Sitting of 3 July 1964

Preamble
The House met at Eleven o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORDERS OF THE DAY

  FINANCE BILL
  Order for Third Reading read.
  11.5 a.m.
  The Chancellor of the Exchequer (Mr. Reginald Maudling): I beg to move, That the Bill be now read the Third time.
  The passage of the Bill in Committee and on Report has been unusually expeditious, but that has not meant that we have failed to give careful attention both to the Bill and to the wide range of new Clauses which have been moved. Certainly the Bill has been improved as a result of its passage. In particular, I draw attention to what is now Clause 8, dealing with the regulator, and to what is now Clause 21, dealing with the distribution of assets of bodies corporate carrying on mutual businesses. In both cases, improvements have been made as a result of our discussions. In the first place, more flexibility has been given to the regulator, and in the second place, in Clause 21—formerly Clause 19—we have so restricted the provisions of the Clause as to deal only with the possibilities of tax avoidance, thereby removing the anxieties which had been felt previously by a number of bodies corporate, who felt that they might come under the mischief of the Clause as originally drafted.
  The Bill in its final form, in which it is now presented to the House, is a substantially improved Bill. I should like to express my appreciation to both sides of the House for the way in which the Bill has been passed through its various stages and to thank my Treasury colleagues and the Solicitor-General for once again this year doing all the hard work during the passage of the Bill.
  Any Finance Bill contains three different categories of proposal—first, what
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  one might call machinery proposals; secondly, minor proposals for tax changes; and thirdly, major proposals for tax changes. This year the machinery proposals are probably not as numerous as usual, but they are important. There is the provision which I have mentioned for putting more flexibility into the use of the regulator, and there are, once again, one or two anti-avoidance provisions which have been thoroughly discussed both in Committee and to some extent on Report.
  The tax changes contained in the Bill fall into two categories. First, there are some changes designed to deal with particular social problems and problems of hardship. There is the new Clause inserted on Report providing for the increase in the limit for age exemption. There is Clause 11, exempting from Excise Duty vehicles modified for use by invalids. I am sure the House agrees that these modest changes in the tax structure will be of benefit to people who fully deserve our attention and care. There is also the change in the Betting Duty which, as I explained in the Budget, was designed to improve the previously existing structure of betting duty, to remove some anomalies and at the same time to protect the revenue, which was to some extent threatened with undermining. Incidentally, as I said at the time, these provisions will also bring in a modest amount of additional revenue.
  There are also one or two minor changes designed to help industry—for example, the proposal for a rebate on hydrocarbon oils used in industrial processes, the Clause dealing with sugar, and the Clause dealing with stores carried in aircraft. Altogether I commend these minor tax changes to the House as being useful and justifiable, as indeed they have been accepted to be in the course of the passage of the Bill to date.
  I come, finally, to the only two major changes—those concerning the taxation of alcohol and tobacco—which together are likely to bring in the large sum of around £100 million annually. The broad judgment of any Budget comes under three heads—first, the amount that needs to be raised in taxation; secondly, whether it should come predominantly from direct or indirect taxation; and, thirdly, having taken those two decisions,

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  what particular taxes should be selected either for increase or for reduction.
  I explained in introducing the Budget that the amount I proposed to collect in additional revenue, around £100 million, was the best calculation I could make of what was needed to help steady the economy and achieve the transition from the 6 per cent. growth rate, which was the rate in the early part of this year, to a 4 per cent. growth rate, which is what we believe can be maintained by the economy in the long run. I think that the comment on the size of the Budget proposals has, on the whole, tended to be that, if anything, they were too modest and that perhaps I should have collected more in additional revenue. I myself do not accept that. I think that to have gone further would have been to put an unnecessary load on the taxpayer and possibly to administer a check to confidence at a time when we wish particularly to avoid that. I have not wavered in my judgment that the total amount of £100 million was about the right figure.
  The House is aware that in choosing the sources of revenue I concentrated on indirect rather than direct taxation, because, as I said at the time, our object must be to encourage enterprise and output and to restrain consumption. These seem to be the classic reasons for choosing indirect rather than direct taxation. The Opposition have made it fairly clear that they would have preferred an increase in direct taxation, but in general I do not accept that argument, and neither the House nor the Committee accepted it in the course of the Bill's previous stages.
  Finally, on the choice of particular taxes—tobacco and alcohol—there was a certain amount of complaint, naturally, from the consumers of alcohol and tobacco, among whom I number myself; but I think that broadly speaking it would be fair to say that it has been generally accepted that, if I needed £100 million of revenue this year and had decided to raise it from indirect taxes, it was better to do as we did and concentrate on tobacco and alcohol rather than spreading over, for example, into Purchase Tax.
  We have discussed the provisions of the Bill thoroughly in Committee and on Report. For the second year running the
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  Opposition have not divided the House against any one of my Budget proposals, which I take as a possibly unintended tribute to the soundness of the proposals themselves. It is against that background that I commend the Bill to the House.
  11.13 a.m.
  Mr. Douglas Jay: In the absence of my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) who is, I understand, visiting his constituents, I think that I should say that I am glad to see the Chancellor here today, because I had heard a report that he was going to Cardiff to shore up the failing fortunes of a certain Mr. Dexter, instead of which, however, he appears to be here with us.
  The Chancellor said almost nothing this morning about a Bill which has almost nothing in it. His speech reminded me of these lines:
  "But answer came there none—
  And this was scarcely odd because
  They'd eaten every one."
  We are now parting with a Bill which has made no contribution whatever to greater social justice in this country, which has helped in no way to avert the rather threatening balance of payments deficit which faces us this summer, and which has made no visible step towards tax reform. The Bill does little harm and no good. Indeed, it is rather typical of the complacency of the rather senile Government we now have in office that they are so smugly satisfied with a Measure which arouses no enthusiasm whatever in anybody else.
  The Bill really does only one thing, as the Chancellor freely admits. It raises the cost of living by placing an extra £100 million burden on consumer taxes. The immediate effect of that was to raise the cost of living index by one point, which directly and immediately raises a number of wage rates and indirectly raises a very much larger number, in addition. The Government have chosen to do this in the name of regulating the economy at a time when world prices are rising and we are fighting a pretty grim battle for extra exports.
  I do not know whether the Chancellor looks at his own retail price figures, but the latest cost of living or retail price figure, that for May, is actually nearly three points up on last December. By the method the Chancellor once used, and

