Sitting of 21 December 1966

Preamble
The House met at Eleven o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  SCOTLAND

    Non-Graduate Teachers
    Mr. Eadieasked the Secretary of State for Scotland what representations he has had from the college of education principals on his policy that teacher training provision will be made for male non-graduates in Scotland.
    The Under-Secretary of State for Scotland (Mr. Bruce Millan): None, Sir. I understand that the college of education principals welcome the decision to admit men to the three-year course for primary school teachers.
    Mr. Eadie: While thanking my hon. Friend for his answer, is it not true to say that the college principals have shown a remarkable consistency in this advocacy of non-graduate male teachers?
    Mr. Millan: As I have said, the college of education principals have welcomed this decision, and we are making further places available at the colleges of education to cater for the men who will be coming into them.
    Mr. Brewis: How many male non-graduates does the Under-Secretary expect to come forward?
    Mr. Millan: It is rather difficult at this time to give a firm estimate. One thinks that, potentially, there might be about 400 a year, but one would not expect that to happen in 1967. Again it is difficult to estimate firmly, but we might have about 200 coming forward then. Certainly we hope for that.

    Highlands and Islands Development Board (Report)
    Mr. Alasdair Mackenzieasked the Secretary of State for Scotland if the Highlands and Islands Development
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    Board will publish an annual report; and when the first report will be published.
    The Minister of State for Scotland (Mr. George Willis): I hope that the Board's first report, covering the period from 1st November, 1965, to 31st December, 1966, will be published reasonably early in 1967, but I cannot as yet give a definite date.
    Mr. Mackenzie: In view of the great interest in the work of the Board and its importance to the Highlands of Scotland, would the Minister be prepared to grant a debate on the first annual report in the Scottish Grand Committee?
    Mr. Willis: That is not for me. That is really a matter for the Leader of the House.
    Mr. Noble: Will the Minister of State ask the Board if it can include in its report not only the money which the Government have put into the Highlands, but what by increased taxation they have taken out?
    Mr. Willis: That is not the Board's responsibility, of course. Its responsibility is for the exercise of its own powers in the Highlands.
    Mr. Maclennan: Will the Minister be able to say whether or not a list of companies which have received financial assistance from the Board will be a part of the first report?
    Mr. Willis: I cannot say whether it will or not, but I should have thought not. One does not usually publish lists of companies receiving financial assistance from the Government.

    Gaelic Language
    Mr. Alasdair Mackenzieasked the Secretary of State for Scotland, in view of the decision of district councils in the Western Isles to give Gaelic equal validity with English in the conduct of business, and of the need for the status of the native language of Scotland to be clarified, if he will set up a commission to look into this matter.
    The Secretary of State for Scotland (Mr. William Ross): I do not think that the appointment of a commission would be justified.
    Mr. Mackenzie: As there is so much evidence of growing interest in the language, would the Secretary of State consider looking at this further or, by some other means, giving further incentive to those who are doing so much for the future of the language?
    Mr. Ross: I welcome the indication from the hon. Gentleman's Question that there is growing interest. He will be aware that, following the meeting which I had with the deputation from An Comunn, we have already announced that we shall be doubling the grant for the year 1967 from £500 to £1,000.

    Unemployment
    Mr. Hamlingasked the Secretary of State for Scotland what action he is taking to prevent unemployment exceeding 100,000.
    Mr. Rankinasked the Secretary of State for Scotland what steps he is now taking to bring unemployment in Scotland within the confines of the national average.
    Mr. Ross: I would refer hon. Members to my reply to the hon. Member for Louth (Sir C. Osborne) on 9th November [Vol. 735, c. 1281]. Since then substantial increases in retraining facilities and temporary increases in investment grants have been announced.
    Mr. Hamling: Can my right hon. Friend tell the House when unemployment in Scotland last reached the figure of 100,000 in the month of December?
    Mr. Ross: It was in 1962, but my hon. Friend will be aware that that was only the start of a six-month period when in no month did it go below 100,000.
    Mr. Rankin: Is my right hon. Friend confident that these measures will bring unemployment in Scotland into line with his statement in July of this year?
    Mr. Ross: I am confident that, as a result of what we are doing in respect of the long-term economic situation in Scotland, in time we shall be able to improve the position considerably. The indications that we have of the incidence of unemployment throughout the country, bearing in mind its relationship with Scotland, gives us some reason to think that already a certain amount of the
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    balance has been redressed as a result of the work of the past two or three years—not just by this party, but by the others as well—in the diversification and modernisation of Scottish industry.
    Mr. Noble: Will the right hon. Gentleman take it from me that everyone on both sides of the House is most anxious to see this position improved, and does not he agree that what he has told us today—and I am sure that there are other things that he is doing—is a very disappointing Answer to the Question in view of the great anxiety all over Scotland?
    Mr. Ross: I think that the problems in relation to the present situation are related to the weakness of the country, and I think also that the right hon. Gentleman should be the last one to get up and talk about this, bearing in mind for how long, and for what continuous period, his party had control of the whole situation.

    Educational and Recreational Projects (The Highlands)
    Mr. Hamlingasked the Secretary of State for Scotland what discussions he has had with the Highland Development Board on educational and recreational projects in the Highlands.
    Mr. Millan: My right hon. Friend has not had any discussions with the Board about specific educational and recreational projects. The Board has, however, given him its views on secondary education in the Highlands and Islands, and these are being carefully considered in relation to proposals of the Highland education authorities.
    Mr. Hamling: Is the hon. Gentleman aware that my interest in this matter arises from the fact that one of the schools in my constituency has a project in Argyllshire, and will he have discussions with his right hon. Friend about this project?
    Mr. Millan: I am very well aware of my hon. Friend's interest in this. I think he knows that this has been discussed at quite considerable length, but I also think he knows that the problem is principally one for the Department for Education and Science and not for my right hon. Friend.

    Cadco Report
    Mr. William Hamiltonasked the Secretary of State for Scotland if he will now publish a full report of his findings on the Cadco affair.
    Mr. Ross: I would refer my hon. Friend to the Answers I gave him on 30th November—[Vol. 737, c. 106.] and 14th December.—[Vol. 738, c. 85.].
    Mr. Hamilton: Is my right hon. Friend aware that I shall have a few caustic comments to make on that reply within the hour?
    Mr. Ross: It would surprise me if my hon. Friend did not have caustic remarks to make, but I am not going to anticipate the reply to those comments.

    Housing
    Mr. Edward M. Taylorasked the Secretary of State for Scotland how many houses he estimates will be completed in 1966.
    The Under-Secretary of State for Scotland (Dr. J. Dickson Mahon): I cannot give a precise figure.
    Mr. Taylor: Can the hon. Gentleman explain how it was that in March of this year, only nine months ago, the Government and all hon. Gentlemen opposite were able to say almost precisely that the figure of 40,000 would certainly be exceeded? How can the hon. Gentleman justify that situation when, during the last three months, the number of unemployed building workers in Scotland has risen by more than 3,000?
    Dr. Mabon: There are nine days to go to the end of the year, since no self-respecting person in Scotland works on Hogmanay, and it would be foolish to try to give a precise figure at this stage. Public sector completions are reported to us monthly. Private sector completions are reported to us quarterly. The last return which we received was in September. I have discussed this with the builders, and in future they will report monthly. I welcome this, because we shall then be in a better position to give these figures earlier.
    Mr. Rankin: Will my hon. Friend assure us that he is not depending on Santa Claus?
    Dr. Mabon: No, Sir.
    Mr. G. Campbell: With only nine days to go, can the hon. Gentleman say whether the figure of 40,000, Which was given in the Scottish Labour Party election manifesto, Election Special, will be reached?
    Dr. Mabon: We shall certainly beat ten years of Conservative rule.

    Scottish Economic Planning Board
    Mr. Edward M. Taylorasked the Secretary of State for Scotland what specific proposals for action he has received from the Scottish Economic Planning Board since it was established.
    Mr. Ross: The Board's main function is to co-ordinate the work of the Government Departments concerned with the formulation and execution of plans and proposals for the development of the Scottish economy. Much of the Board's work is reflected in the detailed schemes contained in the White Paper on the Scottish Economy, but the Board has also been involved in many other questions on which I and the Scottish Economic Planning Council have required its advice.
    Mr. Taylor: My Question asked whether any specific proposals had been made. Has the Board made any specific proposals? If not, will the House be advised if specific proposals come forward?
    Mr. Ross: The purpose of the Economic Planning Council, as distinct from the Planning Board, has been explained time and again in the House. The Board consists mainly of civil servants representing their own Departments, who meet, who advise, and who also accept advice from the Secretary of State through the Planning Council, and these Departments go on in relation to the execution of these plans.
    Mr. Noble: Does not the right hon. Gentleman think it a little odd that he cannot say whether or not specific proposals are being made by these people? They always were by the development group in the old days. I see no reason why these distinguished civil servants sitting and working together should not draw up plans.
    Mr. Ross: Of course they do, in relation to transport, labour and, as I announced in answer to a previous Question, in relation to retraining facilities. These plans are discussed, agreement is reached and then the work is carried out. It is seen in the actual work of the Scottish Office and the other Departments.

    Universities (Student Failure)
    Mr. Adam Hunterasked the Secretary of State for Scotland what percentage of male students failed to complete their courses at Scotland's universities in each of the last three years.
    Mr. Millan: This information is not available; the latest information on student failure for British universities as a whole is given in paragraphs 80–85 of the Report on University Development 1957 to 1962, Cmnd. 2247.
    Mr. Hunter: I am sorry that my hon. Friend cannot give this information. Would not he agree that had the non-graduate teaching courses for men, as now proposed by my right hon. Friend, been in operation for the previous months, this would have helped to improve teacher supply in Scotland, particularly when we think of the failures in universities who might have opted for these courses?
    Mr. Millan: Yes, Sir, but I would not like to think that the people who are to come into the colleges of education will be looked on merely as failed university students. I agree with the first part of my hon. Friend's question that these new proposals will improve teacher supply.

    Road Accidents
    Mr. Adam Hunterasked the Secretary of State for Scotland what action he is taking to reduce the number of road accidents in Scotland.
    Dr. Dickson Mabon: New and improved roads, traffic management, publicity and education are all helping to keep down the number of accidents. But care, courtesy and consideration by all road users can make the biggest contribution.
    Mr. Hunter: Is my hon. Friend aware that the general grant apportionment for
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    road safety is no higher than that of last year? Would not he agree that, due to the appalling number of accidents in Scotland in recent weeks, some further consideration must be given to this question?
    Dr. Mahon: I very much agree. This is why my right hon. Friend and the Minister of Transport have set up the National Road Safety Advisory Council In his Question my hon. Friend is emphasising the point that it is the desire of local authorities to push ahead with this matter which determines the level of expenditure, and I hope that we can proceed further.
    Mr. Russell Johnston: Is the hon. Gentleman able to say whether the 50 miles per hour speed limit on certain roads in Scotland has had any effect?
    Dr. Mahon: It is too early to make an assessment. The Road Research Laboratory is taking the figures, and we hope to discuss this issue with the Laboratory in the near future.
    Mr. G. Campbell: Would not a restoration of the cuts in the Scottish road programme make a signal contribution in this direction?
    Dr. Mabon: No, Sir. If the hon. Gentleman looks at this a little more closely, I think he will see that they were small and were not applied primarily for accident reasons but for economic ones.

    Fee-paying Schools
    Mr. Ellisasked the Secretary of State for Scotland what is his policy regarding fee-paying schools.
    Mr. Dewarasked the Secretary of State for Scotland whether he will withdraw Exchequer grants from independent and grant-aided schools in Scotland.
    Mr. Millan: My right hon. Friend regards education authority fee-paying and other selective schools as inconsistent with a system of comprehensive education and he has asked Edinburgh and Glasgow—the authorities mainly involved—to review the future organisation of such schools in that context.
    So far as grant-aided schools are concerned, local authorities were asked, in Circular No. 600, to consult the governing bodies of these schools as to the part they

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    could play in a comprehensive system. Consideration of any wider question affecting the future of these schools would not be appropriate at this stage.
    As regards independent schools, we are in the first instance awaiting the report of the Public Schools Commission. Independent schools in Scotland do not receive Exchequer grants.
    Mr. Ellis: Will my hon. Friend confirm that what he expects in the pattern of education which is emerging is that these schools will cease and will disappear?
    Mr. Millan: As I have said, we regard this as inconsistent with a comprehensive reorganisation. We are now awaiting the proposals of the two authorities which I have mentioned.
    Mr. Dewar: As my hon. Friend has given what is obviously a rather long-term picture, will he consider in the short-term the introduction of responsibilities in return for the considerable State aid given to grant-aided schools, similar to those contained in the Direct Grant School Regulations, 1959, as subsequently amended, which apply in England?
    Mr. Millan: I think that the background and circumstances of grant-aided schools in Scotland are rather different from the situation in England. As I have said, these wider issues—and what my hon. Friend has just outlined is a wider issue—are not appropriate to be dealt with at this stage.
    Mr. MacArthur: Is the Minister aware that he has just made a very grave statement? Would he resist all attempts to remove parental freedom of choice in education?
    Mr. Millan: I do not think that it is a question of parental freedom of choice. It is a question of fee-paying in corporation schools, which incidentally does not apply to schools south of the Border. So I would not take that to be a particularly valid argument for Scotland. For the vast majority of children in Scotland and in the vast majority of local authority areas, there is no question of fee-paying in corporation or local authority schools.
    Mr. Edward M. Taylor: What is the point of having local authorities at all if the Government are to give them no freedom about the pattern of education within their own areas?
    Mr. Millan: Nothing which is being done by this Government with regard to the pattern of organisation is any different in principle from what had been done by right hon. and hon. Members opposite. We are still working under exactly the same legislation.

    Scottish Special Housing Association
    Mr. Dalyellasked the Secretary of State for Scotland what instructions he has given to the Scottish Special Housing Association in relation to investment in areas of above-average unemployment.
    Dr. Dickson Mabon: The Association's future building programme is designed mainly to support industrial development. A substantial part of it will be in areas of high unemployment.
    Mr. Dalyell: Does my hon. Friend realise that not only Government supporters view with great enthusiasm the expansion in the activities of the Scottish Special Housing Association which has been encouraged by the present Government? Do we have an assurance that every possible opportunity is taken to use the S.S.H.A. as an instrument of regional development according to certain priorities?
    Dr. Mabon: Yes; I am quite convinced—so is my right hon. Friend—that this is so. This year we would hope that we can get more than 2,000 houses completed by the S.S.H.A. for the first time since 1960. In my hon. Friend's constituency and in the adjacent part of Midlothian we hope to start 1,850 houses in the next three years.

    Houses for Sale (Central Scotland)
    Mr. Dalyellasked the Secretary of State for Scotland what steps he is taking to encourage the provision of houses for sale in central Scotland.
    Dr. Dickson Mahon: I have had three meetings with private house builders in Scotland, and a working party has been set up in conjunction with them with a view to increasing the number of houses built for sale.
    Mr. Dalyell: When are we likely to have the results of this important Working Party?
    Dr. Mahon: The Working Party has been in existence now for three months and reported to the builders and myself—that is, the full session of builders and myself—on 9th December. We propose to meet again when the Working Party finishes its Report. It is discussing primarily finance, land use and planning procedures.

    Tourist Trade
    Mr. Edwin Wainwrightasked the Secretary of State for Scotland if he will seek power to enable him to encourage an increased number of people from England and Wales to spend their holidays in Scotland.
    Dr. Dickson Mabon: I do not think that my right hon. Friend needs more powers. The Scottish Tourist Board has his full support in its work in this field and, as my right hon. Friend told my hon. and learned Friend the Member for Aberdeen, North (Mr. Hector Hughes) on 30th November, the Scottish tourist industry will share in the benefits of the expanded home holidays campaign with the British Travel Association is mounting with the aid of a Government grant.
    Mr. Wainwright: As the Government want people to spend their holidays within these shores, will my hon. Friend take steps to ensure that the advertising of the beauties of Scotland is intensified? Would he also consider the question of improving the available accommodation? Would he also consider the question of the vast areas of land in Scotland that are reserved for private use just for a few days per year?
    Dr. Mabon: I will certainly draw these matters to the attention of the Tourist Board, as well as giving the assurance that they will be noted by my right hon. Friend. My hon. Friend should know that the work going on just now on all these matters, including market research—market research in England, primarily—is sustained by a Government grant of £25,000 each year for three years. We hope to get some results out of it which will lead us to a considerable change in policy regarding tourism in Scotland.
    Mr. David Steel: Will the Under-Secretary take a look at the success of the Governments of the Republic of Eire
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    and of Northern Ireland in giving direct grants for the promotion of advertising for tourism in their respective countries? Should we not be doing the same in Scotland to attract more tourists?
    Dr. Mabon: My right hon. Friend the President of the Board of Trade, together with my right hon. Friends the Secretaries of State for Scotland and Wales, are considering these matters thoroughly. We have taken, and are taking, comparisons with other countries, including the Republic of Ireland, which, I agree, has a very good record of State support of tourism. We want to make decisions about this when the facts are quite clear and when the proposed action which should be taken is economically sensible.
    Sir J. Gilmour: Would the Under-Secretary consult the management of British European Airways, a State-run airline, which spends all its money advertising trips to every part of Europe but nothing to Scotland?
    Dr. Mahon: One of the main changes which was made under this Government in the Tourist Board by itself, with the endorsement of the Secretary of State, was to change it from those who were specifically disinterested—or not interested commercially—in tourism to what is in fact a manufacturers' co-operative. The airlines are now for the first time represented on the Scottish Tourist Board, and I am sure they will want to play their proper part in tourism in Scotland. This is a matter of education and persuasion which I think is going along very nicely.

    Salmon and Trout Fishing
    Mr. Edwin Wainwrightasked the Secretary of State for Scotland if he will seek power to ensure that more salmon and trout fishing, at a reasonable charge, is made available in Scotland for visitors from England and Wales and from abroad.
    Mr. Willis: Excellent fishing is already available to visitors at very reasonable charges in many places in Scotland, but my right hon. Friend is aware of the increasing demand for angling facilities, and he will bear this in mind when deciding what action to take on the Hunter Committee Report on Scottish salmon and trout fisheries.
    Mr. Wainwright: In view of that Answer, will my hon. Gentleman give the assurance that he is satisfied in regard to the removal of pollution from Scottish rivers? Will he do more to ensure that Scottish rivers are stocked with trout and salmon? Will he ensure that the riparian owners do not put too great a restriction on people wanting to visit Scotland for fishing purposes?
    Mr. Willis: We are concerned about the pollution of rivers, but the purification boards are doing a good job of work here, although there is a considerable amount more still to be done. On the question of riparian owners and trout fishing, I do not know whether my hon. Friend knows what the position is in Scotland regarding trout fishing. The position is that a person can fish for trout in Scotland without a licence. The riparian owner can take an interdict against him, but that is rather a long and tedious process.
    Mr. Stodart: As the hon. Gentleman has just mentioned the Hunter Report, can he state what the state of consideration at the moment is? Two years ago he said that it was urgent. A year ago he said that it was very urgent. Is it now very, very, urgent?
    Mr. Willis: It is still very urgent. There is a later Question on the Order Paper on this subject tabled by one of my hon. Friends. It would be more courteous to say more at that stage.

    Elderly and Handicapped Persons
    Mr. Doigasked the Secretary of State for Scotland if he will request local authorities in Scotland to appoint only persons with nursing qualifications to take charge of homes for elderly and

    CLASS OF POLICE

    Year

    Total

    Men

    Women

    Additional

    Accident

    Assault

    1961

    …

    …

    358

    347

    9

    2

    298

    60

    1962

    …

    …

    426

    416

    8

    2

    366

    60

    1963

    …

    …

    413

    403

    8

    2

    357

    56

    1964

    …

    …

    406

    397

    4

    5

    342

    64

    1965

    …

    …

    442

    432

    8

    2

    366

    76

    Fire Brigade Equipment (Breathing Apparatus)
    Mr. Dewarasked the Secretary of State for Scotland how many fire brigades in Scotland are not presently equipped with breathing apparatus; and whether
    handicapped people when such qualified people are available.
    Mr. Millan: No, Sir. The circumstances, such as the degree of frailty of the residents, vary so much that this is best left to local authorities' discretion.
    Mr. Doig: Is not my hon. Friend aware that situations frequently arise in these places where nursing experience can be invaluable?
    Mr. Millan: That is true. Each home cannot be compared exactly with every other home. Circumstances vary. This is a matter better left to local authorities. If they want to appoint somebody with a nursing qualification, they can do so; and many of them do so.

    Police (Assaults and Accidents)
    Mr. Doigasked the Secretary of State for Scotland how many policemen have been injured in Scotland during each of the last five years while on duty.
    Mr. Willis: As the Answer contains a table of figures, I shall, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Doig: Is my hon. Friend aware that the Police Federation is very concerned about the increase in the number of assaults upon policemen recently? Is he aware further that many of these assaults could have resulted in murder, but fortunately did not so result? An inch either way would have meant the difference between superficial injury and death.
    Mr. Willis: I am aware that there has been an increase in the number of assaults upon the police. We are naturally concerned about this.
    Following is the table of figures:
    he will take steps to remedy these deficiencies.
    Mr. Willis: Every Scottish brigade is equipped with breathing apparatus, although it is not held at all fire stations.
    Mr. Dewar: Will my hon. Friend take steps to ensure that this apparatus is available to the smaller units, to avoid a situation like that which happened as a result of a fire about a month ago which tragically affected some of my constituents, when the Northern Fire Master had to comment on widespread Press reports that lives might have been saved if breathing apparatus had been available at one of these smaller stations?
    Mr. Willis: I understand that, in the tragic circumstances of the fire at Stornoway, to which I think my hon. Friend is referring, it was the intense heat and collapse of the buildings which prevented firemen from gaining access and that the lack of breathing apparatus at that fire was not the cause of these deaths.

    Land Use (Highlands)
    Mr. Maclennanasked the Secretary of State for Scotland what proposals he has received from the Highlands and Islands Development Board for improving land use in the Highlands of Scotland; and if he has approved them.
    Mr. Willis: My right hon. Friend has not as yet received any proposals on this subject.
    Mr. Maclennan: Is my hon. Friend aware that this is a most disappointing reply in view of the fact that the development of the land economy of the Highlands is central to any development of the Highlands, and that, for 50 years and more, all possible development of land has been hindered by absentee landlords?
    Mr. Willis: Naturally, we realise the importance of the development of land, but it must be remembered that the Board has existed for only 14 months. Nevertheless, I understand that it has a number of developments under active consideration. It has already stated publicly that it is interested in land use and development, for instance in the Isle of Mull, the Strath of Kildonan and in Glencoe, and I have no doubt that other matters concerning land are under its consideration.
    Mr. Buchan: Is my hon. Friend aware that the biggest single boost which he could give the Highlands would be to take land into public ownership? Until we break the rule of the Lairds north of
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    the Highlands line we will make no satisfactory land use there.
    Mr. Willis: That may well he so. The Board wants to get on with the job in hand, and it is getting on with it in the manner I have indicated.
    Mr. Noble: Before accepting his hon. Friend's suggestion, would the hon. Gentleman carefully consider the land which he and his right hon. Friend own and see how well that is run?
    Mr. Willis: Of course, the right hon. Gentleman is one of the last entitled to complain about the amount of land people own in Scotland. At least the land owned by my right hon. Friend is publicly owned.

    Ambulance Service
    Mr. Maclennanasked the Secretary of State for Scotland if he will take steps to improve the ambulance service in the Highlands of Scotland.
    Mr. Millan: The arrangements for providing ambulances in all parts of the country are reviewed frequently by the Joint Central Committee of the Scottish Ambulance Service. If my hon. Friend has any particular point I shall be glad to look into it.
    Mr. Maclennan: I thank my hon. Friend for that reply. However, will he look at the cumbersome procedures for obtaining helicopter ambulance services in the remoter parts of the Highlands? Will he also consider whether or not the present system of sub-contracting the ambulance service to local operators is working adequately?
    Mr. Millan: On the first point, I will look into the matter. On the second, there are occasional difficulties, but it is often necessary to work through subcontractors in remoter areas. There was a little difficulty in Thurso recently, as my hon. Friend knows, but that was put right—I hope to his satisfaction.

    Brothels
    Earl of Dalkeithasked the Secretary of State for Scotland what information he has as to the number of premises in Edinburgh being used as brothels; how many prosecutions have taken place in the past two years; and what was the maximum sentence imposed.
    Mr. Willis: The Edinburgh Police know of three houses under single management. There have been four prosecutions for brothel keeping in respect of these premises since the beginning of 1965. The biggest penalty imposed was a £40 fine.
    Earl of Dalkeith: Would the hon. Gentleman not agree with many of my constituents, who feel that the repetition of trifling fines for persistent offenders is tantamount to running a licensed brothel system, but without many of the advantages of supervisory safeguards? What is he going to do about it?
    Mr. Willis: Of course, the question of fines is essentially one for the courts, and it is not for me to comment on their decisions.

    Loch Lomond Water Scheme
    Earl of Dalkeithasked the Secretary of State for Scotland what is the most recent estimate of the dates for starting and for completing the Loch Lomond Water Scheme; and what changes in the estimated cost of the work have occurred in the past three years.
    Dr. Dickson Mabon: The start is being held up only by delay in obtaining the necessary powers. The work will take 2½ to 3 years to complete. The estimated cost in 1963 was £7·7 million to provide a supply of 50 million gallons a day, but the scheme has since been adjusted to provide up to 70 million gallons a day at a cost of about £9·8 million.
    Earl of Dalkeith: In view of the many changes of circumstances since the scheme was first mooted, will the hon. Gentleman give a firm undertaking that he will not use dictatorial or undemocratic powers to compel those local authorities which have already made adequate provision for their needs for many years ahead to join in a subsidised scheme unless they expressly favour it?
    Dr. Mahon: Neither my right hon. Friend nor the Government would dream of exercising dictatorial powers in any circumstances. I can give that as an absolute assurance. The Government, however, were committed in the Queen's Speech to introduce a Measure designed to reorganise water supplies in Scotland. Irrespective of that, there is no doubt
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    that the Government are looking to the Parliamentary procedure governing the Order to see what eventuates from it.
    Mr. Wylie: Is it not the case that the figure of £9·8 million, which the hon. Gentleman gave, was the cost given at the inquiry in 1965? Does that mean that there has been no increase in cost in the intervening period or that the increase has not yet been calculated?
    Dr. Mabon: I am advised that there is no marginal increase of such a nature as to give rise to other figures than those which I have given to the House. The hon. and learned Member probably has a point, and I shall look into it, but I am so advised at present. This scheme was first sponsored and costed—and endorsed by the previous Government—in 1963 and it is a matter of great urgency for the areas in Cumbernauld and Livingston in particular and for other parts of Scotland that water supplies are augmented as quickly as possible—indeed, if not in 1967, certainly in 1968 and 1969.

    Doctors
    Mr. Bruce-Gardyneasked the Secretary of State for Scotland if he will set up an inquiry into the reasons for the continuing decline in the number of doctors in general practice in Scotland.
    Mr. Millan: No, Sir.
    Mr. Bruce-Gardyne: Is the hon. Gentleman afraid of such an inquiry, which would place a large burden of the responsibility on the Government's shoulders for the heavy burden of taxation on general practitioners and the position of the general practitioner service arising from the abolition of prescription charges? Is he aware that his right hon. Friend's statement that the trend would be reversed has been proved completely inaccurate and that the last quarter's figures were as bad as any under the present Government? What is he doing about it?
    Mr. Millan: I do not agree with the hon. Gentleman at all. The whole matter of recruitment to general practice has been exhaustively considered and has also been considered by the Review Body. The new system of remuneration now coming into operation will, we think, make a great improvement in the attractiveness of general practice. That is the

    1405
    information which we get from the medical profession itself, which has welcomed the new system.

    Fishing Industry (Subsidies)
    Mr. Ellisasked the Secretary of State for Scotland what is his policy with regard to the future level of fishing subsidies in Scotland.
    Mr. Willis: The subsidy for white fish vessels over 80 feet is required by Statute to be reduced annually by between 7½ and 12½per cent.; the subsidy for herring vessels and white fish vessels under 80 feet is reviewed annually in the light of operating results. The Government are, however, at present carrying out a review of policy, and I cannot indicate what changes, if any, will be made as a result.
    Mr. Ellis: Can my hon. Friend give us some indication of when this review will be completed?
    Mr. Willis: I am sorry; I cannot give my hon. Friend an indication of when it will be completed, but it should not be too long.
    Mr. Grimond: What representations, if any, have been received from the smaller boat owners about the level of subsidies?
    Mr. Willis: We received representations, of course, when the subsidies were considered. I can recall no representations received recently on the matter.
    Mr. Baker: Would the hon. Gentleman not agree that the heaviest burden of the latest fall in the subsidy rate was borne by the Scottish inshore fishing fleet, namely 33 per cent.? Is this not too high a drop compared to other ports of the fleet, and will he take steps to remedy the situation?
    Mr. Willis: The hon. Gentleman should appreciate that it is the policy, as I have indicated, to review the subsidy annually, in the light of operating results. The inshore fleets have had two very good years, and it is the policy that, in good years, of course, the subsidy should be reduced.

    Tayside Study Group
    Mr. Buchanan-Smithasked the Secretary of State for Scotland when the Tayside Study Group will be appointed.
    Mr. Ross: The Group held its first meeting yesterday.
    Mr. Buchanan-Smith: Will this group have any responsibility in respect of the transport needs of the Tayside area where the decision has been taken to close the Strathmore line? Many people are concerned to know what function the group will have in respect of this kind of problem.
    Mr. Ross: If it had been in existence, it would have been consulted. I am sure that one of the advantages of these local area groups is that they will be able to inform us of the transport needs for promoting the economic life of the area.
    Mr. James Davidson: Would the right hon. Gentleman tell the House what is intended to be the northern limit of the area of study of this Tayside group?
    Mr. Ross: It goes from Dundee to Perth. I know that there is much concern in relation to Aberdeen, but that area, which the hon. Member represents, has its own area group. I see no conflict between the two areas, and I think that the best way to proceed is along these lines.
    Mr. Bruce-Gardyne: Does the Secretary of State agree that the Tayside group had already been set up before the decision on the Strathmore line was announced and, therefore, could have been consulted and should have been consulted?
    Mr. Ross: I said the first meeting was yesterday.

    Life Sentence Prisoners (Release)
    Mr. Wylieasked the Secretary of State for Scotland how many prisoners serving life sentences for convictions of murder have been released in the last two years; what were the periods of imprisonment served in each case; and how many were released contrary to the recommendation of the trial judge.
    Mr. Ross: One life sentence prisoner was released last autumn after serving nine years. The trial judge was not available. The Lord Justice General expressed the view that the prisoner should be detained for a longer period.
    Mr. Wylie: Does the Secretary of State agree that in the new climate set by the Murder (Abolition of Death Penalty)

    1407
    Act it is more than ever important to have the closest regard to the views of the judiciary before taking administrative action in this field?
    Mr. Ross: This is not administrative action. This is the statutory obligation of the Secretary of State. I should not like anyone to think that any decision in respect of this is taken by any civil servant. It is taken by the Secretary of State. I should not like anyone to assume that because in this case I did not agree with the trial judge, that is always the situation. It would be quite wrong to jump to that conclusion.
    Mr. Doig: Does the Secretary of State agree that releasing a person convicted of murder after nine years can cause very great anomalies, bearing in mind that people charged with lesser crimes, such as manslaughter and the mail train robbery, can get far longer sentences and may have to serve them?
    Mr. Ross: I think that the mail train robbery aspect of this problem is slightly irrelevant. That was very exceptional indeed. But I, as Secretary of State, certainly take into account the question of sentencing in respect of more related crimes. This is one of the things which is taken into account.
    Mr. Wylieasked the Secretary of State for Scotland to what extent it is a general practice in Scotland to release persons convicted of murder and sentenced to life imprisonment after a period of between eight and nine years; and if he is satisfied with this practice.
    Mr. Ross: There is no such general practice. Each case is considered individually on principles that have been explained in the House on previous occasions. Release is on licence; and the person released is liable to recall, if necessary, as long as he lives.
    Mr. Wylie: Although it may not be the general practice, is it not the case that in the ordinary way the release on licence of a person convicted of murder normally takes place after eight or nine years? If that is the case, is it not quite illogical that it should be so when the judiciary have expressed the view that in certain circumstances for the much lesser crime of culpable homicide a person convicted may be sentenced to 15 years imprison-
    1408
    ment, of which ten years will normally be served?
    Mr. Ross: It is very wrong, certainly in Scotland, where I have certain knowledge, to talk about what "normally" happens. The last Answer that I gave showed that one person had been released in two years. In the last six years, which covers three Secretaries of State—and I am sure that they all took the same responsible attitude as I take in this matter—the number of people released has been three. It is very wrong to start talking about general principles on that kind of basis. Each case is dealt with individually on its merits. It would be wrong to give the impression to anybody that automatically after a certain number of years anyone is released. As a matter of fact, there is certainly one case that would distort the average in relation to the last two years if we started to consider averages. There is one person in a Scottish prison who was sentenced to life imprisonment and who has been there for 11½ years.
    Mr. Dewar: Will the Secretary of State clear up the position and assure me that there is continuity of policy over the last few years and that the average sentence served in the late 1950's and early 1960's by persons convicted of murder and released on licence is very similar to that at the present time?
    Mr. Ross: If anyone wishes to work on this average business—which I deplore, because it is misleading—the position is that at the present time such prisoners tend to be kept in longer.

    Teacher Training
    Mr. Buchanan-Smithasked the Secretary of State for Scotland if he is satisfied that rates of grant are adequate for those entering teacher training under the special recruitment scheme; and if he will make a statement.
    Mr. Millan: My right hon. Friend has no evidence that the current rates of grant under the Special Recruitment Scheme are inadequate, and he has no proposals at present for increasing them.
    Mr. Buchanan-Smith: Is not the hon. Member aware that men who have held responsible positions outside teaching and who have family commitments can suffer

    1409
    financial hardship on entering teacher training? Does he not agree that it is most undesirable that this should happen at a time when there is a great need for good people to enter the teaching profession?
    Mr. Millan: I do not agree with that. The grants are related to the circumstances of the prospective students. In the case of a married man with two children, for example, the grant might be £750 per year or it might be rather more, depending on age and other circumstances.
    Mr. Buchan: Does not the Minister agree that there is a point of substance here, bearing in mind the need to recruit graduates from industry and commerce? Should he not consider paying another grant for the equivalent of the first year's salary that they would draw in teaching? Would he also look at other aspects of the scheme, particularly the imposition of the requirement of two "highers" for these people?
    Mr. Millan: My hon. Friend's first suggestion has wide implications, because it would also have to be related to what happens to graduates who go to teacher training straight from university. It is a very big question. On the second point, we try to be as flexible and realistic as we can about initial qualifications, but it is not of any advantage to a prospective student to allow him in with qualifications which are seriously below standard, for the prospects then are that he will not be able to complete the course. We should not ask people to give up outside employment in those circumstances. We must strike a balance.
    Mr. Noble: Does not the hon. Member think that if about £750 a year is the most that can be given, then the people we are likely to get from industry and other places who are suitable for this work are bound to suffer hardship because they will be making much more at the time in outside industry?
    Mr. Millan: I did not say that £750 was the maximum. I quoted an instance and said that other people can get grants beyond that. The response to the special recruitment scheme last year was extremely good. We had more than
    1410
    10,000 inquiries, and eventually 1,000 people seriously considered entry and 500 entered last year. The response to this year's publicity campaign has been equally good and we have already had several thousand inquiries.

    Redeployment of Labour
    Mr. Monroasked the Secretary of State for Scotland what consultations he has had regarding measures to assist the redeployment of labour in Scotland.
    Mr. Ross: Responsibility for administering the Government's policies affecting redeployment rests with a number of Ministers, notably my right hon. Friend the Minister of Labour. I am naturally in close and regular consultation with him and other Ministers concerned.
    Mr. Monro: Would the Secretary of State say how many people have actually been redeployed since July? Would he say whether they have moved to manufacturing industries or to service industries.
    Mr. Ross: Not without notice.
    Mr. Steel: How many retraining centres will be set up in Scotland outside the central belt?
    Mr. Ross: I can give the hon. Gentleman the whole list. I think that it is about seven, and one is being built and one was announced last week. I am sorry that I could not give him the actual locations off the cuff.
    Mr. Maclennan: In so far as redeployment has occurred out of areas largely dependent on service industries, has the Secretary of State had consultations with his right hon. Friend the Chancellor of the Exchequer about the possible relationship of the Selective Employment Tax with this phenomenon?
    Mr. Ross: I have assured my hon. Friend before that the question of the Selective Employment Tax and its effect in the first year is a subject that certainly closely concerns me.
    Mr. G. Campbell: Does the right hon. Gentleman realise that we have been urging a regional investigation of S.E.T. since May and for action to be taken

    1411
    regionally in this matter? If the first year is to pass before the Government consider this, may not the effects of S.E.T. have gone too far, so that it will then be too late?
    Mr. Ross: The hon. Gentleman can rest assured that the present Government will not take any action too late. [Interruption.] The trouble with the former Conservative Government was that they did not take any action at all.

    Police Force (Strength)
    Mr. Monroasked the Secretary of State for Scotland what has been the net change in the strength of the police force over the last 12 months.
    Mr. Willis: A decrease of 77 in the year ending on 31st October.
    Mr. Monro: Is the Minister aware that when pay negotiations take place next year a substantial increase will have to be given if we are to have a net gain in strength?
    Mr. Willis: That is a matter for the negotiations. I recognise the seriousness of losing police at the present time.

    Doctors (Principals and Assistants)
    Mr. MacArthurasked the Secretary of State for Scotland what was the number of principals and assistants in general practice in October 1964, October 1965, and October 1966, respectively.
    Mr. Millan: 2,790, 2,728, and 2,673, respectively. These figures exclude trainee assistants. The last figure is provisional.
    Mr. MacArthur: Is the hon. Gentleman aware that those figures confirm what my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) was saying a moment ago? Is he aware that this is a serious decline, that it reflects the high burden of taxation on doctors and the professional classes generally, and that it also reflects the Government's muddled priorities in the Health Service?
    Mr. Millan: Any decline in the number of doctors in general practice is a serious matter, although the reasons for this decline are many, including the failure of previous Conservative Administrations to extend the medical schools
    1412
    sufficiently. Indeed, at one time hon. Gentlemen opposite put the process of extending the medical schools in reverse. We are now paying the penalty for that.

    Agriculture
    Mr. MacArthurasked the Secretary of State for Scotland what steps he will now take to encourage the expansion of agricultural production.
    Mr. Ross: This question will be fully considered at the forthcoming Annual Review in the light of all the relevant factors, including the requirements of the selective expansion programme.
    Mr. MacArthur: That is not a very encouraging Answer. Is the right hon. Gentleman aware that oats, potatoes, swedes, turnips, dairy cows, pigs, poultry and sugar beet are all substantially down this year and that income from livestock has fallen disastrously? Will he take urgent steps to restore the confidence of the farmers?
    Mr. Ross: We have already taken steps in respect of those sections of the industry which have been hardest hit by recent events and conditions, in particular by giving the advance payment of 15s. per ewe to hill sheep farmers and by stating, in advance of the Annual Review, our intention to raise the middle band for pigs by 400,000. The hon. Gentleman may consider this to be a not particularly encouraging Answer, but it shows that the Government are anxious to tackle this problem, remembering that this is the time when all these products should be fully taken into account by the Government and the industry.
    Mr. Emrys Hughes: Is my right hon. Friend aware of the concern that is felt, especially in Ayrshire, about milk production, and will he give an indication of the position?
    Mr. Ross: The position regarding milk production is that there has been a decline in the number of herds. However, the size of individual herds is increasing, and that has shown a further tendency towards concentration in dairy production.
    Mr. Stodart: Is the right hon. Gentleman not aware that the figures which my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur)

    1413
    gave—of eight commodities being down; and only two commodities are up—shows that the June census return is a contradiction unparalleled in the post-war years and shows the lack of confidence among the agricultural community in the present Administration?
    Mr. Ross: That is quite wrong. I remember the hon. Gentleman's maiden speech in which he told us that he nearly joined a farmers' hunger march because of the activities of his hon. and right hon. Friends.
    Mr. David Steel: Will the right hon. Gentleman pay particular attention to the crisis of confidence in the hill and marginal section of farming, not only at the time of the next Review but immediately, so that something may be done to restore confidence, particularly if we are to enter the E.E.C.?
    Mr. Ross: Not on this Question.
    Mr. Stodart: Will the right hon. Gentleman accept that my maiden speech was not made on the subject of agriculture?
    Mr. Ross: Perhaps I should say that the remarks I attributed to the hon. Gentleman were made by him in one of the many important speeches which he has made.

    Emigration
    Mr. Bruce-Gardyneasked the Secretary of State for Scotland what estimates he has made of net emigration from Scotland in the year to end June 1966, and of the proportion of emigrants going to England and overseas, respectively.
    Mr. Ross: The estimated net emigration was 47,000, of which 22,000 was to the rest of the United Kingdom and 25,000 overseas.
    Mr. Bruce-Gardyne: In view of these appalling figures, would the right hon. Gentleman explain why, since the Labour Government came to power, the population of Scotland has begun to decline year by year? Will he look into this as a matter of great urgency and bear in mind these appalling figures when considering the level of unemployment, on which a strict watch must be kept?
    Mr. Ross: If the hon. Gentleman will study these matters closely, he will appreciate that the first time when these figures rose above 40,000 was in 1963–64. Thereafter they rose even higher, and in 1964–65, when the Conservative Government were in power—I mention that in case the hon. Gentleman is anxious to attach responsibility for this trend—they rose to more than 43,000. The hon. Gentleman should not blame us for any calamitous rises. I am concerned, as every Scot should be, to arrest this trend. We used to talk about the drift to the South. The figure of 22,000 is a fairly stable one today. I am more concerned with overseas emigration and about what we can do to prevent that. I suggest that only by proceeding along the right long-term lines—by providing the right social facilities, the right housing, the right industry and so on—will we solve this problem.

    Hill Cow Subsidy
    Mr. Bakerasked the Secretary of State for Scotland in how many instances in 1964, 1965, and 1966 applications by farmers in Scotland for the hill cow subsidy have been refused solely on the ground that application was not submitted by 30th June.
    Mr. Willis: The numbers in these three years were 20, 18 and 7, respectively.
    Mr. Baker: Will not the Minister of State agree that some of the trouble here is due to the change either in tenancy or ownership of the holding concerned, and will he take administrative steps to make sure that an incoming tenant or occupier is informed of the procedure, or sent the correct form automatically with the change in tenancy or ownership?
    Mr. Willis: This matter was looked at at the beginning of the year when certain modifications were made in the payment of these subsidies which have helped to reduce the number of those not eligible.

    Inverness Prison
    Mr. Wolrige-Gordonasked the Secretary of State for Scotland in what ways the new segregation unit being built at Inverness Prison will differ from the old segregation unit at Peterhead started in 1951; and if he will make a statement.
    Mr. Willis: I would refer the hon. Gentleman to the Answer which I gave to him on 9th March.—[Vol. 725, c. 521.]
    Mr. Wolrige-Gordon: Is the Minister of State aware that all of us on this side wish him well, particularly at Christmas time, and hope that there will be no Christmas escapes from Scottish prisons in the way they seem to be so easily occurring south of the Border at present? Is he aware that the segregation unit at Peterhead was developed in 1951 and was a very great success, in spite of opposition to it, and that one essential feature of the segregation unit now being established at Inverness must be an awareness in the prison population of the disadvantages and the punishment nature of the centre?
    Mr. Willis: The segregation unit at Peterhead served its purpose, but the purpose at Inverness is rather different. We also think that the establishment at Inverness will avoid some of the problems that a rose at Peterhead.

  HOUSE OF COMMONS

    Refreshment Department (Losses)
    Mr. Rankinasked the Lord President of the Council what inquiries have been conducted into the reasons for the losses of the Refreshment Department of the House of Commons; and if he will now make a report on the matter.
    The Lord President of the Council and Leader of the House of Commons (Mr. Richard Crossman): The Select Committee on House of Commons (Services) has not yet completed its investigations into the reasons for the losses of the Refreshment Department, but it hopes to be able to make a report to the House soon after the Recess.
    Mr. Rankin: Would my right hon. Friend convey to the new manager our best wishes for his success in his job and assure him that he will get all possible support from the House? When the stage of making a report has been reached will my right hon. Friend consider publishing that report and making it available to hon. Members?
    Mr. Crossman: I thank my hon. Friend for that message, which I will pass on
    1416
    to the new manager. The question of publishing the report is something that we will have to consider when we have received the result of the investigations.
    Sir Knox Cunningham: Can the Lord President say when the Committee will be in a position to improve staff wages?
    Mr. Crossman: That is quite a different question.

  JUSTICES OF THE PEACE (APPOINTMENT)
  Mr. Hoosonasked the Attorney-General (1) whether a recommendation of the Advisory Committee of a Lord Lieutenant must be unanimous before a person is recommended to the Lord Chancellor for appointment as a justice of the peace.
  (2) what is the precise function of the Lord Lieutenant's Advisory Committee; and how it is appointed.
  The Attorney-General (Sir Elwyn Jones): The advisory committees are not Lord Lieutenants' Committees, but are appointed by my noble Friend the Lord Chancellor to assist him, in confidence in the appointment and removal of justices of the peace in their areas, and in the selection of new justices when vacancies occur. My noble Friend has a complete discretion but would not ordinarily accept a recommendation from an advisory committee for the appointment of a justice if any member of the committee opposed the recommendation.
  Mr. Hooson: Is the right hon. and learned Gentleman aware that there is no constituency implication in my Question? Would he not agree that, under the present system, there is a danger of a man who might be otherwise quite suitable not being recommended, simply because of hostility on the part of one member of the committee? What proportion of the committee is made up of nonpolitical appointees, remembering that it would be wrong for the public to think that only party adherents can be appointed to the bench?
  The Attorney-General: I hope that no member of the advisory committee would be allowed to be influenced by emotions

  1417
  of personal hostility. If there is any indications of such a case, I am sure that my noble Friend would be glad to be informed about it. The essence in these appointments is that the candidate should have the appropriate merit and qualification for the job. We have had a good deal of discussion lately about the importance of the bench reflecting the broad spectrum of the community as a whole and that there should be no undue preponderance of one political party. In fact, many J.P.s have no political affiliations at all.
  Mr. Renton: Would the right hon. and learned Gentleman agree that the advisory committees have a difficult and delicate task to discharge and that they have, for the most part, discharged this task very well, with satisfactory results?
  The Attorney-General: Yes, that is so.

  JUSTICES OF THE PEACE (APPOINTMENT)

    ROYAL ASSENT
    12.3 p.m.
    Message to attend the Lords Commissioners;
    The House went:—and, having returned;
    Mr. SPEAKER reported the Royal Assent to:

    1. Armed Forces Act 1966.

    2. Bus Fuel Grants Act 1966.

    3. National Coal Board (Additional Powers) Act 1966.

    4. Films Act 1966.

    5. Housing (Scotland) Act 1966.

    6. Industrial Reorganisation Corporation Act 1966.

    7. Local Government (Scotland) Act 1966.

    8. Police (Scotland) Act 1966.

    9. Ross and Cromarty (Strathcarron South Strome Road) Order Confirmation Act 1966.

    10. Liverpool Corporation (General Powers) Act 1966.

    11. Lee Valley Regional Park Act 1966.

    Mr. Rankin: On a point of order. I was on my feet prior to the recent interruption, Mr. Speaker, under the impression that you were calling me to ask a
    1418
    supplementary question. Was I correct, and may I now be called?
    Mr. Speaker: This is almost a nice point of theology, but the hon. Member was not called.

"THE TIMES" AND THE "SUNDAY TIMES"
12.16 p.m.
The President of the Board of Trade (Mr. Douglas Jay): With permission, I would like to make a statement on the proposed transfer of The Times and the Sunday Times to a newspaper proprietor.
I have received the Report of the Monopolies Commission, which is being published today. The Commission concluded that the proposed transfer may be expected not to operate against the public interest. I accept its conclusion and have accordingly given my consent to the proposed transfer.
The Thomson Organisation has formally confirmed to me the personal assurance given by Lord Thomson to the Monopolies Commission about the preservation of the separate identities of The Times and the Sunday Times, and about the maintenance of the independence of their editors.
Mr. Barber: As none of us has had an opportunity of seeing the Report the Monopolies Commission, we obviously cannot comment on it in detail, but I should like to ask the right hon. Gentleman three short questions.
First, is he aware that the economic difficulties of The Times are merely a reflection of the problems of the newspaper industry generally, and that other national dailies of all political persuasions are in dire straits?
Secondly, does the right hon. Gentleman agree that the duty of a Government, wherever possible, is to avoid any action which is calculated to make less viable the production of newspapers? I have in mind, for example, the imposition of the import surcharge on newsprint in 1964 and the loss of advertising which is directly due to the Government's deflationary measures.
Thirdly, and lastly, is the right hon. Gentleman aware that editorial costs are only a fraction of total costs and that The Times and other newspapers are

1419
bedevilled by restrictive practices in the production and distributive sides which helped to kill the News Chronicle and will kill other newspapers? Does not he agree that these restrictive practices are a national scandal and that the Government, in the national interest, have a clear duty to intervene?
Mr. Jay: I entirely agree with the right hon. Gentleman that other newspapers are in difficulties at present, and that we must all feel real anxiety about the situation. There are certainly a number of things which we would like to see improved in the newspaper industry, but the main reason for the industry's present economic difficulties was the introduction of commercial television by the party opposite.
Mr. Grimond: I should also like to ask three questions. First, what is the form of the formal assurances given by the Thomson Organisation? Are they legally binding on that organisation indefinitely? Secondly, is the editor-in-chief to continue in office over the two papers? How is this to be reconciled with the independence of the existing editors? Thirdly, have there been any recommendations about the printing arrangements for other newspapers, which certainly affect the whole matter?
Mr. Jay: The assurances given will be binding now on the Thomson Organisation and not just on Lord Thomson.
Mr. Grimond: Legally binding?
Mr. Jay: I thought that it was not sufficient to have assurances just by Lord Thomson personally. Therefore, we have now obtained written assurances on behalf of the Thomson Organisation.
As for the independence of the editors, the assurance made clear that the two editors will be responsible for political and other opinions expressed in the newspapers and will not be able to be interfered with by the editor-in-chief.
As to the rights—and it is The Guardian and the Observer that we have in mind, which are both to be printed on presses under the control of this organisation—legal arrangements have been made which will ensure these rights for 10 years ahead. In the Commission's view, that was as far as it was possible to guarantee them.
Mr. Dickens: Is my right hon. Friend aware that many of us on this side of the House very much regret the Commission's findings in this matter, in that they seem to condone a further concentration of ownership in the already immensely strong Thomson Organisation, and that this thus represents a grave threat to democracy? Will he tell the House what is to happen after the death of Lord Thomson? Are we to understand that there will be a limitation on the ultimate disposal of the capital of the Thomson Organisation—at present owned by Thomson International of Toronto—in this new joint venture?
Mr. Jay: It is just because we had anxieties as to what might occur after the death of Lord Thomson that I thought it necessary to go rather beyond what the Commission recommended and obtain these formal assurances not from Lord Thomson personally, but from the Thomson Organisation. They will remain binding after his death.
As to my hon. Friend's views about the Commission's Report, when he reads the Report he will see that the Commission was not by any means without anxieties about the whole situation, but its view was that this was the only firm arrangement in sight which would preserve The Times as an independent newspaper.
Mr. Goodhew: Is the right hon. Gentleman aware that the restrictive practices to which my right hon. Friend referred have caused the cancellation of two new evening newspapers which were started in Hertfordshire and Bedfordshire, that 200 people have moved from other parts of the country, giving up their jobs to take employment with these two newspapers, that many of them have bought houses in the area and that they now find themselves without a job?
Mr. Speaker: Order. Supplementary questions must arise out of the statement.
Mr. Goodhew: Mr. Speaker, I was trying to endorse the importance of looking at the restrictive practices in the printing industry, and I hope that the right hon. Gentleman will do just this.
Mr. Jay: There is no question that there are regrettable practices in the newspaper industry, but, as my right hon.

