Sitting of 15 December 1966

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  WALES

    Barmouth-Ruabon Railway Line
    Mr. William Edwardsasked the Secretary of State for Wales where the Welsh Economic Council will give their views on the future of the Barmouth to Ruabon railway line.
    The Minister of State, Welsh Office(Mr. George Thomas): The Welsh Council has now given my right hon. Friend the Minister of Transport its views on the question put to it about the disposal of the formation and assets between Llangollen and Morfa Mawddach.
    Mr. Edwards: Is my hon. Friend aware that there has been considerable delay in giving these views, that British Railways has been awaiting the views of the Ministry of Transport, that the Ministry has been awaiting the views of the Welsh Economic Council and that the plans of local authorities have been held up for a long time, because of the uncertainty about this railway line?
    Mr. Thomas: My hon. Friend ought to feel all the more pleased that the Answer has now been given.

    Cardiff-Merthyr Road
    Mr. Arthur Pearsonasked the Secretary of State for Wales how he intends to proceed in placing the contracts for the extension of the Cardiff-Merthyr road programmed for 1967.
    The Under-Secretary of State for Wales (Mr. Ifor Davies): Selected firms will be invited to tender for the first stage of the work, between Tongwynlais and Nantgarw.
    Mr. Pearson: Perhaps one could say that that is short, though not unduly sweet. Would my hon. Friend use his best endeavours to guard against a lack of urgency in the placing of these contracts? Are there any solid reasons why these contracts should not be placed on a project which was programmed for 1966–67?
    Mr. Davies: At present, there is no reason to believe that the scheme will not proceed as planned, but, of course, the programme depends on the completion of the statutory procedures.

    Cynon Valley (Traffic Congestion)
    Mr. Probertasked the Secretary of State for Wales what action he proposes to take to overcome the road transport bottlenecks in the Cynon Valley.
    Mr. Ifor Davies: This is a matter initially for the local highway authorities who are responsible for the classified roads in the valley. A comprehensive land use and transportation survey is being planned in Monmouthshire and East Glamorgan which may have a bearing on road proposals in this valley and the Welsh Office is helping with technical advice and finance.
    Mr. Probert: As much of the through traffic from the south to the north is now using the A4059 road from Mountain Ash to Aberdare, would my hon. Friend consider enhancing this road's status?
    Mr. Davies: I am pleased to say that my right hon. Friend is prepared to make this part of the road a principal road from 1st April, 1967.

    European Economic Community
    Mr. Probertasked the Secretary of State for Wales what action he proposes to take to assess the effects upon industry in Wales in the event of British entry into the Common Market.
    The Secretary of State for Wales (Mr. Cledwyn Hughes): The possible implications of membership of the E.E.C. for industry in the United Kingdom, including industry in Wales are under continuous study.
    Mr. Probert: Will the position of industry in Wales be considered during the

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    negotiations of terms for entry of the Common Market?
    Mr. Hughes: If, in due course, discussions which the Government are having suggest that conditions exist for fruitful negotiations, all considerations will be kept in mind and carefully weighed.
    Mr. Hooson: Could not the Welsh Economic Council study this problem and, possibly, publish something on it? Professor Edward Nevin published a book on Wales in the Common Market two or three years ago, and it would be helpful if that kind of thing were published again, this time by the Economic Council.
    Mr. Hughes: If, at the appropriate time, I consider that any matter should be referred to the Economic Council, I shall do so.
    Mr. Anderson: Is not a more important question what will be the effect on Welsh industry if we do not enter the E.E.C.?

    Welsh Economic Development Plan
    Mr. Gwynfor Evansasked the Secretary of State for Wales if the Welsh Economic Council has yet considered the Welsh Economic Development Plan which is to be published early next year.
    Mr. George Thomas: Consultations with the Welsh Economic Council have so far been on parts of the material to be included in the White Paper on Wales. A complete draft of the White Paper will be seen by the Council as soon as it is ready.
    Mr. Evans: I thank the hon. Gentleman for that reply, but does he realise what a disgraceful situation exists now, 26 months after Labour came to power, which suggests that the Welsh Economic Council is not taken seriously by the Government, that planning in Wales is not taken seriously and that the Welsh nation is not taken seriously?
    Mr. Thomas: The hon. Gentleman must realise that this Plan deals with the long-term interests of the Welsh people. We are determined that it shall be the best plan possible. There never has been and never will be a Government with a greater interest in Wales.
    Mr. Gibson-Watt: Would the hon. Gentleman remember that the National Plan was produced in the long-term interests of the British people as a whole? May we be assured that the Welsh Plan, when it comes out, will be a good deal better? Second, how many subjects has the Economic Council before it at present, and why does the Council continue to work in an air of mystery?
    Mr. Thomas: It is very hard to please the hon. Gentleman. On his first question, the Plan for Wales will fit into the National Plan and will be in the best interests of the Welsh people. Second, the Economic Council's current work is another question, but it is engaged on real and important relevant issues.

    Welsh Language
    Mr. Gwynfor Evansasked the Secretary of State for Wales if he will now give a date for the introduction of legislation which will incorporate the principle of equal legal validity of the Welsh and English languages.
    Mr. Ifor Davies: I have nothing to add to the Answer my right hon. Friend gave to a similar Question from the hon. Member on 3rd November.
    Mr. Evans: Is the hon. Gentleman aware of the frustration felt in Wales at this protracted inaction of the Government, that this is only one of the estimated two thousand official forms published in Welsh and that it has been possible for Mr. Justice Widgery, in the meantime, to compare the status of the Welsh language in the courts of Wales with that of Polish in the Central Criminal Court here?
    Mr. Davies: The legal and other difficulties concerning this legislation were fully explained in the Welsh Grand Committee, when it discussed the Report. I can assure the hon. Gentleman that my right hon. Friend is equally anxious to make progress in this matter, and a great deal of work has been done. In the meantime, it is not too much to ask those who care for the Welsh language to exercise a little more patience. I would appeal also to those people making unjustified and deplorable attacks on my right hon. Friend to cease doing so.
    Mr. William Edwards: Is my hon. Friend aware that, in the scale of priorities for legislation, many people in Wales would like to see the leasehold reform Bill given priority to this kind of thing?
    Mr. Davies: We are fully aware of the need for exercising priorities in this matter.

    Schools Survey
    Mr. Gibson-Wattasked the Secretary of State for Wales whether he will report on the planning implications of the schools survey announced by the Minister of State for Welsh Affairs.
    Mr. George Thomas: As I told the Welsh Grand Committee, where the results of the survey demonstrate a need to replace an existing school in a potentially dangerous location by a new school and planning problems arise that cannot be resolved by the Local Planning Authorities, appropriate action will be taken.
    Mr. Gibson-Watt: I would commend this action to allay any anxiety which there may be. How many schools have been so surveyed, how many have received a bad report and what schools, if any, have been closed as a result?
    Mr. Thomas: The education authorities in Wales were asked to survey their areas. An analysis of the results so far has led to the temporary closure of two schools—Alitwen Infants School, Pontardawe, and Graig Ddu Infants School, Dinas Rhondda—and the final results of the survey are still being studied.

    Welsh Office (Staff)
    Mr Gibson-Wattasked the Secretary of State for Wales what were the numbers in the Welsh Office in Cardiff and London, respectively, in November. 1964, and November, 1966.
    Mr. Cledwyn Hughes: At the end of November, 1964, there were 225 in post in Cardiff. These were officials of the Welsh Office of the Ministry of Housing and Local Government which was the first to be absorbed in the new Welsh Office. Subsequently additional functions including roads, information and publicity, certain functions of the Ministry of Public
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    Building and Works and the Forestry Commission were taken over with the relevant staffs. The total figures at the end of last month were 451 in posit in Cardiff and 27 in London.

    Selective Employment Tax
    Mr. Birchasked the Secretary of State for Wales what representations he has received about the effect of the Selective Employment Tax on the employment of the old and the handicapped in North Wales.
    Mr. Cledywn Hughes: None, Sir.
    Mr. Birch: Is the right hon. Gentleman not aware that the Medical Officer of Health for the Flintshire County Council has made representations to the Welsh Board of Health about the loss of work of handicapped men and women in Flint-shire, because of the Selective Employment Tax? If there is to be a Selective Employment Tax, would it not be much better to give privilege to the old, the disabled and the handicapped rather than the other way round, as it now works?
    Mr. Hughes: I read reports in the Press on the views of the Medical Officer of Health for Flintshire that representations are to be made to the Welsh Board of Health. My Office will be in touch with the Board about these reports and with the Ministry of Labour, which is paying particular attention to the effects of S.E.T. on employment prospects. Any firm evidence will be considered by the Welsh Economic Council and a report made to me as soon as possible.
    Mr. Gibson-Watt: Is the right hon. Gentleman aware that it is not only the Medical Officer of Health for Flint who is concerned about this matter? This has been raised by various hon. Members and by people outside. As it is now a long time since the Budget, may we not have the report from the right hon. Gentleman's Office, which we know the Welsh Economic Council is considering upon this matter?
    Mr. Hughes: As the hon. Member must know by now, the reports of the Welsh Economic Council and of any other Economic Council in the United Kingdom are not published. I would ask him to bear this in mind. These councils report, in the case of Wales,

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    to me, in the case of Scotland, to my right hon. Friend the Secretary of State for Scotland and, in the case of the English Economic Councils, to the First Secretary of State.

  EDUCATION AND SCIENCE

    Space Research (Information)
    Mr. Martenasked the Secretary of State for Education and Science if he is satisfied with the dissemination of scientific information obtained from his Department's space activities for potential industrial users; and if he will make a statement.
    The Minister of State, Department of Education and Science (Mr. Goronwy Roberts): Industry has accesss to this information through scientific journals, reports of United Kingdom organisations, the Department's National Lending Library for Science and Technology, and the Ministry of Aviation's Technical Information Service. In addition the Scientific and Technical reports issued by the European Space Research Organisation, as well as those published by the U.S. National Aeronautics and Space Administration, are available through the ESRO/ELDO documentation service. Moreover, my right hon. Friend the Minister of Technology is actively engaged in ensuring that industry gets the fullest advantages from knowledge derived from space activities.
    Mr. Marten: In both parts of that Answer, the Minister of State said that the information is available. The purpose of the Question was to know whether the Ministry takes positive action to use this scientific knowledge and push it out to industry. The purpose of such knowledge is that it should be applied to the benefit of the whole country. The Question related to whether it is being pushed out to industry.
    Mr. Roberts: I am sure that this is so. Detailed scientific reports on the activities of space research groups in universities, Government research establishments and other establishments are published in annual reports issued constantly by the S.R.C. and the Royal Society. We watch the position carefully and anything which
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    we can do to disseminate knowledge, as well as to cause it to be assembled, we do.

    Graduate Teachers (Salaries)
    Mrs. Knightasked the Secretary of State for Education and Science whether he will amend his regulations so that graduate teachers are paid graduate additions to salary whatever their age.
    The Minister of State, Department of Education and Science (Mr. Edward Redhead): Any change in the provision which governs this matter is for consideration by the Burnham Committee in the first place.
    Mrs. Knight: Does the Minister think it right that graduate teachers, having accepted the offer of posts at an advertised salary, should receive the nasty shock upon receiving their first salary cheques of finding that they have not been given the promised salary? Would he not agree that if graduate teachers are thought to be inferior, because of their age, they should be told that they are not eligible for the proper salary?
    Mr. Redhead: I am conscious of the point to which the hon. Lady draws attention, but it would be improper for me to comment on it in detail at the moment, in as much as it is a matter which is negotiable between the parties on the Burnham Committee.

    Robbins Report
    Mr. Dalyellasked the Secretary of State for Education and Science whether he will publish some time in 1967 a progress-chasing analysis of the Robbins Report, giving details of his present policy towards its recommendations.
    The Minister of Education and Science (Mr. Anthony Crosland): I have given figures in recent weeks showing that the Robbins targets for student entry in September 1966 have been exceeded both for higher education as a whole and for each individual sector. I shall keep the House regularly informed of future progress.
    Mr. Dalyell: That is all right as far as it goes, but what serious follow-up has been done on the 170 or so lesser recommendations of the Robbins Report on

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    residents' wastage and other related topics? In particular, can he say what machinery exists in his Department to deal with the vital appendices to the Robbins Report?
    Mr. Crosland: To answer the first part of my lion. Friend's supplementary, many of the 170 recommendations were addressed directly to universities and not to the Government. Of those addressed to the Government, a very high proportion have been carried out; and I would be happy to give my hon. Friend the details. To answer the second part—on what is sometimes referred to in the House as "keeping Robbins un to date"—I forecast in July, and shall be announcing the details today, that we would be setting up in the Department a long-term planning branch, one of whose objects would be precisely this matter.
    Sir E. Boyle: Would the right hon. Gentleman give the House an assurance that university targets and grants after 1967–68 will reflect the fact that a larger proportion of the university age group is becoming qualified for university entry than the Robbins Committee expected?
    Mr. Crosland: I can certainly give that assurance. However, as the right hon. Gentleman knows, the other side of the picture is that the size of the 18 year old age group is, for the moment, static and will fall by 25 per cent. over the next few years.

    Engineering Students
    Mr. Dalyellasked the Secretary of State for Education and Science what measures he is taking to encourage pupils to study engineering, either while they are still at school or subsequent to their leaving school.
    Mr. Redhead: An inter-departmental Working Party on which the Department is represented has, among other activities, arranged for the preparation of films and exhibitions and the publication of a booklet and a magazine, both widely distributed to schools. The Schools Council is studying ways of ensuring that the curriculum gives pupils a sense of the importance of technology and develops their practical and creative ability.
    Mr. Dalyell: When does my hon. Friend expect the results of this study?
    Mr. Redhead: I am not able to give a precise date when the Schools Council study will be completed, but if my hon. Friend will keep in touch with me on the subject, I will be happy to give him any further information that becomes available.
    Mr. Charles Morrison: Is the hon. Gentleman satisfied with the numbers studying engineering? Will he undertake to ensure that there is better and greater contact between the engineering world and the schools?
    Mr. Redhead: I am well satisfied that there is increasing contact. Indeed, its importance is widely recognised and we are anxious to encourage it.

    Selective Employment Tax (Student Labour)
    Sir H. Lucas-Toothasked the Secretary of State for Education and Science whether he is aware that students are finding it difficult to obtain technical experience in industry by reason of the unwillingness of employers to take on student labour now that they have to pay Selective Employment Tax; and what action he proposes to take.
    Mr. Goronwy Roberts: No such case has been brought to my notice.
    Sir H. Lucas-Tooth: While the particular case which gave rise to this Question has been satisfactorily dealt with, will the Minister look into the cases of those who are doing sandwich courses at technical colleges for what the Government are pleased to call "non-productive indusitries", and particularly those doing courses for the catering trade, as I believe that he will find that there are great difficulties in this connection?
    Mr. Roberts: My right hon. Friend will be very ready to look into this matter in the light of any evidence that comes forward.

    Primary School Hours
    Mr Biggs-Davisonasked the Secretary of State for Education and Science what consultations he has had with, and what advice he has given to, local education authorities about the shortening of primary school hours for the youngest children.
    Mr. Crosland: None, Sir.
    Mr. Biggs-Davison: Is the right hon. Gentleman not aware, as I am aware, of five-year old children for whom the full school day is extremely long and for whom, in some cases, it causes nervousness as well as physical exhaustion? Is it not possible for primary school staff to have the same latitude as is enjoyed by the staff of private schools?
    Mr. Crosland: Some latitude is already granted in respect of children under eight years of age, and that occurs under Regulation 10(1) of the 1959 School Regulations. The hon. Gentleman is right in saying that this subject has aroused a great deal of public discussion recently; but I would prefer not to make any suggestion relating to a new policy until we know, which we shall in the middle of January, whether—and, if so, what—the Plowden Committee has anything to say about the matter.

    Welsh Joint Education Committee (Teacher Representation)
    Mr. Andersonasked the Secretary of State for Education and Science whether he will take the necessary steps to change that section of the constitution of the Welsh Joint Education Committee which gives to the Joint Committee the power to determine the nature and distribution of the teachers' representatives, since one of the largest teachers' associations in the Principality is denied membership.
    Mr. Goronwy Roberts: No, Sir. It is for the Welsh Joint Education Committee to approach my right hon. Friend if it thinks that changes in its constitution have become desirable. I understand that it has this whole question of teacher representation on the Joint Committee under review.
    Mr. Anderson: Does not my hon. Friend realise that this matter has been under study for a considerable time and that the N.A.S. has been extremely patient during this period? Does he not recognise that so long as this body, which represents more than 10 per cent. of the teacher population of Wales, is excluded from the W.J.E.C., the W.J.E.C. cannot be representative in the terms of its constitution?
    Mr. Roberts: This is essentially a matter for the Joint Committee and its
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    constituent authorities. My right hon. Friend thinks that it is best to leave it to the Joint Committee to decide this issue in the light of all the circumstances—to decide whether and, if so when, to approach him for a varying Order.

    School Meals and Clothing Grants
    Mr. Archerasked the Secretary of State for Education and Science whether he will undertake a survey of the income qualifications current among various local education authorities for free school meals and for clothing grants.
    Mr. Redhead: Since 1964, local education authorities in England and Wales have operated a uniform scale of income qualifications for free school meals, which my right hon. Friend has approved. The income qualifications for clothing grants are properly a matter for the discretion of local authorities.
    Mr. Archer: While respecting the right of local authorities to make their own decisions, would they not find it helpful if they were given some guidance on this subject? Would my hon. Friend not agree that at the moment, at least in respect of the clothing grant, the provision available for a child depends not on its needs but on the accident of where it happens to live?
    Mr. Redhead: I am not aware of any general dissatisfaction with the clothing grant arrangements which would warrant the survey suggested by my hon. Friend's Question. The grant made by authorities in respect of the cost of school uniforms, for example, means that while it is not usually large, about £10 for initial outfits, in respect of other hardship cases for other forms of clothing, there are provisions made and the scales used for this purpose are comparable with those for free school meals.
    Mr. J. E. B. Hill: Is the Minister satisfied that the present regulations achieve a correct balance between the needs of the smaller and larger families?
    Mr. Redhead: It is fair that I should say that the associations of local authorities are at present being consulted on a proposed increase for the qualifying income levels, to make them conform with the increase in supplementary benefits

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    announced which took effect on 28th November, and this will more adequately reflect the situation.
    Mrs. Knight: Would the hon. Gentleman assure us that no demarcation of any sort will exist in the arrangements for the issue of free meal tickets? In other words, will he ensure that children are not aware of who are and who are not getting free meal tickets?
    Mr. Redhead: My experience has been that local authorities are usually extremely careful to avoid any possibility of that happening. This is an anxiety which we all share; and if anything to the contrary is brought to our notice, I assure the hon. Lady that it will receive our urgent attention.
    Mr. Onslowasked the Secretary of State for Education and Science how many departmental and local authority staff are at present wholly or mainly employed with the administration of the school meals service; and what is the total annual cost so involved.
    Mr. Redhead: Twenty-four of the Department's officers are so employed full-time or part-time, at an estimated annual cost, including overheads, of £57,848. Information on the number of local education authority staff employed is not available but the cost of their administration of the school meals service in 1965/66 was £4,326,000.
    Mr. Onslow: Would not the hon. Gentleman agree that the cost of school meals and free milk now represents one-quarter of the annual running costs of primary schools? Is not this a field in which there is room for some economy of manpower and public money?
    Mr. Redhead: In fact, the cost of administration forms only 5·4 per cent. of the sum total cost of the school meals service.

    Scientific Research Students (Grants)
    Mr. Moonmanasked the Secretary of State for Education and Science how many suitably qualified candidates applied for Scientific Research Council grants to engage on research and postgraduate studies in the current year; and how many awards were offered.
    Mr. Goronwy Roberts: 3,109 suitably qualified candidates applied for S.R.C.
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    studentships to start in October 1966; 2,763 of these were offered awards.
    Mr. Moonman: I thank my hon. Friend for that reply. Would he not agree that, in view of the need to extend post-graduate study, the S.R.C. should increase the number of awards for the coming year? If so, to what extent will that be done?
    Mr. Roberts: There has been a progressive increase in the number of awards made by the S.R.C. during the last few years, and I have no doubt that it will continue the good work. However, I would remind my hon. Friend that while the S.R.C. is the main awarding body for post-graduate study, it is not the only one. It is responsible for about half of the total awards given for postgraduate study.
    Mr. J. E. B. Hill: What proportion of these candidates came from overseas and will, therefore, after their work, probably leave this country to work overseas?
    Mr. Roberts: I could not answer that without prior notice.

    Science and Technology (Degree Courses)
    Mr. Moonmanasked the Secretary of State for Education and Science what was the estimated number of student places for degree courses in science and technology in the years 1964–65, 1965–66, and 1966–67; and how many places were taken up.
    Mr. Crosland: As the reply contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Moonman: Would my right hon. Friend not agree that a real responsibility in this matter lies on the schools, industry and the Government information services to ensure that as much information as possible about this is given to the youngsters concerned?
    Mr. Crosland: I entirely agree with my hon. Friend. A considerable responsibility is involved here. The present picture on this front is comparatively favourable, but we cannot be sure that it will continue to remain favourable in the years ahead. This is, therefore, a matter on which the Dainton Committee, among other bodies, was set up to report, and I

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    hope to receive the second report of the Dainton Committee early in the new year.
    The following is the information:
    The Reports of the Universities Central Council on Admissions for 1964 and 1965 show that approximately 20,050 places in faculties of science and technology were taken up in universities and colleges of advanced technology in October 1964 and 24,341 in October 1965, an increase of 25·6 per cent. for scientists, 15·8 per cent. for technologists and 12·1 per cent. for agricultural scientists. Figures for places taken up in October 1966 in these faculties are not yet available. In addition 3,760 students were admitted in the 1965–66 academic year to full-time and 'sandwich' degree courses in science and technology in technical colleges.
    The Reports indicate that in the field covered by their scheme 1,500 fewer students in science and technology were admitted in the year 1964 than the institutions had forecast; and that in 1965 admissions differed only marginally from the estimate, with the exception of pure science, where the number was 430 less than expected.
    No figures are yet available for 1966.

    Sutton Primary School, Macclesfield
    Sir A. V. Harveyasked the Secretary of State for Education and Science what steps are being taken to provide a new primary school at Sutton, Macclesfield, bearing in mind that planning permission has been granted for approximately 170 new dwellings in the parish.
    Mr. Redhead: My right hon. Friend is now considering whether a new school in Sutton can be approved for the 1968–69 major building programme.
    Sir A. V. Harvey: Will the hon. Gentleman come to an early decision on this matter, since the people of Sutton are alarmed at the prospect of the programme being put back? Will he bear in mind the promises made only eight months ago about additional primary schools to be built in Cheshire, a promise which was also made by the Labour candidate who opposed me at the last election?
    Mr. Redhead: I am sure that the hon. Gentleman will not expect me to enter into election controversies. I assure him that an announcement on this matter will not be long delayed.

    Welsh School
    Mr. Hoosonasked the Secretary of State for Education and Science on how many occasions he has refused to
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    sanction the setting up of a Welsh school when the local education committee has been in favour of such a school; and what were the grounds for refusal in each case.
    Mr. Goronwy Roberts: None, Sir.
    Mr. Hooson: Is the hon. Gentleman aware of a recent report about a case in North Wales, in Denbighshire, where the Ministry refused to confirm the view of the local education authority that such a school should be established at Coedpoeth? Would he confirm or deny that report?
    Mr. Roberts: If the hon. and learned Gentleman is thinking of the proposal for a school at Coedpoeth, in Wrexham I assure him that my Department has not refused the proposal in that case, but has asked the local education authority to consider an alternative possibility.
    Sir E. Boyle: As one who has had the pleasure of opening one of these schools, at a place which I will not attempt to pronounce, is it not clear that in this, as with primary schools, educational development must be considered to be educationally viable in all cases and that nobody stands to gain from a project which cannot work out sensibly in educational terms?
    Mr. Roberts: I am glad to agree with the right hon. Gentleman. I believe that the place which he felt unable to attempt to pronounce is Rhydfelen.

    Territorial Army Drill Halls
    Mr. Philip Noel-Bakerasked the Secretary of State for Education and Science what proposals he has for securing the use of Territorial Army drill halls, when suitable, for purposes of physical recreation.
    Mr. Redhead: My hon. Friend has asked regional sports councils to assess the suitability of redundant Territorial Army Centres for use as indoor sports centres. Under the new arrangements announced last October in Circular 57/66 issued by my right hon. Friend the Minister of Housing and Local Government, the county and district or borough council will have first option to purchase any such centres which are surplus to Territorial and Army Volunteer Reserve or any other Government requirements.
    Mr. Noel-Baker: While expressing my gratitude to my hon. Friend, may I ask him to be good enough to keep me informed about developments in Derby and Derbyshire?
    Mr. Redhead: I will most certainly do that.
    Sir Harmar Nicholls: Whilst I agree that it is a good thing that local authorities should have some sort of option on buildings such as these, will the Minister bear in mind the need to pay attention to the commercial value of the premises so that they can play some part in building up the economic strength we must have to keep going at all?
    Mr. Redhead: The hon. Gentleman's point will he duly noted.
    Mr. J. T. Price: Is my hon. Friend aware that when I made a similar inquiry of his Department not long ago as to the possibility of releasing one of these drill halls for recreational purposes, I was informed in the official correspondence from the Department that, provided no other Government Department required it for other purposes, the local authority would be considered after that process had been gone through? Is he aware that this antediluvian process of offering building like this, which are needed by local people for real purposes and not for bureaucratic purposes, is something to which we in Lancashire strongly object?
    Mr. Redhead: The reply my hon. Friend received from the Department was in every way consistent with the reply I gave to the original Question. I would not dismiss other Government requirements in this respect in quite the derisive terms my hon. Friend used.

    Comprehensive Schools
    Mr. St. John-Stevasasked the Secretary of State for Education and Science what plans he has in hand for additional building programmes for the provision of comprehensive schools following the response of local authorities to Circular 1065.
    Mr. Crosland: I would refer the hon. Member to the Answer I gave to my hon. Friend the Member for Ealing, North (Mr. Molloy) on 3rd November.—[Vol. 735, c. 641.]
    Mr. St. John-Stevas: In those circumstances, is it not inevitable that the authorities will put forward botched-up and sham schemes, and if no extra money is available, would it not be better to concentrate on improving existing schools and securing the services of more teachers?
    Mr. Crosland: As the hon. Gentleman must know if he has attended Question Time on educational matters or educational debates, the latter part of his supplementary question refers to exactly what we are trying to do. That is where the money is being concentrated As to the first part, it is perfectly true that the existing stock of buildings imposes a limitation on the speed at which schools can go comprehensive, but we have to face the fact that we are suffering from the legacy of the previous Government—[Interruption.]—having approved hundreds, even thousands, of inadequately-sized secondary modern schools.
    Mr. Molloy: Will my right hon. Friend appreciate that the point he made in his reply to me was well taken and well understood? Will he acknowledge, further, that there will certainly be no botched-up or sham schemes in the Borough of Ealing, which may very well disappoint the hon. Member for Chelmsford (Mr. St. John-Stevas)?
    Mr. Hornby: Will the Secretary of State give an assurance that, whatever plans he may have for secondary schools, he will not divert resources from the primary schools which, in view of the size of the age groups coming along in the next five years, constitute far and away the biggest problem?
    Mr. Crosland: The hon. Gentleman knows perfectly well that I must have given this assurance at least 50 times in the last 12 months, but I am quite happy to give it for the 51st time this afternoon. As to approving botched-up schemes, to which his hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) referred, if the hon. Member has read this morning's newspapers, I am sure that he will be completely satisfied that we will not, in any circumstances, approve schemes we do not think satisfactory.
    Mr. Hugh Fraser: Is the right hon. Gentleman aware that in Stafford, as far as comprehensive schools are concerned,

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    he is himself regarded as the arch botcher?
    Mr. Crosland: One of the agreeable features of our educational scene in the last few months has been the fact that the right hon. Gentleman has been in the forefront as one of our most fanatical supporters of comprehensive reorganisation, for which I am extremely grateful.

    Beverley (Secondary Education)
    Mr. Wallasked the Secretary of State for Education and Science if he will make a statement about the future plans for the reorganisation of secondary education in Beverley.
    Mr. Redhead: A deputation representing the governors of the school will be received by officers of the Department on 19th January. My right hon. Friend cannot make a statement until after he has had an opportunity of considering what the governors have to say at this meeting.
    Mr. Wall: Will the hon. Gentleman bear in mind that there are strong local feelings that the views of parents, contrary to paragraph 40 of Circular 1065, have not been ascertained in this case, and will his right hon. Friend consider all points of view when coming to a final decision?
    Mr. Redhead: According to what my right hon. Friend has made abundantly clear, we are ready to consider all relevant points of view and take them into due consideration.

    Expenditure
    Mr. Biffenasked the Secretary of of State for Education and Science it there will be any revision of expected education expenditure for 1969–70 indicated in Command Paper No. 2915 on account of the postponement of the National Plan.
    Mr. Crosland: I have nothing to add to my Answer on 3rd November to the right hon. Gentleman the Member for Handsworth (Sir E. Boyle).—[Vol. 735. c. 137–8.]
    Mr. Biffen: But quite a while has elapsed since then. Is there not now an opportunity for the right hon. Gentleman to state quite clearly whether or not the figures of educational expenditure con-
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    tained in the White Paper were related to the expectation of the economy contained in the National Plan? If not, will he please make this quite clear?
    Mr. Crosland: It was made perfectly clear in the National Plan that the figures contained in it were subject to continuous modification in the light of the development of the economy. I can assure the hon. Gentleman that in the last two years since this Government came to power, educational spending has increased by between 5 per cent. and 6 per cent., and is now taking a larger proportion of the national income than two years ago. Further, I can certainly assure him that this improvement will continue, and that we shall not have the occasional cuts in school building programmes, for example, that we had under the previous Government.
    Sir E. Boyle: Can the Secretary of State answer this specific question? In the National Plan it was made clear that under the Conservatives expenditure on each child in a primary school had been going up, in real terms, by 5 per cent. a year, and on each child in a secondary school by 10 per cent. a year. Can he say whether the Government's latest proposals for local government finance are consistent with the continuation of that rate of climb in expenditure?
    Mr. Crosland: The fact is that at the end of the period of Conservative Government, education was still taking a completely inadequate proportion of the national income. [HON. MEMBERS: "Answer."] I am happy to say, in answer to the right hon. Gentleman, that in the last two years we have further increased that proportion, and have further increased, which is the precise question he asked, the average standards per pupil in both primary and secondary schools.

    Students (Greater London)
    Dr. Grayasked the Secretary of State for Education and Science what is the total number of full-time students in Greater London, and the percentage increase in these over the last five years.
    Mr. Goronwy Roberts: About 89,500. This represents an increase of 47 per cent. over the figure for five years earlier.
    Dr. Gray: Whilst welcoming the news of that sweeping increase in the number

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    of students in London, may I ask my hon. Friend to look at their desperate lodging situation? Will he seek to increase also by 47 per cent. the supply of hostel and single-room accommodation?
    Mr. Roberts: My right hon. Friend and I share to the full my hon. Friend's concern about this problem. It is not an easy problem, but we continue to do what we can to alleviate the situation.

    School-Leaving Age
    Mr. Biffenasked the Secretary of State for Education and Science if he will review the policy of raising the school-leaving age in 1970–71.
    Mr. Crosland: No, Sir.
    Mr. Biffen: Despite the right hon. Gentleman's heroic Answer to Question No. 29, is it not quite clear that the failure of the Government's economic policy is bound to put some limitation on the resources available for education? In those circumstances, will he assure the House that there will be an adequate supply of buildings and teachers before he concludes this particular aspect of educational policy?
    Mr. Crosland: I can assure the hon. Gentleman—and there is a Question on this subject on the Order Paper—that I still think that his own right hon. Friend, when he announced his decision under the previous Government, was absolutely correct; and that to go back on that decision now would be both educationally and socially disastrous.
    Mr. Philip Noel-Baker: Is it not vital for the country's economic future that the policy of raising the school age should be adhered to, and that the age should he raised above 16 at the earliest possible date?
    Mr. Crosland: I think that it is completely vital. The country needs more and better educated manpower, and we know from endless reports from Newsom, Crowther and so on, what a desperate waste of talent there is due to early school leaving.
    Sir E. Boyle: In view of the Minister's earlier Answer, would he accept that I have never, nor have my right hon. Friends, regretted the announcement I
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    made at the end of January, 1964? And would he not agree that the latest figures of regional variation in the numbers of those staying on at school voluntarily further justify that announcement? But is the right hon. Gentleman aware that we are concerned, and public opinion is concerned, that adequate resources should be available? And would he not agree that one should think of this as an extra year of full-time education?
    Mr. Crosland: I entirely accept what the right hon. Gentleman has said in the first part of his supplementary question. If I may say so, he has given most valuable support to the decision he took, and which we have confirmed against those fainthearted people in the educational service who would now like to go back on that decision. As to the second part of his supplementary question, there is a Question on the Order Paper on this precise subject.
    Mr. Wolrige-Gordonasked the Secretary of State for Education and Science what progress is being made towards the raising of the school-leaving age; and what work is being done in planning suitable courses for the extra year.
    Mr. Crosland: I am making over £100 million available for the necessary buildings between 1968 and 1972 and shall announce the first allocations very shortly. I have already given authorities practical guidance on extending existing schools. I am continuing to develop the teacher supply programme. Progress is being made by teachers in working out new courses with the help of the Schools Council.
    Mr. Wolrige-Gordon: I thank the right hon. Gentleman for that reply. Is he aware that particularly in the planning of the further year's courses there will be a great need to win the imagination of the young people in the schools, some of whom already feel that they have been at school long enough and have, I think he would agree, a laudable ambition to go to work instead to try to help the Government get out of their economic difficulties?
    Mr. Crosland: I entirely agree that the question of what is taught and what is studied in the last year is an extraordinary important one, and we must produce a

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    last year's course which is different in character from what is being taught in the rest of the school. That is why the Schools Council, with a great deal of support from the teachers, has given such a high priority to trying to produce more imaginative, more practical, less academic, courses for the last year.

    Head Teachers (Clerical Assistance)
    Mr. Wolrige-Gordonasked the Secretary of State for Education and Science what administrative and clerical assistance he makes available to schools to enable head teachers, in particular, to do more teaching.
    Mr. Redhead: This is a matter for local education authorities.
    Mr. Wolrige-Gordon: Is the hon. Gentleman aware that there is considerable complaint from head teachers that they have so much administrative and clerical work to do that they have very little time to teach? Cannot he do anything to expedite this sort of practical assistance in the course of their work?
    Mr. Redhead: A recent report showed that a total of some 23,000 clerical and secretarial staff were currently employed in maintained schools, three-quarters of them part-time. This is perhaps a larger figure than is commonly realised. We are in favour of schools having adequate non-teaching help of all kinds to serve the purpose the hon. Gentleman has in mind, and the authorities and teachers' associations are currently examining, through a joint working party, the use of non-teaching staff.

    Sixth Form Pupils (A-Level Subjects)
    Mr. Hooleyasked the Secretary of State for Education and Science how many sixth form pupils sat A-level science subjects, including mathematics, and A level arts subjects, including economics, respectively, in July of each of the years 1960 to 1966; and whether his Department has made any estimates of future trends.
    Mr. Redhead: This information is not available in the form requested. I shall, however, publish in the OFFICIAL REPORT a table of figures which shows the number of subjects attempted at A-level, analysed by main groups of subjects.
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    Estimates of future trends have not been made but the whole subject is being studied by the Dainton Committee.
    Mr. Hooley: Would not my hon. Friend agree that these figures have serious implications for this country's future scientific manpower? Would the Department be prepared to make a special study of this problem?
    Mr. Redhead: This matter will be kept under constant review, but if, after studying the figures which I have promised, my hon. Friend would like to approach me again, I would be very happy to assist.
    Following are the figures:

    NUMBERS OF SUBJECT ATTEMPTS AT THE GENERAL CERTIFICATE OF EDUCATION, ADVANCED LEVEL SUMMER EXAMINATION, BY MAIN GROUPS OF SUBJECTS

    Year of examination

    Arts

    Science (including Mathematics)

    Social Science and vocational subjects (including economics)

    1960

    75,952

    116,122

    24,841

    1961

    85,089

    129,028

    29,658

    1962

    95,022

    137,534

    37,154

    1963

    101,838

    140,181

    43,363

    1964

    116,469

    150,722

    50,457

    1965

    140,029

    166,108

    64,298

    NOTES:
    (1) At every examination most candidates attempt more than one subject and therefore appear more than once in the table above.
    (2) Of all candidates approximately 20 to 25 per cent are students at further education establishments or enter under private arrangements or come from overseas; the remainder are boys and girls taking secondary school courses, most of them in the Sixth Form.

    Teachers (Supply)
    Mr. Charles Morrisonasked the Secretary of State for Education and Science whether he is satisfied that there will be an adequate supply of teachers to cope with the increased number of schools arising from the raising of the school-leaving age in 1970–71; and if he will make a statement.
    Mr. Crosland: I would refer the hon. Member to my reply of 2nd December to the hon. Member for Oswestry (Mr. Biffen).—[Vol. 737, c. 170.]
    Mr. Morrison: Has the right hon. Gentleman taken into his calculations the fact that in this year, as in previous years, two and a half times more women students are entering college than male students?
    Mr. Crosland: Yes, I have taken that into the calculations; but the hon. Member will realise that there was also a further increase in the number of male students going into the colleges this year.
    Mr. Biffen: Is the Secretary of State aware that in the Answer he gave me he said that 21,000 additional teachers would have to be recruited and that this could not but cause some temporary setbacks? In these circumstances, will he give the House an assurance that the raising of the school-leaving age in 1970–71 will not be bought either at the expense of educational standards or of the morale of the teaching profession?
    Mr. Crosland: The hon. Member really must consult his right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle). It was the right hon. Gentleman who rightly announced this decision. When he announced it he made it perfectly clear that there must be some temporary setback. Of course there was bound to be. The difference between now and when the announcement was made is that the whole teacher supply position looks better now than it did a few years ago and, therefore, the setback will be considerably less serious.

  EUROPEAN ECONOMIC COMMUNITY
  Mr. Kenneth Lewisasked the Prime Minister whether he has now arranged a timetable for his visit to the capitals of the European Free Trade Association countries and the Common Market countries with the Secretary of State for Foreign Affairs.
  The Prime Minister (Mr. Harold Wilson): Yes, Sir. In agreement with the Governments concerned the timetable has now been announced. With permission, I will circulate the details in the OFFICIAL REPORT.
  Mr. Lewis: On these visits, does the Prime Minister intend to represent the Commonwealth view? What steps is he taking to secure from the Commonwealth its exact attitude to these negotiations on any safeguards that may be required?
  The Prime Minister: It will be the duty of my right hon. Friend and myself to represent the general British interest,
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  including Commonwealth interests, in all these talks. As to consultation with the Commonwealth, I would refer the hon. Gentleman to the very full answers I gave about this on Tuesday.
  Following are the details of the timetable:
  The full programme for the visits by my right hon. Friend the Foreign Secretary and myself is as follows:—

  16th–17th January: Rome.

  24th–25th January: Paris.

  31st January–1st February: Brussels.

  2nd February: Luxembourg.

  14th–16th February: Bonn.

  26th–27th or 28th February: The Hague.

  Mr. Murrayasked the Prime Minister when he intends to visit Paris to hold discussions with the President of France on Franco-British policy differences.
  The Prime Minister: As my right hon. Friend the Foreign Secretary announced on 6th December, he and I will be visiting Paris on 24th and 25th January. The main purpose of our visit will be to discuss with President de Gaulle and French Ministers the problems associated with British entry into the Common Market.
  Mr. Murray: I thank my right hon. Friend for that reply. Would he consider making Paris the first stop rather than Rome, because of General de Gaulle's attitude? Further, will he and the Foreign Secretary be discussing the French attitude towards the North Atlantic Treaty Organisation?
  The Prime Minister: I think that on a balance of the considerations the timetable which has been announced is right, both in regard to timing and in regard to the order of the visit. Of course we shall take every opportunity of discussing all matters of common Anglo-French interest. As my hon. Friend will be aware, my right hon. Friend the Foreign Secretary has been discussing these questions with M. Couve de Murville on his visit to Paris this week.
  Mr. Grimond: Does the timetable announced by the Prime Minister include a visit to the Community at Brussels?
  The Prime Minister.It includes a visit to Brussels. I have already said in answer to a supplementary question that

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  I should be very surprised if it does not provide facilities for discussions with members of the Commission.
  Mr. Bruce-Gardyneasked the Prime Minister if he will hold discussions with the President of the United States of America about the adjustments to the Anglo-American alliance which would be necessitated by British membership of the Common Market.
  The Prime Minister: I have no immediate plans to discuss with the United States Administration the implications of possible British membership of the European Economic Community.
  Mr. Bruce-Gardyne: Has the Prime Minister noticed the dismay which was caused on the Continent by the Foreign Secretary's statement last month that British membership of the Common Market could not affect our relationship with the United States in any way, and, in particular, the statement of one of the members of the Commission that this even cast doubts upon the sincerity of the Government's approach? Does he not agree that the Government must accept that there will be adjustments in this relationship as a result of British membership of the Common Market?
  The Prime Minister: I do not know whether the hon. Gentleman is really suging that we make fundamental changes in the Anglo-American relationship as part of these talks, I think that he would do better to leave it for the talks we have with Heads of Government in the Community and not think that these matters can be settled by statements on or off the record by individual European statesmen, including members of the Commission. I think that it would answer some of his points if I were to send him a copy of the speech which I made at the English Speaking Union recently on Anglo-American relationships against the European background. I shall be very glad to send him a copy.
  Mr. Jennings: Will the Prime Minister consider asking the United States if it would, in its turn, consider applying for membership of the Common Market?
  The Prime Minister: There are certain clauses of the Treaty of Rome—I am sure that the right hon. Gentleman could remind me of the numbers—which
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  would make this impossible, because the United States, as the hon. Gentleman will recognise, is not a European country. Whatever might be the position regarding associate membership, I think that the Treaty of Rome would require pretty fundamental amendment to enable that to be possible.
  Mr. Eldon Griffiths: Will not the Prime Minister agree that one of the many good reasons for British membership of the Common Market is to bring the whole of Europe much closer to the United States?
  The Prime Minister: I am not sure what the hon. Gentleman means by that, but I agree with what I think he means. If this is approached as a situation in which Europe can be stronger and will be able to negotiate with the United States on a stronger and a friendlier basis, I think that that is right. I very much agree not with all but with one of the points made by the right hon. Gentleman the Leader of the Opposition in the recent debate on the Common Market, when he revived the theory of the two Atlantic pillars. This was the main theme of my speech at the English Speaking Union.

  MINISTERS (TRADE UNION MEMBERSHIP)
  Mr. Martenasked the Prime Minister what instructions he has given to Ministers about membership of trade unions while they are in office.
  The Prime Minister: The hon. Member will be aware of the rules which governed these matters when he held office in a previous administration. They have not changed, Sir.
  Mr. Marten: Does the Prime Minister agree with the very sensible custom that a Minister appointed to the Government should divest himself, for example, of any shares in companies which are connected with the work of the Ministry so as to avoid any conflict of interests? By the same token, and purely to avoid any conflict of interest, should not Members who are trade unionists and who are appointed to Government posts also divest themselves temporarily of trade union membership?
  The Prime Minister: No, Sir. As I say, the rules have not changed. The rules governing all ministerial appointments are those which were very eloquently stated by Mr. Macmillan some six years ago about conflict of interests. These rules have not changed since that time and they are still being operated. I think that there is a very great difference between being able to make money out of holding shares in businesses concerned with the Department with which a Minister is concerned and being a member of either a trade union or a professional association. I am not aware that under any successive Government, for example, Ministers who happened to be member; of professional associations or trade unions, whether legal, medical, or any other, resigned from them.
  Mr. William Hamilton: Is my right hon. Friend aware that the former Prime Minister was a member of the National Farmers' Union, which industry was receiving hundreds of millions of pounds of public money?
  The Prime Minister: I believe that my predecessor was a member of the Scottish National Farmers' Union. If I remember from some supplementaries, he had not been a very active member until he became Prime Minister. There was even some question about whether he was behind with his dues. I would not for one moment believe that his membership of that august body in any way affected his attitude to questions of annual Price Reviews or anything else which might ultimately affect the prosperity of the Scottish farming community.

  MINISTER OF HOUSING AND LOCAL GOVERNMENT (SPEECH)
  Mr. Channonasked the Prime Minister whether the public speech by the Minister of Housing and Local Government to the conference of the Federation of Registered House Builders on 17th November, 1966, on the subject of housing represents the policy of Her Majesty's Government.
  The Prime Minister: Yes, Sir.
  Mr. Channon: In the light of the Minister of Housing's estimate in that
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  speech that the likely completion figure for 1967 would be below the Government's target of 400,000 houses in 1965, would the Prime Minister care to explain how he envisages the target figure of 500.000 being reached in 1970?
  The Prime Minister: I envisage that target with great confidence and great optimism. The hon. Gentleman will be aware that the 400,000 target was never adopted by us as a target. My right hon. Friend the then Minister of Housing and Local Government in January, in an election campaign, said:
  "Let me remind you that in our manifesto we expressly told the electorate, when presented with a Tory target of 400,000, that we did not intend to have an election auction on housing figures".
  And neither did we.
  Mr. Rippon: Does not the Prime Minister recall that on 27th March in Bradford he said that the Government would go on year by year exceeding the target of 380,000, and he added,
  "This is not a lightly given promise. It is a pledge."?
  Does he agree that there is now no prospect of exceding 380,000 houses this year or next year either? Will he give us a new pledge or even a lightly given promise?
  The Prime Minister: I thought that we might hear from the right hon. and learned Gentleman. Until we have the December figures, I shall not say what figure we shall have for this year. No one knows what the December figure will finally be. As regards what I said at Bradford, this is true; and, of course, we have been maintaining higher figures of achievement than our predecessors. I believe also—if the right hon. and learned Gentleman, with his own considerable record in this, will now get away from the hustings and look at the facts—[HON. MEMBERS: "Oh."] I believe also, as I think the right hon. and learned Gentleman probably does, that as a result of certain—[HON. MEMBERS: "Get on with it."] I am trying to get on, if I may be allowed. I believe that, as a result of certain economic developments recently—[HON. MEMBERS: "Developments?"] I should be out of order in talking about the export figures, 25 per cent. above what the Tories did two years ago, on which

  659
  no right hon. Gentleman has yet issued one of his statements.
  I was saying to the right hon. and learned Member for Hexham (Mr. Rippon) that I believe that he would feel, as I do, that because of certain changes, particularly on credit, we could now look forward in the next year, if the proper response is made, to a very big—[HON. MEMBERS: "Too long."] It is too long because hon. Members seem to be anxious to help me out. I intend to get on—
  Mr. Farr: On a point of order, Mr. Speaker. Quite rightly, you call hon. Members to order if they take too long in asking or answering supplementary questions. May I suggest that the Prime Minister has exceeded his fair ration of time for answering this question?
  Mr. Speaker: The length of the answer is dictated by the number of interruptions.
  The Prime Minister: If I may assume no further interruptions, I was saying to the right hon. and learned Gentleman, through you, Mr. Speaker, that I believe that, as a result of certain changes in the credit position, the reintroduction of bridging finance and in other ways, we ought now to be able to discuss with the private building industry a very big boost in private building next year.
  Mr. Rippon: Does the pledge still stand, not lightly given and to be carried out whatever the developments or circumstances?
  The Prime Minister: Yes, Sir; I have already said that the pledge still stands, and the economic developments to which I have drawn attention, which have not received the favourable comment of right hon. Gentlemen opposite—perhaps they are too favourable to the national interest to receive that comment—now provide a situation in which we could look forward to a big boost in private building.
  Mr. Heath: When, in the Prime Minister's view, will the number of houses built for owner-occupation rise again to the number built in 1964?
  The Prime Minister: The number of houses in course of construction is adequate to get a very big increase. One of the mystifying features is why more
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  have not been finished by private enterprise since they had already been started. I believe that next year, if there is the response from private industry—there is nothing now to stop it—we could see a very big increase in private building. In addition, there is the fact that public authority building is now far in excess of anything right hon. Gentlemen opposite ever achieved.
  Mr. Freeson: Bearing in mind my right hon. Friend's last remark, that public authority building is now well in excess of what has been achieved hitherto over many years, may we have a close investigation and review of the whole technique of sponsoring and financing private house building for owner-occupation in this country?
  The Prime Minister: A discussion and general review of that was the occasion of my right hon. Friend's speech which is the subject of this Question. There will be continuing discussions with private industry on all these matters. As regards public authority building, I think, speaking from memory, that we are now this year building more than double the amount the Conservative Government achieved after about eleven years in office.

  ADEN (MINISTERIAL RESPONSIBILITY)
  Mr. Evelyn Kingasked the Prime Minister how many Ministers have had responsibility for Aden since 1964; and for how many months each of those Ministers exercised that responsibility.
  The Prime Minister: Five, Sir; for approximately fourteen months, four months, one month, three months and four months.
  Mr. King: Unfortunately—I make no complaint about this aspect—Aden is governed now by the military and the police, and there are detainees there without trial, about whom there have been complaints, which. I am sure, are untrue. But, granted that situation, is it not most unfortunate to chop and change Ministers in this manner?
  The Prime Minister: I think that it was right, although it was a difficult decision,

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  to transfer responsibility from the Colonial Office to the Foreign Office. I am very well aware that there is this special problem arising out of the difficulties and the subversion which we have had to face in Aden, as our predecessors did. I think that one of my right hon. Friends may have something to say further on the question of detainees in the very near future.
  Mr. Rose: Is my right hon. Friend aware that the most satisfactory position will be reached when no Minister has responsibility for Aden? Will he say when the House can expect a statement with regard to the visit of Mr. Bowen and his report on the treatment of detainees in Aden?
  The Prime Minister: I should require notice to say when, but I think that my right hon. Friend will be able to make a statement to the House quite soon. I am sorry that I have not got the date before me.

  TREASURY MINISTERS
  Mr. Bruce-Gardyneasked the Prime Minister if he will appoint an extra Minister to the Treasury with specific responsibility for answering representations of honourable Members on behalf of their constituents.
  The Prime Minister: No, Sir.
  Mr. Bruce-Gardyne: Has the Prime Minister noted from the pile of correspondence which I have sent to him that some of my constituents, employees of the Post Office, feel themselves the victims of injustice arising from the Prices and Incomes Bill and that the Treasury has not been able to give any coherent answer to this complaint for two months? Ought not something to be done to speed up the means of dealing with complaints from constituents to the Treasury?
  The Prime Minister: I am most grateful to the hon. Gentleman for sending me this detailed correspondence, which I read very carefully, and I note the way in which he has intervened on behalf of his constituents, many of whom are, I think, employed as Civil Service drawing office assistants and tracers.
  While I think that his intervention with the Treasury, in addition to the nor-
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  mal trade union negotiation which is usual in these matters, can only have been helpful, I regret that he has not had quicker answers from the Treasury. As has been explained to him, this has been partly associated with the fact, as he knows, that the Financial Secretary who has been dealing with this matter has been ill.

  VIETNAM (BOMBING OF HANOI)
  Mr. Mendelson: On a point of Order, Mr. Speaker. May I ask for your guidance? In view of the growing seriousness of the situation in North Vietnam, with the bombing attacks on Hanoi and main population centres by the United States Air Force, is it not incumbent upon Her Majesty's Government to make a statement to the House so that questions can be asked and the Government's view known?
  Mr. Speaker: I am afraid that is not a matter for me. I have had no request for a Minister to make such a statement.

  QUESTIONS TO MINISTERS
  Sir Harmar Nicholls: On a point of Order, Mr. Speaker. Quite a number of the Answers to Questions today by the Secretary of State for Education and Science, particularly his Answer to my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle), depended on the Answer to further Questions which, he said, he would reach today, to do with school buildings and the staffing of them in order to fit in with the raising of the school-leaving age.
  Not through the right hon. Gentleman's fault no doubt, we have not reached those Questions, which makes the other answers incomplete. Has the Secretary of State asked for permission to answer those later Questions and, if he had, would such permission have been given?
  Mr. Speaker: If the Minister had asked to be allowed to make answers to the later Questions on the Order Paper, he would have been making them now. He has not so asked.
  Mr. Sydney Silverman: On a point of order, Mr. Speaker. You will remember that a few days ago I raised a point of order with you about a Question I

  663
  have sought to put on the Order Paper which had been disallowed, and you were good enough to give me reasons for its disallowance.
  I said the that the only way in which the House could express an opinion about a Ruling of that kind would be on a formal Motion, and I expressed my intention to put such a formal Motion down. This I did. It is, I think, unusual for such a Motion to be left undealt with and undisposed of indefinitely.
  We are now approaching the Recess, and, in the meantime, as appears from the newspapers this morning, events are happening in other parts of the world where there are British subjects who are being subjected to the death sentence by illegal Governments.
  While your Ruling remains unchallenged, Mr. Speaker, Members of Parliament will be unable to ask Questions about these matters. May I, therefore, be allowed to ask the Leader of the House whether he has given any consideration to this point and whether he thinks that he will be able to find time, or will be able to ask the House to deal with—[HON. MEMBERS: "That is a business question."] I am asking about business. I know that there is no formal business statement before us today, which is why I am asking my question in this way.
  What I am asking, Mr. Speaker, is whether I have your leave to ask the Leader of the House, on business, whether there is any possibility of finding time to deal with this question, in view of its importance and urgency, before we actually go into recess.
  Mr. Speaker rose—
  Several Hon. Members rose—
  Mr. Speaker: Order. It is the custom when Mr Speaker is on his feet for hon. Members to remain seated.
  There is a Motion on the Order Paper criticising Mr. Speaker, but there are several Motions on the Order Paper and Mr. Speaker himself has no power to arrange for their debate or discussion. That is a matter for the Leader of the House.

  QUESTIONS TO THE PRIME MINISTER
  Mr. Hugh Fraser: On a point of order. May I ask your guidance and assistance, Mr. Speaker? Questions Nos. Q9 and Q11 concern the House of Commons and I wonder whether it would be possible for the Prime Minister to answer them before we go into recess as they deal with the matter of Parliamentary privilege.
  Mr. Speaker: That is a question for the Prime Minister and not for Mr. Speaker.
  The Prime Minister (Mr. Harold Wilson): Further to that point of order. When I made, most unusually and exceptionally, a statement about telephone tapping, I said that it was exceptional and that I did not intend to answer any further Questions on that issue. Since I said at that time that it involved no extension of Parliamentary privilege—which it is not in my power to extend in any case—I submit that the issue of Parliamentary privilege does not arise.
  Mr. Speaker: I think that the Prime Minister has now answered Questions Nos. Q9 and Q11.
  The Prime Minister: I have the Answers to those Questions. What I have just said is not the exact prepared Answer. I was explaining, on a point of order, why I was not asking your leave, Mr. Speaker, to answer them after Questions.
  Mr. Hugh Fraser: With great respect to you, Mr. Speaker, and the Prime Minister, there has been a change since the Prime Minister made his statement. This privilege has been extended to the House of Lords, where there are well known to be several members of the Communist Party. This is quite a different matter. I beg to ask the Prime Minister to answer these Questions now, or he will put this House in a privileged position against the whole of the rest of the community.
  Sir Charles Taylor: On a point of order. Following the point of order raised my my hon. Friend the Member for Peterborough (Sir Harmar Nicholls), as the Prime Minister knew what would be the length of his Answers to the Questions Q1 to Q7, did he ask your permission,

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  Mr. Speaker, to answere the other five Questions?
  Mr. Speaker: I think that that is a bogus point of order.

BUSINESS OF THE HOUSE
Mr. G. Campbell: On a point of order. Is there to be no business statement today? Last week the Leader of the House gave what appears to have been incorrect information about the Scottish business for next Tuesday. As far as I know, that has not been correctly stated in the House.
Mr. Speaker: I have not been informed that there is any business statement today.

BILL PRESENTED
  RENT ACT (AMENDMENT)
  Bill to amend the Rent Act 1957 to provide for the application of the Rent Acts to long tenancies not at a low rent, presented by Mr. John Fraser; supported by Mrs. Margaret McKay, Mr. Raymond Fletcher, Mr. William Hamling, Mr. Leo Abse, Mr. Marcus Lipton, and Mr. Frank Alla tin, read the First time; to be read a Second time upon Friday, 27th January, and to be printed. [Bill 156.]

HOUSING SUBSIDIES BILL
3.39 p.m.
The Minister of Housing and Local Government (Mr. Anthony Greenwood): I beg to move, That the Bill be now read a Second time.
The Housing Subsidies Bill, which received a Second Reading in December last year and which lapsed when the General Election took place, dealt only with that part of the housing programme which is undertaken by local authorities, new towns and housing associations. The present Bill combines the new subsidies for rented housing in Part I, with entirely new provisions for helping owner-occupiers in Part II.
In moving the Second Reading of the original Bill in December, last year, my hon. Friend the Joint Parliamentary Secretary gave an extremely clear and detailed account of its provisions and I do not propose, therefore, to go through Part I Clause by Clause. Instead, I will briefly summarise the basic concept of the new subsidy system and how it differs from earlier housing subsidies; and I will explain the significant changes which have been made since the earlier Bill was introduced.
Ever since 1919, housing legislation has reflected the social philosophy and economic policies of the Government of the day, and this Bill is no exception. The basis of our housing policy is twofold—first, to overcome the immediate and appalling need for more houses to let at reasonable rents, and, secondly, to help people to own their own homes. Our new Bill is based on that policy.
The White Paper on the Housing Programme set out the justification for the Government's decision to increase the public authority housing output to about 250,000 houses a year in 1970. The crux of it was in one stark and poignant sentence:
"In Great Britain, some 3 million families still live either in slums, in near slums or in grossly overcrowded conditions."
That bald statement has not been challenged and no one in this House denies the crying need to provide better homes for these families. There is no room for complacency and there is certainly no complacency on the part of Her Majesty's Government.