  1699
  used again today, for calculating rises in production, this is a rise of 7 per cent. per year. It is not a method that I would use, but it is the Chancellor's favourite statistical method. The rise in the cost of living between March and May was two points, and the food price index is 5·3 points up even compared with last August. The Minister of Agriculture is blithely engaged in restricting our imports of food and trying to raise prices, still under the impression that we are living in a world of food surpluses and falling prices.
  Mr. Maudling: In the case of the food price index, where there is a big seasonal factor, is it not better to compare similar seasons than two years?
  Mr. Jay: I am comparing summer with August, and I do not think they are very different seasons. Whichever way one looks at it, the index is undoubtedly rising. Even if I accepted the Chancellor's view, which I do not, that the whole increase in taxation this year should have been on indirect taxes, I doubt whether even then he chose the right method. He might at least have had a look at the vehicle tax on goods vehicles, which the Minister of State was good enough to inform me at Question Time before the Budget has not been raised since as long ago as 1933. If the Chancellor wanted to raise indirect taxes, he could have looked at an example where we might have achieved some secondary benefit at the same time, as for instance balancing a little better the costs of goods transport between the railways and the roads.
  However, my main quarrel with the Chancellor this year is that I have never been convinced by his argument that the whole weight of extra taxation this year should go on the consumer rather than on profits. The Chancellor's argument was that a rise in Profits Tax would take too long to operate. I have never thought that that argument was valid, because it has been often proved that the announcement of a higher Profits Tax is itself an immediate deterrent to higher dividends, and that in itself would have given the Chancellor some of the restraint in consumption that he wanted.
  Even if the argument about the Profits Tax were accepted, there would have
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  been other alternatives in direct taxation, quite apart from a capital gains tax. The Chancellor could have raised the rate of Income Tax on the higher unearned incomes. That would have been perfectly possible. I myself think that it would be less fair than raising the Profits Tax, because in these years of rising prices I do not think that we should raise equally the tax falling on the unfortunate holders of War Loan, who, as the Economic Secretary will agree, are suffering enough already under this Government, and the tax falling on the holders of equity shares. Nevertheless, whichever of those one prefers, with a capital gains tax it would have been possible to restrain demand this year without raising consumer prices and, therefore, our export costs further.
  Despite this, the Government took the other road and the evidence seems already to be accumulating that it was the wrong one. Let us briefly judge the results by the Chancellor's own test, which he mentioned today; the effect on growth, the effect on the economy and on the balance of payments. The figures published by the Chancellor this week tell us that the balance of payments on current account was in deficit as to £62 million in the first quarter of this year and on capital account by another £90 million. Again by the Chancellor's pet method of accounting things on annual rates, that would amount to an annual deficit of about £250 million on current account and about £600 million on the current and capital account taken together.
  Those are the worst balance of payment figures we have had for four years, even taking only the first quarter. Only once in the last 12 years, in 1960, have we suffered a balance of payments deficit on current account as great as a rate of £250 million. So, on the evidence of hard facts rather than of the Ministerial verbiage we have had in the last few months, this Bill and this Budget do not seem to have contributed very much to correcting the trend in the balance of payments.
  Mr. Maudling: They could not have.
  Mr. Jay: The Chancellor says that they could not have done, but he must know that the visible trade figures for the second quarter of the year, since the Budget, have continued the story at almost exactly the same rate as the figures for

  1701
  the previous quarter, and that the cost of living has been rising more steeply since the Budget than it had been in the previous months.
  It is rather unfortunate, in these circumstances, that the Prime Minister should go around the country repeatedly misleading the public by telling them that the economic situation is splendid. Whatever else we do about this problem, it is better to tell the public the truth. The Prime Minister tells his various audiences of hand-picked Conservative women—and some others, I suppose—that the economic situation was never better; this at a time when his own Chancellor's figures show that the balance of payments is in a worse deficit now than at any time, except once, in the whole of the past 12 years.
  I suppose that the Chancellor may say that the Prime Minister does not understand the subject and, therefore, he must be forgiven for not knowing what he is talking about; that he does his best with some matchsticks but that if the answer comes out wrong we must remember that he is, after all, an amateur. I am not convinced that ignorance of the subject is the best qualification for being the Prime Minister of this country. It used to be said of Neville Chamberlain that he could not be blamed for this blunders because he did not understand foreign affairs. That may have been so, but I do not think that that is a qualification for being the Prime Minister of this country—a job which one does not have to accept but presumably, if one does accept it voluntarily, one knows how to do it.
  I hope that the country and the House will notice one further irony in the present economic situation, which the Chancellor did not mention today. That is that despite the defects of this Bill and the Budget we have been saved much worse trouble—and I do not think that the Chancellor will deny this—with our gold reserves and balance of payments this summer by the earnings of the rest of the Commonwealth. Had there not been the present booming dollar earnings of the Commonwealth countries, many of them much poorer than ourselves, the £ would be far weaker than it is at present and I imagine that the Chancellor would have had to announce a higher
  1702
  gold loss for the past month than the £20 million which he announced two or three days ago.
  Only two years ago Ministers in the present Government—notably, I agree, the Secretary of State for Industry and Trade rather than the Chancellor—were persistently denigrating and depreciating the Commonwealth, telling the public that it was economically played out and that we must look elsewhere to build up our failing fortunes. Ironically, it is now the earnings; of those very countries—countries which hon. Members and particularly right hon. Members opposite were denigrating—which are now shoring up this country's economic fortunes, our reserves in particular, and are saving us from much more serious economic difficulties than we might otherwise have faced this autumn. Perhaps it is a bitter lesson which will be learned by those on the benches opposite who are still capable of learning from experience.
  There is one other point I should like to put to the Front Bench opposite, if they have not lost the power of speech to answer, having lost the power of action. There is a rather curious feature in the economic situation this year. We are told that employment is rising, and I do not doubt that that is true. We are also told that internal money incomes and expenditure are also rising, despite the extra taxation. However, according to the Treasury's official figures, industrial production has stayed absolutely still for the last three or four months.
  Can the Economic Secretary say what this means? I trust that he has given some thought to the subject—or are we to suppose that, after all the Government's talk about productivity and all the discussions which have been generated by N.E.D.C., productivity has been falling in this country for the last six or eight months? If not, why is it that we are employing more people and apparently producing the same volume of goods? If it has been falling, is not this a serious matter when in Germany, for example, both production and productivity are, I understand, still rising? How can we expect the expansion in exports which the Chancellor is always asking for if our rival's productivity continues to go up while ours does not? I hope that we can have an explanation of this before the

  1703
  end of the debate in view of the Government's own figures in respect of employment and production.
  When one looks at the rather bleak facts of the present situation—rather than the Ministerial whitewash—one finds that the state of play, as we approach the late summer and autumn period, is not very encouraging. It certainly does not suggest a hope of anything better than a draw. This Bill pushes up still further the already rapidly rising cost of living, our balance of payments is more deeply in deficit than at any time in the last four years, production in British industry does not appear to have risen at all in the last six months, on the official figures productivity is apparently falling and we are being saved by our fellow Commonwealth countries, so despised by so many hon. Members opposite, from even worse gold losses than we are now suffering.
  In addition to all this, the Government are still losing valuable export orders, notably in the case of Pakistan—about which I asked a Question last week—through their misguided refusal to grant export credits on the same terms as our competitors. I heard an hon. Member used the word "Spain". The Prime Minister is now talking a lot of partisan nonsense about the loss of military export orders to Spain, when those orders, of course, involve scarcely any manufacture or employment in this country. [AN HON. MEMBER: "Nonsense."] Hon. Members opposite may disagree, but hardly any employment in this country is involved.
  At the same time, however, the Government have turned down a £6 million equipment contract for Pakistan, which would have been wholly manufactured in this country and which would have created a great deal of work and employment over a large sphere of engineering—but the Government refused to supply the necessary export credits. In case, on this latter point, the Government have not finally made up their mind, I hope that they will think again, and see whether they can find a compromise that will enable this order to go forward, because in those two cases it is the Government, and the Government alone, who are preventing us from getting exports that really would give employment.
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  I hope, therefore—although I see no evidence of it today—that the Chancellor knows what he means to do if his present optimistic attitude proves unfounded over the next few months, but I must say, looking further ahead, that I do not believe that either our growth targets or our balance-of-payments problems will be successfully tackled until we have a Government who have a real sense of priorities—who have, incidentally, a wholly new attitude towards this question of export credits which is more and more vital to our export trade with the developing countries—above all, a Government who have a tax policy that is designed to keep living costs, and therefore, export costs, down, and a Government visibly founded on some sort of principles of social justice, without which the opportunity of any sort of incomes restraint is, I am quite convinced, wholly an illusion.
  11.32 a.m.
  Sir Stephen McAdden: I suppose it is a little difficult for the right hon. Gentleman the Member for Battersea, North (Mr. Jay) to be very cheerful when he is talking with his tongue so firmly lodged in his cheek—it is rather an uncomfortable position in which to make a speech and sound cheerful at the same time. Nevertheless, I thought that he was unnecessarily depressing. He started off on a wrong note by referring to the senile character of the occupants of the Government Front Bench. He should have looked a little closer home. It is quite true that the average age on the other side there has been brought down with a rush by the advent of the hon. Lady the Member for Leeds, South-East (Miss Bacon), but I should have thought that any senility there might be was firmly on that side of the Chamber.
  This debate has been worth while because it has given us an opportunity to see that the right hon. Gentleman has not changed at all. He is still full of woe and depression. Everything is black. Nothing is good about this Government. He will find that position difficult to sustain in the country, though I do not doubt that he will go on with it.
  We have also been given the opportunity to discover that the right hon. Gentleman has still not lost his fertility