1421
Friend the Prime Minister pointed out yesterday, this and other aspects of the industry are being reviewed by the Joint Board for the National Newspaper Industry at present, and we had better await its decision.
Mr. Pannell: Is my right hon. Friend aware that such is the interest in this subject, as is evidenced by all Members who wish to ask questions on it, that we do not think that anything irrevocable should be done until we have had a debate in the House? Is my right hon. Friend further aware that when he made this reference this morning to television it seemed to me that he was seizing on a purely peripheral point which hardly affected the principle with which we are now concerned?
My right hon. Friend will be aware that there is a great deal of interest in the subject and that probably we shall all digest the Report over Christmas. I hope, too, that my right hon. Friend will redigest it and will consult his right hon. Friend the Leader of the House with a view to having a debate as soon as possible after Christmas. This is a far more important matter than many things which the House goes out of its way to discuss.
Mr. Jay: My right hon. Friend the Leader of the House has noted those views and I understand that he is willing and ready to have a debate as soon as possible. But it was necessary for us to make a statement, having given the Commission three months to come to a decision, because of the uncertainty of the situation which causes great difficulties for The Times itself.
Mr. Boyd-Carpenter: Returning to the assurances on which, as the right hon. Gentleman said, the recommendations of the Commission and his own consent were given, can he say whether he or some other Minister accepts Ministerial responsibility for ensuring that these are implemented?
Mr. Jay: I would certainly accept Ministerial responsibility to do all that is in my power to see that they are implemented.
Mr. Orme: Is my right hon. Friend aware that referring the Thomson application to the Monopolies Commission has almost a Gilbertian ring about it? Is
1422
it not extraordinary that the Monopolies Commission can award this newspaper to a monopoly? Have my right hon. Friends and the Government not considered that some form of public control running this as an independent newspaper similar to the B.B.C. might be tried by the Government before turning it over to Lord Thomson?
Mr. Jay: My hon. Friend may think it Gilbertian of me to have referred the matter to the Monopolies Commission, but I am bound to do so by the Statute passed by Parliament.
As to wider questions of possible public control, I do not think they arise strictly on this matter, but I would think that the newspaper industry is one of the last, in which the Government would wish to intervene.
Mr. Alfred Morris: Is my right hon. Friend aware that many will see the majority Report as toleration by the Monopolies Commission of at least a tendency towards the growth of monopoly in quality newspapers? Is he further aware that there were some well-authenticated versions of this Report available in the Press yesterday? Can he say why the House was not the first to know of the Report?
Mr. Jay: As I said before, we all share the anxieties expressed during the last five minutes about the situation in the newspaper industry, but so far nobody has found a satisfactory solution. As to the publication of this Report, it was made available for the first time to Parliament at 11.30 this morning.
Mr. Allason: In considering the Report, did the Government take account of the difficulties in the newspaper industry over inter-union manning?
Mr. Jay: That is one of the aspects of the whole problem, but it was not specifically raised over this particular issue of The Times.
Mr. Emrys Hughes: Has my right hon. Friend's attention been drawn to the situation in Scotland, where Lord Thomson now controls the Scotsman and owns Scottish Television? Further, he has made one attempt to take over the Glasgow Herald, which he may try again. This means control not only of daily newspapers, but of weekly newspapers.

1423
Is my right hon. Friend aware that I introduced a Bill for the nationalisation of The Times about six years ago and that the House gave it a Second Reading? Why does my right hon. Friend dispose so lightly of the idea of public control when the B.B.C. runs a good successful weekly paper, the Listener, which has more reliability in its news than many newspapers? Why dismiss out of hand the idea of public control?
Mr. Jay: As my hon. Friend knows, the B.B.C. does not express political opinions as the B.B.C., whereas newspapers do. Therefore, there is a distinction. We must all be anxious about this. The Thomson Organisation now controls quite a large section of the quality newspapers in this country. On the other hand, if we look at the total circulation of all newspapers, we see that the proportion is very much smaller.
Mr. Gresham Cooke: Should not we be realistic and recognise that 10 or 11 morning newspapers are commercial enterprises? If they are to be adversely affected by economic conditions, some of which have been brought about by the present Government, having regard to the trend of the times, should we not accept further amalgamations and rationalisations among the 10 or 11 morning newspapers?
Mr. Jay: Even though we recognise the commercial realities, we must feel considerable concern about the dwindling independence of the Press. That is the problem before us.
Mr. Buchan: Surely, as my right hon. Friend is worried about the dwindling independence of the Press, he will agree that the last thing we want to do is to hand over one-third of the quality newspapers to one organisation? In Scotland, not only the quality Press but commercial television is in the same hands. Now it is suggested that two out of the six morning newspapers should be handed over. The Government would do better—
Mr. Speaker: Order. Questions please.
Mr. Buchan: Would my right hon. Friend not do better by following the minority Report?
Mr. Jay: As I thought I had already explained to my hon. Friend, on the most important point I have obtained a
1424
substantial assurance from the Thomson Organisation which was suggested in the minority Report. I did that for precisely the reasons that he sets forth. I think that we are all anxious to ensure, so far as is humanly possible, the genuine independence of the editors of these two newspapers.
Sir D. Walker-Smith: In answer to an earlier question, the right hon. Gentleman said that he would accept Ministerial responsibility in respect of these assurances so far as he had the power. Since these assurances obviously go very much to the heart of the matter, and the House is at some disadvantage in canvassing these matters without having seen the text of them, will the right hon. Gentleman tell the House to whom the assurances are given, by whom they are enforceable, and by what machinery they are enforceable?
Mr. Jay: The original assurance was given personally by Lord Thomson to the Commission. The renewed stronger assurances were given by the Thomson Organisation to myself. They are, clearly, morally binding on the organisation. What I said, and I repeat, is that I will do all in my power to see that they are carried out. I have no reason to believe that they will not be carried out.
Mr. Mendelson: As my right hon. Friend has now three times repeated the term "written assurances and moral obligations", will he tell the House whether, if for commercial or other reasons which perhaps in the future could be justifiably argued by Lord Thomson and his successors, there will be any authority to countermand any change or move away from the position given in those assurances? If there is not, why are the Government in such haste? Why not let the House express an opinion on this before taking final action?
Mr. Jay: I am glad that the House of Commons should express such opinions, but these assurances have just as much validity as any other assurance given to a Minister in a formal written document, and I do not think that we should depreciate the value of such an assurance.
Mr. Bruce-Gardyne: Reverting to the third question raised by my right hon. Friend, is not the overriding problem in this matter the restrictive practices in

1425
the printing industry, admittedly assisted, perhaps, by the spinelessness of managements over the years? Surely the Government cannot opt out completely in its consideration of this matter. Should not the Government move on this whole problem of restrictive practices in the industry?
Mr. Jay: I am not sure exactly what the hon. Gentleman is proposing. We have already had the Report of the Royal Commission on the Press, and there is now a review going on by the joint body in the industry which I have described. When we have its conclusions, we shall certainly consider them. I do not think that the restrictive practices to which the hon. Gentleman referred are the only trouble in the industry. There are many faults going much wider than that.
Mr. Marquand: Is my right hon. Friend aware that the problem is much wider than simply the Thomson take-over of The Times? What we are really discussing this morning is the future of the quality Press and the possibility of the disappearance of any independent quality press in this country.
Can my right hon. Friend tell us whether the Government, during the Recess, will come forward with proposals to ensure the survival of independent, dissenting radical newspapers in this country, of the quality of The Guardian and the Observer, possibly by altering the arrangements whereby advertising revenue is now concentrated in a very small number of hands, possibly by leasing presses to independent groups of journalists? I do not know the exact mechanism, but can the Government at least give an assurance that they will think very hard and very radically on these lines during the Recess?
Mr. Jay: I fully agree with my hon. Friend. I have said several times today that there are much wider problems than this. We are certainly seriously considering whether there is any possible solution which has not yet been discovered, and I am prepared to consider any suggestion put forward by my hon. Friend.
Mr. Heffer: In view of the last reply by my right hon. Friend, and the fact that the Commission points out that the apprehensions are not groundless, would he not have a further look at this matter and withdraw his giving of consent at
1426
this stage, and let the House of Commons discuss the whole matter? It is of such great importance that I appeal to my right hon. Friend to let the House discuss this at great length before any final decision is taken.
Mr. Jay: No, Sir. I cannot withdraw the consent given, because although we have to consider these wider problems, and the Government will do so, my hon. Friend must really face the fact that we have to ensure that The Times can immediately carry on. After the Commission had three months to consider this, its conclusion, to which I must pay some respect, is that there is no other practical way of doing it which is in sight.
Mr. Rowland: If, as my right hon. Friend says, moral assurances are as good as legal assurances, why should Lord Thompson not be willing to make his moral assurances as legal assurances? Secondly, given that my right hon. Friend is now giving consent, and presumably this is irrevocable, should he not have consulted the House of Commons before giving that consent?
Mr. Jay: As to the latter question, I am sure that my hon. Friend knows that it has always been the practice of all Governments since the Monopolies Act was passed in 1949 that the Government, simultaneously with the publication of the Report, should make up their mind on accepting its decision. I regard the assurances as being as fully binding as any assurances can be.
Mr. Dalyell: Is there contingency planning in the Board of Trade for a potential situation in which my right hon. Friend might be asked by sections of the Press for Government help? Should such help be offered, would he make it clear that any newspaper receiving help is in no way beholden to the Government and will have the inalienable right to spit in the Government's eye—any Government's eye?
Mr. Jay: My hon. Friend is asking a slightly hypothetical question. I would certainly say, as I did, that we are seriously considering these very difficult problems. I do not want to be taken here and now to be offering what my hon. Friend calls help to any newspaper.
Several Hon. Members rose—
Mr. Mendelson: I beg to ask leave, Mr. Speaker, to move the Adjournment of the House, under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely,
"the decision of Her Majesty's Government to give such quick assent to the recommendation of the Monopolies Commission before giving the House of Commons an opportunity to discuss this most important matter."
I want to be very brief and to concentrate entirely on the Standing Order involved.
First, the House of Commons is adjourning today for the Christmas Recess and there will be no opportunity whatsoever to use any of the established means of Parliamentary procedure to bring this matter again before the House for almost four weeks.
Secondly, I submit that in these circumstances the exchanges that we have just had place the House at a very serious disadvantage. Because of the publication of the Report, only a few minutes ago, no hon. Member, apart from members of the Government, was in a position to know the contents of the Report. There have been some leaks, but Members of Parliament cannot act on leaks. They have to see the official text of the Report before they can form a considered opinion.
Thirdly, there can be no doubt about the public importance of this matter. There is not only the decision on this particular newspaper, but there are involved a number of general principles which are highlighted by the difficulties in which The Times finds itself.
In these circumstances, although it is pleaded that quick action was needed, a delay of a few weeks in order to give the House of Commons an opportunity to debate the matter would have been supported by hon. Members on both sides of the House. It is on those grounds that I ask leave to move the Adjournment of the House.
Mr. Speaker: The hon. Gentleman seeks leave to move the Adjournment of the House for the purpose of discussing a definite matter of urgent public importance, namely,
"the decision by Her Majesty's Government to give such quick assent to the recommendation of the Monopolies Commission before
1428
giving the House of Commons an opportunity to discuss this most important matter."
The House instructed me yesterday to adjourn the House without putting any Question at 5 o'clock tonight. The Standing Order is, clearly, not operable in these circumstances.
Mr. Atkinson: Arising out of that, Mr. Speaker, I wonder whether I could add to your knowledge on this situation, in the sense that in view of the advocacy of my hon. Friend in stressing the imminent possibilities that are likely to arise during the Recess—
Mr. Speaker: Order. The hon. Gentleman, with all due respect, has not understood the Ruling that I gave. May I assure him that I am seized of the important issue that was sought to be raised under Standing Order No. 9. I usually am. The question of Standing Order No. 9 usually comes on important issues. I hope that the hon. Gentleman is not questioning my Ruling.
Mr. Atkinson: No, Sir, I am not. With great respect, I am seeking not to question your Ruling but to try to add to the information which has already been given to the House, because some of the trade unions which are involved in this matter will be asked to negotiate on their future during the Recess. I would like, therefore, with your permission, very briefly to state—
Mr. Speaker: Order. We cannot debate this. I must protect the business of the House, and the business has been laid down for today. It was because this matter was so urgent that I allowed questions to run for 40 minutes. But I have ruled on the question of the Standing Order, and the matter must be raised by the hon. Gentleman in some other way with the Ministers concerned.
Mr. Atkinson: I am not challenging your Ruling, Mr. Speaker, but may I point out that you allowed questions to run for 25 minutes, not 40 minutes?
Mr. Speaker: I am sorry. I looked quickly at the clock. I withdraw that. It was 25 minutes.
Mr. Mendelson: May we seek your guidance, Mr. Speaker, in these circumstances? As a general principle, and not on this particular matter, how is the House of Commons to be protected? If

1429
the Executive is in a position to move and have passed the Motion for the Adjournment of the House for a Recess, and to do this not just one day, as in this case, but several days in advance of the effective date of the Adjournment, if it wishes, then, if the Executive brings forward a whole series of most important decisions, is not the House of Commons prevented, under the Ruling you have just given, from raising them under Standing Order No. 9 or in any other way? Would not this be an intolerable situation?
Mr. Speaker: I am bound by the practice of the House. I am seized of the importance of the grave issue raised now by the hon. Member for Penistone (Mr. Mendelson). I understand that the House is to consider this issue of Standing Order No. 9 at some time in the new year. I hope that it will give serious consideration to all aspects of the question of Standing Order No. 9 which, I know, troubles the House.
Mr. Lipton: On a point of order, Mr. Speaker. The proposed arrangement of subjects for debate on the Adjournment is set out on the Order Paper. If any hon. Member who has had time allocated to him wishes to waive his right to have the subject opposite his name discussed, would we then be able to discuss the question of the Monopolies Commission's Report on The Times?
Mr. Speaker: The subjects to be discussed are the subjects set out on the Order Paper. Hon. Members have chosen certain topics for discussion.
Mr. Lipton rose—
Mr. Speaker: Order. I understand the hon. Gentleman's question. He need not repeat it. The matters for discussion are those on the Order Paper. I must leave it at that.
1430
May I point out that we are now 45 minutes behind the time set for the beginning of the Adjournment debates. For those hon. Members who have debates, this means, roughly, cutting off one-tenth of the allocated time. I hope that hon. Members who have Adjournment debates will be fair to those who follow later.
I have asked the Table hurriedly to draft new timings for the debates, and these are as follows. The first debate will run from 12.40 to 1.30; the second from 1.30 to 2.10; the third from 2.10 to 2.50; the fourth from 2.50 to 3.40; the fifth from 3.40 to 4.20; and the sixth from 4.20 to 5 o'clock.

BILL PRESENTED
  WATER (SCOTLAND)
  Bill to provide for the establishment of regional water boards and a Central Scotland Water Development Board, and the transfer to those boards of functions in relation to water supply in Scotland previously exercisable by local water authorities, to confer on the Central Scotland Water Development Board functions in relation to the bulk supply of water to its constituent regional water boards, to enable other regional water boards and water development boards to be established by order of the Secretary of State, to amend the Water (Scotland) Acts, 1946 and 1949; and for purposes connected with the matters aforesaid, presented by Mr. William Ross; supported by Dr. J. Dickson Mabon; read the First time; to be read a Second time upon Tuesday, 17th January and to be printed. [Bill 164.]
  ADJOURNMENT
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Howie.]

  WAR DISABILITY PENSIONERS
  12.43 p.m.
  Sir Robert Cary: I thank you, Mr. Speaker, for your courtesy in allowing me to raise this matter on the Adjournment, and I thank you also for rearranging the time allocated so that my debate will not be prejudiced. It is my duty in these circumstances to be as brief as I can, and I propose, therefore, not to elaborate certain matters which I have in mind. It is my duty, also, not to refer to legislation but to outline only in a factual sense the effect of Acts of Parliament upon war disability pensioners, and this I shall do.
  What are the main problems confronting war disability pensioners? First, there is the question of the value of pensions. The improvement in war disability pensions in March, 1965, when the basic rate of compensation was raised to 135s. a week, brought the purchasing value of the pension to slightly more than the old 40s. a week pension of 1938. That increase in March, 1965, in the basic payment, therefore, which brought the value of the pension to only slightly above the rate in 1938, illustrates that for these pensioners, and probably for all pensioners, inflation knows no frontiers, and these pensioners, the most deserving in the population, suffer just as much in terms of income or compensation as anyone else.
  In March, 1965, when 135s. a week became the operative basic rate, the Index of Retail Prices stood at 109·9, but in August, 1966, the index had risen to 117·3. In other words, since March, 1965, the purchasing power has dropped to 126s. 8d. Therefore, even at the present quite generous basic rate of 135s., the pensioner is slightly worse off in terms of purchasing power than he was in 1938 at the 40s. level.
  There are, surprisingly, no fewer than 448,000 war disability pensioners, and there are 13,700 whose income is limited to war pension and allowances. These 13,000 severely disabled consist of about 5,000 survivors from the First World War and 7,000 from the Second World War. I beg the Government to realise, in their future consideration of this matter, that it is this section of the disabled, the
  1432
  severely disabled numbering 13,700, who are entitled to first priority in any easements which the Government, in due time, I hope, will be able to make in regard to pensions.
  I turn now to another subject, artificial limbs and appliances. It is very sad that, although Great Britain used to be far ahead in the design and fitting of artificial limbs, we have now lost our place in the world in this work. I was distressed two or three years ago when a delegation of British limbless ex-Service men went to the Scandinavian countries and Germany and found that their British limbs were considered by the Scandinavians and the Germans to be inferior to what they themselves possessed. But there is a possibility that, even if we cannot achieve our old position, we can catch up again by the creation of the bio-mechanical research department at Roehampton which, I understand, the Minister of Health is to open in the new year.
  I hope that there will be research not only into improving many of our fittings and appliances but into ways to cure the present delays in limb fitting at Roehampton. I need not remind the House of a most distressing strike which took place a few weeks ago among the limb fitters at Roehampton. It was most unfortunate. A special appeal about it was made on television programmes. While I sympathise with the members of the organisation for whom I am privileged to speak, the British Limbless Ex-Servicemen's Association, I am sympathetic also to the views expressed by the limb fitters who were on strike. I feel that there is a way by which the problems created in distressing circumstances like that can be cured. I realise that on this theme there are differences between the parties, but this is my proposal. I should like to see limb fitting centres set up under the regional hospital boards in our orthopaedic hospitals and the limb fitters at Roehampton brought under the umbrella of the Ministry of Health, being treated as fully qualified technicians on level terms with other technical grades in the National Health Service.
  In those circumstances, the Ministry of Health would not only be responsible for supplying the limbs but would become responsible for the technicians and the

  1433
  fitting of those limbs. I know that different views have been expressed from both sides of the House as to just how far the great National Health Service umbrella should be extended. But I am anxious never to see again a limb fitting strike such as that which took place at Roehampton and caused so much distress among the members of the organisation for whom I speak.
  I now turn to a third subject, the provision of mini-cars for the disabled. No doubt hon. Members saw the headline and article in the Evening Standard last night concerning invalid drivers and the great row blowing up in Sussex about tricycles and wheeled vehicles. It is necessary to send to a special depôt in Lancashire for fittings, and there is delay. The Parliamentary Secretary to the Ministry of Social Security knows all about that problem. I do not want to elaborate on it, but to take this opportunity to thank the Ministry of Health for supplying no fewer than 5,000 mini-cars to disabled ex-Service men.
  That is a great triumph. How superb that small car is. I hoped for years that the motor manufacturers would design a vehicle which would be perfect for the limbless man, and suddenly they produced for the public at large a car that is not only popular with everybody but is extremely suitable for the limbless ex-Service man. There is still a large demand. I know that the hon. Gentleman will also be speaking for the Ministry of Health, which controls these matters, and I know that the sum involved is enormous. This subject has been mentioned at Question Time.
  If any Government had to meet the entire requirement it would cost them about £40 million. However, we are grateful to the Government for their cooperation so far not only in regard to the provision of mini-cars for disabled drivers but for their most helpful cooperation in dealing with individual cases. I know that the hon. Gentleman is extremely well-informed on this subject and is most sympathetic to our claims. I hope that, as 1967 progresses, we shall perhaps have another small helping. I may not be able to ask for 500, but how about a suitable supply to take the 5,000 just a little higher in the coming year?
  1434
  I now turn to the main point, which is the matter which creates the most burning anger among the disabled. That is the rate rebate scheme. The impact of the scheme is well known to all hon. Members. I and the hon. Member for Manchester, Ardwick (Mr. L. M. Lever) recently circulated the necessary documents to all hon. Members. I am angry with the Government because, under the scheme, for the first time since 1919 the war disability pension has been treated as income and not as a compensation.
  It is an award earned in the field by a man who has been gravely injured. We have never interfered with his right to have that as compensation and not considered as income. It is not for me to elaborate on the scheme, based on the Allen Report, whereby 75 per cent. of the ratepayers subsidise the other 25 per cent. But it compelled the Government to make two levels, and for a married couple the ceiling for rate rebate was set at £10 a week.
  The result is that if two married couples living next door to each other both enjoy the National Insurance pension of £6 10s. a week, but one man has a disability compensation payment of £4 9s., that couple are taken over the ceiling of £10. They therefore cannot receive the rebate, and that means that the war disability pensioner is put in the position of subsidising his next door neighbour.
  I would much rather see the rebate provided from central funds and not brought down to the homes in this way. There is nothing more disastrous than making people quarrel, as happens at present, about rate rebate. In the debates on this matter at the end of the last Parliament the Government did not modify their view about war disability pensions, and we shall cover that ground again. I still look upon such pensions as an award and compensation and I resent the Treasury's treating them as part of income for the first time in our history. Not even in the great financial crisis of 1931 did we invade the compensation sum paid to war pensioners.
  Mr. Speaker, you know my position in the House. I belong to a very small number of hon. Members who served in the battles of the Somme. I also belong to another small surviving number of hon. Members who left the House on 3rd September, 1939, to rejoin the Armed Forces.

  1435
  That I survived both conflicts without a scratch is, perhaps, the greatest blessing I enjoy in life. I never go to that great gathering, the annual conference of the British Limbless Ex-Servicemen's Association, without thanking the Creator, when I see that great roomful of men shattered by war, that I should have been allowed to go through the hazards of both wars without a scratch. I cannot recall suffering even one day's sickness in all my service as a professional soldier.
  In taking over your great office, Mr. Speaker, you ended your speech of dedication by paying tribute to those who gave their lives in two world wars, and to those who are still with us, the members of the British Limbless Ex-Servicemen's Association. I hope that the time will come when the House will take steps to bring to an end the circumstances in which limbless ex-Servicemen have their right in compensation described as an income.
  12.59 p.m.
  Mr. L. M. Lever: I express to you, Mr. Speaker, our appreciation for extending the time available for discussing the problems of the war disabled. I am pleased that we are being allowed a little social injury time so that we may extend our debate.
  I support the plea of the hon. Member for Manchester, Withington (Sir R. Cary) on the subjects which he raised which are of very great consequence for the limbless ex-Service men. I should like particularly to draw attention to the way in which the war disability pension is affected under the rate rebate scheme. This is a matter which gives great concern and a feeling of injustice to limbless ex-Service men vis-à-vis other people who are receiving social benefits.
  There seems to be a misconception in the House as to what is a war disability pension and whether, even with the merger of the Ministry of Pensions and the Ministry of National Insurance, it should be treated in a similar way to other pensions. The question of war disability pensions is separate. A war disability pension is compensation for loss of faculty. Parliament, in its wisdom, decided that such a pension should be free from the taxation which is involved in other social service benefits. That is sacrosanct. That same freedom from
  1436
  taxation should be applied to the rebate scheme in calculating the income of a disabled ex-Service man.
  It is true that Parliament decided that matter in the last Parliament, but under our constitution what one Parliament has done another Parliament can undo. That is fundamental under the constitutional law of this country. The decision that a war disability pension should be treated as income under the rate rebate scheme was a very serious mistake. We should like Parliament—and it would be a sign of its greatness if it did this—to admit that it made a mistake and to exclude the war disability pension for income purposes. This should be corrected as soon as possible so that the anxiety of disabled ex-Service men and their relations is removed.
  It was to that end that we tabled a Motion. It was an all-party Motion. This was not a party question. It is not submitted by the hon. Member for Withington or myself as a party question. This country has a very fine record in improving pensions, whether by a Government of one party or another. Since 1950, I have had the privilege of being Honorary Secretary of the British Limbless Ex-Servicemen's Association all-party committee in the House. I pay tribute to Members on both sides of the House, since the improvements made in the position of disabled ex-Service men have been considerable. We should not spoil a good record of achievement on behalf of the disabled ex-Service men by including their income from disability pension for taxation purposes under the rate rebate scheme. This is the fly in the ointment.
  The hon. Member for Withington cited a very important case in which two people were each receiving £6 10s., one person from a disability pension and one person from a social service benefit. One is entitled to a rate rebate where the disability pensioner is at a great disadvantage. This is a clear anomaly and it is Parliament's duty to look at it as soon as possible.
  I have been in comunication with each of the last two Ministers of Housing and Local Government. My right hon. Friend who is now Leader of the House wrote a letter to me dated 17th March, 1966, in which he said:
  "Thank you for your note enclosing this copy of a letter from the General Secretary of

  1437
  the British Limbless Ex-Servicemen's Association about the Rating Act. I am sorry not to have replied before.
  We had a good look at pleas for disregards for such things as disability pensions in the final stages of Standing Committee on February 10th and 15th, as you will see if you look at the HANSARDS for Standing Committee D, discussion of new Clauses from column 268 onwards. The House of Commons took a further look at the justification for various disregards at Report Stage on February 24th, but no changes in the Bill were made. Much as we sympathise with the feeling that disability pensions should be left out of income for the rebate schemes, we have not been persuaded"—
  and the object of our raising this matter is to persuade the Minister that it would be proper to disregard the war disability pension under the rate rebate scheme—
  "that it would be proper to have any disregards for this particular purpose. It seems to me that the fact that Income Tax is not payable on these pensions is in itself no precedent for leaving them out of income for rebate purposes. The problem is that if one starts having disregards, it is difficult to know where to stop—though we do understand the reasons which prompt people to suggest refinement of this sort."
  The present Minister of Housing and Local Government said this in his letter to me:
  "I have looked most carefully into the background of the debates in Standing Committee and at Report on the Rating Bill earlier this year and I have concluded that the Government line was reasonable and justifiable. Both Dick Crossman and I have had many letters on this matter, particularly from branches of the British Limbless Ex-Servicemen's Association, and have made it clear in our replies that we regard the issue as having been settled by the last Parliament."
  I have already pointed out that what one Parliament has done another Parliament can undo.
  "The rebate scheme is a tax reform with a limited objective—to reduce the proportion of lower incomes taken by rates, in order to lessen the regressive nature of rates and improve them as a tax."
  Neither letter, while couched in sympathetic terms, deals with the fundamental principle that a disability pension is in a category of its own, whereas benefit under a social service scheme is entirely different.
  I support what the hon. Member for Withington said on the other matters which he raised. I emphasise that the treatment of disabled ex-Service men under the rate rebate scheme is not just and that 244 Members have to date signed
  1438
  our Motion No. 163 agreeing with us. I hope, accordingly, that the Government, realising the urgency of the matter, will think again and will relieve the limbless ex-Service men from the additional disability from which they are suffering under the rate rebate scheme. I am sure that all sections of the country and the House, if they were asked their frank opinion, would support us and regard it as a duty to help or relieve disabled ex-Service men in this way. I am sure that this great country is not so broke—not that it is broke at all; we have many great assets—that it cannot afford to allow disabled ex-Service men to benefit from the rate rebate scheme and thus enable them to live happier lives.
  1.9 p.m.
  Mr. Philip Holland: We on this side of the House are grateful to my hon. Friend the Member for Manchester, Withington (Sir R. Cary) for raising this subject today. The whole House is aware of my hon. Friend's longstanding interest and his expertise in matters relating to the war disabled. His hon. Friends on this side support fully the Motion on the disabled, which is also supported by a number of hon. Members on the benches opposite.
  Until the election of a Labour Government in 1964, it was always the policy of successive Governments that disability suffered by war pensioners as a result of service in the Forces merited special generosity. The reason is quite simple. The war disabled were our comrades who fought to preserve the sort of society we were all trying to build. In fighting, they sacrified their opportunity to live a full life in the years that followed—I would not like to live in an occupied country—and for the rest of their lives they are paying the price for my freedom. That is how I see it. They have certainly earned their place in the hearts of the British people, but not, it appears, in the hearts of the present Labour Government.
  Successive British Governments prior to 1964 have all taken the view that the war disabled merited special treatment in matters of finance. Consequently, war pensions and allowances paid to war pensioners, but not to their dependants, have been disregarded for Income Tax assessment. In the same way, a major part of war pensions and allowances has been

  1439
  disregarded for purposes of assessing National Assistance need.
  Early this year, as has been said so eloquently both by my hon. Friend and by the hon. Member for Manchester, Ardwick (Mr. L. M. Lever), the Rating Act brought a marked change of attitude to these men by denying them any special consideration under the rate rebate scheme. The Opposition made the strongest possible protests about this when the Bill was passing through its various stages. The issue was debated both in Standing Committee on 10th and 15th February and again on Report on 24th February, when a new Clause was moved by the Opposition. The then Minister of Housing and Local Government, now Leader of the House, rejected the new Clause on the assumption that the new Rating Act would provide essentially a tax concession which was intended to ease the burden of the less affluent members of society and should not be confused with social service provisions.
  In replying to the debate on the Clause, the right hon. Gentleman emphasised that was pensions constituted
  "a highly worked out social service".—[OFFICIAL REPORT, 24th February, 1966; Vol. 725, C. 670.]
  In our view, far from being a social service, war disability pensions are payments borne by the Exchequer as compensation for physical disability and loss of function due to injuries suffered in the service of the nation. They are not related to the economic circumstances of the individual, and the amount of pension is based on a medical assessment of functional loss. These are the payments that, we believe, should be disregarded for purposes of the rate rebate scheme. They are not social insurance payments. They are not based on financial need. They are not benefits from a contributory pension scheme. They are compensation paid by the nation as an employer to those who have suffered grievously in the service of that employer. As such, the compensation should be paid in full and should not be subject to deductions in the form of any kind of tax collected by that same employer. That is our view.
  The Government, of course, have a substantial Parliamentary majority and for the time being they have forced their
  1440
  shabby treatment of these deserving people through the legislative processes. I hope that with a change of Minister at the Ministry of Housing and Local Government, we may look for a change of heart. I confess to some misgivings on this score, but it is the season of good will.
  Whether or not the Government reconsider the position, I should like to make our own position quite clear. The Conservative Opposition remain implacably opposed to any measure, including this one, that treats a war disability pension as if it were income for the purposes of taxation.
  My hon. Friend the Member for Withington also raised the question of the work-to-rule—incidentally, not a strike—by limb fitters at Roehampton. Whilst I share his concern at the distress caused to the patients, who, goodness knows, have in all conscience already suffered enough by this type of action on the part of the limb fitters, I do not feel able to endorse his proposed remedy. It does not seem to me that to move a man from the private sector to the public sector would put any obstacle in the way of his working to rule if he wanted to. In fact, on the record so far, I should have said that a man was more likely to work to rule in the public sector than ever he was in the private sector. [HON. MEMBERS: "Oh" In the private sector, the tendency is rather to strike than to work to rule.
  The particular problem to which my hon. Friend referred has now been solved, but there are other problems at Roehampton which are still in urgent need of solution. For example, the appointments arrangements are still appallingly bad, as are the transport facilities for ferrying patients to and fro. I hope that these will be looked at as matters of urgency. There is no doubt that the patients, who already have enough to bear, are quite unnecessarily having to suffer frustration, irritation and tiring, time-wasting periods of inactivity.
  As we move into the Christmas Recess, I should like to end on a note of peace and good will. I should like for example to be able to commend the Government for the improvements in war disability pensions which became effective at the end of March, 1965, when the 100 per

  1441
  cent. basic rate of compensation was raised to 135s. This was certainly welcomed at the time by all the ex-Service organisations. Unhappily, however, the Government's record is not quite as good as it looks. Since that time, according to my calculation, the purchasing power of that 135s. a week has dropped by about 9s.
  Therefore, in all financial matters—I exempt the question of mini-cars, on which the Government have a good record and for which I give them credit—relating to war disability pensioners the Government appear to have a worsening record. The ability of these people to live by reasonable standards is becoming more rapidly eroded than ever before. It is to our shame that this is so. Can we know, I wonder, when the Government propose to reverse this process?
  1.17 p.m.
  The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Harold Davies): I am sure that the House is grateful to the hon. Member for Manchester, Withington (Sir R. Cary), who opened this debate. I am grateful to him for the manner in which he raised the subject. One does not doubt the absence of ulterior motive and the absolute sincerity of the hon. Member, whose gallant record is known not only to this House, but to the country. I thank also my hon. Friend the Member for Manchester, Ardwick (Mr. L. M. Lever) for his contribution. I therefore impute no ulterior motives in the debate and I will try to answer it in exactly the same spirit.
  If I may change the key, however, I was a little worried when the hon. Member for Carlton (Mr. Holland) said that it was not in the hearts of the Labour Government to recognise the sacrifices and the price paid by these men for our freedom. That is a bit hot. That is all I will say about it, otherwise I could really get into orbit and spoil the atmosphere of the debate. I know the nature of the hon. Gentleman and I know that he does not really mean that. Let us, therefore, deal with the realities as constructively as we can.
  Throughout all my journeys during the past two years or more with our officials—who serve all Governments—when going to meetings concerned with war pensions committees of one kind and
  1442
  another, B.L.E.S.M.A. and to places like Roehampton, where my responsibilities overlap with those of my hon. Friend the Parliamentary Secretary to the Ministry of Health, I have never failed to pay tribute to the work that was done by the previous Government when dealing with these complicated problems. Having said that, I hope that I have created the right atmosphere for the reply to this debate.
  This is a subject with which the whole country has great sympathy, and we have too little opportunity to discuss it. We in this House meet on common ground when we discuss war pensions, and as I have pointed out—I have certainly tried to—we make it not a party matter.
  I have been very conscious of the difficulty which we are in this morning because of the looming shadow of the rules of order as they affect one subject, namely, the question of the rates, but later I will try to answer fairly some of these problems, which need answering, about rates rebates.
  Taking up the point which the hon. Gentleman the Member for Withington mentioned, the question of value, I am an old hand at statistics myself, and when I want to make a political speech what I can do with statistics is nobody's business, and there are other men in this House who can do so as well. I can make them dance about and serve my purpose—without my tongue in my cheek, because the figures I quote do serve my purpose. I am careful not to quote those which do not. What is the truth? We have had to meet a great deal of this increase in the cost of living, and that increase is in the nature of the kind of society in which we are living, and it is happening all over the world, but I want to reiterate that when we came to power we gave the largest single increase that has ever been given to war pensioners. We are aware of this: the value of this pension and its position is just about ahead.
  There again, the hon. Member for Carlton said, "Of course, on some of the material things you have done well, but you have forgotten the financial side." There is something which we must not forget. I do not want to claim all the credit for this Government. I see present the right hon. Gentleman the Member

  1443
  for Bridlington (Mr. Wood), who was a previous Minister of Pensions. He will know of the work which was done by the McCorquodale Committee. The right hon. Gentleman gets the credit for setting that Committee in motion, but since we came into power—I do not want to make a party quip about it—despite all the difficulties of the country we, with alacrity, and a little charm, introduced the McCorquodale Committee's Report and a large increase on the financial side.
  So never mind the statistics. What I am saying is that we are well ahead if we add all these up. If it is asked, "Are we satisfied?" I reply, "Which of us is ever satisfied?" But we have a practical issue of politics.
  Sir R. Cary: I raised this issue because none of us can win against inflation. Inflation is the great enemy that we all, on both sides of the House, have to fight. The Government must consider this in considering the priorities when the easements come. I was claiming that then the war disability pensioners should be first.
  Mr. Davies: The hon. Gentleman's charm is almost overwhelming. I march shoulder to shoulder with him into battle on this issue of inflation.
  Let me come now to motor cars. This is not entirely the responsibility of my Ministry but to try to give a coherent answer I have the authority and help of my hon. Friend the Parliamentary Secretary to the Ministry of Health to get this clear; there is some overlapping between the Departments. In October, 1964, there were 4,250 war pensioners whose cars were supplied through the Health Department. Today there are 5,500, as well as about 250 National Health Service patients who have the benefit of arrangements introduced under extra statutory powers in 1964. In addition—this is a point for the House, and it is very relevant—there are about 1,100 war pensioners who prefer to run their own cars and who receive special allowances to assist them so to do. It was the pressure of organisations like that to which the hon. Gentleman belongs and the British Legion and others that this sensible policy was introduced, and it has worked.
  It is worthy of mention, too, and I think the House should know, that as well as
  1444
  cars there are about 500 war pensioners who, strangely enough, still prefer to have the invalid tricycle although they could, if they wished, be supplied with cars. There are a number of reasons for this, on which statements have been made in the House by my hon. Friend the Parliamentary Secretary and also the Minister of Health—that the invalid tricycle is a reliable machine if it is properly driven and maintained. It continues to meet a real need amongst the severely disabled. As the hon. Lady the Member for Melton (Miss Pike), smiling there so charmingly and who contested the seat of Leek against me some years ago, will know, in Leek we have quite a number of these. The tricycles have certain advantages. For instance, they can sometimes be parked in a man's backyard without any expense or difficulty involved if one wants to put up a garage—and there are some local authorities—I had better be careful—who are sometimes not hasty in allowing garage space. I came near to danger there.
  Again, and this is the direct answer to the hon. Gentleman and his colleagues and to my hon. Friend the Member for Manchester, Ardwick. A review has recently been completed of the present processes and the Parliamentary Secretary to the Ministry of Health, in the House, in answer to a Question on 5th December, said that his right hon. Friend was now studying the results of the review and hoped to make a statement early in the new year. We must await his statement. It is not my responsibility, and he will, of course, take note of what has been said in this debate. That is why my hon. Friend is here, and he will also, as he has said on many occasions, have to take note of other priorities within and outside the Health Service.
  I come to the matter of the limb fitters. I can just about fit this matter in in the time I have. It is through the fitter that the manufacturer is able to fulfil his responsibility under a contract to provide limbs which fit properly and which function properly, and it is because of that that the Minister of Health is able to hold the manufacturer to that responsibility. It is a responsibility, too, of the limb surgeon, because it is he who decides what the amputee should have, and it is the limb surgeon who has to be satisfied at the end of the day that the

  1445
  manufacturer has fulfilled his contract. Whatever system we have, whether a public or private system, the key man here all the time is the limb surgeon, and whether we have it public or private—as we have in our nationalised industries, too—we can have work-to-rule.
  May I sum up this by saying that I add my tribute to those paid on both sides of the House to the manufacturers. I have read the letter in The Times today from that lady and I, too, pay tribute to the people Who helped to get rid of this working to rule, and I am delighted it has come to an end. Now we are trying to catch up with the backlog. That is a terrible word, but I have used it.
  The rates. Now I am going to say this. I have looked at this, the rates and rebates, the Allen Report. We know it is a regressive tax. Logic can be a horrible thing, but I must call it to my aid. With due respect, I think that both sides of the House are missing the point here. Rates have been going on for years. I put the 64 dollar question. Whether it was a Labour, Liberal or Conservative Government, why did they not, when they exempted people from Income Tax. 40 years ago in logic exempt them from payment of rates? It is as good a point. It could have been thought of then.
  We are not putting a burden on a war pensioner who has two children and an income of £13 a week. He still comes in for the rebate. The result of the Allen Report is to relieve people from a regressive system of taxation. War pensioners always paid rates, yet, suddenly, as a result of the Allen Report, it is implied that we are neglecting the preference principle.
  The fear is sometimes expressed that the special position of war pensioners may be endangered by the extension of the range of benefits under social security schemes. I am sure that that is quite misconceived. Some hon. Members appear to believe that this is a precedent, but far be it from the Ministry of Social Security to make any precedent of that. I do not want it to get abroad that, because the new Ministry of Social Security includes as only part of its work the War Pensions Scheme, there has been any neglect. There have been 28,000 personal visits to the severely disabled during last year. We have also sent out a note to
  1446
  increase the number of visits to the old men of World War I by about another 11,000 a year. All these things are being kept in mind, as I am sure they would have been by any hon. Member opposite who held a post in the Ministry of Pensions. On rate rebate, the position remains the same, and I have no authority to go further.
  I hope that I have answered the debate in the spirit in which it has been conducted. I feel sure that all responsible Ministers will have noted the importance of the various points which have been made today.

  CHILD POVERTY
  1.31 p.m.
  Dr. David Owen: I wish today to discuss the topic of child poverty. In many ways, it is a dismal commentary on our so-called affluent society that this debate is necessary. The tragedy is that only over the last few years has this problem been appreciated by and delineated clearly to the general public. For that, we have to thank the work in academic units throughout the country and particularly, more recently, the efforts of the Child Poverty Action Group.
  I hope that what I say today will be taken by the Government as a challenge and not as a rebuke. I know the starkness of their inheritance, and I know and appreciate the very real concern of everyone in the Government from the Prime Minister downwards, particularly the Minister without Portfolio, the Minister for Social Security and the Parliamentary Secretary, who is to reply to the debate. I hope that they will understand when I tell them that many of my hon. Friends are dismayed that we approach the third Christmas under a Labour Government still with no concrete proposals to help the low-income large family. We hope that we shall hear from the Government today a firm decision to increase family allowances, because, as I hope to show, that is the single and most effective measure to tackle this diffuse and manysided problem.
  Recent estimates indicate that, at a minimum, there are 200,000 families and probably a maximum of nearly 300,000

  1447
  where the breadwinners, the fathers, are in full-time work, and earn less than the basic minimum thought necessary by the Ministry of Social Security. We have a situation where approximately 500,000 to 600,000 children—more than half a million—suffer poverty, despite the fact that their fathers do a full day's work. I hope that that will answer categorically the myth that we are dealing only with parents who are irresponsible misfits or malingerers.
  A further large group, which is becoming larger, are families where the fathers are unemployed, disabled or have fallen victims to the so-called wage stop. The wage stop hits low-wage earners and particularly those with large families. Often it is not widely realised that it also hits the sick, besides the permanently disabled. It is particularly tragic that this ruling should apply in sickness. Presumably it is an encouragement to people to get back to work, but how many fathers of large families with heavy commitments return to work before they should?
  At a time when unemployment is rising—and, as a deliberate act following the Government's deflationary policy, though very necessary, it still means that many men are forced out of work—can we really justify a situation where, because they have lived below the poverty line before, we must ensure that they remain below the poverty line when they are out of work? The only way that I can see of circumventing the wage stop and ensuring that a man at work is not impoverished by the number of his children is the payment of a generous family allowance. When it is often said that this is an unpopular social security benefit, it needs re-emphasising that it has the full backing and support of the T.U.C.
  Another large group of children living below minimal subsistence are those without a father in the household, either through divorce, desertion or death. There were half a million such children in 1961, and a reasonable estimate indicates that some 300,000 of those live below the poverty line as judged by the Ministry of Social Security.
  Another group which is perhaps small, but which is very important to me be-
  1448
  cause of my concern about disablement, is the family where the young mother is suddenly disabled. For her, there is no industrial benefit and no war pension. She is alone. In effect, that housewife and mother is a very real breadwinner, and suddenly that family is deprived of her services and the savings which her work can bring to the family's weekly budget. Suddenly, it is all lost. Disablement can turn a medium income into a low income, a low income into poverty, and someone in poverty into squalor. All the time, the chief sufferers are so often the children.
  I believe that the need for a separate disablement income is overwhelming in these cases. It appears likely that nearly 1 million children are affected and are living below the subsistence level put out by the Ministry of Social Security, and in many ways that is not over-generous. I believe that the trend is increasing, and not decreasing. In my own constituency of Plymouth, particularly near the dockyard where wages are notoriously low, I have seen this problem many times. I am determined that something must be done to alleviate the worry and anxiety that so often follow these people with low incomes and large families. Often they make no claim on social security benefits. They battle alone against the very real difficulties of poverty. If some people suspect these figures, I should like them to look at other examples in which one can, to an extent, get some measure of the incidence of poverty.
  It is a strange fact that the number of people living on a diet below the minimum level thought necessary by the B.M.A. has increased in the last few years. Ill health in children, particularly recurrent chest infections, is especially related to family circumstances, and we are still able to see differences in stature and physique related to family circumstances—not so much as before the war, but still present.
  It is perhaps one thing to state the problem. It is another thing to formulate a solution. Most of all, we have to try to show how we are to pay for it.
  There are a few myths about family allowances which need to be killed straight away. There is no evidence that an increase in family allowances also increases the birthrate and encourages large

  1449
  families. The experience in Czechoslovakia, where the birthrate actually fell after the introduction of family allowances, is backed up by experience in Canada, Germany, Italy and Russia.
  Another myth is that the Welfare State in Britain is a great provider and that we cannot possibly increase our expenditure. In fact, in this country we are spending less on social security benefits than practically any other European country. Our family allowances were last raised in 1956, and they were raised only once before then since their introduction. Germany is the only other country among the E.E.C. who, like us, does not give family allowances for the first child, but even they spend double the amount that we do on family allowances. When one looks at the other figures one sees that. France spends about six times as much, and Italy closely follows that. If Beveridge's original recommendation in wartime were introduced now, we would have a family allowance of about 25s. per child. These allowances have been allowed to fall markedly behind.
  Given the need, given, as I believe, a solution, or at least a temporary solution, the question is payment. It is not my intention to cover all the numerous schemes which have been put forward in the newspapers recently. I should just like to warn the Government of one of the real dangers. That danger is that they could sabotage the credibility of family allowances by introducing an old-fashioned means test to overcome this problem in the short term.
  If, as I hope, we successfully negotiate entry into the E.E.C., it will be vital to have developed before entry a system of family allowances which is acceptable throughout the country, a system which is fair, and is seen to be fair, for this I believe is the only possible way we have of offsetting gradual increases in the cost of the food prices which will inevitably follow entry.
  It will be a bitter indictment of our contingency planning if we are now to be told that all the changes in the tax reliefs are to be defeated because the Inland Revenue is unable to introduce them before the Budget in 1967, and that we will have to wait until 1968. We have been discussing this problem for
  1450
  nearly two years, and I hope very much that this will not be the Government's attitude.
  If that regrettable situation were to be true, I would prefer the Government to concentrate an increase on the third and subsequent children as an interim measure. Even an increase of 5s. of the third and subsequent children would cost £32 million, giving a family allowance of 15s., but, here again, we would be paying allowances to those families which were well off, and to a certain extent at the expense of those less well off, unless we were not to give the increase to anybody who was claiming tax relief.
  We must look again at the problem. I know that it is complicated, but let the Government make a declaration that in times of economic difficulties we will not shirk the perhaps unpopular decision in some quarters of redistributing wealth, that we simply cannot afford, for the sake of these children, to wait until we get expansion in our economy, expanding resources, and the establishment of growth.
  I recognise that there is a real problem affecting the middle-income groups, people earning £1,200 a year, if we withdraw all tax relief, and I am fully aware that their position must be safeguarded. I would not like to see them worse off by withdrawing tax relief, but a Labour Government should not be prepared to continue a situation in which a family of four children, with the wage earner on £10 a week, has allowances to the value of £85 12s. a year, whereas a similar family, with the father earning £30 a week, gets allowances and tax relief to the value of £239 9s. a year. This is a situation which I believe exists, and which should not be allowed to continue.
  I should like the Government to raise the low-wage earner's income so that it comes up to the supplementary benefit scale. This would mean about 30s. per child, which is a large amount of money. This is also the approximate amount which would be needed to compensate the standard rate Income Tax payer if we took away all his tax relief. By making allowances payable for all children, I believe that we could make this very much more acceptable, because at the moment quite a large number of families where there is only one child feel great bitterness that they are

  1451
  exempted from family allowances and receive no benefit.
  The estimated saving to the Exchequer in 1966–67, if tax relief were abolished, would be about £580 million. I think that we would need more money, and I would be prepared to look at the situation of the single man and increase his tax, for there is no doubt that he has developed a preferential position over the years. Perhaps I should add that I speak as a bachelor, so it would affect me.
  How the Government finance this is a problem of great interest to us in the long term, though I realise that they are faced with a very real problem in the short term. However, quite apart from family allowances, there is something else that must be done. I believe that there is a growing need for an overall positive poverty programme, an attack on the problem from all fronts, for family allowances alone will not solve the problem.
  Let us look at the problem first from the point of view of the home. We need more education for the mother and the father. In many cases facilities already exist in this country to help them. The tragedy is that the facilities which exist are only partly used. Whether out of ignorance, pride, or a lack of understanding of these very facilities, we see the situation in which those in need are not claiming them, and I should like the Government to bring all the propaganda that they can to bear on this, in the newspapers, and on the radio and television.
  At school, I should like to see a new method whereby those children who are receiving free school meals are not known to be receiving them, are not labelled as receiving free school means, for this causes very real difficulties in the school and marks the child out as different from the others.
  We also need very much more information about uniform allowances and about clothing grants. These valuable benefits are again under-used. Whether again it is from ignorance or pride, we do not know, but both can be broken down with greater education.
  Mr. Peter Archer: Would my hon. Friend agree that the test of need for these purposes varies from authority to authority, and sometimes within departments of an
  1452
  authority, and that often a headmaster cannot tell what is the test of need for a pupil?
  Dr. Owen: I agree, and I think that this is one of the real problems, that we have a whole series of different types of means test. It may be that we have to develop a situation in the welfare services where there is selectivity. I am not opposed to this in principle, but what I wish to see is an equable and fair means test. I think that this has to be done by having a universal tax code system, with everybody being put on it, but this is long-term and not short-term.
  Health education is very important. Here, I think, we must face more courageously than in the past the real need to provide family planning advice to mothers. This must be freely available under the Health Service. This is its right place. To put it under local authorities would be a mistake, just to get a short-term benefit.
  I think that we must place very much more emphasis on nutrition and on educating mothers about what foods are important and what constitutes a really adequate diet. I pay tribute to those who have gone to live with a family and shown them by practical example some of the real benefits which can come from using the same amount of money. I think that there should be very much more propaganda about welfare foods. In November, 1965, only 5,715 children in families not receiving National Assistance were getting free welfare foods. It looks as though only 4 per cent. of those eligible were getting welfare foods. This is something into which we could well look, bearing in mind the appalling statistics of nutritional standards.
  Finally, and perhaps most important, there is the problem of housing. We need many more four- and five-bedroomed council houses for large families. In my constituency too many large families have to buy old-fashioned houses in order to house their large families at even minimum standards, often with high rates. We need very much greater publicity for rates, and, where they exist, rent rebate schemes.
  So far, about 660,000 people who were thought to be eligible have not claimed rate rebates. This is an indictment of the system by which the onus is always put

  1453
  on these people to claim. They have so many different types of claim that they are simply befogged by the whole situation.
  We obviously need the emphasis again to be on slum clearance and rebuilding slum schools. All this I think that the Government are doing, but I urge them to give the Minister without Portfolio, whose sympathies we all know are with us, the money to co-ordinate and force through a programme for abolishing poverty and to be not afraid of a greater redistribution of wealth. They should resist any temptation to bring in yet another old fashioned means test, which I believe will result in people losing out on the benefit which is being made available and which would be a retrograde step in establishing family allowances.
  Above all, let us resolve that by Christmas, 1967, the incidence of child poverty will be markedly reduced in this country and that a Labour Government will have established their fundamental priorities, for it is at Christmas that child poverty is revealed in all its starkness. Many families dread Christmas. Many families regard Christmas as one of the most distressing times of the year because they have to say "No"—"No" to toys and "No" to good food, and they are constantly faced with their children comparing their circumstances with those of their neighbours. We now want more than sympathy from the Government. We want positive and concrete proposals for these children who live in poverty.
  1.52 p.m.
  Miss Mervyn Pike: I am sure that we all regret that we have such a very short time for this debate. Nevertheless, we are grateful to the hon. Member for Plymouth, Sutton (Dr. David Owen) for bringing this matter before us at this time. I have promised that I will be very brief so as to give the Joint Parliamentary Secretary adequate time to reply to the debate. I have about five minutes at my disposal. I am sure that we all regret the fact that the Minister herself could not be here today. We recognise her great sympathy in this matter.
  However, I agree with the hon. Gentleman that it is not sympathy that we want.
  1454
  It is action we want in the few months that lie ahead, because this winter could be one of the worst winters that many of these families have known. I hope that we shall have a full debate on this subject after the Recess, because it is possibly one of the most important matters we could be thinking about at this time.
  As the hon. Gentleman said, there are 300,000 families with incomes below the old National Assistance level, which means that there are at present 600,000 children not receiving the basic essentials of life. We all recognise that all large families, except those who are very rich, have greater difficulties than smaller families. Therefore, it is in sharper contrast even still that those on low incomes are trying to get by in these increasingly difficult times.
  The hon. Gentleman said that, nutritionally, they are often at a disadvantage. Their diet is inadequate. Today's newspapers contains more figures showing the inadequacy of diet, not only amongst old people, but amongst the very young. We also know that very often children in large families seem to be at a disadvantage. The perinatal mortality rates are higher in large families. Statistics show that there is a greater incidence of stunted growth and smaller children in larger families. In terms of educational development and academic achievement these children seem to be at a disadvantage. According to some of the statistics which are available, there seems to be a negative correlation between family size and intelligence quotient in the child. This is probably connected with slower development of younger children in larger families because of so many of the economic and social difficulties which they face.
  The Crowther Report showed that 42 per cent. of only children stay on at school after 15, whereas only 8 per cent. of children from families of six or more stay on at school after 15. The Robbins Report showed, in regard to children of parents of the same income and social background, that the chances of the child of the small family staying on to take A levels were dramatically higher than the chances of the child from the larger family. The difficulties of housing are so much greater with larger families. These are all things that we urge the Government to see to.

