Department and its ability to deal with the Scottish problem when provision is made here in the South-East for the reception of a million people in the future, many from Scotland?
    Mr. Noble: The hon. Gentleman is quite wrong. It is very few from Scotland compared with the present figure.

    River Clyde (Pollution)
    Mrs. Hartasked the Secretary of State for Scotland what action is being taken by the Clyde River Purification Board in the matter of the pollution of a tributary of the Clyde at Quothquan, which was referred to the Board by the hon. Member for Lanark last autumn.
    Mr. Noble: The Board tells me it has been in touch with Lanark County Council and the farmers concerned about means of improving effluents which are causing some localised pollution. I understand that it has written to the hon. Member giving details.
    Mrs. Hart: Is the right hon. Gentleman aware that it is only two days after putting down the Question and after six months of writing to the Board that I got an answer on this question? Is he satisfied that the river purification boards have enough money available for the work which they have to do? Would not it be a good thing if the right hon. Gentleman were to look seriously at the possibility of making a grant to the river boards to enable them to be better staffed and do their job more effectively?
    Mr. Noble: I regret that the board should have taken so long to write to the hon. Lady. It has not been suggested to me that the boards are short of money or that this was the reason for the delay in this case.
    Mr. Rankin: Is not it a disgrace that thirteen or fourteen years after the passing of this Act the River Clyde—and

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    possibly other Scottish rivers—is still being fouled by tributaries and that it would appear that the river purification boards are paying little attention to this matter?
    Mr. Noble: I think it true that the problem raised by the hon. Lady is a localised problem. My information is that there is no pollution of the Clyde itself.

    National Health Service Executive Councils (Appeals)
    Mr. Brewisasked the Secretary of State for Scotland what is the average time taken to dispose of appeals from decisions of National Health Service Executive Councils; and what action he proposes to take to reduce the delay.
    Mr. Noble: About three and one-half months in cases decided without a hearing and about nine months where there is a hearing. I am reminding all concerned in the handling of appeals of the need to ensure that there is no avoidable delay.
    Mr. Brewis: I thank my right hon. Friend for that reply. Will he look at the time taken between notice of appeal being given and the actual date of the hearing? Is he aware that on the last two occasions in Galloway the period was five months and four months from the time of the appeal notice to the case being heard?
    Mr. Noble: Yes, I will certainly do that. I am doing everything I can to speed up these cases.

    National Hotel, Dingwall
    Sir John MacLeodasked the Secretary of State for Scotland if he is aware of the inadequacy of the accommodation in the National Hotel, Dingwall, to provide facilities for large functions held by local organisations or members of the public; and if he will now carry out the necessary extensions to the hotel.
    Mr. Noble: I am aware that there is a shortage of facilities in Dingwall for large public functions. As my hon. Friend will know, consideration has been given, as one method of meeting this need, to the possibility of extending the National Hotel. But at present I am not in a position to make a statement
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    about the possibility of carrying out such an extension.
    Sir J. MacLeod: If my right hon. Friend is not prepared to provide this very necessary facility, will he hand over this hotel, or rather dispose of it, to those who will?
    Mr. Noble: I am not preventing anyone from providing public rooms for social functions in Dingwall. If my hon. Friend is suggesting the termination of State management, that is another question.

    New School, Glasgow (Govan)
    Mr. Rankinasked the Secretary of State for Scotland if he will state the reasons for the delay in proceeding with the building of the new High School of Govan.
    Mr. Noble: The Glasgow Education Authority is, I understand, proceeding with the remaining planning work as quickly as it can. It estimates that building should start next year.
    Mr. Rankin: Is the right hon. Gentleman aware that the promise of the commencement of building next year is not a very hopeful one? Is he further aware that some of the pupils formerly housed in Govan High School have to travel a considerable distance—although still within my constituency—to a school already abandoned by its previous occupants? Is he aware that this is not the way to treat an honoured and highly distinguished institution like Govan High School, and will not he try to prompt the authority to move a little quicker in this matter?
    Mr. Noble: I think the authorities are moving as quickly as they can, but I am sure that they will take note of what the hon. Gentleman has said.

    Juvenile Offenders
    Sir T. Mooreasked the Secretary of State for Scotland, in view of the policy recently advocated by Lord Kilbrandon regarding the treatment of juvenile offenders, what proposals he has for strengthening the law affecting the power of the courts to award more suitable punishment to such offenders.
    Mr. Noble: None, Sir. No doubt the hon. Member will have read the Report of Lord Kilbrandon's Committee on Children and Young Persons, which was published last week.
    Sir T. Moore: Yes, indeed, but would my right hon. Friend not agree that the most suitable punishment for these "young perishers", as Lord Kilbrandon so aptly termed them, would be a suitable spanking on the place which hurts without doing any harm?
    Mr. Noble: The Government view, which I share, is that corporal punishment inflicted on the rather distant advice of a court is probably not a useful solution.
    Mr. Woodburn: Would the Secretary of State ask his hon. Friend the Member for Ayr (Sir T. Moore) to publish the reminiscences of his youth to show how effective this was?
    Mr. Speaker: Order. Fascinating as it would be, I do not think it is part of the Minister's duty to ask an hon. Member questions.

    Greenock and District Hospitals (Radiographers)
    Dr. Dickson Mabonasked the Secretary of State for Scotland how many vacancies exist for radiographers in the Greenock and Districts Hospitals Group; and when there was last a full complement.
    Mr. Noble: One, Sir. There was last a full complement in August 1963.
    Dr. Mabon: Would the Secretary of State consider initiating some bonus system for radiographers in certain places because the shortage of even one deprives a hospital service of a considerable amount of investigation, particularly in an area of heavy industry? Would he look at this matter, not as one of great urgency, but as one of pertinence to situations such as this?
    Mr. Noble: I shall certainly look at it. I am glad to see that the numbers of radiographers coming into the service are going up, and I commend the particular efforts Greenock has made in bringing notice of this sort of work to the attention of school-leavers.

    Local Government Reform (Report)
    Dr. Dickson Mabonasked the Secretary of State for Scotland what progress has been made by the Working Party on the reform of local government in Scotland; and if he will make a statement.
    Mr. Noble: The Working Party's first report will be considered by the Steering Committee of elected members at a meeting on 1st May under the chairmanship of my noble Friend, the Minister of State.
    Dr. Mabon: Is the Secretary of State not finding from information he receives from the Committee that there are so many imponderables and unknowns—for example, the absence of a report from the Allen Committee on the question of the working of the rating system, the burden on the police and so on—that he has been somewhat premature in setting up this Working Party?
    Mr. Noble: There certainly are some imponderables in local government finance, but when the Steering Committee agreed to go into the problem it was agreed that the problem of local government finance should be considered at the same time. I do not anticipate, as I have said to the Standing Committee, that we are likely to get a final report for perhaps at least another year.

    Slum Clearance
    Mr. Rankinasked the Secretary of State for Scotland what new plan he has for the abolition of slums in Scotland.
    Mr. Noble: The essential point is to increase the rate of new building to permit more rapid clearance of unfit houses, and my policy is to get output increased to 40,000 houses a year.
    Mr. Rankin: Does the right hon. Gentleman remember that he definitely excluded Glasgow from this plan? As I got no satisfaction last week from the Prime Minister, can he help by telling me why he did so? Is he aware that if we take into account the number of houses in Glasgow which are beyond repair, plus the number of slums, something like 100,000 represents the replacement figure for the City of Glasgow and, at the present rate of progress, allowing for no further wastage, that will take

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    20 years? How does the right hon. Gentleman propose to face Glasgow's problem?
    Mr. Noble: I think the hon. Member has answered his own question in his supplementary question. It is just because Glasgow is a very big problem and has this particularly difficult problem of slum clearance that I excluded it from a target which otherwise I think reasonable. The corporation is doing its best and my Department is helping in every way it can to accelerate the programme.
    Mr. Rankin: The right hon. Gentleman is evading the main problem. If Glasgow is to speed up the rate of building to solve its problem within the years he evidently thinks possible, does he realise that if it has to face the financial aspect of that alone it will cripple the city? What particular or special financial aid does he propose to give Glasgow to help it to reduce the 20 years to 10 years?
    Mr. Noble: I have never suggested that it could be reduced from 20 to 10 years, so that point does not arise.
    Mr. Ross: Did I correctly understand the right hon. Gentleman to state that his aim was to build 40,000 houses a year? Does the Government's record of 39,000 houses built in Scotland in 1953, falling last year to 28,000, inspire us with any confidence in this ability to reach that target?
    Mr. Noble: I should have thought the fact that we are able to get so near to it in 1953 should inspire the hon. Member with great confidence. As he knows, we moved from 1955–56 a very great deal into the problem of slum clearance. Everyone knows that is much more difficult and much slower.
    Sir T. Moore: If Glasgow Corporation is so short of money that it cannot build houses for its own people, why was it able to advance nearly £4 million to buy Abbotsinch Airport while Prestwick Airport was available?

    Sugar Beet
    Sir J. Gilmourasked the Secretary of State for Scotland what acreage of sugar beet has been sown in the Cupar factory area of the British Sugar
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    Corporation this year and how this compares with the acreage sown in the two previous years at the same time in the season.
    Mr. Noble: As at 24th April this year 9,350 acres of sugar beet had been sown in the Cupar factory area. This compares with 9,193 acres sown at 26th April, 1963, and 15,417 acres at 27th April, 1962.
    Sir J. Gilmour: Would my right hon. Friend agree that while Scottish sugar beet growers should be congratulated in a difficult spring in getting so much sown, the figures since 1962 show that there is great need to review the price paid to beet growers in Scotland and possibly to reintroduce the transport subvention which used to be paid?
    Mr. Noble: That, as my hon. Friend knows, will be a question to come up at the February Price Review next year. The sugar beet growers had a particularly bad year last year because of the weather and other factors. This will have had some influence on the amount of beet planted this year.

    Breeding (Intensive Methods)
    Mr. Woodburnasked the Secretary of State for Scotland to what extent the factory method of breeding and producing poultry, eggs, pigs and calves is developing in Scotland; and what proposals he has to compensate for the reduction of livestock of all kinds in traditional farming.
    Mr. Noble: While there has been some development of intensive methods of broiler and egg production in Scotland, the only very large scale factory development I know of is one now being set up for the production and processing of pigmeat. I am not satisfied that the situation calls for any special measures to compensate traditional producers.
    Mr. Woodburn: Does the right hon. Gentleman realise that there is a proposition for one factory to produce 500 million eggs? If this development is to take place it will have serious repercussions on the farming community in Orkney and Shetland and many other parts of the country. If factory production of pigmeat, broiler chickens—and very soon, cattle—is to take place,

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    will the Secretary of State arrange for a specimen farm to be put into the Zoo so that future generations can see what farming looked like?
    Mr. Noble: And perhaps a piece of land so that they can see what land looked like. I am glad to see such large egg production in Scotland. The whole of this problem, which is a big problem, is being discussed by us with the N.F.U. and the situation is being watched carefully.

    Herring Industry
    Mr. Wolrige-Gordonasked the Secretary of State for Scotland what are the present arrangements to pay back moneys owing to the herring fishermen following the low price of 15s. offered by the Herring Industry Board for herring bought for reduction to meal and oil at its Stornoway factory.
    Mr. Noble: The Chairman of the Board on 22nd April proposed to the fishermen's associations that the Board should make supplementary payments to the salesmen acting for the boats concerned to bring the price actually paid for herring bought since 1st September last up to 27s. 6d. per cran.
    Mr. Wolrige-Gordon: May I thank my right hon. Friend for that reply and for what the Government are now seeking to do to rectify this tragic mistake? Is my right hon. Friend aware that the fishermen, in addition to the small payment per cran last winter, suffered unemployment during the winter? Some had to invest money in different expensive fishing gear and some had to leave the industry altogether.
    Mr. Noble: Yes, I am aware that some of the things my hon. Friend has mentioned took place. It is fair to say that if the Board had tried to make a guess earlier at the right price it would certainly not have been nearly so high as 27s. 6d. per cran.
    Sir John MacLeod: Would my right hon. Friend pinpoint who was responsible for this discrepancy? Why did it take so long for it to be corrected?
    Mr. Noble: The Chairman of the Board has accepted responsibility and the Board has expressed its regret. The Board submits accounts to my Depart-
    396
    ment every six months, and the accounting period concerned was to 31st December. My Department received the accounts a few weeks after that and the mistake then came to light.
    Mr. Wolrige-Gordon: But is my right hon. Friend aware that from the time that the factory at Stornoway was paying 15s. a cran, the factory in Fraser-burgh was able to pay 27s. 6d. a cran rising to 33s. a cran? Is he further aware that had there been any sort of economic price for herring at the Stornoway factory, far more herring would have been landed at that factory and the fishermen would not have had to pay the costs of transporting herring from the West Coast ports to the East Coast for processing?
    Mr. Noble: All this I accept, but it is in the past. The Board has accepted responsibility and acknowledged its mistake.
    Mr. Wolrige-Gordonasked the Secretary of State for Scotland what steps he proposes to take in order to prevent a recurrence of the mistake in regard to the grant payable to the Herring Industry Board to cover the standing costs of its factory at Stornoway and to exercise tighter control over the Board's provision for depreciation of the factory.
    Mr. Noble: The Chairman of the Board has assured me that he has made arrangements to prevent such a mistake recurring in future. The Board is discussing with my Department the arrangements to be made in future for the depreciation of the factory.
    Mr. Wolrige-Gordon: But is my right hon. Friend aware that there is a very real need to restore confidence in the industry with regard to its administration? What does he propose to do about it?
    Mr. Noble: I will certainly discuss what my hon. Friend has said with the Chairman of the Board.
    Mr. Hoy: Is the right hon. Gentleman aware that what has been disclosed shows complete mismanagement and mishandling of the whole situation and calls for rather more than a mere apology either from the Chairman or from members of the Board? Does he propose

    397
    to hold an inquiry into why this happened and into what has been happening in the past and, as a result of that inquiry, to report to the House what action he proposes to take to see that it does not happen in future?
    Mr. Noble: I will certainly think about the hon. Member's suggestion. The information available to me at the moment does not suggest that an inquiry would bring out any facts which I do not already know.

    Agricultural Price Review
    Mr. Woodburnasked the Secretary of State for Scotland to what extent the agreement of the National Farmers' Union to this year's agricultural Price Review was dependent upon commitments entered into by himself in regard to future reviews.
    Mr. Noble: The terms of the settlement are set out in the Annual Review White Paper. No other commitments were entered into.
    Mr. Woodburn: Is the right hon. Gentleman aware that, contrary to what appears in that Review, the farmers were not quite satisfied with the Review and that they are under the impression that the right hon. Gentleman has committed himself to something like a three-year or five-year plan? Would he tell the House what commitment he has made? He may not be Secretary of State next year, and it is better that the next Secretary of State should know.
    Mr. Noble: I can assure the right hon. Gentleman that no assurances were given about the determination of future Reviews. They could not be given under our system.

    Health Centres
    Mr. Manuelasked the Secretary of State for Scotland if he will state the number and location of health centres provided in Scotland since the passing of the National Health Service (Scotland) Act.
    Mr. Noble: Three, Sir, located in the Sighthill district of Edinburgh, in Stranraer and in Cumbernauld.
    Mr. Manuel: Is the right hon. Gentleman aware that successive Secretaries of State have fallen down very badly in
    398
    the provision of health centres throughout Scotland? Is he further aware that the National Health. Service (Scotland) Act places this duty plainly upon the shoulders of the Secretary of State and the Scottish Office? Will he inform the House whether he has any prepared scheme for these health centres for the future and, if not, why not?
    Mr. Noble: These are experimental types of provision in Scotland, and I think that we should move only as fast as there is obvious agreement on the need for them between local health authorities and the public.
    Sir John MacLeod: Is my right hon. Friend aware how very unfair it is to people in the remote areas on the West Coast to have to pay all the transport charges to get to these centres? This causes great hardship. Could he meet their expenses to the centres?
    Mr. Noble: That is quite a different Question, but I understand what my hon. Friend means.
    Mr. Ross: If these are experimental, as the right hon. Gentleman says, would the right hon. Gentleman give us some basis on which to judge how long the experiment has been going on? When was it started in Edinburgh, in Stranraer and in Cumbernauld?
    Mr. Noble: The Edinburgh experiment was opened in 1953, that in Stranraer in 1955 and, as far as I can remember, that in Cumbernauld last year.
    Dr. Dickson Mabon: Is it not a fact that the Minister of Health intends in his plan to have 47 health centres for England and yet the Secretary of State has never published a plan to indicate what his future intentions are? Is it not reasonable for my hon. Friends to ask this question and for the Secretary of State to give us a reply?
    Mr. Noble: My hon. Friend the Under-Secretary of State last week indicated that health centres were planned at Livingston and Cumbernauld.
    Several Hon. Members rose——
    Mr. Speaker: Order. We must get on.
    Mr. Manuel: On a point of order. In view of the very unsatisfactory nature

    399
    of the reply, I beg to ask leave to raise the matter on the Adjournment at the earliest possible moment.

    Housing Subsidies
    Mr. Manuelasked the Secretary of State for Scotland what was the total amount of subsidies paid to local authorities for houses completed in 1957 and 1963, respectively.
    Mr. Noble: Houses completed in the local authority financial year 1957–58 earn total annual subsidy of £827,466. The corresponding figure for houses completed in 1962–63 is £445,313.
    Mr. Manuel: Does the right hon. Gentleman not agree that this is a very substantial decrease? Is he aware that this reduction in subsidies allied to the high interest charges is contributing to a situation in which local authority finances are getting into a mess and creating enormous difficulties? Has he any plans for an examination of local authority finances in Scotland with a view to providing some solution in the years ahead instead of allowing the situation to become completely unmanageable?
    Mr. Noble: The main reason why there was a drop in this particular year is that there were 9,000 fewer houses being subsidised. But I find it difficult to accept the hon. Member's suggestion that everything is in a state of chaos when the housing figures for this year are so enormously greater than for any year since the war. It does not look as though the situation is desperate.
    Mr. Manuel: The right hon. Gentleman is quite wrong. The figures for 1952 were very much higher in respect of the houses completed than for this year.
    Mr. Noble: That is for houses completed. But a great many houses cannot be completed by the middle of April this year. If the hon. Member looks at the number of houses under construction, which at this time of the year is important, he will find that the figures are very different.

    National Joint Council on Teachers' Salaries
    Sir M. Galpernasked the Secretary of State for Scotland what steps he proposes to take in view of the Scottish
    400
    Schoolmasters' Association's disregard for the basis on which they accepted membership of the National Joint Council on Teachers' Salaries.
    Mr. Noble: I have seen Press statements issued on behalf of the Association in connection with the inaugural meeting on 22nd April of the Scottish Joint Council for Teachers' Salaries, but I do not think that any action on my part is called for at present.
    Sir M. Galpern: Does the Minister agree that, in view of the lengthy and somewhat complex nature of the negotiations on the National Joint Council for Teachers' Salaries in Scotland and the consequent need for non-publication of interim proceedings, and the fact that the Scottish Schoolmasters' Association accepted membership of the N.J.C. on the basis that it would respect this provision, he ought to take steps to ensure that the criticism which it levelled after the inaugural meeting will not be repeated and to warn the Association that if such action is persisted in the drastic action which I understand is part of the constitution will be put into operation?
    Mr. Noble: I am sure that I and the whole House hope that the bodies on this Council will act in a thoroughly responsible way. I do not think that I should add anything to that at the moment.

    Extra-Mural Education
    Sir M. Galpernasked the Secretary of State for Scotland what was the total expenditure on extra-mural and Workers' Educational Association education in Scotland for 1963; and what was the amount of the contribution made by his Department.
    Mr. Noble: I have information only on the expenditure on which grant has been sought. This amounted to £69,000 in 1962–63, towards which my Department contributed £13,125, in respect of administration.
    Sir M. Galpern: The Secretary of State fails to recognise, in giving that reply, what a miserable pittance has been contributed by the Scottish Department—the figure is £13,000—to the necessity of developing adult education in Scotland. I can assure the

    401
    right hon. Gentleman, if he is not already aware of the fact, that the development of this aspect of our educational system is not restricted through lack of demand, but purely because the financial resources are not available. I wonder that the right hon. Gentleman is not shamefaced through having to admit this afternoon that for the whole of Scotland he has contributed only £13,000. [HON. MEMBERS: "Question."] This is a vital matter. Will he take steps to ensure that greater development takes place at a far more rapid pace than has been the case hitherto?
    Mr. Noble: The grant which my Department makes is in respect of administration. The Extra-Mural Committees of the Universities of Edinburgh, Aberdeen and St. Andrews have not sought grant aid under further education regulations. I have no information about what they have spent. The Extra-Mural Committee of Glasgow University is the one which has applied for grant and satisfies the conditions of these Regulations. This is not the total amount.
    Mr. Brewis: Does the figure given by my right hon. Friend include adult education organised by local education authorities throughout Scotland?
    Mr. Noble: Without notice I would not be certain of the answer. This is certainly part of it, but I have not got the figures.

    Universities (Class Attendances)
    Mr. G. Lawsonasked the Secretary of State for Scotland to what extent the statistics of attendance on classes which he is to receive from the Scottish universities in connection with their annual reports for 1961–62 will include the numbers of those repeating classes as a result of failure or other cause.
    Mr. Noble: The statistics of attendance on classes for 1961–62 contain no information about the numbers repeating classes.
    Mr. Lawson: Is the Secretary of State aware that this is the type of information that we most urgently need? Does he agree that we cannot tell how universities are doing and what their figures are, unless we know how successful the students are? Will he ensure that we get
    402
    this information, not merely for the universities in total, but for each university separately?
    Mr. Noble: I do not think I can add to what my right hon. and learned Friend the Secretary of State for Education and Science said to the hon. Gentleman on 9th April.
    Mr. Lawson: Is the Secretary of State aware that he has those responsibilities under the 1889 Act? This is not a matter affecting the Secretary of State for Education and Science at all.
    Mr. Noble: Yes, but the information which the hon. Gentleman wants is not called for by the 1889 Act.
    Mr. Rankin: Is not the right hon. Gentleman aware that, although this information may not be officially available, it is known. It is not secret. If it is known, why should it not be made officially known?
    Mr. Noble: The hon. Gentleman also probably read the answers my right hon. and learned Friend gave. I do not think I can add to them today.

    Universities (Scotland) Act, 1889
    Mr. Malcolm MacPhersonasked the Secretary of State for Scotland when the consultations with the universities on the future of the Universities (Scotland) Act, 1889, will be completed; and between whom these consultations are taking place.
    Mr. Malcolm MacPhersonasked the Secretary of State for Scotland if, in the course of his consultations with Scottish universities on the Universities (Scotland) Act, 1889, he will propose to broaden the scope of the reports required from the university courts under the Act, in order to ensure that the Scottish public is kept informed on matters of general interest to them.
    Mr. Millanasked the Secretary of State for Scotland whether, in terms of the Universities (Scotland) Act, 1889, he will, in the course of his consultations with Scottish universities, propose the amendment of the Act to require that the annual reports of the university courts contain, in addition to the matters specified in the Act, information about rates of failure in undergraduate classes.
    Mr. Rossasked the Secretary of State for Scotland whether, in the course of his consultations with Scottish universities, he will propose the amendment of the Universities (Scotland) Act, 1889, so that the annual reports of the university courts shall include all matters on which the universities make regular reports to the University Grants Commission.
    Mr. McInnesasked the Secretary of State for Scotland what advice he has received from the University Grants Committee with regard to the operation of the Universities (Scotland) Act, 1889.
    Mr. Noble: I cannot yet indicate when consultations on this matter between the Scottish universities, my right hon. and learned Friend, the Secretary of State for Education and Science and myself will be completed. The first step must be for the universities to express their views. It is not the practice to disclose the details of any advice which may be given to my right hon. Friend, the Secretary of State for Education and Science, by the University Grants Committee.
    Mr. MacPherson: Are we to understand that the universities have not yet expressed a view—in other words, that the first step in these consultations has not yet been taken? Will the right hon. Gentleman keep in mind in the course of these consultations that the annual report called for by the 1889 Act gives the universities an excellent opportunity to make their work better known to the Scottish public than probably any other method which can be devised?
    Mr. Noble: The universities have been discussing this problem but have not yet formally presented any views.
    Mr. Millan: Does the Secretary of State accept the view that far more information about universities ought to be made publicly available? Will the question of failure rates be discussed with the universities so that we can learn exactly what is happening in those institutions the bulk of whose money is now paid for by the taxpayers?
    Mr. Noble: I will certainly discuss this question with the universities, but they presumably will be replying officially to my right hon. and learned Friend.
    Mr. Ross: Can we have the Secretary of State's assurance that, if the 1889 Act is amended, he as Secretary of State for Scotland will retain his interest in the Scottish universities?
    Mr. Noble: I shall certainly retain my interest, but I am not certain, if the 1889 Act is repealed, what other legislation may be put in its place.
    Mr. Ross: I do not want to be misunderstood. When I said "interest" I meant "statutory interest".
    Mr. Noble: I have to look at the problem in the light of what the universities say.
    Mr. McInnes: Am I to understand that the right hon. Gentleman is aware that he has a responsibility under the 1889 Act? Will he take steps to carry out this responsibility?
    Mr. Noble: As I explained to the hon. Member for Motherwell (Mr. Lawson), I am trying to do that, but he wants me to give the House information which is not within my responsibility under that Act.
    Mr. MacPherson: Without disclosing details about the consultations, will the right hon. Gentleman tell the House what his policy is in the matter of the universities keeping the Scottish public better informed?
    Mr. Noble: I often discuss this problem with the heads of the universities, but, apart from the question of the 1889 Act, the direct responsibility for Scottish universities rests with my right hon. and learned Friend.

    Garrick Hospital, Stranraer
    Mr. Brewisasked the Secretary of State for Scotland when he expects work to start on the 20-bed extension to Garrick Hospital, Stranraer.
    Mr. Noble: The Western Regional Hospital Board proposes to start work on this scheme in 1966–67.
    Mr. Brewis: Is my right hon. Friend aware that, while this announcement will be greatly welcomed in the Stranraer district, there is also urgent need for improvements to the Waverley Home, Stranraer?
    Mr. Noble: I will certainly do that.

    Schools and Universities (Liaison)
    Mr. Smallasked the Secretary of State for Scotland what proposals he has for closer liaison between Scottish schools and universities.
    Mr. Noble: Some of the major common interests of the schools and universities come within the scope of the new Scottish Certificate of Education Examination Board on which both schools and universities are represented. Individual universities are developing direct contacts with headmasters and other teachers. The universities are also in regular touch with my Department and, whenever appropriate, are represented on committees which I appoint.
    Mr. Small: Although recognising that definition, may I suggest that there are many entrants to universities who failed to find places, and can we not get a clearer definition of the Secretary of State's responsibility in further assisting university entrants?
    Mr. Noble: Both those supplementary questions are different questions from that on the Order Paper.

    Council Houses (Rents and Charges)
    Mr. McInnesasked the Secretary of State for Scotland what were the average loan charge, the average interest charge and the average rent, all stated in weekly terms, for a council house in Scotland in 1951 and 1963.
    Mr. Noble: I shall, with permission, circulate the available figures in the OFFICIAL REPORT.
    Mr. McInnes: I happen to know the figures which will be circulated. The figures reveal that high interest rates have added 12s. 10d. a week to the rent of the average four-apartment local authority house in Scotland. What steps does the right hon. Gentleman propose to take to eliminate the viciousness of high interest rates?
    Mr. Noble: The hon. Gentleman and I have discussed this on many occasions across the Floor of the House. He knows very well that, if subsidies are to be given, we on this side of the House believe that they should be given openly to the
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    individual and not by subsidising rents by lowering interest rates.
    Sir Harmar Nicholls: On a point of order. Within the last three or four minutes on two occasions hon. Members opposite have said that they already know the answer to the Question they have tabled. Is not that an abuse of Question Time?
    Mr. Speaker: Claims to omniscience raise no point of order.
    Mr. Ross: Is there any real reason why the right hon. Gentleman cannot give us this information? It is only three simple figures for 1951 and three simple figures for 1963? Cannot he give us them now?
    Mr. Noble: The figures which will be circulated do not apply to 1963, because we have not yet got these figures.
    Following are the figures:

    Scotland

    1951–52

    1961–62

    s.

    d.

    s.

    d.

    1. Estimated total loan charges per house per week

    11

    7

    25

    5

    2. Estimated total interest charges per house per week

    7

    7

    18

    10

    3. Average weekly rent of council houses

    9

    2

    10

    1

    The figures for the financial years 1950–51 and 1962–63 are not available, and the estimated loan and interest charges for 1961–62 are based on provisional figures.

    Perinatal Mortality Survey Report
    Mrs. Hartasked the Secretary of State for Scotland if he will review all plans for future hospital maternity provision in Scotland in the light of the evidence of the recent Perinatal Mortality Survey Report concerning the relative degree of success of consultant obstetric units, general practitioner maternity units attached to hospitals with consultant facilities, and other general practitioner units, respectively, in preventing avoidable infant deaths.
    Mr. Noble: The great majority of new maternity beds being provided in Scotland are in specialist obstetric units, and this pattern will be maintained. I do not think, therefore, that the Report makes necessary a review of the plans that we have already made.
    Mrs. Hart: Is the right hon. Gentleman aware that there are some plans in hand relating to certain areas for the provision of general practitioner units, not necessarily on the site of consultant hospitals? Is he further aware that according to the Perinatal Mortality Survey Report about 1,000 avoidable infant deaths take place every year in Scotland and does he realise that a great many of these could be avoided by careful deductions from the conclusions of that Report?
    Mr. Noble: My Department has certainly studied the Report and I agree with the hon. Lady that there are some units where general practitioners will be playing a very useful part, perhaps with adequate specialist cover looking after them. I do not think that I could go as far as to accept the whole of the Report at this stage.

    BILL PRESENTED
      MALAMWI INDEPENDENCE
      Bill to make provision for and in connection with the attainment by Nyasaland of fully responsible status within the Commonwealth, presented by Mr. Sandys; supported by the Prime Minister, Mr. Selwyn Lloyd, and the Attorney-General; read the First time; to be read the Second time Tomorrow and to be printed. [Bill 135.]

GUIDE WEAPONS CONTRACTS
3.31 p.m.
The Minister of Aviation (Mr. Julian Amery): I beg to move,
That this House takes note of the Second Report from the Committee of Public Accounts relating to guided weapons contracts placed by the Ministry of Aviation with Ferranti Limited.
I would like at the outset of my remarks to express the appreciation of the Government for the clear and objective Report which the Public Accounts Committee has made to the House on the Ferranti contract. As the Committee recognises, many of the questions posed in the Report cannot be finally answered until the results of Sir John Lang's inquiry are also in our hands. All the same, the Government have thought it right to invite the House, at the earliest opportunity, to discuss the important issues of public policy which are involved.
The immediate issue before us is the Ferranti contract. But bound up with it is the whole question of the weapons procurement policy pursued by successive Governments since the war. Before dealing with the contract itself I will say a few words about the general problem, of which it is a part.
The development and production of modern weapons is an extremely complicated business and what one is trying to do when one starts a new weapons system is to make something which will match the weapons which a potential enemy may deploy, a decade or so, ahead. This is not like printing a book, or turning out a motor car. One is making something that has not been made before. It is all at the frontiers of technical knowledge.
Admittedly, the production of new weapons is simpler than their development, but if the new weapons are to reach the Armed Forces in time, production generally has to begin well before development is completed; and the process of production is often made even more difficult by the need to introduce retrospective modifications as the military requirement changes—and it is likely to change over a 10-year cycle. It is, therefore, extremely difficult to estimate accurately how much the development or production of a new

409
weapons system will cost or how long it will take. The House is well aware of examples of slippages in cost and time drawn from our own experience and the experience of successive Governments. The experience of the United States and the French has been much the same.
It will be clear to hon. Members that the difficulty of making accurate estimates in the circumstances is, naturally, reflected in the contractual arrangements between the Government and industry under which weapons are developed and produced. In development the uncertainties are so great that most contractors—very often the Government as well—have little choice but to agree their contracts on a basis of cost-plus. Under this system my Department pays for what is actually spent on a project, plus a margin of profit agreed with the contractor.
Under cost-plus the contractor runs no risk of loss, but he has very little incentive to efficiency, economy or punctuality. Rather the reverse. Since the bills will be met by the Government, the contractor is tempted to play safe, use more labour and take more time than might be strictly necessary. His profit will not be affected one way or the other by the use of out-of-date methods or delay. Indeed, in some cases the higher the cost the greater his margin of profit can become.
Because cost-plus tends by its very nature to be wasteful of national resources and to lead to delays, successive Public Accounts Committees—and the Leader of the Opposition has often endorsed this view—have urged the Government to restrict the area of cost-plus contracts to the minimum and to adopt fixed-price contracts wherever possible. Under fixed prices the contractor can hope—if he is efficient and punctual—to secure higher profits than he could expect under a cost-plus contract. However, if he has miscalculated, is inefficient, or late, he may meet with a loss.
We have done our best to follow this advice of Public Accounts Committees and to extend the area of fixed-price contracts as far as possible. We have done this mainly in the sphere of production contracts because very few contractors are prepared to take on fixed-price contracts for development work.
410
The essential problem in a fixed-price contract is how to arrive at what is a fair and reasonable price for a particular programme or project. Where a contract is awarded after competitive tender—following tenders having been received from different firms—one at least has the yardstick of the competitive offers put in by the rival firms.
The Ministry of Aviation places about £200 million worth of new production contracts every year but, of this, only a bout £15 million worth are related to contracts where there is genuine competitive tendering. The remaining £185 million or so are related to contracts for which there is only one possible source of supply. This sounds a very high proportion, but it is not surprising. An aircraft or missile project is usually entrusted to a particular firm at the development stage. By the time a decision is taken to go into production the contractor who has done the development is generally the only serious candidate for the production contract.
All this means that over most of our production contracts—and we conclude about 18,000 a year—prices have to be agreed between the contractor and the officers of my Department on the basis of the best estimates that both sides can make of what is often an entirely new job. La view of the risks involved, my Department and industry sometimes conclude incentive contracts, where the liability to both sides is more limited than in a fully fixed-price contract. There are, for example, maximum-price contracts as well as target-price contracts, in which the contractor gives back a share of any savings he may make and has to pay part of any excess. There are also cost contracts in which the profit paid varies in an agreed way according to the contractor's performance.
None of these forms of contract offers as sharp an incentive to efficiency and speed as fixed-price contracts, and in the majority of production agreements we proceed on the basis of fixed prices A main reason for this is that our object is not only to secure satisfactory weapons as cheaply as possible, but to ensure delivery to the Armed Forces on time. Delay can be very expensive for a contractor, by adding to his labour and

411
overhead costs, and fixed prices give him the maximum incentive to get on with the job.
I have said enough to show that to estimate and agree fixed prices for the kind of programme that we are considering is plainly a difficult and complicated process. Other countries have found this, too. Hon. Members who have studied the Report of the United States Senate Sub-Committee—it is called The Pyramiding of Profits and Costs in the Missile Procurement Programme—will have seen what happened over the NIKE and BOMARC contracts.
On one BOMARC contract the United States Air Force agreed to an 8 per cent. fee on a target of 112 million dollars. The actual cost of the work proved to be not 112 million dollars, but 75 million, so the Boeing Company made a substantial windfall profit. BOMARC happens also to be a first-generation surface-to-air guided weapon. I refer to this not in extenuation of what happened over Bloodhound I, but to illustrate the difficulties that face those agencies responsible for procurement, abroad as well as here, in estimating the costs.
I come now to the Ferranti contract. Ferranti's has been established in the electrical and electronic business for 80 years. It has developed and produced highly complex equipments for the Services. It has an excellent record in the export field, and has been regarded by my Department as a highly competent organisation.
In 1950, when the right hon. Member for Vauxhall (Mr. Strauss) was Minister of Supply, Ferranti's was entrusted with the development of important components of the Bloodhound I missile. The Bloodhound I was a first-generation surface-to-air guided weapon designed for the Royal Air Force. In passing, it is interesting, I think, to note that the right hon. Gentleman's original estimate of the cost of developing Bloodhound I was between £1 million and £1½ million. The actual price proved to be £32 million. I say this not from any wish to criticise the right hon. Gentleman's record, but merely to emphasise how very difficult it is to get these estimates right.
412
Ferranti's was made responsible for the guidance and control of Bloodhound I, and for the launch control equipment related to it. Development was carried out on the basis of cost-plus. Ferranti's share of the total development cost of £32 million was about £8 million, on which their profit was £400,000, or about 5 per cent. of the cost.
As usually happens with weapon systems of this kind, production began before development was finished. The total value of the production contract of the whole weapon system was £44½ million and production was undertaken on the basis of fixed prices. Ferranti's share in this was £13½ million. The £11 million or more referred to by the P.A.C. is, of course, the money paid in the period ending 31st March, 1961, investigated by the Comptroller and Auditor General.
Up to 31st March, 1961, Ferranti's profit, according to my Department's assessment, amounted to £4,550,000 on production including the export orders. This represents a profit of about 113 per cent., on capital employed, or 63 per cent. on cost, or 40 per cent. on turnover according to how one likes to look at it. Ferranti's has stated that its further profit for the period after 31st March to completion of contract amounted to another £850,000—again, including foreign orders. This would give a total profit of about £5·4 million out of total payments by the Ministry of £13½ million, and export orders estimated at £1¼ million.
It must be said clearly that Ferranti's share of the work——
Mr. James Callaghan: The right hon. Gentleman went rather quickly over those figures. As it is the first time that we have had at least two of them, would the Minister repeat them so that we may write them down?
Mr. Amery: The total profit would have been about £5·4 million out of total payments by the Ministry of £13½ million and export orders estimated at £1¼ million. This represents a profit of about 63 per cent. on cost, or 113 per cent. on capital employed, or about 40 per cent. on turnover——
Sir Godfrey Nicholson: The term "capital employed" is being rather loosely employed in this inquiry.

413
Would my right hon. Friend tell the House how the capital employed was assessed?
Mr. Amery: My hon. Friend has caught me there. I do not have details of the exact method of assessment, but I can certainly find them out and let him know. This is not a figure that I have produced today. I produced it originally in answer to a Question by an hon. Member opposite, who asked what the figures of capital employed were. The figure was produced only after considerable research by my Department.
It must be clearly said at once, and in fairness to the firm, that Ferranti's share of the work on Bloodhound I was carried out on time and to the full satisfaction of the R.A.F. The weapon was sold to Sweden and to Australia in competition with American missiles; and the sale of Bloodhound I undoubtedly paved the way for the export orders for Bloodhound II, which are already valued at about £40 million. B.A.C., Ferranti's and the other firm concerned pay a levy to the Government on exports, and these should amount to about £4 million overall on Bloodhound II.
These are very creditable achievements, but I think that it is the general view on both sides of the House that the profit secured by Ferranti's on these particular Government contracts was, by any standards, excessive and unjustified. Before I deal with the central problem of how this excessive profit arose I want to turn to one or two related matters that arise from the Public Accounts Committee's Report.
The Committee has criticised my Department for not agreeing its prices with Ferranti's at a much earlier date. It is perfectly true that if this had been done neither the Ministry—nor, indeed, Ferranti's—would be open to the charge of having agreed what have proved to be inaccurate estimates at a time when the contract was two-thirds of the way through and when both sides had access to a great deal of relevant information. If prices had been agreed earlier, there would have been a more genuine element of risk to both parties.
The reason prices were not agreed earlier was that Ferranti's was not pre-
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pared to conclude until it could form a clear judgment of what overheads were likely to be, and we understood and accepted that position. Here, perhaps, it is interesting to note, simply as a commentary on this issue, that in the case of the BOMARC missile, to which I have referred, the United States Senate Sub-Committee criticised the United States Air Force for having agreed the price with the Boeing Company too early in the day; for acting, in fact, on insufficient information.
I think that the House would agree that the precise moment at which prices are agreed must be a matter of judgment and balance—one has to weigh the risk and have some information on which to proceed—but in this case, regrettably, the fact remains that even if prices had been agreed earlier the loss to the taxpayer would have been no less—it might well have been greater.
The Public Accounts Committee has also criticised the Ministry's failure to compare the total technical cost estimates of direct labour employed on the project with the direct labour figures used by the accountants branch in assessing the actual expenditure on overheads. Sir Richard Way, the Permanent Secretary to the Ministry, has explained in some detail to the Public Accounts Committee how this came about.
Briefly, the reason is that the accountants branch figures relating to overheads very seldom have the same relevance to technical cost estimates as they had in this case. There are usually several different programmes, some on Government and some on private account, going on in the same group of factories. It is then virtually impossible to deduce the true figure of direct labour employed on Government business from the estimate used for overheads.
In the Bloodhound contract, as it happened, the 'Ferranti product group concerned was doing virtually nothing else except the Bloodhound I. The figures were thus directly relevant to each other. This happens very rarely. As I said, we have been placing about 18,000 contracts a year and I have been able to find—and when I say that I mean with the help of my Department—only five cases over a periled of 10 years where a check between these two has been of value. It has not, therefore, been a routine

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procedure to compare the two. It is however, clear that if these figures had been compared in this particular case we should have insisted on very different prices.
I have accordingly requested that in all future contracts the two sets of figures should so far as possible, be compared. I have also asked that the Department's normal practice of building up cost estimates on the basis of the three elements of direct labour, materials and overheads should be reviewed. This, of course, will include the relationship of overheads to direct labour. I am not satisfied that the present formula is the best on which to proceed. I am also looking carefully at the suggestion which is sometimes made that the profit rates that we allow in Ministry contracts do not of themselves give a sufficient incentive.
The Public Accounts Committee has a good deal to say about the part played by Ferranti's in all this. For my part, I would only say that it is clear from Mr. Sebastian de Ferranti's evidence, on page 25 of the Report, that when the prices came to be agreed, between July and October, 1960, the firm knew that it would make a very large profit. The contract, after all, was two-thirds of the way through. In those circumstances, where the element of risk was at least very much diminished, I think that it would have been commercially more prudent for a firm of Ferranti's standing to have dealt differently with an important customer.
I do not want to say more than that at this stage—[HON. MEMBERS: "Why?"]—but, when all is said and done, the central fact remains that there was a serious discrepancy—a discrepancy of nearly 100 per cent.—between my Department's estimate of the cost of the direct labour that Ferranti would use on this contract and the cost of the labour that it actually used. I am determined that we should find out exactly what happened and how this discrepancy arose. We must know this as a matter of fact and not a matter of speculation. This is not just because of the money involved, but because until we know exactly what happened we cannot be sure that this is an isolated incident; and we cannot take steps to stop it happening again.
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As the House knows, Sir John Lang is inquiring both into what went wrong in this particular contract and into any consequential changes in our contracting procedures that may be needed. Sir John has had vast experience of this kind of work, but hitherto he has had to work with one arm behind his back. This is because he has not had access to Ferranti's records. Mr. Sebastian de Ferranti has felt strongly, as he told the Public Accounts Committee, that it would be wrong in principle for him to disclose his records in the case of a fixed-price contract. He has felt, I understand, that to do so would be to put in question the agreement reached between the industry and the Government in 1947.
Under that agreement, the Government of the party opposite agreed to give up their right to inspect records in the case of fixed-price contracts, but in the special circumstances of this case I have asked Mr. de Ferranti to make his records available to Sir John Lang, and, in the public interest, he has agreed to do so. He has given me an assurance that Ferranti's will give the Lang Committee all the help and assistance it can. He has told me that Ferranti's will open its books in so far as these are relevant to the Bloodhound contracts, to the Committee and its representatives. He has also said that he will give the Committee access to whatever records it wishes to examine in relation to those contracts and that Ferranti's will co-operate with the Committee in every possible way. I welcome Mr. de Ferranti's offer. I think that now, on both sides of the House, we can feel that we shall find out exactly what happened and that we shall have information on which to base any remedial measures that may be needed.
I turn now to the Amendment standing in the name of the Leader of the Opposition and the names of some of his hon. Friends. This invites the House to censure the Government for their laxity in permitting excessive profits. I can only interpret this as a censure on the administration of my Department and more particularly of the branches connected with contracts. [An HON. MEMBER: "And the right hon. Gentleman."] I have said "of my Department" and more particularly on the contracting aspects of that Department.
It is possible that the Lang report may reveal laxity or negligence, or even

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worse. If it does, the Government and the House will no doubt see to it that appropriate measures are taken. But it would be quite contrary to our sense of justice to condemn the Government or their officials of laxity before the inquiry is finished, and before we have the facts. I could understand it if the Opposition had felt justified in putting down their Amendment on the ground that without access to Ferranti's books the Lang inquiry could not get at all the facts, but now that Sir John Lang is to have the facts, and I have told the House about the position over this, I feel sure that the Leader of the Opposition will agree that the Amendment is wholly premature and should be withdrawn.
The Amendment can also be construed as implying that the Opposition think that the Government have allowed excessive profits not just in the case of Ferranti, but in others as well. There may be cases of excessive profit which have not come to light, but I have seen no evidence of them, and if the Opposition are to persist with this charge, and use the wording of the Amendment, they are under an obligation to substantiate it. My Department lives very close to the aviation industry and I do not think that anyone would say that the industry, taken overall, is a high-profit industry.
A few years ago five major companies in the business revealed to us that their average profits on Government contracts had been 11·7 per cent. on cost in 1951. This was the time of the Korean War, and, incidentally, when the party opposite was still in power. They were 8·6 per cent. on cost in 1954. These figures were made available to the Estimates Committee in 1956 and, I understand, accepted by the Committee. The average percentage of profits related to capital employed by the major Government contractors in the aircraft industry is disclosed in their published accounts as 6·3 per cent. in 1961 and 7·5 per cent. in 1962. I know that these are overall figures, but, frankly, any suggestion that the industry had been financing private ventures out of excessive profits on Government account would be met with a hollow laugh by the Society of British Aerospace Companies.
The Amendment censures us for allowing excessive profits. Does this imply
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that we should be congratulated where we inflict excessive loss on industry? [HON. MEMBERS: "Oh."] We do not hear so much from the party opposite about losses suffered on fixed-price contracts, but I think that I ought to say something to the House about this. Hawker-Siddeley recently informed me that it has made heavy losses on the fixed prices agreed with the Government for the purchase of Argosy aircraft for the Royal Air Force. The total value of the contract was about £27 million, and I am advised by my Department, which has been into the matter with Hawker-Siddeley that the net loss is at least £5 million, and may be more. I could give a number of other examples where heavy losses have been incurred on fixed-price contracts, among them the Prestwick Pioneer, the jet Provost Trainer Mark 3 and the Gazelle engine.
In my view, these losses by industry underline the extreme difficulty of the problem of getting the estimates of cost and time-scale right where the development of modern weapons is concerned. They show that the contractors themselves are quite liable to make serious mistakes. They show, also, that the officials of my contracts branch are not a bunch of incompetents who are habitually "taken for a ride" by industry, but are serious officials who are perfectly capable of striking a hard bargain.
I want to make my position quite clear. I take no pride in the losses industry has suffered from fixed-price contracts. They are just as regrettable as excessive profits, in some ways almost more regrettable because profits are at least a sign of efficiency and the Department of Inland Revenue gets something back from them. What the Government want is fair and reasonable prices, and we have continually to adjust our contracting procedures to achieve this aim.
Mr. John Diamond: The Minister quoted one particular case of losses—[HON. MEMBERS: "Four."] He quoted one particular case by name—[HON. MEMBERS: "Four."] I am sorry to hold the Minister up. He mentioned that case but, of course, he did not describe the income or the expenses. In its expenses, this firm has in the past

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included a figure of £72,000 as compensation for loss of office to one director. Was a figure like that included in the expenses before arriving at this particular loss?
Mr. Amery: Not to take up the time of the House too much, the broad picture is this. The firm tells us that its losses are about £7·7 million on the contract. There are certain features in this loss where we may have a liability I do not want to pre-judge that at this stage. There are other features which we do not accept as real loss. But, having set those aside, and taking account of what we regard as genuine loss, I am advised that it is at least £5 million and may be more.
Mr. George Wigg: Will the right hon. Gentleman draw the attention of the House to what actually happened over the Argosy? Surely he is not saying that the Argosy is in any way comparable with Bloodhound. Bloodhound was developed under Government order as a result of instructions from the Government Department concerned, but the Argosy was a replacement for the American DC6A, which was operating at 16 cents per ton-mile. The truth is that the company could not sell the Argosy and the Government helped it out of a hole. If there has been any loss, therefore, it is, perhaps, because the Government drove a hard bargain—perhaps an unduly hard bargain—in what they did, because the whole Argosy programme, which was originally developed as a civil project, failed to come off.
Mr. Amery: The hon. Gentleman's lecture on what happened over the Argosy is interesting to all of us, but I am not here concerned with all the details by any means. I am not trying to draw an exact parallel of complete identity between the Argosy and Bloodhound any more than I was trying to draw an exact parallel between the BOMARC and Bloodhound.
All I am saying—and it is highly relevant—is that, if one criticises, as the Amendment does, the administration of our contract procedures, and if one tries to give the impression, as the Amendment does, that there are other cases of excessive profits having been allowed, it is plainly important that the House should take account of the fact that there are also a number of cases of important con-
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tracts on which industry has made losses on fixed prices, and in the particular one I have cited industry happens to have lost more than Ferranti made.
Mr. Callaghan: The Minister introduced this comparison. It was not raised from this side of the House. Can the right hon. Gentleman confirm that the Argosy programme started off as a private venture by the company and it is, therefore, to be distinguished from Bloodhound? Heavy losses were made. The company was unable to sell the aircraft, and, as my hon. Friend the Member for Dudley (Mr. Wigg) said, the Government then placed an order which, for prestige reasons among others, the company was glad to accept. This still involved the company in a heavy loss, but, if the Government had not helped, the loss might well have been even greater.
Finally, will the right hon. Gentleman tell us who suddenly found this out and put it out to the public? The company says that it did not put it out to the public. Is this a red herring dragged in at the last moment?
Mr. Amery: The only issue relevant to the debate here, and the questions whether we have been lax in the administration of contracts or whether there have been other excessive profits, is that this is a fixed-price contract in which the contracts branch of my Department agreed with Hawker Siddeley a price under which Hawker Siddeley lost £5 million on a particular deal. This and nothing else ise relevant to the debate. I am not surprised that the hon. Gentleman finds it a little embarrassing. It pricks a little the balloon of the case which he had meant to inflate.
The point I make is this. We do not take any pride in these losses.
Mr. A. Woodburn: Why mention them?
Mr. Amery: That is a fair question. I mention them for three reasons. First, because I think it very important that everyone in the House should be quite clear that it is extremely difficult to get the estimates right and that not only my officials, but industry also, are liable to get the sums wrong. I mention them because I think that it is only fair to the technical costs branch, the contracts

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branch and the accountancy branch of my Ministry to show that they are not "suckers" who are "taken for a ride" by industry on every occasion, but are very competent people. I mention them also because, if there is any allegation, as there is in the Amendment, that there are excessive profits widely being made, it is important to have it well realised that the general profit level of the industry s not a high one and that there are several cases, of which I have mentioned four, where losses have been incurred on fixed-price contracts.
What we want to see is neither excessive profit nor excessive loss. What we want to see is fair and reasonable prices. As my Permanent Secretary told the Public Accounts Committee, I have initiated a review of our contracting policy. It may well be that we have pushed the principle of fixed prices too far. I am sure that the principle is right, though it may be that we have pushed it into an area where it does not fully apply. It may be that between the black area where cost-plus has to operate—the development area—and the white area where one can justifiably use fixed price we ought to have a larger grey area than we have where we make greater use of more limited incentive contracts.
It may be that the Government ought to share with the contractor the fruits of excessive gain or the damages of excessive loss. They do under some contracts at present, and perhaps we ought to enlarge this. For instance, one might have a target price under which the Government would recover a proportion of any profit beyond an agreed percentage and under which the firm would recover a proportion of loss beyond an agreed percentage. It is also worth considering whether, in certain contracts, there might be advantage in supplementing the efforts of the technical branch by bringing in outside consultants. We also want to consider whether there are any lessons to be learned from the procurement policies of other countries. All these matters are being studied. The Ferranti case has given impetus to these studies, and I hope in due course to report on them to the House.
Before I sit down, I should like to return to the Amendment. I have criticised its terms, but I am more seriously
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concerned with what lies behind it. We all know that there are several right hon. and hon. Members of the party opposite who would like to see the aircraft industry taken into public ownership or nationalised. [Laughter.] It is all very well for hon. Members opposite to laugh, but an Amendment was put down on 28th February, 1963, by the hon. Member for Swindon (Mr. F. Noel-Baker) and some of his hon. Friends; a resolution was passed by a large majority at the meeting of the Trades Union Congress last summer; and the New Statesman and Nation has very conveniently reminded us of what the Leader of the Opposition said at the Labour Party conference in Scarborough in 1960.
In case there are any hon. Members who are not readers of the New Statesman and Nation, let me read what the right hon. Gentleman the Leader of the Opposition is reported as having said in the debate on Labour in the 1960s.
Mr. Harold Wilson: Read the full text.
Mr. Amery: The right hon. Gentleman said:
"In the interests of the taxpayer"—
Mr. Wilson: Read the full text.
Mr. Amery: He said:
"In the interests of the taxpayer there is in my view an unanswerable case for the public ownership or nationalisation of the defence industries in this country. If you do not do that there is no way of protecting you as taxpayers from hundreds of millions pounds more going down the drain."
Hon. Members: Blue Streak, Blue Water.
Mr. Amery: The hon. Member for Cardiff, South-East (Mr. Callaghan) has shown me that he is a little hard of hearing, so I will read the quotation again.
Mr. Wilson: Read the full text.
Mr. Amery: The right hon. Gentlemen said:
"In the interests of the taxpayer"—
Mr. Wilson: Will the right hon. Gentleman——
Mr. Amery: I will give way in a moment.