  1705
  of thinking up new forms of taxation—it is nice to see that the leopard has not changed his spots. He is anxious still to pursue the path of previous Socialist Governments in whacking up taxation as far as possible for the most abstruse reasons. His bright idea this morning was that the Chancellor should have increased the duty payable by commercial road users. He thinks it would be a good idea—not in itself, perhaps, but to make those road services less effective competitors of the railways.
  He says that he is a chap who is interested in bringing down prices and costs, but does he not realise what would happen if we whacked up taxation on the goods vehicles that are taking goods throughout the country? Most of the goods produced here, from the raw materials to the finished article, incur transport charges four times, so that if we increase transportation charges we increase the cost of living—
  Mr. Jay: Is not the hon. Gentleman aware that this valuable suggestion came from one of his hon. Friends a few weeks ago; who, in fact, sits on the same side of the Gangway as he does?
  Sir S. McAdden: That may be so, but the monopoly in inanity is not confined to one side.
  When the right hon. Gentleman talks of the taxation to which goods vehicles are subject, and says that it has not been changed for a very long time and should be increased, does he forget that these vehicles also pay a substantial sum of money in fuel tax? I should have thought that he would take all those factors into account and say, "Here is an industry that does a useful job that is appreciated by those using its services, and we should not make it more difficult for them to compete for merely doctrinaire reasons".
  For all these reasons, the right hon. Gentleman has had a pretty rough time today. He has been trying to find some grounds on which to attack my right hon. Friend's Budget, suggesting all sorts of things that will be disastrous, and how, though the country is facing a very big future, the best we can hope for is a draw. Some of us are a little more optimistic. We have been listening to prophecies of doom from hon. Members
  1706
  opposite for so long, and we know that none of their prophecies has been fulfilled.
  Hon. Members should remember that it is easy to be a prophet as long as one does not live too long. They have been here too long and have not seen their prophecies fulfilled. We remember their forecasts of eggs at 1s. each and three million people out of work—none of these things has come about.
  I hope that the next time the right hon. Gentleman has an opportunity of speak-for the Opposition on a Budget from this side—and I think that that will come about in 12 months' time—he will be a little more cheerful and will realise that the country is not going to the dogs, that people are living in conditions of full employment, that the standard of living is pretty high, and that if he is miserable the rest of us are not.
  11.36 a.m.
  Mr. John Biffen: I congratulate my right hon. Friend on the Finance Bill, and I particularly agree that the balance of taxation in Clauses 1 to 4, which has been proved right by the events of the past few months. It is extraordinary to find this morning that the right hon. Member for Battersea, North (Mr. Jay) is still remarkably reluctant to say whether or not he thinks the £100 million was, on balance, the right kind of figure to choose as the additional amount of taxation to meet the situation.
  The only real indication we have had from hon. Members opposite about this figure seem to have been contained in their frustrated attempts to reduce Purchase Tax. If anything, one can only conclude that their reading of the economic position against which this Finance Bill was formulated was that it was a situation in which more purchasing power should be pumped into the economy rather than taken from it. That is rather an extraordinary position for hon. Members opposite to adopt and can only be explained, I imagine, from the fact that they realised that there was an election in the autumn and that they might get some advantage from advocating such a dangerous policy.
  The fact is that two-thirds of our total expenditure is on consumer spending, and, therefore, any policy designed to act as a gentle brake on the economy

  1707
  had to be applied to consumer expenditure rather than in the sphere of direct taxation, which would have taken a good deal longer to implement. The proposals of hon. Members opposite— which, fortunately, were not incorporated in the Bill—would have had a very damaging effect on the economy—
  Mr. H. Hynd: Perhaps when the hon. Member is criticising the Opposition for not suggesting fresh taxation he is not aware that it would be out of order for us to do so. We can only suggest reductions.
  Mr. Biffen: I am grateful to the hon. Member for the gentle guidance he seeks to give me. I also appreciate the sensitiveness there is on the benches opposite to this kind of criticism.
  The right hon. Member for Battersea, North talked of a real sense of priorities. This is the heavy language of the Socialism of the 'forties. It really is quite delightful to hear hon. Members opposite talk of senile Government when they are so firmly anchored to that time and show such a complete lack of constructive reaction to Clauses 1 to 4.
  Hon. Members opposite seem to have been remarkably unconstructive in their reactions to these Clauses. Confronted with them, the reaction of the right hon. Gentleman was to suggest that one should increase taxation on prime costs by increasing taxation on road transport. That is completely out of court with the realities of the situation. Everything that has happened since April has justified the initial proposals of the Finance Bill, as they are now before us—
  Mr. H. Hynd: What about the by-elections?
  Mr. Biffen: The hon. Gentleman really is feeling very sensitive about these things this morning. I do not imagine that the by-elections can reasonably be discussed on Third Reading of the Finance Bill, so I will not follow the hon. Member in that. I am sure that he will get more than enough of an answer in the electoral consequences in the autumn, but we cannot anticipate that now.
  The Chancellor was confronted with a situation in which the balance of investment and consumer expenditure
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  could easily have conspired to provide a difficult and inflationary situation for this country next year. All the events which have occurred since April confirm that he was right in his judgment to choose to increase consumer taxation by some £100 million. Those pundits who accused him of being far too modest in his taxation proposals are having second thoughts, and the economy as it stands today certainly offers every bit as good a prospect of a steady growth without the kind of inflation which would follow from the proposals made by the Opposition.
  I believe that this Third Reading debate is a clear demonstration of the fact that the Opposition still are not able to make any constructive comments on alternative taxation proposals, other than the comment that somehow or other, even if the amateurs on this side of the House produce better economic policies than the professionals on the benches opposite, there is something disgraceful about being a successful amateur.
  11.41 a.m.
  Mr. G. R. Mitchison: This is a poor little Budget. I should like to congratulate the Chancellor of the Exchequer on one thing. He succeeded in talking about it for 10 minutes, which was really rather creditable. He has described, perhaps with a bit of repetition, what it is all about.
  What does it all come to? The Tory Party is faced with a General Election and it has produced this baby. It might have been a baby intended to make a serious contribution to the solution of some very real difficulties that the country is in. One of those difficulties—I say no more than this—is the threat of an exchange crisis this autumn. The other is to preserve the right balance between road and rail in order to get a proper transport system. I hope we can all agree—except, perhaps, the hon. Member for Southend, East (Sir S. McAdden)—that that must be a matter very largely of the tax that road, on the one hand, and rail, on the other, have to bear.
  The Chancellor could have made another contribution. I should have thought that we could all be prepared to accept that if the economy at present is relatively affluent, even without going