  1455
  The problem we are talking about is largely due to the low income coming into these families. In spite of the high wages we often point to at present, half the industrial working population earns less than £18 a week. Ten pounds to £12 a week is still all too common, particularly in many of our large nationalised industries. Increased training to increase skills and to advance our industrial development so that we can get a high wage economy is better than bringing in things like minimum wage legislation. In this area what we should be aiming at is to ensure that people can get the skills that give them higher wages and to bring about the economic growth that can make this possible in our society as a whole.
  The hon. Gentleman talked about children's allowances. We could debate this question for a considerable time. I remind the House that we have on several occasions in this Parliament, particularly on the Social Security Bill, put forward proposals to help the low wage earning family with a special supplementary children's allowance. We believe that a special supplementary children's allowance for large families below a certain limit should be payable, whether the husband is in work or not. It could be on a sliding scale. It could get over many of the difficulties of the wage stop to which the hon. Gentleman referred.
  We have also brought forward in this Parliament a scheme for an invalidity allowance for the chronic sick and the disabled. We all recognise that some of the most tragic cases are in homes where there is disablement, particularly of the mother. This is why on the last Finance Bill we pressed for special tax allowances in these circumstances. We shall continue to go on pressing these matters.
  It is exactly 10 years ago today—on 21st December, the last day of Parliament before the House adjourned for the Christmas Recess—that I took my seat after a by-election. I can remember on that occasion being asked by the Press, because one is always news on these occasions, what had brought me to the House. I remember replying that it was the poverty and the injustice that I had grown up with in Castleford, a mining town in the West Riding of Yorkshire, which had driven me into politics, and
  1456
  which I hoped will always be my driving force in my political life.
  I was told then that the one thing I would learn in Parliament was patience. I have learned some patience, but I agree with the hon. Gentleman that our patience is now running out. We have been too slow to recognise these problems. It was only in the hard winter of 1963 that this problem of family poverty came to our recognition. This is why we on this side believe that one of the best solutions to this problem does not lie only in cash, important though that is. It depends so very much on having an integrated and coherent policy.
  This is why we believe that the Ministries of Social Security and Health should be merged into one Department so that cash and care can be co-ordinated. The Children and Young Persons Act, 1963, passed by a Tory Government, to some extent helped with co-ordination at a local level. The children's committees can now do a great deal to give the sort of help the hon. Gentleman talked about with regard to care—help in the home, education in the home, the health visitor, the welfare visitor, help with family planning, and so on.
  We also believe that there should be a definite responsibility on the Government and on the Ministry of Social Security to seek out need, because so many of these people do not know what their rights are. So often we do not know where these pockets of poverty really exist. This is why we press on the Government the need for the co-ordination which we believe would come about by combining the Ministries of Social Security and Health and the ground and by establishing the responsibility to go and seek out need.
  We also believe that there must be a research unit in the Ministry so that these problems can be pinpointed as they arise. One of the great tragedies of the past was that we did not realise that this problem was creeping up on us. We have known now for over three years and now is the time for action. There will be many different problems in future and I hope that the Minister will listen once again to our pleas and that this time we shall not simply be told that there will be a review but that there will be some definite action as soon as the House reassembles.
  2.0 p.m.
  The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Norman Pentland): I am grateful to the right hon. Lady the Member for Melton (Miss Pike) for honouring the time limit. She mentioned that she came to the House exactly 10 years ago and that she was inspired to come here, among other things, to fight on this subject. It is just over 10 years since I came to the House and anyone who looks at my background and that of my right hon. Friend will realise that one of the motivating forces which inspired, provoked and directed us towards the House was poverty. We did not simply know of it: we endured it. Our fathers and mothers endured it. My wife and I, when first married, certainly experienced poverty, whether we mean relative poverty or in real terms.
  I congratulate my hon. Friend the Member for Plymouth, Sutton (Dr. David Owen) on his choice of this vital subject. I join the right hon. Lady in complimenting him on the cogent way he deployed his case and the manner in which he drew attention to the plight of these families, who are deprived of so much that the rest of us these days take for granted for ourselves and for our children. Like other hon. Members, I think that it is appropriate that, at this festive season, on the last day before we enter the Christmas Recess, we should be compelled to acknowledge the reproach to our prosperous society which these families represent.
  I know that my hon. Friend will acknowledge that, in her Answers to Questions recently, my right hon. Friend the Minister left no doubt in anyone's mind of the seriousness with which the Government view this problem and the importance which we attach to devising means whereby these families can be most effectively helped within the limit of available resources. I assure my hon. Friend that many of the methods which he and the right hon. Lady advanced are being seriously considered, along with many other proposals, by the Government. I also agree with my hon. Friend when he says that there should be a real attack on poverty and all its implications.
  I must point out, however, that, when we first took office in October, 1964, we had to face the fact that very little was known about the scale and nature of this problem, the numbers of families living
  1458
  within any particular definition of poverty, the composition of such families, the factors which caused them to he in that position and so on.
  Therefore, to obtain this essential information, we carried out an inquiry in June and July of this year based on a statistical sample of about 2,700 families selected from family allowances records. Perhaps I might say in passing, Sir, that we received an excellent response from the families approached and their cooperation in answering a lengthy and detailed questionnaire will be of great value to all Government Departments concerned with this problem. We are certainly indebted to these families.
  The processing of all the material resulting from this inquiry is proceeding as rapidly as possible and it is hoped to publish a full report no later than the late spring of next year. However, we have some provisional figures already extracted which provide us with some essential background information. As my hon. Friend indicated, the inquiry suggests that there are about 160,000 families, including perhaps 500,000 children, with incomes below the appropriate rate of non-contributory benefit, where the breadwinner is in full-time work, or on non-contributory benefit but subject to the wages stop. This figure has been adjusted, of course, to take into account the fact that non-contributory benefit rates have gone up since the inquiry was made. This, incidentally, illustrates how, if we take the current non-contributory benefit rate as defining the level of poverty in this country, improvements in the non-contributory benefit rate have the paradoxical effect of raising the number of families regarded apparently as living in poverty.
  This figure of 160,000 is appreciably lower than some earlier estimates have suggested, as they were based on the very scanty evidence which was available at the time.
  Nevertheless, I would agree and I think that every hon. Member would agree, that it is much too high for our peace of mind. One can only guess at the extent of deprivation and human misery which these figures represent. But without suggesting that I want to minimise the need for further Government action, it might not be out of place for me to remind the House of some of the ways in which these families can be helped by

  1459
  existing social services. For example, all school-children in such families have the right to a free school dinner, as well as the free milk available to all school-children. At the most recent count, about 387,000 children were receiving a free dinner, at a cost of about £9 million a year.
  Then there is a right to free milk and vitamin supplements if the family includes a child under school age or an expectant mother. These and other services for children have helped to bring about a striking improvement in the general health of schoolchildren over the past 20 years. The latest report of the Chief Medical Officer to the Department of Education and Science shows that, in 1965, the percentage of schoolchildren found to be in an unsatisfactory physical condition fell to 0·38 per cent., the lowest figure on record.
  Among the measures already taken by the present Government, the provision for rate rebates is designed to be of particular benefit to householders with large families and low incomes. Fatherless families, who face special problems, have been helped by the improvements in noncontributory benefit and the raising of the widow's benefit and guardian's allowances.
  My hon. Friend has spoken particularly of the problems facing families where one or both of the parents are disabled. There can be no doubt that these are some of the saddest cases with which any of us have to deal. But when we receive the full results of the survey to which I have referred, we shall know more clearly how far disablement is a factor in child poverty generally. But the problem of disablement is by no means the same as that of child poverty, though there is an area in which they overlap; and to a large extent they represent competing claims on the resources which can be made available for improvements in the social services field.
  The breadwinner who is unable to work is already substantially better off as a result of the benefit increases to which I have referred. For example, a chroni-
  1460
  cally sick man with a wife and two children aged, say, 9 and 12 years can now receive £10 5s. a week. plus rent and rates, to which additional payments can be added, if, because of his disablement, he has extra expenses not covered by the 9s. long-term addition. Nor is it the case, as is sometimes suggested, that if he is a low wage-earner his benefit is wage-stopped. The wage stop, and I want to make this very clear, has never applied to the chronic sick.
  But, of course, we all recognise that much more remains to be done—and that is not in dispute with the Government. In particular, none of us can be indifferent, as my hon. Friend said, to the plight of the family where the wife is incapacitated and is not entitled to either National Insurance or supplementary benefit. My right hon. Friend has assured those who have put the case of these families to her on more than one occasion that the Government are very conscious of the financial needs of all chronically sick people in this country, and these are being very carefully considered in connection with the review of the social services.
  We also have to face the fact that we cannot simultaneously do all the things that we would wish to do and for which everyone is agreed that there is an admitted need. But I know that my hon. Friends will agree that the record of improvements which we have already made in very stringent and difficult financial circumstances demonstrates in no uncertain manner the very high priority which this Government give to the strengthening and development of the social services.
  In my view, my hon. Friend the Member for Sutton has performed a valuable service by highlighting this problem today, and I assure him, and all those who have supported him from time to time both inside the House and outside, that we join with them in assigning the very highest priority to measures aimed at dealing with child poverty, however caused.

  SCOTLAND (CADCO REPORT)
  2.12 p.m.
  Mr. William Hamilton: Exactly three weeks ago today Board of Trade inspectors published the Report on what I choose to call the Cadco affair. The Press had access to that Report 48 hours before I had, and I protested about this treatment of back-bench Members and got the brush-off from the Government for my pains. I make this comment at the outset, that in cases in which a Member of Parliament can be easily identified as being intimately involved, as I was in this instance, it should surely be within the discretion of a Government Department to treat that Member at least not worse than the Press, and I hope that some action will be taken to ensure that that is done in the future.
  May I next address my remarks to the Report itself? Those who have read it will agree that it is at one and the same time a most squalid and fascinating piece of reading, certainly that I have read for a very long time. From the first page to the last it is a concoction of dishonesty, deceit, crime, gullibility and incompetence the like of which has probably never been known in Scotland before.
  The present Government have taken certain action to ensure that such a thing will not occur again. The steps taken were outlined by the Secretary of State in answer to a Written Question of mine on 30th November, the day the Report was published. I will not go into the details of that Answer, which is there for everybody to read, but I am not sure whether it fully implements the recommendations found in paragraph 435 of the Report, namely, that the financial standing of those behind a project like this, as well as the viability of the project itself, should be investigated before any contractual commitments are made involving substantial sums of public money, and that one inquiry should be carried out on behalf of all the interested parties on these particular matters.
  Be that as it may, and however effective the proposed steps are in preventing any more Cadcos, there are still a host of questions which remain unanswered and which are causing a good deal of public disquiet not only in Fife and in
  1462
  Scotland, but in the whole of Britain, as my postbag indicates.
  The first question with which I wish to concern myself relates to administrative and technical incompetence and/or negligence and/or lack of judgment. The Report does not cast any doubt on the integrity of the officials of the Development Corporation at Glenrothes. No evidence was found of any dishonesty or impropriety in that quarters. But there is a great deal of difference between integrity and incompetence, and between integrity and naïvety or lack of judgment or gullibility.
  Like others, I may be accused of being wise after the event. Nevertheless, one cannot help being amazed at the credulity at those who, for instance, attended the Edinburgh Press conference on 28th May, 1963. I ask hon. Members to note the date. It was May, 1963—not the present Government then in power. A Conservative Administration were in power. I say that because we have been subjected to some criticism on the ground that the present Government were responsible. The previous Conservative Administration were responsible for this—and I want to emphasise that point because I shall return to it later.
  The Press hand-out at the conference was prepared by a Mr. David Donald, then information officer of the Scottish Council, and it is clear that no attempt was made to ascertain the accuracy of the handout. The most cursory investigation would have revealed it for what it was—a tissue of lies designed to deceive everybody concerned. I will not go into the details. They are all in the Report. But if the Development Corporation at Glenrothes had made any kind of inquiries into the financial standing of the sponsors or the viability of the project by the spring of 1963, they would have discovered that this company, called Royal Victoria Sausages Ltd., had already lost irretrievably over £250,000. In fact, I have seen a figure of £600,000 mentioned in other information that I have seen.
  It was subsequent to this that the Development Corporation used an American company in Glenrothes, Beckman Instruments Ltd., to seek to obtain a bankers' reference on the Cadco Co.—the multiplicity of companies called Cadco. Two

  1463
  replies were eventually received to the inquiries of Beckman Instruments Ltd., dated 10th July and 18th July, 1963. But meanwhile, before the Development Corporation had received those references, they had allowed building to begin, and when they were received they were anything but convincing, as the Report says in paragraph 183:
  "Surprisingly, neither the executive staff nor any member of the Board of the Development Corporation saw in the replies which the Beckman Instruments inquiry ultimately produced, anything to put them on enquiry."
  Far from questioning the financial standing of the companies, building went on at full speed by the Cadco building company—£1 million worth of building in the first stage of the project, and this by a company which had never engaged in any building operations whatever. Paragraph 167 of the Report makes that quite clear. All the technical staff of this building company—indeed, the entire labour force—was recruited locally, I believe some of it from the Development Corporation itself. Despite this, as the Report states, in paragraph 168:
  "… it does not appear to have occurred to any of the officials"—
  officials of the Development Corporation—
  "to question the competence of Roe, Loraine, Sanders, or Black"—
  who were responsible for this venture—
  "to control and supervise building operations of such substantial size"
  The story of the building of the piggeries can only be described as a hair-raising fiasco of monumental incompetence. The story is told in detail in paragraphs 161–166 of the Report and it is clear that no technical advice was taken on the design of the piggeries at Glenrothes, although the Pig Industry Development Authority had offered advice. The Authority's advice was rejected. I wonder by whom and when? Did the Development Corporation know that that advice had been rejected? If so, did it know by whom and when it had been rejected?
  The result was that the piggeries, costing £277,000, were designed by people who did not know what they were doing. An example is given in the Report. The effluent from 20,000 pigs, which was the planned project, was equivalent to the effluent emanating from a town of 50,000
  1464
  people. It was proposed by these people who did not know what they were doing that this quantity of effluent should be catered for by the installation of one 9-inch pipe, with an inadequate fall, leading to a sewage tank which was capable of taking only 24 hours' flow of effluent. Imagine anyone thinking that a 9-inch pipe could deal with the quantity of effluent emanating from a town three times the size of Glenrothes itself. There was incompetence at technical and administrative level and there can be no doubt that that applied to the Development Corporation and beyond.
  Has any disciplinary action been taken? If not, is any contemplated? It is not sufficient to say that this will not happen again. That will not do. I urge the Minister to be more forthcoming, particularly about the publication of the details of the investigation which he conducted at Glenrothes. As the representative of the people concerned, I have a right to know just where the fault lay in this matter.
  I turn to the question of the Scottish Development Department and the Board of Trade. At that time, the responsible Ministers were the right hon. Member for Argyll (Mr. Noble), who was the then Secretary of State for Scotland, and the present Leader of the Opposition, who was the then President of the Board of Trade. I sent a note to the right hon. Member for Argyll saying that I would be referring to him and he has apologised for being unable to be here this afternoon. Never at any stage did those Ministers raise any objection or express any doubts about what the Development Corporation was doing or about the way it was doing it.
  It seems that both of those Departments allowed the Development Corporation to get into deeper and deeper water, without at any time questioning either the viability of the project or the financial soundness of its sponsors. The actions of Conservative Ministers at that time were in complete breach of the obligations laid on them by Section 12(7) of the New Towns Act, 1946, which states:
  "It shall be a condition of the making of advances to a development corporation under this section that the proposals for development submitted to the Minister under section 3 of this Act shall be approved by the Minister with the concurrence of the Treasury as being likely to secure for the corporation a return which is reasonable, having regard to all the circumstances, when compared with the cost of carrying out those proposals".

  1465
  I assume that those Ministers thought that this investigation would be done by B.O.T.A.C., but there was no reason for that assumption. No application had been made for a loan and even when a belated application for grant was made, and was rejected, the Scottish Development Department ignored the red light that was clearly flashed by that rejection.
  Was the Scottish Development Department a quiescent, approving spectator of what was happening, or was it an unwilling agent of the Development Corporation, which was desperately anxious to get 2,000 new jobs in the pipeline before the pending General Election? Did it knowingly take unwarranted risks with public money, or was it completely ignorant of what was going on? Should the charge be that of ignorance, indifference, incompetence, or folly? We have a right to know the truth. The political heads at the Scottish Office, the Board of Trade and the Treasury were Conservative Ministers at that time and they must bear a heavy responsibility for what happened.
  I come to what I believe is a much more disturbing aspect of this matter. It concerns the crimes perpetrated in this evil affair. The Report is replete with examples of criminal activities, of which I will give some instances. Bosley & Co., the solicitors in Sussex, were responsible for putting into local newspapers what are described in the Report as fraudulent advertisements, in infringement of certain legislation, designed to attract capital to Royal Victoria Sausages.
  The Report goes on to say that this was attributable to
  "… the ignorance and inexperience of Miss Christy …"
  who, I understand, was a junior clerk in that solicitor's office. On that account, and because it happened five years ago—in addition to which certain individuals have got their money back—the Report recommends no action. But ignorance on the part of an employee seems to be a flimsy reason for not taking action against the firm, which must surely assume full responsibility for whatever is done in its name.
  No criminal charges are preferred and apparently no disciplinary action has been taken by the relevant professional organi-
  1466
  sation—the Law Society or whatever other body may be concerned; and the Report recommends no action—against Mr. Braidwood, who was then an assistant accountant with Cadco Developments—on the grounds that he was young and inexperienced—or against any of the other subordinate staff who were involved in currency irregularities. I am inclined to agree that action should not be taken against the subordinate staff, some of whom, no doubt honest people, were not aware that they were being led and were leading people up the garden path.
  The real villains of the piece, most of whom were at the root of this business, are those against whom action should be taken, although it is said that they are out of reach. Loraine was a treacherous, lecherous character of the worst possible type. Some of these people are within reach and I will come to one of them who is not out of the country. Indeed, he is still in Scotland.
  I must preface my further remarks by referring to Parliamentary privilege, something which, by its very nature, must be used sparingly and with a full sense of responsibility by the hon. Member using it. No hon. Member would dare use it either frivolously or vindictively. It is in that spirit that I refer to the part played by Mr. McKee, the group accountant of the Cadco companies. Several specific charges are made against this man in the Report, and I will enumerate them.
  First, McKee made a number of false statements to the Royal Bank of Scotland, knowing them to be false, to get an overdraft, which eventually amounted to £460,000. Paragraph 412 recommends that prosecution of McKee, Loraine and Roe should be contemplated. Secondly, McKee was responsible for putting before B.O.T.A.C. documents and accounts, an action which the Report refers to as being
  "… perhaps a most serious aspect of this whole matter."
  Paragraph 422 recommends that his prosecution should be contemplated.
  Thirdly, McKee was involved in the misappropriation of large sums, and the diversion of £398,325 from the Cadco Building Company to other sources, and, again, paragraph 426 of the Report

  1467
  recommends consideration of his prosecution. Fourthly, McKee was knowingly engaged in the infringement of currency regulations, and paragraph 432 gives some details of how thousands of pounds were smuggled out of the country in £10 or £5 notes, secreted between the leaves of a film script.
  Altogether, this amounts to a massive indictment of one who is not a subordinate, but who knew full well just what he was doing. In view of that, I find it completely inexplicable that the Lord Advocate has decided that criminal proceedings in Scotland are not warranted, and that the Director of Public Prosecutions has also decided that there is no action he can take at present.
  On 6th December I wrote to the Lord Advocate:
  "I feel I must write to you to express my deep disquiet concerning your decision not to take criminal proceedings following the findings of the Board of Trade inquiry into the Cadco affair at Glenrothes. In view of the comments in paragraphs 408, 411, 421, 422, 425, 427–9 and 432, I am quite unable to understand the reasons for your inaction. I may say my views on this matter arc shared by large sections of opinion in Fife and, I believe, in Scotland as a whole.
  I must give notice that I intend to pursue this problem much further. If it is not satisfactorily resolved, I am afraid the confidence of many people in the administration of justice may be seriously undermined."
  On 8th December, I received a reply from the Lord Advocate, and I have his permission to quote it. He says:
  "I have carefully considered what you say, and I have looked again, in particular, at the paragraphs in the report to which you have referred me. It is the invariable practice not to make known the grounds upon which a decision is taken to prosecute or not to prosecute any individual, and you will appreciate that there are good reasons for this. I may say, however, that in a case of fraud I have to consider the whole evidence available, and to decide inter alia whether there is satisfactory evidence of false representations having been made in Scotland to any party with the effect of inducing that party to take action to his loss.
  The Cadco case, as you can well imagine, has occasioned me much anxiety, and it was only after a long and exhaustive investigation, and after considering the whole evidence obtained as a result, together with all the circumstances, that I reached my conclusion. But for my decision not to proceed against any of the persons involved, I could not, of course, have agreed to the publication of the Report in view of the fact that it contained statements prejudicial to these persons.
  1468
  I need hardly add that I should make no complaint at all against your pursuing a matter of this gravity, and if I can be of any assistance to you, please do not hesitate to let me know."
  As a result, Mr. McKee, Mr. Sanders, Mr. Roe and Mr. Loraine and others have got away with it. For one reason or another they all escape punishment for what they have done. The Scottish Development Department, the Glenrothes Development Corporation and the Board of Trade have come out of this shambles unscathed. The only people punished are the ruined contractors, and the workers who lost wages and jobs and who are still awaiting wages they will probably never get. Surely this is the massacre of the innocents.
  I am far from satisfied with the situation as it now stands. It seems to me that the logical consequences of the revelations in the Report have not followed. I do not believe that the whole truth has yet been told, nor do large numbers of people in Scotland and elsewhere. When the Parliamentary Commissioner Bill is on the Statute Book, I intend to refer this case to the Parliamentary Commissioner in the hope that he may unearth information within the Scottish Office, the Board of Trade, the Treasury, and the offices of the D.P.P. and the Lord Advocate, which is denied to me.
  Meanwhile, I would recommend to my hon. Friend that a film be made of the whole sordid story. Never has it been truer than in the case of Cadco that truth is stranger than fiction. If the copyright of such a film were retained by Her Majesty's Government, a handsome profit might yet be made out of this gruesome nightmare.
  2.35 p.m.
  Sir John Gilmour: The hon. Member for Fife, West (Mr. W. Hamilton) said that some of the blame for this sorry affair rested on two of my right hon. Friends. If that were the fact, it would be in the Report. It is not in the Report.
  My chief interest is in the fate of the sub-contractors to the Cadco Building Company, many of whom live in my constituency, but I would like to ask the Under-Secretary a question about the piggeries, because it seems quite extraordinary that the plans should have been

  1469
  passed and the piggeries built with a drainage system that was completely ineffective and unworkable. I am told, though I do not know whether it is right, that the pig men's houses that were built, and which are still there, could not be occupied because they had no drainage system. That seems extraordinary, because when I went on the N.F.U. summer outing in 1962—a year before the company folded up—it was known that there was a real drainage problem.
  I feel very strongly that the Glenrothes Development Corporation was in breach of paragraph 30 of the Scottish Building Regulations, which particularly lays down that the principal contractor shall not be entitled to obtain another certificate from the architect for a further instalment unless and until he has satisfied the architect, by the production of vouchers or other evidence, that he has settled with the sub-contractors. That does not seem to have been done by the Corporation or, if it was done, it was only partly done.
  I feel this all the more because, since the time of this affair, we have moved in Scotland to conditions known as the R.I.B.A. conditions, under which it is possible for the architect to certify that the bill should be paid direct to the subcontractor if he is not satisfied that the main contractor is passing on the money. I therefore feel that in this case that the Corporation has let down those contractors.
  Another aspect is the lack of liaison between the Board of Trade and the Development Corporation—and possibly the Scottish Development Department as well. The letter to the Board of Trade of 5th June, which is quoted in the Report said that the company would repay £250,000 by 30th June, and £200,000 by 30th September, from the progress payments that were to be received from the Corporation. In reply to a Written Question yesterday, the Secretary of State outlined the dates of payment which showed that the total payments for the project at Glenrothes were about £766,000. In June, when that letter was written, about £700,000 had already been paid over, so there was no possibility whatsoever of this £450,000 being provided. If there had been liaison between the Board of Trade, the Glen-
  1470
  rothes Corporation and the Scottish Development Department the matter would have come to a head not at the end of September, but back in June, and some money would have been saved.
  It is also difficult to work out from the Report exactly on what date it was known to the Glenrothes Development Corporation that this project was going entirely wrong, but the Report states that a Mr. Clayton went to the Corporation towards the end of August and admitted that the company was in very great difficulties.
  The Question answered yesterday shows that £17,500 was paid out on 28th August by the Corporation to the Cadco Building Company. Was this payment made before or after the Development Corporation knew that the Cadco Building Company was insolvent? Here again, we have this £17,500, a big proportion of which could have been paid to the sub-contractors but which was taken up by the Cadco Building Company.
  Mr. Speaker: Order. I hesitate to interrupt the hon. Member but this debate has to finish at about 2.50 p.m., and the Minister has yet to reply.
  Sir J. Gilmour: I have almost finished, Mr. Speaker.
  Was it after this date in August when the Development Corporation knew that the Cadco Building Company was insolvent? If so, this money should not have been paid to the Cadco Company; it should have been retained, to pay the sub-contractors.
  2.41 p.m.
  The Under-Secretary of State for Scotland (Dr. J. Dickson Mabon): Many issues have been raised in this debate and I shall try to deal as swiftly as I can with the major ones. In fairness to the whole position of Cadco, and its whole story, we have to go back to 1963 and the atmosphere of that time. We all know now that it was a great swindle, but it would have been a wise man who said at the time that these people were suspicious and that we had to be very careful about the project.
  The year 1963 was one of distress to Scotland. There were well over 100,000 unemployed and, as my hon. Friend for Fife, West (Mr. William Hamilton) knows,

  1471
  Fife was going through a very hard time. Industrial prospects were bleak, and Glenrothes was struggling to establish a broader industrial base, and in the aftermath of the decision not to proceed with the Rothes pit it would have been difficult to rebuff any new attraction to the new town.
  The Cadco project came in 1963 and it was very welcome. The exercise by the public relations people, to which my hon. Friend has referred, was enormously successful. I have here a great collection of Press clippings, ranging from the Scottish Grocer to the Financial Times and embracing all the Scottish daily newspapers. Some important commentators then, perhaps unwisely, welcomed the project as being a great boon and blessing. This is the general atmosphere that we have to recognise, which surrounded not only the Press conference and the Corporation publicly but the officers and members of the Development Corporation principally responsible for making this arrangement with the Cadco people.
  I have been concerned in this matter on behalf of my right hon. Friend the Secretary of State since the Labour Government came to office, and I can tell my hon. Friend the Member for Fife, West that he is quite fair in seeking to question Ministerial responsibility. Nevertheless, he must realise that Ministers cannot answer for Ministers in a previous Government. This is a matter entirely for ex-Ministers themselves to decide, as to how they should answer.
  I have been looking up the debate on the Crichel Down affair, which took place on 20th July, 1954, and I want particularly to refer to the remarks of Sir David Maxwell-Fyfe, as he then was, when talking about the fourth category of considerations, concerning the question of Ministerial responsibility in relation to civil servants. He said:
  "where action has been taken by a civil servant of which the Minister disapproves and has no prior knowledge, and the conduct of the official is reprehensible, then there is no obligation on the part of the Minister to endorse what he believes to be wrong, or to defend what are clearly shown to be errors of his officers. The Minister is not bound to defend action of which he did not know, or of which he disapproves. But, of course, he remains constitutionally responsible to Parliament for the fact that something has gone
  1472
  wrong, and he alone can tell Parliament what has occurred and render an account of his stewardship."—[OFFICIAL REPORT, 20th July, 1954; Vol. 530, cc.1286–7.]
  That applies to present and past Ministers. I do not presume to answer for previous Ministers; it is entirely their prerogative, and it is up to them to volunteer information if they think that it is important.
  But that is in relation only to officers of our own Department—the Scottish Office—and not in relation to Development Corporation officials, who are answerable to the Development Corporation. One must be fair and read what is said in the Report about the Development Corporation general manager and other officers, and also the statement made by the Development Corporation quite recently.
  I shall not go over the whole history. My hon. Friend has gone over this before, in two previous Adjournment debates, the first answered by myself and the second by my right hon. Friend the Minister of State, Board of Trade. When we came to office matters had reached a head. In December, 1964, the Board of Trade appointed inspectors under the Companies Act to investigate the affairs of Cadco Developments Limited and two other companies in the Cadco group. The Cadco Building Company had by that time gone into the hands of the Official Receiver.
  The Report, which is a very good one—I am glad that my hon. Friend was sensible enough to fortify his speech with a number of quotations from it—is by no means a whitewashing exercise. It has been carried out by two very good inspectors, who have gone into the matter quite thoroughly.
  On the question of Ministerial responsibility, I would add that the inquiry or review which we carried out took place later and that at the material dates the matter was the responsibility of the past Administration. Constitutionally, the then Secretary of State was responsible to Parliament for what happened when he was in office. I do not suggest that he would have been bound to support the action taken by the officials if it had been taken without his knowledge. I leave that part of the case and turn to the part concerning ourselves.
  On 1st December, 1964, my hon. Friend raised this matter in an Adjournment

  1473
  debate and I then told him that I was proposing to invite the Development Corporation to discuss the whole history of the project with me. The first meeting with members and officials of the Corporation took place on 19th December, in the course of which we analysed the details of the course of events as known. These followed a series of meetings in Edinburgh and Glenrothes at intervals up to June, 1965, but as early as February and March, 1965, we had decided to review the arrangements governing the clearance procedure for industrial and commercial projects in Scottish new towns.
  We did not apply this just to Glenrothes; we decided to apply it to the three other new towns—and it now applies to the fifth new town.
  It is now endorsed in New Towns Memorandum No. 7 as the correct procedure, and it is very thorough—a better tightened-up procedure than existed in the previous circumstances was issued in May, 1965, and subsequently referred to by the Comptroller and Auditor-General in his Report and Accounts for 1964–65. We issued this Memorandum in respect of new towns, giving this guidance on clearance procedure. I cannot say that a Cadco can never occur again; no one can. But the chances of a Cadco project ever taking place again in any Scottish new town are very small. The new procedures that we have established are the best that we can devise in human experience so far. We have taken a wide consensus of opinion to arrive at this. The Scottish public is entitled to that assurance.
  I think, also, that the whole Cadco affair is a lesson to many officers and other people engaged in new town work and in the attraction of industry not only to Scotland but to other parts of the United Kingdom.
  My hon. Friend referred to the Lord Advocate. The position in Scotland is a little different from that which obtains in England. The Lord Advocate's decision in this matter is final, and I cannot give the House the reasons which he felt were
  1474
  conclusive in deciding not to prosecute those mentioned in the Report, including Mr. McKee, to whom my hon. Friend has referred. The position of the Director of Public Prosecutions is entirely different. His decision for the moment, is tentative and not by any means final, and it remains to be seen what further developments there may be in this matter.
  I have very few minutes left. I am sorry that I cannot comment on the question of the sub-contractors under contract to the Development Corporation and the building company. This is a matter between the two parties which does not involve the Scottish Office. If there is a feeling that the Development Corporation is in breach of contract there is redress in the courts, which the sub-contractors can take. I have had a lot of correspondence with my hon. Friend on this matter and I do not propose to say any more than that.
  The new town of Glenrothes had a sharp setback with the decision not to proceed with the Rothes Pit, and the failure of the Cadco project was a considerable blow to it. These were two heavy blows, just at the beginning of its development. Since then we have made every effort to restore the morale of everyone concerned and to try to ensure that the energy with which the attraction of new industry was pursued is continued. In fact, 12 new industrial projects have come to the new town since the Cadco project collapsed. These new firms employ 1,600 people already, and they have a potential employment of 2,250.
  In housing and in other ways development is going well, and my right hon. Friend takes an active part in ensuring that this is so. I am sure we all wish the new town success, now that it has got over the intense disappointment of the failure to proceed with the Rothes Pit and this unfortunate affair of Cadco.
  Mr. Speaker: I am grateful to hon. Members for keeping to the time table. May I remind right hon. and hon. Members that this next debate will finish at about 3.42 p.m.

  TOURISM, SPORT AND SUNDAY ENTERTAINMENT
  2.51 p.m.
  Mr. W. R. Rees-Davies: I am obliged to you, Mr. Speaker, for the opportunity to raise the subject of the tourist industry, sport and Sunday entertainment. I do so largely in a representative capacity as chairman of the all-party committee on tourism. I have had a number of apologies from colleagues on both sides of the House who have been unable to attend and contribute to the debate. I regret particularly the fact that the representative of the Liberal Party and two of my hon. Friends, who have a particular knowledge of certain aspects of the industry, cannot attend this debate.
  The first difficulty that arose in this matter was that there was naturally a flutter in the dovecots amongst the Ministries, because there are no fewer than six Ministries any one of which could equally have dealt with this important matter. This is by far the most important issue because the main objective to which I wish to draw attention today is the need for the co-ordination of policy by the Government in respect of the tourist industry and the proper pursuit of leisure. There is absolutely no co-ordination of any kind between the Departments in respect of any proper cohesive policy for the tourist industry or for the ancillary and equally important subjects of sport, entertainment, culture and, indeed, the pursuit of leisure in the modern age.
  I will briefly state the five assurances that I should like to have from the Minister of State, Home Office, which I believe are reasonable because they do not commit her or, indeed, the Home Office as such, save one of them. They are as follows. I ask that the hon. Lady will, together with the other Ministers, consider carefully whether the time is not ripe for a committee of the House of Commons, analogous to the Committee on Nationalised Industries, for example, to he set up for the following purposes: to inquire into and to recommend action and measures designed to promote tourism and to encourage proper leisure pursuits, including the field of sport and culture. Such a committee of this House
  1476
  would be an all-party committee, of course. I should like to think, too, that to a large degree it would not be very partisan, but that it would embody the immeasurable experience of hon. Members of this House. I think the time has now come for a committee of this kind to be set up.
  Secondly, I ask that there shall be a continuing inter-departmental committee of advisers from the Ministry to assist and to set the guidelines for Government policy. Such an inter-departmental committee would, of course, be of the greatest value in advising a committee of this House. I ask that both those matters should receive attention and, I would hope, at Cabinet level.
  Thirdly—this is more directly in the hon. Lady's province; indeed, it is directly within the province of the Home Secretary—I ask for an opportunity for this House to debate a Bill from another place, the Sunday Entertainments Bill introduced by Lord Willis, as and when it has received its Third Reading in another place. It does not follow that it would automatically come here, but, having had the widest measure of careful consideration in another place, it is certainly more than opportune that this Measure should then be given time for debate with a view to securing a Second Reading in this House.
  Fourthly, I ask for an assurance that we shall have an early White Paper from the Home Secretary on Sunday trading and a promise that after there has been a debate, there will be early legislation to deal with that subject, one hopes in the 1967 Queen's Speech—
  Mr. Speaker: Order—
  Mr. Rees-Davies: Yes, I beg your pardon, Mr. Speaker.
  Mr. Speaker: The hon. Member obviously knows what I am going to say. He may refer only incidentally to legislation.
  Mr. Rees-Davies: I realised, Mr. Speaker, that I had been guilty of an incidental transgression. I withdraw the last part of my remarks. May I put it in this way: I should like an assurance that all the matters relating to Sunday trading will be carefully considered at an early opportunity.

  1477
  Finally, I hope that the gaming laws will he brought up to date, more particularly because of their important impact upon the revenue of the tourist industry.
  Dealing with these items in turn, taking the Board of Trade, the difficulty is that international tourism is largely involved and there is little executive power for the Minister of State, Board of Trade here. He is nearly always defeated by the greater power of manufacturing industry. The Treasury is extremely helpful in matters of works of art which are in the particular province of the Treasury, but is is a small province. The Ministry of Education, which deals with sport and with museums such as the Victoria and Albert Museum, is without cognate power. The Ministry of Housing and Local Government deals with some houses, whilst the Ministry of Public Building and Works deals with Stonehenge and other aspects of the subject. The Minister responsible for sport, whom we are delighted to see here, is left with noble words, with a desire for action but with no money and no executive authority to give strength to his elbow. I have no doubt that it is a good elbow; as understand it was an even better foot in the old days.
  I think it is fair to say that there are many hon. Members who do not recognise that there is a tourist industry, an industry of sport or an entertainment industry. They regard these as pleasures which are in no sense measurable against manufacturing industry. The truth is that the fourth largest industry in this country and one which could become the largest is tourism. I do not need to go into the figures this afternoon, but they are there for all to see. This is a major industry and I invite the Minister to recognise that It is now practicable to take the view that the tourist industry should have the same yardstick as manufacturing industry.
  This involves directly the Board of Trade. It equally involves not only the question of Selective Employment Tax but the abolition of investment allowances and the lack of any investment grants. The extraordinary situation is that there is no capital or modernisation grant available to modernise our hotels, and this has resulted in the complete arrest of all building in the hotel and catering industry.
  1478
  The situation overseas is in marked contrast. In Switzerland there is a bank to provide merchant banking facilities for tourism. In Italy one may build hotels with capital loans and grants provided by the Government. In Eire one can get a tax-free holiday to enable one to promote tourism. None of these facilities obtain in this country. All of these are matters which I would have thought ought probably to be referable to a committee of this House to consider and to put forward to the Government with a view to inviting action.
  I turn from hotels and the catering industry, upon which a great deal has been said on other occasions, to sport. What is the picture here? We find, firstly, that large numbers, indeed, approximately 90 per cent. of football clubs are at present operating on a deficit and in the red. Almost all county cricket clubs are at present in dire financial straits.
  Turning to music, we find that classical music badly needs, and receives, some form of subsidy. Theatres find themselves at an acute disadvantage with television. Looking at the other field of entertainment, at gaming, we find that here is a field which is likely to attract suitable revenue and in which tourism could provide a benefit. We find here that there is certainly a sad need for improvement. Right across the field of sport there hangs today the spectre of a lack of finance to provide improvements which are so sorely needed and which are unable to be achieved at present.
  Continuing on the subject of sport—I said that it was a question not of words alone, but of inability to take financial action—there is one startling fact regarding the provision of capital. Whereas approximately £15½ million was spent in 1964, the estimate for 1966 is a mere £4 million. Expenditure outside the schools has reached the lowest level since shortly after the post-war period. While it is true that the school provision may continue, we find ourselves with a virtual stop since July, 1965, on all building projects.
  Without the executive power resident in the Minister, without anybody to supply separate grants and finance for sport, we are unable to achieve what is basically necessary for improvement. What are these improvements which are most

  1479
  urgently needed? I list a mere four of them: the need for international sports centres, the need to provide far better indoor facilities for sport, the need to ensure a greater and more adequate provision of swimming pools and, more particularly, of sports halls.
  Regarding swimming pools, the attractive report produced by the Sports Council illustrated the fact that today there are only about 500 swimming pools. There are 600 local authorities without any at all, and three-quarters of those that do exist are from 30 to 80 years old. There are only 63 sports halls of over 7,000 sq. ft.
  Here is a field of need for facilities which requires the provision of capital. I urge reconsideration in the next year to enable us to get ahead with these projects.
  Another important reason for there being a committee of the House as I suggest and an inter-departmental committee available to consider these matters, is that at the moment there are no accepted standards for local authorities to provide a yardstick for them. Furthermore, there are no direct grants in this field. The grants which come under the General Grant Order do not make specific provision to cover these items which I have envisaged as needing direct grant. I therefore feel that this whole matter requires to be taken at a higher level than hitherto.
  Regarding the regional sports councils which have been admirably set up, the next stage surely is to ensure that there are local sports advisory councils. This field is one where local authorities could provide a valuable service. In the main, the criteria would seem to be, first, the need of the community for sport and recreation, secondly, the need to develop local facilities; third, the need to ensure in particular that school leavers are able to continue in the participation of sport, and fourthly, with a view to future planning, to collect together the facilities under one umbrella so as to avoid duplication. I believe that action along those lines would go a long way to assist in the proper pursuit of sport and of our leisure. To expect this to fall merely upon the shoulders of one Minister, without any proper co-ordination and with
  1480
  an absence of finance, is really not a viable policy.
  Turning to Sunday entertainment, it cannot be gainsaid that if the Bill from another place comes to this House for consideration it will not have arrived too soon. It is two years or more now since the Crathorne Report, which we had an opportunity to debate, and I venture to say that the House of Commons as a whole, will accept a measure of reform. I have no doubt at all that a Bill of this nature would certainly receive the sanction of this House and would be passed into law, certainly so far as it would affect Sunday evenings. I refer to provision for theatres and Sunday entertainment and for getting rid of the ludicrous anomalies where a person cannot even wear a false moustache for a performance in the evening but he can, sing without it. Whereas at present one can watch the London Palladium on television, one cannot watch the London Palladium performance itself. It seems to me that these are matters which must be remedied at an early date.
  We should have an opportunity to deal with them and also to see whether afternoon commercial sport can receive the support of the House. There could be no greater boon to cricket and football than that there should be the opportunity to have commercial sport on Sunday afternoons. Theatres would certainly wish to open on Sundays, but would close on Mondays. The labour situation would be made little worse, if at all.
  Regarding Sunday trading, we have had the valuable report of the Crathorne Committee and we await further action. I take the view that it provides a perfectly adequate basis for legislation, but clearly the Government have had second thoughts about it. We wait anxiously to hear from the right hon. Lady exactly what is proposed.
  The all-party Committee, as it sits at present, attracts the attention of those of us who are concerned with tourism and seaside resorts. It also from time to time attracts the attention of some other Members. But the tourist industry today and the proper pursuit of leisure in this country is a matter of the closest interest to everybody in this House and the country. The House of Commons all too seldom talks about the pleasures of

  1481
  life. This is an occasion where if we have suitable assurances from the right hon. Lady they will provide, if I may say so, a Christmas present for the nation, and, I hope, a New Year resolution which will be thoroughly well worth while in the forthcoming year.
  That resolution will be substantially reinforced if the right hon. Lady can give the assurances for which I have asked. They would not commit her Ministry; they would merely commit her to saying that the Government will now carefully consider setting up an all-party committee with, one would hope, a strong chairman, to which these questions of tourism, sport, culture and leisure can go, and become co-ordinated for thought and action.
  I hope that the Ministries will get together to see whether we can promote something which would be for the benefit of Britain as a whole, of its exports, the provision of better home holidays, which the British Travel Association will try to promote within the next week or two, and at the same time, of the interests of sport, culture, historic homes, museums, and of those many things which at the moment are handled by no fewer than six different Ministries. With such a committee we could have a co-ordinated policy, and I believe that it would be for the benefit of everyone. I do not believe that it would be opposed by anyone.
  3.10 p.m.
  Mr. Alfred Morris: I am grateful to the hon. Member for the Isle of Thanet (Mr. Rees-Davies), whose speech ranged very widely, for raising this matter. I regard his suggestion for an all-party committee as an especially stimulating one. I have no doubt that it will receive very careful consideration by my right hon. Friends.
  The debate gives me an opportunity very briefly to raise two matters which are of considerable interest in the City of Manchester. The first concerns the lack of playing fields and sports grounds for many amateur soccer and other teams. I hope to hear by right hon. Friend emphasise today that sport and recreation are regarded as a totality. Our problem here is not so much a lack of facilities as the under-use of facilities
  1482
  owned by local education and other public authorities. This causes much frustration and I should like to see school playing fields open at weekends and during the school holidays so that people engaged in amateur sport could have access to many excellent facilities which are now denied to them.
  My second point relates to the question of Sunday trading. My right hon. Friend the Minister of State will recall the debate on 15th February, 1965, on the Report by Lord Crathorne's Committee. I referred then to paragraph 134 of the Report, and I should like my right hon. Friend, if she can, to let me know now whether the Home Office have considered the points which I raised in that debate. If I may remind her, my observations are reported in columns 916–9 of the OFFICIAL REPORT.
  The hon. Member for the Isle of Thanet spoke of the Minister for sport as one of the more deprived Ministers in the present Government. He has certainly been one of the most successful Ministers. The House should not forget that there have been some important sporting achievements during the past year. Thus, if I may say so, the money which has been spent by my hon. Friend the Minister has been a very good investment. Finally, may I emphasise again my hope that we shall have full use for youth generally, at weekends and during school holidays, of all the resources so far invested by local education authorities and the Government in school sports grounds and other playing facilities.
  3.14 p.m.
  Mr. Kenneth Lewis: I congratulate my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) on raising this subject today. He has long taken an interest in it in the House and has done a great deal to promote British tourism in so far as we can promote it in Parliament.
  It will be accepted generally, and certainly by the Government and any Chancellor of the Exchequer, that tourism is one of the main ways by which we can earn foreign currency. There is no better way. Tourism is also a two-way traffic. What we lack in sunshine here we have to make up for by the facilities which we offer to the holiday-maker. The kind of holiday we should go for, more than

  1483
  any other, for the foreigner coming here is the short stay—people coming here for a week or so or even for long weekends—and I am not sure that the British tourist trade is as geared to this as it might be.
  For example, our hotels do not give to foreigners coming to this country the same facilities as hotels overseas have long given to British tourists going abroad. British Rail hotels have started to do this; they have now started to accept block bookings at cheaper rates. I hope that this will be copied by many other hotels in Britain.
  The Government must do something to help, and I am not sure that they have assisted the hotel trade by some of their actions in recent months. The Selective Employment Tax, bearing as it does on hotels, does not help, and neither has the abolition of the investment grants. I very much hope that the Government will look at these matters again because it is vital that the hotel trade, on which we depend to encourage foreign visitors here, be recognised as playing a most important part in the earning of foreign currency for us.
  Something must be done, also, about the British Travel Association grant. The Government subsidise the B.T.A. fairly heavily, but money spent in grants to the B.T.A., in so far as it enables this country to advertise overseas, is money well spent, and it comes back in the form of visitors from abroad.
  A word now about the £50 allowance and the £15 sterling which one is allowed to take out of the country. Tourism is a two-way traffic. Obviously, if we are to go into Europe, there must be an open door. There is an open door for British travellers going abroad, and there must be an open door for people to come here. The sooner the Chancellor of the Exchequer removes this restriction—I hope that he will take it off next year—the better. It is becoming clear that it is not really working. People will spend just as much. There is a traffic in "V" forms, as there always is such traffic when restrictions of this kind are imposed. The restriction affects the heavy spender abroad, but heavy spenders are very few. Its removal would, on the other hand, help the general mass of travellers. Overseas Governments
  1484
  feel that their people are coming here and spending foreign currency with us, whereas there is a restriction on our people spending their currency abroad. I am sure that this is a disadvantage to us, and the sooner it goes the better.
  During recent years, tourism has given a big boost to our balance of payments. It can do more in the years to come, and it deserves all the support the Government can give it.
  3.19 p.m.
  Mr. Peter Bessell: I am very grateful for the opportunity to intervene briefly in the debate. I undertake to sit down in time to give the right hon. Lady the 18 minutes which I believe she wants for her reply.
  I wish to express my gratitude and that of my right hon. and hon. Friends to the hon. Member for Isle of Thanet (Mr. Rees-Davies) for raising a subject of vital interest to hon. Members on both sides of the House and the whole country. He said that the tourist industry is the fourth largest in the country. It is, indeed, one of the fastest-growing industries and should not be restrained in any way by Government action. The constituents who are fortunate enough to be represented by the hon. Member are aware of his very keen interest in this matter, which affects them as indeed it affects my constituents.
  Tourism is one of our major dollar earners, but over and above that is the fact that in the areas of high unemployment in many parts of the country, including Cornwall, in particular, and also Scotland—I am glad to see that my hon. Friend the Member for Ross and Cromarty (Mr. Alasdair Mackenzie) is present—tourism is vitally important because it is a mainstay of the economy. It not only produces dollars and employment, but also makes a direct contribution to the welfare of the economy of those difficult areas, which the Government are concerned to assist.
  At this moment I am concerned, as are many other hon. Members who represent rural constituencies, that this will not be a happy Christmas for many people in areas like Cornwall. Unemployment there is at an all-time high, particularly in my constituency. In one place in my constituency unemployment is over 13 per cent., and in an area which depends so much on the tourist trade it is tragic

  1485
  that the effect of the Selective Employment Tax has been to force certain hotels in my constituency to close this Christmas, when they would otherwise have remained open. That must apply to many other areas of the country.
  The absence of the investment allowances has prevented the building of new hotels not only in the under-developed areas, but in many of our major cities. London is more fortunate than many provincial areas. Nevertheless, absence of good hotel facilities detracts from opportunities of attracting the high dollar-spenders who are essential to the welfare of the economy. The hon. and learned Member referred to the position in Switzerland, and there are many other countries which provide facilities for the development of hotels, and the money for their building and, in some cases. operation. It is a very sad reflection on the present and past Governments that we have been so slow to recognise this opportunity to obtain additional foreign currency earnings by this means.
  The areas which have often been promised the greatest help have, alas, been the worst hit by the present squeeze. I now refer particularly to my own constituency. There is a short sightedness in the Chancellor of the Exchequer's attitude. There is not only the loss of overseas currency at present but the tendency for people to be attracted to other countries in the future. Holidays are habit-forming. People who travel abroad tend to visit more and more the one country they like, and there is no doubt that this will have an effect in the long term, as well as the short term, on Britain's tourist trade.
  I should have liked to refer to the question of Sunday entertainment which the hon. Gentleman raised. I shall not do so, because I should then encroach upon the time of the right hon. Lady. That is the last thing I would wish to do, because I am sure that those in the tourist industry, especially hotel owners and many thousands of hotel employees who are out of work, are looking to her at this moment for a little light and hope at Christmas.
  3.24 p.m.
  The Minister of State, Home Office (Miss Alice Bacon): When the hon. Member for Isle of Thanet (Mr. Rees-Davies) gave novice that he would raise the ques-
  1486
  tions of tourism, sport and Sunday observance, there was a little to-ing and fro-ing in Ministerial circles to decide who would reply to the debate. As the hon. Gentleman said in his speech, about six Ministries are involved. But we had a word with him and he said he would perhaps raise the question of Sunday observance more than anything else, and, in any case, the maxim is, "When in doubt always pass it over to the Home Office", so here I am. I shall do my best to reply for the various Ministries involved although, of course, I am more au fait with the things for which my Department is responsible.
  At the beginning of his speech the hon. Gentleman pressed the need for co-ordination, and suggested that there should be a Committee of the House to look at all these matters. He also stressed the need for a continuing inter-departmental committee. I assure him that we have a great deal of inter-departmental co-ordination in these matters already, although perhaps not as formally as he would like. I do not want to commit my right hon. and hon. Friends in any way, but we shall look at his other point about an all-party Committee.
  I thought that he was a little less than fair when he spoke of a lack of co-ordination on tourism, sports and the arts. I cannot forbear saying that while we may not have had the co-ordination he would like under this Government we have made a great deal of progress in tourism, sports and the arts, indeed, more than any other previous Government. My hon. Friend the Minister of State, Board of Trade, was given special responsibility for tourism. While the hon. Gentleman might feel that my hon. Friend has not as many powers as he thinks he should, this was at any rate the first time a Minister was given specific responsibility for tourism.
  Mr. Rees-Davies: I think that the right hon. Lady is not quite right about that. When Lord Erroll of Hale was a Board of Trade Minister, he had a specific responsibility under the previous Government for tourism. He was the first at the Board of Trade.
  Miss Bacon: I am glad to hear that. I must say that I had not realised it from the work which was being done at that time.

