Sitting of 20 July 1966

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  TEES VALLEY AND CLEVELAND WATER BILL (By Order)
  Consideration, as amended, deferred till Tuesday next.
ORAL ANSWERS TO QUESTIONS
  AGRICULTURE, FISHERIES AND FOOD

    Fishery Protection Squadron
    Mr. Wallasked the Minister of Agriculture, Fisheries and Food whether he is satisfied that, in view of the extension of fisheries limits, the protection at present afforded by vessels of the Fishery Protection Squadron is adequate; and if he will make a statement.
    Mr. Wolrige-Gordonasked the Minister of Agriculture, Fisheries and Food if he is satisfied with the degree of fishery protection currently being afforded to the inshore fishing fleet; and if he will make a statement.
    The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy): Yes, Sir. I am satisfied that the resources of the Fishery Protection Squadron are deployed to give the maximum assistance to our fishermen.
    Mr. Wall: Is the Minister aware that many people are not satisfied that there are enough vessels in the Squadron to carry out adequate protective duties? Would he seriously consider augmenting the number of vessels with helicopter patrols?
    Mr. Hoy: We have thought of that. It is true to say that we also augment the force when we feel that it is necessary, but we have to make the best use of available resources.
    Mr. James Johnson: Is it not a fact that there is now less congestion inside the new limit than there was in the old, but that foreign vessels are being much less careful in observing the six-mile limit?
    Mr. Hoy: No. That is not the information that we have. Since we extended the limits to protect our own fisheries, we have had infringements, but these have been pretty quickly detected.
    Mr. Hector Hughes: Has the Minister realised that the extension of boundaries by foreign countries has reduced the size of that part of the North Sea available for British fishermen and has thereby increased the responsibilities of the Fishery Protection Squadron? Will he take that into account?
    Mr. Hoy: Whenever a country extends its limits, there are obviously less fishing grounds available for others. I do not differ from my hon. and learned Friend in this. It makes it all the more important that we should give the best possible protection to our fleet.

    Brambell Committee (Report)
    Mr. Wallasked the Minister of Agriculture, Fisheries and Food if he will now make a statement on the implementation of the Brambell Report on farm animals.
    Sir H. Lucas-Toothasked the Minister of Agriculture, Fisheries and Food what steps he has taken in accordance with the recommendation of the Brambell Committee to ensure that the intention of its report is not prejudiced by imports of food produced under unacceptable systems; and what progress has been made in this direction.
    The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart): My right hon. Friend and I are still considering this Report, including the recommendation about imports.
    Mr. Wall: Can the Minister say what is causing this long delay? If it is because of the long congestion in the legislative

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    programme, would he consider setting up a standing advisory committee to keep this matter under review, as so many people are interested in the results of this Report?
    Mr. Peart: It is not a question of a hold-up in legislation. It is merely a question of giving the industry and all interested parties a fair opportunity to present their views. This is a very difficult matter and I will make a statement as soon as I can.
    Sir H. Lucas-Tooth: Is the right hon. Gentleman aware of the need to secure some satisfactory arrangement overseas as the basis of any final arrangement? Will he consider urgently ways of taking this essential preliminary step?
    Mr. Peart: The position of overseas countries in relation to our imports of food products is something that I shall have to bear in mind, and I am doing so.
    Mr. Molloy: Is my right hon. Friend aware that there are very many people in the country who are greatly interested in the Brambell Report and who will be a little, disappointed at the delay which is taking place in implementing its recommendations? Will my right hon. Friend bear this in mind?
    Mr. Peart: There is no delay here. I hope that my hon. Friend has read the Report very carefully. It involves a considerable number of organisations and one must give them an opportunity to air their views fully.
    Mr. Godber: Will the Minister confirm the undertaking, given by the Leader of the House, that we shall have an opportunity to debate this Report before the Summer Recess? This would be welcomed on both sides of the House.
    Mr. Peart: The right hon. Gentleman should put that question to the Leader of the House, not to me.

    Brucellosis Control
    Mr. Kitsonasked the Minister of Agriculture, Fisheries and Food if he will introduce legislation to prohibit the use of Strain 19 on cattle over eight months of age.
    Mr. Peart: No, Sir. I hope shortly to announce a decision on brucellosis con-
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    trol. It would be premature to adopt this suggestion.
    Mr. Kitson: While welcoming that statement, if the Minister really means it, may I ask him whether it is not a necessary first step to introduce this legislation, otherwise it will be very complicated to carry out blood tests on cattle over eight months of age?
    Mr. Pearl: I think that the hon. Gentleman should wait until I make the announcement.
    Sir A. V. Harvey: I welcome the change of heart of the Minister and his Department in the last four weeks. Will he undertake to make a statement about brucellosis before we rise for the Summer Recess, because the matter is far more urgent than he or his colleagues ever realised?
    Mr. Peart: There is no question of a change of heart on my part. I have always recognised that this problem must be tackled. It has always been a question of settling priorities.

    Old Orchards
    Mr. Crouchasked the Minister of Agriculture, Fisheries and Food if he is aware that there are large areas of old orchards no longer productive, the owners of which have not found the present level of grant sufficient incentive to grub trees, with the result that the standard of fruit from these orchards is unlikely to meet his minimum grade; and if he will raise the grant to meet this.
    Mr. Hoy: The matter is being discussed with the N.F.U. and the outcome will be announced. We should not too readily assume that a higher rate of grant would solve the problem.
    Mr. Crouch: Is the hon. Gentleman aware that the very high cost of grubbing, which can be as much as £80 an acre, is deterring the British apple grower from increasing his orchard productivity? Will he look into this question to see whether we can compete with, not just match, the productivity in countries like Holland and Italy?
    Mr. Hoy: Yes. Only a few days ago I had an opportunity of visiting some of the orchards in the hon. Gentleman's constituency. We give fairly substantial

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    grants at present, but, as I said in my original reply, this matter is being discussed with the N.F.U. and an announcement will be made.
    Mr. John Wells: Is not the hon. Gentleman aware that it is primarily the general farmer with a few odd acres of old orchards who is unwilling to grub up? If he would seriously consider a once-for-all-time elimination of these old orchards, rather than the rotational grubbing grants, that would be far more helpful. Would the hon. Gentleman consider that?
    Mr. Hoy: I know that it has been suggested that we should make a 100 per cent. grant, but perhaps the time is not quite Propitious to think about spending public money in that way.
    Mr. Crouchasked the Minister of Agriculture, Fisheries and Food if he is aware of the poor growth that may occur in fruit trees planted on land previously occupied by the same or closely related species and that this is causing concern in the fruit growing areas; and if, in view of the research carried out at East Mailing Research Station and in Holland in connection with this problem, he will seek to provide a grant-aided soil fumigation service to farmers to facilitate the replanting of obsolescent orchards.
    Mr. Hoy: This problem is not a new one. The common precaution is to replant on fresh land, but fumigation may prove effective in some cases. Research is proceeding, and when reliable and economical methods are developed, grant will be available under the Horticulture Improvement Scheme for the equipment.
    Mr. Crouch: I thank the hon. Gentleman for that helpful and forward-looking Answer. Is he aware that there are Dutch apple growers who are getting a crop three to four years after planting compared with six to seven years in this country due to the advance in techniques of soil fumigation? Will he look with more energy into this matter?
    Mr. Hoy: We have looked into it very carefully—and the growers have to do so, too, and endeavour to maintain technological advance in the same way as their competitors overseas.

    Pigs
    Mr. Buchanan-Smithasked the Minister of Agriculture, Fisheries and Food what he estimates will be the number of pigs slaughtered from July to December, 1966; and how this compares with the number slaughtered in the same period last year.
    Mr. Peart: The number of pigs slaughtered in the United Kingdom in July to December, 1965, was 7,579,000. I expect the comparable figure this year to be somewhat under 7 million.
    Mr. Buchanan-Smith: Would the right hon. Gentleman agree that the reduction in the number of slaughterings which he forecasts is because the size of the breeding herd is at its lowest for over four years? Would he accept that this is because of the stringent way in which the Government have treated this industry?
    Mr. Peart: On the contrary, as the hon. Gentleman must know, this shows how the flexible guarantee system works. In the Price Review we raised the middle band by 400,000, which gives over 2s. 3d. a score more than in the previous February.
    Mr. Maxwell-Hyslop: But would not the right hon. Gentleman agree that the standard quantity of the centre band for pigs is substantially less than the number which we need to have coming on to the market?
    Mr. Peart: I do not accept that. I think that the hon. Gentleman should wait to see how the flexible guarantee finally operates.

  Cheese and Dried Milk (Imports)
  Mr. Buchanan-Smithasked the Minister of Agriculture, Fisheries and Food if he is aware of the concern amongst British farmers over the imports of Dutch cheese and French dried milk; what action he will take; and if he will make a statement.
  Mr. Hoy: I am aware that these imports have been the subject of recent comment. For the last calendar year, they were less than 3 per cent. of total imports of the products in question, and

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  should therefore be kept in perspective. I am not satisfied there is any cause for action by the Government.
  Mr. Buchanan-Smith: Would the Minister agree that the British dairy farmer can make an even greater contribution to the replacement of imports of dairy produce? Would he accept that with the present economic stringency this is the time when they could be given a bigger share than they would have under this arrangement?
  Mr. Hoy: We hope that they will play a bigger part, but, if we expect to sell overseas, we have to buy. But that does not detract from the part which we think this sector of the industry will play in future.

  Meat Inspection (Fees)
  Mr. Norwoodasked the Minister of Agriculture, Fisheries and Food if he will introduce legislation to make the fees payable for inspection of slaughtered meat a charge upon the Revenue and not one which falls upon butchers.
  The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie): Our proposals for the amendment of the Meat Inspection Regulations, 1963, do not include any change in the financial arrangements. My right hon. Friend hopes to make a statement shortly.
  Mr. Norwood: Would not my hon. Friend agree that the arguments used by his colleague in 1963 when this matter was under discussion are equally compelling now? Since it is a national scheme, as he said at the time, it should be a national responsibility.
  Mr. Mackie: The total amount which meat inspection puts on a pound of meat is less than a tenth of a penny. I do not think that the public objects to paying for the aesthetic and health value of meat inspection.

  Cereals (Deficiency Payments)
  Mr. Godberasked the Minister of Agriculture, Fisheries and Food how many claims for acreage payments have been submitted too late to rank for payment in each of the last three cereal deficiency payment years; and what are
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  his reasons for abolishing the sending out of reminders to growers to send in these forms.
  Mr. Joplingasked the Minister of Agriculture, Fisheries and Food what acreage of barley and oats was involved in applications which were received too late for subsidy payment in each of the last three cereal deficiency payment years.
  Mr. John Mackie: The number of late claims rejected in each of the last three years was 183, 165 and 123. I regret that information about the acreages involved is not available. It is the farmer's responsibility to submit his claims in time, and we do not issue reminders under other subsidy schemes.
  Mr. Godber: The numbers which the Parliamentary Secretary has given are fairly substantial. He will realise that it has been the practice to issue reminders. Although, in spite of reminders, there has been this number, is not the hon. Gentleman afraid that it will be vastly greater without them? Does not this mean that many farmers who would otherwise be entitled to a subsidy will not get it? Is not this very unfortunate?
  Mr. Mackie: No. In the form which we are sending out we include this red printed slip, which surely should be adequate. We are trying to save money. To put out hundreds of thousands of extra reminders is quite a lot. That influenced us a good deal in stopping this reminder system.
  Mr. Jopling: Would the hon. Gentleman say how much money his Ministry has saved by stopping the sending of these reminders?
  Mr. Mackie: Not without notice.

  National Plan (Targets)
  Mr. Bruce-Gardyneasked the Minister of Agriculture, Fisheries and Food whether he is satisfied with the progress of the home agricultural industry towards fulfilment of the targets set out for it in the National Plan and if he will make a statement.
  Mr. John Mackie: Yes, Sir. Good progress is being made towards the objectives of a selective expansion of output and the release of labour through

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  increasing productivity. The Government and the industry have taken steps to implement the Plan and we have measures in hand, such as the Agriculture Bill, which will give the industry further help towards the achievement of these objectives.
  Mr. Bruce-Gardyne: Would not the hon. Gentleman agree that, even if the planned targets were achieved, there would be a substantial increase in the bill for imported food, which we cannot afford? Would not he further agree that the right way to give the agricultural industry its head would be gradually to move over to something nearer the Common Market system of agricultural support?
  Mr. Mackie: I do not think that that arises from the Question. The figure for increased demand is roughly what the industry itself thought it was capable of achieving.
  Mr. Godber: May I ask the hon. Gentleman a question which arises directly from Question on the Paper? Will he define what neither he nor his right hon. Friend the Minister have previously defined, namely, what is meant by saying that "a major part" of the increased demand at home will be met under the National Plan by home producers?
  Mr. Mackie: One cannot possibly be precise in agricultural production, as the right hon. Gentleman knows, but a "major part" is a major part.
  Mr. Emrys Hughes: Would my hon. Friend say whether any provision was made in the National Plan for a 7·2 increase in rents last year? In order to encourage small farmers, will he agree to a retrospective rent freeze?
  Mr. Mackie: We all understand my hon. Friend's interest in rents, which, as he well knows, are always taken into account in the Price Review. We did not include this point in the National Plan, because it is not a production point.
  Mr. Gibson-Watt: The hon. Gentleman will be aware that one of the targets in the National Plan was to get rid of 140,000 agricultural workers, 5,000 of them in Wales. Would the hon. Gentleman say whether the Government still have that target and whether they intend to carry it through?
  Mr. Mackie: It is not a good description to say that the aim is to get rid of men. We are asking agriculture to make a contribution of 140,000 men to increasing productivity. We are up to that target. I have not the figures for Wales, where the hon. Gentleman and I were yesterday, as against the rest of the country. But this is part of the target, and it is one which the industry is meeting.

  Shell Fishermen (Cornwall and Devon)
  Mr. Nottasked the Minister of Agriculture, Fisheries and Food what action he intends to take to protect the traditional shell fishermen of Cornwall and Devon from the activities of Irish aqualung divers who have been banned from commercial fishing in the Republic.
  Mr. Hoy: I have no reason to think that any protection is needed.
  Mr. Nott: Is the Minister aware that in South Africa, the United States, Ireland and many other countries skin diving has been banned because of its effects upon stocks of crayfish? If the hon. Gentleman is not prepared to ban skin diving, will he consider a method whereby zones could be introduced to protect the spawning grounds of the crayfish?
  Mr. Hoy: The hon. Member will be aware that I cannot answer for other countries, but he will also be aware that scientific investigation is at present taking place into the Cornish crayfish stocks. Certainly there is no scientific information to bear out the hon. Member's allegation that skin diving is having an effect.
  Mr. Loveys: Is the Minister aware that this is an increasing problem and is not confined solely to the South-West but that there is much poaching of lobsters from fishermen's pots by aqualung operators in other parts of the country, including Selsey, in my constituency? Cannot the Minister offer some protection for the fishermen?
  Mr. Hoy: If poaching of that kind is taking place and the hon. Member will let me have information, I will see that action is taken. This was not borne out, however, by a delegation which was led by one of his hon. Friends.

  Brewers (Charges)
  Mr. Ellisasked the Minister of Agriculture, Fisheries and Food if he is aware that, despite the agreement arising from Report No. 13 of the National Board for Prices and Incomes, brewers are evading the spirit of the agreement by increasing charges in their managed houses in non-public bars, and increasing the practice of not providing public houses with public bars; and what action he will take to deal with this situation.
  Mr. Peart: I have no evidence to suggest that brewers are evading the spirit of the agreement in either of the ways suggested by my hon. Friend. My Department is in close touch with the Brewers' Society on the working of the agreement.
  Mr. Ellis: Is my right hon. Friend aware that there is plenty of evidence to show that this is taking place? I will make it available to him pretty quickly if he does not know about it. On the other point, will my right hon. Friend make representations to the Brewers' Society that when some of us are called to the bar we prefer the unpretentiousness of the public bar and are more concerned with price and quality than with the knick-knacks on the walls?
  Mr. Peart: I can only say that I sympathise with that last remark. I have, however, made an agreement with the Brewers' Society and I have no evidence of the kind suggested by my hon. Friend. If he has any evidence, I will carefully look at it.
  Mr. John Hall: Would not the Minister agree that the brewing industry has done everything possible to comply with the undertaking which was given to him? Would he not further agree that the attention of his hon. Friend the Member for Bristol, North-West (Mr. Ellis) might better be directed to the much higher prices charged in houses leased to free undertakers by the Bristol Corporation?

  Salmonella Typhimurium Infection
  Mr. Kitsonasked the Minister of Agriculture, Fisheries and Food what are the factors responsible for the rise, spread and increase in salmonella typhimurium infection; what are the reasons for the rise in drug resistance in these organisms; whether he is aware of the potential risk
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  of infection from these organisms in man; and if he will make a statement.
  Mr. John Mackie: I have no precise information to show whether this infection in animals is increasing or that veterinary use of antibiotics has led to an increase in drug resistance. A Joint Committee of the Agricultural and Medical Research Councils has been considering some aspects of this problem and its report is awaited. My right hon. Friend's Scientific Advisory Panel is also reviewing the use of antibiotics in food and agriculture.
  Mr. Kitson: Is the Minister aware that six people in this country died of salmonella typhimurium infection during the last six months? Is he further aware that the source of most of this infection is in Essex? Will he not have discussions with the Minister of Health to see whether action should not be taken, because it has definitely been proved that the use of drugs in calves is setting up a serious resistance within human beings?
  Mr. Mackie: I doubt the hon. Member's last statement that it has been proved that these drugs have set up this resistance. We recognise, however, the problem of salmonella infections, of which, as I take it the hon. Member knows, there are simply hundreds, including this one. We are looking at the matter carefully and the eminent committees which I have mentioned are looking into the position seriously.
  Mr. Godber: Will the Minister undertake personally to follow up the situation carefully? Some serious issues are involved, including that of human health, and I am sure that he would wish to see every possible safeguard maintained.
  Mr. Mackie: I certainly give that assurance.
  Mr. Kitson: Owing to the unsatisfactory Answer which I have received, I give notice that I will raise this matter on the Adjournment.

  Insecticides (Organo-phosphorous Compounds)
  Mr. Harold Walkerasked the Minister of Agriculture, Fisheries and Food if he will have published the names of agricultural insecticides based on organo-phosphorous compounds.
  Mr. Hoy: The list of products for farmers and growers approved for efficiency under the Agricultural Chemicals Approval Scheme indicates those which are based on organo-phosphorous compounds. Manufacturers participating in the Pesticides Safety Precautions Scheme indicate on the label of their products when an agricultural insecticide is so based.
  Mr. Harold Walkerasked the Minister of Agriculture, Fisheries and Food what information he has concerning the lethal and epidemic qualities of certain agricultural insecticides such as those based on organo-phosphorous compounds from the Chemical Defence Experimental Establishment; and if he will make a statement.
  Mr. Hoy: There are no agricultural insecticides on sale in this country based on organo-phosphorous compounds provided by the Chemical Defence Experimental Establishment.
  Mr. Walker: Is my hon. Friend aware that a lecture on this subject was given recently by the senior principal scientific officer of that establishment? Is he aware that one of these pesticides was recently reported in the Press as the cause of a small township in the United States needing to be evacuated because of its accidental misuse, and that this particular compound, Paraphion, is freely available to members of the public in this country? In the public interest, should not my hon. Friend prohibit it and the use of other similar pesticides?
  Mr. Hoy: We exercise tremendous care in dealing with these matters. We have advisory committees consisting of really eminent people to consider them. I was unaware of the lecture to which my hon. Friend has referred. I shall certainly look at what he has said in the last part of his supplementary question.

  Fish, Broccoli and Potatoes (Transport from Cornwall)
  Mr. Geoffrey Wilsonasked the Minister of Agriculture, Fisheries and Food the average quantities of fish, broccoli and potatoes exported from Cornwall to other parts of the British Isles each year; by what means they are transported; and whether he will make a statement.
  Mr. John Mackie: Precise figures are not available but it is estimated that in a normal year some 4,000 tons of fish, 30,000 tons of broccoli and 11,000 tons of early potatoes are exported from Cornwall to other parts of the British Isles. Some two-thirds of the fish, broccoli and potatoes goes by road and the remainder by rail.
  Mr. Wilson: Has the hon. Gentleman any information about the route taken by the proportion that goes by road? Is it the A30 or the A38?
  Mr. Mackie: All I know is that if any of it goes the way I went round the A38 one day, it could be slowed up considerably. I cannot give the hon. Member precise information, but there is no evidence of a real hold-up in the area in the transport by road of this produce to the markets.

  European Economic Community
  Mr. McNamaraasked the Minister of Agriculture, Fisheries and Food whether he will publish a White Paper setting out the main effects of British entry into the European Economic Community on British agriculture and retail food prices, respectively.
  Mr. Peart: I do not think I could usefully enlarge upon the statements that have already been made on these matters.
  Mr. McNamara: Would not my right hon. Friend agree that this is one of the most important questions regarding any sort of negotiations which might be made with the Community, quite apart from any other political considerations, 'and that we need this information to have properly informed public discussion of the matter?
  Mr. Peart: I agree that many statements have been made. I have made statements myself. Obviously, joining the Community could mean a considerable increase in prices.
  Mr. Hooson: Would not the Minister agree that his well-known opposition to the Common Market would be put in better perspective by publication of a White Paper of this kind to enlarge public debate on a major issue which will arise if we again seek membership of the Community?
  Mr. Peart: I am not certain about all the factors in relation to the European Community, which has not finally clarified its own position on many points of agricultural policy. I still adhere to the statements which I have made. Entry could be harmful without proper safeguards to our farmers and it could mean increased food prices to consumers.
  Mr. Godber: Will not the Minister leave aside his well-known prejudices in regard to this matter and let us look at it factually? Is it not an excellent thing to do as is suggested and issue a White Paper and let us have discussion of these matters? The right hon. Gentleman knows that I take a very different view from him in this regard and that many of us are not satisfied with his negative approach to the whole question.
  Mr. Peart: I may have prejudices, but I believe that they are good prejudices. My only anxiety on this matter is that our home agriculture should not be jeopardised. Therefore, in any future developments we must hear this in mind.
  Sir T. Beamishasked the Minister of Agriculture, Fisheries and Food what discussions he is having with the National Farmers' Union and the Agricultural Workers' Union with a view to preparing the ground for the United Kingdom's entry into the European Economic Community and what conclusions he has reached about the problems involved.
  Mr. Pearl: I am not holding any such discussions with either of these organisations at present.
  Sir T. Beamish: As it is now clear that, in spite of all the gobbledegook from the Prime Minister, one of the primary aims of British foreign policy is to join the Common Market on acceptable terms, is it not deplorable that the Government have been so slothful in considering the effects that this might have on British agriculture and horticulture?
  Mr. Pearl: The Government have not been slothful. If we had accepted the Conservative approach. we would have gone in without any safeguards.
  Mr. Godber: The right hon. Gentleman must know that that is not so. He has refused to issue a White Paper. Is
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  it not time that he took this matter seriously and tried to take some action which will help to facilitate our entry into the Common Market with proper safeguards?
  Mr. Peart: The right hon. Gentleman knows that the Tory Party levy policy for British agriculture means the end of major safeguards?