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  into exactly how affluent it is, there is one large class of people who need more help—those in receipt of pensions, small fixed incomes and so on, the people who are at the bottom of the scale. One contribution—a very small one—was made at the last moment by the Chancellor. By and large, the form of indirect taxation that he has selected is the kind of thing that hits those people with undue hardness because they have got so little or no margin to live on.
  I will not go into it in detail—I would not be in order if I were to do so—but a Finance Bill which at this moment makes no contribution to the solution of any of those problems, which makes no contribution to the solution of the further problem of what we are going to do about the maintenance of trade in the world, and shows no sign at all of recognising the need for the measures about the Commonwealth which my right hon. Friend the Member for Battersea, North (Mr. Jay) adumbrated, seems to me to be making singularly little contribution to the real point.
  This is a baby of a Budget. The Government could have produced something which just tided them over for the moment, regardless of what they were going to pass on to their successors, not at all relucant to leave them to carry what may be a somewhat uncomfortable baby. They could have done that, and that is exactly what the Chancellor has done. He has provided just enough to carry his party and the Government forward to the time of the General Election without very much regard to what the country will require in succeeding years. This is, of course, an election Budget. It is exactly what one would expect from—I repeat—a senile Government.
  I cannot emulate the Chancellor in this. I hope I have not taken 10 minutes. If I have, it has been a pretty good but rather excessive effort. I should, however, like to say one thing more. We usually keep a friendly atmosphere on personal matters, especially on this occasion, and I must say, speaking for myself, that one could not have had a more courteous Chancellor, whatever his electoral or political merits may be, or one who has been more patient and tactful in dealing with us. That goes for the
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  Treasury Ministers and the Solicitor-General, too.
  We have not had to fight very hard. One cannot hit little babies on the head; it is not done nowadays—not even little financial babies. Our trouble is that we think this is a silly little Budget, inadequate for the needs of the nation and only just adequate for the electoral considerations, which has obviously been the Chancellor's principal motive in bringing it forward.
  11.46 a.m.
  The Economic Secretary to the Treasury (Mr. Maurice Macmillan): While thanking the hon. and learned Member for Kettering (Mr. Mitchison) for his courtesy, may I say that I wish I could emulate his ingenuity. I admire enormously his effort to describe as an electioneering Budget one which increases taxation by £100 million, putting up the prices of drink and cigarettes. I thought it was a noble but not altogether successful effort. I can assure the hon. and learned Gentleman that my right hon. Friend the Chancellor will be very much concerned with the consequences of this Budget and its effect on the country's economy next year and thereafter.
  Despite the noble efforts of the hon. and learned Gentleman and of his right hon. Friend the Member for Battersea, North (Mr. Jay) to dream up a crisis before the General Election, I think that my hon. Friend the Member for Oswestry (Mr. Biffen) was quite right when he said that the validity of the Budget in the context of this year's economic conditions has been shown by what has happened since it was introduced. My right hon. Friend will, I hope, forgive me if I compare his Budget to an advertisement for shaving cream—"Not too little, not too much." Last year he was criticised for doing too little, and the same criticism has been made again this year. In both cases the events have proved him right.
  The right hon. Member for Battersea, North said that there is nothing in the Bill. Really, £100 million extra taxation cannot be regarded as nothing. I think that the right hon. Gentleman in his electioneering efforts exaggerates greatly the effect of a one point rise

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  in the cost of living on our wage bill and on our competitive position overseas.
  Mr. Mitchison: Is not the sum of £100 million about the habitual amount of error in the Treasury estimates?
  Mr. Macmillan: I think the hon. and learned Gentleman is paying a tribute to my right hon. Friend's skill in that the marginal amounts of extra taxation which are critical in these circumstances tend to fall within the margin of error. This makes budgeting very difficult for any Chancellor. It is not a criticism. Indeed, last year and this year he has been successful.
  The right hon. Gentleman has exaggerated the effect of this Budget on our economic position. Whatever the price rises in this country are, the inflationary spiral in the countries of our main competitors in the European Economic Community is rising alarmingly. I thought that perhaps the right hon. Gentleman would not have been quite so bold in referring to the position of small savers and those whose income is derived from 3½ per cent. War Loan and Daltons had my hon. Friend the Member for Tyne-mouth (Dame Irene Ward) been here. She upbraided me the other day for not reminding hon. Members opposite of their share in this when their party was in power, and I do so now.
  I would point out to the House that the cost of living has gone up 2 per cent., not since last December but since last April, and a further 1 per cent., as the right hon. Gentleman correctly pointed out, due to the Budget increases, but I would say to the House that I do not regard, and I think it is an exaggeration to regard, this 1 per cent. as being critical in our export competitiveness. I am sure that my hon. Friend the Member for Southend, East (Sir S. McAdden) is right when he suggests that any rise in vehicle licence duty is likely also to put up industrial costs.
  Mr. Jay: The hon. Gentleman mentioned Daltons. Has he not noticed that, whether it is a question of War Loan or of Daltons, it is during the last ten years of the present Government that holders have suffered heavily both in terms of capital value and, of course, in the real value of the interest they get under the policies of the present Government?
  Mr. Macmillan: The right hon. Gentleman cannot elude responsibility, not the least part of which can be attributed to an attempt artificially to maintain a lower interest rate which I was horrified to see that he and his right hon. Friends appears still to favour despite the disastrous evidence of their attempts to do this in previous Governments.
  The right hon. Gentleman referred to the Prime Minister's speeches as painting an unduly rosy picture. In return, he tried to paint one almost entirely in black colours. Certainly, my right hon. Friend the Prime Minister, in speaking not to a hand-picked audience of Tory women, as the right hon. Gentleman said, but to the work people and others in my constituency, painted a picture which would far more easily be recognised in the country than that painted today by the right hon. Gentleman.
  I must say one word about the balance of payments. This really is the only point that hon. and right hon. Members opposite have been able to raise in criticism of my right hon. Friend's Budget. As he himself said, they have not divided against any of the Budget proposals this year or last year. As my hon. Friend the Member for Oswestry said, the success of the Budgetary measures has been confirmed by events. The balance of payments difficulties, as my right hon. Friend has repeatedly said, are those which were foreseen and must be expected in the earlier stages of expansion. I think that success has been shown by other indicators. There is no check to confidence, production is rising, and there is evidence that a more efficient use is being made of our manpower and that the employment figures are getting more nearly the same in the different regions of the country.
  The right hon. Gentleman used one side of each equation only. In referring to the balances with the overseas sterling area he quite correctly said that these have been increased. Indeed, the United Kingdom basic balance with the non-sterling area has worsened by some 41 million from the previous quarter, but the overseas sterling area balances with the rest of the world have improved by some £94 million. He must also see that this is not a question rescuing the United Kingdom from the disaster into which it would otherwise have fallen. Because the circumstances which produce those