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The right hon. Gentleman said:
"In the interests of the taxpayer there is in my view an unanswerable case for the public ownership or nationalisation of the defence industries in this country. If you do not do that there is no way of protecting you as taxpayers from hundreds of millions of pounds more going down the drain".
Mr. Cyril Bence: It has gone down the drain.
Mr. Amery: The right hon. Gentleman added:
"That is only my view".
Is that still the right hon. Gentleman's view? We want to know. [HON. MEMBERS: "Answer."] Is that still the right hon. Gentleman's view?
Mr. George Brown: Down which drain did it go?
Mr. Speaker: Order. We have rather a lot to do, and a large number of hon. Members want to speak. I hope that the House will make a little less noise, so that we can get on.
Mr. Amery: Is that still the right hon. Gentleman's view? Is that the view of his colleagues who have put their names to the Amendment? Is their criticism not so much of our administration as of the system itself?
Mr. H. Wilson: I have three times asked the right hon. Gentleman to read the whole quotation. He has read a selected part, but not the whole quotation, or he would have got it better in context. However, we do not expect more than that from him. The phrase—[HON. MEMBERS: "Straight answer."] I do not want to take up too much of the right hon. Gentleman's time.
Had the right hon. Gentleman read the lot—he quoted the last few words of what I said—he would have realised that I was introducing a report in which I said that we would produce our programme for public ownership the following year. That programme was produced. The section which my right hon. and hon. Friends are prepared to deploy in this debate was drafted by myself and dealt specifically with the problem of preventing the taxpayers' money from going down the drain.
Mr. Amery: Quite frankly, I do not think that I should have interrupted if I had had so little to say.
The central question here is whether, behind the Amendment, there is a criticism not of our administration of procurement policy, but of the system as a whole. If it is a criticism of the system as a whole—and, certainly, the quotation which I read shows that the right hon. Gentleman at one time thought that the system was all wrong—then I for one will be very glad to discuss the issue in every constituency in the country.
Mr. E. Shinwell: Will the right hon. Gentleman come to my constituency and debate it?
Mr. Austen Albu: Will the right hon. Gentleman give way?
Mr. Amery: No. I am sorry.
I hope that I have said enough to show that we are very far from being complacent about the details of our procurement policy. But if the challenge from the Opposition is to the system of defence procurement, then there is an overwhelming case to be made for this system.
This is the system which produced the Canberra and the Hunter, two aircraft which have given splendid service to the Royal Air Force and which have been sold throughout the world. It is the system which has produced the Vulcan and Victor bombers, by general consent by far the best medium bombers in the world. It is the system which has produced the Lightning, now flying at well over Mach 2.
It is the system which has produced some of the best missiles yet developed or produced anywhere in the world—Blue Steel, Firestreak, Bloodhound II, Seacat, Red Top and the Vigilant. It has earned us £575 million worth of orders for the export of military equipment since we came to power. What is more, it is the system which, despite the persistent knocking of the party opposite, will produce the TSR2 well ahead of the TFX and the Concord several years before its American rival.
Of course, mistakes will occur under any system. When they do, we shall do all in our power to correct them. The system itself, however, has stood the test

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of time. The equipment of our Armed Forces testifies to its success, and we shall stand by it.
4.21 p.m.
Mr. James Callaghan: I beg to move, at the end of the Question to add:
"and censures Her Majesty's Government for their laxity in permitting excessive profits to be made at the taxpayer's expense on private contracts".
The Minister has a curious air of smooth blandness which, this afternoon at least, did not carry conviction. [HON. MEMBERS: "It did."] Certainly, I was not convinced by his theological distaste for anything to do with nationalization. [HON. MEMBERS: "We were."] I am glad to see that hon. Members opposite were convinced, but I should like to ask them at the outset where their distaste begins and ends.
In the concluding sentences of his speech, the Minister spoke of the great success that we will have in developing the Concord. This is apostasy. The French half of Concord is being developed by a nationalised undertaking. When does the Minister propose to pull out of that project in order to preserve the sheer pristine, unsullied virginity of private enterprise?
Mr. Amery: The only suggestion that we should take steps to pull out of the project came in a Motion moved recently by the Opposition, when they said that we should have left ourselves a way out.
Mr. Callaghan: If the Minister wishes to interrupt again, I suggest that he remembers the words which he used about an earlier interruption. That one was rather thin.
I propose to develop my main argument, but before I get into trouble and rough waters, as, I have no doubt, I will this afternoon——
Sir Ian Orr-Ewing. Deep water.
Mr. Callaghan: I deliberately forbore using the word "deep". It is the Minister who is in deep water. He is drowning. Now, let hon. Members opposite be quiet.
I want, at the beginning of my speech, and I hope that I shall carry the whole House with me, to thank hon.
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Members, on both sides, who serve on the Public Accounts Committee and who have done this job for us. I should also like to express, I believe, the thanks of the whole House to Sir Edmund Compton, the Comptroller and Auditor General, who originally uncovered what is admitted by the Minister and on all sides to be a rather grave matter.
Having had to study its Report, I should like to say of the Public Accounts Committee that it is frequently unhonoured and unsung, but that it does one of the most valuable jobs of work that is done by any Committee of the House. I must include in that the work of the Estimates Committee. The Committee has in this case ascertained the facts, probed the reasons and given us more authoritative, reliable, factual material than we could otherwise have had.
We see the members of the Public Accounts Committee stealing out of the Chamber just when all the Thursday afternoon excitement is at its height. Off they go to their Committee, where they are isolated for a couple of hours in doing this job on behalf of the House and of the public.
Mr. Frank Allaun: In agreeing with what my hon. Friend has said about the Public Accounts Committee, may I ask whether he would agree with me that it would have been an excellent thing if Mr. de Ferranti had offered to open his books to that Committee instead of refusing to open them until the Committee had finished its work?
Mr. Callaghan: I am obliged. I said that the Committee had given us more material for the debate than we would otherwise have had.
I was going on to say, when I had finished with the work of the Public Accounts Committee, that it was a very great pity indeed that Mr. de Ferranti refused to the Committee information that would have made its Report absolutely complete. I do not understand why he should now be ready to give to Sir John Lang the information that he denied to the Public Accounts Committee.
I finish thanking the Public Accounts Committee by saying that in the light

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of its Report and of a number of others which have been produced, there is a growing case of the need to extend the system followed by the Public Accounts Committee if Parliament is to maintain its supremacy as an authoritative forum.
Whatever may be said, the plain truth is that Ferranti's is not an isolated case. It is simply the latest example of the financial chaos which has existed in the missile field during the whole of the last 10 or 12 years. It is an almost exact repetition of the experience that the House of Commons and the country had in connection with three other weapons whose financial history was examined by the Public Accounts Committee some years ago, in 1960. I refer to Thunderbird, Seaslug and Fire Streak. According to the Public Accounts Committee, of which my right hon. Friend the Leader of the Opposition was then Chairman, the total cost of those three weapons was £162 million, paid for by the taxpayer.
When the Public Accounts Committee examined what had happened in the financial history of the development of those three weapons at that time, the conclusions which it reached were that the technique of comparing cost with estimate had broken down and that the arrangements for measuring work done against money spent were deficient. There were loud protestations from the Treasury Bench that all this was to be altered, but exactly the same two criticisms are levelled by the Public Accounts Committee against the Ferranti contract as were levelled against those three contracts, which, at the time, were admitted to be deficient and an embarrassment to the Government as well as a great loss to the taxpayer. Nothing has changed.
What were the conclusions that were reached at that time? The Public Accounts Committee of 1959–60 found, first, that the original estimates made in the case of Thunderbird, Seaslug and Firestreak were so far from reality as to be useless. Is not that still true in the case of Ferranti? The Committee's second finding was that the Ministry's control over the firm was seriously inadequate. Is not that still true in the case of Ferranti? Four years have gone by. We are back in exactly the same
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position, as though the Public Accounts Committee had never even spoken.
Of course, the Minister of Aviation at the time promised substantial amendments. He said that what would happen as the result of this expenditure of £162 million was that there would be a review of internal organisation, that the primary responsibility for estimates would be placed on the technical staff and that the financial staff would become responsible for criticising and approving the estimates after they had been made by the technical staff.
I ask the House to note this because of something which I shall come to later, the failure of co-ordination between the accounting staff and the technical cost officers in the Ministry. This is what the Minister said in 1960 about a similar failure, that the financial staff would become responsible for approving the estimates
"after all the parties inside or outside the Ministry have been properly and fully consulted."
This afternoon the Minister has said that because it has always been very difficult to compare these two types of figures, it is only today that he has issued instructions that in all cases in the future these comparisons are to be made, in the hope and expectation that they may prove to be relevant.
Sir Ian Orr-Ewing: Will my hon. Friend give way?
Hon. Members: He is not your hon. Friend.
Mr. Callaghan: I want to get this clear with the Minister. What new instructions has he issued to the Ministry today about the comparison of accountancy figures with the estimates of technical officers which the House was not promised would be issued by his Ministry four years ago?
Mr. Amery: The hon. Gentleman puts a direct question to me. When I had the news of what appeared to have been happening in the autumn, I at once said that in future, from then on, all these contracts must be compared. An attempt to compare these things has been going on all the time, of course, but in my view not sufficiently closely or intensely. I have tried to put the matter right.
Mr. Callaghan: I do not think that I need to repeat the question. Four years ago, the House was promised that, whether the comparison would be strictly relevant or not, it would be made. The Public Accounts Committee finds that it was not made. At this stage, it did not blame the Ministry for not making it, and I do not do so at this stage, but the Public Accounts Committee says that it was not made and the Minister admits that it was not made.
The right hon. Gentleman says that he has had to issue new instructions. I ask why it is that he has had to issue new instructions when the House was given a definite assurance that these comparisons would be made in every case. I repeat. He said that the estimates would be approved
"after all the parties inside or outside the Ministry have been properly and fully consulted."
It was not done.
The fourth promise made to the House on that occasion, four years ago, was that the technical staff would be responsible for ensuring that the work was executed within the budget and the time prescribed. The ironical thing about all these undertakings which were then given to the House, on behalf of the Treasury as well as by the Minister himself, was that they were given during the very period in which negotiations between Ferranti's and the Ministry were being conducted, May, 1960. That is when these very pledges were given to us, and we find four years later that we might as well not have said a thing for all the effect that it has had on the financial out-turn of these contracts.
I repeat that Ferranti's is merely the latest extension despite Ministerial promises to reform and alter and improve the system. Once again, the estimates are not related to the actual cost. I am bound to admit that the unusual feature this time is that, unlike most occasions, the cost was less than the estimate. It could have provided a bonus for the hard-pressed taxpayer, but the basis on which we seem to work is, "Heads you lose and tails you win."
Hon. Members: That is the wrong way round.
Mr. Callaghan: All right. "Heads they lose, tails we win."
Hon. Members: Still wrong!
Mr. H. Wilson: It is a muddle-headed penny.
Mr. Callaghan: In any case, whichever way it is, the taxpayer never wins. Either we have to pay up because the estimates are grossly exceeded, or we pay up because the profits are excessive. Either way it comes to the same thing. [An HON. MEMBER: "What about Hawker Siddeley?"] I will return to Hawker Siddeley later.
An excessive profit has been given to Ferranti's. Is that a matter for congratulation? Do hon. Members opposite believe that that is proper? Do they think that it was right, if I may use the words of the right hon. Member for Wolverhampton, South-West (Mr. Powell), that the firm should maximise its profits? He believes that it is. He told us some months ago that it was nonsense to expect any firm to fix prices anywhere below where it needed to fix them. He tells us that it is nonsense to expect a firm to keep down its profits. Is that so? Is it nonsense to expect a firm to keep down its profits? Should it try to make as much profit as it can? Hon. Members do not seem to be so ready to give us an answer to that question.
We know where the right hon. Member for Wolverhampton, South-West stands on this, and he has a very enthusiastic disciple in Mr. Sebastian de Ferranti. I suspect that he has many other disciples who are a little uncertain whether they should declare their faith at this moment. It was an education to sit and watch not the Minister but the faces of his supporters while he was speaking. There were mingled expressions of alarm and apprehension and pride at what Ferranti's had done chasing across their faces like sunshine and shadow across an April hillside.
It was astonishing to see how hon. Members opposite could not quite make up their minds whether they were in favour of maximising profits in the case of a firm like this, or whether they should express some apprehension about it because the public were rightly incensed. I know, and I believe this to be commonly true, that the philosophy which was expressed by Mr. de Ferranti in his examination by the Public

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Accounts Committee is shared by a great many companies in this country.
If this is not so, how do hon. Members explain the refusal not of Ferranti's to give information to the Public Accounts Committee, but of all the employers to give information about their profits to the National Incomes Commission? The Commission asked for profits to be declared by the employers when the case of the heating engineers was referred to it. The employers refused. The Commission then said that the Board of Inland Revenue was willing anonymously to disclose all profits if the employers were not able to provide the information.
The employers again refused. They were busy maximising their profits. They were quite unwilling to say what those profits were. What the Commission was considering was whether it was improper for the heating engineers to have an increase of not 63 per cent., not 61½ per cent. per annum, but 4½ per cent. per annum.
The poor Chancellor of the Exchequer must despair of some of his colleagues at times when he is trying to get an incomes policy and has to come here to listen to a Minister, with a mixture of braggadocio and penance, trying to explain away a profit of 63 per cent.
Sir Douglas Glover: The hon. Member is usually very fair on these things. I have been into the figures. He might have added that over the last 10 years this firm, which is one of the most efficient in the trade, has made a profit of 10 per cent. on its Government contracts.
Mr. Callaghan: I do not accept that for a moment. I have carefully studied all the Ferranti balance sheets for the last seven years since 1958 and I am ready to swap figures with the hon. Member if he has the details as well. It has paid 6 per cent. every year, but that does not reflect profits. [HON. MEMBERS: "What about the risk?"] Someone said "risk". I have always understood that profit was supposed to be a reflection of the risk taken. What risk was taken in this case?
Sir Ian Orr-Ewing rose——
Mr. Callaghan: No, I cannot go on giving way; let me say a sentence or two.
I agree that the rest is ploughed back temporarily, but it is later issued in the form of preference shares which provide a tax-free capital gain. I do not want to go particularly into the affairs of Ferranti's, but if hon. Members adopt this tack, I will "go to town" over Ferranti's and its profitability. I can assure hon. Members that I have been into this matter very thoroughly. There are tax-free capital gains which run into hundreds of thousands of pounds, perhaps £1 million or more, which have never paid a penny-piece in tax, due to the exertions and very clever financial abilities of one of the directors for whom I have a very great respect. I only wish that he were working for the public interest instead of for Ferranti's.
Mr. de Ferranti believed, with the right hon. Member for Wolverhampton, South-West, that it was his job to maximise his profits. He did it very successfully. The Ministry was operating on a different philosophy. The Ministry believed that if the contractor's profit was to be excessive it was his duty—the contractor's duty—to draw the attention of the Ministry to the position. The Public Accounts Committee's Report, in paragraph 8, states:
"they considered that between a big contractor and the Government the non-disclosure of emerging information was unsatisfactory."
The Ministry hoped and expected that Ferranti's would share its knowledge of excessive profits. But what was Mr. de Ferranti's view, as quoted from paragraph 15? It was that it was thought
"unreasonable to expect a contractor engaged on a fixed-price contract to tell the Ministry that he was doing better than he thought he would…"
Mr. de Ferranti said:
"when discussions with technical cost officers were completed they were under no obligation to draw attention to any subsequent development."
This is his philosophy, his approach. All right, I understand it—I disagree with it, but I understand it.
The Public Accounts Committee also disagrees with Mr. de Ferranti about this in its conclusions in paragraphs 25 and 26. It is important to quote the

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exact words in these matters. The Committee says:
"They consider that the special relationship between the Ministry and contractors of the standing of Ferranti, Ltd. should have evoked a desire on the part of both parties to the contract to exchange up-to-date information… Failure on the part of the Ministry to possess or to use relevant information should not in the opinion of Your Committee relieve a contractor of the obligation to facilitate negotiations on the prime condition of the contract, namely 'fair and reasonable prices'."
The Minister was anxious to turn the criticism on to Ferranti's. I criticise the Ministry, the Minister and the past occupant of that office for one basic failure. They never recognised, never reconciled, the two different approaches. They thought that they were working on a basis of partnership. Ferranti's believed that they were working at arm's length. So the Ministry went on giving information to Ferranti's, as the Permanent Secretary freely admitted. He said that maybe the Ministry gave Ferranti's too much information—it thought that it was working in partnership with Ferranti's.
I do not think that one needs to talk to Mr. de Ferranti for long—I do not recall ever having met or spoken to him—but having read his evidence I think that one has to talk to him not very long to see what his philosophy was, and is. How any body of senior and competent officers could possibly believe that they were working in partnership with Ferranti's is beyond my comprehension. He was quite clear, I would say that he was almost brazen, in his philosophy and the way in which he believed that it was his job to maximise his profits.
The Ministry was, in fact, hunting a tiger, but instead of taking a gun it took a saucer of milk and then wondered why it got mauled. I must say that if there is one lesson to be drawn from this contract it is that the myth that the Conservative Party is a party of good administrators and good businessmen has been destroyed for good and all. I would not trust them with a Sunday school collection.
I wish to make clear, in this matter of relationship, whether we should be at arm's length or what one might call at grips with them, with the utmost faith between the two. In these particular
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circumstances I believe that we must come down in favour of the second alternative. I believe that for reasons both of finance and defence. On the finance side, the firm is, at any rate in some part of its supplies, in a monopolistic position. The Ministry must use the firm again. The Permanent Secretary told the Public Accounts Committee that there was no alternative source of supply and, of course, again, there is this fact, that, unlike the position in the past, or, indeed, at present, the Ministry of Aviation had no production work against which it could test the validity of these estimates or the cost incurred.
Take the great days of the Navy—the present days of the Navy. The Navy can build destroyers or frigates in the naval dockyards and know exactly what is the cost and can compare and trace what is happening at Vickers Armstrong, or Cammell Laird. There is a basis of comparison. Because of the nature of this work Ferranti's has a semi-monopolistic position and there is no basis of comparison at all. I shall come back to nationalisation later, because I think that this is a very serious matter which we ought to consider.
We have never, as a nation, shirked the idea that our weapons of war and defence should be built by nationalised enterprises. The right hon. Member for Woodford (Sir W. Churchill) was one of those who prepared us for the first war—and thank heaven—when he was First Lord of the Admiralty by using to the full the resources of national enterprise. I think that it is a retrograde step if, 50 years later, the Conservative Party is to tell us that there is a theological distaste which would prevent them from using national resources to fulfil our defence needs.
Mr. Victor Goodhew rose——
Mr. Callaghan: I said that I was going to run into rough water. I think that the volume and number of interruptions which I am provoking is the measure of the discomfiture of hon. Members opposite.
Mr. Goodhew: Perhaps the hon. Gentleman would give the answer to the question which we have been trying to

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elicit from him for so long, and for so many weeks—whether his party would shrink from nationalising this industry? And since he is disturbed at the idea of our co-operation with the French nationalised aircraft industry, will he say whether he would nationalise our share of the Concord?
Mr. Callaghan: I shall make my speech in my own way, if the hon. Gentleman will allow me, and in the order in which I have developed it. I shall not be tempted from it; but may I tell him not to worry, I shall come back to him.
For defence reasons—and I am trying to address a serious argument to the House on this matter, even though passions may run high and there may be great difficulty about it—I believe it is wrong that one company should be in a monopolistic position in relation to essential items of defence. I do not impugn the patriotism of Ferranti's, obviously that would be a foolish thing to do, but I do not believe that it is right that the essential defence of this country should rest in the hands of a group of shareholders in Ferranti's.
Of course, there should be some better relationship. We should not be at arm's length, as Mr. de Ferranti believes that we are and ought to be. There should be a partnership and there should be no dispute on either side of the House about this. Therefore, I think that Mr. de Ferranti must alter his approach and his philosophy very quickly. He has to recognise that he is not only operating, as he said, on behalf of his shareholders, he is acting as agent for the nation as a whole and there was singularly little of that sort of approach in what he had to say to the Public Accounts Committee. I could quote examples about that, but I leave it to the hon. Member for Farnham (Sir G. Nicholson), who put a pertinent question which was answered in a peculiar way which showed how Mr. de Ferranti shirked that responsibility to the nation because of his greater loyalty to his shareholders. I thought it a most revealing answer.
What are the changes in relationship to be, if we are not at arm's length and are to come closer together in the way I have said? First of all, the books of
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Ferranti's and other companies operating in the defence field should be open to inspection at all stages. I should like to ask the Minister of Defence whether he agrees with that.
Secondly, the technical cost officers should remain at the scene of operations until the negotiations on prices are concluded. At the moment they play blind man's buff. They were there for a substantial period of time, but they left the scene of operations in January, 1960. Production had hardly got into full swing then. It got into full swing during the ensuing months. Negotiations continued in July, August, September and October, 1960. Ferranti's was operating on up-to-date knowledge on recent batches of production. The Ministry was operating on the basis of figures that were nine months out of date before production had got into full swing.
How can that be right? Does the right hon. Gentleman think that the technical cost officers left the scene of operations too soon? Will he make it a condition of future contracts that they remain on the firm's premises until the negotiations on prices are complete and satisfactory? Otherwise, there can be no doubt that the firm has an unfair advantage over the nation. In this case the Ministry's officers were playing blind man's buff, in which Ferranti was bound to be the winner.
Thirdly, there should be a continuing comparison of figures throughout the whole period of the contract. The Minister has admitted that this was not done, but he has said that it will be done in future. I hope that the promise will be carried out better next time than it was the last time it was made.
I come next to the nature of the contracts. The Public Accounts Committee adheres to fixed-price contracts. I have some sympathy and understanding with that point in view, but there is a weakness in the fixed-price contract in circumstances where there is no possibility of competitive tenders. If one has competitive tenders, one can rely on the fixed-price system with a fair degree of confidence, but one cannot do that in a case like this. The Ministry has proposed what might be a possible improvement, and that is that there should be a preliminary production run of a small batch of the final article

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which should be costed and a price fixed on that basis. That could well lead to an improvement, but it will be no more than an improvement. I do not think that it will be a final answer to this problem.
Mr. Dudley Williams: I agree that when a design is finalised one can put through a pilot production and get an estimated cost, but one cannot do that when a weapon such as Bloodhound is continuing its development, and is being modified even up to this day.
Mr. Callaghan: The Minister will correct me if I am wrong, but I believe that there was a stage when development had reached 90 per cent. of finality. There certainly was a continuing element of development after the production contract had been entered into, but there was a time when one could draw the line and say that it was in production. This point would be met if we had the preliminary runs, as I believe the Ministry has suggested. [Interruption.] I hope that we do have the time, because we started production on this weapon in 1955 and it was finished in 1961.
The Times this morning suggested a form of risk-sharing between the Government and companies. It suggested that there might be some sort of partnership between the two which would entail a different form of contract. Signposts for the Sixties has much the same sort of suggestion to make in page 14. I do not know whether my right hon. Friend the Leader of the Opposition has sent the Prime Minister a copy of that document. In case he has not, let me read what it says. Referring to national research and development, and to the Corporation, it says:
"…the Corporation should be authorised to engage in production, either in its own establishments, through the creation of subsidiary productive undertakings, or by joint enterprises with private companies which have the expertise to develop new products but lack the resources.
The Corporation could also be used for mobilising the under-used talents of groups of scientists by placing research or development contracts with them. In the past such contracts have been used at great cost and with inadequate financial control by Defence Ministries to develop new types of aircraft or guided missiles."
The hon. Member for St. Albans (Mr. Goodhew), who asked what our policy
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was, does rot seem to have waited for an answer. If hon. Gentlemen opposite want to know what policy is to be followed by a Labour Government in relation to these weapon contracts, they will find it set out in the document to which I have referred. My right hon. Friend and I will forgive The Times for plagiarism. It is comforting to think that what we said in 1960 is being caught up by the editorial of The Times in 1964.
Mr. John Biggs-Davison rose——
Mr. Callaghan: I have given way much more than the Minister did. I am ready to give way again, but I think that we had better try to get a connected argument.
I agree that the question of contracts should be looked at again after the Lang Report. A risk-bearing contract of this sort should mean that the company concerned will share the losses as well as the profits, but, as we pay for the losses anyway, I do not think that it will make much difference. We pay for them one way or another. It is very rare that a firm has losses, although the Minister has given us four unsubstantiated examples this afternoon of losses which are not in some way borne by the taxpayer at some time.
I am very suspicious of the examples which the Minister gave. There was one that was dropped into the Sunday Press about Hawker Siddeley, which gave us a little time in which to check the position with the company. The right hon. Gentleman produced the others out of the hat this afternoon in the course of the debate, and I dismiss them forth-with, because if he had a good case about them he should have produced it in documented form and placed it before the House.
As regards Hawker Siddeley, I repeat what I said during an intervention. My understanding is that it has not complained to the Press or to the public about its loss, and I ask the Minister, as I did before, how the complaint that went to him got into the Press on Sunday? Did he give it to the Press?
Mr. Amery: Why should I give it to the Press?
Mr. Callaghan: The right hon. Gentleman asks me that question. My answer is to try to draw a red herring across the trail of this afternoon's debate. Would he be good enough to say that neither he nor anyone in his Ministry gave this information to the Press last week?
Mr. Amery: I have had no contact with the Press about this. I told the House about a month ago that there was such a claim. I did not mention Hawker Siddeley. I told the House that a loss of between £5 million and £6 million had been reported to me. I have been studying in my Department how genuine this loss was, and I have reported to the House what I have found. No doubt many people in the Department and in the firm have been discussing this recently. I have had nothing whatever to do with the publication of this information.
Mr. Callaghan: If the Minister says that he had nothing to do with the publication, I accept that.
Mr. Philip N. Hocking rose——
Mr. Callaghan: I must remind hon. Gentlemen opposite that this is my speech, and that it is still my property at the moment. I must be allowed to say a sentence or two in reply to the Minister before I give way to anybody else. [Interruption.] Oh, do shut up. If the Minister says that he did not convey this information to the Press, I accept it forthwith, but I am told that the firm did not give it to the Press either. I wonder how it got there.
Mr. Hocking rose——
Mr. Callaghan: Does the hon. Gentleman want to confess that he gave it to the Press?
Mr. Hocking: The hon. Gentleman has two hon. Friends who represent part of the City of Coventry where the Argosy is being built. I represent the third constituency in the city. During the last six months this matter has been discussed in Coventry between people from Hawker Siddeley, and, I believe, all three hon. Members representing the city. The information is common knowledge in the city. It has been talked
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of freely and frequently, and it is conceivable that it could have got into the Press from any of those people.
Mr. Callaghan: In that case I would ask the hon. Member and the Minister for the replies which I did not get to the questions I asked earlier. As this is such a well-known matter, perhaps they could provide us with the answers now. Was this started as a private venture or as a Government contract? That is a quite simple question, and it admits of an immediate answer.
The Secretary of State for Defence (Mr. Peter Thorneycroft): As many other hon. Members wish to speak in the debate, and I hope to be able to reply, if the hon. Member will put his questions I will do my best to answer them at the end of the debate.
Mr. Callaghan: Very well. I will put my questions directly to the Secretary of State for Defence, and hope for better behaviour from him on this occasion.
Did this start as a private venture, or, as in the case of Bloodhound, as a Government contract? Did it start because the firm itself wished to enter—as it was entitled to—into a private venture of selling the Argosy aircraft for commercial purposes? Did it fail to sell it for commercial purposes? Did it make a substantial loss as a result? I am not commenting on the question whether it was a good aircraft or a bad one; I do not know. I am merely dealing with the financial aspects of the matter.
If the answers to my previous questions are "Yes", then did the Government step in, either of their own volition or at the request of Hawker Siddeley's, with an order for a number of these aircraft for military purposes? I hope that the right hon. Gentleman is writing all these questions down. Did this aircraft require substantial modifications from its well-known civilian use? Did that involve the substantial loss to which the Minister has referred? Finally, would the loss have been very much heavier for the firm if the Government had not stepped in?
If the Minister wants us to set this off as a comparison, he might have produced all these well-known facts—which he says have been well known for months—a long time ago. We could then evaluate what he has said. But the Minister is

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an artful dodger. We all know that. We know the reason why this argument has been brought into the debate. His Ministry is blameworthy, and the Minister must take the responsibility for not reconciling the nature of its relationships with Ferranti's. About that there can be no doubt.
Next question: is the Ministry to be blamed for not comparing the technical cost officers' estimates with the accountants' actual costs? It is admitted that the accountants in the Ministry of Aviation knew what had been spent, while the technical cost officers were looking to the future and did not know what had been spent. But they are all in the same Ministry. Presumably they had two sets of files and they were never brought together.
The Public Accounts Committee was certainly promised that these comparisons would be made. Now the Minister says that it is an exceptional case. We are not dealing with low-level civil servants here; we are concerned with high-level civil servants. These officers, at the top of their respective branches, are being paid between £4,000 and £5,000 per annum. I do not expect routine clerical officers to do more than routine clerical work, but I expect people who enjoy salaries of £4,000 per annum to be able to see beyond the limits of their blinkered ignorance. They should be able to see what is the relationship between two sets of figures.
But the Minister comes into this. Ferranti's assumes a pose of injured innocence. When my hon. Friend the Member for Edinburgh, Leith (Mr. Hoy) asked if Ferranti's was prepared to offer a reduction in price if the Minister came back the answer was:
"…we knew they"—
that is, the Ministry—
"had access…to the labour figures to date, and I thought they were bound to challenge these."
That was Ferranti's view.
Then my hon. Friend the Member for Sowerby (Mr. Houghton) asked to know what the nature of the relationship was. Mr. de Ferranti was very clear. He said:
"If they"—
the Ministry—
"pressed very, very hard, we might reduce the price by 10 per cent., but it would be a big battle."
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The Ministry knew the figures. It could have got a lower price. It did not do so. Is it to be blamed? The Public Accounts Committee says that it is premature to blame the Ministry. It does not say that it is blameless. It says that it is too soon to blame the Ministry because Sir John Lang is now investigating the whole circumstances surrounding this question.
I trust that when Sir John does this he will also examine the overhead rate applied to this contract, because when the labour costs are so grossly inflated, as they were on this occasion, the multiplier for the overheads increases the margin of error by several hundred per cent. I speak with a certain amount of temerity on this aspect of the matter, but those who have looked into the figures believe that the overheads figure adopted by the Ministry was very high—at 558 per cent. I am told that a more reasonable figure would have been 300 per cent.
Mr. Dan Jones: Yes, it would. [Laughter.] I have been to the Ministry on these figures.
Mr. Callaghan: My hon. Friend is well known in the engineering industry and hon. Members need not scoff if his opinion, which is based on many years' experience in the trade union movement, coincides with that of many other people. I hope that the Ministry will look into the question of the relationship between the overheads ratio of 558 per cent. and what it might have been—about 300 per cent.
I come back to the question of profitability. The Permanent Secretary, in reply to a question by the hon. Member for North Angus and Mearns (Sir C. Thornton-Kemsley), asking how he checked when everything was so unknown in this field, said:
"…there is a general yardstick that you can apply in this sort of case, that is to say, the general profitability of the firm".
The hon. Member did not follow up that idea, but I have looked into the question of general profitability, and I wonder how the Permanent Secretary could have made such a reply.
The general profitability of the firm is higher than nearly every other firm operating in this field. The Permanent Secretary admitted this. He said that

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the rate was higher in that firm than in any other firm he had been able to find. Why was not this picked up and noticed by the Ministry, if this was its yardstick? I should like to give the House the net profits of Ferranti's, starting from March, 1958. They were £1·2 million in that year. In 1959, they were £2·4 million; in 1960, £4·0 million; in 1961, £3·4 million; in 1962, £2·1 million; and in 1963, £1·6 million. They went up, and then they came down again. The normal profitability is about £1 million or £1·5 million a year. Ferranti's had three fat years. Yet the Ministry did not see it, although this is the yardstick by which it judges these matters.
The Minister told us that the firm's return on capital employed was 113 per cent. Since he has given this comparison, will he give the ratio of profitability to capital employed for English Electric, which made Thunderbird? Has he looked it up?—because I have. I did not know that he was going to bring this comparison in. I have looked up the figure, and according to my recollection the profitability of English Electric in relation to the capital employed works out at about 14 per cent., as against Ferranti's 113 per cent. I have taken the same basis of assessment. If hon. Members will look at the accounts of English Electric they will see the interesting table which is set out for the last 10 years, which will give them the information they want.
My point is that the Ministry says that this was one of its yardsticks. What happened to the yardstick? If one is 14 per cent. and the other is 113 per cent.—and this can be deduced by any second-year student looking at the accounts—what went wrong at the Ministry? The Public Accounts Committee has said that it is not yet time to blame the Minister. The time will come when Sir John Lang has finished his investigations and reports.
I am very sorry that Sir John has been brought into this matter in the manner he has. I believe that he has been used as a political decoy. I have known Sir John Lang for some time. He and I served on the Board of Admiralty 15 years ago. There is no more devoted civil servant or single-minded man than
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Sir John. I am sure that he would not allow himself to be used as a political decoy if he knew that that was going to happen, but I do not think that Sir John knows the Minister of Aviation as well as we do.
It is all of a pattern. It took the right hon. Gentleman six months to set up the Lang Committee, and he set it up only when he knew that the Public Accounts Committee was getting on with the job. He hoped that it would be spread over the period of the election, but that was thwarted. He and Mr. Sabastian de Ferranti met the Tory back benchers last night. What is the purpose? Is it in order to get at the truth or to put the best gloss on it that they can? This is what I believe Sir John Lang has been brought in for, and I am sure that he is not likely to fall for that. I am certain that his reputation stands high and that the Committee will make a full and complete report. Then it will be for the Public Accounts Committee to say whether the Ministry was blameworthy or not. Meantime, all I would say to the Minister of Aviation, in the words of the old homily, is, "Be sure your sins will find you out".
I turn to the question of repayment, and on this I finish. The Public Accounts Committee has put some figures in its Report, on page IV, of the costs and what was allowed in prices. It established the costs incurred by the firm in this contract at £6·8 million. That, the Committee said, represented a profit of 72 per cent. of costs. The firm disputes this, and says that the Ministry undercharged for materials and that another £273,000 ought to be added for materials. I accept that. [HON. MEMBERS: "Hear, hear."] Who am I to dispute it? I cannot challenge it; I can only accept the figure if Mr. Ferranti says it is true. If that is the case, then the actual cost to the firm was not £6·8 million but £7·2 million. The profit was based, as it says on page IV, on a basis of 7 per cent. of the cost, and, as I understand it, a profit based on an agreed rate of 7 per cent. on £7·2 million would be £505,400. Making allowance for Ferranti's own suggestion that the firm was undercharged for materials—I am giving all I can to the firm—its actual profit was not £505,400 but £4,550,000. I am altering the figures

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here in order to give the firm the benefit of the doubt.
The profit, therefore, is £4 million greater than it should have been. It should have been £500,000 on this contract on the basis of 7 per cent., but it was actually £4½ million. And here we are trying to get an incomes policy! The Public Accounts Committee proposes repayment, as it says in the last paragraph of its Report, on the basis that both parties were in possession of up-to-date information on all ingredients of prices, etc.
Is the Minister starting off his negotiations on that basis? If so, I suggest the figures that he should use, what he should ask for. I should like to know whether he will follow the basis suggested by the Public Accounts Committee, which I propose to translate into figures. Mr. Ferranti said that he had clearly negotiated this contract on the basis of a 7 per cent. profit. My hon. Friend the Member for Leith put three questions to him.
"All I am trying to find out"—
said my hon. Friend—
"is on what basis the prices were negotiated and when you negotiated the prices with Messrs. Ferranti whatever the out-turn was, the price was fixed on a 7 per cent. profit basis?——Yes."
That was Question 2422.
"And Messrs. Ferranti knew this when the price was negotiated?——Yes."
"Would you confirm that, Mr. de Ferranti?——Yes."
Three of the straightest, shortest and swiftest answers in the whole of that long and murky episode. Ferranti's knew what it was doing. The firm negotiated on the basis of a 7 per cent. profit, but it now disputes that 7 per cent. was a reasonable profit. It may well do. I know that the firm had no risk to take on this. Everything was with it. It had entered the harbour and was practically tied up at the finishing post.
I want to put this straight question to the Secretary of State for Defence. Is he going to start out, as I believe he should, on the basis that £4 million out of this £4½ million profit should be repaid to the State on the basis of 7 per cent., or is he going to argue—and I would not differ with this—that there ought to be a slightly higher ratio of
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profit than 7 per cent.? I can see reasons why it might be. [HON. MEMBERS: "Hear, hear."] I am glad to have reached a stage in my speech where I have prompted some agreement from hon. Members opposite.
My hon. Friends must realise that, because the Government have allowed interest rates to rise so high, if we gave Ferranti's much less than 7 per cent. the firm might as well sit at home and invest in Government securities and not use its capital assets at all. Of course, if interest rates were lower, then one would expect a lower return, but when they are high we might have to offer a little more than 7 per cent. Supposing the figure was double. I agree that it would be incredible——
Sir William Robson Brown: Make it 10 per cent.
Mr. Callaghan: I will settle for 10 per cent. In that case, what the Secretary of State for Defence should be asking for is the repayment of the difference between £4½ million and£¾ million. He should be asking for repayment of £3¾ million. I think that the House has a right to demand to know on what basis the Minister is going to start the negotiations. The Secretary of State has said that he is going to reply to my questions tonight. I ask him now whether he is going to start these negotiations on the basis that there is to be repayment of something like £3½ million to £4 million out of the £4½ million profit. Mr. de Ferranti has had his pound of flesh. He has almost been brazen about the way in which he has taken it.
If the Minister feels a little chary and a little timid about asking for repayment of £4 million out of the £4½ million, I have one final suggestion to make to him. When he goes to see Mr. de Ferranti he might like to take the leaflet which I have in my hand and offer it to Mr. de Ferranti. It is a Government leaflet entitled "Changes in conditions for widowed mother's allowance". He might remind Mr. de Ferranti of what it says, that if a widowed mother supporting children goes out to work and dares to earn as much as £8 a week, 10s. will be deducted from her allowance. If she has the effrontery to earn £9 12s. a week, 41s. 6d. will be deducted. He might suggest to Mr. de Ferranti that

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he should read the document which says,
"If you earn £7 1s. or more in a calendar week you must not cash the order"—
in the pension book—
"for the following week. Instead, you should complete the declaration of earnings overleaf."
It is all set out. The widowed mother is asked to state any other income, to give the name and address of her employer and check number and to declare to the best of her knowledge and belief that the information on this form is a true and correct statement of her earnings—and she signs it. At the bottom there is a warning:
"If you draw benefit without declaring your earnings or if you make a false statement on this form you may be committing a criminal offence, punishable with imprisonment."
We are talking about £7 1s. a week. I hope that I do not carry a chip on my shoulder, but I get sick and tired of this hypocrisy when I see the difference in treatment extended to those with power and pomp and place, those who are wealthy, and people like this.
I know that the right hon. Gentleman did not have the disadvantage of being brought up under these conditions. Nor did the Secretary of State for Defence, the Prime Minister or 95 per cent. of hon. Members opposite, but some of us did. When I see the distinction and difference made between a widowed mother earning £7 a week and the consideration with which a firm like Ferranti's is treated, I resent it. I hope that one of the early things a Labour Government will do will be to remove something which I suffered under in company with a great many other hon. Members on this side of the House. This is the way in which I was brought up. Will not Ministers understand us? Until they do, and until their policies are expressed in the form of equality between a widowed mother such as I have spoken of and a firm like Ferranti's, I say that this Government are not worthy to lead the British people.
5.22 p.m.
Sir Ian Orr-Ewing: The hon. Member for Cardiff, South-East (Mr. Callaghan) ended his speech on a very controversial note. I cannot help feeling that pensioners who know
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where they stood when his Government went out of power will give the answer when the time comes. The point that he made will be answered. It did not seem particularly appropriate to this debate and the censure Amendment that we are discussing.
The hon. Member was muddled in a number of his arguments. We had the business of heads or tails. It seemed that he was equally muddled by not discerning between development costs of these missiles and production costs. The Public Accounts Committee was specifically directing its attention to development costs of missiles, not production costs, but it is the control of production costs that this debate is about. I am sure that the hon. Member did not mean to misrepresent the facts, or to deceive the House, but inadvertently he did so.
As a "Shadow" Chancellor—and I think that he will remain so for a very long time—the hon. Gentleman missed a point which I should have thought, in all fairness, he should have brought out. Of all the profits he quoted as made year after year by Ferranti, rather over half goes straight back to the taxpayer. [Laughter.] Hon. Members may laugh at this, but they must know that profits are taxed to about 50 per cent. in this country, and 46 per cent. in the U.S.A.
I understand that hon. Members opposite want to put up the proportion even higher. This point was completely missed when the hon. Member asked if we were to rake back £4 million. He seemed to have forgotten that £2½ million have already been taken back by the Inland Revenue. He also did less than justice in putting the matter in perspective. The Government of the day, whatever Government there is, place contracts with industry worth £3,000 million over a year.
My right hon. Friend the Minister, in his admirable opening speech—[Laughter.] He hit fairly hard, but I do not think that experienced hon. Members will mind that, because we are used to it in the House of Commons. My right hon. Friend made the point that £200 million for development was placed by his Ministry every year. This is one instance among the 18,000 contracts in which an exceptional profit

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was made. It seemed very surprising that the hon. Member somehow resented that the facts should be put before the taxpayers. He seemed to resent that the Hawker Siddeley contract had become public knowledge.
If he were anxious to squeeze the maximum political propaganda out of the profit of £4½ million, it is fair that taxpayers, equally, should know that in many instances they benefit to the extent of £5 million through other Government contracts. It is extraordinary, but it reflects, as the Gallup polls are at the moment very much in his favour, the fact that he and the Leader of the Opposition get into a sort of arrogance in which they cannot put the facts and their policy before the country.
It was the same in today's speech. When the hon. Member for Newton (Mr. Lee) winds up the debate on behalf of the Opposition, I hope that he will make clear where hon. Members opposite stand on the question of taking over, nationalisation, or, to use a term of the hon. Member for Coventry, East (Mr. Crossman), "science-based industry," because this is the sort of firm which is threatened under that formula.
We should also recognise, as a House, that the taxpayers have benefited very considerably from orders which were secured by this company for the Bloodhound weapon in Switzerland and Sweden. I know from personal experience that those are two nations which are hardest to convince of the merit of any technical weapon, but this firm successfully sold the weapon there in the teeth of competition from the United States. We secured £40 million worth of overseas orders for Bloodhound I and Bloodhound II and already £4 million has gone back to the taxpayer. So, again, the taxpayer benefited from the success of this firm.
These points should be fairly pointed out. I should like my right hon. Friend to have given more facts about some other defence contracts from which, because of the levy which is put on, the taxpayer benefits. The Viscount project was carried for soma time on the Ministry of Supply or the Ministry of Aircraft Production Votes. The B.E.A. cancelled that order for a period, but it continued development. When an aircraft is sold, whether it is a Viscount or another type which
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has been sponsored on a development contract, a levy is paid by the firm to the taxpayers. I should like to see the global figures and to know how taxpayers have benefited from this, also.
I am rather surprised that hon. Members opposite should choose this particular subject for debate, because here is a case where the Whitehall machine has made an error and my right hon. Friend was the first to admit it. I see that the hon. Member for Newton is refreshing his mind on Signposts for the Sixties, the Labour Party policy statement. I understand that the policy of hon. Members opposite is to go further with centralisation and control from White, hall. If mistakes are made and this is only one in a large number of contracts, surely, under their régime, there will be far more and much bigger mistakes. The taxpayers will say, "We do not want to go further. We have reasonable control under the present system", as my right hon. Friend so ably showed.
This is an instance of Satan rebuking sin. Hon. Members opposite believe that all the gentlemen from Whitehall apparently have complete knowledge and sagacity and should have complete control of the whole defence industry.
Mr. Albu: Does not the hon. Member see that the argument he is making is in support of what we are seeking? If it is so difficult to fix costs and prices it is necessary for the Government to have a share in the company in which the work is being done.
Sir Ian Orr-Ewing: I am not sure that Short's would be the best example of profit being made by a company where the Government have had a share for a number of years. It seems a poor example to cite in the aviation or the electronics industry. Some reference has been made to the difficulties of the technical cost officers. The hon. Member for Cardiff, South-East said that they were paid about £4,000 a year. I should have thought that they were paid much more modestly.
Mr. Callaghan: I was referring not to the technical officers, but to the heads of the departments. It was said that these co-ordinating arrangements should be done at the top, and the two heads of department each get about £4,000 a year.
Sir Ian Orr-Ewing: The technical cost officer has a desperately difficult job in industry and, if anything, he is underpaid. If he is qualified to judge what is going on in this highly technical field, he is worth a good salary. I believe that he has a rather boring and unimaginative job, and that this must be a factor which makes it difficult to attract people of the right calibre to this very responsible job.
I believe that estimating and costing by our Civil Service would be better done if we had more people with scientific and technical training in the Service. This must come about sooner or later. After all, when the Foreign Office recruit they take some pains to see that the recruit is trained in languages, because they deal in this sphere. No doubt the Church gives its recruits theological training.
But this is not done in the technical Ministries among the people who are to try to control and guide very highly technical matters. I feel that the time must come when we ask that a much greater proportion of our civil servants are trained, and should have an opportunity of being trained, in industry and have a basic scientific knowledge so that they understand the language used by the people with whom they are dealing. At present, they are often technologically blind on these subjects, and it makes life much more difficult for them and does not lead to the tightest and most successful control.
I shall celebrate the day when I see a trained scientist as a Permanent Secretary going right to the top of his Ministry. This has never happened in modern times. I should like to see a scientist at the top of a technical Ministry, just as Lord Hives is at the top of Rolls-Royce and Lord Fleck, a chemist, is at the top of I.C.I. I cannot see why, in the technical Ministries, there should not be opportunities for the brightest people to go right to the top of the Civil Service administrative structure.
But this will take time. What shall we do in the meantime? My right hon. Friend rightly told us of the action which he has taken. He has taken swift action in many respects, starting back in the autumn. I am surprised that in the Public Accounts Committee's Report there were not more references to other ways of negotiating a contract. At the
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one end the Committee had the cost-plus system, which, I think, is the worst of all worlds for the taxpayer, and, at the other end, there was the fixed-price contract. These are the absolute extremes—the two ends of the spectrum.
As my right hon. Friend said, it is not beyond the wit of the human mind to invent a system which gives perhaps a certain rate of profit up to a certain sum—say, 10 per cent. over the expected costs—and then after that the profit is shared between the sponsoring Ministry, which means the taxpayer, and the firm, perhaps on a reducing scale. Similarly, if a loss were made above a certain amount it would be met by the firm, but if it became a substantial loss it would be shared between the company and the taxpayer. This seems the right opportunity to provide a formula which would achieve something better than the present system.
I have worked in an electronics firm for much of my life, and I want to tell the House—I am sure hon. Members know—that working for the Government is not all beer and skittles. One often has a large research and development project which ties up half one's scientific and development staff. At the end one meets the specification, but, instead of getting an order, one finds that there has been a change and that this piece of equipment is no longer required. One has all the overheads of the production people, but no instruments to feed in for production. The space has been kept available as part of the contract, but the factory remains empty.
Similarly, when one begins to go into production there are long arguments. There are many modifications. They come in spate. I hope that there are fewer than when I was at the receiving end. When one has these long arguments, it takes a long time to get one's money. This is where I disagree with the hon. Member for Cardiff, South-East; there are also risks in the development stage that it may never come to production, and there are all sorts of uncertainties. If there were no uncertainties, research and development would not be sponsored. One is probably engaged in pioneering.
Mr. Frederick Lee: Most development contracts are on a cost-plus basis, so there is no risk.
Sir Ian Orr-Ewing: There is the risk that they may not lead to production. One is lying up one's brain-box in the firm without feeding the production factory It is a very big risk. Even when one gets into production there may be many problems and modifications being fed back which need to be built into the weapon.
To sum up, a man in Whitehall made a mistake—a mistake which by a formula was multiplied by 5½ times. I suggest that this is a stupid sort of formula. We devise fail-safe mechanisms in the aircraft industry, but this is certainly not a fail-safe mechanism if we multiply the error by 558 per cent.
If we are frank in the House we recognise that under any system and under any Government some errors will always be made. It is wrong to suggest that the taxpayer has been mulcted. Half of all these profits have gone straight back to the Exchequer. The taxpayer has benefited enormously from the levy on overseas orders and we taxpayers have gained in every case in which a loss has been made. I should like to see an improvement in the recruiting of civil servants so that more people with knowledge of these matters are serving even in high places, particularly in technical Ministries.
Lastly, I do not believe that we cannot devise a better system for contracts. My right hon. Friend has shown sincerity and vigour, and I am sure that he will tackle this problem with great success.
5.38 p.m.
Mr. John Diamond: The hon. Member for Hendon, North (Sir I. Orr-Ewing) started by saying that he thought that this was one case on its own. I do not know whether he meant that it was one case out of thousands of others in which the taxpayer had been adequately protected, but he went on to say that we ought to have technical cost officers who are much more competent, different forms of contract and so on. He is therefore admitting, although implicitly, that this case was of such an order and of such a category as to demand a review of the whole of the circumstances.
Whether he is right or not—and nobody can know—in saying that this is the only case, what every cautious-
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minded person, what every hon. Member on either side of the House, responsible for seeing that the nation's purse is properly used, must say is that here is a case in which things have gone so extremely wrong that it must be examined from beginning to end. I agree with one thing which the Minister said—that he would not rest until he found out how the technical costs were 100 per cent. out.
Therefore, we must look at the facts carefully. We know that motives enter into all these things. There are a whole host of problems connected with the firm. I am particularly glad that the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti) is in his place. I do not want to detain him, but I hope he will find it convenient to stay there, because I have many comments to make about the brothers Ferranti.
The background story is simply this. A firm which had developed a missile was asked to produce it. It was asked to produce it on the basis that the price was to be agreed later, but that the price was to be fair and reasonable. The contrast at the time of starting was a verbal one and was absolutely clear to both sides—"Get on with the work. You know what is to be done. We will agree the price later. The price will be a fair and reasonable one."
So the work started. It lasted for over five years. It was not until five years after the work had started and while it was going on that the negotiations were finally concluded. It was not until two-thirds of the goods ordered had been delivered that the price was agreed. If my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) will excuse me for adding a slight gloss to what he said, two-thirds delivered means much more than two-thirds of the work completed. Taking what was in the pipeline, the contract work was virtually completed by the time the price was agreed. Those are the circumstances.
When the negotiations were conducted, they went something like this. I am putting it very shortly. Ferranti's said to the Ministry, "We want two and a half times our labour costs". The Ministry said, "No, you cannot have that. That is too much. You can have