  Pork and Beef (Imports from Yugoslavia)
  Mr. Peter Millsasked the Minister of Agriculture, Fisheries and Food how many tons of Yugoslav pork and beef were imported into the country during 1964–65
  Mr. Hoy: 2,200 tons of pork and 13,100 tons of beef between April, 1964, and March, 1965.
  Mr. Mills: Will the Minister bear in mind that increasing quantities of these products will be coming into this country due to the Common Market tariffs, and therefore food is diverted to this country? Does that not show how important it is that there should be far stricter import control over these products?
  Mr. Hoy: No. I think the figures for 1965–66 show a very substantial fall. Beef fell to 3,500 tons and pork to 1,300 tons.

  Tractors (Outrigger Arms)
  Mr. Peter Millsasked the Minister of Agriculture, Fisheries and Food what consideration he has given to the new type of outrigger arms for tractors as an adequate safety device in forming the regulations he is preparing on tractor safety.
  Mr. John Mackie: We are considering the possible effectiveness of the outrigger arms for tractors to which the hon. Member refers as part of the general study of the comments on the proposed regulations. It does not seem probable, however, that they will afford adequate protection against overturning in as wide a range of circumstances as would a safety frame or cab.
  Mr. Mills: Will the Minister bear in mind that we have had a further two

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  or three fatal accidents with tractors in the South-West very recently? Will he urgently bring forward new regulations to deal with this very serious problem?
  Mr. Mackie: Yes, we are attending to this very urgently indeed, but as the hon. Gentleman's Question suggests, there are differences of opinion as to what is the best method, and consultations are going on. We should like to be sure that what we decide is right. We appreciate that outrigger arms afford a considerable amount of safety.

  White Fish (Retailing)
  Mr. Bakerasked the Minister of Agriculture, Fisheries and Food what plans:le has, in co-operation with the White Fish Authority, for market research into the retailing of white fish.
  Mr. Hoy: My Department is meeting half the cost of the White Fish Authority's programme of economic research, which includes studies of retailing.
  Mr. Baker: Would the hon. Gentleman not agree that, in view of the savage cut in the white fish and herring subsidies for the ensuing year, it is essential to press on with this project with a view to giving better returns to fishermen as quickly as possible?
  Mr. Hoy: Quite obviously, I disagree with the first part of the hon. Gentleman's supplementary question, but we will debate it later. As to the latter part, we have always believed that proper marketing would bring better results, not only to those who catch and sell fish but to the consumers as well.
  Mr. John.Hall: Would the hon. Gentleman agree that the White Fish Authority has been in existence long enough to have conducted half a dozen market researches? Does he really think that the White Fish Authority is making a worthwhile contribution to the industry?
  Mr. Hoy: I think that the White Fish Authority has done a fairly good job; and I 'think that under the present Chairman this job has been tackled. I cannot be held responsible for what went on in the years prior to his taking over.

  South Atlantic Fishing Grounds
  Mr. Bakerasked the Minister of Agriculture, Fisheries and Food what study he has made of prospects for the
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  exploitation of the South Atlantic fishing grounds; and if he will make a statement.
  Mr. Hoy: Investigations into prospects in the South-Eastern Atlantic are being carried out jointly by the White Fish Authority, the Ministry of Technology and my Department. An account is given in the Annual Report of the Authority laid before Parliament on 23rd June, 1966.
  Mr. Baker: While thanking the hon. Gentleman for that reply, may I ask him if he would not agree that the exploitation of these grounds would help in easing the overfishing in some of the more traditional grounds around our coasts?
  Mr. Hoy: Yes, I agree with the hon. Gentleman, and that is the reason why these researches have taken place.
  Mr. James Johnson: Is my hon. Friend aware that fishing off the Patagonia coast will cause longer and longer voyages for the home-based fishing fleet, and is he further aware that the consequent absence of the husbands causes their wives much concern? Will he agree to have a sociological survey into this?
  Mr. Hoy: I do not underestimate the seriousness of the question raised by my hon. Friend. When we are investigating these things, as we are, quite obviously we have got to consider all the repercussions they will have on the people employed in the industry.

  Fish Farming
  Mr. Evelyn Kingasked the Minister of Agriculture, Fisheries and Food what research is now being conducted in the field of fish farming; what results have so far been achieved; and if he will make a statement.
  Mr. Hoy: Research and experimental work in fish farming is being carried out by the Fisheries laboratories, by the White Fish Authority and by universities. An account appears in the Annual Report of the White Fish Authority laid before Parliament on 23rd June.
  Mr. King: Will the hon. Gentleman hurry this research on? Would he confirm its potential importance to seaside resorts, particularly where heat and power from power stations are likely to be available.
  Mr. Hoy: Yes. In reply to the latter part of the supplementary question, research is going on into this particular aspect. With regard to overall research, whatever we do it is going to take some time to get proper answers, but I can assure the hon. Gentleman that the three parties concerned in this work are not losing any time at all in seeking to find results.
  Mr. Manuel: Would my hon. Friend indicate just what success has been attained so far in connection with fish farming as a viable enterprise? Have any definite conclusions yet been obtained?
  Mr. Hoy: We are in the early stages of the research at Lowestoft, which is being very helpful indeed; but I am bound to tell my hon. Friend that it will be some time yet before we are able to say whether it will be a viable proposition or not.

  White Fish Industry (Minimum Prices)
  Mr. James Johnsonasked the Minister of Agriculture, Fisheries and Food what talks he has had with the White Fish Authority regarding the formulation of a scheme for the establishment of minimum prices in the white fish industry; and whether he will make a statement.
  Mr. Hoy: I have nothing to add to the replies given on 2nd March and 11th May.
  Mr. Johnson: While thanking my hon. Friend for his usual candour, may I ask him whether he is aware that this delay is becoming a little niggling? Could he possibly give us a date when this report may come?
  Mr. Hoy: I think my hon. Friend will realise that this really is not a matter for the Ministry. It is a matter for the Authority and the industry. I think my hon. Friend can be assured that the Authority and its very able Chairman are doing all they possibly can.
  Mr. Godber: On this point, may I endorse what the hon. Member for Kingston upon Hull, West (Mr. James Johnson) has said, in that speed is needed, and also what the hon. Gentleman has said about the very able Chairman, but may I ask whether he would not agree that it is
  616
  most essential to get this cleared up, since otherwise the industry will suffer very seriously?
  Mr. Hoy: Yes, I agree with the right hon. Gentleman, but when one undertakes a scheme like this, then consultation has to take place with every part of the industry.
  Mr. Speaker: Order. It is difficult for the Chair to hear the Questions and Answers when there is so much background noise.

  Milk (Half-Pint Bottles)
  Mr. Lomasasked the Minister of Agriculture, Fisheries and Food if he will introduce legislation compelling milk retailers to provide half-pint bottles for milk, in view of the number of retired persons and individuals living on their own who have no means of storing milk overnight.
  Hon. Members: Wake up.
  Mr. Hoy: I must say that it is a little difficult to hear what Questions are being asked.
  Some dairies have discontinued the sale of milk in half-pint bottles because they find it uneconomic. I am not satisfied that it would be desirable to introduce an element of compulsion into the present arrangements governing the sale of milk.
  Mr. Lomas: Is my hon. Friend aware that the present system creates a great wastage of milk and also creates a wastage of money? Does he not think that, in the interests of those living on low fixed incomes and of people having to live on their own, this legislation is long overdue?
  Mr. Hoy: I have had a look at this. If we are going to insist on this, we are going to put up considerably the cost of delivery. We also have to remember that, in at least half of the country, people are still able to get these half-pint bottles, and we do not want to cause an increase in their cost of living by forcing them upon the others. On the other hand, I am informed by the people concerned that today milk bought in one-pint bottles and kept in a cool place will last two days.

  River Teifi (Flooding)
  Mr. Elystan Morganasked the Minister of Agriculture, Fisheries and Food how soon work can commence near Llechryd, Cardiganshire, to combat the danger of flooding by the River Teifi in that area.
  Mr. John Mackie: We are ready to consider the proposals for approval for grant as soon as we get the details required and I understand that the river authority hopes to give these shortly. I cannot say when it will start this work.
  Mr. Morgan: Does my hon. Friend appreciate that there has been quite some delay in this matter? There were reports to the Government in 1852 and 1873. There is a grave danger that if this work is not carried out expeditiously there will be further flooding, perhaps causing loss of life.
  Mr. Mackie: My right hon. Friend and I cannot be responsible for the reports submitted on the dates referred to by my hon. Friend, but we are advised that there is no great danger of the slate slipping or loss of human life, but we will look into the matter.

  Meat (Imports from New Zealand)
  Sir J. Gilmourasked the Minister of Agriculture, Fisheries and Food what estimate he has made of the quantity of meat which will be imported annually into this country from New Zealand during the currency of the recently negotiated agreement whereby imports of meat from New Zealand will be without restriction in quantity until September, 1972.
  Mr. Peart: The quantity will depend on supply and demand but I do not foresee any marked divergence from current trends.
  Sir J. Gilmour: As the New Zealand meat producers have announced plans to diversify the sale of lamb from New Zealand, and particularly to review what is sold to the United Kingdom and North America would not the hon. Gentleman agree that he ought to be able to give encouragement to those producing lamb in this country to increase the amount for the home market?
  Mr. Peart: Certainly, Sir. That was the purpose of our National Economic Plan, to have a selective approach to increased production.
  Mr. Speaker: Order. I must ask the House to be fair to those who have Questions to ask.
  Mr. Peart: We have encouraged home production, and that was the purpose of the last review.
  Mr. Godber: Can the right hon. Gentleman assure us that this agreement will not run counter in any way to the assurance given in the National Plan that the major part of the increased requirement would come from home farmers?
  Mr. Peart: Certainly we stand by the National Plan.

  Exports
  Mr. Bryant Godman Irvineasked the Minister of Agriculture, Fisheries and Food what steps he is taking to increase agricultural exports; and what success has been achieved in the last 12 months.
  Mr. Peart: The full range of Government services to exporters is available to the agricultural industry, and my Department works closely with the Departments responsible. Exports of agricultural and food products in the year ended May, 1966, were worth £316 million—£38 million up on the previous year.
  Last week I presided over the launching of the British Agricultural Export Council, which has been set up by the industry with encouragement and advice from me and my Department.
  Mr. Irvine: Has the right hon. Gentleman considered the possibility of in, creasing our agricultural representatives in embassies abroad?
  Mr. Peart: I will consider the whole question of attachés, but, where we have no attachés, obviously our commercial counsellors help considerably.

  Fruit and Vegetables (Consumption)
  Mr. Bryant Godman Irvineasked the Minister of Agriculture, Fisheries and Food what steps he is taking to increase the consumption of fresh fruit and vegetables.
  Mr. Hoy: Sales promotion is primarily a matter for the industry. But the introduction of statutory grading and the setting up of an Apple and Pear Development Council should help.
  Mr. Irvine: As we are at the bottom of the league table in Europe in respect of both products, will the hon. Gentleman look at this again to see whether there is anything that his Department can do to be of assistance?
  Mr. Hoy: We have made a start, and we have persuaded the industry—at least we have done it in consultation with the industry—to set up this machinery, and I am certain that it will show good results.

  Hormone Selective Weed Killers
  Mr. Burdenasked the Minister of Agriculture, Fisheries and Food if he is aware that some hormone selective weed killers are a danger to the health and life of human beings and animals; and what steps are taken to clear them for use and ensure that dangerous specifications are not put into use.
  Mr. Hoy: The Advisory Committee on Pesticides and Other Toxic Chemicals subjects weed killers to rigorous scrutiny before making recommendations for their safe use and before they are cleared through the Pesticides Safety Precautions Scheme.
  Mr. Burden: I understand the interest of the party opposite in pesticides at the moment, but will the hon. Gentleman give an undertaking that really great attention is being paid to this matter, because it is causing grave concern in the country?
  Mr. Hoy: Yes, Sir. I can give the hon. Member that assurance.
  Mr. Maxwell-Hyslop: Does the Minister to agree that it looks as if the Treasury Bench needs a little selective weed killer at the moment?
  Mr. Hoy: I am encouraged in that view from the position I am looking from just now.
  Mr. Speaker: It is obviously time to move away from Questions.

  ORDER PAPER (SELECTION OF AMENDMENTS)
  Mr. Worsleyasked the Lord President of the Council whether he will arrange for the Services Committee to consider the matter of producing an Order Paper listing amendments announced as being provisionally selected by the Chair to be available to Members when a Bill is being considered in committee of the whole House.
  The Lord President of the Council and Leader of the House of Commons (Mr. Herbert Bowden): The time available is insufficient to produce an over-printed Order Paper listing Amendments provisionally selected by the Chair but consideration is being given to placing an extra 50 copies of the list of selected Amendments on the shelf in the No Lobby. Even if extra copies can be provided in this way, however,Mr.Speaker or the Chairman must, of course, retain their right to alter the provisional selection, which is sometimes done after representations have been received.

  HOUSE OF COMMONS (VISITORS)
  Mr. Archerasked the Lord President of the Council if he is aware that admission under the Gallery is not open to women without special permission; what is the reason for this discrimination; and whether he will take steps to admit women on the same terms as men.
  Mr. Bowden: Under the Gallery is intended primarily for expert advisers and those having a direct interest in the debate and if a woman comes within those categories arrangements can be made for her to be admitted.
  Mr. Archer: Is my right hon. Friend aware that to secure the admission even of a woman expert, it is necessary to obtain the certificate of the Chief Whip on either side of the House? Would my right hon. Friend explain why his need is greater than that of other hon. Members?
  Mr. Bowden: The history of the admission of women under the Gallery goes back to the eighteenth century. There is a very good reason for it. I

  621
  would remind the House that both Mr. Speaker's and the Serjeant at Arm's Galleries are reserved for women only.
  Mr. R. C. Mitchell: Will the Lord President undertake a complete review of the allocation of seats in the public Gallery? Is he aware that many hon. Members have been told that there is not a single seat left today, yet we look up there and see a whole row of empty seats? Is he further aware—
  Mr. Speaker: Order. The hon. Gentleman cannot call attention to the presence or absence of strangers without risking serious consequences.
  Dame Irene Ward: May I partly thank the right hon. Gentleman for his information? Is he aware that who sits in various Galleries in other parts of the House is nothing to do with the right of women to be admitted under the Gallery as experts? The whole procedure to get women's rights established as experts has been abominable. Is the right hon. Gentleman aware that I was thinking of establishing myself a wayleave under the Gallery in order to protect our interests?
  Mr. Bowden: There is no difficulty whatever about a lady being given permission to sit under the Gallery if she is an expert and is advising any hon. Member within the House on a private Member's Bill or on public business.

  MEMBERS (FILING CABINETS)
  Mr. McNamaraasked the Lord President of the Council what progress is being made towards supplying each private Member who so requests with more than one filing cabinet.
  Sir Gerald Wills: I have been asked to reply.
  The number of filing cabinets issued to Members depends largely on space. A Member who has a single room can have a second filing cabinet if he wants one but there is normally insufficient space in Members' desk rooms for the provision of a second filing cabinet for each Member.
  Mr. McNamara: While thanking the hon. Gentleman for that reply, may I ask whether he is aware that, within hours of
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  asking my Questions last week about the provision of desks for new hon. Members within the precincts, I was offered one? May I ask him whether that is establishing a precedent, so that if all new hon. Members table similar Questions they will get new desks?
  Sir G. Wells: I am glad to hear the efficacy of the hon. Gentleman's efforts so far.
  Mr. John Smith: Is not this tinkering with the problem? Is not the spirit of the age after much bigger game than filing cabinets? Is it not the truth that we cannot do our job by our constituents in a building designed as an early Victorian club, charming though it is, and ought we not to clear out of here, Galleries and all—
  Mr. Speaker: Order. The hon. Gentleman cannot make a speech. Questions should be brief.
  Sir G. Wells: I think that that raises rather a wider question.

  ESTIMATES COMMITTEE (CLERKS)
  Mr. William Hamiltonasked the Lord President of the Council what progress is being made in the recruitment of extra Clerks for service with the Estimates Committee in accordance with the recommendations of the Select Committee on Procedure.
  Mr. Bowden: The Select Committee on House of Commons (Services) has already reported on the proposal that Select Committees should be permitted to employ specialist assistance but the recommendation for extra Clerks for service with the Estimates Committee will be considered as part of a wider review of the work and staffing of the Clerk's Department, which is currently being undertaken by a Treasury O and M team.
  Mr. Hamilton: Is it not the case that, some time ago, my right hon. Friend accepted the recommendation that there should be two full-time Clerks for the whole Committee and that the Clerks of each Sub-Committee should be full-time to the Estimates Committee? Will he give an assurance that the cuts in public expenditure to be announced shortly will not include this particular item, and will

  623
  he give a further assurance that we might have some women Clerk experts added for the Estimates Committee?
  Mr. Bowden: On 27th October, 1965, I promised the House that the House of Commons (Services) Committee would look at the problem. I am sure the whole House is aware of the importance of adequately staffing all the Committees of the House, but the o and M team at present engaged in looking at the whole question is anxious to make sure not only that they are fully staffed but that they are not overstaffed.

  HOUSE OF COMMONS (DUPLICATING MACHINES)
  Mr. Higginsasked the Lord President of the Council when a duplicating machine will be installed in Old Palace Yard.
  Mr. Selwyn Lloyd: I have been asked to reply.
  The Administration Sub-Committee of the Select Committee on House of Commons (Services) is considering the installation of additional duplicating machines in the House, and this proposal will be sympathetically considered.
  Mr. Higgins: In thanking ,my right hon. and learned Friend for that reply, may I ask him to ensure that this matter is treated as one of some urgency? Hon. Members crossing the road to duplicate their documents run some risk, and the effect of a by-election after the Government's economic announcement today might be traumatic on Government morale.
  Mr. Lloyd: We hope to make a recommendation within a few days.

  BILLS (SECOND READING DEBATES)
  Mr. Winnickasked the Lord President of the Council whether he will move to alter the procedure of the House for the Second Reading of Government Bills on major subjects so that there would be a greater opportunity for back-bench Members to speak.
  Mr. Bowden: I answered a similar Question on 22nd June when I said that the Select Committee can, if it wishes, look at this question.

  LAND REGISTRATION
  Mr. Hector Hughesasked the Attorney-General if he will state his plans to cheapen, expedite and simplify the procedure relating to the registration by the Land Registry of transfers of property.
  The Attorney-General (Sir Elwyn Jones): The attainment of these objects depends in large measure on improvements to the substantive law relating to the transfer of land. The Law Commission is considering this with a view to simplification. It is hoped that expedition will be achieved through the passage of the Land Registration Bill and the expansion of the Ordnance Survey Department and of the Land Registry, together with the extended use of modern processes and equipment. No immediate reduction in land registration fees can be expected.
  Mr. Hughes: While thanking the learned Attorney-General for his historical reply and his hope, may I ask whether he realises that the procedural reforms asked for in the Question are particularly urgent having regard to the present financial stringency which inflicts loss and damage on the vendors and purchasers of properties when there is delay in completing purchases?
  The Attorney-General: The need for improvement is appreciated, and the appropriate steps are being taken.

  DIRECTOR OF PUBLIC PROSECUTIONS (BOOK)
  Sir C. Taylorasked the Attorney-General whether he will now direct the Director of Public Prosecutions to institute criminal proceedings against the publishers of the book, details of which have been handed to him by the honourable Member for Eastbourne, in view of the publicity which it has now received.
  The Attorney-General: No. As I indicated in my Answer to the hon. Member's Question on 11th May, the Director of Public Prosecutions, after consultation with the Law Officers, decided that criminal proceedings should not be instituted. The grounds for this decision are as valid now as they were then.
  Sir C. Taylor: Has the right hon. and learned Gentleman's attention been drawn to Motion No. 119 signed by 35 hon. Members of all parties, which urges that he should change his mind about this?
  The Attorney-General: Yes. My attention has been drawn to that Motion, and also to Motion No. 116, to exactly the opposite effect.
  Sir C. Nabarro: How does the right hon. arid learned Gentleman reconcile his Answer today and his earlier Answer with his imputation that the flood of pornography entering the country was the fault of the Tory Party? In his answers to both these questions, is he not himself guilty of moral turpitude?
  Mr. Speaker: Order. I know that the hon. Gentleman means it lightheartedly, but he should withdraw that at once.
  Sir G. NabarroI am sorry, Mr. Speaker, if that is unparliamentary, and I will withdraw it unhesitatingly. May I substitute moral indecision—moral in. decision.
  The Attorney-General: Whether I heard the hon. Gentleman's condemnation correctly I confess does not trouble me greatly. Nevertheless, the fact is that the Government and public authorities are taking all active steps that are within the resources of Customs and of police in regard to the flood of pornography, and I do not accept the summary of what I said earlier to be accurately stated by the hon. Gentleman.

LAW OF SUCCESSION (ILLEGITIMATE PERSONS)
Mr. Abseasked the Attorney-General whether Her Majesty's Government accept the recommendations of the Russell Committee on the law of succession in relation to illegitimate persons; and what action is intended to be taken upon them.
The Attorney-General: The Government are considering the Report and no decision has yet been reached about the acceptance of the recommendation contained in it.
Mr. Abse: In view of the fact that the Report was almost unanimous, and also that it undoubtedly has been received in many circles with acclamation, and since many of its recommendations are not re-
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trospective, will my right hon. and learned Friend look at this as a matter of urgency?
The Attorney-General: Yes, most certainly, but the Report was published only on 13th July, and we are anxious to get the views of the House, the public, and all interested parties before action is taken.