  1487
  As has been mentioned, my hon. Friend the Under-Secretary of State, Department of Education and Science, has been responsible for sport and has done a magnificent job during the past two years. My hon. Friend the other Under-Secretary of State, Department of Education and Science, has done for arts what no other Minister has ever done. Credit should be given for what the Government have done in those respects.
  Before I deal with the hon. and learned Gentleman's main point, I wish to deal with one or two points raised by other hon. Members. First, on the point raised by my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris), the Government view the better use of school sports facilities as very important, and my hon. Friend the Under-Secretary of State has made many speeches urging that policy. But that is a matter for the local authorities. The Government have no mandatory powers on it. Each of the nine regional sports councils, plus those for Scotland and Wales, has been asked to undertake a survey of all existing facilities including the degree of their use.
  The surveys are expected to be completed during next year. It is then my hon. Friend's intention to ask each council to discuss with the appropriate authorities, the local education authorities, the way in which they could bring about the fullest possible use of those grounds.
  I am not in a position to deal with all the points raised by the hon. Member for Rutland and Stamford (Mr. Kenneth Lewis). I noted his points about the British Travel Association, which was set up by the present Prime Minister in 1950 when he was President of the Board of Trade. Therefore, my right hon. Friend has a sort of proprietary interest in seeing what is happening.
  I noted what the hon. Member for Bodmin (Mr. Bessell) said about the difficulties in which his constituents find themselves. He stressed the question of the Selective Employment Tax, which has been fully discussed, as he will be aware, during our debates. There is very little that I can add. We realise that there may be some difficulties, particularly in such constituencies as he mentioned.
  1488
  I have spoken of some of the things which my hon. Friend the Joint Under-Secretary of State, Department of Education and Science is doing in sport. This year has seen the setting up of 11 regional Sports Councils. This is a most important development in co-operation between central Government, local government and sports bodies. The Sports Councils are still in their infancy, but we look to them to do a good job in co-ordinating the various sports activities in their areas. A great deal has been done. Both the Sports Council and the Regional Sports Councils are co-operating with other bodies interested in the open air, such as the National Parks Commission, the Nature Conservancy, and the Forestry Commission.
  On the problems of tourism generally, the Government realise that tourism is a factor which is of major significance in correcting our balance of payments problem. International tourism today is big business. In the past two decades our own tourist earnings from overseas visitors to Britain have developed from relatively small proportions to a point at which they go quite a long way to off-setting the still bigger debits for our own people's holidays abroad.
  In 1965, the United Kingdom received almost 3½ million visitors from overseas, including those from the Irish Republic, who spent an estimated £193 million. However, I must admit that for various reasons the revenue from tourism, during the last year or two, has not been increasing as rapidly as it has been increasing in previous years. More substantial increases in our earnings will certainly not be achieved without the most strenuous promotional efforts being made.
  To this end, the B.T.A. is engaged in carrying out a "Holiday in Britain" campaign at a total cost for this winter of £75,000. It may be small, but it is something. Subject to Parliament's approving the necessary Supplementary Estimate, this will be made up of a special Board of Trade grant of £40,000 and £35,000 subscribed by local authorities.
  Mr. Kenneth Lewis: Presumably the £75,000 does not include expenditure on advertising abroad. If it does, it is a very small amount and it should be considered again. If we are to promote overseas the

  1489
  attraction of holidays in Britain, ten times that amount will need to be spent.
  Miss Bacon: I agree. I am not sure whether that includes the amount spent abroad. But it is a start. I know that if we can afford it it should be more, but we are alive to this problem.
  The Prime Minister announced the hotel loans scheme to the House on 20th July. It might be considered to be a comparatively small amount, but it will be about £5 million in the first experimental year.
  I come to some of the problems for which my Department is responsible. I refer particularly to Sunday observance, which was raised by the hon. Member for the Isle of Thanet and by my hon. Friend the Member for Wythenshawe. Members will no doubt recollect that following the debate on the Crathorne Report last year the then Home Secretary stated that this was a matter on which Parliament should be given an opportunity to pronounce and that, in a matter so closely affecting the individual conscience of Members, this could best be arranged if a Bill were introduced in private Members' time. This is still our view, but, as the hon. Gentleman knows, no Member who was lucky in securing a place in the Ballot decided to introduce such a Bill.
  However, we welcome Lord Willis's initiative in introducing his Bill in another place and thus providing an opportunity for Parliament to consider the question whether and, if so, how best the law on Sunday observance might be rationalised and liberalised. We have made drafting facilities available to Lord Willis, which was in accordance with the undertaking which we gave. But the collective view of the Government is one of neutrality, because we feel that it would not be right in a matter of conscience for the Government to try to impose a view.
  Leaving that aside, as the Crathorne Committee pointed out, the existing law about what may or may not be done on Sundays is full of anachronisms. There would b advantage in tidying it up and establishing a single set of rules easily understood by all and of common application to all forms of Sunday entertainment. Sunday sport, whether amateur or
  1490
  professional, will not flourish unless there is a public demand for it, but the purpose of Lord Willis's Bill is to provide that if the public want to spend their Sunday afternoons and evenings at sport, they should not be precluded from doing so.
  The hon. Member asked specifically whether we would be able to give time for the Bill if it goes through the House of Lords. The hon. Member will not expect me to be in a position to give that undertaking today. This is a matter for the Government as a whole. When the Government have given Government time for Private Members' Bills in the House of Commons, the decision has usually been taken after Second Reading of the Private Member's Bill, when it has been possible to see what degree of support the Measure has.
  Mr. Rees-Davies: If the Bill received a Third Reading in the Lords, I hope that the right hon. Lady, having discussed the matter with her right hon. Friend the Home Secretary, can go as far as to say that the Home Office would certainly strongly invite the Leader of this House to regard it as a proper case for the Government to give time. I quite agree that the right hon. Lady cannot give a Cabinet decision, but can she go that far?
  Miss Bacon: I could not go that far at the moment. I might, perhaps, go as far as to say that if a Measure of that kind came before the House I should probably be in the same Division Lobby as the hon. Member. I cannot, however, commit the Government about the provision of time a considerable distance ahead. We had better wait and see what happens to Lord Willis's Bill in the other place.
  Broadly speaking, the effect of Lord Willis's Bill is to remove all restrictions under existing Sunday observance laws concerning sport and entertainment on Sunday afternoon and evening and to impose restrictions on Sunday morning only in respect of entertainment and spectator sport that the public have to pay to watch. I am sure that all these things will be discussed at great length when the matter comes before the House of Lords.

  1491
  Lord Willis's Bill is not concerned with Sunday trading. Sunday trading recommendations are being considered separately by my Department as part and parcel of the much wider and more general review that we are undertaking of the whole of the law relating to retail trading hours generally. We all know that there are anomalies not only in Sunday trading hours, but in weekday trading hours, also. The problem of Sunday trading is best dealt with from the viewpoint of retail trading as a whole rather than as part of Sunday observance.
  We are undertaking that review arising from the recommendations put forward in Part III of the Crathorne Report. My Department followed this up with a booklet entitled, "Retail Trading Hours", published by the Stationery Office in 1965. This booklet was sent to all interested organisations and bodies, and we have now received the replies. When I was asked about this matter recently at Question Time by an hon. Member opposite, I said that the replies which we have received show that there is no consensus of opinion on the matter and that it is fraught with difficulty. It is a matter in which it is difficult to get agreement between the various interested bodies.
  But we are at present studying the replies that we have, and we hope that we will then be able to produce—I do not want to give any undertaking that this will be in the near future—some kind of legislation arising out of the replies which we have received.
  I have not time to deal with the other points—
  Mr. Rees-Davies: The White Paper, or whatever is the outcome of this matter—can it be expected early in the new year?
  Miss Bacon: Well, I could not say that it could be expected early in the new year. We have received all these replies, as I have said, there are very great and wide differences of opinion among all the various parties interested in this matter. I remember that some years ago I was a member of the Gowers Committee on shop closing hours, in the 1945–50 Parliament. We sat for about two years and produced a Report, and I know the intricacies and the great difficulties which are associated with this problem. I agree
  1492
  that there are some anomalies which need to be dealt with.
  We have had a very interesting debate. My time is up. I can only promise that all the points which have been raised will be noted. While we may not be able to satisfy the hon. Gentleman on every point, I should like to thank him for raising these matters. They are important matters of which the Government are fully aware and we will do our best to deal with them.

  SERVICE MEN'S WIDOWS (ESTATE DUTY)
  3.41 p.m.
  Miss J. M. Quennell: The title of my Adjournment debate, death duty payable by widows of Service men who died on active service, cloaks the anonymity of the deceased officers' family and also preserves the anonymity of the medical officers who have tendered advice to those concerned, and in this case I am sure the House will allow me so to preserve their anonymity.
  This is a constituency case, but it has revealed certain wider issues which, I think, are important not only to Service men generally, but, in particular, to married Service men who may wish to make provision for their wives. I should like, therefore, to develop the constituency case and touch on the other matters as I proceed.
  There are certain provisions in our laws which exempt the estates of Service men from full death duty. This exemption lies in the Finance Act, 1952. I think it will perhaps be helpful to the House if I remind the House of the exemptions which are included in Section 71:
  "Estate duty shall not be chargeable by reason of the death on or after the twelfth day of March, nineteen hundred and fifty-two, of a person in whose case it is certified by the Admiralty, the Army Council, the Air Council or the Secretary of State that the deceased died from a wound inflicted, accident occurring or disease contracted at a time…when the following conditions were satisfied, that is to say, that the deceased was a member of any of the armed forces of the Crown or was employed as a person of any of the descriptions specified in the Thirteenth Schedule to this Act"—
  which, incidentally, relates to the women's Services—
  "or…was subject to the law governing any of those forces by reason of association with or

  1493
  of accompanying any body of those forces and (in any case) was either

  (a) on active service against an enemy, or.

  (b) on active service of a warlike nature or which in the opinion of the Treasury involved in the same risks as service of a warlike nature,.

  or that the deceased died from a disease contracted at some previous time, the death being due to or hastened by the aggravation of the disease during the period…when the deceased satisfied the conditions aforesaid."
  As far as Parliamentary drafting goes, that seems fairly clear.
  One of my constituents is the widow of a Royal Air Force officer who died in August, 1964. As his sole executrix she instructed her solicitors to apply for the exemption under Section 71 of the Finance Act which I have just quoted. Her solicitors applied on those grounds in the terms that they were making an application for a grant of probate under that Section and for a certificate that the deceased died of a wound inflicted, an accident occurring or a disease contracted at a time when he was a member of the Armed Forces of the Crown.
  On 2nd November, the application of that firm of solicitors was refused by the Ministry of Defence on the ground that, in recommending the remission of death duty on the estate of a deceased officer or airman, the Secretary of State is bound by Section 71. That provides for exemption where it can be certified that a deceased person died from a disease contracted when he was a member of the Armed Forces of the Crown and was on active service against an enemy or on other service of a warlike nature which, in the opinion of the Treasury, involved the same risk.
  For the purpose of this Section of the Act, active service against an enemy was deemed to cease on 31st March, 1963, and, since it has not been possible to relate the cause of the flight lieutenant's death to a day within the relevant period, he cannot be considered as coming within the scope of this Section.
  That was a blow to the unfortunate widow. In his service her husband's means consisted of his salary and a life policy which he had taken out. In January, 1965, the widow was told by the Ministry of Pensions that she would not be granted a war widow's pension
  1494
  either, as the Minister did not consider that her husband's death was due to or hastened by a wound attributable to his service, nor that it was due to or hastened by the aggravation by service of a wound, injury or disease which existed before or a rose from his service.
  His widow appealed against the decision of the Minister and adduced in her support the opinion of a distinguished physician. That was that the flight lieutenant's death had been caused by a heart condition which had been aggravated by his service in the Air Force.
  In response to that, on 1st October, 1965, his widow received a letter, which reads:
  "I refer to your appeal to these Tribunals and now write to inform you that I have today heard from the Ministry of Pensions and National Insurance that they have now accepted that the death of your husband was substantially hastened by service, and an award will be authorised in due course. As this disposes of the grounds of your appeal it has been struck out and I have so informed your representatives, the Officer's Association and the firm of solicitors who I understand are interested in your case."
  However, the Treasury still refused to grant exemption or partial exemption from death duties on the deceased officer's estate. That has hit his widow very hard, because she is now deeply concerned about how she is to bring up the child of the marriage.
  The objections raised by the Department concerned have all hitherto hung on the definition of "active service of a warlike nature." It seems to me that this debate can be more widely useful if the Ministries concerned will use it to redefine what "service of a warlike nature" consists of.
  The 1952 Finance Act is now about 14 years old, and the nature of the actions in which our forces are engaged have changed. It seems likely that, in the next decade or so, their character is likely to change again. Broadly speaking, all the Services are, ipso facto, engaged upon activities of a warlike nature. After all, that is why they are there. In times of national emergency, they are immediately engaged in war. Until then, their services must be of a warlike nature.
  The deceased officer was engaged with the Royal Air Force at Laarbruch in Germany immediately before his death.

  1495
  He was then a flight lieutenant and the pilot of a bomber in a force which was standing by as part of the N.A.T.O. forces on what is known as "quick-readiness alert".
  It is understood that the squadron in which he was serving was always to have certain planes available during the day and night, ready to take off at an instant's notice, armed with atomic bombs, presumably to meet an attack on the N.A.T.O. forces. This seems to me to involve service of a warlike nature if nothing else, and other people think so, too. The Minister may wish to express the Government's view on this, and I am glad to give him the opportunity to do so.
  In a letter to me dated 17th February of this year, the Minister's noble Friend in another place set out the qualifications for exemption from Estate Duty under this section. He said:
  "…Flight Lieutenant … would have:

  (i) to have been engaged at the time of his death on.

  (a) active service against an enemy or

  (b) on other service of a warlike nature or which in the opinion of the Treasury involved the same risks as service of a warlike nature or

  (ii) to have contracted heart disease at a time when he was engaged on such service or

  (iii) to have died from a disease contracted beforehand which was aggravated during a period when he was engaged on such service."

  In writing that the noble Lord does not seem to have appreciated that the widow was claiming exemption on the ground that her husband's death was due to disease contracted beforehand while engaged on a service of a warlike nature, and this case stands or falls on whether or not the officer's heart condition was aggravated by his service with the Royal Air Force.
  It must, I think, be accepted that when he was accepted for service with the Royal Air Force he was 100 per cent. fit. He entered Cranwell from school, and was commissioned into the Royal Air Force. Thereafter there are continuous medical records of his life. He was graded I in 1946, when he was 18, and he died when he was 35. The Department claimed that there was nothing in
  1496
  his medical reports to show that his health was affected by his service. I think that it is here that one gets a little puzzled by the attitude taken by the Department.
  It is fortunate that I have been able to obtain a copy of the man's entire medical record while in the Service. I am a lay-woman, and I have no medical training, but on looking through these records I was struck by the behaviour of the officer's blood pressure readings throughout his Service career. When he was 18, in 1946, he had a medical examination, but no blood pressure reading was recorded. In 1947, when he was 19, he had another medical. His blood pressure readings were 130 for the systolic reading, and 70 for the diastolic reading. Not having had any medical training, I have naturally consulted those who have, and I am relying on their advice for the comments that I make now. I think that these comments are valid.
  In 1948, when he was 20, he had no medical. In 1949, when he was 21, he had one. His blood pressure readings then were 128 for systolic, and 76 for diastolic. There is nothing in those readings to lead one to suppose that there was anything wrong with or strange about a man of that age. It was not until he was sent abroad for three years, from the age of 21 until 1953 when he returned that things began to behave erratically. In 1950 when he was 22 he had a blood pressure reading of 120 for the systolic and a reading of 94 for the diastolic reading. The significant figure here is the diastolic reading. The doctors who have advised me on this have both commented on the leap that this reading shows over the previous year's reading. By the time he had his next medical, which was in the same year, it had fallen to 76.
  In 1951, when he was 23, it had climbed again to 80. The really serious jump was in 1952, when he was 24, when his systolic reading was 110 and his diastolic reading was only 44. It had completely collapsed and his systolic reading was low for a man of his age. In 1953, when he was 25, the systolic reading had jumped from 110 to 140, which was too high for a man of his age, and the diastolic reading, which had previously been 44, had suddenly risen to 75.

  1497
  This is not satisfactory behaviour for a blood pressure reading. What is worrying is that throughout the course of his career this man's medical officers never thought of giving him an electro-cardiograph. He returned to this country from his tour overseas, which consisted of high-flying Sabres: he was a fighter pilot. His blood pressure readings remained stable until he was sent abroad then. Then, after a short time, he unfortunately died.
  Here again it is necessary to look at the comment of the Ministry of Defence and to quote it again:
  "During the twelve months before his death, the Flight Lieutenant was a pilot in a low-level Canberra strike squadron. As such he was frequently required to practice a method of weapon release which involves flying at high speed at ground level and then pulling up into a loop with a roll off at the top. The Canberra is a bomber which was not designed for this technique and the manoeuvre is most demanding, both mentally and physically, for the crew. The Flight Lieutenant was flight commander and authorising officer. In this capacity, in addition to his flying and secondary duties, he was required to spend every third day in his squadron operations room to supervise the flying programme. This duty started at 0800 hours and ended at 1800 hours, although if night flying was in progress he would probably have worked longer hours. Short breaks were, of course, allowed for meals, but this was a hard day's work by any standards. He was also required to fulfil a standby duty, which involved a two week period every six weeks working on a 24 hour on and 24 hour off shift system, living in special accommodation at 15 minutes readiness to fly. Apart from this, during the previous 12 months he had completed"
  some 200 hours flying, 19 simulated bombing attacks, 62 shallow dive bombing attacks, and 23 air to ground firing attacks. This document says that
  "His job involved considerable pressure for most of the time."
  I will not continue to read out the list, but by any standards this man was carrying an enormous load of responsibility and was being subjected to physical stress in a plane which was not designed for the job he was doing. Yet this was a man who had displayed, through his blood pressure readings, a cardiovascular disturbance at a time when he was on active service within the meaning of the act before 1953.
  This raises one or two questions of wide importance to all our Service men. I put them to the Chief Secretary, although I appreciate that he is not in
  1498
  a position to answer them now. This is something which needs seriously considering. I do not expect him to be able to answer these questions today.
  In so far as the medical aspects are concerned, when a Service man who has, by the nature of his service, been subjected to a stress of an unnatural kind and whose blood pressure readings behave erratically afterwards, is he given an electro-cardiogram? Why is this machine not regularly in use by the R.A.F.? As the U.S.A.F. regularly uses this machine and the R.A.F. will soon be flying U.S. planes, will it become the normal practice for the R.A.F.? On death duties exemptions, what is the current definition of "service of a warlike nature"? When was it redefined? Thirdly, in view of the constantly changing nature of the actions of Her Majesty's Service, do the Government intend to review the conception of "an enemy"?
  I know that this has been a fairly detailed case to put to the right hon. Gentleman and I accept that he cannot be expected to answer some of the more specific and detailed medical questions which I have posed, but I would ask him to ask his right hon. and hon. Friends whether they will not review the case of this unfortunate flight lieutenant's death, especially in view of the evidence of cardio-vascular disturbance before 1953, which his blood pressure readings so clearly show on his medical records.
  4.1 p.m.
  The Chief Secretary to the Treasury (Mr. John Diamond): The three detailed questions which the hon. Lady the Member for Petersfield (Miss Quennell) put to me about the use of electro-cardiograph, and on which she kindly said that she would not expect an answer now, I will be glad to do as she asked and write to her as soon as I have the information. On the main question which she put, I would say to her that I hope she will understand that, although what I say is dictated by considerations of accuracy, I have every sympathy with her constituent and her present state and every recognition for the gallant service which her late husband gave to this country. There is no question of that.
  The reason that every review of this case has come to the same answer is that there is a major distinction to be

  1499
  drawn between the circumstances under which a pension is granted and those under which exemption from Estate Duty lies. It is this major distinction which the hon. Lady absolutely fairly described, but did not concentrate upon. The hon. Lady at times referred to "active service" and at others to "service". These are very different things.
  I would, first, of all explain the reason behind the exemption from Estate Duty. It is not as the hon. Lady thought. She referred to the widow receiving the information that there would be no exemption and said that that was a blow, or that the widow was very hardly hit. Therefore the hon. Lady is contemplating that the purpose of the exemption is the relief of hardship. This is not so and is not intended. The idea of exemption from Estate Duty when an officer dies while engaged on active service—is killed in action—is that it is wholly repugnant to the State to think that, not only has he lost his life, but that because he has lost his life in the service of his country, Estate Duty should also be collected. Therefore, Estate Duty is completely remitted.
  The hon. Lady will realise immediately that this means that those in the greatest need, because they are the poorest, get the least and that those of minimum need, because they are the richest and their estates are the largest, get the most help by being exempted completely from Estate Duty. Therefore, this has nothing to do with hardship but with the sense that it would be horrible and wholly repugnant to impose Estate Duty in these circumstances.
  These circumstances did not apply in the case of the hon. Lady's constituent's husband. I will follow the hon. Lady and refer to no names. This gallant officer was not killed on active service. He was not engaged on service of a warlike nature. He was engaged on "service". Because the Government, as the employer, naturally wants to treat every employee as a good employer should, they decided that it was proper that a pension should be paid because this officer had, as a medical examination showed, become entitled to a pension on the conditions on which a pension is payable. that is, the deterioration of his health while on service.
  1500
  That is absolutely right, but the conditions for a pension and the conditions for exemption from Estate Duty are two very different things. It does not follow that relief under one heading will bring exemption under another. In this case the officer was not on active service and was not engaged on duties of a warlike nature during the relevant period. The hon. Lady asked me, "What are the duties of a warlike nature?" The essential condition is that there shall be a hostile element present the whole time—a danger of being shot at, or shot down in an aeroplane, for example. Recent examples were in Borneo and Malaya. Those were cases in which there was a real risk to life in the sense of being shot at by an enemy.
  The hon. Lady made it clear that this was not the case during what I and the medical examination call the relevant period. The officer was not engaged in duties of a warlike nature in the sense that he was not in danger of being shot down or shot at during the whole of this period. Although the disease was aggravated in a sense such as to justify a pension, it was not a condition which satisfied the terms of the 1952 Act. I make no party point, but this Act was brought in by the Government in power at the time and it has been accepted by every Government since. As I say, this condition did not satisfy the terms of that Act.
  Although I look at the case with every possible sympathy, and am grateful to the hon. Lady for bringing it forward, I cannot accede to her request. She has done a real service in enabling me, on behalf of the Government, to explain the essential difference between these two kinds of relief. I have been able to explain that Estate Duty exemption is granted for entirely different reasons from those in the grant of a pension.
  In such cases, of course, we are ready to look at any new evidence which is proffered. If any hon. Member feels that there is a miscarriage of justice in such a case, which engages everyone's sympathy, we shall certainly look at it with the greatest possible care. But the facts having been so clearly established, I see no likelihood of being able to alter the decision which has been taken in this case. This officer became entitled to a pension but he is not entitled—because of the absence of duties of a warlike

  1501
  nature and the absence of a hostile element—to relief from Estate Duty.
  I am, therefore, sorry that I cannot help the hon. Lady as much as I should like to have helped her on grounds of human sympathy.
  Mr. Speaker: Before I call the hon. Member for Moray and Nairn (Mr. G. Campbell) for the next debate, I want to thank the House for co-operating in sticking to the time-table today. The next debate will run until five o'clock and the Minister who will reply to it will rise at about twenty minutes to five.

  DECIMAL CURRENCY
  4.8 p.m.
  Mr. Gordon Campbell: May I start, Mr. Speaker, by echoing what you said. Because of this I am able to have the full time for a debate on a subject which I am sure the House regards as extremely important.
  I applied for this debate before the announcement by the Chancellor of the Exchequer that he was issuing a White Paper on the decimalising of the currency. I applied for it because I considered that it was a very important question. It has now become a highly topical question, too. As far as I know, since the Government announced the date for decimalisation as February, 1971, and showed a preference for one system, this is the first opportunity that the House has had to discuss decimal currency. There have been announcements from time to time but no debates.
  May I make it clear that I am strongly in favour of the decimalisation of the currency. That is why I am extremely concerned that the best system should be chosen. In the White Paper last week the Government indicated that they favoured the £-cent-½ system, but I am glad to note that it is plainly stated in the White Paper that this is subject to Parliamentary approval.
  There has been no opportunity hitherto to discuss this subject, although it is a vital question to consider which system, the £ or 10s. unit, should be adopted. I will come to a comparison of the systems later. The decision is one of major importance because it affects the daily lives of the whole population, and I trust that there will be a full debate in Par-
  1502
  liament on the White Paper sometime after the Christmas Recess. I do not expect today a fully reply of substance from the Chief Secretary, because I recognise that there must be a full debate later. However, I want him to confirm that there will be such a debate and to give certain assurances.
  I want the right hon. Gentleman to assure us, first, that no action has yet been taken which would prejudice the decision between the two systems and that, secondly, no action will be taken in the weeks or months before Parliament has fully considered the matter which would prejudge the issue. For example, will he confirm that a go-ahead has not been given to machine manufacturers or others on the basis of the £-cent-½ system? Will he give an assurance that no work has been started at the Royal Mint for coinage of one system which would not be usable for the other system?
  I ask these questions for two reasons: first, because it would be a deplorable case of by-passing Parliament on a matter which will, in due course, closely concern every citizen in the land, and, secondly, because it would mean that manufacturers would be financially committed to one system even if they preferred the other. Again this would be inexcusably prejudicing the final decision.
  I have no wish or intention to delay decimalisation. It will not be introduced for another four years and we must remember that in South Africa, for example, only two years' notice was given between the choice of the unit and Decimalisation Day—D Day—and in that case the 10s. unit was chosen.
  All informed opinion is agreed that the issue is between the two systems I have mentioned, one based on the £ and the other on the 10s. unit. The Government favour the £-cent-½ system. But this is not pure decimalisation, for it includes the fraction of a ½d., which would be equivalent to 1·2d.; and this, the smallest unit in the proposed system, would be required for a least a generation; that is, unless there is runaway inflation. The only excuse given so far for the fraction of a ½d. is that it will eventually disappear—hardly a commendation for such a system.
  The Halsbury Committee reported more than three years ago and found the choice between the two systems an

  1503
  extremely difficult one. However, the Committee narrowed the question, having considered 25 systems, to the choice between these two, and the Committee split in a decision on the two. Four, the majority, favoured the £ system, while two, the minority—who put in a report of dissent—favoured the 10s. unit. I pay tribute to the Committee for the admirable job it did, the immense study it made and the many helpful recommendations it put forward about the carrying out of decimalisation. But on the vital question of the choice between the two systems the Committee was divided.
  It is significant that the minority—the two in favour of the 10s. unit—consisted of the industralist and the businessman, the head of a department store. They were men familiar with cash transactions and with the problems arising for industry and commerce. The other four were a scientist, a professor of statistics, a banker and a trade unionist. As I say, they all did a fine job, but on this point the whole Committee said that the choice was a matter of judgment.
  It is also significant that at the Press conference on 23rd September, 1963, when the Report was published, it was clear from questions that the members of the Committee were five to one in favour of the 10s. unit, on the basis of efficiency and of its domestic use in Britain. It was clear that substantial weight had been given to the international aspect of retaining sterling, and of having no doubt abroad about its position, and that this was what had led to the majority Report. It has since become clear that what is called the international argument has less weight than was then given to it. Indeed, paragraph 12 of the White Paper, issued this month, states that this argument is not in itself decisive. The minority Report in favour of the 10s. unit contains very cogent arguments that have still not been answered.
  The Chancellor has thrown out challenges in the last few days, and I and others will gladly take them up. Paragraph 17 of the White Paper states that powerful reasons would be needed to change to the 10s. unit. Those reasons exist as I shall show. Further, on a television programme on 12th December the Chancellor of the Exchequer said:
  1504
  "Those who don't want the £ have got to prove it."
  He must not be surprised if he receives a vigorous response to his challenge.
  There have been changes of view since the Halsbury Committee reported, and many, both in the general public and in various trades and professions, are only now looking at the question, although they will themselves in due course be greatly affected. The Government must not regard this matter as settled.
  On 1st March, the Chancellor of the Exchequer announced to the House in a general economic debate the decision on decimalisation and the date for its operation. I would remind the House that the General Election date had just been announced, and the debate followed the course of criticism or defence of the Government's general handling of the economy. It was not concerned with an announcement about something that would happen in five years' time. Naturally, therefore, no one reverted to currency decimalisation during the debate.
  The Government were then in no way committed, and I remind the House, again, that in the same speech—only a few minutes earlier—the Chancellor announced a mortgage option scheme. A few weeks later that was withdrawn, and it has reappeared only this month in a quite different form. This question of currency is not, as far as I know, a party matter, or at all political, and if, following that earlier announcement, the Chancellor of the Exchequer were to reconsider the matter, he need not in any way lose face if, on that further consideration, he decided on the 10s. system.
  Although it is not a political subject it is none the less essentially a matter for Parliament, because it affects the shopper, the passenger, the bus conductor, the housewife, the cashier and the consumer in general. With the £-cent-half-system there is a fraction and there are three units instead of two. In its Report the Halsbury Committee translated the prices of 1962 and found that no less than 40 per cent. of the prices then existing would involve a fraction. I believe that the percentage is still broadly the same. This means that 800 million transactions a week would involve the fraction.
  At present the halfpenny is involved only in about 11 per cent. of transactions.

  1505
  Moreover, during the transitional period—which is to be about two years—the present currency will be circulating with the new currency. Under the 10s. system there would be fewer new coins. No wonder that organisations representing consumers and retail and distributive trades organisations strongly favour the 10s. unit, as do transport undertakings and many others.
  I want to say a word about banks and large financial institutions. They work mainly on paper—with cheques, clearing and accounting. Currency is used only in a small way. It is already clear that they would not use the half-unit at all if it were introduced; it would not affect any of their paperwork. Further, in their non-currency work the banks would change to decimalisation and the new decimal currency—with cheques and accounting—on D-day. They would not be bothered with two currencies during the transitional period.
  It must be borne in mind, if some of the large financial institutions show a slight preference for keeping the £, that they will not suffer all the inconvenience they will not suffer all the inconveniences and exasperations of having to deal with a fraction, or with old and new currency at the same time. But outside their doors people will be wrestling with fractions on the buses and at the newspaper stands on the street corner. This will be a sad outcome after London Transport Executive has recently successfully eliminated the halfpenny from its fares.
  Such large financial institutions might be influenced by the international standing of the £, but if decimalisation is announced under a 10s. system, with four years' notice at a definite time, no one can possibly imagine that this will amount to devaluation. Sterling has survived more perilous vicissitudes than this during the last two years. The Government have raised the objection that there would be difficulties in choosing a name for a 10s. unit.
  The Chief Secretary to the Treasury (Mr. John Diamond)indicated assent.
  Mr. Campbell: The Minister nods his assent. I do not believe that there will be difficulty. What is important is to choose a name which has a distinctive initial, which could not be confused with the
  1506
  initial of some other major currency. I am not wedded to any particular name, but I propose, as a suggestion, the "Noble". It would be the Noble sterling.
  Mr. Eric Lubbock: Not Michael.
  Mr. Campbell: This has an excellent antecedent, in that it was suggested in 1696 by Sir Christopher Wren—a man who was well acquainted with practical mathematics and had a very sound sense of proportion, as his work will remind our successors for many years.
  Mr. Diamond: Notwithstanding the hon. Member's statement about there being no difficulty in choosing a name, the first and immediate response of his mention of a name was "Not my choice".
  Mr. Lubbock: No. What I said was, "Not Michael."
  Mr. Campbell: That is the kind of misunderstanding that has bedevilled the whole subject. I was more actuated by Sir Christopher Wren than by my right hon. Friend the former Secretary of State for Scotland.
  Mr. John Tilney: Would my hon. Friend also agree that the noble was used in this country long before the days of Sir Christopher Wren?
  Mr. Campbell: Certainly. I am obliged to my hon. Friend.
  The point that I was coming on to in connection with the suggestion of 270 years ago was that it was a decimal currency that he proposed. The proposal was for a noble divided into 100 parts—no fractions or anything like that for Sir Christopher Wren. He was an architect and he had a sound knowledge of practical mathematics.
  The transitional period will be the most testing, and the ease with which the change-over can take place is an important factor in the choice of systems. There is no doubt that the 10s. system is the easier and the most practical one. The first reason is that there would be fewer new coins. Under the £-cent-½ system the 6d. and the half-crown must disappear because they would become fractions. Under the 10s. system the 6d., the shilling, the florin and the

  1507
  half-crown can all stay as needed. One or two of them can be dropped if required, but they can all stay during this transitional period. The ones that would remain would have new markings and the original coins would gradually disappear.
  This would be of immense value in all vending machines and meter operations, because similar coins will mean very little if any alteration, and it has been calculated by the vending machine association that the change to the £-cent-½ system would cost as much as £10 million, which raises the whole question of compensation. Of the coins under the 10s. system, only two new coins are required. Under the Government's system four new coins are proposed.
  As regards bank notes, I do not believe these matter very much because their life is, in any case, very short. They circulate only for a short time. But the £1 note can clearly continue during the two-year transitional period and would be worth two nobles.
  Then there is the question of what the Halsbury Committee called associability. Here the 10s. system has clear advantages. The shopper can see at a glance the close approximate value of an article compared with the shillings to which he has been accustomed. For example, a price of 15s. becomes one unit 50, and under the Government system it becomes 75 cents. Anybody who has been trying to associate fahrenheit and centigrade over recent months will appreciate the advantage of this. It means that the shopper and the housewife can assess prices and compare them quickly.
  Then there is the point that there would be no fractions. The fraction would he a bugbear to trade, services and transport. There would be long queues and frustrations. I should not like to be receiving money at the entrance to a football match between Celtic and Rangers during the transitional period.
  Let us also consider the increase in the price of a newspaper. To avoid the fraction the price would have to go up by 2·4 of a penny which, even in 10 years' time, one hopes will be far too much. Bus fares would suffer from the same difficulties. Any change which avoided the fraction would have to be by at least 2·4 of a penny.
  1508
  I draw attention to Appendices 8 and 9 of the Halsbury Committees' Report referring to experiments which were carried out in lifelike conditions under the auspices of the Medical Research Council. The 10s. system was mastered much more quickly and the transactions were carried out and change dealt with more easily. The General Post Office favoured the 10s. system in its evidence to the Halsbury Committee.
  Then we come to the argument about the "heavy" unit. The Government say in the White Paper that a "heavy" unit is to be preferred. Paragraph 14 says that other developing countries have major units of lower value but that it is hardly likely that if they were starting afresh with a new system they would deliberately choose "light" units. But this is simply not so, and it is misleading. South Africa, Australia, and New Zealand have all decimalised very recently and have all chosen the 10s. unit. On the television programme on 12th December, Australia and New Zealand were referred to and quoted as supporting the £ system. But, of course, they are exactly the opposite, because they adopted a 10s. unit.
  The United States dollar is worth about 7s. 2d., and this is giving no trouble to the United States. It is unlikely to do so even in Texas, where everything is big and where, we understand, there is a lot of money. The dollar is not regarded there as being too light. France, in a recent revaluation, chose a unit worth about Is. 6d. in our money as the main unit.
  The Chancellor says that he is planning for 1,000 years. I believe that that is faulty, and is part of the trouble. He may have said it light heartedly, but he ought to plan for from 100 to 200 years, and make sure that we have the really best and efficient system for that.
  Some of the bodies which supported the 10s. unit are the General Post Office, the Ministry of Social Security—its predecessory gave evidence to the Halsbury Committee to that effect—British Railways and the London Transport Executive, together with the Passenger Vehicle Operators' Association, retail and distribution trades representative organizations—which includes Marks and

  1509
  Spencers and Messrs. Sainsburys—organisations representing consumers—the National Chamber of Trade, the Association of British Chambers of Commerce, the Co-operative Union, the Gas Council, and the Automatic Vending Machine Association.
  This matter will impinge on every citizen. The users of coins must be considered, especially cashiers and others dealing with coins in their jobs.
  Mr. Speaker: Order. I hope the hon. Gentleman will remember that we gained a bit of time by the restraint of others. There are still other hon. Members who want to join in the debate.
  Mr. Campbell: Certainly, Mr. Speaker. I am drawing to a close. There are other bodies who are concerned in all these matters, and the general public should look at this question now and make their views clear to the Government. It is of the greatest importance that the change-over should take place as easily as possible. Apart from reducing and averting dislocation, we must preclude antagonism growing, as a result of exasperation, to this and other changes to the metric system which we ought in due course to carry out. Moreover, it is surely unsatisfactory to build anything into the economy, like the fraction, which would be improved by its disappearance, with inflation. I would deplore this.
  There are powerful reasons for adopting the 10s. unit rather than the £. The Economist last Saturday said:
  "Having finally decided to switch Britain to a decimal currency, the Government is proposing to do it in the worst possible way."
  I would also commend for the right hon. Gentleman's reading comments in the Financial Times. Neither of these papers would say anything that would endanger sterling or put it at a disadvantage. They would be very conscious of any risk of that kind.
  As more people become aware of the choice, the issues, and the likely effects, there will be increasing support for the 10s. system. I warn the Chancellor—and this is my final sentence—that he could get into the position, say in a year's time, when most of the country had woken up to what is proposed and would be against it, and by then he would find it far more difficult to change.
  4.34 p.m.
  Mr. Eric Lubbock: The hon. Member for Moray and Nairn (Mr. G. Campbell) has done the House and the country a great service in raising this subject, because it is a matter of very great regret that although the Halsbury Committee reported some years ago there has never yet been a full-scale debate in the House on the question of decimal currency. The Government should have found time for it, hut, as they did not, we are very grateful indeed to the hon. Gentleman for doing so.
  As the Chief Secretary knows, I have always been a wholehearted advocate of decimal currency. Indeed, I put it into my first election address in 1962, to the annoyance of my agent, who thought it was not a very important matter. Since I was elected, I have always been very concerned with this question and have pressed the Government to come to a decision. I am delighted that they have done so, but I agree very much with what he has said on this question, that a mistake has been made by the Government in choosing the £ as the major unit rather than 10s.
  I endorse every word the hon. Gentleman said about the opinion of responsible bodies in this country having an interest in the conversion, which are almost unanimously in favour of 10s. as the major unit. I see the Chief Secretary shaking his head. Has not he heard of the opinions of the bodies to which the hon. Member for Moray and Nairn referred, some of the most authoritative bodies on the subject? I shall mention one or two more—the Association of British Chambers of Commerce, the Consumer Council, and the Committee of Retailers on whose behalf Mr. Ramage appeared on the television programme to which reference has been made. The hon. Gentleman has already quoted the opinion of the Automatic Vending Machine Association.
  The hon. Gentleman pointed out, also, that Australia, New Zealand, and South Africa, which have recently converted or decided to convert to the decimal system each decided in favour of the 10s. unit. In addition to considering the advice given by the Halsbury Committee, has the right hon. Gentleman looked at some of the arguments which were advanced in those countries in favour of the 10s. unit?

  1511
  In the limited time at my disposal, I shall make only one quotation, this coming from the Report of the Decimal Currency Committee of Australia which reported in August, 1960:
  "The inclusion of a half-cent does weaken the decimal principle or could, in certain circumstances…amount virtually to a three-decimal system."
  This is an extremely important criticism which is equally valid in this country because, in our domestic situation, we face exactly the same problem as Australia, New Zealand and South Africa did.
  The only difference between our situation and that of the Commonwealth countries is the so-called international case for the £. The Chancellor may not attach much importance to this in public. He said in answer to Mr. Mocatta, on the television programme, that he did not consider that it was of overriding importance. But much was made of it by the Halsbury Committee, and I think that one can safely say that, if it had not been for the advice of the Bank of England, the Halsbury Committee would have unanimously, or by five to one, come down in favour of the 10s. system.
  Has the right hon. Gentleman studied the evidence submitted by Mr. Wills, which was quoted in the Financial Times of 25th May this year, in a very penetrating article by "Lombard" headed, "The Story behind the Decimal Blunder"? Here is a quotation from the article:
  "As Mr. Wills put in his letter to the Chancellor, while at all other points the Chancellor took detailed evidence and conducted thorough research, in this respect no attempt was made to test the validity of the assertions that were made as to how foreign holders of sterling would react to the abandonment of the £ as the major unit'. 'Certainly,' he adds, foreign financial opinion was not sought by the Committee'.
  "How is this curious fact to be explained? The short answer seems to be that the Committee accepted without question the Bank of England's contention in evidence that there was nothing to he gained by taking evidence from foreign bankers on the international case for the £ because, while some would favour retention, others would minimise its importance, so that in the end an act of judgment would still be required'."
  This seems to me to be an extraordinary omission on the part of the Halsbury Committee, and a most important one
  1512
  considering that, as I say, the international case was probably instrumental in bringing the Committee to take the decision in favour of the £.
  The hon. Member for Moray and Nairn referred to the question of associability, to which the Halsbury Committee attached great importance. He gave one example of a sum which would have to be done by a consumer. On television, the Chancellor maintained that associability would be easier under the £-cent system than under the 10s.-cent system. He asked Mr. Ramage whether he did not think that translating 13s. 7d. in his way would be easier to understand than in the way which would work under the 10s.-cent system.
  The Halsbury Committee was absolutely plain on this point. It said:
  …the 'associability' advantages of the 10s.-cent system over the £-cent-½ system—easier translation of amounts and easier coin recognition and manipulation—coupled with the absence of vulgar fractions, would facilitate the immediate change to decimal currency working for the ordinary shopper and for the retail and transport undertakings which would have to bear the main burdens of the change-over."
  It is because of the difficulties consumers will face with the changeover to decimal currency, which were extremely well dealt with by Lady Elliot in her correspondence with the Chancellor, that I beg the Chief Secretary, on behalf of the Government, to think again and make the decision not in favour of the £, for spurious reasons of its international character, but in favour of the 10s.-cent system, which would be vastly more favourable to the people of this country.
  4.40 p.m.
  The Chief Secretary to the Treasury (Mr. John Diamond): I, too, am very grateful to the hon. Member for Moray and Nairn (Mr. G. Campbell) for raising this important matter, for it gives me an opportunity to remove certain misunderstandings and reiterate the Government's point of view.
  The hon. Gentleman asked, first, if I would confirm that the decimal currency is subject to Parliament's approval. It is very much so, and of course he recognises that the White Paper says so in precisely those words:
  "The Government will be bringing forward for the approval of Parliament a Bill to establish the new decimal currency units and to take certain other necessary powers."
  Mr. G. Campbell: I referred to that, but I was asking whether there would be a full debate.
  Mr. Diamond: If the hon. Gentleman will be good enough to give me a chance to reply to each of his points in turn, I shall cone to them. I cannot answer them all in one sentence. I was going on to say hat he asked me about a debate. The Government have considered a debate, and these matters are being considered through the usual channels. I thought that that had been brought to the hon. Gentleman's attention, but can understand his reasons for asking me about it now.
  The hon. Gentleman also asked me if I would state that no action had been taken, and could undertake that no action would be taken, to prejudge the issue between the two systems. Certainly no instructions have been given to machine companies or anything like that. The Government's purpose in making the statement was to give guidance, so that those members of the community who are interested in making early preparations, because they require plenty of time, will be able to assess the situation.
  Although I have listened very carefully to the arguments adduced by the hon. Member for Moray and Nairn and the hon. Member for Orpington (Mr. Lubbock), and although the Government are, naturally, listening very carefully to the debate and discussion which we are glad is now going on in many learned quarters, no new argument has emerged which the Government did not have in mind when the White Paper was issued, and when the decision was made. The Government see no reason to alter their views on the essential problem of the kind of monetary unit and the number of coins.
  Both hon. Gentlemen made clear that the debate is not about decimalisation. That is a matter which we are all glad to say has met with general approval, and I think that the House will agree that the date, February, 1971, is wise, giving plenty of time for people to make the adjustment.
  The question under consideration is which of the two runners—there are only two—is the better, and, for reasons which I hope the House will listen to, the Government are convinced that the £ system
  1514
  is the better. Perhaps it would be acceptable shorthand to refer to it in future as the £ system, as opposed to the £-cent-½system.
  I am reminded that I was discourteous to the House in not asking permission, immediately on rising, to speak a second time because this is the second Adjournment debate to which I am replying. I apologise for that omission.
  The arguments for the £ system are very solid. It does not help the 10s. case which is also very good—nobody argues that this is a black and white issue—to under-state the arguments for the £, or to put them in their wrong context. Of course, there was division in the Halsbury Committee. There has been division in a good many well-informed bodies.
  The majority of the Halsbury Committee came down in favour of this system for reasons which the Government accept, but which we would put in a slightly different order of priority. The Government would regard the domestic arguments as having been slightly understated by the Halsbury Committee and the international arguments as having been slightly overstated. But the same total weight of argument is there, and the Government are satisfied that this is the right decision.
  The House must recognise that we have had the £ for a very long time. Everybody inside and outside this country knows of the £.
  Mr. Lubbock: A good conservative argument.
  Mr. Diamond: Yes, a good conservative argument.
  There is no reason to put people to a lot of trouble unnecessarily. There is no reason for disturbing people unnecessarily. It is not wise for a Government to do that when there is no advantage in it. Those who seek to upset the £ have the onus on them to demonstrate that another system is better and that there is a good reason for it.
  Mr. Lubbock rose—
  Mr. Diamond: I hope that the hon. Gentleman will not get himself too worked up so near Christmas.
  This is a very good reason which people are inclined to overlook. The £

  1515
  is of great importance, and it is of tremendous psychological importance.
  The interesting thing about both the recent cases in which there was a change from pounds, shillings and pence to decimalisation in a 10s. unit, in South Africa and Australia, is that there is solid evidence—evidence given to Select Committees and other evidence of that kind—to demonstrate that people still think in terms of the £, and advertisements are made in terms of the £ for items involving the sale of goods at so many £s per item.
  Mr. Lubbock: If the right hon. Gentleman is arguing in favour of something on the ground that people are used to it, would not he admit that people have become fairly accustomed to the 6d. piece and the half-crown, both of which are to disappear?
  Mr. Diamond: I am glad that the hon. Gentleman has said that, because he will realise immediately that neither of the coins which he mentioned is anything like as important as the stable anchor On which people base their monetary thinking and calculations, namely the £. The £ is the thing which matters.
  In our present system, there are only two units—the £ and the penny. The rest is a combination of the penny or multipliers of the £. The £ is the unit on which money is calculated. People receive their wages in terms of the £plus some smaller denominations. Everybody abroad thinks about our currency in terms of the £. Countries abroad which deal with one another of whom we have no knowledge reckon in terms of the £. The £ is a very solid, important, existing, built-in, accepted idea, and there must be a very solid argument put forward before we uproot it.
  I come now to the other major arguments, all of which support the £. There are not many, but they are very solid indeed. The two following arguments I would not put in order of priority. I mention them as being of equal importance. The first is our past. Again, the hon. Member for Moray and Nairn will accuse me of being conservative. I can understand that when the arguments are solid. We have had only a short debate. All of us would have wished to have
  1516
  further time in which to develop these important matters. We are grateful to the hon. Member for Moray and Nairn for providing us with this opportunity of debating the matter even shortly. I did my best to increase the time available for this debate by helping on a previous Adjournment debate.
  All the existing records would be, I will not say wrecked, but of considerably less value if we were to change to a 10s. system. All the existing records would be of full value for us in future, for comparative purposes and for other purposes when we need to look back at the records, if we stay on the £. If we were to move from the £, all the existing records and accounts which are extremely valuable to all of us—businesses, business men and organizations—would be invalidated and there would be great trouble in seeing how the situation compared with the previous situation. If we hang on to the £, all the records will be of considerable value. I shall not get much further if every hon. Member wants to intervene.
  Mr. Tilney: It is necessary to multiply by two, and that is easy enough.
  Mr. Diamond: Having to multiply by two is what it is all about. The hon. Member confirms what I am saying. Every figure would be wrong, no figure would mean what it says, whereas all the existing records would otherwise be valid by continuing in the £.
  Then I come to the argument of the heavy unit. It is a very solid argument. The hon. Gentleman either misunderstood or put it out of context for the purpose of his argument and his debate. It cannot be denied that the heavy unit results in greater efficiency in the sense that one is dealing with smaller rather than larger numbers.
  With a larger unit, the average article is in smaller numbers than otherwise would be the case. It would be precisely half the size in the present example. It would be much more efficient for all the purposes that go with this, including ease of calculation and ease of matching.
  The hon. Member said that the Chancellor should count not in terms of 1,000 years, but in terms of only 200 years. It is the same argument. It must be very lasting indeed. Nobody would claim to

  1517
  look precisely at what the difference would be in 300 as opposed to 200 years. It must be lasting, and one has to realise that the importance of small units gets less as time goes by, not mainly because of inflation, although that is an element in it, but mainly because, as income increases, as gross national product increases and as the things one buys and consumes become more and more expensive, the money item becomes larger, the smaller figure become less useful and it would be necessary to have tens, twenties, thirties and forties where otherwise, in course of time, one would have singles of a monetary unit.
  This has nothing whatever to do with inflation, although when looking at the past one recognises that inflation has its effect. Although every Government does what it can to keep inflation in check, that has happened and one draws whatever conclusion one wishes to draw from it. The major point is that it is lasting, not because of that element, but because of the increasing prosperity of the nation and the importance, therefore, of a larger unit.
  I have been asked about the new half-penny. I do not say that it will disappear. The hon. Member may say that this is an argument against the £. those who support the £ say that it will disappear, but the Government do not. The Government say that this is the smallest unit in the £ system. It is exactly the same value as the smallest unit in the 10s. system, and there is no difficulty in coping with the half.
  Every housewife—everybody—is used to halfpennies. There is no problem about machines—we have been assured of this by machine manufacturers—by adding on 0·5 and the third decimal place. There is no reason why the half-penny should disappear. In fact, by the very fact that it is there, it is a cushion against increasing prices.
  Mr. Edwin Brooks: I understood my right hon. Friend to say that the Government are not claiming that this coin will disappear. Paragraph 16 of the White Paper states, however, that
  "The £ system will need a half cent (new halfpenny) coin but, with growing prosperity, this coin will eventually disappear."
  Mr. Diamond: Eventually—that is the point. I have already stated the argu-
  1518
  ment that in course of time, with increasing prosperity and the greater value in terms of money in terms of the things we buy, the smaller value unit becomes less and less important and gradually will drop out, as the farthing did and would have done with or without inflation. It is the result of increasing prosperity more than inflation.
  The argument of the hon. Member for Moray and Nairn was that this halfpenny would disappear overnight, or something like that. I gather that that, virtually, was what he said—a very short period.
  Mr. G. Campbell: What I was saying was that the argument put in favour of the fraction was that it would soon or eventually disappear.
  Mr. Diamond: I am glad we have cleared that up. I understood the hon. Gentleman to say—I think that he will perhaps find he did say—that the argument being put by the supporters of the £ was that the ½d. would soon disappear. I am saying it will not.
  It is a benefit of quite the opposite kind, and I am grateful to my hon. Friend the Member for Behington (Mr. Brooks) for drawing attention to the fact that the White Paper makes it absolutely clear. The logic of this argument makes it absolutely clear that what we are contemplating is that there will be no reason for the ½d. as a result of rising prosperity.
  These are, I think, very solid arguments indeed. Then there is, in addition, the international case, and I do want to put this in perspective. I hope I may read—I shall be as quick as possible—some part of the White Paper dealing with the international case, because the Government have put it absolutely fairly and it is continually coming back to us in these debates. Paragraph 30, on page 9, sets out the various benefits for maintaining the £ so far as the world is concerned. It refers to one-third of the world's international trade as settled in sterling. One-third of the world's trade is an enormous amount of trade.
  Rather more than one-half of this covers transactions in trade between third countries—third countries we are not concerned with at all. They all support sterling; they also support the £. Of course. That is what their records are in. They are not asking for a change. It is

  1519
  of no interest to them that there should be a change. They want their records to continue as before—and why should there be a change from the £ unless there are good reasons for it? On the contrary.
  No hon. Gentleman was talking to me of the number of bodies supporting the 10s. I can assure the hon. Gentleman that we know debate is going on about it. We are glad that public opinion is expressed in that debate. I can assure him that the Government are happy—I will not say more than that—that the support for the £ is very solid. It is very widespread. And, of course, because of this, because we make a change of this kind, as is usually the case, those who are opposed are the most vociferous, and those who support are silent in their support.
  Then the argument for the international case refers to the earnings of invisible income which depends to some extent on the continuation of the pound as an international unit. Only in paragraph 32 does it touch at all on the fourth point which the hon. Gentleman put as a main point. It says:
  "There is no doubt that a change in the major unit will inconvenience a lot of sterling users who are not concerned with the domestic arguments for decimalisation. Equally it would be idle to claim that a change could benefit the international standing sterling; if there were any effect at all it might prove to be an adverse one."
  So there is a vast number of solid arguments for the international case, and
  1520
  I repeat that the international case is a very solid one indeed. I have given what, in my view, are four very solid reasons why the pound should be the unit. The other arguments balance themselves out. The transitional arguments balance themselves out; the machine argument balances itself out—there being advantages to some and disadvantages to others; the 10s. argument, in my view, balances itself out.
  This I will give to the hon. Gentleman—gladly: that the transitional period for the pound will take about two to three months for every housewife to become accustomed; the transitional period for the 10s. will take about one month—that is on the best information. I gladly give the extra month of temporary disturbance for a unit which has got all these advantages behind it, and which we are considering for, in the hon. Gentleman's own words, the next 200 years. I hope that the House will be similarly disposed.
  Mr. G. Campbell: May I, Mr. Speaker, as the initiator of the last debate, be permitted, on behalf of the House, to wish you a happy Christmas and a prosperous New Year.
  Mr. Speaker: Thank you very much.
  It being Five o'clock, Mr. SPEAKER adjourned the House, without Question put, till Tuesday, 17th January, pursuant to the Resolution of the House yesterday.

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  Government Forms
  Government Forms

Preamble
The House met at eleven of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Truro.

USE OF IMPORTED HARDWOOD IN PUBLIC BUILDINGS
11.5 a.m.
LORD INGLEWOOD: 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 why imported hardwood is being used in the extension and renovation work being carried out in the Old Bailey, the Royal Courts of Justice, the Imperial War Museum and other public buildings in preference to English oak which is more in keeping with tradition.]
LORD HILTON OF UPTON: My Lords, English oak is used a great deal. However, other hardwoods are sometimes chosen to meet special requirements or achieve variety and interest.
English oak was used throughout in the six new courts recently added to the Royal Courts of Justice, but in the new court block now being built Commonwealth hardwoods may also be used to give variety. At the Imperial War Museum where new fire-resisting doors, hand-rails and panelling were fitted, Commonwealth hardwoods were considered more suitable. Work at the Old Bailey is not the responsibility of Her Majesty's Government but of the City of London Corporation.
LORD INGLEWOOD: My Lords, I thank the noble Lord for that Answer. While I agree entirely that we want variety in this connection, may I ask whether he will at least see that architects in the public service do not follow the rather unfortunate fashion of the moment of prescribing imported hardwoods in
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place of British hardwoods which are traditional, because they are deemed to be on the safe side. Does the noble Lord realise that very large quantities of English oak of constructional and decorative quality for which there is little market are just sawn up in a wasteful way to provide fencing for the motorways?
LORD HILTON OF UPTON: My Lords, I am quite prepared to pass on what the noble Lord has said to my right honourable friend. If I may give one illustration which I think will prove that the Government are doing what the noble Lord would wish, I can take the Palace of Westminster. English oak has been used throughout both in the scheme to provide new accommodation in the roof space and in the new building in the Star Chamber Court for the other place. I am aware of the noble Lord's keen interest in this, and I hope that the example I have given will go some way to prove that my right honourable friend is also keen to use English oak wherever possible.
LORD INGLEWOOD: My Lords, may I ask a further question? I would say, incidentally, that I had these buildings in mind to use as an example should the discussion have gone that way. Will the noble Lord also look into the question of flooring? A vast amount of hardwood flooring is now used in hospitals, schools and other public buildings. Practically none of it is home-grown timber—and this at a time when we are thinking so seriously about the balance of payments. Will he please treat this as a serious question?
LORD HILTON OF UPTON: My Lords, I can assure the noble Lord that I will do that.
THE DUKE OF BUCCLEUCH AND QUEENSBERRY: My Lords, as President of the Commonwealth Forestry Association, I was glad to hear the emphasis given on the use of hardwoods from the countries in the Commonwealth; but, at the same time, I should like to know if there is any country in the Commonwealth which can compete with English oak. I do not think this is possible. May I ask whether the noble Lord will keep in mind the fact that the Forestry Commission now find it is very

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costly to grow oak in England and are rather tending to give this up and to say that Departments could find timber merchants on all occasions who would be able to secure really high-class English oak for use by Government Departments. In view of the difficulty and cost of growing it, will the noble Lord keep this in mind with a view to helping those who are trying to grow it.
LORD HILTON OF UPTON: My Lords, I cannot say from the information I have at the moment whether any other Commonwealth country can compete with this country, so far as oak is concerned; but I will certainly pass the point to my right honourable friend. So far as the second part of the question is concerned, I think the noble Duke can be assured that the Department concerned is as keen as any Member of your Lordships' House to ensure that we get the right type of timber at competitive prices. In any case I will pass his question to my right honourable friend.