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But, as the White Paper explained, slums and obsolescence are only part of the picture. We also need 30,000 houses a year to replace those lost through redevelopment and road widening in addition to the slum clearance. We need about 140,000 houses a year to keep pace with our rising population. We need to add about 700,000 to the total stock to overcome shortages and to promote mobility. These are demands which both the public and private sector can help to meet, and I want to see the total programme divided roughly equally between the two sectors.
The problem of homelessness, as the B.B.C. television play "Cathy Come Home" reminded us, is still a tragic one, particularly in London. But the position has improved a lot since the Protection from Eviction Act was passed in December, 1964, followed by the Rent Act, 1965. By increasing security of tenure, these Acts have greatly reduced the number of people evicted from rented accommodation and this has had its effect on the total level of homelessness. In the old L.C.C. area, for example, more than 2,000 homeless families a year had to be taken into welfare accommodation in 1962, 1963 and 1964. In 1965, the total fell to 1,338, but it is still cruelly high.
Voluntary organisations, as I am the first to admit, are doing magnificent work, but we must expect that local authorities will continue to play the biggest part in accommodating families which become homeless. Co-operation between welfare authorities and housing authorities is vitally important, particularly so that families in difficulty can be helped without the threat of the family breaking up. Once that family home is lost, the difficulties of re-establishing that family are vastly increased. The circular which the Minister of Health, the Home Secretary and I issued in October underlines this point, and I commend it to hon. Members who, like me, are concerned about this problem of homeless families.
Our aim must be to eliminate so far as is humanly possible the causes of homelessness and the most important factor of all is to provide good housing to let at moderate rents. We have, therefore, given highest priority to encouraging local authority house-building in the areas of greatest need and the Bill gives substan-
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tial help to local authorities so that over the next few years they can make a real impact on the housing problem in all its aspects.
Part I, which applies only to England and Wales, marks a major departure in housing legislation. For the first time since 1923 we move away from the standard unit subsidy, that is, the same basic subsidy for each house irrespective of cost, location or changes in interest rates, and we put in its place a 60-year subsidy which is related to building costs, site costs and the costs of borrowing. In place of the present basic subsidy, which was fixed in 1961 at £8 or £24, depending on the state of the local authority's housing revenue account, Clause 2 introduces the aggegrate cost subsidy.
It works like this: the local authority applies to the Minister for subsidy approval for houses—or flats, of course—which it proposes to build, and approval is related to the actual cost or value of the land and the estimated cost of site works and construction at the tender stage. The approved cost of all houses built by the authority in the financial year is then totalled and the subsidy covers the difference between the loan charges incurred in that year and what the loan charges would have been if the money had been borrowed at 4 per cent.
To simplify the new system, the local authority associations have agreed that the Minister should specify representative rates each year instead of calculating borrowing costs separately for each of the 1,500 or so authorities. Clause 2, therefore, gives the Minister power to specify the rate or rates of borrowing, after consulting the authorities, by means of an Order subject to a negative Resolution. There has to be power to specify more than one rate, because the borrowing arrangements for the new towns, for example are different from those from local authorities.
Let me give specific examples. On a house costing £3,000, including land, the loan charges at 6¼, per cent. would be £199 a year, and at 4 per cent. £132 a year, a difference of £67. On a flat in a high block costing £5,000—which, I fear, is not by any means unusual—the loan charges at 6¼ per cent. would be £332 and at 4 per cent. £220, a difference of £112. Hon. Members should compare

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these amounts of subsidy, £67 and £112 a year, with the basic subsidies under the 1961 Act of £8 or £24.
The Bill also provides additional subsidies to meet special needs—for flats in high blocks, housing for industry and town development, the extra costs incurred through mining subsidence, building in local materials such as Cotswold stone, and special provision for expensive sites. In each case the special subsidy is paid in addition to the basic aggregate cost subsidy.
There are two important changes in the subsidy provisions since the introduction of the earlier Bill. In its original form, the Bill provided that the new rates of subsidy for local authority housing would apply only to those houses for which a tender was approved by resolution of a council after 24th November, 1965, the date of the White Paper. This simply followed the precedents in earlier housing legislation.
This was criticised by hon. Members at the time of Second Reading. They argued that some authorities had decided to push ahead with their building programmes in the belief that the Government would not want them to delay until the new financial arrangements for council housing, which we had promised in our 1964 election manifesto, had been announced, and that they would, therefore, be penalised if they did not receive the new subsidies on houses already in the pipeline. The Government agreed that there was a good case for giving special help to a limited number of councils, with exceptional problems of slums or housing shortage, which were already committed to large building programmes.
A Government Amendment to the Bill was put down for committee stage and similar provisions now appear in Clause 1(3)(c) and (d). These provide that, in the case of those selected authorities, the new subsidies will be paid on houses completed on or after the 25th November, 1965. A first list of authorities to qualify under this special provision was published in HANSARD on 28th February this year. A complete list is now being prepared and will be published shortly. My hon. Friend the Joint Parliamentary Secretary will have more to say about the basis of selection for retrospective subsidy when he replies to the debate.
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The second important change in the subsidy provisions is one which was foreshadowed in the earlier Bill, which said that subsidy would be payable on the cost of the houses
"so far as that cost is approved by the Minister as having been reasonably incurred".
We attach so much importance to this aspect of the new subsidy system that the Minister's powers are now spelt out more fully in Clause 3(4) of the Bill.
To put it quite briefly, costs are related to standards. Although housing standards have been rising, the mandatory minimum standard has not changed in some respects since 1949 or since 1952 in others. The House will recall that improved standards were recommended by the Parker Morris Committee in 1961. I have decided to set a new standard based on the Parker Morris standards, which will come into effect about two years from now.
The new subsidies will help local authorities to achieve the new standard. But there are two pitfalls which, hon. Members will agree, we must avoid. In the first place, the proposed new subsidy will be a percentage contribution towards the cost of each house. I therefore have to ensure that the cost of the house is kept to a reasonable level to avoid an open-ended commitment of Exchequer moneys. Secondly, while we are trying to bring all authorities up to this standard—and the Parker Morris size house is a very good house indeed—we just cannot afford to let other authorities build to even higher standards. The cost of housing schemes from now on will, therefore, be limited by new cost yardsticks which the Ministry have prepared and are publishing. I intend that the new subsidy will be payable only up to the cost limit set by the yardstick. This deals with the difficulty of the open-ended commitment.
Secondly, schemes will not receive loan sanction if their cost exceeds the yardstick by more than a tolerance of 10 per cent. plus, of course, the reasonable cost of items like garages, which do not qualify for subsidy. This will limit the amount that local authorities can spend on each house, even if they are willing to bear the extra cost themselves. We have to prevent a situation where some local authorities might use more than their fair share of the global resources available

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for house building. This is essential if we are to raise the general standard of local authority housing.
These measures will help local authorities with their housing programmes. They will know with certainty what subsidy they may expect to get on each scheme. They will know in advance the cost limits within which they must operate. They will have full freedom within these limits to vary designs to suit the needs of their tenants at a standard which meets modern needs.
I believe that local authorities will welcome arrangements under which they will be able to plan the cost of their programmes with greater assurance and can introduce and operate the most modern methods of cost control. The local authority associations have been consulted. All have accepted the principle of the new cost control arrangements. The majority have also accepted the new yardsticks, but the G.L.C. and the London boroughs feel that they ought to be higher for London. My hon. Friend will be discussing this point with the Greater London Council next week.
I should like to summarise very briefly the principal objectives of the new subsidy system. They are, first, to enable local authorities to increase and sustain their building programme. Secondly, to relieve them of the uncertainty about interest rates which stands in the way of that long-term planning which improved productivity demands. Thirdly, to encourage them to move towards Parker Morris standards. Lastly, to introduce a new discipline of cost control, which will help to restrain rising prices and stimulate greater efficiency in house building.
I turn now to part II of the Bill, which applies to Great Britain as a whole and which will come into operation on 1st April, 1968. I hope that my task in explaining it may have been made a little easier by the White Paper, "Help Towards Home Ownership", which we published on the day that the Bill was introduced. We want to bring home ownership within the reach of more families, and this is what is what part II is designed to do. It goes without saying that those who are better off are more likely to be able to buy their own homes, than
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those on low incomes. But one of the absurdities of our present arrangements is that we give substantial assistance to those who are better off, rather less to those who are not quite so well off, and none at all to those who are at the bottom of the scale.
This derives from the tax reliefs which are given on interest payments. If a man has sufficient income liable to tax at 8s. 3d. in the £, he is entitled to tax relief at that rate, or strictly at 6s. 5d. after account is taken of earned income relief, on all his mortgage interest. His interest, in fact, is effectively reduced by about one-third. Those who pay tax at only 6s. in the £ or 4s. in the £ before taking out a mortgage, get correspondingly lower tax reliefs, and the man who pays no income tax, of course, gets no relief at all.
We want to remove those anomalies and to put those on lower incomes in broadly the same position as the taxpayer at the standard rate. We shall be evening up, not evening down. We propose to do so by introducing, with the co-operation of the lending agencies, a new type of mortgage which has come to be called an option mortgage. On these, interest payments will not be eligible for Income Tax relief. On the other hand, however, they will attract an Exchequer subsidy.
The borrower himself who is taking out a mortgage will have a choice. He can either choose to have tax reliefs as at present, or he can have the Government subsidy. The same choice will be available to those who already have mortgages. People's individual circumstances and prospects vary, and every borrower will have to make up his own mind which will suit him best.
Those whose tax relief is below that available to the taxpayer at the standard rate will usually find that the new scheme is better from their point of view. It will certainly be so for the great majority of the borrowers who pay tax at 4s. in the £, and for those who pay no tax at all. At present, there are 500,000 borrowers in these two categories, and more will be attracted into home ownership by the scheme. Many of the 750,000 people who pay tax at 6s. in the £ will also find the option mortgage scheme advantageous. But they would

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be wise to consider their prospects of becoming standard rate taxpayers.
On annuity type mortgages of the sort normally given by building societies and local authorities, the subsidy will be 2 per cent on the capital outstanding from time to time. Or, to put it differently, the interest payable on the mortgage will be reduced by 2 per cent.—subject to an interest "floor" of 4 per cent.
In the case of endowment type mortgages, where the capital is not repaid until the end of the period for which it is borrowed, a 2 per cent. subsidy would provide a very much greater benefit. To keep the subsidy on the two types of mortgage broadly in line therefore, only l¾ per cent. will be paid on endowment mortgages.
The present scheme is a modification of that outlined by the Chancellor of the Exchequer to the House last March. The principle is the same, but the subsidy is to be calculated on a quite different basis and that is the reason why it has now been fixed at 2 per cent. instead of 2½ per cent.
Under the original scheme, the subsidy in the case of the normal annuity type mortgage would have been the difference, on the one hand, between the payments which the borrower would have had to make if they had been calculated at the rate of interest due to the lender and, on the other, what they would have been if calculated at a rate of interest 2½ per cent. below that. It would have been a fixed sum each year which would have remained constant throughout the mortgage.
That scheme was not acceptable to the building societies, which believed that the amount of administrative work involved—in particular, in calculating their claims upon the Exchequer for subsidy payments—would have been too onerous. The present scheme, I am happy to say, will be much easier for them to administer.
The 2 per cent. subsidy to be paid by the Exchequer will be calculated on the capital outstanding from time to time in the same way as the interest on a loan is calculated. Since the capital debt on a mortgage is reduced year by year, so the subsidy will be reduced year by year.
It is not possible to make any direct comparison between the 2½ per cent. proposed under the earlier scheme and the
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2 per cent. proposed under this one, but the total subsidy paid over the first 10 years would be roughly the same in each case. This is important, because most mortgages are paid off within the first 10 years as people sell their houses and take out a fresh mortgage to buy another. The method by which the subsidy is passed on to the borrower will be laid down in schemes made by the three Housing Ministers. It will vary with different types of mortgages, and different types of lending agencies.
For the ordinary type of building society annuity mortgage, the new borrower in the future will, in effect, get a mortgage at 2 per cent. below the current rate of interest charged by the society, and his periodical payments will be calculated accordingly. Apart from lower payments, he will have the advantage of having his capital debt paid off rather more rapidly. This is because it is inherent in annuity type mortgages that, the lower the interest rate, the quicker the capital debt is reduced.
Existing borrowers whose mortgages have been running for some time present a special problem. Payments have often been maintained at their original level, although interest rates have changed and the payments will often bear no relation to current rates of interest. To get over this difficulty, the existing payments of all existing borrowers who opt to take the subsidy will be reduced by a uniform one-sixth, which represents roughly the effect of the subsidy in other cases. Any disparity will be corrected by a small adjustment of the period.
For the other types of mortgage the calculations, I am happy to say, are rather easier. It is simply a matter of recalculating the interest due each year at 2 per cent. lower than the rate being charged by the lending agency—or for endowment mortgages, 1¾ per cent.
Co-ownership housing associations in which the members own co-operatively the houses they occupy have been treated as being on all fours with owner occupiers for tax purposes and we propose to extend the right to receive the subsidy to them by regulation.
Even with the advantage of the option mortgage scheme, some people may still find it difficult to buy a house because they cannot raise the deposit. Linked

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with the option mortgage scheme, therefore, is a new scheme by which guarantees will be provided so that loans can be made in excess of the amount which would normally be advanced by a building society. It has been agreed in principle with the Building Societies Association and the British Insurance Association.
There are, of course, existing arrangements under which mortgages above the normal level are often advanced on the collateral security of an insurance indemnity. Under those arrangements the maximum advance is normally 90 or 95 per cent. of valuation, while our new scheme contemplates advances of up to 100 per cent. of valuation in suitable cases.
We have thought it right to graft the new scheme on to the existing arrangements and the guarantee will be provided by an insurance policy in the ordinary way. The Government will join with the insurance company in sharing the risk and the premium which the borrower has to pay will be reduced accordingly. He will be able to add the premium to his mortgage debt, even if it means going above 100 per cent. of valuation, and repay it over the period of the loan. Clause 29 of the Bill provides for these arrangements to be brought into operation on a date to be prescribed in a statutory instrument.
The option mortgage scheme will inevitably make substantial new demands on sources of finance for house purchase. So, too, will the guarantee scheme. It would run counter to the whole object of the schemes to introduce the guarantee arrangements before we were sure that adequate finance was available. To do so, indeed, would only be to increase the size of individual loans at the expense of the number of people who would get them.
We must, therefore, proceed by stages, starting with the option mortgage scheme and moving on to the guarantee scheme when we are sure that this can be done without jeopardising our main purpose. This approach is strongly supported by the building societies and the other lending agencies.
That is the main outline of the option mortgage scheme. It will be worked through the main lending agencies—the
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building societies, the insurance companies, the friendly societies and the local authorities. We have had lengthy discussions with their representatives over the past months to produce a workable scheme, and I should like to express my warm thanks to them for all the help and co-operation that they have given us.
This is a proud moment for the Government and a great day in our social history. In two years we have restored security of tenure. We have provided machinery for fixing fair rents. A record number of houses have been built. We have helped the less prosperous ratepayers with their rates. Today, we are commending to the House a Bill which symbolises our Socialist housing philosophy. It helps councils to swell the stock of houses to rent and it brings home ownership within the reach of large numbers of families to whom in the past it has been denied by low pay and the inertia of our predecessors.
I hope that the Bill will receive the unanimous support of the whole House.
4.7 p.m.
Mr. Geoffrey Rippon: I am grateful, as I am sure the House will be, to the right hon. Gentleman for his careful explanation of the detailed provisions of the Bill and to the Government for agreeing to a Second Reading debate before the Christmas Recess. But I am afraid that I cannot follow him along the lines of his passionate peroration. If the Government really regard this as a proud moment, heaven help us in the future.
We have serious reservations about Part I of the Bill, relating to subsidies to local authorities which I will indicate briefly and which we will pursue in detail in Committee. At the same time—and this is why we are glad to have the Second Reading today—we are anxious that the provisions in Part II, relating to the mortgage option scheme, should be strengthened and brought into operation as soon as possible. We are glad that the Government have adopted the Conservative scheme and abandoned their own later and unworkable one.
We regard it as particularly regrettable that the mortgage option scheme is not to come into operation until 1st April, 1968, and that no date at all is fixed, as the right hon. Gentleman has told

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us, for the introduction of the guarantees for mortgages up to 100 per cent. of valuation. This delay is the more inexcusable because, as he said, there is in the Bill the decision to make the increases in housing subsidies to local authorities retrospective to November, 1965, although I gladly accept the Minister's declaration that that is in accordance with precedent.
One thing must be made clear at the outset. This Bill cannot in any sense be regarded as a fulfilment of the Government's manifold pre-election pledges. It does no more than provide a meagre mitigation of the disastrous effect of the Government's housing and financial policies. What we have to consider today is the effect of the Bill against the background of a sagging housing programme, soaring building costs, rising land prices and unprecentably high interest rates.
Those facts make nonsense of the Minister's mathematics about a reduction of 2 per cent. in terms of reduced loan charges. On 27th March this year the Prime Minister said at Bradford—and I am glad that I was able to refer to this at Question Time today:
"Starting from last year's total of 318,000 houses and flats, we shall go on, year by year, exceeding this total."
The Minister told us the other day that the figure this year was likely to be 380,000. We will not get 400,000 houses this year, we will barely get 380,000, whatever the December figures are, and we will not get any more next year. So much for what the Prime Minister described, in his inimitable fashion as, not a promise lightly given but a pledge. [Interruption.]
I am sure that hon. Members do not like my referring to this matter. The only comfort that we have is that the Prime Minister did not say, "I mean it sincerely" otherwise we would really be in the cart. All that we have in housing at the moment, taking both sides of the equation, the private and public, is virtual stagnation. In his election address in October, 1964, the Minister followed many of his colleagues in promising that the Labour Party would build more houses, both for rent and for sale. Now we know that they will not. On the Ministry's own figures there are likely
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to be 30,000 fewer houses built for sale next year.
This is importing an inflationary element into the mortgage option scheme which ought not to be there. The House has to recognise that as a result of the Government's housing policies, and this is relevant, against the background of 3 million families in slum houses, to which the Minister referred, 170,000 families who would have had new homes under a Conservative Government by next year will have to remain in those slums and substandard accommodation. That is the fact and it is on the record in almost every document which the Minister receives from the building industry and from the estimates made.
Mr. Frank Allaun: Whatever the right hon. and learned Gentleman's criticisms of the Government's housing achievements may be, would he not admit that this Measure will give substantial help in increasing the present building programme, and that it is something which his party has refused to do, despite repeated requests from Labour Members over the last 10 years?
Mr. Rippon: What I will establish is that whatever this Bill does, in every respect the country is worse off than in 1964. At the same time, as the Government have failed to maintain the momentum of the building programme which they inherited, in spite of all that we have done to lay the foundations of industrialised building, costs have been rising dramatically and since 1964 the price of a new house, including the price of land, has risen by 16 per cent. The cost of land has not cheapened under this Government.
The cost of an acre of land in London has risen by 50 per cent. since 1964.
Mr. Reginald Freeson: Is the figure of 16 per cent. a rise in prices or a rise in building costs?
Mr. Rippon: It is a rise in building costs.
Mr. Freeson: From what source?
Mr. Rippon: From the Ministry of Public Building and Works. I will give the hon. Member a copy of the full table, it is provided year by year. The Government have not cheapened the cost of land,

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because an acre of land acquired for all purposes by the L.C.C. in 1964–65 cost £44,162, while the same amount of land cost the G.L.C. in the first nine months of this year £66,217. The Land Commission Bill will not help because market prices will still prevail, while the levy will add to the cost of the land and go to the Exchequer. In addition the molt-gage rates have risen from 6 per cent. in 1964 to 7⅛ per cent. today
The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish): Is the right hon. and learned Gentleman saying that if the Government were to promote legislation to control land prices, his side of the House would support us?
Mr. Rippon: We warned the country in 1964 of what would happen if it elected a Labour Government pledged to cheapen the cost of land, but with no Measures to do SO. [HON. MEMBERS: "Answer."] The pledges have been made by the Labour Party. The Government were elected on a pledge to cheapen the cost of land and they did not do so. Let the Government answer that. It is the Government who are in the dock on this. [Interruption.]
Mr. Speaker: Order. I want to hear the debate.
Mr. Rippon: In London, the average total cost of a three-bedroom "unit of accommodation", as the G.L.C. calls it, completed in the year ended 31st March, 1966, was £4,760. including £580 for land, compared with £3,974, including £388 for land in the year ended 31st March, 1964.
Taking into account the higher interest rates prevailing today the amount payable over a 60-year loan period is £20,000 in 1966, compared with £14,000 in 1964. If anyone says that that comparison is purely mathematical, all that I can say is that it was the favourite mathematics of the Socialists when in opposition.
We must judge the mortgage option scheme against the Prime Minister's speech at Stevenage on 16th September, 1964, when he said:
"We shall cheapen the cost of housing by our interest rate policy."
The price of housing has not been cheapened and nothing in this Measure will reduce the cost to the local authority
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or the house purchaser to anything like 1964 levels. Instead we have the "Great Mortgage Fraud", perpetrated "in all sincerity" by the Prime Minister and his Government.
Let us examine the facts. The table annexed to the White Paper published last week is already out of date. We need a new one based on 7⅛ per cent. And we should have one based on 6 per cent. and a standard rate of tax of 7s. 9d. to get a fair comparison with 1964. The Minister was one of those who repeatedly complained that high rates of interest under the Tories meant that the actual cost of buying a house was nearly double the price.
Now, under a Labour Government, it is more than double the price. The table at the back of the White Paper shows that the total cost of borrowing £1,000 over 25 years at 6¾ per cent. is £2,097; at 7⅛ per cent., which we now have, it is £2,169. In 1964 at 6 per cent. it was £1,955 or £214 less for every £1,000 borrowed than it now is under the Labour Government. Every house purchaser, whether he pays tax or whether he goes into the mortgage option scheme, now pays and will continue to pay substantially more to borrow £1,000 than he did in 1964.
That is leaving entirely out of account the fact that with the rise in costs of housing, £1,000 will buy less. To put it another way a man taking out a £3,000 mortgage at 6 per cent. for 25 years in 1964 and paying the standard rate of tax of 7s. 9d. would have paid just under £3 10s. net a week in the first year. With housing costs up 16 per cent., the standard rate up to 8s. 3d. in the £ and the mortgage rate of 7⅛ per cent., to buy an identical house he would have to raise £3,480 and make a corresponding weekly payment of £4 6s.
This means that all standard rate house purchasers are much worse off than in 1964, and the Bill and the mortgage option scheme will do nothing to help. On the same basis the less well-off house purchaser, paying tax at 6s. would pay £4 14s. a week compared with £3 14s. 6d. in 1964. If he exercises his option under the Bill, he will pay—this is in the first year, of course—£4 16s. 2d. or 2s. a week more; it is not till the fifth year that he begins to get the benefit at all.

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That was why I thought it was important that the Minister emphasised that people considering whether or not to use the mop gage option scheme if they are at 6s. in the £ will be wise to consider their prospects of becoming standard rate taxpayers. This is important because once existing and prospective buyers have exercised their option their decision will be irrevocable. But whether a man exercises his option or not, all borrowers will be paying about £1 a week more for houses they could have bought on a £3,000 mortgage under a Conservative Government in 1964.
What we do admit—this is something—is that those who pay no tax, or tax at a low rate, will, in the very difficult circumstances in which they find themselves under a Labour Government, get some help—assuming they can afford to buy a house at all with rising prices, the difficulties of bridging finance, and current interest rates. But, in any event, they will be worse off than in 1964, despite all the Labour Party's pledges. Moreover, it is quite manifest that the falling level of private house building at present means that there is a strong likelihood that this scheme may lead to higher prices and so have an inflationary effect. I saw one property correspondent—I believe, in the Newcastle paper, the Journal, my own local paper—was saying that while the subsidy may be £36 a year the additional price of a house could go up £30 a year and there was a balance of about £7.
No doubt this is precisely why the Government have put no date on the provisions of the Bill dealing with guaranteed advances, and yet the finding of the deposit is the greatest problem of a young couple trying to buy a house of their own.
Mr. Freeson: Since it appears that the right hon. and learned Gentleman has finished with Part II and sees no benefit in the option mortgage scheme, does that mean that, in the unlikely event of the Tory Party being returned to power, a Tory Government will scrap it?
Mr. Rippon: Of course not. It will be made to work in much more favourable circumstances. What I am trying to prevent is fie Government from misleading the House and the country into thinking that there is some improvement which they have brought about, when all they
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are doing is mitigating the effects of their policies.
The average mortgage loan at present is between 72 per cent. and 75 per cent. of valuation. Even if a building society gives up to 95 per cent. after an insurance guarantee has been arranged the gap between loan and price is often formidable.
We on this side of the House made no promises about 100 per cent. mortgages, which, building societies believe might discourage people from saving for housing. What we did suggest, and promised indeed, was a capital grant scheme to assist young people in their task of saving, just as is done, for example, in Australia. The Prime Minister, on the other band, did make the clearest promise in his Election address in 1964:
"100 per cent. mortgages, lower interest rates, and cheaper loan charges will help those who wish to buy."
They have still got to wait for the 100 per cent. mortgages while interest rates and repayments are, as I have demonstrated, at record levels, and will remain so even after we have passed the Bill.
In all these circumstances, it was an act of cynical hypocrisy for the Chancellor of the Exchequer to assert, as he did on Monday, that the mortgage option scheme is the substantial fulfilment of the Government's election pledges. It is nothing of the kind, as the hon. Gentleman the Member for Westhoughton (Mr. J. T. Price) recognised at the time, and as many other hon. Gentlemen in their hearts must also recognise.
I was asked if we would repeal this Bill. No; we would not repeal it. We hope to improve it. The Bill is better than nothing. What I am saying is that life was better under the Conservatives, and unfortunately, we are letting Labour ruin it.
I turn now to that part of the Bill which deals with the provision of subsides to local authorities. This, the Minister explained, is in substantially the same form as that in the Bill we debated on Second Reading on 15th December last year. We on this side of the House have the same strong reservations, or most of them, that we expressed then. We do not dispute that housing subsidies must be reviewed from time to time and in

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the light of changing needs and circumstances.
This has been done frequently in the past, and regard must now be had once again to the effect on local authorities and their tenants of soaring costs and higher interest rates. Some upward revision of subsidies in these circumstances was inevitable, but what concerns us—
Mr. Roy Hattersley: The right hon. and learned Gentleman says that in the past the housing subsidies had to be reviewed, and now they are to be reviewed, but would he tell the House that on four occasions when that was done with rising prices they were revised downwards?
Mr. Rippon: Of course, when things get better one can do it. When they get worse, as under the Labour Government, one has to increase them.
What concerns us is that while the taxpayer will have to shoulder a substantial additional burden no attempt has been made by the Government, in the Bill or elsewhere, to rationalise the subsidy scheme or to ensure that the help goes where it is most needed.
The cumulative cost of this new scheme is formidable. The Explanatory and Financial Memorandum to the Bill gives the total of Exchequer subsidies to local and public authorities for the current year at £83 million. That figure is estimated to rise as a result of the Bill to £145 million a year by 1970–71 on the optimistic assumption that there is an average borrowing rate of 6½ per cent. The Memorandum says that if there were a reduction in the borrowing rate by ½ per cent., that would reduce the additional cost by nearly one-third. It should have been probably, in present circumstances, the other way round. An increase in borrowing rate of ½ per cent. would increase the additional cost by nearly one-third.
The White Paper on Housing, Cmnd. 2858, in describing this new subsidy arrangement said:
"The whole system of housing finance also needs much deeper study than this Government have yet had time to give to it".
They have had another year. When is this study to be completed? No doubt the Parliamentary Secretary will be able
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to tell us. And how long is it envisaged that the new system of the Bill will last—if a revision is made? Local authorities are concerned to have a degree of stability in planning their operations over the period. We shall certainly wish to examine closely in Committee the financial implications of the new system and its likely effect both on particular areas and on particular needs.
In his speech at Bradford on 8th July—Ministers do talk a lot—the Minister's predecessor, the new Leader of the House, emphasized:
"The need is to ensure that the Government's generous new housing subsidies are not frittered away but will go to those who need them."
He went on:
"I must hold myself responsible for ensuring that councils follow policies which apply the most help where it is most needed."
Well, that is certainly not happening now in a great many cases. According to the housing statistics published by the Institute of Municipal Treasurers and Accountants for 1964–65, nearly one-half of the local authority tenants with incomes of up to £10 a week or less paid more than one-fifth of their incomes in rent. On the other hand, 95 per cent. of those who earned £20 or more paid rent of less than one-tenth. As the Lord President of the Council said:
"This is not only morally indefensible: it is thoroughly bad housing management"
and so, he said, he proposed to take the matter up with the local authority associations, and then, with their approval, with the authorities themselves, so that they could review their rent rebate schemes, if they had them, and consider whether, if they did not, they should have them. I hope that the Parliamentary Secretary will say something about the progress which is being made in this matter.
The Minister, speaking in London on 14th November, spoke also of his responsibility to Parliament for the expenditure on housing subsidies, but he directed his observations then, as he has virtually done today, solely to the fact that the average cost of a three-bedroom council house rose by nearly 10 per cent. between the first quarter of 1965 and the first quarter of 1966. This is serious enough in all conscience, but it is not really the important consideration here.

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The Minister, quite rightly, emphasised in his speech the concern which is felt in the House, and outside, about the large number of people who are not as well off as the rest of us. He says that it is the Government's intention to help them. What is he doing to follow up what his predecessor said about this, to see that these large subsidies go to those who need them?
The time has surely come when we must insist on sensible rent policies. There are widespread discrepancies between the rents charged by different authorities for similar properties. We have had a detailed analysis of this. It shows that 275 authorities out of 983 still charge maximum rents of less than 30s. a week for post-war three-bedroom houses. There is an obvious disparity between this and rents paid by tenants of other local authorities, and by tenants in the private sector who have a fair rent assessment.
I hope that the Minister is studying carefully the recent report of the working party set up by the Chartered Land Societies Committee of the Royal Institution of Chartered Surveyors, the Chartered Land Agents' Society, and the Chartered Auctioneers and the Estate Agents' Institute. This is an authoritative body, as its title presupposes, and it examined the position in regard to rents and subsidies in the public sector. It stated, and, I think, rightly, that they are in a chaotic state.
The working party concluded that there was no reason why rents in the public sector should be assessed in any different way from those in the private sector, since there was no substantial difference between the income of the tenants in the two groups. This is substantially what the Lord President of the Council said in his speech at Bradford. The report went on to declare that subsidies to local authorities should be paid only on proof that fair rents were being charged but were insufficient to meet outgoings.
I believe that the Minister must see that the local authorities who receive these large sums keep their housing revenue accounts in a proper state. As matters now stand, many additional millions of pounds of public money are to be spent without any guarantee of relief to the 97,000 tenants whose earnings are less than £10 a week, and who are
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paying more than one-quarter of their income in rent. These are the people who ought to be helped. These are the people whom both sides of the House want to help. These are the people who ought to be lifted above the subsistence level at which they exist, and not the people whose housing subsidy is, in effect a subsidy on their motor cars.
Mr. Arthur Blenkinsop: I am following the right hon. and learned Gentleman's argument very carefully. Does he mean to imply that he will recommend a definite mandatory provision that local authorities must adopt rent rebate schemes of a particular character?
Mr. Rippon: I am not in favour of that. What I am in favour of is that we should take steps, as we said in our election manifesto, to see that fair rent schemes are brought into operation. I think that the best way of doing this is to ensure that local authorities keep their housing revenue accounts in a proper state, and that is what I have said.
We have the assurance of the Minister's predecessor that he is discussing this with the local authority associations, and hopes then to discuss it with the local authorities themselves. I prefer to await that before being dogmatic, but I am sure that all hon. Gentlemen opposite recognise, as their Ministers have recognised, that something must be done to see that these large sums of money go where they are most needed. The way in which local authorities do this may vary from place to place, because the needs of areas are different, their housing pools are different, and so on, and if hon. Members read Corfield and Rippon on "Target for Homes", they will see it all very carefully set out.
We would like to know what thought is being given to the suggestion, which is also canvassed in the report of the Royal Institution of Chartered Surveyors, that what are sometimes called "portable subsidies" should be paid direct to impoverished families. Will the right hon. Gentleman provide the requested investigation at Government level into the possibility of paying rent allowances direct to tenants on the lines adopted in a number of other countries? We would be grateful to hear from the

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Parliamentary Secretary whether this is under consideration.
We receive the Bill, as I think the House does, with the minimum of enthusiasm. It is a typical Socialist sellout. It is a sell-out of the home owner. It is a sell-out of the ratepayer. It is a sell-out of the taxpayer. It is a sellout of the public, and, above all, it is a sell-out of the voter. The electorate is in the position of the poor innocent boy who is offered 1s., but has 6d. taken away from him instead and is then offered back 2d. If we decide not to vote against the Bill, it will be only because we believe that we must now try to cut our losses and get another ld. back in Committee.
4.36 p.m.
Mr. Frank Allaun: The right hon. and learned Member for Hex ham (Mr. Rippon) has ignored the key question, which is this: will the Bill help to provide ordinary people with more houses at rents and mortgages which they can afford? That is the criterion. It is an old but true saying that one half of the world does not know how the other half lives. It is also true to say that one half of a city does not know how the other half lives.
Recently, the nation has been helped to find out, and I believe that the conscience of the nation has been jolted, by a television play. I am referring to "Cathy Come Home". I am informed by the B.B.C. that on that night 12 million people watched the play, almost half as many again as the normal Wednesday evening audience. This was due largely to the fact that it had been publicised in advance in the Midlands, because it was in the Midlands that it was produced. I am asking the B.B.C. to put on a special showing of this television play for M.P.s in the cinema in Westminster Hall. I also understand that there is to be a repeat performance on B.B.C. television.
The play dealt with a happily married couple who were separated from their children because of the housing shortage. It lead to an immediate response. The B.B.C. was inundated with 'phone calls and letters. A new organisation called "Shelter" was established to try to help homeless people. In an old people's home in the Home Counties the old folk sub-
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scribed in small amounts, £5 which they sent to help homeless people.
Perhaps I might give the House one or two examples of what the housing shortage means to the citizens of a typical northern industrial city. If it has been a wet week, I know that my advice bureau will be crowded at the weekend with the tenants of slum houses. They come because the rain has been streaming through the rotten roofs of their houses, and they have had to sleep downstairs in the parlour or in the kitchen. I am frequently visited by constituents who have been on the waiting list for 19 years or more, having applied in some cases immediately after the war. During that time their children have grown up and missed the childhood to which they were entitled, in a decent home with such minimum amenities as hot water, a bath and an inside lavatory.
Then there is the overcrowding and the unhappiness that this creates. In most cities working-class families live in "two-up and two-down"—accommodation with two tiny bedrooms, which are really only box rooms. Take the case where three or more children—probably teenagers—are living in the house. What happens? The father sleeps with the sons and the mother sleeps with the daughters. It is not right or proper that happy family life should be interfered with in this way. It is intolerable in this age.
Will the Bill help these people? The answer is, "Yes, it will". I say this as a not altogether uncritical Labour Member. Ever since 1956—and that date should be remembered—interest rates have risen and, in consequence, the number of council houses built was reduced by half within a very few years. Ever since then, some of us have been urging cheap loans for council house building and for owner-occupiers with low incomes, because of this enormous burden of interest, and the land price racket—
Mr. Rippon: Hear, hear.
Mr. Allaun: I am glad that the right hon. Gentleman agrees. I am glad that he appreciates the truth of the situation, because these are the greatest obstacles to the building of more houses.
I do not wish to say anything about land prices—that question is being tackled under the Land Commission Bill—except to remark that the House of Lords is

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being dangerously obstructive. It is carrying Amendments which will frustrate the will of the House of Commons and delay reforms put through this House.
Mr. Rippon: In that case, why did not the hon. Member object to the Lords Amendments to the Local Government Bill, which raised exactly the same constitutional issues?
Mr. Allaun: The Amendments to which I am referring have not been raised in any other place or at any other time. The House of Lords, with its permanent inbuilt majority of Conservatives and landowners, should watch its step.
In my view, it is vital to bring down interest rates, and not just on housing loans. The people are paying a growing toll to the moneylenders. That is beyond the scope of the Bill, but the Bill will at least relieve tenants and owner-occupiers and balance the effect of the dead weight of finance on housing.
A typical council flat initially costing £3,700—£700 being the amount paid for the land—will, by the time interest has been paid for the usual period of 60 years, at the current rate of 6¾ per cent., ultimately cost no less than £15,300. The difference between these two figures is due entirely to the interest charged. I hope that tenants will note that out of every £1 they pay in rent 15s. goes to the financier.
After allowing for the existing subsidy, the amount of rent plus rates works out at nearly £6 a week, which is simply "out of this world" for most working-class fathers. When the present basic subsidy, which will work out at about £1 12s. a week for such a house, has been applied, the rent will still be far too high for most families. Councils are consequently spreading the extra cost of new houses over all thir council houses, some of which were built a generation ago. This means constant and almost annual increases, some of which are alarmingly high. My hon. Friend the Member for Southampton, Test (Mr. R. C. Mitchell) can tell the House of increases up to 31s. a week which are now being imposed, after a big rent increase not long ago.
In Harrow, the council is raising rents by 50 per cent., and in my City of Salford the rents are being raised by up to
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17s. a week. In many cases the only alternative is to stop building council houses altogether, which would be criminal, when the need is so great. It will be obvious to the House that the constant raising of council rents is a highly unpopular business. It is the biggest disincentive to extending the housing programme in the way that the country needs. Therefore, I warmly welcome the Bill.
Unlike Conservative Members of Parliament who claim that the subsidy is too great, in my opinion it is still not great enough. There will be no dramatic rent reductions as a result of the Bill. At best, it will help to stabilise the position. Despite the big subsidy to council housing that Salford makes out of its rates, I was informed by the city treasurer, some months ago, that it will be years before the new subsidy can make any significant impact on the accumulating deficiency in the housing revenue account. That is why the council has had to raise its rents.
In some London boroughs, where land costs are exorbitant, the situation is even more serious. Including land, an average three-bedroom house is costing £4,500 in one borough. My hon. Friend the Parliamentary Secretary probably knows these facts better than I do. Even with the present subsidy rents will be so high that the people who need these houses most would be unable to afford them. The council pays a subsidy of £4 a week per house, out of the rates. Under the Bill the Government's subsidy will rise, and so the amount paid by the council can be reduced to £2 10s. a week, for which it is truly grateful. Nevertheless, it means paying out of the rate the sum of £7,500, over the next 60 years, for every new flat built in this borough. Moreover, it will be understood that this rates burden will be increased with every new house built. I therefore urge the Government to remove this discouragement to an increase in council house building.
If I am fortunate, or unfortunate, enough to be selected as a member of the Standing Committee which will deal with the Bill, I intend to propose that if the market rate of interest falls by 1 per cent., then the 4 per cent. interest rate should be further reduced to 3 per cent.
A study of council rates shows that they tend to rise or fall in sympathy with

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the Bank Rate. This now stands at the unusually high figure of 7 per cent. Sooner or later, we hope that it will fall. This should, therefore, lead to some reduction in the market rate of interest, which, in turn, will reduce the contribution required from the Exchequer.
A drop of 1 per cent. in general borrowing rates would reduce the extra cost of the subsidy laid down in the Bill by almost two-thirds. A drop of 2 per cent. in borrowing rates, would result in the Government granting less subsidy than prior to the introduction of the Bill The virtue of my proposition is that if general borrowing rates fall, councils can be given 3 per cent. loans without its costing the Government a penny more than they are prepared to award by way of subsidy in the Bill. Councils should not pay more than 3 per cent. in any case. I am not asking for the moon. In the Labour Government of 1945–51, interest rates under Hugh Dalton were never more than 3⅛ per cent.—
Mr. Mellish: In view of the theme which my hon. Friend is adopting, it is important to get it on the record, that, at the moment, councils are borrowing for building houses. At the moment, therefore, they would get this subsidy and, whether interest rates drop or not, this is absolutely certain for the whole period of the loan, which is 60 years. They will benefit from the subsidy which we are now giving.
Mr. Allaun: I assure my hon. Friend that I do not under-estimate the value of the new subsidy. However, if market interest rates fall, without costing the Exchequer an additional penny he could reduce the borrowing rate from 4 per cent., let us say, to 3 per cent.—
Mr. Julius Silverman: On the houses then being built?
Mr. Allaun: Yes, on all new houses. Not on existing stock, obviously. Hugh Dalton never increased interest rates above 3⅛ per cent. They varied between that and 2½ per cent., which is considerably lower than the rates operating under hon. and right hon. Gentlemen opposite.
What attitude will the Conservative Party adopt towards the Bill? I am ready to bet that hon. Members opposite will
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not vote against the Second Reading of the Bill, because it is too popular. I am ready to make a further bet that they will do the same as they did with the Rent Act: not oppose a Second Reading, but do everything possible in Committee to whittle down the advantage to the tenants—
Mr. Michael Foot: Or try to get the House of Lords to do it for them.
Mr. Allaun: Yes—or try to get the House of Lords to do the dirty work for them. After all, the Lords are not subject to electoral control.
There are important vested interests at stake here—the financial investors, the land owners and the property owners. I must recall to the House one enlightening incident in Committee on the Rent Act. I drew attention to the fact that five out of the six Conservative Members at that moment on the Opposition Front Bench were all landlords or directors of property companies. Up jumped the sixth Member. He protested indignantly that he, too. was a property owner—
Mr. Oscar Murton: May I also draw attention to the fact—the hon. Member did not declare this at the time, but passed it off jovially, and we let him off—that the right hon. Gentleman the then Minister of Housing also was a landowner?
Mr. Allaun: I thanked the sixth Member for strengthening my case. Leading for the Opposition on housing on that occasion was the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), personally a most amiable man—
Mr. Mellish: Where is he?
Mr. Allaun: —who both was and is a director of the £27 million London County Freehold and Leasehold Properties Ltd. Today, we have had a Front Bench speech by the right hon. and learned Member for Hexham who is chairman of a big building firm and a director of three others.
Then, I expect that we will hear from another amiable Member, the hon. Member for Crosby (Mr. Graham Page), who is a director of five property companies

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and legal adviser to the Property Owners Building Society—
Mr. Graham Page: I am a director of one property company, which holds no residential property at all, I am a director of a building society and that is all. I wish that he would get his facts right and not indulge in these smears.
Mr. Allaun: I hastily correct myself. I was not suggesting anything evil about this—
Mr. Graham Page: Then why do it?
Mr. Allaun: I will tell the hon. Member why I am doing it. Hon. Members tend to represent certain classes or sections or interests. That is only right. I believe that, on this side of the House, we represent the people who work by hand and brain and largely the tenants and poorer people, and that, on the other side of the House, there are representatives of property interests. It is right that those interests should be known. I say nothing more than that and I think that I am perfectly entitled to say it.
It is significant—this is why I mention it—that the Financial Times devoted a leading article to the Bill recently under the headline, "Housing Subsidies. Getting Out of Hand". Although it recognised the mortgage option scheme as reasonable and modest, the paper claimed that the housing proposals were neither. The extra cost will be £12 million a year in 1968–69. This is "chicken feed" compared with the £190 million a year being wasted on the maintenance of British Forces in Germany or on much bigger items which right hon. and hon. Gentlemen opposite support.
I hope that the public will not let the Conservatives and their Press drive a wedge between the owner occupiers and the council house tenants. They are both suffering from the same burden, which is high interest rates. For instance, a wealthy man obtaining a mortgage from a building society for £3,500 for 25 years at 7⅛ per cent. enjoys no less than £53 a year relief in Income Tax. Over the 25 years that amounts to £1,325. I am not objecting to that, but simply pointing out that this is far higher than the amount received by the average council house tenant, who, up to now, has been getting £24 a year in some areas or £8 a year
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subsidy in others. So let us have no more howls about "pampering the council tenants".
I warmly welcome the fact that the poorer house buyers will in future enjoy the same subsidy as that enjoyed for years by their richer brethren. I fear that the delay in introducing this measure until April, 1968, and the 100 per cent. mortgage guarantee scheme until later, is mainly due to the squeeze, which, in turn, is due to our overseas military expenditure. I hope that, in future, mortgagors will be given preference over military expenditure.
I wish the Minister good luck with the Bill, and hope that he will be prepared to strengthen it during its progress through the House.
4.58 p.m.
Mr. Walter Clegg: The first part of the speech of the hon. Member for Salford, East (Mr. Frank Allaun) was admirable, in that it was deeply felt. He had seen the conditions in which tenants were living and wanted to do something about them. He has consistently waged war in the House on behalf of those tenants, not only on this side of the House but against his own Government. However, I could not see the motive for the latter part of his speech, when he talked about property owners on this side.
To put the record straight, while it seems that this should be done, I had better try to inform the hon. Member of my position. I own one house, in which I live, I own another, in which my mother lives, and I have an interest in some property which my firm has. I had better add that I am a solicitor and act for people who buy and sell land—for tenants and for landlords. It works both ways sometimes.
The hon. Member's speech highlighted something which is a problem not only in this sector of welfare, but in all parts. That is, are the people who need the most help getting it? I am sure that the hon. Member was mainly speaking for many of his constituents who need that special help; this was something to which my right hon. and learned Friend the Member for Hexham (Mr. Rippon) also referred. I know that many hon. Members opposite are concerned about this,

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which we see in the Health Service, in education and so many other aspects.
The great difficulty with housing, as with all the other forms of welfare, is that it is competing for limited funds. The Government, any Government of any party, have only a limited amount to spend. The right hon. Gentleman has to fight in the Cabinet against the Treasury for his share of the cake for housing, as the Secretary of State for Education and Science has to fight for his.
The true question is whether the present structure of the subsidy system, as outlined in the Bill, will fully solve the housing problem, as I thought the hon. Member for Salford, East hoped that it would. I do not think that it will, on its own, because of the amount of public funds which are available. The limitation is partly political. Any Government in power must pay concern to the taxes which they impose to run the Welfare State, and this, in itself, is a limitation.
There is also the limitation of overseas balance of payments. The hon. Member for Salford, East has an acute realisation of this, because he constantly urges the House to change the balance between defence and welfare. He comes down honourably—he feels that this is right—on the side of welfare, housing and many other interests which he has at heart. I cannot help wondering, however, whether or not the Bill will achieve its true aims and whether or not the most important thing mentioned today is the review of the whole structure promised by the Minister's predecessor.
There is one way in which to get more money into housing, which is what we all basically want to do, and that is to have a subsidy which is personal to the family. This would mean that private landlords or private capital could provide housing for letting. This is just not happening at the moment. It is not attractive. Hon. Gentlemen opposite may say, "In that case, we would be giving an indirect subsidy to a private landlord." But if he is providing houses at a fair rent, this would not be a bad thing—
Mr. Freeson: I am particularly interested in this matter, although I am uncommitted at this stage. Would the hon. Gentleman state, even if only briefly, the
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grounds on which he has come to the apparent conclusion that, if we adopt a rent contribution or rent grant system, this will encourage money to flow into rented housing, from the point of view of capital investment?
Mr. Clegg: I think that there is some experience of this abroad—
Mr. Freeson: There is no experience here.
Mr. Clegg: No, not here.
To get money in from private funds, the investment must be productive. It must show a return—
Mr. Freeson: Where has this happened? I have been in the United States, where I discussed and studied this matter in some detail. There is little evidence to show the results suggested by the hon. Member.
Mr. Clegg: I am interested in what the hon. Gentleman says. This is something which, I believe, should be considered in the light of the present review. The way in which I think that it would work is that the landlord would get a fair rent. The difficulty at the moment, without the subsidy, is that landlords are not always able to let the properties at the economically high rent which is demanded by them, certainly for the smaller families. I am sure that, if the landlord were given a fair return, funds would flow in from outside.
The burden of tenanted housing is being thrown on to State resources. I will give an example of some of the reasons why rented properties are diminishing on the market, not only in my constituency but throughout the country. I know something of this problem because, in my capacity as a solicitor, I am frequently asked to advise people on their affairs. In my constituency, there is nothing like the shortage that exists in London. However, there are many houses owned not by groups of landlords, using them as an investment, but by people who have saved up and have bought one or two houses. There are three prices to be realised, under the operation of the Rent Act, on these houses. There is the pure investment price, which is the lowest of all; the sitting tenant price, when the tenant buys the house, which is the intermediate

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price; and then the vacant possession price, when the house can be sold with vacant possession.
Under the Rent Act, what is the position when one of these small houses becomes available? Consider, for example, the case where one of these small property owners comes to me and says that the sitting tenant has died and the property is available. He asks, "Should I let it or sell it?" As a solicitor, because of the different price ranges that I have described, I must reply that if he wishes to protect his capital it would be better for him to sell the house with vacant possession. Once he lets it to a protected tenant the capital value of the house for a considerable period—which might be two generations—would be lowered and he could suffer a capital loss.
I mention this to point out the need to consider the position outside London. I often feel, looking at the problem from the provincial point of view, that we discuss these matters in Parliament after our thoughts have been coloured by what has been happening in the metropolis, instead of thinking of the country as a whole. The problems resulting from the Rent Act vary widely.
Mr. Eric Lubbock: Does the hon. Gentleman not think that a great many landlords who own one or two properties and who are not in the business in a big way would sell their properties to local authorities if there was a greater willingness to buy them? Could not the Government encourage authorities to accept properties offered to them by small landlords?
Mr. Clegg: To preserve the stock of rented property?
Mr. Lubbock: It would help to do that.
Mr. Clegg: It is an idea that could be considered.
I pursued a matter in my maiden speech—and I shall go on pursuing it—about the present set-up of council housing. It is a rigid set-up and this rigidity arises from one main factor; the tenure on which a council tenant holds his property. It is basically a monthly tenancy and that, in law, is all the protection a council tenant ever gets. It is probably comparable with being a grace and favour
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tenant in St. James's Palace or Hampton Court. In law, a monthly tenant has little more protection than that.
This is a fundamental defect in that once people are in a council house they find it difficult to change houses and particularly difficult if they wish to move to another part of the country. I have been thinking of ways to achieve greater mobility among council tenants and I suggest that, to achieve this, they must be given a greater sense of protection. It is partly psychological that if one has an interest in one's property and one knows that one is likely to be there for a number of years, one is more inclined to spend money on the property. That outlook cannot be prevalent if one is merely on a monthly tenancy.
Mr. Julius Silverman: Would the hon. Gentleman not agree that in fact, if not in law, the great majority of council tenants have a tenure similar to a protected tenancy?
Mr. Clegg: It depends on the local council. I agree that few council tenants are turned out, Other than for arrears—although the courts deal with a number of those cases and they sometimes deal with them more harshly than they deal with private tenants.
I was saying that the psychological effect of having a term of years as a tenant would enable council tenants to spend more money on their houses for their own comfort. Like my hon. Friends, hon. Gentlemen opposite are anxious to instil a sense of ownership into people and I suggest, therefore, that in certain circumstances local authorities should grant long-term leases, providing for rent reviews to take place at periods during the lease. People could then say, "My family will live in this house for the next 21 years. We can bring up our children and spend our own money to make the house more comfortable because we know for sure that we will be here for a long time". I would also grant a right to assign, subject to the approval of the local authority.
I am convinced that these changes would make the structure of council house tenancies better and would encourage more movement because people would have an interest to assign. We should

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import this form of protection into council housing, for it would instil not only a sense of ownership but a sense of flexibility. We need this flexibility and a dynamic community, and only if we achieve it will people in, say, the Midlands be prepared to move when there is a shortage of work in the area.
If one has a private house to sell somewhere in the North it is not difficult to sell it—although I have never been able to understand why anyone would, from choice, wish to leave that part of the country and move to London; except, that is, for the purpose of coming to Parliament. The Co-operative Permanent Building Society has shown the amazing difference that exists between the prices of houses in, say, the North-West and in London. To move from a council house in Salford to one in Ealing is almost impossible. However, if there was the sort of interest I have suggested, tenants at both ends would feel that they could transfer their interests, and this would create a healthier situation. A sense of personal ownership in council houses would, I suggest, be of inestimable value.
5.13 p.m.
Mr. Robert Davies: As a member of a local authority—the local authority for the area which I have the honour to represent in this House—I am glad of this opportunity to speak, particularly since my authority recently decided to increase the standard rents of its 9,000 council houses by 25 per cent. from 1st April next. This will, of course, be a considerable blow to the council tenants in my constituency.
I will not comment in detail on every point raised by the hon. Member for North Fylde (Mr. Clegg), although I was particularly interested in his comments about the problem of privately-owned tenanted houses. As for the tenure of council tenants, I understand that, in practice, my local authority, of which I have been a member for nearly 15 years, recognises that its tenants do, in practice, have security and my recollection is that the housing management committee has thought it necessary to obtain a court order before any tenant was evicted. It is fair to say, therefore, that council tenants in my area enjoy considerable security of tenure. To give flexibility, it
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would seem necessary to secure easier transferability of tenants between different towns and better arrangements for exchanges of tenancies.
I have no doubt that Part I of the Bill, which provides for percentage subsidies, will be of considerable benefit to local authorities, at any rate at existing borrowing rates. This will certainly be the case in the City of Cambridge. Assuming a borrowing rate of 6½ per cent., with a building programme of 500 houses and flats a year—it is a relatively small town with only 9,000 council houses—the subsidies provided in Part I will be £20,000 a year higher than the existing subsidies, and for a relatively small authority this will be of considerable assistance.
Unfortunately, it takes some time for an authority's housing programme to be completed and although this new arrangement will operate on houses on which tenders were accepted in November, 1965, it will not be of great benefit in my area at the moment and will not enable us to meet the considerable deficit of £125,000 in our revenue account, as a result of which the authority has decided to increase the standard rents by a quarter.
On this basis of interest charges, we will get an additional subsidy—these figures are based on the calculations of the city treasurer and myself—of between £20 and £30 a year for a housing unit with a capital cost of between £2,000 and £2,500; a subsidy of between £40 and £50 a year for a housing unit costing, all in, between £3,000 and £3,500; and an additional £65 to £75 a year for a unit costing between £4,000 and £4,500. The Bill will, therefore, be of considerable benefit to my housing authority.
It is evident, however, that the benefit, while very real and substantial when there is a high borrowing rate, as is the case unfortunately today, will fall off and finally disappear entirely if the borrowing rate is reduced. It is important to be honest about this point. If the rate of interest on loans were to fall to 4 per cent., the subsidy would be nil—although to the extent that it does fall towards 4 per cent., that will be a welcome trend indeed.
For that reason, I warmly support the remarks of my hon. Friend the Member for Salford, East (Mr. Frank Allaun). At

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some stage not only might the benefit of the Bill decline, but become less than the value of the existing 1961 Act subsidy of £8 or £24 a year; and in respect of my local authority, for reasons connected with its revenue account, it would be £29 a year.
I find some difficulty in calculating the subsidy that would be due according to the formula in Clause 2, but it is quite possible to get a clear, if crude, picture of the value of the new subsidy at varying rates if one compares the loan charges that would be payable on units of various capital cost, less the subsidy that would be available under the new Measure, with that available under the 1961 Act.
If one compares the value of the proposed new subsidies for a unit of capital cost of about £3,000 with the benefits now obtainable under the 1961 Act—and they are very considerable at the existing rate of interest—one finds a very considerable fall. With a 6½ per cent. borrowing rate on a unit of all-in capital cost of £3,000, the additional benefit is about £50 a year, but it declines very rapidly to not more than, perhaps, an additional £5 a year when the borrowing rate is 5 per cent.—and below that there is no benefit at all.
Indeed, the value of the new subsidies, taking into account loan charges, when the borrowing rate is reduced below 5 per cent.—and the faster it is reduced below that rate the better—falls away completely, so that at 4½ per cent. the value is about £10 less than the present 1961 Act subsidy and at 4 per cent. it is the full £29 less, because we get at present a subsidy of £29 per house.
If we compare the proposed new subsidy with the Exchequer and compulsory rate subsidies of £35 12s. which were available between 1952 and 1955, then, if the borrowing rate fell below 5½ per cent.—which is not a very low rate—council tenants would benefit less with the new subsidy than they did between 1952 and 1955. I find that in October, 1953, the Public Works Loan Board rate was 4 per cent., so that any house built at that time would have been assisted to the extent of £35 12s. a year more than would be the case if we went back to 4 per cent. with the Bill. We should face that fact, and from it I draw the consequences that
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are also drawn by my hon. Friend the Member for Salford. East.
I support my hon. Friend also in his reference to the inadequate value of council house subsidies as compared with the value of subsidies, direct and indirect, available to owner-occupiers. This includes the tax relief and the remission of Schedule A because, although justifiable, that is a real subsidy. Table 49 of the National Income and Expenditure Blue Book for 1966, estimates that Exchequer housing subsidies in 1955 amounted to £103 million and that the local authority subsidy amounted to £46 million, making a total of £149 million.
My right hon. Friend's predecessor, the present Leader of the House, answering a Question on 6th July, 1965, said that in 1964–65 the value of tax relief on mortgage interest amounted to £125 million. It would doubtless be more now. In an article in Local Government Finance, the journal of the Institute of Municipal Treasurers and Accountants, in March, 1964, it was estimated that the value to owner-occupiers of the remission of the Schedule A liability for 1962—and doubtless it is considerably higher now—amounted to £85 million.
Those two figures total £210 million, as compared with the Blue Book estimate of £149 million for council house subsidies. Those figures show that the subsidies already being received by owner-occupiers are 40 per cent. more than the housing subsidies made available to council tenants. I therefore agree with my hon. Friend the Member for Salford, East when he said that the existing subsidies for council building are by no means generous.
I have taken no account of Income Tax relief on life endowment policies, which is considerable, and which is enjoyed by owner-occupiers like myself who have financed house purchase in this way. I have checked what subsidies, direct and indirect, I receive from the State. I do not know whether my arithmetic is right—it often is not, which is why I get the help of my friends in the mathematical laboratory at Cambridge—but I believe that with the inclusion of Schedule A remission I enjoy a subsidy of £80 or £90 a year in respect of my purchase of a comparatively small house, which some people understandably mistake for a council house. This is a very considerable

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subsidy, and much more than that enjoyed by council tenants.
It should be recognised that council tenants receive an additional concealed, but necessary and unavoidable subsidy—and if it were not made local authorities would inevitably make a profit on housing which I would consider highly undesirable—to the extent that the open market rents of council houses would certainly significantly exceed their economic rents when fixed on a historic cost basis.
The right hon. and learned Member for Hexham (Mr. Rippon), when speaking of rent policies, referred to Cmnd. 2838, Housing Programme 1965–70, from which he quoted that the whole question of housing finance needs much deeper study than this or any other Government have yet had time to give it. That is perhaps not true of hon. Members opposite, because they had plenty of time but failed to give it the deeper study it requires.
It is important to direct attention to this. I get the impression that the philosophy underlying the new subsidies, as set out in the White Paper, is that the subsidies should be used, at any rate largely, to make it possible for council tenants who would not otherwise be able to afford to do so to live in a reasonable house without spending an unreasonable proportion of their income on rent—that is, to make it possible for local authorities to provide generous rebates for tenants who cannot afford the standard rents of their council houses.
I do not know whether this should be mandatory, but I believe that it is essential that the rent policies of local authorities should be so designed that the aggregate standard rents of their houses equals the aggregate economic rent. I am not referring to market rents. I mean the historic economic rents. The aggregate standard rents of the houses should cover the cost of providing and managing them. Some people cannot possibly afford the standard rent of a house just because, particularly with past high interest charges and other high costs, it would necessitate their paying an unreasonable proportion of their income on standard rent.
I believe—this is hinted at, if not clearly stated, in the White Paper; it either does or should underlie the new
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Subsidies—that the Government subsidy ought to be used to meet the cost of rebates for poorer tenants—that is, to enable those who could not otherwise afford to do so to live in reasonable modern houses. In so far as it is not sufficient, it should be topped up by a local rate contribution.
In addition, there should be a rate contribution to offset the cost to housing revenue accounts of the deficit resulting from undertaking housing operations which are not properly the business of a housing authority and which, although legally and properly charged to housing revenue account, result from the actions of councils as public health authorities. This is so with regard to slum clearance. Every time a housing authority must rehouse somebody from a slum house, because of the operations of that authority, not as a housing authority, but as a public health authority, it throws a burden on the revenue account and imposes a burden on other council house tenants which they should not have to meet. It should be a charge on the community at large.
Mr. Julius Silverman: This also applies to the ratings of what are called 1954 houses. This matter is quite distinct from the ordinary housing revenue account, but yet it is a burden upon it.
Mr. Davies: I agree. There are many other fields in which at the moment housing revenue accounts have to bear costs which properly are chargeable to the community at large. There should always be a rate contribution from a local authority to offset these charges, which unfortunately are, legally, quite properly chargeable to revenue accounts.
A great deal more work needs to be done on housing finance. The present basis of the Government subsidy, beneficial as it is at existing and high rates of interest, is very largely arbitrary. If and to the extent to which the Exchequer subsidy should be used to reduce the standard rents of council houses for poorer tenants to make it possible for them to live in a reasonable house without having to pay an unreasonable proportion of their income in rent, it should be directly related to the cost of doing so.
It is not so at the moment. It is purely coincidental if it works out that way.