SOLICITORS (CONVEYANCING CHARGES)
Mr. Whitakerasked the Attorney-General whether he will take powers to refer solicitors' conveyancing charges to either the Monopolies Commission or the Restrictive Practices Court; and if he will refer recent increases in solicitors' remuneration arising out of conveyancing to the National Board for Prices and Incomes.
The Attorney-General: No. Statutory control over solicitors' conveyancing charges is exercised by a committee of which my noble Friend the Lord Chancellor is the chairman. There has been no change in the scales authorised by the Committee since 1960. My noble Friend recently invited the Law Society to consider alterations in the method of charging. The Law Society is now doing this. It would therefore be premature to consider the desirability of the suggested references at this stage.
Mr. Whitaker: Will my right hon. and learned Friend explain why the legal profession is reluctant to submit its contentions to the verdict of a jury composed of non-lawyers?
The Attorney-General: The Committee to which I have referred contains eminent public personalities and judges who, I think, ought to be relied on to protect the public interest, but, as I say, in any event this matter is now under active consideration by the Law Society, and is being watched most carefully by my noble Friend.

LEGAL AID (RENT ASSESSMENT COMMITTEE PROCEEDINGS)
Mr. William Wellsasked the Attorney-General whether, in view of the high proportion of landlords appearing

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before rent assessment committees who either are represented by solicitors or counsel or who call expert witnesses, he will hasten his review of this problem with a view to amending the regulations under the Legal Aid and Advice Acts so as to provide for the grant of legal aid in cases to be determined by these committees.
The Attorney-General: My noble Friend the Lord Chancellor will continue to watch this matter. But, as my right hon. Friend the Minister of Housing and Local Government indicated yesterday in answer to my hon. Friend the Member for Hampstead (Mr. Whitaker), it is doubtful whether the extension of legal aid to these proceedings is really the answer to this problem. What would seem to be most needed where a party is without adequate means is the assistance of a surveyor. This, as my right hon. Friend indicated, he is considering.
Mr. Wells: Will my right hon. and learned Friend remember that the present position is loading the dice heavily in favour of property companies and tending to frustrate the purpose of rent control, and that second-best is better than nothing at all?
The Attorney-General: It is the availability of a competent and expert witness which could, I think, render the greatest assistance to the tenant, and it is along these lines that we are thinking.

ECONOMIC MEASURES
The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I wish to make a statement.
Sterling has been under pressure for the past two and a half weeks. After improvement in the early weeks of May we were blown off course by the seven-week seamen's strike and when the bill for that strike was presented in terms of the gold and convertible currency figures in June the foreign exchange market reacted adversely. But there were deeper and more fundamental causes. Many have been at home and of these I shall speak in a moment. Several have been overseas. For several weeks past there has been an increasing pressure on liquidity in the world's financial centres.
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Action taken by the United States' authorities to strengthen the American balance of payments has led to an acute shortage of dollars and Euro-dollars in world trade and this has led to a progressive rise in interest rates in most financial centres and to the selling of sterling to replenish dollar balances. Last Thursday, action was taken by the Bank of England to raise its discount rate and to double its call on the clearing banks for special deposits. On that day I informed the House that I would shortly be announcing further measures to deal not only with the short-run pressure on sterling, but also with the underlying economic situation.
Action is needed for the purpose of making a direct impact on our payments balance, and particularly on certain parts of our overseas expenditure which, in recent years, has been growing rapidly. Action is needed equally to deal with the problem of internal demand, public and private, and to redeploy resources, both manpower and capacity, according to national priorities, and check inflation.
Exports until the seamen's strike have been rising. By value, in the first five months of this year they were 9 per cent. higher than in the same period last year. By volume, the increase over the same period last year was 6 per cent., a rate of increase higher than that laid down in the National Plan. But abundant market opportunities abroad for British products—which are competitve enough in terms of quality, performance and price—are being lost owing to the shortage of labour. Order books are too long, and delivery dates excessively protracted. Hours of work have been reduced and incomes have been rising faster than productivity.
What is needed is a shake-out which will release the nation's manpower, skilled and unskilled, and lead to a more purposive use of labour for the sake of increasing exports and giving effect to other national priorities. This redeployment can be achieved only by cuts in the present inflated level of demand, both in the private and public sectors. Not until we can get this redeployment through an attack on the problem of demand can we confidently expect growth in industrial production which is needed to realise our economic and social policies.

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I will begin with the measures needed to restrain private demand at home. The economy is carrying too heavy a burden of production financed by hire purchase which means that too high a proportion of today's production is being paid for by a mortgage on tomorrow's earnings.
My right hon. Friend the President of the Board of Trade has today made Orders. which will come into effect at midnight tonight, tighteninig up still further the regulations governing hire purchase. The down payment on cars, motor cycles and caravans is raised to 40 per cent. and the repayment period shortened to 24 months. The down payment on furniture is raised to 20 per cent. and the repayment period shortened to 24 months. The down payment on domestic appliances is raised to 33⅓ per cent.; the repayment period remains at 24 months. There is no change in the present regulations for cookers and water heaters. Corresponding changes are made in the regulations governing rental payments. It is estimated that this will cut hire-purchase borrowing by £160 million.
This of itself is not enough. The Government have, therefore, decided to activate the regulator created under Section 9 of the Finance Act of 1961, renewed in successive Finance Acts and given greater flexibility in Section 8 of the Finance Act, 1964.
The 'Treasury has today made an Order the effect of which is to put a surcharge of 10 per cent. on the duties on beer, wines and spirits; on hydrocarbon oils, petrol substitutes and power methylated spirits; and on Purchase Tax.
I wish to make it clear that in the case of Purchase Tax the increase is the equivalent of 10 per cent. of the existing rates. Thus, for goods now chargeable at 10 per cent. the new effective charge will be 11 per cent; for goods chargeable at 15 per cent. it will be 16½ per cent.; and for goods chargeable at 25 per cent. it will be 27½ per cent.
The surcharge will take effect from midnight tonight. Its effect will be further to increase the revenue at the rate of about £150 million in a full year. This is a net figure after allowing for the effect of the hire-purchase proposals and for the additional export rebate which
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will become payable following the increases in oil duty and Purchase Tax.
The increase in the duty on petrol and derv will, following the precedent set last year, be refunded to bus operators. The necessary administrative arrangements will be made as soon as possible and Parliamentary authority sought in the ordinary way. In addition, a further £20 million will be taken out of the economy as a result of changes announced today by my right hon. Friend the Postmaster-General in certain postal and telecommunications tariffs; parcels, registration and overseas rates will be increased from 3rd October. The telecommunications changes affecting certain call charges will involve no net increase in Post Office revenue, but will be designed to rationalise changes on a basis more closely related to costs. These will take effect from 1st January next. In addition, my right hon. Friend will be requiring a year's rental in advance for new telephones instead of a quarter's rental as at present. This will apply to orders accepted from tomorrow. Details will be published in the OFFICIAL REPORT and are now available in the Vote Office.
In the field of direct taxation the Government propose that a one-year surcharge of 10 per cent. be imposed on Surtax. This will be levied on Surtax liabilities for 1965–66 for payment on 1st September, 1967. The necessary legislation will be introduced in next year's Finance Bill. The extra yield is estimated at £26 million.
These measures on private current expenditure will be reinforced by action to restrain private sector building outside the housing and industrial fields and outside the development areas. The Government have decided to intensify the control on less essential building work and thus to reinforce the priority accorded to building programmes in the fields of housing, schools, hospitals—and new factories.
When the Building Control Bill, now before Parliament, receives the Royal Assent, the Minister of Public Building and Works will make an Order reducing the cost limit above which a project is subject to control from £100,000 to £50,000. The Order will require an affirmative Resolution in both Houses.

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As before, this control will not apply in the development areas as now defined. With a cost limit of £100,000 the control would affect about 500 projects worth £180 million in a year. The lowering of the limit to £50,000 will extend control to cover a total of about 1,000 projects worth £220 million in a year.
This will give the Government more power to adjust the volume of privately-sponsored construction work as the economic situation develops. Hitherto, approval has been withheld from less than 10 per cent. of the projects about which the Minister has been consulted, but it will be necessary to defer a larger proportion of privately-sponsored work in future. The lowering of the limit will give the Minister scope to concentrate the postponement control on less urgent smaller schemes instead of having to rely on deferring some of the larger projects which are more in the public interest. This measure will be supplemented by a tighter control on office building.
My right hon. Friend the President of the Board of Trade has made an Order, coming into force at midnight, extending control of office building to the whole of Britain south of a line from the Wash to the borders of Hampshire and Dorset, by including within the control the whole of the East Midlands, West Midlands and South-East Region. Projects for buildings of more than 3,000 sq. ft. of office space which were not the subject of an application for planning permission at the time the Order comes into operation will require on Office Development Permit. In addition to tightening the control on building, this measure will reinforce those already taken by the Government for the prevention of undue congestion in these parts of the country and will supplement the strict policy which is being applied to the issue of industrial development certificates.
Now I turn to public investment programmes. The investment programmes in the public sector have been reviewed and the Government are introducing a number of deferment measures which will reduce demands on resources in this field by £150 million in 1967–68, though these steps will also lead to significant reductions in demand in the current year. While they will involve forgoing for the
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present a number of desirable projects, they will be concentrated on those activities which are not vital to our production capacity and for the development of the economy as a whole.
Housing, schools, hospitals, Government financed factories built in develop. ment areas, including advance factories, will not be affected. On investment by central and local government, we are making cuts amounting to £55 million in 1967–68. This will mean cutting back projects designed to contribute to local amenities, but which, in present circumstances, must be postponed without any set back to our major projects. These will cover such items as swimming baths and new local government offices. The Covent Garden Market project will similarly be deferred.
The programme for investment in nationalised industries has also been carefully scrutinised to ensure that essential industrial investment within the public sector shall go on. Nevertheless, the Government are arranging, in consultation with the chairmen of these industries, for a reduction in the total demand on resources made by public industry investment to be reduced by £95 million in 1967–68. This is in addition to programmes which have fallen behind schedule owing to slippage in construction, or in the delivery by contractors of the necessary plant and machinery.
The measures I have so far announced, by reducing the level of demand within the domestic economy, will make a vital contribution to our balance of payments by freeing resources, particularly labour, for work on exports and essential investment. But this, of itself, is not enough. More direct action on the balance of payments is required.
In accordance with the policy foreshadowed in the Defence White Paper, we have been urgently reviewing how far we can make a major saving in overseas Government expenditure without altering the basic lines of external policy on which the Defence Review was founded. We have also reviewed the level of military and economic aid which we can afford next year. The Government have decided on firm programmes which will reduce our overseas Government expenditure, military and civil, by at least £100 million.

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I will come, in a moment, to the cost of our forces in Germany. Elsewhere, we are pressing ahead with measures designed to ensure a substantial and early saving compared with the present level of expenditure. Given an end to confrontation, the plans made by my right hon. Friend the Secretary of State for Defence during his recent visit to the area will secure a major contribution towards this saving.
As regards Germany, in the Defence White Paper published in February we said that we thought it right to maintain our ground forces in Germany at about their existing level until satisfactory arms control arrangements had been agreed in Europe, provided, however, that some means was found for meeting the foreign exchange cost of those forces. In my right hon. Friend's Budget statement on 1st May, he made clear our intention to negotiate with the Federal Government a new settlement aimed at eliminating the foreign exchange cost of our troops in Germany.
In a few minutes my right hon. Friend will be leaving for Bonn to continue these negotiations. In the light of these discussions, the Government will immediately consider what, if any, further action is called for, including the question whether this would mean proposing, forthwith through the prescribed N.A.T.C). and W.E.U. procedures, very substantial cuts in our forces in Germany, sufficient to bring the foreign exchange costs down to the level covered by offset and other payments.
The figure of £100 million that I have mentioned includes in addition to the savings on defence expenditure, which, of course, are by far the greater part of it, reductions on military and civil aid expenditure and in the cost of our representation and information services overseas.
Private overseas expenditure must also make its contribution. Expenditure on holiday travel outside the sterling area has been rising rapidly and the deficit on travel account with non-sterling countries has risen from £38 million in 1961 to an estimated figure of £95 million in 1966 and is expected, on current trends, to reach about £105 million next year. We cannot allow this formidable deficit to go on mounting without restric-
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tion, but the change requires consultation with the International Monetary Fund, which we have initiated.
For the 12 months starting on 1st November next there will be a basic allowance of £50 per person for travel to countries outside the sterling area. This allowance will have to cover all the foreign exchange requirements of the traveller, whether paid for in sterling or a foreign currency, except for fares paid for in sterling. There will be special arrangements for business and health travel and for those who, instead of paying fares abroad, take their cars abroad.
From today up to 31st October the amount of foreign exchange which may be bought for journeys to be started during that period will normally be limited to £50 per person. Special arrangements will, however, be made for people who have already made their holiday bookings to acquire a reasonable amount of foreign exchange, and sterling payments through travel agents may continue to be made as under existing arrangements. The Treasury is announcing full details this afternoon.
On the positive side of encouraging tourist expenditure in this country, the Government have decided to introduce, for an experimental period of one year in the first instance, a scheme under which development loan assistance can be offered for the building, expansion or modernisation of hotels which can show that this will result in a significant increase in their earnings from overseas visitors. The President of the Board of Trade will be making a full announcement on this before the Recess.
There is another field of private overseas expenditure lying between current and capital expenditure, which has imposed an increasing charge on our balance of payments—the remittances of emigrants to non-sterling area countries. In addition to the genuine transfers of capital by emigrants, there has been evidence of evasion of the control of capital movements. We have decided that, while the existing allowance of up to £5,000 in official exchange for each emigrating family should stand, any balance over and above this should be transferred through the investment currency market and not through the security sterling market. Also from today, the

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total amount which may be sent by way of cash gifts to residents outside the sterling area will be reduced from £250 a year to £50 a year.
The net direct saving on our overseas payments from all these measures, Government and private, amounts to £150 million. This is a direct saving on our overseas outgoings and, therefore, on the balance of payments deficit.
To sum up the measures I have so far outlined. I estimate that they will reduce demand on the domestic economy by more than £500 million. This is in addition to the earlier budgetary measures by this Government, reducing the pressure of demand in the private sector by over £700 million. They are in addition to the monetary policy which has been in force and which was reinforced by the three further measures announced last week. They are in addition, also, to the impact of this year's Finance Bill which is yet to have its effect on the economy, which is due to reduce demand and which will extract a further £300 million from the economy, with all which this means in terms of imports and of redeployment of labour towards exports and other essential industries.
In addition to the measures designed to reduce the domestic pressure, the economies in overseas expenditure, public and private, will, as I have said, make a direct saving of £150 million. But the House will recognise that the whole operation stands or falls on the extent to which we can keep our costs and prices under control. In recent years money incomes have been increasing at a rate far faster than could be justified by increasing production; in 1965, we paid ourselves increases in money incomes of about £1,800 million compared with in the previous year. About £1,300 million of this represented increases in wages and salaries. Over the same period we earned only £600 million by way of increased production. These trends are continuing.
The Declaration of Intent of 16th December, 1964, was a great landmark when, for the first time in our history, employer, trade union and Government signed a compact designed to restrain the growth of incomes to a norm within the national capacity to pay. Yet ever since that time wage increases have outrun the
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figure allowed for, and pre-empted the amount available for such increases for a considerable period ahead. The time has come to call a halt.
The Government are now calling for a six-month standstill on wages, salaries and other types of income, followed by a further six months of severe restraint, and for a similar standstill on prices.
Where a definite commitment already exists to increase pay or reduce hours, its implementation should be deferred for six months. New commitments should not be implemented during the rest of 1966 and in the following six months only if the grounds for exceptional treatment are particularly compelling. In this way it is intended to secure virtual stability in incomes for a period of six months followed by a limited growth of incomes in accordance with national priorities during the first six months of 1967. Thereafter, it will be essential to secure that the growth of incomes is resumed in an orderly manner in step with national output.
The same principles apply to other types of money income. Companies, for example, must hold down their dividends during the 12-month period. The Government similarly call for a 12-month standstill on prices of all goods and services, except to the limited extent that increases are necessitated by increases in the cost of imported materials, by seasonal factors or by the action of the Government, for example through increased taxation.
It is not our intention to introduce elaborate statutory controls over incomes and prices. This is a situation in which the Government look with confidence to everyone concerned with these matters to act in accordance with the public interest. Many individual salaries and other forms of remuneration are fixed outside the normal process of collective bargaining. Here, too, the same canons of restraint must apply. This applies also to emoluments of directors and high executives: companies will be required to publish details of these fees and salaries with comparable figures for the previous year.
Within the main field of collective bargaining we shall rely in the first instance on voluntary action. Nevertheless, in order to ensure that the selfish do not benefit at the expense of those who cooperate, it is our intention to strengthen

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the provisions of the Prices and Incomes Bill, to speed its passage through Parliament arid to redefine the role of the National Board for Prices and Incomes. Meanwhile the Government will not hesitate to act within the powers they enjoy, or may further seek, to deal with any actions involving increases outside and beyond this policy.
The Government will be consulting the T.U.C., C.B.I. and other interested organisations on the detailed application of the standstill within the next few days and a White Paper will be issued in the near future.
The House will not under-rate the deep significance of what I have just announced, its implications for industry and the degree of co-operation and restraint which will be required on the part of those affected by it. But, equally, the House, and, I believe, the country, will recognise the urgency of these measures, if we are to get our economy into balance and to keep our costs under control.
I should not feel justified in making this demand on industry, if I did not feel that we had done everything in our power—
Hon. Members: Resign.
Mr. Speaker: Order. If the right hon. Member for Hexham (Mr. Rippon) wishes to intervene, he must do so in a proper manner.
The Prime Minister: I should not feel justified in making this demand on industry, if I did not feel that we had done everything in our power to secure social justice for the first time in the broader fiscal and social policies of the Government. For no Government have the right to ask for restraint, still less for an effective standstill, unless they have done everything a Government can do to create a climate of social justice, which alone can justify such a policy.
Inevitably, today I have dealt with measures which, taken by themselves, involve restriction and restraint. But the House will realise that their whole purpose is to provide industry with the opportunity to achieve a major increase in productivity by streamlining production and labour utilisation. They must be seen against a background of policies designed to speed the application of scientific methods and techniques—
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already well-known to progressive managers—to increase efficiency in private industry and in the public sector.
Industry by industry, the Economic Development Committees are tackling the practical problems of raising efficiency and spreading knowledge of how performance can be improved in individual companies. Industry by industry—shipbuilding, printing, the docks, rail transport—the Government are engaged in urgent discussions designed to increase productivity and to eliminate overmanning and restrictive practices. We have sought to proceed by voluntary agreement. Where this is not forthcoming, other action must be taken. The Government have indicated to all concerned their determination that the freight liner train services shall go ahead on the basis of open terminals.
The problems with which I have been dealing are problems that have beset Britain's economy virtually since the end of the war. The unsung achievements of keen executives and of hard-working, responsible trade unionists, of inventive scientists and creative designers are all too often overshadowed by attitudes of selfishness and indifference, of indolence and indiscipline on both sides of industry.
For while the Government can and must do all in their power to create conditions to lay down the rules within which the economy must operate, the determination and resolve which today's measures demonstrate must be matched by effort and endeavour on the part of the whole British people.
Mr. Heath: The long statement which the Prime Minister has just made, so far-reaching in its scope and affecting every man, woman and family in the country, recognises, albeit belatedly, the gravity of the present situation, which is all the more serious because of the delay in announcing the measures which the Government have now decided to take, measures which, on the first hearing of this statement, contain nothing new in type but a combination of all those measures which the right hon. Gentleman and his colleagues have so repeatedly condemned in the past and, when others have put them forward, they have so repeatedly maligned.
Is the Prime Minister aware that Her Majesty's Opposition have always pledged

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support for measures which they believed to be properly designed to protect the £? That remains our position, but it does not exempt us from the duty of exposing the weakness, the vacillation and the incompetence which have brought the country to its present position.
Does the Prime Minister recognise that it is fundamentally a crisis of confidence in himself and his Administration? It is now no longer the words of the Government which matter, but their actions; and this is particularly true of the concluding part of the Prime Minister's statement. We shall judge this statement, when we have had time to examine it, on the extent to which these measures deal with the long-term position, as well as the immediate problem, the extent to which the balance—
Mr. Michael Foot: On a point of order. Mr. Speaker, would you tell us whether there is a Motion before the House?
Hon. Members: Sit down.
Mr. SpeakerOrder. Noise makes no useful contribution to the discussion
Mr. Michael Foot: On a point of order. On many occasions during the war, when statements were made—[HoN. MEMBERS: "The hon. Gentleman was not here. I was not here, but I have studied the affairs of the House of Commons. On many occasions during the war, when a statement was made by the Prime Minister of that day, Mr. Speaker ruled that spokesmen in other parts of the House were not entitled to follow with statements or speeches of their own.
What I am asking, Mr. Speaker, is that you should rule in that sense. If the Opposition wish to have a debate, they can call for a debate. All they are entitled to do now, which is what other Members are entitled to do, is to put questions to my right hon. Friend.
Mr. Speaker: The query I accept, obviously, as a point of order from the hon. Gentleman, but the Chair will rule and make its own decision on ruling. It is the custom—the hon. Gentleman is perfectly right—that when a statement is made elucidatory questions may be asked by Members of the House of the Minister who has made the statement. How-
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ever, I give some latitude to the Leader of the Opposition, who is in a special position.
Mr. Heath Mr. Heath rose—
Mr. Rankin: Further to that point of order—
Hon. Members: Sit down.
Mr. Speaker: Order. There are differences of opinion in the House, but we ought to be able to hear each other without making just silly noises.
Mr. Rankin: Further to that point of order and to what my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) has said. Are you aware, Sir, that opposite us there is the Official Opposition, there is the Liberal Opposition, and now there is a third opposition on the other side? Are the leaders of these oppositions to be granted the same privilege as that being granted to the Leader of the Official Opposition?
Mr. Speaker: Order. The hon. Gentleman should know that the Chair is aware of the political complexions of various Members of the House. He must leave the Chair to decide this issue.
Mr. Selwyn Lloyd: Further to that point of order. You, Mr. Speaker, will remember that when I made my statement on 25th July, 1961, the comments and questions of the right hon. Gentleman the present Prime Minister occupied a column and a half in HANSARD.
Mr. Speaker: Order. I am grateful to the right hon. and learned Gentleman for his support. May I say, very kindly, that I do not need it?
Mr. Heath: Is the Prime Minister aware that we shall judge these matters, after careful consideration, on the extent to which they maintain the balance between the immediate requirements and the longer term, especially in the context of the Selective Employment Tax, on the balance between the private sector and the public sector, and the extent to which they maintain justice between individuals? Is the Prime Minister aware that the House has noted that at last he has recognised the need for keeping demand in check? This is to be welcomed.
Finally, is the Prime Minister aware, in this context, that the measures which