GUMMED ECONOMY LABELS
LORD STRANGE: 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 it is true that owing to the rise in printing costs their gummed economy labels now cost more than envelopes.]
LORD SHEPHERD: My Lords, the Answer is that it is not true.
LORD STRANGE: My Lords, I thank the noble Lord for his reply. Would he not agree that this practice, expedient fifty years ago, makes our Civil Service look very down-at-heel and out-at-elbow? Would he not further agree that, when more mechanisation comes into the Post Office, these gummed labels stuck on by furious taxpayers will tend to gum up the machinery? Is it not time that it came to an end?
LORD SHEPHERD: My Lords, to the first question of the noble Lord, the answer is, No. The second question is, I think, rather hypothetical.

INDONESIA AND WEST IRIAN PLEBISCITE
LORD OGMORE: 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 their attention has been drawn to the formal renunciation by Indonesia of her pledge to the United Nations to hold a plebiscite with United Nations participation in West Irian not later than 1969; and whether Her Majesty's Government will, as a matter of urgency, bring this issue before the Security Council in order that a plebiscite be held, and the vital interests of the West Irian people be safeguarded.]
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR COMMONWEALTH AFFAIRS (LORD BESWICK): My Lords, the Indonesian Government have assured Her Majesty's Government that it is their intention to hold the plebiscite to which the noble Lord refers. The second part of the Question does not, therefore, arise.
LORD OGMORE: My Lords, can the noble Lord inform the House why the Indonesian Government made a formal renunciation of their pledge, if they now intend to hold the plebiscite? Is it not a fact that if they do not hold the plebiscite they will be in flagrant defiance of the United Nations? Furthermore, is the noble Lord aware that when, on November 21, 1963, I asked the then Government in this House whether they would ensure that the rights of the West Irian people are being preserved, the Government spokesman assured me that United Nations experts would visit the territory from time to time and report to the United Nations?
LORD BESWICK: My Lords, I think that what the noble Lord is referring to is a Press report in this country, based on a foreign agency report, which was not accurate. As I have said, the Indonesian Government have since assured Her Majesty's Government that they propose to hold this plebiscite. There is therefore no question of any formal renunciation.
THEEARL OF DUNDEE: My Lords, may I ask the noble Lord whether he is aware that when this pledge was given to the United Nations at the end of 1962, a much better plan, which would have placed West Irian under the direct rule of the United Nations, obtained a clear majority in the General Assembly, but not a two-thirds majority? Next, is the noble Lord aware that in order to get agreement on this question, general agreement, the Dutch were prevailed on by very strong pressure from their friends and allies to acquiesce in this present arrangement, although they were very unhappy about it, on the strength of this pledge? Finally, does the noble Lord really confirm that reports that the pledge is not going to be observed are untrue, and, to the best of the Government's knowledge, is the plebiscite going to be held under the auspices of the United Nations and not under the auspices of the Indonesians?
LORD BESWICK: My Lords, the answer to the first two of the noble Earl's questions is that I was aware of the earlier history. So far as the later and more recent history is concerned, and that is what we are concerned with, the fact is that this pledge was given and the present Government intend to honour the pledge. I feel that it is possibly a little unreasonable to assume that the present Indonesian Government, which has done so much to establish her place in international affairs and which has already rejoined the United Nations, intends to dishonour that pledge.
LORD OGMORE: My Lords, may I ask the noble Lord whether he is aware that I am delighted with the news that he has given us this morning, and that it is most unfortunate that this statement about the renunciation was very widely publicised and in fact had the honour of a leader in The Times, so that it was not a mere rumour and must have been some very serious misapprehension? Furthermore, may I ask the noble Lord, as I asked his predecessor in 1963, whether the United Nations will send experts into Indonesia from time to time and whether these experts will report on what they have seen so that we, who are responsible as members of the Security Council, will know the extent to which the wishes and desires of the Security Council have been carried out?
LORD BESWICK: My Lords, I am afraid that I cannot, obviously, give any undertaking in answer to the second part of the noble Lord's question. I will make inquiries and let the noble Lord know the result of those inquiries.

ITALIAN FLOOD DISASTER: BRITISH AID
11.16 a.m.
LORD SNOW: 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, in view of the disappointing amounts so far contributed in the country to aid for Florence, they will consider organising or encouraging a united national appeal.]
LORD BESWICK: My Lords, I cannot agree with the noble Lord that the amounts so far contributed in this country to Italian flood relief have been disappointing. My right honourable friend the Foreign Secretary described in detail what was being done in his statement in another place on November 18. The latest figures suggest that the sums given or pledged to date by the voluntary societies, Her Majesty's Government, other bodies and private individuals, amount to some £200,000 for Italy as a whole. This is apart from the sums being collected by the Italian Art and Archives Rescue Fund, under the chairmanship of Sir Ashley Clarke, which has already sent to Florence nearly £50,000 in cash or materials.
In addition, I understand that a Trust Fund is to be set up, under the chairmanship of Lord Hastings, for the relief of human victims of the floods, both in Florence and in other parts of Italy. I am told the Fund will be opened officially in January, after the necessary preparations have been made. Her Majesty's Government welcome the intention to establish this Fund and wish it every success. I should like to take this opportunity of paying tribute to the efforts of the voluntary societies as well as to the public spirit of the private individuals who have contributed towards or are helping to organise relief.
LORD SNOW: My Lords, obviously there can be differences of opinion about the meaning of "disappointing", but I should have thought that £200,000from a country so interested in Italian art was (shall I say?) pitiable? On the other hand, I am delighted at the news that a Trust Fund, under the chairmanship of the noble Lord, Lord Hastings, is to be set up. I cannot imagine any person who would preside over it with more drive and love. May I therefore ask Her Majesty's Government whether this particular exercise will act as a guide to them in what must be a similar appeal for Venice on a much bigger scale in the near future?
LORD BESWICK: My Lords, so far as the noble Lord's expression of opinion about this being "pitiable" is concerned, I think he will probably agree that all those who share his view will have an opportunity to set the matter right when the Trust Fund is established in the New Year. I agree that if one compares it with the most remarkable sums collected for the national tragedies both at Aberfan and at Shepherd's Bush recently the amount is smaller. But, as the Italian Red Cross made clear, Italy is not herself a poor country, and I should have thought that in all the circumstances what has been done was not inconsiderable. As to the latter part of the noble Lord's question, again I will make inquiries and let him have the answer.
LORD SOMERS: My Lords, can the noble Lord, Lord Beswick, give any figures which show how our contribution compares with the contributions of other countries?
LORD BESWICK: My Lords, I understand that in some cases our contribution is smaller, for example, in relation to that of the United States. In relation to other countries it is, of course, larger.
LORD FARINGDON: My Lords, I wonder whether the noble Lord would not agree that perhaps the most useful help we could give to Italy at this time would be the help of our experts and skilled people who have rare knowledge of the repairs that are needed, rather than actual sums of money?
LORD BESWICK: My Lords, I am quite certain that what the noble Lord says is correct. A good deal has been done, and every encouragement is being given for further help of this kind to be given.

THE TIMES MERGER
LORD SHEPHERD: My Lords, immediately after the Royal Commission at 12 noon my noble friend Lord Rhodes will be making a statement on the Monopolies Commission Report on The Times merger.

GENERAL RATE BILL [H.L.]
11.21 a.m.
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I beg to move that this Bill be now read a second time. This is a Consolidation Bill and therefore will go in the usual way to the Joint Committee on Consolidation Bills. It is a major piece of consolidation relating to our laws of rating and valuation and consolidates Acts going back 366 years. If it is possible for the Committee to deal with it so that it can become law by April 1, the beginning of the new rating year, that will, of course, be extremely convenient.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
On Question, Bill read 2a, and referred to the Joint Committee on Consolidation Bills.

AIR CORPORATIONS BILL [H.L.]
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR: My Lords, I beg to move that this Bill be now read a second time. This also is a Consolidation Bill, to consolidate four Acts dealing with Air Corporations.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
On Question, Bill read 2a, and referred to the Joint Committee on Consolidation Bills.

REGIONAL RAILWAY BOARDS ORDER 1966
11.22 a.m.
LORD LINDGREN LORD LINDGREN: rose to move that an humble Address be presented to Her Majesty praying that the Regional Railway Boards Order 1966 (S.I. 1966, 1508), laid before this House on December 7, be annulled. The noble Lord said: My Lords, in moving this Prayer against Order No. 1508, I should perhaps declare an indirect interest. Many of the staff adversely affected by the Order are those among whom I worked before entering Parliament and in the brief period between my leaving another place and entering this House. Also, for many years I was a voluntary officer of the Transport Salaried Staffs Association, which is the trade union catering for the clerical, professional and technical staffs affected by this Order.
The Order facilitates the amalgamation of the Railways Board Eastern and North Eastern Regions and the establishment of a new regional headquarters at York. Some 5,500 staff are affected, almost equally divided between the two regions. To-day I am most concerned with the 2,800 Eastern Region headquarters staff at present located in London. Although for the North-Eastern Region headquarters staff it will mean some dislocation and uncertainty as to their future, for the Eastern Region headquarters staff it will mean a major upheaval, the movement of homes from London and the Home Counties, interruption of children's education, the loss of one social life and the making of another.
I ask the House to remember that this is a movement of a complete range of staff, from the youngster who has not been very long in the service to those with 30 to 45 years' service, many of whom are reaching retirement age. I ask the House to remember, too, that over the past ten years staff have suffered many organisational upheavals. They have been centralised, decentralised, reorganised, and, in fact, disorganised. The Prices and Incomes Board, in their recent Report on pay and conditions of British Railways staffs, referred to—and I quote:
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"reorganisations following in quick succession as policy changed, leaving the staff bewildered and dispirited."
And in paragraph 79 of the same Report, the Board said:
"Difficulties over past years and continued contraction of the industry have led to a lack of sense of direction in the minds of management and to insecurity in the minds of the staff."
In this proposed merger we have a further example of a change of policy and." lack of sense of direction" by management, and again "a bewildered and dispirited staff". Can one wonder that the staff are asking: "Just when and where is it all going to end?" They say, too, that if management would give their mind to running the railways and securing traffic, instead of to successive changes in structure, organisation and administration, we might get somewhere.
My Lords, there are compelling reasons why this merger should not go through. In July of this year, we had the White Paper on Transport Policy, outlining the Government's ideas, which showed that some major changes are likely in the organisation and administration of transport in this country. New concepts, such as the National Freight Organisation and the conurbation transport authorities, were put forward. If these changes come about—and discussions on them have already begun between the management, the staff and the Government—it will mean another upheaval in railway organisation and further movement of staff, many of whom are affected by this Order. I ask: Why not wait until the implementation of the White Paper proposals, until the implications are known, before deciding whether this merger is advisable?
The Minister herself must have some doubts, for she has set up a steering group, under the chairmanship of the Joint Parliamentary Secretary, Mr. John Morris, M.P., the terms of reference of which include
"…to consider the suitability of the Board's management, structure and procedures for the future operation of the system in the light of the context of the White Paper and of the changes which may stem therefrom.…
"To make consequential recommendations, including suggestions for possible legislative changes."
How daft can you get! Surely, having set up a steering committee to examine these matters, it is only right to await

2077
its report before embarking on a further reorganisation affecting many hundreds of staff.
The new region will cover a vast straggling area, from South end to Berwick-on-Tweed, an area with such different problems as the London conurbation, the rural areas of East Anglia and the heavily industrialised North and North-East. I ask—and I hope that my noble friend will be able to reply: is the Minister satisfied that it will be possible to administer such a vast region efficiently? I am delighted to see the noble Lord, Lord Hurcomb, here this morning, because in his days at the British Transport Commission the Eastern and North-Eastern Regions were kept separate, in view of the dissimilarity of the functions they have to perform.
The White Paper on Transport Policy, to which I previously referred, says:
"The Government is deeply conscious of the difficulties of the past which, in the atmosphere of an unstable and declining industry, have inhibited the fullest co-operation among all concerned."
British Rail staff are wondering when stability is going to come to them. Time and time again railway staff have been told, "This is the last reorganization".Is it any wonder that they are sceptical of the statement that this proposed merger will be the last reorganisation that will affect them, especially when they have no confidence that the Railways Board themselves are sure of the direction in which they are going?
Further, they have studied the White Paper, and know that radical changes are bound to come from it. They know of the John Morris Committee and its terms of reference. They feel that this is just another gimmick of accountants who know very little about transport in general, and perhaps even less about railways in particular. They know that, as with other schemes of centralisation, some other bright boy will come along a little later with a further scheme of decentralisation to fit in with the National Freight Organisation and the conurbation transport authorities. They feel that they will again have to pack up their bags and move.
I ask the House to remember that it is not only the employees themselves who are involved: their wives and families
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have to move with them. There are bound to be major housing and educational problems with thousands of people converging on York. I should like to ask what arrangements have been made in regard to housing. Is the Minister satisfied that adequate educational facilities exist in York to provide for this influx of a child population? Even at this late stage, I would ask the Minister to reconsider her decision, and to withdraw her consent to the proposed merger, so that we might await the result of our own investigations and the implementation of our own White Paper before there are further upheavals of staff. I beg to move.
Moved, That an humble Address be presented to Her Majesty praying that the Regional Railway Boards Order 1966 (S.I. 1966, 1508), laid before this House on 7th December, be annulled.—(Lord Lindgren.)
11.32 a.m.
LORD POPPLEWELL: My Lords, I congratulate my noble friend Lord Lindgren on bringing this very vexed question before the House. I am sorry that I cannot agree completely with his line of argument. Probably I ought to declare an interest inasmuch as for all my working life, before going into the House of Commons in 1945, I was a working railway man. The constant changes that have taken place in recent years, as referred to by my noble friend, are something that few people are aware of. I think it is right to say that during the last three or four years something like 150,000 railway men's jobs have been dispensed with. A gigantic reorganisation has taken place. We have often heard the railwaymen condemned for the particular line they have adopted in regard to branch lines, liner trains and such like, but little or nothing has been said with regard to the wonderful co-operation that has taken place (and here I want to choose my words carefully)
"particularly by the better trade unions in the railway world, and I specifically refer to the N.U.R."
My noble friend understands that I am quoting his own words used in a speech about the N.U.R. on May 27, 1965. In the speech that my noble friend then made he referred to this and made it clear
"that at no time has the Labour Party or his trade union"—

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referring to the speech of one of his friends—
"gone on record in support of a policy of petrifying the present railway structure".—[OFFICIAL REPORT, Vol. 266, col. 991; May 27, 1965.]
It is odd that, with all these 150,000 changes, when we get what is in my opinion a really common-sense change—that is, the amalgamation of the Eastern and North-Eastern Regions—which will mean a saving of £1,500,000 in administrative costs, criticism is made. In my view, this is a step in the right direction. I think that one of the weaknesses of the 1947 Act was that it established too many regions. It established six regions. 1 never thought, with all due deference to my noble friend, that there was any justification for this. The noble Lord, Lord Hurcomb, was in charge, and I can well understand his difficulty, because there was this nationalistic wave of feeling that Scotland must have a separate region. I think the structure of the old 1921 Act, with just the four big group companies—the L.N.E.R., Great Western, L.M.S. and the Southern—was the best administrative structure that has yet been established. To be quite frank, I should like to see a return to that situation because, as has been said, the railway unions, and particularly the better ones, among which is the N.U.R., are not against efficiency. They are seeking a greater degree of efficiency.
My noble friend refers to 5,500 staff being affected. Of course, there are not 5,500 staff affected in this merger. I am told that it is likely to affect rather less than 2,000, so far as the Eastern headquarters is concerned. But I also understand that out of these 2,000 there are some 400 who will remain in London in the departments that are to be there. My noble friend shakes his head, but if he checks I think he will find this is the correct position.
I think my noble friend was right to bring to the notice of the House the hardship and the human problems involved in all these changes. I, for my part, feel that I also am right in bringing to the notice of the House the wonderful co-operation that has constantly been given by the organisations concerned within this service. Just think, my Lords, 150,000 jobs have been dispensed with
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in the railway service in the last three or four years without a murmur, without any strike, and purely by wonderful co-operation!
In this particular merger, the redundancy and transfer arrangements include even the paying of legal charges for the cost of a house in the new area, and this has been undertaken by the Railways Board. I think that every man in the Eastern Region who is to be transferred up to York is being contacted to find out whether he is willing to go, and if not, so far as possible, arrangements are being made for employees to remain where they are. I think this is an indication of the good will existing between the Railways Board and the men concerned in the changed policy. I think it is as well that these thoughts should be expressed in this House, because it will give all of us a better appreciation of what is taking place. My noble friend will no doubt know that it is not possible to make any change at the moment, and I am sure that he will withdraw the Prayer.
11.39 a.m.
LORD HURCOMB: My Lords, I will not detain your Lordships for more than a few moments, but as my memory goes back to the original amalgamations under the Geddes régime in 1921, and as I was personally responsible for the reorganisation of the regions of British Railways upon nationalisation in 1947, I should like to make one or two observations on both of the speeches that have just been made. The Geddes reorganisation into the four amalgamated railways lasted, after all, from 1921 to 1947. As some of your Lordships who were in another place at that time may possibly remember, it was the Scots who forced upon Sir Eric Geddes what he did not want to do—namely, the amalgamation of the numerous Scottish railways of that day with what they thought were the wealthy North-Eastern and Great Northern Railways south of the Border who could carry their financial burdens. It was on that political ground that Sir Eric Geddes got rid of the railways in Scotland and some of them went into the North-Eastern group and some into the London, Midland and Scottish group.
When I became Chairman of the Transport Commission in 1947 almost the first problem I had to consider was what

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should be the regions in the new régime and what changes, if any, should be made. I thought then, and I still think, that on on any ground, not merely that of national feeling but that of efficiency, the formation of the Scottish railways into a single group instead of being split as they were then between the two sides of the country, was sound. It was really intolerable that every time the businessmen of Glasgow and other Scottish interests wanted a decision they should have had to come up to Euston or King's Cross.
On the other hand, the North-Easternarea presented a problem. York is one of the great cities of the world, and happens also to have a fine railway tradition. Names of great managers and engineers are attached to it, and there is there an admirable local museum, among other things. It is a very good centre. I thought then, in 1947, that the industrial interests of Tyneside and Teesside, and many of the great Yorkshire manufacturing cities, were entitled to have access to management rather closer to their own doors than London. It was an easy change to make, and it worked very smoothly.
So far as I can remember, in all my six years, if there was one region that caused the Transport Commission and the Railway Executive no trouble at all it was the North-Eastern Region. It was well staffed, both on the engineering and on the commercial and management side. Now, apparently, the emphasis has shifted even further. The business interests and the freight traffic element in what is at present two regions has shifted preponderantly to the North. The doubt I have—and I am sure the noble Lord, Lord Champion, when he replies will deal with it—is whether on this reamalgamation the passenger interests that centre on the Metropolis, and the important transport interests of East Anglia, will get sufficient attention. The argument which convinced me in favour of the division in 1947 might now be turned round. Instead of saying that we must give more weight to the freight interests in the North, shall we now have to say, "Will enough weight be given to the passenger interests in the southern part of the area if in future they are managed from York?".
I am sure that the answer to that problem can be found by internal reorganisation
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on the commercial and managerial side. On the engineering side, the civil engineering problems are dealt with in divisions in any case, and I should have thought presented no difficulty at all. But the passenger interests in the southern part of this combined area will remain very important.
Incidentally, may I say how glad I am that the present Minister killed the proposal to close the railway from Ipswich to Lowestoft? Though I am entirely in favour, and always have been, of getting rid of many small spur lines on which the traffic only goes by rail to suit individual convenience on odd occasions, and does not carry the regular traffic which goes by road, 1 think it is quite wrong to say that you cannot serve an area from Ipswich to Lowestoft with a railway.
On balance, I should have thought that the present proposal tore amalgamate the two regions was right. In saying that, I feel that in point of fact the shift of staff would not be so great as the noble Lord, Lord Lindgren, fears. One does not want to underestimate the inconvenience and even the hardship when people are required to move their homes, but, after all, transport, the railway transport largely, lives by shifting people about from one place to another, and occasionally those who serve in that industry must be asked to move. That does not seem to me to be unreasonable, because in spite of what the noble Lord, Lord Lindgren, said, in this matter there has been great stability over a very long period. As I say, the amalgamated railways in their original form lasted from 1921 to 1947, and the reorganisations of 1947 have again lasted nearly twenty years. Therefore, if the noble Lord who is to reply can give us some assurance that the passenger interests of East Anglia and London will not be handled from some remote centre in York, but will receive proper and adequate attention under this reorganisation, I feel that I am bound to support the change which is now proposed. As to the level of the economies, I have no knowledge. They will undoubtedly be substantial, and that again is another reason why the change should be accepted.
If I may conclude, I would say that my own experience in the past was that in these matters (though I cannot honestly say that either management or the trade

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unions were as enthusiastic about integration as they might have been) I had nothing but co-operation from the leaders of the great railway unions, and in the "great unions" I am bound to say that I include all three of them, not merely the N.U.R.
11.47 a.m.
LORD INGLEWOOD: My Lords, may I, as one who has always lived in the North of England, add one word to this debate? Half my life I have lived in the North-East, and half in the North-West. Though I appreciate all that the noble Lord, Lord Lindgren, has said about the interests of the staff, with which we all sympathise, there are other interests involved, and the noble Lord, Lord Hurcomb, has touched upon them. Latterly, railway organisation, as seen from the north of England, has of course included one great difference: the North-East had its area headquarters in its own area; the North-West was dependent upon Euston.
I should like to ask the noble Lord who is to reply one question: whether he can assure us that that feeling of remoteness which we have in the North-West of England—it is no good gainsaying it—will not be repeated under this new organisation, because I think there is an advantage, as the noble Lord, Lord Hurcomb, has said, in having the centre of railway management at least not too far distant. This looks a little as if the disadvantage which we have in the North-West may be repeated in the North-East. I am sure that that is not in the interests of passengers or of local people.
11.49 a.m.
THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION): My Lords, my noble friend Lord Lindgren and I share a common trade union experience, although in different trade unions, and with a very short break have spent some 21 years of Parliamentary life together. I think I can say that this is the first occasion upon which I have been at variance with him in any matter. In the case of the Order against which he has tabled a Prayer, he feels that the Minister has acted with undue haste in respect of the reorganisation mentioned in the Order while I, speaking for the Government, have to justify the Minister's decision. I hasten to add that, having studied all
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the papers available to me on the matter, I am bound to say that not only am I about to justify a decision taken by someone else but I would have taken the same decision as the Minister has taken, had the task of deciding fallen upon me personally; and this, despite the fact that, as a railway trade unionst, I would be well aware of the consequences of my decision on many of the staff who will have to uproot themselves and their families, and the upheaval in their lives that the decision would involve.
It seems to me that the Minister had to consider and answer three main questions. First, was the Board's proposal one that would fit into the transport policy outlined in the White Paper of July last, and also into any developments of that policy which it is expected to flow from the studies now going on? Second, will the change in the managerial and administrative proposal, and the siting of the headquarters away from London, affect beneficially or otherwise the running of the two merged Railway Regions; and is the change likely to bring about any really worthwhile economy? Third, are the advantages and savings projected of the order that would justify the staffing upheavals involved?
My Lords, the Minister has answered the first of those questions by saying that on a careful study of the problem, together with the closest consultation with the Railways Board, who are well aware of the implications upon their administrative machine of the possible setting up of a national freight organisation, that she is satisfied that the proposed amalgamation will not conflict with the scheme she has in mind. She is satisfied that, whatever changes result from the policy review, there will be a continuing need for an administrative centre at York of the kind mentioned in this Order. Such a centre would always be required for the efficient operation of an East Coast railway network.
On the second question, there are good geographical and business reasons for merging the Eastern and North-Eastern Regions and siting their headquarters at York. I believe the very fact that they will be sited at York should remove any feeling of remoteness to which the noble Lord, Lord Inglewood, referred. This would be very much nearer to them,

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covering the whole region. There is, I am sure, no need for me to stress the importance of the railway system to the developing North-East of the country. The increasingly large-scale movement of coal to the new power stations, and the development of the Humberside area in relation to our traffic into Europe are factors known to us all. This last factor is perhaps an addition to the factors which caused the noble Lord, Lord Hurcomb, to feel that York was a useful centre for the Eastern Region, as it then was. On this aspect of the merger and the placing of the administrative centre, the Minister has been advised by the Board, who are, after all, the experts in this matter and would not lightly advise the Minister to agree to the change unless they were absolutely convinced of its desirability. All this, is in addition to annual savings which are estimated at a figure of the order of £1½ million a year by 1969.
This close look at the headquarters staffing of our railways certainly appeals to me, for in so many of the talks I have had with my old railway colleagues in the uniform and comparable grades about the reduction of railway manpower that has been going on over the past few years—resulting, as my noble friend Lord Popplewell said in a reduction of some 150,000 staff in that short period alone—I have always been faced with the bitter comment: "We are being cut to the bone, but what about those 'so-and-so's' at headquarters; they seem to be dodging all this and we are having to carry the swollen administrative weight at the top." I have always felt that there was just a little something to be said in justification of that feeling which did, and does, undoubtedly exist in the uniformed and comparable grades. Added to all this, there is the fact of the release of valuable office accommodation in London, and the movement outwards is very much in line with the Government's policy of moving as much as possible of offices and office staff out of this overcrowded South-East Region.
In answer to my noble friend Lord Hurcomb, who asked about the administration of the area around London, especially the commuter services and the passenger services, I would say that there will, of course, be strong divisional
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management retained in London to ensure that this part of it is not neglected.
My Lords, I have just had a note passed to me to the effect that I must be down by 11.55 a.m.; it is now 11.56 a.m., so, with your Lordships' permission, I will postpone the remainder of my remarks, which will not take long, until after the Royal Commission.

HOUSING (SCOTLAND) BILL [H.L.]
Returned from the Commons, agreed to.

INDUSTRIAL REORGANISATION CORPORATION BILL LOCAL GOVERNMENT (SCOTLAND) BILL POLICE (SCOTLAND) BILL LEE VALLEY REGIONAL PARK BILL
Returned from the Commons, with the Amendments agreed to.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION
12 noon.
The following Bills received the Royal Assent:

Armed Forces,

Bus Fuel Grants,

National Coal Board (Additional Powers),

Films,

Housing (Scotland),

Industrial Reorganisation Corporation,

Local Government (Scotland),

Police (Scotland),

Ross and Cromarty (Strathcarron—South Strome Road) Order Confirmation,

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Liverpool Corporation (General Powers),

Lee Valley Regional Park.

House adjourned during pleasure.
House resumed.

REGIONAL RAILWAY BOARDS ORDER 1966
12.15 p.m.
Debate resumed.
LORD CHAMPION: My Lords, when my great oration was torn in twain by the Royal Commission I could not help feeling that this was the first time I have ever seen it happen in this House; but I have seen it happen so often in the other place, and I can well understand how Members feel when this does happen there, and why the whole matter of the Royal Commission is now being looked at.
I return to what I was saying. On the third question that I posed at the outset about upheaval in the life of the staff, I know that this is an aspect of the problem that has greatly exercised the mind of the Minister, for she, too, realises the difficulties which staffing removals and possible redundancies cause to the men and their families, the people who will be involved. This is a point which the noble Lord, Lord Lindgren, stressed, and rightly so in this connection. As I understand it, it is likely that between 1,100 and 1,800 employees will be required to move to York, and while the Board have a system of allowances incorporating payment of disturbance allowance, additional allowance for redundant staff, the reimbursement of legal charges in connection with the sale and purchase of houses and loans to redundant staff to assist in house purchase, I am, as is the Minister, well aware that these allowances cannot compensate for the family upheavals involved.
In addition to the figures I have just given, of between 1,100 and 1,800 required to move, there will be in addition some staff savings, expected to be of the order of some 1,500 posts. But this number of people will not be put out of jobs, for about half of the posts represent unfilled vacancies at present and the
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Board will be able to absorb some of the remainder in other places.
There has been a fear that because of changes of structure within the railway industry some of the men involved will perhaps be concerned in a double move, first to York and then subsequently to somewhere else. I am assured by the Railways Board that no more than a score are likely to be affected in this way, and any staff whose place in the York headquarters is not immediately clear will be kept in London. Perhaps I ought to add that, before taking her decision, my right honourable friend the Minister met representatives of the T.S.S.A. and the N.U.R. to hear their views—this, of course, in addition to the normal joint consultation which would take place about this sort of proposal.
My noble friend Lord Lindgren asked me about housing at York. Pending the Minister's decision to make the Order, the Railways Board have felt constrained not to enter into official discussions with the York Corporation on possible housing problems. They intend, however, to get into touch with the Corporation formally quite soon, and they intend to maintain close liaison with York City housing authority, other adjacent local authorities and the private building industry. The Board's impression is that there is no chronic housing shortage in the York area, and they do not expect any serious problems to arise. An approach has already been made by the local building firms to the General Manager, Eastern Region, offering their services. I hope that these moves, which are projected and are taking place, will help with the difficulties of housing, which of course are always a problem to a shifting family.
Viewed in the light of the railway finances and the necessity for relieving the taxpayer of the burden of subsidising the railways to the greatest possible extent, consistent with providing uneconomic services where the national and local situation demands it, and of bringing about, what I have always felt should be aimed at (though this has at times brought me into conflict with some of my own trade union colleagues)—that is, a streamlined railway system employing more and more highly skilled, and much more highly paid, workpeople—it seems to me that we ought to allow the Order to pass this House and that we I should reject the Prayer.

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I can well understand my noble friend's motives in bringing forward this matter to the House and putting his point of view so forcefully. I felt that the House agreed with him that these moves should be kept to the absolute limit, consistent with producing the sort of railway system about which I have been talking. I appeal to my noble friend to withdraw his Prayer, although I understand completely, as I am sure do most Members of this House, his motives in tabling the Motion.
LORD LINDGREN: My Lords, first I would thank my noble friend for his reply. One point I should like to make is that I am not against the dispersal of staff. In fact, I spent a lifetime in the New Towns movement, and in any movement of staff surely the first thing that is necessary is to move with the staff the housing, the schools, the church and social facilities. My noble friend has had to admit that, in regard to this move of 1,500 staff—which was the figure he mentioned, though my information is that the number who will be moved is 2,800—negotiations have not yet started, although the Order comes into effect on January 1.
LORD CHAMPION: The move will not take place straight away.
LORD LINDGREN: My noble friend says that the move will not take place straight away, but in fact the moves have already started. Some of the staff have undertaken preliminary arrangements to move very early in the New Year.
Then not one word was said about educational facilities for the children. The upheaval of a child's education is perhaps not so vital a matter as the loss of the breadwinner's earnings, because he has to maintain the home, but for parents who care about their children's future the educational opportunities available are very important, and any interruption of them is a vital matter. I should like to thank the noble Lord, Lord Hurcomb, for his contribution, with his extensive knowledge of the railway world. So far as my noble friend Lord Popple well is concerned, I do not propose to enter into an inter-union dispute. I would, however, tell him that, in spite of what he said, not a single member of the N.U.R. is affected by this.
LORD POPPLEWELL: My noble friend is wrong. There are quite a number of N.U.R. members involved.
LORD LINDGREN: There is not a single N.U.R. member affected. The N.U.R. caters for porters, platelayers, signalmen; and so far as clerical, professional and technical staff are concerned, the N.U.R. membership is nil. Equally, I would say to my noble friend Lord Popple well that, while I appreciate all that has been done, perhaps we could have had a little more co-operation on liner trains. But, this being the last day before the Christmas Recess, and finding myself in a Christmas mood, I will, in order to facilitate the business of the House, beg leave to withdraw the Prayer.
Motion, by leave, withdrawn.

THE TIMES TRANSFER TO THOMSON ORGANISATION
12.25 p.m.
TIIE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES): My Lords, I should like to repeat a Statement which is being made in another place by my right honourable friend the President of the Board of Trade on the proposed transfer of The Times and The Sunday Times to a newspaper proprietor. The Statement is as follows:—
"I have received the Report of the Monopolies Commission, which is being published to-day. The Commission concluded that the proposed transfer may be expected not to operate against the public interest. I accept their conclusion and have accordingly given my consent to the proposed transfer.
The Thomson Organisation have formally confirmed to me the personal assurances given by Lord Thomson to the Monopolies Commission about the preservation of the separate identities of The Times and The Sunday Times, and about the maintenance of the independence of their editors."
LORD ERROLL OF HALE: My Lords, I should like to thank the noble Lord, Lord Rhodes, for repeating the Statement which has just been made in another place. On behalf of noble Lords on this side of the House I would say that we are glad that the Commission

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have found that the proposed merger will not operate against the public interest. We are glad to learn of the formal assurances given by the Thomson Organisation. May I ask one question? Will there be any surveillance over the keeping of those assurances in the years to come?
LORD WADE: My Lords, may I, too, thank the noble Lord for repeating the Statement? I am afraid I listened to it with no great enthusiasm. It seems sad that a paper with such a long tradition as The Times should be taken over by a large combine. May I press the noble Lord a little further as to the assurances given by Lord Thomson of Fleet, particularly with reference to the separate identity of The Times and the independence of editors? What will be the long-term position? Will there be any particular safeguards? Would it not have been better if a trust had been set up? I wonder if the noble Lord could say whether Lord Thomson of Fleet was asked about the possibility of creating a trust, or whether this was considered by the Monopolies Commission.
LORD RHODES: My Lords, the question of alternatives was considerd by the Monopolies Commission. They concluded, however, that there was no alternative at present in sight which could give any more grounds for confidence than the proposals under investigation. They also recognised the need to bring to an end the uncertainty about the future of The Times. They believe the conclusion they have reached to be the right one. With regard to the continuance of surveillance, all I can say is that the assurances have been given by Lord Thomson, and, so far as I know, they will be carried on in the future. I cannot say more than that.
LORD MERRIVALE: My Lords, a very important recommendation was made on page 44 of the Report by Mr. Davidson. I was wondering whether the noble Lord could say if this was one of the
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assurances which was given by Lord Thomson of Fleet. The recommendation was that Times Newspapers Ltd., when incorporated, should give and honour a similar formal undertaking.
LORD RHODES: My Lords, the assurances given by Lord Thomson of Fleet were that in regard to the office of the editor-in-chief of Times Newspapers Ltd. it was not the intention that that office should infringe in any way on the independent responsibility of the two editors in matters of editorial opinion. I may say that this assurance has been formally confirmed to the President of the Board of Trade.
LORD MERRIVALE: That relates to the first recommendation made by Mr. Davidson on page 44. I am seeking assurance on the second recommendation.
LORD RHODES: My Lords, I cannot reassure the noble Lord any further than I have done at the moment.
BARONESS STOCKS: My Lords, did the noble Lord, Lord Thomson of Fleet, in his evidence express any intentions with regard to those papers which now compete with The Times? One has especially in mind the Observer and the Guardian and the Observer is surely at risk since it prints with The Times.
LORD RHODES: My Lords, with regard to The Observer and The Guardian, the Commission noted the dependence of both these papers on the new company for their printing. But they concluded that this should not be made the subject of conditions to a consent for the transfer, expressing the view that it was a matter which must be left for commercial negotiation between the parties. I would say at this juncture that the Observer has, in any event, secured revised arrangements to come into effect if the transfer is effective, and the Guardian is negotiating for such arrangements.

COMPANIES BILL [H.L.]
12.31 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 Champion.)
On Question, Motion agreed to.
House in Committee accordingly.
[The BARONESS WOOTTON OF ABINGER in the Chair.]
Clause 43 agreed to.
Clause 44 [Resriction of carrying on insurance business.]
Restriction of carrying on insurance business
44.—(1) No person shall carry on in Great Britain insurance business of a class specified in section 1(1) of the principal Act except—
(a) a company incorporated, whether under the Companies Act 1948 or otherwise, which is authorised by or under the following provisions of this Part of this Act to carry on business of that class;
(d) a member of Lloyd's, or of any other association of underwriters approved by the Board of Trade, who carries on insurance business of any class and complies with the requirements set out in Schedule 1 to the principal Act and applicable to business of that class.
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR THE ROYAL NAVY (LORD WINTERBOTTOM)THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR THE ROYAL NAVY (LORD WINTERBOTTOM) moved in subsection (1), after "Act" where that word occurs a first time, to insert "(other than industrial assurance business)". The noble Lord said: Before we launch ourselves into the discussion of the various clauses in Part II of this Bill, may I say that I know there is a conflict between the wish of my noble friend the Chief Whip that progress should be made and the need to consider many of these Amendments carefully. The point is that there has been a whole series of Government Amendments since the Bill was first tabled, and I feel that, for the guidance of this Committee, and in view of the work which will have to be done on the Bill in another place, I should explain in some detail the reasons for these Amendments. So I hope that noble Lords will forgive me if I spend some time on explaining the reasons for certain Government measures.
The first Amendment to Clause 44 is No. 43A on Marshalled List No. 5, and it relates to a whole series of Amendments covering life assurance business which apparently was insufficiently considered in the Bill as it was first drafted. I wonder whether it would be convenient to the House if I enumerated them and if we then agreed to take them together. The Amendments are Nos. 43A, 44C, 44D, 44F, 44G, 44J, 44K, 63B, 91 and 94. These Amendments are designed to clarify the law as to the persons who may carry on industrial assurance business and to co-ordinate that law with the provisions of Clause 44 of the Bill defining the persons who may carry on insurance business of any class. "Industrial assurance business" means life assurance business on which the premiums are payable at intervals of less than two months and are collected by collectors making house-to-house visits. The business is subject to special controls imposed by the Industrial Assurance Acts for the protection of this class of policyholder. Section 1 of the Industrial Assurance Act 1923 provides that industrial assurance business shall not be carried on except by, one, insurance companies under the Act of 1958 which are registered in this country; and, two, registered friendly societies (called "collecting societies" if they do such business).
Clause 44(1) of the Bill restricts the persons who may carry on insurance business of any of the supervised classes, and it is therefore appropriate that the further restrictions on the persons who may carry on industrial assurance business should be embodied in this clause rather than in the Industrial Assurance Act. Amendments 43A and 44C achieve this by exempting industrial assurance business from the restriction imposed by subsection (1) of the Bill, and then by enacting in the new subsections (1A) and (1B) a narrower restriction on the persons who may carry on industrial assurance business. The result is to preserve the present law as to the class of persons who may carry on this business, except that the opportunity has been taken to widen that class so as to include any incorporated company authorised by the Board of Trade to do industrial assurance business, and therefore an overseas company which has been so authorised. At present, Section 1(1) of the Industrial Assurance Act 1923, restricts the business

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to companies registered in this country, and it is the only instance in which British insurance law discriminates against overseas companies. It is thought expedient to remove this ban, though overseas companies are unlikely to want to embark on industrial assurance business having regard to the specialised domestic nature of that business.
Going on to another group of Amendments, Nos. 44F, 44G, 44J, and 44K, they relate to the authorisation of companies within the permitted class; that is, within paragraph (a) of the new subsection (1A) of Clause 44. The effect of the Amendments is that companies which are already lawfully doing such business will automatically have authority, under subsection (1) of Clause 45, to continue to do it. New companies or companies not now doing the business will need the Board of Trade's authorisation under subsection (2) before they can do it. Because of the wording of paragraph (b) of the new subsection (1B) of Clause 44, a registered friendly society will not need Board of Trade authorisation to do industrial assurance business; nor, because of Clause 44(1C), will it need such authorisation for its other insurance business. This, in effect, preserves the present position under which these societies are exempted from all the controls imposed on insurance business by the Insurance Companies Act 1958. This is thought to be right in view of the supervision of these societies by the Registrar of Friendly Societies, who is of course also the Industrial Assurance Commissioner under the powers given him by the Friendly Societies Acts and the Industrial Assurance Acts.
Then, going further to Amendment 63B, which is on Clause 87, and Amendment 91, which is an Amendment to Schedule 6, these provide for two consequential repeals to the Industrial Assurance Act 1923. They are to repeal Section 1 of that Act, which imposes the present restriction on the persons who may carry on industrial insurance business, and Section 39, subsection (4), which is a provision penalising the unauthorized carrying on of industrial insurance business. This provision will be superseded by the final subsection of Clause 44 of this Bill, under which any unauthorized person who carries on such
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business will be liable to the penalties there provided.
Amendment No. 94 is consequential on the repeal by Amendment No. 91 of certain words in Section 1, subsection (1), of the 1923 Act. In Amendment No. 44D, the changing of "subsection" to "subsections" is consequential on the addition of the two new subsections proposed in Amendment No. 44C. The addition of the words "guilty of an offence and" result from the necessity of the clause to stipulate, before specifying the appropriate penalty, that the contravention of any of the subsections of Clause 44 constitutes an offence. It has been found necessary, in Amendments Nos. 44C, 44G and 44K, to make reference to "society" as well as to "company" in consequence of the 38 Government Amendments put down in place of Amendment No. 44, which is in the name of the noble Lord, Lord Peddie, and which we are about to come to. I hope that is a fairly clear explanation of the reasons for these many changes. I beg to move.
Amendment moved—
Page 42, line 21, after ("Act") insert ("(other than industrial assurance business)").—(Lord Winterbottom.)
LORD DRUMALBYN: I think I can only express my thanks to the noble Lord, Lord Winterbottom, for having made clear what all these Amendments are about. I must say it is very surprising to find such a welter of Amendments coming on the Order Paper at such a late stage. It now transpires that this is due to the vigilance of the noble Lord behind him, the noble Lord, Lord Peddle, who was able to draw attention to this particular omission. I am quite certain that what is being done here is the right course; I do not think there can be any doubt of that. Again, I would merely express our gratitude to the noble Lord.
VISCOUNT ECCLES: I should very much like to congratulate the noble Lord, Lord Winterbottom, on these Amendments—and, indeed, on all the other Amendments on the Paper. We were told by the Lord Chancellor that this was a Bill we could not lengthen. We were told, "Oh! it must stay in its present proportions because there is such a lot of work in another place." My noble friend Lady Elliot of Harwood and the

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noble Lord, Lord Peddie, received this message the other night about their Amendments; I received this message on the Amendments about no par value shares. I hope that, after dealing with the Order Paper before us to-day, we shall never again hear from the Government Bench that moving large new clauses or Amendments to the Bill or to the Schedules, and all the rest, is in bad form—because, after all, we must follow what the Government do.
LORD WINTERBOTTOM: The noble Viscount, Lord Eccles, has, I think, misunderstood what my noble and learned friend the Lord Chancellor said. What the Lord Chancellor said was that we could not extend this Part II of the Bill to other fields. But may I say that I rather share the view of the noble Lord, Lord Drumalbyn, that this rash of Amendments at a late stage does rather confuse our proceedings.
On Question, Amendment agreed to.
12.45 p.m.
LORD PEDDIE LORD PEDDIE moved, in subsection 1(a), after "otherwise" to insert:
"or a society registered under the Industrial and Provident Societies Act 1965".
The noble Lord said: This Amendment is quite a simple and apparently innocuous one, but it does draw attention to a serious omission in the Bill as it now stands. Since the Amendment was put down, as we have just heard, there has been a long series of consequential Amendments which I think will remedy the situation, but I think it is right and proper on my part to endeavour to explain the situation which called for the Amendment being put down in my name.
As the Bill now stands, Part II relates to insurance companies, and it would indeed leave the Co-operative Insurance Society completely outside the range and scope of the Bill. Indeed, if the Bill as it now stands became an Act, that considerable insurance organisation would be in a legal limbo. The Co-operative Insurance Society is not registered under the Companies Act; it is registered under the Industrial and Provident Societies Act; but I would point out to your Lordships that it is the second largest industrial organisation in this country, with a premium income of £75 million a year
2098
and with 15 million policyholders. It seems strange indeed that the Bill as it originally stood completely left that organisation out of account.
I think your Lordships are entitled to know how the omission occurs. Clause 43 of the Bill defines the principal Act for the purpose of Part II as being the Insurance Companies Act, 1958, and Section 1 of the 1958 Act indicates the companies to which the Act applies. Section 1, subsection (1), provides that the Act applies to all insurance companies which undertake insurance within Great Britain and within the classes mentioned in the Act.
Section 33 of that same Act indicates that
"'insurance company' means a person or body of persons (whether incorporated or not) carrying on insurance business",
but Section 2(1) of the 1958 Act provides—and I now quote:
"Subject to the provisions of subsections (5) and (6) of section one of this Act and of the Second Schedule thereto, no person shall carry on in Great Britain insurance business of a class specified in subsection (1) of the said section one …except a company incorporated, whether under the Companies Act, 1948, or otherwise, and having a paid up share capital of not less than £50,000:
"Provided"—
and this is the point—
"that this subsection shall not apply to any insurance company which, immediately before the 29th day of October, 1945, was carrying on in Great Britain insurance business of a class specified in section one of this Act in compliance with such of the provisions of the Assurance Companies Act, 1909, as then applied to the company and to that class of business".
It will therefore be seen that from Section 1 of the 1958 Act the Co-operative Insurance Society was an insurance company, but that Section 2(1) of that Act would have barred the C.I.S. from business had it not been for the proviso to that subsection, which related to the fact that the C.I.S. was operating before October 29, 1945. Thus, the legal mandate upon which the Co-operative Insurance Society operated rested on that.
Now, the combined effect of Clause 44(1) and Clause 46(1) of the Bill will be to repeal the whole of Section 2 of the 1958 Act. Therefore, the proviso to Section 2 will disappear, and so will the right of the Co-operative Insurance Society to function. Thus, the restriction on insurance business will be contained

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in Clause 44(1) which I need not bother to quote in full. Clause 44(1) says:
"No person shall carry on in Great Britain insurance business of a class specified in section 1(1) of the principal Act except—
"(a) a company incorporated, whether under the Companies Act 1948 or otherwise, which is authorised by or under the following provisions of this Part of this Act to carry on business of that class …".
It is that clause I wish to amend. Thus it will be seen that with no clause in the Bill equivalent to the one that is eliminated in the 1958 Act the Cooperative Insurance Society would have no right to function. I would emphasise that the C.I.S. is not a company: it is registered under the Industrial and Provident Societies Act. I am pleased that the Amendments which stand in the name of my noble friend Lord Winterbottom have been put down and I should be glad to have an assurance—which I am sure will be forthcoming—that the combined effect of these Amendments will be to remedy the situation to which I have drawn the attention of the Committee. I beg to move.
Amendment moved—
Page 42, line 23, after ("otherwise") insert ("or a society registered under the Industrial and Provident Societies Act 1965").—(Lord Peddie.)
LORD WINTERBOTTOM: I hope it will be for the convenience of the Committee if I list the 38 Amendments which have been designed to meet the important point raised by my noble friend Lord Peddie. In Clause 44, we have Amendment No. 44A; in Clause 45, Amendments 44E and 44H; in Clause 46, Amendments 44L, 44M, 44N, 440, 44P, 440, 44R, 44S, 44T, 44U;in Clause 47, Amendments 44V, 44W, 44X; in Clause 48, Amendments 44Y and 44Z; in Clause 49, Amendments 46A, 46B, 46C, 46D, 46E and also Amendments 47A, 47B and 47C. In Clause 51 we have Amendments 48A and 49A; in Clause 73, Amendments 60C, 60D, 60E, 60F, 60G, 60H, 60J, 60K and 60L; and in Clause 78, Amendment 60P. That is the group relating to my noble friend Lord Peddie's Amendment.
May I say that the Government are grateful to the noble Lord for having brought to their attention an omission from the Bill? It has caused us a sub-
2100
stantial amount of work, but surely this is the function of the Committee stage of the Bill where the combined knowledge of the House can be brought to bear on Government measures. Before moving the various Amendments standing in my name, I would ask the noble Lord, Lord Peddie, if he is willing to withdraw his Amendment.
LORD PEDDIE: In view of the gracious manner in which my comments have been received by my noble friend, and of the explanation he has offered, I am certain that the Amendments indicated will cover the position. I therefore beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD WINTERBOTTOM: I beg to move Amendment No. 44A.
Amendment moved—
Page 42, line 25, at end insert ("or a registered society which is so authorised to carry on business of that class").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: This Amendment by the Government is designed to make it clear that the approval by the Board of Trade of associations of underwriters comparable with Lloyd's is, in fact, approval for the purpose of Clause 44 of the Bill rather than approval for the purpose of non-compliance with Section 1(6) of the Insurance Companies Act 1958. This Amendment is linked with Amendment No. 86 to Schedule 4, for of course the Schedule must tie up with changes in the structure of the Bill as we go along. This later approval is now given automatically following the approval for the purpose of carrying on an insurance business by the Amendment to Schedule 4. This is a measure of foresight, since no association comparable with Lloyd's is in existence to-day; although a similar association existed in the past and may exist in the future. I beg to move.
Amendment moved—
Page 42, line 36, leave out from (" approved") to end of line 39 and insert ("for the purposes of this Part of this Act by the Board of Trade").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move Amendment No. 44C.
Amendment moved—
Page 42, line 39, at end insert—
("(1A) No person shall carry on in Great Britain industrial assurance business except—

(a) a company incorporated, whether under the Companies Act 1948 or otherwise which is authorised by or under the following provisions of this Part of this Act to carry on such business or a registered society which is so authorised to carry on such business;

(b) a society registered under the Friendly Societies Act 1896, being a friendly society within the meaning of that Act.

(1B) No person shall carry on in the Isle of Man or any of the Channel Islands industrial assurance business except—

(a) a company incorporated, whether under the Companies Act 1948 or otherwise or a registered society;

(b) such a society as falls within paragraph (b) of the last foregoing subsection.").—(Lord Winterbottom.)

On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment No. 44D.
Amendment moved—
Page 43, line 2, leave out ("the foregoing subsecton shall be") and insert ("any of the foregoing subsections shall be guilty of an offence and").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 44, as amended, agreed to.
Clause 45 [Authorisations for purposes of Section 44]:
LORD WINTERBOTTOM: I beg to move Amendment No. 44E.
Amendment moved—
Page 43, line 9, after ("company") insert ("or society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment 44F.
Amendment moved—
Page 43, line 14, after ("Act") insert ("(other than industrial assurance business)").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move No. 44G.
Amendment moved—
Page 43, line 15, at end insert ("and any company or society such as is mentioned in the said paragraph (a) which, immediately before the said day, was lawfully carrying on in Great Britain industrial assurance business shall, by virtue of this subsection, be authorised to carry on in Great Britain such business").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment 44H.
Amendment moved—
Page 43, line 17, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 43, line 19, at end insert ("(other than industrial assurance business)").—(Lord Witnerbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment 44K.
Amendment moved—
Page 43 line 20 at end insert ("and may authorise any such company or society as aforesaid to carry on in Great Britain industrial assurance business").—(Lord Winterbottom.)
On Question, Amendment agreed to.
On Question, Whether Clause 45, as amended, shall stand part of the Bill?
1.0 p.m.
LORD DRUMALBYN: I should like to raise a rather difficult matter of drafting. Subsection (1) of Clause 45, as I understand it, automatically authorises companies at present carrying on business to carry on the type of business that they are at present carrying on; whereas subsection (2) gives the Board of Trade power to authorise companies to carry on business. It seems to me that a certain confusion arises because authorisation is a positive act in the normal way, and if you have some companies authorised by the Board of Trade and some which are deemed to be authorised and there is no positive act of authorisation involved at all, it may in future give rise to misconceptions, confusion and possibly oven difficulty.
One sees the effect of this in Clauses 47, 48 and 49. The Board of Trade is told what it may not authorise in Clauses 47 and 48, and Clause 49 gives it power to impose conditions for the proper conduct of business. Reading this it would appear that the Board of Trade could impose the conditions on any company, whereas of course it can impose only on companies which the Board of Trade itself is to authorise. I am not sure that this is a very desirable form of drafting.