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If and to the extent to which some part of the Exchequer subsidy should be used to reduce the general level of standard rents, to that extent and for that part it should again be directly related to the cost of doing so and should be calculated on that basis.
While greatly welcoming the Bill, because I think that it will be of great assistance to local authorities—it will certainly be so to my own—I hope that the Minister and his colleagues will give housing finance the deeper study which I am sure that it needs and to which reference is made in the Housing White Paper.
5.35 p.m.
Mr. Oscar Murton: I congratulate the hon. Member for Cambridge (Mr. Robert Davies) on his statistical erudition. I will not pretend that I was able to follow it line by line. I only hope that the Official Reporters were, because it was very interesting. I notice that the Minister was trying to think how the hon. Gentleman's recommendations could be applied in practice, as I was.
I am sorry that the hon. Member for Salford, East (Mr. Frank Allaun) has left the Chamber, because it is always with particular pleasure that I see him rise, because he usually endeavours to submit an argument which causes a certain amount of trepidation on the Treasury Bench. I noticed today particularly that the hon. Gentleman got dangerously near to the very well known but dangerous figure of 3 per cent. which the right hon. Member for Belper (Mr. George Brown) will go down through the ages in the annals of fame as having pronounced.
Mr. John Fraser: My right hon. Friend the Member for Belper (Mr. George Brown) was talking about something which he hoped for and which we all hope for. If that is to be quoted, perhaps fie hon. Gentleman would quote fully and accurately and not merely reproduce what was said in the Daily Express.
Mr. Murton: I am obliged. I will:
"What we propose to do is to have immediate discussions with building societies, local authorities and other interested parties for reducing the mortgage rate. We shall try to get it down immediately for new mortgages. We have something in mind to the order of 3 per cent., though we are not committed to that figure."
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The date was 26th September, anno 1964.
I am sorry that the heavenly twins, if I may so disrespectfully refer to them—the two Parliamentary Secretaries who accompany the right hon. Gentleman on these occasions—have left. If I am not out of order in referring to them as Castor and Pollux, one was a horseman and the other was a boxer. The hon. Member for Bermondsey (Mr. Mellish) was probably the boxer, because he turned in some alarm when 3 per cent. was mentioned. He consulted his right lion. Friend and then said, or inferred, to the hon. Member for Salford, East that the argument which was being advanced was not one which he wished to pursue.
Both Parliamentary Secretaries, if I am to carry mythology a little further, were argonauts and, therefore, both were fighters and were also involved in another piece of mythology, in something called the Calydonian boar hunt. It is a pity that the Under-Secretary of State for Scotland was not present at that point on the Treasury Bench to take an interest in this discussion, because the Scottish side of this matter does arise and it is a matter of some importance.
By a strange coincidence, it is exactly one year since the Second Reading of the previous Housing Subsidies Bill. I do not know whether this is intentional, but that Bill received its Second Reading on 15th December, 1965. It makes one think that, even allowing for the supervention of a General Election, there has been a considerable, indeed inordinate, delay on the part of the Government in getting round to this subject again, especially as there are in Part I of the Bill very few alterations to its predecessor.
It is relevant here to quote something which the Joint Parliamentary Secretary, the hon. Member for Bermondsey, said on that occasion about the need for increased council house building:
"For years, uncertainty about interest rates likely to be payable on houses yet to be built has put a curse on long-term planning.—[OFFICIAL REPORT, 15th December, 1965; Vol. 722, c. 1285.]
In my view, in their new proposed basic study the Government have gone very much to the other extreme. Not only will local authorities be insulated from what I would call the realistic costs of borrowing, but they will also be cushioned in certain respects against the effects

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of expensive sites and of tall buildings by the grant of supplementary subsidies. This is certainly a venturesome policy.
Is it not verging on the foolhardy? It has always been the accepted commercial practice to borrow short-term in times of high interest rates in the hope—it is a hope, though not a pious one, I hope—that there will be lower interest rates some day. In commercial practice, it is best not to borrow for too long a period at excessively high rates.
We now have an odd situation. If local authorities build at a time when interest rates in the preceding year have been high, they are assured of that high rate of subsidy for no less than 60 years. Obviously, this will lead to a scramble to climb on to the bandwagon. The political life of the Chancellor of the Exchequer has so far been dominated by thoughts of the need to keep the economy in balance by the use of the well tried fiscal weapon of the interest rate. One wonders whether he will be very happy to know that that can go on indefinitely.
Conversely—and this is surprising—if interest rates fall, the basic subsidy will be of considerably less value to the local authorities, which will no doubt prefer to sacrifice that subsidy for a lower interest rate which they may be able to obtain on the open market. Meanwhile, when this has taken place, those who have accepted the basic subsidy, as, of course, they will, will find that it cannot be reduced, and neither can the contributions by local authorities be altered until 10 years after the Royal Assent has been given to the Bill. The local authority associations are somewhat worried that there can be no alteration in this arrangement, once it is agreed, for that period of 10 years.
The worst mistakes of the system are, first, that at times of high interest rates, with the automatic increase in expenditure on housing subsidies, there will, obviously, be an increasing move from house-building in the private sector to the public sector. [HON. MEMBERS: "Hear, hear."] I expected hon. Members opposite to say "Hear, hear" to that, but the Government must not get their views on this matter out of balance. We all appreciate that there is a crying need for council houses, but one must realise also that there is a crying need
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for the building of houses for owner-occupiers. Even the Government admit that in Part II of the Bill.
The statistics show that those who desire to live in a home of their own are a higher proportion of the population than those who wish to live in rented accommodation. It should be our ultimate aim, when the slums which, unfortunately, still exist are swept away, that those who can afford to do so should be encouraged to live in houses of their own, in something which is their own property which they can live in or sell when they want to move to another house as free men not tied down to a system under which they live without certainty as tenants of rented accommodation, where the problem of redeployment of labour can cause difficulty by making them wonder whether they can afford to take a job somewhere else because they do not know whether they can have another rented house at the other end.
The situation is grim indeed as regards building for private ownership. The figures already show that completions are falling off, and the forecasts for next year are even graver. Although the Government's housing target may grow on the rented accommodation side, the council building side, the private enterprise building target will shrink. This is a very serious matter.
Another objection is that a policy which couples increased public sector building at high interest rates with an exhortation to keep council rents down can mean only that there must be larger subsidies from somewhere to balance the housing revenue accounts, and those larger subsidies will have to come from the taxpayer. If the policy upon which the Government are now embarking fails, if the housing revenue accounts are not balanced and there is a deficit, only one body of people can meet the deficit, the poor old ratepayers.
It is important, therefore, that the Government should encourage those local authorities which have not yet instituted adequate differential rent schemes to heed the exhortation of the Minister's predecessor and, literally, put their houses in order.
Mr. Lubbock: I intervened in the speech of the right hon. and learned Member for Hexham (Mr. Rippon) and

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asked whether it was his opinion that such schemes should be made mandatory. He replied, "No." Why are we all arguing that we should have differential rent schemes when no one is prepared to take the bull by the horns and impose them on local authorities?
Mr. Rippon: May I add to that intervention and remind the hon. Gentleman that what I said was that I was not in favour of them, but they may be necessary.
Mr. Deputy Speaker (Sir Eric Fletcher): Order. We cannot have interruptions on interruptions.
Mr. Murton: I put it to the Government. They must make the decision. As my right hon. and learned Friend has said he is not in favour of them. We do not want them to be mandatory. But the Government have expressed certain opinions and, if a Government express opinions, I expect those opinions to be carried out. That is the point of governing. I was drawing to the attention of the present Minister what was said by his predecessor, in the hope that he would reinforce it, if that is the Government's view, and see that something is done.
Even if he would not be prepared to admit it, the Minister must be worried about the possible cost of this scheme when it is applied to actual building. I do not want to weary the House, but there are some detailed points which I must bring to the Minister's attention. Clause 3 points the way to a much greater degree of ministerial direction or, perhaps one could say, interference with the practical application of the subsidy by local authorities. The key to the Bill from the local authorities' point of view lies in the meaning of Clause 3(1) where the reference is to
"the cost incurred … in providing the dwelling".
In the original 1965 Bill the words were "aggregate cost", but the word "aggregate" has now been dropped. The basic subsidy will depend on what the Minister interprets as being included in the cost.
It is, therefore, most important that the Ministry should provide a list of those items connected with the provision of dwellings which will rank for subsidy—I hope that this will be regarded as a constructive suggestion on a matter of
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importance—and, what is more, provide another list showing the items which will not rank for subsidy.
Further difficulty may arise under the formula which ties the yardstick to a tolerance of 10 per cent, excess beyond which subsidy will be refused. Not only will the subsidy be refused if the yardstick shows more than 10 per cent. excess in building but, what is more, there will be danger of the loan sanction also being refused, If either higher standards than the Parker-Morris minima produce a tender 10 per cent. more than the cost calculated by reference to the yardstick or, alternatively, the standards exceed the Parker-Morris minima by 10 per cent. although the tender comes within the 10 per cent. tolerance allowed for loan sanction purposes, the basic subsidy and loan sanction as well could easily be lost.
This is an important point which has been made by the Association of Municipal Corporations. It is our duty as back benchers to draw attention to points which are raised by these expert bodies. It is not suggested that these proposals should he revised so as to allow local authorities to embark on extravagant designs, but, on the other hand, the Government should bear in mind that many local authorities have already advanced beyond the Parker Morris standards.
Indeed, I think that the right hon. Gentleman himself hinted that he would shortly review them. I hope I am right in thinking that. He will agree that the Parker-Morris standards have been improved on in recent years and they are widely regarded now as barely adequate. Let us not be inhibited by those standards in our building. If a local authority feels that it can do better, let it do so. It would be a very good investment for the future.
What the A.M.C. would wish to see is the subsidy allowed if those higher standards can be achieved within the yardstick limits, and also that authorities should not be prevented from building to better standards if they are prepared—this is the important point—to carry the increased cost themselves without an Exchequer grant.
I come now to another important point on Part I. As I understand it, the subsidy is payable not on final costs but on the

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amount of the original tender, the actual land costs and the estimates where costs are not known at the time when the resolution accepting the tender is passed by the local authority. As final costs are not to be the determining factor, a heavy burden will be put on the architect of the local authority and his staff if they run into difficulties.
One knows about hidden work. Difficulties may be encountered on the site. With a high building, subsidence could easily be encountered. If an architect is faced with such difficulties and he has not foreseen that they might arise—in certain circumstances, it would be difficult even for an expert to know that they might arise—and the entire tender has been put in on the premise of a certain figure, could it not happen that, because of the miscalculation, caused not by human error but by nature, the Exchequer subsidy would be lost? That needs very careful consideration by the Government, because one can well see that this sort of thing could happen.
I have tried to be constructive so far, but the Government have given a dismal performance with Part II of the Bill and the option scheme. There was a tremendous fanfare at this year's General Election about what was to happen and it was said that the annuity rate was to be 2½ per cent. lower than the full rate chargeable on a mortgage. I know that there are technical reasons for it and I know that the building societies were unable to work the system which the Government proposed, but we are down to a bare 2 per cent., and not 2½ per cent.
Mr. Blenkinsop: Will not the hon. Gentleman accept that the benefit to the tenant is the same as the proposed 2½ per cent.?
Mr. Murton: Yes, but it will be rather difficult to get that across to people who happen to remember. It is not strictly the same, but to be honest—and I hope that I always am—it is not all that important. What is of some importance is that this scheme will not start to work until 1st April, 1968, and that is the crux of the matter.
"Hope deferred maketh the heart sick".
That is very much what is now happening. I remind the hon. Member for South Shields (Mr. Blenkinsop) that in his
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party's election manifesto of 1964 it was said:
"This policy of specially favourable rates will apply both to intending owner-occupiers and to local authorities building houses to let".
That sounds very fine and encouraging, but that is two years ago and we are not very much more forward. The owner-occupier has to wait 16 months for any relief and his heart will be even more sick about these proposed 100 per cent. mortgages under the guarantee scheme, because there appears to be no hope at all of anything being done in the immediate future to implement that promise.
I look upon this as a sad and cynical story, and it is especially sad for hon. Members opposite whose Government have made a good score of promises which have been broken. The 100 per cent. mortgage was a vote-catcher, something to which many young people looked forward and which might well have influenced the way in which they voted at the General Election, but such a scheme will not operate in the foreseeable future, and one wonders whether it ever will.
On the other hand, my party was perhaps a little more honest about this and suggested a scheme of capital grants by which a sum of money would be given to match what the couple had been able to save. That was a very sound scheme. I do not want to labour this point of the 100 per cent. mortgage, but I hope that it will be achieved by some party some day. I know and understand the difficulties which young people have to face. They want to live in a house of their own, but in the meantime, if they are unfortunate—and I do not mean that unkindly—they have to share the home of the parents of one or the other. If they are a little more fortunate, they may live in rented accommodation. In either event, they have to pay rent for the rented accommodation, or make some form of contribution to the expenses of the parents concerned.
The difficulty for these young people is saving the money to obtain a deposit when they already have to pay as much as £5 a week from their combined earnings to keep a roof over their heads. This is a difficulty about which the whole House sympathises. I end on that note, because it is a hobby horse of mine that

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I would like to see the day when these young people get assistance from a capital grant scheme so that they are able to manage to put down the money for a deposit for a house as well as being able to pay rent and rates which they have to pay in the meantime.
6.0 p.m.
Mr. Julius Silverman: The hon. Member for Poole (Mr. Murton) referred to the balance between local authority and owner-occupied houses and thought that it was going the wrong way. Hon. Members on this side of the House will not agree with him. We believe that the balance has been the wrong way for a long time and that it is now being corrected. I do not think that it will go far enough until we are building 250,000 council houses a year, and we are glad that the Bill gives considerable assistance in this direction.
The nub of the housing problem is the long list of people on the registers in our large cities. There are 40,000 in Birmingham, and there are similar figures in all the large cities, lists of people who cannot think in terms of owner-occupation and who cannot afford to rent private houses which have not previously been in control and whose only hope is local authority housing. I welcome the Bill, because without it it would not be possible to maintain, still less extend, the number of local authority houses needed.
In Birmingham, for instance, more than 18 months ago the council commenced an expanded housing programme. It has been doubled and is now likely to be trebled. Without the assistance of the Bill, which, of course, the council anticipated in its financial policy and in its rents policy, the measures taken by Birmingham would have been completely impracticable. The money would not have been available without totally impossible burdens for the ratepayers or existing council tenants.
I agree with my hon. Friend the Member for Salford, East (Mr. Frank Allaun) that the Bill does not go far enough, and I hope that in Committee my right hon. Friend will consider the sort of suggestion which he and my hon. Friend the Member for Cambridge (Mr. Robert Davies) made.
For many years, not just since 1944 or 1945, or 1946, there has been a crisis
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in housing finance. All local authorities have made massive increases in rents. To some extent, the crisis has been due to increased rates of interest and increased costs, but those have not been the major factor. The major factor, as I have said a number of times, is that every time a new house is built it is more expensive—probably now costing about £4,000; it has been rising steadily since the war—a burden which simply cannot be financed out of the rents of the property. The consequence has been that as more houses have been built there has been an ever-increasing burden on the housing revenue accounts, a problem which has not been completely obviated even by the Bill.
For instance, Birmingham has incurred a debt of about £10 million on which interest has to be paid simply on the capital cost of houses in the pipeline. If that burden is not paid by the ratepayers, it must be borne by the existing tenants. Although new houses are let at realistic rents, there is still a burden on the housing revenue account for each new house of about £40 a year, even after the new subsidy is taken into consideration, and that burden has to be borne by someone. With flats the burden is still greater, because the cost of flats per dwelling is greater and the services for the flats probably add an additional cost of £30 or £40 a year. Yet many local authorities have to build high because land in their areas is so scarce.
All this burden has to be borne by the existing rent structure, and this is a burden which has been piling up year by year. It has not been popular to put the additional cost on the rates, and so existing council house tenants, perhaps people who have lived in council houses for 25 years, or since before the war, have to bear the burden of the enormous increase in rents which has been described today in more than one speech.
The Bill goes a good way towards relieving this burden, but it does not entirely relieve it. I know that in the present economic situation it is unrealistic to ask for more, but I hope that when the economic situation allows for a reduction in interest rates, the same amount of subsidy will be allowed on new houses as within the present structure, and I hope that the Minister will consider including a provision to that effect.

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Something has been said about spreading the burden of costs, but I notice that no direct reference has been made to the sort of differential rent and means test scheme which is so dear to the hearts of Tory Members. The hon. Member for Poole spoke of the terrific cost of subsidies. It has already been pointed out that the owner-occupier already gets a subsidy substantially higher than that of the council tenant, even under the new scheme of things.
When the Bill is completely effective, Part II will apply to all mortgages whether they come into operation before the Bill or not. But Part I, which refers to council houses and the new subsidies, will apply only to debts incurred if the houses were completed after 25th November, 1965. For the rest, a huge burden of debt will be placed on local authorities, a debt on which most will pay an average rate of interest close to 6 per cent. Even today council house tenants will not be pari passu with owner-occupiers.
I believe that both council tenants and owner-occupiers should get this relief on interest payments. This is not a matter of means. I do not think that this is a form of subsidy. If the nation decides as a matter of policy, as it does, that interest rates should be at a certain level because of the economic situation, then it is only fair and proper that it should insulate both the council tenant and the owner-occupier against these increased charges. Therefore, I think that what is happening in both cases is socially just.
However, it must be pointed out that those who ask for a means test for council tenants, those who ask, for instance, that there should be a personal payment instead of the present subsidy, would not propose that the personal payment should apply to the owner-occupier also, or that he should have to prove hardship before getting it. We have the situation today that the wealthier the owner-occupier the greater the relief he gets. One writer has said that nobody gets more relief than the millionaire owner-occupier. Until this Bill came into operation, the only means test that existed was a means test in reverse, because the people who had the income and paid Income Tax got it, and the people who
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were not up to the level of the higher standards of Income Tax did not get it. Now, at any rate, this situation will be altered. However, we have to bear in mind that there is still no means test for the owner-occupier, and I cannot see why there should be a means test for a council tenant.
I listened with interest to some of the suggestions made by my hon. Friend the Member for Cambridge in a very thoughtful speech. He referred to the present structure of local government finance and mentioned the various burdens which were borne by existing housing revenue accounts. Quite obviously, this matter has to be considered afresh. I understand that the last Minister was already considering issuing a new circular on the subject of housing revenue accounts. At present, the situation is completely unsatisfactory. The hon. Gentleman mentioned, for instance, that slum clearance is in the housing revenue account, that the patching and maintenance of 1,954 houses, until they are finally demolished, is also in the housing revenue account. Council tenants, as I have already mentioned, have to bear not merely the cost of their own houses—the historic and economic costs—but also the whole of the development which is taking place and the development which is still to come.
That is an enormous burden, and there are all sorts of other additional expenses, such as various items of hostels and welfare services, which have nothing to do with council tenants. These are all in the housing revenue accounts. The subsidy which we have given today is not given to the individual tenant but to the housing revenue account which spends its money in many ways.
A rebate scheme was mentioned today. Why should a rebate scheme, which is a welfare scheme, a scheme of assistance, given to tenants who are poorer off, fall on the shoulders of council tenants only? Is it not obvious, on the face of it, simply that the tenant, having paid a fair rent himself, should be in the position of all other ratepayers in meeting that expense? Let us take the question of keeping the housing register. Here is another matter which is not one of the ordinary expenses of what I would call estate management—the question of interest, repairs and

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administration are part of estate management. This item again is all in the housing revenue account.
Out of the housing revenue account comes also debt redemption. Council tenants in Birmingham are paying off £1 million a year for debt redemption for an asset which will accrue to the whole of the citizens of Birmingham. All this is coming out of their rents. I venture to suggest—and I would mention Birmingham in particular—that if the existing council houses in Birmingham had been kept entirely separate from fresh development, supposing the Birmingham Corporation were an ordinary form of estate management, they would have been making not a loss but substantial profits on existing houses, apart from the matters which I have described.
Therefore, the time has come for a radical review of rent policies and of the whole basis on which these accounts are kept. Tenants cannot go on bearing these additional and massive increases year by year for the sake of posterity. It is right that they should be asked to pay a fair rent for the houses they occupy, and in most cases they are already paying an economic rent, and very often substantially more than an economic rent in view of what the house costs. I agree that they should pay a fair rent, but not with-standing this Bill, local authorities will still get into trouble with their housing revenue accounts unless there is a radical alternation in the way they are kept and in the allocation of the burdens which they have to bear. I hope we shall hear something from the Minister about the matter.
I have one further question to ask him regarding Part II of the Bill. Reference has already been made to an organisation called "Shelter". This organisation, starting from small beginnings, is endeavouring to do a good job, and hon. Members on both sides of the House will agree that it is desirable to have other housing agencies apart from the council. It is not desirable that all the eggs should be in one basket. This is a voluntary organisation which is commencing to do quite good work. Apparently it does not benefit from the provisions of Part II of the Bill, which refers to owner-occupiers or to co-ownership housing societies, which are in the same position as occupiers.
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I should like the Minister to say why this benefit should not be extended to bona fide housing associations approved by the Minister, which would help in rehousing the people. I hope we shall have some assurance from the Minister, otherwise, if by good fortune I am on the Committee, I shall raise the matter on Committee.
In conclusion, I welcome the Bill. It is a useful Bill. It will not only save the finance of local housing authorities from disaster, but it can result in an expansion of houses for the most needy sections of the population.
6.17 p.m.
Mr. Gordon Campbell: I wish to speak on Part II of the Bill, which applies to the United Kingdom and therefore, to Scotland as well as to England and Wales. It introduces a system of option mortgages.
I should like to say, in passing, that Part I of the Bill is very similar to the Scottish Housing Bill, the Committee stage of which was completed last Tuesday. In principle, Part II of this Bill, which introduces a system of option mortgages, is not an issue between the parties, as has already been made clear. The Conservative Party first put forward proposals and the Labour Party put forward a plan as recently as 1st March this year.
The present position has arisen, as I understand it, because the taxpayer who pays the standard rate of Income Tax benefits from special relief. This is a measure, which successive Chancellors have approved of, to encourage savings. This has, therefore, grown up, understandably, in the same way as relief, for those who take out life insurance policies, on their interest payments.
There have been these inducements to saving for those engaging in mortgages but, with the increasing demand for home ownership, there has been a welcome spread of a wish to take more personal responsibility for housing oneself and one's family. Under the Conservative Government, there was an increase in real income and steadily diminishing taxation. Together, these produced a situation in which there was an increasing potential of mortgage applicants coming forward.
The situation arose that more and more of those becoming interested in homeownership were not paying the standard

719
rate of Income Tax. There are clearly economic and social requirements why the Government should encourage and help such persons to become home owners. I have mentioned the Labour Party scheme put forward on 1st March for mortgage options. It has been considerably transformed since then. We have only seen it again in recent days with the emergence of the Bill, when we find that it is considerably different from the original proposals. I note that the 2 per cent. only operates above 4 per cent. interest rates. We are a long way from getting down to 4 per cent. interest rates at the moment but, in future, when interest rates come down below 6 per cent., this will matter more.
It was clear after 1st March that the Government's scheme was considered unworkable by the building societies, which had to help them with the present scheme. Indeed, the Minister today described the original scheme as unacceptable to the building societies because of the administrative burden it would have imposed. In the months following 1st March and before this scheme was published, the Government presumably have had to have long discussions with the building societies about amending the proposals and producing a workable scheme.
The present position, for a potential mortgage applicant, however, is considerably different from what it was two years ago. First, this scheme is not to come into effect until 1st April, 1968. That is still a long way off. Secondly, Government policy has pushed interest rates extremely high and the 2 per cent. help towards interest rates now means much less than it would have been earlier or if interest rates were not so high.
The Chancellor of the Exchequer on Monday pointed out that higher rates of interest were required to attract deposits to the building societies. This was why building societies had to raise mortgage interest rates. Another difference is that the prices of houses have risen greatly in the last two years. It has been estimated that the average rise is about 16 per cent. since October, 1964. All this makes the financial burden for the potential mortgage applicant more onerous and it raises the threshhold of income which can prudently qualify for a mort-
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gage and thus enable a person to become a home owner.
Then again, there is no help with the deposit. The scheme we heard so much about—of lending up to 100 per cent. of valuation—has been indefinitely postponed. That is confirmed on page 6 of the White Paper. So this is another pre-election proposal which has apparently come to nothing. What worries me is that a person who, in 1964, might have been considering becoming a home owner and may have been approaching the threshhold of home ownership will now need to produce considerably more money, and even with this scheme he may not now feel that he is able to afford it. He may feel that, even if he put it to the test he may be unable to afford the high prices, high interest rates and requirements of the building societies even under this scheme.
The encouragement of private building is essential, particularly in Scotland. Private building normally adds to the total of houses which can be built and completed and is complementary to public authority building. In England and Wales, there was, up to 1964, a welcome expansion of home ownership and private building and this greatly assisted the record figures for building in England and Wales in the early 1960s. But in Scotland the private sector has regrettably not expanded in the same way.
There are two reasons. First, there has been a certain tradition in Scotland for living in rented houses. This is clearly a traditional matter. Secondly and more important, some local authorities, particularly certain large ones covering populous areas, have subsidised artificially low rents. This is not a matter of argument. It was reported on succinctly by the Allen Committee in its inquiry about the impact of rates on the housing programme. But besides being a burden on the ratepayers, this practice distorts the situation and has inevitably restricted the amount of building in the private sector which could be carried out.
I am not raising this in a controversial way, because the Secretary of State for Scotland has made it clear, in White Papers and in other ways, that his aim is what we have urged for a long time in Scotland—to encourage local authorities to charge reasonable rents and operate sensible rebate schemes. Unless this

721
happens, very little use can be made of this new option mortgage scheme in Scotland and this would be unfortunate.
There is now therefore, I believe, a real chance in Scotland of getting some agreement about this and getting the local authority rent structure altered where necessary. The Opposition's views on this are clear. Most of these large local authorities in Scotland covering the populous areas have Labour majorities and therefore the Secretary of State has a real opportunity to use his influence. The Under-Secretary of State has claimed already that the Government are persuading more local authorities in Scotland to adopt sensible rebate schemes and he knows that we will support him in anything more he can do on this.
Economic and social progress in Scotland is bound up with the encouragement of a new attitude to housing and with the encouragement of home ownership and the private sector of building. I hope for an increasing demand for and expansion in home ownership in Scotland because that is part of the growth and development of a thriving modern society, with individuals taking more responsibility for their own affairs as their prosperity increases. But it would also help to relieve the long housing lists which, unfortunately, confront far too many local authorities in Scotland.
In far too many places in Scotland, the local authority house is now the only kind of house obtainable or available even though the person wanting a house could afford to own one. I note that Part II of the Bill extends to housing associations. These are housing associations which are engaged in co-ownership schemes but I should be interested to hear about the position of other housing associations which are carrying out other schemes in response to the question put by the hon. Member for Birmingham, Aston (Mr. Julius Silverman).
In Scotland, the most recent Report of the Housing Corporation gives a clear picture. After stating that there is little opportunity for cost rent housing associations in Scotland because of the artificially low subsidised rents in many areas, it goes on:
"… co-ownership seems to be better able to make an impact because of its tax advantages and the element of ownership involved. Even so, the promotion of co-ownership housing
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is not immune from the climate created by the general level of rents and the scale of Local Authority building."
The Government must do a great deal to help alter the climate and the attitude towards housing in Scotland in order that housing associations with co-ownership of this kind can really get off the ground and benefit under Part II of the Bill. To the extent that Part II will promote home ownership in Scotland, limited as it must be to start with, because of the background to which I have referred, I support it. It can only be used in Scotland to any large extent if the whole climate is changed, and the other factors which I have mentioned, and which limit expansion of the private sector, are tackled resolutely by the Government, in view of their conversion over the last two years, assisted by hon. Members on this side of the House.
The private sector can help to transform the whole house-building situation in Scotland by adding to the local authority programmes already in operation. The Government must be disappointed with the figures that they have had this year from the house-building programme in Scotland. I have a statement here, which is an election document and must therefore be read in that light, but it shows that in March the Government's expectation was that they would reach their target. This was presumably so otherwise they would not have put it in their Scottish manifesto, known as "Election Special". In this they said that 40,000 houses would be completed this year.
We are nearly at the end of the year and I am afraid that it is clear—unless whoever is to wind up announces something very spectacular—that the Government will be nowhere near their 40,000 target for housing in Scotland this year. The document also said:
"This is going to be a record year for house-building in Scotland".
Again, since there are only 15 days left to the end of the year, unless something very unusual happens, this statement is pretty wide of the mark.
This is a situation which we want changed, and if the Government adopt the right policies and make a serious effort to change the distorted Scottish situation, we will do our best to help. Part II will be of little use to Scotland

723
unless the Government take the necessary action needed to encourage private house-building and home ownership, as well as encouraging the public authorities in their house-building. This is the way in which record figures can be achieved in Scotland.
6.34 p.m.
Mr. Ernest G. Perry: I would like to take up a point made by the hon. Gentleman the Member for Moray and Nairn (Mr. G. Campbell) relating to 100 per cent. mortgages and an increase in the amount that borrowers can expect. If the hon. Gentleman would look at Clause 29 of Part II, he will see that, while we do not go to the extent of 100 per cent., we do say that the Government are prepared to guarantee excess amounts over the normal advance to the borrower and also to pay half the insurance premium for that excess amount.
In the past, a borrower from an insurance company or building society who could not quite raise the amount of money needed could sometimes borrow the excess amount by paying a premium of £7 10s. per cent. If this can be done it would be a great help to would-be borrowers. This is a very sound investment for the insurance company, and the premium of £7 10s. per cent. should be good, because it is one of the few insurance risks that shows very little loss indeed. From my experience in selling insurance with house purchase, very few people who enter into an obligation to borrow money to buy a house ever fail to meet that obligation.
In the area of London that I operated we found that the valuation of the house was far smaller than the price, with the result that if a person failed on his mortgage and the house was sold there was usually something like £1,000 difference between what had been advanced for it and what it was sold for. Any loss to the Treasury or the insurance company concerned would be minute. We should grant more money on this basis to would-be house purchasers.
What I have not enjoyed during this debate is the division that has arisen between potential owner-occupiers and council flat occupiers. We have had discussions about subsidies given to one and
724
not so much to the other. It has been proven that the higher an income a person has, say £2,000, £3,000 or £10,000, then it is better for him to buy a house through the endowment mortgage scheme over 15 years or more. One does very handsomely out of it from the point of view of income tax relief.
However, if one has a wage of about £15 a week, then the amount of money to be claimed back in income tax relief is very small indeed. The person who requires the relief does not get it and, to some extent, the borrower who can do without it gets even more. Part II tries to remedy this. I appreciate the efforts which have gone into attempting to find the solution and to help would-be purchasers who are of modest means.
This Bill is one of great social significance, because it recognises and sets out to remove the present unfairness of our tax system with regard to house purchase and owner-occupiers. For that reason it is welcomed on this side of the House. Here I would like to convey to my right hon. Friend the Minister of Housing and Local Government and to his two Ministerial colleagues our appreciation and thanks for introducing this long-overdue reform for our consideration.
It has been talked about for a long time, and people have tried to introduce legislation to help with tax relief, but nothing has been done until now. I should like to thank them for their prompt and speedy action with regard to railway land and the recent Parliamentary statement about Kidbrooke. This is relevant to many Members representing London constituencies. Railway land ranks first in many London boroughs, such as Wandsworth. If the Minister could see his way clear in the near future to releasing some railway land in Wandsworth we would do more than we are doing at present. My right hon. Friend will know that the London Borough of Wandsworth has a very high output of houses. If he would release more land we would help him to achieve his target of 500,000 houses by 1970.
My hon. Friend the Member for Bermondsey (Mr. Mellish) deserves the thanks of all those overcrowded families in London. I want to deal particularly with London, because it has been hit harder than any other place by overcrowded

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conditions, and all of the other things that we have experienced. We thank him for his efforts which he has put in, and which he is putting in through this Bill, to try to remedy these things. I and my hon. Friends from Wandsworth would like to see the release of more railway land so that by that means he could be helped.
Quite frankly, so much has been written and said by so many people about London's housing problems in the last 15 years that one is appalled by the indifference shown by the party opposite during its 13 years of power. I say this quite determinedly. As a matter of fact that party was responsible for the worsening conditions in London during that time. In 1957 it obtained its Rent Act which aided and abetted those absentee owners who exploited every loophole in that Act and who exploited, evicted and harassed tenants in the good old Rachman style.
The infamous 1957 Act led to so much movement of population in London, due mainly to the decontrol of hereditaments over rateable value of £40, which in turn led to an enormous increase in rents, that there was an actual reduction in the number of houses or flats to let in London. This was what happened in London because of the introduction of the 1957 Act. Less accommodation became available for letting in London, and that made the position far worse. This was in spite, of course, of the claim of the party opposite that that Act would lead to more places being available for rent. Such movements of population, of course, accentuated the housing shortages, and the promise that the Act would reduce or prevent shortages has been obstructed, not only because accommodation is so scarce, but also because the supply which is available, in terms of size, price and location does not meet the real needs of the situation.
This statement I am making is borne out by the party opposite in the White Paper, "Housing in England and Wales", Cmnd. 1290 of 1961. In paragraph 55, under the heading, "Attack on Squalid Living Conditions", it says:
"One of the most acute housing problems still left is the multi-occupation by families or lodgers of many large houses designed originally for use by single families. There has been no proper conversion, and the houses are without adequate cooking or sanitary facilities for the numbers now living in them. Often as a result the houses are decaying and the living conditions are disgusting."
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This is the situation we are faced with in many parts of London, particularly in areas like my own, Battersea and Wandsworth. The Tories were in power from 1951 to 1964. It took them 10 years to learn this lesson, to realise that multi-occupation was a living abscess on the face of London.
These living conditions also led people into delinquency. Paragraph 58 of that White Paper said:
"The Government want to see an attack on the squalid living conditions to be found in these houses which are not only bad in themselves but may also breed delinquency and crime."
This is what happened in London in 13 years of Tory rule. While, of course, I do not say that these conditions are the sole cause of delinquency and crime, there is no doubt that children and adults suffering under these conditions do not enjoy the same opportunities of other members of the society. The opposite party's record in housing, and on the provision of housing for these families, was negligible through its long period of 13 years in power. If one looks at the graph in the White Paper, that enables one to see that it was the deliberate intention of the party opposite to reduce the number of places to let and to increasee the number of places for sale. If we examine this graph we see that the Tory Party was responsible for these conditions in London. The average number of houses built by the Tories during the whole of its period in office—
Mr. Speaker: Order. The hon. Member must come back to the Bill.
Mr. Perry: What I am trying to point out, Mr. Speaker, is that these conditions which exist in London today are the result of neglect in the past. Only by trying to examine the past can we hope to deal effectively with the problem in future. If I have overstepped the bounds of order, I do apologise, Mr. Speaker, and shall continue my remarks I was going to make.
The average number of houses the Tories built in their years in power was less than 300,000. In the two years we have been in power it has been nearly 400,000, and I think, Mr. Speaker, this just shows the vigour and the effort which are being put in by the Minister in trying to solve this problem.

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Local authorities have to cope with sordid conditions which exist in housing, particularly the larger conurbations. In Wandsworth the housing revenue account has to stand an enormous cost for housing inquiries. We have literally tens of thousands of people visiting the housing office every year to ask questions and to find out information, and we have to keep an enormous staff to deal with all those queries, and the result, of course, is that an enormous amount of money has to be paid out which is passed on to the housing revenue account which the tenants have to pay. If we want to build a house or a flat, we find it costs us, before we start the structure, before we lay a brick, say, £3,000 for a two-bed roomed flat—or if the industrialised builders come in to build, £2,000 for a two-bedroomed flat—because of the high price of land in London.
I suggest to the Minister that this Bill will go a long way to solve this problem of multi-occupation and Rachmanism and the bad conditions in London. This may not apply in many of the smaller towns, but it is a fact that in London this situation has been acentuated by these happenings. The Bill will help, and, on behalf of all my hon. Friends from Wansdworth, I welcome this Bill, which will not only help the tenants of the local authorities but also the ratepayers. I say to the Minister that he has the support of the hon. Members from Wandsworth, and of all the tenants and ratepayers of Wandsworth.
6.47 p.m.
Mr. Paul Hawkins: I had a note at the top of my papers to congratulate the hon. Member for Battersea, South (Mr. Ernest Perry) on some sensible remarks about the 100 per cent. mortgages, because as an auctioneer, and as somebody who does valuing for building societies, I do know that 100 per cent, mortgages would help more people to buy houses and that the building societies would not be let down because the buildings are generally well below selling value a few years later. On the other hand, I cannot follow him in the rest of his arguments, because, although, at every election, we shall accuse the party opposite of not building so well, or of generally not doing so well, nevertheless I believe that the hous-
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ing problem must be looked at as impartially as possible, because his home and his job are the most important things in a man's life.
I should, after the speech of the hon. Member for Salford, East (Mr. Frank Allaun), declare an interest in property matters. In fact, I own one house and a smaller house adjoining. I say that I own it. I hope that my bank manager thinks I do, but it is, of course, like many other people's owned by the building society. However, I do not think that this matter should be used to stir up trouble between landlord and tenant, or between the parties, because housing is far too big a matter to be considered entirely as a party matter, and I believe that all the landlords and the private developers and the people who are prepared to put money into houses, whoever they are, be they the State, or, as I say, private developers and those who buy houses, wish that more and more houses can be made available for letting.
I want, for a short time, to draw attention to housing in the countryside, which has not been mentioned to date. I realise that the big conurbations have very special problems. On the other hand, in my constituency there are about 115 villages, and in every one of them there are slums and appalling housing conditions. I feel that very often housing in the countryside is neglected and I hope that we shall not forget about it in this debate. The rents of council houses in the countryside are far too high for the average agricultural worker, and if the Bill does anything to reduce rents, which I hope it will, I shall be prepared to support it.
A short time ago I had an Adjournment debate, and I am glad to see present the Joint Parliamentary Secretary who replied to it. On that occasion, I stressed the extent to which improvement grants can help to overcome housing problems both in the towns and in the countryside. It is appalling that councils pull down a large number of structurally sound houses which, by the expenditure of a certain amount of money to provide amenities which are essential today—hot water systems, bathrooms, and lavatories—could be used for another 20 or 25 years.
I believe that we must increase improvement grants. I think that they have

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remained the same for the last 15 years, while building costs have risen tremendously. I should like to see improvement grants stepped up by 50 per cent., from £400 to £600, because I believe that this would enable many more houses to be brought into use, and would provide decent homes, with the right kind of amenities. I know that the Ministry has circularised local councils to try to persuade them to do this. I hope that this will not be forgotten, and that the drive to increase improvement grants, and thus improve houses, will continue.
Another matter which I raised during my Adjournment debate was the question of improving older council houses. In my area, there are far too many council houses which were built before the war. They are without bathrooms, or lavatories, or hot a water supply. I believe that this state of affairs is to be found in other parts of the country, and I am glad that during the last 12 months improvements have started on a number of houses in my area.
We all know that the country is up against it financially. Nevertheless, I believe that housing is priority No. 1, and should receive a far larger share of the available money than it does. I say this because I believe not only that crime can be prevented by having better housing conditions, but that many other social services would not be needed if our houses were in a better state than they are today. I am afraid that because of the shortage of money, many councils are skimping on the quality of the houses. If houses are to last for 30 or 40 years at least, they should be well designed, well laid out, and give privacy to the tenants.
I do not like the name "council houses", but I do not have any other special name for them. Despite what hon. Gentlemen opposite may say, the fact is that today a large number of what are termed working-class people want to own their own homes. I believe that, possibly by changing the name, as we have done for certain welfare services, and by ensuring that council estates are properly laid out, and are provided with amenities, that trees are planted to make them attractive, and so on, we can make these estates places where people will desire to live and bring up their children. We
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must ensure that open spaces are provided near by to make these areas as attractive as possible.
Is the Minister providing any help to councils over the design of houses? If we could co-ordinate all the best modern ideas and circulate them to councils, I believe that it would be a great help to many of them. We have an exceptionally fine council in my area. It has the strange and rather old-fashioned name of Mitford and Launditch Rural District Council. It has sent representatives all over Norfolk and other parts of the country to collect designs for grouped homes for old people. It has built 20 or 30 connected bungalows, with a communal room in the centre, and all the bungalows are linked to the warden's house by means of a bell. This has been a tremendous help to the older people in my constituency, and I am glad to see that other councils are copying the idea. We ought to encourage this kind of scheme.
I think that I have said all that I wanted to say because, quite frankly, I came into the Chamber only to listen. I do, however, feel strongly about the housing situation. I know from personal experience—I lived in what was termed a slum for five years, admittedly compulsorily, under German rule—how terrible it is to live in bad housing conditions, with no water supply, no bath, and no proper accommodation. The housing situation is desperate. It is, perhaps, a matter which should be considered by a select committee of the type to which we referred yesterday. I believe that hon. Members on both sides could contribute to solving this problem, and if this Measure, small though it is, helps to provide lower-paid workers with cheaper accommodation, I shall do everything that I can to support it.
6.58 p.m.
Mr. Roy Hattersley: I welcome the Bill principally and primarily because I think that its immediate and undoubted effect will be to increase the percentage of the national income spent on the provision of new houses. I appreciate, of course, that an increase in subsidy for a service does not necessarily increase the expenditure on that service. It may amount to no more than a change in the source

731
from which the money comes, but I think that in the foreseeable future, in a period of comparatively high interest rates and increasing building costs, and a growing, rather than a falling, demand for houses, the net effect of the provisions of the Bill will be a greater proportion of our gross national product being devoted each year to the provision of new houses, and this seems to me to be an altogether desirable and admirable state of affairs.
It is a simple fact—but it is one which escaped the notice of the Tory Government—that the amount of national resources spent on housing in any year is directly related to the number of houses built by the country in any one year. If one compares the house building record of this country with that of any other country in Western Europe over the last 15 years, it becomes clear that we have built too few houses because we have spent too little on house building. Our proportion, on both graphs, is invariably lower than that of any other developed country in Western Europe.
The Bill goes some way towards meeting that gap and filling the deficit that has been allowed to arise. To my mind there is no doubt that for 14 years we had an abysmal—by European standards—house building record. We failed to provide enough of our national resources for house building. The reason was the philosophy of the Government which controlled this country from 1951 to 1964—the belief that the money could and would be provided by private initiative and private effort. The experience of Western European countries shows that if we are to have a high level of investment in new housing it must be public investment. It must be provided publicly in some form or another. I very much welcome the Bill, because it is moving towards that happy state of affairs when an adequate proportion of our gross national product is spent each year on this primary requirement of the British nation.
I accept all the qualifications about the Bill's limitations when interest rates fall by 1 per cent. or 1½ per cent., but while they are at today's rates it reverses the trend of the last 14 years in housing subsidies for local authority and municipal houses. The right hon. and learned
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Member for Hexham (Mr. Rippon), who was kind enough to give way to me in order that I might remind him that during the term of office of the Government that he supported housing subsidies fell four times, answered blandly, in a cavalier and not very thoughtful manner, that they had fallen because things had gone so well, and that in a situation as happy as that which existed between 1951 and 1964 we could afford to reduce the amount of Government subsidy for housing.
But what were the facts, in terms of municipal housing in those years? Not only did the level of council house building fall—which in itself might not have been a disastrous thing—but the number slums increased rather than fell. Council housing waiting lists in the great towns were growing longer rather than shorter. These facts do not suggest that the housing situation between 1951 and 1964 was such an admirable one that the Government of the day could afford four times to reduce the amount of subsidy paid to local authorities. I very much welcome the fact that we are now getting into the situation in which the subsidy level is sufficiently large to promote and stimulate added council house development, rather than do what it did in the first years when I was associated with local government building, when we often felt that with the subsidy at the level that it was in 1962–63 and with building costs at their then level, our programmes had to be cut and pared, and aspirations, in terms of numbers built, strictly limited.
I also welcome the Bill because it totally changes the method by which local authority subsidies are paid. I see no virtue in a flat rate subsidy except that of simplicity and the appearance of equity—especially a flat rate subsidy which is spread too thinly throughout the country, and one which did not discriminate in favour of cities with special problems, or in favour of towns where specially high prices have to be paid. I hope that the flat rate subsidy has gone for ever. It is a good thing that it has gone.
The first step away from the flate rate subsidy, to the distinction between areas of high cost and areas of low cost—the first tentative step towards the establishment of a subsidy pattern which was

733
sensitive to special conditions in respect of individual areas, was equally unsatisfactory. The division between high-cost and low-cost areas was arbitrary and crude, and was based on a set of misconceptions about the way in which housing finances should be organised. Ever since 25th November last year we have had a subsidy scheme with a pattern which responds to the small and sensitive demands—the sophisticated demands—of local authorities. We have had a subsidy pattern which pays more to local authorities who choose to build well than to local authorities who choose to build cheaply. We have had a subsidy pattern which pays more to those authorities in areas of high building cost, where the standard dwelling is above the average price. We have had a subsidy pattern which encourages the best local authority development, by providing the extra subsidy warranted if Parker-Morris standards are being met—based on designs and taste which must be met it the British public are to be properly catered for.
We do not have a subsidy pattern which will encourage waste, and the sort of overspending which has been suggested on several occasions in this debate and which was the main burden of the Opposition's objection to this part of the Bill when we debated it a year ago today. I have never believed that a variable rate of subsidy would encourage the over-ambitious architect or the under-prudent treasurer to allow too much to be spent on individual dwellings. First, the overambitious plan has to get loan sanction from the Government before it can go ahead, and one assumes that a cautious Government will make sure that the overelaborate dwelling is not approved for contract.
Secondly, and more important, the subsidy does not meet every penny of the additional number of £s spent on the overelaborate dwelling and, in consequence, a local councillor or housing committee member knows that if he builds a very expensive dwelling, over-elaborate in many ways, some of the price must be met by his tenants and ratepayers—and those tenants and ratepayers are also the municipal voters. He is therefore very sensitive of the need to balance the design of a house against its price in a way which does not cause the sort of trouble
734
which is caused in new housing estates and towns where the houses have been splendid but the rents have been too high.
I hope that that the Opposition have abandoned their argument that this sort of housing subsidy will prejudice the national economy by vitiating the policies of the Chancellor. House building will be insulated against economic vicissitudes, and will no longer be the tool of economic policy. It will exist independently of it, and will go on prospering irrespective of economic stringencies and the immediate situation.
The fact that the notional interest rate to which the subsidy paid is geared is the previous year rather than to the present year means that in a period when interests rates are falling and in a period of economic relaxation, subsidies will be high, whereas in a period where interest rates are rising and there is a period of economic contraction, housing subsidies will be low. The Government subsidy to local authorities will complement the Chancellor's general proposals for economic action. The scheme has the great virtue of at last insulating housing and its problems from becoming the instrument of economic policy, while not working against those economic objectives which the Chancellor is trying to achieve.
I was glad to hear many hon. Members on both sides argue that, of necessity, these proposals cannot be considered in-isolation from the White Paper which preceded the presentation of the Bill a year ago today. Hon. Members on both sides of the House will remember that the White Paper had hard things to say, and positive things to say, about the need and the obligation to provide extra houses for the people who needed them most. I am sorry that my hon. Friend the Member for Battersea, South (Mr. Perry) has left the Chamber, because I must take issue with his complaint that some Members on both sides of the House sought to make a division between the interests of owner-occupiers and council tenants. I suspect that he is not used to accusing me of being the protagonist in a class war. But I must tell him and others who hoped that no distinction would be met between the interests of owner-occupiers and council tenants, that I cannot agree with them.
Everyone in this debate who has said that many lower income group families

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aspire to house ownership is absolutely right; they do. But I am not interested in the theological argument about which form of tenancy is the best—whether it is better to live in rented accommodation or to own one's own house. I can see many virtues in favour of owner-occupation. The great thing about owner-occupation and what every reasonable person must have reservations about is the simple fact that it is not within the power of the people who need houses most to become owner-occupiers. The simple criticism which I have made for 15 years and will go on making on the imbalance between the numbers of houses built of councils and those for owner-occupation is that too many houses are built for people who need them least. The slums will never be cleared or the housing lists ended until a greater part of our resources is devoted to council building.
This is not a matter of class antagonism or theological dispute about two things which cannot be analysed—the preferability of one form of tenancy or another—but a simple fact. Those who need houses most are potentially council tenants, because they have no hope, because of their wage levels, the nature of their employment, the certainty of continuation of that employment and many other things, of becoming owner-occupiers. It is those people who should have our greatest concern when we debate housing. It is those people for whom most provision should be made and for whom a Bill of this sort could provide special assistance and care.
The White Paper of 1964 went further than talking in general terms about where the greatest hardship lay. It implied that, even in the ranks of corporation tenants or prospective ones, need would vary from family to family and from category to category. It urged local authorities to think in terms of housing allocations and rent schemes and said that systems should be operated which ensured that corporations houses were available for the people the potential tenants who needed them most.
Hon. Gentlemen on both sides have challenged each other to say clearly whether, if given the opportunity, they would insist that local authorities should implement house allocation schemes and organise rent schemes which were totally
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fair. We have had the old chestnut about local autonomy and the question of who would insist which local authorities did what. I nail my colours firmly to the mast. I would insist that local atuhorities organise acceptable allocation and rent schemes.
I have said many times in Birmingham that I could give no assurance that the most necessitous family in Birmingham will be the one which gets a house. I have said in this House and outside that I can give no assurance that the family which finds it most difficult to pay for its council accommodation will be paying the least. These two things should be rectified and it is the obligation of the Government—local autonomy or not—to tell local authorities this.
After all, in this Bill, the Minister is taking some very severe and precise powers. If one considers what he has said about standards of property, the fact that it must be at least up to Parker-Morris standards, and that, at some notional level, some yardstick above that level, property will be too expensive, too generally elaborate, to be acceptable for loan sanction, one sees that he is diagnosing within precise limits the quality and type of property which he will permit.
If he is prepared to define precise limits for that purpose, I can see a good deal more social justice in imposing equally precise and stringent limits in other fields—on the questions of who gets the houses and how much they pay. Local authorities will complain about local autonomy, but many sins are committed in its name and we have the obligation to minimise the frequencey of their commission.
Knowing that the processes of selection for a Committee are even more mysterious than the process of selection of speakers in a debate, I want to deal with two clauses and two basic Committee points. I welcome the Clause which provides additional subsidy to high blocks only up to the sixth storeys. In past years, until the Bill which was presented a year ago today, the emphasis on high building was altogether exaggerated.
In my days of association with local authorities, I used to say cynically that the Ministry confused height with high density and, very often, in its subsidies promoted height for height's sake, encouraging what tenants do not want

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and appearing to suggest that what they did want was of no social importance. The 15-storey block on the corner of a generally traditional estate has no sort of social value, but until the new Bill was presented it was receiving special subsidy to encourage this undesirable form of development.
The second Clause is that which talks about expensive sites and continues to do so only in terms of the cost of acquisition. If that Clause is to make any sense, it should relate not only to the cost of acquiring the site but to everything which makes it ready for building on.
I spent my local authority years in Sheffield, where houses were built on inclines and gradients which many cities would have found totally formidable. Sheffield built on those slopes because it had to, but at an extraordinary extra cost. To draw an arbitrary line between the expense of acquiring a site in one city and the expense of preparing it to build upon in another is totally unreasonable. If I am fortunate enough to be a member of the Committee, I shall do what I can to extend that Clause. I understand that these are marginal criticisms of a Bill which, in general, I applaud and which, in total, I welcome, for the basic simple reason above all others—that it is increasing the amount of the gross national product which we spend on housing every year.
This is the sort of thing which a socially democratic Government must be doing. This is the kind of thing which I believe I was elected to do, and it therefore gives me great pleasure to say that this Bill will do it.
7.16 p.m.
Mr. Eric Lubbock: I think that the whole House will agree with much of what was said by the hon. Member for Birmingham, Sparkbrook (Mr. Hattersley)—not only the social democrats among us, but those who believe in good housing for all the people of Britain. It would not be disputed, even by right hon. and hon. Gentlemen who were in power from 1951 to 1964, that we spent too little a proportion of our gross national product on housing in those years and are only now beginning to correct the balance. We still have some way to go, despite the Bill, which I welcome. The Bill will lead to an increase in the total of houses built over
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the next few years and particularly of local authority houses, where the need is greatest.
The hon. Member misunderstood something said by the hon. Member for Battersea, South (Mr. Perry) about the division between council tenants and owner-occupiers. I thought that he was trying to say that we should avoid creating an antagonism between the two groups by talking about whether one or the other was better treated by the Government of the day. I hope that we all agree that that should be avoided. No one, for political reasons, should attempt to stir up these antagonisms.
In this respect, the Bill is an improvement on its predecessors, in that both groups are considered. Therefore, no one can say that the Government favour one or the other, but are trying to do something for both. This is why I think that the Bill will go through without a Division this evening, whereas, on the last occasion that we had a Housing Subsidies Bill, in 1965, the Opposition, for reasons which seemed good to them at the time, put down a reasoned Amendment.
One of the factors which cropped up considerably in that debate was the belief that housing could be largely provided by private enterprise. It has not been mentioned by hon. Gentlemen on this side nearly as much tonight as the Conservatives did in 1965. As time goes by, even the Tories are coming to recognise that the private sector can make very little contribution to the provision of houses to rent. I am not saying that because I am antagonistic to landlords, but because it is a fact of life.
The Milner Holland Report referred to calculations of the rents which a private landlord has to charge to recover his money over a period which he thinks economically reasonable and also to pay the interest charges, which are higher for him than for a local authority, and then adding his profit margin. These show that the economic rent for a house or flat provided by a private landlord must be considerably larger than for an equivalent property provided by a council.
This is a straightforward matter of financial arithmetic and nothing to do with prejudices in favour of local authorities or private landlordism. If anyone disputes this, I would refer him to the table in the Milner Holland Report, which

739
stated that during the 40 months between 1960 and 1963, surveys of private rented accommodation in Greater London showed a decrease of 169,000 properties in the pool—a substantial decrease, at a time when the Conservatives were in office and could have done something, if they thought it necessary, to increase the amount of privately-rented accommodation in the big conurbations, where the demand is greatest.
During their whole period of office—I make no political point, but simply state a fact—the only rented accommodation provided in the large cities was in the luxury class of £1,000 a year and above, where it is still possible for private developers to build to rents which people in that class can afford. It has never been pretended that these private developers could produce accommodation within the means of a person earning around £18 or £19 a week, which is the national average income—
Sir Douglas Glover: The hon. Gentleman is a little unfair to say that all the building was for rent at £1,000 a year. I have a flat, built during the last 10 years, which is only half a mile from the House, and I am paying £325 a year.
Mr. Lubbock: The hon. Gentleman is extraordinarily lucky—
Sir D. Glover: Yes.
Mr. Lubbock: I could produce a queue of 500 people from my constituency who would be delighted to move in if a vacancy occurred in the hon. Gentleman's block. Although I live 16 miles from the centre of Greater London, there is no accommodation available there at that sort of price. I wish that we had privately rented accommodation to supplement what is provided by the local authority.
No private developers, in my experience, are putting up houses to rent in the area I represent, and that has been so for some time. With the rôle of the private landlord inevitably diminishing, as it has been over the last few years, we must do what we can to help local authorities to replace the private landlord almost entirely over the next few years. I think that we shall find that they will be assisted to do so by the Bill
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to provide enough accommodation not only to meet their own needs over a period, but to replace the stock of privately-rented accommodation which is slowly being sold off to sitting tenants or put on the market when it becomes vacant.
There are some problems with which the Bill does not attempt to deal. First, there is the question of the homeless. I have been very distressed by the callousness of some local authorities' provision for the homeless in the past. I recall that there were some distressing cases some time ago in the King Hill Hostel, when some justified criticism was made of Kent County Council. We still have these inhuman rules whereby local authorities separate husbands from the rest of their families when mothers and children need the support of their menfolk the most. I hope that the Government will consider this problem, because it remains a serious one, despite the figures given by the Minister.
I was delighted to hear that there has been a decrease in the number of people becoming homeless in Greater London since the passage of the Prevention from Eviction Act and the Rent Act, both which I supported wholeheartedly. Nevertheless, a substantial problem remains. I trust that this will be borne in mind and that it will not be thought that because permanent accommodation is being provided by local authorities on an increasing scale, as a result of this and other Measures, the problem of Britain's homeless can be forgotten.
The hon. Member for Birmingham, Aston (Mr. Julius Silverman) referred to an organisation called "Shelter", which is attempting to do what it can to house Britain's homeless. The Rev. Bruce Kenrick, the founder of "Shelter", is extremely ambitious because he is hoping to house 3 million families, 10 million people, largely through the formation of housing associations. He is obtaining money for this purpose from charitable organisations, but a lot of his work will be financed by loans.
Cost-rent housing societies, which renovate older properties in twilight areas, will not receive the same advantages from this Bill as will co-ownership societies and owner occupiers. I had some correspondence with the present Leader of the

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House and the Joint Parliamentary Secretary, the hon. Member for Widnes (Mr. MacColl) on this issue, and on 23rd June last the Leader of the House wrote to me saying:
"Provisions for rehabilitating old dwellings that can still have a useful life do need reviewing. I am considering what ought to be done."
I wrote suggesting that cost-rent housing societies should be on on the same footing as co-ownership housing associations, and the Joint Parliamentary Secretary replied on 15th August stating:
"However, we will bear in mind the idea behind your suggestion when we are considering what should be done about the rehabilitation of older property."
I am disappointed, because nothing on this subject appears in the Bill. I realise that this may be a Committee point. I mention it in connection with the Rev. Bruce Kenrick's work because he is attempting to help a large number of people and because if it can be shown that, through the rehabilitation of older properties in twilight areas, much can be done to house people, "Shelter" and other organisations which are attempting to do similar work should have at least the same financial assistance from the Bill as will be given to other types of housing agency.
Much has been said about rent rebate schemes and differential rent schemes. I indicated in an intervention that these should be made mandatory—
Mr. Hattersley indicated assent.
Mr. Lubbock: —and I am delighted to see the hon. Member agreeing with me. It could be done without imposing a uniform pattern on local authorities. One need not be too sensitive about local autonomy if local authorities were left to design such schemes for themselves and submit them for the Minister's approval.
The policy of the Government on this matter is definite. They state, in the White Paper, after making it clear that
"Rent policies are also for local decision",
that
"… these policies should reflect the fact that the financial circumstances of council tenants vary widely".
They go on to recommend the provision of
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"… rebates for tenants whose means are small".
If the Government would request local authorities to submit schemes for rebates for tenants with low incomes there would be no objection on the grounds of local autonomy. An analogy here is that the Secretary of State for Education and Science is asking local authorities to submit to him schemes for the reorganisation of secondary education, and nobody, as far as I know, is objecting to that. Without in any way limiting their freedom of action, local authorities are being invited to make their suggestions on that issue. Similarly, the Minister of Housing and Local Government could invite local authorities to submit schemes on this matter, and we might even be able to do it without legislation. The right hon. Gentleman might find local authorities only too ready to co-operate, once they had been given the necessary lead.
Council house rents have been going up steeply, as we are aware in my part of the country. My constituency has suffered from these increases as much as any other and something must be done to arrest this trend. In the past, the more new houses the local authority provided, the heavier the burden on the council house tenants. With a pooled rent scheme, people placed in older properties found that they were being asked to pay substantially more for their houses, which were built long before the war, than the local authority should have been justified in asking. If we want local authorities to build more houses, we must make it financially possible for them to do so.
We had quite a lot of prefabricated houses left over from the old days in my constituency and I am glad to say that we are busily demolishing them. This policy has always had my encouragement because in modern conditions these houses are not suitable and certainly not nearly up to the Parker Morris standards, about which we hear so much.
However, in a period of severe housing shortage each prefabricated housing site should be dismantled in turn, with new accommodation being built on that site before proceeding to the next one. The London Borough of Bromley has for the past year or so been gradually emptying its prefabs and using whatever vacancies appear in the rented accommodation pool

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to house the tenants leaving those prefabs. I would not object to that if one could say that one site at a time was being cleared and built upon before the next one was touched. The trouble with moving tenants to vacancies in the rented accommodation pool is that the existing housing waiting list becomes no shorter. It is difficult to explain to people with housing problems, on the advice of one's housing manager, that one cannot hold out any hope of providing accommodation in the near future. What advice will the Minister give to local authorities, in view of the provisions in this Measure, about the development of these sites?
I agree that home owners also need assistance and I have always thought it unfair that the home owner who is not paying Income Tax at the standard rate should be given less assistance by the Treasury than the home owner who is paying the full 8s. 3d. This was brought home clearly in the figures given by the Minister. I hope that extensive publicity will be given to the new scheme. This is particularly important since matters of importance often do not come to the notice of one's constituents. I hope, therefore, that the maximum television and newspaper publicity will be given to the new scheme and that those who can benefit from it will be aware of their rights.
There is only one difficulty I detect in the scheme, It is that if a person's income changes during the period of his mortgage, it may have been to his advantage to have chosen one or other method at the beginning of the scheme. In other words, he might choose the option scheme at the outset and find, after a number of years, that his wages have improved and that it would have been to his advantage to have claimed the Income Tax rebate. Or the reverse situation could apply; he might have to retire earlier than he anticipated, perhaps for health reasons, and find that, as he is receiving only a pension it would have been to his advantage to have chosen the lower rate.
I would have preferred a more flexible scheme than the present one, something based on Income Tax credits, so that one gained the best advantage according to one's income in any given year. Nevertheless, I am sure that the Bill, both for
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local authorities and owner occupiers, is not the last word.
The hon. Member for Aston pointed out that many anomalies still exist in housing finance. I hope that the Government will give continued thought to this matter, until we have a solution which satisfies everyone, council tenants and owner occupiers.
7.36 p.m.
Mr. David Winnick: I have spoken before in this House about the great housing hardship and the misery that is caused to so many people as the result of the shortage of rented accommodation. I have also spoken about the difficulties faced by people who wish to buy their own homes.
The right hon. and learned Member for Hexham (Mr. Rippon) belittled what has been achieved by the Government in the last two years. Although I consider it extremely important that we should try to reach the target of 500,000 units of accommodation a year, it is not just the total number of units that matters. When the Conservatives were in power the total number of houses and flats built did little to solve the country's housing problem. Great numbers of luxury priced flats were built in seaside resorts and they all went to make up the grand total. When we refer to the total number of units of accommodation built in any year, we should be concerned not just with the total figure but with what we are doing to help those most in need. I was not. I was not impressed by the emphasis which the right hon. and learned Member for Hexham placed on the total number of houses built in a given year when the Conservative Party was in office.
I welcome the Bill because it is a step in the right direction. It will go some way towards fulfilling the Labour Party's pledges in 1964 and 1966. On those occasions we placed great emphasis on housing and, by the security of tenure which has been achieved as a result of the Rent Act and the rebate scheme—and now, as we make it easier for local authorities to build; not forgetting the benefits for owner occupiers—we are going a long way towards fulfilling our election pledges.
Considering Part II of the Bill, I have always found it difficult to understand or

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justify why people who paid less than the standard rate of Income Tax should receive less subsidy from the Exchequer than those whose paid the standard rate. I asked the right hon. and learned Member for Hexham earlier whether the Conservatives would repeal the option mortgage scheme, and he said "No."
Mr. Rippon: Perhaps the hon. Gentleman did not understand me—we suggested it, and the Government have taken it up.
Mr. Winnick: The obvious reply is to ask why the Conservative Government did not introduce it during their 13 years of office. However, I do not particularly want to make a party point. This is a very just Measure and will be welcomed, if not by the majority, at least by a large minority of owner occupiers who will benefit.
The hon. Member for Orpington (Mr. Lubbock) made a valid point about publicity. We found in Croydon that many people who were entitled under the rate rebate scheme did not claim, not because they did not want the rebate, but because of lack of publicity. The Government have a heavy responsibility to see that this Measure receives maximum publicity. On the other hand, I hope that owner occupiers who learn of the Bill's advantages through national and local publicity will go out of their way to find out whether they benefit under the scheme and, if they do, will apply as soon as possible.
I should have liked the Bill to have embodied what I believe was the original intention, which was that a person would be able to change over once. Circumstances can greatly change. A married schoolteacher in his early twenties may buy a house and find his financial life rather difficult. He therefore opts for the mortgage option scheme. Later, with promotion, he finds that he would have been better off under the tax relief scheme. This may be a Committee point—and if I am selected I shall certainly pursue it—but I should have liked more flexibility—
The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James McColl): I am sure that my hon. Friend will understand that this fine young man, whose career we are
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following, may move, in which case he gets a new house and can start again. The circumstance mentioned applies only when he is staying in the house all his life.
Mr. Winnick: I appreciate that, but quite a number of people who do not move will not claim and might find themselves in some difficulty. On the other hand, the person at present doing reasonably well may not consider it necessary to claim, as an existing owner occupier, the mortgage option. He may later find that illness cuts his income in half, and he is then in great difficulty. If a person is not able to change round, it may cause great hardship once this scheme is in operation. I am well aware of the difficulties, such as building society opposition, but I hope that we can see whether there is any possibility of introducing flexibility into the scheme.
I deplore the building societies' recommended increase in mortgage interest rates, which I understand is to come about early next year. I had hoped that this increase could have been delayed further. I know that this point was made during Question Time on Monday, but I repeat that I deplore the recommended increases.
For a long time it has seemed to me that there are private tenants who have had tremendous difficulties in finding accommodation. They cannot get council accommodation, and find themselves in furnished rooms. If such people want to become owner occupiers, they should be given every possible encouragement. Some people may say that the husband does not earn enough—and that is the usual difficulty when a man applies for a building society mortgage—but it is rather remarkable that when the London County Council initiated a 100 per cent. mortgage scheme a very long queue formed, a large number of people were helped whom the building societies or their own local councils could not help, and very few of those people with 100 per cent. mortgages have defaulted.
That is the reply to those who say that a person not earning a relatively high income should not have a mortgage. The London County Council scheme proved that there is a great deal of potential owner occupation. I listened carefully to the Minister when he spoke of some of the difficulties of 100 per cent. mortgages.