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he has announced are more serious than they need have been even 10 days ago, let alone 10 months ago? In this respect, we regret the fact that he has not announced in the longer term effective action to deal with restrictive practices or to drop nationalisation of steel, both of which are important factors in overseas opinion., which he is trying to bolster. Is the Prime Minister aware that for many months Her Majesty's Opposition have warned the Government of this situation and of the need to take action, that he has repeatedly failed to heed those warnings, that he is accountable to the House and to the country, and that we shall want to debate it all at the earliest possible moment?
The Prime Minister: The right hon. Gentleman—and, of course, I do not cornplain—has made his political points, which might have carried more weight if they had not come from a party which, three months ago, promised to increase, not cut, Government expenditure by £900 million and reduce taxation at the same time. I agree with the right hon. Gentleman that what the country and the world will judge us all by now will be, not words, but actions. I believe that my statement today contained notice of some very resolute actions which I would hope that the whole House can support.
I would say to the right hon. Gentleman, because I know that he is looking at these problems with a great deal more seriousness than some of those sitting behind him, that I believe that both the Opposition and the Government will be judged by the country on the extent to which support is given to measures which, however unpopular, have to be taken.
Mr. Grimond: Will the Prime Minister agree that his statement shows an entirely different view of the economy from that expressed by the Government only a week or two ago? Will he agree that what he is now doing is simply to return to those policies of deflation, about which he used to be so scathing in the days of the Tory Government?
Has the Prime Minister any estimate of the amount of extra unemployment which INC may expect next winter? Which of his measures will do anything to in. crease competition, efficiency or produc-
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tivity in British industry? Finally, since the Prime Minister has now recognised the importance of the hotel industry to the tourist trade, why does he not drop not only the Iron and Steel Bill, but also the more ludicrous provisions of the Selective Employment Payments Bill?
The Prime Minister: I am grateful to the right hon. Gentleman for his questions. [HON. MEMBERS: "Answer them, then."] In relation to the old policies of deflation which we used to debate in the House—and may I say to the Leader of the Opposition that on 25th July, 1961, the column and a half of HANSARD was made up of questions, not a speech—the difference today, as the right hon. Gentleman the Leader of the Liberal Party will be the first to realise, is that we have exempted, as the Tories never exempted, from the necessary steps which have had to be taken, all the development areas — [Interruption.]
Mr. Speaker: Order. I do not wish to have to call attention by name to hon. Members who persistently and consistently interrupt from a sedentary position.
The Prime Minister: —instead of driving these areas into an intolerable level of unemployment and causing a deep gap between the more prosperous parts of the country and the areas of unemployment. What we have done is to bring the unemployment figures of the two parts of the country much closer together and our policies will ensure that the policies that we have been following for the development areas will continue. The same is true of the other priority areas we have exempted in housing, education and hospital building.
On the question of making the economy more streamlined and more competitive in the sense meant by the right hon. Gentleman, I believe that the shake-out that will result and the redeployment of labour will greatly help to do this both at home and overseas. Unemployment has been running for some months at a total of about ·1 per cent. We believe that the effect of our measures would not be to increase it to a level that will be considered by any hon. Member to be intolerable. What we intend to see is that we do not have a situation where it is 0·7 per cent. in

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half the country and 12 per cent. in other areas.
Mr. Hooson: On a point of order Mr. Speaker. Would it be possible for us to have an interpretation of the word "shake-out", which, I think, is new in Parliamentary language?
Mr. Speaker: Order. The hon. and learned Gentleman knows that that is not a point of order.
Mr. Bellenger: Whatever may be said at 'this time by way of recrimination from the Opposition parties, the Liberals included, will my right hon. Friend be assured that he will be supported in these measures at least on this side of the House? Is he confident, however, that the measures he has announced today will, from a longer-term point of view, settle our balance of payments problem?
The Prime Minister: Yes, Sir, and this is a point that I should have referred to when the right hon. Gentleman the Leader of the Opposition mentioned it. He surprised me by saying that the measures required today are much greater and more substantial than would have been required only 10 days ago. There has been no change in the basic underlying economic position in those 10 days.
Either the right hon. Gentleman thinks that these measures are required or he does not. If he thinks that I have gone too far by making them today, and not 10 days ago, he had better say which of these measures are not required. I should have thought that he would have felt, especially since he now claims that he has been asking for these measures for months, that the measures are right, adequate and relevant.
Mr. Maudling: The Prime Minister will be aware that his statement has been of measures that are wholly negative and restrictive. Is it not a fact that, apart from a passing reference to liner trains, the only contribution to further productivity is to talk about a shake-out, which, presumably, means more unemployment? Does he not recognise that this emphasis on restriction and ignoring the question of productivity and efficiency will create a most deplorable effect?
The Prime Minister: I do not remember that the right hon. Gentleman, over two and a half years, did very much of a character designed to increase efficiency. I recognise that he set on foot a great election boom that run us into an £800 million deficit. The right hon. Gentleman knows that if he is referring, as I think he may well be, to the need for special incentives for exports and for the saving of imports by increasing the competitiveness of our import-saving industries, I fully agree with him about the importance of that. I have told the House of the steps we are taking at the moment in the matter of export incentives. He knows the difficulty. He will remember that he turned down the "tax on value added" proposals. I have said that we are re-examining them. This is a difficult question, but, certainly, if it is possible to have an export incentive that is viable and legal under G.A.T.T. and E.F.T.A. we shall introduce it.
Mr. Shinwell: Would my right hon. Friend agree that it will be to the advantage of the House and the country if an opportunity is afforded at a very early date to enable the Opposition, including the Liberal Opposition, to state whether they are prepared to support the policy of the Government? That would be in the interests of the House and the country.
Reference has been made to the need for action. May I have an assurance from my right hon. Friend that he intends with resolution and determination to push this policy through, irrespective of opposition from any quarter?
The Prime Minister: Yes, Sir. We intend to push this policy through. I have taken some heart this afternoon from the fact that the right hon. Gentleman the Leader of the Opposition says that time will be required to study what I know was a lengthy and complicated statement, before the Opposition can state their attitude to the various measures that have been proposed. I have no doubt that there will be discussions through the usual channels about a debate. We shall then see how far there is general agreement on these measures.
Mr. Tapsell: Would the Prime Minister accept that however blameworthy many of us may feel that he is for the present situation, we all very much hope that

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the measures which he has announced this afternoon will take the pressure off sterling? I believe that they will. But will he tell the House whether the grave measures he has just announced carry with them the unanimous support of all his Cabinet colleagues?
The Prime Minister: I thank the hon. Gentleman for his good wishes. I was slightly concerned about the preamble with which he introduced them. What I have announced is the policy of the Cabinet.
Mr. Michael Foot: Will the Prime Minister recognise that many hon. Members on this side of the House have been pressing for a very long time for a direct and stringent attack on the balance of payments, and that although we welcome the moves made in this direction now we do not think that the cuts in defence expenditure go anything like far enough?
Will the Prime Minister further recognise that, whereas we wish to ensure that the situation is overcome, we bitterly oppose a massive, masochistic deflation partially dictated by persons who, apparently, do not understand the real strength of the economy of the country, and that, therefore, we shall judge his measures primarily by their effects on maintaining the employment levels of the people?
The Prime Minister: My hon. Friend will have seen, in connection with defence cuts, that I said that there is a direct attack on overseas expenditure—not an indirect attack through the measures on internal demand—to the extent of £150 million. This is a very substantial part of the deficit against which we are fighting. I know that many of my hon. Friends would like to have seen still further cuts, but I believe that it would not have been possible to make a bigger impact on this.
On my hon. Friend's second point, believe that this will be seen at home and abroad as providing adequate and relevant measures for dealing with the balance of payments problem, which lies at the heart of all our economic difficulties and which has dominated the economic life of the country and debates in the House now for he past 15 years. I believe that it is by their relevance to the balance of payments that the measures will be judged in the country and the world.
Sir D. Glover: May I put to the Prime Minister two questions? He has so far wriggled out of the expression "a big shake-out". He and the Cabinet must have some idea of what—
Hon. Members: Question.
Mr. Speaker: Order. I gathered that the hon. Gentleman was coming to his question.
Sir D. Glover: I said that I wanted to ask the Prime Minister two questions. The Cabinet must have some estimate of the figure for unemployment. What does the Prime Minister expect as a result of the measures he has announced? Does he expect a total of 500,000, 600,000, or 700,000? If he does not know, he has not worked these things out.
My second question is this. As the right hon. Gentleman has made this budgetary statement, has he taken over the Chancellorship of the Exchequer? What is the position of his right hon. Friend sitting next to him?
The Prime Minister: I can give the hon. Gentleman an assurance that we do do not seek any policies of the kind he used to vote for that brought unemployment to over 800,000 in this country.
In my view, and in the Government's view, the situation at the moment is that there are still large unsatisfied demands for labour, particularly in our export industries, and that any labour released, redeployed or shaken out from other employment by the measures which I have announced today will be readily absorbed; and it is certainly very heavily needed, whether skilled or unskilled, in essential work, whether for exports, in the construction sector for housing, and the rest. We believe, therefore, that it will be possible to have a very big redeployment without a marked increase in unemployment.
As for the unemployment figures, I said that these must be judged by the spread between the extremes in one part of the country and another. We shall ensure that the unemployment level will he more equally patterned over the country than has been the case in the past. I referred to a tolerable figure of unemployment. If the figure of unemployment were, after all the reabsorption, after all the redeployment and after the measures for regional distribution, to rise

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to a figure between 1½ and 2 per cent., I do not believe that the House as a whole would consider that unacceptable.
Mr. Mayhew: The House will have noted the contrast between the Prime Minister's statement today and the ambitious world military rôle which he outlined in his speech on 22nd June. Will he give an assurance that the defence reductions which he has outlined will relate to cuts in commitments and will not simply increase the strain on our forces and our dependence on the Americans? Can a world military role be sustained by a country which, apparently, will have to count its centimes before crossing the Channel?
The Prime Minister: I welcome the ingenuity and single-mindedness with which my hon. Friend on any and every occasion comes back to the subject he was pursuing with so little support some time ago. [HoN. MEMBERS: "Cheap."] I made it clear to him and to all my hon. Friends some weeks ago that we would carry out our defence commitments and obligations, that we would hope to do so with substantial reductions, substantial economies in costs, particularly as we are able to become more mobile, for reasons which my hon. Friend knows all about. We shall be able to do it, therefore, more cheaply in the future than in the past.
I should be very surprised if my hon. Friend were to put forward as a reason for his defence policy the fact that we have now set a limit on tourist expenditure which is considerably above the average tourist expenditure of everyone leaving our shores for holidays.
Mr. John Hynd: On a point of order, Mr. Speaker. May I ask whether there is any possibility of questions being asked by back benchers apart from Privy Councillors and ex-Ministers?
Mr. Speaker: Order, That is an inaccurate comment on what has happened so far.
Mr. Barber: The Prime Minister is having some difficulty in giving straight answers to the simple questions which have been put to him. Will he answer this question clearly and specifically: what contribution to the balance of payments and the strength of sterling does
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he think will be made by the nationalisation of steel?
The Prime Minister: I shall certainly answer that. The nationalisation of steel is being undertaken for the sake of increasing efficiency in the steel industry —[HON. MEMBERS: "Oh."]—which is highly relevant to our balance of payments. Few industries have led to bigger increases of imports in recent years because of their own inadequacy. Few industries have invited more criticism, even from right hon. Gentlemen opposite, by its pricing policies, because it is not a competitive industry.
As the right hon. Gentleman will know, at the present time, though it is admittedly a relatively small one in quantity, one of the reasons for the increase in imports recently is that this country—I hope that I can get the right hon. Gentleman to believe this, as it happens to be a fact—with the steel industry as at present organised, is actually importing pig iron because it is cheaper than what can be produced in this country or sold on present pricing policies within that industry.
Mr. Palmer: Does my right hon. Friend appreciate that an economic policy founded upon the deliberate creation of unemployment is opposed to everything for which the Labour movement has always stood? Will he do something to remove our misgivings?
The Prime Minister: I have already explained that, I thought, with rather lengthy answers this afternoon. I have explained that what we want is a redeployment of labour, that this is urgently needed, and that it is the necessary condition for increased production and economic growth in this country. What I have said is that we are not going back to the policies which led to very heavy unemployment in the development areas and over-congestion in the rest.
Mr. Gresham Cooke: With regard to the increase in unemployment which will undoubtedly come about by the reduction of £500 million in demand on top of the £700 million brought about by previous measures, the Selective Employment Tax, and so on, has the Prime Minister estimated by how much Government staffs and civil servants will be increased by the implementation of the complicated measures he has announced today?
The Prime Minister: I think that it will lead to very little increase, if any, in Government staffs to implement the particular policies to which I have referred. When the hon. Gentleman says, with such apparent enthusiasm—perhaps it is just his way of speaking—that there will be an increase in unemployment as a result of the measures—[HoN. MEMBERS: "Cheap."] We can see the hon. Gentleman.
Mr. Ridley: On a point of order, Mr. Speaker. Is it in order for the Prime Minister to imply that my hon. Friend used words which he never used? Will you ask him to withdraw?
Mr. Speaker: Order. The hon. Gentleman is unduly sensitive.
The Prime Minister: I did not put any words into the hon. Gentleman's mouth. I referred to the expression on his face, and we can see it.
If the hon. Gentleman thinks that there will be substantial unemployment as a result of these measures, he will recall that it has been the policy of his own party to press for some time for more stringent measures to reduce employment. We do not believe that they will have the effect which some hon. Members opposite seem to expect.
Mr. Maxwell: As is well known, one of the causes of our serious balance of payments crisis has been the considerable increase in imports. Will my right hon. Friend tell the House why he did not think it necessary to introduce physical import controls?
The Prime Minister: We considered this very carefully indeed. It has been considered by successive Governments. I know that it was considered by our predecessors. I have a lot of experience of administering import controls. [Laughter.] I have a lot of experience of administering import controls, and I probably know quite a bit about them. I got rid of a lot, and was very glad to do so.
I was saying that we considered this very carefully indeed, but, having regard to our commitments not only under the G.A.T.T., the I.M.F. but more particularly under the E.F.T.A., and the powers, possibilities and likelihood of retaliation, we reached the conclusion, after studying it very carefully—as I think our pre-
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decessors would have done—that this was not the right policy in the circumstances. I believe that it is necessary for us to try to get the maximum economy in the use of imported raw materials, in, for example, cutting out waste in some of them—this could be done—and in reducing the call on certain imported raw materials in favour of indigenous materials produced in this country.
Mr. Boyd-Carpenter: Can the Prime Minister confirm that the pay freeze proposals will involve overriding arbitration awards, wages councils awards and wages cost-of-living agreements? Does the proposed amendment to the Prices and Incomes Bill which he foreshadowed involve taking legal powers to this end?
The Prime Minister: Where there are agreements providing for an increase during the six months that I have referred to, where there is a once-for-all agreement due to come into force in the six months, or, for example, a continuing cost of living agreement, it will mean that these will have to be set aside.
The exact position of wages councils and arbitrations is a matter on which I am sure the right hon. Gentleman will feel we have to see both sides of industry—this we are doing—to discuss with them the least harmful way, to them, in which the policy that we have announced, and are determined to put through, shall be carried out. I cannot at this stage anticipate the exact wording of the amendment to the Prices and Incomes Bill.
Mr. Park: Would my right hon. Friend agree that the real cause of our present economic situation is that we have been attempting to perform two roles at once in the sense of trying to improve living standards and social services at home and, at the same time, maintaining an expensive outdated imperial presence abroad? Has not the time come to make the final choice, to cut down much more drastically than the Prime Minister has proposed today our arms expenditure abroad?
The Prime Minister: It is not only two rôles that we are carrying out. This country must carry out far more rôles than two. A further one concerns measures necessary to increase our

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efficiency and to invest in British industry. There is also the role that we have, and shall continue to have, of providing economic assistance to poorer countries, which I am sure my hon. Friend is not asking me to cut even though it is extremely costly in terms of foreign exchange.
We have debated the defence rôle on many occasions. We have a peace-keeping rôle abroad. We have obligations abroad. It is no good hon. Members in any part of the House urging on us the fulfilment of a peace-keeping rôle through the United Nations, the Commonwealth or our alliances unless we are prepared to maintain the necessary means of getting our forces to the areas where they are needed.
Mr. Stodart: The right hon. Gentleman referred to a freeze on prices. Is he aware that before he made his announcement the electricity board in Scotland announced an increase of 6 per cent. next week? Will he put a stop on that, because it will have the gravest effects on costs of fuel in the development areas?
The Prime Minister: The freeze is to start today. I will certainly look into the case that the hon. Gentleman has mentioned. I had read about it. We intend there to be a six months' freeze from the present time.
Mr. Paget: With regard to the military cuts, and with regard to Germany first of all, will my right hon. Friend tell us whether any estimate has been made of the cost of rehousing the troops and their dependants, who outnumber them two to one, if they are brought home? Secondly, with regard to the overseas cuts of £100 million without reducing commitments, what does my right hon. Friend mean when he says that this will be achieved by increasing mobility? The idea that increased mobility is an economy comes as rather a shock to military planners.
The Prime Minister: It does not come as a shock to those who have been concerned with the Defence Review. The most expensive way, as we have found, of honouring military commitments is to get very large forces locked up in bases where they are not wanted and where
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one has to use half one's forces and resources to hold down the local population. Mobility on the lines that I have described is the right way to deal with the question.
As to the question about Germany, I hope that my right hon. Friend the Chancellor will, when he gets to Bonn this afternoon, be able to negotiate a satisfactory arrangement to cover the foreign exchange costs. If not, I have said that we must go to W.E.U. and N.A.T.O. with the procedures necessary to ensure that we do not go on bearing this additional cost, whether it means withdrawal of troops or any other course of action.
Mr. Maude: Would the right hon. Gentleman seriously reconsider whether it makes sense to evolve yet a new system for injecting into the hotel industry the investment incentives which the Government have deliberately destroyed? Would it not make more sense simply to restore the investment allowances and perhaps relieve the industry from the Selective Employment Tax?
The Prime Minister: Many ideas have been considered in the past. I remember the selective relief from Purchase Tax for visitors to dollar-earning hotels. Many of these have been tried. We believe that the important thing is to give help for the construction, modernisation or rebuilding of hotels which particularly cater for overseas visitors, and that there must be some selection in the matter. That is why we are proposing help on a selective basis in this way.
Mr. Heath: May I ask the Prime Minister to deal with two specific points which have arisen this afternoon before we discuss through the usual channels the question of what I hope will be a very full debate on these matters?
The first point concerns development areas. Is it not a correct deduction from the statement that the right hon. Gentleman has made that the major measures affecting demand at home—in other words, hire purchase, the regulator and the Post Office charges, as well as the individual matters of the holiday travel allowance and Surtax—will affect everybody in the development areas and that the restriction on demand in the country as a whole will also have its impact on development areas? We must be clear about this.

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Secondly, will the right hon. Gentleman deal with what I think is one of the most important statements that he has made today, and, if I may say so, do so without impugning the motives of those opposite him? He said that the Government believe that after redeployment the level of unemployment will be between 1½ and 2 per cent. and that, therefore, will be the level on which the Government intend in future to operate the economy—in other words, I suppose, an upper limit of 500,000 to 600,000. Will the right hon. Gentleman be quite clear about this, because this is one of the most important statements that he has made and obviously governs the attitude of the House and the country and people overseas to the whole of these measures?
The Prime Minister: I was not suggesting that those who are living in development areas will be exempt from the increased postal charges or tourist control. I was referring to the restrictions on capital investment—office building, for example, and the building licensing restrictions. Of course, it is true that anything affecting the general level of demand seeps through to particular areas. This is why we are pushing on with and not suspending or slowing up the action necessary to get more factories into the development areas, so that they do not suffer from the policies that are being followed.
On the question of the unemployment figures, I think that the right hon. Gentleman—I am certainly not impugning him in any way—when he looks at HANSARD tomorrow, will find perhaps that he did not exactly reproduce what I was trying to say to the House.
I do not know—no one knows—exactly how many vacancies there will be and what redeployment is possible. Every

POST OFFICE TARIFFS

I.—TELECOMMUNICATIONS SERVICES

(New charges will take effect from 1st January, 1967)

(The full rates shown below apply from 6.0 a.m. to 6.0 p.m. Mon-day to Saturday and the cheap rates from 6.0 p.m. to 6.0 a.m. Monday to Saturday and all day Sunday.)

Present

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1. SUBSCRIBERS' TRUNK CALLS: INLAND

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time we have taken disinflationary measures over the last two years there has been widespread expectation of heavy unemployment. It has been forecast from the Opposition Front Bench with unfailing regularity. I think that they, and to some extent we ourselves, have been surprised that unemployment now is very much lower than it was a few months or a year ago. We do not know how big is the absorptive capacity for the labour that will be made available by the measures.
I said that if unemployment rises, as it will be likely to rise, it will not be allowed to rise to a figure which the House would consider intolerable. I was asked what the figure was. I said that I do not think any Member of the House will consider a figure between 1½ and 2 per cent. to be intolerable in our present circumstances, but that is quite different from saying that we should want to keep that level of unemployment for all time.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. I cannot call all right hon. and hon. Gentlemen who wish to be called.
Mr. Frederic Harris: On a point of order, Mr. Speaker. I have never been called on a Ministerial statement. How does one ever get into the position of asking such a question?
Mr. Speaker: Order. I too was never called on a Ministerial statement in my life as a backbencher. It is something that happens to almost every hon. Member. The most difficult task the Chair has is to select. All I can say is that the Chair tries to select impartially and fairly.
Following is the information about changes in Post Office tariffs:

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BILL PRESENTED

  PARLIAMENTARY COMMISSIONER
  Bill to make provision for the appointment and functions of a Parliamentary Commissioner for the investigation of administrative action taken on behalf of the Crown, and for purposes connected there
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  with, presented by the Prime Minister; supported by Mr. Herbert W. Bowden, the Chancellor of the Exchequer, Mr. William Ross, Mr. Douglas Houghton, Mr. Cledwyn Hughes, and Mr. Niall MacDermot; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 86.]