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I think it could be done more clearly. I wonder whether the noble Lord will look again at the drafting of subsection (1). All that is meant is the usual enabling provision that any Act of Parliament gives in the form of "may", and all that you have to do is to say is:
"may…carry on in Great Britain insurance business …"
This would draw the distinction between authority given by the Board of Trade and deemed authority under the Act.
LORD WINTERBOTTOM: I think there is some point in the criticism of the drafting by the noble Lord, Lord Drumalbyn. I will see whether we can improve it at Report stage, or I will explain to the noble Lord why we think that would be undesirable.
Clause 45, as amended, agreed to.
Clause 46 [Provisions for securing initial sufficiency of assets and capital of insurance companies]:
THE DEPUTY CHAIRMAN OF COMMITTEES: I understand that Amendments Nos. 44L to 44U are consequential Amendments. Does the noble Lord, Lord Winterbottom, wish to move them en bloc or separately?
LORD WINTERBOTTOM: With the permission of the Committee I should like to move the Amendments en bloc.
Amendments moved—
Page 43, line 22, at end insert ("society")
Page 43, line 24, after ("company") insert ("society")
Page 43, line 39, after ("company") insert ("society")
Page 44, line 4, after ("company") insert ("society")
Page 44, line 14, after ("company") insert ("society")
Page 44, line 25, after ("company's") insert ("society's or body's")
Page 44, line 32, after ("company") insert ("society")
Page 44, line 34, after ("company") insert ("society")
Page 44, line 38, after ("company") insert ("society")
Page 44, line 40 after ("company") insert ("society")
—(Lord Winterbottom.)
On Question, Amendments agreed to.
On Question, Whether Clause 46, as amended, shall stand part of the Bill?
LORD HAWKE: There are some people who think that the provisions in this Bill are not sufficiently stringent, in view of the conditions which now appertain in the insurance world. For insurance purposes you need three things: the cash to start a company, and it is a very small amount in the Bill; the permission of the Board of Trade, and the Board of Trade finds it difficult to deny permission if you have cash and are a respectable person with a decent manager or underwriter; and, thirdly, you have to get the business. In the past business was always rather difficult to get because to get it you had to undercut existing companies and it was a very cut business anyway, and anyone who undercut existing companies must be suspected of underwriting irresponsibly.
To-day there is an enormous class of business for which it is almost impossible to quote an actuarial premium. I am referring to the motor business. There are so many people to-day whose risks vary from above the normal to risks that really ought to be completely uninsurable, young men in sports cars and the like. The established companies will quote the most tremendous premiums for some of these risks because they just do not want to insure them. On the other hand, everybody who owns a motor car feels that he is entitled to find someone to insure him. He goes to a broker and it is the business of the broker to hunt round until he finds someone who will insure the motorist; hence the mushroom companies.
Anybody can set up to-day and get a large book of motor insurance business at rates which are completely unacceptable to the normal market: but the Almighty alone knows whether the rates are profitable or not, so that it has never been so easy to set up an insurance business and collect premiums. There is a provision that a person has to have assets of £50,000 surplus over the liabilities. I am not quite sure whether those assets need all to be in this country. There are various provisions regulating that. Just consider if a person has taken on a portfolio of young men in sports cars and everyone is involved in an accident in which he has killed a pasenger or somebody else, and is subject to the adjudication of the courts, which may take

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almost years to arrive at and the ultimate damages are completely unknown. They may vary from a few thousand pounds to £30,000 or so. Where are his surplus assets going?
I know that there is a clause requiring the Board of Trade to be satisfied that the reinsurance provisions are right, but even then the person may probably be reinsuring with a similar type of company. I do not think that this is very good and I do not honestly know what the Board of Trade ought to do about it. It would be very difficult to alter the Bill at any rate at this stage and in this Committee, but I beg the Government to think most carefully about this, having regard to what I say about the new class of business which it is only too easy to pick up.
LORD DRUMALBYN: May I, before the Minister replies, add a word to what my noble friend Lord Hawke has said? We all realise the essential difficulties which exist in this matter. I do not think that any of us desires to create a completely closed shop in insurance. It must be possible for new entrants to be admitted subject to proper supervision, and new entrants have to start in a comparatively small way. As this seems almost to be a Second Reading debate on principles, could I say in a couple of sentences what I think about it? The Government have got this just about right. They have increased the amount of share capital that is required, and related the amount by which the assets must exceed liabilities to the permanent income; and they are taking powers to supervise an insurance company authorised under Clause 45(2) in the early stages of its existence. It is difficult to see how much further they could go without making it far from easy for a company to come into insurance at all. I know that this is a difficult choice and we all share the anxieties of my noble friend Lord Hawke on this. I would like to have a word when we come to the question of a fit and proper person, because probably this is the key to the whole policy and a very important one. This is a great step forward and I hope that with the supervision that the Board of Trade will now be empowered to exercise, this will work, otherwise further measures will have to be taken.
LORD WINTERBOTTOM: I am grateful to both noble Lords for welcoming the general context of this clause. The noble Lord, Lord Hawke, expressed exactly the problems that the Board of Trade were facing when they started to draft the clause and we have done our best to strike a balance between so tightly restricting entrance into insurance business that a company with limited resources but sound ideas might be kept out and the risk that a company might try to break into the insurance business by taking a whole number of foolish risks just to get a start. As the noble Lord, Lord Drumalbyn, knows this is not the last Companies Bill. There is another that, for better or for worse, will appear in due course and if, in the course of our experience during the next year or two, the provisions of Clause 46 seem obviously inadequate and out of balance, there will be a fairly early opportunity to correct any misjudgments made.
Clause 46, as amended, agreed to.
Clause 47 [Provisions for securing that risks insured are capable of being borne]:
LORD WINTERBOTTOM: I beg to move this Amendment.
Amendment moved—
Page 44, line 43, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move this Amendment.
Amendment moved—
Page 45, line 1, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move this Amendment.
Amendment moved—
Page 45, line 4, at end insert ("society").—(Lord Winterhottom.)
On Question, Amendment agreed to.
On Question, Whether Clause 47, as amended, shall stand part of the Bill?
LORD DRUMALBYN: Arising out of what my noble friend Lord Hawke said on the last clause, may I ask whether the words"adequate arrangements "will be interpreted to enable the Board of Trade to black-list any companies from having reinsurance arrangements made with

2107
them? Plainly, arrangements would not be adequate if they were with companies that were themselves in difficulties or with companies which, as my noble friend said, were new, inexperienced or about which there might be some dubiety.
LORD WINTERBOTTOM: The noble Lord's point is extremely interesting. A company could be entirely sound but might be reinsuring with a company that was not sound. I am certain that the Board of Trade will note this point and watch it.
LORD MITCHISON: If my noble friend is considering this matter, I would ask him to remember that an insured person has a claim against the insurance company whatever that company may have done to protect itself by way of reinsurance. Therefore, this is a point that arises more between an insurance company and the re-insurer and not as regards the original insured. May I take the opportunity of throwing a pebble into the water? I listened to the noble Lord, Lord Hawke, with great attention and respect, as I always do, and I have the feeling that this business of motor insurance is gradually becoming beyond the capacity of the insurance market. I have long wondered, since the time when motor insurance was made compulsory and the insurance companies were charged with responsibility of a semi-public character, whether the consequence of that was not going to be, sooner or later, that the ultimate insurer would have to be the State.
Clause 47, as amended, agreed to.
Clause 48 [Provisions for preventing unfit persons from being associated with insurance companies]:
LORD WINTER BOTTOM: I beg to move the next Amendment, No. 44Y.
Amendment moved—
Page 45, line 20, after ("to") insert ("registered society or").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move this Amendment.
Amendment moved—
Page 45, line 21, at end insert ("society or").—(Lord Winterbottom.)
On Question, Amendment agreed to.
1.19 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved to add to the clause:
"Any person dissatisfied with the decision of the Board of Trade under this section may appeal to the High Court."
The noble Lord said: I beg to move Amendment No. 45 standing in the name of my noble friend Lord Drumalbyn and myself. This is a difficult field of activity for the Board of Trade, because under the clause they have the right to decide whether a person is or is not a fit and proper person to be associated with a company. This gives the Board of Trade, or the Executive, a very powerful say over what an individual may or may not do. It must depend entirely on the "say-so" of officials and of the Minister who carries the ultimate responsibility.
I fully recognise that in this matter, which has to be conducted informally, there may come to the notice of the Board of Trade certain facts about a person which obviously render him unsuitable for work in this field, and it is probably right to allow the Executive this sanction. On the other hand, what troubles my noble friends on this side of the House is the fact that there is no right of appeal; that the Board of Trade may simply say that a man cannot do this, and that is the end of the matter. We have tabled this Amendment to make it possible for anybody dissatisfied with the decision of the Board of Trade to appeal to the High Court. Our wording may not be the best or most suitable solution, but it is the best we could think of. If the noble Lord in charge of this section of the Bill can put forward a better proposal, naturally we shall be glad to consider it.
The practical difficulty, whatever course is pursued, is that the Board of Trade's sources of information in this delicate field must be kept confidential. It might be difficult for them to go into open court and reveal what they know, since not only might it be highly embarrassing in itself, but it might mean that a source of information of particular reliability would dry up in future. It would be equally hazardous for the individual to appeal to the High Court, because the Board of Trade would intimate that certain features of his past life would come out into the open, and that might well not be desirable from his point of view. So

2109
I should think that the difficulties are about equal as between the possible difficulties of the appellant and the possible difficulties of the respondent.
I have taken the opportunity to discuss this point with my noble friend Lord Eccles, who was President of the Board of Trade when I was Parliamentary Secretary. He had one or two particularly difficult experiences in this field, where the decision fell to him to decide in the case of other legislation where similar provisions apply; and I myself, when President of the Board of Trade, also had a particularly difficult one. In both cases, we simply had to "stonewall", and say: "No. You shall not do this or do that"(naturally I do not want to give away precise details), and when the individual asked what was the matter with him, there was nothing we could say. It is a harsh responsibility for the Minister to have to carry. The matters can be raised in Parliament; but he still has to "stonewall". The individual never knows the nature of the case laid against him, and under present procedures there is no possible opportunity of clearing it up. We have tabled this Amendment because we feel that, while the appeal procedure will be used only rarely, the individual ought to have the right to appeal to an individual body, such as the High Court, if he so wishes, and, of course, taking a chance on what the consequences may be. I beg to move.
Amendment moved—
Page 45, line 22, at end insert the said words.—(Lord Erroll of Hale.)
LORD ROYLE: I should like in a few wards to support this Amendment. Noble Lords may be good enough to remember that I referred to this question on Second Reading, and I said at that time that it caused me a great deal of concern. All my sympathies here are with the Board of Trade. We need to have all the safeguards that we can, but it may well be that, in the end, this may appear to be, if nothing higher, a contradiction of our ideas of British justice. It seems to me that to leave the matter entirely in the hands of officials of the Board of Trade (subject ultimately, I know, to the Minister) to decide whether people are suitable to take their place on the boards of insurance companies or to act as
2110
officials, may be a dangerous procedure.
If your Lordships will bear with me for a moment, I should like to quote two small passages from the Second Reading debate. I had support on this matter from my noble friend Lord Stow Hill, and as your Lordships will appreciate, he has tremendous knowledge of these matters. This is what he said:
"But for somebody in the Board of Trade to say, 'I hear that X is to be a director of such-and-such an insurance company. He has not been to prison; he is not in prison at the moment, and he is not bankrupt, but we do not like it. We think he is a person of potential bad character', there being no appeal against that decision, and no recourse to any other authority against it, is a very stringent measure, and your Lordships may wish to examine that in Committee."—[OFFICIAL REPORT, Vol. 278 (No. 72), col. 191: 22/11/66.]
I am sure those are better words than I was able to use. When my noble friend Lord Brown came to reply on this particular issue he said—and I think this indicates a feeling of doubt in the mind of the Board of Trade on this very issue:
"It is a very far-reaching measure to put the Board of Trade into a position where, on the basis of their assesment for their suspicions, they can exercise a veto of this sort. But in the light of the events which have taken place over the last three or four years, it would appear to be necessary." (col. 227.)
I think this shows great doubt, certainly in the mind of my noble friend Lord Brown, and, I would suggest, a doubt in the mind of the Board of Trade generally. If that is so, I am supporting the noble Lord, Lord Erroll of Hale (at this stage there is no question of pushing or anything like that) in asking my noble friend to have another look at this point, so that before it gets to another place this matter can be put right.
There is just one thing on which I am not in agreement with the noble Lord, Lord Erroll of Hale, and that is as to where the appeal shall be. In the Amendment the Court of Appeal is suggested. I feel that there is possibly a better tribunal. Under the Fraud Acts there exist tribunals of an independent character to consider matters of this kind, and it seems that this would be a much more suitable way to deal with appeals, rather than to give them the full publicity of the High Court. I think that, on consideration, noble Lords opposite might

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well feel that this is a better way to do it. This, I think, indicates that it is not something to take a decision on to-day, but something about which a decision might be taken by the Board of Trade before the Bill reaches another place. I would entreat my noble friend to give an assurance that this Bill will be looked at again, and I give all the support I can to the principle of the Amendment.
THE EARL OF SELKIRK: I am grateful to the noble Lord, Lord Erroll of Hale, for raising this matter. I can only regard this as a most peculiar clause. While I appreciate the difficulty the Board of Trade are clearly in, I am concerned at the absolutely unfettered discretion which they have to exercise in this matter. I would not cast any reflection on the manner in which it has been done, but this discretion could be misused grossly and extravagantly. I do not think we should accept a clause of this character. If we look at the subsection above, we see the words, "are accustomed to act". That is purely an arbitrary decision. Someone has to form a judgment on it, and it is an open question as to how that judgment should be formed.
The noble Lord who has just sat down raised the point as to whether the appeal proposed is the best form of appeal. I agree that it is difficult to see exactly what the form of appeal should be, particularly when, as the noble Lord, Lord Erroll of Hale said, there are many matters of a highly discreet character which have to be dealt with. But if there is an appeal—and I am not really concerned to what body the appeal should lie—I think it will act as a sort of moderating influence on the Board of Trade, and will probably discourage a man who has a really bad record from ever using the appeal. Though I agree that this is perhaps not the ideal form of appeal, I should be satisfied with the Amendment as it stands.
LORD AUCKLAND: This Amendment is an important one. I speak as one who until the end of last year, had been seventeen years in Lloyd's, during which time I handled a number of difficult claims and saw some of the problems which the bona fide insurance companies
2112
face. As my noble friend Lord Erroll of Hale said, the wording of the Amendment is flexible. I am rather inclined to the view of the noble Lord, Lord Royle, that a tribunal might be the best answer to this problem of where the appeal should lie, because if it goes direct to the Board of Trade, there will presumably be no representative from the British Insurance Association or from Lloyd's, as the case may be, to assist the person who is in difficulties.
I know that we are all out to catch the unscrupulous insurance broker or underwriter, or the one who fails to comply with the requirements of the Table in Clause 46. But I think we must be careful not to penalise the person who may have to pay out an abnormally large claim while waiting for his premium income to come in. Therefore, if the Amendment moved by my noble friend Lord Erroll of Hale cannot be accepted in entirety, I hope the Government will consult with the British Insurance Association and, if necessary, with Lloyd's, and put down a suitable Amendment on the Report stage.
1.31 p.m.
LORD MITCHISON: I, too, have had some experience of insurance from a different angle, and I hope the Government will be rather careful about this Amendment. It seems to me, with great respect to those who moved it, and for the reasons which they largely gave themselves, that this Amendment is quite useless, and for this reason. It does not make at all clear what question is to be put to the High Court Judge, and on what evidence he is to come to his conclusion. Either the whole of the information in the hands of the Board of Trade has to be published after being given in court—for I do not imagine that anyone is suggesting that this is really a case for in camera proceedings—or he has to proceed on an incomplete knowledge of the facts and circumstances of the case.
The reason why one has to make special provision for insurance business is that it involves the public in a different way from any other kind of business. It is said always to be founded on the maximum of confidence—I forbear using the Latin phrase—and there are provisions as to dishonesty and matters of that kind which are special to insurance business because of its rather remarkable

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character. I say quite frankly that we should be rather proud of ourselves in this country about our insurance business. It started under a terrible cloud. It was first of all regarded as gambling, and gambling with the lives of men, whether in the form of life policies or of marine policies, and it emerged from that cloud with considerable difficulty at only about the beginning of the nineteenth century. Latterly it has had some unfortunate experiences, as has banking, which is another business upon which we pride ourselves in this country. Therefore, I think one can feel that the great majority of insurance business in this country is a matter of pride and confidence, and that there may be something in the slightly irreverent point I made when I last rose in this connection.
At any rate, we are not dealing with the great majority of insurance business. Lloyd's have had some rather bad cases—the Harrison frauds are so long ago that I suppose I can safely mention them now. They have been far from free from trouble, and they had to tighten up considerably their own arrangements about security. They are a remarkable body.
I once had to contend before a court that a Lloyd's underwriter's income was earned, and I was laughed out of court, or my learned leader was. They are an odd arrangement. Leaving that aside for the moment, I do not think it is there that one has to look for trouble. I think they have met it. I think the trouble lies in these mushroom cases we have had recently, which have amounted to a serious volume of insurance in a field that particularly affects the public. We have yet to reach the semi-fraudulent marine underwriter. I do not know whether he will turn up—perhaps he is there, and I have not seen him.
In these circumstances I find it difficult to see what we are to do by way of an appeal. The reason why the Board of Trade come in in matters of this kind seems to me to be the public interest. I should have thought that if you sought to appeal from the Board of Trade, or rather the President of the Board of Trade as the responsible judge of the public interest in this matter, to some judicial body, whatever the judicial body was you would always get into insuperable difficulties about the kind of question they
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had to consider, and the kind of information on which they were to act. I quite see that this is an arguable case, and that it can be put the other way. I do not see that even if the ingenious suggestion, if I may say so, of my noble friend Lord Royle about the prevention of fraud and other tribunals would quite work here. It would take a long time to go into that, and I do not want to take up the time of the Committee.
But I feel some difficulty about it. After all, if one wanted to be thoroughly irreverent one might say that what the President of the Board of Trade might do would be to consult the other members of the Board of Trade. That could be raking back into the past. A number of people would be really astonished to find that they were members of the Board of Trade. I do not put that forward seriously. But on the absolutely laytribunal—for that is what it would be, if you did it—I feel doubtful. I find it so difficult to envisage the right tribunal that I feel doubtful about the suggestion.
May I say one other word very shortly? This does not provide for the right of being heard at all by the man who is going to be judged an unfit and improper person. In some cases he would be heard if he asked to be. I am not so certain about others. There are obviously cases in which he would not want to be heard. But I think it might be considered whether some right of hearing of this sort might be given. It is very common in other connections. In planning decisions there are rights of hearing. I may have missed it in the clause, but I did not notice it there.
LORD DRUMALBYN: Before the noble Lord replies, I wonder whether I might ask him whether he would clear up certain points, about which I personally am not sure. First of all, what exactly is meant by "fit and proper person"?—because this may be a matter of honesty, or a matter of experience. I imagine that some insurance companies go wrong because people who start them have not had the necessary background and experience to start with. I hope the noble Lord will give us guidance in exactly what is meant by this.
As to both questions, I imagine that the noble Lord will have sources of information, and among those sources will

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obviously be the insurance industry itself. One way of tackling this whole problem would be to bring it to the insurance industry in the first place, as it is left, for example, to doctors and certain of the professions to consider whether someone is a fit and proper person. I do not know whether that would be practicable. If it were, I do not know whether it would be easy for the appeal to lie to the Board of Trade. In considering this, we have always to recognise that this must be a most invidious and unwelcome task to perform anyway, and it is certainly not one the Board of Trade would seek.
Both my noble friend and I have had experience of these problems in the Board of Trade, and I do not know that there is a less pleasant job than we had to do there. However, one did it, certainly in the maximum good faith, and I think one would not object to this. But as my noble friend, Lord Auckland, said there are the marginal cases. There are cases which are plumb unlucky, and in such cases a person should be entitled to come along and say, "Something went wrong, but it was not my fault", and this is where the remark made by the noble Lord, Lord. Mitchison, comes in. Clearly there ought to be a right to be heard. Whether that ought also to be in the Bill I am not sure, but we should like to hear an expression of opinion from the noble Lord on this.
Nor does it follow that we have necessarily chosen the right appeal. We were uncertain where the appeal should lie. It might lie to the Privy Council, as it does in the professions, for example, or it might start with the profession itself and then go to the Board of Trade; but I think enough has been said in the debate to make clear to the noble Lord that there is a certain sense of unease about this, and at the same time an uncertainty whether anything can be done about it. I think one wants to summarise it as fairly as possible and we should like to hear why the Board of Trade made the provision in this way, because it must obviously have considered whether an appeal was possible and, if so, to whom it should be.
LORD WINTERBOTTOM: This House is always rightly concerned to protect
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the individual against the State, and of course I share this concern. But this Committee must also concern itself with the hazards of many individuals who may suffer from dishonest insurance companies and people running a wrongly conceived insurance business. The recent failure of one company, as we know, affected 280,000 policyholders who had a statutory duty to insure themselves against motoring risks and who, as a result, were at risk because of the failure of one company which was, at best, incompetently conducted.
I find myself at some disadvantage to noble Lords opposite, all of whom have had personal experience at the Board of Trade and personal experience of these particular problems, and of course their disquiet has been reinforced by that expressed by the noble Lord, Lord Stow Hill, who was himself a Home Secretary. They are all men with experience of reaching unpopular decisions on evidence which they cannot make public. I think the hard fact of the situation is that the Board of Trade has its sources of information, and the first and most important of these sources must be, as the noble Lord, Lord Drumalbyn, has said, the insurance industry. The noble Lord asked me how this question of unfitness can be defined. Of course, "unfitness" is not only dishonesty. It may be inexperience, as the noble Lord has said; it may be a record of a known reputation for recklessness and incompetence.
A man may have got away with reckless conduct in the past and been lucky at the end of the day, but nevertheless in a business which has a statutory requirement placed upon it he is not, in the opinion of the Board of Trade, a suitable person to take the money of the public, which they are forced to give to an insurance company as a prepayment for services that may have to be rendered in the future. If the sources of information open to the Board of Trade on the characters and record of individuals were made public many of these sources of information would immediately dry up and the Board of Trade would not be able to protect individuals who might suffer from the failure of insurance companies.
My noble friend Lord Royle mentioned the tribunal procedure under Section 6 of the Prevention of Fraud (Investments)

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Act 1958. However, Section 6 does not cover all aspects of that Act. That same Act, in Section 17, has complete discretion to authorise a unit trust scheme, and there is no appeal from their decision. Nor is there any appeal under that Act from a decision of the Board to refuse to exempt a dealer. So although the tribunal is permitted to operate under Section 6 of the Act, under Section 17, so far as unit trusts are concerned (which, in a sense, involve a similar sort of prepayment for services) they are excluded and there is no appeal to a tribunal. In this case, if the Board of Trade feels that a person or company proposing to start a unit trust scheme is unsuitable to do so it refuses permission and that is the end of the matter. Of course, it is not only individuals who are going to manage the company but also a person controlling one-third or more of the votes; a controlling shareholder must also be considered a suitable person before authorisation is given.
However, I have one suggestion to put to the Committee which may help us. I do not say it will help us completely but to a certain extent, in overcoming our doubts about the wisdom of the course proposed. The Parliamentary Commissioner will be functioning in the not too distant future, and he will have a limited power to investigate decisions made under this clause. Of course, he could only adjudicate on maladministration or malice, but I think that what we are really fearing at the moment is that malice will in fact be the factor which prevents an honest and prudent man entering this field of business. We fear that somewhere or other his face may not fit or he may have "got across" some official and he will be blocked from entering the business of his choice.
LORD DRUMALBYN: Or the information given by the Board of Trade may not be correct.
LORD WINTERBOTTOM: That is an important additional point. I should have thought that at least some safeguards would exist if, through his Member of Parliament, the individual who felt himself ill-treated could at least put his preliminary case to the Parliamentary Commissioner. This would be done in private, sources of information would not be damaged, and the individual would at least have some safeguard.
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I am afraid we cannot free Ministers completely from the burden of making unpopular and difficult decisions, but I agree completely with the noble Lord that in the process of knocking this Bill into shape we should at least try to make the work as sane and easy as possible. I think the point made by the noble Lord about the starting point for judging the fitness of the individual being the industry itself is an important one. I do not think this needs legislation but simply machinery for consultation. I will discuss this point with my noble friends in the Board of Trade to find out whether we can give some sort of answer at Report stage. I think it is entirely possible and, indeed, desirable. The world of insurance and finance is a small one; most individuals are known to each other, and character judgments, I am certain, should be made much more easy to the Board of Trade if the industry itself advises it before any decisions are made.
1.50 p.m.
LORD MITCHISON: Since the noble Lord was good enough to answer every suggestion which was made to him except the one I made, may I repeat it? I have looked again at this clause and it contains no provision for the person in question to be heard. There are persons who will not want to be heard; there are persons for whom a hearing would serve no conceivable purpose. But there is an intermediate class of people who certainly ought to be heard, and I feel quite definitely there ought to be some provision for hearing in a case of this sort. It is all very well to say the Ombudsman will meet it. We can deal with the Ombudsman when he comes, but my impression about his functions is that they are rather too limited to serve this particular point and, in particular, that this is not really the constituency kind of case that the Ombudsman is intended to meet. I hope, therefore, that my noble friend will consider the possibility in these circumstances of giving the person, whether it is an individual or a company, the right to be heard if he chooses to exercise it.
LORD WINTERBOTTOM: May I ask my noble friend, heard by whom? The Board of Trade?
LORD MITCHISON: Yes, certainly. That was the intention, and if this seems

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strange to my noble friend would he consider that there is a similar right, as I told him before, in planning legislation. It takes various forms; it is usually an alternative to the more elaborate procedure of having an inspector and a public inquiry. He will find clauses, which I am sure will be useful to him and his advisers, specifically providing for a right to be heard. It is not always as good as you think it is, because it does not say by whom you are going to be heard and you may have a rather junior official. But it is worth having, none the less, and in a doubtful case it might be very well worth having.
LORD ROYLE: On the point with regard to the Ombudsman, supposing I was under suspicion in a matter of this kind, since I have not got a Parliamentary vote have I Member of Parliament to appeal to?
LORD ERROLL OF HALE: We have all been most interested in the suggestion put forward by the noble Lord who replied for the Government. I think we have had a useful debate on the subject, including contributions by the noble Lord, Lord Mitchison, and others from both sides. I must say I am rather attracted by this idea of using the Parliamentary Commissioner, because it looks as if he is not going to have a great deal of work to do, and this may be a useful outlet for his energy. It has the advantage that it enables the proceedings to take place in private. I disagree with the noble Lord, Lord Mitchison, that it is not a proper use of the Parliamentary Commissioner; it is not a constituency matter; it is a matter of relations between the central Government and individuals.
LORD MITCHISON: I did not want to go as far as that. We do not know what he is going to do yet.
LORD ERROLL OF HALE: That is a slight private quarrel emerging on the other side of the House. It means that a man must be prepared to go to his M.P. and reveal enough information to make the M.P. go to the Parliamentary Commissioner. That is a useful safeguard. I have two questions on that. First, will an Amendment be necessary on Report stage if the Parliamentary Commissioner idea is to run, and, if so, can we rely on the Government to table
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an Amendment? Secondly, although I do not know yet all the Parliamentary Commissioner is going to do and his functions, I think there was some talk that he would have to produce a report of all his activities. Would that mean that if somebody had his case investigated, albeit in private, there would none the less have to be some reference in the Parliamentary Commissioner's Report that this person's application had been investigated and accepted or rejected? It may make a rather inhibiting bar to the applicant, knowing that it would appear after the event that he had applied under this section of the Act and everybody would know there had been doubt cast upon his fitness to be in the insurance world. The Bill ought to contain an Amendment excluding from the Parliamentary Commissioner the duty to report on cases referred to him under this section of the Bill.
LORD BROWN: My noble friend Lord Winterbottom has asked me to make a comment. There really is no difference in principle between any of us as to intention; it is a matter of mechanics really. I cannot give chapter and verse to support the contention that the Ombudsman is a reasonably sound mechanism to give people who felt they had been the victim of administrative incompetence, et cetera, the right to be heard; nor can I give chapter and verse for the fact that the Ombudsman would not have to make a report on these proceedings. But this matter has been explored. I have discussed it with my right honourable friend the President of the Board of Trade. We went over the facets of this problem quite closely, and the conclusion we reached was that the use of the Ombudsman was a viable means of meeting the natural desire of people that a person should not be "done down", so to speak, without some sort of hearing.
In response to the noble Lord, Lord Mitchison, may I say that we also considered the proposition of having a hearing within the Board of Trade. The difficulty there was that the persons who would be responsible for hearing the information and for doing investigations are not confined to any particular level of the Board of Trade; although they are confined to fairly senior level, many people are involved, so there is no separation, so to speak. The President himself might well be involved in the

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initial decision, and to have a hearing by a person who had already come to a conclusion in the matter did not seem to be a very satisfactory solution. It might have turned out to be reasonably satisfactory to have a kind of second hearing, but if you try to put that on paper you are open to the charge, so to speak, of giving a right of appeal to a person who has already been a judge in the situation.
The final outcome of all these discussions was a feeling that the reliance upon the Ombudsman, after due investigation of what his position will be, seemed to be the most viable way of meeting the problems which we all feel exist. If there is still anxiety about this it is perfectly possible for it to be looked at; the debate will be noted and we can have another look at it. I believe we shall come out with the view that the proposal put forward by the noble Lord, Lord Winterbottom, is probably the best that can be managed in a rather difficult situation where we really cannot give a right of appeal to the courts, for reasons which have been explained.
LORD MITCHISON: I have had my answer and it is a very unsatisfactory one. What the Ministry of Housing and Local Government can do and does do every day is not completely beyond the powers of the Board of Trade.
LORD DRUMALBYN: Surely it is quite possible simply to notify an intention to make an order and give an opportunity to be heard. There is no difficulty about it at all; it is common form in a great deal of legislation.
LORD WINTERBOTTOM: We have offered to look at this. Let us see what we can produce on Report.
LORD ERROLL OF HALE: In view of the generous assurance given by the Government that they are going to do a lot of work during the Recess, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 48, as amended, agreed to.
Clause 49:
Provisions for securing proper conduct of business
49.—(1) Where the Board of Trade issue under section 45 of this Act an authorisation with respect to a company or body, they may,
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when they issue it, impose on the company or body, for the purpose of securing the proper conduct of the business of the company or body, all or any of the following requirements, namely,—
(b) a requirement that, after the day on which the requirement is imposed, a specified proportion of the assets of the company or body or assets of its to a specified value shall be maintained in Great Britain or that, after the expiration of a specified period or such longer period as the Board may allow, a specified proportion of the assets of the company or body or assets of its to a specified value shall be so maintained;
LORD WINTERBOTTOM: I beg to move Amendment 46A.
Amendment moved—
Page 45, line 24, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
THE DEPUTY CHAIR MAN OF COMMITTEES: I understand that Amendments Nos. 46B to 46E are consequential Amendments. Does the noble Lord wish to move them en bloc or separately?
LORD WINTERBOTTOM: With the permission of the Committee, I will move them en bloc.
Amendments moved—
Page 45, line 25, after ("company") insert ("society")
Page 45, line 27, after ("company") insert ("society")
Page 45, line 29, after ("company") insert ("society")
Page 45, line 37, after ("company") insert ("society").
—(Lord Winterbottom.)
On Question, Amendments agreed to.
2.1 p.m.
LORD DRUMALBYN LORD DRUMALBYN moved, in subsection (1)(b), to leave out "Great Britain" and insert "such manner as is prescribed in the requirement". The noble Lord said: This Amendment would substitute the words "such manner as is prescribed in the requirement" for the words "Great Britain". The effect would be to make the clause read:
"…a requirement that, after the day on which the requirement is imposed, a specified proportion of the assets of the company or body or assets of its to a specified value shall be maintained in such manner as is prescribed in the requirement …".
I wonder whether the words "Great Britain" are not unduly narrow. For one

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thing, it could extend to Northern Ireland; and for another, I am not clear that it would not be an adequate safeguard to specify countries other than Great Britain.
On the second point, the more difficult one, my Amendment clearly goes rather wider than just a question of place. Place is obviously what the Government are after here. This is apt to cut both ways, and I wonder whether a rather wider power is not required than just as to place. These are the two points that I should like to make. Perhaps the noble Lord would care to comment on them.
Amendment moved—
Page 45, line 38, leave out ("Great Britain") and insert the said new words.—(Lord Drumalbyn.)
LORD WINTERBOTTOM: Perhaps it would be to the convenience of the Committee if we take Amendment No. 47 with Amendment No. 52, which I believe also relates to the same words.
LORD DRUMALBYN: Yes.
LORD WINTERBOTTOM: I thank the noble Lord. There are two points I want to make. The noble Lord, Lord Drumalbyn, first of all referred to Northern Ireland. If he will look at Clause 80 he will see that this Bill does not apply to Northern Ireland. Assurances are under the control of the Northern Ireland Parliament, and for this reason we are not here legislating for Northern Ireland. I presume that if the Northern Ireland Parliament wishes to have parallel legislation it will introduce it.
LORD DRUMALBYN: But is not the point of this provision to have some control over the funds that are invested? All I am asking is whether there is adequate safeguard for controlling funds which happen to be invested in Northern Ireland, as well as funds in this country. It is not a question of separate legislation.
LORD WINTERBOTTOM: I should like to give the noble Lord an answer which I think is a valid one at this stage, particularly as Northern Ireland is excluded from the Bill under Clause 80. Perhaps again this is some information which we can give at a later stage. On the other point, the material of the Amendment, which we are discussing
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now, as the noble Lord knows I had the benefit of a discussion elsewhere on this particular point and consideration has been given to this problem since that particular set of discussions. I regret to say that, although the Government have considerable sympathy with the point of view put forward by the noble Lord, we have not yet found an answer, although we are trying to seek one.
I understand that the British Insurance Association are concerned about this rather narrow point. The objection is that there is a specific reference to a power to require assets to be held in Great Britain, not to give them freedom to spread their assets in other parts of the world where it would benefit their shareholders and their policyholders to the maximum. I understand that there are no objections to taking powers to ensure that a company operating here, whether just within the United Kingdom itself or as part of an international business, should hold assets to cover its liabilities under British policies.
We must not forget that this power can be used only during the first five years after authorisation, or when evidence comes forward that a company is becoming insolvent. This is protection for policy holders during the early stages of a new company's career in this country, or at a point when an existing and established company is running into difficulties. The power here is, in fact, one that is insisted upon by most developed countries. This country has been a great deal freer, up to now, than many other countries in permitting individuals to start insurance companies. We have been much more flexible. I do not think our experience has been too bad. On the other hand, the picture seems to be changing. Many companies are flowing in from abroad to take advantage of the expanding motor market, and so on, and their standards may be different from ours. Therefore, we believe that these new safeguards are required.
I understand that the British Insurance Association fear that a provision in British legislation for the localisation of assets might be seized upon as a justification for excessive localisation requirements in other countries, untrammelled by the condition which the British power

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is circumscribing; that is to say, while the powers which we are giving to the Board of Trade are limited, the powers of some other country looking enviously upon the funds of insurance companies might be unlimited.
I also understand that the British Insurance Association, while wishing to achieve the object of the Government, would like it to be phrased in such a way that they are not exposed to unnecessary difficulties when trading in emerging countries, where there is little experience of the functioning of an insurance business and where local opinion may be that the funds being accumulated for local insurance should be limited to investment in the country concerned, where, of course, opportunities for profitable investment were very limited. We all agree that this is desirable, but we are afraid that even if we do modify the Bill, the requirements will allow them to be imposed whether a precedent can be found in British legislation or not. We are always at risk on this matter in a difficult world.
As I said earlier, the Government have sympathy with this Amendment, but see serious drafting difficulties. I wonder whether the noble Lord would agree to withdraw his Amendment, on the understanding that the Government will try to put forward a suitable Amendment on the Report stage? If further consideration shows that it is impossible to meet the wishes of the British Insurance Association and the noble Lord, we will give a full explanation at that moment. We are groping, but I hope that we may be able to find an answer.
LORD MITCHISON: I hope that the Government will make clear what they mean. The kind of point I have in mind is that there is a certain value from the point of view of policyholders and others whose security we are now considering, in having scrip in this country; that is to say, the actual share certificate, or whatever it is. The late Clarance Hatry, I think, succeeded in raising a lot of money by pledging scrip. When he ran short of it he produced some more. So that scrip, as such, has its value. That is what is meant by "assets in Great Britain."
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Suppose, for instance, an insurance company has a number of shares in, let us say, a French concern. Is it "assets in Great Britain" if they hold the scrip of that company over here? It might be said, on the other hand, that that is not really assets in Great Britain, that it is merely bits of paper which, whatever their value proved to be to Mr. Hatry, represent only an asset in another country. There is always this difficulty about the location of shares and scrip, and I do not see why the matter should not be cleared up by definition. If they do not know what they mean, then I am sorry for them. If they do, then they should tell us, for it would be a help to people who have to consider the clause and, ultimately, to people who have to live with it. We fully recognise that this is a clause to deal with pretty bad cases, but that is all the more reason for knowing quite clearly what it is all about. Therefore, I trust that a definition of "assets in Great Britain", or some form of explanation as to what is meant by it, will be put into the Bill.
LORD WINTERBOTTOM: I know that my noble friend Lord Brown will note what the noble Lord has said.
LORD DRUMALBYN: I am grateful to the noble Lord for his approach to the question. I do not think it can be emphasised too strongly that these are, in a sense, as the noble Lord said, default powers; they are not a regular insistence, so to speak. All the same one does not want to give any other country an opportunity to say, "You do this. Why should not we?". However, I think I can safely leave this to the noble Lord. I am sure that we are at one in intention on this matter, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD WINTERBOTTOM: I think that it will be convenient to move Amendments 47A to C together.
Amendments moved—
Page 45, line 41, after ("company") insert ("society").
Page 45, line 44, after ("company") insert ("society").
Page 46, line 1, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendments agreed to.
Clause 49, as amended, agreed to.
Clause 50 [Power of Board of Trade to restrict conduct of insurance business, and effect of exercise of that power]:
LORD WINTERBOTTOM: This is purely a drafting Amendment. I beg to move.
Amendment moved—
Page 47, line 7, after ("notice") insert ("stating").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 50, as amended, agreed to.
Clause 51:
Power of Board of Trade to revoke authorisation for purposes of section 44 on company's ceasing to carry on business
51. Authorisation to a company or body, either under subsection (1) of section 45 of this Act or under subsection (2) of that section, to carry on insurance business of a class may he revoked by the Board of Trade if the company or body ceases to carry on business of that class, but the revocation shall be without prejudice to a subsequent issue, under the said subsection (2), of authorisation to carry on business of that class.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 48, line 37, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after the first "on" to insert "in Great Britain". The noble Lord said: I think that it would be for the convenience of the Committee if we take Amendments Nos. 49 and 50 together, since they are interrelated. The reason for these two Amendments is that the addition of the words "in Great Britain "in line 39 makes clear that the authorisation given under Clause 45, which may be revoked, is one under Section 45 which can only be one to carry on business in this country. The second Amendment permits revocation where a company fails to commence business here within twelvemonths of authorisation. We believe that this power is required to prevent companies from commencing business more than a year after authorisation where any of the circumstances in which authorisation had been given had changed materially subsequent to the granting of authorisation—for example, the sale of the company to other owners or the dissipation of its assets.
The new subsection (2) replaces the words deleted at the end of the existing clause which refer to revocation, being without prejudice to a possible fresh authorisation. The reference is now extended to cover revocation resulting from failure to commence an authorised class as well as resulting from a cessation of such a class. In fact, if something has been authorised and the company does not do it it may enable someone else to do the wrong thing under the authorisation.
Amendment moved—
Page 48, line 39, after ("on") insert ("in Great Britain").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 48, line 40, after ("company") insert ("society").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 48, line 41, leave out from ("on") to end of line 43 and insert ("in Great Britain such business of that class, and authorisation to a company or body under the said subsection (2) to carry on in Great Britain such business of a class may be so revoked if the company or body does not, before the expiration of twelve months beginning with the day next following that on which the authorisation is granted, commence to carry on in Great Britain such business of that class.
(2) The revocation, under the foregoing subsection, of authorisation to carry on in Great Britain insurance business of a class shall be without prejudice to a subsequent issue, under section 45(2) of this Act, of authorisation to carry on in Great Britain such business of that class.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 51, as amended, agreed to.
Clause 52 agreed to.
Clause 53 [Substitution of new provisions for those of section 9 (audit of accounts) of the principal Act.]
On Question, Whether Clause 53 shall stand part of the Bill?
LORD DRUMALBYN: May I ask the noble Lord a question on this clause? In line 12, on page 50, there appear the words "by such person". This has to

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do with the auditing of accounts, and it says that:
"The accounts and balance sheets of every insurance company to which this Act applies shall be audited by such person and in such manner as may be prescribed".
This does not appear in Section 9 of the 1958 Act and it is not clear what it means. It is very unusual to prescribe that a particular person shall audit the accounts. I do not know whether it means the Government Actuary or something of that kind, or whether it means a person with such qualifications as may be prescribed. If so, ought the Bill not to say that? Certainly it does not appear to be at all clear. Could the noble Lord explain the situation?
LORD WINTERBOTTOM: I am afraid that at this moment I am not able to explain to your Lordships. Perhaps it will be convenient if I write to the noble Lord and give him the information which he requires.
Clause 53 agreed to.
Clause 54 [Powers of Board of Trade and Industrial Assurance Commissioner to alter insurance companies' financial years]:
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, in subsection (2)(a), to leave out "no business" and insert
"in Great Britain no business of a class specified in section 1(1) of the principal Act".
The noble Lord said: I am given to understand that as at present worded the clause would make the Board of Trade the appropriate authority where a company carries on in Great Britain industrial assurance business and business of a class not specified in subsection (1) of the Act of 1958 and also where a company carries on industrial insurance business in Great Britain and another class of business overseas. In this particular case the Amendment makes the Industrial Assurance Commissioner the appropriate authority. This is just an Amendment for clarification.
Amendment moved—
Page 50, line 33, leave out ("no business") and insert the said new words.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 54, as amended, agreed to.
Clauses 55 to 57 agreed to.
2.20 p.m.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after Clause 57, to insert the following new clause:
Additional copy of accounts, &c., to be deposited by industrial or provident society.

"—(1) A registered society shall, in addition to depositing with the Board of Trade (as required by subsection (1) of section 8 of the principal Act) four copies of each account, balance sheet, extract, statement or report required by that Act, deposit, within the time limited by virtue of that subsection for depositing them, a copy with the appropriate registrar, being a copy signed by the like persons as those by whom the copies deposited under that section are required to be signed.

(2) Subsection (3) of the said section 8 (deposit with every revenue account and balance sheet of a company of any report on the affairs of the company submitted to its shareholders or policy holders in respect of the financial year to which the account and balance sheet relate) shall have effect in relation to the deposit by virtue of this section of accounts and balance sheets as it has effect in relation to the deposit by virtue of that section of accounts and balance sheets.

(3) Section 71(1) of the Industrial and Provident Societies Act 1965 (which empowers the Treasury to make regulations respecting, inter alia, the inspection of documents kept by the appropriate registrar under that Act) shall have effect as if the reference to documents so kept included a reference to documents deposited in pursuance of this section.

(4) In this section 'appropriate registrar' has the meaning assigned to it by section 73(1) of the Industrial and Provident Societies Act 1965."

The noble Lord said: This Amendment is designed simply for the convenience of persons who want to search the file of an insurance company which is registered under the Industrial and Provident Societies Act 1965. Section 30 of the Insurance Companies Act 1958 provides that the Board of Trade may direct that documents or copies of documents deposited with them by insurance companies are to be kept by the Registrar of Companies or by some other officer of the Board and there be open to public inspection. A few insurance companies are registered under the Industrial and Provident Societies Act, and are required by that Act to send their rules and annual returns not to the Registrar of Companies but to the Registrar of Friendly Societies, whose file containing those documents is open to public inspection. It is therefore considered convenient that copies of the insurance returns which these societies have to

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deposit with the Board of Trade under the Act of 1958 should also be placed on the file of the Registrar of Friendly Societies, thus securing that all the statutory returns submitted by these societies, as well as their registered rules, will be available for public inspection in one place.
The new clause achieves this result by requiring the societies to deposit with the appropriate Registrar—that is, the Registrar of Friendly Societies—a copy of each document deposited with the Board of Trade and providing for public inspection of the copies kept by the Registrar. The documents in question are those required by Section 8 of the Insurance Companies Act 1958; that is, accounts, balance sheets, statements of business and valuation reports relating to insurance business, and any report on the company's affairs submitted to its shareholders or policy holders during the accounting year. The meaning of a registered society under this clause—that is, a society registered or deemed to be registered under the Industrial and Provident Societies Act—is given by Amendment 60P to Clause 78. The purpose of this legislation, as noble Lords know, is to keep not only the Board of Trade but also the public better informed, and this is an Amendment which will enable the public to be better informed of the state of affairs of insurance and friendly societies. I beg to move.
Amendment moved—
After Clause 57, insert the said clause.—(Lord Winterbotiom.)
LORD DRUMALBYN: May I just ask whether or not this involves any duplication? One knows that in the case of insurance companies there is a duplication as between the accounts required by the Companies Act and the Insurance Companies Act. Does this involve a duplication?
Loin WINTERBOTTOM: I should have thought it must involve some duplication, although I am speaking subject to correction. But I should think the advantages overrule the problem of duplication.
On Question, Amendment agreed to.
Clause 58. [Margin of solvency for general business]:
LORD WINTERBOTTOM LORD WINTERBOTTOM moved in subsection (3), to leave out words from
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the beginning down to and including "aid subsection (1)" and substitute:
"Subject to the provisions of the following subsection, the Board of Trade may, at any time before the expiration of the period of two years beginning with the day on which this Act is passed, direct that, until the expiration of such period (expiring not later than the expiration of the period aforesaid) as may be specified in the direction, the subsection substituted by subsection (1) above."
The noble Lord said: Perhaps it would be to the convenience of the Committee if we took Amendments 50A and 50B together, since they are interrelated. The reason for these Amendments is that as at present worded subsection (3) of Clause 58 would permit the Board of Trade to relax in individual cases, for a period not exceeding two years from the operative date of subsection (1)—that is, from three months after the Bill is enacted—the more stringent solvency margin requirements imposed on insurance companies by subsection (1) of the clause.
The existing subsection allows the Board, however, to use this power only during the three months between the enactment of the Bill and the coming into operation of subsection (1). On further consideration the Government feel that there may well be cases where a company, although unable to comply with the new solvency provisions, does not obtain a direction under subsection (3) within the period of three months, although it is a company to which the Board would wish to give a direction. For instance, in the opinion of the Board, a company might take an over-optimistic view of its ability to raise fresh capital and find, in spite of undertakings given, that at the end of the period of three months it had failed to raise this necessary capital and had thus put itself in an unsatisfactory position financially.
The first of the Amendments would, therefore, enable the Board to give direction at any time during the whole period of two years from the passing of the Act, inclusive of the three months mentioned above. Such a direction could be in any period but not exceeding the balance period of two years. The second Amendment ensures that the relaxative power provided by subsection (3) as amended is not exercisable, so long as a petition to wind up a particular company is before the court. It is felt that it would be inappropriate for the Board to intervene in matters relating to the solvency of a

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company, if its solvency were being considered by the court at that time. I beg to move.
Amendment moved—
Page 52, line 16, leave out from beginning to ("shall" in line 21 and insert the said new words.—(Lord Winterbottom.)
LORD DRUMALBYN: I should like simply to ask the noble Lord how it is that the Board of Trade came to consider it necessary to make this relaxation. Did particular cases come to their attention since the publication of the Bill, or how is it that this arose?
LORD WINTER BOTTOM: I am afraid I cannot give the reasons why these Amendments were tabled by the Board. As the noble Lord knows, a great deal of intensive work has been going on, with the help of a number of bodies and individuals, since the first publication of the Bill early in November, and I imagine that from experience and advice given during that period these two Amendments have been found necessary. Three months is quite a short time, and it is clear that the Board considers that this is quite insufficient to keep control of the situation which they find now.
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 52, line 24, at end insert—
("( ) The power conferred by the last foregoing subsection on the Board of Trade shall not be exercisable in relation to a company so long as a petition to wind it up is before the court.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 58, as amended, agreed to.
Clause 59 [Provision for securing that a company's solvency is maintained]:
LORD WINTERBOTTOM: Perhaps, again, it would be to the convenience of the Committee if we took Amendments 51, 53 and 54 together. The reason for leaving out the words "or body" is that these two words are made superfluous by the use in line 26 of the words "insurance company". This term is so defined in Section 33 of the Insurance Companies Act, which is applied to this part of the Bill by Clause 78(1)(b), as to include
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bodies other than companies. This is purely drafting. I beg to move.
Amendment moved—
Page 52, line 38, leave out ("or body").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment No. 53.
Amendment moved—
Page 52, line 43, leave out ("or body").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move No. 54.
Amendment moved—
Page 52, line 46, leave out ("or body").—(Lord Winterbottom.)
On Question, Amendment agreed to.
2.31 p.m.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after subsection (1)(c), to insert:
"( ) a requirement that the company shall take all such steps as are requisite to secure that the aggregate of the premiums to be received by it inconsideration of the undertaking by it, during a specified period beginning not earlier than twenty-eight clear days after the requirement is imposed, of liabilities in the course of carrying on business of a specified class (being one of the classes specified in section 1(1) of the principal Act) shall not exceed a specified amount;".
The noble Lord said: Amendments Nos. 55 and 56 are related. The addition to subsection (1) provides the Board of Trade with an alternative, less stringent power to that of restricting business which is provided for in Clause 50. The use of that power would oblige the company to cease writing new insurance contracts and not to renew existing contracts, thus cutting off all further income from premiums and leaving it to discharge its liabilities under existing contracts. The use of the power would have to be publicised. Its use under Clause 50(1)(c) would probably be limited to situations in which, first, evidence of insolvency was not far short of being sufficient for the Board to petition for winding up: secondly, the remaining evidence required would take some time to assemble; and, thirdly, it was in the public interest that the company should in the meantime be prevented from taking any further money from policyholders.
The use of the new power provided by the Amendment would not cut off all premium income. A requirement would normally be expressed so as to require the company to hold the premium income at the existing level, or so as to set a limit to the rate of expansion. The exercise of this power would not necessarily have to be publicly announced, although the Board would not be prevented from doing so where this was deemed to be desirable in the public interest. The use of the power would be less damaging to the company than the power in Clause 50, and the Board would, therefore, be readier to use it.
The use of the additional power would be appropriate where a new company grew rapidly by charging low premiums and alleged that its lower than average reserves were adequate because its underwriting policy was very selective. Such an assertion is not easy to disprove until there has been a reasonable period over which the claims results of the company can be tested. In such a case, the Board's doubts about the adequacy of both premium rates and reserves might suggest to them a risk of insolvency which would be increased if the company's rapid growth continued. At the same time, there might not be sufficient evidence of insolvency to justify the invocation of Clause 50.
The new subsection proposed identifies the case of the company which carries on in Great Britain only industrial assurance business, since the powers given by the clause are to be exercised in relation to such a company by the Industrial Assurance Commissioner as provided for in subsection (3). This particular Amendment, I think, covers one of the points made by the noble Lord, Lord Hawke, earlier in our discussions. I beg to move.
Amendment moved—
Page 53,line 2, at end insert the said subsection.—(Lord Winterbottom.)
LORD HAWKE: I think the explanation provided by the noble Lord amply justifies my fears that the size of company allowed to start up through this Bill is much too small.
LORD MITCHISON: There is one point here that I should rather like cleared up. I see that according to subsection (3) of Clause 50 the very stringent
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powers given under Clause 50 can be exercised only after there has been a written notice and the Board have considered any representations made to them. Apparently there is no such provision in this clause, and I wonder why not. The Board of Trade come to a decision to operate this clause, and there is then an interval of 28 days before it has any effect. I find it a little difficult to see why it should be so hard to allow the company concerned to make representations, as they would do if the powers of Clause 50 were to be exercised. I should have thought there was at least as much a case for doing it where the insolvency, or the pending insolvency, was a doubtful matter as there was in the case of the more stringent conditions of Clause 50.
LORD BROWN: It is possible to conduct a very long debate on these matters of nice judgment, as to whether, in the one case, the Board of Trade must give notice of intention, and, in relation to a matter that looks of a similar kind, they should not have to do so. But these are matters of nice judgment based on long-term experience of trying to deal with some of these insurance affairs—and, as the Committee knows, they have recently been somewhat murky. Where notice has to be given—and, admittedly, it is putting very great power in the hands of the Board of Trade—it sometimes makes it possible for evidence which one would otherwise have obtained not to be given. I can only say in answer to the noble Lord, Lord Mitchison, that these are matters of nice judgment based on a great deal of experience inside the Board of Trade, and I would ask that the Committee accept that this experience has been imported into this post-legislation in such a way as to help the Board of Trade to control a very serious matter in the future.
LORD MITCHISON: I am afraid that does not quite meet the point I was making. May I repeat it? I have no doubt that the Board of Trade have very wide experience in all these matters—nobody disputes that for a minute—but I do not think they can have much experience of operating this clause, because I do not think there has ever been a clause like it before. If there has, perhaps we can be told. But the position