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There are obvious difficulties, but I hope that every effort will be made to help those people who at present find it extremely difficult to become owner occupiers.
It is sometimes said by the party opposite that we Socialists do not want to encourage owner occupation. The very reverse is true. We want to go out of our way in that respect—hence our support of the L.C.C. scheme to make it easier for people to become owner occupiers. The Government by this Measure are taking the first step nationally towards making it easier for a large number of people to gain owner occupation.
Earlier this year the Croydon Council was faced with a financial problem that faces many local authorities. Many council tenants had rent increases of, in some cases, more than 25s. a week. Socialists have always made the point—and it is a fair point, but one that it is sometimes difficult to get across to our political opponents—that when a community goes out of the way to provide flats and houses it should not be penalised. The fact is that, particularly in the last few years, local authorities—and, certainly, council tenants—have been faced with great financial burdens whenever they have wanted to build. No-one can deny that the subsidies outlined in Part I will make it much easier for local authorities to provide accommodation. This step will be welcomed by many council tenants, and by many local councillors of all shades of political opinion.
This Bill does not solve the housing shortage, but it is a Measure we promised in the 1966 General Election campaign. It goes some way towards making it easier for people to own their own houses, and much easier for many local authorities to provide such essential accommodation. I welcome this Bill. When we look back on it in a few years' time it will be said that it was one of the great pieces of social legislation introduced by a Labour Government. I therefore hope that it will be given a Second Reading without a Division.
7.48 p.m.
Mr. Arthur Jones (Northants, South): Those taking part in a housing debate such as this always make very clear the almost infinite variety of place and cir-
748
cumstance there is in housing. We hear from London Members of their tremendous problems of land prices, multiple occupation, and so on, while from those representing the other great cities we hear of circumstances which are, perhaps, not quite so intense, but are similarly difficult in many ways.
My experience in housing has been gained in a county town and I find myself in circumstances rather similar to those of my hon. Friend the Member for Norfolk, South-West (Mr. Hawkins), who dealt with the rural areas. I have been active in housing in a municipal borough with a population of about 60,000, and it is in that context that I have gained much of the experience on which I draw when speaking in this type of debate.
The emphasis I have always found so desirable is on the joining together of both council and private development. It has been unfortunate in many post-war housing schemes that council schemes have been developed independently of private ones. Often in certain parts of a town there seems to have been a concentration of council development, whereas elsewhere most of the development has been in the private sector. I have often heard it said that it is impossible to marry two schemes of this character. In my experience, that is not so. We have schemes in Bedford, for example, where in one location there are both public and private schemes of development. In this way, we do not have the fragmentation that there tends to be in towns and cities where the circumstances are otherwise.
It is in the context of trying to marry together the private and public sectors that I welcome the Bill, because of the contribution that it will make to both sides of the housing problem as a result of Parts I and II. This is a great contribution which the Government are making to solving the housing problem. I know of the difficulties that housing authorities have had with their revenue accounts and of the great debits which have been built up, mainly because of the high level of interest rates which have ruled for such long periods in recent years. However, this is an aggravation of circumstances which existed before. The policy of the Government in trying to keep rents down is naturally exacerbating the position.

749
It is not right to say, as the hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said, that housing can be isolated from the country's general financial environment. Nor was he correct in stating that it is only public money which is involved in council development. A great deal of public money has been found by means of mortgages to house purchasers. The hon. Member for Croydon, South (Mr. Winnick) will recognise this in relation to the G.L.C. It applies to most authorities throughout England and Wales. In this way a great deal of public finance has been found for the private sector.
This has been a good thing, because my advocacy is for owner-occupation, for expansion in the private sector. I regret that there often seems to be a division between the two sides of the House on this question. Perhaps not individually, but collectively, this is so. It does not need a national opinion poll to tell us that most people want to own their own houses. Perhaps 60 per cent. or 70 per cent. would wish to do so.
House ownership is an excellent means of saving spread over a long period of years. People are insulated against inflation by owner-occupation. They are not vulnerable as tenants are, where the tendency in recent years has been for rents to keep rising. House purchase is much less inflationary than a continuing enlarging expenditure in the public sector. This Measure in itself, where it puts money in the hands of people in either the public sector or the private sector, cannot be other than inflationary, but I support the view that we must face additions to inflationary tendencies in housing.
Another great advantage to the owner-occupier is that of mobility. I know that the Government have tried, and sensibly tried, to persuade local authorities to accept tenants from other areas who are changing their jobs because of the shakeout or who are trying to improve their circumstances. Something is done by some authorities. However, there is a general resistance to this move. During recent years it has been acknowledged that it is house ownership that enables a person to buy and sell in the same market and thereby ensure a family's mobility.
750
Above everything else, it is socially desirable that people should have their own houses and take pride in the ownership of them. This is evident as one drives round the countryside. I am very unhappy when I drive past a council estate and am able to recognise it as such, either by the architecture or from the way in which the properties are maintained. It is a most unfortunate example of my earlier point that we have allowed housing in the public and private sectors to be divorced to a great extent. I hope that the Bill will do something towards securing the removal of this unfortunate social distinction.
Sir Stephen McAdden: My hon. Friend's speech is very interesting. It is a great pity that I have to draw Mr. Deputy Speaker's attention to the fact that there are not 40 Members present to listen to it.
Mr. Deputy Speaker: I cannot accept that. It is the closed time of the evening. A count cannot be allowed at this time.
Mr. Jones: I do not think my hon. Friend raised that point really to praise my speech. I feel sure that he did it to keep the House in order, but I thank him for his kind remarks.
Building in the public sector is the only solution for slum clearance and residential redevelopment. Beyond that I am confident that an expansion of building in the private sector is a better contribution to solving the housing problem than an expansion in the public sector.
Mr. Freeson: The hon. Gentleman should think again on the question of what has been traditionally the method of public authority building—that is, wholesale council estates—as the technique solely to be used in redevelopment areas. I ask him to visualise what will happen over the next 20 or 30 years in the main city centres—the twilight areas—if only one type of development is to be permitted or encouraged, as he seems to be implying.
Mr. Jones: The first point is the difficulty of acquisition. In the main, it is only local authorities that can make the necessary acquisitions. If the development is of a varied type and of multistorey and low-rise development, the

751
latter could be so, but it has a limited application in town centres where a high density development is desired, as is the convenience which flat development brings to those who want to live near to the centre of activity. I am talking from my own local experience.
I hope that there will be an extension of town development schemes and new town development on the basis of a substantial contribution in the private sector. It is a disadvantage that this has not been the case hitherto both under the present and under previous Governments. There has been a factor, but it has not been large enough.
I come to a point of current interest, namely, the efforts which some local authorities are taking to offer their council houses for sale to tenants who are in occupation. This policy is in line with my thinking about housing. I therefore welcome it. It has the advantages I outlined earlier. There is no disadvantage to the existing housing arrangements in the local authority undertaking the sale of council houses. I do not wish to deal with the prices at which local authorities might agree to offer properties for sale.
This activity increases the private sector of housing, with all the advantages I have detailed. As long as a local authority can retain a sufficient pool of housing to cater for those in need, financial and otherwise, it fulfils its statutory undertaking. The difficulty in housing which has been built up in the whole post-war period is that people have been housed regardless of their ability to pay. There are many examples now of people in subsidised council houses, irrespective of whether there is a rate rebate scheme.
In effect, this keeps out the needy people on whose circumstances so much emphasis has rightly been placed during the debate today. There is that in-built difficulty, and I think that it could be eliminated, though only gradually over a long time, by the sale of council houses, by the mobility which this would give, and by the freeing in many cases of lower-rented council properties so that they could be offered to people in need.
Now, a final point on Part I of the Bill. I welcome the assurance which I have had from the Joint Parliamentary
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Secretary, the hon. Member for Bermondsey (Mr. Mellish), on a point which I raised with him recently with regard to the back-dating of housing subsidies prior to the date in November which has been fixed. We have substantial building development at Daventry, in my constituency, as part of an overspill scheme from Birmingham. I am very much obliged for the hon. Gentleman's note to the effect that a group of dwellings there will, in the circumstances of an overspill scheme, have the benefit of the new subsidy rates. I understand that there will be a brief reference to this point in his winding-up speech tonight.
My plea is for a widening of development in the private sector. I am confident that great advantages would flow therefrom. This is why I hesitate to accept the criticisms on this point of hon. Members opposite who, in the main, I think, pin their hopes, wrongly in my view, to a substantial expansion in the public sector.
8.2 p.m.
Mr. Arthur Blenkinsop: It is a bit depressing that when we are debating one of the most important subjects we should have such a poor attendance in the Chamber. We have not had more than 10 hon. Members present on the Opposition benches at any time during the debate. I accept that at the moment we are doing no better on this side, although during the greater part of the debate we have had a proper attendance. The attendance is depressing because of the importance of the subject and because, as my hon. Friend the Member for Salford, East (Mr. Frank Allaun) pointed out, we are discussing what is basically a human problem which affects nearly every other home affairs issue which one cares to mention, not least, for example, the prospects of advance in education.
What hope is there of our moving ahead with projects to improve educational facilities if the housing facilities for very large sections of our population in the towns are still so inadequate? What kind of study can young people do in their own homes when there is no space to do it? The effect of this in holding back educational advance is very real, as everyone who is concerned with these matters knows.
Although I welcome the Bill, I regard it still as second best to the reduction in

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interest rates which must remain our aim. We must continue to press for a reduction in interest rates at the earliest possible moment, for this would bring the major advantages which we want for local authority housing and other developments. It is for this reason that I am myself a strong supporter of the Government's efforts to restore our economic position, so that such a change can come about, accepting the necessity for the incomes and prices policy and the rest which are inevitably involved in an attempt to put the country on a sound economic basis.
Undoubtedly, the present high interest rates create a heavy burden. Although we greatly welcome the Bill, which fulfils the pledges which many of us made at the time of the election, we recognise that most of our big industrial cities have to bear a great burden of past debt which they have to service, a debt in some cases running into many millions of £s. This is still the main determining factor in the rents which authorities have to charge. In spite of the many valuable provisions in the Bill, many cities—probably all our major cities—will have to introduce rent increases, never mind restrictions of all kinds, because of the mounting burden of interest rates upon existing debt. There is no getting away from that unhappy fact.
Hon. and right hon. Members opposite should be the last to comment on this state of affairs. We suffered high interest rates under their Administration in the past and, most shocking of all, we had at the same time the severe cut-backs in local authority building which increased the difficulties which we face today.
The major pressure today is still for houses to rent in all our major towns. Although I am entirely at one with the Government's desire to increase the provision of accommodation for sale, I am convinced that, as between the two demands, there is no doubt where the main pressure should lie in most parts of the country.
We are concerned to see that house building standards are raised, and we welcome, therefore, the Government's insistence upon the adoption of Parker Morris standards. As the hon. Member for Northants, South (Mr. Arthur Jones) said, it is depressing that council estates
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are all too obvious as council estates, for the simple reason that many of them, alas, after all our efforts, are still built to relatively poor architectural standards. It is still the unhappy truth that too many housing authorities have no adequate architectural advice in the work which they do. I wish that it were possible to ensure that architectural advice in the preparation of plans was more fully and readily available on a regional basis if each housing authority is not able to provide its own.
I come now to a matter which we shall, no doubt, have to examine more fully in Committee. I am delighted that the Ministry will insist upon Parker-Morris standards, but I am a little sorry about the proviso that, if an authority were to go more than 10 per cent. beyond the limit, it would not even have loan sanction, never mind the actual subsidy. So great is the need for building to reasonable architectural standards in this country that, wherever local authorities are willing to spend some of their own rate money to try to improve standards of design and layout, they should be given opportunity and reasonable flexibility to do so, understanding, of course, that the amount of the subsidy must be limited, understanding that there cannot be an open-ended subsidy, and understanding also that there are proper limitations upon the resources which can be made available to particular local authorities.
This matter is of real importance. There have been references to the care of local authority estates. I believe that there is a fairly close correlation between the standard of building and design and the care which people take of their properties. Some of the least satisfactory estates from an architectural point of view are also cared for least well. It would not be a waste to do all we reasonably can to raise the standard of design.
I am pleased that the Ministry is moving away from the assumption that it is impossible to provide an adequate density of housing except by very high-rise building. I accept that there are many instances in our biggest cities where it is inevitable, but, taking into account all the necessary provisions and reservations when one builds very high, the provision needed for traffic, for amenity, for light

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and all the rest, the advantages even from the standpoint of availability of land are considerably less than is at first thought. There can be no doubt about the enormously increased cost and the added burden which this puts upon the taxpayer in helping to finance high-rise schemes. There can be not much doubt, also, that there are precious few people who would prefer to live in high flats rather than other accommodation where reasonable facilities for children can be offered.
I urge my right hon. and hon. Friends at the Ministry not only to apply the new provisions for subsidy but also to look with care at proposals which are made so that unnecesssary high-rise schemes are rejected or properly modified. I very much hope that that can be done.
I am one of those who have advocated rent rebates consistently since the 1930s, the days when a very famous reverend gentlemen, the Rev. Jenkinson, advocated extreme examples in Leeds and, perhaps, got himself chucked out of the council and the Labour Party majority overthrown on account of the extreme form of the scheme which he then advocated. We felt it to be a rational form of Socialism. Because of the effect of means tests and so on, the whole attitude was different, but now one can appreciate that there is real danger of the people who most need the houses not getting them if we do not take a sensible view about the proper use of the subsidies which are made available, particularly now that they are increased to the new level.
I have some doubt about the idea that such schemes should be made mandatory advanced by my hon. Friend the Member for Birmingham. Sparkbrook (Mr. Hattersley). I taunted right hon. Members opposite that they did not seem to be able to make up their minds and they were not, therefore, offering any contrast to the position taken by my hon. Friends. There are occasions when a rent rebate scheme would not make much difference. One can quote cases where the variety of incomes is, on the whole, so limited that it would not be worth while going to the administrative expense of introducing a scheme. To that extent, therefore, there ought to be some local option left. Nevertheless, I think that
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local authorities should be expected to produce rent rebate schemes, and I should not object if the Minister went a little further than he has already and invited local authorities to submit schemes for their own areas.
I should much prefer what I would call a rough-and-ready rent rebate scheme to the state of affairs in some towns where the authority says that anyone with an income over a certain amount shall automatically not have a council house. I regard this as quite unacceptable. It would be a very bad day if we did anything to make our council housing estates even more sectionalised than they are already.
I remember that in earlier days, when I was involved in introducing housing legislation, it was always our effort to try to get a reasonable mixture of people on housing estates. Nothing was worse than the kind of estate which developed between the wars and which was well known as the slum clearance estate. It was well known because of the kind of house there and because the people living there could not develop their own kind of life, because they were always classified as the slum clearance tenants. I hope that we are getting completely away from that kind of attitude and that mentality.
If I argue for the rights of people with larger incomes to enjoy the advantages of living on a council estate, then I certainly think that they should be expected to make a full contribution towards the rent. I see no reason why they should not pay the economic rent of the house and I am therefore in favour of the encouragement of a rent rebate scheme, although I still have doubts about whether it would be sensible to impose it on a mandatory basis.
As for mortgage options, we are all agreed that it is highly unfair that mortgages should fall most heavily on the lower income earners, that is to say, there are few opportunities for the lower income earner to take out a mortgage. I welcome something which has not been mentioned yet—the fact that it is proposed that this facility should be extended to the improvement of properties as well as to actual purchase. Many of us are concerned that we have not got as far as many of us would have

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liked with improvement grants. There is still a large volume of older property which can and must be used more effectively, and with the introduction of this further facility more people may take advantage of the improvement grants which should be available.
Like many of my hon. Friends, I hope that organisations like the new one called "Shelter" will be able to enjoy some of the benefits of the Bill. It would be something of a tragedy if bodies of this sort were not able to do so.
I welcome the Bill and regard it as second best against the reduction of interest rates. The right hon. and learned Member for Hexham (Mr. Rippon) has been the only contributor from either side of the House with no positive contribution to make and no fresh ideas to give, whereas, to the credit of other Opposition hon. Members and hon. Members from other parts of the House, there has been an attempt to offer useful and positive ideas. I hope that the Bill will be rapidly translated into law and that it will not be long before we can so improve the country's economic position that we can tackle the basic problem of interest rates which lies at the root of so many of our present housing difficulties.
8.18 p.m.
Mr. Graham Page: The hon. Member for South Shields (Mr. Blenkinsop) has a real and sincere appreciation of the human problems in housing and of the problems of administration of housing policy both in Government and local government. I am sure that the House is always grateful to him for the constructive proposals which he puts forward in his speeches on this subject.
However, I doubt whether he has appreciated, or at least expressed his appreciation, of the background to the debate. We are debating the Bill at a time when there have been more than two years of Socialist Government during which that Government have fallen short of the target for house building at a rate of nearly 20,000 houses a year. During the year 1965, 400,000 houses were promised, increasing in 1966, and the Government have fallen short by nearly 20,000 a year.
In fact, each year they have let down 20,000 families who were seeking homes. Now they introduce this salvage opera-
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tion and launch the Bill as a sort of salvage vessel for their policy, and a very leaky salvage vessel it is. Struggling against the rough seas of the Government's general economic policies, this vessel will not reach the owner-occupier mortgagor for 15 months. This relief for mortgage interest will not take effect until April, 1968. Nobody knows when the leaky vessel will reach prospective purchases to help them with their deposit. That is not stated in the Bill. This may be one of the several promises in which the Government have frequently failed—this promise that they would give help to assist in the granting of mortgages of 100 per cent. of valuation.
Let me make perfectly clear what that offer by the Government is and how very different it is from the proposal which we made to assist the owner-occupier with his deposit, a proposal put forward firmly in the last Parliament and during the last election as part of Conservative policy. [An HON. MEMBER: "Why was it not done before?"] Before the present Government came to office, owner-occupation during the 12 years of Conservative government had gone up from 31 per cent. of the houses in the country to 47 per cent. There was a steady increase in owner-occupation, that is to say, a man living in and owning his own house and being able to call it his home. Now we see that since the present Government have been in office such people have been unable to purchase their houses because of the difficulties with mortgages. We have, therefore, put forward this firm policy of a grant to help the prospective purchaser.
What is put forward in the White Paper is only a sort of forecast as something for the far future. It is not a grant to the prospective purchaser. It merely says that he will be able to borrow more money, up to 100 per cent., and that the Government plus the insurance companies will guarantee the excess over what a building society would have lent. The proposal is so vague that we are not even given that figure. We do not know whether the Government and the insurance companies will guarantee 25, or 15, or 10 per cent. At present, the mortgage indemnity policies, whereby insurance companies assist building societies to make advances, cover 20 per cent., the difference between a 75 and a 95 per cent. advance.

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It is details of that sort which we might have expected to be put forward in the White Paper, or at least by the Minister. It is perfectly clear, however, that there is no generosity about this proposal. It merely tells the prospective purchaser, "You can borrow more money, but you will have to pay it back in due course and satisfy the building society that you have the income status to pay the instalments". Our proposal was that if a prospective borrower was prepared to make some savings, we would double them up so that he might pay his deposit—and this would be not by way of loan, but by way of grants, not repayable.
I am not sure from the speeches of the Minister himself and of his hon. Friends that hon. Members opposite appreciate the present housing position and how inadequate the Bill is to meet it. I quote what Mr. Harrington, President of the Federation of Registered House Builders, said at the Federation's annual dinner on 16th November:
"… speaking personally and from a housing experience going back over more than 30 years, never have I felt the outlook to be so poor. Not even in the Depression years of the 'thirties was confidence of both the public and the industry at such low ebb, thereby stifling demand for what is still a public need.
Many house builders are, to varying degrees, being forced by the hard economic facts of life to reduce their land stocks, curtail their building programmes and disperse their organisations. If this continues to any marked degree, I need hardly emphasise the difficulties there will be when a change in the economic climate encourages us to increase our production."
This was from a practical man, in business as a householder and respected by his colleagues sufficiently to be appointed President of their Federation.
That is the background to the debate. Hon. Members opposite seem to think that all this problem can be solved by concentrating on local authority building. They seem to think that it is quite right to run down private enterprise building in order to direct materials and resources into council house building. Apparently, everything is right if the landlord is an individual in his capacity as a councillor, but everything is wrong if the landlord is an individual in his private capacity.
We had it expressed quite forcefully by the hon. Member for Salford, East
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(Mr. Frank Allaun). Judging by the noises of satisfaction which came from his hon. Friends, I think that he expressed the feelings of other hon. Members opposite. He obviously thinks that anyone who owns property is an enemy of all tenants. He has deliberately failed to grasp, as other hon. Members opposite have, that when we on this side of the House ask for a fair deal for landlords, we are asking for the conditions in which good rented houses will be provided and maintained.
The hon. Member for Salford, East and others do great harm to the people whom they profess to champion, the tenants, by their attacks on the persons upon whom those tenants rely for the soundness of their homes. The sneers and smears of the hon. Member at those of us, who have spent the whole of our careers in the House in working for the improvement of housing conditions and for the increase in the number of homes for the people, were quite unworthy of a debate of this sort.
I agreed with the way in which the hon. Member began his speech when he said that our objective should be to enable ordinary people to obtain more houses at mortgage rates and rents which they could afford, but that is just what the Government's policy has not done in the past and will not do by the Bill in the future. It is accepted that council house building is slower than private enterprise building, and so if substantially greater resources are being switched from private enterprise to council house building, then the obvious result is that the rate of building of new homes will slow down.
I notice in the Bill that not even housing associations producing rented accommodation are considered as being favourable for any subsidy. As I understand it, the subsidy to which some housing associations will be entitled will go only to those which are co-ownership. Of course, the great proportion of housing associations are those which are providing property to let, which are providing accommodation for tenants—in other words, cost-rent housing associations.
When intervening in the speech of the hon. Gentleman the Member for Salford, East I omitted to mention that I am a director of a housing association. Perhaps I should declare my interest at once. I

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do not know why the Parliamentary Secretaries are grinning at that. Housing associations are non-profit making concerns, and I would hope that almost every hon. Member would belong to a housing association, which encourages the provision of housing for rented accommodation.
Why is the subsidy not to be given to cost-rent housing associations? I see the Parliamentary Secretary nodding. I take it that he will explain it to me when he replies, so I will not press the point further.
We have waited many months for this second Housing Subsidies Bill. Part I is the same, or is practically the same, as the provisions in the previous Bill, so apparently we have been waiting for Part II to be drafted. Why? Part II includes just the proposals which we put forward in the debate on the previous Bill. The Government realised that the points put forward by this side of the House during the Second Reading debate on the last Bill were very strong and have included them in this Bill.
I am no less conceited, as a Member of the House, than any other hon. Member. Therefore, I shall quote my own words from the Second Reading of the previous Housing Subsidies Bill on 15th December, 1965. Before the paragraph I propose to quote, I had set out the scheme, which I have mentioned this evening, for assisting the prospective purchaser with a grant in making his deposit on his purchase. I had also touched upon relief in respect of mortgage interest. I then said:
"Has the Minister considered helping prospective home owners by some such grant in aid of the deposit to purchase? A person with a low income, helped to purchase a house in this way—being in all probability a non-tax-payer—could be granted without great expense to the Exchequer, an allowance of a percentage of his mortgage interest, similar to the tax concession to the mortgagor who is a taxpayer. Has the Minister considered that sort of assistance to the home owners?"—[OFFICIAL REPORT, 15th December, 1965; Vol. 722, c. 1385.]
I asked whether there was to be assistance over the deposit and whether there was to be assistance over the mortgage interest. Neither of these were included in that Bill, and I am now gratified to find that the principles have been accepted.
Mr. Mellish: Why not come and join us?
Mr. Graham Page: The hon. Gentleman should come over here if he accepts my principles. But, as is usual from the benches opposite, for the owner-occupier this is too little and it will come too late.
Too extravagant words have been used in the course of the debate about the importance of the Bill. It is important only in the heavy burden which it will place on future generations by subsidies of up to £120 a year per housing unit for 60 years. It is important in that it places that burden on this generation and on our children. But it is of no importance whatsoever as a salvage operation for the Government's badly-holed and rapidly sinking housing target and housing policy.
8.30 p.m.
Mr. Roy Roebuck: I know that a number of my hon. Friends have been in the Chamber as long as I have and hope to catch your eye, Mr. Deputy Speaker, so I hope that the hon. Member for Crosby (Mr. Graham Page) will forgive me if I do not follow his argument in detail. It is my intention to truncate my remarks, and I hope that my hon. Friends will take this in lieu of a Christmas card.
The almost universal note that we have heard from the Opposition about the Bill has been one of considerable sourness, with, perhaps, the notable exception of the speech of the hon. Member for Norfolk, South-West (Mr. Hawkins), who made some interesting observations about the design of council houses and council developments. I am sure that many of us on this side will go along with him on that.
I share the view of my hon. Friend the Member for South Shields (Mr. Blenkinsop) that perhaps the most sour speech came from the right hon. and learned Member for Hexham (Mr. Rippon). The right hon. and learned Gentleman's speech was a dog-in-the-manger affair, if ever I heard one. Many of us on this side, when we look at the Opposition Front Bench, often think that we see there the sort of advertisements one sees for "Bob Martin's". If anyone were to run a competition about who should get the powder, I am sure that the right hon. and learned Gentleman would win. I hope that when my hon.

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Friend the Joint Parliamentary Secretary replies he will administer this sort of tonic.
My hon. Friend the Member for Salford, East (Mr. Frank Allaun) gave a most moving impression of the difficulties prevalent in his constituency. Harrow, East is about 200 miles from Salford and one does not normally think of the two places together. But many of the conditions that he described in Salford, East are equally present in Harrow. I have in my pending file now two cases in which women have written to me to say that their marital life is in danger because of over-crowding in the home. A council house tenant has written complaining about outside water closets on a council estate and the fact that there is not a wash basin in the bathroom of a council house. So these conditions do not only apply to the industrial North. They are also very much a problem in what is generally regarded as the affluent South-East.
I warmly welcome the Bill. During the past two and a half years, I have fought three General Election campaigns and I know from that experience that housing is a dominant theme when people consider our way of life. It gives me particular satisfaction to see many of the election promises I gave being fulfilled—and this despite the economic difficulties that the Government inherited from the party opposite. It could have been quite easy for my right hon. Friend to have stated that, because of the stepmother's legacy left to him by the party opposite, it was impossible to bring the Bill in; but he did not do so. He will earn the heartfelt thanks of many people throughout the country whose only wish is the simple one of having a roof over their heads and a front door to call their own.
I am glad to see in the Bill—although I naturally share the disappointment that no date is fixed—the provision for guaranteeing 100 per cent. mortgages. We have all come across cases of young people paying the sort of rent which would be enough to meet a mortgage payment if only they had the capital to put down in the first place. I know that many of them scrape hard to try to cover the deposit. They forgo elementary pleasures. Even the cat's milk is
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rationed. But, as they gather the money together, they find the price of the house they want soaring and they are back at the bottom of the hill again. I do not want to follow the hon. Member for Poole (Mr. Murton) into Greek mythology, but this is the sort of position for so many people. They try hard to gather the deposit and then find the house has gone beyond their reach again. Many local authorities notably the Labour-controlled G.L.C., have led the way in this and I welcome the fact that my right hon. Friend is seeking to extend the system of 100 per cent. mortgages to the building societies.
It is inevitable that in considering the Bill we should think of our own constituencies. I am sure that in my constituency Part II of the Bill relating to the option mortgage scheme, will be very warmly welcomed, for we are not so much high society and not so much low society—we are mostly building society. Many of my constituents have been forced into the position of crippling themselves financially to buy a house because the local council has not built enough council houses to rent. This Measure will bring social justice to those people who are of such modest means that they have not been able to get the benefit of income tax relief.
One point raised by the hon. Gentleman the Member for Orpington (Mr. Lubbock) dealt with the difficulty that might arise once a person has got himself fixed up with a particular sort of mortgage and finds that his circumstances have changed considerably. I can see that there are great difficulties in the way of making this scheme as flexible as the hon. Member wanted, but I hope that my right hon. Friend will consider that where a person with a mortgage suffers a very real hardship, perhaps as the result of some accident or sickness, there should be some provision made to take care of him. I hope that in Committee my right hon. Friend will consider this suggestion sympathetically.
Part II of the Bill nails very firmly the lie which one has often heard from the Conservatives that the Labour Party does not believe in owner-occupation. That is quite wrong. Anyone who studies the history of the Labour movement, and I offer a free course to hon. Gentlement opposite in this subject if they wish

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to take me up on it, would know that one of the first things which the early trade unions did was to introduce a scheme whereby their members were assisted to buy their own houses. The Bill marches along the same road as those early pioneers.
I support the view of the hon. Gentleman the Member for Orpington about publicity, and I hope that my hon. Friend the Joint Parliamentary Secretary when he comes to wind up, will have a word or two to say about it. Hon. Members can also do a great deal to make this Measure known in their constituencies, and I pledge myself to do my bit in Harrow, East. I hope that my hon. Friends will join me in their constituencies.
Part I of the Bill deals with the most urgent need facing the nation, as my hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) said. Certainly, the Conservative Party have offered far too little encouragement in the past. My right hon. Friend's Bill makes the effective borrowing rate for local authorities 4 per cent. That means that assuming that 6½ per cent. is being paid at the moment, the basic subsidy on a £5,000 council dwelling will be £112 a year, that is about five times more than the 1961 grant, brought forward by the party opposite. My right hon. Friend has gone nap on the Conservatives and there will be no excuse whatever for laggard local authorities such as the London Borough of Harrow. It has needed a great deal of prodding and my hon. Friend the Joint Parliamentary Secretary has recently been instrumental in getting it to increase its housing programme by about 450 per cent. to catch up on the past neglect of this Conservative authority. The fact that so much has to be caught up is one of the reasons for the extraordinary increase in council rents which this Conservative-dominated council has just announced—an increase of about 50 per cent., in some cases meaning an increase of 30s. a week. I hope that when my hon. Friend comes to wind up he will deal with this problem and say whether this Bill will do anything to assist the council in the future so that increases of this magnitude are not brought about.
Mr. Anthony Grant: I would like the hon. Gentleman also to tell the House, if he is complaining about
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Harrow Borough Council, that it has acted entirely in accordance with the prices and incomes policy of the Government, and that the reason for this increase in the rents is Government policy on prices and incomes, and it is in the interests of the ratepayers that that council put the rents up.
Mr. Roebuck: I am delighted to see the hon. Gentleman the Member for Harrow, Central (Mr. Grant) here. I am glad that he has managed to pop in to the debate for a few minutes.—[HON. MEMBERS: "He has been here before."] Well, I am glad he has managed to pop in and out. I can tell him this, that if he spent as much time in the borough as I do, and a little less time in the City of London, he would be better informed on what is going on in the borough.
Everyone, I think—certainly, everyone I have met—in Harrow is absolutely disgusted at the way the local council has so managed its affairs that it has to have an increase of this magnitude. If it is the case that this is due purely to Government action, why is it that the surrounding boroughs do not have to put up rents by 30s. a week? Perhaps the hon. Gentleman the Member for Harrow, Central will go back to his friends on the Borough Council of Harrow and ask them that question.
I am rather surprised by the hon. Gentleman's intervention, because, having read the Harrow Observer this morning, I thought that he would have got up to correct the most inaccurate statement which he made in the House the last time he addressed us; a statement which has been repudiated by the leader of the Conservatives on Harrow Council. No doubt the hon. Gentleman will seek some other opportunity to come before the House and make his apologies for that outrageous statement. But not now.
My hon. Friend the Member for Cambridge (Mr. Robert Davies) has tackled the general question of the housing revenue account, and I was greatly obliged to him for the erudite manner in which he spelled this issue out. It is the fact that housing accounts must be non-profit-making, but there are many ways in which this provision can be circumvented by councils such as that of the London Borough of Harrow, which is lacking in all sense of social duty.

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All sorts of impositions can be put on the housing revenue account. Council tenants can be made to pay for looking after the old, for looking after the disabled, for looking after the poverty stricken. It is outrageous to suggest that this should be a burden which resides in one section of the community. It is a burden which must be borne by everybody in the community.
There are other points, of course, which I have not time now to deal with. For instance, I cannot believe that it is proper that the burden of loan charges for land which has been bought by a local authority and awaits development should be a charge on existing council tenants. That cannot possibly be fair. I hope that the Joint Parliamentary Secretary will deal with this point when he winds up the debate. People in my constituency are extremely worried about this issue. My hon. Friend is, of course, aware of the difficulty because he very courteously, with my hon. Friend the other Joint Parliamentary Secretary, received a deputation from my constituency. Anything my hon. Friend can do to induce the fuddy-duddies on the Conservative-controlled London Borough of Harrow to join in the chorus of this progressive song he has been singing tonight will be very welcome indeed.
I would state, without hyperbole, that this Measure which has been introduced today is certainly the most generous housing Measure in our history, and I warmly congratulate my right hon. and hon. Friends on the Treasury Bench; and I hope that my hon. Friend the Joint Parliamentary Secretary will deliver a very strong dose of power to those hangdog right hon. Gentlemen on the Front Bench opposite.
8.49 p.m.
Mr. Anthony Grant: I had not at all intended to speak in this debate, but I have been stimulated to do so not only by the very feeble nature of this Bill, which I regard as being one step forward after two steps back by the Government, but also by the extraordinary speech which we have just heard from the hon. Gentleman the Member for Harrow, East (Mr. Roebuck). It is obvious that the hon. Gentleman is piqued by the fact that he has been
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badly caught out in the campaign which he has joined. Some council tenants have suggested that he has jumped on the band wagon of the council tenants' discontent.
Mr. Roebuck: Will the hon. Gentleman tell the House the political affiliations of the person who made that slanderous statement, and would he also perhaps care to tell the House why it was only last week that he ventured to give his opinion on this question to the people of Harrow, when the decision to increase rents was announced several months ago?
Mr. Grant: I am not aware of the political affiliation of the writer of the letter, but I believe that he is a council tenant.
The facts—and I think it is right that this should be said—are that the local authority in Harrow has reluctantly, and somewhat belatedly, had to increase the rents of its tenants. It is doing so with effect from January, at a time when we move from the freeze into the period of severe restraint. Its policy is entirely in accordance with the Government's White Paper on prices and incomes, as is borne out by the Question and Answer in this House between none other than the hon. Member for Harrow, East and the Minister of Housing and Local Government. The hon. Gentleman was ill-advised enough to ask the right hon. Gentleman
"if he was aware that the success of the Prices and Incomes Policy is being jeopardised by the London Borough of Harrow …"
to which the Joint Parliamentary Secretary, the hon. Member for Bermondsey (Mr. Mellish) replied, "No". I am glad that the hon. Gentleman is here. He went on to say, as we would expect of a Minister who is an honourable and truthful man:
"I would refer my hon. Friend to paragraph 20 of the White Paper 'Prices and Incomes Standstill: Period of Severe Restraint' … which gives the Government's view on council house rents and recognises that some increases may be inevitable."—[OFFICIAL REPORT, 6th December, 1966; Vol. 737, c. 257.]
Councils have to obtain their money from the Government, from the taxpayer, or from the ratepayer, and it is the duty of councils to balance their policy as between their council house tenants and ratepayers, and this the local council of Harrow has attempted to do.
Mr. Roebuck: The hon. Gentleman is doing exactly what the hon. Member for Orpington (Mr. Lubbock) urged him not to do. He is trying to cause some sort of conflict between council house tenants and owner-occupiers. Does he not know that council house dwellers in Harrow pay the same sort of rents as occupiers?
Mr. Grant: I do not take advice from the hon. Member for Orpington. The bare fact is that, as is said in the White paper, councils have to balance the needs of council tenants with the needs of ratepayers, and this is precisely what has been done. If the hon. Gentleman thinks that the ratepayers are getting away with it, I advise him to consult the ratepayers' associations, of which there are many, in Harrow. They take the opposite view from that taken by the hon. Gentleman. They feel that since the Government took office the burden of rates has become intolerable, and I agree. It is outrageous, and they feel that it is high time that some of the effects of Government policy were felt by council tenants, rather than that the burden should be increased on the already oppressed ratepayers.
There is a difference between council tenants and ratepayers, because the council can subsidise its council rents only by means of the burden it imposes on the ratepayers. This is as clear as anything could possibly be, and in Harrow they have found that the main reason for the increase is that the interest to be paid on money borrowed to build their dwellings has increased out of all proportion, in addition to which, apart from the interest charges which are the direct responsibility of the Government, the costs of land and buildings have also risen.
My right hon. and learned Friend the Member for Hexham (Mr. Rippon) spelt this out clearly in his speech, and it is fair to point out that an increase of 1 per cent. in the rate of interest can raise rents in Harrow by as much as 15s. a week, and increased building costs of £1,000 a dwelling can increase the rent by £1 10s. Faced with this situation, and bearing in mind the Government's policies as set out in their White Paper, the Harrow Council has effected this increase which I know only too well, because I have met many of the council tenants,
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bears very heavily on them when they are at the same time having their wages frozen under the prices and incomes policy.
I sympathise with them, but they must realise where the money comes from, and the burden which is imposed upon ratepayers already. Even with the increases, the amount being paid by council tenants for a four-bedroomed house in a desirable area such as Harrow, which is near to London, is considerably less than many—and there are many more of them—private house owners in Harrow are paying by way of mortgages to building societies and other housing associations.
I urge the hon. Member to bear in mind the fact that not only are there increased numbers of tenants but there are ratepayers—and many more of them. I consider that the policy of the Harrow Borough Council is absolutely correct, and in line with Government policy. The reason for the increase in rents is primarily due to the policy of this Government on the question of interest rates and rising costs generally.
I have been stimulated to take up a little more time than I intended by the provocative speech of the hon. Member for Harrow, East. I venture to suggest that the time that I spend in the House, bearing in mind that I have another capacity here, is as much as if not considerably more than the time he spends here.
Mr. T. L. Iremonger: Much more!
Mr. Grant: I, like my hon. Friends, believe that this is a necessary but belated and overdue Measure. We bitterly regret the fact that the new scheme, heralded with so much trumpeting and promise in the 1964 and 1966 elections, is not to come into effect for such a long time. Its operation will be very belated. Nevertheless, bearing in mind that it is one step forward, after the Government have taken two steps back, in my opinion the Bill should be given a Second Reading. I hope that some of the more undesirable and stupid Clauses will be dealt with in Committee.
8.57 p.m.
Mr. Michael Barnes: One of the advantages of being called to speak at a late hour in the debate is that a Member finds that, having

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listened to the other speeches which have been made during the debate, he has become more and more bored at the thought of what he is proposing to say. This persuades him to be ruthless with his own speech, and to be much more brief and come more quickly to the point.
I want to draw the attention of the House to a gap that still exists between those who stand a good chance of being housed by local authorities within a reasonable period and those who have home ownership within their grasp, and to examine the extent to which this gap is narrowed by the Bill—as it certainly is. My hon. Friend the Member for Harrow, East (Mr. Roebuck) spoke of the pleasure with which he viewed the way in which the Government's pledges on housing were being fulfilled all the time.
I share his pleasure. We have had the 1965 Rent Act, dealing with private rented accommodation, and the Leasehold Reform Bill will be coming after Christmas. The Bill gives a boost to local authority housing because of the new subsidy structure which it introduces and the help it gives to people who wish to become owner occupiers by bringing home ownership within the grasp of many more people.
Even so, many people are still slipping through the gaps in our housing policy, and still living in very difficult conditions. I need not go into detail about their circumstances; this question has been referred to by many hon. Members already. My hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) referred to it in some detail. The irony of the situation is that the people who slip through the gap are mainly people with modest or average incomes, who are the most dynamic members of the community—young, go-ahead families with young children; people who are prepared to move from area to area and to try their luck here and there.
They are definitely people who have something to contribute to the community in which they live, but they tend not to be able to build up the necessary residential qualifications which they need if they are to be housed by local authorities. They cannot afford to buy houses in the areas in which they have to live and work. They are not prepared to go on
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living in very unsatisfactory conditions for years and years, and so they tend to move out.
This is certainly happening in London. People like this are tending to move 30 miles from London, to Buckinghamshire, for example, and they are lost to the communities from which they came. It then becomes that much harder to build up and maintain a balanced community in these London areas in the future.
When the Housing Corporation was set up, in 1964, the intention was that the cost-rent housing societies and the co-ownership housing societies—as defined by the 1964 Act, and distinct from the charitable housing associations—should be the "third arm" in the housing drive, between local authority housing and home ownership, to try to meet the needs of those for whom the other two are not the answer.
I welcome the fact that, under the Bill, co-ownership housing societies will be able to borrow the money they need at the option mortgage rate, but it is unfortunate that the cost-rent housing societies will not be able to do the same. It is true that these housing societies have only a few hundred or so houses or flats completed at the moment, but they have thousands of houses and fiats in the pipeline. We could be talking about a form of housing which could become very important in the future.
The economics are interesting. At the moment, the cost-rent housing societies estimate a cost per housing unit of £4,000 and can get their rents down only to a minimum of £6 5s. But if they could borrow money at the option mortgage rate, they could bring them down to about £5 a week. If they could do that, they could bring their schemes within the reach of many people living in poor housing conditions.
I underline the importance of maintaining a balanced community, certainly in parts of London. This is more important the nearer the area is to the centre. We need to think seriously about new housing developments which come between local authority schemes and the luxury houses and flats which are built for sale at prices which, in London at any rate, ordinary people cannot afford. I welcome the Bill, because it gives local authorities a boost to build more and better houses and widens the basis of home ownership.

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I congratulate the Government on bringing it forward.
Sir D. Glover: I support what the hon. Gentleman said about cost-rent houses, as it takes a long time to get them off the ground. I am chairman of one such society in Liverpool. Whereas, at the moment, we have not a single unit in occupation, we shall, by the middle of next year, have 250 units under construction. This is important, if the Government give the support for which the hon. Gentleman asked.
9.4 p.m.
Mr. H. P. G. Channon: I entirely agree with the remarks of the hon. Member for Brentford and Chiswick (Mr. Barnes) and my hon. Friend the Member for Ormskirk (Sir D. Glover). I understand that the Parliamentary Secretary will deal with that point.
This should have been two Bills rather than one. It is divided into two parts, one dealing with the housing subsidies to local authorities and the other with the mortgage option scheme. Hon. Gentlemen opposite have made great play with the fact that Part I of the Bill was introduced in the Housing Subsidies Bill of December, 1965, a year ago today. Although the Government may have been keen on that Bill, they never got it into Committee. The second part of the Bill is the one which my right hon. and hon. Friends welcome very much more than the first, but we regret that it is not as valuable as it should have been.
There is no disagreement about the aims. The hon. Member for South Shields (Mr. Blenkinsop) pointed out that every hon. Member has difficult housing cases in his own constituency which he would like to solve. I am fortunate to represent a constituency which does not have some of the terrible slum clearance problems which others have spoken about with such feeling, but that does not make anyone less keen to solve the problems. My criticisms of some of the Government's proposals are not because of their aims, but because they are not tackling them most effectively.
It is fair to draw attention to the Government's handling of the housing programme since they came to office. We have heard these figures before, but they
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must be given again. When they came in, there were 430,000 houses under construction, but only 384,000 were completed in 1965. This year, we are told, we will be lucky to get that far, while next year it will not be much, if any, more than that.
Although the Prime Minister confidently reaffirmed the 500,000 a year target by 1970, I should be grateful if the Parliamentary Secretary or the Minister could tell us how they think they will get this figure by that year—[An HON. MEMBER: "He has got to get it."] Exactly. He is pledged to get it and it is more than a pledge. We know roughly what the housing problem is. The Minister outlined it tonight—180,000 houses a year needed because of replacements, demolition and the formation of new families, a shortage of 700,000 houses, and the massively difficult problem of slum clearance. I agree completely with my hon. Friend the Member for Norfolk, South-West (Mr. Hawkins) and the hon. Member for South Shields about improvements, because I thought more help should be given to them.
Our main criticism of Part I of the Bill is that the subsidy system the Government propose is not nearly selective enough. Some authorities have a desperate housing need and others are not nearly so badly off. I readily concede that the special concessions scheme in Clause I, retrospective for houses completed after November, 1965, will be a great help to some local authorities. It is a very small number, although I understand that the Parliamentary Secretary will tell us more about it. I have checked the list, and as the Minister said, it is a very small number.
We must face the fact that the basic subsidy for all local authorities in future will be the same and the basic subsidy is not selective. It is not surprising, in view of the small element of selection in the Bill, that the Financial Times stated, in a cutting comment about the Bill on 6th December:
"The well-known fact is that the greater part of the housing subsidy bill goes to help people who stand on their own feet: and much of it also goes to local authorities which are already rich in rents and historic subsidies. Meanwhile the poorer tenants and, much worse, the homeless and slum-dwellers waiting for a council house—get inadequate help or none at all."

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That is the burden of our criticism of Part I of the Bill. We believe that if it were more selective, local authorities would welcome it.
Mr. Frank Allaun: Does the hon. Gentleman mean, for example, that a railwayman earning £14 per week in Bournemouth, which is a well-off place, should not get the same subsidy as a railwayman in Salford or anywhere else?
Mr. Channon: I will come to the question of council tenants and will answer that question.
My hon. Friends and I—and it is obvious from the speeches of hon. Gentlemen opposite that they feel the same—would like the Government to recognise that it is no longer satisfactory for council tenants to go on being subsidised, as happens in some areas, at such a high level when tenants in privately rented accommodation with broadly similar incomes have to pay very much higher rents. Council tenants are often subsidised for historic reasons. They pay much lower rents than those in private accommodation, and my right hon. and learned Friend the Member for Hexham (Mr. Rippon) gave the figures of county boroughs and non-county boroughs which have maximum rents for three-bed-roomed houses of less than 30s. a eek.
Other figures have been given to show that rents of houses built since March, 1964, vary widely; that for three-bed-room houses as little as 20s. 9d. a week is charged in one area while, at the other end of the scale, 139s. a week is charged in another. These are ridiculous figures one too high and the other too low. The term "reasonable rent", a term or art, is something which the Government should seek to achieve in practice as quickly as possible. We want rents that are fair to the tenant, the ratepayer and the taxpayer.
It is incredible to think that only a year ago the Government stated, in paragraph 41 of their White Paper, "The Housing Programme 1965 to 1970", that
"… if the extra subsidies now to be provided are to be used, as they should be, to relieve those with the greatest social need, these policies should reflect the fact that the financial circumstances of council tenants vary widely. This means that subsidies should not be used wholly or even mainly to keep general rent levels low."
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That is the Government's position. That is the position of my hon. Friends and of many hon. Gentlemen opposite.
It should be remembered that 60 per cent. of councils do not operate rent rebate or differential rent schemes. The Government stated a year ago that they would be entering into consultations with the local authorities on this issue, but as recently as 1st November, answering Questions in the House, the Minister of Housing and Local Government said that formal consultations with the local authority associations on rent rebate schemes would start shortly. The Government have had a year in which to have those consultations, but they have done absolutely nothing about them.
Mr. Mellish: Really!
Mr. Channon: The hon. Gentleman will soon have an opportunity to say what he and his right hon. Friends have done. From reading his right hon. Friend's Answer on that occasion, it is fair to draw the conclusion that the Government have not begun the consultations with local authorities which they promised to have a year ago. It is about time that some hon. Gentlemen opposite began to press their right hon. Friends to get a move on, particularly since so many hon. Members are agreed about this matter.
My hon. Friend the Member for Poole (Mr. Murton) pointed out that one of the defects of this subsidy is that when local authorities borrow it will pay them to enter as many tenders as possible when interest rates are high because they will get the subsidy for 60 years based on those high rates. It is obvious that it will pay them to enter as many tenders as possible when interest rates are high rather than when they are low, although I agree that they must get the loan sanction.
We then come to the question of what the Minister of Housing and Local Government will consider to be a fair rate of interest in any one year. I hope that the Joint Parliamentary Secretary will make a clear statement on exactly how this system will work. As far as I understand the Bill, the rate will be fixed annually and will apply for the whole of the preceding year.
In view of the attack on Conservative Administrations by the hon. Member for

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South Shields I have looked up the changes that have occurred in the Bank Rate. During the two years of office of the Labour Government we have had a Bank Rate of 7 per cent. for a longer period than at any time during the whole of the 13 years of Conservative Administration. Bearing that in mind, what will happen when interest rates fluctual e greatly in one year? For example, in 1958—and in giving these figures I do not intend to make a party point—there were five changes in Bank Rate and interest rate fluctuated by as much as 2 per cent. in that year.
How will the Minister fix a representative rate of interest that is fair to local authorities for the whole of the preceding year? Will it not all be a question of chance as to whether local authorities get an uncovenanted bonus or be penalised, depending on the time of year they borrowed their money? I hope that the Parliamentary Secretary will deal with this point.
I welcomed what the Minister said about dealing with extravagance in local authorities, but a good deal more still remains to be done. I expect that the Parliamentary Secretary has seen the report of what is going on in Peckham at the moment, where the Southwark Borough Council has submitted to the Minister of Housing only one tender for a £7½ million housing scheme. It is a direct labour tender. What makes this the more significant is that five years ago the Southwark Labour Group Whip announced that it had been decided that it would be impracticable and not possible to employ their own direct labour team. There are still many examples of local authority extravagance that the Government must look at if we are to have value for our money when the subsidies are given.
I hardly dare say so in the presence of the hon. Member for Salford, East (Mr. Frank Allaun), but in this respect there is an awful lesson to be learnt from his constituency. I read the other day a report in the Salford City Reporter of a speech he made in 1960—perhaps the hon. Member would like to forget it—at a lunch given by the Institute of Building Management:
"In a few weeks Salford will demonstrate to the whole country what public enterprise can do."
Mr. Frank Allaun: Yes, and it did. The hon. Gentleman refers to less successful ventures by the direct labour department, but he must admit that this very large scheme was also highly successful, saving the city thousands of pounds and completing the contract nine months ahead of schedule.
Mr. Channon: No doubt that scheme was very satisfactory, but we must watch for the difficulties and dangers that such schemes can encounter.
Curiously enough, the mortgage option scheme has not attracted as much attention tonight as I had expected—hon. Members have spent so much time dealing with Part I—but many hon. Members on both sides should recognise that the Government have not yet fulfilled their 1966 pledges to the electors on this issue. Even now, when local authority subsidies are back-dated to November, 1965, the mortgage option scheme does not come into effect until 1st April, 1966. The hon. Member for Battersea, South (Mr. Perry) was lyrical about the guarantee scheme, but perhaps he has not taken in the fact that we have not yet been promised a date for its introduction. Will the Parliamentary Secretary tell us what progress has been made with the guarantee scheme, and what conditions are Government waiting for before giving a date for its introduction?
I hope that there is no misunderstanding that unless two things are provided the mortgage option scheme will not be worth anything. To make it work we must get houses and we must get money. On its own, the scheme has one advantage which the House will welcome—it will help existing borrowers, and those who pay less than the standard rate—especially those who pay no tax at all—and new borrowers. That is admirable, but unless something else is done the scheme will not provide the drive for the new expansion of owner occupation for which the Government are anxious.
It does not tackle the fundamental fact that unless the building societies and the local authorities have more money to lend we will increase demand without increasing supply. It may be that as a result of the scheme more people will be able to afford mortgages, though that is not likely without the introduction of a guarantee scheme. Even assuming it

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were, if there is to be no increase in the amount of money to be lent, how can there be any guarantee that the worst-off will be those who will get the benefit of the mortgage option scheme? The Government would have been better with a scheme such as that contained in the House Purchase and Housing Act of 1959, which made available £100 million of Exchequer assistance for building societies to lend on older houses. That would make a tremendous impact on the present problem.
Loans on pre-1919 houses would help the worst-off people who would want to make use of such facilities. It would start a chain reaction which would have a very important effect on the provision of new houses as well. It would be a stimulus to the provision of new houses. What I suspect and fear is that the Government have provided one half of a pair of scissors and that if they do not provide the other half the scissors will not cut and the scheme will not work.
If people are unable to raise a deposit, what help will they get from this scheme? My right hon. and learned Friend the Member for Hexham pointed out that we were pledged to have cash grants to help people to raise the deposit to obtain a loan. If the Government do not like our scheme, they must introduce their own schemes speedily, because I suspect that without it the Bill will not be successful. Time and again we have been told by the Government that the solution to their housing difficulties would be in the introduction of the mortgage scheme. Although the Government were poised to swing their plans into instant operation, although they were supposed to be ready to tackle housing like a wartime operation, we have not got this scheme in 1964, 1965, 1966 or 1967. We have to wait until April, 1968, before owner-occupiers get the benefit of the scheme.
The Parliamentary Secretary may argue that people will, nevertheless, rush in and borrow already, knowing that in April, 1968, they will get the benefits of the scheme. I do not think that there is much evidence that they did so when the Lord President of the Council, when he was Minister of Housing and Local Government, or the Chancellor of the Exchequer announced the scheme
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in March of this year. There has not been much evidence that people have taken advantage of the fact that promises were made at that time. I do not think that they will rush in now.
Very little has been heard in the debate about the building societies. I thought, after the extreme excitement of last Monday and the Motions tabled by hon. Members opposite, that we should have heard much more about the building societies. I suppose those hon. Members who wished to come and talk about that were too ashamed to do so. They were ashamed because they remembered their own election pledges. They were probably ashamed to recall that after nearly four years of Labour Government their constituents will be paying until 1st April, 1968, 7⅛ per cent. for their mortgages, a higher rate than at any other time. Even then, when the great benefits of this scheme come in, they will still be paying the not insubstantial figure of 5⅛ per cent. No wonder the hon. Member for Westhoughton (Mr. J. T. Price) was cross on Monday. He was cross with his own Government, and he was quite right to be cross, because high interest rates and high taxation have brought about this state of affairs.
There is no doubt that the scheme the Government are introducing tonight does not live up at all to the hopes they raised, in particular at the 1964 General Election, in that great speech that the Foreign Secretary either did or did not make, according to which newspaper one reads. During their period of office the mortgage interest rate has risen from 6 per cent. to 7⅛ per cent. The price of new houses has risen by 16 per cent. The hon. Member for Willesden, East (Mr. Freeson) challenged that point earlier. Had he been here now, I should have referred him to the Ministry of Housing and Local Government Statistics No. 3 of 1966, which conclusively show that the figures given by my right hon. and learned Friend were accurate.
I asked the Parliamentary Secretary in a Question for Written Answer—I appreciate that there has been no time for an Answer yet—whether we could have a revised version of the White Paper. It is most misleading, not only to hon. Members, but also to the general public, that we should be given a White Paper "Help to Home Ownership" when all the rates

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at the back are already out-of-date. Will the Government publish a revised version of the table showing the effect of it at the new borrowing rate?
We should also like the Parliamentary Secretary to tell us what would be the effect at 6 per cent., which was the rate when we left office. If that is too shocking a thing to ask him to do, I am confident that my right hon. and learned Friend and I will be able to compile a version which we shall circulate as widely as possible.
My right hon. and learned Friend showed conclusively that, as housing prices have risen by 16 per cent. and as, even when this benefit comes in, the interest rate will be down only⅞ per cent. from what it was in October, 1964, in 1968 borrowers will not he better off under this scheme but will be worse off than they were under Conservative administration. House prices have gone up, and the rate at which they will have to borrow will be only fractionally less in spite of the concession. What a shameful thing for a Government pledged to come in to help the building society borrower. After all that time, they have not produced a scheme which makes a man any better off than he was in October 1964.
The hon. Member for Harrow, East (Mr. Roebuck) asked for publicity, and he was quite right to do so. I hope that no one thinks that this scheme is clear-cut. Only the man who is on a small income and expects to remain so will know that he should take the option. If he thinks that his prospects for higher income are considerable, he will have to calculate what his expected future income will be, what the future course of tax allowances will be—
Mr. Roebuck rose—
Mr. Channon: The hon. Gentleman may have asked for publicity for different reasons. I am pointing out that there will have to be publicity for this reason.
Mr. Roebuck: Is not the hon. Gentleman aware that most mortgages last for only 10 years? If an owner-occupier had reasonable expectations of a greater income, he would be likely to want to buy a bigger house, and he would, therefore, change his mortgage.
Mr. Channon: I quite appreciate that. That is one of the complications in the situation. For the man paying Income Tax at 6s. in the £ the calculation is very difficult. He will have to calculate the future course of tax allowances and consider what the future likely rate of interest will be. He will have to calculate, if he can—some people find it more difficult than others—how many children he will have. He will have to calculate how many years he thinks the loan will run. Many people will guess wrong unless there is publicity, and I hope that there will be widespread and accurate publicity about the effects of the scheme so that people will know what they are about.
Why should people have to opt at all? Would it not be far simpler to have an Inland Revenue allowance on the actual amount of mortgage interest? Would not that be equally fair to rich and poor? Are the Inland Revenue officials so overworked by the Capital Gains Tax and the Corporation Tax that they have not been able to work out a scheme of that kind which would be very much simpler for all concerned?
Why is the guarantee scheme which the Minister hopes to introduce restricted only to option borrowers? There may well be young couples with no capital, both of whom are earning and one of whom has expectations of higher income and a better job in due course. In these circumstances, it would be wrong to opt for the subsidy, but, at the same time, for people like that the guarantee would be of tremendous help in obtaining a house. Will the Minister consider this between now and Committee stage of the Bill to see whether there is any prospect of increasing the help to be given under the proposed guarantee so that these people also can be helped?
The debate has shown that hon. and right hon. Members opposite have different standards for local authorities and for owner-occupiers. There is little selectivity and there is wasteful expenditure in the subsidies provided for in Part I of the Bill, yet under Part II owner-occupiers are to have no benefit until April, 1968. Where is the help for all mortgage payers which the Prime Minister promised on television on 28th February? Will the Parliamentary Secretary

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tell us that this is coming along in due course, after the guarantee scheme. Does the House recall the Chancellor of the Exchequer's scheme announced on 1st March, on the eve of the election, which was immediately withdrawn as unworkable once the election was over? No hon. Member can regard that as a particularly edifying piece of electioneering. The fact is that the Labour Government have defrauded the people who believed in them.
Mr. Roebuck: Nonsense.
Mr. Channon: If the hon. Gentleman is proud of his Government's housing programme, he is about the only hon. Member who is.
Time and again, the Government's housing target has not been reached. No help has been given for deposits and will not be for another 18 months. We were told that housing was to be the first priority of the "reforming" Socialist Government. Instead of that, there has been bitter disappointment. While people have not been able to obtain houses, bricks have been lying in stacks throughout the country because the Government have mismanaged the housing situation and the building industry in unparalleled fashion.
I concede that the Bill gives a small ray of light to the owner-occupier, and for that reason we shall not vote against it. We welcome it to that extent, but we shall look forward eagerly to the chance to amend the Bill in Committee. We believe that under the present Government home owners, and especially those who wish to buy their own houses, have not had a fair deal. They will be worse off when the scheme comes in than they were in the last days of Conservative rule. Does any Minister say that this is a proud day for his Government? He may think it is, but it will not be a proud day for the people who now realise that they have been defrauded over the years by the false Socialist electioneering prospectus put before them last March.
9.30 p.m.
The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish): First, may I say how delighted I am that the hon.
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Member for Southend, West (Mr. Channon) has been promoted to the Front Bench to speak on housing matters. He comes from a very great housing family. The Guinness Trust is very well known to me and to everyone concerned with housing. We know that that housing association has done a remarkable job, not just in the last few years, but for the last century. The hon. Gentleman has a right to come to the Front Bench to talk about housing.
Nevertheless, the hon. Gentleman made a mistake, as did his right hon. and learned Friend the Member for Hexham (Mr. Rippon), in thinking that the General Election is to come next week so that they ought to get ready now for the great election speeches which they will make. The right hon. and learned Gentleman tries so hard to prove to everybody that he is much better than the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). I do not think that he is. The right hon. Member for Kingston-upon-Thames is much better and does his homework better.
I agree with those of my hon. Friends who said that the speech of the right hon. and learned Member for Hexham in opening the debate was the least constructive of all speeches today. It was just a good old political knockabout, and, of course, that is what we get every time from the right hon. and learned Gentleman. The speech of the hon. Member for Southend, West, on the other hand, although that too was a good political knockabout, was constructive in parts. I look forward to his joining the Committee, and I hope that, in a more restrained way he will put some sensible suggestions forward. I assure him that we shall certainly consider them.
The hon. Gentleman began by saying there should have been not one but two Bills. What gratitude is that? Last time we produced one Bill and we were accused of not bringing in a Measure to help those who are buying their own homes. Now, when we are doing just that, we are told that we should have brought in two Bills. That only goes to show that the hon. Member for Southend, West has forgotten what happened this time last year when the Conservatives were in Opposition. They will remain so for a very long time and he had better get used to it.