ORDERS OF THE DAY

  SELECTIVE EMPLOYMENT PAYMENTS BILL
  [1ST ALLOTTED DAY]
  Considered in Committee.
  [Sir ERIC FLETCHER in the Chair]
  4.41 p.m.
  The Chairman: Before I call the first Amendment selected, it might be for the convenience of the Committee if I indicate how the provisions of the Guillotine Order will operate today. Under paragraph 3(3) of the Order, the time which has elapsed between 3.30 this afternoon and the beginning of the consideration of the Bill is to be added to any time specified in the Order. The time which falls to be added today is one hour, 11 minutes. The result is that, under the provisions of the Order, the proceedings upon Clause 1 will be brought to an end at 8.41 p.m. and the proceedings of the Committee in the present sitting will be concluded at 12.41 a.m.
  The first Amendment selected is Amendment No. 2, standing in the name of the right hon. Member for Enfield, West (Mr. lain Macleod) and the names of hon. and right hon. Members.

  SELECTIVE EMPLOYMENT PAYMENTS BILL

    Clause 1.—(SELECTIVE EMPLOYMENT PREMIUM.)
    Mr. Iain Macleod: I beg to move Amendment No. 2, in page I, line 10, to leave out from "paid" to end of line 21.
    I wish to take one minute of our precious time to outline the Opposition's attitude towards the time for these Amendments. We were told by the Leader of the House, no doubt in good faith, that he thought that adequate time had been allotted and that some mysterious gentleman had decided between the relative merits of the claims upon our time.
    We were also told by a number of professors in the guillotine debate that these matters could be dealt with in three or four points. We were also told in the Press by the hon. Member for Tottenham (Mr. Atkinson) that it was
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    idiotic to spend the night discussing whether six hours could be added to consideration of the Bill. On the latter point, I will merely state that the hon. Member's observation was both impertinent and inaccurate. The claim of the Opposition was for six days. We all know this, and the Government would admit it. I trust that the Press will give as much space to the correction as it did to the original insertion.
    Now we have the selection of Amendments before us. That is something not to be questioned by myself or by the Leader of the House, or by these professors. For Clause 1, for which the Leader of the House thought that four hours was generous, 10 Opposition Amendments are selected, together with five Government Amendments, making a total of 15. Altogether 51 other Amendments are to be discussed with them, making a total of 66. It is abundantly clear as we start that an impossible task has been set us and that every word we put before the House two days ago was fully justified.
    Amendment No. 2 is perhaps the most important single Amendment, and therefore it is right, even at the expense of ten minutes of our guillotined time, to record that it would omit the premium. I have not bothered to put on the Order Paper the numerous consequential Amendments which would follow. But the effect would be to leave the premium out. The theory of the Government was old when Queen Victoria was young. The theory of 18th century economists that one can identify and discriminate between manufacture and sale is becoming increasingly impossible in a modern complex society. As I said in the Budget debate, one of the ways to distinguish a democracy or any community with a swiftly rising standard of living is that it should have an explosive growth of its services. It was Sir Paul Chambers who said that production does not become productivity unless one sells the product.
    4.45 p.m.
    The proposal of the Government to add 7s. 6d. as a premium for men in manufacturing industry is bound to encourage hoarding. I do not suggest that it will encourage recruiting. No one will bring a man into his business at an average cost of £18 to £20 a week in

    669
    order to gain 7s. 6d. a week. But equally it will encourage employers in manufacturing industry to hold tenaciously to their labour forces.
    I have made all the study possible, and I am convinced that if there be labour hoarding it is overwhelmingly in the manufacturing industries and not in services. The Government have gone entirely on the wrong track. Today's statement by the Prime Minister makes it all the more important that the spirit if not the words of the Amendment should be accepted, because we are proposing that there should not be such a pay-out. The original figure was stated to be £133 million to manufacturing industry, and perhaps this will be slightly adjusted now as a result of concessions that have been made.
    The Chief Secretary to the Treasury must explain whether he believes that we can afford, in the circumstances of the Prime Minister's statement, a pay-out of that sort, particularly when it impinges upon the labour front, to which the Prime Minister rightly showed himself sensitive this afternoon. We shall be judged by what happens to the country as a result of the Prime Minister's statement, and in no direction will this be more important than in what the Prime Minister euphemistically calls the "redeployment" of labour, which really means the increased unemployment which will flow from his statement.
    The original idea of the premium was that it offered some way around the provisions of the G.A.T.T. and was compatible with our international obligations. The snag in that argument is that the premium is to apply to everyone in manufacturing industry, whether the product is intrinsically worthless or something as valuable as chemicals or machine tools. It applies to people whether they be key exporters or whether they manufacture only for a wholly unimportant market in this country. Above all, it is applied equally to people whose labour force is already streamlined, as efficient manufacturers always seek to do, and to people whose industry is flabby. It will thus encourage the latter to remain in that state. En other words, in the phrase used by my right hon. Friend the Leader of the Opposition in the Budget debate a year ago, it encourages the survival of the fattest.
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    We do not believe in forwarding the welfare state for industry, to use a phrase first used, I think, by my hon. Friend the Member for Oswestry (Mr. Biffen). Through the debates on the Finance Bill, whenever we were chided for suggesting measures which would cost money, we prayed in aid this measure which we were offering to the Government, £133 million, in return. We got virtually no concession in the Finance Bill, but we still put forward our share of that bond and offer this £133 million.
    The Liberal Party at one point put forward an alternative method of regional differentiation in a flat-rate payroll tax. Whatever the merits of that may be, something like it would unquestionably be much more acceptable than the absurdities which have flowed and which can already be seen to have flowed from the Bill.
    To sum up; we believe that the thinking behind these proposals is all wrong, that the distinction between manufacture and services is entirely artificial and. moreover, that it is based on a statistical illusion, because the classification was drawn up exclusively for statistical and not for manufacturing purposes and it is quite wrong to use it as a basis for assessing manufacture.
    The number of anomalies and absurdities multiplies literally with every post we open, and certainly hon. Members on this side of the Committee know that even if right hon. and hon. Gentlemen opposite do not. We believe that it is a premium on inefficiency to operate in this way and we do not see why we should not seek to amend the Bill in this particular. The general provision would still be unacceptable to us, but many of the anomalies would disappear if we could get rid of the premium. I therefore recommend the Amendment to the Committee.
    Mr. Michael Alison: I want for a minute or two to pursue the subject of hoarding in industry. My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) touched on something which is of crucial and fundamental importance. I want to quote to the Committee one or two of the figures behind our assertion that there is already a great deal of hoarding and that it will

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    not be in any sense reduced by the Government's proposals.
    I want to quote a figure which has been given not by one but by quite a number of economists of national standing. It is that the degree of underemployment in manufacturing and distributive industry as a whole is as much as 30 per cent. of the employed population. When we have a possible unemployment level for the nation as a whole of between 1½ and 2 per cent. and that is set against the figure of as much as 30 per cent. of the working force under-employed, due to the inefficiencies of restrictive practices agreements, possibly bad management, and the effect of the unions, we must feel that any measure which encourages management to hold on to labour must be counter-productive in the present economic situation.
    Let us consider some of the factors which are a positive inducement to management in particular to hold on to labour. I want first to draw attention to the National Plan figure for the manpower gap. The National Institute for Economic and Social Research drew attention to this in one of its recent reports. It said that the publicity given to the manpower gap, estimated at perhaps 200,000 by 1970, was a written-in red light to management to hold on to labour as the scarcest asset in production as the years went on.
    Incentives can be given for capital equipment, and the Government does what it can to make it easy to get capital, but the one thing which the Government cannot do, except perhaps by indirect fiscal measures, is to raise the level of the population. It might be able to do so over a long period, but not immediately, and by 1970 we shall have a manpower gap of 200,000. As that is written into the National Plan, how can it be assumed that manufacturers, who are intelligent, will do anything except to make plans to hold on to what they have cause to believe will be the scarcest commodity as the years go on?
    Secondly, as my right hon. Friend said, we should bear in mind that manufacturing industry is the industry in which the tendency and the temptation to hold manpower are greatest, simply because that is the most highly unionised sector of
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    the economy. Nobody would deny that the unions themselves do a good job on behalf of their members, their job being to keep as many men in employment as they can. In an atmosphere of full employment, it is easy for management to take the easy way out and to reach a compromise with the unions and keep on more men than they need. That is inevitable, because in manufacturing industry it is easier to organise union activities and union solidarity in the shop or in the manufacturing plant where men are grouped together in close proximity. It is self-evident that the most unionised sector of the economy will be the one where manpower will be most difficult to shake out, to use the Prime Minister's euphemism.
    In addition, we have the present provisions for redundancy payments. It is open to question whether the Redundancy Payments Act has had the effect of encouraging or discouraging firms to shakeout labour. Perhaps the hon. Lady the Parliamentary Secretary to the Ministry of Labour will be able to tell us whether an effective study has yet been made and whether any statistics are available to show whether that Act has had the effect of encouraging manufacturers to hold on to labour, or has had the reverse effect and encouraged them to get rid of workers when genuinely redundant.
    To do the latter costs manufacturers something. If into the bargain is added the premium, coupled with existing union pressure and the warning lights in the economy about the shortage of manpower, with the penalty imposed when redundancy has to take place and workmen have to be discharged, there are at least four major emphases encouraging management to hold on to labour.
    We want to emphasise as powerfully as we can that the premium in itself bites most effectively in terms of hoarding on the one sector where manpower is ill allocated in present circumstances. We all know how difficult it is to shift manpower from the declining into the prosperous sectors. That will probably be remedied to some extent by the growth area idea, but even that is not yet proven. We want to stress with all the authority and argument which we can deploy that the hiatus which has been created, not only by the Bill, but also by the Industrial

    673
    Development Bill, which received its Third Reading last night, with its artificial and irrational division between services and distribution and manufacturing, will distort and undermine the effectiveness of the economy.
    I draw attention to a vivid illustration of this which comes from the United States of America, from which we have a great deal to learn about productivity, the use of manpower, and the techniques of management. The example is that of Sears Roebuck, one of the largest, most prosperous, most effectively gifted companies in terms of survival—and sheer survival is the acme of managerial enterprise and effectiveness—in the United States.
    Sears Roebuck is a great mail order firm with roots going back into American history. It is essentially a distribution organisation and yet nobody can estimate what it has effectively caused to happen in the American economy over the years by the sheer variety of orders for manufactures and supplies for which it has called. It has called for a huge range of distribution, manufacture and transportation, and a whole diverse range of subsidiary, subordinate, complementary, productive activities in the United States economy have been generated and sponsored and promoted by this vast, efficiently managed, distributive undertaking.
    5.0 p.m.
    I need hardly remind the House that manufacturers in the United States have a knack of increasing productivity which is not strictly related to the amount of capital applied to their manufacturing processes. One thing that studies in the United States have shown is that where plant in the United States is compared with plant in the United Kingdom and in Western Europe, where the degree of capital intensiveness is virtually the same, there is an enormous margin of advantage in terms of productivity, sometimes as much as a third greater. This is not because the plant is more capital intensive but because management techniques are more rationally thought out.
    What incentive is there to management by giving them this sort of medicine? There is the additional incentive to relax on manpower, to hold to what they have and not to shake it out. The initiative
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    and imagination of management is frustrated and distorted by the clutch of economic measures which have been brought along, discrimination in industrial development, the Selective Employment Payments Bill and the rest. Management is discouraged from making a rational use of manpower, and it is with management that the responsibility lies.
    We want to re-emphasise that all the arguments that we bring to bear on the premium are focused upon an artificially separate segment of industry, namely manufacturing, and the distinction against distribution and other features is entirely nonsensical. I will give a brief illustration to show how the general drift of the Government's broad canvas of economic proposals makes no sense at all.
    Anyone in the West Country will appreciate that the British Motor Corporation, rightly or wrongly—but it must be doing it for sound economic reasons—has decided that it pays to farm out the manufacturing of motor vehicle bodies to Pressed Steel in places like Swindon. One of the features of the British motor car manufacturing industry is the diversion and subdivision, horizontal disintegration, to use the economic jargon, of some of their activities. This means that vehicles transport car bodies from Swindon to Oxford, from Pressed Steel to the Cowley manufacturers. Under one of the measures introduced by the Government, the manufacturers will not get a grant for this although it is part of the production line in this industry. This shows the anomalous position which arises in selecting individual segments as we are doing in industrial development and the Selective Employment Payments Bill for a premium quite unrelated to the effect that it will have upon the basic ideals and objectives of productivity. For this reason, we urge the Government to think again on this irrational and nonsensical measure.
    Mr. Peter Doig: I would urge my right hon. Friend to accept this Amendment. In the light of what has been said by the Prime Minister today this opportunity, when the whole Committee apparently agrees that we can save a substantial amount of money, ought to be taken. It can he done without causing hardship to anyone, because none of these people are receiving this money now.

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    I am rather surprised that the right hon. Gentleman the Member for Enfield, West (Mr. fain Macleod) should stop at saying that we should not pay the premiums. If his logic was correct and he convinced himself and his supporters, I am surprised that he did not go the whole hog and say that we should do away with all of the exemptions as well. If his argument was good for the premiums, then why was it not good for the repayments as well? Of course, I am not advocating that. What is wrong with this Clause is that it is based upon the Standard Industrial Classification, and thus begins from an anomalous position. Under this formula one can have two groups of bakeries, producing precisely the same amounts, and because in one case the bakery is contained within one building, holding not only the bakers but the office staff, sales staff, cleaners, motor mechanics, electricians—
    Sir Douglas Glover: On a point of order. Is it in order under this Amendment to talk about bakeries and all the other anomalies of the Bill?
    The Chairman: This will be dealt with under a later Amendment.
    Mr. Doig: The point is that this Industrial Standard Classification is mentioned in this Amendment and, in view of that, I thought that it would be in order to deal with it.
    The Chairman: It can be dealt with in a later Amendment.
    Mr. Doig: I will endeavour to catch your eye again later on. It seems that this basis causes many anomalies. The premium is going to be paid to some groups of people performing a certain task and yet not to others doing exactly the same thing. I will give two examples, and here again I must come back to bakeries, because this applies to them. I am dealing with a particular Clause later in the Bill not relating to retail shops. There can be two groups of bakeries, one of which houses all of its staff within a single building. Not only does it get the rebate for all of these people, but it gets the premiums as well. On the other hand, the other bakery, of similar size, because it happens to have its staff in separate buildings, is unable to receive the
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    premium or rebate on all of those workers not engaged in baking.
    There is a clear anomaly here, because of the basis upon which these premiums are paid. The same thing applies in Dundee, which is the centre of the jute industry in Britain. There are two large combines of almost exactly the same size, producing jute, each of them owning many mills. One group has its office staff within one of the mills and thus qualifies for a full rebate and premium for all of its staff employed. The other group, because it has a separate building for office and other staff, does not receive the rebate or the premium for any of these staff. The difference between these two companies producing the same kind of material in exactly the same amounts, is £19,000 a year.
    Sir John Hobson: Does the hon. Gentleman realise that these provisions do not apply to the nationalised industries and that they receive the premium and a refund for their office staff?
    Mr. Doig: I am dealing with the anomalies affecting my constituency. These are very important, and they can be duplicated in almost every constituency throughout the country. This is a very valid point and the Government should take note of it. If this Bill is left as it is, the difference between these two combines of jute producers is £19,000 a year. If we were to accept the Amendment and to do away with the premium, it would be roughly one-third less.
    This is a good argument which the Government should accept. We should do away with the premium. If we did so, we should be helping the economy and the Government, and we should not be penalising anybody. All that these firms are concerned about is not whether they get the premium but that they should not be at a disadvantage with their competitors in the same industry. This Clause treats differently two groups producing the same commodity in the same amount. That is wrong. The Government should recognise that this is an opportunity of saving about £133 million, and they should grab it.
    Mr. John Nott: This Bill is riddled with anomalies. Perhaps the greatest anomaly is the absurd idea of

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    paying a premium to manufacturing industry. It is a subsidy for inefficiency in industry and a positive disincentive to the redeployment of labour about which we heard so much from the Prime Minister only a few minutes ago. It is absolute nonsense for money to be paid to manufacturing industry for employing more men. It is a complete contradiction of every word spoken from the Dispatch Box less than an hour ago. It is yet another example of the incapacity of the Government to understand the effect of their own measures and to work out their consequences.
    The Government should cancel this premium here and now and make their action suit their words by paying it as a rebate to the development areas. An hour ago the Prime Minister talked about the necessity of benefiting the development areas. Yet we all know perfectly well that this tax will have a very serious effect on the development areas. It will bear upon them very much more hardly than on other areas.
    Before I give an illustration of how it will do that, may I give an example of the nonsense which the premium will create and why I say that it will be a subsidy to the inefficient. Take a firm of cattle food compounders in a small country town. Over the last two years it has increased its efficiency by cutting back on its labour and installing more machinery. The result is that more than 50 per cent. of its employees are not in manufacturing but in office employment. Because of its efficiency in installing more machinery, it will not be paid the premium, whereas a few yards down the street a firm doing precisely the same, compounding cattle food, which has not made itself more efficient or installed more machinery will qualify for the premium. In effect, the efficient firm is subsidising the inefficient firm and is helping it to reduce its prices, whereas the efficient will have to charge more to pay for the excellent rationalisation which it has put into effect.
    I know someone in Bradford who is the joke of all his friends. He is chairman of one of the leading top-making companies in the country. If ever there was an industry which needed rationalisation, it is the top-making industry. Over the last two years this man has cut back on his employment. He has released labour
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    to other more needy industries like the machine tool industry. Now he is the joke of Bradford because all his friends are saying to him, "You made yourself more efficient, but now you will receive only £10,000 in premiums whereas those of us who remained nicely coddled and inefficient and did not install more machinery will receive £30,000 in premiums ". This is an example of the anomalies and nonsenses which this premium will create.
    5.15 p.m.
    My hon. Friends may differ with me here, but the reason why I say that the amount representing premium should be paid as a rebate to the development areas is this. In one part of my constituency only 3 per cent. of employment is in manufacturing as against an average in the country of 38 per cent. Therefore, there are certain parts of the country—the development areas and my constituency in particular—which will be 90 per cent. worse off compared with aver-ace parts of the country so far as receiving the premium is concerned.
    According to 1964 Ministry of Labour figures, the incidence of service trades in the country generally is 51 per cent. In Cornwall 64 per cent. of the people are employed in service trades. The figure in my constituency is 72 per cent. These are Ministry of Labour figures. Therefore, there are development areas such as the St. Ives division which are 40 per cent. worse off than the average parts of the country when it comes to receiving a refund.
    I hope that I have shown how this tax will bear extremely hardly on the development areas. The premium should be used as a rebate to offset some of its adverse effects, bearing in mind that it is in the development areas that there is already high under-employment and incomes generally are much lower than in the country as a whole. Moreover, the premium should be abolished for the simple reason that it is a disincentive to the redeployment of labour. If manufacturers are to be paid this premium per employee, clearly there is a disincentive to them to cut back on their employment and install more machinery. It is a complete contradiction of every word which the Prime Minister said less

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    than an hour ago. If the Government wish us to believe that they mean action they should cancel this premium immediately.
    Mr. R. E. Winterbottom: I should hate to incur your displeasure, Sir Myer, and I am not sure whether I am strictly in order or whether the debate can range over the whole Clause as distinct from the Amendment. From what I have heard, it seems that the debate can cover the whole Clause, otherwise there is not much sense in what has been said.
    I want to deal with the Amendment, which proposes to limit the premiums to firms in development areas. [HoN. MEMBERS: "No."] I stand to be corrected.
    Mr. Norman St. John-Stevas: The hon. Gentleman is on the wrong Amendment.
    The Temporary Chairman (Sir Myer Galpern): We are discussing Amendment No. 2.
    Mr. Winterbottom: I beg your pardon, Sir Myer. I thought that we were still on Amendment No. I.
    I want to comment on Amendment No. 2 and to say this about the development areas. Sometimes it is very hard—
    The Temporary Chairman: Order. I hope that the hon. Member is quite clear about the Amendment which is under discussion. It is Amendment No. 2, which rules out entirely discussion on development areas. I hope that the hon. Member will confine his discussion to the terms of the Amendment.
    Mr. St. John-Stevas: On a point of order. Are we to be submitted, Sir Myer, to a filibuster as well as a guillotine?
    Mr. Winterbottom: Further to that point of order. I asked in the first place for the guidance of the Chair so that I could clearly understand what was being discussed. It was my mistake in thinking that we were still on development areas. For that I apologise, and I will now resume my seat. There is no intention whatever to filibuster. I connected what I heard from hon. Members with the development areas and thought that it was hopelessly wrong. [HON. MEM-
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    BERS: "It was.1 That is clear to me as well.
    There is, however, one thing that 1 would like to say. It seems to me that the debate on the Amendment has been much wider than the text of the Amendment warrants. It has spread almost to the whole of the Clause. I was rather surprised at the hon. Member for St. Ives (Mr. Nott) talking about a premium. I agree for instance, that this premium will be, in the hon. Member's words, a subsidy for inefficiency. I go further and say that it might be an inspiration to inefficiency. I agree on that, too.
    At the same time, when I look at the mass of Amendments to the Clause, none of which will be accepted by the Government, I can only conclude that the Opposition are rather inefficient in putting down all these verbose Amendments, which have no hope whatever of success and, indeed, do not deal with the central point with which they themselves wish to deal.
    There is only one straight issue on the Clause and it cannot be found in Amendments such as the one we are discussing. That is merely to say that this is a big sin; we will countenance it, but we will make it a little smaller. That is not likely to cut any ice in the House of Commons.
    The Opposition would be well advised to cease filibustering with this mass of Amendments and oppose the Clause in truth, as I want to oppose it, in terms of the Question, "That the Clause stand part of the Bill" instead of trying to snipe and enter into full fray and into the joy of battle. Let hon. Members opposite put all those things on one side and deal with the principle which they and I want to see eliminated, namely, that no subsidy should be paid to anybody, whether in the development areas or anywhere else.
    Mr. John Pardoe: I shall be brief. We on this side want to make a lot of points, and I think it best if I follow the line of taking less than five minutes to make each point. I will try to keep to that principle throughout the debate.
    I support the Amendment. It happens to be in the name of the right hon.