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here is that a company is required at the end of 28 days from the date of the requirement to restrict its business, or not to expand it, and this is said to be a less stringent step than the steps that are open to the Board under Clause 50. It is therefore intended to be used in cases where there is some doubt about the matter; and I suppose the requirement certainly involves notice to the company in some form or another. There is not much difference between a notice and a requirement.
What is so curious about it is that if the more stringent powers are to be exercised—and that would be done only in a fairly clear case, as I understand the views of the Board—representations are to be considered. On the other hand, where the matter is more doubtful—and here I should have thought there were more cases in which companies might wish to make representations, and that the Board of Trade might benefit from hearing them—no provision is made for such representations. I wonder whether the fact of the matter is not that the Board of Trade have not really considered the question of representations in connection with this clause, although they have done so in connection with Clause 50.
LORD DRUMALBYN: May I add a word? First of all, this seems to me to be a useful addition to the powers. Secondly, is it not a power which, in the nature of things, can be exercised only in consultation with the concern in question? I cannot see how it will be possible to determine what the level of premiums should be in order to maintain the solvency except in consultation with the company. If that is so, I wonder if this would not meet the noble Lord's point.
LORD BROWN: We are always ready to consider these matters; but it has already been noted, from what my noble friend Lord Mitchison said, that the powers under Clause 50 are somewhat more stringent than those under Clause 59. Under Clause 50 formal notice has to be given; under Clause 59 this is not so. I think it is within the experience of many Members of your Lordships' House that the production of a formal notice can be a somewhat lengthy procedure.
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The less stringent powers under Clause 59 could, therefore, so long as the Amendment is accepted, be operated more rapidly if there is no requirement for some form of official notice in advance. Of course, there will have to be consultation with the company concerned. With respect, I think it would be better if this matter were left as it is and in accordance with the Amendment. Of course if noble Lords have hesitation about this, but see fit to pass the Amendment, the comments that have been made will be taken into consideration before the Report stage.
LORD MITCHISON: I am glad to hear that the comments will be taken into consideration, because the point about notice is a thoroughly bad one. One cannot impose a requirement on a company without telling the company what the requirement is: that is the same thing as giving them notice under Clause 50. The point is that when they are given notice under Clause 50 they are allowed to make representations, which have to be considered. I am not going into the matter in detail again, but I hope that the Board of Trade will consider what are the advantages and disadvantages of putting a similar provision into this clause.
On Question, Amendment agreed to.
Loan WINTERBOTTOM: I beg to move Amendment No. 56.
Amendment moved—
Page 53, line 7, at end insert—
("( ) In relation to a company which carries on in Great Britain no business of any of the classes specified in section 1(1) of the principal Act other than industrial assurance business, paragraph ( ) of the foregoing subsection shall have effect with the substitution, for the words business of a specified class (being one of the classes specified in section 1(1) of the principal Act)', of the words industrial assurance business'.").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: This Amendment meets the necessity to insert the words "Great Britain" into paragraph 59(3)(a). I beg to move.
Amendment moved—
Page 53, line 14, leave out ("no business") and insert ("in Great Britain no business of a class specified in section 1(1) of the principal Act").—(Lord Winterbottom.)
On Question, Amendment agreed to.
2.44 p.m.
On Question, Whether Clause 59, as amended, shall stand part of the Bill?
LORD DRUMALBYN: May I make two points? One is of some substance; the other is purely drafting. The point of substance is that the power given in this clause is to impose requirements where it appears to the appropriate authority—generally the Board of Trade—that there is a risk. This is an extremely wide and nebulous power and, in the nature of all risk-taking, it seems to give the Board of Trade a power to intervene at any time they think fit. This is one of the things that led me to suppose that the Board of Trade will be proceeding by way of close consultation with companies and that this will merely give the Board a general power to intervene, if they think fit, before a serious risk emerges.
I think it is important that the Committee should know what the intention is here. How soon are the Board of Trade likely to intervene? What is the intention behind this clause? Is it to enable requirements to be imposed when there is the slightest sign of danger, or only when there obviously appears to be something going wrong? It is a question of degree and a difficult thing to be precise about. All the same, I think it is important that the Committee should know what is in the mind of the Government.
The other matter is a minor one. I personally dislike the phrase "assets of its". It is a most horrible phrase; it lacks euphony. Surely we can say "assets of the company". The other phrase is a nasty piece of jingle.
LORD HAWKE: I wonder whether, in looking at the clause again, the Government would reconsider the words
"if it appears…that the business…is being so conducted that there is a risk of the company's becoming insolvent…".
I am not sure that the word "insolvent" is the happiest word; for without specifically saying so, it gives a connotation that the company is being conducted in an improper way. I take up exactly the same stand as that of my noble friend Lord Drumalbyn: that an insurance company is always conducted in such a way that it is in risk of becoming insolvent. It is the nature of the beast. For that
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reason I should have thought that the wording of the clause ought to be somehow reinforced to make it clear that it refers only to cases where the business is being improperly conducted.
LORD BROWN: I will take Lord Hawke's point first. The responsibility of the Board of Trade is, in this connection, the protection of the policyholders. It is difficult to ask for these enormous powers—and admittedly they are enormous—unless it is clearly directed to the protection of the policyholders; and there is clearly no risk to the policyholders unless there is a risk of a company's going insolvent. That is the main issue on which we seek the powers to protect the policyholders. We must be careful not to get into a situation where the Board of Trade are seeking powers to make sure that these insurance companies are running their businesses in a manner which appears to the Board of Trade to be efficient; and I am quite sure that this House will not want powers of that kind to be bestowed upon the Board of Trade.
LORD HAWKE: I do not think the noble Lord has quite met my point. My point is that if he used the words, for instance, that the company was "so improperly conducted", the clause would be considerably less wide, and the Board of Trade would then not have powers to step in where a company was being conducted in the normal manner but might go into insolvency—as all companies can, particularly if they are small.
LORD BROWN: We will consider the point. We are dealing with a semantic problem here.
Let me turn now to Lord Drumalbyn's comments. These are enormous powers, and we recognise that. I doubt whether similar powers have ever before been given to a Department of Government. But insurance is an unusual subject. So far as motor insurance is concerned, it is compulsory, which means that large numbers of people have to take out policies. In otherrespects—in house and property insurance and so on—insurance is of great importance to the policyholder, because if the policy is not supported then he loses his house. It is a major tragedy to the individual. The other feature of insurance is that the people providing the service collect the money long before they do anything for the person who is

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paying for the service. This means that a man can go into business, collect the money and, if he is dishonest, decamp with the lot, leaving behind a series of tragedies.
The experience of the Board of Trade over recent years has been a very unfortunate one. We have been under criticism from the public for apparently being helpless in the face of approaching disaster for thousands of policyholders. The Fire and Auto Marine case is an example. We must be in a position to stop this sort of thing happening again. It is difficult to see exactly what powers are necessary to stop all the myriad types of murky operation that we shall have to face from the growing number of small insurance companies; so one can say that this is a blanket request for authority, because before we have the authority we cannot precisely say what we are proposing to do with it in every case. In some of the cases, where personalities are involved, we want to step in very early, because we think that a risk is developing. In other cases, where we are more assured of the history and stability of the concern, it might take more to disturb us seriously, and I suppose that the Board of Trade would take longer to step in. It is very difficult to give a more direct answer than that to the noble Lord's question.
LORD HAWKE: Would the noble Lord consider inserting the words:
"conducted in such a way that"?
That is much more pointed.
LORD BROWN: I have undertaken that this will be considered, and I should hesitate to accept any wording here because there are drafting problems which could possibly arise if I accepted any words.
LORD CHORLEY: I should like to intervene for a moment on this matter because the suggestion that insurance business is much more risky than any other sort of business is not in fact borne out by experience. I practised a good deal in insurance cases and it has been one of my subjects as an academic lawyer. I should say that if they are conducted in a responsible way the risk of insurance companies going insolvent is less than in almost any other sort of business. If the noble Lord, Lord Hawke,
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would study insolvencies in the City over the period between the wars, and indeed since the last war, I think he would find that it is very unusual indeed for a syndicate at Lloyd's to be wound up. It happens only once in quite a large number of years. It is in the type of insurance business which is notoriously being carried on in a semi-fraudulent way that this sort of difficulty arises; and it is just for that sort of case that the Board of Trade needs these powers. But I should not like it to go out from this place that insurance is an eminently risky business. There are large areas of it in which, if the business is properly conducted, it is very sound business indeed and there is no reason to suppose there will be insolvency.
LORD HAWKE: Can the noble Lord, Lord Chorley, tell me how many companies in this country made underwriting profits last year?
LORD CHORLEY: Last year was a very exceptional year.
LORD MITCHISON: If the Board of Trade is going to look at this clause again, I hope that the part they will look at is paragraph (d) of subsection (1). This provides that in certain circumstances the appropriate authority may impose a requirement. Now we come to the requirement:
"that the company, shall at specified times or intervals, furnish to the appropriate authority information about specified matters, being, if that authority so require, information verified in a specific manner".
I am all for the Board of Trade in this little battle, or perhaps it is a big battle. I know how exceedingly difficult the operation of this clause may be. I fully recognise that it will be used only in rather exceptional cases. If you take that statutory provision as written, it is a requirement in circumstances considered by the clause which are a matter of opinion in the first place. The clause states:
"If it appears to the appropriate authority…"
In those circumstances you can require any information about anything and it can be verified in any way whatever. That is pretty wide drafting. I do not know what the Board of Trade may want to ask, but it would cover all kinds of things that they really do not need to ask at all and things which, so far as I

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can see, are outside the purposes of this Bill. Powers of that sort are too wide. I suggest that the Board might look at it and see what it is they want to get by way of information in cases which we all agree are rather serious, and when dealing with people who may well be, to use a colloquial phrase, "pretty slippery customers".
LORD BROWN: I must make clear that we have not undertaken to have another look at Clause 59 as a whole. It is significant, in reference to the point raised by the noble Lord, Lord Mitchison—I think I am correct—that the British Insurance Association and insurance companies have not objected to these very wide powers. They know the dangers which exist. The point the noble Lord raised was about protection to insurance companies against being, bothered by these wide powers. I do not think those who are liable to be bothered are as alarmed about the possibility of being so bothered as they are about the possibility of the continuance and growth of much more serious things which have been worrying them in recent years, for example, about murky behaviour on the part of a very small number of insurance companies.
Clause 59, as amended, agreed to.
Clauses 60 to 62 agreed to.
Clause 63. [Provision for security of information]:
LORD WINTER BOTTOM: Perhaps it would be convenient if Amendments Nos. 57, 58 and 59 were taken together. These are all drafting Amendments to improve the Bill. I beg to move.
Amendment moved—
Page 56, line 17, at end insert ("or any criminal proceedings for an offence entailing misconduct in connection with the management of the body's affairs or misapplication or wrongful retainer of property of its;").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 56, line 18, after ("Board") insert ("of Trade").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 56, line 25, leave out ("as aforesaid") and insert ("there under by the Board").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 63, as amended, agreed to.
Clauses 64 to 67 agreed to.
Clause 68. [Penalty for non-compliance with Part II or the principal Act]:
2.58 p.m.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, in subsection (1), after "be" to insert "guilty of an offence and". The noble Lord said: This is an Amendment which arrived at a very late stage. It is necessary for the Bill to stipulate, before specifying the appropriate penalty, that the defaults described in subsection (1) of this clause constitute an offence, and the first Amendment does that. This has the further effect of making a default under the principal Act which occurs after the passing of this Act
"an offence under this part of this Act".
Consequently it is possible to simplify subsections (1), (2), (3) and (4) of Clause 69 and Clause 71(1) by deleting—in Amendments Nos. 59D, 59E, 59F, 59G, and 59H, respectively—the references to
"offences under the principal Act committed after the passing of this Act"
and relying on the reference to
"an offence under this part of this Act".
Since the Bill is to repeal Section 26(1) and (2) of the Insurance Companies Act1958, Section 39(2) of the Industrial Assurance Act 1923, which indirectly applies that section to contraventions by industrial assurance companies of any provision of the 1923 Act, would become meaningless if left unamended. The Amendments to Clause 68 meet this by enacting in the new subsection (1)(a) a provision for the penalising of any contravention of the 1923 Act by an industrial assurance company after the enactment of the Bill, and by providing in Amendment 59C that Section 39(2) of the 1923 Act is to cease to have effect except in relation to contraventions of that Act occurring before the enactment

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of the Bill. Consequentially Amendment No. 39 preserves Section 21(6) of the 1958 Act for the purpose of any contravention for which Section 39(2) of the 1923 Act is preserved.
The new subsection (1)(a) of Clause 68, in Amendment No. 59B, at the same time brings the penalty for any contravention of the 1923 Act by an industrial assurance company into line with the penalty imposed on insurance companies for any default in complying with the 1958 Act or Part II of the Bill—that is, a fine not exceeding £200. The new subsection (1)(b) of Clause 68 brings the penalty imposed on a collecting society for a contravention of the 1923 Act into line with the penalty which subsection (1)(a) imposes on an industrial assurance company for a like contravention—that is, a fine not exceeding £200.
Under the present law the penalty for a contravention of the 1923 Act by a collecting society or industrial assurance company is a fine not exceeding £100, and in the case of a continuing default a fine not exceeding £50 a day during continuance. Subsection (1)(b) substitutes in the case of the collecting society a penalty of a fine not exceeding £200 and drops the fine of £50 a day for continuing default. The combined effect of subsection (1)(a) and subsection (1)(b) of Clause 68 is thus to bring all these penalties into line with the standard penalties for defaults in complying with the 1958 Act or Part II of the Bill.
Amendment moved—
Page 59, line 6, after ("be") insert ("guilty of an offence and").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 59, line 7, at end insert—
"(1A) An industrial assurance company (within the meaning of the Industrial Assurance Act 1923) which, after the passing of this Act contravenes or fails to comply with any of the provisions of that Act or any directions given there under by the Industrial Assurance Commissioner shall be guilty of an offence and liable, on summary conviction, to a fine not exceeding £200.
(1B) The maximum penalty that may be inflicted on a society registered under the Friendly Societies Act 1896, being a friendly society within the meaning of that Act, for an offence under the Industrial Assurance Act 1923 committed after the passing of this Act shall, instead
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of being a fine not exceeding £100 or. in the case of a continuing office, a fine not exceeding £50 a day during which the offence continues, be a fine not exceeding £200. and, accordingly, section 39(1) of that Act shall, in relation to an offence under that Act so committed by a society so registered, being such a friendly society as aforesaid, have effect with the substitution, for the proviso thereto, of the following proviso:—
'Provided that the maximum penalty that may be inflicted for an offence under this Act shall be a fine not exceeding £200'.)"
—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move this Amendment, which has been covered by the reasons which I have given for the Amendments to Clause 68.
Amendment moved—
Page 59, line 11, at end insert—
("and section 39(2) of the Industrial Assurance Act 1923 (penalization of contraventions of, and failures to comply with, the provisions of that Act or directions given there under by the Industrial Assurance Commissioner) shall cease to have effect, except in relation to contraventions or failures occuring before the passing of this Act.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 68, as amended, agreed to.
Clause 69 [Proceedings against unincorporated bodies for offences under Part II for the principal Act]:
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 59, line 14, leave out from ("body") to ("shall") in line 15.—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 59, line 21, leave out from ("Act") to ("shall") in line 23.—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 59, line 29, leave out from ("Act") to first ("in") in line 31.—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 59, line 35, leave out from ("body") to ("section") in line 37.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 69, as amended, agreed to.
Clause 70 [Criminal liability of directors, etc.]:
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 59, line 41, leave out from ("corporate") to ("is") in line 42.—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move the Amendment standing in the name of my noble friend Lord Shepherd, who is here to see that I give the correct explanation. With permission, I would take this Amendment and No. 61 to Clause 78 together. It is appropriate to apply the exclusion of a professional adviser, such as a solicitor or accountant, from the definition of "a person in accordance with whose directions or instructions any of the directors of a company or other body corporate are accustomed to act", to the reference of such a person in Clause 48(b) as well as to that in Clause 70. This was omitted in the Bill and these Amendments rectify that omission.
Amendment moved—
Page 60, line 7, leave out from ("act") to end of line 10.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 70, as amended, agreed to.
Clause 71 [Application of certain provisions of Part I to summary proceedings under Part II of the principal Act]:
LORD WINTERBOTTOM: This Amendment ensures that the extension of time for the bringing of summary proceedings for an offence under Part II of the Bill shall apply from the date on which the evidence comes to knowledge of the Industrial Assurance Commissioner as well as to the Board of Trade and to the Director of Public Prosecutions. This is necessary because offences under Part II may relate to industrial assurance business. It brings the Bill into line with the provisions of the Industrial Assurance Act. I beg to move.
Amendment moved—
Leave out Clause 71, and insert the following new clause:
(Application of certain provisions of Part I to summary proceedings in respect of offences under Part II
"71. Subsections (2) to (5) (both inclusive) of section 35 of this Act shall apply to, and in connection with, summary proceedings for offences under this Part of this Act and to informations relating to offences there under which are triable summarily as they apply to, and in connection with, such proceedings for offences under the Companies Act 1948 and Part I of this Act and to informations relating to offences there under that are triable summarily, but subject to the modification of the inclusion, after the references to the Board of Trade, of references to the Industrial Assurance Commissioner.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 72 [Restriction of institution of proceedings in respect of offences under Part II or the principal Act]:
LORD WINTERBOTTOM: This Amendment ensures that proceedings for offences under Part II of the Bill may be brought by or with the consent of the Industrial Assurance Commissioner as well as by the Board of Trade. This is necessary because offences under Part II of the Bill may relate to industrial assurance business. I beg to move.
Amendment moved—
Page 60, line 21, leave out from ("Trade") to end of line 24, and insert ("the Industrial Assurance Commissioner or the Director of Public Prosecutions").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 72, as amended, agreed to.
Clause 73 [Power of Board of Trade to exempt certain companies from certain provisions of the principal Act]:
LORD WINTER BOTTOM: With the consent of the Committee I should like to move Amendments 60C to 60L together. I beg to move.
Amendments moved—
Page 60, line 27, at end insert ("or of a registered society")
Page 60, line 29, after ("company") insert ("or society")
Page 60, line 34, after ("company") insert ("or society")
Page 60, line 36, after ("company") insert ("or society")
Page 60, line 40, after ("company") insert ("or society")
Page 60, line 46, after ("company") insert ("or society")
Page 61, line 1, after ("company") insert ("or society")
Page 61, line 6, after ("company") insert ("or society")
Page 61, line 8, after ("company") insert ("or society").—(Lord Winterbottom.)
On Question, Amendments agreed to.
Clause 73, as amended, agreed to.
Clause 74 agreed to.
3.12 p.m.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after Clause 74, to insert the following new clause:
Construction (as to Northern Ireland) of certain references
". In section 1(5) of the principal Act and in section 44(1)(c) of this Act, the expression 'Acts' shall include Acts of the Parliament of Northern Ireland, and in section 44(1A)(b) of this Act the reference to the Friendly Societies Act 1896 shall include a reference to that Act as it applies in Northern Ireland and to any enactment of the Parliament of Northern Ireland re-enacting that Act (whether with or without modifications)".
The noble Lord said: I beg to move to add this new clause to the Bill. The reasons for it are that Section 1(5) of the Insurance Companies Act 1958 excepts from the restrictions imposed by that Act on insurance business.
"a body registered under the Acts relating to friendly societies or trade unions",
and Clause 44(1)(c) of the Bill uses the same words to except those bodies from the restrictions which will be imposed by the Bill. The new clause, by providing that the "Acts" in question shall include Northern Ireland Acts, ensures that any friendly societies or trade unions which in future may be registered in Northern Ireland under Northern Ireland Statutes relating to such bodies are within the exception. I beg to move.
Amendment moved—
After Clause 74, insert the said new clause.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 75 [Annual report by Board of Trade]:
On Question, Whether Clause 75 shall stand part of the Bill?
LORD DRUMALBYN: I should like to ask the reason for the change in this clause. The information that is required to be given under the redrafted clause that is to take the place of Section 10 of the present Act is very much less detailed. What is the reason for this?
LORD WINTERBOTTOM: I am afraid there was some confusion, and I did not quite catch the question the noble Lord asked.
LORD DRUMALBYN: Clause 75 has the effect, if taken together with line 10 on page 95 of the Bill, of repealing the whole of Section 10 of the present Act, and Clause 75 substitutes a very much shortened version of that section. I am wondering why this has been done: whether it is intended to give much less information, and, if so, why?
LORD WINTERBOTTOM: I do not think it is a question of less information; it is a question of compression. The two things are not quite the same. This clause requires the Board of Trade to make an annual report on the working of the Act. The requirement is expressed in terms similar to that of Section 451 of the Companies Act, leaving the Board a certain latitude as to what is included. At present the Board are in principle required by Section 10 of the principal Act to lay all the documents received in accordance with the Act annually before Parliament. This procedure was found to be inconvenient and of little practical value in informing Members, and the public at large, about the financial position of insurers and it was abandoned by general consent within a few years of its introduction in the Life Assurance Companies Act 1870. At that time some 50 companies were involved; there are now over 500.
Although the requirement was not repealed and was carried over when the Acts were consolidated in 1958, its literal terms have remained unobserved since the 1890s and the Board of Trade have since published the documents, in lieu of laying them. Since 1924 they have been published in summarised form and it is proposed under the clause to continue this, although changes in form will now he possible where this appears useful. It is also envisaged that the report will give an account of the use made by the Board of the new powers provided in

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this Bill relating to authorisation, restriction of business and directions. Section 10 of the principal Act is repealed in Part II of Schedule 6.
LORD DRUMALBYN: I am obliged to the noble Lord.
Clause 75 agreed to.
Clause 76 [Amendments (of minor nature or consequential on Part II) of the principal Act and the Industrial Assurance Act 1923]:
LORD WINTERBOTTOM: This is a drafting Amendment, which arises mainly from the fact that several amendments of the Industrial Assurance Act 1923 are now proposed to be made in Part II of Schedule 4 to the Bill, whereas the original Part II of Schedule 4 amended only one provision (Section 7) of that Act. I beg to move.
Amendment moved—
Page 61, line 30, leave out from ("Schedule") to ("consequential") in line 34 and insert ("and the provisions of the Industrial Assurance Act 1923 specified in column 1 of Part II of that Schedule shall have effect subject to the amendments respectively specified in relation thereto in column 2 of that Part of that Schedule (being, in each case, amendments of a minor nature or").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 76, as amended, agreed to.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after Clause 76, to insert the following new clause:
Repeal of certain provisions of section 18 of the Industrial Assurance Act 1923 and of Schedule 2 thereto.
". The following provisions of the Industrial Assurance Act 1923 shall cease to have effect, namely,—

(a) section 18(1)(b) (basis of valuation of liabilities of collecting society or industrial assurance company);

(b) in section 18(1)(g) (power of Industrial Assurance Commissioner to require collecting society to furnish information additional to that required to be furnished under section 28 of the Friendly Societies Act 1896, and industrial assurance company to furnish information additional to that required to be furnished under the principal Act), the words 'all or any of such particulars as are mentioned in the Second Schedule to this Act, and'; and

(c) Schedule 2."

The noble Lord said: This new clause repeals certain provisions which are no
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longer needed in Section 18 of the Industrial Assurance Act 1923 and in the related Schedule 2 to that Act. Section 18(1)(b) of the 1923 Act prescribes in general terms the basis of valuation for an industrial assurance company or a collecting society. There is no similar prescription for other insurance company valuations, and it is thought inappropriate that legislation should attempt to lay down the principles of valuation. This is a matter which can safely be left in the hands of the professional actuaries who carry out valuations.
Section 18(1)(g) of the 1923 Act empowers the Industrial Assurance Commissioner to direct a collecting society or an industrial assurance company to furnish certain particulars relating to its valuation which are set out in Schedule 2 to that Act. So far as these particulars are needed they can be prescribed by the Commissioner, in the case of industrial assurance companies, by Regulations under Section 34 of the Insurance Companies Act 1958, and in the case of collecting societies under the power conferred on him by Section 98(3) of the Friendly Societies Act 1896. The power given by Section 18(1)(g) of the 1923 Act and the Second Schedule to that Act are therefore redundant. I beg to move.
Amendment moved—
After Clause 76, insert the said new clause.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 77 agreed to.
Clause 78 [Interpretation of Part II]:
LORD WINTER BOTTOM: We have discussed this Amendment previously. I beg to move.
Amendment moved—
Page 62, line 7, after ("Act") insert ("'registered society' means a society registered or deemed to be registered under the Industrial and Provident Societies Act 1965").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: This Amendment was the subject of earlier discussion. I beg to move.
Amendment moved—
Page 62, line 11, at end insert—
("(3) A person shall not be deemed to be within the meaning of any provision of this

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Part of this Act a person in accordance with whose directions or instructions the directors of a company or other body corporate or any of them are accustomed to act by reason only that the directors of the body act on advice given by him in a professional capacity").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 78, as amended, agreed to.
Clauses 79 and 80 agreed to.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved, after Clause 80, to insert the following new clause:
The Isle of Man and the Channel Islands
".—(1) The provisions of this Act specified in subsection (3) below shall extend to the Isle of Man subject to such of the modifications specified in section 103 of the Friendly Societies Act 1896 as are relevant in the circumstances; and, notwithstanding anything in section 11 of the Petty Sessions and Summary Jurisdiction Act 1927 (an Act of Tynwald), a complaint relating to an offence under section 44 or 68 of this Act which is triable by a court of summary jurisdiction in the Isle of Man may be so tried if it is made at any time within three years after the commission of the offence and within twelve months after the date on which evidence sufficient in the opinion of the Attorney General of the Isle of Man to justify the proceedings comes to his knowledge, and for this purpose a certificate of the said Attorney General as to the date on which such evidence as aforesaid came to his knowledge shall be conclusive evidence.
(2) The provisions of this Act specified in the following subsection shall extend to the Bailiwick of Jersey subject to such of the modifications specified in section 104(1) of the Friendly Societies Act 1896 as are relevant in the circumstances and to the Bailiwick of Guernsey subject to such of the modifications specified in section 104(2) of that Act as are so relevant.
(3) The provisions of this Act referred to in subsections (1) and (2) above are the following, namely,—

(a) subsection (1B) of section 44 and subsection (2) thereof so far as it relates to carrying on business in contravention of the first-mentioned subsection;

(b) section 68(1A) and (1B);

(c) section 68(2) so far as it relates to section 39(2) of the Industrial Assurance Act 1923;

(d) section 71 so far as it applies section 35(2) of this Act to offences under subsection (2) of section 44 consisting in carrying on business in contravention of subsection (1B) thereof and offences under section 68(1A);

(e) section 76 and Schedule 4 so far as they relate to the said Act of 1923; and

(f) section (Repeal of certain provisions of section 18 of the Industrial Assurance Act 1923 and of Schedule 2 thereto)."

The noble Lord said: I beg to move the new clause. There are related Amendments, Nos. 61A, 63A and 63C and perhaps it would be for the convenience of the Committee if we dealt with them together, the new clause and the Amendments to Clauses 86 and 87. These Amendments extend certain provisions of the Bill concerning industrial assurance to the Isle of Man and the Channel Islands. This is necessary because the Industrial Assurance Act 1923 and the Industrial Assurance and Friendly Societies Act 1948 both extend to those Islands. The provisions of the Bill which Amendment No. 61Awill extend to the Islands are: (a) Clause 44(1B) and (2), which take over from Section 1 of the Industrial Assurance Act 1923 the restriction there imposed on the persons who may carry on industrial assurance business; (b) the provisions of Clauses 68(1A) and (1B), Clause 68(2) and Clause 71 relating to offences under the Act of 1923; and (c) provisions of Clause 76, Schedule 4 and the new clause to be inserted after Clause 76 which amend or repeal provisions of the Act of 1923.
Amendment No. 61A modifies the extension of the above provisions to the Isle of Man and the Channel Islands in the same way as the extension of the 1923 Act to those Islands was modified: that is to say, by reference to provisions in Sections 103 and 104 of the Friendly Societies Act 1896, which adapt expressions used and procedures laid down in that Act to the local law and procedures of the Islands. Amendment Nos. 63A and 63C are closely related. These extend to the Isle of Man and the Channel Islands the provisions of Clause 86 and Schedule 5 which repeal spent or obsolete provisions of the Industrial Assurance Acts 1923 and 1948, and the provisions of Clause 87 and Schedule 6 which repeal provisions of the Act of 1923 consequentially on provisions of the Bill. I beg to move.
Amendment moved—
After Clause 80 insert the said new clause.—(Lord Winterbottom.)
LORD HAWKE: I am afraid I have not understood a single word of what the noble Lord has said, but may I ask him a question? Does this control over mushroom insurance companies extend to companies set up in the Channel

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Islands, the Isle of Man and Northern Ireland?
LORD WINTERBOTTOM: This clause relates specifically to the Isle of Man and the Channel Islands. As we have seen from Clause 80, Northern Ireland is exempted from the impact of this Bill.
LORD HAWKE: If I wish to start a mushroom insurance company, do I start it in Northern Ireland, or is there a local provision there for local supervision?
LORD WINTERBOTTOM: Certainly the Northern Ireland Government will be expected to control this offence within its own sphere of legislation. Since this is a tricky point of law—I will not say of international law—I should like to write to the noble Lord on this subject. I do not know whether the cri de haro would apply in the circumstances since local procedures are being harmonised.
LORD MITCHISON: I hope that the Board of Trade are satisfied that they have covered all the Channel Islands. The Bailiwick of Jersey and Guernsey appears to include Alderney, Sark, Herm and Jethou, but I understand that there are small islands off the coast where there is still a dispute between this country and France as to which is the sovereign Power. No doubt on a matter of this importance—because one must chase fraudulent promoters to the very ends of the earth; they love setting up companies just about there—the Board of Trade has consulted the Foreign Office on the proper status of these islands.
LORD DRUMALBYN: May I ask the noble Lord a question of the same sort that I asked before? How is it that this Amendment comes to be moved at this time? I should have thought that if there was a question of extending this legislation to the Isle of Man and to the Channel Islands it would have been under consideration for some time. Like my noble friend, I am afraid I have not managed to grasp everything the noble Lord has said. We will, of course, study it between now and the next stage. But perhaps in the meantime I could at least ask this question. Has the noble Lord any reason to believe that any evasions of this Bill and of the Act of 1958, which is now in force affecting the people of
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this country, are taking place operated from the Isle of Man or the Channel Islands?
LORD BROWN: I think it would be fair to state that the original Bill which was drafted before the last Election did not have a great deal of insurance legislation in it, so the proposed legislation in this Bill is of fairly recent vintage and is extremely complex. It has made necessary a great deal of discussion with the profession of insurance, and it is not surprising that Amendments of this sort have had to be put in at this stage. It is not altogether a question of omission by forgetting or overlooking; it is a question of trying to get the Bill before the House on the date the Government wanted it, in the light of the fact that there were clauses that still had to be drafted. I am sure the noble Lord is familiar with the difficulties officials suffer from in this respect.
With regard to the second part of the question, as to whether we have anxiety about loopholes of this kind, I am afraid that to be quite certain I have to take note of the question and put it to those who drafted the Bill. We have to be very careful indeed about this. I have not researched into the matter, but I take it that it has been constantly in mind. It is a good question, and I will make it my business to inquire further.
LORD DRUMALBYN: Perhaps I could ask a further question. I apologise for my ignorance in this matter, but is it a fairly common procedure that the Board of Trade acts, or rather claims jurisdiction, if one can put it in that way, in certain spheres so far as the Channel Islands and the Isle of Man are concerned, this particular sphere being the insurance one? I should like to know how far this is common practice and, apropos of that, whether the approaches for the Isle of Man and the Channel Islands to be brought into this orbit came from this side or from the Isle of Man and the Channel Islands.
LORD BROWN: I confess that I should like to know the answer to that question also. I will seek it out and let the noble Lord have an answer as soon as possible.
On Question, Amendment agreed to.
Clauses 81 and 82 agreed to.
Clause 83 [Functions of Board of Trade under Acts relating to Companies]:
THE LORD CHANCELLOR: Clause 83 provides that the functions of the Board of Trade under the Companies Act, Insurance Companies Act and the Bill may be carried out by the President of the Board of Trade or Ministers of State, Parliamentary Secretaries or certain specified officials. These clauses are in the usual form, but the Board of Trade's functions under the Moneylenders Act 1900 (to exempt companies from the requirements of the Act by Order) should also be exercisable in the same way. This is achieved by this Amendment. I beg to move.
Amendment moved—
Page 63, line 23, after ("under") insert ("the Moneylenders Act 1900,").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 83, as amended, agreed to.
3.31 p.m.
LORD MACPHERSON OF DRUMOCHTER LORD MACPHERSON OF DRUMOCHTER moved, after Clause 83, to insert the following new clause:
Amendment of Registration of Business Names Act 1916
". The Registration of Business Names Act 1916, shall be amended as follows:—
(1) In section 1, at end insert the following new paragraph:
'(e) Every association of firms, individuals and companies, which individually are either companies within the meaning of the Companies Act 1948, or fall within the provisions of this section, whether or not such association is carrying on a business for profit.'.
(2 In section 14, at end insert the following new subsection:
'(3) The Board of Trade may prohibit the registration under this Act and the use of any name by any association of firms, individuals or companies to which this Act applies, if in the opinion of the Board the registration or use of such name is undesirable'."
The noble Lord said: This Amendment is, I hope, a non-controversial one and would implement one of the recommendations of the Company Law Committee. I am moving this Amendment principally in order to protect the chamber of commerce movement in this country by preventing the indiscriminate use of the name "Chamber of Commerce". The Association of British Chambers of Commerce submitted written evidence to
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the Jenkins Committee, the main point being that there is nothing to prevent any group of firms or individuals from presenting themselves to the public as a chamber of commerce, even though they may be quite unrepresentative of any particular business interests.
This is obviously an unsatisfactory situation which, so far as the public is concerned, has two major adverse effects. First, overseas interests, which are accustomed to chambers of commerce being semi-public law bodies, are misled into thinking that every so-called chamber of commerce in the United Kingdom is of the same standing. Secondly, there is no means of distinguishing between a genuine chamber of commerce, which is representative of industry, commerce, transport and the professions in the area, and an organisation which has a predominantly retail membership but which chooses to call itself a chamber of commerce rather than, as would be correct, a chamber of trade.
In the Memorandum submitted to the Jenkins Committee both incorporated and unincorporated chambers of commerce were dealt with. The position with regard to incorporated chambers does not in practice cause any difficulty because, although the title has no statutory protection, the Board of Trade uses the powers which it has under Section 17 of the Companies Act 1946 to ensure that no association of firms is incorporated as a chamber of commerce unless it can genuinely claim to be such. Therefore, the practical difficulties arise only in connection with unincorporated chambers because the Registration of Business Names Act 1916 does not give the Board of Trade power to refuse to register a business name on the grounds that it is undesirable. In the case of companies the Board has such power by virtue of Section 17 of the Companies Act and it uses it to ensure, after inquiry and consultation with the Association of British Chambers of Commerce, that only truly representative chambers are registered as companies. The Jenkins Committee accepted this point and recommended in paragraph 444 of their Report that the Registration of Business Names Act 1916 should be amended accordingly.
The first new clause which I am proposing would give the Board of Trade

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powers to deal, where necessary, with unincorporated chambers. Section 1 of the Registration of Business Names Act 1916 lists those classes of individual firms and companies to which the Act applies, and at present no provision is made for the registration of associations of individuals who would have to register on their own account if they adopted a business name. My first proposed Amendment remedies this omission. Section 14 of the Registration of Business Names Act is entitled "Misleading business names" but in fact it does no more than give the Registrar the right, subject to appeal to the Board of Trade, to refuse to register a business name which falsely implies British ownership, and forbids the use of a registered name where such would be prohibited on other grounds.
Subsection (2) of the proposed new clause would give the Board of Trade the right, through the register of business names, to refuse to register the name of an association of firms on the same grounds of undesirability as the Registrar of Companies is empowered to refuse to register the name of a company.
I should like to draw your Lordships' attention to the fact that my Amendment has been worded to cover only associations of firms, and thus the implementation of paragraph 444 of the Jenkins Report, and will not result in the Registrar of Business Names having to concern himself with other associations, such as social and sporting clubs. It will in fact do no more than give the Board of Trade the same power in respect of unincorporated business associations, including chambers of commerce, as it already has and uses in respect of incorporated associations. I beg to move,
Amendment moved—
After Clause 83, insert the said new clause.—(Lord Macpherson of Drumochter.)
THE LORD CHANCELLOR: I am, of course, familiar with the evidence given by the Association of British Chambers of Commerce before the Jenkins Committee and with the recommendation made by that Committee. I appreciate very much, if I may say so, the great clarity with which the noble Lord has put forward his Amendments. I should be inclined to think that in his first Amendment the first line in subsection (1)(e) should read,
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"Every association of firms, individuals or companies,"
rather than "and companies".
I am afraid I am unable to advise the Committee to accept the Amendment because this is dealing again with the question of names. We have already considered what Amendments there should be in relation to the Board's powers with regard to companies' names, and the Committee negatived this because it was assured that the whole question of names, which includes of course the Business Names Act, was being favourably considered by my right honourable friend for the next Companies Bill. I do not know whether the noble Lord was here on Monday.
LORD MACPHERSON OF DRUMOCHTER: I have read the noble and learned Lord's speech.
THE LORD CHANCELLOR: I was hoping that I might not have to inflict the speech on the Committee again; noble Lords opposite are familiar with it. I am afraid that is the position. There are, as I have said, some questions which my right honourable friend has had an opportunity to consider with his Department, but there are other questions which he has not so considered, and I am afraid the subject matter already chosen for this Bill goes as far as the Government can go in this Bill. Therefore I hope the Committee will take the same course with regard to this Amendment as it did with the other Amendment dealing with names.
LORD MACPHERSON OF DRUMOCHTER: I have been privileged to lead two delegations to Europe this year on behalf of the London Chamber of Commerce, to promote our export trade both in Northern France and in the Netherlands, and I can assure your Lordships that now that we are trying to move closer to our European neighbours it is imperative that we do not allow unscrupulous people to take unfair advantage of the present position and possibly prejudice our prospects. It must be borne in mind that chambers of commerce in certain circumstances are responsible for the issuing of such documents as certificates of origin. I am, of course, aware that the Government are trying to limit the Amendments to this Bill, and

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I have carefully studied the noble and learned Lord's speech on Monday evening and note that a further Companies Bill will be presented to Parliament some time in the future. But in the same speech the noble and learned Lord goes to great lengths to advise your Lordships of the tremendous amount of work being done and to be done by the Government and how difficult it is to plan and meet commitments in the Parliamentary programme. I should, therefore, like to ask the noble and learned Lord to allow this very small but so important Amendment to go forward and thus show the Government's support for those people who are dedicated to the promotion of our export trade. I assure your Lordships that this is a point of urgency to-day.
LORD ERROLL OF HALE: I wonder whether I may reinforce the powerful plea of the noble Lord, because here I speak also as a representative of a chamber of commerce being currently President of the London Chamber of Commerce. While I appreciate the noble and learned Lord's point on consistency, that having rejected one Amendment we should, to be consistent, reject this one, I submit that the two are not on all fours. This is a rather special Amendment dealing with the particular position of chambers of commerce and their role in the export drive. These certificates of origin are becoming of increasing importance to our export drive, where they are being increasingly required as proof of the origin of the goods being British. At the moment there is nothing to stop an unincorporated body from calling itself a chamber of commerce and proceeding to issue certificates of origin. This could be a very serious matter and prejudice the widespread acceptance of the authority and integrity of the certificates of origin at present issued by reputable chambers of commerce. It is for this reason, as well as for the fact that it was a strong recommendation of the Jenkins Report, that the noble Lord put forward the Amendment, which has the full support of the chamber of commerce movement.
In his long speech on Monday night—I have heard some of my noble friends describe it as a lecture rather than a speech—the noble and learned Lord suggested the Government had a great deal to do and even referred to the export
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drive. Here is a way in which the noble and learned Lord can live up to the lecture by applying its lessons to himself and accepting this Amendment, even in the slightly modified form in which he suggested it should be considered by the Committee. If he cannot give a direct answer to-day, perhaps he will say that he will consult his right honourable and very busy friend the President of the Board of Trade. He is no busier than I was, and we got through it without squealing; we did not need our Lord Chancellor to come and apologise for our being busy; we did not need that support and assistance. If the noble and learned Lord would undertake to put this matter to his right honourable friend, I am sure we might be able to persuade the noble Lord, Lord Macpherson of Drumochter, to withdraw his Amendment.
LORD BROWN: May I start by pointing out that the noble Lord, Lord Erroll of Hale, during his tenure of the Board of Trade never introduced a Companies Bill or an amending Bill, and that is why he had time to think about so many other things. I am impressed, as no doubt I was expected to be, by the reference to the important connection between this Amendment and exports. I say now that I will think about it and probably discuss it. I do not hold out strong hopes of amendment, for this reason; I think, with great respect, that the importance of the points made have been a little exaggerated. For example, it is not true that anybody can form themselves into an unincorporated chamber of commerce and proceed to issue documents of origin. The control over bodies that have that right is now very tight indeed. It is administered by the Association of British Chambers of Commerce, and a body cannot achieve that right unless it meets extremely stringent conditions laid down by the A.B.C.C., as it is referred to; so if this is one of the main legs of the argument, I do not think it stands. I accept that there is a great deal of concern about this subject, but the extent of the practice of irresponsible chambers of commerce is, I believe, extremely limited. Until legislation pursuing the line of this Amendment is introduced in a further Companies Bill—and we have intentions to look at it very seriously then—I do not

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think there is a great deal of danger of things going awry. It has been a matter of a good deal of scrutiny recently by the Board of Trade.
LORD MACPHERSON OF DRUMOCHTER: I should like to quote to the noble Lord an extract from the written evidence given to the Jenkins Committee on the use of the title "Chamber of Commerce":
"The Association is much concerned at the possible misuse of the title 'Chamber of Commerce'. A separate memorandum on the question is attached making suggestions how the matter should be regulated. Added importance is attached to the subject because Chambers of Commerce may in certain circumstances be required to give certificates of origin in connection with European Free Trade Area."
LORDBROWN: I note the paragraph. I personally had to deal with the Association of British Chambers of Commerce quite recently over new arrangements for the certification of other chambers of commerce. I can only repeat the information already given to the House. The matter is under strict control and no body of the sort indicated by the noble Lord can achieve to-day the responsibility of issuing certificates of origin. In the light of the discussion and the assurance that we will have another look at it and will take this point very seriously into account when we come to the further Companies Bill which we hope to introduce in the life of this Government, I hope the noble Lord will see fit to withdraw his Amendment.
LORD MACPHERSON OF DRUMOCHTER: I am not very experienced in the ways of this House. If I understood the noble Lord correctly that he says he will consider this matter, then I should be ready to withdraw my Amendment. But if his answer is that consideration will be given to it in another Companies Bill, I should feel slightly differently.
LORD BROWN: I think I ought to be quite specific about this. In the light of the important connection between the Amendment and exports, which the noble Lord has fairly successfully forged in his earlier remarks, I think it would be proper for me to say I will have this matter considered. But I added that I do not think the chances of getting this included
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in the present Bill are high, because of our desire to limit this Bill for reasons already given. In saying I will have it reconsidered, I do not want to mislead the noble Lord into thinking that the prospects of the Amendment, or words to give effect to the Amendment, being included in the Bill are high. Nevertheless, I will have it reviewed. Subject to that, I hope the noble Lord will withdraw his Amendment. I am not giving him a great deal of hope; I am giving him just a chink.
LORD MACPHERSON OF DRUMOCHTER: In view of the noble Lord's remarks, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 84 agreed to.
Clause 85 agreed to.
Clause 86 [Cesser of spent or obsolete enactments]:
LORD WINTERBOTTOM: I beg to move No. 63A.
Amendment moved—
Page 64, line 12, at end insert—
"(2) This section, and Schedule 5 to this Act, so far as they relate to the Industrial Assurance Act 1923 and the Industrial Assurance and Friendly Societies Act 1948, shall extend to the Isle of Man and the Channel Islands.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 86, as amended, agreed to.
Clause 87 [Short title, citation and repeal]:
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 64, line 21, at end insert—
("(a) each of the provisions of the Industrial Assurance Act 1923 specified in column 1 of Part (Repeals in the Industrial Assurance Act 1923) of Schedule 6 to this Act shall. to the extent specified in relation to it in column 2 of that Part, be repealed at the time so specified in column 3 thereof.")—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTER BOTTOM: I beg to move.
Amendment moved—
Page 64, line 44, at end insert ("and this section and Schedule 6 to this Act, so far as

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they relate to the Industrial Assurance Act 1923, shall extend to the Isle of Man and the Channel Islands.")—(Lord Winierbottom.)
On Question, Amendment agreed to.
Clause 87, as amended, agreed to.
Schedule 1 [Amendments of Schedule 8 to the Companies Act 1948]:
3.52 p.m.
LORD DRUMALBYN LORD DRUMALBYN had given Notice of several Amendments, the first being, in paragraph 12(2)(c), after "tax" to insert "properly chargeable against profits" The noble Lord said: With the permission of the Committee I should like to take Amendments Nos. 64, 65, 74, 75, 77, 78, 83 and 84 together. They deal with the same point. The point here relates to capital gains tax. I am not absolutely certain that it is rightly taken in the first two Amendments but at any rate the point is relevant to Schedule 1. It is that capital gains tax is not always properly chargeable against profits. Indeed, if I could give the example of the investment trust companies, both by their articles and by law, under Section 37 of the Finance Act, 1965, they are prohibited from distributing capital surpluses as dividend. They are prohibited from taking capital surpluses to the credit of the profit and loss account. It would therefore he quite misleading to shareholders to show net profit after deduction of the taxation charge on these capital surpluses, as well as being contrary, I am told, to good accounting practice.
It is true that under the Finance Act 1965 capital gains taxes are included as profits subject to corporation tax; but it does not follow that in all cases the tax charge on capital gains should be shown as a charge against profits in the profit and loss account. There is surely no justification for confusing capital and income in company accounts. Whether it suits the Chancellor of the Exchequer to treat capital as income or not, it is surely indefensible to require companies to falsify their net profits by deducting a capital charge from revenue profit. Even the Finance Act 1965 recognises that, at least in the case of investment trusts, capital gains and tax chargeable on them are essentially capital items, since capital gains are charged at a special rate and credit for any capital gains reduced by tax is permitted to be passed on to shareholders. Clearly, this should
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be reflected in the accounts of the company.
Whether or not it is right in some circumstances for capital gains tax to be deducted from the profits in the profit and loss account, it is plainly wrong in the case of investment trusts. Amendment No. 65, therefore, qualifies the words "taxation of capital gains" by the words "properly chargeable against profits"; while the effect of Amendment No. 64 would be that only so much of corporation tax as was properly chargeable against profits would be shown. As I said, I am not at all certain that my Amendments are the right way to deal with the point; but at least I am certain that putting down these Amendments is as good a way as any of drawing Government attention to it. I beg to move the first Amendment.
Amendment moved—
Page 69, line 2, after ("tax") insert ("properly chargeable against profits").—(Lord Drumalbyn.)
LORD BROWN: I find myself in an unusual situation because the purpose of the words in paragraph 12(2)(c) are that the company is asked in its profit and loss account to show
"the amount of the charge for United Kingdom corporation tax"
and so on. On reading the noble Lord's Amendment I was of the mind that this meant that the whole of the corporation tax was to be charged in this way to the profit and loss account; in other words, when I was reading it I was of the same mind as I think was the noble Lord himself, and thus the Amendment. I have sought legal advice inside the Board of Trade trenchantly on the point, and I am advised that these words are intended to be construed, and indeed can be construed, in such a way that part of corporation tax can he charged against the profit and loss account and part against capital reserve, according to what looks to be common sense to the company concerned. In other words, if those who drafted this paragraph are right in the interpretation that can be put upon this matter, then the result will be a degree of flexibility which I believe will he quite salutary to all concerned.
I expect the noble Lord will agree with me on this point, because those of us who are concerned with company

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matters know that situations can easily arise where it becomes a matter of judgment as to whether one is dealing with a capital gain or a profit on current account. There are such occasions—if necessary I could give examples—where one requires flexibility. If the noble Lord will accept that the words are intended to mean what I have said they are intended to mean, and that they can be so construed, perhaps he will not persist with these Amendments. I will have the matter examined closely, because there has not been much time to make sure on this point, and if it is found that the flexibility that is intended to be written into this clause is not there, we will amend the clause to give that flexibility.
LORD ERROLL OF HALE: We are grateful to the noble Lord for the work that he has already done and is proposing to do in this matter. In his further examination would he make absolutely certain that the option will lie entirely with the company as to whether it charges the tax to capital or to profit and loss account to its own better advantage, and that such a determination cannot be upset by the Inland Revenue? Will he also ensure that the company may change the balance of the options at any time to suit its own advantage without the Inland Revenue being able to upset such a changed determination?
LORD BROWN: I will undertake to go into that point. I cannot, here and now, undertake to give total assurance on that point. I have not looked at this issue yet. One might be giving the most glorious loophole for tax avoidance, or something like that, that anybody ever dreamed of by agreeing to such a thing. But the intention in the paragraph as printed was to give flexibility at the discretion of the company, although I am sure it would not give flexibility for the company to indulge in massive tax avoidance, or anything like that. If we may leave the matter there, we will, as I say, take note of the discussion. I am sure that the intention on both sides of the Committee is the same, although the question of the best wording seems to be a little difficult.
LORD DRUMALBYN: I am grateful to the noble Lord for the assurance he has given. It is rather an odd defence
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of drafting to say "Well, the words can be interpreted in the sense in which the Board of Trade intended they should be interpreted." If he had said they can be interpreted only in that way, that would have been a different matter. But surely, while retaining flexibility, we must have some sort of clarity. I thought that my wording did just that. I hope that the noble Lord will, as he has said, look at the matter again. If he thinks it can be dealt with rather better as the Bill stands, that is fine; but I should have thought that if he cannot say more for the drafting of the Bill as it is now, then it should be altered.
LORD BROWN: I do not want to prolong this discussion, but it is only proper that I should defend the very hardworking officials who helped to draft these provisions. I think I have understood them aright in saying that they can be interpreted only in this way, and in giving me this advice the officials have referred to other provisions of the Bill which would back up that interpretation, but which I have not given the Committee, in order not to prolong the discussion. I do not think I want to be quoted as saying that it "can" be interpreted in this way. My advice is that it should be, and can only be, interpreted in that way. But I should like to be a little more certain on the point.
LORD HAWKE: The noble Lord has spoken of possible loopholes for tax avoidance, and so on. Surely this is quite irrelevant. Tax is determined by the Finance Acts. This matter is only a question of giving information to the stockholders.
LORD DRUMALBYN: Surely one comes back again to the same point. The noble Lord now says that he is advised that this can be interpreted only in this way. I concede that he means that it can be legally interpreted only in this way, but the fact is quite clear: that it has been, and will be, interpreted in other ways unless he does something about it. So will he please do something about it? I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.3 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved in paragraph 12(3), after "(ga)" to insert "Subject to sub-paragraph (3) of this

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Paragraph". The noble Lord said: I think that it would be for the convenience of the Committee to discuss Amendments 67, 68, 69 and 70 at the same time. This deals with an important matter which was raised on Second Reading concerning private companies which are at present exempt companies. It follows one of the recommendations of the Jenkins Committee that, while exemption should be withdrawn in the case of private companies, nevertheless they should not be required to show details of three things: turnover, directors' emoluments, and rents. As time is getting on, I will not trouble the Committee by putting the whole argument again.
I would just point out briefly that the disclosure of rents in the case of a small company can be a very serious embarrassment to it when it has been encroached upon by a large company. This applies particularly to the retail trade, and can also apply to the small manufacturing business the subject of approaches by a larger firm who wish to take them over. If they know that the rent is small they can lower their bid, and it can put the small company at a serious disadvantage. Without prejudice to our consideration of the other two matters, namely, turnover and emoluments, I hope that the noble Lord can consider favourably exempting rents in the case of non-quoted companies.
Amendment moved—
Page 69, line 12, after ("(ga)") insert the said new words.—(Lord Erroll of Hale.)
LORD BROWN: Like the noble lord, I shall deal quite quickly with this matter, because I think that I can probably satisfy him. We do not agree that disclosure of charges for hire of plant is harmful; we do not agree that disclosure of rents receivable where they are material in the case of revenue is harmful. We cannot, for reasons I have explained on many occasions, treat one class of company differently from another, but we agree that disclosure of rents payable may be harmful. Therefore, we are prepared to omit from the Bill altogether the need to disclose rents payable.
Perhaps I could add the explanation that the original inclusion of the rents payable was in line with the Jenkins Report to take account of the company—and there have been a large number of cases of this kind in recent years—which has sold its property to receive
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capital and has rented it back on long leases. It seemed appropriate that these should be disclosed. Our difficulty was that in getting this information disclosed we also brought to bear the same onus on the tiny companies. We have come to the conclusion that it is not as important as it might appear because if a company in fact sells property in this way and leases it back, it will have to explain the source of the large amount of capital which it has acquired. In that sense disclosure of these major deals will come about automatically. Therefore, we propose to withdraw altogether the question of disclosure of rents payable. If noble Lords who have moved this big block of Amendments are prepared to withdraw them, we will make consequential Amendments to the Bill to give effect to what I have stated to be our intention.
LORD HAWKE: Is this matter of withdrawing the provision to disclose rent to apply to all companies? That would appear to be logical. I know what was exercising the noble Lord's mind in regard to the selling and renting back, but when one considers that the normal company expects to make far more money on the capital employed than it would be paying in percentage on the capital sunk in rent I think his point falls.
LORD ERROLL OF HALE: May 1 say how grateful we are for what the Minister has just said? It is a pity that he could not go all the way with us, but I am sure this important change will make a very great deal of difference to the large number of small companies, which at present feel they have been rather hard done by, under this Bill. We look forward to seeing the Amendments in the New Year—more hard work, I am afraid, for the noble Lord's Department. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD DRUMALBYN LORD DRUMALBYN moved, in the proposed new paragraph 13A of Schedule 8 of the 1948 Act to insert:
"(1) This paragraph shall apply except where the company is a private company or a company none of whose shares or debentures are for the time being dealt in or quoted on a prescribed stock exchange."
The noble Lord said: It might be convenient to take Amendments 71 and 73 together. These two Amendments deal