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Several hon. Members have mentioned improvement grants. There is much to be said for an improvement in the grant itself. I give the assurance that we hope in the not too distant future to be able to announce to the satisfaction of the House that improvement grants are to be improved. I should like to tell all those who have mentioned housing associations that Part I of the Bill will deal with housing associations building new houses, which get approval from and work in conjunction with local authorities.
A great deal has been said about cost-rent housing associations. It is the view of the Government that if we were to help cost-rent housing association in the same way as we are to help others, the whole character of cost-rent associations would be changed. I know that the hon. Member for Ormskirk (Sir D. Glover) has taken a personal interest in this subject. The fact is that if we give a subsidy by Statute to cost-rent associations, we destroy the very title "cost-rent". I ask hon. Members to believe that we gave this matter a great deal of thought and that while Part II of the Bill will help co-ownership associations and so on, for the reasons I have given cost-rent associations cannot be included. However, if this subject is raised in Committee, we shall certainly consider any suggestions, because we are anxious that associations should get all the help which we can give them, because, although their contribution is small, it is important. In this, too, I know that the hon. Member for Southend, West has a personal interest.
Mr. Graham Page: Does not this put housing associations at a disadvantage, compared with local authorities, in producing houses to let at reasonable rents?
Mr. Mellish: I see that the hon. Member for Crosby (Mr. Graham Page) has lost none of that Blackpool ozone which I was talking about the other day. He came back very refreshed for his speech today. We are prepared to consider in what way we can help housing associations, because we support any effort which they may make, but it must be clear that whatever their effort, alongside the national problem it can be only very small—that is generally agreed—although very important. I assure the House that we will help where we can.
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The right hon. and learned Member for Hexham spoke about rising costs since 1964. Building costs have been rising about 10 per cent. every year since 1959.
Mr. Rippon indicated dissent.
Mr. Mellish: This is so. I must ask the right hon. and learned Gentleman to check this up in his own little book of words. The new subsidy will at least provide some cushion against these rising costs. One of the reasons for local authority costs rising is that the standards are rising. This is a good thing of which both sides of the House will approve. But if we improve standards, as we are doing all the time, and if we are trying to get some of the backward authorities to adopt the minimum of Parker Morris standards, then costs will inevitably rise.
The right hon. and learned Gentleman and the hon. Member for Southend, West referred to the Government's housing programme, and I accept that this is one of the main issues with which I have to deal. Is the Government's housing programme now in a state of tremendous disarray, as the right hon. and learned Gentleman said, or does it have the stability which we think it has and the prospects of great improvement which we think it has?
Hon. Members opposite have spoken of enormous figures of 350,000 and 360,000 and 380,000 houses a year as though such figures were regular features of Conservative rule for 13 years. The only time when the Conservatives achieved anything of that ilk was in 1964 when they were coming up to a General Election. Their other figures included 298,000, 305,000, 296,000 and 297,000—that was the sort of general pattern. Now they have this passionate desire for 400,000 houses a year to be built and they say what a great disaster it is that that figure has not been reached; this from a party which achieved 370,000 only once in thirteen years.
Mr. Rippon: Surely the hon. Gentleman remembers that just before the last General Election the then Minister of Housing and Local Government said that 400,000 houses would be built this year. Our complaint is that promises have been made and not fulfilled.
Mr. Mellish: I will deal with that. In 1965 the Government built 382,000 houses. In the first ten months of this year, 313,000 houses were completed, practically the same number as in the same period last year. Therefore, despite the economic difficulties which the Government have had to face, we have been able to sustain a record-breaking level of new house construction, and I do not believe that that is a bad achievement. It is proof, if proof be needed, that in spite of the economic difficulties, the Government continue to give housing the highest priority.
The right hon. and learned Gentleman is quite right to say that my right hon. Friend the then Minister of Housing and Local Government predicted 400,000 houses this year. He said that in March and he was right to say it then, because as trends were and on the figures of the number of starts, he was right to assume that 400,000 houses would be achieved. It is a fact that since July there has been a sag in the private sector, and I must say that I regret it very much. I would have thought that the party opposite would have regretted it, but I do not think they do. I think they are delighted—[HON. MEMBERS: "Oh."] I accept that some hon. Members opposite would be upset, but the right hon. and learned Gentleman the Member for Hexham wallowed in the thought that we might miss our target of 400,000, and he wanted to rub it in as hard as he could as a Tory political party effort.
While the local authority sector has been rising, it is true—and I do not deny it—the private sector is sagging, and is sagging badly. In 1967, the private sector will start 180,000 houses. That is on their present-day predictions. That would be a fall of about 15,000 houses compared with the figure for this year. It is clear, from the many talks we have had with the builders, that the main reason for the decline in starts is that sales of new houses are hanging fire. It is easy enough in most cases to get a mortgage on a new house, but it is far less easy to get one on an old house. The people who want to move from an old house to a new house have to stay put because the buyer of their house cannot raise a mortgage.
The irony in the situation is that building society lendings this year are an all-time record. It is expected to be
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£1,300 million. The trouble is that, despite that figure, the demand for home ownership is so great. I do not deny this, and we must do as much as we can to help those who want to buy their own homes.
Mr. Murton: The all-time high is very largely because of the high prices of houses.
Mr. Mellish: That point was made by the hon. and learned Gentleman the Member for Hexham. When I suggested that the Government of the day should bring in a little one-Clause Bill in which we stopped prices of houses and land from rising, I did not get any ready response from the party opposite. No. hon. Member opposite is jumping to join us on legislation to stop this happening.
The truth is that we live in a private enterprise jungle in which the law of supply and demand has been the determining factor over the years. This has happened under both Labour and Tory Governments. Prices of houses have been rising rapidly for years and years and are becoming dearer. Housing is about the only commodity which gets dearer the older it gets. We can all quote instances from our own experiences of houses, 40 or 50 years old, being ten times dearer than when they were first bought. There is nothing new about this. To listen to Tory Members one would think that this has happened since 1964 onwards, whereas this has been the normal trend.
On Monday the House heard my right hon. Friend the Chancellor of the Exchequer comment on the decision of the Building Societies Association to recommend their members to raise their investment rate to 4¼ per cent. and their lending rate to 7⅛ per cent. He explained how,
"if other interest rates are more competitive, asking the building societies to keep their rates down may well mean that they would not get any extra inflow of funds and would not, therefore, be able to lend for house purchase."—[OFFICIAL REPORT, 12th December, 1966; Vol. 738, c. 42.]
The building societies are a voluntary movement and they were guided in their decision by the paramount need to fulfil their traditional role—a role in which they have been strikingly successful over the years. But this House now has the right to expect and believe that, as a result of this decision, the flow of funds

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for home ownership will increase, and this will help to stimulate private house building.
Although the figures for the private sector will be down by about 8 per cent. next year—while public authority house building will rise and take some of the slack—it is not unknown for private house building within a very short time to increase by as much as 50,000 in any one year. I ask the right hon. and learned Gentleman therefore not to be too smug about this and to stop believing and hoping that he can go on with his General Election speech—he makes it every time in housing debates—claiming that the Government will never hit the 400,000, 450,000 or 500,000 houses targets. When the argument on this comes it will be at the next General Election about what the Government have done, taking account of the economic problem.
The case for the Bill is the case for the local authorities' need to extend their housing programmes. A number of my hon. Friends have spelt this out but it is essential to remind both the House and the country that, when we are talking about slums, overcrowding, multi-occupation and redevelopment, the only people who can deal with these things are the local authorities—and I hope that that is generally agreed by both sides of the House. 13ut if we do agree on it, it really does not become the Opposition to sneer and jeer at the fact that we are giving these enormously increased subsidies to local authorities to do this job.
Every study that has been made of the problem—the latest is the Halliwell Report—has shown that, if the occupants of an area of outworn housing have to be rehoused, redevelopment cannot be carried out unless it is heavily subsidised. Private enterprise cannot do the job—and I do not say this with any party prejudice—simply because the job is uneconomic. This is why we have to subsidise such work and ensure that we give the local authorities the cash to do it.
Mr. Graham Page: But is it not true that, within the slum clearance and development schemes, there are a great number of owner-occupiers and others who wish to become owner-occupiers? One must provide for these as well as those who wish to go for rented houses.
Mr. Mellish: I do not deny that. I certainly do not suggest that the Government have turned their back on the idea that local authorities should be able to build for sale where this is practicable. But we must remember the type of area we are talking about. The hon. Member for North Fylde (Mr. Clegg) made a contribution which, if I may say so, without appearing to be patronising, was first-rate. His speech was really impressive. He talked about local authorities leasing their properties to their tenants. He saw in this a great deal of wisdom and I respect and understand his argument.
But I put it to him that, in the vast majority of our towns and cities, the need for local authority housing is so great—it speaks for itself—that the local authorities, concentrating as they are on slum clearance and redevelopment, must have the largest pool of housing that they can get for relets from their general waiting list.
In some of our towns and cities the general waiting lists will never move unless there are relets, and that is the tragedy. In London, and I am sure that this applies to Birmingham, Manchester, Liverpool and elsewhere, the general waiting list has become, for some people, just a period that is now of no consequence. Although I respect what the hon. Gentleman said about leasing or selling council houses—and it may be done in some areas—it cannot be done generally.
In giving these increased subsidies, the Government selected 130 priority local authorities with major slum and overcrowding problems. My right hon. Friend gave them virtually maximum targets, with the result that they will be the authorities which, in the main, will benefit from the new system because they will be building the most houses. We also gave them—and this is very important—four-year rolling programmes in the London area and three-year rolling programmes for the priority areas elsewhere. My right hon. Friend gave another 177 authorities three-year programmes and some priorities, although their needs were less pressing.
Thus, about 307 local authorities have been given special preference by the Government and are able to plan three or four years ahead instead of having to do this work on a yearly basis, waiting to

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see the Government's view of the following year's programme. My right hon. Friend has given me the task of housing programming, and we shall ensure that a further year is added each year to the forward programmes so that the local authorities know at least four years ahead what they are able to do.
Before I leave Part I, I want to say that local authorities vary in character, irrespective of politics. They vary in ability, competence and know-how. It is essential, particularly if these 300 authorities are to achieve the targets that we have set, and we want the targets to be realistic, that we ensure that their progress is sent to us, and that they reach the target. We have therefore established progress chasers at a regional level. These people will be expert in advising authorities on procedures and helping them at all stages of the contracts. We hope that by the time the matter reaches Whitehall my right hon. Friend will be in a position to rubber-stamp these contracts, thus enabling the work to go ahead much faster.
We have to watch the period between the granting of loan sanction and the job starting. In some instances it is as much as six months. We want to know why and we want it to be shortened. When a job starts, we want to make sure that the houses are built that much quicker. For the benefit of those who do not know this, 91 per cent. of everything built by local authorities is built by private enterprise. The more work we give local authorities, the more work we give to private enterprise also. Let us not forget that. My hon. Friend the Member for Harrow, East (Mr. Roebuck), my hon. Friend the Member for Salford, East (Mr. Frank Allaun) and the hon. Gentleman the Member for Orpington (Mr. Lubbock) have raised the problem of local authority rents. The Government have taken the view that it is not right to introduce in the Bill any question of a rent rebate scheme.
The previous Administration did not do so and we do not think it is right that we should. The hon. Gentleman the Member for Southend, West was good enough to read out from paragraph 41, showing that we believe in the principle that a fair rent rebate scheme is essen-
792
tial if these subsidies are to go to those who really need them. Figures have already been given by the Ministry of Labour Family Expenditure Survey, that of something like 30 per cent. of council house tenants with household incomes of £500 a year or less, were paying more than one-fifth of their income in rent.
We know of rent rebate schemes today in which only one tenant in 8,000 is getting a rebate. Call that a rent rebate scheme? If one wrote into the Bill that these will only go to authorities operating rent rebate schemes it is meaningless. We have to have realistic schemes. We were challenged as to what we had done. We have established a working party with the local authorities, in order that they can prepare the sort of rebate scheme to be the pattern for the rest of the authorities to follow. The working party will meet very early in the New Year to discuss a detailed working paper. This is why we said that local authority discussions are starting. We have now something to talk about.
Mr. Lubbock: Will the hon. Gentleman consider the suggestion that I made, that housing authorities should be invited to submit proposals for rebate schemes to his right hon. Friend, rather on the lines of the local education authorities who were invited to submit secondary school reorganisation schemes?
Mr. Mellish: From the activities of my Department, I think that I can say that we have as much information about the schemes as one could possibly have. My hon. Friend the Member for Harrow, East in quoting his own constituency, mentioned what I thought was the classic instance of the problems we are facing today. Here is a local authority which has decided to increase rents from 1st January by something like 50 per cent.
This local authority does not believe in a rate subvention. The hon. Member for Harrow, Central (Mr. Grant) has explained why. We cannot and do not intend as a Government to take over the functions of local authorities and tell them how they have to apply rents. It is not for us to do that, any more than it is for us to allocate tenancies. This must be for the local people, but I share my hon. Friend's view that anyone with a 50 per cent. increase in rents, at a time

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of severe restraint is entitled to complain to my right hon. Friend. I respect and understand that view. My right hon. Friend has now to be concerned with whether and in what form this Government can assist local authorities by looking at housing revenue accounts.
We must remember that whatever we introduce, someone has to pay for it somewhere, if not council tenants, then ratepayers generally. The fact is that there are some injustices among council house tenants, which I beg of hon. Members to understand. This debate has been notable for this. We have not heard so much of the idea that council tenants are a lot of peasants and everybody else is rather of the gentry. Today I think that we are getting away from that state of mind, and that all of us know that council tenants are paying very heavy rents, particularly in the great cities, and that they are also ratepayers, and that the vast majority have lived in appalling conditions for many years, and that it is the duty of this Government or of any other Government to ensure that local authorities are able to do a bigger and better job for that sort of person, and if we do that we shall have done a job of work
I come now to the option mortgage scheme and I see I have left myself only five minutes for it and I am sorry for that.. I think the fundamental question asked about it is this, why was the scheme delayed till April 1968? There were two factors which the Government had to take into account. The first was the present state of the national economy. During the coming year we must continue to restrain public expenditure wherever we can. Some interval after Royal Assent would have been necessary anyway to issue the explanatory literature, to give people who already have mortgages time in which to make up their minds whether or not to switch to the option mortgage scheme, and to deal with the accounting work that will be involved for both the lending agencies and the Inland Revenue in altering large numbers of individual accounts. Taking both those considerations into account, particularly the economic condition of the country, we decided as a Government to delay the date till 1st April, 1968.
The hon. Member for Orpington and others asked whether something could be done with regard to flexibility—to en-
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able the option to be made more flexible. I say this to him and to others, that we shall have to consult the building societies on this matter. I will be quite frank about this. They will be the agency which will in fact operate the scheme on behalf of the Government. We make no apologies for the fact that we were convinced that our original scheme—I know I have a great job to convince anybody on the other side of the House about this, but we were and still are convinced—was a practicable scheme, but then the building societies threw up so many additional difficulties that we decided to make a compromise scheme, which we have brought forward, and which will cost the Government just as much as the other scheme, though we did not have any idea that we were going to save this money.
Another question I was asked was about the 100 per cent. guarantee scheme being delayed indefinitely. The answer is, because the necessary funds must be built up to finance it, and it would destroy the whole point if people were being given larger loans but because of shortage of finance the fewer people were getting them. The only sensible thing to do in the view of the Government was to proceed in stages. The mortgage option scheme itself can be expected to make substantial new demands for finance for house purchase. When that has been launched, when we are sure that finance becomes available, we can go to the next step, which is the guarantee scheme and larger advances.
I agree with those who have said that probably the key to ensuring home ownership is to make certain that we as Government introduce this, because to my own personal knowledge what most deters many young married couples is the difference there is between what the building society charges and what the seller of the house asks for. I accept, therefore, that the Government will do what they can to ensure that we bring this forward as quickly as possible.
There was a Scottish Member, the hon. Member for Moray and Nairn (Mr. G. Campbell) who asked a question to which I can only say that on the information I have I understand that one of the reasons is that in Scotland wage levels are lower and building societies do not

795
there give money to some people to whom they would, normally, if they were here in the South. If the hon. Gentleman gets on to the Standing Committee—I wish him luck—then he could ask that question of the Scottish Minister who will, I am sure, be a member of that Committee.
This has been a debate which to a large extent has been constructive. Though I except the speech of the right hon. and learned Gentleman the Member for Hexham there were constructive speeches on that side of the House, too. This is a Bill which I believe the whole House will support, as it will ensure that help will be given to those people who are in greatest need.
Question put and agreed to.
Bill accordingly read a Second time.
Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

HOUSING SUBSIDIES [MONEY]
[Queen's Recommendation signified]
Considered in Committee under Standing Order No. 88 (Money Committees.)
[Mr. SYDNEY IRVING in the Chair]
Motion made, and Question proposed,
That, for the purposes of any Act of the present Session to make provision with respect to financial assistance towards the provision, acquisition or improvement of dwellings and the provision of hostels. it is expedient to authorise the payment out of moneys provided by Parliament—
(1) of subsidies in respect of dwellings in England and Wales completed on or after 25th November, 1965, or the sites of such dwellings, or in respect of the cost of such dwellings, being dwellings approved for the purposes of that Act by the Minister of Housing and Local Government or the Secretary of State for Wales and provided by—

(a) a local authority; or

(b) a development corporation or the Commission for the New Towns; or

(c) a housing association in pursuance of arrangements made with a local authority or with the said Minister or Secretary of State;

(2) of advances to local authorities on account of such subsidies as aforesaid which may become payable in respect of the sites of dwellings provided by them;
796
(3) of sums in lieu of subsidies which have ceased to be payable on the transfer or letting of any dwellings or other land;
(4) of any increase attributable to the said Act in the amounts payable out of moneys so provided under section 15 of the Housing (Financial Provisions) Act 1958;
(5) of any increase attributable to the said Act of the present Session in the sums payable out of moneys so provided by way of Rate-deficiency grant or Exchequer equalisation grant under the enactments relating to local government in England and Wales or in Scotland or by way of rate support grants to local authorities in England and Wales;
(6) of subsidies in respect of the provision, acquisition or improvement of dwellings in Great Britain given by way of payments to the lender towards the amounts due in respect of loans made on the security of an interest in land by local authorities, insurance companies, building societies, friendly societies, development corporations, the Commission for the New Towns, the Housing Corporation, the said Minister or Secretary of State or the Secretary of State for Scotland for the purpose of the provision, acquisition or improvement of dwellings on that land.—[Mr. Greenwood.]
10.1 p.m.
Mr. H. P. G. Channon: Mr. Irving, are we dealing with the Money Resolution, or are we in Committee of Ways and Means?
The Deputy Chairman (Mr. Sydney Irving): We are dealing with the Money Resolution.
Mr. Channon: I do not think that we can allow this occasion to pass without a few moments' debate, because the Committee will realise that this is an historic occasion. I am glad that the Chief Secretary to the Treasury is present, because, owing to the decision taken by the House last night, this is the last time in the history of the House that a Money Resolution of this kind will be taken in Committee. This is due partly to the evidence given by the Chief Secretary to the Select Committee on Procedure, on which I had the honour to serve.
The Committee will realise that this practice of taking Money Resolutions in Committee goes back several hundred years. I do not think that the Committee would like this occasion to pass without realising that a small piece of Parliamentary history will be made on the next occasion when a Money Resolution of this kind is taken, because it will be taken in the House instead of in Committee.
The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl): I, too, am glad to be able to participate in this historic occasion. I think that we can be pleased with this Money Resolution, because it is a broad one, and will give right hon. and hon. Gentlemen opposite an opportunity to exercise their ingenuity upstairs.
Question put and agreed to.
Resolution to be reported.
Report to be received Tomorrow.

WAYS AND MEANS
Considered in Committee.
[Sir ERIC FLETCHER in the Chair]

HOUSING SUBSIDIES
Resolved,
That in connection with any Act of the present Session to make provision with respect
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to financial assistance towards the provision, acquisition or improvement of dwellings and the provision of hostels, it is expedient—
(a) in connection with any provision of that Act for the subsidisation out of moneys provided by Parliament of loans on the security of an interest in land, to authorise charges to income tax and corporation tax—
(i) on sums received by the lender out of such moneys; and
(ii) by way of the modification of the Income Tax Acts and Corporation Tax Acts in their application to payments of interest on such loans;
(b) to authorise the payment into the Exchequer of any sums received under the said Act of the present Session by any Minister of the Crown.—[Mr. Diamond.]
Resolution to be reported.
Report to be received Tomorrow; Committee to sit again.

SCOTLAND (WINTER KEEP SCHEME)
10.4 p.m.
The Minister of State, Scottish Office (Mr. George Willis): I beg to move,
That the Winter Keep (Scotland) Scheme 1966, a draft of which was laid before this House on 7th December, be approved.
I do not think that I need take up much time in commending this Scheme to the House. It applies only to Scotland. Nevertheless, it is important. It will enable us to continue to pay grants to Scottish hill and upland farmers for growing crops during the next three years for the winter feeding of their livestock. The present Winter Keep Scheme, which expires at the end of this year, has allowed cropping grants to be paid to Scottish hill farmers for the last three years.
The Scheme now before the House differs in only two small respects from the present one. In the first place, we are adding one new crop—I know that the hon. Member for Perth and East Perthshire (Mr. MacArthur) will be interested in this—fodder radish, which, I understand, is a very fast-growing crop of the cabbage, rape, kale family, suitable for feeding to both sheep and cattle. We think, therefore, that it is only right that if Scottish farmers wish to try it out under Scottish conditions they should not be deterred by its not being grant aided.
Secondly, and perhaps of more immediate importance to the farmers concerned, we are dropping the requirement that farmers should tell us by the end of March which crops they intend to grow. Experience over the last three years leads us to the firm conclusion that we can retain effective control over the Scheme on the basis of the information which farmers give us in their claims at the end of June. In any event, the information which farmers gave us in March was—necessarily—very speculative. This simplified step will be welcome to farmers, and we are glad to be able to relieve them of a little paper work.
The Scheme allows winter keep grants in Scotland to be paid on an acreage
800
basis for three years. This is the maximum period for which a scheme can be laid under present legislative powers. When, however, the Agriculture Bill which is at present before the House becomes law the maximum period will be extended to five years. It would not have been practicable for us to wait for these extended powers before seeking approval of the new Scheme because the present Scheme expires at the end of this year, and we think it important that Scottish hill farmers should plan their next year's cropping knowing that the Winter Keep Scheme has been renewed.
I commend the Scheme for the approval of the House.
10.7 p.m.
Mr. Anthony Stodart: I congratulate the Minister of State on the lucidity of his speech, but the House will agree that no elephant has ever produced quite so small a mouse. At a time when the National Farmers' Union—if I read the newspapers correctly—is making strenuous demands about winter keep with a view to alleviating the hardships caused by deliberate Government policy, it is being fobbed off with something called fodder radish. I hope that the hon. Member will tell us a little more about this crop.
How many acres are being grown in the winter keep area? What will it really be worth as a concession? Because concession the hon. Members has made it out to be. The hon. Member has made out that this is an addition to the Winter Keep Scheme. He has said that it is a new and fast growing crop, of the brassica family. This is true. On low ground it has come in during the last two or three years as a catch crop. It has been found useful as a break crop between cereals. But will not the hon. Member confirm that it is extremely prone to frost, and that if it is not eaten by about the beginning of November it virtually wilts away?
If we take the literal meaning of the words "winter keep" we wonder whether this is quite the sort of crop that the hon. Member should be advocating as one of the various crops included in this Scheme. Is it being

801
allowed unconditionally? There is no date by which it must be eaten. Therefore, could the hon. Gentleman give his views comparatively to this on the subject of rape. I would not think of criticising the hon. Gentleman, as this was originally agreed. Rape must not be eaten before a certain date if it is to qualify. It is no good having rape in the winter. Therefore, it would be helpful if he could tell us the relative advantages—they are obviously similar crops—between fodder radish and rape.
I have something now to say more generally about the Scheme. Would the hon. Gentleman give us a progress report, which would be interesting, on the general subject of the gradings, which are a peculiar feature of the Scottish scheme. Originally, out of about 15,000 farms eligible 3,000 were graded "A", 4,000 "B" and 7,500 "C". This is leaving out those which were excluded because of the varying conditions. How much movement is there?
By now, we ought to be introducing these things generally between grades. What chance is there of a "B" becoming a "C" or an "A" becoming a "B"? How often does the hon. Gentleman's Department allow an appeal to be made against grading? Obviously, it would be ridiculous for a person who was put in a particular grade to be allowed to appeal at unlimited intervals.
I think that the hon. Gentleman would probably be surprised if I did not mention a subject mentioned in our previous debates on this matter, the question of the "C" grade farm which could not cultivate. The hon. Gentleman has always been extremely confused about this—
Mr. Willis: Not me.
Mr. Stodart: He has never been entirely with us on this matter.
When I first raised this matter three years ago, the hon. Gentleman insisted and went on insisting that I must be talking about the hill cow subsidy and not the Winter Keep Scheme at all. When we discussed this in Committee the other day, he again showed great confusion when he said:
"At that time hon. Members"—
802
referring, of course, to the Opposition—
"were arguing that the farmers should have the choice of acreage or headage."
I interrupted to say:
"For the 'C' grade farmer.",
to which the hon. Gentleman replied:
"That is another refinement which he is suggesting."—[OFFICIAL REPORT, Standing Committee A, 15th November, 1966; c. 1036.]
Mr. Willis: That is quite true.
Mr. Stodart: Of course, this is no other refinement and if the hon. Gentleman still thinks that, he is not with us even tonight. That is a pity, as we had hoped that he had mastered his subject this evening. If he still thinks that this is another refinement, I must remind him again that it is only for that very limited sector that we have ever suggested this alternative. For him to say only a few weeks ago that this is another refinement is, of course, a travesty of the truth.
The hon. Gentleman has written an interesting letter to my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur) which he has been good enough to allow me to refer to. The hon. Gentleman refers there to a survey, saying:
"The survey shows that about 300 hill sheep and upland farms had no eligible crops on which they could claim grant."
He went on:
"It was precisely to help this type of farm, with little or no land suitable for cropping and therefore unable to take advantage of the acreage grants to any extent, that we introduced the 2s. hill ewe supplement."
This means, therefore, that to help 300 farms—for the purpose of argument, I accept that figure—the Government give a 2s. supplement to nearly 14,000 farmers, because that was the number of applications for the hill sheep subsidy last year. To make up the acute difficulties and the unfairness under which 300 people labour, the Government dispense this money to 14,000 people, which is typical sloppy Socialist administration.
Mr. Willis: This is your scheme.
Mr. Stodart: The hon. Gentleman has shown that he does not possess—this is a very sad thing to have to say—that precision of thought which he always used to impress upon us when speaking from this side of the House.

803
If the Minister of State cannot answer my next question, I hope that he will at least bear it closely in mind. There is a great deal of speculation about the future of agriculture in the Common Market. This Winter Keep Scheme is one of the production grants. In the Treaty of Rome, there is an Article which says:
"Due account shall be taken of the distinctive nature of agricultural activity which results from agriculture's social structure and from structural and natural disparities between the various agricultural regions."
I understand that production grants like the hill cow and hill sheep subsidies could be looked upon with disfavour as ancillaries virtually to the deficiency payments of the end-product. That is a conceivable view that could be taken.
However, the Scots may well live to thank the Conservative Government for this separate Winter Keep Scheme, which stands entirely on its own, unconnected with the two schemes I have mentioned, and I hope that the Minister will agree that it is absolutely essential that the Government should cling tightly to this Scheme.
10.20 p.m.
Mr. Alasdair Mackenzie: I welcome the extension of this scheme for another three-year period. It is the successor to the earlier scheme, which was known as the "M.A.P. Scheme"—the Marginal Agricultural Production Scheme—and those of us who have been connected with this type of land for a long time realise that the M.A.P. Scheme was the best we had in the post-war period. It was introduced during the emergency conditions of the war and was continued into the post-war years. It proved to be the best scheme and best incentive we received.
There came a time when the Government decided to discontinue the M.A.P. Scheme and, after a good deal of persuasion, the Government agreed to introduce the Winter Keep Scheme. Because of this, we have been able to carry on the good work that was done under the earlier scheme. The new Scheme is ideally suited to the type of land it is designed to help. However, in purely hill areas, where there is little cropping land, headage payments would be of greater
804
advantage. That would be of particular benefit because most of the hill farmers must purchase hay for the winter in any case.
The other criticism we have of the Winter Keep Scheme is that it does not apply to barley. In the North of Scotland most farms that come in this category grow a certain amount of barley for feeding purposes. This custom is growing and I suggest, therefore, that it would be appropriate if barley were allowed to qualify for winter keep. This has been pressed on the Government year after year.
Another case that has been pressed on the Government constantly is that upland dairy farmers—the most hard working section of the farming community; they work long hours, seven days a week and get little profit at the end of their toil—should be encouraged. I hope that the Minister will have another look at the Scheme and incorporate these items into it for this season. It is still not too late for him to do so.
The Minister said that the period would be extended to five years after the agriculture Measure which is now before the House becomes law. I hope that this will be done because these farmers need long-term assurances. In this connection, I notice that a new crop, fodder radish, has been introduced into the Scheme. Crops like this are grown successfully in parts of Scotland and I have no doubt that the fact that this new crop has been incorporated proves how progressive these farmers are.
It is gratifying to note that one less form will have to be filled in before farmers qualify under the Scheme. Personally, I do not mind filling in forms. My farm has qualified for winter keep and I am always happy when I see what we call the "winter keep form" arrive because it means that something will be coming along later in the year.
Farmers in my part of Scotland are happy to know that the Scheme is to be extended for another three years and I trust that the Minister will consider the two points I have made; the barley grower who grows that crop entirely for winter keep and the small dairy farmer who is working under difficult conditions in these upland areas.
10.25 p.m.
Mr. Hector Monro: I, too, welcome, this scheme but that does not mean that I do think that it could not have been better, particularly when we are looking three years ahead. On 20th October, the Minister discussed with the Scottish National Farmers' Union the hill farming grant and the Winter Keep Scheme. But it seems that the only decision coming from that meeting was to include fodder radish. It does not seem to have been a very fruitful meeting. I hope the Minister will give us a little more information about this crop, particularly having regard to Scotland's climate and the known susceptibility to frost of fodder radish. He may be encouraging people to grow a crop they have no right to grow in Scotland at all. Most winter-keep farmers would prefer relaxation in relation to barley.
At the same meeting, the Minister also discussed headage payment, which the S.N.F.U. is pressing, and I should like his views on this point—
Mr. Speaker: Order. I do not think that this subject comes under the Scheme.
Mr. Monro: It does not come under the Scheme, Mr. Speaker, but it is all so tied up with the application of winter-keep grant in England that I rather hoped we might be given an opportunity to have it in Scotland as well.
I hope that the Minister will consider the provisions of Schedule 2 in relation to Class "C" farms which need a change in winter keep more than anything else. I hope also that he will consider the option that farmers might have in regard to headage and acreage payments under the Scheme, as that is what so many of them want. We, as a country, want the beef and the mutton, and the Minister should encourage farmers to produce the meat by whichever method will be most advantageous to them and to the country.
The hon. Gentleman will remember that when we debated this subject on 6th May, 1965, he said that there had been talks, and that Scotland had opted for the acreage basis after discussions with the Scottish N.F.U., the Scottish Agricultural Advisory Council and the Hill Farming Advisory Committee. The views of those bodies may have been right or wrong, but I wonder whether they have reported to him before he drew up the
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Scheme and, if so, whether he has included their observations in the Scheme.
The importance of this Scheme has been accentuated by the disaster in the hills—and I use that word advisedly and with care—that has occurred this autumn. A month ago—and, as we all know, it was ridiculously late—the Secretary of State yielded to pressure from hon. Members about the Government's treatment of hill farmers, particularly those receiving winter keep, and gave an advance on the hill ewe subsidy. It is most important that farmers should realise that that is only an advance, and not an additional payment. I hope that the farmers also realise that this is not given in addition to their income, and that it has certainly not been as generous as the Secretary of State has tried to make out—
Mr. Russell Johnston: Surely, this has not been absolutely determined yet. We all hope that it will turn out to be an addition in the end.
Mr. Monro: I hope so, but I have forever given up any hope of anything optimistic from this Government.
I hope that the Minister will remember that we warned him of the advantages of flexibility in the winter keep and the hill ewe subsidy schemes. That warning has now come home to roost, and I am sure that he now wishes he had taken our advice a year ago. I wish that the Minister would realise that there are many people in Scotland who can give him the very best advice on winter keep, but he never seems to take it. If he had, the situation in the hills in Scotland would not be so desperate today.
What will the Minister of State do about winter-keep farms that are not eligible for the hill ewe subsidy? There is a great opportunity here to be flexible and allow them into the Winter Keep Scheme. The Minister is frowning, but he should know that one does not necessarily get the hill ewe subsidy if one has a winter keep farm. That is an important point which he should examine.
We have told him about this often enough. I told him so on 25th October—it is col. 986 of the OFFICIAL REPORT—in the Adjournment debate on hill farming, but he has still done nothing about it. Would he also consider, as the hon.

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Member for Ross and Cromarty (Mr. Alasdair Mackenzie) suggested, a relaxation in relation to dairy farms? I disagree, however, with what the hon. Member for Ross and Cromarty said about "affluent" dairy farmers.
Mr. Alasdair Mackenzie: I did not say "affluent"—I only said upland.
Mr. Monro: I could hardly believe my ears, and I am glad to know that the hon. Gentleman did not use that word, because he knows as well as I that there are none.
Beef is what the Minister wants, in more than one way, and it does not seem to matter particularly what else happens on the farm if those receiving winter-keep grants are providing meat and mutton for the country. There is not one shred of imagination left in the Scottish Office regarding the Winter Keep Scheme and hill farming generally. I sometimes wonder whether the Minister of State has been further up a hill than the top of Arthur's Seat. The Scheme has not been improved in the past two years in any substantial way.
I hope that the Minister of State will be very much more generous in times of adversity such as the present and be more practical. I hope that he does not always rely on statistics and that he gets out to markets and farms, and listens and learns from what has been said about the Scheme. It is, and always has been, a good Scheme, but it should be very much better. I hope that in supporting and commending it to the House for a further life of two or three years he will make an effort to make it as good as it should be.
10.32 p.m.
Mr. Ian MacArthur: The whole House will welcome the renewal of the Winter Keep Scheme. Equally, all hon. Members who have any knowledge of the conditions in which hill farmers in Scotland are now working will view the proposal with a certain disappointment.
The Minister of State has said that there are two major changes. One is that the payments may be speeded up, which is certainly welcome, and the other is that that splendid crop, fodder radish, is to be included. I am grateful to the
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Minister of State for referring to my interest in that crop. My only knowledge of fodder radish is that I believe that once, by accident, I grew some in my garden. I found it uneatable. I do not know how significant the crop is. I could not discover from what the hon. Gentleman told us whether it is grown in any upland areas of Scotland.
It is rather disappointing, after all the hopes we have had over the past few months that the hon. Gentleman would at last recognise reality and try to help the farmers in the difficult areas of Scotland, that all we have in this new policy, forged in the purposive white heat which has shrivelled the Government, is the admission of fodder radish. I shall say no more on that, because I do not want to embarrass the hon. Gentleman too much. I have said on previous occasions, that fond as I am personally of the Minister of State, I grow more and more disappointed in him. That feeling is shared not only in the House but by a growing number of farmers, particularly in the hills.
I shall not embarrass the hon. Gentleman by referring to some of his previous speeches in the House, but I was astonished, as was my hon. Friend the Member for Edinburgh, West (Mr. Stodart) by his comment in the Agriculture Bill Standing Committee the other day about "C" grade winter-keep farmers.
According to HANSARD, which has already been quoted, he then alleged that we were somehow refining our position. I am all for refinement, but I remind the hon. Gentleman that the argument we have advanced all along about the position of the "C" grade farmer is precisely the same: there has been no change. I direct the hon. Gentleman's attention to what I said on 6th July:
"I suggest to the Minister of State that the figures which I have quoted show that there is a case for introducing at least an optional scheme for 'C' grade farmers, whereby they can opt for payment either on an acreage basis, or on a headage basis."
This point was absolutely clear during that debate. Later, I said this:
"I hope that the Minister will consider this, and if possible give us some indication of his thoughts on the matter when he replies."—[OFFICIAL REPORT, 6th July, 1966; Vol. 730, c. 611.]

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The debate that night centred round the problem of the high lying farmer who is on paper eligible for "C" grade winter keep, but who cannot receive his winter-keep payment because he is unable to grow the crops which would qualify him for winter keep.
The hon. Gentleman listened to our argument on that occasion. It was obvious from his comments in Committee the other day that he has forgotten what the argument was. I do not want to be over-generous to the hon. Gentleman, but he has been less than helpful about the whole matter. I believe that, clear as we have tried to make our argument, the hon. Gentleman has not yet understood it. I had hopes that tonight we should hear something more encouraging, because following the July debate my hon. Friend the Member for Edinburgh, West (Mr. Stodart) and I tabled a number of Questions for Written Answer to the Secretary of State for Scotland about the whole question of the "C" grade winter keep farmer.
For example, my hon. Friend asked why it would be administratively difficult to introduce this optional scheme. The answer which we received was, to put it mildly, incomprehensible gobbledygook. We continued with our Questions. I give credit to the Secretary of State and to the hon. Gentleman for finally agreeing to a proposal we made which was that a survey should be conducted of a sample of those farmers not receiving the "C" grade winter-keep grant although on paper they were entitled to it. I am grateful to the hon. Gentleman for the part he played in getting that survey conducted, because I think it is of value.
As my hon. Friend has pointed out, the Minister was good enough to write to me last month letting me know the result of the survey. I do not want to bore or detain the House, but I should like to quote a short passage from the letter, because it is important that the result of this important and significant survey should be widely known. The hon. Gentleman wrote:
"A 10 per cent. random sample of non-claimants last year was selected and the relative agricultural returns were examined to see if they gave any lead as to why claims had not been submitted. No inspections specifically related to the investigation were carried out, but the comments of my Department's local inspectors were sought in doubtful cases. Following this examina-
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tion, which led to the exclusion of a number of units which were identified as crofts, etc., or units re-classified as 'lowland'—in either case basically ineligible for winter keep grant—some further analysis of 'C' category units not making claims was undertaken, and the results of raising the sample are set out in the attached table.
They confirm the view that the bulk of the 'C' category non-claimants are part-time units. They also show, as one would expect, that excluding part-time units only a very small proportion of apparently fully eligible farms do not claim grant. Further—and this, I imagine, is where your interest really lies—the results show that about 300 hill sheep and upland farms had no eligible crops on which they could claim grant. In some of these cases it may well be that this is accounted for by the farms concerned having no in-bye land suitable for cropping. This could only be confirmed with certainty by carrying out individual farm inspections, and I doubt if the cost would be justified."
That quotation summarises the general sense of what the Minister communicated to me.
I am astonished that the Minister declares that the cost might not be justified. I join with my hon. Friends in questioning the whole logic of the hon. Gentleman's argument about these "C" grade farmers who do not receive Winter Keep grant. There are 300 hill sheep farmers who get no winter-keep grant, and it must be that at least a very large proportion of them do not receive it because their farms lie too high for the growing of the crops which would make them eligible.
If that is so, it underlines the argument which my hon. Friends and I have been advancing for months, and it dramatises the hardship which many of the hardest working and most deserving farmers of Scotland are suffering through their exclusion from this Scheme by the Government's refusal to recognise and overcome the administrative difficulty which has excluded them. The difficulty could be easily overcome if the will were there. I implore the Minister of State to look at the whole question again and create the will. He could do so quickly by coming to look at some of the hill farms in Scotland to see the difficulties which these fine farmers face today.
I am concerned still, as I have been all along, about the grading of farms eligible for winter keep. In any system of differentiation, there must be grey areas between one grade and another. That I recognise, but, after looking round

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some farms recently I found it very difficult to see why one farm was graded as "B" and another as "C" when, to me at least, they appeared very similar in terms of layout, climatic conditions, and the like.
I hope that the Minister will exercise sympathy in the final determination when disputes arise about the grading of farms in one of these categories. Will he tell me also—I confess that I am ignorant about it—how often the grading of farms is reviewed for winter-keep purposes.
The money which is available to hill farmers under the Winter Keep Scheme is critical to the financial operation of hill farms, and I am very worried about the position of the Scheme now that we are, quite rightly, making a new approach to the Common Market. I do not suggest for a moment that this consideration should influence the major policy decision, but the great difficulties now being experienced on the hill lands make it necessary for the Government to discover and to announce soon—I appreciate that the Minister may not be able to give an answer tonight—just what the position of grants of this kind would be within the Common Market.
It is imperative that the Government announce, also, that transitional arrangements will be made to provide continuing protection for farmers of this kind until such time as market prices within a unified Europe remove the need for such selective supports.
10.45 p.m.
Mr. Willis: We have had an interesting debate during which most of the usual points have been raised. Once again, there has been a great deal of discussion of the hill sheep farmers in the "C" category, but I do not know that anything new has been said about that subject, except that the hon. Member for Dumfries (Mr. Monro) argued that in the Scheme itself there should be an option. The supplementary headage payment, of course, is made precisely because of the conditions of the "C" category hill sheep farmer. In other words, it is paid in recognition of the fact that they are less likely to obtain benefit from the average payments than the farmers in the "A" and "B" categories. It is interesting to notice that out of the total supplementary headage payment of some £192,000, it is
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estimated that "C" category farmers receive £167,000. It therefore seems that this supplement of 2s. goes where hon. Members want it to go.
Now the hon. Member for Dumfries comes forward with the proposition that there should be an option. I can assure
him that in my meeting with the S.N.F.U. I raised this issue and was assured by the S.N.F.U. that it was certainly not in favour of that. In the literature which the S.N.F.U. has produced since, it has not come forward with the proposition that there should be an option. It has come forward with a quite different proposition.
Several Hon. Members rose—
Mr. Willis: I read the literature as well as any hon. Member opposite. Hon. Members opposite must not imagine that because they happen to run farms they are the only persons who know about farming. That would be quite absurd, and yet they come along with that kind of arrogant assumption.
Mr. Monro rose—
Mr. Willis: I was living on a farm before the hon. Member was born.
Mr. Stodart rose—
Mr. Willis: And before the hon. Member was born, too. It was in a notable farming area, one of the most famous in the country. Hon. Members must not run away with the idea that nobody else knows anything about farming.
I have carefully listened to the argument of the S.N.F.U. and I questioned its leaders very carefully about it. Hon. Members can take it from me that the Scottish N.F.U. is not advocating at present that there should be an option. It is advocating something different.
Mr. Stodart: Is it not the case that the S.N.F.U. is asking something very different now, but that for all the time until now, when we have been advocating it, it has been in favour of that option but, not having got it, has now moved on to another position?
Mr. Willis: The hon. Member does not know as much about the thinking of the Scottish N.F.U. as I thought. In fact, he seems to be rather ignorant of its thinking in this respect.
Mr. MacArthur: In his discussions with the S.N.F.U., which, I must say, produced very little in the way of Government action, did the hon. Gentleman call its attention to the fact that 300 hill farmers originally in the "C" grade scheme on paper are, in fact, not receiving "C" grade winter keep because of the absence of the option for which we have been pressing?
Mr. Willis: They are not receiving the acreage payment because they are not cultivating any crops.
Mr. MacArthur: Precisely.
Mr. Willis: Precisely. But they are getting the supplementary headage payment and that is what the 2s. supplement is intended to provide. As the hon. Gentleman says, of course the S.N.F.U. has come forward with different proposals, and it has done so for very good reasons. But at least it rather knocks the feet from under hon. Members who keep promulgating the benefit of this option. There are difficulties. I have explained them before in the July debate. But at present this is not being put forward by the S.N.F.U. What we are trying to do, through the 2s. supplement, is to give assistance to persons who have not got any land on which they can grow winter feed.
The hon. Member for Perth and East Perthshire (Mr. MacArthur) also asked about grading, as did the hon. Member for Edinburgh, West (Mr. Stodart). There is not really any movement between grades. I understand that the grading has been done and appeals have been made and almost all have been settled. Unless the acreage or the other circumstances are changed, there is no further assessment of the farm. It remains in its category. The fanner does not appeal again.
The hon. Gentleman also asked about the position of the scheme should we enter the E.E.C. That is a rather hypothetical question. This is one of the matters to be borne in mind along with other supports to British agriculture, but, clearly, I cannot say much about it now.
Most hon. Members who have spoken had their fun about fodder radish, that mysterious crop about which no one appears to know anything. The hon.
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Member for Edinburgh, West did not seem to know much about it. I myself did not pretend to know much about it in introducing the Scheme, but at least I had the honesty to say so. His hon. Friends did not seem to know much about it either. I understand that an article in Farm and Country, in February, 1965, was headed:
"Fodder Radish—the fastest growing green crop".
It went on to point out the advantages of this crop.
This might be a small thing but the question is whether we were right to include it in this scheme or not. If Scottish hill farmers wish to experiment with this crop, surely it is right for us to include it and allow them to become eligible for increased payment in respect of their experiments. This is surely—perhaps generous is too large a word—a forthcoming and helpful attitude by the Government. Yet hon. Members opposite have spent their time denouncing it as though it is something we should not have done. I would like the hon. Member for Edinburgh, West to tell us whether he would have put it in.
Mr. Stodart: That is hypothetical. Alas, I am not in the winter-keep area and, therefore, the question seems slightly irrelevant. But the Minister of State has not answered the question—I hope that he will—about the practical point concerning frost—whether the crop is really all to be withered away with frost in November as compared with rape, which he has not touched on. This is a most relevant matter. Why are the Government discriminating against rape and allowing fodder radish in unconditionally?
Mr. Willis: The hon. Gentleman has not answered the question I put to him. If he were still in the position he held two years ago, would he include fodder radish?
Mr. Stodart: I am sorry. I thought that the hon. Gentleman was asking whether I would have sown fodder radish on my farm. Certainly, if I had been satisfied, as a Minister about the weather resistant qualities of fodder radish, I would have included it. But we are still trying to find out from the hon. Gentleman whether this is so or not.
Mr. Willis: The hon. Gentleman still has not answered the question. He must not run away with the idea that what he grows on his farm is so important that it has to be debated in the House of Commons. This really is arrogance which is almost unsurpassed in this House in my memory of it. To imagine that what the hon. Gentleman happens to be doing on his wee piece of land in—East Lothian, is it not?—is of national importance! Really! The hon. Gentleman never ceases to amaze me, I am bound to say.
On the other point, it is not for me to prescribe, or to try to tell farmers, the relative merits of different crops. They are the experts, not I. It is for them to decide whether or no they will grow certain crops, and, quite clearly, in deciding that they will take into account the considerations mentioned by the hon. Gentleman. The question we as a House have to decide is, if they engage in this experiment should we encourage them, or not? And as I understand the hon. Gentleman, he would not. Hon. Gentlemen have shouted for months about assisting the hill sheep farmers, but this wee small thing they are not prepared to do to help them, apparently. The hon. Gentleman has not answered that yet.
Mr. Stodart: I do not pretend to be the encyclopaedia which the hon. Gentleman clearly is on these matters. I am still asking him if he will give me the answer I asked for. I will say to him bluntly that if what I have heard about fodder radish is true, that frost destroys it at the beginning of November, I would not have thought this could possibly qualify as a winter-keep crop.
Mr. Willis: Not in the literal sense. I understand that, as with other crops, it is eligible if it is fed to livestock after the beginning of the winter period, which is 1st October. This is what I understand. But it is wholly for the farmer himself to decide whether he will grow it. The hon. Gentleman has been clamouring for millions of £s from the Treasury, but he is apparently not prepared to say he would give the farmers this small little supplement to encourage them to experiment with fodder radish. After all the battling and shouting and all the speeches made—
Mr. Monro: What a battle!
Mr. Willis: This is true—this is all it has amounted to. I remember that in Committee on the Agriculture Bill the hon. Gentleman and his colleagues told us how they were preparing for battle on the Floor of the House. Where has their battle gone to? They are not even prepared to give the farmers a few hundred pounds for fodder radish. This is the extent of the keenness of the hon. Gentlemen opposite. Really, you could not become more ridiculous than this, could you?
Mr. Monro: You could not.
Mr. Willis: The hon. Gentleman is quite correct: you could not. And I am still awaiting an answer from the hon. Gentleman the Member for Edinburgh, West. I do not think he asked many more questions.
The hon. Gentleman the Member for Ross and Cromarty (Mr. Alasdair Mackenzie) —I am sorry he has left—asked me a couple of questions. First, he asked about long-term assurances. So did one or two other hon. Members. Some asked wider questions concerning the finances of the industry. Quite clearly, these are considerations for the Annual Review and will, of course, be taken into account then, and will be considered then.
The hon. Gentleman, and one other hon. Member, too, asked me about barley. Of course, hon. Gentlemen know the answer about barley as well as I do, but they will persist in raising it on every occasion. The short answer is that barley is really a profitable crop; it is a cash crop; and to include it for winter keep grant would be to give special encourage to its production in marginal areas which are normally more suited to the growing of oats. Although barley can be, and is, used as fodder on farms where it is grown, a considerable proportion is sold as a cash crop, unlike oats which is almost entirely retained, and for this reason it has never been considered as a crop which should qualify under the Winter Keep Scheme.
The hon. Gentleman also asked why upland dairy farms were excluded from the Scheme. The view of the Government, and the view of the hon. Gentleman when he was a Minister, is

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essentially that a farmer has to choose between dairying, with the advantages of the guaranteed price, and livestock rearing, with the aid of the special livestock rearing subsidies. In some of the areas it may he more profitable to dairy farm, but quite clearly this is a choice which the farmer has to make, and for the reason which I have given the upland dairy farms are excluded if their dairy produce is more than 40 per cent., I think it is, of their total income.
I do not think that many more questions were asked. I think that I have answered them all. Hon. Gentlemen kept on reminding me of the meeting that I had with the Scottish N.F.U., and talked about nothing having eventuated since then. The Scottish N.F.U. met my noble Friend and myself, and also the English Ministers the next day. Since then we have announced our intention of advancing the payment of the whole sheep subsidy, and hon. Gentlemen may be interested to know that this has begun. The first payments were made yesterday, and the second payment will be going out in another day or two. In spite of the comments of hon. Gentlemen opposite, I think that this was welcomed by the farming community. Our information is that this was a most welcome step, so something did arise as a result of these deputations to the Scottish Department and to the English Ministry.
I do not think that there is any other point to which I wish to reply, and I hope that the House will now approve the Scheme.
Question put and agreed to.
Resolved,
That the Winter Keep (Scotland) Scheme 1966, a draft of which was laid before this House on 7th December, be approved.