  1713
  figures also affect our own balance of payment figures which appear in the record.
  The differences are that the overall balance shows that our own position with the non-sterling area is healthier than it was in the fourth quarter of last year. I think, therefore, that it is fair to say that the evidence shows that the importing and stock building is flattening out, production is continuing to rise; so it is not a crisis that we can look forward to in the autumn but the sort of situation which one must accept in the country or, indeed, in any business at a time of expansion, and my right hon. Friend's Budget and other measures that he has taken show every sign of controlling the situation.
  Mr. Jay: Can the hon. Gentleman explain why the official figures show a rise in employment but no rise in industrial production this year?
  Mr. Macmillan: The right hon. Gentleman is making very much out of figures over a very short period. The figures show that production is continuing to rise and there is no particular evidence yet of where and why employment is rising as well as unemployment falling. I personally—this is no more than a personal comment—think this is due to the increase in the number of people employed in the Service industries, among other things.
  Turning to the Bill itself, I should like to mention one or two points. I think that my right hon. Friend has covered the more serious and important elements of the Bill. Perhaps I may refer to two minor matters not mentioned since the Second Reading and which have disappeared, if not from the Bill, at least from HANSARD. One is the transfer and so on of Government stocks entered on the Dublin Register and the other is the inclusion of black beer in Purchase Tax instead of Duty. If it were not quite so late one could make some short remarks about the evidence that this gives of changes in political organisations and social habits.
  1714
  I should like to thank the House and others for the help we have had, particularly myself, on the difficult new tax which the Chancellor referred to—the Pool Betting Duty—which was designed to safeguard the existing duty and to make the incidence fairer. I would not expect those on whom it would fall to welcome it, but I am glad that on a minor matter we were able to meet their difficulties, and I should like to pay tribute to the hard work, skill and patience of her Majesty's Customs and Excise in dealing with what was really a very tricky little problem.
  From last year we still had the provision to exempt from Excise Duty vehicles modified for invalids. I should like to mention, as this has been raised several times, that although we have retained in the Bill the word "invalid", the licence, whatever form it may take, will follow the disc that is used for local authority parking schemes in using the words "disabled driver", since there were those who felt that "invalid" was perhaps making the driver appear a little decrepit.
  We have had interesting and useful debates some of which have ranged fairly wide. On one occasion I thought that I should be answering a debate on the oil duty, but we had an interesting discussion on transport and fuel policy generally.
  It may be unusual, but I hope that it is not inappropriate in winding up to express my personal thanks to my hon. Friend the Financial Secretary and the Solicitor-General who with my right hon. Friend the Chief Secretary has taken rather more of the burden than I have of the Committee stage of the Bill.
  I feel that the House will commend the Bill as a contribution to the stability of our economic system and, despite strictures from right hon. and hon. Gentlemen opposite, an adjustment of our tax system which is both effective and just.
  Question put and agreed to.
  Bill accordingly read the Third time and passed.

  REFRESHMENT HOUSES BULL
  Considered in Committee.
  [Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

  REFRESHMENT HOUSES BULL

    Clause 1.—(CHARGES IN, AND TOUTING FOR, REFRESHMENT HOUSES.)
    Question proposed, That the Clause stand part of the Bill.
    12 noon.
    Miss Alice Bacon: I should like to make a few remarks about Clause 1 (1,a and b), because this is the crux of the Bill. Here we have a suggestion that the tariff of charges should be displayed, and also that it shall not be lawful for there to be any personal solicitation outside for custom.
    I made a few remarks on Second Reading in which I said that this was a Bill to protect people who ought to know better. Since then I have had correspondence about those remarks, most of it agreeing with what I said. One or two of the letters have taken me to task, but these have merely confirmed my opinion about the Bill, namely, that those who complained were complaining not because of the high cost of the lemonade drinks but because they thought they were being taken into the refreshment house for a quite different purpose from what it turned out to be.
    I had one letter evidently from a man who is very annoyed about this, who says:
    "The prices charged are not important. What is important is that these women are thieves posing as prostitutes."
    In other words, if they were really prostitutes there would be nothing to grumble about, but because they were not prostitutes my correspondent says that they are really working under false pretences. I should like the Joint Under-Secretary to tell us whether or not the real purpose of the subsection dealing with personal solicitation is to protect people who think that they are, as it were, being done because they think a woman is a prostitute and then she turns out not to be one.
    I much prefer the letter I received from a man who is, I suspect, an old-age pensioner. He says:
    1716
    "It would be much better for the time of the House to be spent helping the old-age pensioner as such to get a decent living."
    He calls this "a silly Bill" and says:
    "Our male M.P.s seem to be getting dafter. Cannot we have an all-woman Government instead and get something sensible done? After all, it is the only Government we have not yet tried."
    I shall not repeat the remarks I made on Second Reading, but I wanted to draw attention to the provision which seeks to protect people because they feel that a woman is a prostitute and then find out that she is not.
    The Joint Under-Secretary of State for the Home Department (Mr. C. M. Woodhouse): The hon. Lady the Member for Leeds, South-East (Miss Bacon) has touched again on a point which she made very elegantly in the Second Reading debate. I would begin by assuring her that the purpose of the Bill in general and the Clause in particular is not simply to protect foolish men from their folly but to remove a public scandal, and a public scandal which is imposing a great nuisance upon the police, because complaints are frequently made to the police about the conduct of these refreshment houses which require investigation even if the outcome is that the police discover that no offence has been committed and that nothing can be done about it. Naturally, one has no sympathy with the men who allow themselves to be misled in this way, and it is certainly not for their benefit that we are introducing the Bill.
    The hon. Lady suggested on Second Reading that this was strictly a man's Bill for the protection of men, and she alluded again to this point by implication in one of the letters that she quoted. I have reflected carefully upon what she said during Second Reading, as I always reflect carefully upon anything the hon. Lady says in her very constructive speeches, but I have come to the conclusion that this is, in fact, a ladies' Bill for the benefit of ladies, if it is to be regarded as in any way discriminating between the sexes.
    The intention is to ensure that foolish men can no longer patronise clip joints, because clip joints will be put out of business by the Bill. The effect will be to leave the foolish man financially better off, and this will, of course, ensure that those members of the opposite sex who

    1717
    are dependent upon him to a greater or lesser degree will have another opportunity to benefit from the money which has so been saved. At least, it is reasonable to suppose that this will be one consequence of making it impossible for foolish men to gratify their follies. On a slightly more serious note, one must not forget that a number of women are employed in these so-called clip joints in what amounts virtually to criminal activities—that is, obtaining money by false pretences.
    The men who are thus fleeced, or clipped, thoroughly deserve it, and one has no sympathy with them, but I think it is a social evil that girls should be given the opportunity of being employed in this scandalous way, and when this avenue for easy money is closed to them, one may hope that they will look to more legitimate and respectable occupations. Surely, therefore, one may look on this as a ladies' Bill insofar as it may turn these girls who work as touts, hostesses and waitresses away from the fringe of crime into less anti-social activities. If I may make a concession to the hon. Lady, I have no doubt that once clip joints are put out of business these girls may be relied upon to be less foolish than the men they have previously preyed upon.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.
    Clauses 2 to 4 ordered to stand part of the Bill.
    Schedule agreed to.
    Bill reported, without Amendment; read the Third time and passed.

  EDUCATION (EAST RIDING)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]
  12.10 p.m.
  Mr. Patrick Wall: I wish to raise two constituency cases concerning decisions of the East Riding Local Education Authority and the Minister's refusal to intervene in those decisions. They are both complicated cases and, as far as possible, I want to stick to the broad principles, because I believe that in both cases important principles are involved. The first case involves the parental choice of school and concerns a child who has passed her 11-plus examination, and the second case involves the allocation of State grants for young men studying in business institutes abroad.
  Inevitably, by introducing these subjects, I am seeming to be critical of the local education authority and, I suppose, to some extent of my right hon. Friend's decision not to intervene. Therefore, I want to make it clear at the start that, although I am taking up these two cases, I have the greatest faith in the East Riding Local Education Authority, which has a magnificent record in education, and that I have confidence in its Chief Education Officer, who has done an excellent job in the East Riding.
  I turn now to the details of the first case, which concerns a girl named Andrea Reynolds. Before dealing with the problems of the child herself, may I sketch the background of this matter, which concerns the allocation of places and the geographical position of grammar schools in my constituency. There are two grammar schools in Beverley, one for boys and one for girls. Recently the local education authority has been introducing sixth form streams into the secondary modern schools in other parts of the constituency, particularly in Hessle, which has transformed those schools into what is, I understand, now called high schools.
  It is obviously a good thing to have sixth form streams in secondary modern schools—I am in no way opposed to them—but I think that it must be done without interfering with existing grammar schools. The boys' grammar school at Beverley has, for the last two years, made