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only twice your labour costs". "Very well", said Ferranti's, "We will take twice our labour costs". Those are the figures, as simple as that.
It can be said that the Ministry did not know what the labour costs were. That is true. It cannot be said that Ferranti's did not know what the labour costs were. That would be untrue. It would be incredible, it would be unbelievable and it would be totally out of character with the distinguished financial director, who is a Fellow of the Institute of Cost and Works Accountants, who is a C.B.E. and who looks after these matters for Ferranti's with such satisfactory results that the chairman and managing director has said, "Our cost department is fine. We spend 1 per cent. of our turnover on our cost department".
As everybody knows, no responsible manufacturer—I am sure that the hon. Member for Hendon, North, who said that he is connected with an electronics firm, will agree with this—who is making a number of articles, who has been producing for five years and more, who has got very near to the end of his contract, is unaware of his labour costs. He cannot live if he is. He would be bankrupt in no time. The hon. Member knows that as well as I do. Everyone who has put his nose inside a factory, inside a set of books, or inside a set of cost accounts, knows that as well as I do. Therefore, the attempt to ride out of this knowledge was the first thing that must have prejudiced every single member of the Public Accounts Committee against Ferranti's. We have only to read the evidence given to the Committee, rather than speeches made on either side in this debate—I am conscious that I am making a speech at the moment—and read the kind of questions which were asked to know that when an hon. Member, of whatever party, is asked to serve on the Public Accounts Committee he does his duty. He does his duty and does not consider his party. He finds out what the facts are.
The facts were fully found out. The answers are there for all to see. No finer conclusion can be drawn than the Public Accounts Committee's Report: the facts speak for themselves. We
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know what happened. My hon. Friend the Member for Cardiff, South-East referred to the figures. The Minister gave some. A profit was made, not of 7 per cent. on cost but of 110 per cent. and more on the capital employed. One hon. Member opposite suggested that 10 per cent. was a reasonable figure. The Ministry says that between 7 per cent. and 10 per cent. is the range, 10 per cent. being the maximum. I would say from my experience that 10 per cent. is again a reasonable maximum. I am therefore anxious to give them a reasonable maximum—10 per cent. on the capital employed. These are exactly the figures I am giving.
I remind the hon. Member for Esher (Sir W. Robson Brown), if he wants to challenge this, that the whole of British industry pays less than that. If he wants to go further and ask Ferranti what it pays, I can tell him that Ferranti's borrow millions of pounds on preference shares. The three Ferranti brothers organise the firm on the basis that they own all the ordinary share capital and borrow on preference. On that preference capital they pay 5½ per cent. [Interruption.] The weighted average on the three sets of preference capital is almost precisely 5½ per cent. I try to be as accurate as I can.
Sir Ian Orr-Ewing: I am sure that the hon. Gentleman would agree that capital employed is a rather uncertain figure and that it would be better for him to say what percentage he would think reasonable on turnover or on sales price.
Mr. Diamond: Of course it is not. Capital employed is the only significant figure, and no accountant would suggest anything different. The State said that capital employed was the only significant figure when it brought in an Excess Profits Tax, and excess profit is what we are talking about. Excess can have relation only to the return on capital. Profit is what one gets for putting one's capital in. Excess profit is the extra amount. It is the return on one's capital. I do not think one wants to waste the time of the House. It is admitted by everybody that the relevant figure here is 110 per cent. and the excess profit is 100 per cent. It is therefore right that we should know what we are talking about in

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simple figures, namely, an excess profit of something over £4 million, representing 100 per cent. on capital employed.
Mr. A. P. Costain: Would the hon. Gentleman tell me of one Government contract on which the profit is based on capital employed? This contract, which it is agreed was based on cost, produced 7½ per cent. on turnover.
Mr. Diamond: Every single development contract is based on the capital employed. One of my criticisms is that there was no mention of capital employed on this contract, until I raised it myself in a Question to the Minister. During the war I myself dealt with hundreds of cases, and there was not a single case which was not based on capital employed. The hon. Gentleman knows that that was laid down. This will be repeated in the Lang Report, because he was one of the main persons responsible for laying down that in every case the capital employed had to be considered. How ridiculous it is to talk about turnover, without considering the nature of the business. Marks and Spencer, or somebody like that, can turn their capital over time and again. A small profit on their turnover is a large profit on their capital, because the capital is turned over many times. A steel foundry will turn over its capital less than once. Was there, or was there not, an excessive profit of something like 100 per cent., something like £4 million, made by this firm?
Sir W. Robson Brown rose——
Mr. Diamond: Unless the hon. Gentleman wants to challenge that, I would rather not give way.
Sir W. Robson Brown: I want to make my own position quite clear. When I referred to 10 per cent. in my intervention I did not refer to 10 per cent, on capital employed, because that is a very elastic figure and you yourself have shown——
Mr. Deputy-Speaker (Sir William Anstruther-Gray): I hope that the hon. Gentleman, even in an intervention, will remember that he is addressing the Chair.
Sir W. Robson Brown: I am sorry, Mr. Deputy-Speaker. I want to say
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that my reference to 10 per cent. was to 10 per cent. of the gross cost.
Mr. Diamond: It does not make very much difference in this case, so it does not really matter. If anybody cares to take considered advice on this, he will find that the whole of the technical world agrees that there is only one significant figure, and that is capital employed. There is no need to go into all this again. If hon. Members opposite are taking the view that there was not an excessive profit here, if they want to take that view and go into the Division Lobby against us, on the ground that this was not an excessive profit but was a proper profit to make, nothing would please me more than to be divided from them on that issue.
Inasmuch as this is the background to the case and this is the firm in question, we should have regard to whether the profit—this excessive profit—was, as sometimes happens and might conceivably happen in a case like Hawker Siddeley, spread over a large number of individuals, so that, in a sense, what with the tax being paid and it being spread over a large number of individuals, the harm to the nation as a whole was much reduced. However, this is not the case of this firm, and this must be recognised.
This firm consists of three brothers and their ordinary capital before the war was £300,000. The brothers, Sebastian, Basil and Dennis, receive director's remuneration, which is now running, on average, at £10,000 a year each. They receive a dividend worth about £30,000 a year each and they receive capital bonuses, which so far have totalled £1 million each. These bonuses are free of tax. That is the point of capital bonuses; they are free of Surtax and Capital Gains Tax and are converted into cash.
The share capital of the company has increased in value, without a penny of new money being subscribed by these ordinary shareholders, from that pre-war £300,000 to the present figure of well in excess of £20 million. That is not an unreasonable return for their efforts.
Mr. Frank Tomney: Is it all scrip issue?
Mr. Diamond: It certainly does not go to the taxpayer but to these three

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individuals. This was arrived at under the careful guidance of the same financial architect who was, no doubt, responsible for the costing. To use a technical term which is well known to everyone in the profession, that gentleman certainly knows his onions.
The system is that one declares a small dividend to the ordinary shareholders, As I have said, at present it is running a only about £30,000 a year each. Having declared a dividend of those proportions, the balance of the enormous profit remains in the firm and is then distributed by way of capital bonuses, free of Surtax and Capital Gains Tax. That is what has happened in this firm. I must make this point clear because it is a different situation when one is dealing with, as we are here, a defence contract—an instrument being made for the defence of the nation to save the lives of human beings—and being made by a particular firm which, because of its skill in negotiating and nothing else, has managed to net for itself during this contract £1½ million for each of the three gentlemen to whom I have referred. Do we consider this a proper way to go on when arranging defence contracts?
I have read the whole of the evidence, all the appendices, the notes and the second thoughts. The firm has attempted to put the best possible foot forward, and no one can blame it for doing that. However, the essence of the matter is that the firm is now saying, in effect, "We have done nothing improper. It was right for us to try to get every penny we could out of this contract".
Why did not the firm open its books to the Minister? It would not produce the figures, although we have been told that it will be willing to show them to the Lang Committee, although I wonder under what conditions. Why would not the firm open its books to the Ministry, the House of Commons and the Public Accounts Committee? Hon. Members can draw only one conclusion from its unwillingness to do that. It is worth recalling that there was only one set of figures which the firm was prepared to show—the cost of materials, because, the firm said, that cost had been greater than it had first been estimated. The circumstances must be
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looked at in an embarrassing light when people will not produce their figures. In addition, the firm will not repay unconditionally the excess amount. In short, it will not say that it was an error and that we should go back to the beginning.
As the firm was doing this work for over five years it was absolutely clear that in due course, a price would be negotiated which would be fair and reasonable, but we have seen how grossly unfair and unreasonable it was by the simple process of misleading the buyer at the time the negotiations were being made. No new machines came into the picture. There were no new methods. There was no new design. The firm was carrying on year after year, for five and a half years, and at the end of the fifth year it agreed a price—and that price, to the firm's knowledge, was twice the labour cost incurred, as a result of which all the rest has followed.
I regard all this as too clever by half. To adopt this method to get £1½ million for each of three individuals out of the needs of the nation for a missile to defend itself in case of enemy attack, to refuse to acknowledge that something had gone wrong, to refuse to repay, to refuse to open its books so that all the facts could be looked into—I say that in these circumstances a firm of this structure, of this limited shareholding, with a great incentive for one man or one family to look after themselves exclusively, is not a firm with which the country is capable of negotiating or contracting. It is as simple as pie to my mind that this firm should be struck off the list and that the matter should not be left at that.
Having struck it off the list the next thing is to issue a writ. I would not dream of debasing myself if I were on the Government Front Bench by adopting the attitude at present being adopted by the Minister towards a firm which has breached one of the essential terms of contract; the term stating that it must be done on a fair and reasonable basis. This firm has misled the Ministry about its labour costs. We are not talking about 2½ per cent. but a difference of 100 per cent.
Mr. Stephen Hastings: Will the hon. Gentleman give way?
Mr. Diamond: I hope I will be allowed to finish one part of my speech without interruption. I am not accusing the hon. Member for Mid-Bedfordshire (Mr. Hastings) of anything. It is the firm with which I am concerned and its greediness in this matter. The train robbers were given 30 years for £2½ million. This is twice that sum.
I am saying that the first thing to be done is to strike the firm off the list. The next is to issue a writ for the return of the excess money which was paid under false pretences—for falsely pretending that the labour costs were twice as much as they were when the firm knew what the actual labour costs were. This having been done, a writ having been issued, the books will have to be produced in court and everyone will see the true situation.
Mr. Hastings: Is the hon. Gentleman aware that 18,000 people are employed by this company? He is suggesting that the company should be struck off. Is he also suggesting that anyone inside or outside the House has accused them of incompetence or inefficiency?
Mr. Diamond: I am saying that the firm should be struck off as contractors because this is a company with which it is incapable of contracting for a Government contract. It can seek to make its money elsewhere, as it used to do, on a smaller scale. This work can be done by other firms and the employees can be transferred to other employers. That is what I am suggesting the Tory Party could do. The Labour Party could do something else.
Mr. Hastings rose——
Mr. Diamond: I cannot give way every other minute.
Mr. Hastings rose——
Mr. Diamond: Does the hon. Gentleman have something new to suggest?
Mr. Hastings: Is the hon. Gentleman prepared to repeat what he has just been saying outside the House?
Several Hon. Members rose——
Mr. Diamond: The hon. Gentleman asks a legitimate question, but why he should ask it I do not know. I am anxious to repeat what I said. The hon.
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Member for Mid-Bedfordshire might like to be reminded that it was arranged, through the courtesy of B.B.C. television, that in the Thursday evening programme "Gallery" Mr. Sebastian Ferranti and I should debate this, with about 5 million people viewing. That is the answer to the hon. Gentleman's question about whether I would be prepared to say this outside the House. At 5.30 p.m. on the day Mr. Ferranti and I were to discuss this matter on television he cried off and would not discuss it with me. I am going on television tonight. I hope that I will have the honour of discussing this issue with another hon. Member opposite. How curious it is that any hon. Member opposite should even begin to have the idea that I might not be pre-pored to discuss these things in public. All these are public facts that are well known—and well known to everyone who reads the Stock Exchange figures.
I turn now to the Air Ministry. The Air Ministry's job is a simple one—it is to try to protect the public purse. I take a totally different view here from that of my hon. Friend the Member for Cardiff, South-East, who thinks it necessary to wait for the Lang Report before deciding what action the Minister should take. My view is that we now have ample information on which to decide what action we could take, and that when we get the Lang Report we shall be much reinforced in our discussions as to the different kinds of contract we may be considering. That is the Lang Committee's job.
I accuse the Minister of being dilatory, foolish, negligent, complacent and misleading, and I will give my reasons for each of those five accusations.
This price was agreed virtually at the end of the contract, at the end of the production period, and was agreed on the basis of a contract whose sole justification was to give an inducement to the contractor to reduce his costs in future production. That was the whole purpose of that contract—to be an incentive. An incentive is something for the future—there is no such thing as a retrospective incentive. But here the whole incentive had gone, because the contract was practically completed. This was a totally irrelevant form of contract at that time. To call it a fixed-price contract is just to play with words.

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It was a cost-plus contract and—oh boy—it was some plus. Therefore, the first thing I say about the Ministry is that not to fix the price until five and a half years had gone by and the contract was practically completed was to be dilatory to the point where it cannot be excused.
I then say that the Ministry's technical cost officers were wrong by 100 per cent. The figures they finally accepted for labour costs were 100 per cent. out—not 2 per cent., but 100 per cent. And there was no new information needed—no new methods, no new machinery, no new designs. That is wrong and foolish.
Then I say that the actual labour and overhead figures were ignored, and to describe that as negligence is to put it at its kindest. Here is a case in which the buyer, in the person of the Ministry, was on one side of the table and the contractor was on the other side, and on the table itself were the figures showing—without any complicated percentages—the labour costs and overheads of the contract. When we are told in this House that the Ministry was unaware of them we must accept it, but we cannot understand it. I cannot understand it—it is beyond my comprehension. I shall be glad when the Lang Committee, or someone else, has satisfied itself about motives. I have the strangest letters coming to me with the strangest allegations, but on this issue I cannot understand why Ministry officials who at this time were interested in this aspect more than anything else, who were agreeing the prices of the contract and who had on the table in front of them the figures that gave the answers, were unaware of those figures. Again, I say that that is negligence of a kind that cannot be excused.
I go beyond that. I refer to the published accounts, as did my hon. Friend the Member for Cardiff, South-East. Anybody who has on his mind the safeguarding of the public purse, anyone who is trying to prevent too much money going from the Exchequer into the hands of defence contractors, anyone who has a vague 1 per cent. attitude of that kind on his mind, would immediately say, as no doubt did the Comptroller and Auditor General, "Let us look at the
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published accounts." Whatever goes on in cost accounts and whatever goes on in negotiations between a contractor and the Ministry concerned, when the published accounts are made available the auditors have to certify the facts to the shareholders, and they go to considerable lengths to try to satisfy themselves that their certificate is properly given. One therefore knows the truth, by and large, from the published accounts.
What happened with the published accounts? They show that the net profit after tax, which is the relevant figure, had quadrupled—it had multiplied by four. These were the accounts that go to March, 1960, and which were available in June, 1960. The negotiations took place in July and August, 1960, and were finally completed in October, 1960. In short, had those negotiating on behalf of the Ministry asked to see the Stock Exchange records, or anything giving the latest figures, these would be the first figures to be put in detail before them; the enormous profit—four times the average run of profit before this contract started to come home. And one gets profits on the contract being shown in the accounts towards the end of the production period.
That did not put anyone on his guard either. I therefore say that the Department did not attempt to fix the contract until so late that it was the wrong type of contract to use. The Department was 100 per cent. wrong on technical costs. It ignored the actual figures of labour and overheads on the table in front of it, and it did not attempt to look at the balance sheet, which would have put it on guard. Those four things, taken together, are not to be explained away. There is only one course of action for the Minister to take—and I now come to the Minister.
The matter was queried with the Minister by the Comptroller and Auditor General on 14th August. I do not know how any of my hon. Friends would have responded to such a query, but I am sure that I would have been considerably alerted when told of such a state of affairs by the Comptroller and Auditor General. Ministers do not usually like the thought of a first-class row in the House of Commons with the Comptroller and Auditor General on the other side—he is a powerful person to choose as an opponent.

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That was on 14th August. What did the Minister do? Until after Christmas he did nothing. The only thing that happened after that date—and I refer purely to the historical record—was that the Parliamentary Secretary resigned on 30th October. The Parliamentary Secretary to the Ministry of Aviation, who happens to be one of the three brothers, resigned on that date.
Sir Ian Orr-Ewing: I am sure that the hon. Gentleman would not wish to go so far as to suggest that the Parliamentary Secretary was in any way involved. He was appointed on 16th July, 1962——
Mr. Diamond: No—1963.
Sir Ian Orr-Ewing: The hon. Member has the date wrong, so perhaps he will withdraw that very unpleasant smear, which is not worthy of an hon. Member. I should be grateful if he would withdraw it.
Mr. Diamond: I am most receptive to any suggestion by the hon. Member, because he treats me as an hon. Member, too. That is why I want to help him by saying that it was 1963. I checked it this morning——
Sir Ian Orr-Ewing: No—1962.
Mr. Diamond: Just let me reply. He was there for about four months. I am only stating an historical fact, which is that that happened. But I go further to say, as the hon. Member has asked me, that I hope that the Lang Committee will find out what is going on. When a Prime Minister is appointing a Parliamentary Secretary to a Department which has such close and direct dealings with the contractors, it is absolutely vital that he should satisfy himself that the circumstances are such that an hon. Gentleman can be properly so appointed.
Mr. Thorneycroft: I am sure that the hon. Member for Gloucester (Mr. Diamond) wants to be fair. I think that he made a slip, and it is one that should be corrected. I understand the hon. Gentleman—but perhaps I misunderstand him—to say that the Parliamentary Secretary had left a little time after the letter from the Comptroller and Auditor General came in. I think that the hon. Gentleman got the year wrong. But perhaps he will make it absolutely
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plain that the year was 1962 and not 1963. Perhaps he will make that quite clear.
Mr. Diamond: If the right hon. Gentleman says that, I must accept it from him. I had the figures from the Library this morning and I was told that he was appointed in 1963 and resigned in 1963.
Mr. George Wigg: I have an interest in this point and I took the precaution of writing to the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti) telling him that I was going to raise the question of the part that he played whilst he was a Minister. It is true that he was a Minister from 16th July, 1962 until the end of October.
Mr. Diamond: I accept that, and I withdraw any suggestion that the hon. Member for Morecambe and Lonsdale resigned after the inquiry by the Comptroller and Auditor General. I was not making the point. It was put into my mouth by the hon. Member for Hendon, North (Sir Ian Orr-Ewing). The point I am making and repeat is that if the Prime Minister chooses—and this has nothing whatever to do with the date on which the hon. Member resigned—as his Parliamentary Secretary to a particular Ministry a gentleman who is in the most direct financial relationship with that Ministry he must take steps to assure himself that he can be properly so appointed. I repeat that and I hope that the Lang Committee will so satisfy itself. That is all that I have to say about it.
I am not making any allegation of any kind about anybody at all. It is far better that it should be said by me, and that I should repeat that I am not making any allegation of any kind whatsoever, than that the slurs which are going round should be repeated outside. Let us have it authoritatively stated that nobody in the House regards the hon. Member's particular association as anything worse than that, but this is a matter on which the Prime Minister ought to have satisfied himself.
What I am saying, therefore, is that what happened after the Comptroller and Auditor General's letter of inquiry was nothing at all until the very day the Report was to be published, the D-day, the final possible day on which the Minister could do anything. On that day

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the Minister decides to set up a Committee so that he can say, "Look boys, we had better not discuss it now. We had better discuss it later when the Committee has "reported," and it might have been that it would not have reported until after the then generally anticipated day of the General Election. That is complacency of a kind which one cannot forgive.
Again what I also cannot forgive is the way in which the Minister behaved at our last debate on 17th February. We were all talking about a figure of £2·7 million which we had been told about by the Comptroller and Auditor General in his report. Nobody knew anything different from that, except the Minister. In the course of the debate the Minister told us, "My chief accounting officer is going before the Public Accounts Committee tomorrow." He went, and we know the evidence. The Minister knew that his Permanent Secretary was going to give evidence the following day. Did the Minister not know what the evidence would be? Did he not know that the first thing that the Permanent Secretary would say was that this £2·7 million was only half the story and that the full excess profit was double that figure?
Was it not up to the Minister to put to the House of Commons, "You are all uninformed, because I must let you know that the figure you are talking about—and we are satisfied about it because we are giving the evidence to the P.A.C. tomorrow—is double that amount"? Is that the way a Minister should behave to the House of Commons? [An HON. MEMBER: "Slippery."] I say that a Minister who behaves in that way, and who is the head of a Department which has behaved in that way, has only one honourable course open to him—to resign. There was a Minister of Agriculture opposite who resigned for much less than that. There was a right hon. Gentleman, who was Chancellor of the Exchequer, who resigned for much less than that.
Finally, we come to the difficulty of what we do about the future. I shall be very brief about this, because we can discuss it more adequately and fully
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when we have the Lang Committee's conclusions in its detailed Report. The essence of this matter, and the essence of why it has gone so completely wrong, is clearly that a Government cannot deal at arm's length with a contractor who is alone capable of making something on which the safety of the nation depends as one can in an ordinary business deal between a buyer and a seller of ladies' overcoats. It was a partnership, and the Minister said that it was a partnership. Everybody here recognises that it is a kind of partnership.
What degree of partnership there can be must be considered. There is no difficulty about a contract. A contract merely clothes in words the relationship that is established. It is getting the relationship right that matters. There is a whole variety of contracts that can be used, or new contracts that can be devised, in which the sharing of risks and of profit can be organised and arranged, but the one essential is the fundamental relationship between the Minister who is buying and a contractor who is supplying a defence article of such vital need and, as one of my hon. Friends says, is supplying it in a monopoly degree. In that kind of partnership one can only act in utter good faith. Mr. Sebastian de Ferranti's fault was that he dealt with it as a sheer business deal and wanted to make the last penny out of it. The Minister regarded it as a kind of partnership. As a Socialist I say that it can be done only as a kind of partnership and we must see to it that the partnership can be made effective and reliable.
6.16 p.m.
Sir John Barlow: Some harsh and unjustified things have been said today about the great firm of Ferranti. It is in many ways a unique firm and it has served the country very well indeed. Before discussing the details and merits of the case it may be desirable to give some of the background of this firm.
I am informed that the great-great-grandfather of the present chairman came to this country from Italy by way of Belgium in 1810 and then, very wisely, married an English girl. The grandfather of the present chairman began and established the firm in 1882. He was a noted scientist and was the first

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man to conceive the idea of a high voltage alternating current system which was a great advance on the Edison system in America at that time. It is interesting that an exhibition to his memory is now being held at one of the South Kensington Museums. Such was the contribution that he made to the electrical industry in those days. He was one of many enterprising people who came from Europe to Manchester at that time to settle and who developed great businesses from which Lancashire in particular and the United Kingdom in general have benefited.
Ferranti has always been in the forefront of scientific research. Over the years it has developed into a very large firm almost entirely by ploughing back the profits when it was lucky enough to make them. Until very recently, I believe, all the ordinary shares were held by members of the family and at no time during the last 30 years has the firm paid more than 6 per cent. per annum, and sometimes it has paid less.
Mr. Albu: So what?
Sir J. Barlow: The rest was ploughed back for the benefit of research and development. [An HON. MEMBER: "Come off it."] I am telling hon. Members the facts. The profit on turnover for the last 14 years has averaged 8·4 per cent. and for the last three years, including the profits on Bloodhound I, it has averaged 7·4 per cent.
It will be realised from what my right hon. Friend said today that this is a highly speculative business. Ferranti had started and successfuly forged ahead with many developments. Other developments, after costing a lot of money, have ended in dead loss. The firm has the reputation of being one of the best and most enlightened employers. The dynamic personalities of the present chairman and, formerly, his father have attracted to the firm enterprising people who knew that they would be treated fairly.
Ferranti has by no means always been a successful firm. Before the First World War, owing to losses on fixed contracts, it went bankrupt, but it was able to reconstitute itself and carry on with its work. Needless to say, during both the last two world wars it has made great contributions to the defence
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and offence programmes of our country.
Owing to the unsatisfactory nature of the cost-plus basis of contract, especially for conventional production, the Government have rightly tried, where possible, to make fixed price contracts, but this method does not lend itself in the least to this type of new development. By this method, of course, the Government know the extent of their indebtedness, but the contractor has a considerable risk. Not long ago, Ferranti made large losses on a fuse contract for the Navy, and on another fixed contract it made a loss of about £2 million.
The contract that we are now discussing is for Bloodhound I. As has been said repeatedly, it is an entirely new missile in advance of anything yet invented or produced. At the time the project started, Ferranti made available a works which was particularly suitable for production, but to do this it abandoned all radio and television work going on then. The closing down of radio and television production in this factory, and the holding together of the labour during the interim period, cost the company substantially over £1 million. The pre-production or development work an Bloodhound I was done, by arrangement with the Government, on a 4 per cent profit basis, but, owing to inflation, this actually meant a loss.
For the Bloodhound contract, the Government said categorically that they must have a fixed contract which would allow for profit at a rate of 7 per cent. on turnover. This was due, I believe, to a ruling of the Treasury in pre-war days. It will be realised how difficult it is to estimate the actual cost of a new missile such as this. The Government had two teams of experts, one, the technical costs officers, the other, the accountants representing the Comptroller and Auditor General's department. The estimated cost of materials was agreed by both the Ministry and Ferranti representatives at £1,760,000. In fact, they were £500,000 too little and the materials actually cost much more, which meant a loss to Ferranti on that part of the work of about 30 per cent. This shows the impossibility of accurate estimation in matters of this kind.
The estimated cost of material, labour and overheads was about £8·3 million,

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This was the figure which eventually turned out to be so wide of the mark. The so-called profit of nearly £5 million does not allow for the loss of £500,000 on the under-estimated cost of materials nor the figure of over £1 million on providing works, machinery and scientific staff. Having staff, machinery and an empty works all ready to make a flying start was of immense benefit to the Government. To speak of an overall profit of 70 per cent. is not, in my opinion, to convey accurately the facts of the situation.
In addition, it will be realised that over half of any profit goes back to the Government in taxation.
Mr. Archie Manuel: Everyone pays taxes. What is the hon. Gentleman talking about?
Sir J. Barlow: I am talking about it because so many people do not seem to realise it. It may be said that the Government are, in fact, a partner to the extent of over 50 per cent. only in successful ventures.
The contract was not agreed and signed until October, 1960, by which time about half the material was delivered. It is repeatedly suggested in the proceedings of the Public Accounts Committee that Ferranti was under an obligation to inform the Government that the cost of production appeared to be lower than the original cost. If it had done this, the Government would have negotiated the contract on a basis of 7 per cent. profit, which, in the circumstances, would have been very unfair.
It is important to realise, also, that the Minister had the up-to-date figures produced by his representative and, apparently, by some serious oversight, the figures were not compared and coordinated by the Department. It is a well-known fact that, in production of this kind, the later stages may be relatively very much more expensive than the earlier ones owing to delays, waiting for material, and finishing particular work.
Mr. Diamond: I deliberately did not interrupt the hon. Gentleman on his previous misstatements as to the date on which the contract was agreed, as to the amount of goods which had been
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delivered when the contract was agreed, and as to the amount of tax which the company pays, which anyone who looks at the Stock Exchange figures can see for himself.
I did not interrupt when he made those three misstatements, but I interrupt on this occasion because the point he has just raised has not been dealt with previously. It is quite wrong to say that one does not know what the upturn in one's labour graph will be, and it is quite wrong to say that it will be substantial. The pattern of the graph is always the same; it turns up very slightly at the end, and one can calculate it within shillings.
Sir J. Barlow: That may be the hon. Gentleman's opinion, but it is not mine, having been advised by contractors of various kinds in this type of business.
In addition, there was no certainty of continuity; indeed, there was a likelihood that there would be no further orders for the firm for this type of business, and this would have left it with an empty shop. Moreover, it has great responsibilities in making adequate provision for its staff. Unless it were known that firms of this kind doing work of this sort would look after their staff, they could not attract the best in the country. This is what Ferranti set out to do and has accomplished, and we have benefited from it, though, perhaps, we have paid rather highly for it in this particular case.
It may be of interest to the House to know that Bloodhound 1 is somewhat similar to the American Hawk, but the American production is both inferior and more expensive than Bloodhound. A development of Bloodhound 1, known as Bloodhound II, which is much more complex though far superior, is being produced by Ferranti, I believe, in conjunction with the British Aircraft Corporation, and is being supplied, I understand, to Switzerland and Sweden, in competition with other British and American firms. These two countries, Switzerland and Sweden, are very keen buyers. They will go for the best bargain that they can get anywhere in the world. They have come to Ferranti for a variety of good reasons, and they have made no complaint.

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Already export orders amount to over £40 million on which, as the Minister told us, the Government get a royalty of 10 per cent., amounting to about £4 million. Although these foreign Governments are keen buyers, there have been no complaints whatever. Do we want to pare down to the last mite—[HON. MEMBERS: "Oh."]—and pay considerable compensation overseas when it is not required and not asked for? It may seriously prejudice much overseas competition if this line is unduly pursued. It seems to me that this is a political mountain arising out of a commercial molehill.
The thing which concerns me most, however, is the suggested lack of good faith, or dishonesty, on the part of Ferranti. I am convinced that this is not the case. It is a firm of very high standing which is doing an excellent job of research and production in highly competitive modern fields. It may make a big profit in one case. It has made colossal losses in others.
I should like to draw attention to Questions 693 and 693A in the Public Accounts Committee's Report where there is a suggestion by the Ministry official that Ferranti was unfair and took undue advantage of its position. I regard that accusation as most unfair. Besides being, as I believe, untrue, that kind of thing destroys any good will which may exist between the Government and the firm. If the two parties seriously mistrust each other, it is difficult for them to continue to work together in future.
We know that, technically, the Minister has responsibility for all his civil servants. The present Minister was not in the Department at the time that this went through. At the same time, I imagine that the civil servant who gave evidence was not responsible in any way. It seems to me unfortunate that there is so much moving about, both by Ministers and civil servants, that there is insufficient continuity to carry through this type of work.
On one basis, the estimated profits are said to be 70 per cent. But it can be more accurately argued that the profit on the whole transaction is more like 30 per cent. Taking the profit of £5 million, from which should be deducted the £1 million loss on pre-contract costs, and the £500,000 on the underestimated
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cost of materials, that leaves a profit of about £3½ million, or in the region of 30 per cent., on turnover. Of course, the tax on this is very substantial. Also the Government will get the tax on, I expect, very substantial profits from the important overseas business.
The percentage profit on Ferranti's turnover for the year 1961 was 10·8 per cent. In 1962, it was 6·5 per cent., and in 1963 4·6 per cent. This includes the period of the Bloodhound I contract. Therefore, the Government and the country get very many benefits. In all these circumstances, I do not believe the profit is outrageous. I have no doubt, however, that in future both sides will take extra care to ensure that neither excessive profits nor losses occur. But it might be worth cons Bering in such new and speculative fields that production of this kind should be entered into on a limited partnership basis on both sides—the Government and the firm.
It has been vaguely suggested that this firm should be nationalised. I totally disagree with that. Once a firm of this kind is nationalised, or unduly controlled, it will lose the spark of personal genius for research which has brought it to such tremendous eminence. I feel that the whole House appreciates the high quality of work which this firm has done over a long period of years, but I should like to see other methods adopted to prevent anything like this from occurring again.
6.35 p.m.
Mr. James H. Hoy: I did not think that we could have heard a worse speech than the one with which the Minister opened this debate—but we heard it. I honestly do not believe that the hon. Member for Middleton and Prestwich (Sir J. Barlow) understood a word of what he was reading. There were so many misstatements in his speech that it is nearly impossible to correct them all. To take the simple point that even he, with his I.Q., will understand, the 7 per cent. profit that was mentioned earlier in the debate was agreed as a basis of negotiation between the Ministry and Ferranti. They both admitted that. Therefore, I cannot understand why the hon. Gentleman, at this late stage, should say that this was a most unfair profit for anyone to be offered.
Sir J. Barlow: I believe that that was an imposed or suggested profit by the Ministry as the basis on which it always works in this kind of thing, which I consider to be quite insufficient.
Mr. Hoy: It does not matter whether the hon. Gentleman considers it sufficient or insufficient. This was the figure which was agreed. It was not imposed. If the hon. Member looks at the Public Accounts Committee's Report, he will see that the Ministry and Ferranti agreed that this was the basis on which the contract should be made. The hon. Member said—and this is about the only thing on which I agree with him—that this was a unique firm. Having listened to the speech of my hon. Friend the Member for Gloucester (Mr. Diamond), I agree with him. He proved it up to the hilt.
I am grateful that the House should be discussing the Public Accounts Committee's Report. I am grateful to my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) and, indeed, to the Minister for saying a word or two about the work of the Committee and the Comptroller and Auditor General. Since this Report there has been considerable discussion about the control of public expenditure. Indeed, we have even had a speech from the Leader of the Liberal Party about it.
I have been on the Public Accounts Committee for a considerable number of years. I think that in seniority I take second place to my hon. Friend the Member for Chesterfield (Sir G. Benson), who has served on it longer than anyone in the House or in the history of the Committee. Throughout the years we have tried to direct the House's attention to the control of public expenditure. The amount of money spent by Departments without any control by this House has been getting bigger and bigger, especially in recent years. The House votes hundreds of millions of pounds to certain agencies which do not come within the purview of the Public Accounts Committee. The Comptroller and Auditor General has no right to inquire into these accounts and, because of that, he cannot report to the Committee on them. I know from my experience that this sum is going up and up.
Following the introduction of the Robbins Report and the diverting of
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expenditure on technical colleges, and so on, which at present get a direct grant from the House, but which, in future, will have to get it through the University Grants Committee, a further large section of expenditure will be taken outside public control. I do not want to name the institution in question, but our next Report will show what I mean.
During our deliberations, we considered another institution of a technical educational nature and we did not agree with the way in which the money had been spent. Our Report will prove this conclusively. From this year onwards, however, we will never be able to inquire into that type of organisation, because henceforward the money will be given through the University Grants Committee. Consequently, the Public Accounts Committee and, therefore, the House will no longer be entitled to inquire how the money has been spent or whether it has been well spent.
Some people think that the Ferranti case has been given undue publicity. That is an opinion with which I strongly disagree. Even if there had been a tendency for it to be played down, Mr. Sebastian de Ferranti himself has played an important part in giving it publicity. Even when we were discussing the matter as a Public Accounts Committee, and before that Committee, appointed by this House, had the opportunity of reporting, Mr. Ferranti appeared on television to explain the case for his business. I do not know what right he had to do so. I felt that at that stage it was getting near to contempt of the House of Commons, because he had appeared as a witness before the Select Committee on Public Accounts.
Indeed, if Press reports are correct—and I have no reason to doubt them—apparently Mr. de Ferranti was in this building last night briefing members of the Tory Party at a meeting upstairs. It is no use the hon. Member for Farnham (Sir G. Nicholson) nodding in disapproval. Mr. de Ferranti was here last night. Is the hon. Member saying that he was not?
Sir G. Nicholson: If the hon. Member had been at the meeting, and knew what happened, he would not have said what he has said.
Mr. Hoy: Mr. de Ferranti discussed the whole of this matter with that committee last night. Does the hon. Member deny that?
Sir G. Nicholson: I am not being cross-examined by the hon. Member. He must know perfectly well that committee meetings are confidential. All I am saying is that there was no personal briefing. Had the hon. Member been present, he would not have said what he has just said.
Mr. Hoy: The purpose of Mr. de Ferranti's visit last night was to discuss the debate which we are now having. The hon. Member cannot deny it.
Sir Arthur Vere Harvey: I might be able to help the hon. Member. Without committing a breach of the confidence of the committee, may I say that I was in the chair and that, of the 60 minutes, 50 were spent in questioning Mr. de Ferranti on this whole business?
Mr. Hoy: That is exactly what I am saying. The hon. Member states that for at least five-sixths of the time the committee privately questioned Mr. de Ferranti about the affair which we are discussing today. That step was taken by Mr. de Ferranti knowing that it would be discussed today. It leaves a bad taste in the mouth of the House of Commons. Surely——
Mr. Hastings rose——
Mr. Hoy: I wish that the hon. Member would sit down.
During the proceedings in the Public Accounts Committee, Mr. de Ferranti went on television and last night, knowing that this debate was to be held today, he consulted certain Members on the benches opposite. It is no use hon. Members opposite saying that Mr. de Ferranti did not have an opportunity to state his case. He was given every courtesy by the Public Accounts Committee. Indeed, in reply to a question from the hon. Member for Farnham (Sir G. Nicholson), who, late on the first day of Mr. de Ferranti's visit, asked whether, having answered all the questions that afternoon, there was anything further that he would like to say, Mr. de Ferranti replied that he had a word or two. What he said fills over five columns of the Report of the Select Committee—over
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2,000 words. So he had not come unprepared for the question that the hon. Member put to him. Therefore, in addition to all the questions, he got five columns.
During the debate, there has been frequent reference to research and development costs. As I have so often said, we had better remember that it is not Government money, but the taxpayer's money, that we are discussing. The Government spend considerable sums of money. Hon. Members opposite had better be a little careful. They are always saying, "What about nationalisation? "I point out to them that if it were not for public undertakings, nationalised industry and Government undertakings, comparatively little money would be spent on this work. I shall prove this from someone who is associated with the firm of Ferranti. Considerable sums of Government money are spent in this direction.
That was put clearly and succinctly in a paper issued only this morning by the Scottish Council (Development and Industry), a kind of quasi-Government agency, one of whose most distinguished members is Sir John Tothill, of Tothill Report fame and. I think, the chief of Ferranti's in Scotland, a man for whom we have the highest respect. This is what he had to say in the statement issued by the Scottish Council:
"In many industries, the dynamic source of growth is technology—the continuous and rapid use of scientific knowledge. This is just as true of the development and survival power of established products as it is of the evolution of new products.
The greater part of all research and design in Britain is paid for by Government and nationalised industries, which also dominate the market for many of the products of industry."
That is admitted by hon. Members who say that this money which the nation pays for the development of science and technology will enable not only the country, but private enterprise, to compete with its competitors in other countries. Let us, therefore, have no more nonsense about that.
Let the country be under no misapprehension about this development. The Minister has not so far said what was paid in development costs. What we are discussing today is the profit that was made on production. It has nothing to do with development. I challenge

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the Minister to say how much was spent on development, because neither the House nor the Committee has been given a figure.
If I have worked it out with any accuracy, the development cost came to between £5 million and £6 million. Let it also be well understood that on this money Ferranti received interest at the rate of approximately 5 per cent. [Interruption.] I will quote Mr. de Ferranti's own words. When I said to him that the interest rate was 5 per cent., he replied that it was not quite 5 per cent.; it was 4 and a bit. So we know that if it was not quite 5 per cent., it was something over 4 per cent. That is what he was paid on money every penny of which was provided by the taxpayer through the Government.
Mr. Wigg: I have tried to do the same sums as my hon. Friend and I think that I am on the right lines. When my hon. Friend refers to the development cost of £5 million or £6 million, that was for Bloodhound Mark I. Mark II was probably a similar amount. We know from the reply to a Question the figure for Bloodhound Mark III. So we get roughly equal sums for production and development, bringing the figure to between £25 million and £30 million in all.
Mr. Hoy: I am prepared to rest my case and the case of the Public Accounts Committee on this project. I shall expect the Minister of Defence to tell the House tonight what the total cost of development was. I suggest that it was between £5 million and £6 million, on which Ferranti was paid between 4 per cent. and 5 per cent. profit.
It is said that Messrs. Ferranti gave up its production of wireless and television sets. The hon. Member for Middleton and Prestwich knows better than that. At least, if he does not know, he should not have delivered the speech he made this afternoon. I do not know who his script writer is, but the hon. Gentleman should tell him what it is all about. I do not believe that the hon. Member wrote that speech. He is not as bad as all that. What we do know is that Ferranti was glad to relieve itself of the production of wireless and television. I will not mention the firm
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which took over—[An HON. MEMBER: "Ekco."]—this problem, but Ferranti was delighted to get rid of it. That argument does not hold water.
I will not take up the time of the House by going through all the various stages, but I will content myself with the date when the price was finally agreed. This came after some years, but the price was finally agreed in October, 1960. There has been some humbug about Ferranti not knowing what the outcome was likely to be. At that time, as Mr. de Ferranti himself informed the Public Accounts Committee, more than 60 per cent. of the contract had been not only completed, but already delivered.
Will anyone seriously suggest that a firm of this stature, after completing 60 per cent. of the contract, did not know what the outcome was likely to be? I do not think that I was being in any way rash when I suggested to Mr. de Ferranti that if he could not find out for himself, at least he might have used one of his own computers. This firm is supposed to be very up to date. I did not think that its chairman did it any justice—he would never get a job as a public relations officer after this—when he said that, after 60 per cent. of the contract had been completed, he did not know what the outcome was likely to be. I do not believe it and I do not believe that there is one hon. Member here who does.
In the circumstances, I was not prepared to agree that Mr. de Ferranti did not know what the out-turn of his account was likely to be. Indeed, I think that there was something a little worse. Sir Richard Way said that this was a price which had been beaten down by the Ministry by 20 per cent. Members of the Public Accounts Committee will remember that this was not the price asked by Mr. de Ferranti, who had asked for 20 per cent. more. When I asked him he denied it, saying "No, we did not ask for all this."
Apparently Mr. de Ferranti must thave thought it over again, because on page 55 of the Report we have a lot of extra notes about it. After denying that he had been beaten down, he said, in a letter dated 17th March:
"…it may be that during this process some of the original labour estimates were reduced by 20 per cent. on some limited part of the contract."

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After his firm denial that he had reduced the price, all I can say is that I leave it to the House to judge whether Mr. de Ferranti had been quite honest with the Committee.
I should like also to deal with the subject of repayment. There was some confusing evidence about this. I suggested to the Permanent Secretary that he ought to ask Ferranti about a repayment. I did so because the Committee unanimously agreed that the profits were excessive. In paragraph 27, the Committee unanimously said, quite clearly, that negotiations should now take place as though they were starting all over again with all the facts known to both sides.
Even Ferranti had been prepared to agree to a 10 per cent. reduction if the Ministry had pressed strongly enough. I was surprised to find that when this was put to Mr. de Ferranti he sought to deny it. This was typical of his evidence. On page 31 of the Report hon. Members will find a note submitted by Mr. de Ferranti in which he said:
"We did not, in fact, give the hypothetical 10 per cent. reduction referred to in preceding evidence."
To describe this as hypothetical is an abuse of the English language.
In reply to Question 926 Mr. de Ferranti said quite clearly and, apparently, in no doubt about it:
"When we put in our quotation, I remember discussing it with the team at the time, and we realised that they"—
that is, the Ministry—
"had as much information as to the way the costs were going as we had, and we expected them to come back and say: 'Well, it looks to me as though the costs are going all right', and had they come back to us at that stage"—
and let hon. Members mark what he says—
"and I remember the matter very clearly at the time—we thought that it would be reasonable and, if they pressed very very hard, we might reduce the price by 10 per cent.…"
Even at that time Mr. de Ferranti was prepared to make a cut in the price. There was no ambiguity about it, because he said that he remembered it quite clearly. Apparently, it was clear to him on the first day he came to the Public Accounts Committee, but not quite so clear when he returned. However, I am bound to say that this was typical of many of the answers which Mr. de Ferranti gave to the Committee,
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and once more I leave it to the House to decide who was right and who wrong.
There were many shortcomings on both sides. Obviously, the Ministry does not escape responsibility for what happened. But we ought to say that the present Permanent Secretary was not the official involved at the time. Perhaps it was one of the mistakes of the Public Accounts Committee that we did not summon before us the Permanent Secretary who came to the original agreement with Ferranti.
It is not very good for the Minister this afternoon to say that Mr. de Ferranti has now agreed to make available to the Lang Committee the books that he denied to a Select Committee of the House of Commons. Why should he? It is rather insulting that he should deny to a Select Committee of the House what he is prepared to give to a "stooge" committee served up by the Minister of Aviation—[Hon. Members: "Oh."] Yes—whose purpose was to try to prevent the Public Accounts Committee from dealing with this issue. It did not.
Why he should now offer books to this Departmental Committee which he refused to a Select Committee is difficult to understand. It means that, even though the books are now produced, there will always be a suspicion that something has happened between when they were asked for and when he is to hand them over.
It is not possible to stop people from drawing that conclusion. This request having been made many times, and having been refused every time, it is not possible to stop people getting that impression. Let us not put the responsibility for this on the taxpayer or on hon. Members on this side of the House. The responsibility lies with Mr. de Ferranti, who had the power to produce the books if he wished to do so.
We have often heard complaints about what will happen if various industries are nationalised. The state of affairs that we are discussing today has arisen under private enterprise. I find this appalling. It is nonsense to talk about loyalty to the country. The Minister said this afternoon that this firm, which was making these tremendous profits out of taxpayers' money, was able to deliver the goods on time.