APPLE AND PEAR DEVELOPMENT COUNCIL
11.3 p.m.
The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy): I beg to move,
That the Apple and Pear Development Council Order, 1966, a draft of which was laid before this House on 29th November, be approved.
This Order is presented for approval in accordance with the requirements of the Industrial Organisation and Development Act 1947. Its purpose is to provide for the establishment of a development council for the apple and pear growing industry in England and Wales. The House will recall that earlier this year my right hon. Friend announced that he had decided to seek Parliamentary authority for the establishment of a development council for this industry. This followed his study of the views of the industry, which he had sought individually by writing to those growers of apples and pears who would be called on to meet the costs of a council.
It gives me great pleasure tonight to be able to introduce an Order whose purpose has been welcomed generally by both sides of the industry. Indeed, the proposals for the establishment of a council originated with the N.F.U.
The general aim of development councils established under the Industrial Organisation and Development Act is to assist industries to increase their efficiency and productivity and to improve and develop the service rendered to the community. Two councils now exist, the Cotton Board, shortly to be reconstituted to cover additional sections of the textile industry, and the Furniture Industry Development Council, which was set up in 1948.
The Apple and Pear Development Council will be the first to be established in the agricultural and horticultural sector, and I can therefore say to night that we are making something in the way of history. Apples and pears form an important part of the horticultural industry. I will not burden the House with a mass of figures, but perhaps I might just mention that in the 1965–66 season the value of the output of dessert apples was £17½ million, of cooking apples £7

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million, and of pears £3½ million. Before making a Development Council Order the Minister concerned is required by the Act to consult organisations representing persons carrying on business and employed in the industry. In compliance with this provision consultations have taken place with the National Farmers' Union of England and Wales, the National Union of Agricultural Workers, and the Transport and General Workers' Union.
I am pleased to be able to say that these bodies have all welcomed the establishment of a Council, and the discussions have proved useful and productive. These discussions together with the results of the survey of growers' opinion, satisfied my right hon. Friend—as the Act requires—that a Council was "desired by a substantial number of the persons engaged in the industry." The functions to be assigned to the Council are listed in the First Schedule to the Order. They are taken from the list set out in the Act and all of them are functions which the growers themselves want this Council to have.
The Council's most urgent task will be to publicise home-grown apples and pears with a view to increasing sales, a function which will fulfil a long-felt need. If British growers are to continue to compete effectively with their overseas rivals for the housewife's purse, publicity is essential, but this costs money. Recognition of the desirability of affording the horticultural industry a means of advertising its products through a statutory scheme was given by the inclusion in the Horticulture Act, 1960 of provisions for the establishment of producer organisations with power to raise money compulsorily for publicity. But organisations of this kind were to be financed through the Horticultural Marketing Council and with the dissolution of that body in 1963 these provisions could not be implemented.
Since 1960 there has been in existence an Apple and Pear Publicity Council, financed by voluntary donations from growers. It has been doing a fine job on what can only be described as a shoestring budget. There is a clear need for a body with a much more substantial income to take over and develop the work
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in this field. It may be said that eye-catching publicity is not enough and that the product itself must have eye appeal. In this context the introduction of statutory grading for apples and pears from 17th July next will make the Council's task that much easier. There will also be much useful work for the Council to tackle in the realm of market research, the encouragement of export business and providing information and advice to growers on these matters.
The Order provides that growers having five acres or more planted with apple or pear trees—but not cider apples or perry pears, which are expressly excluded from the Order—must register with the Council within one month of 1st April next. To meet the expenses which will be incurred in the exercise of their functions the Council is empowered, subject to the Minister's approval, to impose on every registered grower an annual charge not exceeding 30s. an acre. In order to comply with the requirement of the Act that the Minister must satisfy himself that the incidence of charges as between different classes of undertaking in the industry will be in accordance with a fair principle, my right hon. Friend has decided that growers on lightly planted land should be given the opportunity to pay, instead, 30s. per 50 trees.
We estimate that about 2,800 growers, with upwards of 90,000 acres—about 80,000 acres of apples and 13,000 acres of pears—will be called upon to contribute to the Council. For technical reasons, these estimates are subject to some margin of error, but it is safe to assume that the Council's income will exceed £125,000 a year. The Council will need information from growers to enable it both to carry out its functions and to impose or recover the levy. The Order accordingly empowers the Council to require growers to make returns.
This power is enforceable in the courts and the Order provides penalties on conviction of the offence of failure to register or to provide information required by the Council. There are restrictions on the handling and disclosure of particulars relating to individual businesses, to safeguard the interests of individual growers. Only the independent members and specially authorised officers of the Council may examine individual returns.

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The enabling Act provides that every Development Council shall have members representing employers and employees and also independent members. The Minister may also appoint members having special knowledge of the marketing and distribution of the products of the industry. My right hon. Friend has decided that, since the Council will be financed by growers, their representatives should be in the majority. Although the Order provides that there shall be not more than 12 and not less than ten growers' representatives, the Minister has decided initially to appoint 12 growers. These members will be appointed on the recommendation of the National Farmers' Union.
There will be three representatives of the employees in the industry, appointed on the recommendation of the National Union of Agricultural Workers and the Transport and General Workers' Union, and three independent members, one of whom will he the Chairman. The Minister has also decided to appoint to the Council three people with special knowledge of the marketing and distribution of apples and pears. He hopes to be able to announce the names of the Chairman and members very shortly.
I am confident that the House will approve the Order in the knowledge that it has the full support of both sides of the industry and that there is much useful work awaiting the attention of the Apple and Pear Development Council.
11.13 p.m.
Mr. John Wells: We welcome the Order and the comprehensive way in which the Joint Parliamentary Secretary introduced it. It will be of particular value if and when this country joins the Common Market. It is a useful forerunner to help our growers, who may have a difficult time. The previous proposals of ten years ago failed to materialise, of course, because the industry voted against them. Since then, the N.F.U. has worked hard to bring this new scheme forward, and it was a previous Conservative Minister of Agriculture who was the "godfather" of the scheme.
I am sorry that the Minister is taking so long to announce the names. The
822
hon. Gentleman said that we would get some names soon: I hope that it will be really soon, as we have waited a long time. He said that the poll was heavy. I understand that the poll in favour was 60 per cent., but was this calculated by men or by acreage? I understand that a certain number of larger growers, particularly in the Home Counties and the areas near London, were and still are opposed to the scheme.
I hope that steps are being taken by the Department, by the N.F.U. and by the others concerned to show these growers the advantages to them and to the whole industry of this scheme. I believe that this is of particular importance, because growers have now had their first and last chance to vote. The members of the Council are all Ministerial appointments and, as there is no further democratic process involved, it is most essential that minority interests are carried along with the will of the majority.
Turning to the detail of the Order, in paragraph 3(2) one notices the phraseology:
"The Council shall exercise their functions in such manner as appears to them to be likely to increase efficiency and productivity in the industry."
Does that efficiency and productivity include such detailed arrangements as assistance to growers in amalgamations and business schemes, or is it merely to be directed entirely at the generality of the industry? Will the money to be paid out by the Council in certain circumstances be paid to individual growers or growers' co-operatives?
I mention growers' co-operatives in this connection because at Question Time we had yesterday some faint glimmer that the Government are at last taking a more realistic view of growers cooperatives in relation to Selective Employment Tax. It is important that we should know tonight whether the payments will be made only as a generality to the industry or whether they will apply only to individuals. In this connection the first paragraph of the First Schedule of the Order is important. This says one of the Council's functions is
"Promoting the production and marketing of standard products."
Does this apply to individual growers and individual firms, or only to the industry as a whole?

823
In relation to the composition of the Council, set out in paragraph 4, I want to urge upon the Parliamentary Secretary the fundamental truth that the great bulk of the workers in the horticultural industry are not trade union members. The hon. Gentleman has mentioned that the three representatives of the persons employed in the industry are all going to be nominees of the trade unions. One can accept that there is no other body to nominate non-union labour, but the fact remains that the trade unions are very weak in the agricultural industry and perhaps weakest of all in the horticultural section. Therefore, a turn of phrase which may well be suitable for the furniture industry and the other industry which the Parliamentary Secretary mentioned is not necessarily particularly applicable here, and I hope that this inclusion of three trade unionists does not mean that this is going to be a happy hunting ground for places for the boys.
I am sure that such a thought is far from the Parliamentary Secretary's mind tonight, as he wishes the scheme well, but it might well be that at some future date some other Labour Administration might not be so well disposed. I hope that in these outside members, and possibly even in the trade union nominations, there will be some attempt to get female representation. There is a large number of female workers involved, and from the consumers' point of view there is obviously a great preponderance of interest among housewives. I am not one of those who say that we should have women on every committee just for the sake of having women represented, but I do say that provided they are suitably qualified it is highly desirable.
Just as the majority of the workers are not members of the trade unions, so the Parliamentary Secretary should bear in mind that not all growers are members of the N.F.U. Like other hon. Members who represent fruit growing districts, I have close friends in the N.F.U. However, we are all aware of leading growers who are not N.F.U. members. I trust, therefore, that when the names are announced, it will be remembered that while the N.F.U. is important, it is not all-important in this matter of horticulture.
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One of the most valuable functions of the Apple and Pear Development Council will be the production of statistics. It has been noticeable from recent Parliamentary Answers that the Ministry is woefully deficient in its knowledge of information about certain aspects of the apple industry. Last Wednesday, when seeking information about older orchards—on which there should be a concentration of grubbing up and renovation—the figures were not available. The Council should result in valuable statistics being produced, for the improvement of the industry and for other purposes. However, I do not want to see the already harassed grower, who already thinks that he is a part-time civil servant, being further chivvied into producing statistics. I am sure, however, that the statistics which the Council produces will be useful and that the Department will be able to use them for other purposes, too.
The Minister gave the anticipated income, but he did not comment on the anticipated running costs of the organisation. We note that the Council can pay remuneration and out of pocket expenses. We realise that publicity must be the first aim of the Council, although the Minister mentioned competition from abroad. Will it be within the scope of the Council to make active representations to the Board of Trade about the time-phasing of imports, since this is one of the burning problems felt by the majority of growers, who say that the present time-phasing of apple imports is not entirely satisfactory?
It is expected in Schedule 1(5) that the Council will promote the development of the export trade. Will the Council be able to promote and take part in exhibitions overseas? Exporting to Northern Europe and Scandinavia is easier while we are outside the E.E.C., but if we enter Europe we should have a potential to export the specially highly prized British varieties whose flavours are unsurpassed in the world.
The Third Schedule gives an enormous list of 250 varieties. I understand that this list of exempt varieties was drawn up by the National Fruit and Cider Institute at Long Ashton. However, the Institute has told me that it is almost impossible to compile a really complete

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list of varieties because nobody can say how many there are. Farmers have raised their own varieties for hundreds of years and some of these have never spread beyond individual farms, whereas others have become popular and are recognised more widely. Thus, any list is bound to be somewhat arbitrary. The research station says that it would be possible to find other names in the West Country if one were prepared to pursue inquiries from parish to parish and from farm to farm.
While one accepts that this list of some 250 names contains all the notable varieties which occupy any sizeable acreage, might there not have been some neater method of deciding the cider and perry varieties? There may be a few growers of other obscure varieties who, because of this tight definition in Schedule 3, will find that although they are not growing dessert or culinary varieties they are subject to the levy. This is an important point, and I hope that at some later date it will be possible to get some neater definition of cider and perry varieties.
One reads the names with some slight amusement. There are high Norman-French names and names of high chivalry—we have Camelot and Churchill, which are very good names, indeed. However, when I turned to the perry varieties I was inclined to think that perhaps the Minister was seeking to lampoon some of his cabinet colleagues and other distinguished hon. Members opposite. We have Jenkins' Red, and Golden Balls seems to be the sign of the pawnbroker for all time. There is also Steelyard Balls—perhaps it was some reference to the Minister of Power.
When I read of Brown Bessie I could only assume that it was a kindly and friendly reference to the Chairman of the Kitchen Committee. I do not know how they came on in another place this afternoon when they got to Stinking Bishop. The name of Roughs might perhaps designate the Cabinet as a whole. And I wonder whether Early Treacle and Late Treacle might be a modern version of the Minister of Agriculture himself—jam yesterday, jam tomorrow, but never jam today. There were other possibilities, notably in page 9.
Despite the odd language and, perhaps, the unnecessary verbosity of the Schedule, we welcome this Order most warmly and
826
commend it to the House. welcome the apparent width of the drafting. I am particularly glad that the Parliamentary Secretary paid a tribute to the existing voluntary body. It has been very difficult for it to get publicity on anything like an adequate scale with only voluntary contributions. I join the hon. Gentleman in his tribute.
11.28 p.m.
Sir Harry Legge-Bourke: I join with my hon. Friend the Member for Maidstone (Mr. John Wells) in welcoming the Order. When the Parliamentary Secretary said that we were making history tonight I thought that he certainly was, because, as my hon. Friend has already hinted, the hon. Gentleman is seriously in danger of being prosecuted under the Obscene Publications Act for Schedule 3. When I find a cider apple called Slack My Girdle and a perry pear called Bloody Bastard I begin to wonder quite where we are getting to. One variety mentioned by my hon. Friend certainly made me think that I was still in a certain Standing Committee—that happy variety called Steelyard Balls.
The varieties we have mentioned are specifically excluded from the effect of the Order, and I agree that it is rather desirable that we should have a simpler form of definition of cider apple and perry pear without having to go into the infinite varieties which may mean quite different things in quite different places.
The Parliamentary Secretary was kind enough to give an estimation of what he thinks will come in as a result of this Order. I gather that a sum of about £125,000 is expected from the 30s. per acre likely to be paid by those affected by the scheme. My calculations, taking the total acreage of dessert apples, culinary apples and pears, have worked out at £158,400. Therefore, perhaps he is under-estimating and I am overestimating. But growers in my constituency will probably be contributing £4,500 if all the growers of apples and pears in the Isle of Ely, particularly around Wisbech, contribute their 30s. per acre.
Obviously, those making such contributions like to see value for money. In the recollection of a good many growers there is the rather unfortunate absence of real benefit from the contributions some of them who were both growers and pig breeders made to P.I.D.A. I

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hope that steps will be taken to ensure that the work of this scheme will be more apparent to the individual contributors to it than was the case with schemes such as P.I.D.A., which, of course, I cannot go into tonight.
It is rather fantastic that our dessert apple acreage has remained virtually constant for the past 10 years. The latest detailed figures I have from the Ministry of Agriculture go up to 1963–64. Over the 10 years ending then, the dessert apple acreages remained virtually constant at around 63,000 acres. The cooking apples acreage has dropped, but the interesting thing is that the yield has gone up very considerably.
It varies enormously year by year. This year is perhaps a very good year to take as an example of some of the problems that will come out of our attempts to make better grading and better market presentation, which is one of the principal objects of the Council, as one can see from Schedule 1:
"1. Promoting the production and marketing of standard products."
I must not go into this in detail, but there are problems developing over the Horticulture Improvement Scheme, which came into force voluntarily last 21st July and will be compulsory next year. There is an enormous difference in the size of apples this year. They are of first-class quality but Bramleys vary in size from 2½ inches right up to five inches in diameter. That presents great problems, and the work of the Council will not be easy.
One of the things it can do, and which would be welcome, would be to try to advise the industry on the best types of grading machines to install. I know that N.A.A.S. does wonderful work, and probably that is its big success story is in horticulture, but by bringing in the manufacturers the Council could greatly help the industry. The sort of problem that will confront growers from now onwards is packing their fruit to within a variation of three-sixteenths of an inch throughout in each pack. The best possible technical advice will be needed for this.
Some growers are at present extremely worried about how they will fully comply with the scheme when it becomes compulsory next year. One of the real tragedies is that all these schemes rely for their
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success not so much on those who originally helped sponsor them but the recalcitrants who did not want them at all. That is the bitter lesson of the old Apple and Pear Marketing Scheme, which foundered and did a great deal of damage to the interests of the best growers, and did no good to the less careful growers.
The fact remains that only about two-thirds of the growers likely to be affected in my constituency voted for the scheme. Therefore, one-third did not. I believe that over the whole country about 60 per cent., by acreage, supported the scheme when it was first put about.
I hope that a real drive will be made by the Council to consolidate on the success it has had in winning the support of a considerable majority of growers by going straight into the task of persuading those who were not in favour of the scheme. The success of the scheme will depend largely upon the success obtained in bringing along those who either did not understand the scheme when it was put to them or who have misconceptions about it or who perhaps did not want to know. Of the one-third who did not vote probably the majority would come into the latter category: they did not want to know.
One thing I worry about a little under the scheme is the exclusion limit or Article 8, Exemption from registration:
"If a grower has fewer than 50 apple or pear trees growing on land occupied by him for the purpose of business in the industry, he shall be exempt from registration."
I believe that an enormous amount of harm has been done to the interests of the best growers by the ordinary arable farmer who has an orchard or two and who perhaps falls into the category of having just under 50 trees and who puts on to the local market some very inferior quality produce just at the wrong moment. This undermines the position of the best growers to a great extent year after year. I hope that somehow we can consider this in the future and see whether we can reactivate the grubbing up exercise which went on in those areas where there were a few scattered orchards, often with very old trees producing very inferior quality fruit from holdings which could not be categorised as horticultural holdings in the true sense of the word.
Now, returns and information. It grieves me that this provision is necessary.

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I think that growers are busy enough and already have quite enough paper work to do without having to be burdened with yet more. I hope when it comes to obtaining information that the Council will take every possible step to make use of the official statistics which are available as a result of the various Agricultural Returns. An enormous amount is known in the local agricultural executive committee offices and in the regional offices of the Ministry. I hope that the Council will not imagine that it must set up from scratch a complete statistical unit to contain ab initio all the information already available in various places. I am certain that there is a great deal of information already available, although I accept that it is sometimes difficult to get the latest figures. The latest full statistics on agricultural production in our Research Library are those for 1963–64; in other words, already we are nearly three years out of date. I hope that an effort will be made to accelerate the provision of such information, because it is very helpful.
On the question of the borrowing and investment of money, can the Joint Parliamentary Secretary give us any idea of what the Council's borrowing powers are likely to be and what sort of initial borrowing it will have to indulge in to float itself and become an effective body? We are all becoming more and more worried about the problems that arise because of the credit squeeze, and so on. It would militate against the Council's interests if it was suddenly put in a privileged position at a time when growers do not find it easy to get the credit they need. There are times when the Minister says, "All you have to do is to ask your bank manager", but the bank manager does not take quite the same line. This has already caused a great deal of resentment in the last few months in the farming world. I hope that the Council will not suddenly become the blue eyed boy in the matter of obtaining credit, whilst growers, who are only too anxious to try to jolly along the recalcitrant one third about whom I have spoken, find themselves rather hard put to it to carry themselves through to the next season.
I again welcome the Order and point out that I think that it has at least one godfather in the background in the shape
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of the former Minister of Agriculture who cannot entirely be excused from some responsibility for it. I think that Mr. Christopher Soames really laid the foundations for the Order and I am glad that the building is now taking place.
11.40 p.m.
Mr. Brian Harrison: Like other hon. Members who have spoken, I welcome the Order. Anyone who was conscious of what was going on or had an interest in the previous scheme which was put forward and, unfortunately, not accepted by the growers ten years ago will welcome that this scheme, even with only 60 per cent. on an acreage basis in favour of it, is being proposed.
I am worried, nevertheless, lest the whole scheme may prove abortive because there seems to be nothing in it to enable the Council to make representations about the phasing of imports. I admit that, with my associations with another country, I receive representations at times that there should be a freer market for the products of Australia, of New Zealand and even of Canada. But there is no reason why their products should not come into this country at a time other than when our own growers are marketing their prime crop. If our growers could have a "fair crack of the whip" or go at the market, there should be room for all in our big United Kingdom Market.
It is not clear whether the people who produce the nursery stock and young trees can be brought in to help in keeping the scheme afloat. They may well have a number of stock trees grafted more than five years previously, but I am not sure whether they can have a part in the scheme. It should be possible for them at least to be influenced by the activities of the Apple and Pear Development Council. Perhaps the answer would be that one of the growers' nominees should be a representative of a big nursery producing plants and trees for the fruit grower.
What exactly will the standards be when the new forms of grading come in? Shall we be using a series of standards for fruit now and then, if the Prime Minister's attempt to bring Britain into the Common Market proves successful, as so many of us hope, shall we find that a change of grading standards is

831
needed once again? Would it not be much more sensible at this early stage to institute the right form of grading to accord with what we shall have to do ultimately?
Now, the question of health. Will the Council have power to deal with the health of orchards, or will this remain with a separate part of the Ministry? Fire blight is an example. Will it be the Council's job to draw to the Minister's attention the problems which might arise from the import of apples and pears, or will there be a completely separate organisation with no co-ordination between the two bodies?
It is probably unkind to bring this up when we are welcoming the Council, but there have been some extremely unfortunate experiences with the winding up of various boards and I am not sure that the Order contains provisions for winding up the Council, should that most unfortunate occasion arise in what I hope would be in the very distant future.
Generally, representing an area which produces some of the finest apples and finest pears in the United Kingdom, I welcome the scheme and look forward to its operation and to its improving the quality and marketing of these very useful products.
11.46 p.m.
Mr. Richard Body: Although the majority of growers will support this Council, I must be churlish and tell the Joint Parliamentary Secretary that a sizeable minority regard this Development Council as a time-consuming and money-wasting piece of bureaucracy. I hope that before a few years are out the hon. Gentleman's successor, from this side of the House, will have convinced them that they have been wrong.
Horticulture is the one industry whose confidence in the future is tempered by thoughts of the Common Market, and if there is one branch of horticulture more vulnerable than any other, it is the growing of apples and pears. Continental growers of apples and pears have well-known advantages of climate. More than that, producers groups are rapidly growing in the Community, and even in France, where growers have been
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traditionally very individualistic, 40 per cent. of the growers now belong to producer groups. That gives them a great advantage when it comes to marketing.
However, one advantage remains with us in this country, and it is that we have varieties which in the main are of better quality than those grown abroad. I hope that you, Mr. Deputy Speaker, would never touch a Golden Delicious when you could taste a Cox's Orange.
The first function of the Council should be to put across to the public the quality of English produce, and I am sorry that that function is listed as No. 6 in the First Schedule. The Council must set about the task of improving our methods of marketing. It must convince the public that homegrown apples and pears are of higher quality than those which are imported. The value of the Council will be decided by the work it does in making sure that this branch of horticulture is ready for entry into the Common Market.
However, I have one reservation and it is one of bureaucracy. The staff of the Council should be efficient and go-ahead and the organisation must be streamlined. There is always a danger that official and semi-official bodies attract the less able. As Bernard Shaw said, those who can, do and those who cannot, teach. Every farmer is afflicted by those individuals who come along and take up many hours of his time trying to teach him his job and to persuade him to embark on schemes which would get him very near to Carey Street. I hope that the Council will not recruit any people like that.
11.50 p.m.
Mr. J. E. B. Hill: I am glad that this Order has come up now. I did not mind waiting for it. I am thankful that it has not come on either a Wednesday or—still worse—a Monday morning. Up to now nearly every point I hoped to make has been made by my hon. Friends and I would not have liked the Order to go through without these points being stressed.
If the Order had come up on a Monday morning, I would have had to cancel engagements with constituents, perhaps with my own apple and pear growers, to make what would have been a

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minimal appearance here, and this would have made a travesty of my job as an M.P. This matter is relevant to the Order. I hope the Minister will allow me to beg him not to bring on what is alleged to be minor business dealing with agriculture on Monday mornings. I would much rather wait until the evening, when I am not missing any other political engagements.
I want to stress some of the points made because they are important. To what extent will the functions of the Council touch upon research into marketing? Obviously, we want to avoid overlapping and yet it may well be that, from the marketing point of view, certain production practices would be worth encouraging. I have in mind possibly spray developments to enable apples to have a better appearance.
In grading, I hope that duplication between the efforts of the Ministry and those of the Council will be avoided. It is immensely important that we should try to shape our grading both as to size and other characteristics towards the standards that are likely to be adopted in the E.E.C.
Here there is a real difficulty and danger. We all know that one of our premier apples, the Cox's Orange Pippin, is superb. The great danger is that Europe may settle upon first-class grading standards which will include colour requirements cutting out the somewhat autumnal russet colour of an English quality apply, because, on the whole, we do not go in for the ruddy and deceptive appearance of some of the inferior Continental products. It is important to work towards English standards that will admit our kind of quality. We all have faith that, once people get to know our standards and qualities, they will prefer them.
The phasing of imports is obviously vital, including, as it does, the question of the period in which Commonwealth and other qualities are allowed on the market. Such matters are immensely important because of the fitting in with our own products. The possible argument about overlap applies here because our traders will have gone to the expense of building storage facilities and the like.
I do not see in the Order reference to provisions for appeal should a grower
834
find himself in dispute with the Council. We should know what appeal procedure there is to be. Nor am I clear whether the Council is to be elected or appointed. I believe that the hon. Gentleman said that the N.F.U. would recommend or put forward twelve names for twelve posts. Will the Minister more or less approve or reject the 12 names put forward or is there to be a longer list from which he will make selections?
May I also suggest that he would have in mind if possible to get a good regional spread of representatives, because I think that this is important in getting in the different apple-growing areas of the country confidence in the Council. I would hope that the appointment of the Council will phase in well with the demise of the voluntary Apples and Pears Publicity Council, which has done a very good job.
No one has yet mentioned that we have just completed a week of special apples and pears publicity, in which, I think, if anyone travelled from the Hook to London he would have found himself presented with a free Cox's Orange Pippin with two slogans. I think that the Minister may approve of them. The first was, "Finish your meal with an English apple." That may make the Minister think he has missed his last chance of an apple today, but I hope that, on going to bed tonight, he will have in mind the other slogan, "The English apple is nature's toothbrush".
11.56 p.m.
Mr. Eldon Griffiths: My constituency has a very great deal of horticulture. We have wide acres of flowers in the fen country near West Row. We have large acreages of glass. Above all, we have very fine apple orchards. Many of their blossoms in the spring time near the airfields in Suffolk always seem to me to make a remarkable combination of the English countryside and the United States' presence in Britain.
We do not have some of the Anglo-Saxon varieties in the list appended to the Order. We have no Bastard Long-dons. I mean no reference to my hon. Friend the Member for Hertfordshire, South-West (Mr. Longden). Nor do we have any Slack My Girdles, which, I must say, I find an intriguing name. But we do grow, as indeed, throughout

835
Britain we grow, some of the best apples in the world. During the many years I lived in the United States I used to long, on many occasions, for the flavour of the Cox's Orange Pippin, and for the crispness and juiciness of the Bramley. One simply does not get these quality fruits in the United States.
But whereas we grow splendid fruit in our country I fear that we very often fall down badly on the grading, the packing and the merchandising of that fruit. I am aware of this, having lived in California for many years and seen the enormous amounts of capital, research and expertise which the American apple-growing industry puts into grading, packing and merchandising, in particular, of course, in the north-west of America, in the Okanogan Valley, where they have apples by the hundreds of thousands of tons, probably, and marketed in a fashion which, I must admit, is very impressive indeed. Those apples so often are big and very rosy and very attractive to look at, and British housewives are impressed by the rosy cheeks and the shiny character of those apples and sometimes, at least, away from the perhaps less rosy, but, in my view, sweeter-tasting apples of our own country.
It is because I believe that this Development Council will go some way towards bridging the gap between our own grading, packaging and merchandising and that in the United States and now in Italy as well, that I welcome the Order tonight. There is still an enormous gap between the best of our apple grading and merchandising and the average or worst.
In my constituency we have the very large orchards of Justin Brook. Here, I should have thought, was a model example of how to do this job, and to do it well. Having visited it only recently, I must say that I was surprised and very impressed by the large sums of money which have to be put into the business of handling and packaging apples properly. But, as my hon. Friend the Member for the Isle of Ely (Sir Harry Legge-Bourke) said, there is at the same time in many of our smaller orchards, perhaps not so much in East Anglia, a lot of inferior fruit which is thrust on to the market, gnarled and badly graded, and it does
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from time to time give the whole of the English product a bad name, particularly in comparison with some of the products from other countries. I believe that this Council will go some way towards bringing the less good producers of merchandise in Britain up to the level of the very good ones.
There are one or two specific points which I want to raise on the Order. The first concerns the functions of the Council. These are extremely comprehensive, and so much the better, but I am bound to say that while I have no desire at all to see the levy of 30s. per acre increased—on the contrary, I am afraid that it will be something of a burden to some of my constituents—nevertheless, I am at a loss to understand how £125,000 will suffice to carry out all the eight functions described in Schedule 1.
This is a lot of money to any one of us, but I wonder whether it will be sufficient for the council to carry out its functions. Research itself can cost scores of thousands of pounds in a year. One of the Council's functions will be to promote the development of the export trade, including promoting or undertaking arrangements for publicity overseas. Has the hon. Gentleman any idea what overseas publicity costs? Will the council consider having a colour spread in Der Spiegel, in Germany, or in some of the glossy magazines in Italy, or the United States, or in France? It used to cost 25,000 dollars for a colour page in the magazine for which I used to work in the United States.
I wonder whether £125,000 will really be adequate to finance research, statistics collection, promotion in this country, and export promotion as well. I hope that it will be. We shall get extremely good value for money if it suffices, but I suspect that the powers of the Council to borrow money, as set out in paragraph 11, will be used, and used very soon. How much money will the Council be empowered to borrow? There is no indication in the Order of any limit on the Council's borrowing powers, and I hope that when he replies the hon. Gentleman will tell us how he sees the limit or the ceiling on borrowing.
I should like to underline again—and no doubt the hon. Gentleman will deal with this—the importance of the time phasing of imports. Whenever I discuss

837
the apple business with my constituents, it is always this subject which comes up first and last as well. I recognise the difficulties. Unfortunately, even in my hon. Friend's other affiliation in Australia, they do not seem to grow them at the right time of the year, and the phasing is not always easy to correlate with our own.
I must emphasise the importance of women being on the Council, first, because they really are the buyers of the apples, and, therefore, ought to play some part in promoting sales, and secondly, because, certainly in my area, most of the apple pickers are women. If there is to be representation of the workers in the industry I hope that the Minister will bear in mind the fact that a large proportion of the pickers, graders and other workers are women, most of whom are not members either of the National Union of Agricultural Workers or the Transport and General Workers' Union. I hope that when he appoints members he will bear in mind the importance of the ladies. Perhaps he will also tell us how many staff he envisages for the Council and its secretariat—I appreciate that he cannot be precise at this stage—and what will be the costs of the salaries and administration.
I end with three brief admonitions. I hope that in respect of this Council, as in the other councils which are coming into being or have been with us for some time, the Minister will insist that it should first and foremost keep down administrative costs. Nothing is so distressing to the agricultural industry as the suspicion—justified or not—that the administrative costs of many of these hoards, councils and agencies with which the whole industy is encumbered, are too high. Let us keep them down.
Secondly, will he keep the forms and statistics as few as possible and as simple as possible? Many farmers will be smothered in paper work. The most important implement on a farm in these days is a pencil or a biro. I understand the need for that, but please let us keep the forms as few and as simple as possible.
Thirdly, if we are to have advertising—and we must have it at home and abroad—let us be sure that we get the very best possible advertising advice before public money is spent on it, be-
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cause nothing is so wasteful as ineffective and badly organised advertising. Let us go to the best in the business, even if it is relatively more expensive, because it is important to get the advertising right.
12.7 a.m.
Mr. Hoy: If I may speak again, with the leave of the House, this has been an absolutely first-class debate, and if I deal with the last points first it is not because I am taking them out of the order of priority. I can assure the hon. Member for Holland with Boston (Mr. Body) that the functions in the Schedule to the Order are taken as they were dealt with in the First Schedule to the Act, and they appear in that form in the Order for that reason and no other. The hon. Member for Holland with Boston, unlike every other Member who spoke, apparently did not want a council at all—
Mr. Body indicated dissent.
Mr. Hoy: Perhaps when we are dealing with names like Holland with Boston we are dealing with a point of view that is not entirely British. The hon. Member has a very good constituency. I admire it very much. I have visited it on many occasions, in a private capacity.
Mr. Body: The Minister is maligning me. I am not opposing the Order.
Mr. Hoy: The hon. Member did not greet it with enthusiasm. I would have liked to hear him express much more positive support for it.
The point about the income of the Council was raised by the hon. Member for the Isle of Ely (Sir H. Legge-Bourke). I said that it would be about £125,000. It could be £150,000, or £158,000. I was trying to make a reasonable estimate. The argument is: are we giving the Council enough money to enable it to do all the jobs it is to do? Hon. Members must make up their minds. They cannot complain that we are taking too much from the industry and then say that the Council is not getting enough money to do the job properly.
I hope that it will be enough to make a sensible start. I do not think that a revolution must take place all at once. I would rather the Council started gradually and did a first-class job. When the case for the Council and the work it is

839
doing has been proved we can ask for more money. I hope that by its actions it will prove that the money has been well spent.
Sir H. Legge-Bourke: Most growers would prefer that a substantial bite was taken at one problem, rather than a nibble at many.
Mr. Hoy: I agree, and that is the way in which the Council will work. It will not spread a limited income over too many things. It is not for us to instruct it, because the money will not be public money but will be provided by the growers, who will want the best return for it. I want them to get the best value.
The hon. Gentleman said that there is no limit on what the Council can borrow. This is true, but the bank from which it wanted to borrow would want to know its income, and would not be likely to lend an amount greater than that income. We have given this some consideration. The initial borrowings are unlikely to exceed £50,000 or thereabouts: I would not care to go further than that tonight.
The hon. Member for Maidstone was probably right to say that this would be a help if we entered the Common Market. It is not for me to comment on what might happen, because the Common Market has already settled its grading schemes. If we went in, this would have to be considered. But what we are considering tonight is the setting up of an Apple and Pear Development Council to strengthen our own industry. The stronger it is, the better able it will be to meet competition.
I would confirm that the poll in favour of the Council represented about 60 per cent. of the acreage liable to levy. I hope that the others will come to see the value of this proposal. I hope that they will do so enthusiastically. If we can get people to co-operate voluntarily, that will be much better than using compulsion. However, I would say that 60 per cent. of the acreage liable to levy supporting the proposal is very firm ground from which to work.
I was asked what help the Council will give to individual growers. That is not its purpose. That assistance is provided
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by Government, and it will remain a Government job.
The hon. Member also spoke about representation. The only dissenting note he struck, and one which I disliked, was his criticism of the trade union representation as being "jobs for the boys". They are no more "jobs for the boys" than are the places provided for the growers. We are trying to get the best people in both capacities to help the Council work. The hon. Gentleman is bound to concede that, if we are to get representatives from the growers, obviously we must depend considerably on the N.F.U., to which they are attached. It is the same with the trade unionists. The workers also have their organisations. Obviously, we must consult the trade unions just as much as we consult the N.F.U. We do no more than that.
Therefore, I did not like that note. If I wanted to be party political, I could point to lots of boys who have had lots of jobs since 1964, which might be said to be "jobs for the boys"; but I want harmony and to get the Order through, so I will take it no further—
Mr. John Wells: I do not want to provoke the hon. Gentleman, but I hope that he will take note of the fundamental point which I made, that the bulk of the growers belong to the N.F.U., whereas the bulk of the operatives do not belong to any union.
Mr. Hoy: I do not know whether or not that is correct. We must consult the organisations which exist—[Interruption.] Indeed we have. These jobs are dependent on people who not only earn their living from them but are willing to support organisations which make it possible for them to get a decent livelihood. Just as we consult the N.F.U., we are entitled to consult the trade unions.
I was asked about the representation of women on the Council. Obviously, the Minister is bound to give this considerable thought. After all, the housewife is the person who normally purchases, and if she does she is entitled to have her views heard and this will certainly be taken into consideration.
Mr. J. E. B. Hill rose—
Mr. Hoy: May I be allowed to finish one point at a time.

841
I want to deal with a point raised by the hon. Gentleman himself, if he will wait a moment. He asked me to consider area representation. Of course, this has got to be given some thought too, and indeed when we agreed in the initial stage to have 12 representatives from the growers we obviously had taken into consideration the tremendous areas with which we are concerned. As far as possible we would want to see every section represented, and so we have not overlooked that one either.
Mr. J. E. B. Hill: On the question of a woman being on the Council, I wonder whether the hon. Gentleman would think in terms of such organisations as the Women's Institute both on the working and the using side, and possibly one of those television cooks who are great users of, and encouragers of the use of, apples?
Mr. Hoy: We have a tremendous number of women's organizations—women's guilds, co-operative guilds, women's institutes and many others. But quite frankly we cannot have one from each of them. What we have to do is to select a representative who will cover the interests of the women of this country and make their voice heard on this Council.
I was also asked whether the Council would be asked to encourage exports to other countries. This would be part of the work the Council would undertake. Even I, in a very small capacity, was able to persuade certain sections of the horticultural world to take their apples to Berlin last year and indeed we did a fairly good job for the apple and horticultural industry in this respect. Without tremendous expenditure of money, we were able actually to take the apples there and make it possible for people to taste them and then to buy them. At the exhibition I was at they were not given anything, they had to buy. Indeed it was run on the very best Scots principles.
I have replied to the hon. Member for the Isle of Ely as to what the income would be. This is an estimate we have both made, and perhaps in that range we will both be correct. I would not expect that either of us is absolutely right.
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On the question of statutory grading, the hon. Gentleman said this will present difficulty; but every time one introduces something somebody says it is going to be difficult. We must realise that our competitors do not find it too difficult to grade. They grade and sell their produce accordingly, and I would link that with what was said by the hon. Gentleman who spoke last when he said there are certain things on which we are a little backward.
The hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) was not too critical; but he said that in grading, packaging and merchandising we have a lot to do, and unless we get our grading right the others could go by the board. These things are all dependent one upon another. If those in Europe can do it, it is possible for us to do it, and we have got to do it if we are going to compete.
The hon. Member for Maldon (Mr. B. Harrison) got into a little difficulty. I understand his difficulty about the overlapping of arrivals from other countries. He is very warm in support of the constituency which he represents but he also has leanings towards his home country which I do not deny. He wants Australia to be able to supply her superb produce as well. I am not denying him that right.
The Government have tried to get a satisfactory arrangement so that the produce from other countries, particularly from the Commonwealth, arrives here when the demand for our produce is not so great or when our fruit is not available. It is a question of working it out to the best of our ability; but we cannot fix a calendar date which will guarantee that all our produce will have been sold on the very day when their produce arrives. There is bound to be some overlap, but we have tried to make the best possible arrangements to cover it.
The hon. Member for Maidstone (Mr. John Wells) referred to imports and the question of representations which might be made on this subject. I assure him that the Government will pay attention to the views of representative bodies. When discussing this matter, it is obvious that

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we must have the views of the large representative organisations. I assure him that we are discussing it with, for example, the N.F.U.
Reference was made to the Horticulture Improvement Scheme, 1966. This came into operation on 21st July. It provides grants to growers; and has nothing to do with the statutory grading scheme for apples and pears. It is intended that that Scheme will be introduced in July, 1967 and that an Order, which will be subject to negative resolution procedure, will be laid next year. There will, therefore, be another opportunity of discussing this matter; and while hon. Gentlemen opposite objected to morning sittings, they do not appear, judging from the clock, to object to discussing this issue at a very early hour in the morning.
The hon. Member for Maldon spoke about the winding up of the Council. I assure him that it is not necessary for that to be mentioned in the Order. Provision for that to be done is already made in the relevant Act, should it prove necessary. In any case, it would not be a particularly good idea, when introducing an Order which gives life to the Council, to at the same time talk about winding up the Council.
The levy is payable on apple and pear trees of five years of age or older and which are used for producing apples or pears for sale. This is the answer to the question I was asked about nurserymen. That specific matter is not provided for in the Order; the Order applies to apple and pear trees which bear fruit offered for sale.
I was also asked to explain the duties of the Council. I was not sure why that question was put, particularly since the hon. Member for Bury St. Edmunds said that the duties were all carefully laid out in the Schedule. Naturally, whenever one includes something in an Order such as this, somebody is bound to complain about something having been left out. We have tried to spell the duties out clearly and we have been conscientious in our efforts.
There is no need to make fun of some of the names of the varieties of fruit.
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Hon. Members should reflect that some of these names have been in use for many years. They were not produced by us merely so that we could include them in the Order. Many of them have been used by growers for many years and I suggest that they are good, healthy, couthy names. I admire them and I regret that they have been criticised. Frankly, I prefer them to some of the junk that is being sold in some book shops under the name of literature. I understand what these names mean.
I am grateful to hon. Members for taking part in this debate. We have been discussing the inauguration of a Council that will play a distinctive and important part in the horticultural industry and I am certain that the whole House will wish it well. I do not claim any credit, any more than anyone else. for this enterprise. I could never find any satisfaction in saying that I, or somebody who used to be here, thought of this idea first. Only one question need be asked: Is this worth doing? That should be the test. Anybody can have the credit. I only hope that the Council will work and will benefit the industry which it seeks to help.
Question put and agreed to.
Resolved,
That the Apple and Pear Development Council Order 1966, a draft of which was laid before this House on 29th November, be approved.

AGRICULTURE [MONEY] (No. 2)
Resolution reported,
That, for the purposes of any Act of the present Session to make provision with respect to matters connected with agriculture, it is expedient to authorise the payment out of money provided by Parliament of grants—
(a) towards expenditure incurred on or after 17th January. 1966 or on in connection with equipment, plant or machinery used or to be used wholly or in part for the purposes of an agricultural business, on improvements to land comprised in such a business, or in the provision of vehicles;
(b) by way of supplement to grants made in respect of any cost or expenditure under any enactment.
Resolution agreed to.

COTTON TEXTILE INDUSTRY
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lawson.]
12.25 a.m.
Mr. Arnold Gregory: In raising the question of the level of foreign imports, I introduce a matter that has long given concern and anxiety to the Lancashire cotton industry. I know that my right hon. Friend recognises this, and the way in which it challenges the very existence of our domestic textile industry; the way it attracts future investment, the possibilities of establishing long-term plans for the modernisation of the mills in Lancashire and Cheshire and, indeed, in providing a secure place and livelihood for the workers in the industry.
In a debate at such a late hour as this, one could get a depressed point of view of what the industry is like, so I will quote from an article in the Manchester Evening News on 6th December, on the part that the Lancashire cotton industry is playing. It is headed:
"Old King Cotton fights back."
and it speaks of the cotton industry as being among the first of many other sophisticated and advanced industries. It says:
"The spectacular advances made by man-made fibres in recent years have tended to mask the importance of cotton as a textile fabric.
While the synthetic fibre boffins have been hogging the headlines with one exciting breakthrough after another, Old King Cotton has been more concerned with picking himself up off the deck and fighting hard to get into tiptop shape for the battles ahead.
Yet cotton, the product of one of the most widely cultivated plants in the world, is still by far and away the most important textile fabric of all."
The statistics are interesting. We learn from the article that
"Cotton accounts for 62 per cent. of world consumption of all fibres. Man-made fibres can claim 29 per cent., and wool only 9 per cent."
Dealing with the modern mill, the article says:
"The familiar outlines of the dark satanic mills now often conceal startling modern interiors equipped with all the resources that twentieth-century science and technology can provide.
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Investment in new plant and machinery has risen from £8½ million in 1958—when the industry was twice its present size—to an annual rate of more than £25 million.
This fact, coupled with extended shift working, has resulted in a remarkable increase in productivity—in general output per head in spinning and weaving is 30 per cent. higher than in 1959. Some firms have doubled and even trebled their productivity.
Large and small firms throughout the industry are engaged in an intensive and continuous programme of re-equipment leading to radical changes in working methods and conditions."
This is very encouraging.
I have a fairly good first-hand experience. I am, I believe, a third-generation member of my family to be employed within the industry. I hail from Salford, which is a cotton town by the Irwell. I spent a large part of my life in Manchester, which is world famed as "Cottonopolis", and I represent a part of Stockport, which still boasts many a mill even though many have not for a long time known a cotton bale. These facts probably justify talking cotton in this House so late at night, or so early in the morning, whichever way one looks at it.
Efforts to deal with the problem by new global quotas have given rise to great hopes in the industry. On 15th July the Statist said:
"Lancashire needs a bit more breathing space to put its house in order."
This has been the struggle since the Cotton Board Act, 1959, and the first agreements with principal Asian suppliers of cheap cotton goods, with a strong emphasis for voluntary limits to be imposed on such shipments.
I shall not attempt to deal tonight with rationalisation and modernisation in the industry, bu one hopes that the plans announced by my right hon. Friend the President of the Board of Trade to establish a new Textile Council will be successful. Members on both sides of the House will give every support and encouragement to it and the industry to create a new era of expansion that will weld together and represent the interests of both cotton and man-made fibres. There was a detailed debate on Tuesday evening, when the Order was approved.
On 20th October, The Times gave this warning, which cannot be ignored:
"The present state of textile politics is that the Government has given warning that

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the industry has only a temporary breathing space ''—
again, we find that very challenging phrase, which is ever related to the doubtful condition of the industry's respiratory system—
"until 1970 to put its house in order behind the protective barrier of a global quota system which limits imports of textiles into Britain."
The year 1970 might well see a General Election—with possible backward or forward adjustments as the situation demands. That point is not lost on The Times, which continued:
"Indeed, it is doubtful if the industry could survive in anything like its present shape if it had to withstand the full blast of low-cost imports from Commonwealth Asian textile producers. Already imports of textiles into Britain account for some 40 per cent of the home market compared with average 8 per cent imports penetration of European markets."
That is an alarming state of affairs, and it naturally strikes fear into the hearts of those dependent for a living on the cotton industry. If we are to examine in some depth the problems caused by cheap imports, it is clear from the outset that quota arrangements are not designed to solve the problem of price as opposed to quantitative disruption.
My right hon. Friend will readily concede that anti-dumping legislation is notoriously difficult to invoke in cases of suspected dumping of imported textiles, since there is no provision against such disruption. Piecemeal erosion rather than wholesale destruction is not catered for within the anti-dumping legislation.
That kind of Measure is virtually impossible to invoke for the following reasons: first, the difficulty of establishing home market prices for comparable products in exporting countries, because of the variety of production that is a feature of the textile industry; secondly, the difficulty of establishing enough evidence to prove that sporadic imports of particular fabrics at low prices are injurious to the industry, even if they present a direct challenge to only a limited sector.
In more general terms, it must be pointed out to my right hon. Friend that disruption within the quota arrangements remains a possibility unless the categorisation arrangements take full account of Lancashire's production capacity, related as it must be to home demand in each of the sectors. An
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obvious illustration of this point is pillow cottons, where 80 per cent. of the supply is now accounted for by imports. Apparently, that is now also the case with sheets and sheetings, where import prices are between 20 and 30 per cent. below Lancashire prices. It must be stressed that it is not possible to put sheeting looms to use for other kinds of production.
I suggest to my right hon. Friend that there is the strongest possible case for my right hon. Friend the President of the Board of Trade getting together with industry in relating in more positive terms category levels within quotas to our own productive capacity and home demand.
Even with the limited time available tonight, we should pay some attention to the shortcomings and loopholes provided under existing arrangements for a limited application to products containing 50 per cent. or more cotton only. Clearly, this creates an arbitrary distinction and obviously serves as an inducement to substitute minority cotton blends with man-made fibres, so as to avoid quota control. The effect of this has already been seen in a sudden influx of 55 per cent. rayon, 45 per cent. cotton blends from the Far East. I suggest that existing arrangements do not touch or contain this problem in the faintest possible way.
It is also the impression that the import surcharge, that ended without a hint of drama on 30th November, 1966, somewhat aided the cotton textile industry, certainly in household textiles. Yet I think it is fair to say that the fall in imports of cotton textiles in 1965 was not due entirely to the import surcharge as such. Indeed, the fact that existing quotas were not filled is probably due as much to uncertainty over quota arrangements at the end of 1965, and in particular to the decision of my right hon. Friend the President of the Board of Trade in not allowing a carry-over in 1966.
To be more precise on this, the impression to be gathered is that the surcharge did have a temporary marked effect on prices quoted, but prices have in fact been reverting to the pre-surcharge levels since mid-1965, very probably in anticipation of its removal, as I have mentioned, in November of this year. I suggest to my right hon. Friend that all this gives more

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than a strong hint of the need for a permanent, as against a temporary, duty in combination with quota control which would have a more positive and lasting effect in helping to control prices. We are all aware that a tariff on cotton imports is by no means a new suggestion, in whatever form it might take, even as a levy returnable as Government aid to the qualifying exporting country concerned.
At the Cotton Board Conference at Harrogate in October 1965 the President of the Board of Trade said this:
"There are very natural fears that, even though global quota is enforced, price disruption may occur, and investment in the process be impeded. This issue also is being studied now by the Board of Trade, in the light of practical proposals which the Cotton Board have made to me. I cannot here this morning express a final view on what can he done; but I hope to do so in the very near future. I can add, however, that having committed ourselves to the controls I have described, we cannot of course allow them to be undermined by subterfuge or evasions of any kind".
That speech and the paragraph I have just quoted was taken very seriously by the delegates at the conference. I know the atmosphere, because I was present at Harrogate for most of the time at the conference. Indeed, the speech was given wide publicity throughout the land and an almost embarrassingly enthusiastic reception in the Press. For example, The Times, in posing the question, "Too much Protection?" on 19th October, 1965, described the speech of the President of the Board of Trade as:
"Mr. Jay, the President of the Board of Trade is the textile industry's darling after the Cotton Board Conference".
No one will really doubt that after such a grand performance.
Mr. John Horam in the Financial Times of 21st October, 1965, wrote:
"Mr. Jay's weekend speech has given those attending the Cotton Board Conference plenty to think about. Cheap imports have long been Lancashire's sore, and the path to be regularised and reasonable measure of protection has been strewn with disappointments, half-measures and broken promises. But now the present Government has accepted the main plank in the industry's case and negotiations with the affected countries are in full spate. All will he over in a matter of months—but Lancashire is avid to know its fate".
Those are strong words, showing considerable enthusiasm, but I realise that the Minister is not entirely responsible for what is written in the Press. What
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is clear is that the industry, workers and management, after a very tough time, took my right hon. Friend's words very seriously as, in the final analysis, an undertaking by the Government that they would give serious study to the problem of price disruption and measures to deal with it.
It must be said, alas, that any practical and constructive results are far from apparent. Can my right hon. Friend help to clear the air tonight and give us a real and effective guarantee that these undertakings will be carried out, and when? In his winding-up speech at the end of the economic affairs debate on 30th November, 1966, the President of the Board of Trade told us that,
"In the case of textiles, the Cotton Board is now carrying out a major survey of productivity in both the cotton and man-made fibre industries, and will examine in depth methods of improving productivity in the widest sense. I see this as one part of the programme for modernising the textile industries, together with the special import restriction scheme which is to run, as the House knows, until 1970."—[OFFICIAL REPORT, 30th November, 1966; Vol. 737, c. 584.]
We all look forward to the result of the survey, and we are encouraged that the Cotton Board will study in depth methods of improving productivity within the industry. All this is most welcome. We might well recall the words of Sir Frank Kearton, F.R.S., then Mr. G. F. Kearton, chairman of Courtaulds Limited, at the same Harrogate Conference:
"It is time the Government asked itself how much longer it can carry out its oft-declared and proclaimed intentions to promote economic growth, while exposing a major industry to the effect of lopsided free trade. In no other country in the world is our industry treated in the way which has grown up here. The question becomes serious for the nation when it is recognised that a new integrated 'cotton' mill would efficiently utilise £6,000 per person employed, and the labour content of net output would fall from 68 per cent. shown in the 1958 census to under 40 per cent. This figure of under 40 per cent. is much better than the average for all manufacturing industry."
Again, challenging words, and they are still in the main as pertinent today as when they were uttered at Harrogate. They complete the scene in which the President of the Board of Trade himself, as I have said, addressed the conference on the following day, and his own words were then shaped to meet the situation existing within the industry.

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The problem of price disruption is at the core of things. The assurances which were given were taken very seriously. It is essential that policies should not—to use my right hon. Friend's words—"be undermined by subterfuges or evasions of any kind". I put these questions, therefore, to my right hon. Friend the Minister of State. First, has a study group been set up to consider the effects of price disruption and measures to deal with it? Second, how soon will there be a report to the House and industry in general on action taken as a result of the Government's undertaking to study this important question? Third, has the idea of price surveillance related to vetting of import licences been considered, and what conclusions have been drawn?
These are important questions deserving an answer, and I hope that the Minister of State will have some encouraging news tonight.
12.45 a.m.
The Minister of State, Board of Trade (Mr. George Darling): As my hon. Friend the Member for Stockport, North (Mr. Gregory) has said, this is the second debate on the cotton industry which we have had this week. If I may say so in parentheses, I agree with some remarks which were made earlier and hope that we can get to morning sittings—sittings in what we normally think of as the morning and not this time of night—as quickly as possible.
I am glad that my hon. Friend has drawn attention to the encouraging developments within the cotton industry in the last few years. It is quite wrong in Lancashire or outside it to be gloomy about the present situation, or about the future prospects of the industry. I think that my hon. Friend will agree that quite a number of speeches and remarks now being made about the temporary turn down in trade, which affects not only the cotton industry, but many other industries, are far too gloomy and do not present a proper picture of the industry.
My hon. Friend has drawn attention to what The Times has called the breathing space which the industry has
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—until 1970—to put its house in order. There is no doubt that the progress which has already been made in modernisation and in concentrating production in the best equipped mills is certainly doing the industry a great deal of good. It is perfectly true that as production per unit of machinery is increased, the number of operatives employed in the industry is reduced, but that, of course, is what modernisation means—if there is bigger output per man, fewer people are required. Not enough attention is paid to this side of the picture.
Right up until July of this year, in many parts of Lancashire there was an actual shortage of labour in the cotton industry and even at present in North-East Lancashire, which, according to certain speeches, is almost a depressed area, the level of unemployment is still well below the national average. In these circumstances, we can ask those engaged in the industry to be far more encouraging and less gloomy in their remarks.
My hon. Friend quite properly voiced the fears which are held in some quarters in the industry about what will or might happen when the present quota import arrangements come to an end. He suggested—anyhow, I think that he did; he certainly did it in a subtle manner—that there might be a tariff arrangement of some kind at the end of this quota arrangement period.
Much has been said about price dis ruption and the need to set up some kind of body to keep under review the level of import prices—not only the quantity, but the cheapness of imports, a point which has been made consistently—and to tell the Board of Trade when antidumping action is required where there appears to be evidence of price disruption. Although the Board of Trade has had a number of complaints about prices charged for imports, I must stress that there is very little evidence of price disruption. One can complain about low-priced imports coming into this country.
It was suggested, not by my hon. Friend, but in the debate on Tuesday, that we should do something about low-priced imports from countries where the wages of cotton operatives were lower than in this country. This is a very dangerous argument. Our biggest export market is North America. If we were

853
to say, as a matter of principle for all countries to follow, that there should be a limitation or complete refusal of imports from countries where wage levels were lower than the importing country, as the wage levels of the United States and Canada, generally speaking, are about three times higher than those in this country, we would be in appalling difficulties. Of course, we could not help the developing countries as we would wish if we worked on that basis. I am sure that my hon. Friend is not one of those who wish to attack the low-priced imports problem in that way.
What we are concerned about and the only thing about which we can be concerned is evidence of price disruption which comes from dumping. When dealing with dumping one has to prove two things—first, that the prices of the goods coming into this country are below the prices charged in the country of origin, and, secondly, that these low-priced imports do material damage to the appropriate industry in this country.
We are willing always to examine any evidence of price disruption caused by dumping. Under the international rules we have to work to, we can take action about dumping, but we must have evidence. We have no legal authority either under the international rules or in our own legislation or anything else to take action unless we have the evidence. I am not saying we need proof. That is something to be discussed when taking the appropriate measures. But it is evidence that we require. I repeat that we have very little evidence of price disruption due to dumping, in the way I have described it—which is the only way it can he described—of cotton goods in this country.
My hon. Friend referred to the speech my right hon. Friend made in Harrogate in October last year, in which he said that the problem of price disruption was being studied. I have to tell my hon. Friend that the studies we undertook and which we finished some time ago have shown that there is no practicable and
854
internationally acceptable solution to the problem. It has been suggested that we might have Government purchasing through a commission which would adjust prices to suit our home market, particularly in the form of categorisation, or that we might have an imposition of an import levy that would automatically be imposed if the prices came down to too low a level, thereby having the same effect as dumping, or that we could exclude imports which fell below a certain price. Every single one of these suggestions is contrary to G.A.T.T. and, because we gain from sticking to the international rules over the whole range of our industries, we obviously could not undertake to introduce measures contrary to our international obligations.
There is no doubt that imports from developing countries are cheap. That is why they are sold here. It is equally true that many of our exports to the U.S. and Canada and other countries could be considered cheap in the same way, and we do not want to break our international obligations so that we would encourage other countries to take that same kind of action.
We are always willing to examine evidence of price disruption. I would say this to my hon. Friend. The modernisation of the Lancashire cotton industry that has been going on, the setting up of the Textile Council which will bring in the man-made fibres industry to this new association and other measures which will be put in train, will, I am convinced give the textile industry, as we must now know it, a very good future because it will be capital intensive and thoroughly modernised. It is going to be capable not only of satisfying our home market but, I am convinced, of establishing a very good export trade as well. I am convinced also that, as time goes on, we will be able to deal with foreign competition in a most satisfactory way.
Question put and agreed to.
Adjourned accordingly at six minutes to One o'clock.