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    Member for Enfield, West (Mr. lain Macleod) only because I have a constituency far from London. I thought it up or the train, but by the time I got back to London I found that the right hon. Gentleman had put down the Amendment instead.
    My hon. Friends and I had an Amendment to Clause 42 of the Finance Bill to leave out the word "selective", which is what Amendment No. 2 would do. In the Bill, the whole business of trying to select is an absolute nonsense. It is the sort of thing which I would have been keen on doing on having just finished reading part one of economics at university and being lectured to for hours on end by Left-wing professors. One had then a tremendous feeling that economics were all-powerful and could select in this way. In the intervening years, I have found that they cannot select in this way and that it is nonsense to pretend that they can. To try to mix up all these industries, which are vastly different and have vastly different problems, just because they happen to appear in a booklet produced some years ago by a statistical office is sheer and utter nonsense.
    I would like briefly to illustrate my meaning by references to two industries. Why does not agriculture qualify for the premium? I know why the National Farmers' Union does not want it to qualify—because it would then be classified as a manufacturing industry and might he rated as such. That, however, is not why I thought about it in this context.
    Agriculture has a very good productivity record, with a 6 per cent. increase a year. Very few industries can match that. "Very well", say the Government, "we accept this figure". Nevertheless, agriculture is still not paid the premium because the Government say, as they have said in the National Plan, that they want x number of people to leave agriculture and go into industry.
    I do not altogether quarrel with the National Plan's figure. I remind the Government, however, that the present rate of exit of people from agriculture is substantially faster than the figure laid down in the National Plan. If we go on like this we will not have enough people left on the land to match the targets which the National Plan has produced.
    Captain Walter Elliot: In the hon. Member's opinion, would the owner of a battery hen organisation which employs men get the 7s. 6d. refund?
    Mr. Pardoe: I would have thought, at present, certainly not; but if the Government rate these enterprises, it should qualify as a manufacturing industry.
    The second industry which I take is coalmining, which will not qualify for the premium. We shall talk later about opencast mining on an Amendment which appears in my name. Coalmining is not classified as a manufacturing industry, so it does not get the premium. We find, however, that the exit of men from coalmining is at a much faster rate than the figure laid down in the National Plan. The Minister of Power will back me up in saying that there is a real danger that we will not have sufficient men in coal-mining to match the targets laid down in the National Plan. Therefore, if we are being selective, we ought surely to say that coalmining is an industry which needs the premium to encourage labour into it, and yet here we are not paying it the premium. These two examples show clearly how nonsensical it is to try to differentiate between industries in this way.
    I presume that the Government must be convinced that there has been a movement of employment from manufacturing into service industry which is altogether too fast, and that they wish to check it. I accept that there is an argument here. What the Government must prove, however, is that the movement is any faster than it is in other Western industrialised economies which are successful. I dispute that. The lastest figures in my possession show clearly that the movement from manufacturing into service industries, which is a phenomenon of all highly industrialised countries in the modern world, is no faster in this country than elsewhere.
    The Chief Secretary to the Treasury (Mr. John Diamond): I hope that the hon. Member will proceed to give his figures, as mine show the opposite.
    Mr. Pardoe: I shall be delighted later to hear the right hon. Gentleman's figures. I hope that he will prove the point. I made much the same point on Clause 42 of the Finance Bill, but the Chief Secretary did not bother to produce the figures.

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    If he is able to prove the point, I am certainly prepared to withdraw the argument, but I doubt whether he can prove it.
    My third point may not be extremely important, but it is worth making. If we are to get rid of the selective principle and do away with these premiums, which I do not think serve any purpose, we could substantially cut the administrative costs of the scheme. It will cause great complication in the Ministry of Labour in giving a premium plus a rebate to somebody and then a rebate only to somebody else. It would be much simpler to have one figure.
    My fourth point arises from an Amendment of mine which has not been selected. To select between men and women and have a different incentive for employers to encourage them to employ men as opposed to employing women is absolute nonsense. We surely want to encourage women into industry to take jobs just as much as we want to encourage men to take jobs in industry. I see no reason at all to make this kind of nonsensical differentiation.
    5.30 p.m.
    Finally, if the Government want to be selective at all—and I disagree with this selectivity because I think that this is Left-wing economics gone mad—it would have been far better to have been selective in terms of the criteria in the Government's economic policy, namely, to get a better balance between the regions, to get productivity up by 4 per cent. a year at least, and to increase exports by 4 per cent. a year.
    I am sorry that the Amendment I tabled has not been selected, because if it had been it would have confined the premiums rather more to those sectors. I am sorry it has not been chosen, because had it been I hoped the Chief Secretary would have had to say the Government could not measure this productivity. I had hoped to hear him say SO.
    This Measure is not a Measure to increase productivity. It will undermine the whole economic policy of the Government. If those are the criteria by which the Government choose to judge the economy it would be far better to use the selective principle, if one is to
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    use it at all, to encourage those three criteria, but this is not going to do that. It is not genuinely selective but only mixes everybody up, and then takes a chunk of the people here and another chunk there, and nobody knows the reason why in the end.
    Mr. John Hall: It was not originally my intention to take part in this debate because from the start it appeared likely that all the speeches would come from this side of the Committee—only four back benchers being present on the Government side. However, I have been encouraged to take part because 50 per cent. of the representation here of the party opposite have spoken, and 50 per cent. of that party as represented here have spoken in support of the Amendment moved from this side of the Committee. Therefore, it would appear that this particular part of the Bill has no support in any part of the Committee. Now we have just heard the Liberal Party condemn the principle, and in no uncertain terms, and the hon. Member for Cornwall, North (Mr. Pardoe) produced some extremely good examples to back up his point.
    I speak on this aspect of the matter as an industrialist, and I can say that when I first heard the Government's proposal to introduce a premium for employees in industry it horrified me. As an industrialist I have been trying for a very long time, despite all the discouragement offered from time to time, to ensure that my concern employed no more people than absolutely necessary to make it efficient. One has been opposed in this by difficulties put in one's way—by reduced hours of work, by restrictive practices, many of which cause managements very often to employ more people than they need.
    Then, when one is getting to the point where one is overcoming one's difficulties, difficulties with which managements are confronted every day of their working week, one gets this blow—to keep labour one does not need for efficient operation of the factory or other work. If the average undertaking is employing, say, about 500 men—and I shall deal with men only at the moment and not be diverted to consider the sexual inequality which comes out in this Bill—but if the average factory has about 500 people

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    it may pay the management to keep eight out of ten men with the tax, because it is paid for by the premium. This is absolute Insanity.
    I would suggest to the Committee that in view of what we have heard this afternoon the present Bill is quite irrelevant. It does not match up to the needs which we are told are required. It will dislocate industry. It will create appalling anomalies between one manufacturing industry and another, one qualifying for premium, and another, for various circumstances, not.
    It is certainly not going to have the effect of diverting labour from service industries into manufacturing industry. In fact, in many cases we do not want to divert it, because manufacturing industries have got too much labour already. The Chief Secretary shakes his head. I do not know how long it is since he was actively employed managing a factory or dealing with men on the shop floor. It is a long time ago, I imagine. Let me tell him quite frankly that I foresee underemployment in the manufacturing industries mentioned with the announcement of the suggestion in the National Plan that by 1970 we shall have a shortfall of 200,000 men. My hon. Friend the Member for Barkston Ash (Mr. Alison) brought this point up.
    I would have thought that the purpose of any Government employment tax, a payroll tax, should be to encourage all industry, whether in services or manufacturing. to be efficient, and I personally—I speak purely personally—would not be averse to a payroll tax, preferably as a tax on the payroll and not as a poll tax, because one of the great advantages of having a tax on the payroll is that it encourages manufacturers sometimes to put up resistance to wage demands which are unjustified because they know that if they are to have an increased wages bill they will pay the increased tax put upon it. If we had an overall tax on the use of labour of this kind spread over the country as a whole at a reasonably low level it might have useful results in that way.
    This tax, however, is going to dislocate the industrial effort of this country. It will penalise in many respects the very service industries which make a very great contribution to the export potential, and to the invisible exports of this country.
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    It is not going to have the effect at all, as I see it, of bringing about redeployment of labour.
    I beg the Government to think about it again. I do not believe for one moment that manufacturing industries want to receive this £123 million in the form of premium. I imagine it was designed originally, as I understand it, in order to try and offset the additional costs which might be brought about by the tax on manufacturing industries in the form of increased costs of insurance and services which industry might be called upon to meet. It is an extremely rough method of doing something for industry, to reverse the export-import rebate, and to spread it over such a wide field as to include industries which are not concerned with exports at all. I can only think this to be the basis of this.
    It is not going to have that effect. Let me tell the Chief Secreary what happened as soon as this premium was announced. A major customer of one company said he hoped to find it reflected in the prices, since the company was to get the premium. He hoped to receive a substantial discount.
    Secondly, shop stewards were very quick to point out that when the next round of wage demands came up they would expect a proportion of the premium received by the industry to meet them.
    Mr. Winterbottom: Quite wrongly!
    Mr. Hall: Now we have had the statement that there is to be a standstill for six months, and a further attempt to prolong that standstill beyond that six months, but to that extent it will only delay the demands and in due course we shall have the next round of wage demands with the hope that they can be met from the premium.
    As I see it, it serves no useful purpose. It is a form of economics that I find extremely hard to follow. It is a measure which has no support on either side of the Committee. Indeed, I venture to suggest to the Chief Secretary that if he likes to have a secret ballot among the members of his own party—a really secret ballot—he will find an overwhelming majority against having this premium at all. I challenge him to conduct this investigation and to stand by the results,

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    because if he did he would offer this Amendment every encouragement.
    Mr. Raymond Gower: I echo what my hon. Friend the Member for Wycombe (Mr. John Hall) has just said. Indeed, the speech of the hon. Member for Sheffield, Brightside (Mr. Winter-bottom) illustrated some of the disquiet which exists in the party on that side of the Committee about the nature not only of the tax but in particular of these premiums which we are discussing. I think that not only the hon. Gentleman and some of his colleagues but some members of the Government, too, would welcome an excuse to bury this tax in the ground, and I suggest to the Chief Secretary that they have an excuse, they have an eminently good reason, in the nature of the present emergency as described by the Prime Minister this afternoon.
    I put it to the Chief Secretary a little more seriously than that. In announcing the steps which the Prime Minister has described to us, he was obviously calling for considerable sacrifices from the country. He was asking the people to forgo a number of things. He was asking for restraint. He was asking them to undergo increases in certain forms of taxation. The Government themselves are showing a very poor example if, at the same time as calling for that kind of restraint and those sacrifices, they are giving away or passing over premiums to manufacturers who have not asked for them, who in many cases do not need them and whose industries do not require them. I should have thought that the reasons for reconsidering the payment of premiums on that level are very strong.
    Then my hon. Friend the Member for Barkston Ash (Mr. Alison) observed that we were reminded that the division between manufacturing and service industries is somewhat artificial. It is far more artificial than has been suggested. I think that it is completely fallacious. There are a great many industries where the service parts of those industries have a close relationship with the productive parts. The hon. Member for Dundee, West (Mr. Doig) gave some useful examples of that in his own constituency.
    The distinction is based on another misconception of the inevitable growth
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    of sophisticated economies in the Western countries. In countries with low standards of living, it would be natural to find a vast preponderance of productive industries. But we should be comparing ourselves with the more sophisticated economies of the West.
    In an earlier contribution, the Chief Secretary intimated that he would adduce evidence that the movement of people from the manufacturing industries into the service industries was too rapid. Like others of my hon. Friends, I shall be interested to hear those figures, because we should expect a considerable growth in the service industries; it is bound to happen. I expect that growth to accelerate in years ahead; it is bound to. I should expect to see more and more people employed in those industries and services which render life more pleasant.
    Mr. James Dance: Following on what my hon. Friend has been saying, I was talking to a constituent of mine the other day who had put a new piece of plant into his factory. As a result, he was able to employ fewer people and produce more, and he wanted more salesmen on the roads. I am sure that that pattern is one which will be seen increasingly.
    Mr. Gower: Precisely. On the other hand, in the more backward countries that does not happen.
    The Government are being misled into making hasty judgments about this. They are dealing with the problems of today with the minds of those who were considering the industries of 20, 30 or 40 years ago. I hope that it can be reconsidered.
    As my hon. Friend the Member for St. Ives (Mr. Nott) has indicated, the payments of premiums, as they appear in the Bill at present, must bear harshly on certain parts of the country where there are fewer manufacturing industries. That is true of a large area in Scotland, it is true of a large part of the West Country, and it is certainly true of the preponderant part of Wales. The payments of premiums as intended by the Bill must be totally at variance with all the Government's policy about the development areas, and I hope that the Government will reconsider the matter from that point of view as well.

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    Let them at least accept the Amendment. It would be far better if they consigned the whole Bill to limbo, but the next best thing would be to bury these premiums.
    5.45 p.m.
    Sir Lionel Heald: A number of hon. Members will find this a convenient Amendment on which to speak, because it provides a means of improving many of the anomalies which have caused so much concern all over the country.
    There are undoubtedly a number of things, if I may call them that, which any ordinary person would describe as "manufactures" and which are not included i the premiums as matters stand. I need not refer to them in detail, but there are several categories which we hope may be referred to during the debate, although it is doubtful whether we shall be able to discuss them in detail.
    There will be a premium in some extraordinary cases, and the most extraordinary one of all, which shows the anomaly which l mention not from hostility of any kind to those concerned, is that which concerns the printing and publishing of newspapers and periodicals, including publishers who do not do their own printing. It means that premium is going to be paid to those who publish newspapers and do not even print them.
    The only possible justification for including newspaper publishers under the heading of "manufacturers" is because, owing to their use of great printing machines and industrial processes, they are regarded as manufacturers for the purpose of the Factories Acts safety regulations and such things of that kind. That is perfectly right. But that that should enable them to attract a payment of 25s. a week for every employee in that part of the business is fantastic, unless we give it to people like builders, film studios, and others who do exactly parallel things.
    It is a remarkable fact that we have read little about this matter in the newspapers. One can understand it, of course, They may feel a little delicate about it. However, I have received a letter from someone engaged in that business, amongst whom I have a number of friends. He said that he thought that it
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    was fantastic for them to get a premium. As I say, it is a rather delicate matter. If the Government offer to pay a man 25s. a week for everyone he employs, he ought not to attack them for it. That may account for it, but the fact remains that it is an extraordinary position. If one considers the end product, what is the difference between the various forms of communication? In one case the product may be a film, and in the other case a newspaper. However, they are both intended to give information, instruction or entertainment to the public, yet one is in and the other is out.
    It seems that there are two alternatives. Though it is not what we are discussing now, one is to put all these things in. The other is to take them out, and that is what I suggest.
    Mr. St. John-Stevas: There are a number of other hon. Members who wish to speak on this Amendment, so I shall be brief. But the brevity of my remarks should not be taken as an indication of the importance that I attach to the Amendment, because I agree with my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) that it is perhaps the most important single Amendment that we have to consider in this truncated Committee stage. I am sorry that there are not more hon. Members opposite present to listen to the arguments and to support the Government. I dare say that they are ashamed, and I imagine that they are also dazed by the statement which the Prime Minister made earlier today and have gone away to recover as best they may.
    There is a connection between the general economic policy of the Government and this Clause of the Bill, in that both are entirely irrelevant to our real economic problems. The Clause is not only irrelevant; it is positively harmful to the efforts which are being made to solve those problems and put the economy on a sound basis.
    The aim of the Amendment is to do away with the premium altogether. The whole idea of this premium is misconceived. It rests upon the fundamental flaw of a distinction between manufacturing and service industries. No such distinction can be made. It was Adam Smith who, in that book "The Wealth of Nations", which I am sure the hon.

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    Lady the Member for Hitchin (Mrs. Shirley Williams) has read, because she is one of the better read Members of the Government—that is a modified compliment—
    Mr. Charles Fletcher-Cooke: The hon. Lady may be better read, but under this Bill she is worth only 3s. 9d., compared with 7s. 6d. for the other illiterates.
    Mr. St. John-Stevas: I would give her the benefit of the doubt, and award her an extra half crown.
    In that book to which I have referred there is a chapter on productive and unproductive labour, in which Adam Smith takes this point of the distinction between manufacturing and service industries and disposes of the whole economic argument for the distinction between them.
    Quite apart from the fallacious economic basis of this distinction, there is, too, a fundamental moral error which lies at the base of it, the idea that in some way it is better to be in a manufacturing industry than in a service one, that somehow the contribution made by a manufacturing industry is more worthwhile than the contribution made by a service industry. This is an erroneous, puritanical notion, because in an advanced industrial society, such as we have today, the contribution of service industries is every bit as vital as that of manufacturing industries. Indeed, in practice they cannot be separated, because manufacturing and service industries are inter-connected at so many points.
    Once again the Government are behind the times in trying to make this distiction, because the whole trend in an advanced society is to employ fewer people in manufacturing industries and more in service industries, and surely this is a trend which must continue when we move towards a much more automated society than we have at the moment?
    Leaving those more general considerations, even if we look at the very narrow point of the effect on the balance of payments—and it is said that this premium will somehow help our balance of payments by increasing exports—the argument is ill-founded. First, because it is not selective enough between one type of manufacturing industry and another. Sec-
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    ondly, because it so grossly discriminates between manufacturing industry and a service industry such as the hotel industry which makes a vital contribution to the tourist trade and to solving our balance of payments problem.
    A rather delayed measure of justice for the hotel industry was foreshadowed in the Prime Minister's statement this afternoon. It would be much more sensible to give back to the hotel industry in some tangible form the investment grants of which it has been so unfairly deprived, and to relieve hotels of the extremely heavy burden of taxation which is being imposed by the Bill.
    It is impossible in practice to make a sharp distinction between manufacturing and service industries, because so many industries cross the frontiers of the distinction which is attempted to be laid down by the Bill. The Clause will raise immense difficulties of classification, which would be got rid of by a simple excision of this Clause from the Bill.
    One of the justifications for the Bill is that it is said to be likely to facilitate the redistribution and better use of labour. I wish that these hopes could be justified, because one of our basic economic problems, which so far has not been tackled in any way by the Government, is the lack of effective use of manpower, and it is the effective use of manpower within manufacturing industry which is really the nub of the whole matter.
    The Chief Secretary shook his head when my hon. Friend the Member for Barry (Mr. Gower) referred to the over-manning of British industry and the uneconomic use of labour. Perhaps I might remind the right hon. Gentleman of the words of his colleague the Chancellor of the Exchequer, which I put down in this notebook, in what I might call my commonplace book. "I have referred," said the Chancellor, "to complaints about the wasteful use of manpower in manufacturing industry. Many of these complaints are justified". There one has as it were from the Chief Secretary's superior officer confirmation of the indictment made by my hon. Friend the Member for Barry.
    That is where the hoarding is, and that is where the problem centres. This Bill may lead to a number of part-time teachers, part-time charladies, and part-time hairdressers losing their jobs. They

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    will not be turned overnight into skilled workers, and this is where the problem lies. It is not a problem of unskilled labour, but one of a shortage of skilled labour in industry, and the efficient use of this extremely scarce commodity.
    Here one finds a direct contradiction in Government policy. On the one hand there is the policy of exhorting industry to use its skilled labour in an efficient way, and on the other one has the positive incentive provided by the premium laid down in the Bill to do precisely the opposite. I agree with my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). Of course industrialists will not go out and recruit skilled labour because of the premium provided by the Bill. But that is not the problem. The problem is to get manufacturers to disgorge skilled labour so that it can be usefully employed elsewhere, and the existence of this premium may well tip the balance.
    After all, though small in itself, the total subsidy being given to manufacturing industry is likely to be about £150 million a year, and as we move into recession, as we surely shall after the Prime Minister's statement this afternoon, the temptation to hoard skilled labour will be greater than ever, because manufacturers know that it is extremely difficult to get that skilled labour back when the "go" of the "stop-go" gets going again.
    The whole purpose of the Government's labour policy should be to increase the flexibility and mobility of the labour force. This Bill in general, and this Clause in particular, do the opposite. The Bill as a whole is unpopular, and rightly so, in the House and in the country. But the most unpopular part of it is this Clause. It has literally no friends—or if it has friends in this House they have been remarkable by their silence. I commend the Chief Secretary to the advice given by the distinguished banker and economist Walter Bagehot to his nephew, Guy, when his nephew, at breakfast, had difficulty in opening his egg. Bagehot said, "Hit it hard on the head, Guy. It has no friends." I commend that course of action to the Chief Secretary in relation to this Clause, and if he declines to hit it hard on the head we will hit it as hard as we can.
    6.0 p.m.
    Mr. Geoffrey Rhodes: I agree with the hon. Member for Chelmsford (Mr. St. JohnStevas) that the distinction made in the Clause between the manufacturing process and the distributive process is far too easily drawn by people who, if they knew industry and commerce sufficiently, would realise that it is far from clear in practice.
    I also want to refer to the point made by the spokesman for the Liberal Party, who referred to the Bill, and to this Clause in particular, as being the product of Left-wing economists. I am an economist, and I claim to be Left-wing, but I hope that nobody will think that the Bill or the Clause was any product of my intellect or imagination, because there are some things that I want to say about them that I would interpret as being critical.
    As I understand the Clause, it provides that a number of premiums will be paid to manufacturers regardless of the social value of the work that they do or of any special contribution they may make to the national economy, and especially to the export trade. The subsidy will be given to all people who are suitably classified in the Standard Industrial Classification on a basis which seems to me to be irrelevant to the overall needs of the economy, and partly irrelevant to the White Paper that preceded this debate, some months ago.
    As a result of this legislation people constantly ask why, for example, the brewers, who do not need a subsidy and who have not asked for one, are being given one, at the same time as many other people will suffer a severe fiscal penalty. That is a fair question, and I repeat it this evening because I have constantly asked it and I am still waiting for a satisfactory answer.
    Mr. Geoffrey Hirst: The hon. Member may or may not know—the Committee certainly does—that I have often declared an interest in the brewing trade. That trade estimates the net cost to it as being about £5 million. It will not be receiving a benefit.
    Mr. Rhodes: I would not quarrel with the hon. Gentleman's information. I merely say that because of the way in which the Bill is framed that is the kind