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We are often told that we must put the defence of our country first. If my recollection of the salary that I received when I was in the Armed Forces is correct, that is the basis on which they paid us. There was certainly no financial reward for that service.
No longer will hon. Gentlemen opposite be able to make speeches about loyalty, either in the House or in the country. This is an example of the loyalty which this firm has shown to the country, and its actions will certainly not commend the firm to our people. What this firm has done is——
Sir Ian Orr-Ewing: To produce the best computer in the country.
Mr. Hoy: I do not want to reply to the hon. Gentleman, because I might say something that he will not like.
This firm has shattered the confidence which had grown up over the years between contractors and the Government. It has proved beyond peradventure that we can trust it no longer. The worst feature of the whole affair is it has broken faith with the country. It ought to be ashamed of itself. It will be a long time before confidence is restored and satisfaction is given to the country.
7.2 p.m.
Mr. A. P. Costain: I welcome the opportunity of following the hon. Member for Edinburgh, Leith (Mr. Hoy), as we are colleagues on the Public Accounts Committee. In that atmosphere of coalition we agree on most things, but it is interesting to see that today the hon. Gentleman is wearing his full party colours.
The hon. Gentleman said that this debate had not been given a great deal of publicity.
Mr. Hoy: I did not say that.
Mr. Costain: Since I have been a Member of this House, I have attended every debate on the Public Accounts Committee's findings, and I have endeavoured no speak on every occasion, The number of hon. Members present during the debate demonstrates as clearly as anything can that this debate has had a great deal of publicity.
The hon. Member for Cardiff, South-East (Mr. Callaghan) referred to the
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work of the Public Accounts Committee, and I appreciate what he said. That Committee is sometimes looked on as the lifeboat service of this country. It is accepted as something which is there, and of which we are rather proud, but it does not get much publicity. A lifeboat receives publicity only when there is a dramatic rescue from a liner, or a film-star is rescued from a yacht. Those are the occasions on which people who watch the launching of the lifeboat go on to the cliffs to cheer her efforts. Today, we have not had many people standing on the cliffs and cheering. We have heard many hon. Gentlemen opposite jeering because of the political advantage which they hope to gain out of this debate. That is the issue that we have to consider.
Mr. Woodburn: I think that the hon. Gentleman will agree that it was the Minister who introduced a controversial note by referring to nationalisation and sneering at the Labour Party's policy. If the hon. Gentleman wishes to reproach anybody, he should start with his own right hon. Friend.
Mr. Costain: We are all the better for a lively debate.
The Opposition have tabled a censure Amendment to the Motion, and hon. Gentlemen opposite have shown their party colours—when in doubt, nationalise. The hon. Member for Leith will remember as well as I do that in its third Report, in 1961, the Public Accounts Committee criticised the cost of converting trucks. It pointed out that this conversion, which was undertaken by a nationalised section of the community, cost £1 million more than a similar operation carried out by private enterprise. The hon. Member for Cardiff, South-East talked about yardsticks. He said that we should nationalise some industries to produce yardsticks. If hon. Gentlemen opposite intend to produce yardsticks of that type of inefficiency, it will cost the public a great deal of money.
Sufficient credit has not been given in this debate to the Comptroller and Auditor General's Department. It has an enormous task before it. The hon. Member for Leith suggested that that Department did not audit certain items. I accept that, but I think we must realise that it has complete control of about 700 different audits. Anybody who realises

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the extent of Government expenditure on the public sector would be fooling himself if he did not accept that a lot of discrepancies may occur.
I am glad that the discrepancy which we are discussing today has been found out, because, if it had not been, I might have wondered whether the system for discovering discrepancies was wrong. I suspect that almost every accounting officer in every Government Department is saying to himself, "There but for the grace of God go I."
Mr. Bence: That is what the contractors are saying, too.
Mr. Costain: I shall come to what the contractors are saying.
Shortly after I joined the Public Accounts Committee, I gave a thumbnail sketch in the House of how I saw the operations of that Committee. I received a number of letters, including many from civil servants, saying that they were glad that I had given the House that picture of the Committee. I made it clear in my speech that one of our greatest problems was to find a yardstick by which to judge efficiency.
Today, we are debating a contract which is connected with an extremely sophisticated weapon. No man can possibly have appreciated its final cost. I do not in any way contend that a mistake has not been made. I do not base any of my arguments on the fact that there has not been a mistake, or that a much greater profit has been made on this contract than we had reason to expect. Why should I? My experience tells me that it is not correct. The Minister himself has referred to the fact. But we must get our vision correct and appreciate the object of the exercise. These weapons have been produced on time, and to the satisfaction of the clients. They have been sold to other countries, who do not depend upon their technical costs officers or accountants, and they have been sold in open competition on world markets. That is some indication of the success of the venture.
Since contracts have been mentioned, I want to give the House an impression of the various forms of contracts. Hon. Members and the public often talk about this and that form of contract, and I occasionally wonder whether they appreciate the various kinds that exist. Let
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us think of the alternative ways in which a product can be bought. The nearest comparable product that I can think of, although it is much less complex, is the motor car. People buy a motor car when they see the finished product and compare various prices and various performances. They choose, on balance, a dear car or a cheap car, taking into account the cost of maintenance.
At the other end of the spectrum is the case of somebody who wants to buy something, but who honestly does not know what it is. A performance specification is produced. The prospective purchaser will say that he wants a certain throughput from an oil refinery, for example. He says: "There is the crude oil" and gives a specification of the finished product he wants it to produce. That is the nearest example to this problem that I can find from industrial life.
The client does not know what he wants. The contractor cannot price it. The client has not designed it. It is entirely nebulous. A design team is then got together to develop the project. That is the accepted practice, and the purchase goes forward on a cost-plus basis. I have had 30 years' experience in industry, and I dislike cost-plus contracts. They do not provide any incentive for individuals on either side to be more efficient. Nevertheless, in respect of certain items cost-plus contracts are necessary.
The first lesson to be learned from this exercise is that at that time of placing a development the purchasing department has the greatest power over the contractor. It has more freedom of choice in deciding who should do the job. It is at that time that the pattern and type of contract must be considered. Most contractors, naturally, dislike having all sorts of people barging about and disorganising their offices. They can never be certain that the people who are doing the audits and investigations will not at some future time join a competitor. That happens. It is not just that contractors are frightened of disclosing their profits. My industry is only too willing to disclose its profits. An hon. Member opposite criticised an industry for not being prepared to disclose its profits. The building industry is prepared to do so,

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but I cannot develop that point because I should be ruled out of order.
At the time of the development con, tract the purchasing officer can say, "I have a choice of two, three or four firms. I will give the development contract to the firm which is prepared to go through with me in a tighter partnership." It is fairly obvious why I dislike cost-plus contracts. Under them, the more that is spent the more the profit. People all the way down the line, even down to those who are doing the smallest jobs, ask themselves why they should hurry, because the "guv'nor" has got the job on a cost-plus basis.
That is wrong. People who work on that kind of contract can never get back their competitive spirit, and it is that which this nation must have if it is to make its way in the world. That is why I would restrict cost-plus contracts to that field where the imponderables really are imponderables, and where nobody can assess anything with any degree of certainty.
Coming from the cost-plus contract, the next stage in the spectrum is the target-cost contract. It is basically the same as the cost-plus contract, but has one real difference. The fee is based on an agreed cost. Whatever the contrac- for may spend, his fee will not be larger. If he spends less, he will receive a bigger fee, on a percentage basis. I do not think that any hon. Member would object to that. He receives a larger fee for being more efficient. It is small, but it is enough to be an incentive.
The next kind of contract, which has been adopted largely by industry, is the sharing-of-efficiency contract. That enables both parties to a deal to have a common interest in saving money. That type of contract is used extensively by large and medium-sized industrial organisations who know their onions, as one hon. Member opposite put it. That is a pretty good sort of contract, because if the contractor manages to end up with a saving on his estimated cost he gets half of it and the client gets half.
Next in the spectrum comes the maximum fixed-price contract, with the same sharing of profit or loss clause. This type of contract is used where a client
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does not have the resources of Her Majesty's Government. A private firm may say, "I have so much to spend on this. It is all that I can spend." We often say, when we want to buy something ourselves, "Look; I can spend this much on this article. I want the best possible article you can give me."
I now turn to the question of Ministerial responsibility. I know that it is the tradition in this House, and it may have to remain so, that ultimately a Minister is responsible for everything that goes on in his Department. That is a fundamental principle of our Parliamentary system. But let us think for a moment of the growth in the size of projects which Ministers now have to deal with. Can we imagine the chairman of I.C.I. attending every committee at which any part of his organisation was being discussed?
One could imagine the sort of letter which the chairman of I.C.I. would send to a public relations officer who said, "One of your shareholders or a client is coming to see you at twelve o'clock at night and he wants a debate with you, so you must come along." What sort of reply would the public relations officer get? Yet we expect that to happen in this House year in and year out. Is not there something wrong with the system where we have these sort of problems and yet they do not occur in industry?
Mr. J. J. Mendelson: Before leaving the point about the chairman of I.C.I., may I ask whether the hon. Member is aware that several hon. Members have the opportunity to meet the chairman in a Committee Room? I do not think that had the hon. Member been one of them he would suggest that the chairman of I.C.I. would not know a great deal about a project which involved £20 million.
Mr. Costain: Is it necessary that he should?
Hon. Members opposite are the first to criticise when a Minister is not sitting on the Government Front Bench and particularly Scottish Ministers. Hon. Members opposite will say, "Where is the Secretary of State for Scotland? He is not here and I am making a brilliant speech and he is not listening to me." Today, they are saying that the Minister

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ought to spend more time reorganising his Department. This debate may involve greater things than we appreciate at present. Perhaps, in the future, we shall have two Ministers, a political Minister and a commercial Minister. The policy adopted of dual Ministers in some Departments by the present Government seems to be following that process.
A Minister is rather like the owner of a motor car, if hon. Members can imagine a Ministry as a large motor car. The Minister sits in the back of the car and the accounting officer is his chauffeur. That gives a simple idea of how the policy and administration of a Ministry works. The Minister tells the chauffeur where to go and if the chauffer has an accident, regardless of the circumstances it is the fault of the Minister. That would not work in industry.
I do not intend to detain the House long because, there are other hon. Members who wish to speak. The hon. Member for Dudley (Mr. Wigg) is on the benches opposite, with his usual bunch of papers. I am most interested in what he will have to say. We all admire his speeches on such occasions as these. I think I am correct in saying that the hon. Member is a director of Tote Investments. The principle of Tote Investments is that there should be a large turnover. It takes a small profit, but is so organised that it never makes a loss. The punters make the losses, and sometimes they make large profits.
Mr. Wigg: One difference between me and the hon. Member is that I was asked by the Government to serve and that I get neither salary nor expenses.
Mr. Costain: I am quite sure that the hon. Member for Dudley is doing a very good job, and I am not suggesting that he is a bloated capitalist because he is doing it.
My point is that when Tote Investors is running on a marginal profit it does it very well. It can expect its punters to make profits and losses. When the punter makes a really good profit, that is advertised, because it helps business. That is all right. But if a contractor makes a big profit, to overcome a loss, that is all wrong.
7.24 p.m.
Mr. George Wigg: The hon. Member for Folkestone and Hythe (Mr. Costain) would have clone far better to stick to contractual obligations, because I have no doubt—although I did not understand it—that he knew what he was talking about. But when it comes to racing he has to be a little more careful. There is a curious analogy between what has happened over Ferranti's and what some punters would like to happen. Like Ferranti's, if they win they take the profits. But if Ferranti's lose, the Government pay the bills. It is a formula which has the approval of the hon. Gentlemen opposite. It means to say that Ferranti's can always collect and the taxpayer can always pay.
Sir Henry Studholme: Surely, if Ferranti's lose, it—and not the Government—pays the bill.
Mr. Wigg: If the hon. Gentleman will contain himself for a little while, I will demonstrate to him how impossible that is.
Before I start let me deal with a point which staggers me. Hon. Gentlemen opposite have consistently talked as if Ferranti's produced Bloodhound, but Ferranti's did not do that. Bloodhound was produced by the British Aircraft Corporation. Ferranti's produced the guidance and control system and the launch control posts. Presumably at an early stage the Government Department concerned asked Ferranti's to take part in a design study. But hon. Gentlemen opposite talk as if Ferranti's did this that and the other, and it is so much nonsense.
This is Shakespeare's quater-centenary, so may I pay lip-service to the blessed memory with a quotation
"The fault, dear Brutus, is not in our stars, But in ourselves.…"
We cannot put the blame on some obscure Ministry official for what has gone wrong here. It cannot be exclusively the blame of Ferranti's, which is a capitalist firm working in a capitalist market. As the right hon. Member for Wolverhampton, South-West (Mr. Powell) has so ably told us, one of the principles of firms operating in the capitalist market in peace or war is, "Profit, profit, profit—and to hell

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with public service". Why should we be surprised about it?
One of the things which fascinates me is to compare what happened about Ferranti's with what happened in the United States where there has been an exactly parallel case before a Congressional Committee. A report was made as recently as 9th March 1964. It refers to a firm called Tyco which was hauled before the Committee. The chairman of the Committee did not say, as was said here, "Please, Mr. Ferranti, we want to ask you some questions", and Mr. Ferranti replied, "I do not want to answer them"—the Senate Committee ordered. I am prepared to give the Minister a loan of the report of the proceedings. Every question about valuation, taxation, employees, representatives and pay was answered.
This seems the only possible way in which the House of Commons can effectively exercise its control. For we cannot have it both ways. In the United States they believe in putting in the serpent of competition. This was what all the row was about in the Tyco case. They wanted four firms to compete against each other. Then if the selected firm delivered the goods, well and good. If the firm went broke, that was that.
What Mr. de Ferranti wants is a monopoly position, to be able to make what profit he can from his monopoly position and then to be recouped if he should make a loss. This will not work. We must have either one system or the other.
Here let me say something which I have no doubt will be repeated on many platforms in the country. The charge has been made that my hon. Friends may want to nationalise the aircraft industry. Let me say again what I have said before. So far as I am concerned hon. Gentlemen opposite could go on their knees and put their hands together and plead to Heaven to be nationalised. I would not nationalised the aircraft or indeed any defence industry. I would investigate, and I should like hon. Gentlemen opposite to know that I would investigate retrospectively. I want to know what has happened in the defence industry. I ask my hon. Friends to consider this Ferranti case against the background of
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defence and to see what the aircraft industry has had in the last 15 years; or see what we have spent on defence in the last 20 years. I have repeated the figures before, but they roll off, like water off a duck's back. Altogether £20,000 million has been paid since 1951 out at the behest of the Conservative Administration on defence.
Let us start with the poor old Army. Its rifle is Belgian. Its field gun is Italian. Its anti-aircraft system is Swedish. Its medium gun is American. So we can go on, weapon after weapon. Where has the money gone? Then we come to the aircraft industry—and I have given the figures, and again they are obtained by the research department of the House and have been confirmed by the Ministry of Aviation—no less than £5,200 million has gone into the aviation industry in the last 15 years, £3,700 million on Government account. And what have we got for it?
Even Bloodhound I is not all that good. There is some little doubt about its ceiling. Bloodhound II is more sophisticated, has a little more height and can operate at a lower range. But Bloodhound III was cancelled. Yet we are told that Ferranti took a risk. When Bloodhound III was cancelled the Minister of Aviation told us what the cost was. It was £600,000. But it did not cost Ferranti a penny. If Bloodbound II had been cancelled, would it have cost Ferranti a penny? Of course not. When Blue Streak was cancelled, what happened? The Government put their hands in their pockets and forked out. The idea that there was any special risk arising out of the cancellation is a subject for Conservative meetings and children, the only difference being that the children are innocent.
I am not exclusively concerned with the past. I am concerned with the present and more with the future. What I have tried to do—not only on this occasion but on any other occasion—is to take the attitude that if one criticises one should make a suggestion as to how things could be done better. I believe that whether it likes it or not, the House of Commons has to come some way towards the American system. We have to find a Mr. Charles Hitch who will drill Government Departments or Conservative

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Parties into the meaning of cost effectiveness. I wonder how many hon. Members opposite have read the book written by him on the economics of defence in a nuclear age. Very few. I suggest that even few civil servants have done it either. Yet Mr. Hitch has part of the answer. I do not know whether it is all the answer of what we ought to do.
I have put this matter on the Order Paper again and again, without support—and I do not complain about that. But I argue that we ought to have a Defence Committee with more powers than the Estimates Committee has, perhaps something akin to the Public Accounts Committee, to look at the Estimates as a whole, with the power to take evidence on oath and to send for papers and persons and to ascertain the facts. I t should do that not only in the service of the House of Commons but in the service of the Ministries concerned.
Short of that, I do not know what the answer could be, because if we look at the Service Estimates we see that we are told less and less. What happens when we read the Report of the Public Accounts Committee? I pay my tribute to those who served on it, although I believe that some of the hon. Members on it play with a soft ball. If anyone wants to see underhand, easy deliveries they should look at the questions asked by the Chairman of the Estimates Committee of Mr. de Ferranti. If ever I were in the dock I hope that he would be prosecuting council.
Sir G. Nicholson: If the hon. Member were in the dock I should have a soft place in my heart for him because he is always willing to admit interruptions to his speech. I am grateful to him. But he has twice misunderstood the function of the Public Accounts Committee. That function is to elicit facts. When I am Chairman of the Estimates Committee and an outside witness comes in, the first thing I ask is, "Would you like me to start by asking questions or is there anything which you would like to say to the Committee as a start?" This is not only fair to outside witnesses but extremely helpful to the Committee. The answer which I elicited by what the hon. Member calls my underhand question—a perfectly simple question—was very valuable to
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the Committee in the first lot of information.
Mr. Wigg: I withdraw the use of the word "underhand" as having anything like the meaning which the hon. Member suggested. What I meant was that he played a soft ball so as to make sure that Mr. Sebastian always scored a boundary.
Sir G. Nicholson: If the hon. Member registers Mr. de Ferranti's answer as a boundary he must be very short-sighted.
Mr. Wigg:: Not only was it a boundary but he hit the ball out of the ground. That is the impression which it conveyed to me, and that is what Mr. Sebastian Ferranti succeeded in doing.
I do not want to speak for too long, but there is another aspect with which I want to deal. I am a lover of Sherlock Holmes, and Sherlock Holmes's most famous case—and I am sure that the hon. Member for Folkestone and Hythe will not be surprised—is concerned with racing. It is the case of Silver Blaze, and the clue was the dog which did not bark. The Ferranti case had been before the House in various forms on a number of occasions, and if ever there were a case which demanded a personal statement by an hon. Member it was this case, which required a personal statement from the hon. Member for More-cambe and Lonsdale (Mr. de Ferranti), because he was a director of Ferranti. I thought that he owed an explanation to the House.
I thought that in fairness to him I should give him notice that I intended to refer to him, and I wrote to him the other day to say so. But the only time which I can trace on which he broke his silence was on 17th April when, as reported in the Guardian, he said that the missile contract was at a high risk. This was a good publicity point, and publicity in this Ferranti business has been a fairly extensive operation. I am not sure what happened last night. How can I be sure? It may well be that the Conservative Committee asked Mr. de Ferranti to come and meet them. On the other hand, it may well be that in view of his powerful position inside the Conservative Party he sent for the Committee. I would not know. Anyway, they met.

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There is no doubt that Mr. de Ferranti has been active. Unfortunately, I have been abroad and I had to move rather quickly when I got back to keep pace with the news. I have a copy of his hand-out, but what fascinates me is not the hand-out which was prepared for circulation in this country but one which was circulated in the United States. This is quite fun. It is an agency report printed in the United States:
"The 36-year-old Mr. Ferranti smiled".
He must have been thinking about the £4½ million.
"He was asked how he accumulated such a large margin and whether there had been some exciting new technological breakthrough. 'Yes, of course,' he said. 'We set up a special department staffed by some of our best scientists and technicians, and this concentration of effort was one major factor in our success with Bloodhound. But another factor involved the development of a new computer control process.' He did not elaborate beyond saying that the company today is selling the new computer, known as the Argus, in this country and abroad".
This is quite fun.
But the hon. Member for Folkestone and Hythe asked a question of Sir Richard Way—No. 713:
"It would help me considerably if I could get a picture of what Ferranti's operation consists of in the widest terms. Are they manufacturers, or what do they do?"
The answer was:
" What they did in this case was to develop and produce the guidance and control system for this particular missile and the launch control posts from which the missiles are controlled on the ground. They also do a great deal of work for us on radar, and generally until recently they did a great deal of work on computers, but they have now got rid of that."
That is a bit hard, because my information is that Ferranti's is still producing computers although under a different name. I think that the hon. Member for Morecambe and Lonsdale is now chairman of I.C.T., which deals with the computers. My information is that as recently as last week negotiations were being opened with a view to the supply of computers to the Admiralty. But he will know more about that than I do. How he or his brother can possibly say that the profit was made on this weapon because of its high risk is utterly and completely beyond me. Perhaps the House may be favoured later in the evening—if he
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catches your eye Mr. Speaker—with an explanation of just what was the high risk, remembering that the design study was paid for by the public, the development was paid for by the public and, as far as Bloodhound I was concerned, there was £4½ million profit. That may well have covered Bloodhound II. Bloodhound III was cancelled, and that was paid for out of public funds. What the risk has been for Ferranti's is beyond my comprehension.
Again I ask what the amount is. The Minister of Aviation is not present now, but he knows that I have a considerable admiration for the slickness of his observations and the ease with which he tries to get away with it. I asked when the Ferranti business started—as I have a passion for facts—what Ferranti contracts had been concluded. If I may say so in parenthesis, the House of Commons is wasting its time tonight because we are asking about facts which are possible of ascertainment and if the House had the will to copy the American model we could get at the facts. When dealing with such vast sums, it is our duty, not only to ourselves but to our constituents, to ascertain the facts.
Mr. David Renton: Has the hon. Member's passion for facts led him to find that there is no family in this country which has done more to advance the technical progress in electrical manufacturing and electronics than the Ferranti family has done now for three generations? Will he therefore weigh his words very carefully before making imputations?
Mr. Wigg: If I have to prolong my speech by only a little I will do so because, of course, I ascertained my facts. I have ascertained them so well that I need not have given way to the hon. and learned Member to make such an obvious party point. Of course the Ferranti grandfather was an electrical genius, but he has been succeeded by people who are not engineering but financial geniuses. This is what happened from one generation to the other. The old boy knew his stuff and they are celebrating. Good luck to them. The grandsons have come and they are all multi-millionaires. This firm was in fact "broke" before the war. It was saved, not by the gong, but by the war. It was nearly "broke" a second time and while others went out and served

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they stayed behind—[Interruption.] If hon. Members opposite wish to make obvious party points I shall reply roughly to them.
Mr. Basil de Ferranti: The hon. Member might at least allow me to reply that my father went out and fought in the 1939–45 war while we were too young to do so, although we would have gladly fought.
Hon. Members: Withdraw.
Mr. Wigg: What have I to withdraw? If hon. Members want me to do so, I shall read the details.
Sir Harmar Nicholls: Really!
Mr. Wigg: Hon. Members opposite interrupt me and ask me if I am aware of the history of the Ferranti family. I say "Yes", and I pay tribute to the Ferranti grandfather. If some members of the family, including the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti), feel that I have said anything wounding about them, I withdraw it, but someone stayed behind and ran the Ferranti firm which was "going bust" in or about 1938 and now they are millionaires. Does anyone deny this? Does anyone deny that before the war the firm was making only a trickle of profit and now they are millionaires?
I am glad of the opportunity to make the point. The Ferranti family own all the ordinary stock. If the hon. Member is right in saying that there was this enormous risk and they had a reward for taking the risk, they need not have taken it. They could have shared the risk. Plenty of speculators on the Stock Exchange would have taken it off their hands.
Mr. de Ferranti: I must interrupt the hon. Member again. If my grandfather was so brilliant and made all this money, how does it happen that before the war we were "bust" and afterwards we were millionaires?
Mr. Wigg: The hon. Member does not do himself credit. He should not be carried away by his supporters. His grandfather was an electrical genius but capitalist societies do not reward men who are geniuses, they reward men who can manipulate finances. This is precisely what has happened. These are
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the facts. In 1938 the firm made only a trickle of profit. We were told by Mr. Sebastian de Ferranti that the firm was broke once and nearly broke a second time. Now the firm has prospered so much that all the ordinary stock is owned by the Ferranti family and the risk is so great that they refuse to share it with anyone else.
All I am rebutting is the argument that the family were not taking very much risk. If I have wronged any member of the family who served in the firm and fought in the Forces, I genuinely apologise. All I am saying is that, as a result of the need for electronics and such devices, in accordance with capitalist tradition and philosophy expounded by Mr. de Ferranti, the firm is taking advantage of the market.
I come to the real thing that worries me, Ferranti's current operations. In the debate on the Navy Estimates I gave notice that I would ask some questions——
Sir Harmar Nicholls: Before he went into rather unpleasant personalities, the hon. Member for Dudley (Mr. Wigg) made the point that it would be better if we had committees based on the American model which could make people answer questions. Would he concede now that he prepared that particular point before the speech made by my right hon. Friend the Minister? It would be a good thing if he now acknowledged that the head of this firm has apparently agreed, so we are told, to show its books. I think that acknowledgment should be recognised; otherwise the hon. Member's speech is not up to date.
Mr. Wigg: I was just coming to that point. This is the folly of giving way. When I was interrupted by the hon. Member on a purely party point, I was making the point that the Minister of Aviation, when I asked him questions about the total cost of the Bloodhound as recently as 7th April, said that it was not in the public interest to give the information. I asked each of the Service Departments to give particulars of the Ferranti contracts, for I wanted to establish the facts. The right hon. Gentleman refused to reply and only today in the course of this debate—this is a typical trick—in order to cancel

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the effect of the Amendment moved by my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), he says that the firm has agreed to do this.
We should read his words. The firm is to show its books only in connection with the production side of Bloodhound I. If the hon. Member agrees to look at the proceedings before the Congressional Committee he will see that that body had all the information. There should be a Select Committee of this House, not the Lang Committee, which should have all the information it wants, not the information which Mr. Ferranti is prepared to supply.
If this were a genuine conversion, why was the House not told before? The right hon. Member could have made a statement at the end of Questions today or yesterday, or he could have made a statement to the Press. This statement is brought out as a kind of tour de force to cancel the Amendment moved by my hon. Friend. I welcome it and am prepared to suspend judgment on what I now have to say about H.M.S. "Eagle". I speak with my tongue in my cheek, although I hasten to add that I know a great deal more about it than when I started on this subject. I had an Answer from the Admiralty that the contracts with Ferranti's amounted to £7 million. That concerned the supply of A.D.A. and Ferranti was not doing this on its own but in association with others.
We have been told a great deal about the punctuality of the firm. I remind hon. Members that it cost £31 million for the modernisation of the "Eagle", but again let me say that only part of that has gone to the firm of Ferranti and its associated firms. My information is that a considerable amount of the A.D.A. equipment—when the right hon. Gentleman replies, perhaps he will tell the House what proportion—supplied by Ferranti's was supplied so late that it could not be evaluated and it has been installed in the fire control compartment of the "Eagle" with a yellow X on it, which means that the equipment is regarded as sub-standard.
This equipment was supplied on the understanding that it could not operate effectively at a temperature above 60 deg. Centigrade. My information is that in
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trials in the Channel the temperature in the control compartment has repeatedly risen far above 60 deg. I am also told that, through a fault in design, a memory storage was missing and had to be fitted afterwards, and the bulkhead was cut, with the result that the air conditioning could not operate when the plate which covers the new installation is in fact removed.
That is not all. What interests me here is the cost. I have got particulars of the amounts which were estimated for the development, for the production, and, indeed, for the preparation of the instruction manuals. My figures go only to the end of 1963—that is to say, the completed figures are not there. In each of the three cases the amount expended under this head is nearly 100 per cent. more than the original sum estimated.
I am being deliberately vague. I am quite prepared to give the right hon. Gentleman the contract numbers. I am quite prepared to give him a great deal more detailed information. What I say is that there is as great need for an inquiry into the expenditure on the modernisation of H.M.S. "Eagle" as there ever was in the case of the Bloodhound. This is one of the reasons why the words I use are guarded. There are security considerations involved in this, but there are questions here which far transcend any question of political controversy. They concern vital questions in relation to the defences of this country. I am not satisfied that either Ferranti's or the companies associated with the firm have delivered on time. In fact, I know for certain that this equipment, which was promised 18 months or two years ago, to A.S.W.E.—that is, the Admiralty Surface Weapons Establishment—was delivered so late that a great deal of the evaluation has never taken place even down to this day.
In the debate on the Navy Estimates I tried to get some replies from the Government, in the same way as I tried from the start of the Bloodhound controversies to get rational statements from the Government. We failed. When the Government say that they will not give answers for reasons of public security, they mean that they will not give answers because it impinges upon their political convenience. I respond at once and with alacrity to any plea that anything I say

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might be damaging from the public point of view, but I repudiate any suggestion that I shall discharge my duty as a Member of the House of Commons by keeping my mouth shut, however, inconvenient it may be to either side of the House, when in fact the reason for asking me to keep quiet is the political convenience of any other Member of the House. There is a clear-cut duty here.
Mr. de Ferranti rose——
Mr. Wigg: Let me finish. I hold the view that what has gone wrong over Bloodhound and Ferranti, although it has cost £4½ million, will have been money well spent if the House will wake up to the absolute necessity of finding some method of control, some method of assisting Ministers to effect control, because we have had it from the right hon. Gentleman that he knew nothing about the Ferranti case until the Comptroller General told him. Therefore, this is in the interests of the Ministers concerned. My right hon. Friends should realise that in a few weeks or a few months Labour Ministers may be in charge. They, in their turn, will need help to ascertain the expenditure over this vast complicated field in which no man, however clever he may be, however devoted he may be, can possibly know all the facts.
I have proposed before—I do so again—that the House should seriously look at what happens in the United States. We should look at their successes and their failures and perhaps consciously and deliberately forgo some of the democratic——
Mr. de Ferranti: On a matter of fact, the hon. Gentleman is quite incorrect in suggesting that we were seriously late in the delivery of the computing equipment for H.M.S. "Eagle". I suggest the hon. Gentleman checks up on his sources.
Mr. Wigg: I have checked. I am willing to reveal my sources of information to the Minister. The Minister can ascertain the facts. He can then make a statement to the House, or I will go to the Minister. I assert—I have checked this with great care—that there was a substantial delay, a delay of such a period that this equipment was not in fact tested. That is a question of fact.
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I beg all hon. Members, whatever political excitement this debate may have engendered, to remember that the serious and fundamental problem of controlling £2,000 million a year still remains with us. When my right hon. and hon. Friends form a Government, nothing they can do to ascertain the facts or try to put things right can be effective until some years have passed. Therefore, it is in the interests of every single Member of the House, every man, woman and child in these islands, that there should be a non-political approach, whilst retaining our democratic procedures. In ascertaining the facts, in pointing out what it is all about, in doing it, if necessary, behind closed doors, we should be as objective as we can be. It should be an all-party approach to find out what goes wrong, not so as to make political capital out of it, but to get things right, so that we can at least assure our constituents that they are getting value for the money which is being voted.
7.57 p.m.
Sir Arthur Vere Harvey: I go a long way with some of the remarks made by the hon. Member for Dudley (Mr. Wigg) tonight. He has made a very serious allegation, which he says is based on good information, about the late delivery of equipment to H.M.S. "Eagle". Every means should be taken by my right hon. Friend tonight either to deny it or to set up some form of inquiry, otherwise the public are not in a position to know where they stand on this matter. In fairness to the firm, the public should be told.
The hon. Member said early in his speech that if the contract had been cancelled it would not have cost the firm a penny. He is probably right. It does not cost a firm cash at the day a contract stops, but it leaves the firm with several thousand men on its hands without any work. That is very big money and, what is more important, the livelihood and welfare of those employed in the plant are jeopardised.
I was disappointed to hear the reference made by the hon. Member for Gloucester (My. Diamond) to my hon. Friend the Member for Morecambe and Lonsdale (Mr. de Ferranti). My hon. Friend is quite capable of defending himself. I can see the position he is in.

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Unfortunately the hon. Gentleman tied up my hon. Friend's appointment to and resignation from the Ministry of Aviation with the Report. The hon. Gentleman was a year out in his reckoning. It is important to be clear that my hon. Friends' appointment took place in July, 1962. As I understood it—he was then a constituent of mine—he had trouble in arranging his affairs to dispossess himself of his family interest in the trust. That could not be done, and he resigned, I think in September. So he was in office three months and, as I understand it, had very little to do with this side of the business.
Perhaps my right hon. Friend will make a reference to this in winding up, because it is important, when the honour of a Member is concerned, that it should be stated quite clearly what the exact position is and if my hon. Friend did or did not come in contact with this contract.
I also understand that the figure of £4 million which has been mentioned contains a good proportion of ordinary shares, on which tax has been paid. Even with preference shares tax is paid at 7s. 9d. in the £. As with any firm making a scrip issue, benefit is gained only after tax has been paid in the ordinary way. I mention this in an endeavour to persuade hon. Members to check their facts before making statements.
Reference has been made to the Concord, although I do not believe that anyone wishes to score any points on this issue. We know that the French contribution is nationalised while the British is not. Nevertheless, it is working extremely well, so much so that President Johnson a few days ago had to postpone for a year the decision he hopes to make to compete with the Concord.
Although there has been some criticism, having studied the project in detail I am full of optimism and believe that the people concerned in both countries are approaching it in the right way. I am equally optimistic that the Mach 2 speed of the aircraft is correct. The Americans will find it difficult to catch up, if they are ever able to do so. While one has a great deal of admiration for the French technical ability and confi-
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dence in some of their projects, I am told that the Caravelle, for example, has still not made a profit, although a large number of that aircraft has been sold.
Today's debate is one of the most important from the nation's point of view. As my right hon. Friend said, there is no doubt that weapons have become extremely complex and continue to grow more complicated year by year. It is almost impossible to budget or estimate for a new piece of research and development, and the advances in technology have been greater than the machinery for controlling them. Time and again the costs exceed the original estimates owing to changes in technology which, in turn, lead to changes in specifications, resulting in modifications; and this goes on all the time.
Hon. Members are aware that until about seven or eight years ago I was a non-executive director of an aircraft company. I have declared my interest in the past, although I must admit that I have been much better in health since I have been out of the business. It is a worrying industry and that goes for the aircraft industry and everything connected with it. My experience was that the cost-plus system was an expensive one. The system we use today has been brought up over the years, so to speak, and has had nearly 50 years of use. I will try today to elaborate on how I think it can be improved because my concern is to try to improve the system on which we place and build up our contracts.
It is on this issue that I go some of the way with the hon. Member for Dudley. Hon. Members are frequently inhibited in defence debates. The hon. Member for Dudley must seek his information throughout the country and we must all scrummage for what information we can gather. Some hon. Members are well-informed while others are not. This is not the right way for Parliament to approach this important matter and, like the hon. Member for Dudley, I would like to see an all-party committee set up to consider this whole question and see how best hon. Members can approach this topic.
By suggesting this I do not mean that the committee should be comprised solely of Privy Councillors. So often

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when a special job must be done the Privy Councillors are given the task, possibly because of the provisions of the Official Secrets Act. It is often thought that they are the best people to do the job. In this case I would like to see the committee arranged in such a way that all hon. Members could take part in its deliberations.
As I see it, Ferranti's had an entirely separate division to deal with the Bloodhound. When most firms conduct projects like this they have a civil aircraft in one hangar and a military one in another. The drawing offices are usually mixed up and the tool shop does both jobs. In such circumstances it is difficult to separate the work and cost it. If Ferranti's did have a separate division for this work the firm must, with the aid of its computers, have had excellent knowledge, almost daily knowledge, of how the job was progressing. I imagine that that must have been so. It should not have been difficult for Government officials to see this information when it was before them in the first place. That information must have simplified the task of the Ministry.
When the chairman of the company was asked for the records of the contract he refused, apparently on the principle of the thing, to give them. Presumably he was advised not to give them. With great respect, I think he was wrong. As an industrialist I have always thought that the customer is right and that if one wants future business one should try to enhance one's reputation for delivery and fair arrangements.
We have now been told that the books will be opened. I hope that this will not be done in respect of, say, only the Bloodhound but that the books of the whole lot will be shown. When this information is given I suggest to Ferranti's that it should make all the information available, without reservation.
I understand that the average profit on Government contracts made by Ferranti's in the last 10 to 12 years was 10 per cent., although at least one hon. Member opposite has disagreed with that percentage. I hope that the Lang investigation will verify that figure, particularly since I understand that it includes Bloodhound.
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These facts should be known to all concerned; that the profit has been 10 per cent., with the overall percentage being 8½ per cent. and——
Mr. R. T. Paget: But 10 per cent. of what?
Sir A. V. Harvey: The gross profit on Government contracts.
Mr. Paget: On turnover?
Sir A. V. Harvey: Yes, which I would not consider as excessive. The company's dividends have been moderate, although I appreciate that various suggestions have been made to the effect that they have been moderate deliberately.
Mr. Callaghan: Is the hon. Gentleman not aware that the payment of a steady 6 per cent. is a complete subterfuge, to avoid the payment of tax? I appreciate that he is trying to be fair, but I hope he will appreciate that he is on a very false point here.
Sir A. V. Harvey: The hon. Gentleman is entitled to his views and I am entitled to mine. He has, no doubt, studied the balance sheets and, perhaps, has taken advice. I have done the same and I believe that the dividends have been moderate, certainly not excessive. I appreciate that sometimes there may be other motives for firms to pay moderate dividends, but in this case I believe that a great deal of the profits have been ploughed back into the business. This is an important point. The progress made by this firm is due to the fact that money has been ploughed back. The firm has not been milked of its resources like many other companies about which one bears—firms being left high and dry when they run into trouble.
This firm is of the highest technical repute. Its deliveries in respect of the Bloodhound and other equipment—although this has been questioned by some hon. Members opposite—have, I believe, been excellent and it has been one of the few companies in Britain which have kept to their delivery dates. If we must be defended properly and if value is to be obtained for the taxpayers' money, deliveries must be made on time because in many cases if they are delayed the equipment frequently becomes useless.

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Hon. Members opposite may like to be made aware of some other facts, because I am told—I was told this not at last night's party meeting but elsewhere—[HON. MEMBERS: "Oh."] I do not know why hon. Members opposite should make sounds of surprise, since they had every opportunity of approaching, Mr. de Ferranti and, if they wished, of asking him to attend a Labour meeting. [Laughter.] Hon. Members opposite can laugh, but it is well known that both parties frequently seek the advice of chairmen of the nationalised industries and ask them and other officials to speak at meetings. It is a good thing that this is done.
Mr. Wigg: The hon. Member for Macclesfield (Sir A. V. Harvey) has been in the House for 20 years. Does he really think it proper for hon. Members to ask a witness before the Select Committee to meet them to discuss evidence given to that Committee, even before its Report is published? Was it not grossly improper that that should have been done? My hon. Friends and I are not making a song and dance about that and I intervene to point out that we do not play it that way.
Sir A. V. Harvey: The Report of the Public Accounts Committee is known and there has been a debate today. I saw no reason why hon. Members should not try to inform themselves of the facts, not just by listening to stories but by asking pertinent questions. That is our job. We must seek our information wherever we can. To that extent I support the remarks of the hon. Member for Dudley about the difficulty of getting information.
I was going to mention certain facts made known to me. I am told that on the private venture of the Orion computer the firm lost about £2 million. That was a private, not a Government, venture and I understand that the same officers who dealt with the costing of that equipment were engaged on the costing of the Bloodhound.
What makes me unhappy is that when the production price was agreed, two-thirds of the contract had been completed. My experience in industry is that, once one gets as far as that with a contract, unless there are such radical
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changes in the specification that one has practically to rebuild one knows fairly well how things are going. Why did the Government representatives get in so late?
Legally, Ferranti's is in the clear, although, with great respect, I believe the firm to be morally wrong in this matter. I should have dealt with the position rather differently. At the same time, a profit of 7 per cent. is very small compared with what other countries and other Departments allow. Where there is risk, 7 per cent. is too low. In such a case the margin should be nearer 12 per cent. or 15 per cent. That is more equitable, and provides a cushion in case of cancellation, which frequently takes place, or of a change in design——
Sir D. Glover: Perhaps I might add that what strengthens the case that 7 per cent. is not high enough for the risk is that when the product is exported the Government take, as it were, 10 per cent. commission.
Sir A. V. Harvey: I intended to deal with that point. It is well known that when the Government finance a development contract they have a right to a return. In the case of the Viscount, which was a success, the Government collected quite a lot of money. Of course, there have been many ventures in which the Government have not collected. Here, however, it is clear that Ferranti's, being an energetic firm, went out into the world——
Mr. Wigg: Ferranti's did not go out into the world; it was the British Aircraft Corporation which sold this equipment.
Sir A. V. Harvey: The hon. Gentleman is entitled to his view, but I believe that Ferranti's materially assisted in getting the Swiss, Australian and other orders. To sell £40 million worth of equipment against the strongest competition from America is a great achievement, and one of the few of its kind we have seen in the post-war years. The Government collected £4 million from it. I do not use that as an argument the other way, because it merely cancels what many of us think was an excess profits. Nevertheless, the contractors are not all the bad boys they have been made out to be——
Mr. Woodburn: The hon. Member for Macclesfield (Sir A. V. Harvey) speaks so convincingly that he almost makes us feel sorry for Ferranti's. I had a great deal to do with contracts of this kind—with Vickers and de Havillands on the Brabazon, and so on—and as far as I know, when I was there the companies concerned did everything to play fair with the Government. The fact that today they are not in a state of ruin, in spite of the ups and downs of the industry—some going from nothing to millions—shows that, on the whole, they did pretty well out of the work. I agree with the hon. Gentleman in saying that a company should play fair with the Government when getting public money.
Sir A. V. Harvey: I do not disagree with the right hon. Gentleman, I certainly am not defending Ferranti here; I think that in my remarks I am allocating a fair proportion of blame to the firm.
There is no doubt that some years ago the technical costing officers at the Ministry were equal to those employed in industry. The equipment, aircraft, radar, and so on were not so sophisticated, and these officers were able to keep pace with development and argue prices on technical merit on an equal basis with the technical people in industry. But such remarkable progress has been made in the last 20 years that it is not the fault of the Ministry's officials if they do not compare with the people in industry. The people in industry have been the inventors, and have lived with the job since its inception. The Ministry's officers visit a factory for a week or two, and then have to go on, and are really handicapped in carrying out their duties.
Successive Governments should have realised that, and my right hon. Friend should have got in some outside help. It is well known that I.C.I., Shell, Rolls-Royce and other companies have all employed top consultants in recent years to help out with their organisation, and I think that my right hon. Friend and Ministers in previous Governments should have gone to outside consultants and accountants. My right hon Friend should have hired teams of highly-skilled cost accountants, with great experience in this type of work. He should have
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put six of them into Ferranti's, and said, "You will only have the contract if you accept these men." After all, a number of purely technical Ministry men are resident in many places, and I do not see why we should not have resident costing officers and accountants. We might have spent £¼ million in wages and salaries but it would have paid handsomely, the Government would have been better informed, and everyone would have been happier. These civil servants are first-class men of integrity, and it is not their fault that they have not been able to keep pace with developments.
In future, and whether the party opposite likes it or not, we have to give incentives. If we are to get the right delivery at the right price, firms must be given something to work for. Something has been said about doing things on a share basis. I do not know about that, but a firm must be given an incentive for quick delivery, with a penalty on late delivery—it must cut both ways. Incentives are good for everybody.
The hon. Member for Cardiff, South-East (Mr. Callaghan) referred to the salary of the top men dealing with contracts in the Ministry. I understand that the Director of Contracts gets just over £4,000 a year, but I wonder what his juniors get who do this important work on contracts down at the third and fourth levels. I am sure that they are underpaid. I can give an analogy. I believe that the manager of the London Airport gets about £4,000 a year, but there are 26,000 people employed on the site. The head man at Idlewild gets the equivalent, taking in things like the cost of living, of £15,000 or £20,000 a year. Is it surprising that London Airport is not the show piece for Britain, when we pay these miserable salaries?
I know that it is difficult to recruit civilians into these jobs, but we must hire people from civil life to help out——
Mr. Tam Dalyell: Is the hon. Member aware that a number of members of the Public Accounts Committee would entirely agree with him on that point?
Sir A. V. Harvey: I am glad to hear it, because we have to do something about it.

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The other disturbing feature is that good men are constantly leaving Government service, and one can understand why. We heard the other day that Mr. Havilland, a very senior officer at the Ministry of Aviation, has gone into industry. Others have done the same. Perhaps it is good that men of their experience should go into industry, but it is not turning out to be a two-way traffic. We either have to keep men in the Government Departments or hire men to do the job.
We are not the only country in this difficulty. Not very long ago, an aircraft company in the United States, employing 16,000 men, had 800 Government officials in the plant. One can imagine the chaos there would be here with 800 civil servants checking various things and delaying the work of the various departments. One can also imagine the cost to the country. Such a system is not ideal, and it is certainly very costly. A survey of 12 N.A.T.O. projects in the United States showed that the final cost exceeded the estimates by 3·2 times—in one case it was by seven times. Only two of the 12 projects were completed within the scheduled time, and both were cancelled on delivery as being obsolete. They certainly have their problems in the United States.
Another point is that too much Government interference puts up the cost and brings about delay. I have seen it with aircraft where modifications go on month after month and year after year. Somebody must be big enough in the Ministry to advise the Minister in charge that at a given time modifications must cease and equipment must go out to production if it is to work at all and to be used. I am not at all convinced by the argument of the Hawker Siddeley loss. It helps the taxpayers. They have Argosy aircraft, fine aeroplanes which will do a good job of work. The taxpayers will save £6 million, but I want to see good housekeeping between Government and contractors.
Mr. Bence: I would not like the impression to go out of the House that in all cases in engineering and in the aircraft industry where there are Government officials, like the A.I.D., almost in permanent residence that they are always an interfering body who
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frustrate production. They have been most helpful with the modification and development of projects.
Sir A. V. Harvey: I made quite clear that for a good many years there have been resident technical officers in the industry, but I was talking about those who visit the industry for purposes of technical costing. The resident officers are very few, but they have done a great deal in building up the aircraft industry over a number of years.
The Opposition frequently talk about the inefficiency of the Conservative Government and about wasted millions. They mention this in their pamphlets, but when they were in office they were no more successful with apparently simple equipment. The Princess flying boats are even today sitting down on the Calshot slipway. There was the Brabazon and, it is true under another Government, the Swift Fighter which had to be cancelled at a cost of £35 million. There was the sale of jet engines to Russia, which was done at such a very inconvenient time. In a great many things it does not do to point out the mistakes, because when the party opposite come into power they too will have the problems. It is very difficult to keep up with these technical matters.
A great deal has been achieved by the Government. I had the privilege some days ago with several hon. Members of visiting a modern R.A.F. station at Coningsby. I have never been so proud of having had some connection with the R.A.F. as I was there. This was not merely because of the bearing of the men but because of the whole organisation, the efficiency of the electronic shops and the engine repair shops, and the team spirit which was manifest all through. I came away with a feeling that British taxpayers have something worth while which is paid for and is working. Moreover, it was proved to me that the V-bombers of Great Britain have real low-level flying capability which the American aircraft do not have. One is prevented from saying too much about it, but we should be well pleased about that.
Rolls-Royce and Bristol-Siddeley undoubtedly lead the world in aircraft engines. Let the Americans remember that it was Britain that gave them the

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design and development of the jet engine. It was a British invention, but not one American in a thousand realises it. The Americans keep very quiet about it. Rolls-Royce engines power half the aircraft in the world. The V.T.O.L. is British. We do not push these inventions quickly enough to get full advantage from them in world markets. The TSR2 is coming along. It is a remarkable invention and is ready to fly any day now from Boscombe Down. When hon. Members are fully informed about this project they will find it far in advance of anything in the TFX, if that ever works.
Hon. Members opposite have said that they would nationalise the aircraft industry. If they do, they will have to deal with pretty big problems which they will not welcome. The Leader of the Opposition today was rather cagey when the matter was put to him and he was asked what he would do. We know that political leaders have to go along very carefully, and the right hon. Gentleman is going carefully. He is leaving the door open. The party is not as in 1959 playing the hand too big so that the cost can be estimated. The hon. Member for Newton (Mr. Lee) said in February this year that the aircraft industry is not to be nationalised in the next Parliament. That is the last utterance I have heard from a party leader. The hon. Gentleman said that it was not to be nationalised. Perhaps he will confirm that tonight.
Mr. Lee: What more does the hon. Gentleman want me to say?
Sir A. V. Harvey: The Leader of the Opposition was not very explicit earlier today and rather left the door open. The 200,000 to 250,000 employees of the industry are concerned about it. They would like to know where they stand.
We shall finish the debate in an hour or two, but there is a great deal to be done. The system which has grown up over 50 years has many merits, but it has many deficiencies today. I want to see the Lang Report go into all the details and to see all the recommendations brought to the House as soon as possible. I hope that this Government and the next Parliament will try to bring about a better system to enable hon. Members to in quire into efficiency, whether it is that of the defence system in general or the
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method of placing and evaluating contracts. My right hon. Friend has done a very fine job indeed in difficult circumstances.
8.27 p.m.
Mr. Leslie Hale: The House started out to discuss an Amendment censuring the Government and it is to this that I should like to revert for a few moments. Mr. de Ferranti has had sufficiently hard knocks from those who have attacked him and even more thunderous blows from those present to defend him. I should like to go back to the facts of this inquiry.
The development contract was placed in 1949. The production contract was embarked upon, but was not in writing, about 1955, and considerable progress was being made. It was at that stage that the Ministry of Aviation came into the matter. It came in by asking its cost technicians to devote 1,000 man-days to ascertaining the appropriate figure of costing for labour. After these 1,000 man-days, representing the work of four men for a full working year, a figure was arrived at of £1,170,000. The only argument about this arise from some questioning before the Public Accounts Committee, when Sir Richard Way said, "To the best of my recollection, but I am not quite sure, we got the figure down by 20 per cent.".
Mr. de Ferranti said, "No; to the best of my recollection, our figure was never anything like 20 per cent. above the £1,170,000". That was the situation at that point.
Then occurred the most fantastic thing that ever happened in the history of contract, if I read the evidence aright. Incidentally, I have no other source of information. I did consult the shop stewards on their view of the matter—I shall refer to this in a moment—because they, of course, are concerned about employment. I am concerned about employment, too. I am concerned about employment at the Ferranti works at Hollinwood, in Oldham, and at the other modern factories which the company runs. Ferranti is just about the best employer in Oldham.
I am concerned, also, about employment at A. V. Roe, in Chadderton, in my constituency. The workers are desperately concerned. Some of them

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are desperately unhappy now about their prospects. Although we have managed to maintain an unemployment record of about 2 per cent.—it is 1·7 at the moment—a steady series of fiascoes which have been brought about by the Government have jeopardised our employment. Obviously, this sort of thing will do no good to anybody.
The Minister who is under censure made, I thought, an appalling speech today in opening the debate, and he has hardly had one defender, except one hon. Member who said the Minister really could not be blamed for the work of a chauffeur whom he did not know intimately if the Government had an accident in their car. That was, I think, the only word said in defence of the Government, apart, of course, from the usual perfunctory peroration made by every Tory speaker when he wishes to explain that he intends to vote for the Government in the end even though he has been speaking against them.
Returning to the history of the matter, the next thing was the arrival of the cost accountants. If I understand the position aright, the cost accountants never troubled to find out what figure had been put as the estimate for labour costs. They never saw the figure of £1,170,000. They had about as much communication with the cost technicians as a couple of prisoners in adjoining cells in the Bastille. Their job was to estimate the percentage addition which should be allowed on labour for overheads. Incidentally, I find it difficult to understand why it should be on Labour at all in a contract of this kind.
The cost accountants produced, entirely unaided, the figure of 558 per cent. Let us be fair to my constituent, even if he is rich. It is not a crime to be rich. I was in a "pub" in Park Lane the other night and a most charming and delightful multi-millionaire came over to me and said, "Leslie, you and I are the only two Socialists here tonight". Their figure, as I said, was 558 per cent. Somebody has done that calculation. Up to that stage, Ferranti's behaviour had been absolutely impeccable. It had given completely accurate figures, supplying the information for which it was asked. The company had even supplied the full details of its costings on the Bloodhound department
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for labour, overheads and other things, but the Government mislaid the figures, never saw them, and said that they were not relevant until the Comptroller and Auditor-General came across them a year or two later. In fact, they got absolutely accurate figures of cost on which they could have based their figures, but they never used them. Up to now, it is the Government.
Many of my hon. Friends say that that is all very well, but all this time Mr. de Ferranti knew that he would make the hell of a big profit and he ought to have said, "Look here, you have put your figures on me and you have laid down your conditions. You has said that this is a cut-price contract. If the wages go over £1,170,000, it is my loss "—at least for the time being, however the situation might be helped along the lines suggested by my hon. Friend the Member for Dudley (Mr. Wigg).
Undoubtedly, at that stage, my hon. Friends say, and the Committee says, he was less than frank about it. There is no argument about that, and I do not think that even Mr. de Ferranti has attempted to say that he was. His view was quite simple, "I am a Tory capitalist and I do not think that it was my duty in a Tory society". This is almost exactly what the shop stewards say. They say, "He is the finest employer in Oldham. We like him very much, but, after all, he is a Tory capitalist, not a Socialist, and this is a lousy Government". I think that that is a fair view to put.
The Government had some reinforcement in the Press this morning from one of the most astonishing propositions ever put forward on behalf of a decaying Ministry. It is said that, "We must not blame the accountants because, although we were £5 million out on Ferranti we were £6 million out the other way on A. V. Roe. If you balance it out, we were only £1 million out on average." This proposition is not a new one, although it is in this field. It is the claim of the Oldham lawyer who, on his deathbed, said, "I have been bitterly attacked on the ground that my advocacy secured the acquittal of many rogues and criminals. But my enemies have never done me the justice to realise that my advocacy has also