  1719
  an appeal for rebuilding funds. It has been a successful appeal, but as yet it has not yet received permission to rebuild. This may sound rather outside the case we are discussing, but I hope that my hon. Friend will remind his right hon. Friend that one of the problems is the shortage of space in the existing grammar schools. This could be cured in the case of the boys by permission being given to make these additions for which funds have already been raised, or by the provision of a new grammar school in Haltemprice.
  In the south of my constituency, a number of children, particularly girls, pass their 11-plus and wish to take up places in the boys' or girls' grammar school to which I have referred. However, last year and again this year many of them have been allocated places in Hessle High School, which has the new sixth form stream and which is an excellent school. I make no criticism of it or the academic standard attained by it. The problem is that a number of parents do not wish their children to go to co-educational schools. It is basically for that reason that they want their children to go to the grammar schools in Beverley rather than to the high school in Hessle.
  I come to the details of the case of Andrea Reynolds. She passed her 11-plus examination last summer, and her parents said that they would like her to take up a place in the girls' grammar school at Beverley. They stressed from the beginning that they had strong objection to their daughter going to a mixed school. However, their daughter was allocated a place at Hessle High School. They objected very strongly, not, I stress, on academic grounds, but on the ground that they wanted their daughter to go to a girls' school. After considerable correspondence, first direct with the education authority and later through solicitors, they assumed that children who had obtained passes lower than their daughter had been given places at the girls' grammar school in Beverley.
  The local education authority, after a great deal of correspondence, admitted that
  "geographical distribution must enter into consideration in allocating schools".
  The parents, therefore, felt that they had grounds for complaint, because they
  1720
  happened to live in the south of the constituency and therefore Hessle High School was closer to them than the Beverley Grammar School, and that this was the basic reason why their daughter was sent to the former school against their wishes as it was a co-educational school. After a further exchange of correspondence with the local education authority lasting several months, the matter was referred to the Minister of Education. He replied on 30th September last, and I should like to quote the penultimate sentence of his letter:
  "The Minister of Education understands that they"—
  that is, the local education authority—
  "are furthermore prepared, if Mr. Reynolds's circumstances warrant, to give assistance towards the cost of his daughter going either to Bridlington High School"—
  which is some considerable distance outside my constituency and from the girl's home—
  "or"—
  this is the fundamental point of the quotation—
  "to an independent girls' school. Any further enquiry should be addressed to the local education authority".
  The girl's parents assumed, therefore, that they could send their child to an independent girls' school and obviously chose one which was as near as possible to her home. In fact, they sent her to a French convent in Hull.
  It must be borne in mind that the girl had already lost several weeks of her education while this correspondence was continuing. Having sent her to the French convent in Hull, the parents applied to the local education authority for the grant referred to in the Minister's letter. On 14th October they received a reply which stated:
  "As this school"—
  that is, the French convent—
  "does not appear in the list of independent schools recognised by the Ministry of Education it is not possible for my Committee to make any grant towards the cost of her education at that school".
  Again, I took the matter up with the Minister of Education, and he replied a month later, on 13th November, saying that
  "… the award of a grant towards the cost of educating a pupil at an Independent School is a matter entirely at the discretion of the Local Education Authority concerned".
  and refused to take action.

  1721
  There seem to be two matters involved. The first is the genuine mistake, partly by the official of the Ministry of Education who drafted the letter of 30th September and because of which the parents sent their child to an independent girls' school, and partly because the local education authority refused a grant because that school was not a recognised independent girls' school. If the word "recognised" had been included in the letter, the mistake would not have arisen. There is, therefore, some blame attributable to my right hon. Friend in his capacity as Minister of Education.
  However, the major principle, which affects not only my constituency but the whole country, is the degree of weight given to the parents' choice when they signify what school they want their child to attend, the child having just passed the 11-plus examination. It is clear to my mind that geographical distribution becomes, in certain cases and definitely in this case, the governing factor, and I suggest that that is wholly wrong. If because parents happen to live near a school which is co-educational their child is directed to that school virtually irrespective of the child's pass mark, it is an affront to the rights of parents. I sympathise very much with parents who, if their child obtains a sufficiently high pass, wish her to go to a girls' school. I believe that the weight of parents' choice in these matters is not given sufficient attention by local education authorities.
  I conclude my remarks on this case by saying that, since it was known that I was to raise this problem in the House today, I have had a shoal of letters from parents complaining about similar application of geographical distribution in the allocation of schools this summer as a result of the recent 11-plus examination. It is a matter which should be looked into carefully as one of principle affecting the rights of parents, rights which our party is pledged to defend.
  The second case which I wish to raise is also somewhat complicated. Therefore, I will not go into it in great detail. It concerns a constituent of mine who was educated at Sedburgh and then went to Cambridge and decided to specialise in European business administration. He went to the European Institute of Business
  1722
  and Administration at Fontainebleau, France. I am no expert in business administration, but I understand that that Institute was started in 1958 and is backed by the Harvard Graduates School of Business Administration and that these schools are virtually unique. Their status is far higher than that of other schools of business administration which have recently been started in this country. I am sure that in the years to come, perhaps in the fairly near future, schools started in England, at Cranfield and elsewhere, will eventually assume the status that the world gives to the Harvard School and to Fontainebleau. It cannot be maintained that the existing schools in England have that status today.
  My constituent applied to the local education authority for a grant to defray some of the costs of attending the European Institute of Business Administration. I understand that the fees are roughly £1,900, towards which European business firms contribute £1,200. Although a number of English students attend, this contribution is given wholly by European business firms. My constituent, therefore, had to find £700 for his costs.
  He applied to the local education authority and, after considerable correspondence, I was told on his behalf in a letter of 15th January this year that his application
  "was carefully considered by the Awards Panel, who felt that they were unable, in his case, to make a departure from their normal practice of making awards tenable at institutions in the United Kingdom only."
  I therefore raised the matter with my right hon. Friend the Minister of State for Education and Science. It seems to me that at a time when the country is being urged to increase its trade with Europe—indeed our trade with Europe is increasing almost monthly; when our people are encouraged to study in foreign languages—the administration of the school is carried out in three languages and students from 21 different countries attend; this is the sort of study that we should encourage our young men to take up. In any event, they must be fairly well qualified before they are accepted by the Institute. There should, therefore, be means of helping them to defray the expense of this form of almost post-graduate education.