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    of question which is constantly being asked. Why should manufacturers be subsidised regardless of their social usefulness to the export trade? Perhaps I am indulging in a Freudian slip in referring to the brewing industry, because I had a number of things to say about it, in another context, on a previous occasion.
    But my main point is one which I do not think the hon. Member for Shipley (Mr. Hirst) will disagree with, because the last time I said it he said that he agreed with me—although I sometimes become worried when he agrees with me, because there are few occasions on which we can share this privilege.
    In replying to the Second Reading debate, while I was recovering from a long stint by having some refreshment, the Financial Secretary criticised me and a number of my hon. Friends—and the Opposition in general—for being critical about the anomalies and difficulties within the Bill. As he put it, we had been completely destructive and had offered no alternative suggestions. I heard the latter part of his speech, but I did not have an opportunity to say anything then, although a number of my hon. Friends protested on my behalf.
    That was a distortion of what was said in the debate. A Liberal Member distinctly categorised at length a number of alternative proposals which the Liberal Party had carefully costed. I specifically suggested that it would not help the Government in the present economic situation for premiums to be paid indiscriminately to certain people who are fortunate enough to fit into the right part of the Standard Industrial Classification, and that it would be better if they were not paid. I suggest that if the Government are concerned to tax the more inefficient parts of the distributive process they might consider imposing the tax upon self-employed retail distributors, who are not the most efficient.
    At any rate, a number of constructive suggestions were made, and to argue that our case is not worth answering because we have not made alternative suggestions is unfair.
    Mr. Winterbottom: We also put up a set of suggestions which even questioned
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    the efficiency of the Treasury as a tax collector.
    Mr. Rhodes: That is not the theme which I developed, although I drew attention to the fact that if the object of the tax was to encourage efficiency in industry it seemed odd that those distributors who were centralising their warehousing and transport systems into central units would become subject to the tax, whereas if they were to leave those units indiscriminately at the various points of production they would become eligible for a subsidy.
    I cannot see the logic of this provision, and as a Left-wing economist it does not seem to me to serve the interests of economic efficiency or sound socialist principle to indulge in the imposition of this tax in this way. We have the situation in which we give a premium to the manufacturer of dog food while imposing a penalty on those who engage in the processing and bottling of milk. I am pleased to see the Joint Parliamentary Secretary to the Ministry of Health here. He might remind me that it is illegal to distribute milk without having previously processed it and bottled it. I cannot see why the processor of milk should suffer a penalty when the manufacturer of certain dog foods receives a subsidy.
    The reason why milk processing becomes subject to this kind of penalty is that, from the point of view of the Bill, it happens to be wrongly placed in the Standard Industrial Classification. This brings us back to the ultimate question: is the purpose of this Standard Industrial Classification sufficiently exact to be used for this type of legislation, which has a different purpose?
    I suggest that it is not. The statistical value of the Standard Industrial Classification is quite unrelated to the purposes of the Bill. Although it is a convenient device, unfortunately, it is a device that is also pregnant with anomalies of all kinds. Consequently, of course, we get all the complaints. One reason why people have never protested at the processing of milk, for example, being placed in the distributive part of the Standard Industrial Classification is that, in the past, it has not mattered very much to the trade which part of the classification it happened to be in—
    Mr. Diamond: I hope that my hon. Friend will not accuse me of discourtesy when I wind up the debate if I do not reply specifically to his comments about milk, as there is another Amendment which deals exclusively with the problem of milk and its bottling.
    Mr. Rhodes: I expected that this point might be raised if not from my right hon. Friend, then from the Chair, but I would still make the point that, if the Committee supported Clause 1 unamended, it would support a classification for giving subsidies to people who, for many reasons which I have explained, neither need them nor deserve them, and would impose a penalty on other groups of manufacturers, like those processing milk. This will, of course, bring the tax into public disrepute, because it is illogical, anomalous and unfair.
    We appeal again for improvements to be made in the classification for carrying out the tax as early as possible. The power is in the hands of the Government, with this legislation, to make Amendments and to switch around into different categories of manufacturing and distribution in different parts of the Standard Industrial Classification for the purpose of the Bill.
    I accept that whenever a new tax has to be got off the ground, whenever a new aeroplane is put into flight, it is defective and needs time for improvement, but I would be encouraged to think that improvements would be made if at least some sympathetic noises were made from the Treasury Bench in answer to the very fair, sensible and moderate points of criticism which have been made, not only by the Opposition—they may have different motives—but from this side of the Committee as well.
    I suggest that, unless improvements are made soon, and the Treasury Bench indicate that they sympathise with and understand the point which is constantly being put to them, this tax will be continually ridiculed in the country and, in the long run, will bring the Government into disrepute.
    6.15 p.m.
    Mr. Fletcher-Cooke: During my 15 years' experience of the House, I do not think that I have ever heard a Clause of a Government Measure so bitterly attacked from all quarters of the House and most bitterly from
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    behind the Treasury Bench. This is the more impressive because we are operating under a timetable, a procedure in which there is no sanction against Government supporters speaking. If we were operating in the normal way, without a timetable, there would, of course, be inhibitions against Government supporters speaking, because that delays progress. But, in these circumstances, there are no such inhibitions.
    Not a single Government supporter has said one word in favour of the Clause or against this Amendment. Three speakers have made the most powerful and damaging criticisms of the Government and have supported the Amendment. If Parliamentary democracy means anything, I should have thought that, with those criticisms from the Labour Party, the Liberal Party, and the Conservative Party, the Government must give some way particularly bearing in mind that this provision entails the Government giving money away.
    Of course, if the Government were taking money from the population, and said that they must have this money and had to stand rigidly like Mr. Gladstone, or Sir Michael Hicks-Beach, or one of the "great black dogs" of the past in favour of rigid Treasury control, one could understand their position. But this is a unique situation. Hon. Members in every quarter of the Committee and in every party are saying to the Government, "Do not give this money away: keep this money." Yet the Government apparently are adamant. Is not that the most unique and extraordinary Parliamentary situation within the recollection of any hon. Member? Does it not make the Chief Secretary think that he must be wrong?
    No credible explanation for this premium has yet been given. All that is said on the positive side is that, hitherto, taxation has been "somewhat" unfair to manufacturing and "somewhat" unfavourable to services, as though they were two disembodied or classical figures on a monument, sculpted figures, one representing "Manufacture" and the other "Services", reminiscent of the Great Exhibition of 1851, which saw two neuter figures in the middle, one representing Charity and one Agriculture, which were neither good nor bad. That personalised fashion is not the way in

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    which to consider taxation. It was understood that, when the Labour Government came to power, they would indulge in what is known as "purposive" taxation, that the fiscal weapon would be used for certain social and defined purposes.
    I think that the hon. Member for Newcastle-upon-Tyne, East (Mr. Rhodes) would approve of that. But he has explained very frankly and squarely that this does not effect any such purpose. Certainly, no purpose has been explained. The most the Government have done is to say that it will not do that much damage, it will not cause the hoarding of labour in manufacturing industries which people think. That is a poor defence. I suggest that even that is not right.
    Although it is true that, probably nobody, will employ more people in order to get 7s. 6d. for a man or 3s. 9d. for a woman, there are, nevertheless, bound to be marginal cases of firms which are within the 50 per cent. rule, or near it, between qualifying and non-qualifying operatives, when it will be worth their while within a plant, establishment or site, or whatever the definitive term may be, to employ two or three more qualifying operatives so as to bring the whole of the site or establishment within qualification for the premium.
    This is a very dangerous and critical situation, because two or three or four qualifying operatives might make all the difference to the whole plant. Although this seems to be a small matter in relation to the plant, for the country as a whole it will be a more frequent occurrence than the Chief Secretary realises, and will be absolutely deleterious and devastating to any suggestion of the redeployment of labour on the lines which the Prime Minister told us this afternoon must happen.
    I ask the Chief Secretary and his advisers, therefore, to consider the critical point at which the numbers of qualifying and non-qualifying operatives are nearly in balance in any establishment. This is a more frequent occurrence than is generally recognised. If that is so the prize for employing more qualifying operatives than one really needs so as to get over the 50 per cent. rule is much too great. We shall never have time to go into the
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    anomalies in the Bill, owing to the Guillotine
    I was most interested to hear the hon. Member for Dundee, West (Mr. Doig) explain the enormous anomalies in the jute industry in his constituency. There is, of course, a great anomaly in my constituency in the processing of paper. If a firm uses as its raw material rags or esparto grass or something like that, it is a manufacture. If, however, it uses waste paper to produce new paper, it is a service industry and does not qualify. There are hundreds of examples. Many Amendments are down, some selected and some unselected: it does not very much matter, because we will not be able to get on to any of them.
    The only clean and honourable way to deal with this is to abolish the premium. I do not think that it is remediable—certainly not in time for the passage of the Bill, since the Government say that they must have all stages before the House rises in August.
    Unlike some hon. Members, I can say that my constituents on the whole will benefit from these provisions. Most of them are qualifying operatives. But I am sure that they would be the first to say that this is not only a wrong use of the fiscal weapon, but also a useless use of the fiscal weapon and that it will achieve no economic objective that one can understand, because there is no economic objective, over and above a personalised and futile attempt to do what is called social justice between manufacturing and services—which is a philosophy which has no foundation in heaven or in earth.
    The Temporary Chairman: Sir Tatton Brinton.
    Sir D. Glover: On a point of order. Is it not usual, particularly under a timetable Motion, that an hon. Member who has his name to an Amendment is called during the debate on that Amendment?
    The Temporary Chairman: As far as I am aware, during my years in the House the matter has been entirely at the discretion of the Chair, but I will keep the point in mind.
    Sir Tatton Brinton: I must declare an interest, because I am a manufacturer and, as a manufacturer, I am totally against this premium which is to be paid to manufacturers.

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    First, I am against the principle of selectivity in general. I think that it is a feature of the Bill which has produced all the difficulties and all the anomalies. We shall have some limited time, I suppose, in this curtailed debate in which to point out a few of the manifold anomalies which have arisen.
    Like many of my hon. Friends and hon. Members opposite, I should have preferred a payroll tax, as my hon. Friend the Member for Wycombe (Mr. John Hall) said. In my opinion, such a payroll tax should have been a percentage tax on the payroll and should have been universally applied. In this way the burden of the tax would be spread in proportion to the amount of labour and the administrative cost on salaries, and so on. This would have done away with the anomalies which will arise over the part-time workers, the disabled workers and the very low-paid workers who may become unemployed in the distributive trade. It would immediately have ironed out many of the anomalies.
    The Government have gone one step further even than was necessary for their purpose., for they have made it not merely selective between the services and the manufacturing industries; they have created three different categories, one of which we are discussing under the Clause. This has unduly complicated what is already a bad idea and has introduced a further series of anomalies over and above those which would in any case have been entailed in the selective principle.
    In the Financial Memorandum to the Bill the Government suggest, to my mind extremely optimistically, that the large number of appeals which they have invited by having this triple selection process will cost the nation only £10,000 in the remuneration and allowances of the tribunals and those required to give evidence to the tribunals which will deal with the appeals. I think that hundreds of cases will arise solely out of this one principle, without taking into account the problem of the major selection between distribution and manufacture.
    Many of the points which I had intended to make have already been made by my hon. Friends and by the hon. Member for Newcastle-upon-Tyne, East (Mr. Rhodes). But one or two comments
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    remain to be made which underline the inability of the Government to make up their mind as to what they wish to achieve. Like so many of their Measures, the actions taken in connection with a particular problem are mutually incompatible. On the one hand, we are told by the Government that manufacturing is such a virtuous occupation, irrespective of what may be made or foisted on the public by certain types of manufacturer, that it deserves to receive 7s. 6d. a week for every male employee. On the other hand, a sum of £150 million will have to be paid by manufacturing industry between September when the tax comes into operation and the first repayment at the end of February.
    We have been told that the entire country will pay between these dates £500 million. I assume that those in manufacturing industry—those receiving the premium—account for about one-third of this. That is a reasonable estimate, although it may not be absolutely accurate. We have also been told that this sum may not be borrowed from the bank.
    As a result, a very serious situation will arise in the autumn. The very people the Government wish to encourage, and who are supposed to earn overseas the living of the nation, will have to find large sums of cash; they will ultimately receive it back, but in the meantime they will have to finance it without assistance from the banks. If the Government want to take purchasing power out of the economy in the present crisis, do they wish to do it at this rate and do they wish to apply it to the very people they say they wish to encourage? This seems to me a complete contradiction of what the Government are trying to achieve.
    My hon. Friend the Member for Wycombe has pointed to the effect which this will have on the distributive customer of the manufacturer, and I should like briefly to confirm everything that he said. Perhaps encouraged by an article by one of the financial editors of a major newspaper, maintaining that the Government were intentionally transferring large chunks of profit from distribution into manufacturing by this tax, the retail customers have been putting pressure on the manufacturers and are still doing so —on the basis that the manufacturers who are to receive the benefit of the

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    premium should be prepared to hand over all or part of it to the distributors who will bear the brunt of the tax. I have some sympathy with the view of the distributors, but I maintain that there is no basis in this demand as a manufacturer.
    My own company is roughly typical of a number of companies in that the tax will be worth about ½ per cent. on the turnover. This must vary between one company and another, depending on the balance between raw materials and labour, but that is a rough estimate for manufacturing companies.
    We have also estimated in my company—and many others have done the same—that by the end of one year, the ½per cent. will have totally disappeared, particularly in my industry where wages are to some extent linked with cost-of-living increases bearing in mind the increased cost of all the services which we need. We believe that this small subsidy will have disappeared into the maw of inflation by the end of one year. That is all the use it is to manufacturers.
    I could go through the many anomalies produced by the Bill and the injustice between one type of enterprise and another and one individual and another. There are over 350 Amendments and 17 new Clauses down on the Paper. There is criticism from all sides of the tax, but the Government appear to be determined to bring it in. Looking at all these Amendments, which we shall never discuss, I wonder whether any sort of plastic surgery can ever repair the physical defects of this moon calf.
    6.30 p.m.
    Sir D. Glover: When the Chancellor of the Exchequer introduced the tax, it was a silly, ill-thought-out, and nonsensical tax. After the Prime Minister's statement this afternoon, it is criminal lunacy to continue with it. After that statement I asked the Prime Minister a detailed question about unemployment. In a masterly piece of double talk, for which the right hon. Gentleman is famous, he wriggled and squirmed, but eventually said that the effect of the measures about which he told us would be to raise unemployment to between 1½ per cent. and 2 per cent., which he, as the Prime Minister, and the Government would accept.
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    In his long-winded statement the Prime Minister talked about shaking people out of jobs. He was not talking about shaking people out of jobs in service industries. He talked about shaking people out of manufacturing industries to go into the export trade. Yet within an hour we are debating an Amendment to a Clause which will give people a premium of 7s. 6d. for not doing what the Government ask them to do. It is criminal irrelevancy to proceed with the Bill immediately after the Prime Minister's statement.
    It is impossible to decide what is manufacturing and what is distribution. Most hon. Members opposite representing mining constituencies would be horrified to think that the coalmining industry is a distributive industry. Yet nobody over the last 2 million years has invented coal. All that a miner does is to move it from A to B. Coalmining is a distributive industry. The miner breaks it up from large lumps into small lumps. He puts it on to a trolley. The coal is moved from one place to another. It eventually reaches a factory, a household or a furnace. This is not manufacturing. This is distribution.
    Is the real thesis of the Government that, if anybody wants to buy a car, there is so much virtue in it that they had better go to Coventry or to Halewood? Is not a motor car showroom anywhere in the country just part of the manufacturing chain involved in turning rough metal into cars?
    Even the Government know that they were very ill-advised to introduce the tax in the first place. They have not had a friend anywhere in the House of Commons or in the country, particularly for the premium we are now discussing. As it is completely not only irrelevant, but actually damaging, to the proposals the Government made this afternoon, could not the Chief Secretary, even at this late stage, save Parliament from wasting its time and withdraw the Bill?
    Mr. John Biffen: The Bill is very much the product of the fact that this is an Administration composed of frustrated management consultants. Almost from the start, but certainly from the end of 1964, we have been presented with a series of measures designed to have a selective impact upon the economy and produce certain pre-ordained results. The

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    fact that the results which are produced are rarely those which are pre-ordained has in no way deterred the Government.
    The Bill is the latest in an unhappy series of Measures which we have been asked to endorse. The Amendment would have the effect of removing a highly discriminatory part of the tax by ensuring that no premiums were repaid. I believe that it is not a logical argument following on from that that the money should remain with the Government. I believe that this is a clear case where it can be demonstrated that when we call for lower taxes we can think of some areas of public expenditure which can be cut.
    I want to examine some of the arguments about the presumed consequences of this kind of legislation. It has been argued that too many people are employed in service industries and that a tax of this kind will have some effect upon the redeployment of labour. I very much doubt this. In fairness to the Chancellor, I acknowledge that he himself has never endorsed the argument that the tax will lead to redeployment of labour. However this is not true of all members of the Administration. I recall, though I certainly cannot detail, an occasion when the Parliamentary Secretary to the Ministry of Power said that one of the consequences of the Bill, particularly the use of the premium, would be redeployment of labour.
    Let us not look to the publications of various Left-wing academic economists which may inspire the Government. We should, instead, think of our experience in our constituencies. For many of the service industries which will be hit by the tax, labour is a major element in their total cost. A gentleman's hairdresser cannot replace labour by the extensive use of plant or capital. Yet in a great deal of heavy engineering, the steel industry and the chemical industry, the labour element is a comparatively small part of the overall cost. Much more importance is attached to having the plant operating 24 hours a day, six or seven days a week.
    Therefore, we are not surprised when we are told, for example, by Mr. Allen, in the Sunday Times, that it is in British manufacturing industry that a great deal of under-employment takes place. I do not regard this as necessarily a blazing indictment of British industry.
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    I suspect that the same is true of other industrial countries in the Western world. I do not draw the conclusion that we are noticeably worse than anybody else.
    In view of the high labour element in the overall cost, one would expect to find a greater concern about the profitable employment of labour in the distributive trades than in manufacturing industry. Yet the purpose of the Bill is to give a premium to manufacturing industry. This is a ham-handed way of trying to ensure that manufacturing industry has £133 million which it might not otherwise have. The alternative of lower taxation is eminently to be preferred.
    I therefore hope that when we vote—alas, under the Guillotine; I wish that the debate could be extended—we shall take this opportunity of repudiating the kind of nonsense which is leading to a welfare state for industry under the guidance of the Chief Secretary to the Treasury, a policy which, in the long run, I believe, cannot but be calamitous for our economic performance.
    Mr. Alfred Morris: I do not want to follow the hon. Member for Ormskirk (Sir D. Glover), who, in my view, degraded this discussion with his talk of "criminal lunacy". The Opposition would have done better to have indulged in reasoned arguments instead of vituperative abuse. I am sure that my right hon. Friend the Chief Secretary wants to hear a reasonable statement about the anomalies in the application of the tax and will be entirely unimpressed by abuse.
    The most serious anomaly is that the Standard Industrial Classification is to be used as the basis for applying the tax. I hope that my right hon. Friend will not try to defend over the long term the use of this standard for a purpose for which it was never intended. It may regard it as a useful ad hoc arrangement, but I trust that when he replies to the debate he will indicate that it is not the Government's intention to stick slavishly and rigorously to the Standard Industrial Classification.
    The second anomaly is that there are manpower-hoarding manufacturers who will benefit financially and that there are distributive enterprises who are short of manpower and who will feel themselves to be very seriously penalised. I have