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secured the conviction of a great many innocent men. Therefore, on the whole, justice has been done".
I ask the Minister to say whether it is true—I believe it to be true—that the people who worked out the 558 per cent. had never heard of this £1¼ million. I do not blame Mr. de Ferranti for being coy about producing his books. He was in the position of having to explain why he had overspent by £500,000 on materials. But if one overspends on materials by getting made-up materials and reduces the price of labour on the contract, one multiplies one's profit by six. I should have thought that it might be possible to effect economies in that way and through some form of sub-contracting. But why has 150 per cent. on a vague assessment of overheads, which, according to the Committee, includes inspectors and inspection—a very big item—to be multiplied by 558?
The Committee has said—it is entitled to its view; I accept it and do not dispute it for a moment—that if Mr. de Ferranti had been a good Socialist he would probably have said, "I have done too well out of this and I will let you have some back". I doubt whether the news would have been welcomed in the Ministry. When he wrote to the Minister and said "Your cost accountants were about 3 million quid out on this. They mucked up all the figures. They multiplied the figures by the wrong number. I have reached the situation which has induced me to feel ashamed of the amount which I am collecting from the Government", what would the Minister have said?
The Comptroller and Auditor General had done quite a bit in investigating this matter, apparently, by 22nd August. Whatever he wrote on 22nd August—we have not read it—it was partly the result of inquiries. Sir Richard Way said, "It was never brought to my notice for weeks after that. It was about the end of September when it came to my notice. Naturally, I thought that something should be done, so I communicated with Ferranti's". This is what happens in the Ministry.
Then nobody dared to tell the Minister. Whether they tried to shuffle it out of his sight, or whether they thought that the moment was not propitious, or whether there had been so many rows
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and blunders recently that it was better to cover it up a bit, I do not know. The Minister did not get to know about it until October. This is where the blame lies, and the Government should have faced and accepted it.
The House is entitled to demand that from now on different methods of costing will be introduced. The only excuse or explanation which has been given for using this form of contract is its use as an incentive. It was described as a spur to quicker delivery. But the contract was not signed until all incentive had completely passed away. That is the problem as it is put to the Minister, and that is the issue which he has to face today.
It is not the first time that this has happened. The Ministry of Aviation has a wretched record in this connection. May I say one more word about the Report? There was the astonishing remark of Mr. Clifton. As far as I remember, it was the only time that he spoke. It was rather like H. M. Bateman's one-note band. He was there to be called upon if no answer was available to a question, and the Committee asked the question to which there was no answer. The Committee said, "Has any businessman ever paid money back before? Has any businessman ever come back with conscience money and said, It is on my conscience. I want to make an offer'?" Sir Richard said, "Mr. Clifton might be able to deal with that one". Mr. Clifton said that speaking offhand, or words to that effect—certainly, he used the word "offhand"; it is a rum word for a civil servant to use when being cross-examined about the misdeeds of his Department by a Committee of the House of Commons—he could not remember. I suppose that the whole Department had been searching the papers to try to find an instance of a businessman who had paid a 1d. stamp back to the Government to advance it as an argument in their favour. No one had ever done so.
In the circumstances, we have, perhaps, been a little too rough on Mr. de Ferranti today and not nearly rough enough on the Government, who are responsible for the figures, who insisted upon them and who shoved in their own accountant. I hope that now that the

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House has expressed its censure, or by a vote may have expressed its rejection of the censure—although it is difficult to understand that anyone could honestly vote against us tonight on this issue—we shall start to forget this matter and think again of Oldham, of Wythenshawe and of employment, because there is one other record that Ferranti has. It has never had a reputation for redundancy.
The hon. Member who spoke about losing a contract spoke fairly. The people at Wythenshawe have been in fairly continuous employment for 17 years. The people in Oldham are not made the victims of punitive measures. I have never look up Ferranti's accounts, and I do not know how much is taken out and how much is put in, but I do know the firm has a continuous policy of the erection of first-class factories and admirable places of employment.
I can promise my hon. Friend the Member for Newton (Mr. Lee)a good deal of local support for some of his proposals. Indeed, on behalf of the workers of A. V. Roe, I express my gratitude for what he has said about Labour Party policy to come. That is a great reassurance to the workers. Apart, however, from the possibility of political action, I should like to see the firm and its employment continue. I should like these highly skilled workers to continue to be employed.
I wish, however, that we could make something more useful than the Bloodhound, because I find difficulty in understanding the utility of making a deterrent to deter other countries from attacking us and selling it to other countries so that they can deter us from attacking them. The cumulative result may be gratifying.
I hope that in these few minutes I have at least dissipated a little of the atmosphere of indignation. It has been pointed out before, at least a century ago, that the House in its moments of moral rectitude does not always express itself with the moderation which would be appropriate to all courses of moral preaching.
8.43 p.m.
Sir William Robson Brown: I will not follow the hon. Member for Oldham, West (Mr. Hale) except in his
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closing words. I want to take him up on that and to remind the House that earlier this evening an oblique attack was made upon the integrity of an hon. Member. The House itself should clear this matter up. Reference has been made from time to time to a meeting upstairs last night of the Conservative Party. I was neither present nor have I met Mr. Sebastian de Ferranti, but I count among my close personal friends his brother, the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti). I deny and contradict any attack upon his integrity in this House at any time, whether before, during or since the time he was a Minister. If the record is examined, how he behaved and his attitude when he resigned will be seen to have been a great credit to him and his political honour. There has never been any conflict of interest on his behalf. It is in HANSARD tonight that there was an oblique attack on him, not too clearly expressed, but the poison was planted.
I want now to refer to the firm of Ferranti and its record in this matter. I do not believe that we can arrive at a proper financial accountancy judgment of the matter until the Lang Committee has reported and the whole picture has been presented. I sincerely hope that in its wisdom, as a supplier to the Government and with its record as a great industrial company—and it is a great industrial company—Ferranti will put its house in order and make such repayment to the Government as is wise, fair and just in the circumstances.
The discussion has ranged widely and has raised doubts on both sides of the House about the way in which the accountancy of various Ministries is conducted in this day and age. Some of my colleagues and I, in a document well known to most of us, Change or decay, have put forward a practical proposition. It is that every spending Department should have a Minister of State responsible solely and entirely for the placing of contracts and the accountancy that goes with it. That man should be appointed far his experience in the field and should have behind him a complete and positive and well-equipped branch to deal with these matters.
This sort of thing has been going on for far too long. It is not only Government contracts for armaments that we

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know about. The waste, mistakes, ill-judgments, wrong purchases, sales at the wrong time—the whole gamut of expenses is not properly supervised and never will be until it is taken out of the hands of civil servants and made the responsibility of a Minister responsible in each Department for the enormous sums of money which are now spent.
My hon. Friend the Member for Hendon, North (Sir Ian Orr-Ewing), with his technical experience, enlarged on this subject. Not only is the Civil Service handicapped because there are not enough technicians at a high enough level, not only do we not have the men, but the men do not have the opportunities of promotion to the top executive branches. They are kept in the technical branch and seem to stick there whoever they are and wherever they come from. This is very well realised in Her Majesty's Civil Service and an attempt is now being made to put matters right. But it is not a patched-up job that we want, but a complete, up-to-date twentieth century approach to these matters. My hon. Friend the Member for Macclesfield (Sir A. V. Harvey) made some very apposite remarks and I do not want to repeat them.
In this subject of Government contracts and the like, I know from practical experience that a firm accepts responsibility for these contracts and sets out its technical staff and its productive capacity and so on often with no guarantee that there will ever be a positive contract resulting. Changes in Government policy can be made at any time and result in a large section of a company being told the next morning that what it was developing is no longer required. More account has to be taken of these things.
There has been much discussion tonight about whether there should be paid a percentage of the capital of the company or of the turnover of the company, or of the cost of production and so on. Whatever method is applied, it must be a proper commercial and reasonable method. It has to be of such a nature that if the company finds that more money is coming out of the contract than is expected, that money can be repaid. That is very clear.
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At the same time, these companies very often have to face the precise reverse. They have to face the position that they may suffer considerable losses. One of the great principles of the Conservative Party is that one must take the rub of the green. If one loses, that is one's bad luck. If one gains, that is what one is there to do.
Mr. Edward Milne: They make the rules as well.
Sir W. Robson Brown: They do not make the rules. There is a different atmosphere and a different approach when they are Government contracts.
In that connection, although we cannot deal with it on the Floor of the House, I think that we should pay attention to this form of contract and work out a reasonable system so that the manufacturer knows where he is, the civil servants concerned know where they are and we have a Minister of State who can stand at the Dispatch Box and answer questions and explain the way in which the matters are controlled. Under those circumstances, I do not think that we would ever again have a debate of this kind.
8.51 p.m.
Mr. Eric Lubbock: In referring to the publication Change or Decay, I believe that the hon. Member for Esher (Sir W. Robson Brown) was endorsing what has been said by other hon. Members who have spoken today, that the Public Accounts Committee should be given greater power. I echo that view. The hon. Member for Cardiff, South-East (Mr. Callaghan) said that this Committee was frequently unhonoured and unsung. The hon. Member for Folkestone and Hythe (Mr. Costain) compared it with the lifeboat service which one praises when there is a spectacular wreck, but which is frequently forgotten on other occasions. Not only should I like to stand on the cliffs and cheer, but I should like to ensure that it has better boats.
I should like to see the proposals put forward by Mr. Anthony Sampson in the Observer implemented as soon as possible. He says that the most obvious answer to what has happened in this case is to increase the power of the Public Accounts Committee, and of the Comptroller and Auditor General who

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supplies the ammunition, to give them the opportunity to investigate not only accounts but organisations and systems, and to deal not only with extraordinary situations but with ordinary ones, so that they are able to make spot checks into any kind of contract.
Mr. Ellis Smith: We have been saying that for years.
Mr. Lubbock: Many hon. Members have been saying that for some time, but perhaps it has taken a case of this kind to get that view expressed unanimously. If there is this unanimity of view, I cannot understand why nothing has been done in the past, and I hope that as a result of this loss of £4·9 million of public money some steps will be taken to implement that proposal.
I think that a lot of time has been wasted on talk about nationalisation. The Minister introduced this subject as a kind of smokescreen to draw attention away from what has been happening. Looking back at the defence contracts which have been placed in industry during the last 10 years, I do not know how any one can say that we would have been better off or worse off if the industry had been nationalised. I am a staunch believer in private enterprise, and I believe that that would not have been to the good of the country, because, just as the Public Accounts Committee has condemned the fixed-price contract as providing no incentive, so, if the industry was in public ownership, every piece of work put into it would be the equivalent of a fixed-price contract and the management of the industry would have no incentive.
I do not think that that is really relevant to what we ought to be discussing today, which is how we can prevent the kind of mistake which has been in this case from occurring again. Apparently it was the incompetence of the technical costs officers which led to this mistake, although that conclusion may be subject to modification in the light of what Sir John Lang says in his report. I think that this is far more important than whether the Ferranti family acted in accordance with their interests as shareholders. I am sorry for some of the things that have been said on this sub-
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ject. They have tended to take attention away from what has happened within the Ministry.
I want to go into the question of the technical costs officers in a little more detail. The hon. Member for Macclesfield (Sir A. V. Harvey) said that these people were poorly paid. I believe that the hon. Member for Hendon, North (Sir Ian Orr-Ewing) made the same point. Perhaps they got their information from the Sunday Times. I have never heard it said how much these men receive. When the question was asked in the Public Accounts Committee it was said that the head of the Department received, I believe, £4,075, but that there was a whole range of salaries, going down to Technical Grade IV. I should like to know how much the person in that grade receives, or, if it is easier to supply the information in another way, what is his salary scale. I should also like to know what qualifications are expected on entry into this grade.
Technical Grade IV was the lowest grade in this service mentioned by Sir Richard Way, in reply to a question. He said that there was a whole range of salaries within the service and that that was the lowest grade. It is important for us to know what the answer is, because only then can we form an opinion whether these people can be expected to deal on equal terms with the highly-qualified methods officers who I have no doubt are employed by all companies in the aircraft industry.
I believe that the House would be horrified at the answers to these questions. I thought that the hon. Member for Macclesfield had an excellent idea when he said that on many occasions outside consultants could be brought in to supplement the efforts of technical costs officers. This would be of advantage, because technical costs officers, by the very nature of their work, have been outside industry for many years and have lost touch with the ever-changing methods of production, whereas outside consultants would have up-to-date experience of industrial methods.
In the remaining two minutes I want to refer to the question how far we can regard a contract of this type as a partnership between Government and industry, in which neither side takes advantage of the opportunities which may

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present themselves for defeating the spirit of the contract or the intention to pay a fair price which is written into the wording.
If the Ministry is really making serious attempts to restrict profits to a level of 7 per cent. of turnover on this kind of contract we can hardly be surprised if the contractor, in turn, seeks to base contract prices on unrealistic labour times which will give him a more favourable margin. Even the hon. Member for Cardiff, South-East admitted that 7 per cent. on turnover was unreasonably low. In his evidence before the Public Accounts Committee Sir Richard Way said that 15 per cent. would have been a much fairer level on the Bloodhound.
Why should not we start by allowing this level of profit in contracts of this nature. That would necessitate a much tighter control of the estimates made by the technical costs officer, but that is necessary anyhow. I do not like the inference that the nominal profit must be kept as low as possible to compensate for the contractor's efforts to put in enormously inflated labour times. That means that we start with an assumption of bad faith on the part of the contractor. That is hardly likely to promote the kind of partnership between Government and industry which has been demonstrated to be so seriously lacking in this case.
9.0 p.m.
Mr. Frederick Lee: A remarkable thing about our debate has been that no one has given any reason why he should support the Motion. Nor has anyone given a reason why he cannot support the Amendment. In other words, the Government's Motion to take note of the Report of the Committee of Public Accounts has not commended itself to anyone who has yet spoken from either side of the House. I think that we should ask the Government exactly what they mean when they say that we should take note. While leaving certain judgments until after the Lang Committee has reported, the Public Accounts Committee is of opinion that, quite certainly, excessive profits were made. What is the Government's attitude to this view? Do they condemn or condone? Is it to avoid giving an
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answer that they merely put down a nebulous Motion to take note of the Committee's Report?
The Amendment which my right hon. Friends and myself have put on the Order Paper condemns the Government for laxity. When we look back on Reports of the Public Accounts Committee for 1958–59 and the Estimates Committee Reports since, time after time we find it to be a considered judgment that the methods of contracting used by the Ministry are defective in the extreme. Therefore, we condemn the Government for laxity. Today, the Minister could not tell us that anything had been done to conform with the Committee's Reports. Only now are we promised shall be done that which Ministers have been promising to do for the last four or five years. Therefore, I think that no hon. Member could say that condemnation of this kind of thing is inappropriate.
We go on to say that we condemn the Government for
"permitting excessive profits to be made at taxpayer's expense…"
Does any hon. Member wish to say that that is not justified and that he proposes to vote against the Amendment because he does not agree? If so, I will give way to him at once. We cannot find a single Tory who can say why the House should support the Motion, or one who can say why he cannot vote for our Amendment.
I should like the Minister of Defence to enlarge a little on what the Minister was saying about the offer made by Mr. de Ferranti to disclose certain figures to the Lang Committee. I was disappointed when, in his evidence, Mr. de Ferranti refused to tell the Public Accounts Committee what was the out-turn of this contract. I am even more worried now, when I can be told that Mr. de Ferranti, who declined to give to a Select Committee of this House, of enormous importance, information for which it asked, and can give it to a committee which has no real standing so far as the House of Commons is concerned.
I should like the Minister to tell us whether that means that when the Lang Committee reports we shall be told details of the out-turn of this contract, that they may be made public so that

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we can debate the Lang Committee's Report, and we can also know that which we do not now know, namely, why the Ferranti episode came about at all.
Listening to the debate today I have been struck by the thought that we are censuring the Government not merely for what has happened in the Ferranti case, but because of the crass inability which they have displayed over the years in creating the kind of relationship which is now essential between Government and industry, in a period when the Government have become the greatest single customer for a wide range of vitally important industries in this country. It seems to me that this has never really been understood as the great problem which the Government have to face, when we can read that on two occasions the Comptroller and Auditor General was in touch with the Ministry to ask it to comment on the Ferranti case and that the best that the Ministry could say to the Auditor General was that it was trying to find out from Mr. de Ferranti what went wrong.
It is fantastic that in this day and age that there should be the kind of ineptitude of which we can read in the Report of the Public Accounts Committee. It reminds me of the scenes in this House after the South African War when, as I have read, there was controversy between members of the Chamberlain family of those days and the people who criticised them because they were making too much profit out of the war. When, in a great peroration in this House, Joseph Chamberlain remarked that the Empire had expanded, David Lloyd George replied, "Yes, the Empire has expanded—and the Chamberlains have contracted." Precisely that charge can be levelled at the Ferranti family as it was at the Chamberlain family and the proof on which such statements can be shown to be correct is as strong now as it was in those days.
Having lived in the atmosphere of the engineering industry for many years, I have a clue as to how these things are done. We had to negotiate costs with technical cost officers whom we called rate-fixers. Part of our professional skill was in the gentle art of "pulling the leg" of the rate-fixer.
Mr. D. Jones: If we were lucky.
Mr. Lee: Yes, if we were lucky, but the very thought of induced error on the part of the rate-fixers multiplied by five would be enough to make my colleagues and I think that Father Christmas had taken up permanent residence.
This is the basis on which this kind of contracting goes on. I care not how technically equipped an officer of the type we are discussing is, if he is only a visitor to a factory he is at a great disadvantage in trying to arrive at fair costings with people who know every peculiarity of the factory and all that it means. I do not believe that it is the technical costs officer who is to blame, but those who give him the type of conditions in which he works whom we should condemn for this kind of thing.
The Guardian summed up this matter well a few days ago by saying:
"Whatever the moral rights or wrongs of the Ferranti affair, one central fact is plain—the Ministry of Aviation's costing system is demented."
Many committees have reported adversely on that system. The Minister must reply tonight to the question why no changes have been made in this period.
The basic cause of our problem is a deep and fundamental clash between the political convictions of the party opposite and the need for change in Government industrial relations of which I have spoken. The operative word in the Committee's Report is that most fudged of words, "partnership". We have precisely the same kind of thing in describing employer-trade union relationships in which mutuality is not the most natural of impulses. The Government are trying to hide behind the word "partnership" the expensive failures they have made, whereas they were in a contractual relationship which does not presuppose either amity or partnership. We do not overcome the self-interest which is the basis of industrial contracting by private firms merely by saying that we thought there was a partnership in existence, especially if one proclaims it after getting the worst of a business deal.
In our last debate on this subject, in February, the Minister of Aviation said:
"I do not think that the Opposition realise quite how far the relationship between

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Government and industry has become one of partnership. I have been trying to strengthen this. I think that the fruits of it will appear before very long."—[OFFICIAL REPORT, 17th February, 1964; Vol. 689, c, 978.]
We have not had to wait very long, and the fruit would not appear to be very palatable now that it has arrived.
The Ministry now realises that it is the form of contract which is defective. Sir Richard Way, in his evidence, agreed that he could not be sure that this is the only case of its kind, despite which, as my hon. Friend the Member for Oldham, West (Mr. Hale) pointed out a short time ago, the Government cannot point to a single case in which a contractor has volunteered the information that he is making an excessive profit. This hardly seems to be the criterion on which partnerships should be based.
We also learn from the evidence in the Report that the Minister's preference for fixed-price contracts of the type which we are discussing—generally known as "price to be agreed"—instead of cost-plus contracts is because they encourage efficiency and act as an inducement to the contractor to beat the price. He said the same again this afternoon. It would be wrong in this case to withhold from the Minister our most hearty congratulations on the out-standing success which his inducements achieved in getting Mr. de Ferranti to beat the price. Indeed, a cynic might argue that it is a little hard to criticise his most successful disciples.
But in seeking to answer the problem of how Ferranti did this, the first point which we have to eliminate is this inducement to beat the price. As has been pointed out on many occasions today, one cannot encourage a firm to beat a price which is not agreed until five years of work and over two-thirds of the products have been produced. If one looks at it from the contractor's angle, the great advantage is that while he is deemed to be taking a point of view no risks are, in fact, involved. Having completed the vast majority of the products before he agrees a price, he knows everything that he needs to know about the costs and would have to be stupid or philanthropic to agree a price which does not yield a good profit. I do not think that Mr. de Ferranti is either stupid or philanthropic. This type of contract defeats
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all the points which the Minister lays down as the criteria for successful contracting. It is, in fact, a cost-plus contract in the way in which it works.
During last week-end we had the Hawker case in the newspapers. I felt at the time, and still feel, that it was a red herring which had been thrown in to make the point that contractors could lose as well as gain. The first thing which one realises from it is that the argument has been that the Ferranti case should be something of a freak; but if it is right that Hawker could lose £6 million, then one thing which that shows is that the Ferranti case was not a freak and that the system is capable of producing a deviation of £11 million on the two contracts, the out-turn of which we know something about. I therefore suggest that that is no answer to the case which we are making in respect of Ferranti.
We also learned from the evidence before Sub-Committee B of the Estimates Committee, at its sitting on 1st July last year, that Hawker Siddeley believed that there was a requirement for a transport plane which had both a civil and a military use. The firm developed such a plane on its own account without any Government authorisation or a contract at all. I emphasise that the firm itself developed it, and that when there was no contract forthcoming it then produced the plane. The firm sold those planes at £600,000 each. I emphasise again that this had to take account of the development costs. After that came the Government contract for 56 of the military version of a plane which had been developed with such a version in mind. To me, it does not make sense that after Hawker Siddeley had got a military contract for 56 planes, which is a huge contract, and after it had done all the development work on its own civil aircraft, which it sold for £600,000, and after, with minor alterations, it had sold the military version at £600,000, the firm is still alleged to have made a loss of £6 million.
Quite frankly, I do not believe that it is possible. I do not want to go through all the questions in the Report, but the fact is that, knowing something of the alterations which had to be made in the military version as against the development costs, I would not accept

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for one second that it could possibly have made any loss at all on the purely Government contract which it took over afterwards. My belief would be that the Government order simply reduced the firm's loss to £6 million rather than created a loss of £6 million.
I have been looking up the returns of the Hawker Siddeley group. In 1960, there was a very considerable expansion of the group following the rationalisation of the industry. About 75 per cent. of the pre-tax profits earned in the United Kingdom by Hawker Siddeley are attributable to the aircraft side of the business. The reorganisation caused some discontinuity, but according to the chairman's annual statement the trading profit from the U.K. companies amounted to £29 million for the 17 months ended 31st December, 1960, £19 million for the 12 months ended 31st December, 1961, and £20 million for the year ended 31st December, 1962, after charging depreciation of £4·2 million. If the firm made this huge loss on the Government contract we are discussing while returning the profits I have quoted, from which contracts did the firm wipe out the loss and build up its overall profits?
We know from the evidence of Sir Richard Way that no firm has ever gone back to the Ministry and declared an excessive profit. We cannot leave this where it is. I suggest that the P.A.C. should examine not only this contract, but every contract going through the Hawker Siddeley organisation within the currency of this contract so that we can find out precisely where the profits came from.
Earlier this year I asked the Minister of Aviation a Question about his contracting methods. I asked him whether he would
"change the conditions of contracting between his Department and private firms to ensure that the out-turn of each contract, and access to the relevant books of the firm, are available to his Department."
The Minister replied:
"Such a condition is already included in contracts when the price is determined on actual cost. It would be inappropriate in contracts let after competitive tendering."—[OFFICIAL REPORT, 15th April, 1964; Vol. 693, c. 400.]
Perhaps the Minister will tell us what is the difference in principle between a contract when the price is determined
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on actual cost and a contract such as the Ferranti one, which was a prices-to-be-agreed contract. In the latter case, we know that prices are fixed with the contractor after the contract has been let. We know that the Ministry has access to the contractor's premises to examine manufacturing processes. Negotiations take place on the basis of costs of direct labour, materials, and so on. In this type of contract there is not the slightest semblance of any competitive element.
Therefore, if, on fixed-price contracts, it can include the desire for the Ministry to see the out-turn, why can it not on the type of contract that it had with Ferranti? I still hope that the Minister will tell us whether the Government now accept the principle that all contracts of the type named in my Question will, from now on, contain the condition that the Ministry has the right to see the out-turn of the contract. This is absolutely imperative, if we are to get to the root of problems such as this.
It would appear from the Comptroller and Auditor General's Report that everything of a competitive nature is the exception when contracting with the Ministry. In paragraph 55, the Comptroller and Auditor General said that
"during a period of four weeks during 1962…competitive tenders were received for only five types of valve, to a value of £23,000, out of a total of 47 types to a total value of £364,000. Competitive tenders had been invited for the supply of a further 18 types of valve but in each case only one firm had responded and contracts to a total of £191,000 were placed by acceptance of the only tender."
May we know whether this is the ratio of competitive tenders against those for which no competition is invited? Does the Minister include among the competitive tenders, about which he gave Answers, tenders which have been invited but in respect of which only one person or firm has responded? The fact that over the years the Government have permitted the kind of arrangements I have been describing to continue means that they have acted as though they have a duty to acquire a vested interest in industrial ignorance. The Government's decision to opt for the fixed-price system instead of competitive contracts is more than one of preference.

533
The one thing which stands out in the Reports of the Public Accounts Committee and the Comptroller and Auditor General is that the Government are now having to negotiate with a firm which has a complete private monopoly position. In other words, they are trying to negotiate a contract on a competitive basis with firms which possess enormous irresponsible powers of private monopoly. If one reads the answers given to the Public Accounts Committee, particularly to questions 631 and 632, one finds that the reason the Government are still compelled to go back to Ferranti's is that there is no other firm in Britain which is capable of undertaking the sort of work that we are discussing. In any case, once a firm has done the development work it is almost certain to get the production contract.
I wonder whether, from the lessons they have learned, the Government are prepared to look at the possibility of doing far more development work, either themselves or in co-operation with firms with which they are in contract. In his evidence to the Public Accounts Committee Mr. de Ferranti argued that if there is to be partnership there must be a form of contract in which the Government share the risk. I have said that there is no reason why the Government should not take up that suggestion. Why not, as a concomitant stipulate that the new form of contract must make it clear that the Government must share the profit, and agree that the public profit made would then be ploughed back into the industry, perhaps the firm itself, so that we could make a proper basic partnership with the company with which we are contracting? We could then redress the position complained of by Sir Richard Way; to the effect that the technical cost officers cannot be trained under productive conditions because the Ministry has no production workshops and that they are always "playing away from home". It would also ensure the expansion of an industry which, in the national interest, we need to expand, and it would help break the semi-monopoly position which at present forces the Ministry to grant all contracts of a certain type to one or two firms. It would also enable the Government to share the
534
"know-how" for development work, which is most difficult to assess.
In Signpost for the Sixties we have enlarged quite a lot—[Laughter.] There is no need for hon. Members opposite to laugh at this, because we have been aware of the problems which the Government have not even begun to tackle. We are making them abundantly clear. We are saying that where there are problems of the type I have been enumerating and which have been brought to our attention—not by the Labour Party as such, but by the Public Accounts Committee—and where the taxpayer cannot he exempt from waste because of the type of contract, we would like to see State participation, it necessary, to protect the taxpayer.
Mr. John Biggs-Davison rose——
Mr. Lee: Time does not allow me to give way.
Hon. Members opposite always seek to find out whether it was I or my right hon. Friend the Leader of the Opposition who said, "No nationalisation". Let me quote what my right hon. Friend said some time ago, in a warning on this point. On 19th December, 1960, speaking as Chairman of the Public Accounts Committee, he said:
"Certainly, neither the Committee nor the House can leave matters where they are, because I repeat again, quoting the Committee Report, that we are dealing here with a problem which presents something new in the financial history of this country and by which, if it is not solved, the whole edifice of parliamentary, indeed, of governmental, control of expenditure is imperilled."
That is the background against which this debate takes place.
We on this side believe that because of their political ideology members of the party opposite can never begin to solve the problems that the second half of the twentieth century has brought up. We believe that they are biased against any type of participation by the people in industry which is now essential, and that private monopoly is endangering not only the nation as such but the authority of Parliament. It is impossible to believe that, with that ideological background, members of the party opposite can ever really solve this problem.

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This debate will be wound up by the Minister of Defence, a right hon. Gentleman who, some years ago, resigned the great office of Chancellor of the Exchequer because he was sure that a £50 million advance in Government expenditure was more than he could stomach. He was the Minister when the contracts with Ferranti were signed. He, in his capacity as Minister of Defence, has probably been responsible for waste far in excess of the £50 million over which he resigned some years ago. We understand his problem as an individual.
I come hack to the central theme of all this, which is that Toryism is now as dead as the dodo. The fact that the Government are hanging on now for a few months more is detrimental to the interests of the nation, but when the annihilation occurs in October it will be seen to have been detrimental even to the Tory Party.
9.27 p.m.
The Secretary of State for Defence (Mr. Peter Thorneycroft): As the hon. Member for Newton (Mr. Lee) has reminded the House, I was once Minister of Aviation. I was appointed in July, 1960, I had the honour to serve there until July, 1962, and I then went to the Ministry of Defence, so I have seen something of these problems both from the point of view of the responsibility for supply and procurement and, latterly, as a customer.
The matters we are discussing are grave and important. They surround problems that would confront any Government in charge of the country's affairs, and it is my desire to try, if I can, to deal objectively and clearly with the points that have been put. I am not concerned here to argue about public and private enterprise—there are other opportunities for that—for this rather good reason. It so happens that this great industry has some of the best public and some of the best private enterprise within it. It has in the Royal Aircraft Establishment one of our finest centres of scientific advance, and it has among the great firms some of the best organisations, technologically and in every way, that we have available, not only serving our defences but contributing magnificently to our export trade.
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Whatever is said about anyone else's activities I would agree with what has been said about the Comptroller and Auditor General. He has made a remarkable contribution. Without his watch-dog activities we would not be having this debate, nor would it have been possible for Members of the Public Accounts Committee to direct their minds to making what I think was a prompt, admirable, and objective Report on these problems.
Mr. Callaghan rose——
Mr. Thorneycroft: I have a lot to say. Perhaps the hon. Gentleman will let me get a little further. What I think we are concerned with here is not simply the money. We are concerned with the viability of a system, because if we suspect that the system which is operating, and has been operated not simply by one party but by all parties in the country, is not viable, it goes to the root of our relations not simply with one firm, Ferranti's, but between any Government and the aircraft and electronics industries.
I therefore want to start by making one or two observations on that theme. I recognise that the debate has gone wider. I will try to deal with some of the wider issues raised a little later, but the point of departure is the Report of the Public Accounts Committee and the Ferranti case and I am anxious that on no side of the House of Commons should we flinch from the implications of that and that we should face it quite honestly and objectively today.
I should like to tell the House what I see to be the essentials of this. There is a lot in between, but there are two main types of contract which can be entered into. There is the cost-plus contract where one does the job and costs it and everybody looks at all the facts and the figures and then one adds a percentage or perhaps, rather better, a fee. It is a fairly simple concept. It is widely applied in research and development contracts, but it has never been welcomed by any Report of the Public Accounts Committee or any other objective inquiry made into it.
The other is the fixed-price contract and, let us face it, very often in this country it is not on a competitive basis. We have not that number of

537
firms to be able to compete in this country. We are not the United States of America and therefore very often it will be on a non-competitive basis and then we have to depend upon very elaborate technical cost estimates. It is, as the hon. Member for Newton has said, a very skilled and complicated job. Let us not be too critical of those who make mistakes. It is a complicated job for anybody to do.
If a fixed-price contract is the system, one sticks to it whether it is a profit or a loss. That system first estimates what a job will cost. The system has been very widely applauded by everybody who has looked at it. I take only one quotation from the Third Report of the Public Accounts Committee for 1953–54 where it says:
"…it appears to Your Committee that the building up of the price from estimates of labour, materials and overheads, checked by the appropriate experts, with a known addition for profits is the surest way of arriving at a demonstrably fair and reasonable price."
I think that this is generally accepted to be the case.
It is true that it would be tempting to say that it is a good thing to look at the books. This was at one time part of the system. It was actually dropped by the party opposite—I am not saying wrongly—as part of the contract condition in 1947. It was dropped because it was in their view, and at the time in the view of the Treasury, essentially irrelevant to the situation because the whole basis was that one made this estimate and one abided by it. Sometimes it might make a profit and sometimes a loss, but it had the benefit of putting this incentive element into the operation. The fixed-price system has been in operation for over 20 years. There has been considerable experience of it and it has been approved by industry and by the Government.
What has happened here? Certain facts are known and accepted, but by far the most important fact, in my view, is that the technical cost staff of the Ministry of Aviation, over whom I was presiding at the time—I do not want to shirk any responsibility in the matter—made an error of 100 per cent. in their estimates of the direct labour cost. That is the essential element in this case, and I think that it is much better to state it plainly. It is true that that error is multiplied by
538
the overheads and so on—I shall have a word to say about the technicality of overheads later on, perhaps—but the basic error here was in the estimate of the direct labour cost.
As a result, an excessive profit was made. By an excessive profit, I do not mean 15 or 20 per cent. I mean 63 per cent. on cost. It is easier to take it on cost, and we all know that we are talking about the same thing. But 63 per cent. is, on any standard, an excessive profit.
The account given by the technical cost department people was that they applied all the knowledge and experience which they had. They took the firm's estimate as a starting point, which was 120 per cent. of what turned out to be the true figure, they negotiated it down 20 per cent., to double the figure as it eventually turned out, and they settled the contract at that figure.
As I said, technical costing is not a simple art. It is complex, and quite obviously, errors are possible. We must all admit that errors will be made. Indeed, if we are to have the system at all, some degree of error—10 per cent. or 15 per cent.—must, I think, be acceptable. I shall refer in a moment to one or two examples which we have. But a 100 per cent. error is not acceptable. If such an error is possible, what is called in question is not the skill of individuals or the capacity of the Ministry of Aviation's technical cost officers but the viability of the system itself. It is that which comes in issue.
Mr. Lubbock rose——
Mr. Thorneycroft: I want to finish this part. It is rather important to have it right. What matters here, therefore, far more than the size of the profit, the fortunes of an individual firm or the skill and reputation of the Ministry is the truth and the ability to identify what really happened in this case. Until we do identify it, it is not possible to be confident that such errors could not creep in in other cases.
I make no charges whatever against Ferranti or anyone else, but it is absolutely vital to analyse this case in detail and for this purpose it is necessary to have all the books and documents. This is one of 18 contracts. One must have much more than the books. One must

539
be able to get hold of the detailed documents. It is vital to see the size of the problem which confronts us and to examine what happened.
In these circumstances, I thought it proper, the other day, to invite Mr. de Ferranti to come to see me, with the Minister of Aviation, and I put these considerations to him. I told him, in terms which I think the House and the Public Accounts Committee would appreciate, that, in the light of what I had read in the Report, it was not possible to accept a situation in which we carried out an investigation without all the facts being available. This would be intolerable to the House of Commons, and I believe that that is the right view for the House to take. Mr. de Ferranti acceded to this view. As my right hon. Friend has said, he agreed to display all the relevant documents, books, accounts and so forth so that Sir John Lang can really have an opportunity to find out how an error not of 10 or 15 per cent. but of 100 per cent. came to be made in this case.
Mr. Lee: Will the right hon. Gentleman answer the point which I made? It will not be a lot of good to the House of Commons unless Sir John Lang has the authority of Mr. de Ferranti to publish, as we publish the evidence with the Report of the Public Accounts Committee.
Mr. Thorneycroft: I have already announced that the report will be published. I assure the House that the last thing that I want to do is to conceal anything. My whole effort has been bent in the other direction. It has been our absolute determination in this case—not from my own point of view but from the point of view of the future of this system and the relations of any Government with the aircraft industry—to demand that we should know how that error crept in so that we can assess whether or not this is a viable system.
Mr. William Baxter: Sir John Lang, with all his eminence, is not a Member of this House. Why not set up a Select Committee of the House to look into this matter?
Mr. Thorneycroft: There are many possible fields of investigation. The two
540
investigations which have taken place have been extremely valuable. First, the Comptroller and Auditor General pointed out that something had happened. Then we had the Report of the Public Accounts Committee, which set out in very clear terms that this must be properly investigated. If we want a detailed examination, many people must look at the figures, including the technical cost officers of the Ministry of Aviation. The matter must be examined by the people who have looked at these before, who can identify where the error was. I do not think that anyone on either side of the House really wants anything other than that. We are determined that the truth should be exposed.
Mr. Cledwyn Hughes: Would the right hon. Gentleman make one thing clear, namely, that, whatever Mr. de Ferranti may have agreed regarding the books, the Minister of Aviation has the statutory right to call for records and books if he wishes?
Mr. Thorneycroft: He has not. I should like to make that absolutely plain. I do not object to being interrupted, but I want to answer some of the debate. It would be a little unfair to hon. Members who have asked questions if I did not do so. The contractual right to call for records was abandoned in 1947 and no statutory right exists.
The hon. Member for Cardiff, South-East (Mr. Callaghan) said that this was not an isolated case. He then drew attention to other Reports of the Public Accounts Committee referring to estimates of various kinds. I beg the House to realise that there is a sharp distinction between the term "estimate" as it is applied to a costed contract dealing with research and development and the term "estimate" as it is used here, namely, a technical cost officer's estimate of how much it will cost to produce—the best estimate that one can make. There have been mistakes made in the kind of estimates which the hon. Gentleman was talking about.
My right hon. Friend the Minister of Aviation referred to the Bloodhound contract itself—not the production one, but the development one. It was estimated at £1½ million by the right hon. Member for Vauxhall (Mr. Strauss). Before anyone starts to blame the right hon. Member, let it be recognised that

541
the estimating of the future development cost of an anti-aircraft weapon designed to come into operation seven or more years ahead and to shoot down aircraft travelling at near supersonic speed is not easy. In fact, it cost £32 million. That was an error in estimating. But it is a quite different problem from the problem of the estimate of a technical cost officer on a fixed price production contract.
The hon. Member for Cardiff, South-East then said, "Should the firm have tried to make the maximum profit?" Indeed, quite a lot of hon. and right hon. Members turned to this issue. I do not believe that it is entirely a question of organisation—what people are trying to do when they are negotiating together. It is a question not so much of organisation as of human relationships. I agree with what the Public Accounts Committee said about this. When Government and industry are in contact on arrangements of this kind, there has to be open dealing between the two of them.
In a speech in the House of Commons on 11th December last, the hon. Member for Sowerby (Mr. Houghton) said:
"I can only conclude that what is needed in this situation is a reappraisal by private industry of its relations with the Government, who will become an ever-bigger buyer as the years go by. We need a frank and meaningful acceptance by industry, suppliers and contractors that the public interest is at stake and that the public are footing the bill. They are engaeed in a service and not a commercial enterprise in this respect."—[OFFICIAL REPORT, 11th December, 1963; Vol. 686, c. 426.]
There is a great deal in that.
I add one other consideration. There is commercial sense in that as well, because anyone with experience of big business will recognise that, even from a narrow commercial viewpoint, it does not always pay a big firm to seek to extract the maximum profit from anyone, particularly if the person from whom the firm seeks to extract it happens to be its biggest or, in some cases, its only customer. Looked at, therefore, from whichever point of view one takes, I rather agree with the hon. Member for Sowerby in saying that a special relationship exists in cases of this kind.
The hon. Member for Cardiff, South-East then asked me about a number of other points, including the Argosy. The hon. Member was right. It was
542
started as a private venture—and I give credit to the firm for starting it. About £10 million was spent on it. It was ordered by the Royal Air Force because the R.A.F. wanted it. It was not a rescue operation. In recent operations, I might add, it has more than proved its worth.
The point which the hon. Member was making was whether the comparison was a fair one. I do not want to misstate it. I am not a great believer in the swings and roundabouts kind of argument. One cannot justify a firm making a great profit because somebody else makes a big loss. That is not a viable position in which to stand. The point is not taken for that purpose. It is taken to try to ascertain whether this is always a case of a group of well-meaning but rather ineffectual gentlemen who have been taken for a ride in all cases and who are always making the mistakes the same way. The answer is that they are not always making the mistakes the same way.
When one has made all the allowances one likes for the nature of the Argosy contract, for writing in something on the private development side and the rest, it appears fairly plain that in that case, too, although in a different direction, there was a mistake both by the technical cost officers of the firm and by the Ministry of Aviation which in that case resulted in a loss.
The hon. Member asked about overheads. Many hon. Members have pointed out that if one makes a mistake, it is obviously much worse if one multiplies by a very big overhead factor. Like most other parts of the problem, this is an immensely complicated and difficult subject. Hon. Members may say that it should not be 558 per cent. and that it ought to be 300 per cent. It is easy to say that, but when one gets down to it somebody must assess the overheads. When trying to assess the overheads, one problem is how much of them should be allocated to the whole of the concern, how much to certain branches of production or, in the case of the men who work, whether an inspector is part of the overheads, whether a machine setter is part of the overheads or whether they are both part of the direct labour. There is room for endless argument about this.

543
All I would say to the hon. Gentleman is that, however one looks at the problem, in some way or the other multiplication must be introduced. In firms as highly capitalised as aircraft firms, with overhead factors in many cases running above 558, one is bound to multiply the direct costs, however they are estimated, by a substantial factor. There is no technical way of avoiding that.
I appreciated what the hon. Member for Cardiff, South-East said about Sir John Lang, with whom he served in the old days on the Board of Admiralty. I agree with him that there is not the slightest chance of Sir John Lang allowing himself to be put into the position of a political decoy, although I need hardly say that that is not the purpose for which he has been appointed anyway.
He finally asked about the basis of repayment. Let us be clear: there is no legal right to repayment in this case. I want to make this absolutely plain. We have to face facts in the House of Commons. Secondly, it is a little premature to start debating in any detail the precise basis upon which repayment ought to be made until, carrying out what the Public Accounts Committee has suggested, we can find out precisely what the error was and how it occurred. From that moment we will be able to talk about repayment on a far more practical basis than in theory without anybody having had access to the books.
My hon. Friend the Member for Macclesfield (Sir A. V. Harvey) made a number of points, not all of which I propose to reply to this evening. He asked me about my hon. Friend the Member for Morecambe and Lonsdale (Mr. de Ferranti). As his position has been mentioned once or twice in the debate, may I refer to it? An hon. Member does not ask to be a Minister; he is invited to be a Minister, and the hon. Member for Morecambe and Lonsdale was invited to be a Minister. He sought to divest himself of his interests in this firm. For reasons which are perfectly obvious to anybody who looks at the matter, it became obvious to him that he could not do so in a manner which could satisfy himself that he could or had cut himself off completely from his family and firm and so on.
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Therefore, in those circumstances he said to the Prime Minister that he felt that he had not been able and could not divest himself to the complete extent which an hon. Member would wish before taking on responsibilities of that kind. He accordingly laid down the opportunity of serving in the Administration in that particular capacity. Quite simply, that is the story of the hon. Member for Morecambe and Lonsdale. All I would say is that there is not the slightest stain of dishonour upon him whatever.
The hon. Member for Dudley (Mr. Wigg) asked me a number of questions, including one about the "Eagle". I made an inquiry about this immediately. I am assured that the Royal Navy has absolutely no complaint about either the delivery or the cost of this equipment. It is completely satisfied—[HON. MEMBERS: "Withdraw."] Many things are said in this debate and we do not withdraw them. It was a perfectly fair point to make and I am sure that the hon. Member for Dudley will be as pleased as I am that the Royal Navy is being well served in this matter.
Mr. Wigg indicated assent.
Mr. Thorneycroft: The hon. Gentleman went on to say that in the United States of America there was a system different from the one we had here. In particular, there were Senate committees and so on. He followed a line which he has often developed in debates of this kind about the importance of having something comparable to the Senate committee system. There are arguments for all sorts of systems. Let us not underestimate the system we have here. Let us not underestimate the effectiveness of the Comptroller and Auditor General. I say to the hon. Member for Dudley, do not let us underestimate the Public Accounts Committee.
The hon. Member was criticising the fact that questions are asked in this rather mild way, that it is all done so quietly, saying that we were only bowling underhand. I do not believe that many accounting officers who appear before the Public Accounts Committee regard it as other than a pretty formidable undertaking.
Mr. Wigg: The right hon. Gentleman was good enough to say that he had made inquiries of the Royal Navy and that it was satisfied. That is not the point. The point is, are the figures and facts which I gave the House right or not? The question of the satisfaction of a particular officer in the Royal Navy is a subjective consideration. Is what I said tonight right or wrong? If the right hon. Gentleman says that I am wrong, I shall withdraw what I said. If I am right, there is need for an investigation.
Mr. Thorneycroft: I shall not ask the right hon. Gentleman to withdraw anything. I do not believe in everybody withdrawing everything. I confess that I went out to have a bite to eat when the hon. Gentleman was giving the figures, but if what he was saying implied that this equipment was delivered very late, or was much more costly, or something of that kind, I can tell him that I am assured by the Royal Navy that it was satisfied both about delivery times and with regard to the cost.
Mr. Wigg: The point is whether this equipment has been evaluated as being fit for service. Will the right hon. Gentleman give the House an assurance—not what the Royal Navy says but what he says—that in the light of these facts he is satisfied that this equipment will operate under Service conditions?
Mr. Thorneycroft: The hon. Gentleman asked this question, and I got in touch with the senior officer personally responsible for this. He told me that I could give a complete assurance, which I do, that the Royal Navy is satisfied with this equipment. I hope that the hon. Gentleman will now be satisfied with what I have said.
The hon. Member for Edinburgh, Leith (Mr. Hoy) asked me about the development costs of the Bloodhound. As I have already said, they were estimated at £1½ million on a cost-plus contract in 1950. The cost was £32 million. Ferranti's share was £8 million, and the profit at £400,000, represents about 5 per cent.
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My right hon. Friend the Member for Folkestone and Hythe (Mr. Costain), and other hon. Members, indicated that there were other methods than simply cost plus on the one hand or fixed price on the other. This is true. There are other methods, but the more closely the House insists—and we may be right about this—that books have to be examined at every stage, that people have to be looking in on the work sheets, and all that kind of thing, the further away we get from the fixed price, and the nearer we approximate to cost plus.
We can make this system absolutely safe, or as safe as anything reasonably can be made, on the profits side by going further and further towards cost plus, but I must tell the House that we are in a dilemma, because the experience of all parties is that the further we go in that direction the more we minimise the profits but we maximise the cost, and that is not to the benefit of the taxpayer either.
Mr. Callaghan rose——
Hon. Members: Sit down.
Callaghan: We are debating an Amendment which censures the Government, and I want to ask the Minister one simple question. Why is it that we are debating such a Motion as this? On at least four occasions the Minister has referred to the objective and admirable Report of the Public Accounts Committee. Why is he refusing to accept it?
Mr. Thorneycroft: I am glad that at one minute to ten o'clock the hon. Gentleman has called my attention to this matter. We are debating an admirable and objective Report. The Motion is that we should take note of that Report. We have not only taken note of it, we have acted on it, because we have taken steps to ensure that the very thing which the Public Accounts Committee has called for, which was a full, frank, fair and thorough examination of this matter, should take place. We do that determined to ascertain the truth, but confident in the broad system which we have adopted and which has brought to the Services of this country some of the finest equipment in the world.
Question put, That those words be there added:—
The House divided: Ayes 236, Noes 302.

Division No. 88.]

AYES

[10.0 p.m.

Abse, Leo

Herbison, Miss Margaret

Parker, John

Ainsley, William

Hewitson, Capt. M.

Parkin, B. T.

Albu, Austen

Hill, J. (Midlothian)

Paton, John

Allaun, Frank (Salford, E.)

Hilton, A. V.

Pavitt, Laurence

Allen, Scholefield (Crewe)

Holman, Percy

Pearson, Arthur (Pontypridd)

Awbery, Stan (Bristol, Central)

Holt, Arthur

Peart, Frederick

Bacon, Miss Alice

Hooson, H. E.

Pentland, Norman

Barnett, Guy

Houghton, Douglas

Popplewell, Ernest

Baxter, William (Stirlingshire, W.)

Howell, Charles A. (Perry Barr)

Prentice, R. E.

Beaney, Alan

Howell, Denis (Small Heath)

Probert, Arthur

Bellenger, Rt. Hon. F. J.

Hoy, James H.

Proctor, W. T.

Bence, Cyril

Hughes, Cledwyn (Anglesey)

Pursey, Cmmdr. Harry

Benn, Anthony Wedgwood

Hughes, Emrys (S. Ayrshire)

Randall, Harry

Bennett, J. (Glasgow, Bridgeton)

Hughes, Hector (Aberdeen, N.)

Rankin, John

Benson, Sir George

Hunter, A. E.

Redhead, E. C.

Blackburn, F.

Hynd, H. (Accrington)

Rees, Merlyn (Leeds, S.)

Blyton, William

Hynd, John (Attercliffe)

Reid, William

Boardman, H.

Irvine, A. J. (Edge Hill)

Reynolds, G. W.

Bottomley, Rt. Hon. A. G.

Irving, Sydney (Dartford)

Rhodes, H.

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

Janner, Sir Barnett

Roberts, Albert (Normanton)

Bowles, Frank

Jeger, George

Roberts, Goronwy (Caernarvon)

Boyden, James

Jenkins, Roy (Stechford)

Robertson, John (Paisley)

Bradley, Tom

Jones, Dan (Burnley)

Robinson, Kenneth (St. Pancras, N.)

Brockway, A. Fenner

Jones, Elwyn (West Ham, S.)

Rodgers, W. T. (Stockton)

Broughton, Dr. A. D. D.

Jones, J. Idwal (Wrexham)

Ross, William

Butter, Mrs. Joyce (Wood Green)

Jones, T. W. (Merioneth)

Royle, Charles (Salford, West)

Callaghan, James

Kelley, Richard

Shinwell, Rt. Hon. E.

Castle, Mrs. Barbara

Kenyon, Clifford

Silkin, John

Chapman, Donald

King, Dr. Horace

Silverman, Julius (Aston)

Cliffs, Michael

Lawson, George

Skeffington, Arthur

Collick, Percy

Ledger, Ron

Slater, Mrs. Harriet (Stoke, N.)

Corbet, Mrs. Freda

Lee, Frederick (Newton)

Slater, Joseph (Sedgefield)

Craddock, George (Bradford, S.)

Lee, Miss Jennie (Cannock)

Small, William

Cronin, John

Lever, Harold (Cheetham)

Smith, Ellis (Stoke, S.)

Crosland, Anthony

Lever, L. M. (Ardwick)

Snow, Julian

Cullen, Mrs. Alice

Lewis, Arthur (West Ham, N.)

Sorensen, R. W.

Dalyell, Tam

Lipton, Marcus

Soskice, Rt. Hon. Sir Frank

Darling, George

Loughlin, Charles

Spriggs, Leslie

Davies, G. Elfed (Rhondda, E.)

Lubbock, Eric

Steele, Thomas

Davies, Harold (Leek)

Mabon, Dr. J. Dickson

Stewart, Michael (Fulham)

Davies. Ifor (Gower)

McBride, N.

Stonehouse, John

Deer, George

McCann, J.

Stones, William

Delargy, Hugh

MacColl, James

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

Dempsey, James

MacDermot, Niall

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

Diamond, John

McInnes, James

Swain, Thomas

Dodds, Norman

Mackie, John (Enfield, East)

Swingler, Stephen

Doig, Peter

McLeavy, Frank

Symonds, J. B.

Driberg, Tom

MacMillan, Malcolm (Western Isles)

Taverne, D.

Ede, Rt. Hon. C.

MacPherson, Malcolm

Taylor, Bernard (Mansfield)

Edelman, Maurice

Mahon, Simon

Thomas, George (Cardiff, W.)

Edwards, Rt. Hon. Ness (Caerphilly)

Mallalieu, E. L. (Brigg)

Thomas, Iorwerth (Rhondda, W.)

Edwards, Robert (Bilston)

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

Thompson, Dr. Alan (Dunfermline)

Edwards, Walter (Stepney)

Manuel, Archie

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

Evans, Albert

Mapp, Charles

Thornton, Ernest

Fernyhough, E.