  1723
  In his reply of 24th March, my right hon. Friend said:
  "Awards for post-graduate study, whether within or outside the United Kingdom, are made entirely at the discretion of local education authorities under powers conferred on them by Section 2 of the Education Act, 1962."
  My right hon. Friend again said that for that reason he did not feel justified in intervening.
  I cannot question the legal rights in this case, although I should have thought that the Minister could have brought some influence to bear, but I stress the principle which is involved. We are supposed to increase our trade, and our future depends upon our doing so. It is said that business management in this country is not as efficient as business management in the United States and elsewhere. Here is a young man who, having already attended school and university, wishes to go on to a difficult European course at a school which is second only to the world-renowned school at Harvard, but he cannot get assistance from State funds. This seems to me to be a very shortsighted policy. I have evidence to show that since the time of this man's application, grants have been allocated to students to attend this very college and I am quite clear that grants have been given by local education authorities to young British men and women to attend courses in foreign countries.
  I raise the question because it is a matter which may concern many people. I hope that my hon. Friend the Joint Under-Secretary of State for the Home Department, in replying to the debate, will be able to say to what degree State funds can be allocated to this form of course. If he replies, as his right hon. Friend the Minister of State for Education and Science did on 24th March, that this is wholly a matter for the local authorities, I hope that he will either give official guidance or at least express his views strongly so as to encourage local authorities to consider these cases on their merits and that in such cases, involving business techniques on a European basis at a European school, every encouragement should be given to young men who have the initiative to go in for these courses. I hope that my hon. Friend will be able to make it clear that if local education authorities take this view, they will at least have his blessing.
  1724
  Those are the two personal cases which I wish to raise. They involve not only the personal future of a young woman and a young man, but, I stress, they involve two matters of principle affecting many of Her Majesty's subjects in this country. The first is the principle of the degree of weight which is given to parents' choice. Are we to assume that when they sign a form expressing their wishes about the school to which their child should go, it counts for nothing? Is allocation made on another basis and the parents' choice neglected? I realise that the choice of parents cannot be the controlling factor, but it should be a very important one.
  Secondly, what methods are available to encourage our young men and women who wish to study European business administration in foreign schools? Surely, we will not be so insular as to say that only young men and women who study in this country will receive State grants. These are two important principles.
  I hope that, in addition to answering the individual cases and the points raised in them, my hon. Friend will also give us his assurance that parental rights are regarded, not, perhaps, as of prime importance, but certainly as of great importance by the Ministry and that the Department will look into the second question and do everything possible to ensure that people who have the initiative to study abroad should receive adequate help from the State.
  12.28 p.m.
  The Joint Under-Secretary of State for the Home Department (Mr. C. M. Woodhouse): In the unavoidable absence of my hon. Friend the Under-Secretary of State for Education and Science, I am glad to have the opportunity of replying to the arguments of my hon. Friend the Member for Haltemprice (Mr. Wall). I hope that it will be possible for him to take my remarks as being sympathetically disposed.
  Perhaps no hon. Member other than my hon. Friend himself could feel better justified in replying to a speech on education than myself as the representative of a constituency which includes a well-known educational institution and also another very enlightened local education authority, which looks upon problems of this kind with such sympathy

  1725
  that I even recall a case in which the local education authority has provided a grant from its funds for a young lady in my constituency of Oxford to take her education at Cambridge. Generosity could go no further than that.
  I am also glad to have this opportunity to reply to the debate because I am a Yorkshireman by descent, and indeed my grandmother was born and educated in Beverley, so I hope that my hon. Friend will accept my assurance that this is the kind of subject in which I have both a personal and a ministerial interest.
  My hon. Friend has sketched very clearly the background of general principles underlying the two cases to which he has sought to draw my right hon. and learned Friend's attention. I hope that the House will forgive me if I go through the details of these cases as seen from the Department of Education as we have a good deal of time today to consider these questions.
  Taking first the case of Andrea Reynolds, there have been two decisions of the local education authority which the girl's parent has disputed. There is first the authority's allocation of Andrea Reynolds to a secondary school. The facts as I understand them were these: in September, 1963, solicitors acting on behalf of the girl's father complained to the Minister that the authority, in making arrangements for her secondary education, was in breach of the duty imposed on it by Section 76 of the Act. This, if I may say so in parenthesis, is a complaint of a not unfamiliar kind, and the case was very carefully considered by my right hon. Friend who concluded that he had no justification for intervening.
  The facts were that, as my hon. Friend said, the girl qualified in the authority's 11-plus selection tests for education of grammar school type. The parent then expressed preference for Beverley Girls' High School as his first choice. His second choice was Hull High School for Girls, and his third choice was Hull St. Mary's Grammar School. He also indicated a strong preference for single sex education.
  As my hon. Friend pointed out, the local education authority then offered
  1726
  a place at Hessle High School which is a mixed school combining a grammar school stream, which was then entering its fourth year, with a more general secondary course. The local education authority was unable to meet his wishes at Hull High School because vacant places were allocated to girls much higher on the authority's list of selected pupils, and at Hull St. Mary's Grammar School they were also unable to meet his wishes because the places were reserved for Roman Catholic children.
  The decision which the parent contested was the authority's refusal to place his daughter at Beverley High School. The parent argued that the education authority had acted unfairly in allocating places at Beverley High School among pupils who had qualified for grammar school type education in their selection tests on a geographical basis rather than according to relative order of merit. The result of the authority's system was that some candidates lower on the authority's list for selective education than Andrea Reynolds, but who were living in Beverley or the vicinity, secured a place while she did not.
  My right hon. Friend sought information from the local education authority and examined this complaint very carefully. He came to the conclusion that the authority was not acting unreasonably. A full explanation was sent to the solicitors, and as my hon. Friend has no doubt seen the letter in question, I do not think that it is necessary to read it in detail.
  The point is that from inquiries that were made it appeared that the local education authority took account as far as it was able of expressed preference for a particular school. It also, however, felt obliged to give precedence to the demands made on the schools to accommodate qualified pupils living in areas from which other suitable schools were not readily accessible. The number of places required for new entrants to Beverley High School from its own locality in September, 1963, exceeded by a large margin the number of places available, and the authority therefore refused admission to all applicants residing outside the area. I think I should add that this decision excluded 14 pupils who would have preferred to be educated at Beverley and who, in order of merit,

  1727
  were placed higher than Andrea Reynolds.
  The girl's position in the authority's selection list entitled her to a grammar school type of education, but not to education at a particular school, because the authority does not necessarily allocate on the basis of position on the list, but takes geographical factors into account. I am bound to say that this seems reasonable, and is indeed the usual practice, particularly in rural areas.
  Mr. Wall: Does my hon. Friend appreciate the implication of that? As the reconstruction of Beverley Grammar School has not yet started, all the children in the southern part of my constituency who pass the 11-plus will be sent to a co-educational school, namely, Hessle High School, and a lot of parents resent this. What my hon. Friend has said is that geographical distribution is the major factor, and not parents' choice. Does he mean that?
  Mr. Woodhouse: Geographical assessments must be a factor, but parents' choice is also a factor, and a very important one. But these things must in the last resort be left to the discretion of the local education authority, and indeed they are so left under the Act. I do not think that it would be fair to describe the authority's decision as one merely of administrative convenience. The authority stretched admissions to the Beverley High School as far as it could short of what it considered excessive overcrowding. In fact, it admitted 79 pupils in a two-form entry school. Because of the other 14 pupils from outside the zone who were higher on the list than Andrea Reynolds and wanted admission to the school, her case could obviously not be treated in isolation, and the authority's decision had to be based, and was based, on its assessment of the general good.
  Whatever the respective merits of single-sex and mixed education may be—and there is no reason to suppose that the latter is necessarily inferior—I must point out that the Education Acts do not confer any rights on parents to single-sex education regardless of public expense. The organisation of secondary schools is primarily a matter for the local education authority to decide, and many of them consider that mixed
  1728
  schools are preferable, particularly when the area is thinly populated and single-sex schools would thus be small and would involve long travelling for young children. I think that in this matter the local education authority must have the final say in its discretion. I do not think that in this case it exercised it unreasonably.
  There was the second disputed point in the case of Andrea Reynolds, namely, the decision not to assist the girl's parent with the cost of education at an independent school. My hon. Friend has referred to the correspondence on this matter which began with the letter of 8th August, 1963, from the local education authority, and I think that it is important to take this letter as the point of departure in examining this dispute. In that letter the local education authority suggested that if the parent felt strongly about single-sex education it might be possible for him to secure the girl's admission to a recognised girls' private school, and I emphasise here the inclusion of the word "recognised". In that case the letter explained that the authority would be prepared to consider giving assistance towards the cost of tuition, in accordance with the parent's means.
  This possibility was referred to in the letter from the Department to the solicitors, dated 30th September, in which it was stated that the Minister understood that the authority was prepared, if the parent's circumstances warranted, to give assistance towards the cost of his daughter going to an independent girls' school. The letter stated that any further inquiry on the subject should be addressed to the local education authority. This is the letter which my hon. Friend has quoted, but I wish to emphasise that it must be read in conjunction with the letter of the local education authority dated 8th August.
  What happened then was that in October last year the parent made application to the authority for assistance towards the cost of his daughter's attending a school at Hull which he had already arranged for her to go to, and the authority then refused assistance, on the ground that the school was not recognised. My hon. Friend recently wrote to the Minister asking for his intervention on this point on the ground, among others, that the parents had, in