EDUCATION AND SCIENCE
  Married Women Teachers (Sickness Benefit)
  Married Women Teachers (Sickness Benefit)
  Youth Service Building Programme 1967–68
  Youth Service Building Programme 1967–68
  Educational Statistics
  Educational Statistics
  Temporal Bone Banks (Research)
  Temporal Bone Banks (Research)
  Sensory-Neural Deafness (Research)
  Sensory-Neural Deafness (Research)
  Primary School Children (Family Background Questions)
  Primary School Children (Family Background Questions)
  Comprehensive Schools (Separation of Pupils)
  Comprehensive Schools (Separation of Pupils)
  Comprehensive and Secondary Modern Schools (Comparability Studies)
  Comprehensive and Secondary Modern Schools (Comparability Studies)
  Royal Pinner School
  Royal Pinner School
  Technical Colleges, Wales (Staff Qualifications)
  Technical Colleges, Wales (Staff Qualifications)
  Teachers (Wales)
  Teachers (Wales)
  Keele University (Medical School)
  Keele University (Medical School)
  Undergraduates (Expenditure by Universities)
  Undergraduates (Expenditure by Universities)
  University Graduates (Employment Overseas)
  University Graduates (Employment Overseas)
  Performing Arts (Local Authority Expenditure)
  Performing Arts (Local Authority Expenditure)
  University Clinical Teachers
  University Clinical Teachers
  Welsh College of Agriculture
  Welsh College of Agriculture
HOME DEPARTMENT
  Civil Defence
  Civil Defence
  Police Service (Juvenile Convictions)
  Police Service (Juvenile Convictions)
  Aliens (Work Permits)
  Aliens (Work Permits)
  Police Forces (Injuries)
  Police Forces (Injuries)
  George Blake
  George Blake
  Badgers
  Badgers
  Prisoners (National Insurance Cards)
  Prisoners (National Insurance Cards)
  Unlicensed Motor Vehicles, Caledonian Road
  Unlicensed Motor Vehicles, Caledonian Road
  Young Prisoners
  Young Prisoners
  Criminal Justice Bill
  Criminal Justice Bill
  Prison Escapes (Precautions)
  Prison Escapes (Precautions)
  Window Frames (Locking Devices)
  Window Frames (Locking Devices)
  Crime Prevention Certificates
  Crime Prevention Certificates
OVERSEAS DEVELOPMENT
  School Leavers (Overseas Service)
  School Leavers (Overseas Service)
  Peru (Loan)
  Peru (Loan)
ECONOMIC AFFAIRS
  Prices and Incomes Policy
  Prices and Incomes Policy
  Humberside Study
  Humberside Study
  Government Training Centre, South-Western Region
  Government Training Centre, South-Western Region
  Economic Planning Boards
  Economic Planning Boards
  Price Increases
  Price Increases
BOARD OF TRADE
  Pleasure Boats (Licensing and Registration)
  Pleasure Boats (Licensing and Registration)
  British Lion Films
  British Lion Films
  British Trade Centre, New York
  British Trade Centre, New York
  Aldergrove Airport (Escalator)
  Aldergrove Airport (Escalator)
  Industrial Undertakings (Northern Development Area)
  Industrial Undertakings (Northern Development Area)
  Marketing Courses (American Universities)
  Marketing Courses (American Universities)
  London Airport (Facilities)
  London Airport (Facilities)
  Development Areas (Grants)
  Development Areas (Grants)
  Investment Grants
  Investment Grants
  American Aircraft (Imports)
  American Aircraft (Imports)
  Price Increases
  Price Increases
  Amusement Machines (Imports)
  Amusement Machines (Imports)
  SYRIA (BRITISH COUNCIL)
  SYRIA (BRITISH COUNCIL)
  VIETNAM (ARMS)
  VIETNAM (ARMS)
  FOREIGN OFFICE FILES (MISSING DOCUMENTS)
  FOREIGN OFFICE FILES (MISSING DOCUMENTS)
  NORTH ATLANTIC TREATY ORGANISATION
  NORTH ATLANTIC TREATY ORGANISATION
NATIONAL FINANCE
  Overseas Expenditure (Cuts)
  Overseas Expenditure (Cuts)
  Unemployment (Reflation)
  Unemployment (Reflation)
RAILWAYS
  Platform Advertisements (Increased Rates)
  Platform Advertisements (Increased Rates)
ROADS
  Lancashire Schemes
  Lancashire Schemes
  Fatal Accidents (Economic Cost)
  Fatal Accidents (Economic Cost)
  Expenditure
  Expenditure
  Road Congestion (Cost)
  Road Congestion (Cost)
TRANSPORT
  Manchester Study
  Manchester Study
  Canals (Protection of Children)
  Canals (Protection of Children)
PORTS
  Portbury Project
  Portbury Project
TECHNOLOGY
  Technological Development (Northern Region)
  Technological Development (Northern Region)
  British Ship Research Association
  British Ship Research Association
GIBRALTAR
  Telephone Calls (Monitoring)
  Telephone Calls (Monitoring)
  Gibraltarians (Entry into Spain)
  Gibraltarians (Entry into Spain)
  Blockade (Spanish Frigates)
  Blockade (Spanish Frigates)
MINISTRY OF POWER
  North Sea Gas (Price)
  North Sea Gas (Price)
  NEWSPAPER MERGERS (GOVERNMENT POLICY)
  NEWSPAPER MERGERS (GOVERNMENT POLICY)
  TELEPHONE TAPPING
  TELEPHONE TAPPING
  DEPENDENT TERRITORIES (INDEPENDENCE)
  DEPENDENT TERRITORIES (INDEPENDENCE)
  PRESS (GOVERNMENT POLICY)
  PRESS (GOVERNMENT POLICY)
  REDEPLOYMENT (MINISTERIAL CO-ORDINATION)
  REDEPLOYMENT (MINISTERIAL CO-ORDINATION)
AGRICULTURE, FISHERIES AND FOOD
  Farm Incomes (Wales)
  Farm Incomes (Wales)
  Welsh Agriculture (European Economic Community)
  Welsh Agriculture (European Economic Community)
  Borth Drainage Board (Grants)
  Borth Drainage Board (Grants)
COMMONWEALTH AFFAIRS
  Economic Planning (Conference)
  Economic Planning (Conference)
  Rhodesia (Sale of Arms)
  Rhodesia (Sale of Arms)
MINISTRY OF LABOUR
  Unemployment (Bexhill, Hailsham and Rye)
  Unemployment (Bexhill, Hailsham and Rye)
  Self-Employed Persons
  Self-Employed Persons
MINISTRY OF DEFENCE
  Royal Ordnance Factories (Machine Tools)
  Royal Ordnance Factories (Machine Tools)
MINISTRY OF HEALTH
  Doctors
  Doctors
WIRELESS AND TELEVISION
  Unlicensed Television Sets (Forfeiture)
  Unlicensed Television Sets (Forfeiture)
TELEPHONE SERVICE
  Transatlantic Calls (Equipment)
  Transatlantic Calls (Equipment)
SCOTLAND
  Schools (Pupil-Teacher Ratios)
  Schools (Pupil-Teacher Ratios)
SOCIAL SECURITY
  National Insurance (Employers' Liabilities)
  National Insurance (Employers' Liabilities)
WALES
  Clayton Survey
  Clayton Survey
  Councillors (Voting Dispensation)
  Councillors (Voting Dispensation)
  Employment (1966–70)
  Employment (1966–70)
  Tourist Industry
  Tourist Industry
  Cultural Activities (Financial Aid)
  Cultural Activities (Financial Aid)

Preamble
The House met at three of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Derby
The Lord Noel-Buxton—Took the Oath.

INLAND TRANSPORT COSTS AND CENTRAL WALES RAIL LINE
3.6 p.m.
THE EARL OF KINNOULL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they are aware that in September, 1962, the National Council on Inland Transport submitted proposals to the Prime Minister for improving our transport system which included—

(a) An impartial assessment of the true costs of each form of transport;

(b) The application by the British Railways Board of the Light Railways Act, 1896, to lightly used lines;

and whether the Government have any progress to report especially on (b) in relation to the Central Wales line where the Board, according to a statement made in July, 1964, hoped to reduce the losses from £176,000 to £30,000 by light railway methods.]
THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION): My Lords, the Government have indeed seen the proposals put forward by the National Council on Inland Transport to the previous Administration. The Government are, as the noble Earl knows, undertaking studies into the relative total costs of road and rail transport over trunk routes and hope to publish a report on the first part of this work early next year. The position on the Central Wales line is that the Railways Board is making every effort to bring about operating economies; in particular, my right
1752
honourable friend is considering proposals by the Board to modify its statutory obligations in relation to the level crossings on the line.
THE EARL OF KINNOULL: my Lords, I thank the noble Lord for his reply. Is he aware that the Bulletin of Transport Statistics, published by the United Nations, shows that all countries increased their freight ton miles by railway and waterway except Great Britain? Could he say whether the Government intend to correct this trend, and, if so, would he outline by what means they propose to do so?
LORD CHAMPION: My Lords, it would be a big undertaking to answer that supplementary question, and I shall not attempt it. But, of course, the Government are aware of some of the trends on the Continent and elsewhere, and, having regard to all the needs of the economy, we shall try to adjust the amount carried by road and rail in the best interests of the economy.
LORD POPPLEWELL: My Lords, could my noble friend not be a little more specific about the phrase "early next year" in regard to the publication of the report which he mentioned? Is it not a fact that during the time when the noble Lord, Lord Beeching, was chairman of British Railways the undertaking issued an assessment of road costs which was strongly disputed by the transport holding companies? Is it not correct that since that time the Ministry of Transport has been working on this endeavour to get a true assessment of costs? Therefore, can my noble friend be a little more specific as to a date?
LORD CHAMPION: No, my Lords, I should not care to commit myself to a date. This is indeed a difficult study and it would be wrong to rush into an announcement of its results without the most careful consideration. I am bound to say that, having looked at it myself to some extent, I can see the difficulties involved.
THE EARL OF KINNOULL: My Lords, arising out of the noble Lord's Answer to part two of the Question, would the noble Lord explain how it is that the results of the Government's closure policy on railways in both 1964 and 1965 have, instead of reducing the Railway Board's

1753
deficit, in fact greatly increased it at the taxpayers' expense?
LORD CHAMPION: My Lords, I do not think the one is the cause of the other. These are not exactly related. The Board has, of course, as a result of certain of the closures, saved a considerable amount of money; but, as I say, the one is not necessarily caused by the other.

GREATER LONDON OVERSPILL
3.10 p.m.
THE EARL, OF SELKIRK: 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 where the final decision lies in arranging the settlement of the overspill from the Greater London Authority; and whether it has proved necessary to exercise pressure or compulsion on the local authorities concerned.]
THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET): My Lords, the programme to accommodate London overspill includes projects under the New Towns Act which are initiated by central Government and schemes under the Town Development Act which are negotiated between the Greater London Council and the receiving authorities concerned. The agreements to undertake town development schemes have been reached voluntarily, and compulsory powers have never been used.
THE EARL OF SELKIRK: My Lords, I thank the noble Lord for his Answer. I appreciate the importance of dealing with the overspill from London, and the extent of the problem, but is it the case that the noble Lord sees no likelihood of pressure being put upon local authorities to accommodate overspill, particularly bearing in mind the amenities of some areas to which a great deal of importance is attached?
LORD KENNET: Yes, my Lords, that is so. If the noble Earl has any particular areas in mind, perhaps he would let me know about them. The Minister has reserve powers under the Town Development Act to compel unwilling local
1754
authorities to accept overspill. These powers have never been used, and there is little likelihood that they will ever have to be used, for the obvious reason that one would not expect London families to settle down happily in a place which did not want them

RHODESIA: H.M.S."TIGER" CONFERENCE
3.12 p.m.
BARONESS EMMET OF AMBERLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they are aware that the type of conference in H.M.S. "Tiger" has the advantage neither of orthodox secret diplomacy in delicate matters nor of the ordinary Summit Meeting with reasonable access for the Press; and whether this new method does not encourage leakage of information which cannot readily be verified.]
THE LORD PRIVY SEAL (THE EARL OF LONGFORD): My Lords, no. Her Majesty's Government are sure that this method does not have the disadvantages attributed to it by the noble Lady.
BARONESS EMMET OF AMBERLEY: My Lords, while thanking the noble Earl the Leader of the House for his reply, I should like to ask whether he is aware that I am asking this Question in sorrow, because we all wished the Prime Minister to succeed. But I also want to ask whether this new form of diplomacy or dramatic secrecy, without the Press, as exemplified in the "Tiger" episode, is a precedent which is going to be followed, because I do not think it is a very good one.
THE EARL OF LONGFORD: My Lords, I think I had better call the attention of the noble Baroness to the Prime Minister's own answer which he gave at London Airport, when he returned and was asked why this method had been adopted. He pointed out at that time—this was after his return—that a meeting of this kind and sensitivity should be conducted away from the external Press and public relations

1755
pressures which normally apply to international conferences. He felt that in this sense the conference had been uniquely successful.
I hope that the noble Baroness will not think mediscourteous if I also call her attention to the Report in May of the Procedure Committee, in which they deprecated the growing habit of incorporating statements of opinion in Starred Questions which are really intended, as the Procedure Committee pointed out, to elicit information from the Government.
LORD OAKSHOTT: My Lords, on the general point in regard to the last part of my noble friend's Question, would the noble Earl the Leader of the House agree that there are times when it is not so much a question of leakage of actual information as of pure conjecture—quite understandable conjecture—which, if it is inaccurate, as it quite often is, is inclined to endanger the outcome of whatever talks may be taking place?
THE EARL OF LONGFORD: My Lords, I am not quite sure that I follow the thought in the mind of the noble Lord. I should have thought this conference had been very successful in keeping from the world what was being said, and what was going on, until after the agreed time limit. In that sense, as the Prime Minister said, the conference was uniquely successful. If the noble Lord agrees with me there, I am not sure where, if at all, we differ.
LORD OAKSHOTT: My Lords, if the noble Earl will allow me to say so, I agree with him absolutely on that. But my point was that on the more general line of conferences of this type, when I think you are bound to get conjecture by the Press of the world about what is going on, which inevitably must be inaccurate at times, you may get positions taken up in the public mind which can endanger the ultimate outcome and effect of the talks which are taking place.
THE EARL OF LONGFORD: My Lords, I am quite ready to agree that that can happen in any high-level conference, but I should have thought that on this occasion those dangers were well coped with.
BARONESS EMMET OF AMBERLEY: My Lords, may I thank the noble Earl
1756
for drawing my attention to the Report on matters of Questions? Had I known that I could enlarge on this Question by means of an Unstarred Question, I should have done so.
THE EARL OF LONGFORD: My Lords, the noble Baroness is a well-established Member of this House and I am delighted to think there are a few things which have escaped even her attention.
VISCOUNT ST. DAVIDS: My Lords, would not my noble friend the Leader of the House agree that the finest method of keeping anything secret was to give the handling of it over to the Silent Service?
THE EARL OF LONGFORD: My Lords, I am sure that that is absolutely right.

LEE VALLEY REGIONAL PARK BILL
3.15 p.m.
THE DEPUTY CHAIRMAN OF COMMITTEES (LORD MERTHYR): My Lords, on behalf of the Lord Chairman, I beg to move that Standing Order No. 147 be considered in order to its being dispensed with in respect of this Bill, and that the Bill be now read a third time. I think I ought briefly to explain the purpose of this Motion. Standing Order No. 147 provides for the deposit of a copy of a Bill, as amended in Committee, with various Government Departments not less than three clear days before the Third Reading. This Bill was considered by the Committee on Unopposed Bills last Thursday and was reported with Amendments last Monday. If it is to go through its remaining stages in another place in order to receive the Royal Assent before this House rises for the Christmas Recess it must receive its Third Reading this afternoon. In these circumstances, I beg to move.
Moved, That Standing Order No. 147 be considered in order to its being dispensed with in respect of the said Bill, and that the Bill be now read 3a.—(Lord Merthyr.)
On Question, Motion agreed to: Bill read 3a, with the Amendments, and passed, and returned to the Commons

APPLE AND PEAR DEVELOPMENT COUNCIL ORDER 1966
3.17 p.m.
LORD CHAMPLON: My Lords, I beg to move that the draft Apple and Pear Development Council Order, a copy of which was laid before the House on November 29, be approved. The Order is presented for your Lordships' approval in accordance with the requirements of the Industrial Organisation and Development Act 1947. The purpose of the Order is to provide a development council for the apple and pear growing industry in England and Wales, a purpose which is in accord with the wishes of that industry I should perhaps here call attention to Section I (3) of the 1947 Act which requires that, before making such an Order, the Minister shall consult any organization appearing to him to be representative of substantial numbers of persons carrying on business in that industry and such organizations representative of persons employed in that industry as appear to him to be appropriate; and also that he shall satisfy himself that the establishment of a development council for the industry is desired by a substantial number of persons engaged in that industry.
I can assure your Lordships that my right honourable friend the Minister of Agriculture, Fisheries and Food has satisfied himself that a substantial number of growers of apples and pears want a development council for their industry and that he has the support of the National Farmers' Union, the National Union of Agricultural Workers and the Transport and General Workers' Union in promoting this Order.
As to the Order itself, this is designed to increase the efficiency and productivity of the industry and the functions which are assigned to in under schedule I of the Order are, we think appropriate for that purpose. They will enable the Council to undertake the all-important task of publicizing home-grown apples and pears as well as a number of other subsidiary but useful functions, all aimed at making the industry more efficient and productive.
My right honourable friend has decided that it would be fair and equitable for the growers—who will be called upon to meet the entire cost of the Council—to be in a majority on the Council and he pro-
1758
poses to appoint initially twelve grower members; he will also appoint three members to represent the interests of those employed in the industry; three independent members (who will include the chairman) and three having a special knowledge of the marketing and distribution of apples and pears. The Order requires that growers having five acres or more of land planted with apple and pear trees shall register with the Council by a certain date, and it also provides penalties for non-registration and for failing to furnish returns, produce books and other matters.
Article 10 of the Order enables the Council, with the approval of the Minister, to levy registered growers at a rate not exceeding 30s. per acre of land planted with apple and pear trees, although a grower with lightly planted land may, if he so chooses, elect to be levied on every fifty trees instead of on each acre. This will, we envisage, result in a sum in the order of £ 125,000 per year on which the Council will carry out its work. My right honourable friend is satisfied, as he is required to be under the provisions of the Act, that the incidence of the charges as between different classes of undertakings in the industry is in accordance with a fair principle.
The remaining provisions of the Order are in a common form and do not, I suggest, call for further comment by me other than to call your Lordships' attention to the fact that cider apples and perry pears are outside its scope. Accordingly, Schedule 3 to the Order lists the known varieties of cider apples and perry pears, and makes interesting reading. I was amazed to find that there are some 150 named varieties of cider apples and 101 named perry pears—and what lovely names most of them are, my Lords! As I read through them last night I found joy in being reminded of many names familiar to me in my boyhood days in a cider county—names which I had long since forgotten. Joy, that is, until I came to the name Morgan Sweet, which reminded me of a painful occasion when I was discovered with pockets bulging with Morgan Sweets, and my ingenious explanation of how they got there fell, to say the least of it, on doubting ears. My Lords, despite that painful memory, I am happy to commend the Order to your Lordships.
Moved, That the draft Apple and Pear Development Council Order 1966, laid before the House on November 29, 1966, be approved.—(Lord Champion.)
3.22 p.m.
LORD NUGENT OF GUILDFORD: My Lords, may I thank the noble Lord, Lord Champion, for describing the Order so graphically to the House? We are glad to know that he has recovered from his early experience with Morgan Sweets. This is an Order very much to be welcomed. The setting up of this Development Council comes at the end of a long struggle over post-war years to get something of this kind set up; and the description of the Council which the noble Lord has given us should, I think, give confidence that this is the right kind of Council. If I may say so, I think he is right to give a majority on the Council to the growers, as their living is very much at stake and the levy can amount to quite a considerable sum of money.
This Council will, of course, give publicity to the sale of home-grown apples and pears which will be very valuable. I see that it can also do such things as promote research; and, of course, it can promote the export trade. The noble Lord will know that the apple trade, particularly, "had a go" in Germany recently at the Berlin Exhibition. The new grading scheme which the noble Lord and his ministerial colleagues are now putting into action for top fruit is a very valuable background to any publicity that is given to home-grown fruit. This will ensure that top-grade homegrown apples and pears will go into the shops and that there will be the proper kind of publicity to bring that to the attention of the housewife. In my opinion our home-grown apples are the best apples in the world—there is no apple to compete with the Cox's Orange Pippin in flavour—but they have to face the very efficient competition of apples grown in all parts of the world which are extremely well presented in very well-graded packs and very well advertised; and it is certainly high time that the home growers organised themselves to match up to the challenge of the imported produce. Certainly my impression confirms the noble Lord's, that there is general agreement in the industry, a last, that it is
1760
the right move to set up this Development Council.
I should like to pay a tribute to the leaders of the National Farmers' Union and to the leading growers who have worked so hard in these post-war years to bring this organisation about, and particularly to my own old friend Giles Tuker, who has been very much in the lead in this matter. The history of the industry has been a very troubled one. It happens that some ten or eleven years ago I was active in another place in moving the Order to setup the Apple and Pear Marketing Board, which received Parliamentary approval from this House and the other House but which, unfortunately, when it went out for a vote by the growers, was voted down. There was at the time very substantial opposition from the big growers in Kent, who thought they could do better on their own, and the result was that the idea of a full-scale marketing board was thrown out; so the leaders of the industry (Mr. Tuker was very much in the lead in those days) had to start all overagain.
They felt sure it was right to try to organise the industry to bring the growers together, and they very successfully set up a small voluntary body called the Apple and Pear Publicity Council, which raised its own funds to do just these things. They managed, with great difficulty, to raise £20,000 a year, compared with the £125,000 a year which this Council can raise by a statutory levy. Of course, this bigger figure is needed, and it is only right that the shoulders of everybody in the industry, of all the commercial growers, should be bearing their share of the amount. The levy provided for here should. I think, be the right one to give them the money they need.
This Councl will have the effect of bringing the industry together to organise the presentation of its produce in a really effective way, and I believe that it may well be a very valuable prototype for the rest of this hard-pressed industry. This is the first commodity in the horticultural industry that has set up a Development Council. I hope that noble Lords opposite will watch this to see whether, if it is a success, as I hope it will be, others in this very hard-pressed industry might follow in the same way with Development Councils for their

1761
products. The product approach, I believe, is the right one. There are plenty of problems already facing the industry, but if we go into the Common Market they will be even more intense and it will be even more desirable for the growers in this industry to cooperate in the more effective presentation and marketing of their products; and this may well be the best device for doing it. So I warmly support this Order. I am sure it is going to prove valuable to these growers.
I should like to ask the Minister a question on the appointment of the independent chairman. Of course, he is a factor of great importance to the future success of this Council. I should like to know whether Ministers have any thoughts on the kind of man they are looking for—he needs to be a man with vision—and when they expect to announce the appointment. With those words, I wish the Development Council every success in its functioning, and give my support to the Order.
BARONESS ELLIOT OF HARWOOD: My Lords, just before the noble Lord replies, may I say that I also am interested in and support very strongly the proposal that has come before us to-day? May I ask that among the members of the Council who are to be appointed, a list of whom was given to us by the noble Lord, Lord Champion, there may be a consumer; that is, someone who knows about eating apples as well as about producing them? May we ask that among the independent members there should be someone who is a consumer? Also, I think it is possible that we might have one or two women on the Council, since they are the shoppers and the buyers of this product.
LORD CHORLEY: My Lords, I should just like to make an observation on what the noble Lord opposite said. I hope that, as a result of his speech, the establishment of this Council is not going to lead to the Cox being given greater publicity than it already has, which would be most unfortunate. The Cox is quite a good apple. It is a ladies' apple. There are at least twenty other kinds of apples which are on the same level as the Cox, but all this publicity that has been given to the Cox has tended to push the others out of the market. It is difficult to get
1762
some of the best English apples in the shop. I hope that this Council will see that we get a variety of apples.
THE DUKE OF ATHOLL: My Lords, I am just wondering why the figure of 21 was chosen for the Council. It seems to me to be rather a large Council. I should have thought that 14 would have enabled us to keep the same proportions and that it would have been a body more likely to achieve success. In my experience, once you get over a dozen or 14 members on any of these bodies they tend to leave all the work to someone else. Possibly the noble Lord could say why the figure of 21 was decided on.
LORD CONESFORD: My Lords, may I say that I think the third Schedule to this Order is certainly the best Schedule that has come before this House for a long time. I hope that the noble and learned Lord who sits on the Woolsack will take it as an example of what a Schedule should be. It will be seen that on the last page there is a list of varieties with their synonyms. Perhaps the high-water mark is reached in the following entry: "Tumper", for which the synonyms are "Tum, Tom, Tump".
LORD CHAMPION: My Lords, I am grateful for the welcome this Order has received. I rather liked the remarks of the noble Lord, Lord Conesford, in this respect. I must admit that this Schedule seemed to me to be pure poetry. I almost recommended it to Mr. John Betjeman as something which might meet his approval and cause him to favour us with a few verses on it. Speaking generally I am grateful to noble Lords who have spoken. I particularly welcome the emphasis which the noble Lord, Lord Nugent of Guildford, laid on the export trade of this marvellous product of ours. I think it is right that we should sing our praises in this connection. So many of the apples that I seem to buy, which come from abroad, have beautiful exteriors and a wonderful complexion; but behind the complexion, as in some other sorts of creations there is a rather sour interior. I would join with the noble Lord in his tribute to the National Farmers' Union and the leading growers. This has been a long process, a process which they were anxious to establish, and I believe that the co-operation which has been given over the years and has

1763
led to this successful conclusion is something for which we must be grateful.
As to the chairman of the Council, of course we have had some thoughts about this matter, but we are not yet ready to announce the composition of the Council. The noble Baroness, Lady Elliot of Harwood, talked about the necessity for consumers to be represented. I am afraid there is no provision in the Schedule for consumers to be represented as such. But her point about women being on the Council I will, of course, convey to my right honourable friend, who is at this moment deciding on the composition of the Council.
So far as the noble Duke's remarks are concerned, I tend to agree with him that so often these Councils and bodies tend to become mass meetings, rather than small working councils; but we felt that we had to ensure that all the groups which are important in this connection were sufficiently represented. I believe we have struck the right number; they will be able to work through subcommittees as and when required. By these means I believe we shall be able to overcome some of the difficulties which the noble Duke envisaged. I think this is a very good Order, judging from the way it has been received, and, as I did before, I happily commend it to the House.
THE MARQUESS OF ABERDEEN AND TEMAIR: My Lords, may I point out that this list does not include eating apples like Cox's Orange Pippins, or cooking apples like Bramley Seedlings, and a great deal of research work, starting from the days of Sir William Hardy, was devoted particularly to those apples; and it is from this work that the very successful development of our export trade has grown to such a notable condition that it competed very successfuly with foreign apples.
On Question, Motion agreed to.

ROSS AND CROMARTY (STRATHCARRON—SOUTH STROME ROAD) ORDER CONFIRMATION BILL
Read 3a(according to Order), and passed.
BUS FUEL GRANTS BILL
Read 3a (according to Order), and passed.
NATIONAL COAL BOARD (ADDITIONAL POWERS) BILL
Read 3a(according to Order), and passed.

INDUSTRIAL REORGANISATION CORPORATION BILL
Report of Amendments received (according to Order).
Clause 4 [Exchequer loans]:
LORD SHEPHERD: My Lords, this is a purely drafting Amendment. Its purpose is simply to delete the words "Subject to the provisions of section 7 of this Act" at the beginning of Clause 4(1). These words are not required. Clause 7 places no restriction on the lending powers which Clause 4 gives to the Secretary of State—indeed there is no mention of Clause 4 in Clause 7. The deletion of these words, therefore, will not affect the Secretary of State's powers in any way—in particular, it will not enable him to lend to the I.R.C. sums in excess of the£150 million limit set by Clause 7, since Clause 7(b) makes it quite clear that I.R.C. borrowing from all sources (including the Exchequer) is to be covered by the£150 million limit. I beg to move.
Amendment moved—
Page 3, line 38. leave out from beginning to second ("the").—(Lord Shepherd.)
On Question, Amendment agreed to.
Then, Standing Order No. 41 having been suspended, pursuant to the Resolution of December 13:
LORD SHEPHERD: My Lords, I beg to move that this Bill be read a third time.
Moved, That the Bill be now read 3a.—(Lord Shepherd.)
On question, Bill read 3a, with the Amendments.
LORD SHEPHERD: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(Lord Shepherd.)
LORD DRUMALBYN: My Lords, before we part with this Bill, may I say a few words? Any measure that is designed to promote efficiency and profitability is to be welcomed, in principle at least, but in practice, I must confess I found it difficult to give an unqualified welcome to a Bill which was in itself as vague as this one and about which its sponsors could, or would, give so little information. However, it has been possible in this House at least to improve the Bill by specifying what is to be the duty of the new Corporation in the exercise of its functions. I am sure we are all very grateful to the noble Lord, Lord Aldington, for having prevailed on the Government to introduce that Amendment.
For my part, I still think that £150 million is a very large sum of money to commit for so vague a purpose in a measure which the Government themselves admit is experimental. As I see it, the Bill is so drafted that if the Corporation is to do what is expected of it, and at the same time to pay its way, it will be forced not only to take a share in the equities of industries which it reorganises but to hold on to those equities which prove to be good investments. I suppose it would be too much to expect that they would all be good investments.
I do not think we can regard this prospect with any relish, because it is liable to blur the respective responsibilities of industry and Government. Nevertheless, while we cannot but regard some aspects of this Bill with misgiving, there can be no doubt that the Government have succeeded in recruiting a very good team. We hope that it will play a significant part in the task of modernising British industry which we all recognise to be of the greatest importance. We shall not be surprised if the experiment proves more costly than the Bill would indicate and than the Government appear to expect.
There is one other aspect of this matter which I must mention before we part with the Bill. Repeated fears have been expressed that the Bill represents nationalisation by the back door, or creeping nationalisation. The Govern-
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ment have asserted and assured us that this is not so. We welcome that assertion; we welcome the undertaking it conveys. We hope that in this respect the Government will stick to that undertaking. I can assure the noble Lord opposite that nobody will be more pleased than Her Majesty's Opposition if in this respect they keep their word.
LORD SHEPHERD: My Lords, I will be very brief. First, I should like to thank the noble Lord, Lord Drumalbyn, and the noble Lord, Lord Aldington, for all the help and assistance they have given the Government in improving this Bill. I fully recognise that the Bill has been improved, particularly by the two suggestions of the noble Lord, Lord Aldington. We have set up an organisation. It now has power and a duty. Sums of money, capital, will be made available to it. Its purpose is to assist the reorganisation in industry which I think anyone who has any knowledge of industry recognises is a necessary feature. The Government believe the Board which has been set up—and the noble Lord has paid his tribute to it—and the Boards that will succeed the present Board will, through this organisation, make a special impact upon industry for the benefit of the country as a whole.
I do not believe that this Board will be costly. I do not say that it will make large profits but, as I have said on two occasions, the Board will be judged not just on the profit it makes but on the quality and the size of the mergers it assists and on the results of those mergers on the economy of the country as a whole. I know that the noble Lord, Lord Drumalbyn, and his noble friends have had misgivings, but I think I have given them assurances so far as nationalisation is concerned and about the freedom of the Board to carry out its operations free from everyday instructions and advice of a Minister. I am confident that in two or three years' time the noble Lord, Lord Drumalbyn, if he is still on the Front Bench, will one day get up and say, "I was wrong, and I am glad I.was wrong."
On Question, Bill passed, and returned to the Commons.

LOCAL GOVERNMENT (SCOTLAND) BILL
Order of the Day for the Third Reading read.
LORD SHEPHERD: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Local Government (Scotland) Bill, has consented to place her interest so far as it is concerned on behalf of the Crown at the disposal of Parliament for the purposes of the Bill.
LORD HILTON OF UPTON: My Lords, I beg to move that this Bill be read a third time.
Moved, That the Bill be now read 3a.—(Lord Hilton of Upton.)
On Question, Bill read 3a, with the Amendments, and passed, and returned to the Commons.

POLICE (SCOTLAND) BILL
Read 3a (according to Order), with the Amendments, and passed, and returned to the Commons.

COMPANIES BILL [H.L.]
3.46 p.m.
Order of the Day for the House to be again in Committee read.
Moved, That the House do now resolve itself into Committee.—(Lord Rhodes.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MERTHYR in the Chair.]
Clause 18:
Directors' report to include particulars of contributions of political and charitable purposes
18.—(1) If a company (not being the wholly owned subsidiary of a company incorporated in Great Britain) has, in a financial year. given money for political purposes or charitable purposes or both, there shall (if it exceeded £25 in amount) be contained in the directors' report relating to that year a statement of the amount of money so given and of such of the matters referred to in subsection (3) below as are applicable in the circumstances of the case.
(2)The foregoing subsection shall not have effect in the case of a company which, at the end of a financial year, has subsidiaries which have, in that year, given money as mentioned in the foregoing subsection, but is not itself the wholly owned subsidiary of a company incorporated in Great Britain; but in such a case there shall (if the amount of money so given in that year by the company and the subsidiaries between them exceeds£25) be contained in the directors' report relating to that year a statement of the amount of money so given in that year by the company and the subsidiaries between them and of such of the matters referred to in the next following subsection as are applicable in the circumstances of the case.
(3) The matters mentioned in subsections (1) and (2) are the following, namely,—

(a) the name of each person to whom there has been given money as mentioned in subsection (1) above exceeding £25 in amount or, if it was given for charitable purposes and received by the donee in a fiduciary capacity, the purposes for which it was given and, in either case, the amount of money given;

(b) in the case of money exceeding £25 in amount given for political purposes by way of donation or subscription to a political party, the identity of the party and the amount of money given.

(4) For the purposes of this section a company shall be treated as giving money for political purposes if, directly or indirectly,—

(a) it gives a donation or subscription to a political party of the United Kingdom or of any part thereof; or

(b) it gives a donation or subscription to a person who, to its knowledge, is carrying on, or proposing to carry on, any activities which can, at the time at which the donation or subscription was given, reasonably be regarded as likely to affect public support for such a political party as aforesaid.

LORD DRUMALBYN: The object of putting down this Amendment is simply to inquire why there is a difference of wording between this subsection and the following subsection. I beg to move.
Amendment moved—
Page 17, line 18, after ("given") insert ("in that year").—(Lord Drumalbyn.)
THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES): I take the point. If the noble Lord, Lord Drumalbyn, will withdraw the Amendment, we will consider how the two subsections can best be brought into line.
LORD DRUMALBYN: I am much obliged to the noble Lord. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD POLWARTH: May I ask your Lordships' permission to move Amendment No. 17, in the names of Lord Erroll of Hale and Lord Drumalbyn, because this Amendment, together with Amendment No. 20 is dependent on or consequential to my own Amendment (No. 22) to omit subsection (3) and replace it with three new subsections? I understand, or I was advised, that this is the correct procedure.
LORD RHODES: I did not understand it in that way, because on the basis of how the matter was left, the noble Lord, Lord Champion said (in line with what I had said before) that Amendments Nos. 17, 18, 19, 20 and 21 would go, but we would take Amendment No. 16 and then go on to the Amendment of the noble Lord, Lord Polwarth, afterwards.
LORD CHAMPION: There was of course some little negotiation about this. Certainly we left it so that Amendment No. 22 in the name of the noble Lord, Lord Polwarth, would be discussed. If it appears, as it appears to me, that Amendment No. 17 is a paving Amendment for Amendment No. 22, I should think that it would be wise to discuss Amendments Nos. 17 and 22 together.
LORD DRUMALBYN: With respect, as Amendment No. 17 is our Amendment, I would agree with that. The words it is proposed to leave out by Amendments Nos. 17 and 19 are quite incompatible with Amendment No. 22 in the name of the noble Lord, Lord Polwarth. Therefore, in order for the Amendment of my noble friend to make sense, we should first of all leave out words and Amendment No. 17 is a paving Amendment.
THE DEPUTY CHAIRMAN OF COMMITTEES: May I point out to the Committee that, if Amendment No. 17 is not discussed now, it cannot he called later.
LORD DRUMALBYN: Further to that point, we do not intend to discuss Amendment No. 17 again; that was discussed previously. This is purely a technical matter in order to enable Amendment No. 22 to be discussed now.
LORD HAWKE: How are we going to proceed, if this Amendment is going to be accepted, as I trust it will be, unless
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we have previously dealt with the paving Amendment?
LORD DRUMALBYN: I am afraid I did not make myself clear. It is necessary to move No. 17 in order that No. 22 may make sense.
3.51 p.m.
LORD POLWARTH LORD POLWARTH moved, in subsection (1), to leave out all words after "so given" and to insert:
"for political purposes and charitable purposes respectively".
The noble Lord said: In moving Amendment No. 17 now, I hope that it will give me an opportunity to explain the substance of Amendment No. 22, on which it depends. I would start by apologising to your Lordships for my absence on the first two days of the Committee stage of this Bill. I am afraid it is just one example of the difficulty of combining an active part both in business and in your Lordships' House simultaneously. However, I am glad that the discussion on this clause was not finally completed two days ago, because it has given us a little time for reflection on the views expressed and the attitudes taken on that discussion, which ended up. I thought from the account of it, in a bit of a tangle.
Clause 18 deals with the publication of the details of political and charitable donations. My Amendment is concerned solely with charitable donations. I realise that in some quarters the subject of political donations is like a red rag to a bull and that disclosure has become something of a sacred cow. Whichever way one looks at it, if I may switch my metaphor once again, I believe that the Government are making rather a mountain out of a molehill. In this I am supported by the view which the Jenkins Committee expressed at the end of the section on political and charitable donations. They said:
"But we do not think donations are such an important item in most companies' accounts as to justify an express general requirement to disclose them."
Could we look dispassionately at this question of charitable donations? I speak with some recent experience, having been responsible for leading two major campaigns, one in the purely charitable field and the other for raising

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funds for a new university. So I have been in the firing line, as it were, and also at the target end in a number of different board-rooms. In the earlier part of the debate, there was a good deal of talk about directors giving away shareholders' money. This phrase was repeated several times. I find it difficult to accept this complete divorce of charitable support by a company from some other forms of company expenditure which are frequently done for the company's benefit, directly or indirectly—for example, contributions to an educational charity, to youth organisations in the company's area or to other organisations connected with health and welfare which may benefit the company's employees. These are all classed as charitable donations. Even if it may not be so evident as that, it may often be to the benefit of a company's prestige and public standing to be seen to have supported causes of a purely charitable nature. I believe that expenditure on these can be as much for the shareholders' benefit as certain expenditure, for example, on advertising or, if you like, on maintaining well-kept gardens and grounds around a company's head office.
I think it is an accepted idea now that public patronage of this kind by companies is not only desirable but, indeed, essential, particularly in these days when private patronage has been more or less squeezed out of existence. There is much talk, too, in these days of the wider responsibilities of companies, not just to their shareholders and employees but also to the community as a whole. This philosophy was hinted at, I think, in the forecast of a future Companies Bill, to be published before long, which would look into the whole philosophy of a company's existence. And I believe that this patronage and support of charities is in accordance with these ideas.
So I submit that there is no good reason to require detailed publication of the charitable causes supported and the amounts given to them, any more than there is of other items of company expenditure. I think that directors who have been given responsibility by shareholders for managing their business should be credited with enough responsibility for handling such a minor item of a company's expenditure. I agree with what was said by my noble
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friend Lord Drumalbyn in the earlier discussion of this clause, that the provision as included in the Bill is both onerous and invidious. It is onerous because of the time and cost involved in drawing up what may be a lengthy list of donations and printing it in the company's report. I asked a director of one major company what it would involve for them and he said, "A return of 500 different entries"—which would probably mean another 4 or 5 pages of details in the company's report.
It is invidious, I believe, because I cannot accept that the publication of these names will not have a deleterious effect on charitable support in general from corporate bodies. We in board-rooms all know under what strong pressure we are from many charitable bodies to support them. I believe that if we are obliged to detail those we have supported in our accounts, we shall be under still greater pressure and that the inevitable effect will be to retrench, to draw more strictly a dividing line between causes which we shall and shall not support, and to make firm rules rather than regard every individual charity on its merits. I believe that that certainly would be the reaction in the board-rooms of which I have experience
Frankly, I do not believe that any disclosure of charitable donations is really required in a company's accounts. We have made the suggestion, which has been turned down, that it would suffice for the aggregate figure in the year to be published. The Government have rejected this on what seems to me to be the lamest possible grounds. Looking at the report of the debate on this clause on the last occasion, I see that the noble Lord, Lord Rhodes, said:
"May I at this juncture put our case explicity?… we as a Government do not regard it as sufficient to aggregate these donations in this way?…in any event, I do not think the information that would be given on the basis of aggregates would be sufficient."—[OFFICIAL REPORT, Vol. 278 (No. 84), col. 1639;13/12/66.]
Sufficient for what and sufficient for whom? I think we are entitled to have an explanation that is a little more explicit. The noble Lord wanted us to consider a case for raising the figure below which donations need not be published. I do not think that that is a valid suggestion. The insertion of any arbitrary

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level or figure in legislation never is satisfactory; it will be overtaken by changing values. It is the principle with which we are concerned.
My Amendment seeks to meet the views of the Government by providing the maximum information that could reasonably be considered desirable by those to whom it is of prime interest—namely, the company's shareholders. It proposes that in addition to publishing the aggregate figure of charitable donations, the company should be obliged to maintain a register in its office, available for inspection by shareholders at all reasonable times and under reasonable conditions, and subject to suitable penalties. I submit that this is a reasonable way of dealing with this subject, which I think has been magnified beyond all reasonable size. Accordingly, I beg to move the first Amendment.
Amendment moved—
Page 17, line 18, leave out from ("given") to end of line 20 and insert ("for political purposes and charitable purposes respectively").—(Lord Polwarth.)
LORD RHODES: I must have a word on the proceedings of the other night. The noble Lord is now taking the opportunity of having a second bite at the cherry. This is probably due to the good offices of his noble friends on the Front Bench. When he suggests that there was a tangle, I would say that the only tangle was the Royal Commission which interrupted the proceedings. Had it not been for the fact that the Royal Commission arrived when it did, in all probability Clause 18 would have been well out of the way now. It was agreed that Amendment No. 16 should be taken to-day, but that Amendments Nos. 17 to 21 should be finished with quite definitely. We agree now to take the Amendment which leads into Amendment No. 22, and are prepared to accept it on that basis. So I hope the noble Lord will be quite satisfied that he is having a chance on his Amendment.
LORD POLWARTH: I appreciate that.
THE DEPUTY CHAIRMAN OF COMMITTEES: The Question is—
LORD RHODES: Oh, no, Lord Chairman. I have not started yet—although I am obliged for the indication of speed.
LORD ERROLL OF HALE: May I intervene for a moment to make the matter clear? The noble Lord said, "and Nos. 22, 23 and 24 are still to come", and we understood from this that it was still possible to take the Amendment. We then saw that it was not possible to take the Amendment unless we had the paving Amendment.
LORD RHODES: That is quite right. We are all agreed. Christmas is coming, but this does not alter the fact that if it had not been for the circumstances that I have described the matter would have been out of the way.
The noble Lord need not think that we on this side of the Committee are in any way less appreciative of what companies do in the way of contributions to charities than are noble Lords on that side of the Committee. I can give many instances of companies who have factories where they are the main employers in the district—I could name half-a-dozen straight off—wheretheir contributions are valued and where their support builds up a strength in the community. There is no argument about that, in any shape or form; it is a most valuable feature of our everyday life. And it has its counterparts in other parts of the world. I was reading Gower the other day about the law in respect of charities in America, and he definitely quoted cases in America where they are very cognisant of the benefit that accrues through a company's making charitable contributions, whether for academic or other purposes.
The noble Lord minimised the altruism and purity of it when he likened charitable donations to making the gardens nice round a company's office. I regard the charitable contributions that a company disburses much more highly than that. It is true to say that the other night when we were discussing this subject we made overtures in terms of the amounts, and I still stick by that. We will look at this question of the individual amount and raise it. I cannot say at this juncture to what it will be raised, but I am optimistic that something a little more substantial will be agreed upon.
Coming to Amendment No. 22, I would point out that this Amendment would leave out subsection (3). This subsection I requires information to be given in the

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directors' report about any political Party, person or charity to which a company, with its subsidiaries, has given what in a year amounts to more than£25—ignore the figure of£25, because we are going to substitute something for it. In place of the subsection, the Amendment would insert provisions requiring the company to keep at its registered office a register open to inspection by members, showing the details of the money it and its subsidiaries have given for charitable purposes. No detailed information would be given either in the directors' report or in the register about political contributions. If it was in a register of this description, it would not be available to the public to see it. It would be for the members, or, as you like to call them, the shareholders, if they took the trouble to go along to the company's office. But if it were in the directors' report it would be different, because this would be filed for public inspection.
We might as well face the issue and save time in this way. We regard it as important that this information should be available for examination by the public. I do not want to speak for a long time on this matter or, indeed, to work up any heat on it. As I said before, Christmas is coming. But it depends on what is said. I will leave it at that. I am afraid we cannot accept the Amendment.
LORD HAWKE: Before the noble Lord sits down, could he say whether he is referring to charitable or to political contributions? Unfortunately, they tend to get mixed up. On this side of the Committee we are talking about charities, and we should like to know from the noble Lord why he wants the whole of the general public, rather than the members of the company who provide the money, to see where it has gone.
LORD RHODES: That is a fair point; the two do tend to get mixed up. But I was trying to explain that the same principle applies both to charities and to political contributions. I should have thought that it would be a good thing to itemise the charities. The business people to whom I have spoken—and I know many who are in a position to disburse charity—have no objection to this. It would seem that some people think that
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we have something against it. Well, we have not. We are in favour of this, and there is no prohibition here. The intention of this requirement is quite innocent.
LORD BOOTHBY: There is nothing innocent about this at all. We all know the object of the Government: it is to stop companies contributing to the Conservative Party. That is what it comes to, and that seems to me not altogether unreasonable. I have had some political experience, and by no stretch of the imagination can the Conservative Party, the Labour Party or, indeed, the Liberal Party, in so far as it exists, be described as a charitable organisation—if anything, the opposite. I cannot think why the Government were not content to draw a distinction between political Parties and charitable organisations and let it go at that, and save a great deal of unnecessary paper work.
4.11 p.m.
LORD DRUMALBYN: The first thing is to dispose of this question of the aggregate once again. This is a subject that we discussed earlier, and my noble friend who moved the Amendment and I are in agreement that it would have been much better if the Government had seen fit to accept that Amendment. That does not arise at the moment, although of course we are perfectly at liberty to put down a similar Amendment again at Report stage.
What we are now discussing, granted that the details of the charities should be published, is the way in which they should be published. On this the noble Lord who speaks for the Government has said nothing. All he has said is that the same principle applies to both. But does it? As I pointed out on the previous occasion, and as my noble friend said, in some cases there are companies who make 500 separate contributions to charities and yet, as I pointed out, the number made to political Parties is (what shall we say?) about one-hundredth part of that. I do not want to be precise on this matter—and I shall be taken to task if I suggest limiting the number to four. Surely, however, there is an essential difference between the two types of contribution. The noble Lord concedes that there is no purpose in disclosing the details of charities to the public at large—he accepts that. But, he said, "We must not make a difference in the way

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in which we deal with these two matters. "But if they are essentially different—and, as my noble friend Lord Boothbay said, these are entirely separate matters—why? Why cannot the noble Lord, Lord Rhodes, make any difference? He has given no good reason whatsoever, except that it is nearly Christmas.
LORD RHODES: The noble Lord, Lord Boothby, has made probably the most telling interjection that will be made in this debate. He said that it is to stop companies contributing to the Conservative Party. He went on to say that he did not think it was unreasonable. I may agree with him on the basis of unreasonableness, but I disagree with his statement that we are trying to stop it. We could not care less whether they contribute to the Tory Party or whether they do not. They can contribute, so long as the shareholders know; and if the shareholders do not know they have every right to know. There are many shareholders who will agree with what the noble Lord, Lord Boothby, said: that what is proposed is not unreasonable. That disposes of the political element in this.
When it comes to the charitable element, there is no question but that it is a highly desirable thing. We on this side believe that it is a highly desirable thing, but that the contributions should be itemised. It may be that we were wrong in the original amount of £25. But I would remind the noble Lord that this matter of bringing in the charities with the political element arose in another place; it was not suggested on our side of the House. If he will be patient and will read in Hansard the debate which took place on February 21 of this year in another place, he will realise that there is a tremendous amount of support on the Opposition side in another place for the inclusion of charities.
LORD DRUMALBYN: May I interrupt?
LORD RHODES: No. We are not slow to take hints. If we can take a hintor accept an Amendment from the Opposition which is a good one for the benefit of the Bill, we are all for it. We have accepted many Amendments up to now, and maybe we shall accept many more. But on this I cannot be stirred.
LORD CONESFORD: I wish to understand the noble Lord, if I can. He said that another place had expressed its view on this clause. How did it do that if this clause has never been before another place?
LORD RHODES: That is not quite up to the noble Lord's standard, because normally he comes to this House having done his homework. But he has picked this up because we are being agreeable and good-tempered in allowing this to be discussed again, as it were. We did not finish it off the other night—I keep coming back to this. This political element of contributions was included in the earlier Companies Bill which was read a second time in another place on February 21 of this year. It was made quite apparent by the Opposition there that if the Bill had included charitable contributions they would have had no objection to it whatever. On that basis I rest my case.
LORD MITCHISON: It is the privilege of Back Benchers to get in the way of everybody at times, and I am sure that the question I am about to ask is one that I ought to be able to answer quite easily. But the question is this. The object of this Amendment is to leave out subsection (3) and to insert certain provisions relating, I agree, to charitable contributions only. But if we do leave out subsection (3), what happens to the political side of the clause? Take, for instance, subsection (1) of Clause 18.That says:
"If a company…has, in a financial year, given money for political purposes …there shall…be contained in the directors' report relating to that year a statement of the amount of money so given and of such of the matters referred to in subsection (3) below"—
but there will not be any subsection (3) if the Amendment is carried—
"as are applicable in the circumstances of the case."
It therefore seems to follow that all we may put in about political contributions is the statement of the amount of money so given; there will be no need to put in the matters referred to in subsection (3), which at present cover political contributions, and include
"the name of each person to whom there has been given money"

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and, where the contribution exceeds a specific amount, the identity of the Party and the amount of the money so given.
I always remember the well-known company director who used to contribute to all main three political Parties. He was a very strong anti-Communist, and he never contributed to that Party. He contributed the same amount to the Conservative Party, the Liberal Party and the Labour Party, on the grounds that, however improbable it might seem at the moment, any one of them might come to power, and he desired to stand in the good books of all three. One sees the point of that attitude but there are other considerations to be taken into account.
As to the names of the people to whom the contribution is made, this seems to me important. I understand that it is the practice of the Conservative Party rarely to have contributions given direct to them. They are given to what I may call "stooge" companies formed for the purpose, which then pass the money to the Conservative Party. I do not know why they want to do this. It is not for me to consider the motives of high statesmanship in connection with Party finances. But there it is. One would rather like to know what their names are, because one is curious about this sort of thing, and also one is interested to know, if the names do not tell us enough, which political Party is intended.
LORD BOOTHBY: Can the noble Lord give us any grounds for this rather astonishing statement that the Tory Party has a lot of stooge companies with people contributing to them and the money is then just quietly and surreptitiously passed on to the Conservative Party Central Office? This is complete news to me.
LORD MITCHISON: That is because my noble friend does not read The Guardian and other papers sufficiently. He would find a lot of details there. It has probably not been in the Daily Telegraph, but some of the Press have had the story. I will give the noble Lord a private lesson afterwards, if he likes.
LORD BYERS: Is not the noble Lord referring to the United Industrialists, and other organisations of that sort, all of which have been known for some time?
LORD MITCHISON: I am always very careful what I say about this subject because one can have new stooges, and the stooges of Yesteryear may not be the stooges of to-day, but I should have thought the practice of giving to companies formed for the purpose had been rather notorious for some time past. Of course, if I am misinformed and anyone on behalf of the Conservative Party likes to tell me that this is all wrong, and that any contributions they receive from companies are always received directly into Party funds, I shall be only too pleased to withdraw my remarks, but the members of the Conservative Party are very honest and I do not think they would say that to me.
Therefore, without developing this particular point any further, I should like to know whether the Government are accepting the withdrawal of subsection (3) as regards political objects. It is not for me to talk about charities at the moment—I am sure we shall all try to do the right thing for them—but I am not certain about the political purposes, and I think we ought to be clear what is happening. May I ask the movers of the Amendment whether it is their intention that the information contained in subsection (3) should no longer be obligatory as regards political contributions and, if so, would they give us a general indication why?
4.24 p.m.
LORD CONESFORD: It is clearly for those in whose name this Amendment stands to say what their intention is as regards the disclosure of the names in the case of political contributions. For once I am in agreement with the noble Lord, Lord Mitchison, that, if we are in favour of Amendment No.22 in regard to charities, it might be necessary to have consequential Amendments to deal with the political matters. But I approach this question in the same way as my noble friend Lord Hawke. What I want to know is what is the Government's attitude as regards the charities. Of course, I accept from the noble Lord the Parliamentary Secretary that he does not wish to injure the charities, but I wonder whether, if he leaves the Bill as it is without this Amendment, he will not in fact be injuring them. It seems to me that this is one of the matters which

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the Government have not fully considered.
I admit that I have no experience of being on the board of a company, because no company has ever taken the risk of putting me on the board; but I have had some experience of being an applicant on behalf of a charity. The charities on whose behalf I have appealed have been educational charities. I have appealed, sometimes with success and sometimes without, for one of the new universities in which I was particularly interested, and I have appealed also for a grammar school in which I was interested. It may be that the response of those who contribute to charities of that sort would be to contribute a sum not so small as to be affected much by the clause, but, if it is necessary to give this publicity to every single charity above a fairly small figure, will not the board of a company be subjected to very great pressure by innumerable people who are not included in the list, and may not the result of that be that the company which has hitherto contributed to a number of charities will say: "Well, the only way out of this is to stop almost every contribution to charity?" Is there not a real risk of that, and can that be the result the Government wish to bring about? I can quite see that they may wish the shareholder to have the right to find out, but, as I understand it, that is provided for in Amendment No. 22.
I do not think the noble Lord who has replied for the Government has really shown that the provision is necessary or that it will not injure charities. Frankly, what worries me is that there have been so many other recent acts of the Government showing great indifference about the effect of their actions on charity: the most notorious being, of course, the selective employment tax, where a savage contribution has to be made by charities, who lend the money to the Government and then subsequently get it back. The Government have never indicated what part of their work they wish the charities to abandon, but they have compelled them, of course, to abandon some. I wish the Government would be a little more sympathetic towards the charities.
There is a lot to be said on the subject of political contributions. A most relevant interjection was made by the noble
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Lord, Lord Boothby, and I think he got very much nearer to the truth than the Government may be willing to admit; but at the moment I do not wish to discuss the political contributions. There may be an opportunity to do that on the Motion that the clause stand part, or on a subsequent Amendment. I agree with the noble Lord, Lord Mitchison, that if the existing intended provisions about the political contributions are to stand, some part of subsection (3) must stand. But what I cannot see is why the Amendment of my noble friend Lord Polwarth is being resisted in so far as charities are concerned.
THE EARL OF IDDESLEIGH: May I beg Her Majesty's Government at this time to offer to confer with the noble Lord, Lord Polwarth, and his friends on this whole subject? I am perfectly sure that as regards genuine charities there is no difference between the two parties in this matter. I am confident that the noble Lord, Lord Polwarth, has no intention of bringing in political contributions by any backdoor or any side door. The question is how the genuine desire on both sides of the Committee, and certainly on these Benches, that the flow of money to charities shall not be dried up, can best be effected. Surely it is a matter, at this stage in the discussion, for the Government to offer a conference to my noble friend Lord Polwarth.
BARONESS ELLIOT OF HARWOOD: May I also add a few words, in order to appeal to the noble Lord on this matter, because in the course of my life I have raised very large sums of money for charities of different kinds—at some times more successfully than others; but it is a tremendous undertaking. In the course of years, millions of pounds are raised for charity. The money comes from businesses and other sources, and these sources are varied and widespread.
I can think of companies (indeed, I think this has already been said, and the noble Lord will bear me out in this) which, because of their enormous spread, particularly companies that have to do with retailing and have branches through out the country, will give to charities in their own localities; and if one adds up the total they give in the course of the year, one finds that it comes to a large

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number of small entries. It is going to create a lot of work and trouble if all these items have to be recorded,£10 by,£10,£ 20 by,£20,,£50 by £50. in everybody's accounts. It might end up by the head office simply saying, "We will 'dish' out so much to charity from the central office", say, in London, and then somebody who is trying to raise money in Newcastle or Glasgow will get the answer: "It is all being done from London". One of the advantages of the system of being able to apply wherever you are raising money is that you can get the interest of the branch of that company in different areas.
The noble Lord, Lord Rhodes, is very interested in what happens in Yorkshire. If he were trying to raise money in Yorkshire, I am sure he would be very disappointed to be told to go and get it in London, simply because the unfortunate people who had to produce the accounts for the firm had to record all these innumerable sums of money throughout the country and said: "A plague on all your houses! Let us do it in one lump sum from London". It will be very unpopular indeed in Scotland and Wales and the north of England. I hope the noble Lord will consider this dispassionately as a practical matter and produce some other proposal, instead of this method which may injure the flow of money to charitable organisations. I am sure he does not want that. I beg him to take this provision back and see whether or not something more sensible cannot be arranged for this particular purpose.
LORD WAKEFIELD OF KENDAL: I should like to add my name to those of other noble Lords who have been making this appeal to the Government. For much of my life I have been concerned with appealing for charities as I am at the present time, and I have been at the receiving end of appeals, either as a director of a company or individually. I am absolutely certain that if this Bill goes through as it is, charities will be harmed. There is no doubt about it. The question the Government have to make up their minds about is, do they want to harm the charities? If they do, the Bill must go through as it is. If, on the other hand, they feel there is something in what noble Lords have been saying and that charities will be injured, I
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beg the Government to have another look at the matter. Surely it must be possible to withdraw the Amendment with a view to their having a look at it and re-writing what may be necessary in a consequential Amendment at Report stage. I am sure they do not intend to injure charities, but they will—believe me, they really will—if this clause goes through as it is. Would they take another look and try somehow or other to distinguish between charities and political contributions in a satisfactory way? I am sure it would be of real public advantage in every possible way. I make an appeal to the Government to have another look to see whether something can be done so as not to injure charities.
LORD CLITHEROE: May I add one word to this discussion? I entirely sympathise with the objects of my noble friend Lord Polwarth in his Amendment. I also sympathise a little with the noble Lord, Lord Rhodes, who, I suspect, is in a drafting difficulty. I can see both problems. I would suggest that the Committee accept the sense of Lord Polwarth's Amendment, which would mean that companies would not have to give in their annual report a list of all the charities to which they have subscribed, but would have a list in their office which any member of the company could look at. It is a very wise, sensible suggestion. I entirely understand that the Government do not wish this applied to political or semi-political or semi-semi-political contributions. I believe this Amendment can be redrafted in a way to meet both sides, and I hope the noble Lord, Lord Rhodes, will, on Report stage, bring forward an Amendment which will meet Lord Polwarth's point without giving away his own.
LORD ROYLE: My main concern with regard to the Amendment I share with the noble Lord, Lord Mitchison. I am concerned with regard to the drafting of the Amendment because of paragraph (b) of subsection (3), and therefore before we can proceed to anything like a Division, consideration will certainly have to be given to that point. I see the noble Lord, Lord Polwarth, nods his head in agreement.
I should not for one moment like it to be thought that there is an argument in your Lordships' House where one side

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of the House is very concerned about charitable organisations and the other is not. I want to assure noble Lords that we on this side are just as concerned about the help given to charitable institutions as are noble Lords on the opposite side. I would make this proviso, and I think it is an aspect which has not been sufficiently considered. There are very many charities that do not of necessity attract the support and sympathy of every person who is a shareholder in a particular company. It may well be, for example, that the Society for the Abolition of Cruel Sports may be regarded as a charity, and a certain board of directors may be very sympathetic towards it, but that same company may have a number of shareholders who engage in hunting activities. They would surely have the right to say, "You are putting money into this organisation; we deeply object to it", and it could apply adversely.
The other point which comes to my mind, and it may well be in the minds of many shareholders of companies, is the criticisms which have been in the past and are at present levelled at certain charities because of their excessive administrative expenses. They have critics, and those critics may be shareholders in companies which are subscribing. These matters have to be considered. But let it be said again from this side of the House that, so far as the great charities are concerned—and I especially agree with regard to educational charities—there is as much support from this side as there is from the other. I would end by asking my noble friend whether a fur-there look can be given to this matter, so that we may arrive at what is a real position of justice. I did not want it to he thought we were not sympathetic to these matters.
LORD CITRINE: I am really puzzled at this debate. Nearly all the discussion that has taken place so far has been concerned with charities and the charitable aspects of the Bill. This Amendment, as I see it, goes far beyond that. As I see it, the Amendment is to delete—it is stated specifically here—the whole of subsection (3).
LORD POLWARTH: May I say that I entirely agree that in this respect the Amendment as drafted is probably faulty.
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I intended to deal solely with the charitable position and not disturb the political position. I agree that the Amendment is probably faulty in this respect, and would very much hope that we could put it right later on. I would apologies if that has given rise to misunderstanding.
LORD CITRINE: I am still puzzled. The subsection is in two parts. If it is proposed to withdraw the reference to paragraph (b), what I have to say need not be said at this stage in the debate. But if it is the intention to bring in at a later stage in the debate some revival of the idea to get rid of the provisions of the Bill in respect of political contributions, I should certainly oppose that as firmly as I can.
4.40 p.m.
LORD SANDYS: There is still one further point which has not been mentioned up to date that I should like to raise in support of the Amendment put down by the noble Lord, Lord Polwarth. It is that certain charities are also companies. Here I should declare an interest. I am a member of a board of directors of a charity which is also a company—namely, OXFAM. OXFAM will suffer quite materially if the Bill goes through as it is at present drafted, because in regard to its substantial income it would, as I understand it, have to itemise every single donation to all other charities all over the world. This would involve a most intolerable burden and, as has rightly been said from the Opposite Benches, as its expense ratio is much criticised by donors I feel that it would be greatly appreciated by OXFAM and indeed many other charities if this problem could be looked into most seriously by the Government. Therefore I would warmly support Lord Polwarth's Amendment.
LORD DRUMALBYN: May I be allowed to complete the speech in which I was interrupted? I thought earlier that I was giving way to the noble Lord. I put a question and he immediately leapt up, I thought to answer that question, but he continued with his speech. However, the debate that has taken place will, I am sure, have convinced the noble Lord that there is real sincerity and great importance attached to the spirit behind this Amendment. Like many of the Amendments that are moved from this side of the Committee, it is far from perfect.