Marsh, Richard

Timmons, John

Finch, Harold

Mason, Roy

Tomney, Frank

Fitch, Alan

Mayhew, Christopher

Wade, Donald

Fletcher, Eric

Mellish, R. J.

Wainwright, Edwin

Foley, Maurice

Mendelson, J. J.

Warbey, William

Foot, Dingle (Ipswich)

Millan, Bruce

Watkins, Tudor

Foot, Michael (Ebbw Vale)

Milne, Edward

Weitzman, David

Fraser, Thomas (Hamilton)

Mitchison, G. R.

Wells, William (Walsall, N.)

Galpern, Sir Myer

Monslow, Walter

White, Mrs. Eirene

George, Lady Megan Lloyd (Crmrthn)

Moody, A. S.

Whitlock, William

Ginsburg, David

Morris, Charles (Openshaw)

Wigg, George

Gourlay, Harry

Morris, John (Aberavon)

Wilkins, W. A.

Greenwood, Anthony

Moyle, Arthur

Willey, Frederick

Griffiths, David (Rother Valley)

Mulley, Frederick

Williams, W. T. (Warrington)

Griffiths, Rt. Hon. James (Llanelly)

Neal, Harold

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

Griffiths, W. (Exchange)

Noel-Baker, Francis (Swindon)

Wilson, Rt. Hon. Harold (Huyton)

Grimond, Rt. Hon. J.

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

Woodburn, Rt. Hon, A.

Gunter, Ray

Oliver, G. H.

Woof, Robert

Hale, Leslie (Oldham, W.)

O'Malley, B. K.

Wyatt, Woodrow

Hamilton, William (West Fife)

Orem, A. E.

Yates, Victor (Lady wood)

Hannan, William

Oswald, Thomas

Zilliacus, K.

Harper, Joseph

Owen, Will

Hart, Mrs. Judith

Padley, W. E.

TELLERS FOR THE AYES:

Hayman, F. H.

Paget, R. T.

Mr. Rogers and Mr. Short.

Healey, Denis

Pannell, Charles (Leeds, W.)

Henderson, Rt. Hn. Arthur (Rwly Regis)

Pargiter, G. A.

NOES

Agnew, Sir Peter

Forrest, George

Loveys, Walter H.

Allan, Robert (Paddington, S.)

Foster, Sir John

Lucas. Sir Jocelyn

Allason, James

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

Lucas-Tooth, Sir Hugh

Amery, Rt. Hon. Julian

Fraser, Ian (Plymouth, Sutton)

McAdden, Sir Stephen

Arbuthnot, Sir John

Freeth, Denzil

MacArthur, Ian

Ashton, Sir Hubert

Gammans, Lady

McLaren, Martin

Atkins, Humphrey

Gardner, Edward

Maclay, Rt. Hon. John

Awdry, Daniel (Chippenham)

Gibson-Watt, David

Maclean, Sir Fitzroy (Bute & N. Ayrs)

Balniel, Lord

Gilmour, Ian (Norfolk, Central)

McLean, Neil (Inverness)

Barber, Rt. Hon. Anthony

Gilmour, Sir John (East Fife)

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

Barlow, Sir John

Glover, Sir Douglas

MacLeod, Sir John (Ross & Cromarty)

Barter, John

Glyn, Dr. Alan (Clapham)

McMaster, Stanley R.

Batsford, Brian

Glyn, Sir Richard (Dorset, N.)

Macmillan, Rt. Hn. Harold (Bromley)

Beamish, Col. Sir Tufton

Godber, Rt. Hon, J. B.

Macmillan, Maurice (Halifax)

Bell, Ronald

Goodhart, Philip

Madden, Martin

Bennett, F. M. (Torquay)

Goodhew, Victor

Maginnis, John E.

Berkeley, Humphry

Gough, Frederick

Maitland, Sir John

Bevins, Fit. Hon. Reginald

Gower, Raymond

Markham, Major Sir Frank

Bidgood, John C.

Grant-Ferris, R.

Marshall, Sir Douglas

Biffen, John

Green, Alan

Marten, Neil

Biggs-Davison, John

Gresham Cooke, R.

Mathew, Robert (Honiton)

Bingham, R. M.

Gurden, Harold

Matthews, Gordon (Meriden)

Birch, Rt. Hon. Nigel

Hall, John (Wycombe)

Maude, Angus (Stratford-on-Avon)

Bishop, Sir Patrick

Hamilton, Michael (Wellingborough)

Maudling, Rt. Hon. Reginald

Black, Sir Cyril

Harris, Frederic (Croydon, N. W.)

Mawby, Ray

Bossom, Hon. Clive

Harris, Reader (Heston)

Maxwell-Hyslop, R. J.

Box, Donald

Harrison, Brian (Maldon)

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

Boyd-Carpenter, Rt. Hon. John

Harrison, Col. Sir Harwood (Eye)

Mills, Stratton

Boyle, Rt. Hon. Sir Edward

Harvey, Sir Arthur Vere (Macclest'd)

Miscampbell, Norman

Braine, Bernard

Harvey, John (Walthamstow, E.)

Montgomery, Fergus

Brewis, John

Harvie Anderson, Miss

More, Jasper (Ludlow)

Brown, Alan (Tottenham)

Hastings, Stephen

Mott-Radclyffe, Sir Charles

Browne, Percy (Torrington)

Hay, John

Neave, Airey

Bryan, Paul

Heath, Fit. Hon. Edward

Nicholls, Sir Harmer

Bullard, Denys

Hendry, Forbes

Nicholson, Sir Godfrey

Bullus, Wing Commander Eric

Hicks Beach, Maj. W.

Noble, Rt. Hon. Michael

Burden, F. A.

Hiley, Joseph

Nugent, Rt. Hon. Sir Richard

Butcher, Sir Herbert

Hill, Mrs. Eveline (Wythenshawe)

Oakshott, Sir Hendrie

Campbell, Gordon

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

Orr, Capt. L. P. S.

Carr, Rt. Hon. Robert (Mitcham)

Hirst, Geoffrey

Orr-Ewing, Sir Ian (Hendon, North)

Cary, Sir Robert

Hobson, Rt. Hon. Sir John

Osborn, John (Hallam)

Channon, H. P. G.

Hocking, Philip N.

Page, Graham (Crosby)

Chataway, Christopher

Holland, Philip

Page, John (Harrow, West)

Clark, Henry (Antrim, N.)

Hollingworth, John

Pannell, Norman (Kirkdale)

Clark, William (Nottingham, S.)

Hope, Rt. Hon. Lord John

Partridge, E.

Clarke, Brig. Terence (Portsmth, W.)

Hopkins, Alan

Pearson, Frank (Clitheroe)

Cleaver, Leonard

Horny, R. P.

Peel, John

Cole, Norman

Hornsby-Smith, Rt. Hon. Dame P.

Percival, Ian

Cooke, Robert

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

Peyton, John

Cordeaux, Lt.-Col. J. K.

Howard, John (Southampton, Test)

Pickthorn, Sir Kenneth

Corfield, F. V.

Hughes Hallett, Vice-Admiral John

Pike, Miss Mervyn

Costain, A. P.

Hughes-Young, Michael

Pitt, Dame Edith

Coulson, Michael

Hulbert, Sir Norman

Pounder, Rafton

Courtney, Cdr. Anthony

Hutchison, Michael Clark

Powell, Rt. Hon. J. Enoch

Craddock, Sir Beresford (Spelthorne)

Iremonger, T. L.

Price, David (Eastleigh)

Crawley, Aidan

Irvine, Bryant Godman (Rye)

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

Critchley, Julian

James, David

Prior-Palmer, Brig. Sir Otho

Crowder, F. P.

Jenkins, Robert (Dulwich)

Proudfoot, Wilfred

Cunningham, Sir Knox

Jennings, J. C.

Pym, Francis

Curran, Charles

Johnson, Eric (Blackley)

Quennell, Miss J. M.

Currie, G. B. H.

Johnson Smith, Geoffrey

Ramsden, Rt. Hon. James

Dalkeith, Earl of

Joseph, Rt. Hon. Sir Keith

Rawlinson, Rt. Hon. Sir Peter

Dance, James

Kaberry, Sir Donald

Redmayne, Rt. Hon. Martin

d'Avigdor-Goldsmid, Sir Henry

Kerans, Cdr. J. S.

Rees, Hugh (Swansea, W.)

Deedes, Rt. Hon. W. F.

Kerby, Capt. Henry

Rees-Davies, W. R. (Isle of Thanet)

Digby, Simon Wingfield

Kershaw, Anthony

Renton, Rt. Hon. David

Donaldson, Cmdr. C. E. M.

Kimball, Marcus

Ridley, Hon. Nicholas

Doughty, Charles

Kirk, Peter

Ridsdale, Julian

Drayson, G. B.

Kitson, Timothy

Rippon, Rt. Hon. Geoffrey

du Cann, Edward

Lagden, Godfrey

Roberts, Sir Peter (Healey)

Duthie, Sir William (Banff)

Lancaster. Col. C. G.

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

Eden, Sir John

Langford-Holt, Sir John

Robson Brown, Sir William

Elliot, Capt. Walter (Carshalton)

Leather, Sir Edwin

Rodgers, John (Sevenoaks)

Elliott, R. W. (Newc'tle-upon-Tyne, N.)

Leavey, J. A.

Roots, William

Emery, Peter

Legge-Bourke, Sir Harry

Ropner, Col. Sir Leonard

Emmet, Hon. Mrs. Evelyn

Lewis, Kenneth (Rutland)

Royle, Anthony (Richmond, Surrey)

Errington, Sir Eric

Lilley, F. J. P.

Russell, Sir Ronald

Erroll, Rt. Hon. F. J.

Lindsay, Sir Martin

Scott-Hopkins, James

Farey-Jones, F. W.

Linstead, Sir Hugh

Seymour, Leslie

Farr, John

Litchfield, Capt. John

Sharpies, Richard

Fell, Anthony

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

Shaw, M.

Fisher, Nigel

Longbottom, Charles

Fletcher-Cooke, Charles

Longden, Gilbert

550

551

Shepherd, William

Thatcher, Mrs. Margaret

Webster, David

Skeet, T. H. H.

Thomas, Sir Leslie (Canterbury)

Wells, John (Maidstone)

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

Thomas, Peter (Conway)

Whitelaw, William

Smyth, Rt. Hon. Brig. Sir John

Thompson, Sir Kenneth (Walton)

Williams, Dudley (Exeter)

Soames, Rt. Hon. Christopher

Thompson, Sir Richard (Croydon, S.)

Williams, Paul (Sunderland, S.)

Spearman, Sir Alexander

Thorneycroft, Rt. Hon. Peter

Wills, Sir Gerald (Bridgwater)

Stainton, Keith

Thornton-Kemsley, Sir Colin

Wilson, Geoffrey (Truro)

Stevens, Geoffrey

Tiley, Arthur (Bradford, W.)

Wise, A. R.

Stodart, J. A.

Tilney, John (Wavertree)

Wolrige-Gordon, Patrick

Stoddart-Scott, Col. Sir Malcolm

Touche, Rt. Hon. Sir Gordon

Wood, Rt. Hon. Richard

Storey, Sir Samuel

Turner, Colin

Woodhouse, C. M.

Studholme, Sir Henry

Turton, Rt. Hon. R. H.

Woodnutt, Mark

Talbot, John E.

Tweedsmuir, Lady

Woollam, John

Tapsell Peter

van Straubenzee, W. R.

Worsley, Marcus

Taylor, Sir Charles (Eastbourne)

Vane, W. M. F.

Yates, William (The Wrekin)

Taylor, Edwin (Bolton, E.)

Vaughan-Morgan, Rt. Hon. Sir John

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

Vickers, Miss Joan

TELLERS FOR THE NOES:

Taylor, Sir William (Bradford, N.)

Walker-Smith, Rt. Hon. Sir Derek

Mr. Chichester-Clark and

Teeling, Sir William

Wall, Patrick

Mr. Finlay.

Temple, John M.

Watkinson, Rt. Hon. Harold

Main Question put and agreed to.
Resolved,
That this House takes note of the Second Report from the Committee of Public Accounts relating to guided weapons contracts placed by the Ministry of Aviation with Ferranti Limited.

FLEET AIR ARM (REPLACEMENT AIRCRAFT)
Motion made, and Question proposed. That this House do now adjourn.—[Mr. Mac Arthur.]
10.13 p.m.
Mr. John Farr: Perhaps one of the most important announcements in the speech of my right hon. Friend the Secretary of State for Defence in the House on 26th February was that relating to the supply of Phantom aircraft to replace Sea Vixens for the Fleet Air Arm. Hon. Members will recall that my right hon. Friend declared that he proposes to acquire a substantial number of Phantoms for this purpose, subject to their proper technical evaluation.
In this country we have a magnificent fund of aeronautical knowledge upon which to draw. We also have in some parts of the aircraft industry a shortage of orders. It is these two factors which have compelled me, coupled with the suspected size of the proposed order, to raise this matter on the Adjournment tonight.
My right hon. Friend's declaration was greeted with a certain amount of surprise, because only seven months before, on 30th July, when he was announcing the proposal to build a new Fleet aircraft carrier, he had said:
552
"I have also had under consideration an air craft replacement for the Sea Vixen. I am now able to announce that the Royal Navy and the Royal Air Force have reached agreement on the characteristics of a common aircraft that will replace both the Sea Vixen and the Hunter. This aircraft, which will be capable of operation either from land or from carriers, will greatly increase the flexibility of our use of air power and provide the opportunity for economies in its disposition. The aircraft will be based on the Hawker P1154 and a detailed study is at the moment proceeding."—[OFFICIAL REPORT, 30th July, 1963; Vol. 682, c. 237.]
We now know that it was found impossible to evolve a common aircraft for both the Royal Navy and the Royal Air Force from the P1154, and presumably the decision which my right hon. Friend the Minister of Defence announced to buy foreign was based on one of two possible reasons. The first possible reason was the inability of our aircraft industry to produce the right type of aircraft and the second possible reason was the prohibitive cost of possibly producing only a limited number of this particular requirement.
The first of these two ideas I find impossible to accept, because I am quite certain that our own aircraft industry is capable of producing aircraft as good as any in the world, and that, given adequate warning of the operational requirements, it would have been able to produce an adequate Sea Vixen replacement.
As it happens, we have a magnificent example of what the civil side of our own aircraft industry can do in the first scheduled flight of the VC10 which took place today to Lagos in Nigeria. Perhaps I might mention, in passing, that this aircraft is by now in Lagos, having

553
reached there at an average speed of over 600 m.p.h., with 150 passengers.
We all agree that the Fleet Air Arm must have the finest type of aircraft available—as good as or better than any which the crews are liable to meet in the skies. With that in mind, it is essential to agree on an early replacement for the Sea Vixen which are already becoming out-dated. There is almost certainly no time now to go through the lengthy process of producing a British replacement ready for service before the end of the decade, but what I should like to ask my hon. Friend is: why was not this lengthy process started years ago?
I remind my hon. Friend that in 1957, when the Estimates Committee reported on the supply of military aircraft, the Committee considered no fewer than 26 different research projects on aircraft which were in hand or had been in hand between 1945 and 1955. It seems extraordinary to me that out of those 26 aircraft on which the Committee reported not one proved to be an adequate successor to the Sea Vixen.
It might possibly be that we pinned a little too much faith on the dual rôle of the P1154, but I am convinced that a firm operational requirement given to our industry in the 1950s would have produced the right plane in a year or two's time. The operational requirement for the Phantom was given only in 1955 by the American Government to their industry, and their first prototype was flying in 1958.
The other possible reason for this decision to which I referred earlier is perhaps the prohibitive cost of producing a limited number of this aircraft with virtually little or no expectation of export orders. Obviously, this is a matter of great importance, and my right hon. Friend himself referred to this as being a limited buy for the Royal Navy only. The number required will be limited to that needed to equip three or four aircraft carriers until the 1980s. I do not know the exact number—perhaps 100 or 200. In view of the cost of producing, say, 150 aircraft of the equivalent of the Phantom, it is not a simple mathematical calculation of the actual purchase price required.
There is a great value to be placed on the way in which such an order
554
placed in Britain enables the British aircraft industry to keep abreast of technical "know-how". It helps to provide jobs not only for the aircraft factories producing a specific plane, but also for the myriad of supporting industries which go to make the components. It also helps our industry to keep abreast of scientific and technological advances.
A few weeks ago Short's, of Belfast, announced a substantial reduction in its labour force to take place in the fairly near future. In my own constituency, at Bitteswell, where, for a number of years, the Argosy aeroplane has been being completed and assembled there are fears of great redundancy in a large labour force from 1965 onwards.
I therefore ask my hon. Friend what arrangements my right hon. Friend has made to effect compensatory sales for British aircraft and engines abroad to keep our own factories humming. If this order must be placed with the Americans—it appears to me to be very likely that this is the case—in what manner, to put it bluntly, are Her Majesty's Government attaching strings to the order?
We are all concerned with the "brain drain" from this country. It is precisely because decisions of this nature are taken that our scientists and technologists are encouraged to go abroad, perhaps to the United States, where opportunities are greater. The drain from the aircraft industry will become a flood if many months pass like the last month—March—which not only saw this large order for Phantom aircraft announced, but also saw an order for 90 Italian-built American helicopters to be bought for use by our Army.
I ask my hon. Friend whether it is such a good thing to put the British Spey engine into the Phantom. I know that it has been considered to be a step to improve the capabilities of this aircraft, but is there not a danger that adapting the aircraft to suit the Spey will result in delay in production of the aircraft and may result in a possible overpowering of the aircraft? Surely it would be better to order it complete with the two General Electric engines which are installed in the standard model now, and which have already

555
enabled the plane to break a large number of world speed and performance records.
At the same time as ordering the plane equipped with its General Electric engines, we should make it quite clear that our order will be placed subject to a firm order by the United States for the equivalent in British aircraft and engines.
To sum up, I hope that the House will be given answers to three questions. First, what progress has been made in the evaluation and technological studies to which my right hon. Friend referred in February, when he announced the possible purchase of the Phantom? Secondly, why have we no suitable British aircraft to effect this replacement? Thirdly, may we be told what compensatory sales have been arranged, or it is hoped to arrange, before any firm order is placed?
10.26 p.m.
Mr. E. G. Willis: I appreciate that time is short and I do not wish to ask the same questions as were posed by the hon. Member for Harborough (Mr. Farr). He asked a number of questions about the effects of this decision on the aircraft industry and the men employed in it, and he pointed out that it is bound to mean a loss of employment. We cannot assess this loss until we know the answers to one or two questions which I wish to ask.
How many aircraft will be purchased? We have tried to get this information from the Government on previous occasions but, until now, they have been rather cagey. The hon. Member for Harborough spoke in terms of 100 or 200 aircraft, although I recall that when the announcement was made reports appeared in the Press of there being between 40 and 50 aircraft. There is a wide discrepancy here and this demonstrates the variety of rumours that are going around. I see no reason why the numbers should not be divulged.
We know that the Phantom will be fitted with the Rolls-Royce Spey engine but we were told that negotiations would be begun to see whether we could make the airframes here under licence. What has been done
556
about this, and has any progress been made? This is particularly important from the point of view of employment in the industry. Although the engine will be made here, if, in addition, the airframes could be manufactured under licence in this country the impact of this decision on the men who work in the industry will not be as serious as it might be.
10.28 p.m.
Commander Anthony Courtney: I will not delay the House for long. I wish to make only one point in support of my hon. Friend the Member for Harborough (Mr. Farr), to whom we are all grateful for raising this important matter tonight.
Are we certain that this question of aircraft replacement for our Services is really in tune with the changing strategic situation? It seems that it is not and that it is time we changed our ideas drastically in this matter. The events in Libya, the Far East, South-East Arabia and the fact that our overflying rights are being affected each day—perhaps by Turkey, as a result of the Cyprus trouble, interfering with our overflying rights and with those of the Western allies—represent a deteriorating situation which can be met only by the provision of an alternative to land-based aircraft; namely, aircraft that use the aircraft carrier.
We have heard, and have read in the Estimates, of various types of aircraft—the P1127s, the P1154s, the TSR2s and others—and the House will know that not a single one of them, as far as I am aware, coming from British sources is being specifically designed with the requirement of landing on an aircraft carrier. We seem to have lost our sense of proportion in this respect. I hope, therefore, that we will be given an indication tonight that there is a change of thinking with regard to the replacement of aircraft for the three Services, in accordance with changing strategic requirements as history develops.
10.30 p.m.
The Parliamentary Secretary to the Ministry of Aviation (Mr. Neil Marten): I welcome the opportunity to discuss this matter, though I very much regret that I have only 10 or 12 minutes in which to do so.

557
My hon. Friend the Member for Harborough (Mr. Farr) traced the history of the case accurately. In essence, we found it technically impossible to design one aircraft to give operationally satisfactory results to both the Royal Navy and the Royal Air Force. Had we found such a compromise aircraft, the export prospects—and this is the point that my right hon. Friend made—would have been very slight indeed. But the version of the P1154 which will be coming into service with the Royal Air Force will, I hope, be most attractive to many foreign air forces having, of course, the same land base requirements as our own Royal Air Force.
My hon. Friend asked whether we could not build a Sea Vixen replacement ourselves. Of course, we could, but to develop a new British aircraft to meet the naval requirement would have been very expensive—certainly very much more expensive than buying an aircraft already developed—and any such new British aircraft would have taken longer to introduce. Though the experience of all aircraft producing nations shows that there are delays and cost increases in the introduction of almost any aircraft into the Services, the solution which we are considering will minimise those risks.
Commander Courtney: Is it not the fact that in 1957 there was a design study for a Sea Vixen to replace the P177? Why was that given up?
Mr. Marten: That was a very long time ago. We are now looking forward to the 'seventies, when such a study would not have been applicable.
The aircraft under consideration is the McDonnell Phantom. I would emphasise that this is still only a proposal, and is subject to our being satisfied both on the cost and on certain technical modifications. My hon. Friend asked for a report on these matters, and I can tell him that we have received preliminary cost estimates which show that adoption of this aircraft would be substantially cheaper than developing a new one of our own; but we still need firmer figures and further negotiations before reaching a final decision.
The technical modifications relate to the nose-wheel—to permit catapult-launching from British carriers—and to the aircraft's ailerons, so as to reduce the
558
aircraft's landing speed by the small amount needed for operation on British carriers. We expect to receive answers to these problems by about mid-summer. I might say that we have also been working on the development of a new arrester gear, and expect that that gear will be available if and when Phantoms come into service.
The hon. Member for Edinburgh, East (Mr. Willis) asked about numbers. I will not give him that information because, as he knows, to do so is contrary to public policy——
Captain John Litchfield: Will they be based on one new carrier, two new carriers or three new carriers?
Mr. Marten: I think they are on three British aircraft carriers. My hon. and gallant Friend asks whether they would be new carriers or not, but that I cannot answer.
Naturally, we would regret making a foreign purchase—if, indeed, we do eventually decide to buy the Phantom. However, especially within the limitation of our financial difficulties, we cannot always expect to produce our own solution.
Concern was expressed by my hon. Friend and by the hon. Member for Edinburgh, East about the employment situation. As the House knows, the British aircraft industry is currently engaged on very large defence contracts, and my hon. and gallant Friend the Member for Harrow, East (Commander Courtney) mentioned some of them.
If we buy the Phantoms they will be engined with the Rolls-Royce Spey. My hon. Friend asked what strings were attached to the possible contract if it was finally signed, and that is one of the strings we attach. These engines will represent about one-third of the cost of the whole programme. My hon. Friend also asked whether it would be safe to put the Spey engine into the Phantom. The answer is that it would not be put in if it were not safe. They are certainly a better engine for us. They are faster and I believe that they are more suitable for the purpose for which we would require the planes, if indeed we have them.
We would, naturally, hope that there would be scope for other British components in the aircraft, and, obviously,

559
we would do our best to ensure this. My right hon. Friend, when he was in America recently, took this up with the Americans and they, of course, are fully aware of our interest. I would not, however, wish to mislead the House into thinking that the Phantom project will inevitably carry with it component orders for the British industry. While possibilities exist we shall certainly press for them and will take them up, but we would be reluctant to have the additional delays which might be involved by modification of the aircraft.
My hon. Friend asked about reciprocity or compensatory sales. It would be unrealistic to insist on a directly-related American purchase of some British aircraft. But as my hon. Friend knows, we are big buyers of American equipment and we cannot go on indefinitely buying from America without obtaining compensatory orders from the Americans. My right hon. Friend made this point very clearly in his recent visit to Washington and I welcome the opportunity of this debate to make the point publicly now. We realise that the Americans have their own large industry, but we believe that our common policy of interdependence ought, in practice, to lead to a greater mutual adoption of each other's weapons.
As for import restrictions, I should mention that the restrictions on the purchase of foreign products currently operated by the United States Department of Defence could seriously affect our export trade. While not unsympathetic to the balance of payments difficulties confronting the Americans in
560
1960–61, which led to the imposition of the present restrictions, we hope that the United States will feel able now to relax them. Our views are well-known to the American Government and we hope that there will be an opportunity to raise the matter of the "Buy American" Act in the discussion on non-tariff barriers during the forthcoming Kennedy Round of G.A.T.T. negotiations.
I do not think that I need tell the House that we continue to make every effort to increase our aeronautical exports. I was glad to note that, in total, these exports increased last year. The 1962 total was £112·5 million and the 1963 figure was £117 million. In the context of the present debate it would be out of order to go into the civil aspects, but I am happy to say that our exports of military aircraft, which rose slightly between 1961 and 1962, more than trebled between 1962 and 1963.
Mr. Willis: Can the hon. Gentleman say whether, when his right hon. Friend was in America, he also pursued the question of building airframes under licence?
Mr. Marten: My right hon. Friend may have discussed it, but no conclusions were come to. I do not think that it is "on" for financial reasons. The cost would be very much greater if we were to do it.
Question put and agreed to.
Adjourned accordingly at twenty-one minutes to Eleven o'clock.

SCOTLAND
  Children and Young Persons (Report)
  Children and Young Persons (Report)
  Senior Boys' Approved Schools and National Apprenticeship Scheme
  Senior Boys' Approved Schools and National Apprenticeship Scheme
  Sheep Dips
  Sheep Dips
  Committee on Conveyancing
  Committee on Conveyancing
  Scottish Certificate of Education
  Scottish Certificate of Education
  Mental Health
  Mental Health
  Feu Duties
  Feu Duties
  Housing, Dundee
  Housing, Dundee
  Edinburgh-Aberdeen Roads (Expenditure)
  Edinburgh-Aberdeen Roads (Expenditure)
  Farmers (Dairying and Livestock Rearing)
  Farmers (Dairying and Livestock Rearing)
  Wheatley Report
  Wheatley Report
  Forestry
  Forestry
  Lewis and Harris (Deputation)
  Lewis and Harris (Deputation)
  Teachers, Dunbartonshire
  Teachers, Dunbartonshire
  Primary Schools Classes (Clydebank, Milngavie and Kirkintilloch)
  Primary Schools Classes (Clydebank, Milngavie and Kirkintilloch)
  Houses (Rent Control)
  Houses (Rent Control)
  Houses, Coatbridge and Airdrie
  Houses, Coatbridge and Airdrie
  Hospital Plan (Revision)
  Hospital Plan (Revision)
  Shellfish
  Shellfish
  Spoken English
  Spoken English
  Teachers (Recruitment Scheme)
  Teachers (Recruitment Scheme)
  Motor Rallies
  Motor Rallies
ROADS
  Channel Tunnel (Road Links)
  Channel Tunnel (Road Links)
  Otley (By-Pass)
  Otley (By-Pass)
  Motorways
  Motorways
  Highways (Grant Structure)
  Highways (Grant Structure)
  Trunk Road, Bridge (Accidents)
  Trunk Road, Bridge (Accidents)
RAILWAYS
  Proposed Closure, Cleethorpes-New Holland Line
  Proposed Closure, Cleethorpes-New Holland Line
TRANSPORT
  Motor Rallies Advisory Committee (Report)
  Motor Rallies Advisory Committee (Report)
  Heavy Goods Vehicles (Tests)
  Heavy Goods Vehicles (Tests)
  Sick and Elderly People, Scotland (Fares)
  Sick and Elderly People, Scotland (Fares)
SHIPBUILDING
  Credit Scheme
  Credit Scheme
MINISTRY OF AVIATION
  Polaris Missiles (Warheads)
  Polaris Missiles (Warheads)
  Aircraft (Seat Belts)
  Aircraft (Seat Belts)
BRITISH ARMY
  Kinnegar Ordnance Depôt, County Down
  Kinnegar Ordnance Depôt, County Down
  Royal Malta Artillery
  Royal Malta Artillery
  Married Quarters (Mr. McKay)
  Married Quarters (Mr. McKay)
ROYAL AIR FORCE
  Practice Cargo Drop, Bridgham Heath
  Practice Cargo Drop, Bridgham Heath
  Aldwark Toll Bridge, Yorkshire
  Aldwark Toll Bridge, Yorkshire
ROYAL NAVY
  Training Classes (Teaching Machines)
  Training Classes (Teaching Machines)
  Ferranti Ltd.
  Ferranti Ltd.
HOME DEPARTMENT
  Professional Football (Alleged Bribery)
  Professional Football (Alleged Bribery)
  Professional Football (Fixed Odds Betting)
  Professional Football (Fixed Odds Betting)
  Traffic Wardens and Meter Attendants, London Area
  Traffic Wardens and Meter Attendants, London Area
  Central Ticket Office and Fixed Penalty Office, London
  Central Ticket Office and Fixed Penalty Office, London
AGRICULTURE, FISHERIES AND FOOD
  Meat Prices
  Meat Prices
  Foodstuffs (Retail Prices)
  Foodstuffs (Retail Prices)
EDUCATION
  Redland Teach Training College, Bristol
  Redland Teach Training College, Bristol
  Adult Residential Colleges
  Adult Residential Colleges
  Adult Education (Full-Time Tutors)
  Adult Education (Full-Time Tutors)
HOUSING
  Council Houses (Charges and Rents)
  Council Houses (Charges and Rents)
  Shipbuilding and Ship Repairing Industry
  Shipbuilding and Ship Repairing Industry
EMPLOYMENT
  Unemployment
  Unemployment
  Government Training Centre, Hindley
  Government Training Centre, Hindley
  Government Training Centre, Hillington
  Government Training Centre, Hillington
  Lanarkshire
  Lanarkshire

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Lichfield
The Lord Gorell—Sat first in Parliament after the death of his father.

OXFORD BY-PASSES: THE SANDFORD LINK
2.35 p.m.
LORD LUCAS OF CHILWORTH: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government the contract date for the completion of the Sandford Link which will complete the Oxford outer by-passes; whether it is anticipated that this date will be met and whether there is a penalty clause in the contract which will operate in the event of failure to complete by the stated date.]
THE PARLIAMENTARY SECRE, TARY, MINISTRY OF TRANSPORT (LORD CHESHAM): My Lords, the Contract date for the completion of the Sandford Link is September, 1965. Progress to date is such that there is no reason to suppose that this date will not be met. The contract provides for the payment of liquidated damages by the contractor in the event of failure to complete the works within the stipulated period.
LORD LUCAS OF CHILWORTH: My Lords, may I thank the noble Lord for his forthright reply, and express my pleasure at what he has said about the completion date? I share his hope that it will be completed in September, 1965.
LORD SALTER: My Lords, may I ask the Minister whether the Government realise the full importance and urgency of this link, partly because,
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unlike other parts of traffic policy proposals in Oxford, this is uncontroversial and universally admitted to be both valuable and without offsetting disadvantages, and also because so much bypass work already completed cannot be of full benefit until this link also is completed and in use?
LORD CHESHAM: My Lords, the Government are well aware of the urgency of this matter, which is the reason why the work was put in hand in September, 1963.

PROPOSED PRISON AT CULHAM
2.38 p.m.
VISCOUNT BRENTFORD: 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 what inquiries for alternative sites were made before the decision of the Prison Department of the Home Office was taken to propose the use of part of the former Royal Naval Air Station at Culham, Oxfordshire, for the building of a new full security prison for 500 men.]
THE MINISTER OF STATE, HOME OFFICE (LORD DERWENT): My Lords, the search for sites for new prisons is a continuous one. Suitable sites are hard to find, and no other suitable site was in view when the proposal to build at Culham was first made.
VISCOUNT BRENTFORD: My Lords, may I ask my noble friend whether in fact the site at Didcot was considered, and whether the alternative sites of two aerodromes which are now being given up by the Americans, at Brize Norton and Upper Heyford, have also been considered?
LORD DERWENT: My Lords, all these sites are considered as they come forward. The Didcot depôt became available after the proposal was first made to build at Culham. It was examined, but the only available site there was less suitable than the one at Culham; and this applies also to the other two sites
LORD LUCAS OF CHILWORTH: My Lords, may I ask the noble Lord whether or not this new building is to be within the Green Belt?
LORD DERWENT: My Lords, this question of the Green Belt was thoroughly considered at the public inquiry, in the report of the inquiry, and by my right honourable friends the Home Secretary and the Minister of Housing and Local Government. The county planning authority did not object to the proposal, and the conclusion reached was that the prison would be secluded and that its situation in a proposed Green Belt ought not, in all the circumstances, to be regarded as an overriding objection.
LORD LUCAS OF CHILWORTH: My Lords, may I take it, then, that this prison is to be in the Green Belt? Further, is this not a violation of avowed Government policy? Is the noble Lord aware that in the Green Belt surrounding Oxford there has been one violation of a commercial building for the British Motor Corporation, now there is the violation for the erection of this prison, and yet it is impossible for houses to be built in the Green Belt, or for permission to be obtained to build them, to house the overspill of thousands from the City of Oxford?
LORD DERWENT: My Lords, it is to be in the Green Belt. The original buildings there are in the Green Belt. This matter was thoroughly considered by all concerned and, in the circumstances, it was thought that, as it was replacing existing buildings in the Green Belt, it was not an overriding matter.
LORD LUCAS OF CHILWORTH: Then are we to take it that the Green Belt policy of Her Majesty's Government is now jettisoned?
LORD DERWENT: My Lords, the noble Lord is not to take that to be so.
VISCOUNT BRENTFORD: My Lords, is my noble friend aware that, when authority was given for the existence of the building in this Green Belt, it was given deliberately on condition that it did not set a precedent for any further building? Can there really be any justification whatsoever for planting down 25 acres of prison buildings, with a 12 foot
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surrounding wall, plus 30 additional houses, in the middle of the Green Belt?
LORD DERWENT: My Lords, as I say, there was an inquiry and all concerned went into the matter. Prisons have to be built somewhere. There were existing buildings and, in all the circumstances, it was thought necessary and wise to build the prison in this particular place.
LORD MORRISON OF LAMBETH: My Lords, will the noble Lord answer the point put by the noble Viscount opposite—namely, whether an undertaking was given earlier that the buildings then existing would not be replaced by other types of building? If there was, it looks as if there is a breach of the understanding. Further, do the Government take the Green Belt seriously, or do they take it flippantly? Are they going in for a policy of nibbling at the Green Belt, which may lead us anywhere?
LORD DERWENT: My Lords, as regards the second part of the noble Lord's supplementary question, I have explained why this building comes within the policy of the Green Belt in these particular circumstances. As regards the first part of his supplementary question, I am not aware of any such undertaking. I had not heard about it until this moment, so I am afraid I cannot give the noble Lord an answer.
LORD MORRISON OF LAMBETH: Would the noble Lord inquire and let the House, or somebody, know?
LORD DERWENT: Certainly.
VISCOUNT BRENTFORD: My Lords, will the Government now consider these three alternative sites which the noble Lord says have come to light since the original decision to seek permision to build at Culham?
LORD DERWENT: They have, in fact, been considered, and I am afraid we are not likely to go back on our policy of building this prison at Culham.
2.44 p.m.
VISCOUNT BRENTFORD: 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 is the estimated inclusive cost of the provision of the projected prison at Culham, Oxfordshire.]
LORD DERWENT: My Lords, as the prison scheme at Culham has not yet been formulated in detail, no estimate of its cost can be made at this stage.
VISCOUNT BRENTFORD: My Lords, if it has not even got as far as that, surely there is still plenty of time to consider alternative sites. Is my noble friend aware that it is going to cost Her Majesty's Government considerably more to build the prison at Culham than it would to build it at any of the other sites to which reference has been made?
LORD DERWENT: The first Question which the noble Viscount asked was a question as to site, which has now been settled. This is a question of buildings. I cannot agree that the other sites, in particular the Didcot site, would cost less. It is clear from examination of the Didcot site that, since far more and much heavier demolition work would be necessary, the cost of a prison here would be greater than at Culham.
LORD SALTER: My Lords, if the Minister finds on inquiry that such a pledge was made that the earlier building would not be a precedent, will he then consider whether that is not a sufficient reason for considering alternative sites, realising—apart from the particular damage done to the Green Belt in a particular case—that there is a great danger that it will form a precedent for future breaches?
LORD DERWENT: I think I had better make the inquiry before I answer that question.
LORD SILKIN: My Lords, is the noble Lord seriously saying that the Government, having decided to go forward with this scheme, have acquired a site, and yet have no estimate as to the cost of building?
LORD DERWENT: I said I had no detail about the cost of building. It is probably likely to cost over £1 million, but the exact estimate I cannot give.
LORD MORRISON OF LAMBETH: The noble Lord had better ask the Ministry of Aviation.

FLUORIDE IN WEST MERSEA BOREHOLE WATER
2.46 p.m.
LORD DOUGLAS OF BARLOCH: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what kind of fluoride is contained in water derived from West Mersea borehole, and whether this water is mixed with other water before reaching the consumers.]
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD HASTINGS): My Lords, the fluoride present in the water is the fluoride ion. Water from the West Mersea borehole is not mixed with other water before reaching the consumers.
LORD DOUGLAS OF BARLOCH: My Lords, how does the noble Lord reconcile that Answer with the Answer which he gave me eight days ago, stating that this water contained 5·8 parts of fluoride?
LORD HASTINGS: I see absolutely no contradiction at all. I said that it contained 5·8 parts of fluoride direct in the public supply. I did not say that it was mixed with other water.
LORD DOUGLAS OF BARLOCH: Has the noble Lord forgotten that he told me last week that this water supply contained 5·8 parts per million of fluoride, and that he went out of his way to admonish me that fluoride was not the same thing as fluorine, a fact which I knew fifty years ago? How does the noble Lord now say that it is 5·8 parts per million of fluoride?
LORD HASTINGS: I said it is fluoride. I did not say fluorine. Either the noble Lord cannot read or he cannot hear. I have never said that it was fluorine. The noble Lord's Question last week related to fluorine, with an "n", and I pointed out that it was fluoride with a "d". This is fluoride with a "d".
LORD DOUGLAS OF BARLOCH: If that is so, will the noble Lord then answer my Question to-day: What kind of fluoride is contained in this water? Is it calcium fluoride, sodium fluoride, or what?
LORD HASTINGS: Certainly I will explain more fully. It is fluoride ion, which is formed from both calcium fluoride and sodium fluoride when put into solution. Both those salts form fluoride ion, which is exactly the same from both sources. I hope the noble Lord is now satisfied.
LORD DOUGLAS OF BARLOCH: Is the noble Lord aware that fluorine ion is simply fluorine?
LORD TODD: My Lords, as a chemist I must protest at anybody suggesting that fluorine (and incidentally it should be pronounced "fluoren" and not "fluorine") is the same as fluoride ion, because fluoride ion carries a negative charge, which fluorine itself does not.
LORD HASTINGS: I am grateful to the noble Lord who has intervened with that question, asking me whether I knew. The answer, of course, is that I entirely agree with him.
LORD DOUGLAS OF BARLOCH: So do I.
BARONESS SUMMERSKILL: My Lords, may I remind the noble Lord that he has been rather cruel to my noble friend, whose views on this subject I do not share; nevertheless, he has the support of many eminent scientists in other countries. I think the noble Lord's attitude to-day was uncalled for.
LORD HASTINGS: I take very strong exception to the noble Baroness's speaking like that. I have not been in the least cruel to the noble Lord opposite. He was trying to catch me out entirely, and putting words into my mouth which I know I had not said, either last week or this week. I was trying to make that perfectly clear. I think I am entitled to do that.
BARONESS SUMMERSKILL: My Lords, the noble Lord is behaving in a way that one is accustomed to see when a Minister thinks that a noble Lord or an honourable Member in another place is in a minority of one. We have always
968
been taught that, however small a minority, they have a right to express their opinions and to expect courtesy.

ELIM CHURCH MOOR LANE BOLTON BURIAL GROUND BILL
Read 3a, with the Amendment, and passed, and returned to the Commons.
LONDON COUNTY COUNCIL (GENERAL POWERS) BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

PRIMARY EDUCATION
2.51 p.m.
LORD SILKIN LORD SILKIN rose to call attention to the education of children up to the age of 11-plus; and to move for Papers. The noble Lord said: My Lords, the debate to-day is the third in a series of educational debates which have taken place in this House in the last few months. The first, as your Lordships will remember, was on a Motion introduced by my noble friend Lord Taylor on the Robbins Report. That debate aroused a tremendous amount of interest, and there were a very large number of speakers. After that we had the debate on the Newsom Report, which dealt with the education of children of average or below-average ability over the age of 13. That debate aroused a lesser amount of interest, but still a considerable amount. To-day we are having a debate on primary education and, judging by the number of speakers, it appears to have aroused less interest than the other two, although, as I hope to show, I regard primary education as far more important than either higher or secondary education.
In one respect, perhaps I should correct what I said, because I am glad to see a strong array of Bishops here and that two of them are to take part in the debate. I feel that this subject is one on which they are especially qualified to express views. It may be that we have been discussing education in the wrong order; that we should have started with primary education and worked our way up. The reason we have gone in the way we have is that the Robbins Report was at the time very topical, and, as I have said, a large number of noble Lords

969
wished to take part in that debate. But I regard our educational system as one. Although we are having three debates, we have, in fact, to consider education as a whole; and primary education, I would submit, constitutes the base of a pyramid. Upon the soundness and firmness of this base depends the soundness of the whole superstructure, and it is essential, therefore, that we should see to it that we are building on the soundest foundations. I want to ask, therefore, whether our system of primary education is really firmly based.
To answer this question we must first ask ourselves: what is the purpose of education? We all have our views as to what is meant by education and what is its objective, but I would say there are three main purposes. The first, and I suppose the most popular, is to equip the child eventually to earn its living, having regard to its aptitude and ability; to give it the most appropriate background, knowledge and skill, and to give it, so far as possible, an equal chance with all other children of the same aptitude and ability. The second purpose is to enable the child to play its full part in adult life as a good and intelligent member of the community, and as a good citizen and family man or woman. The third purpose is so to develop the child's character, personality and abilities that it may lead a full life, spiritually, morally and intellectually and get the best out of the great cultural heritage which is available to all of us capable of enjoying and appreciating it. If we accept these as the true aims, or what should be the aims, of education, there arises the question: how far and to what extent, after nearly twenty years since the passing of the 1944 Education Act, have we proceeded and what are the prospects in the foreseeable future?
I should like first to say a few words about the physical conditions under which children in primary schools are being taught, and I need hardly emphasise that the physical conditions do play a vital part. According to the National Union of Teachers' Survey, The State of Our Schools, there were in 1963 55 per cent. of our primary schools which were built before 1900, and a further 16 per cent. which were built between 1900 and 1914. So that 71 per cent. of our primary schools to-day—that is to say,
970
seven out of every ten—were built before the First World War. Then 60 per cent. of our schools have no separate dining room where children can have their school dinners; 43 per cent. of our primary schools have outside lavatories only; half of them have no playing fields, half have no assembly hall, and 40 per cent. have no staff room where teachers may meet.
I need hardly stress the handicap under which young children taught in these conditions must suffer. It is true that much has been done, and I have no doubt that the noble Lord, Lord Newton, when he comes to reply, will devote the greater part of his speech to telling us how much this Government have done. But I am pointing out how much still remains to be done, and the effect of the deficiencies on the children of this generation and of the next generation.
Now I want to say a word about the building conditions. They would have been far better if the Government had not from time to time held back school building and cut down programmes submitted to them by the local authorities, even as regards schools which have been condemned by Her Majesty's Inspectors as being unfit for education. For instance, for 1964–65 they have cut back the value of plans submitted from £188 million to £50 million. On three occasions—in 1952, 1957 and 1961—they have even cut back on the level of expenditure already approved. So that it was not merely a matter of not approving plans: even when the local authorities had approved their plans, the Government stepped in and ordered them to cut down.
Then there is the question of the size of classes. One-fifth of the classes in our primary schools have over 40 children in a class. It is generally accepted—certainly in educational circles—that no children should be taught in classes of more than 30; that is the standard we have laid down in our secondary schools, and that should be our immediate objective. After all, children are curious and anxious to learn if their interest is stimulated, and they are practical and like making things. The quality and success of their learning depend on their being stimulated to explore, to find out and to ask questions. The classroom should be a playroom and a work-room, and the children must come to

971
look on their teachers as friends to whom they can go whenever they are faced with difficulties or problems. How can one achieve this in classes where one teacher is supposed to be teaching 40 or more children, or even between 30 and 40? But all these desirable, essential, aspects of education have got to be completely ruled out.
In passing, I might say that various suggestions have been made for tiding over the difficult period of over-large classes. There is the use of television and broadcasts, and there are various mechanical aids. Perhaps the noble Lord, when he comes to reply, could tell us whether anything is being done, and, if so, what, as regards these mechanical aids to help us over the intervening period, after which we hope that we may be able substantially to reduce the size of classes. In the meantime, apart altogether from teaching, it is even impossible to maintain order and discipline in classes of 40 or more. I regard a reduction in the size of classes to a maximum of 30 as perhaps the most important of the objectives that should be carried out. At present, two-thirds of the primary classes in this country have more than 30 children per class. I would submit to the House that we are really wasting time, money and effort in endeavouring to teach children in such large classes and in such bad conditions as those in which, to a large extent, our children are being taught to-day.
Coupled with that there is, of course, the question of the supply of teachers. I recognise that the Government have done something in the last two or three years (the noble Lord, Lord Newton, may say they have done a good deal) to increase the number of teachers; but the numbers are still hopelessly inadequate. I can summarise these deficiencies by quoting an article by a Mr. John Vaisey, of the London Institute of Education, in the Observer of January 6, 1963—and the position is as true to-day as it was over a year ago. He said, speaking of this type of school:
"Their teachers are often a transient group of half-trained supply teachers; their buildings old and inefficient; their classes are big; and their playing fields, if any, are long bus rides away."
Speaking of teachers, I would ask whether we are satisfied that our
972
teachers really are of the right quality. I believe that, as a profession, they are under-paid and lacking in status; and in most walks of life one gets what one pays for. The teaching profession should not be the Cinderella of the professions. Its status should be the equal of other professions, or of the higher branches of the Civil Service; and if we aimed at that we could get it. But even with the increased facilities for training there is no hope of achieving the general maximum of 30 per class for eighteen to twenty years unless we raise the status of our teachers and attract far more young people, men and women, into the profession. So much for the physical conditions under which our children are being taught. I do not want to exaggerate the picture. I recognise that there have been built in the last years a good many very fine new schools which contain the amenities that are necessary and desirable in providing education for the majority of children, who are still being taught under the conditions that I have described.
Next, I propose to discuss how far we are progressing in carrying out the three objectives of education that I put forward. Basically, as I have said, our purpose should be to bring out to the full all the potentialities of the child; to discover and encourage its latent abilities; and to give it an interest in what is going on around it, both at home and abroad. We should also ensure that these opportunities are available to all our children, whatever their background or home conditions.
Are we succeeding in this? In other words, are we making the most of the human material presented to us? I am afraid, my Lords, that the answer must be, broadly, in the negative. There are far too many of our children who leave school who are inarticulate, unable to express themselves on the simplest matters; who are lacking in understanding of the simplest of ideas; who are unable to concentrate; who have not acquired the habit of reading for pleasure and information, or of writing; whose interests are limited; who are even lacking in a desire to understand; and who are (though I would not put this too high) incapable of filling in a simple form or answering simple questions intelligibly. Of course, this does not apply to all our children; not even,

973
necessarily, to the majority of them: but even if it applies to only one-third, I say that we are wasting an enormous amount of human material and are not doing justice to these children. Nor am I suggesting that our children are incapable of benefiting from education if it is properly conceived and if they are given the opportunity. On the contrary, they are as potentially able as any children in the world; but we are largely wasting our children's talents.
Undoubtedly, the home background plays an important part. For instance, research took place recently among a group of 5,000 children from all parts of the country. At 8 years of age the average ability mark gained by the middle-class children was higher than that among the working-class children. As time went on, the gap widened, more particularly in areas where education is bad. The parents of the middle class could to a considerable extent shield their children from the effects of bad schooling and bad teaching: the working class suffer the full effect.
The moral is, of course, that we must improve teaching and conditions, especially in areas where they are particularly bad. I feel that something much more fundamental is needed. We must do very much more study, research and clear thinking about the real purpose of education. If we agree that the aim is broadly as I have stated, to bring out all the potentialities of the child, we must always have that purpose fully in mind and work out, as has not yet been done, the best way of achieving all this. Much more research is needed. I realise that there is a Committee sitting, the Plowden Committee, but I am not sure whether the terms of reference are wide enough to enable as thorough an investigation to take place as I have in mind. But I would hope, at any rate, that we could widen the terms if necessary.
We must find a more satisfactory and fairer way of deciding the future education of our children than the 11-plus examination. At present, this largely accentuates the disadvantages of humble origin. It creates unfairness between those children living in one local authority area and those in another. A child may have a one-in-three chance of attending a grammar school in one area, and the
974
same child will have a one-in-ten chance in another area. The proportion of the age group entering higher education varies from 25 per cent. in Cardiganshire to 1·7 per cent. in West Ham. This illustrates the waste of talent at present inherent in our educational system. This percentage discrepancy certainly cannot be justified by the quality of the children in those areas. Further, we have to make up our minds as to whether the 11-plus age is necessarily the right age to make a break.
I believe that research will discover that our present methods of teaching need fundamental change. I want to say at this stage that I am certainly not criticising the teaching profession. I think they are doing their best with the material they have to hand and with the standard we are at present paying for. But what we need is a far more generous outlook on education. This cannot be achieved unless we are prepared to spend more money on education, to devote a higher percentage of our national income to it.
It is true that this expenditure has been increased from 3·5 per cent. of our national production in 1951 to 4·9 per cent. in 1963, and the noble Lord opposite can claim credit for this very substantial increase in the percentage. But he has to take into account that this covers the increased expenditure which has been forced on the Government by the rising birth rate. There are more children to educate; and there are more children staying on voluntarily at school after the age of fifteen. In fact, the school population has increased by 20 per cent., by 1,200,000, in the last twelve years; but the individual child has benefited very little by the increased expenditure from 3·5 to 4·9 per cent. It may well be that so long as the local education authorities have to bear so large a proportion of the cost of education, these anomalies and differences between one area and another are inevitable.
I think that serious consideration should be given to the question of the Government assuming a far greater proportion of the cost of education than they do to-day. In other words, education should be made, to a very large extent, a national charge. In that way we should iron out the