  1729
  good faith, sent their child to an independent girls' school which was not recognised and that up to this time they had not been told that the grant would apply only to recognised schools.
  It seems to me to be difficult to maintain this argument in view of the terms of the local education authority's letter of 8th August, to which I have referred. I do not think that it could reasonably be argued that the Ministry's letter should have specified that the school should be recognised when that requirement had already been specified in the letter from the local education authority. The matter of assistance with fees at an independent school to widen parental choice is entirely one for the discretion of the authority. In this case I do not think that there was anything unreasonable about the way in which the authority exercised its discretion, and for those reasons my right hon. Friend felt unable to intervene.
  I turn secondly to the other case which my hon. Friend has raised, which is the case of Mr. Bruce Beharrell, a student of the International Institute of Business Administration at Fontainebleau, in France. He was there in April of this year, but we have not heard from him since. The likelihood is that he has completed, or is about to complete, the one-year course at that Institution.
  The facts in his case are as follows: in January last he complained to my hon. Friend against the refusal of the local education authority for the East Riding of Yorkshire to grant-aid his studies at Fontainebleau. He rested his complaint on the belief
  "that there were no equivalent institutions in Britain"
  and he commented that whereas "the State" is prepared to extend State scholarships to enable holders to take the course at Fontainebleau, the Yorkshire East Riding is not prepared to help one who is not a State scholar.
  My hon. Friend had communicated with the local education authority before he wrote to the Minister on 17th February of this year. The local education authority told my hon. Friend, in a letter of 15th January, that it had felt unable to depart from its normal practice of making awards tenable at institu-
  1730
  tions in the United Kingdom only. They reminded my hon. Friend
  "that the whole question of awards for post-graduate courses is left to the discretion of local education authorities."
  This is quite true. It added that had Mr. Beharrell embarked on a suitable post-graduate management course in this country
  "it is quite possible that he would have been given an award although … it is only fair to point out that his academic record so far has not been distinguished."
  My right hon. Friend, now Minister of State, told my hon. Friend, on 4th March, that there was little he could do to help, because this matter rested with the discretion of the local education authority. For courses of a vocational nature, such as that at Fontainebleau, students must look to their local education authorities for assistance. State studentships awarded by my right hon. and learned Friend's Department and by the Department of Scientific and Industrial Research were not available for vocational courses of the kind that Mr. Beharrell was following. As a rule local education authorities are prepared to consider, on their merits, applications for awards from students who wish to undertake post-graduate courses, but it is not unusual for authorities to require that applicants should have shown by their performance during their degree course that they are above average. Most authorities look closely at applications from students who wish to study abroad, since the cost is normally much higher than in this country, and it is general practice to refuse assistance where comparable courses are available in this country.
  There has been some further correspondence between my hon. Friend and the Minister of State in which a number of points have been elucidated. I will refer only briefly to two items in this correspondence. First, on 24th March my right hon. Friend pointed out that awards for post-graduate study whether within or without the United Kingdom are made entirely at the discretion of local education authorities under powers conferred on them by Section 2 of the Education Act, 1962, and that because of this discretion he would not be justified in intervening with an authority on behalf of an individual student who had been refused an award. He also pointed

  1731
  out that one-year post-graduate courses in business administration or industrial management are freely available in this country. Examples are Birmingham, Cambridge, Edinburgh, Glasgow, Leeds, London and Manchester universities, and a number at institutes of further education.
  Mr. Dan Jones: Were there any vacancies at those educational establishments?
  Mr. Woodhouse: I could not say, but this question did not arise, because the young man about whom we are talking had not applied for such a vacancy. At the same time, my right hon. Friend pointed out that while none of these conducts courses in three languages, the standards of admission are as high as, if not higher than, those at Fontainebleau.
  Mr. Wall: But Fontainebleau has students of 21 different nationalities, and the courses are conducted in three languages. Surely my hon. Friend is not trying to say that the courses to which he has referred are of a comparable standard? That suggestion is not tenable.
  Mr. Woodhouse: I certainly am asserting that. As to the number of nationalities represented, I should have thought that at most of the universities that I have named, if they are in any way similar to the university in my constituency, the number of languages spoken would be likely to be even greater than at Fontainebleau.
  Turning to the later letter which my right hon. Friend sent to my hon. Friend, he there pointed out that State scholarships are not extended automatically for students to take the Fontainebleau course; each case is considered on its merits. Some extensions have been granted, but in other cases they have been refused. This clearly indicates the exercise of discretion of a precisely similar kind to that which local education authorities have in considering their award holders for post-graduate study.
  Mr. D. Jones: If the local education authority had granted Mr. Beharrell's request, it would not have been establishing a costly precedent.
  Mr. Woodhouse: It would not have established a precedent. There are cases where grants for such extensions have been made, and local education authorities are entitled to make them at their discretion.
  To sum up, the underlying reasons in this case—as we have been informed by the Director of Education in the local education authority—for the committee not making an award to Mr. Beharrell, were twofold. First, his academic record did not justify an award for this course, and, secondly, he could have obtained the post-graduate education which he needed in this country. It could have made an award if it had so chosen. It was within its power to do so, but it was also within its right to exercise its discretion. That, indeed, is what it did, and in the circumstances my right hon. Friend could not see any grounds for intervening himself.
  If I may conclude in more general terms, having dealt with the details of these two cases, I can certainly assure my hon. Friend of my right hon. and learned Friend's sympathy with the two points that he has personally stressed—first of all, that the rights of parents should be given considerable weight. He said that they should not be deprived of consideration, and I certainly agree with him that they must be a very important consideration even if they cannot be in all cases the overriding and decisive consideration. That assurance I can gladly give my hon. Friend.
  Secondly, my hon. Friend asked whether it was a matter of policy to encourage or discourage attendance at foreign schools providing valuable training and experience such as that at Fontainebleau. I am quite sure that my right hon. and learned Friend does regard this as a desirable kind of educational experience but not one which would justify him as a matter of doctrine in overriding the discretion which local education authorities have the right to exercise and are indeed bound to exercise, and which in this particular case it appears to me they exercised rightly.
  Question put and agreed to.
  Adjourned accordingly at seven minutes to One o'clock.

  ERRATUM
  In OFFICIAL REPORT, 2nd July, 1964, Written Answers, col. 288, in Mr. Sandys's reply to Mr. F. M. Bennett, the table should have read as follows:

  —

  Southern Rhodesia

  Northern Rhodesia

  Nyasaland

  £m.

  £m.

  £m.

  Gift towards recurrent budget

  —

  —

  4·27*

  Gifts in respect of ex Federal short-term debt

  4†

  2·75†

  0·73*

  Loans to-wards costs of Compensation for H.M.O.C.S.

  —

  3‡

  1·75*

  Gifts for development

  —

  —

  3

  Gift for University College

  1·85*

  —

  —

  Notes

  * Aid already announced.

  † To be made available as to half as soon as possible and half in April, 1965.

  ‡ This loan will be made available on the normal terms for such loans.

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