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I think that the noble Lords, Lord Mitchison and Lord Citrine, were perfectly in order in drawing attention to its limitations. But my noble friend, in introducing it, made it abundantly clear that he was concerned with only the charities aspect of this matter. What we have been trying to get out of the noble Lord is whether there was any real reason why there should not be some distinction between the method of treating political contributions and that of treating charities.
The noble Lord referred to a debate in another place and I think, for the Record, it would be only fair to say that the two Back-Benchers to whose speeches he referred were not advocating positively that charitable contributions should be published, but were saying that if political contributions are to be published, why should contributions to charities not be published too? There may be force in that argument. I should have thought that it is not an argument that the Government would want to rely on altogether. But, even if there is some force in it, there is no necessity for the two to be treated in exactly the same way. So I beg the noble Lord to have another look at this matter, to make certain, as is the sense of the Committee to-day, that whatever arrangements are finally come to they will not mean charities.
LORD SILKIN: May I say just one or two words? First of all, I think it is conceded on all sides that the actual Amendment cannot stand up, and it would be absurd to pass such an Amendment which is faulty by general admission. Therefore, I would hope that the noble Lord would be willing to withdraw the Amendment and, if he so desires, come back again at a later stage. I should also like to express the view, which I am sure everyone who has listened to this debate shares, that we greatly appreciate the fact that the noble Lord has moved the Amendment in such a moderate way. If I may respectifully say so, I found his speech most interesting and valuable, and this discussion has been valuable.
I think we all agree that there is a distinction between charitable contributions and political contributions, and therefore they must be dealt with separately. As regards charitable contributions, I am quite sure in my own mind
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that the Bill as it stands is unsatisfactory. To have a limit of £25 seems to me absurd, and I would imagine that if the limit were £100 Lord Polwarth's objection in regard to his 500 contributions by his company would be greatly reduced.
LORD POLWARTH: Not by my company; I said, by a hypothetical company.
LORD SILKIN: The noble Lord is associated with a most exceptional company. I should like to know the name of it because I may make certain approaches to him. Speaking quite generally, I think that if the limit were substantially raised to£100 it would remove a great many objections which have been voiced to this provision.
The other point is whether the list of contributions should be open to shareholders alone or to the general public. I think the general public as well as the shareholders ought to know. I shall not attempt to enlarge or elaborate on the argument, but in my view the general public are as much entitled to know of the charitable contributions of important companies, especially if we raise the limit to a figure of, say£100. If I may advise the Government, the noble Lord should offer seriously to reconsider the whole question and come back again at a later stage with an Amendment. I think that if he does that all parties would be satisfied.
LORD MITCHISON: Before my noble friend replies I should like to mention two points. I am glad to hear that this is, after all, not a googly but is only a "no ball". But accepting that, as of course one does, I share Lord Silkin's view that this is, after all, a question of disclosure and that there is a great deal to be said for the public, as well as the shareholders, being able to see what is going on. I quite agree that there is a great deal to be said both ways, but I really cannot accept that it is going to interfere with charities because a certain amount of disclosure should be made and because it should be disclosure to the public at large. I quite accept that many noble Lords opposite sincerely think that a mistake. But, after all, like other noble Lords I have been some time in the world, and I may perhaps admit to having been a director of a company at

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one time—several companies in fact—and indeed to having made a few charitable contributions. I just do not accept this suggestion without a bit more evidence about it.
I want to say one more thing. The noble Lord, Lord Wakefield of Kendal (I think it was), thought that you ought to treat charitable and political contributions in the same way. I am not quite sure that I understood him rightly. I am glad to see that he is shaking his head. One has to be careful about this. Charities are a tricky business when you come to the question of defining them. Speaking "off the cuff" and without having the case in front of me, I think there is a reported case in which contributions were made to what appeared to be an educational object—Ashfield, was it? It was some case north of London. It was, in fact, a Conservative organisation. When it was taken to the court the decision—as I say, I am speaking"off the cuff ", but I think this is right—was that, though in fact the objects of the trust appeared to be purely educational, the way in which it was run made its purpose other than educational. I perhaps ought to say at once that I happen to know, so far as the Labour Party is concerned, of another case where the organisation does, I think, keep strictly to political education. But it is very hard indeed, with a body which has a definite political complexion, not to get some confusion between the charitable purpose of the education and the political purpose of the views of its own Party. One has to be rather careful about this line. It is not an easy one when it comes down to practical cases.
LORD FRASER OF LONSDALE: I am sure that the noble Lord who has just spoken, being a distinguished lawyer, would know that the hard cases he has cited do not make good law. There will always be some hard cases and the courts can take care of them. I rise to say that I thought the noble Lord, Lord Silk in, was most conciliatory and made a suggestion for disentangling this matter now and speedily. I have an alternative to suggest, with equal friendliness, and that is that we vote for this Amendment, beat the Government, and thereby compel Lord Rhodes to take it to the Minister—unless he is willing to say that that is just what he is going to do.
LORD MITCHISON: That is a wholly unreasonable suggestion, and I rise to say this. No doubt the noble Lord knows more about the law than I do; I have only practised it; but he does not know more than the Judges do.
LORD RHODES: I am taking the opportunity to reply. May I support my noble friend Lord Silk in in his praise of the noble Lord who moved this Amendment in the moderate way in which he did? But I would have been very thankful if my noble friend had given me a bit of a pat on the back, too; for I answered in a moderate way. I liked the story by the noble Lord, Lord Mitchison, who quoted a gentleman who made contributions to three political Parties so as to make sure of whatever it was he was going for. It reminds me of an old reprobate in the locality where I live who died a few months ago. His daughter fetched the parson, and the parson said to him, "Do you now renounce the Devil and all his works?" and the old man said, "Nay, lad, I'm not going that far. After all, you never know." I would not say that it is the same with Lord Mitchison.
Let us get straight, quite briefly and quickly, what this Amendment involves. I was obliged to the noble Lord, Lord Ciitheroe, with his first-hand knowledge and his experience in another place for putting his point. This Amendment would leave out subsection (3), which has to do with political contributions. We do not accept that in the slightest degree—let me be quite clear on that point. The noble Lord accepts that he would not have chosen this form, if he could have done it in another way. His Amendment then requires information to be given in the directors' report about any political Party, person or charitable purpose to which a company or its subsidiaries subscribe; and it mentions the amount. In place of the subsection the Amendment would insert provisions requiring the company to keep at its registered office a register open to inspection by members showing the details of the money which it and its subsidiaries have given for charitable purposes. No detailed information will be given in either the directors' report or the register about political contributions. If the noble Lord has no intention of objecting to the subsection applying to political

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contributions, which the noble Lord, Lord Clitheroe, also indicated, well and good; but the argument is joined on the basis of the disclosure of contributions to charitable institutions. I have no mandate on this whatever. I will say forthwith that I have been impressed by the arguments in the Committee, from all sides, and may I say that I will take it back and have the matter reconsidered to see what we can do.
LORD POLWARTH: May I start by thanking the noble Lord opposite for what he has just said? I am glad that he and his colleagues have exculpated me of bowling googlies. In his first innings the noble Lord stonewalled most effectively; but in the second innings he played a little more openly. I am very grateful to all noble Lords who have taken part in this discussion and who have supported me. I should like to make it perfectly clear that, so far as I am concerned, my object in moving this Amendment is to deal solely with the charitable contributions, regardless of what anybody else may wish to do on the other aspect. Therefore, I was particularly grateful to the noble Lord, Lord Conesford, who brought the debate back to this aspect from the political byways into which it had strayed. On the question of a limit, and the offer to put the limit higher, I still do not feel that this would be a reasonable solution. Whatever figure of limit is chosen it will be arbitrary. It will mean one thing for a company like I.C.I.; it will mean a totally different thing for a small or, at present, exempt private company. It will not have relevance of any kind. If we are to find a solution, let us get away from setting any arbitrary limit.
Another noble Lord referred to the desirability of disclosure to the public. I am all in favour of disclosure to the public of information if that disclosure serves a useful purpose. But I am far from convinced that disclosure for its own sake is inevitably a good thing. Reference was also made to the generosity and charitable giving of American companies. I am sure we are all aware of this. We are also aware that the standard of information supplied by, and required of, American companies in their reports is of a high order, yet there is no requirement in American company law for a disclosure of charitable donations, either
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in detail or in aggregate. Having said this, I am grateful to the noble Lord for offering to reconsider the matter to see whether we can arrive at an acceptable solution. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD DERWENT LORD DERWENT moved, after subsection (4), to insert:
"( ) This section shall not apply to any money given for charitable purposes outside the United Kingdom by any company or other body corporate incorporated outside the United Kingdom."
The noble Lord said: My noble friend Lord Tangley has, unfortunately, to be away for a short time, and he has asked me to move the Amendment on his behalf. It is quite a simple Amendment. Its object is to ensure that where a company has world-wide ramifications, and subsidiaries overseas, any charitable donations given by the subsidiaries in the country or countries in which they operate will not have to be divulged in the head office report. I would stress that in some countries charitable donations are made quite regularly by companies to various forms of charity which might hardly be considered charities in this country, though they are essential to anybody operating in that country. This is a small point, but I hone the Government will look at it sympathetically. I beg to move.
Amendment moved—
Page 18, line 11, at end insert the said subsection.—(Lord Derwent.)
LORD RHODES: We are sympathetic to this Amendment. If the Amendment is withdrawn, the Government will consider putting down another one at a later stage which will achieve part, at least, of what the noble Lord, Lord Tangley, had in mind.
LORD DERWENT: On behalf of my noble friend Lord Tangley, may I say how delighted he will be? On his behalf I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 18 shall stand part of the Bill?
5.0 p.m.
LORD DRUMALBYN: May I say one quick word on this clause, just to make certain that there is no misunderstanding? I revert to what I said in moving

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the first Amendment. We do not, of course, accept the noble Lord's point of view on the aggregate of political contributions. I made it clear to the noble Lord at an earlier stage that we believe that if the details are to be disclosed, then it is only right and proper that steps should be taken to make certain that no discrimination or victimisation results. We shall put down an Amendment at the next stage to ensure that that is so.
LORD CONESFORD: I rise only to raise a point on subsection (4). Subsection (4) is in two parts. It deals with what is meant by giving money for political purposes; and a company gives money for political purposes if
"(a) it gives a donation or subscription to a political party"
or
"(b) it gives a donation or subscription to a person".
And then it describes the person intended to fall within the paragraph. I think the Government will agree with me that, as a matter of legal construction, the word"person"in paragraph (b) means a legal person and not merely a natural person; that is to say, anybody known to the law as a person, whether another company, a partnership or whatever it may be. I think I am right, so far as paragraph (a) is concerned, in saying that nowhere in this measure is there a definition of "political Party". I do not know, for instance, whether the Fabian Society would be considered a political Party, nor do I know about the position of the Committee (I forget what the Committee is called) interested in nuclear disarmament. I am not sure whether that would be a political Party within paragraph (a) or possibly a "person" within paragraph (b). But if it were a "person" within paragraph (b) and not a political Party, what political Party would it be held to be supporting? Would it be the Labour Party or would it be the Communist Party?
There are many points of considerable legal difficulty which it seems to me may arise on this wording. I am not sure how subsection (4) can be worked at all, without listing the institutions which the Government believe, at any rate, to come under paragraph (a), and possibly listing those which come under paragraph (b). The difficulty, so far as paragraph (a)
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is concerned, is that we are giving no guidance at all about what is meant by a "political party". When we come to paragraph (b) the "person", as I say, need not be a natural person but may be an artificial or legal person. But a company comes within paragraph (h) only if it is helping one of the bodies which comes under paragraph (a), and with many of these persons it may be very difficult to say. The company may help more than one Party, and great doubts may arise about whether it is helping a political Party within the meaning of paragraph (b).
I think those matters are worthy of being looked at by the Government before we come to a later stage of the Bill, because I take it that, whatever else the Government intend about these provisions dealing with political contributions, they at least desire that they should be workable.
LORD RHODES: In answer to the noble Lord, Lord Drumalbyn, about the discrimination, I entirely agree with him, and may I say that the Government would take a very serious view of this. What more I can say, I do not know at the moment. But we should take a very serious view, if it were thought that discrimination was likely to ensue. I noticed that the noble Lord said that the Opposition would put down an Amendment. When it comes, we will consider what sort of answer can be given.
With regard to the noble Lord, Lord Conesford, the information which will have to be given will be the total contributions made for political and charitable purposes as a whole, and where the contributions to a donee exceed a certain amount the name of the donee and the amount will have to be given. That is as the Bill stands. The political contributions which I am talking about—
LORD CONESFORD: May I—
LORD RHODES: Wait a minute. Just be patient. I am coming to subsection (4) in a minute. The political contributions relate not only to "a political party of the United Kingdom or of any part thereof" but also to a person. I am not going to enter into an argument on a Jesuit basis, or on a legal basis, with the noble Lord, because I do not know

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anything about the interpretation that he has in mind about a "person": whether it is an artificial thing or an individual. But I should have thought that in this case a "person" would have meant both.
Subsection (4) defines giving money for political purposes as indirectly or directly, giving
"a donation or subscription to a political party of the United Kingdom or of any part thereof".
Even to me that is clarity itself. Then we go on to paragraph (b), which refers to giving
"a donation or subscription to a person who"
to the knowledge of the company
"is carrying on, or proposing to carry on, any activities which can, at the time"
of giving
"reasonably be regarded as likely to affect public support for….a political party…"
Here the words "directly or indirectly" have the effect of requiring disclosure in cases where the donation is made not, for example, to a political Party, but to a nominee for such a Party. That is what the subsection means.
LORD CONESFORD: Well—
LORD RHODES: Wait a minute. The words in paragraph (a)
"a political party of the United Kingdom or of any part thereof"
are intended to secure the disclosure of political contributions to political Parties of local significance. That is something which is very much in people's minds in a locality. The contribution might even be for anybody who was wanting Scotland to become independent, or for a Scottish National Party, or a Welsh National Party, or a Yorkshire Independence Society, if someone wanted to do something in a way which would mean that it was a political endeavour. I should have thought that it was quite clear, and I, as a layman and not a lawyer (and there are plenty in this House who probably know a lot more about it than I do), would have said that in this case a "person" is either a person in the ordinary sense of the word, or could be, as the noble Lord suggests, a body.
LORD CONESFORD: I am very sorry that the noble Lord has not understood
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my point about paragraph (b), and I am sure it must be my fault. But I think the noble Lord will find, when he consults his advisers, that a person can come within paragraph (b) not merely if he is a nominee, which is what the noble Lord said in his last speech, but also if he is in a position which is much more widely described. I gave an example earlier. I cannot remember the names of all these bodies, such as the Campaign for Nuclear Disarmament, and all that class, but—
LORD RHODES: Aims of Industry.
LORD CONESFORD: I do not care which you take, but you can take a great number. I wonder whether the Government have fully considered whether they will or will not come within (b) if you cannot identify the Party which will be benefited. I gave as an example a body which might be thought to benefit, or possibly to benefit, both the Labour Party and the Communist Party.
Clause 18 agreed to.
Clause 19:
Directors' report to include, in case of certain companies, particulars of exports
19.—(1) lf, at the end of a financial year, a company whose business consists in, or includes, the supplying of goods does not have subsidiaries, then, unless the turnover for that year (so far as stated in the accounts in respect of that year in pursuance of Schedule 8to the principal Act) does not exceed £20,000, there shall be contained in the directors' report relating to that year,—

(a) if, in that year, goods have been exported by the company from the United Kingdom, a statement of the value of the goods that have been so exported from the United Kingdom during that year;

(b) if, in that year, no goods have been so exported from the United Kingdom, a statement of that fact.

(2)If, at the end of a financial year, a company has subsidiaries, then, unless neither the business of the company nor that of any of the subsidiaries consists in, or includes, the supplying of goods, there shall he included in the directors' report relating to that year—

(a) unless, in the case of the company and of each of its subsidiaries, no goods have been expored by it in that year from the United Kingdom, a statement of the aggregate of the values of the goods which, in the case of the company and of each of the subsidiaries, have been exported by it in that year from the United Kingdom;

(b) if, in the case of the company and of each of its subsidiaries, no goods have

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been exported by it in that year from the United Kingdom, a statement of that fact.

(3) For the purposes of this section, goods exported by a company as the agent of another person shall be disregarded.
On Question, Whether Clause 19 shall stand part of the Bill?
5.12 p.m.
LORD ERROLL OF HALE: Before we part from this clause, I should like to take the opportunity of asking the noble Lord who is going to reply just what is its real purpose. It is quite plain what the clause intends to achieve—namely, the publication in the directors' report of the exports of a company doing more than £20,000 worth of business in goods in a year. But when the information has been published that it has exported such-and-such a percentage or such-and-such a value, what are the Government going to do with the information? Because if they are not going to do anything with the information, there is really no point in publishing it.
On the other hand, do the Government intend to write letters to those firms whose export performance, in their own opinion, is not up to the norm? Or, perhaps, to a company whose performance is apparently poor when compared with another's? And does the wretched company then have to come along to see the appropriate Minister at the Board of Trade (who may be the noble Lord, Lord Brown, who has been charged with special responsibilities in this field) and have to prepare a long explanation as to why it has not done as well as Lord Brown thinks it ought to have done? Or is such a company going to have to face the music in some way or another? If it is not going to have to do any of these things, then I can find very little justification for this clause at all; but if it is the Government's intention to proceed to make use of this information, then I think they are going far too far in their otherwise laudable attempts to increase our exports.
There is another important matter, and that is that the disclosure of this information may in certain circumstances do positive harm to a firm's activities abroad; and I am sorry to find that, so far as I can tell, there is no safeguard for this matter in the clause as it stands. I would ask the noble Lord at least to consider the possibility of allowing firms
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to be exempted from the requirements of this clause where they can show that the publication of the export figures could be harmful to their work abroad.
Then, the whole purpose of the clause is manifestly unfair as between one firm and another, because many firms do not export for the simple reason that they are engaged in supplying components and assemblies to other firms which are making up completed articles for export. Such firms, of course, will have to put up a nil return, or possibly a very small return, in respect to spare parts directly exported, and it will look as though their performance, of perhaps 0·3 of their total output, is very bad, when in fact the whole of the finished products of the other firm is wholly dependent on the efficiency and reliability of delivery of the components and assemblies firm.
A particularly good example, of course, is a well-known diesel engine maker who manufactures a very large number of diesel engines which are incorporated in tractors which are then exported as complete units. The tractor building firm will get all the credit for those exports and will be able to show a very large figure for exporting, both in terms of value and in terms of percentage. I must admit that I think it would be quite impracticable to start getting firms to indicate indirect exports of that sort, but that only serves to demonstrate the manifest unfairness as between one firm and another.
Then, of course, it is characteristic of a Socialist Government to concentrate solely on goods. They do not like invisible exports. They do not understand them; they think they are something to do with the City and so they leave them out. If this clause is to have any meaning at all, it ought to include all forms of export activities. Agencies are to be excluded under subsection (3); insurance firms are to be excluded; banks and all the other activities of the City of London which contribute so much to our balance of payments, are all excluded. Why?
The hotels of this country make a tremendous contribution to our balance of payments. Not only the big London hotels, but hotels in many different parts of the country, boast of a regular stream

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of visitors, not only from North America, which is very important, but also from sterling area countries, such as Australia, New Zealand and South Africa. We know the Socialist Government do not like the tourist industry. They do not like people enjoying themselves. They do not really like hotels; so perhaps it is a blessing to hotels that they are left out. But it does make rather a nonsense of the purpose of any of this clause that such important sectors of our economy, which are making substantial contributions to our balance of payments, should be left out and that the emphasis should be entirely on goods—and, then, goods only when the firm is manufacturing more than £20,000 worth in any one year. As the noble Lord, Lord Brown, doubtless knows, there are many small firms which are very proud of their export records, but they are to be left out. They are the "small fry". They are too small to be co-ordinated, probably too small even to be bullied by the noble Lord when he gets his hands on these figures. I beg to move that the clause be rejected.
LORD MITCHISON: I accept, of course, the complete and absolute sincerity with which we all know the noble Lord, Lord Erroll of Hale, to express his views, but that does not prevent me from wondering sometimes how on earth he arrives at them. I listened just now, and I can only say this to him. I read through this clause, and it seemed to me to have a fairly clear object, which I do not think he even mentioned, and I found very great difficulty in attributing to it unfairness, or the deep machinations which he seems to find in the most surprising places.
What it seemed to me to do was this. In a trade which was supplying goods—and that is all we are dealing with for the moment—there should be some firms which would be doing extremely well in what I am sure we would all agree is the very important matter of exports, and other firms which would not be doing so well. The noble Lord has, I think, given examples of two companies which do well in this respect; and nowadays we have taken to giving decorations to ladies and gentlemen who have distinguished themselves in the export trade. Without going into the detail of all that, I should
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have thought that even the noble Lord, Lord Erroll of Hale, would recognise, with his past experience of the Board of Trade, that there was some advantage in trying to promote exports, and that at any rate one of the possible ways of doing it was a little disclosure of what people were and were not doing in that field.
Let me give him an instance. I am a child in these matters. I have no doubt he knows how you disclose the precise amount that a merchant bank, say, has contributed to the export campaign, or the almost equally complicated question of what an hotel does in that direction. I am sure he understands, but I can only tell him that I do not. But I do understand the position regarding one of the main industries in my own former constituency. Kettering made boots and shoes, and this is a trade that is changing a little. The materials are changing, and the structure of the trade is changing out of a number of comparatively small companies of a private character into a structure rather dominated by big firms. All that is perfectly true, but when at the end of the day you looked at their efforts to export boots and shoes, you found that there were some rather remarkable differences which I think required a little explanation. I think they knew it themselves.
I knew some firms who made extraordinary efforts to promote exports in this trade, and others who said that it was all too difficult. I should have thought that it was a good thing that the results of that should be published. After all, there are facilities nowadays for assistance for exporters, assistance by way of information, credit and so on; and I should have thought it reasonable that if a firm was doing rather badly one should know it and that their attention should be called to the possibility of doing rather better in one way or another. Some things, I agree, present peculiar national difficulties.
There was a centre—not actually in my constituency but not very far from it—that made most of its products in the form of policemen's boots. Policemen's boots are notoriously large. They are, perhaps, not wholly exportable. I do not know enough about the habits of the flics in Paris or policemen in other countries to know whether you can do

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much about exporting policemen's boots. There are difficulties like that. This may sound a frivolous point; but it is a real one. Therefore I say to the noble Lord, Lord Erroll of Hale—and I know that I am a child and an innocent in these matters, and I do not really understand all these things—that I read this clause and it seemed to me to have a good and fairly simple purpose. If we expand it a great deal by putting in some of the things that he suggested, I am not sure that it would then be workable. But I should like to add that it did not strike me as being unfair to anybody. I thought it a suggestion in the national interest with which we might all concur and that it did not involve any Party question at all.
LORD WAKEFIELD OF KENDAL: I would support my noble friend Lord Erroll of Hale when he says how unfair this is. It is unfair because there are very many companies in this country, as he said, who do a great deal of exporting by way of supplying components. I am a director of a company which, as well as exporting directly, provides a lot of wrapping for goods that go overseas.
LORD BROWN: I wonder whether I might interject a point of clarification? I do not want to interrupt the noble Lord in what he is saying, but I think there is a misunderstanding here. The clause insists that a certain category of firms must state their turnover. There is nothing in it to prevent any company other than those in that category from stating anything it likes.
LORD WAKEFIELD OF KENDAL: The difficulty is that many companies that do a considerable amount of exporting indirectly do not know where the articles that they are providing for other goods which are exported are going. In the case of the company of which I am a director they know they are supplying wrapping for some goods but do not know what proportion of this wrapping is going overseas. They know that a great amount of the goods for which they supply wrapping goes overseas, but the proportion cannot be determined. I suggest that this clause might do more harm than good. Many firms may feel extremely disgruntled, knowing that they do a great deal of export trade for which they get no credit at all because their contribution is
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indirect. I suggest that the clause be looked at again.
LORD McCORQUODALE OF NEWTON: I should like to support what my noble friend Lord Wakefield of Kendal has said. The noble Lord, Lord Mitchison, said that he was a child in these matters; and, if I may say so without offence, that was apparent to everybody who listened to him. Take the trade with which I am associated, book printing and publishing. Half the books that are printed in this country at the present time are exported. The figure is something between 40 per cent. and 50 percent. But they are exported by the publishers. The printers do not publish in their accounts that they do any exporting, neither is the author allowed to claim that he is an exporter. The exporter is the publisher although he has neither written the books not printed them. Is that fair? I should say it is not.
I cannot understand the object of this clause. It seems to me that any firm which is exporting and wishes to tell its shareholders can put it in their directors' report. There is nothing to stop them from doing so. A great number of companies do so. But some firms are doing exports and do not wish to allow foreign competitors to know that they are exporting in those lines. I do not wish to go into details, because I should be giving away trade secrets; but I can assure the noble Lord, Lord Brown, that I know of certain exports from this country, very valuable ones, to which the trade unions and other interests in the countries to which they are exported have strong aversion and against which they continually make attacks in the Parliaments and in the Senates of those countries. If we are going to advertise unnecessarily what these products are and to where they are going it will only aggravate the opposition to our own exports.
LORD BROWN: Could I make another point of clarification? There is no intention in the clause, expressed or otherwise, of asking firms to publish the names of the markets to which they export their goods.
LORD McCORQUODALE OF NEWTON: The trade of which I am thinking—and it runs into many millions of pounds—is directed to only one market

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which is well known, and there is no other market outside this country for those goods; and the opposition on the other side is well-known. This clause is only going to do harm to our exports. Surely it can be left to the good sense of the firms who export to give that fact publicity when it is all to the good, and not to give it publicity when it is going to do harm to the exports of this country. I wish the Government and the Board of Trade (who nearly always, when they begin to interfere with these things, put their heavy foot into it) would sometimes refrain from interfering in things which business men of this country know something about.
LORD INGLEWOOD: I hope before this debate is over we shall hear from some noble Lord what really lies in the mind of the Government in wanting this information and to what purpose it is to be put. I had hoped that the noble Lord, Lord Mitchison, would tell us. Even though I once represented a constituency where one of the principal industries was the manufacture of boots and shoes, I feel that he chose a bad example. It is well known that the opportunity to export boots and shoes is very limited since every other country has a fairly highly-developed industry of its own. What can the noble Lords opposite want with these figures, except, as the noble Lord, Lord Erroll of Hale, said, to use them to bully those that they do not like. Do they want to publish lists of the kind that one used to have published at school—form lists? Surely we are dealing with adult matters here and not something teenage. There are enough statistics of goods exported, and surely the Board of Trade and their regional offices have sufficient contact to know what is going on, without asking firms to go to all this trouble and to be forced to publish results which are so easily misunderstood by many people that they can only do harm. I hope that if the noble Lords opposite cannot show how they can use this information responsibly—which to date they have not been able to do—they will agree to withdraw this clause.
LORD CHORLEY: I suggest that the type of goods that it is essential to keep secret must be very small and this must be a very unusual case. I should have thought that it could have been got over
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by giving the Board of Trade power to issue a permit which would cover that sort of case. Disclosure to Government Departments is always confidential, and there are cases where Government Departments are given the opportunity to issue permits of this kind.
VISCOUNT BRENTFORD: I would reiterate the request that the Government tell us for what purpose they really want this information. It seems to me that it can only be to penalise those companies which do not publish good export figures. There is a wide variety of reasons why a company may not be able to export, just as there may be a variety of reasons why a company can export. I recall when I was a member of the Government going to Leicester to look at one of the most old-fashioned companies that I have seen in my life and which had not had any form of modernisation for a hundred years, and I saw there the production of many thousands of brown cotton stockings. I told the chairman of the company that I was exceedingly interested in the method of production, and I asked where he found a market for brown cotton stockings, as, so far as I was aware, every lady of my acquaintance wore nylon stockings and was not interested in brown cotton stockings.
He said, "Nylon is a very interesting subject. We have heard of nylon, and we are contemplating setting up an enquiry into whether or not it might be advantageous to go into the manufacture of nylon stockings." I said, "Yes, but I should like to know where you sell your brown cotton stockings." He replied, "In North-Western Australia. All the ladies there wear brown cotton stockings." If this provision had been in operation then, that company would have got immense credit for something for which they were not in any way responsible. It was purely a traditional custom with which they happened to be connected and it was not as a result of any of their efforts whatsoever.
Another aspect of the matter I have not heard referred to is that of the company which deals in the Middle East. If that company is required to publish its export figures to the Middle East it will run into very great trouble and difficulties indeed, because immediately it publishes its export figures for its exports to Israel

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it will be banned from exporting to any of the Arabian countries—an outcome which cannot possibly be of advantage to the company, to our exports or to this country as a whole. I hope that the Government will accede to the request to inform us why they need this information, so that we may judge whether or not it is information which companies should be required to supply.
LORD HAWKE: Of course we all want to see exports increased, and my reading of this situation is that some bright person at the Board of Trade had a brainwave and said, "Let's have a league table. That will encourage them all. "But, like so many brainwaves which emanate from that ivory tower, when it comes to be examined in practice it is found to have all sorts of disadvantages that the begetter of the idea never dreamed about. The whole of industry in this country co-operates over exports. How could the great engineering works of this country export unless somebody supplied their workmen with overalls and cloths for cleaning their machines? How could they export if somebody else did not supply them with cutlery to use in their canteens? The whole of the exports of this country represent one vast act of cooperation, and to think that by producing a league table of people ultimately to get the credit you will not put some stigma on the companies not in the table is, in my view, just wishful thinking.
5.34 p.m.
LORD BROWN: It seems to me that the noble Lord, Lord Erroll of Hale, has made nearly all the comments and asked nearly all the questions which everybody else has asked, with one minor exception; so I will confine my reply mainly to what he said. I think he covered in advance all the questions asked subsequently, although the subsequent questions included different details. I am not going to start off by talking about the purpose of the clause. It is going to be a great pleasure to me to make that statement later, but I want first to deal with some of the other things. I do not want to finish up what I have to say on this important issue with a mass of tiny detail.
The first question asked of me was what are the Government going to do with this information? With the greatest
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respect, it would seem that some noble Lords opposite are obsessed with the idea that if any information is produced by any company, or perhaps any other institution, it is inevitable that the Government will use it for some malevolent or bothering purpose; that they will do something with it to somebody. The noble Lord, Lord Hawke, seems to get a lot of nightmares over this sort of thing. He has already constructed in his mind a league table with which we are going to bother industry. I will come to the purpose of the disclosure of these export figures, as I said, at the end of what I have to say. Let me assure the Committee that we are not going to set up league tables or use the figures to do things to people in any sense of the word. The second point made was about harm being done to companies abroad. Hypothetically I think it would be quite possible to construct cases where you might be able to argue that harm was being done to the overseas relationships of companies by quoting the case of companies which export to only one customer in one country. It is conceivable that there is a tiny number of companies where this happens. I do not know of any, but in general this would be an extremely exceptional occurrence, and I do not think that we have to legislate for tiny exceptions to the general trend.
A number of noble Lords have made some very heartfelt, and no doubt sincere, comments about the unfairness of the proposal to exhibit these export figures to what they have categorised generally as indirect exporters. Let me be the first to agree that "indirect exporter" is a term which would necessarily have to cover a large section of the country's services and industries. There are a great many people who consider that suppliers of components are special types of indirect exporters. This really is not so. Anybody who contributes to the process of producing an export is, in fact, an indirect exporter; and if you try to define the category of indirect exporter, inevitably you find yourself including almost everybody who has anything to do with commerce or society in the country.
The point I would make, which I think has been overlooked by those who have spoken on this matter, is: who makes the selling effort overseas? This is a crucial point. We want to give full

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credit, and ever more credit, to those who are prepared to undertake the onerous task of doing market research, initial marketing effort and all the rest of it, overseas; and the people who do this are the direct exporters. If an indirect exporter is fortunate enough to number among his customers those who export a large proportion of their total production, that indirect man is a very fortunate person, because he is getting increased volume of orders for his component materials simply because his customers are indulging in this extremely serious overseas effort on behalf of our economy and on behalf of the supplier as well.
LORD ERROLL OF HALE: I am most grateful to the noble Lord, Lord Brown. Perhaps he is coming to the point; but if the exporting agents are the people who are doing all the exporting, why are they left out of this clause?
LORD BROWN: Export agents are people who act on behalf of companies overseas and are not principals in the deal. The noble Lord knows this very well indeed. If a legal definition is wanted of the term "agent", which we hope to be able to provide from the Board of Trade in the very near future, in order to clear up a great deal of misunderstanding about this, it is necessary to come up with some such words as "somebody who acts on behalf of another without himself being the legal participant in the deal". That is what an agent is. If in the term "agent" you include those who buy goods from companies in this country and sell them overseas—that is to say, act in the role of principal—they will disclose a turnover as being direct exporters. I hope that I have cleared up that point.
It may be that what I have said deals with this general accusation of "unfair to indirect exporters". It may be disappointing for praise to be bestowed on those who actually indulge in all these marketing and selling activities overseas, which are sometimes very expensive and certainly require a great deal of effort. But unless we are prepared to discriminate to a much greater extent in the way we give encouragement, in order that we can give still further encouragement to
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our direct exporters (and by so doing, of course, we necessarily put the indirect exporter in a lower place) we shall not solve our economic problems.
THE MARQUESS OF ABERDEEN AND TEMAIR: May I ask a question about subsection (3)? The noble Lord referred to the propaganda and advertising work which is done before an export can be made. Surely there are organisations who do the whole of this work and manufacture nothing themselves. Are they to receive nothing for the work they have done?
LORD BROWN: If these firms manufacture nothing, but are principals in the transactions—that is to say, they buy the goods in this country and engage in all the market research and the selling overseas—they are direct exporters, and they get the praise. The noble Lord, Lord Erroll of Hale, in reference to hotels, made the comment that the Government did not like people to enjoy themselves. I think that a comment of this sort is out of place and I pass it by. But let me make it clear that the difficulty in making any calculation of foreign earnings by hotels and financial and insurance institutions; is immense. In making calculations one has to take account of outgoings in other directions and produce the net amounts, and by the time all the necessary information is obtained one has a very complex result.
I do not see why we should stop drawing the attention of the community to the existence of these direct exporters just because it is not possible to give equal prominence to others who are doing at least as good a job. I admit that it is rough justice to exclude a statement of the overseas earnings of banks, insurance companies, and hotels, but because of that difficulty I do not think it is logical to say that we should not give praise to those who are directly exporting. In any case. there is nothing at all to prevent any financial institution from including in their own report and accounts a statement of what they are doing in exports. I should be delighted to see such statements about their contribution to our balance of payments. It has been suggested that it is unfair to leave out small firms. But here again there is nothing to prevent them from putting their export figures in the report and accounts. I think that if we had not

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drawn this line, the complaint might have been made that this was too much bother for the small firm.
I must make one comment on the firm exporting brown cotton stockings, mentioned by the noble Viscount, Lord Brentford. He asked why a firm supplying the export market with what customers wanted should benefit by some action it had not brought about. I think that a firm that goes out into the world and finds more markets for brown cotton stockings is doing this country a good turn and is not to be criticised for that.
Now let me come to the purpose of the clause. Ours is a society which has been suffering from recurrent balance-of-payment difficulties for the last fifty years—indeed, I could almost say the last hundred years. If we look into our history, I think we shall find that one of the principal causes has lain in the fact that ours is also a society which, for reasons I do not fully understand, has never given commerce and industry the place to which it is rightfully entitled. When we reach the stage in our society when a father, upon being asked about the future career of his son, replies, "Well, John is my best lad and the most intelligent—he is going into industry. The others are good lads and we will find a place for them in the professions" we shall have reached a situation which we ought to have reached a long time ago. It has already been reached in America and Germany, which are successful exporting countries.
If we have given too little support to the status of industry and commerce, we have equally failed to give due status to those who directly export our goods overseas, and the more that can be done to inform the members, the shareholders, the employees and the middle managers about the direct exports of the companies with which they are associated, the better it will be for the growth of our exports. If this figure has to be published by industrial companies every year, we can he assured that all the directors will see it when they come to look at the draft balance sheet and accounts. I know that many directors are going to look at this figure and say, "Is that all we directly export?" For the first time such a company is going to have to face its own music. I am not saying that it
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will have to face the Government's music. but it will have to face the facts of its own situation.
LORD MCCORQUODALE OF NEWTON: May I interrupt the noble Lord, because he seems to be so ignorant about this? The Government are at present paying a subsidy of up to 3 per cent. to firms for exports. All the directors know this amount when they see the accounts. Surely every board of directors are delighted to see the amount that it comes to and will have it at their fingertips? I am sorry for the woeful ignorance of the noble Lord.
LORD BROWN: The noble Lord has accused me of ignorance. I think he is skating on to thin ice here, because if a company has no exports there will be no export rebate to show on the accounts, and the directors cannot ask why they do not have an export rebate figure there. So I refute the noble Lord's accusation of ignorance, which I think is a little unfair. The fact that the figure of direct exports is going to be disclosed will doubtless mean that directors may begin asking some awkward questions of the management and employees. But if the figure is a very good one, it will be a heartening stimulus to those who are doing their national duty.
LORD COLERAINE: I do not want to spoil the effect of the noble Lord's peroration, but, while I can see that this clause may provide some very slight stimulus to exports, it seems to me that it will put some exports at risk. I think that the noble Lord was a little cavalier, and even light-hearted, in his dismissal of any danger there may be to our export markets in the disclosure of too much information. He said that if it is in the chairman's statement or directors' report, it will be drawn to the attention of the directors. I cannot conceive of any company in which the directors are not already fully seized of the importance of the export trade. As for the people in the works, they see the stuff going out. They know where it is going, and they are seized of that too. But there seems to me a very real danger in some of our overseas markets.
The noble Lord said that we suffer from a balance-of-payments problem. So do other countries and we export to

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markets which have periodic balance-of-payments crises. I am chairman of a company which does a big export trade, and I have often thought that it would be nice to put in the chairman's statement or in the directors' report some figures to show the extent of that trade. But I have always been warned—and I think the warning has been right—that if I did that people in some market on the other side of the world, or in Europe, or in one of the developing countries, could get hold of our accounts, as competitors do, and could go to their Government and say: "You see the measure of this company's export trade. You see what a threat it is to us in the future. You must do something about this. You must either impose a tariff or you must insist on the company manufacturing in this country instead of in the United Kingdom. "I suggest to the noble Lord—I would not say that it is a serious danger—that very likely the practical disadvantage of this clause could far outweigh the theoretical advantage he outlined in his speech.
LORD CONESFORD: There is one question that I should like to put to the noble Lord, Lord Brown. I understood him to say that his general object was to increase the prestige of industry and trade in this country, and that is an object with which I feel a certain sympathy. He also said that they did not here enjoy the prestige of some of our rivals, and I think he mentioned the United States and Germany. The question I should like to ask is whether the company law of either of those countries has any provision such as the provision we are now discussing.
LORD BROWN: To deal with the last question first, frankly, I do not know whether such a provision prevails in other countries. If it does not, it would not affect in the slightest the arguments that I have put forward.
To correct one misapprehension, I do not think I said that the prestige of industry was lower in this country than it is in these other countries. What I said was that the prestige of industry to people in this country was lower than the prestige of industry in the U.S.A. to the people in the U.S.A. or the prestige of German industry among people in Germany. I have made a rather confused
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point, but I hope that it is understood. I do not want to be misunderstood on this matter. I am all for not knocking British industry.
Another noble Lord made a point about the danger of exposure, and I cannot deny that dangers of this sort can conceivably arise, and do arise. But one has to deal with this situation in a practical way, and exports in general are things that make themselves reasonably obvious in a market. In fact, many companies will go to work in a market to advertise the volume of their sales as indicating how good their goods are. If there is one thing that you cannot disguise in a market it is the fact that you are selling goods in that market. This is one of the most difficult things to keep secret. I am not dealing with the point facetiously, although I may be smiling. The whole idea of keeping secret the fact that you are pushing large amounts of exports into a market seems to me to be a difficult proposition. The Government of the country can so easily look at the imports and get the figures. So any attempt to keep these figures secret by not encouraging British firms to publish their total exports, which cover all markets in the world, does not seem to me, with respect, to be a particularly cogent point.
LORD ERROLL OF HALE: The noble Lord would help the hard cases very much if he would consider putting down an Amendment on Report giving the Board of Trade discretionary power to allow individual firms on application to the Board of Trade to withhold these figures when in their opinion it is found to be damaging to the export prospects of those firms. Why cannot the noble Lord be decent to the firms who are liable to be hit? It is quite easy to do this, instead of saying that the majority must have its way, and the small minority will have to go to pot. It might be more considerate to people who may be hurt by this extraordinary course, which I do not think will do much good.
LORD BROWN: I should be willing to concede that the noble Lord had a point there, if anybody had taken the trouble to provide us with evidence of these firms. But this Bill has been available for inspection for a long time now; no evidence has been given to us in this connection, and it is difficult to think of

1813
any firms that fall into the categories named. I am not questioning the sincerity of those who say that such firms exist, but there would have to be some small number of such firms before we could have a movement in this way. As I say, we have no evidence of this at all. I am not being churlish on this. If evidence is produced, I will undertake to look at it.
Clause 19 agreed to.
Clause 20:
Limitation of operation of sections 16 to 19
20. None of sections 16 to 19 (both inclusive) of this Act hall apply to a report attached to a balance sheet of a company laid before it in general meeting in respect of a financial year ending before that section comes into operation.
5.56 p.m.
LORD DRUMALBYN LORD DRUMALBYN moved to leave out all words after the second "before" and to insert:
"1st April 1967 or the coming into operation of that section, whichever is the later."
The noble Lord said: I move this Amendment very much in an exploratory way, and I should like to explain the purpose of my doing so. I think the noble Lord will appreciate that this is a difficult little clause, because, if I understand it aright, Clause 16 comes into operation after six months from the date on which the Act is passed, and Clause 17 comes into operation twelve months from that date. As to Clauses 18 and 19, I take it that they come into effect on the day when the Act is passed. But I am afraid I have been unable to find this. I would suggest to the noble Lord that, from the point of view of giving any figures of this kind, the best thing to do is to fix the date on which the Act should come into operation at the beginning of a quarter, since the financial year of a company runs from the beginning of a quarter to the end of the fourth quarter. I think this would be much more convenient.
I am not sure whether I have taken the right date here as April 1. I have found it difficult to interpret this. I suggest that it might be as well to redraft this passage to make clear, if possible, when the various clauses do come into operation. When you first read the Bill you assume, I think, that all the clauses will come into operation on the same
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day, and it is not until much later in the Bill you find they come into operation on a different day. I wonder whether the noble Lord would consider this suggestion. I beg to move.
Amendment moved—
Page 19, line 6, leave out from ("before") to end of line and insert the said new words.—(Lord Drumalbyn.)
LORD RHODES: I agree with the noble Lord that this is an intricate clause, but I hope that I shall be able to explain it to him. Clauses 16 to 19 of the Bill deal with the information to be given in the directors' report. Clause 42(1)(b) brings Clauses 16, 18 and 19 into operation six months after the passing of the Bill, and Clause 42(1)(c) brings Clause 17 into operation twelve months after the passing of the Bill. Clause 20 limits the operation of Clauses 16 to 19 so that they do not apply to a directors' report on a period which ends before the clauses come into operation.
Let me illustrate it. It is impossible to be certain how long the Bill will take to go through all its stages in both Houses, but one can hazard a guess, and it is unlikely that it will receive the Royal Assent before the end of June, 1967, at the earliest. On this basis, Clauses 16, 18 and 19, dealing with the general content of the directors' report and information about political contributions and exports generally, will not come into operation until December 31, 1967.
Clause 17, requiring certain analyses of turnover in the directors' report, would not come into operation before mid-1968. Thus a directors' report attached to accounts laid before a company in general meeting in 1968, dealing with the financial year ending before the end of 1967, would not have to comply with Clauses 16 to 19.
Let me say that the proposed Amendment will have the effect of exempting from compliance with the requirements of Clauses 16 to 19 a directors' report dealing with a financial year ending before April 1, 1967, or the coming into operation of the clauses, whichever is the later. As the Bill is drafted, however, the clauses could not possibly apply to a directors' report relating to a financial year ending before April 1, 1967, and, as has been explained, would probably not

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apply to a report relating to a financial year ending before December 31, 1967, at the earliest. I therefore submit that the Amendment is unnecessary, and I hope that after my explanation the noble Lord will withdraw it.
LORD DRUMALBYN: I am grateful to the noble Lord for his clear explanation of the effect of this clause. He did not deal with the point I made, that it might be convenient if the coming into operation were not dependent entirely on the date of the passage of the Bill but on, say, the last day of a quarter immediately after the passage of the Act, or something of that kind. I do not wish to press this Amendment at the present time, but I wonder whether the noble Lord could consider that suggestion before the next stage.
LORD RHODES: Yes.
LORD DRUMALBYN: On that understanding, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Clause 20 agreed to.
Clause 21 [Directors' report to show, for certain items included under authority of proviso to Section 163 of the principal Act, corresponding amounts for preceding financial year]:
6.4 p.m.
LORD RHODES LORD RHODES moved to leave out Clause 21 and insert the following new clause:
Directors' report to show, for items included under authority of proviso to section 163 of the principal Act, corresponding amounts for, or as at the end of preceding financial year
".Where advantage is taken of the proviso to section 163 of the principal Act to show an item in the directors' report instead of in the accounts, the report shall also show the corresponding amount for (or, as the case may require, as at the end of) the immediately preceding financial year of that item, except where that amount would not have had to be shown had the item been shown in the accounts."
The noble Lord said: Paragraph 11(11) of Schedule 8 to the principal Act makes a requirement that there shall be stated the corresponding amounts at the end of the preceding year for all items shown in the balance sheet. Those who
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are accustomed to seeing balance sheets understand that well. Paragraph 14(5) requires that there shall be stated the corresponding amounts for the preceding year for items shown in the profit and loss account. So there are the two things there: the balance sheet and the profit and loss account.
Clause 10, subsections (2) and (3), of the Bill state that amounts at the end of or for the preceding year do not have to be given in respect of the new items required by the Bill in the first of the company's accounts that are required to show the new items. For example, suppose a particular company is first required to show turnover in its accounts for the year ending on March 31, 1967. An exception is made in Clause 10(6) for the new items relating to emoluments For these items, corresponding amounts for the preceding year are required in the first accounts in which the items appear. In the example, the company would have to give in its accounts for the year ending March 31, 1968, figures relating to emoluments in that year and in the preceding year.
The purpose of Clause 21 as drafted was to require that when information about emoluments was given in the directors' report the corresponding amounts for the preceding year should be stated, as they would have been stated had the information been given in the accounts or in a statement annexed to the accounts. The clause does that. But it might be thought to imply either that no other accounts item may be given in the directors' report, from the wording of the clause as it was, or that, if some other item is given, there is no obligation to hive the corresponding amount for the preceding year.
This is a very technical point. It is because the words
"required by this Act to be given in accounts, and is thereby allowed to be given in a statement annexed"
refer really to what can be given in the accounts and what can be given in a statement annexed. Our intention here is to clear this small item up. First, these words mean precisely what they say, in which case the proviso is relevant only to Section 196, and Clauses 6, 7 and 8. Your Lordships will remember that Clauses 6, 7 and 8 relate to directors'

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disclosures. No other accounts items are to be given in the directors' report. This is a confusion that could arise. I ask the noble Lord to accept that what I am saying is right—I know it is right.
The second point is that the words "given in the accounts" may be taken to embrace "given in the balance sheet" and "given in the profit and loss account". On this second construction, which is perhaps the more generally accepted, other accounts information, such as that required by paragraph 11 of Schedule 8 to the principal Act, may be given in the directors' report. The aggregate market value of quoted investments is an example. The amended version of Clause 21 makes it clear that when advantage is taken of the proviso to Section 163 to show any item in the directors' report instead of in the accounts, the corresponding amount as at the end of the preceding year or for the preceding year has also to be shown if it would have had to be shown if the item had appeared in the accounts. In short, disclosure of an amount relating to the preceding year cannot be avoided by showing the amount for the current year in the directors' report instead of in the accounts. I beg to move.
Amendment moved—
Leave out Clause 21. and insert the said new clause.—.(Lord Rhodes.)
LORD DRUMALBYN: I am we are grateful to the noble Lord for that explanation. For myself, I feel that I should want to read it again before I knew what it meant. But I know that is my fault and not the noble Lord's.
On Question, Amendment agreed to.
Clause 22 [Penalization of failure by directors to secure compliance with requirements of the principal Act and Part I as to directors' report]:
On Question, Whether Clause 22 shall stand part of the Bill?
6.10 p.m.
LORD DRUMALBYN: I must confess I am not entirely happy about this clause. In conjunction with Schedule 6 this clause apparently repeals subsection (3)of Section 157 of the principal Act, under which it is an offence not to state in the directors' report the dividend recommended, if any,
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and the amount that it is proposed to carry to reserves; but in that section the manner in which they comply with subsection (2) was left entirely to the discretion of the directors.
Under this clause it is also to be an offence to fail to comply with Clauses 16 to 21. Noble Lords will see that the maximum punishment on conviction is imprisonment for a term not exceeding six months or a fine not exceeding £200. I do not think anybody would object to making it an offence not to disclose the matters referred to in Clause 16, although I am not entirely happy about subsection (1)(f): I rather feel that may fail in its object. But I wonder whether it is really necessary to make it an offence, for example, where a company considers that one class of its activities differs substantially from another, to fail to state the turnover and profitability separately for each. If two companies have exactly the same activities, one of them might take the view that they were substantially different and the other might not. One is left wondering whether one company would be guilty of an offence because the other takes a different view.
Then as to the stating of the value of exports, I should have thought it undesirable to make it an offence in the manner stated. It is quite possible to make it an offence not to state ascertainable facts, but I should have thought it was undesirable to make it an offence not to state facts which are to some extent nebulous. Nothing could be more nebulous than the value of exports. Some are sent on consignment, some direct; some are shipped to subsidiaries at various prices. In any case, is it reasonable to make it an offence not to state the exports, and, in particular, not to state that one never has had any exports and never could have any exports? This seems to me to be going rather too far. I wonder whether the noble Lord could look at this clause again? One knows the difficulties of determining offences but one does not want to create offences unnecessarily. The anxieties about Clause 19 have been mentioned, and I think it is rubbing it in a good deal to make it an offence punishable with a fine of £200 or six months' imprisonment not to state the exports.
LORD RHODES: I am obliged to the noble Lord. He was not making the point that there should be no penalties at all, because if he had done that he would have been going against precedent and what is embodied in the law as we know it; because these penalties are there already. He is merely trying to pick out one of those penalties which applies to a particular item and saying that it would be unjust if it were carried out. I suggest, however, that if there is a discipline in an Act there has to be some inducement for it to be carried out; and this is one. I do not think it would be in the least onerous, and I do not think a penalty of £200 in this sort of circumstance would worry anybody. However, at this moment I cannot enter into a hypothetical argument about how it would affect firms with different categories of goods. I think the penalty is quite reasonable in the circumstances.
LORD HAWKE: I think we must remember that we are now legislating for 300,000 more companies than have been legislated for before, and I should have thought it much more reasonable, on the assumption that there will be a certain amount of misunderstanding and mistakes over this, to say that the penalty of six months' imprisonment should come into operation only for a second or subsequent offence.
LORD RHODES: I will take notice of that.
Clause 22 agreed to
Clause 23 agreed to.
Clause 24 [Penalisation of dealing by director of a company in options to buy or sell shares in, or debentures of, the company or associated companies]:
LORD DRUMALBYN: I was going to suggest that Amendments Nos. 26 and 28 should be taken together.
LORD RHODES: I agree.
LORD DRUMALBYN: The purpose of these Amendments is to secure that directors are not placed in a worse position as regards rights than other members of the company—if for instance, rights are conferred on holders of any class of share or debenture to elect to convert them into shares of another class or to subscribe for further shares of the same
1820
or another class, to exercise those rights in common with other holders of securities of the same class, and to acquire shares with such rights on the open market. It looks as if the clause as drafted might be held to preclude them from doing so, and if that is so I think some alteration is plainly desirable. I beg to move the first Amendment.
Amendment moved—
Page 20, line 4, at beginning insert—
("Subject to the provisions of subsection (3) of this section")—(Lord Drumalbyn.)
LORD RHODES: It might save time later if I now give a full explanation of what we are trying to do here, because it might shorten the discussion on Amendments 27 and 29.
LORD ERROLL OF HALE: Could we not deal with the Amendments we are now discussing, and then go on to Amendments 27 and 29 afterwards?
LORD RHODES: That is what we are doing. I am dealing with Amendments 26 and 28. Clause 24 prohibits a director from buying an option to acquire or dispose of shares or debentures of his company or of a company in the same group. It is particularly directed against the purchase of the call, put and double options that can be bought on the Stock Exchange. It is not intended that the prohibition should extend to the buying of a right to subscribe for shares or debentures. In two particular cases the Bill makes this quite clear by implication. If the noble Lord will turn to Clause 28(2)(a) he will see that it contemplates that a director may buy from his company a right to subscribe for shares or debentures of the company, and Clause 26(1)(b)(iv), together with Clause 26(7), contemplates that he may buy from another company in the group a right to subscribe to that other company's shares or debentures. I think that makes it quite clear.
The noble Lord, Lord Drumalbyn, may fear that somewhat similar transactions, not explicitly mentioned in this Bill, are prohibited—for example, the buying of a right to subscribe which is bought not from the company itself but on the Stock Exchange or from a member of the company. Such a right would normally be available for purchase after a rights issue. The noble Lord may also have in mind that it applies to convertible debentures,

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and may consider it possible that even although the buying of a right to subscribe for ordinary debentures is not prohibited, the buying of a right to subscribe for what are called convertible debentures is prohibited. A distinction might exist if the exercise of the right to convert is not to be regarded as a subscription to the shares into which the debentures are to be converted. (I am dealing with this matter fairly fully for the benefit of anybody who wants to read it in Hansard.) If there is a doubt on this point, for instance on the nature of the transaction which takes place when a right to convert is exercised, it might be held that the mere buying of convertible debentures on the market was the buying of a right to call for delivery at a specified price and within a specified time of a specified number of shares and so within the prohibition imposed by the clause.
If the effect of the Amendment is as I have explained, and it is clear that it is to ensure that some at least of the transactions set out above are outside the prohibition imposed by the clause, the Government would be willing to consider whether some addition to the clause is necessary in order to limit its scope. We are quite prepared to do that. If the noble Lord feels it requires a little more clarification, we are prepared to do that. But the terms of the Amendment are not suitable in the present form.
One reason for this is that the words in the Amendment "shares or debentures referred to" would appear to be the shares or debentures referred to in subsection (1) of the clause. If they are, these shares and debentures would not be held by a person at the time he buys a right to call for delivery of them, and that puts the timing out. I resist the Amendment as it is, but will undertake to consider sympathetically what the noble Lord has said, and if consideration shows that an Amendment is desirable the Government will put one down at a later stage.
LORD DRUMALBYN: I am very grateful to the noble Lord for his explanation, which again I should like to read carefully, and I dare say many much more expert than I am will want to read this carefully. I am grateful to him for having said he will consider it, and I shall look forward to his putting down an
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Amendment at a later stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.24 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved, in subsection (1), after "shall" to insert:
"unless the purchase shall have been previously approved (either generally or by reference to the particular transaction) by the company in general meeting".
The noble Lord said: It might be for the convenience of the Committee if we take Amendments Nos. 27 and29 together. I should like to make it plain that I am in agreement with the intention to prohibit directors from taking put or call options in their company's shares, since it is plainly wrong that a director who is in possession of confidential information about the company's business affairs may be able to turn this information to his own advantage by engaging in such transactions. But it seems to me—and this is why I have tabled these two Amendments—that the clause is far too widely drafted and it will bring in transactions which it is obviously intended not to catch.
For instance, it will prevent a director of a public company from buying convertible shares in his own company through a recognised Stock Exchange. Moreover, it would appear to put a complete stop to share option schemes, which, despite the penalty in the 1966 Finance Act, may still be looked upon as a legitimate way of offering worthwhile incentives to directors and senior managers. The Jenkins Committee said such schemes should not be prohibited, and it is clear that the Government intended to follow this recommendation since Clause 16(1)(d) requires directors' reports to state the existence of such schemes. It does not ban them. I also believe that Clause 24 should not apply to unquoted companies or, if they are preserved—perhaps they will be—exempt private companies.
Not only do the same opportunities for a director to make an improper benefit for himself not arise in the case of the private company, if only because of the absence of a ready market for his company's shares, but perfectly genuine transactions for financing a private company will be inhibited. It is by no means uncommon for a person with capital, in return for a seat on the board, to agree

1823
to put money into a private company with certain option rights attaching to the equity shares. I think it would be very wrong if these transactions were to be banned; and this is the reason I am proposing these two Amendments, which I hope the Government will see fit to accept. I beg to move.
Amendment moved—
Page 20, line 20, after ("shall") insert the said words.—(Lord Erroll of Hale.)
LORD RHODES: May I ask the noble Lord whether the first Amendment is directed towards employees' option schemes or whether it is directed to a rights issue and so intended to ensure that a director is not deprived of a right available to the members of the company and approved by them?
LORD ERROLL OF HALE: I think it is intended to apply to the second consideration.
LORD RHODES: If that is the noble Lord's intention, we will have another look at the clause to see whether an Amendment is necessary to ensure that the prohibition it imposes does not go too wide. I think that will satisfy the noble Lord on the first of his Amendments.
I come to the second. There are two parts to this. The first would make the prohibition imposed by Clause 24 on option dealings by a director in shares or debentures of his company apply only when the shares or debentures are quoted on a prescribed stock exchange. The clause is particularly directed against the purchase of the call, put and double options that can be bought on the Stock Exchange. These options are concerned with the shares or debentures that are quoted, and so would continue to be prohibited if the Amendment were accepted. It is doubtful whether there is much scope for dealing in options on shares of unquoted public companies, and there can be hardly any scope for dealing in options on shares in private companies. So with regard to this part of the Amendment we have really no objection to it; we agree with it and would accept it in principle.
The second part of the Amendment is intended to ensure that the prohibition imposed by the clause does not extend to such transactions as the taking up of a
1824
right when there is a rights issue, or buying or subscribing for convertible debentures. This is also the purpose of Lord Drumalbyn's Amendment No. 28. We will have another look at the clause to see whether it is desirable to limit its scope. If we do that, the Government will take account of the proposal in the first part of the Amendment which would limit its scope to quoted shares and debentures. I undertake to do that if the noble Lord will consent to withdraw this Amendment.
LORD ERROLL OF HALE: I should like to thank the noble Lord, not only for his explanation but also for his generous offer to have the clause reconsidered in the light of the various suggestions put forward. In the circumstances, I am naturally happy to withdrawn this Amendment.
Amendment, by leave, withdrawn.
Clause 24 agreed to.
House resumed.

ARMED FORCES BILL
Returned from the Commons with the Amendments agreed to.
  RESERVE BANK OF RHODESIA: LONDON BOARD
  RESERVE BANK OF RHODESIA: LONDON BOARD
  RAIL CLOSURES: ESTIMATED SAVINGS
  RAIL CLOSURES: ESTIMATED SAVINGS