975
inequalities between one area and another, and a child would not be penalised for living in a particularly unfortunate area.
To summarise what I have said, what I am proposing is that we should proceed much more rapidly with the programme of building new schools, so as to eliminate at the earliest moment schools which are 60 years old or more. Above all, we should provide, particularly in the poorer and more congested areas, adequate playing fields available out of schools hours and at weekends; and, of course, these playing fields must be serviced. Then we should train far more teachers and make the profession more attractive by better pay and higher status. Both proposals will involve a larger share of expenditure of the total national resources and, as I have said, I think the greater part of that cost should be transferred to the Exchequer from the local education authorities.
Then we should do far more to attract our best teachers to the poorer districts, where they are most needed. If necessary, we should do so by special pay and allowances, if these teachers are prepared to go to these areas on a fairly long-term contract. One of the difficulties in these poor areas is that there is a far greater rate of loss of teachers than in other areas. Teachers come for a short time and then go; there is a constant movement of teachers and very little continuity. I would suggest that it should he possible to get some kind of continuity if we were to employ teachers on contract over a period and grant them special pay and allowances for it.
Then we must give much more thought, study and research to the whole question of the purpose of education. We must be prepared courageously for drastic changes in the character, outlook and even the content of education. We must particularly have in mind the need for an outlet for the spirit of adventure and the desire to break new ground that is latent in every child and which should be encouraged. It should he encouraged in the direction where it will be of social rather than of anti-social value. We must put an end to the classification and virtual segregation of children at the age of 11-plus and we must work out some fairer system of education accord-
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ing to ability either through comprehensive schools or in some other way. I would not wish to be dogmatic, but we must put an end to the 11-plus system. I believe that if these objectives were accepted and energetically pursued we should, and could, within a few years find a solution to the restlessness and sense of insecurity from which the young suffer to-day, and we should have created what I know we can create: a well-educated, purposeful society, the equal of any in the world. I beg to move for Papers.
3.20 p.m.
VISCOUNT ECCLES: My Lords, we are beholden to the noble Lord, Lord Silkin, for giving us yet another opportunity of discussing an aspect of education. The series of debates which your Lordships have had and the great attention your Lordships have given to education have made, I am confidently assured, a great impression in the education world. And I believe that this is a well-chosen moment to follow up our earlier discussions with a debate on primary education.
The noble Lord, Lord Silkin, opened our discussion, as we expected, with a speech full of knowledge and sympathy. I cannot follow him in all his points, but I will try to say a word about buildings, 11-plus and the supply of teachers. I felt that he gave a rather too gloomy view of the primary schools as they are to-day. Since the passing of the Act of 1944 these schools have had a better chance than the secondary schools to settle down and go ahead. They have not been pulled about in different directions, as the secondary schools have; and, by and large, the teachers have taken their opportunities to make striking progress. I find that they have earned a great reputation for themselves, here at home and also abroad.
I mention the opinion held overseas, because it is a good thing to try to see ourselves as others see us. Of the large number of educational experts who are always coming here from all over the world, some, I think, go away critical of the later stages in our system, but every single one with whom I have talked has had a good word to say about the way in which small children are taught in the maintained schools. It is

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not only the teaching they admire; it is also the sympathetic care with which small children are looked after, inside and outside the school. I believe that your Lordships share this good opinion of the teachers in our primary schools. Even the infants (for that is what nearly half of their pupils are called) express themselves nowadays with a freedom and a facility that astonishes anyone who knew these schools before the war. When one comes away from a visit to one of our good primary schools one cannot help feeling that these children, both at work and at play, are a cheerful lot and are certain to give a lively account of themselves when they grow up. Therefore I cannot share the opinion of the noble Lord, Lord Silkin, who said that almost one-third of the children coming out of these schools will not have benefited very much.
I was glad that the noble Lord referred, in passing, to the excellence of the new school buildings. I am afraid that British contemporary architecture is often compared unfavourably with the designs that one sees in, say, Scandinavia or Brazil, but there is one group of buildings for which British architects have won universal praise and carried off the highest international award for design—that is, our post-war schools. And perhaps the flower of that achievement is the primary school of moderate size, which was given the top award at the Milan Triennále. I know that it is one thing to praise excellent buildings, and quite another to say that we have enough of them; and, as the noble Lord showed us once again, the Government and the Opposition will always argue about the size of building programmes. However, the record stands, that the local authorities have never been beaten in providing enough places to match the swiftly rising number of school children.
British children, unlike children in almost every other country, have not had either to go to school in shifts or to stay many months at home after the statutory entry age because there was not places for them. The noble Lord, Lord Silkin, quoted the number of schools in use which were built before the war. I think that a more useful figure is the number of places, and it is now true that half of the primary schoolchildren in this country are in new post-war places, which is a much better comparison than the
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actual number of school buildings. The pressure to build new places is a little easier now, and when all our primary schools are brought up to the standard of the best—and that of course, is the policy of Her Majesty's Government—we shall have the most imaginative, useful and economical set of school buildings anywhere in the world. That will he an achievement of which all Parties can be proud.
I want to turn now to the more difficult subject of how to teach the children inside the fine buildings. On the curriculum and on teaching methods, there are, and there always will be, strong differences of opinion. My own observation led me to believe that primary education had made good progress since the war, judged by the usual educational tests, such as reading and writing ability. No one in the Ministry was satisfied, or ever will be; but at any rate the educational problems of the primary schools were nothing like so obvious or so acute as those of the secondary moderns or the 15 to 18-year-olds. That was the justification for commissioning Crowther and Newsom before asking for a full-scale inquiry into primary education.
Now the time is very well chosen for a thorough and objective review, and to this end Sir Edward Boyle has reconstituted the National Advisory Councils for Education, both for England and for Wales. The Lady Plowden has become the distinguished chairman of the English Council. The Council has begun to work, and I am very much hoping, as indeed the noble Lord, Lord Silkin, himself said, that when my noble friend comes to reply he will be able to tell us something more than the little we know now about the scope and the methods of the Plowden Council. Just to ask one question: how long shall we have to wait for this Report? Three years, I suppose. It could hardly be much less because of the extent of this inquiry.
But even now I think one could hazard a guess about the impact which this Report is going to have. It will excite much more political controversy that Crowther, Newsom and Robbins all put together; for the Plowden Council is reviewing the procedures for the transfer of children from primary to secondary education. The evidence about selection has still to be gathered, and it could not

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usefully be gathered until the schools had had a fair trial after the 1944 Act, particularly the secondary moderns and comprehensive schools. No one has yet been in a position to say whether 11 or some other age is the best for the break between primary and secondary education. Up to now we have been guessing. That is why it is particularly important to wait for the recommendations of the Plowden Council, which will have been armed for the first time with adequate school surveys and case studies.
However, I wonder whether we shall have the patience to wait for the Plowden Report. It almost looks as though those who are not directly involved in education have already made up their minds on social grounds that any selection is bad. Members of all political Parties, of course, are intensely aware of the social implications of separating children between different types of secondary schools. It is our business as politicians to try to do what we can to improve the texture and harmony of society. But politics is one thing, and education is another. They may be allowed to overlap, but not too much.
As I believe, British education should be first and foremost designed as a service for individual children. If that is so, then it cannot be right to insist upon carrying out a political theory before examining as objectively as we can the full effect of that theory on the education of individual boys and girls. This is my plea for doing nothing drastic to the structure of primary secondary education until the Plowden Report has been received and studied. When it comes, I expect this Report to surprise and confound both the advocates and the opponents of the very large comprehensive schools which are to-day in favour with the Party opposite.
LORD GREENHILL: My Lords, is the noble Viscount suggesting that the Plowden Report, or any other report, on the ground of evidence collected, can possibly lay down a scheme of education that will do—I will not say for all time, but even for one generation? Is not this process of trying to get a scheme of education one that is constantly changing? The kind of suggestion made by the noble Viscount is not, I sug-
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gest, even a partial answer to the problem with which we are faced.
VISCOUNT ECCLES: I entirely agree with the noble Lord that education is something which must be continuously improved and built on. But the Minister has asked the Plowden Council to look at this important question of the break between primary and secondary education, which is something that from time to time I feel all noble Lords would like to see objectively studied, so important is it to every child in the country. Of course, one cannot know what the Plowden Report will recommend. But if we want to be just to individual children, then it seems to me that selection will have to stay, although I suspect not at the age of 11. The verdict might very well be that 13 is a better breaking point. If so, then 5 to 13 is too long for a child to remain in the same school, so a second stage in primary education will become essential.
It is going to be most interesting to learn which of the two contending views about this second stage captures the Plowden Council. One side says that primary education to-day is so free and easy—even sloppy—that a child grows right out of it by the age of 9 and should go on to a middle school, where in a disciplined way he may begin to learn formal academic subjects, with examinations, to keep him up to the mark. The other side want the freedom of primary education as we know it to-day to be extended to older children, who, in their view, would benefit if formal subjects and examinations were deferred until 12 or 13. They also would like to see middle schools to which all children went at 9, but in which the teaching methods resemble those in the best primary schools we have to-day: that is, plenty of self-expression, no streaming and no examinations. Which side should we back? To me, the answer should wait upon the results of the studies being made by the Plowden Council.
Recently this House gave a Second Reading to a small Education Bill which allows middle schools to be established. An experiment of modest size would, I think, be valuable in these middle schools, but I should deprecate any very large changeover until we have had the Report and considered all it says. A changeover now would unsettle and upset the

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teachers, who would think it had been made on insufficient examination.
Your Lordships may have noticed that one interesting result must come out of this controversy about middle schools. Whichever side wins, the problem will be greatly eased for a boy of 12 or 13 wishing to go to a public school who has been to a maintained primary school. That, I think, is a result much to be desired.
The other aspect of primary education to which I would draw attention, and which your Lordships may think the more important, is the supply of teachers. This is a problem to which there is no single solution; nor, so far as I am aware, is there any combination of measures which could give us in the next ten years the number of qualified teachers that the schools should have. As the noble Lord, Lord Silkin, pointed out, we usually measure the teacher shortage by reference to the number of over-size classes; that is, classes which exceed the prescribed maximum of 30 in the case of primary schools. There is nothing sacred about this figure of 30 and in fact it is a misleading simplification. Some classes ought to be much smaller than 30, and others could be a little larger without doing any serious harm.
Here the infant schools are an excellent example. They cater for children when they first leave home and go to school. The child of 5 suddenly finds himself no longer in the constant care of one person whom he knows and trusts. What is the best way to help that child to settle down? The first and most important act is to place him in a class small enough for the teacher to have time to give all the members of that class a real sense of security. And the same is true of classes for backward children, who for one reason or another need special help. If classes for these backward children can be kept quite small, the skilful and sympathetic teacher achieves very remarkable results. So what really matters is not that all classes should be under 30, but that in each school the teaching staff should be large enough to organise classes appropriate in size to the varying needs of the children.
If that be accepted, we have to look to the teacher/pupil ratio rather than
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the size of the classes to see what is happening in the primary schools to-day. I would again take the infant schools and classes as an example, because the teacher shortage is worst there. Last January, rather more than 2·4 million infants went to the maintained schools in England and Wales. This figure was 60,000 higher than a year earlier, and by January, 1971, there will have been a further large increase of something more than 300,000. How is that prospect going to effect the teacher/pupil ratio? To-day these schools have about one teacher for 29 children, with the result that more than one-third of their classes are over 30; and, what is in my view much more important, far too few small classes can be organised for beginners or backward children.
What ought this ratio to be? To take an average of all the schools, big and small, there ought to be one teacher to 20 children if the pattern of the classes is to give both the teachers and the children full scope to do their best. What chance is there of getting down to the ratio of 1 to 20? If by "teachers" we mean qualified teachers, the answer is, no chance at all. To do no more than maintain the 1 to 29 ratio, 13,000 more teachers would have to be in service in the infant schools by 1971.
I will not weary the House with the detailed figures, but assuming the largest possible number of new recruits coming out of the training colleges and universities, and adding to these the married women returners on the most favourable estimates made by Professor Kelsall, then on present rates of wastage the ratio in 1971 is likely to be—I ask the House to take due note of this figure—no better than 1 to 35 children. A ratio of 1 to 35 children is a very serious prospect. With the present trend towards early marriage and an early start to the family, no Government—and it is not a question of pay at all, though I am all for paying the teachers well—can within the lifetime of the next two Parliaments hope to train and to keep the number of women teachers required to prevent a deterioration in the present 1 to 29 ratio. Too many girls will leave teaching too early. Later on, the number of married women returners could substantially increase, but that can happen only slowly.

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I fear, too, that we may be overoptimistic about the number of women graduates who will come forward to teach as the universities expand. It is good to know that the universities are to provide thousands more places for women, but many of the girls who will fill these places will be drawn from the same groups who now go to the training colleges precisely because there is no place for them in a university. When these girls get to a university they will find a wider choice of career in front of them. The days are over when teaching and nursing were the only two large professions open to an educated young woman. As we heard in this House this day last week, when the Welfare Services were discussed with so much knowledge, competition is going to grow for the woman graduate, and that is going to make it still harder to get enough women teachers.
What, then, in this very unpromising situation, can be done for the primary schools? A desperate remedy is now being discreetly canvassed, which is to raise the age of entry from 5 to 6. I can hardly believe that any Government would commit themselves to so unpopular a course, unless the primary schools were actually breaking down under the strain. It would indeed be a desperate remedy. None the less, it has its supporters, and as the ratio worsens it may get more. Those who like international comparisons point out that other civilised countries have entry ages higher than 5. I personally should hesitate to change our educational policy in respect of small children on arguments drawn from abroad. Anyway, the British people have become accustomed to the entry age of 5 for nearly a hundred years. The great majority of families organise their lives with that entry in mind, and the mothers who would object most strongly to the age of 6 would be those who could not afford, or could not obtain, any help at home. It would be an odd sort of reform which hit those families hardest.
On the other hand, there are some children—not many; really very few—who have been found too young at 5 to move suddenly and successfully from home to school. But one has to say this about these cases: in nearly all of them the trouble comes, not because
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a nervous or delicate child has to go to school, but because he has to stay there all day. It is too much for the child, and I would support an option to send a boy or girl between the ages of 5 and 6 for the mornings only, if the parents so wished or if the school recommended it.
No case can be made on educational grounds for raising the age to 6, even if this were compensated by another year at the other end of school life. On the contrary, the experts are telling us that we have not yet appreciated how many children would benefit from preschool classes; that is, from some form of organised care before they are 5—probably not the children or grandchildren of your Lordships, but there are a great many families where these young children really do need a little more looking after than they get. On that view, keeping the age of entry at 5, we ought to be establishing a great many more pre-school classes. But if that age were raised to 6, the pressure for such classes would become overwhelming, and many teachers who are now in the infant schools would have to be diverted to this work, so that the effect on the teacher/pupil ratio would be nothing like what had been expected.
I cannot put out of my mind on this subject that the children most likely to suffer from staying at home until they were 6 would be those who lived in bad houses, or had no mother or no substitute for a mother. We should have to help those children, and the help would mean the use of women who would otherwise be in the primary schools.
If your Lordships agree that raising the entry age to 6 is not a tolerable remedy, is there anything else to be done to relieve the teacher shortage? Faced with a ratio of 1 to 35, it is unthinkable to sit back and do nothing. I see only one practical measure, and that is to put on a regular and national basis the piecemeal experiments in the use of helpers who are not qualified teachers. Two years ago, when I suggested that the schools should employ auxiliaries, in the same way as doctors, dentists, architects and other professional people do, the reaction of the teachers and the local authorities was decidedly cool. They feared that this was an attempt to dilute the profession

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and to get the job done cheaply and without proper training. Of course, it was nothing of the kind, and since then quite a number of authorities have begun quietly, and in different ways, to employ helpers. My impression is that in the schools where these experiments are being carried out the teachers would be sorry to see the young helpers or the older women withdrawn.
If this is right, the time has come to take these experiments a stage further. The duties of a helper should now be defined and an assurance given that the use of helpers would be in addition to the maximum number of qualified teachers who could be trained in the colleges and universities. No one wants a helper to be a substitute for a qualified teacher; but as we cannot, by hook or by crook, get enough trained teachers, is it not sensible to relieve those we have of as much work as possible which is not strictly teaching?
Your Lordships will know how frequently a child of 5 requires to have his shoes or coat found and thrust upon him, his nose wiped and his sudden anxieties comforted. Within the school there is milk to be distributed and dinners to be supervised; and outside in the playground someone has to keep an eye on what these small creatures are up to. How far a helper under the direction of a qualified teacher could do jobs in the classroom itself must, of course, be a matter for consideration, and the teachers must be fully consulted. But it is hard to think that the professional status of the teacher would be undermined if one of these helpers heard some of the children read, told them a story, or took a part in their play activities. Anyway, the point here is that they should do none of these things except under the direction of a qualified teacher.
How many of these helpers might it be possible to recruit? No one, I believe, could to-day give us a useful estimate. They are drawn now from girls who are waiting to go to a university, to a training college or to train as a nurse, or from girls who want to work with children and do not wish to train for any profession. Then there are a large unknown number of older women who welcome a part-time job somewhere close to their home. I think it must be
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true that anyone who loves being with small children could become a valuable helper.
I should like to see the Minister, the local authorities and the teachers agree upon a national scheme to recruit helpers, defining their duties and settling their pay in such a way as to make it perfectly clear that they were not dilutees of the profession. Their cost to the ratepayer and taxpayer would have to be seen to be over and above the cost of training and employing the maximum number of qualified teachers. Some such scheme must be adopted quickly and put into practice with the good will of the teaching profession, or the post-war advances in primary education will be checked, halted and reversed. To act in this field we do not need to wait for the Plowden Report. I hope, therefore, that the recruitment of helpers will appeal to your Lordships, who, through the service which you give to local government, have a great influence upon the maintained system of education, and I believe that this House could give an effective lead to securing, as I see it, the only possible way of teaching our small children, who are the basis of the whole pyramid, up to the standard that we should all wish.
3.54 p.m.
THE LORD BISHOP OF LONDON: My Lords, I, too, welcome the opportunity which the noble Lord, Lord Silkin, has given to us of considering this part of the educational structure which, rather oddly, we seem to have left to the end in our massive rethinking of education. It seems a little odd that we should have been discussing the top storeys and not paying very much attention to the foundations. But perhaps there may be an advantage in that, as the noble Viscount, Lord Eccles, himself rather suggested, in that perhaps we are now better able to see education as a whole and have more adequate information on which to see particular needs of that part of it which at the present time we call "primary"— although I personally hope the day will come when we shall stop putting labels on different parts of the educational system and regard it all as one whole process.
I personally would hope, too, that we shall not talk about breaks between

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one type of education and another, but be concerned more particularly with the best form of transition, because when we think of transition we are not raising those overtones which sometimes come with the word "break"; and as we are moving towards being within sight of what we should all regard as being socially necessary—that is, a unified free system of education at all levels—we must not allow any one part of it to be developed at the expense of another.
On this subject of primary education there are so many points which one would wish to take up that some kind of selection has to be made, and I would touch only upon one or two to which reference has already been made. The first is the point about the physical environment of the children at the beginning of their formal education. In the Newsom Report we were given pretty shattering information about the effects of bad conditions upon children who, we were also shown by the Newsom Report, were capable of being educated up to the levels of anybody else. The secondary schools in depressed urban areas constitute a very great problem and challenge to us; but so, also do the primary schools. I believe that the Manchester University Institute of Education is now engaged upon a piece of research into the effects of social and economic environment on the performance of primary school children, and there is some reason to think that that research will show that the relationship is close and that the results of environment can be very serious.
The building programme has already been referred to, and no more need be said on that, perhaps, except (since the criticism is sometimes made that those responsible for aided schools, who, because they were the pioneers, usually have the oldest schools to look after, are not doing enough to improve their schools) that anything that can be done to accelerate the building programmes in order that the Churches, which have been champing at the bit to improve their buildings, will be able to do so, will be more than welcomed by them. But, even more than buildings, there is this problem of the supply of teachers. With a good teacher it is possible to do a great
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deal in bad conditions. On the other hand, the most beautiful school in the world will not produce very much in the way of results if the teachers who operate within it are not up to their job. That is a truism and perhaps hardly needs restating. Yet, somehow, it needs to be remembered.
The noble Viscount, Lord Eccles, has given us, on the other hand a realistic and depressing forecast of the difficulties of increasing the numbers of teachers available, and has intimated that at the present time the prospects of improvements, even in terms of the staffing ratio, are not particularly good. He seemed to assume, since his references were to the female sex—and this was perhaps accidental—that teachers in primary schools would necessarily be women. Perhaps it is worth saying here that we could do with many more men in primary education. In my own experience, male teachers in primary education are sometimes more effective than the women teachers; and certainly they do not betray any lack of care and understanding for small children. And if women are all going to get married, then perhaps we ought to try to get more of the men, whose marital status does not affect their capacity to continue their teaching career.
However that may be, I think two things must be done. I would agree with the noble Viscount, Lord Eccles, in what he said about the need for taking off the shoulders of qualified teachers the many little chores which they have to perform, particularly in primary schools, through the organisation of a system of helpers properly thought out and approved and accepted by the teaching profession. This, I believe, is something which must be done unless the primary schools are to break down under the strain of increasing numbers and the need for higher standards.
The other thing I believe must go with this is that the primary school teachers themselves should not feel that they form in any way a part of the teaching profession which is lower than that which is employed in the grammar schools or in secondary education. As the supply of graduate teachers increases, it is surely essential that more graduates should be teaching in primary schools, where their own particular knowledge and maturity will bring many benefits to the children

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while at the same time maintaining, as it were, the academic status of the primary stage of education. If we have nothing but non-graduate teachers in the primary schools and nothing but graduate teachers in the secondary schools, I think we shall be doing real harm to the unified education which we all desire to see.
Moreover, as the principal of a training college remarked recently, there is a sense in which before long every primary school teacher will be a specialist. And, speaking as one who was himself a teacher for some 20 years, I would say that it requires more in the way of capacity and teaching ability to teach in a primary school than it does to take a sixth form in a grammar school. I personally should be scared stiff, although I was a sixth-form master for many years, to be landed with the care of even 30 children of the ages of 5 to 6 for four or five hours a day. I am quite certain that if I had to do that I should go home a nervous wreck. It requires qualities of personality and of knowledge, and a degree of training and professional competence which are second to none of those required in any other part of our educational system.
As we improve the training of our teachers, as we try to increase their numbers, my own plea would be that we do everything possible to secure that within the primary stage of education the standards of training and the numbers of graduates should not be lower than those in any other part of our educational system; for it is there that the real work has to be done. From my own experience also, I think I have seen more really good teaching, in the professional sense, in the primary schools of our country than I have seen in any other part of our educational set-up. Perhaps since we have a good many first-class teachers it is not fair to draw comparisons.
But there is, of course, something else which in this early stage we must all be concerned about, as the noble Lord, Lord Silkin, said in the third objective of education which he described: the development of the child's moral and spiritual qualities; the child's equipment to be a good man, or woman, when it grows up to adult life. That which begins, or should begin, in the home is reinforced and developed in the primary schools perhaps more than at any other stage, where the school and the home
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are, as it were, closest to each other. There perhaps the Churches, which are only too anxious to play an increasing part as partners in any developing system of primary education, can serve as a link between home and school, and perhaps also as a link between those other parts of education which we perhaps tend to forget in our educational discussions—that education which takes place outside the walls of the classroom or the walls of the school.
The child is always being educated. He is educated by those with whom he plays; educated in one way of another by the availability of opportunities for proper recreation; educated in one way or another by what he sees in the "box" or hears on the sound radio, or by what he reads in the glossy magazines or sees in the cinema when he has queued up on Saturday morning for the children's performance. These are education no less than what happens in school, and I believe that there is a need for a much closer liaison between what happens in formal school and that which is going on all the time outside. There is need for more help with playgrounds, for children's clubs and the like. In all this it is our society as a whole that is concerned. I hope that out of this concern in your Lordships' House for primary education, in advance of the recommendations, whatever they may be, of the Plowden Council, there will be a reinforcement of the conviction that what happens from 5 onwards—or, as I would say, earlier still, because I personally believe that there is a great value in nursery classes or nursery schools—is quite vital for the contribution which these children, as they grow up, are going to be able to make to the life of the nation whose future will depend on them.
4.8 p.m.
LORD CHAMPION: My Lords, I, too, would join in thanking the noble Lord, Lord Silkin, for initiating this debate. I am sure that if we heard no more speeches to-day we should think the three speeches we have listened to have made the decision by Lord Silkin well worth while. I would congratulate the noble Lord, Lord Newton, upon his appointment as Minister of State for Education and Science. We have had excellent speeches, and I look forward

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certainly to hearing a major speech by him on this most important topic.
I agree with the noble Lord, Lord Silkin, particularly on the three main purposes of education which he set before us. I think the mistake we have to avoid in connection with the primary schools is laying too much stress on education designed for the preparation of cogs for the economic machine. We must try to ensure that the eventual product we turn out from our schools, no matter what they may be called, shall be persons who are able to lead a full and satisfying life.
It is the case, and this has been stressed before this afternoon, that since the discovery that we were trailing a long way behind other great nations in the production of scientists and technologists, the politicians, the Press and the forward-looking trade unions have urged the Government and educational bodies towards a vast expansion of the facilities necessary for an output of scientists and technologists proportionately as great as in the United States of America and the U.S.S.R. We have had Crowther, we have had Robbins, and a whole host of books, articles and speeches devoted to the grammar schools and their product. The effects of the 11-plus and the arguments for and against the comprehensive and the grammar schools have been debated unceasingly.
In all this, it seems to me that we have tended rather to overlook the beginning of it all, the primary school. To this the noble Lord, Lord Silkin, and the noble Viscount, Lord Eccles, referred. I know that this is an oversimplification. Part of the excellent Newsom Report was devoted to some of the aspects of primary education, and throughout the years there have been pressures upon the Government from the Opposition and elsewhere for the clearance of the bad old buildings and the training of more and more teachers. The simple fact is that if you talk to reasonably intelligent men in the train or anywhere else about education, they might be expected to discuss the pros and cons of the public schools; Robbins would probably be known to them, Crowther possibly; Newsom, I would say, very doubtful
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indeed; and they would be quite unaware of the decision to reconstitute the Central Advisory Council to consider
"primary education in all its aspects, and the transition from primary to secondary education."
I hope that this will not mean that this reconstituted Council is going to pay too much attention to 11-plus onwards, but that it is really going to consider primary education in all its aspects. Certainly I welcome the decision of the then Minister of Education to appoint, or to reconstitute, this Council and to place it under Lady Plowden. Incidentally, I rather sympathise with her, for it seems to me that we shall have some little difficulty about calling the report the "Plowden Report", for we already have a major Report under that title, although, of course, it covers an entirely different field.
In regard to the Report itself, I hope it will be as authoritative, comprehensive and deeply searching as was the Newsom Report; and I certainly hope that it will be as well written, because that Report was a delight to read and carried one along excitingly and excitedly from the opening until its final conclusions. I am not going to say, in the circumstances of the times—the urgent need to increase the output of scientists and technologists—that the crash programme of urgent needs was wrong. But I am bound to say that apart from that necessity, in education we simply must get our beginnings right, and that means beginning with our primary schools, which, in my opinion, are much the most important part of the educational structure. I agree with the noble Lord, Lord Silkin, on this point and with others who have said the same thing. If we do not get our beginnings right I do not see how we are to get our ends right; and I certainly think that we must get our beginnings right.
The noble Lord, Lord Silkin, referred to some of the disturbing facts about our primary education as it is at the moment. He referred to the basic fact of the size of the classes given in the Ministry Report for 1963. This shows that for pupils under the age of 11, classes comprising more than 40 pupils actually rose during the year 1962 from the 18·9 of 1961 to 19·5 per cent. At

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the end of the year. Thus, approximately one in five is being taught to-day in a class that is over sized. That just is not good enough. Another report, by the National Union of Teachers, tells us that over half of our primary schools are housed in buildings which date back to the last century. Some of us who were educated in them know what they were like, and must still be like, even though the fly-blown portraits of Queen Victoria have been removed and a bit of paint has been put on the walls and on the doors.
But I am not going to indulge to-day in fruitless criticism of the failure to build more schools or to provide more teachers, although of course I agree about this with the noble Lord, Lord Silkin. But I think it is time that we began to question some of the basic assumptions about primary education. The first of these about which I have great doubts is that classes of 40 are suitable for those under 11, while for those over 11, 30 is the acceptable figure. The 1959 Schools Regulations laid down a standard of 40 for primary school classes.
Like most people who have ever looked at this matter, I am strongly of the opinion that the greatest amount of individual attention and encouragement is required at the outset of one's educational progress—at the stage when, as the noble Viscount, Lord Eccles, said, the youngster comes into the school, into a strange new world and, in this strange new world has to adjust himself and needs the greatest amount of help to enable him to meet all the problems he has then to face. It is at the primary school stage that for so many children the environmental handicap of the illiterate home and neighbourhood has to be overcome, if it is ever to be overcome.
In our struggle towards equality of educational opportunity we have rightly removed the crudest of economic barriers. The provision of many forms of monetary assistance, the abolition of school fees, and the provision of university grants, have removed the obstructions which prevented so many of my generation and later generations from climbing the educational ladder. The most serious obstacle now remaining
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for so many is the environmental hurdle —the obstacle of which Newsom wrote:
"Many boys and girls may well appear to be so much more stupid than they need be simply because of the inarticulate homes from which they come".
Here, in the primary school, one should be taught and encouraged to achieve the absolute essential for educational success, which I say is a quick and eager mastery of reading. Here one should be helped away from the crippling sense of inferiority vis-à-vis others who come from a different background with a wider, regularly used vocabulary and the confidence which that brings—that inferiority which it takes half a lifetime to overcome, and which in so many cases is never overcome at all.
Mr. Leslie Hale, a Member of the other place, has recently written a novel, in which I spotted the following sentence. He was writing of an intelligent man, whom he said had "a shy appreciation of the limitations of his own vocabulary". I have suffered from this the whole of my life. I am now getting over it, as perhaps your Lordships may have observed, but certainly this can be a stultifying experience, a holding-back factor. It is extremely difficult for anyone who has not had the right beginnings to mix and talk with other people happily and readily, and really to express oneself and allow the personality to flower, unless somehow one gets over this inferiority which starts so early in life. All this means a greater amount of individual attention and encouragement, which I believe, as I think the noble Viscount, Lord Eccles, was saying, is quite impossible in a class of 40 or over.
Then there is also the difficulty, as I see it, that so often the child is pushed up from the class, whose main function is to teach him to read, when he has not yet acquired the ability to do so, into the larger classes, without his having acquired the "thought tools" which are necessary to enable him to cope with the new problems he has to face. When he is pushed on in this way he just does not understand what it is all about, and inevitably becomes bored; and eventually with the difficult child it leads so often to juvenile delinquency. The Times of yesterday quoted a teacher

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who has to cope with the problem of large classes. He said that
"When classes are too big we have to revert to old-fashioned methods: questions are asked of all instead of one; response comes from the mass. You have to be much more strict or you would never get anything done. You can't teach as many different things when you are teaching so many; they all have to progress at the same speed …".
At this stage the teacher either has to adjust to the below-average in a class, or to concentrate—under the pressure of examinations and possible future examinations—on the above-average and let the rest go hang.
The wastage of excellent brains caused by the environmental handicap has been shown up with startling clarity by the Crowther and Newsom Reports, and by a book which I read recently called Education and the Working Class, by Jackson and Marsden. I make no apology at all for labouring this point, for I believe, accepting, as I do, what those Reports and people have said about it, that we must keep hammering at it until somehow we find a way to remove this large remaining inequality in our education system. I am sure that both the noble Viscount, Lord Eccles, and the right reverend Prelate were hammering at this very point this afternoon. We cannot remove the illiterate parents or the illiterate neighbourhood background, but by smaller classes and a greater degree of individual coaching and attention we could remove some of their worst and limiting effects. I believe that in this way we shall help to remove for the next generation their bad, illiterate homes and their illiterate background.
The noble Viscount, Lord Eccles, stressed the practical difficulties of getting more teachers. The difficulties must somehow be overcome. I know the problems which would be created by some of his suggestions, but they are worthy of consideration. We must be careful not to lower standards, or certainly not to lower standards in such a way as to arouse the understandable opposition of the National Union of Teachers to the dilution which the noble Viscount suggests. The problem is to get over this temporary difficulty without creating the dilution which would be objected to.
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I should like to make a brief reference to school buildings and the urgent need for the replacement of the worst of them. The worst of them that I happen to know exist in the poorest areas, or, at least, most of them do; but I happen to know some which exist in our beautiful countryside. But it is not much help for the child coming from an ugly and depressing home and background to enter a new world in a building as ugly and depressing as his own home. With the right reverend Prelate the Lord Bishop of London, I do not believe that buildings are everything. I would rather have a child of mine taught by some teachers I happen to know, even if it had to be in a hovel, than by some others I happen to know if it were going to be in a palace. I do not believe that buildings are everything, but bad buildings and surroundings are partly the cause—and this is an important feature—of the high rate of the drift of teachers from some of the worst areas to better areas and better school buildings. There is an excessive rate of turnover among teachers in these schools, and this is recognised by everybody who knows anything at all about it as a bad thing, particularly for the pupils.
The Newsom Report showed that the "holding power" of men in modern schools is 65 per cent. as an average; in socially-mixed areas it is 70 per cent.; in rural areas it is 75 per cent.; in slum school areas it is only 34 per cent. This is a tragic situation which we ought to try to overcome in every possible way open to us. New buildings in these areas clearly are one part of it, and I certainly would have no objection to paying enhanced salaries to those teachers who work in slum areas. I believe the Ministry should consider this point. The Newsom Report concludes, from its examination of this throughput of teachers in some of these areas, that
"Clearly having good buildings is an important advantage in keeping a stable staff, especially while most schools are indifferently housed."
Factors other than buildings enter into this, but they are one of the more important factors and are more within our control than staff relationships, which happen to be another factor in the movements away from schools.
I conclude from all this that the sooner we get to the stage where classes

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in primary schools are reduced to 30 or under, the better the chance of producing citizens capable of a full life who will be able to use increasing leisure without suffering Clacton or any other form of boredom. Boredom, I know, can be an awful thing. Fortunately, I seldom suffer from it, except when I have to go to cocktail parties and sometimes listen to my own speeches. But the well-equipped and the inquiring mind is seldom bored. I believe that to be absolutely true. In all that we have been talking about the stepping up of our building programme for primary schools, particularly in poor areas, will play its part, as will decreasing the size of classes. My Lords, all this has been said a thousand times before, but we must keep on saying it until it becomes irrelevant. When it becomes irrelevant we shall then have to turn to the new problems in education which will inevitably emerge.
4.31 p.m.
THE LORD BISHOP OF CHICHESTER:My Lords, I hope very much that the smaller list of speakers in this debate does not indicate, as the noble Lord, Lord Silkin, suggested, a decreased interest in this aspect of education. I feel that it might indicate a decreased knowledge of it, because this is a sphere of education of which we, and men generally, have very much less experience. All children up to a certain age look very much alike and we are apt to oversimplify their problems. Therefore it is very good that the noble Lord has raised this issue now. No doubt we are not speaking to a brief, as we were in the case of Newsom and Crowther, and that handicaps our own efforts; but we are speaking to a long series of educational debates and plans which presupposes the basis about which we are debating this afternoon.
I am personally very grateful to the noble Lord opposite, who reminded us of some of the practical work that still has to be done in terms of conditions in our primary schools. The Newsom Report opened up a good many things that were under a stone, and I am sure that the Plowden Council will open up a few more. While some of these facts have been, quite rightly and adequately, modified by some of the observations made by the noble Viscount, Lord Eccles, we cannot get away from others.
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We cannot get away from the conditions of school buildings and, like the right reverend Prelate the Lord Bishop of London, I feel bound to reinforce what has been said about the urgency of this part of our programme, which is something we can tackle even while the teacher problem defies any such immediate solution.
On this matter the Churches can speak not only from great knowledge but also from some rather bitter experience, because many of the voluntary schools were first in the field and, therefore, are the older schools. While it is certainly not true that an old school cannot be reconstructed in a new and imaginative manner—many of them have been—it is still true that we come in for a great deal of unmerited criticism. After all, what we are doing is waiting in the development plan pipeline, with all our own plans ready and our finances arranged for our share in the reconstruction, and we have to watch our own children suffer from the continual postponement of these plans. So I hope very much that the emphasis that has been laid on buildings—and I hope not apologetically laid—as part of the issue will be borne in mind.
My Lords, I should like to consider briefly two aspects of the framework in which primary education goes on to-day. One of these has been particularly mentioned already. We are all of us uneasy at, if not puzzled by, the disparity and the variety that we see to-day between different forms of education at what I might call the later levels. Some of them are educational divisions, some of them are not educational divisions. I am not at this moment thinking particularly (because it has been referred to elsewhere, and may be more of a temporary division) of the division in secondary education groupings as between grammar and secondary modern schools, although this casts its shadows back upon the previous stage of education. I am thinking also of this cleavage between the independent schools—the public schools, as they are called—and the State schools. The differences here are one of the challenges of our modern society. To some they represent differences which are in themselves desirable; to others they are differences that are undesirable, though they may

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still seem inevitable. But if we are to think of ways in which we can better express the one-ness of the nation it educational opportunity, then undoubtedly we should make a beginning in the primary school.
I remember that the noble Viscount, Lord Eccles, himself raised this point at an earlier stage at the Ministry. There are already primary schools which serve pretty well the whole of their own local community, regardless of any distinctions, and I believe that there are many other such cases where this greater embracing of the community would be welcome. In fact, I should hope that we could see some such steady extension of the national primary school education, so that it would afford a common basis of education for all the nation's children, and in this way take unto itself in due course a great deal of the work now being done by independent and preparatory schools. That would, in many ways, mark a very welcome advance. But, of course, it would mean essentially a far greater concentration of effort upon our primary school system, if it is to bear its extended rôle, especially in dealing with such matters as the supply of teachers and conditions which have already been mentioned this afternoon.
The second consideration of which I should like to remind your Lordships—and it is outside the primary school—is the nature of our modern society. Industrialisation is going to bring with it more leisure and therefore more need, as well as more opportunity, for creative living. It will ask of us more responsibility in citizenship. There is far more partnership in different aspects of society to-day and thus a greater need for rational co-operation together. Also, of course, if we were not careful the mass-minded man could easily develop in great numbers, and be easily induced to conform to certain patterns of habit through the arts of salemanship or the sheer, pressure of the crowd. If we are to have a free society, it must be through an education that helps boys and girls to grow up into real persons, and not to suffer later from some kind of arrested development.
I raise this point, my Lords, in this context because maturity is not a matter of techniques, or even of actual know-
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ledge. You can superimpose this upon a half-developed character. I believe it is the primary school that has to lay the foundation for maturity; for the emphasis there, if I take it aright, is not so much on learning or on acquiring skills, though these begin there; it is on awakening personalities, helping them to discover their enthusiasms, and perhaps giving them some confidence in their own powers which they can use later. That is one of the difficulties about the present form of selection, because it is not, as all selection should be, selection for something but selection from something.
There must be different branches to express the disparity of the human gifts but not, perhaps, the straitjacket which is at present applied and seems very much the cause of strain. As has already been mentioned, there are many forms of new teaching, imaginative teaching and techniques, which are being used to-day in the primary school. I think it could be said that they are aiming at developing intelligent and personal response, rather than the acquiring of knowledge, which in a few years, perhaps, will be instilled into us in our sleep. They are helping people to grow up as persons, and this is the foundation for which we look especially to the primary school.
It is for this reason that I wish briefly to return to two points which were touched upon, and much better touched upon, by the right reverend Prelate the Lord Bishop of London, in the light of the experience in primary education which the Church has had over so long a period, and in the light of what it claims to be, within the whole national system, religious education. Religious education means, it is true, teaching and learning. It does not mean a process of indoctrination—at least, it should not mean that—of certain formulae, into a certain way of living. It means opening up to children, as far as they can take it, the wider dimension of life, by teaching them about God and about their own relationship to Him, and so bringing them to face the demands of their own nature upon themselves—to face them confidently and to face them responsibly in what is asked of them.
Now there are many voices raised today, as in the past, against a built-in

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system of religious instruction. I hope we shall not be swayed by these, for I think that the omission would deprive the children of this age of something which they would not in most cases have any opportunity of getting later. There are, of course, more specific things to be said, which need not be said here, about religious instruction; but at the further stages, as the Newsom and Crowther Reports indicate, inquiry and discussion about the meaning of life and our own decisions in it come into it on a much wider basis. It is at that stage that there will be room for mature choice between different spiritual or moral attitudes: but I do not think such choice can be made at all adequately at that later stage if, at the earlier stage, there has not been some effective presentation of the religious view of life.
Paradoxically, many parents who themselves have apparently no deep religious convictions or practice, often ask for religious instruction for their own children. I think it is on the sincere basis that they would like them to be equipped to make the choice for themselves; and if this is omitted at this stage they will never be able to make the choice fairly. Of course, religious education is not bound up wholly or simply with instruction. The values of the spirit and the mind come in, as Newsom has indicated, through all kinds of other parts of the curriculum: through the corporate acts, whether in worship or elsewhere; through anything you like that opens up the wonder of the child in his world and helps him to get excited about it and to make some kind of serious response. All this is, if you like, part of religious education, and all of it is essentially part, surely, of this primary stage in particular.
Side by side with this emphasis, I should like to refer to what I believe to be the second piece of experience which the rather smaller schools of the past have brought to us. It is the whole play of the local community, within the school as well as outside, upon the education of the child. Now modern society does not seem to be very successful in developing mature human relationships. There are indications of this in the breakdown of marriages, the lack of communication between the dif-
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ferent generations, and the intense loneliness and the "keep-yourself-to-yourselfness", so to speak, of much that goes on in our own new housing estates. I believe those in the teenage are very conscious of the need for adequate and personal relationships, partly because they are themselves insecure and very aware, sometimes, that they have not been given them at an earlier stage. Surely it is essentially at this primary stage, where you get the personal atmosphere of a community, that so much can be achieved.
This would imply, so far as the school goes, questions, quite seriously, about what is the size that really is large enough to produce educational variety at this age and small enough to retain, in a sense, the local family atmosphere. Is it bound up with any kind of maximum? I doubt very much whether this atmosphere of community can be, for young children, retained in a school larger than, say, two-form entry. I think there is a strong case for something smaller than that. I think there is a strong case for anything which does not seem to stream children into different abilities at this age. They will be streamed by life later; let it wait until then: and let them learn something of the variety within the framework of their own age group.
Equally, I think it is unhappy when children have to break their schooling between the infant and the junior stages. This aspect of the local community within the school could, of course, be carried further into an aspect dwelt upon by the right reverend Prelate, and therefore I will not go into it again, and that is the aspect of the outside community. We would only say that the kind of suggestions which have been adumbrated by the noble Viscount, Lord Eccles, will, we hope, be taken up and investigated with the utmost responsiveness. There are all kinds of people who ought to be brought in to assist, or to be seen to be assisting, in the process of education.
One of the difficulties of labelling it by different ages is that you suggest that outside those age groups education is not going on at all. That would touch upon what is precisely one of our chief problems: how parental responsibility can be geared into a society where men and women are at work and where there are not, and perhaps never will be, enough

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nursery classes or schools to cope with the children adequately at an earlier age.
My Lords, I will not dwell on this subject. I will conclude with one very brief remark, since this is an aspect which has not been seriously mentioned. It is about the countryside. You can deal with statistics—the size of classes, the ratio of teachers—and forget that, within these figures, there are particular problems attached to the local rural schools. It is impossible not to see these rural schools to-day against the whole expanding scene of education elsewhere, or to consider them otherwise than on educational grounds; and yet we are bound to admit that the old village school, the village schoolmaster or schoolmistress dies hard.
In the past, the Churches have been very strong champions of the small village schools. I think we must recognise that, with the changing times, we have to revise our own estimates of this. It is difficult to conceive educationally, I think, of a school that would be much less than a three-teacher school, though that does not mean to say that there are not two-teacher schools and even one-teacher schools in parts of the country which are effective. But, none the less, what we would do most, I think, is to plead for some flexibility where the countryside in particular is concerned. After all, when it comes to matters of finance or of the use of teachers in a teacher shortage, the countryside is very badly placed. On the whole the country school, I suppose, is in these matters more costly per place than the town school, inasmuch as it is possibly smaller. It would be a great pity if decisions about the countryside, with its own changing rural problems, had to be decided on grounds of finance rather more than on grounds of education.
I know that while this matter is very much in the minds of local authorities, no fixed standards can be effectively made while the population of the countryside is so much in flux itself. In some places it is diminishing; in some places it is almost growing into a town overnight. What is the right educational framework now for that? Could we plead for an avoiding, shall we say, of blueprints about rural education, and for the maximum consultation, both be-
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tween the authority and local representatives and with the Churches, who have been in the past, and would like to continue to be, in this, as in other things, very ready and sympathetic partners?
4.50 p.m.
BARONESS ELLIOT OF HARWOOD: My Lords, I rise with great pleasure to follow the right reverend Prelate on the subject of rural schools and rural education. I take part in this debate because I am the only one in the list of speakers who is chairman of a local education authority; and, indeed, of a local education authority which is almost entirely rural. I hope that, because it happens to be North of the Border, the noble Lord who is to wind up the debate will not accuse me of having any particular Scottish axe to grind. I speak in general, although my experience is of an authority North of the Border.
I was struck with a phrase which was used by the noble Viscount, Lord Eccles, and which I think is very significant in our educational programme. He said that the local authorities have never been beaten by the rise in the school population. What he did not say, and what I should like to say, is that I think that is largely due to his long tenure of the Ministry of Education, to his enthusiam for education, his drive and ability to get people interested in education, that has helped the local authorities never to be beaten by the rise in school population. Admittedly, we fall short in many ways of what we should like to do for children in schools. Nevertheless, it is the drive, the activities and enthusiasm of Lord Eccles and the Ministry of Education—and, in Scotland, of Lady Tweedsmuir and her Department—that make it possible for local authorities to get any enthusiasm at all for education. It is not a popular subject because it is expensive; and nothing that is financed out of the rates and is expensive can be popular with the ratepayers. But we must fight this battle; it is a battle we believe in, a battle which we want to fight and one in which we get great support from the central Departments, both in England and in Scotland.
My Lords, I should like to say something about the situation in Scotland, which strikes me, listening to this debate, as being in many ways similar to that

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in England. The great rise in the school population last year, according to the Annual Report which I have here, was in primary education, in the primary classes only. In fact there was a decrease in the secondary classes in Scotland. The primary class increase, which was 2,397 and meant an increase of 73 classes, will eventually, of course, pass through to the secondary departments; and there again we shall be faced with the great problem of shortage of teachers and of school buildings. Nevertheless, we have time to meet that when it comes. But it is in the primary classes that the big increase at the moment is taking place. I think, therefore, that it was great foresight on the part of the noble Lord, Lord Silkin, to put this subject down for discussion in this House. We have had, as I think noble Lords have noted, the Robbins Report, the Crowther Report and the Newsom Report; but we are really coming down to brass tacks when we deal with the increase in the primary population.
One of the problems in the rural areas—and the right reverend Prelate also referred to it; so the problem in his county must be the same as in mine, in Roxburghshire—is not the too large classes; it is a matter of their being too small. The question is: at what point do we keep the small single-teacher school going; and at what point do we close it? The Scottish Annual Report announces that 50 small schools have been closed. I know that in my own county we had to close four last year, and this is a large proportion of the total of 50. One does not know exactly what effect that is going to have.
As chairman of the Education Committee, I have tried, when closing rural schools, not to take children to towns (and although the towns are not big cities, yet they are still towns) but to concentrate several small schools into one larger school in a rural environment so as to preserve the rural aspect of our education. This is because the children who are going to those schools will, in all probability, spend a large part of their lives in rural employment. To take them competely out of their environment and put them into an urban environment at the age of 5 is, in my opinion, a mistake that we should, if
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possible, avoid. Therefore, we have developed the idea of concentrating in one rural area a school which will perhaps be a three-teacher school and of doing away with three one-teacher schools in the surrounding district. This, I think, is a pattern that might well be developed, and if this is done it will preserve the rural environment in which we want those young children to grow up.
It is difficult to judge what is going to happen in rural areas with regard to population. Years ago, schools in rural areas were badly needed, and the populations were quite considerable. To-day, with the development of mechanised agriculture, with the replacement of men by machines, the rural population is going down at a very great speed. Therefore, one is forced, whether one wants it or not, to close many of the small schools. Whether that will continue and whether we shall go on in this way is hard to predict. Therefore, I would support the right reverend Prelate when he asks for flexibility in these matters and for having not too rigid a point of view; since we cannot foretell accurately what is going to happen in these areas.
I should like to pay a tribute to the teachers in these single-teacher schools and particularly to those in the very remote areas. Last year, when we lived in almost Arctic conditions in my own county, one school had to be closed for 25 days. Nobody could get to it, although the teacher was living in the schoolhouse. The conditions were appalling. I think we cannot praise sufficiently the devotion of those men and women who worked under those conditions and who did such a splendid job in all types of weather and despite all the very great difficulties of transport.
Among the teacher shortages that we have been talking about, and which are reported in the Annual Reports of the Education Departments, both in England and in Scotland, that of infant teachers is the most acute. They, it is said, are the most difficult to find. Therefore, I think that what has been said by many speakers in your Lordships' House this afternoon is most apposite. Judging by what I have listened to in the course of the debate, I do not think we in Scotland are quite so badly off regarding the pupil-teacher ratio as England is.