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with the other of the two recommendations made by Jenkins in paragraph 352 (ii)—namely, that unquoted companies should not have to disclose their turnover. The noble Lord, Lord Brown, has resisted the exclusion of unquoted companies from the requirement in Clause 17, but that clause does not affect companies which deal only in one class of goods. In any case, it only requires companies dealing in two or more classes of goods which differ substantially from each other to state the proportions—and only the proportions—in which turnover is divided between classes. The total turnover, therefore, cannot be deduced from the figures required by Clause 17 to be given.
As the Jenkins Report observed, the principal object of their recommendation that the privilege of exemption from filing accounts with the Registrar should be withdrawn was to provide creditors and prospective creditors of limited companies with adequate information from which to judge their credit status. Commenting on their recommendation that unquoted companies should not have to disclose turnover, the Committee said:
"We do not think that this limited exemption will materially reduce the value to creditors of the filed accounts of such companies."
It went on, after other observations, to say:
"We have limited the scope of the exemption to companies in which the general investing public will not be interested."
Disclosure of turnover could harm the interests of local companies. For one thing, it could make them vulnerable to attack in a number of ways by companies with much greater resources, especially to attempts to squeeze them out by the use of monopolistic practices of one kind or another. I think it is sufficient for me to move this Amendment quite briefly in those terms. I beg to move.
Amendment moved—
Page 69, line 44, after "13A" insert the said new paragraph.—(Lord Drumalbyn.)
LORD BROWN: The noble Lords on the opposite Bench have been so polite and courteous at various stages of this Bill that if my heart were in the right place I should almost want to give way, lust for the sake of being courteous: but I am afraid I cannot do so. It is the Government's view that the accounts which a limited company should publish for the
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benefit of those who trade with and extend credit to it should include information about turnover. The trend of turnover of three or four years could be significant information for creditors. There are other reasons, also, which I have given in arguing a similar point on other Amendments. There is a general wish on the part of the Government to have one class of limited company. We think we are doing something very important here in the long run.
If the Amendment is accepted, there will be exclusion of a large number of private companies which are of a very substantial size, and we do not wish to exclude them. Disclosure of turnover is of significant value to shareholders if they are watchful ones, and there are some watchful ones. Disclosure by the tiny firms, we admit, may be very bothering, but we think that this also has a silver lining to it. In many small towns all over America people know a great deal about each other's business. It is a stimulus to those tiny traders to know that somebody else, with the same kind of market and stock, is doing twice the turnover.
This is really the philosophy of being against secrecy. It is said that if we disclose the information there are dangers everybody is going to be frightened about it: it is a big change. But then we have steadily gone through the years towards more disclosure and less secrecy, and every step in this direction has resulted in people being fearful. Yet when we have got used to it for a bit we have looked back and said that it was rather foolish to be so secretive in the past. We must go on advancing in this way. As a nation we tend to be more secretive than other nations, and I think we have got to be a little bold. It is for these reasons that I would once more turn to noble Lords and say, "Please would you be good enough to withdraw your Amendment in the light of the comments that I have made?"
LORD INGLEWOOD: The noble Lord referred to my noble friend's Amendment as being concerned not only with small companies but with companies which were of substantial size. I wonder whether he would consider at a later stage changing these words so that companies of small size are exempted, because it seems to me, whatever he may say and

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with all his courtesy and smiling ways, that on balance small companies are going to be harmed as a result of this Bill.
I do not agree with him entirely that it is the function of Government to apply this stimulus. 1 should have thought that small companies ought to be allowed to be the better judge of their own affairs. On balance, I should have thought, certainly so far as smaller companies were concerned, that this was a body blow. I hope the noble Lord will look at the Amendment again, if he feels that as worded now it also exempts a number of companies of a very large size, who are in a position to defend themselves against the dangers to which the Bill at the moment exposes them.
LORD BROWN: This, again, is a point which has already been debated vis-à-vis other Amendments, and had we been able to exclude the "tinier", as I like to refer to them, we should have done so. But attempts were made by the Cohen Committee in 1945 to work out a boundary separating the very small companies from their larger brethren, and they gave up the job. They could not do it on any of the criteria available, and they produced the exempt private company scheme which we all know has proved an open gateway. We now have 300,000 exempt private companies. We do not know how to work out a de minimis provision. There is no watertight way of doing it, and the worst thing you can possibly do is to think you have erected a fence over which people cannot scramble, when in fact it is not that sort of fence at all and it lets everybody in. So we have come to the conclusion that we shall have to let the "tinies" face the brunt of these disclosures. You can make a horrifying story about this and say that it is going to be bothering for them, but it is going to have its good side.
LORD INGLEWOOD: Not very often.
LORD DRUMALBYN: I think that this is a matter on which at this stage, just before Christmas, we shall have to agree to differ. I think we can draw the margin of difference quite clearly. At no time have the Government been able to tell us how many of these 300,000 companies they think ought to be subject to the full rigours of disclosure, so we
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do not know what the division is. They have been prepared to concede that there are companies—and it must in the nature of things be a very large number of companies—which are going to be harmed at the smaller end. It must be so, because there are so many more smaller ones than bigger ones.
LORD BROWN: May I just interject to say that I must dispute the fact that they are going to be harmed? I used the word "bothered", but bothering may in very many cases be good for them.
LORD DRUMALBYN: I am not certain. I think that the noble Lord is underestimating the damage that can come to these companies as a result of making their affairs generally known. Some people will be avid to acquire them, and so forth. There are not many advantages to the small companies that I can see in this. The general point is, surely, that under Clause 2 of the Bill we are calling for a great change, the abolition of the exempt private company, with most of the privileges of exemption. Jenkins has recommended that all the privileges of exemption should not disappear at one time, and the question which the Committee has to decide is whether it is right to try to take this one very big step at one time, irrespective of the consequences, or whether, as the Jenkins Committee recommended, we should to some extent temper the wind to the lambs that are going to be shorn. I have tried to express it quite objectively, but I think this is the difference between us. We shall have to reserve our position on this matter until the next stage of the Bill. Meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.18 p.m.
LORD DRUMALBYN: This is a slightly different point, and I hope that the Minister will at least concede that sometimes disclosure of turnover may involve a risk of harm to a company and to the community in which is operates—a harm much greater than any likely gain. All this new sub-paragraph asks is that if a company feels that it can make a case, it will have an opportunity to do so to the Board of Trade, and it will be open to the Board of Trade to grant exemption. I beg to move.
Amendment moved—
Page 70, line 7, at end insert—
("(5) The Board of Trade may direct that this paragraph shall not apply to a company where they are satisfied that its application is not required in the public interest and would prejudice the company or might have a misleading effect.").—(Lord Drumalbyn.)
LORD BROWN: I do not think this Amendment is specifically directed at disclosure overseas. Had it been so directed, I should have been prepared to say that if the noble Lord would withdraw it I would have it looked at from that point of view. I think there may be a case for considering whether we should release a company from disclosure, in the event of unforeseen overseas occurrences. But if we were to agree in principle that the Board of Trade should receive on general grounds claims for exemption from companies which were not making the case that it was overseas reasons which caused them, then we should have an enormous number of claims for exemption which would be completely unhandleable. The whole purpose of the Bill in this respect would thereby be defeated, by the flow of claims.
So I would ask the noble Lord to withdraw this Amendment, and I will cause consideration to be given to a different type of Amendment that would possibly give leave for claiming exemption on the ground that overseas interests would be affected. I cannot guarantee that we will introduce such an Amendment—we shall want to look at it—but we will seriously consider doing so.
LORD HAWKE: The noble Lord has an obvious remedy if he is frightened of being overwhelmed. He should exempt all these people from having to produce the figure of their turnover. But he is quite right: there are many people who, if he accepted this Amendment, would come along with very legitimate reasons for wishing not to disclose their turnover. Think of the numerous component manufacturers scattered all over the Midlands, making components for the motor trade, for the big stores and so on. It is greatly to their disadvantage that perhaps their only buyer should know precisely what their turnover is. He can find their profit; he will know exactly what their margin of profit is, and the next time he goes along to buy from them he will try
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to screw them down a bit tighter still. The noble Lord does not really realise what an appalling disadvantage these firms are going to be put to by having to disclose their turnover.
LORD INGLEWOOD: May I suggest another example in support of my noble friend? Take the case of a small hotel of which the obvious purchaser is a large brewery company. The disclosure of turnover year after year puts that hotel in a far weaker position should the small company which owns it be obliged, for some reason or other, to dispose of it. It will be very cruel, and I cannot believe that it is the purpose of noble Lords opposite that every village pub and every small hotel should have its days numbered and should fall, one by one, into the hands of very large brewery companies. Yet that will be one of the results of these provisions, and that, I should have thought, was a bit more than this rather mild word "bothering", of which the noble Lord told us in the previous debate.
LORD ERROLL OF HALE: I should like the noble Lord particularly to think of the administrative problems involved. He is going to have to look through 300,000 company accounts every year to see if the turnover figure is put in. If you got anything like a sit-down strike on this matter and some 50,000 firms decided not to put the turnover figures into their accounts or their directors' reports, what are the Board of Trade going to do about it? They cannot run 50,000 prosecutions a year on this one point. There is a lot more of the Bill which is rather like this, and which it will he quite impossible to police. We should try to be law-abiding whenever the laws permit us to be law-abiding, and I am sure regarding most features of this Bill that most companies will try to put into their accounts all the unnecessary information which this Bill is demanding. But here is an item on which many small firms feel very strongly. They will say, "It will ruin our business to publish this. It is better to be called a law-breaker and be fined than to give this information away. "The Board of Trade will not he able to police this provision, and if there is mass evasion the whole thing becomes a nonsense. I do urge the noble Lord to think along these lines as well when considering the matter further.
LORD BROWN: It is strange that what appear to be quite logical ideas can be supported against or for a single idea. May I take the points which have just been made? The noble Lord, Lord Hawke, has referred to the single-customer concern in the Midlands supplying components, and how he is going to be damaged by a disclosure of turnover. It is possible to hypothesise a company which has a single customer in this way, but it is a jolly sight more difficult to produce a handful of them. If you liked to work on the basis of hypothesis, you could invent all sorts of situations in which this Bill would be extremely damaging, whereas on looking round one finds they do not in fact exist, or that one may be able to pick up just two or three examples out of 400,000 companies. That is my response to the noble Lord, Lord Hawke.
The question of hotels disclosing turnover and being snapped up has been raised. It was also raised in an earlier part of the debate on this Amendment. There are many small businesses in this country which are avid to be snapped up. You would not believe how many applications the larger companies get from smaller companies who wish to be taken over. This may be news to some people. Here is a privately-owned company—owned, perhaps, by the landlord and his sons and brothers—and they are approached by somebody who wants to take them over because they have seen that they have a large turnover. Why should this bother them? If I owned something which was valuable to me and somebody wanted to buy it, I should not mind so long as I had the discretion as to whether I sold it or not. I should be in a very good position. I may be very pleased to sell it in this way.
LORD SOMERS: Might I suggest to the noble Lord that the only reason for these large numbers of small companies who wish to be taken over is that present Government legislation makes it so difficult for them to carry on what they have to do?
LORD BROWN: That is rather a different point. But this cuts both ways. The disclosure of information always does. Those who argue that it is either good or damaging for somebody are
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always faced with the fact that disclosure of information can do anything.
LORD INGLEWOOD: Will the noble Lord allow me to ask him a question? He mentioned a turnover level, but, of course, turnover levels are going to go up and clown, so naturally they could be damaging. But why is it necessary for the Government to risk damaging these small businesses? That is what is not clear.
LORD BROWN: I have given the reasons—and I do not want to go all over them again—why the Government wish companies to disclose turnover. I merely wanted to deal with the questions raised by the noble Lord when he suggested that it would be damaging to these small businesses when somebody approached and wanted to buy them. I merely make the point that it is sometimes a very good thing. If it is a company with a large number of shareholders, then it is quite unfair to hide the turnover in order to prevent others from coming along and offering the existing shareholders a very good price, because they are entitled to have a situation in which it might be possible for them to get much more for their shares than they would expect from the trickle of income they may be getting from them. I do not want to go further into the point.
Finally, to come to the point made by the noble Lord, Lord Erroll of Hale, about examination of returns, he is well aware that the examination of returns by Companies House is done on a sampling basis. It must be. Returns of this kind are not done on a 100 per cent. inspection basis, and we are assured that this is not too much of a load on the people concerned. I do not think this is really a point which is going to disturb us a great deal in the future. We in this country are, fortunately, by and large, a law-abiding country. I know that the crime figures worry us all, but in matters of this sort the average citizen is inclined to obey the law rather than try to "jump" it. It is because of this that we are able to maintain law and order by taking samples.
So, having done my best to reply to the points made, I would again request noble Lords that they withdraw this Amendment in the light of my assurance

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that I will have the position examined vis-àvis the overseas situation.
LORD DRUMALBYN: I am grateful to the noble Lord for his willingness to examine this point further. My difficulty is to see how the overseas situation could possibly be affected, because there is only one single figure called for: the figure for turnover. Therefore, it can be affected only where a company is doing only an overseas turnover, so far as I can see. I may be wrong about that, but to the extent that I am wrong then I think the noble Lord's argument also falls regarding the sole buyer or sole customer, because it is not so much the case of the sole customer as of the case of the dominant customer being able to see the extent of his dominance. That is the case the noble Lord will really have to look at.
The point about this Amendment is not the question we were arguing on the last Amendment, whether small firms would or would not be harmed. Here, it is not a question of our claiming that all small firms will be harmed. What we are claiming is that they may be harmed. All this Amendment does is to enable those small firms that can show that there is a strong likelihood that they would be harmed to go to the Board of Trade and say, "Look, here is the situation. Will you kindly exempt us from giving this figure?". That is all. I do not propose to pursue this matter any further now. I know the noble Lord will look at these arguments again, and, on that assurance, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
4.30 p.m.
LORD DRUMALBYN LORD DRUMALBYN moved, after paragraph 32, to insert:
"(32A) For the purposes of any requirements in Part II of this Schedule relating to turnover a subsidiary incorporated outside the United Kingdom or, being incorporated in the United Kingdom carries on business outside the United Kingdom, of another body corporate shall not be treated as a subsidiary of that body corporate nor that body corporate as its holding company."
The noble Lord said: This Amendment would limit the content of the figure for turnover to companies and their subsidiaries in the United Kingdom. This is probably more the kind of point the noble Lord had in mind. Considering
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that the Government are anxious that the value of exports from the United Kingdom should be disclosed, I think it is logical that the value of the turnover should also relate to the same source of supply, so to speak. In the case of an international company with headquarters in Britain, a global figure for a turnover (including the turnover of subsidiaries all over the world) converted into sterling at some arbitrary rate of exchange would, in some cases, be completely meaningless. I cannot believe that that is what the Government want. If they want the turnover, it surely should be the turnover in this country; then, if they are going to insist on exports being shown separately, a separate figure should be shown for exports. But it seems to me, even supposing you have just the turnover as a whole, that you can deduct the export figure but you will not in that case, for a company as a whole, get its turnover at home, because of the turnover of subsidiaries elsewhere. I suggest to the noble Lord that he is really asking for a completely meaningless figure here. I suggest that it be looked at again. I beg to move.
Amendment moved—
Page 74, line 18, at end insert the said paragraph.—(Lord Drumalbyn.)
LORD BROWN: The Government are looking at the question of the division of turnover because we are not satisfied that we have got it right. I do not want to go at this late hour into all the considerations that are passing through our minds. The effect of the Amendment would be to treat for this purpose certain companies which, in fact, are within the group as though they were outside it. Let us take the simple example of a holding company with one subsidiary. The Schedule as drafted requires the holding company to show its turnover with its subsidiary separately from its turnover with all other persons. If the subsidiary were incorporated abroad, or incorporated in the United Kingdom and operating abroad, the Amendment would permit the holding company to show a single figure for turnover; that is, to regard its trade with its subsidiary as trade with persons outside the company. I do not want to go into all the accounting reasons but, in fact, this could lead to something that would be an innocent falsification of the accounts. It is for this reason that we want to look at this

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question again; we do not think it is necessarily the right way to do it. If the noble Lord will withdraw his Amendment, the comments he made will be looked at seriously along with other considerations which are in our mind about the division of turnover into external and internal components.
LORD DRUMALBYN: I am much obliged to the noble Lord and I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
First Schedule agreed to.
LORD DRUMALBYN: I do not propose to move any of the Amendments (Nos. 77 to 84 inclusive) to the Second Schedule.
Second Schedule agreed to.
Third Schedule agreed to.
Fourth Schedule [Amendments (of minor nature or consequential on Part II of the Insurance Companies Act 1958 and the Industrial Assurance Act 1923]:
LORD WINTERBOTTOM: I beg to move Amendment No. 86.
Amendment moved—
Page 91, line 8, at end insert—
("Section 1 (companies to which Act applies)
In subsection (6), after the word "approved"there shall be inserted the words"for the purposes of Part II of the Companies Act 1966")
—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM LORD WINTERBOTTOM moved to leave out Part II and to substitute:

PART II AMENDMENTS OF THE INDUSTRIAL ASSURANCE ACT 1923
Provision amended and subject Matter thereof
Amendment
Section 1 (industrial assurance business)
After subsection (1), there shall be inserted the following subsection—
'(1A) In this Act "industrial assurance company" means a body corporate which carries on industrial assurance business and "collecting society" means a society registered under the Friendly Societies Act 1896 which carries on such business, being a friendly society within the meaning of that Act'.
Provision amended and subject Matter thereof
Amendment
Section 7 (deposits by collecting societies)
In subsection (1), for the words from the beginning to the end of paragraph (b), there shall be substituted the following words:—
'Every collecting society shall be under obligation to deposit with the Accountant General of the Supreme Court the sum of £20,000 and to keep that sum so deposited while it carries on industrial assurance business, and the following provisions shall have effect with respect to deposits under this section, namely,—

(a) the provisions substituted b the Administration of Justice Act 1965 for sections 19(1) and 20(1) of the Insurance Companies Act 1958 shall apply for the purposes of this section subject to the modifications that for the references, in the provision so substituted for section 19(1), to section 2 of the Assurance Companies Act 1909 and paragraph 1 of Schedule 2 to the Insurance Companies Act 1958 there shall be substituted a reference to this section and that regulations under the provisions so substituted for section 20(1) shall be made by the Industrial Assurance Commissioner;

(b) a deposit under this section shall not be accepted except on a warrant of that Commissioner', and paragraph (f) shall be omitted."

The noble Lord said: This amended Part II of Schedule 4 preserves, with appropriate revision, the definition of "industrial assurance company" and "collecting society" in Section 1 of the Industrial Assurance Act 1923. The provision in Section 1(1)of the 1923 Act which now defines those terms is also the provision which restricts the persons who may carry on industrial assurance. That provision is being repealed (by Schedule 6, Part I) consequently on the embodying of the relevant restriction in Clause 44 and a new provision is therefore needed in Section 1 of the 1923 Act preserving the definitions. At the same time the definition of "industrial assurance company" is widened so as to tally with the class of companies in the new subsection (1A) of Clause 44 which may be authorised to do industrial assurance business.
The provision amending Section 7 of the 1923 Act is not a new provision. It is taken up from Part II of Schedule 4 to the Bill as presented. The reason for amending Section 7 is that this section defines the obligation of collecting societies to make deposits by reference to provisions of the Insurance Companies Act 1958 which are being repealed. The Amendment makes Section 7 independent of the repealed enactments, and preserves the present obligations of collecting societies in the matter of deposits and the Commissioner's power to make regulations respecting the varying or withdrawal of those deposits. I beg to move.
Amendment moved—
Page 92, leave out lines 2 to 26 and insert the said new Part II.—(Lord Winterbottom.)
On Question, Amendment agreed to.
Fourth Schedule, as amended, agreed to.
Fifth Schedule [Spent or obsolete enactments ceasing to have effect]:
THE LORD CHANCELLOR: I beg to move this Amendment standing in the name of my noble friend Lord Winter-bottom. The Amendment repeals various spent or obsolete provisions in the Industrial Assurance Act 1923. The reason for the reference to "with or without hard labour" is very obvious, on the face of it. If noble Lords want to know why any other particular section is spent, I will do my best to explain it.
Amendment moved—
Page 92 line 30, at end insert—

("13 & 14 Geo. 5. c. 8.

The Industrial Assurance Act 1923.

Section 4(4). In section 7, in sub-section (1), in paragraph (d), the words from the beginning to 'Act' and in paragraph (e) the words after the passing of this Act', and subsection (4).

In section 18, in subsection (1), the words ' made as at the thirty-first day of December, nineteen hundred and twenty-four, or any later date' and the proviso to paragraph (d), subsection (2), and in subsection (3) the words 'whether made before or after the passing of this Act' and the proviso.

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In section 24(3), the words 'after the expiration of five years from the passing of this Act'.

Section 24(5).

Section 30.

In section 40, the words with or without hard labour'.")

—(The Lord Chancellor.)

On Question, Amendment agreed to.
THE LORD CHANCELLOR: I beg to move the next Amendment standing in the name of my noble friend Lord Winter-bottom. This Amendment repeals various spent or obsolete provisions in the Industrial Assurance and Friendly Societies Act 1948. They are, in the main, provisions either deferring the operation of provisions of the Act until a certain period has expired or certain events have happened, and the period has long since passed or the event has long since happened.
Amendment moved—
Page 92, line 32, at end insert—

11 & 12 Geo. 6. c. 39.

The Industrial Assurance and Friendly Societies Act1948.

In section 2, in subsection (1), the words from "This subsection, and "onwards, and in subsection (3), the words "from the expiration of one year from the day appointed as aforesaid".

Section 5(3).

In section 6(1), in the proviso, paragraphs (a) and (b).

Section 10(4).

Section 11(4).

In section 12, subsection (1), in subsection (3), the words from the beginning to "Provided that" and subsection (4).

Section 17(2).

Section 19(1) to (4).

Sections 21 and 22.

Section 25(5).

Schedule 6.

—(The Lord Chancellor.)

On Question, Amendment agreed to.
THE LORD CHANCELLOR: The effect of this Amendment is to add Sections 3(3), 3(4) and 33(5) to the list of provisions in the Insurance Companies Act 1958 which are "spent or obsolete enactments" ceasing to have effect by virtue of Clause 86. Sections 3(3) and 3(4) were transitional provisions enacted in 1909 applying respectively to, first, mutual life insurance companies carrying

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on non-life business and established before August 9, 1870 (the date of enactment of the Life Assurance Companies Act, 1870) and, second, life insurance companies established before that date which might still have contracts entered into before that date. Section 33(5) was a transitional provision enacted in 1909 permitting any insurance company to continue to treat as life insurance business any non-life insurance business so treated under the provisions of any special pre-July 19, 1910, Act relating to that particular company. The Life Offices Association and the Industrial Life Offices Association have agreed that all these provisions are now spent and can be repealed. I beg to move.
Amendment moved—
Page 92, line 36, column 3, at end insert:—
("Section 3(3) and (4) Section 33(5).")
—(The Lord Chancellor.)
On Question, Amendment agreed to.
Schedule 5, as amended, agreed to.
Schedule 6 [Enactments repealed]:
LORD WINTERBOTTOM: I beg to move Amendment No. 91.
Amendment moved—
Page 93, line 2, at end insert:—
("PART (Repeals in the Industrial Assurance Act 1923)

REPEALS IN THE INDUSTRIAL ASSURANCE ACT 1923

Provision

Extent of Repeal

Time at which Repeal is to take Effect

Section 1.

In subsection (1), the words from the beginning to 'Provided that'

The passing of this Act.")

Section 39.

In subsection (4), the words from the beginning to 'three months'

—(Lord Winterbottom)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: I beg to move Amendment No. 92. The proviso to Section 5(1) of the Insurance Companies Act 1958 grants a concession to any mutual insurance company carrying on life assurance business
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or industrial assurance business where the profits are allocated to members wholly or mainly by abatements of premium, in that it permits such a company to make the abstract of the actuary's report (required by Section 5(1)) at intervals of five years, whereas other insurance companies carrying on those classes of business and allocating profits in a similar manner would in certain circumstances be obliged to make the abstract more frequently. It is considered, however, that there is no good reason why this particular mode of distribution of profits should be specially treated and that the proviso should accordingly be repealed. The Life Offices Association, the Industrial Life Offices Association and the Government Actuary's Department agree with this proposal.
Amendment moved—
Page 95, line 9, at end insert—

("Section 5.

In subsection (1), the proviso.

Section 8.

Subsection (5).")

—(The Lord Chancellor.)
LORD DRUMALBYN: Has this Amendment any practical effect? Section 5 says that every insurance company
"shall, once in every five years, or at such shorter intervals as may be prescribed by the deed of settlement of the company, or by its regulations or byelaws,"
cause a quinquennial investigation to take place. Has this really any practical effect?
THE LORD CHANCELLOR: I understand that in fact it has. There is no particular reason why this particular class should he treated differently.
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move this Amendment.
Amendment moved—
Page 95, line 22, column 2, leave out from ("except") to end of line 24 and insert ("as applied by the Industrial Assurance Act 1923 and except in relation to defaults in complying with requirements of the Act of 1958 occurring before the passing of this Act").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move.
Amendment moved—
Page 95, line 33, column 2, leave out ("seven") and insert ("one").—(Lord Winterbottom.)
On Question, Amendment agreed to.
On Question, Whether Schedule 6, as amended, shall be agreed to?
LORD DRUMALBYN: May I ask two concluding questions?—I promise that they will be the last. Part II of this Schedule includes the repeal of Part I of Schedule 2 to the Insurance Companies Act 1958, which relates to mutual associations. We have just heard from the Lord Chancellor that there is no reason why mutual associations should be treated in any different way from anybody else. But they are different from anybody else, of course. There is an essential difference, and I wonder why that is now dispensed with. Also, paragraph 11 of Schedule 2 is to be left out. That paragraph says:
"Where, on the application of any insurance company, the Board of Trade are satisfied…that it carries on business wholly or mainly for the purpose of insuring a limited class of persons…"
and so on. This again is to deal with a special case. Is this provision to be regarded as spent? Is it no longer necessary? Will authorisation be required in each case by the Board of Trade? What is the reason for this also being dispensed with?
LORD WINTERBOTTOM: I am sorry that I cannot answer with certainty of accuracy the points made by the noble Lord, Lord Drumalbyn. With his permission I will write to him and give him the answer.
Remaining Schedule, as amended, agreed to.
House resumed: Bill reported with Amendments.

THE F 111 AIRCRAFT
4.46 p.m.
THE EARL OF KINNOULL THE EARL OF KINNOULL rose to ask Her Majesty's Government, first, whether they intend to reach a fixed contract price with the American Government for support costs for the British order of the F 111 Aircraft; and, secondly, whether they are fully satisfied with the new American escape system to be fitted to the
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aircraft in preference to the well-proved British ejector seat escape system. The noble Earl said: My Lords, it is perhaps almost out of keeping with the spirit of Christmas, and the obvious good will that is displayed on the countenances of those noble Lords sitting on the Government Front Bench, to raise a subject as serious and as important as the F 111 aircraft just before the House rises for Christmas. But I do so because in my humble opinion the second part to my Question raises an issue which involves the future safety of R.A.F. pilots, an issue which I sincerely hope the Government will reconsider for reasons which I will come to.
There have not been many debates in this House on the F 111 Aircraft in the past, for the very good reason that the Government virtually purchased the aircraft off the drawing-board, and since then there has been a rather natural silence while this aircraft continued its stages of development in America. I believe I am correct in saying that the last debate on this subject was held on May 16 this year when the noble Lord, Lord Shackleton, answered in some detail and, if I may say so, with great care, certain criticisms of the future operational performance and deployment of the aircraft. The noble Lord, I am sure, will be pleased to hear that I do not intend to cover the same ground again and would not, naturally, expect him to feel obliged to do the same.
The disadvantage of taking part in that three-man debate, if I may so call it, of last May was that neither the noble Lord. Lord St. Oswald, who I hope may support me to-day, nor myself had had the Privilege of having flown in the aircraft, having seen it in the flesh or even having seen a film of its flying capabilities. I do not think that on that occasion the noble Lord, Lord Shackleton, committed himself as to how far his own personal experience had gone in this field; but whatever the gaps were, he certainly showed a complete mastery of his brief. At that time he explained that the Government had negotiated with the American Government a maximum ceiling price of £2·1 million for the basic F 111 which could prove cheaper if the United States programme worked out at a lesser cost. In fact, I understand now that the Government are purchasing a version of the F 111 knowns as the F111C, and perhaps

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the noble Lord will explain later whether the basic ceiling price for this modified version has now been agreed with the American Government.
On that occasion the noble Lord went on to explain that the total programme costs for the entire 50 aircraft, which would include both the original cost of the aircraft and the subsequent support costs, had been estimated at£280 million over the next ten years—in other words, just over £5½ million per aircraft. This figure was to include spares which would be made available, he advised us, at the same price as will be charged to the American Air Force by the manufacturers. That, briefly, my Lords, was the position as stated by the noble Lord, Lord Shackleton, last May.
Within the last few weeks I have had the privilege of meeting the only British test pilot so far to have flown this aircraft, Wing-Commander Fletcher, who, as the House may know, has been on three or four sorties in the early prototype of the aircraft. I must say, in fairness, that the impression one formed from meeting him was that this was a remarkable aircraft which incorporated great technical advance. Perhaps one of the drawbacks to a pilot was that it is so computerised and so automatic that it leaves the pilot feeling almost redundant.
I have also had the good fortune in recent weeks to see an unclassified film of the F 111 which demonstrated clearly the extraordinary simplicity and flexibility in the design of the servicing of this aircraft's equipment. It appeared from the film—the noble Lord will correct me if I am wrong—that the engine and its equipment is divided into sections, which can be readily withdrawn from the aircraft and replaced in a matter of moments. Although one could not but help admire the system of servicing, one formed the firm conclusion, from watching the film, that the cost of spares and the method of replacing them would prove exceedingly heavy and I venture to say would come well above the Government's present estimate.
I come now to the specific questions I should like to put to the noble Lord this afternoon on the support cost of this aircraft. First, do the Government intend to encourage British firms to manufacture under licence electronic spares of this aircraft? I deliberately limit this question to electronic spares as I am advised
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that it is a field for which we are geared and in which we are competitive. I need hardly mention to your Lordships the benefits which would accrue if orders for these could be placed with British firms.
Secondly—and I base this question on information I have just received—would the noble Lord explain why it is that the F 111 project branch of the Ministry of Defence are considering at this moment placing an order of the probable value of 15 million dollars with an American firm for the supply of automatic test equipment for the R.A.F. version of this aircraft, when it is known that the British industry is quite capable of meeting the technical requirements for the aircraft and at a much lower cost? Would the noble Lord also explain why not a single British company has so far been invited to tender for this equipment? The noble Lord, Lord Shackleton, has a very high reputation in this House for answering as fully as he is allowed to, and I hope that on this occasion he will give as much information on this second question as he can.
THE MINISTER OF DEFENCE FOR THE ROYAL AIR FORCE (LORD SHACKLETON): My Lords, I am bound to say that this is wholly outside the terms of the Question on the Order Paper. With the best will in the world, if the noble Earl wants this sort of information he really ought to put down a Question that relates directly to it. This is a question of the supply of British equipment and I cannot see how it fits into his Question. I am sorry.
THE EARL OF KINNOULL: I am sorry, my Lords, if misinformed the noble Lord. My question was on the support cost of this aircraft and I considered that the question I have just put was covered by that point.
To turn to the second half of my Question, the House will be aware, I am sure, that among other revolutionary designs incorporated in this aircraft is a new system of escape known as the eject-able crew module. This system has been designed to allow the pilot, at the push of a button, to abandon the aircraft. The effect of this button will he to trigger off a number of small charges aroundthe cockpit, which in turn will cause the separation of the cockpit in its entirety from the body of the aircraft. From that

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moment the cockpit becomes a sealed container, with the pilot, co-pilot and all the instruments comfortably inside. It is then designed to float down gently to earth with the aid of an umbrella of parachutes.
I must admit that on the face of it the theory of this system has a number of advantages over the ejector seat. For instance, it is claimed that it will allow shirt-sleeve flying environment for the crews, with a lot more comfort, where the pilots will be free from all the paraphernalia normally associated with the ejector seat. Secondly, it has been suggested that the module will operate with much greater safety than an ejector seat at high altitudes and will have the advantage of acting as a survival shelter for the crew on land or sea. It is also claimed that it will give the pilots a better chance of survival when ejecting at a combination of high speeds and low altitudes. The tremendous amount of G-force built up on deceleration in such circumstances can, of course, severely rupture human organs and lead to the ultimate death of the pilots.
All these advantages are claimed over the ejector seat, but the problem of the true assessment of these claims remains frustrated at present, for whereas the ejector seat has a record of twenty years of practical and life-saving service, in which the lives of 1,420 pilots have been saved, the module, so far, has not got further than the development stage of being fired from a rocket-driven sledge and being dropped from a B 52 aircraft, neither of which, I suggest to your Lordships, can fairly represent all the conditions of a likely emergency.
It will not surprise the noble Lord to learn that the specification of this module has been studied in some detail by the British specialists in this field, and here, of course, I refer to the Martin Baker Aircraft Company, whose ejection seat is renowned throughout the world. In the light of their considerable experience, the conclusion that has been reached is that the present specification of the module, which calls for safe ejections at all the aircraft's speeds and altitudes, cannot possibly be perfected in the short time left before this aircraft is due to go into service with the Royal Air Force. I say "in the short time left" deliberately, because for a testing programme as delicate as
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that for an escape system, where accuracy and thoroughness may decide the life or death of many pilots, one year in development time is a very short period indeed. What is genuinely feared is that, unless the decision on the module is reconsidered now, the time will come by mid-1967 when the noble Lord's Department will be faced with the agonising problem of accepting the aircraft into service with only a partly proved escape equipment.
It may be of interest to the noble Lord to know that a recent analysis of statistics was shown to me of all the successful and unsuccessful ejections in a Martin-Baker seat over the last few years. This information is available to the noble Lord, of course, if he wishes it afterwards. The purpose of quoting this analysis is that many of these conclusions affect the module just as much as they affect the ejection seat.
The main conclusions were as follows. First, the most likely conditions to cause fatal ejections from aircraft are a combination of low altitude and high sink rate; secondly, abandonment rarely takes place in practice above an altitude of 20,000 feet; thirdly, the majority of ejections at low altitudes take place at indicated air speeds of around 200 knots. It also may he of interest to the noble Lord to know that the recovery rate in ejections from the Martin Baker seat in 1965 stood at 92 per cent., whereas the recovery rate from the best American seat available was only 76 per cent. It may also be of interest to the noble Lord to learn of some of the doubts that have been expressed about the capability of the module. The question has been posed: How, in practice, will the module perform in low altitudes when the aircraft is in a steep dive, and would it prove better or as good as the ejection seat? Secondly, can it be guaranteed that at high speeds and low altitudes the module will be able to separate successfully from the body of the aircraft? Thirdly, has it been established that the drastic effects of deceleration will not be felt inside the module upon ejection?
The purpose of my Question to-day is not to claim that in the long run the ejection seat will always be superior to the module but to remind the noble Lord that at the present time the ejection seat is far ahead of the module, in both

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practice and experience. The Martin Baker seat has been in operation since 1945 and has so far saved 1,420 pilots' lives: some of them have been saved three times by the seat, and others have been saved twice within the same week.
With this great record behind the seat, is it right to abandon it at this time for the sake of an untried module in a highly advanced aircraft? The Minister, in his reply, may say that the tests on the module are progressing satisfactorily and there is no need for alarm. If this is his answer, will the Minister be prepared to give this undertaking to-day: that none of these aircraft will come into service with the Royal Air Force until a number of live ejections from the module have taken place which clearly demonstrate and prove that its capabilities live up to its specification?
5.1 p.m.
LORD KINGS NORTON: My Lords, I should also like to comment on the escape system of the F 111 aircraft. For the Americans to be satisfied with it is not enough. They were presumably satisfied with the response to their specifications for escape systems in earlier American aircraft, but in fact their ejector seats have never approached the standards as set up by the seats designed by Sir James Martin, which have become our standards. Sir James, whom I know well, is a most extraordinary man. He is one of the great engineers of our time; one of those gifted people for whom nature's laws are second nature, and his designs are masterly. As the noble Earl, Lord Kinnoull, has said, they have saved the lives of over 1,400 men, and, incidentally, over 30 per cent. of those are Americans.
Two American engineers, Mr. Bradfield and Mr. Thommason, presented a paper at a conference at Houston, Texas, at the beginning of September, in which they said:
"In '56 Martin Baker Aircraft Company Limited completed the design of the first dual automatic ground level escape system. This system, even to-day, ten years later, maintains the highest success record of any system in use."
Mr. Bradfield and Mr. Thommason go on to quote figures to prove this point which are similar to those mentioned by the noble Earl, Lord Kinnoull. They say that the United States Navy record
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a success rate of 79 per cent. for American rocket assisted seats, as opposed to 90 per cent. for the standard Martin Baker seat. In other words, out of every 100 people ejected by other seats, twenty-one die, but with Martin Baker seats only ten. Sir James would say that current figures show an even greater disparity in his favour, because his latest rocket seats have rocket motors which improve upon the already stupendous Martin Baker performance.
I make these remarks because I believe that in Sir James and his organisation we have a tremendous facility for solving these ejector problems, and a tremendous asset which we should always use to the utmost. I should like to offer a suggestion to the noble Lord, the Minister, who will shortly speak. However satisfactory he may feel the American solution for escape from the F 111 aircraft is likely to be, it would surely be prudent, against the background which the noble Earl, Lord Kinnoull, and I have sketched, to have an insurance policy. I suggest, with respect, that he should arrange for a contract to be given to the Martin Baker Company to design their solution to the problem of escape from this aeroplane. If this were done, I would suggest further that it might be possible thereafter to test the American and the Martin Baker systems for the F 111 under the same conditions, and the system demonstrated to be superior should be adopted for our F 111s.
5.5 p.m.
LORD SHACKLETON: My Lords, we have, as always, had a persuasive and well-informed speech from the noble Earl, Lord Kinnoull, and I should like to echo his expression of goodwill, tempered, T must say, with some regret that, while I fully agree with his commendation of the Martin Baker ejection seat as an outstanding example of British initiative and design, I really cannot accept the substance of his case as regards the F 111. I should like to make it clear that this is in no way a reflection on the Martin Baker Company, and least of all on Sir James Martin, to whom so many flyers owe their lives and whose great achievement has been not so long ago recognised. I should like to make it clear, also, that there is no suggestion of any rejection of his particular achievement or the quality of his engineering.

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I wish first to put the matter in context. The new American escape module is not peculiar to the F 11ls that the R.A.F. are to have. It is, in fact, being developed for the many hundreds of F 111s which the United States Air Force are going to purchase. We had, therefore, to decide whether in this particular respect the F 111 did not meet our requirements. Apart from the implications in terms of cost and time of requiring ejection seats to be specially fitted to our small order of 50 aircraft—and I stress that we are talking about a relatively small order—the key factors to be considered were the module specification and the likelihood that the development programme would be successful. It is at this point that, perhaps with the advantage of greater knowledge, if not direct knowledge (and I am not sure that my own personal knowledge of the module or the aircraft would effectively replace it), the advice that I get from my expert advisers is to query whether this development programme would be successful. We are watching this very closely.
I would say to the noble Lord, Lord Kings Norton. that one would greatly respect the views of Sir James Martin. But I would suggest—although there may be those who on occasion think that the Air Staff do not always get things right—that this is a matter of such importance that it has been very closely watched, and we are monitoring the programme. It is going well, and a performance at least as satisfactory as that of any ejection system can be, according to my advice—and I have gone into this matter pretty deeply—is to be expected long before the Royal Air Force take delivery of their first F 111 s in December. 1968. In these circumstances, we see no reason to reconsider our decision to accept the escape system which the United States Air Force have specified. We are interested to see that this new concept should be developed.
Let me explain the two systems in more detail, because, as on so many of these matters, it is the technical detail that is decisive. When a pilot uses an ejection seat—and again I fully acknowledge the value of the latest prototypes of the Martin Baker Company—to escape from his aircraft in emergency, he is exposed
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immediately to the outside environment. This can, depending on the circumstances, be a very hostile environment indeed. In the worst case this could be at high speed, at high altitude, over a cold and possibly a stormy sea. He must therefore carry adequate clothing for protection against air blast and immersion in cold sea (I do not know whether the noble Earl has ever worn an immersion suit, but it is not the most comfortable thing), a restraint system to prevent his limbs flailing when he meets the air blast; an emergency oxygen supply to sustain him until he reaches a lower altitude; an elaborate helmet and oxygen mask assembly designed to withstand air blast; a life raft and survival equipment, and a personal locator beacon. All this has to be done on the individual.
The capsule, on the other hand, comprises the whole of the pressurised cockpit, and escape in this way allows an airman to remain in the same environment throughout the descent, with full protection against blast, and it is, furthermore, a lifeboat or shelter as well. It offers space in which emergency oxygen and other supplies can be stored without being attached to the person, thus simplifying any flying clothing and equipment which must be worn, thereby increasing crew comfort, and therefore reducing crew fatigue, which is important in view of the long hours that can be spent in these aircraft, even in normal operations.
THE EARL OF KINNOULL: My Lords, may I interrupt the noble Lord? I think he is describing the capsule. These are conditions where it lands satisfactorily, and is not damaged; but in adverse conditions possibly the capsule could be damaged.
LORD SHACKLETON: If the noble Earl will allow me to continue, there is a judgment of balance of risks and advantage in this, and I am putting the case as we see it in the Air Force Department. Where, of course, there are two crew members, as in the F 111, both leave the aircraft together, and this avoids problems of ejection sequence for which fully satisfactory solutions have still to be developed for the ejection seat system. In principle therefore—and I do not think any noble Lord will disagree with this—the capsule concept is a step forward from the ejection seat system, which becomes

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increasingly hazardous over the speed of 450 knots. Indeed, I would say that the ejection seat is approaching the end of its development potential. In the case of the F 111, the specification calls for safe ejection at all the aircraft's speeds and altitudes, including under-water escape from 30 ft. (which may or may not be of great importance) and the capsule is to provide a survival shelter for up to three days on land or at sea.
The noble Lord made play of the fact that the ejection seat has served us well for a number of years; and I fully agree. But there is some argument in favour of progress. There are safer ways of travelling around at the moment than in high-speed supersonic aircraft. In the last resort you can go by railway train, although the hour of arrival may be slightly uncertain, if I heard the noble Lord, Lord Boothby, aright on the B.B.C. the other night.
LORD BOOTHBY: My Lords, we are now approaching Christmas. Could the noble Lord be slightly less gloomy?
LORD SHACKLETON: I was endeavouring to lighten the atmosphere by referring to the noble Lord, Lord Boothby, which I thought was certain to raise some hilarity. But the noble Earl raised his Question as a serious one, and I think it is up to me to answer it seriously. Until the trial programme is completed about the middle of next year, on the present timetable, it will not be possible to give an absolutely final answer as to the realistic nature of that programme. At this stage my own description would have been "ambitious." I would remind the noble Earl that the equipment is being developed by the company (MacDonnell) who are responsible for the United States Mercury space capsule. I would also say that the development of the capsule has reached a stage where its performance has already been proven almost to the same limits as ejection seats, and this gives us some real grounds for confidence.
The noble Lord referred to the question of ejection at high speeds and high altitudes, and he said that these are rare. I should not have thought, however, that this was an argument against further progress, and if technological advance offers us an opportunity to provide an escape system that will operate successfully
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throughout the full spectrum of the aircraft's flight envelope, we should encourage its development. Here again, I would suggest to the noble Lord that these statistics which he has quoted, and which I freely acknowledge, are based almost, though perhaps not entirely, on peace-time operations, and they are no guide to what is needed against the risk of hostile encounters at high speed and altitude.
THE EARL OF KINNOULL: They are based on Vietnam, as well.
LORD SHACKLETON: To find supersonic aircraft operating in those conditions is very rare indeed; and even when they do it is a comparatively small number. I should have hoped that we were right to look ahead to improve techniques. Indeed, as long ago as 1962 the British Naval and Air Staff formulated a staff target for an escape capsule for advanced aircraft, and the Americans have now introduced this concept into the F 111. There are no grounds known to me why we should take the view either that they are wrong in principle to do so or that the development progress of the capsule is such that it will not give at least as good a performance as we could get from an ejection seat.
LORD ST. OSWALD: My Lords, I wonder whether I might ask a question. The noble Lord referred to performance at high speeds. I am sure there is some worry about the performance close to zero height and zero speed. Obviously, one does not want an ejection at zero height or zero speed, but at low speed and low altitude. Could the noble Lord say something more reassuring about that?
LORD SHACKLETON: I would say to the noble Lord, who used this curious jargon with which he was wrestling, and with which we all have to wrestle, that a zero-zero ejection is a definite possibity—in other words, at no speed and on the ground.
LORD ST. OSWALD: But it is a rare thing.
LORD SHACKLETON: I am not so sure, and I think one of the great difficulties we have had recently in relation to the Martin Baker seat is safety of ejection if possible on the ground, with the aircraft moving on an abortive takeoff,

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which in certain circumstances may well require ejection. We are confident that it will meet the zero-zero requirement. I am grateful to the noble Lord, because this is important. It is our view that it will meet all these vital low-level requirements and give an added advantage in the more extreme conditions of great height and supersonic flight, particularly in circumstances where an ejection may be required almost at a split second.
LORD BOOTHBY: Did the noble Lord say "ejection" or "injection"?
LORD SHACKLETON: If the noble Lord will continue to keep his merriment over Christmas, what I said was "ejection"; and if I did not, that is what I meant to say. The Americans have now introduced this concept and, as I say, we hope that we shall get as good a performance as we got from the present ejection seat in comparable circumstances, and better in others.
These are matters of great importance to the Royal Air Force, and the last thing I would do—and I stress this again—would be to discount the very real achievements of the ejection seat, which is a British development of quite outstanding value, both to this country and to the world. The capsule which is now being developed gives us a chance to move forward. I assure your Lordships—and one is always nervous about the possibility of being wrong in anything with regard to aircraft equipment—that we have looked into this matter most carefully, but for the reasons I have mentioned we do not consider there are any grounds for accepting that the R.A.F. F Ills should not have the escape features currently proposed in the design of the basic F 111 aircraft.
In regard to the question of consulting Sir James Martin, certainly the noble Lord has in fact indicated some of Sir James Martin's views and, speaking for myself, and indeed for the Air Force Department, we should be willing to listen to any observations he may care to make, but I can only repeat that we ourselves have a great deal of experience of ejection seats, and this is something to which we have devoted careful attention.
Let me now turn to the other part—
THE EARL OF KINNOULL: My Lords, before the noble Lord does that, could he perhaps mention the final point of my speech, whether in fact he would give an undertaking that a live ejection from this module would be made before it went into service with the Royal Air Force?
LORD SHACKLETON: My Lords, I believe that in his original remarks the noble Earl referred to "a number of live ejections". I do not think I can give an undertaking of this sort. I do not doubt that this is being tested fully and that there will be such live ejections, but clearly this is a matter on which we shall have to exercise the best judgment we can bring to bear.
LORD ST. OSWALD: My Lords, before the noble Lord passes to another matter, I should like to say that the reassurances he has given are welcome and, coming from him, impressive. There are, however, one or two questions which I though he might be answering in the course of his speech, and therefore I did not put down my name to speak. First, I understand that the apparatus is heavy; that is to say, it adds to the weight as well as to the expense of the aircraft itself, and I should have thought the weight must increase the problems of handling and range. I wonder whether this is so.
There is also the problem, which no doubt has been overcome, of the separation of the control connections—the wiring, the cables and so on. I am not intentionally springing this as a surprise on the noble Lord because I know how well informed on technical matters he is, but there are problems associated with spinning in the air which are not associated with an ejection seat; and also there is, I am told, a greater bang at high speeds than with the individual ejection seat. I am quite prepared to hear that these factors are, as the noble Lord said, balanced against other advantages, but I should like to know whether he can say something reassuring on those points.
LORD SHACKLETON: My Lords, I am gratified by the noble Lord's confidence in my ability to answer technical questions off the cuff. When he said a "greater bang", I presume he meant that the individual goes out with greater force and there is increased G as a result of it. There are certain technical difficulties,

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especially in the trans-sonic area, in an ejection with this capsule owing to the aerodynamic effects of the capsule. This is one of the problems that is in process of being overcome in the development stage. I do not know about the problem of spinning. I have not heard of this one, but I will let the noble Lord know. I should have thought that there were no insuperable difficulties in overcoming this.
LORD KINGS NORTON: My Lords, I just want to emphasise two points. First of all, I was not arguing against the capsule but in favour of an insurance policy. Secondly, most noble Lords have spoken as if this were a case of module versus ejector seat. Again, that was not in my mind. I should hope it would be possible to invite the Martin-Baker Company to design (if they think it is the best solution) a module, having in mind that with their relatively limited facilities but extremely high I.Q., they have in the past defeated the best efforts of the best American designers in this field, even though the latter have vast resources.
LORD SHACKLETON: My Lords, I fully take the noble Lord's point, and there is nothing we should have liked better. But I must stress two things. First, the module is an integral part of the aircraft to a greater extent than an ejection seat and, secondly, the cost really would be prohibitive. One of the difficulties with the F 111 purchase is that it is a comparatively small one and we have not therefore been able to get nearly as much British equipment into it because it would have added greatly to the cost. I mentioned in our previous debate that there are certain increases in cost as a result of certain alterations made to the aircraft, both to meet the British specification and to some extent to meet British suppliers. I would say to the noble Lord, Lord Kings Norton, that it is simply "not on". The cost of developing this would be enormous and at the moment it is being spread by the Americans over this huge number of F 111s.
I should now like to turn to the first part of the noble Earl's Question, and I was going to say that now that the noble Lord, Lord Boothby, has gone, I can make a slightly grimmer remark, but
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perhaps he is not attending at the moment. However, I think the noble Earl has pulled a slightly fast one by putting in this further question quite unrelated to the original Question, at two day's notice. I do not say this in an offensive way. I should have thought that if he wanted to deal with the second point it would have been better to deal with it as a separate question, but I will answer the point as best I can.
First of all, he said we bought this aircraft off the drawing-board. In fact, at the time we ordered it there were twelve flying, and I think this is a point worth stressing. Therefore I think he was a little unfair in saying we had just bought it off the drawing-board. The noble Earl also asked whether we would encourage British firms—this is all quite separate from his original question on the ejection seat—to manufacture electronic spares for our F Ills. I do not know whether he really thinks it is economic for them to set up separate production lines for British copies of United States spares for our small number of aircraft. I should have thought it was inherent in the whole policy that has been explained that it is better to draw spares from the large United States production at the same price and priority as the United States Air Force; but if he has in mind any particular item I shall be glad to look at it, and so, I am sure, would the Ministry of Aviation—or rather, it will be the Ministry of Technology.
The noble Lord asked a question about the automatic test equipment for the F 111 Avionics. This is another googly. I am not protesting because I rather like trying to play googlies. I can say that the question of whether suitable British equipment should be developed for this purpose is being looked at urgently at the present time by the Ministry of Aviation and the Ministry of Defence, and subject to the problems of time scale and cost we should naturally prefer to buy British equipment, but at this stage I cannot forecast what our position will be. At least I have gone some way towards meeting the noble Earl.
THE EARL OF K INNOULL: My Lords, while thanking the noble Lord for going as far as he has gone, I think it has been a surprise to many of the manufacturers that they have not even been

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given a specification for this equipment, let alone been approached.
LORD SHACKLETON: My Lords, I note what the noble Earl has said. If he wants to give me any details of what is involved in this I will certainly look into it, but we should wish in relation to time and cost to have British equipment.
The noble Earl asked a question on whether we intended to negotiate a fixed contract for support costs. A re-reading of the Official Record of our previous debate on May 12 would suggest to me that the noble Earl understands the position exceedingly well. Indeed, on that occasion he appeared to regard the matter as satisfactory. The noble Earl certainly did not query the arrangements which we have with the United States authority under which, through their Co-operative Logistic Systems, we can get spares at the same price as the United States Air Force do. Indeed this arrangement, as does the noble Earl's Question—though I am not sure whether he intended this—goes further than the supply of spare parts; it allows us to enjoy also the same benefits in respect of modification kits, repair and overhaul services and engineering support.
And now, after several months of further contemplation, perhaps rather as an afterthought, since it was only added to the Paper, the noble Lord has raised a question; I was not quite sure whether he wanted to change all that and go for a fixed price contract over this very disparate field of support. I am assuming he only wants information; I do not think he can seriously consider we want fixed contracts, because we have this very satisfactory arrangement. The noble Earl may have doubts and even a change of heart on this matter, but I can assure him that in this matter Her Majesty's Government have not changed their minds. To be able to get spares and, if we want them, these other items also for the F 111, as for the C 130 and the Phantom, at the same price and priority as the United States Air Force is, to my mind, a very good bargain indeed, and we have no intention of changing what is
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not only a financially sound but an essentially equitable arrangement between allies and bringing up any question of a fixed price contract.
THE EARL OF KINNOULL: The point I also raised in my speech was this question of the cost of modifications of what I believe is now known as F 111 C, and on May 12 the noble Lord said that he was going to agree upon a fixed price for those modifications. Can he advise us on this point?
LORD SHACKLETON: I really think that the noble Earl is—I hesitate to use the word—abusing the custom of the House, for this is wildly outside the Question on the Order Paper and I should prefer to leave it. If he wants this sort of information, may I beg him to put down Questions on the subjects on which he wants answers?

LONDON BRIDGE BILL
The Queen's consent signified, and Bill reported from the Select Committee, with Amendments.
  PATENT LAW OF PRIOR CLAIMING
  PATENT LAW OF PRIOR CLAIMING