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Our pupil-teacher ratio is 23·9 to one. I realise that that figure includes the rural areas, and that in our rural areas the number of small classes is greater than in the cities. Nevertheless, it is a more encouraging figure. All the same we are faced, as are the schools South of the Border, with an increasing shortage; and I should like to support the noble Viscount, Lord Eccles, in his suggestion about the use of auxiliaries, certainly in the towns, to help with such duties and services as school meals, supervision of playgrounds, and so relieve the teachers of some of their obligations. I think it is an excellent idea, and, like my noble friend, I do not see why this should be treated as a dilution of the teaching profession, since these helpers would not be put on the same basis as teachers at all.
In England there is a Council under the chairmanship of Lady Plowden, inquiring into primary education, and I believe there is also one in Wales. I wonder whether the Department of Education in Scotland would not consider an inquiry of this kind for Scotland, too. It may be that in their archives they have all the information they want, but we are planning to raise the school leaving age to 16 in 1970, and that will mean a reorganisation of our schools and almost certainly an alteration in the age groupings to which we are now accustomed. I have heard it said that when the school-leaving age is raised to 16 in England, the groupings will be from 5 to 9, from 9 to 13 and from 13 to 16. This is a revolutionary proposal.
In Scotland, our age groups are different. At the present moment, the 11 plus is taken at 12, and in rural areas, where there are single-teacher schools and two and three-teacher schools, the children are kept up to the age of 10 and then passed on to secondary schools, where they do two more years of primary education before they are divided into grammar school and ordinary secondary school streams. I think it would be well worth while making an inquiry of the same nature as that which is being undertaken by the Plow-den Council in order to guide us in what we are planning to do in Scotland in 1970. I agree with what other noble Lords have said about education up to 16 being only half the battle in which
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we are engaged, and I think it is extremely important that we should not divide up our interests but begin with the primary school and carry on up to the age of 16.
Several noble Lords have spoken about old buildings. Of course, there are too many old classrooms, but when one goes round it is astonishing to see the marvellous new schools that have been built, particularly in our industrial centres where there is more money and it is easier to get new buildings put up. But I think we could do more in rural areas. We could build three or four-teacher schools, which would serve a whole rural area. Here I would make a plea that specifications for new schools in rural areas should allow for a little more space. It seems odd that in non-built up areas, school space should be confined by specifications which are sometimes rather cramping. Small children do not want to sit at tiny little desks for long times together. They want a large classroom or small hall to run about in and have games or other types of active educational work. I make a plea for more space in our new rural schools in order that in this new age, in which so much experimentation is going on in school classes, there should be room for this experimentation.
I would also make a plea for more specialist teachers in primary schools. I know we are up against a great shortage of specialist teachers, but if we could get them for such subjects as music and physical training it would be a great help in preparing children for their further education. To begin teaching music at 5 or 6 is much easier than starting at 8 or 9.
In the Report on Scottish Education which I have just been studying I read with considerable interest the figures about school meals and school milk. I have a real, personal interest in this subject, which I disclosed to your Lordships, in that the milk-in-school scheme was started by my husband when he was Minister of Agriculture in the years 1934 and 1935. There is no doubt at all that the health and strength, the height and weight, of many of the children, now adults, who received milk at school has been enormously improved. It is encouraging to know that the number of children

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in Scotland who are still being provided with a third of a pint of milk—it is still the same amount as it was in 1934—amounts to 88·9 per cent. I think that that is a very good thing, indeed.
I have talked about Scotland and rural schools because that is where my experience lies, but I realise that other noble Lords have covered ground which is of the utmost importance, and I find myself in complete agreement with what they have said. There is only one subject which nobody has mentioned—a very important and difficult matter, as any chairman of an education committee knows—and that is, money. Money looms very large in the development of education and, as I said at the beginning of my speech, it is hard to persuade the ratepayers that money spent on education is money invested. I believe that it would be really and truly the best investment for our national funds, for both the rates and taxes.
I cannot agree with those who would spend more and more money making our roads more like billiard tables, when we cannot get money to turn old-fashioned schools into new schools for the education of children—and, of course, nearly all their parents to-day drive motor cars. I go on hammering at it, and one is greatly helped by people who have done such a wonderful job in education during the last years. We have a number of people in your Lordships' House and in the other place who have been tremendously enthusiastic about education. But one has to get it across, not only in your Lordships' House and in the other place—that is not so difficult—but to the ordinary ratepayers in our own areas. That is where the difficulty begins and where one has to fight such a hard battle.
I would not agree that there is waste and inefficiency in the administration of education, certainly not in the areas about which I know anything. We cannot get education on the cheap: we cannot obtain good teachers, good schools or good pupils in that way. We must spend money in order to get these things. It is only a hundred years ago that we had Dotheboys Hall and Mr. Squeers, and, goodness knows!, we do not want in any point of our lives to have to fight conditions of that kind over again. To-day we need to have vision and faith in the future of this
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service; and it is necessary, I think, to start with that vision and to have that faith in the primary schools, as well as in all the other sections of education. I very much hope that what we say to-day in your Lordships' House will help those who are engaged in administering the education services in our country.
5.13 p.m.
LORD DOUGLAS OF BARLOCH: My Lords, education is a complex and difficult subject, but it is of fundamental importance to all of us, because in its widest sense education is the whole basis of civilised life and upon it depend the stability and success of our whole society. Education is so important, because men are not like insects. They do not come into the world endowed with a set of instinctive aptitudes which enable them to combat all the circumstances of their environment. It all has to be learnt by each generation, and it is because this accumulation of knowledge has gradually been developed from the dawn of civilisation up to the present moment that mankind has been able to make progress. Man's essential nature has not been altered in the course of heredity; it is the social endowment which is transmitted by education in its broadest sense from one generation to another upon which he depends.
Of course, it is not merely what happens in school that educates children. They are being assailed from birth onwards by all kinds of influences in the home and outside it. Many of these influences to-day perhaps make the problem of education more difficult than it was in the past, because influences of broadcasting, television, the popular Press and many other things which press upon the young and developing intelligence are not by any means calculated to develop to the best the novel and intellectual aptitudes with which the human being is endowed. So it seems to me that in many ways the problem which confronts our schools to-day has not become easier, but more difficult.
We cannot, I feel, discuss education mtelligently merely from the aspect of education up to 11-plus. No discontinuity in human development occurs at that age; it is only an administrative cleavage which then occurs, which

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has no relationship whatever to human nature, but arises out of problems of administrative convenience. Therefore it deserves a great deal of consideration, as the noble Viscount, Lord Eccles, indicated, whether our present method of making a break at 11-plus is a rational and sensible way of handling things.
However, that is perhaps a little outside the scope of the Motion we are discussing this afternoon, and I will come back to the basic problem of education—namely, the transmission of knowledge. This has become, since the development of the art of writing, and still more the development of the art of printing, a question of literacy; a question of ability to read and write; to acquire information by means of what is in print and to transmit it by means of writing. With that I couple the arithmetical side of education, which is of much greater importance in a world in which mathematical disciplines are playing a larger part in industry and commerce, and where it has become so much more desirable that people should understand at least the bases of mathematical study, even if they do not proceed to understand the more intricate parts of it.
There is a great deal of complaint to be heard about whether we are succeeding in teaching children to perform these elementary arts of reading, writing and arithmetic. Certainly I am rather surprised at times when I go into shops and find that young people are quite unable to perform the simplest pieces of mental arithmetic and have to resort to tables, cash registers or other devices in order to do something which they ought to be able to do themselves almost instantaneously. I wonder what the reason for this is? I do not recollect that when I was a child at school anybody found any great difficulty about these things. Whether some change has taken place in education which makes it more difficult, I do not know.
Let me pass from that to the arts of reading and writing. Here, again, we find a great many complaints that children are unable to read. I wonder whether that is wholly true, because where does the enormous sale of the popular Press and such things come from
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if people are not able to read them? Nevertheless, the view is widely held that reading is an extremely difficult thing, and that many children do not succeed in it. Yet when I cast my mind back to education in Scotland as it was when I was a boy, in classes not of 40 children but of 60 or more, the teacher succeeded in getting them to read satisfactorily, and they emerged at the age of seven from the infant school into their next stage of learning with a sufficient degree of competence. It seems to me that some study ought to be devoted to the question of what has gone wrong with our method of teaching.
One thing I know is that, instead of using the phonetic method of teaching children to read, it has become popular to teach them by what is called the "look and say" method, which is admirably adapted for teaching children who have to depend upon an ideographic language like Chinese, but which throws away the whole of the phonetic aspects of our spelling as it has been developed. I am well aware, of course, that the English language is full of spelling anomalies, especially in many of the smaller words—not so much in the longer words—of which there are only a limited number, and which the successful teacher gradually deals with in groups of analogous cases without any difficulty whatsover.
It seems that this new method is one of the things which have interfered with the success of this absolutely essential part of our elementary education, and the dissatisfaction has grown so far that people have taken the trouble to invent a new alphabet, called the initial teaching alphabet, for the purpose of enabling children to read more rapidly. But, of course, the whole mass of literature which exists, and which will come into existence in the future will not be printed in this alphabet. Therefore, the child must in the end go back to learn the existing alphabet and be able to use it properly.
It is said, of course, that this transition will be made quite easily; and that very proposition is an admission that in fact the phonetic elements in our alphabet and our spelling, as it at present exists, are sufficient. I think, therefore, that the effort which is devoted to this is greatly misplaced. It is not

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going to make for ultimate success, and it must always be remembered that it is absolutely essential that children should learn not merely to read, but to write. They ought to be able to communicate with other people as well as to receive communication. Many of us, I think, have had the experience (especially those who have been Members of another place, and who have had to serve a large number of constituents) of finding the extreme difficulty which people experience in communicating quite simple ideas to one and especially, of course, of communicating them in writing, and in many cases one has had to have a personal interview in order to elicit what the problem is, because of this inability to communicate.
To go back to what I was saying a few moments ago, one of the great objections to the initial teaching alphabet is that it makes the problem of writing a great deal more difficult, because it is known from long experience that in teaching children to read one ought to teach them to write at the same time, so that by exercising their eyes and their muscles on writing, as well as upon reading, the matter becomes fixed in their minds. I think this is one of the elementary and essential notions in this matter. Here, as I say, the initial teaching alphabet, instead of being an ultimate aid, becomes an obstacle, because if the child is taught to write in this way it has to unlearn it. In any event, he has to learn the spelling, and is confused in the most essential part, the small elementary words, which are so often the subject of the unsystematic part of our alphabet and spelling.
Something has been said to-day about the school leaving age, and also about the school entry age. We are undoubtedly faced with a situation in which it is difficult to recruit all the teachers we require, and to improve the ratio of teachers to scholars; and to raise the school leaving age as is intended will certainly maze that problem more difficult. I have often wondered whether there is not quite a good case to be made out for lowering the school entry age—perhaps not to make it compulsory, but at any rate to encourage children of younger ages to go to school. At the age of four they
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are full of energy, full of interest, anxious to have something to do, and with only half a day at school they could learn a great deal, and their acquisition of the fundamental aptitudes of learning could be greatly facilitated. It would not be a difficult matter and I think it deserves a very great deal of consideration. I am not suggesting, my Lords, that special nursery schools should be pro, vided for children of that age. They are sufficiently old to be dealt with in ordinary schools, with education adapted to their age and their aptitudes. I have seen plenty of children who have already begun to acquire quite a good mastery of reading at the age of 5 when they have started earlier.
This brings me back, if I may continue for a moment, to the topic with which I started, namely, that the education of the child is proceeding all the time by all the things which are being brought to bear upon it in the home, outside, and in the school, and the problem of education has perhaps become more difficult. It may be that it would be eased if children were encouraged to go to school earlier, and began at an earlier age to be interested and to acquire the disciplines and aptitudes which are needed for their future life. I throw that suggestion out, at any rate, as one which deserves consideration.
5.32 p.m.
THE EARL OF LONGFORD: My Lords, the noble Lord, Lord Douglas of Barloch, was defended earlier this afternoon by the noble Baroness, Lady Summerskill, in her usual chivalrous way. I do not know whether he needed any defence on that occasion, but he does not need any now from me, in view of his interesting remarks. Nor will the Minister require any advice or assistance from me on the subject of education. A good many years ago he received all the educational advice that lay in my power to give him, and I feel, no doubt, he considers that that was too much at the time and will not want any of it repeated. But he will, at any rate, agree that I have not, apparently, retarded his political progress, and we all congratulate him very sincerely, and I, as his late tutor, most of all, on his elevation. We wish him well in his very important office.

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It has been, on the whole, a quiet debate—I think what Sir Winston Churchill once called a "demure debate"—except that the noble Viscount, Lord Eccles, I think, suddenly ejected a bit of Party animus, which in a sense was not unwelcome. He began lecturing us on this side of the House for wishing to confuse politics and education because of our hostility towards the 11-plus arrangements, even in advance of the Plowden Committee Report. I must assure the noble Viscount that whatever the Plowden Committee does or does not say—and it is a very strong body—we on this side of the House consider that we know quite enough as a result of our own experience or the educational experience of those we trust to be entirely opposed to the 11-plus system. I must assure the noble Viscount, therefore, very respectfully, that we shall not wait for the Plowden Committee to cope with that in the way he knows is in the mind of the Labour Party.
My Lords, I am sure I share the general pleasure that we are devoting a whole debate to primary education. Educational experts tend to be more interested in secondary education or higher education, and I suppose it is fair to say, without sneering at anyone in particular, that most of us who talk on education have had closer contact with secondary and higher education. It is perhaps not surprising, therefore, that the number of speakers in this House who felt able to discuss this particular topic was relatively small, although all were expert in different ways, particularly the former Minister and the Bishops.
I agree very much with what was said by my noble friends Lord Silkin and Lord Champion, that primary education is at least as important as any other form of education, and I think they both implied that it was the most important part of education altogether. I certainly agree with what was said by the right reverend Prelate the Lord Bishop of London, that it is quite as difficult to teach children at the primary stage as in later years. I taught in what would now be called a secondary school. Then it was considered part of the primary system; the children were over 11 but it was part of the elementary
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system. I remember that very well because our rugger team, for which I used to play, could not obtain fixtures with the secondary school teams because of this accursed snobbery, which I hope is much less between the schools now, 30 years later, but which was very prevalent in those days.
There is no doubt that teachers in primary schools to-day feel as the old elementary school teachers used to feel, that they are looked down on by the other teachers, and I hope that this debate will do something to improve their self-esteem. Official policy—and here I do not think one can blame one Party more than another, but whichever is in power ought to alter this before much time has passed—seems to me to give further grounds for this kind of inferiority complex, which is too often felt among primary teachers and which has bad effects in discouraging young men and women from embarking on a career in primary education.
I agree very much with the argument of the noble Lord, Lord Champion, about the rule that in primary schools it is all right to go up to 40 in a class, but in secondary schools the official limit (of course, it is exceeded in both cases) is 30. He said that he did not see why there should be any distinction. I feel that this is a point on which we ought to dwell for a moment, particularly in view of what fell from the right reverend Prelate the Lord Bishop of London, with all his great experience. I should like to ask the Minister—if he does not feel able to answer to-day I hope he will be able to do so on some future occasion—to tell us whether, on reflection, he feels there should be a regulation enshrining this difference between the primary and the secondary school.
Is it really harder to teach 30 boys at the secondary stage than at the primary stage? Certainly we do not think so, if we pay for our own children to go to preparatory or public schools. In preparatory schools on the whole one finds that classes are about the same as in public schools, unless you reach the very ton of the public schools where children are grouped in small scholarship forms, and perhaps sometimes are crammed almost too intensively in those forms. But, taking public schools and preparatory school classes as a whole,

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we do not find this distinction, and I put it to the Minister, quite seriously, and ask him to consider what is the justification for it. Perhaps to-day he feels able to offer some justification, but I hope he will not commit himself to the view that there is something of the laws of the Medes and Persians about this extraordinary distinction.
Whatever are the aims of our national policy in this particular matter, there is no doubt that the situation in the primary schools is particularly grave. I realise that there could be some argument as to where the shortage of teachers was greatest, but I should hope the House would take the view that, on the whole, the greatest shortage lay in the primary schools, both at the present time and still more in the years ahead when the bulge will hit the primary schools so hard.
It is true that if you accept the view that an overcrowded primary class is one with more than 40 children and an overcrowded secondary class is one with more than 30, then the proportion of overcrowded classes in secondary schools is greater. But if you make a considered comparison based on the idea favoured at any rate by the noble Lord, Lord Champion, and myself, and perhaps by others, that the standard of overcrowding should be the same in each case, you find that 75·2 per cent. of the children in the primary schools are in classes of over 30, against 52·8 per cent. in secondary schools; while 19·2 per cent. in the primary schools are in classes of over 40 against 2·6 per cent. in the secondary schools. So once one accepts that there ought to be the same basis in each case, one is bound to agree that the primary schools are very much more overcrowded.
The figures I have just give perhaps rather underestimate the dangerous situation in the primary schools, which was brought before us very clearly by the noble Viscount, Lord Eccles. I therefore hope that the proposals of the National Union of Teachers for altering the differential arrangements in this respect will receive the favour of the Government. I realise that the whole subject of the differential payments of teachers is one of appalling complexity. I am not talking about the differential payments for special qualifications or
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experience; I am talking simply of the arrangement under which a child over 13 counts for more points than a child under 13, so that at any rate some of the key people in the primary schools with the same qualifications as those in the secondary schools are paid worse.
I have worked out, with assistance, one example which I present as a rough indication. Take a primary school of 360 pupils and a secondary school with the same number, and assume that the headmasters of the two schools have the same qualifications. Making some reasonable assumptions about the age of the secondary school pupils (one has to make one or two assumptions here, but I have had expert help in making these calculations), leaving out the personal allowance in the headmasters' salaries, which we can assume is the same in each case, you find that the allowance for the headmaster, as headmaster, would be £475 in the primary school and £650 in the secondary school. So there is a difference of £175. And that appears to be roughly, I think fairly enough, the comparison. There is no doubt, assuming that there is a grave situation in the primary schools—and I should think a still graver situation there than in the secondary schools—we are accentuating it, making it worse, by a system of differentials which offers special financial inducements to the abler sort of teacher to embark on a career in secondary rather than in primary education. I certainly support the National Union of Teachers in their argument that that kind of differential (and I repeat that I am not talking about the differential for extra qualifications) should be abolished.
Then we come to the whole question of teacher supply, which was dealt with by my colleagues, and on which, of course, the noble Viscount, Lord Eccles is a very considerable expert. I felt, if I may say so, that on most aspects of this question he threw up his hands in despair. Perhaps that was due to limitations of time; perhaps if he had spoken longer he would not have given so pessimistic an impression. He made one particular suggestion, but otherwise seemed to think that nothing much could be done to improve the prospect of teacher supply. I should like to quote from an address by Sir Ronald Gould,

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the General Secretary of the National Union of Teachers. He said:
"We must turn to the only immediately available supply of trained teachers, the married women. If we really want to protect entry at 5, and prevent a deterioration of primary staffing, old prejudices among authorities and teachers about employing married women must go".
So in the view of Sir Ronald Gould—which I am bound to say is also my own view, so far as I have the right to express one—there are still many prejudices among fellow teachers in the way of maximising the recruitment of these married women.
He goes on to say—and here he agrees with the noble Viscount, Lord Eccles,
"To lighten the load on the hard-pressed teachers, authorities should employ others to do work for which no professional expertise is required."
I think the noble Viscount, Lord Eccles is entitled on this to say that when he started that suggestion it was a good deal less popular than it is now. I have been talking to a young teacher, a friend of my children, and obtaining her views, and she certainly takes the view that it would make all the difference in the world if help of this kind could be given, She was thinking particularly of supervision of meals and supervision of playgrounds. I suppose that most of us, at any rate, who have been to public schools would at first sight be rather sorry to think that masters were relieved of this kind of task. I should regard it, frankly, as rather an emergency measure. I think it would be a pity if the work of looking after the children had to be divided in this fashion. Yet I entirely agree with what is suggested by Sir Ronald Gould, and by the noble Viscount, Lord Eccles and others: that we must make use of these auxiliaries, or whatever we may call them, in the years of grave shortage that lay ahead.
If we turn to the policy of the Labour Party, which will no doubt be declared official as we approach the Election, I would summarise, shall I say, the general attitude of my political friends under five headings, without suggesting that this is an official statement. First of all, salaries must be competitive with those of other private employment, and to make this possible the Labour Party has stated that the burden of teachers' salaries must be transferred, in the main, to the Exchequer.
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The noble Lord, Lord Silkin, explained our point of view about that. I cannot help wondering how the noble Baroness, Lady Elliot of Harwood, who spoke in an interesting way, would react to this proposal. She has told us already that it is difficult to convince the ratepayers of the merits of educational expenditure. I should rather hope this particular proposal might arouse her sympathy; she can explain that on another occasion. Certainly the present teacher-training programmes of the Government must be re-examined and increased. I will not repeat speeches that I have made in this House, last summer in opening a debate on Education and again in our debate on the Newsom Report, and I think the noble Lord opposite at least is well aware that I take a very poor view of the Government's record with regard to teacher-training facilities. At any rate, turning to the future, the existing programme, which has been increased, must be increased again and yet again.
Then we come to the whole question of our attitude to the married woman teacher. We have surely to recognise, in spite of what was said, and rightly said, about the need for attracting men into primary teaching, that teaching is becoming to a large extent a married woman's profession; and training and re-training and school curriculum must take great account of this change. That means a much more strenuous and much more aggressive campaign to recruit women than we have yet seen. And I would suggest also that there are a large number of middle-aged women who have not hitherto had the opportunity of higher education. They should now be brought in and facilities provided for training them.
A point which has not, I think, been made to-day, but which certainly exercises my young friend who is a teacher, is the need for improving the quality of teachers still more by providing refresher courses. Her suggestion is that more time should be spent on the practical side of teaching while in college, and more time later on theory in the form of refresher teaching. And when we are talking of strengthening teacher supply we must think not only of sheer quantity but also of improving quality. Then fullest use should be made (and I am sure, at least I should suppose, that my colleagues would back up

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this idea) of aids to teaching of all kinds—for example, nursery helpers to look after children at dinner time, break-time and in the cloakroom. These ideas are becoming more and more acceptable, certainly among my colleagues.
On the subject of building, we would give priority to essential building; and we are, of course, very critical of the cuts that have been made. Our policy on the 11-plus is well-known; we will certainly end selection at 11. Local authorities should be free to advise the form of comprehensive secondary education most suited to their local needs. That, I am sure, is certain to remain our policy whatever the Plowden Council report.
Before I close I should just like to say a word on the religious aspect. It would not be useful to-day, for me at any rate, to embark on an account of the difficulties of voluntary primary schools. As the House is aware, the financial burden is still very grave. If a religious Communion wishes to provide a new voluntary primary school, unless it replaces an old one it has to pay for the entire cost of the primary school. In the case of my own Communion, the Roman Catholic Communion, for instance, a school to be built in the White City area in London would cost well over £100,000—and I could give other examples.
However, no one wishes, I am sure, that these particular issues should be tangled up with electoral considerations. There is strong, unanimous agreement to try to keep this out of the Election, but we shall no doubt be hearing a good deal about these issues later on. But, in a wider sense, it has seemed to me before to-day, and still more perhaps after listening to the right reverend Prelate, that there is a converging agreement about the need to treat the child as a whole throughout his or her education. May I quote a few words from the official Handbook on Primary Education? The quotation reads:
"One salient feature of primary education to-day is the ever deepening concern with children as children which has gradually spread from the nursery and infant schools to the junior schools. This concern shows itself particularly in the awareness of the child as a whole with inter-dependent spiritual, emotional and physical needs."
I think that fits in with the approach of Lord Silkin at the beginning. The
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only surprise to me there is that we should be told that this is a new awareness. One would have thought that this was an ancient doctrine, but apparently the latest educational theory has come round to this.
We can fairly say, therefore, that the necessity for harmony between the values of the home and those of the school is occupying a central place at last; and this certainly is in part a reply to those who sometimes dismiss the talk of religious education with the airy saying, "Ah, yes, religion, of course, is essential for children, but it is up to the parents to give them that." I think that the latest psychological teaching along with ancient wisdom, demonstrates that we just cannot leave it to the home in that way. We cannot teach one set of values at home, or hope that one great set of values is taught in the home, and then leave a sort of vacuum in the schools.
But, if that is so, while that new of clearer awareness certainly strengthens the demand that has been made by various religious bodies for the right of parents to choose their own religious education for their children, and the demand that the State should provide such schools or pay almost their entire cost, I think there is another thought also which should be in some minds at this stage. Here, I think the right reverend Prelate the Lord Bishop of Chichester expressed what I had planned to say much better than I myself am likely to express it, and I am doing little more than to reinforce what fell from him. But I felt that what he said was so true that, even if one takes the view that an adolescent ought to be absolutely free to choose—I do not quite take that view, nor do I think that he quite takes the view that an adolescent should, so to speak, have no kind of guidance in a positive direction—I would agree with what I think was his argument, that he cannot take that decision fairly unless the religious case has been presented at an early stage. And, of course, if one believes that the Christian life is a much better fulfilment of a human being than any other, one must go still further and say that one hopes that the result of religious teaching in early life will be that children will

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in fact reach a religious conclusion when they are in a position to examine these matters in adolescence.
Even if one is uncertain about that, even if one is doubtful about whether religion is true, I still think, from what one might call the old-fashioned secular point of view, that in order to give a child a fair chance to make up his mind he must be given some understanding of religion in his early days. I would, as I say, go further than that, as indeed I am sure would the Bishop—whom I have ventured to paraphrase rather inadequately in his absence, but I was trying to say the same thing. I feel that parents and teachers in a Christian country—after all, this is a Christian country; we have a compulsory act of worship in every school—and, for that matter, the Government, who must make the arrangements, cannot escape this terrifying but, at the same time, sublime opportunity of helping children during these crucial years to take their first steps, hesitantly but firmly, towards moral and religious truth.
5.57 p.m.
THE MINISTER OF STATE FOR EDUCATION AND SCIENCE (LORD NEWTON): My Lords, I hope that my noble friend Lady Elliot of Harwood will forgive me if I do not say anything about what is happening North of the Border. She knows that I have no responsibility for what happens there. Had I known in time that she was going to take part to-day, I would have taken steps to arm myself with information, but in fact I did not know until just before lunch. I will, however, see that what she has said is brought to the notice of my right honourable friend the Secretary of State for Scotland.
The noble Lord, Lord Silkin, called for much more research into the question of education. In the brief month that I have been in the Department of Education and Science what has struck me with most force about the education service to-day is the immense variety of aspects which are being discussed, examined and researched into. Everywhere, from one end to the other, there is a mood of re-thinking and of change, and I venture to doubt whether any other part of our national life is so
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actuated by new ideas. The plant of education is being tended by many gardeners, each with his own tool, food or fertilisers; and it is apparent to me that its growth is not being hampered through lack of skilled attention.
I should like to thank my former tutor, Lord Longford, and the noble Lord, Lord Champion, for the kind welcome that they gave to me in my new job. I am most grateful to the noble Lord, Lord Silkin, for initiating this debate on primary education, and I am also particularly grateful for the thoughtfulness in all the speeches which your Lordships have made and for the concentration upon the future rather than upon the past.
Naturally, for me, as a new boy in my job, it is appropriate to begin at the point at which boys and girls first go to school; and in view of what the noble Lord, Lord Silkin, said at the beginning of his speech, I think I ought to say, quite firmly and distinctly, that primary education does not arouse less interest in me than the subjects of the Robbins and Newsom Reports. I would certainly agree with what has been said by virtually exery speaker this afternoon, that education should be firmly based. Incidentally, on the point made by Lord Silkin to which I have just referred, I think I am right in saying that the Opposition chose the order of debate on the subjects which he mentioned: that is to say, the Robbins Report, the Newsom Report, and now, to-day, primary education.
Virtually every one of your Lordships who has spoken has talked about the physical conditions in the primary schools and the size of classes and how these cause difficulties. Certainly the noble Lord, Lord Silkin, did, and so did my noble friend Lord Eccles, both right reverend Prelates, and the noble Lord, Lord Champion. I was glad that my noble friend Lord Eccles said that we should not be too gloomy about our primary schools as they are to-day. Of course, the quality of primary education will be improved to the extent that we can get smaller classes.
This raises at once the difficult problem of teacher supply, as has been recognised by every speaker this afternoon. At the present time the staffing standards for primary schools, though

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they are still short of what we should like and what we are seeking to achieve, are better than they have ever been. About one-fifth of children of primary school age are still being taught in classes of more than 40, but this is the lowest figure on record. About another 20 per cent. are in classes with fewer than 30 children in them, while the remaining 60 per cent. or so are in classes with between 30 and 40 children in them. The average class size of primary schools to-day is about 33.
THE EARL OF LONGFORD: My Lords, the grave situation in regard to primary schools lies in the years just ahead. Will the noble Lord be dealing with this?
LORD NEWTON: If the noble Earl will give me time I will come to that. I was going on to say that a different prospect lies ahead of us, as was clearly recognised in the speech of my noble friend Lord Eccles. Progress has already been impeded by the operation of powerful forces which are quite outside our control, and in the coming years these same forces may arrest progress towards better staffing standards in the primary schools or conceivably may even reverse it. The national tendency for young people to marry and have their children much earlier than before—which is, of course, an entirely welcome development in itself—has the effect both of sharply increasing the number of children to be educated and of reducing the number of teachers available to teach them, because young women teachers follow the national tendency and leave schools in their tens of thousands to marry and have children of their own, Like the tender grass, they flourish and grow in the morning—and are lost to the schools long before the evening. It is the primary schools which suffer worst on both these counts, for it is they which first, and for some years, have to bear the main burden of the increased school population; and it is also they which sustain the heaviest loss of trained staff, since they rely so much upon women teachers.
Primary school teachers are, of course, drawn predominantly from the training colleges, and we have responded to the needs of the situation through the unprecedented expansion of the training
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colleges. The student population in the colleges, 28,000 in the late 1950's, has already increased to 54,000, and plans are well advanced for its continued expansion to 80,000 by the end of this decade. The training colleges will thus be expanding, between now and 1970, more rapidly than any other sector of higher education, and the Robbins Committee itself did not consider that they could be asked to undertake a more rapid expansion than this over the next few years. By 1970, student numbers in the training colleges will have been virtually trebled in the space of only twelve years.
Moreover, the more urgent needs of the primary schools were recognised by an important act of policy when, in 1960, the training colleges were asked to make a major change in the pattern of their general training courses by ensuring that 80 per cent. of the places were used to prepare students for teaching in primary schools. Since then, the intake of students to secondary courses has been below 20 per cent., with about 30 per cent. of the students taking a course which fitted them for work in either junior schools or the lower forms of secondary schools, and the remainder (rather more than half of the total) following exclusively primary courses.
The output of trained students from the colleges was 14,000 last year and will increase rapidly to 23,000 by 1970. A considerable majority of these students will have received a training which will equip them to teach in primary schools. If teachers were needed merely to keep pace with the rising birth rate and to replace losses due to retirement and ill-health, recruitment on this scale would very soon transform the staffing situation in the primary schools. But in fact the greater part of the accession of teaching strength to the primary schools is cancelled out by the loss of teachers already in service. The net growth in the teacher force is painfully slow, while the build-up of the school population continues apace. We must therefore examine every possible means of helping the primary schools quickly.
First, and most obviously, we must try to offset the heavy loss of young women teachers. We can do this in two ways: by training more men, as the right reverend Prelate the Lord Bishop of

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London recommended, who will not leave service in their early years at anything like the same rate; and secondly, by encouraging young women teachers who do leave to return to the schools for a second, and we hope longer, period of duty. We have already decided to make some increase, as soon as possible, in the proportion of men students entering the training colleges. At present they represent a little less than 30 per cent. of each year's entry. We propose to increase the proportion to about 36 per cent. over the next few years. This will mean that several thousand training college places will come to be occupied by men rather than women.
The return of married women offers us by far the most promising opportunity of grappling with the problem before us—an opportunity long suspected to be open to us and now confirmed in the findings of the Kelsall Report. For large numbers of the women teachers who leave the schools after short periods of service, their departure represents merely an interruption, and not the end, of their teaching careers. The Kelsall Report suggests that rather more than half of these teachers will eventually return to the schools. The primary schools suffer worst from the loss of young women and it would be reasonable to hope that they would also benefit most from this flow-back into teaching, since returning teachers could be expected to prefer the kind of schools in which they taught before. This is, in fact, what has been happening. In the three years since my noble friend Lord Eccles launched a national campaign to persuade married teachers to return, nearly 16,000 of them have done so, to full-time and part-time service. Of these 16,000, 11,000 have returned to primary schools.
It was recently decided, after consulting the local authority and teachers' associations, to launch a further publicity campaign. This campaign opened about a fortnight ago, on April 12. Its emphasis is placed mainly, though not exclusively, on the needs of the primary schools, and some prominence is given to opportunities for part-time teaching, especially since the Kelsall Report made it clear that many married women would return only if part-time posts were available, at least in the first instance.
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It is true, of course, that some local education authorities have greater need than others to recruit returning married women, and some have greater difficulty in absorbing part-time recruits. The publicity has made it clear that teachers cannot always be fitted into the schools or posts of their own first choice. However, all authorities have been asked to deal with inquiries promptly so that the force of the campaign may not be needlessly weakened by adverse publicity. In all the circumstances, the response we have so far received from local education authorities has been very gratifying.
My Lords, the teachers who took part in the Kelsall Survey placed considerable emphasis on the suggestion that we should improve nursery facilities, so that teachers with children, below school age could resume teaching sooner than would otherwise be possible. The shortage of teachers of very young children precludes any general expansion of nursery education, but my right honourable friend Sir Edward Boyle announced in answer to a Parliamentary Question last year that he was willing to approve the establishment of new nursery classes in existing accommodation in areas where the setting up of such classes would release women teachers for a return to service and, therefore, result in a net gain to the teacher force. So far, four authorities have opened nursery classes on these conditions, and a further eight authorities have submitted proposals which are now being considered. I hope that other authorities will he able to follow suit, especially since the pool of potential returners continues to grow.
LORD CHAMPION: My Lords, does that mean that the children attending these nursery schools must be the children of teachers who are returning to school? Are these nursery schools to be confined to this purpose only?
LORD NEWTON: My Lords, the idea behind my right honourable friend's announcement was that in those parts of the country where it could be shown that the establishment of these nursery classes would enable a number of teacher-mothers, so to speak, to come back into schools, then he would consider proposals on those lines.
Another factor to which the Kelsall Report drew attention is the need for

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more opportunities for part-time service. Two out of every five women returning to teaching are at present coming back part-time, and four out of every five part-time teachers now in service are married women. The number of part-timers has increased from about 5,000 to some 25,000 over the last eleven years, and this is very welcome. In some areas nearly 10 per cent. of the total teaching force in the primary schools is composed of part-time teachers. The national average at present is a little over 3 per cent. If the national average can be made to approach the figure of 10 per cent. which some authorities are already on the verge of reaching—and I believe this is well within the bounds of possibility—then the primary schools will receive very substantial help.
But as well as seeking the greatest possible increase in the recruitment of new teachers, we must also learn to use as effectively and economically as possible the teachers we have. The schools, as has been pointed out this afternoon. have long been accustomed to using the services of a range of auxiliary staff, of which laboratory and workshop technicians and school meals helpers are obvious examples. The question we must consider (and I was very glad to hear my noble friend Lord Eccles ask it) is whether there is not a part which auxiliary staff of this kind can play in the classroom itself. These helpers would not, of course, be teachers. They should not be in charge of classes, and they should always work under the direct command of fully trained qualified teachers.
I believe that a growing number of people, both inside and outside the teaching profession, are coming to see that even if we had all the qualified teachers we reasonably needed, subordinate help of this kind would still be valuable in the schools. How much more valuable, therefore, it should be in a period when our skilled and qualified teaching force, already subject, as I said, to heavy loss through the early retirement of young women teachers, is going to be stretched to the uttermost by the rising number of pupils.
Many local education authorities have already begun to employ help of this kind in infants' schools, to relieve hard-pressed teachers of tasks for which
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their professional training is not required. It is understandable that this development should begin in the infants' schools, where the pressure on teachers is greatest, but we may perhaps look to its eventual extension to schools of all kinds. I am sure that not only would this help the schools themselves but also that the standing of the teaching profession itself would be raised and not lowered if teachers were relieved of all the chores and many of the less skilled tasks they now perform, and were able to devote their energy and expertise more fully to their prime tasks of teaching, planning and organising. I hope that the National Advisory Council on the Training and Supply of Teachers, which is now studying the matter, will find it possible to reach agreement on how best we can make progress in this direction.
My Lords, many of your Lordships talked about the primary school buildings. Certainly, the noble Lord, Lord Silkin, who moved this Motion did so; and so did my noble friend Lord Eccles. I was glad to hear him put on the record, so to speak, the achievements of the post-war period in the design and building of new primary schools. The 1958 White Paper on Secondary Education accepted two tasks of first importance, in a five-year programme for 1960 to 1965. These were the completion of reorganisation of all-age schools in both rural and urban areas, and the replacement or improvement of the worst secondary school buildings, particularly those with poor facilities for teaching science and technical subjects. Beyond this, it was possible to allow the replacement of primary school buildings only in extreme cases. By the end of 1963, some 1,700,000 new primary school places had been completed since the war, and a further 100,000 started. Put another way, 4,142 new schools had been completed, 3,589 of them since October, 1951.
In deciding the policy on school building after 1964–65 the Government had to face the fact that forecasts of future numbers of children in school showed a continuous rise for so far ahead as could be foreseen, exceeding 8 million by the end of 1970; and that the expansion of the housing programme would create increasingly heavy demands

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for new school places. The Government were determined, however, to provide in major building programmes for the regular improvement and replacement of outmoded primary school buildings. To achieve this over and above the provision of essential new places inevitably called for substantially larger programmes. We therefore decided on a three years' programme for the period 1965–68, with building starts at the rate of £80 million in each of the first two years and an instalment of £40 million in the third. These programmes represent an increase of about one-third over current levels.
The programme for 1965–66 is now virtually complete. Its value is £78·4 million and projects so far announced for 1966–67 total £64·6 million. In the 1965–66 programme 428 primary school projects, equivalent to some 120,000 places and costing about £26 million, are required for basic needs; but 105 projects, yielding nearly 27,000 places at a cost of £6¼ million, are exclusively devoted to the improvement or replacement of existing primary school accommodation.
The corresponding figures for the 1966–67 programme, as it stands at present, are 304 projects or 81,000 places, costing £18½ million, for basic needs; and 97 projects, or some 24,000 places, costing nearly £6 million, for direct improvements and replacements. Thus, my Lords, the two years' programmes, as yet incomplete, already provide for more than a fifth as much again as the whole of the direct improvements to primary schools approved in the five programmes 1960 to 1965, and this comparison will, of course, improve still further as authorities' programmes for 1966–67 are completed to the full £80 million. Moreover, in both programmes nearly one-fifth of the projects required for basic needs will result in the replacement of existing unsatisfactory accommodation. The figures for both programmes include 42 projects, or over 13,000 places, for the replacement of primary schools in areas of town re-development.
The 1965 to 1968 programmes offer, I would submit, clear evidence of the Government's determination to tackle the problem of old primary school build-
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ings, in spite both of the unrelenting pressure of rising numbers and of the commitment to raise the statutory school-leaving age to 16 in 1970. The figures which I have given, of course, take no account of the steady flow of improvements of all kinds at primary schools undertaken under the minor works programmes, and these will continue on a rising scale.
Several of your Lordships (particularly the noble Lords, Lord Silkin, Lord Champion and Lord Douglas of Barloch) have discussed this afternoon the content and purpose of education. The noble Lord, Lord Silkin, called in question the whole content of education in the context (if I may paraphrase what I understood him to say) of young people leaving school and going out into the world inarticulate in speech and on paper, and lacking any appreciation of the fuller life. The noble Lord, Lord Douglas of Barloch, asked the question, which he said should be answered: what has gone wrong with our method of teaching?
My Lords, the first thing I would say about all this is that at the present time there is probably more scientific thinking and research going on into what education is, what it ought to be and how it should be organised, than ever before. I shall say a little more about this later; but, I am not prepared to countenance for one moment the suggestion one sometimes hears—I had it put to me recently at a political meeting—that the large sums of money invested in the education service are not producing worth-while returns. Of course there are individual failures, and there always will be.
Cynics can gibe—if the fancy takes them—at the follies of youth, and point at episodes like the Clacton affair, which the noble Lord, Lord Champion, mentioned en passant, but I deprecate attempts to exaggerate such manifestations and to present them as sufficient and conclusive evidence that our educational system is to blame. We must not make education the scapegoat for all human folly and wickedness. The best education will not make all young people perfect. In considering the achievements of our educational system, we must compare what it is now doing for the young with what it achieved a

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generation ago. The bad behaviour of comparatively few young people receives a good deal more publicity than the solid attainment of a much greater number of their contemporaries.
I would remind the House, as my noble friend Lord Eccles did last July in the debate we had then, in which I took part, that the current pressure on places in institutions of higher education is due to the number of passes in G.C.E. in the secondary schools. In the same debate the noble Lord, Lord Taylor, interrupted my noble friend in order to say [OFFICIAL REPORT, Vol. 252, col. 748]:
"Everybody knows that the present problems of higher education are due to the successes of the secondary schools."
In other words, my Lords, the proof of the pudding is in the eating. When you boil a pot, the froth comes to the top, and that is what you immediately see. But what matters is what is happening underneath. It is just not true, though it is sometimes suggested, that illiteracy is on the increase and that there has been no progress in standards of reading, spelling and composition.
Between 1948 and 1956 there was a marked improvement in the ability of children to read with understanding. It was particularly noticeable in the primary schools, where the age group born in 1945 were, in 1956, at the age of 11, nine months more advanced, on average, than the age group born in 1937 were in 1948. The corresponding advance among children aged 15 was about five months. A survey made at the time showed that in that period, 1948–56, the proportion of really good readers in the primary schools rose from 9 per cent. to 17 per cent.; that is to say, it virtually doubled. Moreover, the proportion of children aged 11 in the two lowest categories—the illiterate and the semi-literate—dropped from 5 per cent. to 1 per cent. The next survey was made in 1961, and was one of the investigations of the Newsom Committee. It, too, recorded progress. It found that the standards of pupils aged 14 in secondary modern schools had advanced by the equivalent of 17 months in the five years from 1956 to 1961.
These things do not happen by accident. They are the consequence of many factors. Children are healthier; at
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school they are vigorous, active, inquisitive and less inhibited. Teachers are better equipped; they are interested in each child as a person, concerned about methods and ready to try new processes and materials, with the changes in attitude that re-thinking implies. Outside the schools themselves there is the increasing influence of public interest, expressed locally through parents' associations and Associations for the Advancement of State Education, and expressed nationally by the Campaign for Educational Advance.
In view of the contribution of the noble Lord, Lord Champion, to the debate—which, if I may respectfully say so, much impressed me—I want to pick out three tendencies in the primary schools which are general enough to he significant. These are the use of books, the teaching of written composition and the teaching of science. Until comparatively recently the books to be found in most primary schools were mainly sets of text-books, to help with the teaching of the three R's, with geography, history and so on. There were very few books which children might read for themselves for pleasure and information. Children who came from homes well stocked with books could find what they wanted there: others, who did not, had to go without.
Latterly, there has been a dramatic change. The recognition has spread that a liberal and varied supply of good books is an essential part of a good education, and that the text-book is no more than a means to an end. This has led to many schools possessing something deserving the name of library, and not just a cupboard of tattered books. The books include the classics of childhood, as well as favourites from other countries, books of legends and folk-tales, poetry, and books about travel. The use of the books of course varies from school to school, but mostly they are there to be used in the day's work, not simply to be read when a task is done or to be taken home in the evening. Children undertake studies and projects which involve consulting books, extracting and summarising information, identifying specimens and answering specific questions so that they learn how to use books as well as how to enjoy them. The choice of these books is

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entirely in the hands of the teachers They can, and do, seek assistance from public libraries and from booksellers, but what they buy is their own responsibility. My Department has established two collections, one of 400 volumes mainly suitable for infants—children between 5 and 7 years of age—and another of 450 mainly for juniors—between 7 and 11 years of age. These collections, which I saw for myself last week—and very intriguing I found them—are in heavy demand throughout the year for exhibition at teachers' courses and meetings all over the country.
The teaching of written composition is another part of primary education which has seen important changes in many schools. Until recently the normal method of teaching English was to give many formal exercises, including reproduction and dictation, and to confine individual composition to a short weekly exercise on a set subject, such as "What I do on Saturdays", "My pet", "Dressing a doll", and so on. This was carefully and meticulously corrected, usually in red ink, by the teacher. It has gradually been realised that this method ignored one fact and one hypothesis. The fact was that children undoubtedly write more fluently and more interestingly if they really have something to say, something that they really want to say, something arising from a genuine personal interest or experience. This suggested that the "set" subject might not be a good exercise for young children. The hypothesis was this. Since children learn to talk their own language between the ages of 2 and 4 without any formal teaching at all, simply by the process of talking incessantly, it is possible that a similar process might produce results in learning the written language.
It can be safely claimed, my Lords, that the results of testing this hypothesis have exceeded its proponents' hopes. Not only do children, given the opportunity, write fluently, naturally and freshly, but their personal interest in their subject matter seems to stimulate them to take much more trouble with spelling, grammar and neatness generally; these qualities have not declined in the way that even those who advocated the method feared that they might. An increasing number of teachers have
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tried, and are trying, to ensure that children write about genuine interest and experience and that they write a great deal.
Thirdly, the teaching of science. From the very early days of English primary education, natural history had its place in the curriculum of most schools. But until recently it was the only kind of science to be found in the primary schools. Latterly, however, there has been a growing tendency to add to the time-table, as an extension of natural history rather than as a new subject, material drawn from the physical as distinct from the living world. We all know that children love playing with magnets, lenses, pulleys, low voltage electricity, wheels of all kinds, pumps and water and things like that; and the science done in primary schools simply consists in harnessing this interest so that the children are led to ask questions, to learn what kind of question it is sensible to ask and what kind of thing has to be done before one can find the answer. There is no wish to embark upon a systematic course of science since this is generally thought to be best left to the secondary stage. The aim is rather to turn to good account the natural curiosity of children born in a scientific age.
This brings me to two projects of research about which your Lordships may like to hear. The first one, mounted by the University of Oxford Department of Education and grant-aided by my Department, concerns the matter of which I have just spoken, the teaching of science. Its aim is to indentify the concepts and experience which it will be possible and needful for children at the primary stage to develop if they are afterwards to make satisfactory progress in their scientific education and to consider how best the development of these concepts might be encouraged.
The second project derives from the growing conviction that children of primary age are more receptive and more capable than was thought hitherto. In conjunction with the Nuffield Trust, my Department last year began an experiment into the teaching of French to children aged 8. The Trust has made itself responsible for the production of suitable teaching material, and my Department has undertaken the choice

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of areas and the training of teachers. Thirteen local education authorities and 120 primary schools are taking part; and, to ensure that there is a proper link with the secondary schools, fifty such schools in the same areas will also be involved from September, 1967, onwards. This will be a genuine experiment and no precise syllabus or method will be laid down, but it is agreed that the emphasis should be on the spoken word, and that reading should not be introduced until the children can speak well; and writing later still. During and after this experiment arrangements are being made for a careful assessment of the results.
Several of your Lordships referred to the Plowden Council and to the parallel Gittins Council for Wales. Both are now at work on their immensely important review. Their terms of reference are:
"To consider primary education in all its aspects and the transition to secondary education".
The Councils, although appointed by my right honourable friend the Secretary of State, are largely autonomous; they may choose their own way of working and decide what matters they should consider, Their Reports will attract great interest because it is over thirty years since the Consultative Committee on Education published the Hadow Report, which made a great impression on the primary school world. That is the answer to one of your Lordships who asked why these Councils had been reconstituted at the present time.
The Plowden Council, which was constituted and started work earlier than the Gittins Council, is well under way and I am grateful to Lady Plowden for agreeing that I may give your Lordships a brief account of its approach—something for which my noble friend, Lord Eccles, asked. The Council has decided to establish, at this first stage, five working parties to undertake its initial inquiries; others may be set up later. These first five parties are considering, respectively, the growth and development of children up to the age of 13 and their implications for educational organisation; the relationship between home, school and community; the ages and stages of primary education and the transition to secondary
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education; the internal organisation, curriculum, methods and staffing of primary education; and the training of teachers for primary schools. Your Lordships will see from these titles alone, how wide and how deep the Plowden Council have cast their net.
In reply to the noble Lord, Lord Silkin, who, I think, asked whether the inquiry would be wide enough, I think I can assure him that it will be going very wide indeed. Nor do I think that the noble Lord, Lord Champion, need have any fear about the comprehensiveness of the inquiry. The Council are asking some big and fascinating questions. Let me give your Lordships two examples. First, the growth and development of children. How far does our present knowledge about the growth and development of children support the existing organisation of primary education? Secondly, the relationship between home, school and community. How far is performance at school related to social background? How far can the education service offset cultural and other deprivation in the home?
I think the noble Viscount, Lord Eccles, asked when the Council would be likely to report. I understand that Lady Plowden hopes that her Council will be able to report roughly about the middle of 1966.
My Lords, I am afraid that I have been speaking for a long time, but I hope that I have been able to convince your Lordships that primary education is not standing still but is, in fact, the scene of enormous interest and variety. The work of committees, administrators, researchers and so on is important—indeed very valuable. But in the end everything that really matters turns on the individual teacher in the classroom. So much of our attention is inevitably centred on the shortage of teachers that it may sometimes appear that we have almost forgotten the very large and very vigorous teacher force that we have in the primary schools. I am very glad that the right reverend Prelate the Lord Bishop of London and my noble friend Lady Elliot of Harwood paid their tributes to them. There are now over 140,000 teachers in the 23,000 primary schools, and it is on their skill and their devotion that the success and continuing achievement of our primary education

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depends. I end by reaffirming yet again the Government's conviction that the devotion of a rising proportion of the gross national product to the education service is right as a contribution to individual betterment and wise as an investment in the future.
6.41 p.m.
LORD SILKIN: My Lords, I should like to congratulate the Minister on his maiden speech as Minister. It was a very worthy effort. I will not say that it was uncontroversial, but it was interesting and valuable, and I am sure the whole House will agree that the noble Lord has acquitted himself well in his first Ministerial speech. May I say that I do not blame the Government for the order of the debate of the three aspects of education? If there is any blame to be attached to anyone, we on this side are quite prepared to take our share.
The Minister naturally told us of the progress which has been made in the field of primary education, and, of course, progress has been made. I would not deny that teaching and education to-day is far better than it was before the war, and I did not attempt to deny it. Certainly, in the best of our schools, primary education is very good. I was concentrating my remarks on what is roughly about one-third of the children, who are not getting all the advantages of our system, and I think it would be a great mistake for us to close our eyes to the fact that one-third of our children are not getting the right kind of education.
The noble Lord was not able to tell us what steps are being taken to deal with the particularly bad areas. I pointed out, as he will remember, that the discrepancies between the opportunities in one area and in another are enormous—from 25 per cent. in one area who are going to grammar schools to 1·4 per cent. in another area. Are we doing anything about that? The Government must not be complacent about the great variations in the quality of education which exist throughout the country.
Finally, I was interested to hear of the research which has taken place and
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of the terms of reference of the Plow-den Council. I am bound to say that, in my view, they are not sufficiently fundamental. By and large, they deal with administration much less than with the content of education.
LORD NEWTON: My Lords, with great respect, that is not so.
LORD SILKIN: My Lords, with great respect to the noble Lord, I disagree with him. I listened very carefully to his statement of what are the terms of reference. But it may be that the Council have wide powers and that this debate may have some value to the Council in helping them to take the initiative and deal with what I regard as the fundamental and far-reaching questions which are due for consideration to-day. If they do that, then I think this debate will have been well worth while.
In any case, I would express my appreciation of the contributions which every speaker has made to the debate. Although it has been relatively brief and the number of speakers has not been so large as in other education debates, I think that everyone has made a worthwhile contribution, and I hope very much that the debate will have its effect in improving the system of primary education. I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

CHESHIRE BRINE PUMPING (COMPENSATION FOR SUBSIDENCE) BILL [H.L.]
Returned from the Commons, agreed to.
NEWCASTLE-UNDER-LYME CORPORATION BILL
Returned from the Commons, with the Amendments agreed to.
STAFFORD CORPORATION BILL [H.L.]
Returned from the Commons, agreed to, with Amendments: the said Amendments considered, and agreed to.
  REPORT OF MOTOR RALLIES ADVISORY COMMITTEE
  REPORT OF MOTOR RALLIES ADVISORY COMMITTEE