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    said on another occasion that I am particularly concerned about the possibility that certain employers in the distributive trades will discharge part-time employees and add to the hours of work of their fulltime employees.
    There has been considerable stress on the position of mothers whose children have grown up and who can work between 10 and 20 hours a week in distribution. I am also deeply concerned about the position of the elderly person. I commend to the Chief Secretary a paper presented at this year's national conference of the National Association for Mental Health, concerning mental ill-health among elderly people who go from full-time employment into full-time retirement.
    Professor Ferguson Anderson, of the University of Glasgow, a very distinguished authority, has demonstrated conclusively that it is conducive to mental ill-health among elderly people if they go from full-time employment into fulltime retirement. If it has to be given to anyone, I should like to see the premium given in respect of elderly people in part-time employment.
    I hope, also, that the Chief Secretary will make it abundantly clear when he replies that manufacture is not virtue and that distribution is not wicked. There is a growing tendency now to regard manufacturing as virtuous and distribution as wicked, manufacturing as productive and distribution as wasteful. I should have thought that every hon. Member could accept that distribution is as important to manufacture as manufacture is to distribution.
    I hope that those who follow me in the debate will not degrade the argument as it was degraded by hon. Members opposite, and that we shall have a serious and fair discussion about the anomalies in the tax.
    Mr. W. R. Rees-Davies: I am sure that after listening for a short while the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris) will not think that I degrade the debate by what I say. I have found it difficult to achieve, but I have tried to take a bipartisan approach to the general problems of this subject. I did so yesterday on the Report stage of the Industrial Develop-
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    ment Bill, and I propose to follow the same line today.
    The hon. Gentleman talked about degrading the debate. I wonder whether I could have his attention for a moment. I hope that he is not about to leave us now, immediately after he has spoken.
    The first thing that I noticed about the Selective Employment Tax was that whereas a brick-maker will get a premium of 7s. 6d. for every brick-maker that he employs in the making of bricks, 25s. will be paid in respect of every bricklayer.
    6.45 p.m.
    The Government want to hand industry £133 million, having taken several hundreds of millions of pounds from everybody else, particularly the distributive industries. The difficulty that the Government faced straight away was the question, "What is manufacturing industry, and, indeed, what is industry itself?" After a great deal of trouble, we put horticulture and agriculture into the neutral belt. Now the Government are beginning to recognise that they have made a serious blunder over the tourist industry, particularly the hotel and catering industry, and that they must now try to reverse the situation.
    The matter does not end there. A particular anomaly that must be removed is the one with which the name of Ambrose Congreve is associated. I do not know this gentleman, but I know his company. It is an extraordinary state of affairs when one of the companies that sell "know-how" and the services of great technicians throughout the world will have to carry a burden of over £100,000, I understand, in respect of its staff, whereas if the staff who are seconded were actually working for the companies to which they are seconded, there would be a rebate in respect of them. I specifically put this as a question to the Chief Secretary. What will he do about the Ambrose Congreve case? This is a company supplying from its own resources many of our great technicians and experts.
    The Chairman: Order. The point that the hon. Member raises does not arise on this Amendment. He seems to be pleading for an exemption. There are several Amendments later dealing with exemptions, and I do not think that his present argument is relevant to this Amendment.
    Mr. Rees-Davies: With respect, Sir Eric, it goes right to the point. I am putting it this way. This company of technicians will at present have to pay the Selective Employment Tax. If the technicians were transferred to industry, not only would they not be subject to the tax., but the industry would get the rebate.
    This is an extraordinary situation. The Government should remove the rebate from industry entirely and not apply it at all. In that event, one would not get the absurd situation that if one employed one's own technician in industry one received a rebate whereas if one obtained him on contract one did not.
    This was an aside to my general argument. I do not want to canvass any of the arguments that have gone before, but I take the view, as do others, that this amount of money should not be repaid to industry.
    I draw the attention of the Chief Secretary to the present position of the hotel and catering industry, in the light of the fact that £133 million, much of which it will have paid, will be given to manufacturing industry. It has never been suggested, and it could not be, that a single person in the hotel and catering industry will leave it and go into manufacturing industry. It cannot be suggested that the major-domos, the head waiters, the waiters or other members of hotel and catering staff, which is at present grossly undermanned, will leave the industry.
    I have figures, which I shall pass to the Chief Secretary later in their entirety, which came in today and show the up-to-date position of Grand Metropolitan Hotels. What is the picture here? This hotel group will carry a burden of £225,000 per annum on Selective Employment Tax. That is the direct figure in respect of the group.
    I come now to the impact which this will have together with the withdrawal of investment allowances. In 1964, investment allowances were available in respect of capital expenditure on the Europa Hotel, Grosvenor Square of £299,000—call it £300,000—and with Income Tax at 8s. 3d. in the £ and Profits Tax at 15 per cent. those allowances were worth £170,000 in cash. With Corporation Tax at 40 per cent. today, they would have been worth £120,000 in cash. There has
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    been an increase in building costs of 41 per cent. since then, so that the figure would have been higher.
    The direct cost of the S.E.T. in respect of the staff operating in the hotel is £16,000 a year. Last night, 432 persons were sleeping in the Europa Hotel, of whom 371–86 per cent.—were from overseas. Those are the figures today which have just come to me from the group.
    My purpose in quoting those figures is to show the effect of the imposition of this tax coupled with the removal of the investment allowances. We have reached a point when a real growth industry, albeit not manufacturing, is singled out for a form of treatment which, by contrast, is so unfair that there will inevitably be very serious consequences.
    The Chairman: Order. The hon. Gentleman still appears to be arguing for an exemption, which does not arise on this Amendment.
    Mr. Rees-Davies: With respect, Sir Eric, I submit that the argument does apply. The reason for the strong and bitter feeling in the hotel industry is the same as was felt by people in agriculture until they got out of it, that there is no reason at all why we should pay £133,000 back to manufacturing at this stage, giving an enormous benefit to manufacturing when, as we all know, the hotel and catering industry, although not manufacturing, is the principal growth industry today, bringing the greatest benefit to the country.
    That is the way I use the argument. It is a prestige argument. I have used figures to illustrate it, but it is a prestige argument. There is intense feeling throughout the hotel and catering industry at being singled out to be clobbered by the Government and having to pay a large part of this tax which is to be refunded for the benefit of another industry which it regards as considerably less efficient than itself.
    This afternoon, the Prime Minister intimated that suggestions were coming forward for some kind of loan arrangements for the hotel and catering industry. If it were clearly stated at the Dispatch Box that there would be some concrete benefit to the industry to offset the substantial impost and rebate which it will have to

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    meet—a discrimination which I strongly oppose—that might be some sort of defence. But I understand that this is not to be so and that the scheme being put up is merely a scheme to lend money at Exchequer rates of interest, which will be of no real benefit. We shall be back in the same position as we were before.
    I shall not pursue that aspect of the matter further, Sir Eric, because I can quite see that if I did so I should be going wide of the Amendment.
    The Chairman: The hon. Gentleman is already wide of the Amendment.
    Mr. Rees-Davies: I saw that you were beginning to sidle in the Chair, Sir Eric, with a view to rising to express that Ruling. With respect, I share your view and I shall not get involved further.
    I shall not canvass the other arguments which have been most ably put from this side of the Committee. The country as a whole would be willing to accept either a poll tax or some kind of payroll tax, but, whether on grounds of economic principle or on grounds of general dislike of discrimination, everyone I have met inside the House and almost everyone ontside takes the view that we should remove the selective element in the tax. For these reasons, we should not in any circumstances permit manufacturing industry to have a rebate.
    Mr. John Peyton: I shall not take long, and neither shall I follow my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) in an argument which does not seem to me to be appropriate to the Amendment. My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) was absolutely on the mark when he stressed that we are here confronted with a proposal actually to return money from the Exchequer to various selected sections of industry but not a single person in the House of Commons favours the idea. Normally, we all have our views about how worth while and important it is to extract money from the Treasury and to secure concessions. We always find it very difficult. But here we have a unique situation when no one has a word to say for this fantastic proposal.
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    Now a word of warm though rather unaccustomed sympathy for the Chief Secretary to the Treasury. The right hon. Gentleman is incredibly unlucky. Every time the Government has a rotten case, he is put up at the Despatch Box to defend it. Very often, my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), with far greater eloquence than I can command, has a good deal to say in criticising his answers. On this occasion, I hope that my hon. Friend the Member for Finchley (Mrs. Thatcher) will take heart from the debate and do nothing of the kind. It would be very unfair to criticise the right hon. Gentleman. He cannot possibly put forward a decent case beta use there is not one. I hope that my hon. Friend will temper justice with mercy.
    I was absolutely astounded at the intervention we had from the hon. Memher for Manchester, Wythenshawe (Mr. Alfred Morris). He rebuked my hon. Friend the Member for Ormskirk (Sir D. Glover) for describing these proposals as criminal lunacy. Presumably, if the word "criminal" had been taken out, the hon. Gentleman would not have objected and our criticism would have ceased to be vituperative.
    It cannot be too often or too firmly stated that to adopt these Kaldor experiments is madness. With the extremely delicate and complex economy which we have in this country, it is madness to seize upon this weird counsellor who, wherever he has gone. in very much simpler circumstances, has spread a trail of ruin among people who have accepted his advice. Now he comes here and. with disastrous effect, wishes this sort of thing upon us. All Ministers are left to say, publicly and privately, is that we shall have to let the tax work out in practice, we can refine it in the fire of experience, and so on. Inevitably, there will be immense losses, contortions and distortions inflicted upon industry in a most wanton way.
    7.0 p.m.
    We are greatly curtailed in time, but this is the one Amendment which offers a wide oportunity to consider the ridiculous line dividing those who have premiums and those who do not. My right hon. and learned Friend the Member for Chertsey (Sir L. Heald) spoke of the ludicrous position of publishers who do not

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    do their own printing, but who get the premium. This is utterly indefensible if one compares it with the unhappy lot of the film studio which is sunk without trace. It seems a gratuitous slap in the face to the film industry. I hope that the right hon. Gentleman will be able to give us some cheer.
    Let us take the case of a mixer truck which carries ready-mixed concrete and continues the process of manufacture while in transit and right on to the site. Is the driver regarded as in manufacturing or transport? I have not the slightest idea. Whichever side of the line he happens to be dropped on, it will be just luck or bad luck. There cannot be a really well-founded argument that would be the official justification for putting the man on one side or the other. If he is treated as transport, will he be able to claim that he is taking part in a manufacturing operation? One would say that this was disastrously unlikely. Taxation should not be made the field for such processes of lottery.
    As I said, I am profoundly sorry for the right hon. Gentleman in that he has to present a case when he knows damned well there is not one.
    Mr. W. T. Williams: You may not be surprised to discover, Mr. Jennings, that my real interest is not in this Amendment and that in rising to speak on it my purpose is only obliquely directed to the Amendment itself. I should have preferred to deal with a later Amendment in my name, but I am prevented by the procedure which has been adopted from speaking about the matters that I want to raise, namely, those relating to milk processing and distribution. That being so, I must do the best I can to raise the matters in which I am interested within the terms of order on this Amendment.
    It is clear that if the Government had chosen to introduce such a form of employment tax as is proposed by the Amendment it would have been possible to have spread the tax much more widely. It would have involved a good deal less administrative energy and expenditure, and it would have been possible by that process to have reduced the tax very considerably in respect of each employer.
    If the Government had taxed every employer, instead of making the tax 25s.
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    and comparable amounts for other employees in the way in which the tax is now to be raised, and then redistributed it to some favoured employers by means of the premium, it would have been possible to make the tax a good deal gentler on all employers, including service employers.
    This Amendment would not have met the wishes of those who think as I do that the tax in its incidence upon the distributive trade in unduly heavy. We think that, bearing, as it will in particular, upon that part of the distributive trade which is concerned with the distribution of milk and other essential foodstuffs, it will impose on it so heavy a burden as to cause considerable difficulty, and in some cases possibly disaster, to those engaged in the form of distribution, to say nothing of the increase it will cause in the cost of living—
    The Temporary Chairman (Mr. J. C. Jennings): Order. The hon. and learned Gentleman is being very skilful, but he cannot, under this Amendment, argue even in general terms for exemption. He must restrict himself to the narrow confines of the Amendment.
    Mr. Williams: With the greatest possible respect, Mr. Jennings, I was not arguing for discrimination in favour of the distributive trade. I was merely saying that if the Government had chosen what the Opposition are inviting them to do in this Amendment, it would have been possible not to have laid as great a burden on the distributive industry as they have done. I think that that is entirely within order.
    Since the Government have not chosen to follow the principle of taxation proposed by the Amendment, it is to me and to those who agree with my point of view, a matter to be deplored. However, it may well be that the Government can find a way out of their dilemma and my dilemma if it is possible for the Chief Secretary to say that the provisions laid down by the Government in the Clause are not by any means final, that the Government will hear representations from those of us who think that the form in which the tax is being applied and the premium is being repaid has been too arbitrarily drawn, and that if those who think as I do are prepared to support the Government against the Opposition in their Amendment, it will

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    be possible, even if not now, then very soon for the Government to look again at the Standard Industrial Classification and include some of the industries in which I and those of my hon. Friends who think like me are particularly interested.
    If I dare get this in before you, Mr. Jennings, rise to your feet—
    The Temporary Chairman: Order. The hon. and learned Gentleman is still being very skilful. In general terms and by innuendo he is making out a special case. He must confine himself to the general principle of the selective employment premium. So I am stopping him before he completes his sentence beginning "If I dare get this in".
    Mr. Williams: Very well, Mr. Jennings. I am flattered by your praise. It is the first time that I have been called skilful by the Chair.
    I will abandon completely the point that I was about to make, and substitute for it this one which, I think, is in order. I urge the Government to deserve the support of those who think as I do, and accept it, in the recognition that we have reservations, about which we cannot speak and be in order, but about which the Government must be well aware and to which they should have regard.
    Mr. Diamond: I am in difficulty the moment I rise because of a point of order. I am not addressing you on a point of order, Mr. Jennings, but that is the difficulty before me. My hon. and learned Friend the Member for Warrington (Mr. W. T. Williams) has addressed a suggestion to me which I understand full well. Indeed, you were good enough to say that you understood full well. I get the burden of my hon. and learned Friend's message. But, as you pointed out, in effect we are discussing that part of the Clause dealing exclusively with the premium. It would, therefore, be wrong for me to say, even with respect, that your Ruling is quite right, because, obviously, it does not need saying.
    My hon. and learned Friend was referring, as you indicated, to the second part of the Clause which is not affected by the Amendment. It is thus impossible for me to reply to that part of his speech. I merely make it clear to him that,
    716
    anxious though I would be in other circumstances, and on a different Amendment, or on the Question "That the Clause stand part of the Bill", to deal with what he has said, I must now come to the Amendment.
    What is at issue is the premium. Numerous hon. Members have drawn attention to anomalies that they say exist as between different categories and areas which are no part of the Amendment. Although I could easily answer them, I cannot. In considering the Amendment, the right hon. Member for Enfield, West (Mr. Iain Macleod) said that 66 Amendments had been chosen and he drew a conclusion in relation to the guillotine Motion. I will not waste time on the point except to say that 66 Amendments were chosen after the guillotine Motion was passed by the House and nobody knows what the Chairman would have selected had there been no Guillotine. Indeed, one wonders why a Chairman ever selects when there is a Guillotine.
    The Temporary Chairman: Order. I hope that no criticism of the Chairman's choice is being made.
    Mr. Diamond: I am incapable of making such a suggestion, Mr. Jennings. I was casting my mind back to the time when I had to make selections and I was putting myself in a kind of soliloquy in wondering what I would do in the Chair if there were a guillotine Motion, because, of course, it is for the House to decide its priorities when a guillotine Motion has been passed.
    My right hon. Friend the Chancellor of the Exchequer would have been here himself to deal with the Amendment were he not on his way to Bonn. The proposals in the Bill—including the premium —were, of course, fully taken into acount and were part of the economic background against which my right hon. Friend the Prime Minister's statement was made. There is no question, therefore, of suggesting that, because of the statement, we should not go on with this, or should do something else. These proposals are part of the economic background against which the statement was made and were fully taken into account.
    I want to explain why we propose a premium for manufacturing. Of course, the Government are not saying that

    717
    manufacturing is a virtue and distribution is a vice. The premium is merely a fiscal measure to encourage a faster rate of growth in manufacturing in order to adjust an existing imbalance. It is not an attempt by the Government to make a qualitative judgment or to assess the social values of one or another.
    We say that the existing state of affairs is wrong. It is one under which, by fiscal processes to which every Government have contributed, there has been an undue increase in the rate of labour joining the service industries and an inadequate increases, in the labour force joining manufacture. That results from a system of taxation under which the products of manufacture—it does not matter at which point of time they are taxed—are taxed heavily whereas the products of services are not taxed, or are not taxed nearly as heavily.
    A Whole host of services are totally unrelated to the products of manufacture. Such services as banking, hairdressing, cinemas and other entertainment, for example, have nothing whatever to do with manufacturing or with production in that sense. None of these services is taxed or taxed at the same weight as the products of manufacturing. We are seeking, therefore, primarily to adjust the existing imbalance and if we do not accept that there is an imbalance we do not proceed on the same argument. It is the imbalance that we are trying to adjust.
    An alternative suggestion, which, I understand, would be acceptable to a large number of hon. and right hon. Members opposite, would be a payroll tax levied equally on the wage bills of every employer. That would achieve nothing except an increase in costs and prices. It would be passed on immediately. It would have no differential effect, which is what we are trying to achieve. It would be the same as an all round increase in wages in its economic effect. We are trying to achieve a differential effect.
    7.15 p.m.
    Mr. John Tilney: Does the right hon. Gentleman then want a differential against merchant exporters?
    Mr. Diamond: The hon. Gentleman has asked a valid point and the answer is, "yes". He thought that the answer would be "no". But the answer must be that, if one is levying a tax on services, and one of those services is a merchant exporter who may be—to give the greatest weight to the hon. Gentleman's argument—devoting 100 per cent. of his time to exporting, the answer is still, "yes".
    Here, we are differentiating between manufacture and the services and the hon. Gentleman knows as well as I do that we cannot encourage only exporting activities by either services or manufacturing. What the right hon. Member for Enfield, West, said about this is right. We do not attempt to say that the premium should be exclusively directed to helping exports because no Government could bring forward such a tax having regard to our international obligations.
    Our main reason for introducing this system is to correct an imbalance—and we are still only going a small part of the way. When the Bill becomes law, the position will still be that the products of manufacture are taxed very much more heavily than are the services. We will still not have put the matter right by anything like the full amount that we ought to.
    We shall watch the effect of the tax. If it is effective, as we believe that it will be, we shall consider whether it may not be possible to go further in the same direction in due course. It would be astonishing if it did not have the kind of remedial effect that we are hoping for, having regard to the deterrent effect that existing tax levels have had on increases in manpower in manufacturing, which has held back production and is at the moment holding back export orders.
    Many hon. Members have referred to "labour hoarding". It is a pity that we have not agreed statistics about this. It is a vague concept about which it would be impossible to have precise statistics. The labour hoarder would not be likely to fill in a form saying, "Yes, I am a labour hoarder; I am hoarding three men and two women". We are not likely to get the facts that way.

    719
    I have been asked to consider what my right hon. Friend said in his Budget statement about hoarding. He said:
    " Despite some hoarding and waste of manpower it is still true that the growth of manufacturing output has been seriously impeded by labour shortages; and this has hampered the growth of productivity. If manpower can be saved in the service industries, whether through a slower rate of growth in demand for services or through greater economy of manpower, extra labour might well become available for manufacturing, giving it greater scope for growth. It would be helpful to have a tax system which recognised this."—[OFFICIAL REPORT, 3rd May, 1966; Vol. 727, c. 1454.]
    And he went on to demonstrate how a payroll tax would not achieve this and the logic of his argument was this kind of tax.
    I now come to hoarding more specifically. I do not know what hon. Members opposite have in mind when they talk about hoarding. We are all at one in wanting to avoid labour being used any less efficiently than is possible. But the hoarding which I think some hon. Members mean and which we have in mind and which my right hon. Friend had in mind to some extent is the kind of misuse of labour, its under-use, which can perhaps more accurately be described as overmanning.
    Overmanning stems, as we all know, from practices which are—I will not say common—but in which members of both sides of industry participate. We can all think of one or two industries where it is alleged that there is serious overmanning. That overmanning is the result of the pressures of restrictive practices on both sides of industry rather than any other policy directed to seasonal economic activity or anything of that kind. That overmanning will not be affected or reduced by this kind of tax. It needs a different approach and it is the Government's responsibility to supply that approach.
    But the other kind of overmanning, which is what has been meant by some hon. Members, when a manufacturer deliberately holds more men than he needs, will, it is said, be encouraged by the premium. It is said that the manufacturer will be even more lax or miserly in his retention of labour. I hope that I can say with courtesy that I just do not believe it.
    720
    The hon. Member for Wycombe (Mr. John Hall) asked how long it was since I was on the shop floor. I do not know how long it was since he was on the shop floor and I do not know whether I have spent more hours than he has on the shop floor. I will give my experience. Since being a Minister, of course, I have not been connected with the factories and many commercial interests with which up to that time I had been connected, but as a Minister I have spoken to manufacturers and I have been to many cities where chambers of commerce have been good enough to entertain me and we have exchanged views.
    I have not come across one manufacturer who has said, "I pay an average of £20 or £21 a week to each man, and if you will give me another 7s. 6d. a week, I shall be only too glad to hold on to more men than I need". I do not know of a single manufacturer who, paying £11 to each woman, has said that if he is given 3s. 9d. a week in respect of each women he employs he will hold on to them for longer than he needs them. Yet this is the argument which has been advanced by many hon. Members. They say that this plussage of 3s. 9d. for a woman with an average wage of about £11 will induce employers not only to hold on to excessive woman power, but increase it. I do not accept that argument.
    Mr. John Hall: The right hon. Gentleman is misrepresenting the arguments. No one suggests that because of an extra 7s. 6d. or 3s. 9d., a manufacturer will hold on to one additional person, but, with premiums on the total staff employed in the factory, he will be able to hold on to a percentage of employees whom he would otherwise get rid of rather more quickly because the cost will be covered by the premium.
    Mr. Diamond: My cost accounting experience is wider than the hon. Gentleman's. Cost accounting would show up that sort of thing in a fortnight. We are talking about proportions and there is no firm which could say that it would employ another dozen men, which at £20 a week would amount to £240, just because of the premium—because of the 7s. 6d. against that.
    The whole discussion is on the proportion. All manufacturers' costs are made up of proportions and in cost

    721
    accounting every item in production costs is reduced to a proportion. A manufacturer would see immediately what the proportion of cost was and I have the greatest difficulty in believing that any manufacturer would be induced by the premium to hoard labour in any sense which would be affected by these provisions.
    Mr. A. P. Costain: Is not the right hon. Gentleman forgetting the 49/50 balance and its effect on people eligible for premiums? The employer could keep on half-a-dozen men in order to qualify the whole of the staff for the premium.
    Mr. Diamond: That intervention shows why it is just as well to allow whoever is replying to a debate to do so, for I was just coming to that issue, which was raised by the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). The hon. and learned Gentleman said that the main case against the premium would be not in its overall effect but in its marginal effect and that, where there was a 49/51 case, there could be an inducement to an employer so to adjust as to get the benefit of the percentage. I understand the argument, which is valid. Because it is, the Government considered the figures very carefully before making these proposals.
    I do not want to bother the hon. and learned Gentleman with all figures, but I will give some examples to demonstrate that although the 49/51 per cent. consideration may exist in an individual case—and, of course, I could not say that it did not exist in any individual case—it is unlikely to exist in more than a handful of examples and that overall the figures are such as completely to eliminate this argument from our worries.
    In any of the 14 categories there is a vast difference between the proportion qualifying and the proportion not qualifying. In food, drink and tobacco, 494,000 qualify and 214,000, less than one-third of the total, do not qualify; in chemicals, 276,000 qualify and 184,000 do not; in metal manufacture, 461,000 qualify and 141,000 do not.
    I will send the hon. and learned Gentleman all of these figures with the greatest pleasure, but he will see that there is not one category in all 14 industrial groups in which the numbers qualifying are not
    722
    substantially in excess of those not qualifying. Therefore, overall there is no such problem, although, as I admit, there may be individual cases.
    Mr. Fletcher-Cooke: Those were global figures, which I accept, but it is the individual site figures which matter. Until the right hon. Gentleman can satisfy me on the individual sites, my withers will be quite unwrung by the global figures.
    Mr. Diamond: The hon. and learned Gentleman approaches all these arguments with objectivity and intelligence and he cannot say that his withers are unwrung, for he is just as much impressed by the argument as I am. The deduction to be drawn from the figures is that the likelihood is that there will be vast numbers of firms within each Order which will present no problem at all. He is saying that there may be some which present a problem. There has been one. We have invited correspondence and complaints, but we have come across only one.
    7.30 p.m.
    This is not conclusive evidence, but it is an indication, in that one would have thought that if there were many people falling into this category there would have been complaints and letters. As every hon. Member knows there has been an enormous number of letters, but only one complaining about this. If the anomaly which the hon. and learned Gentleman the Member for Darwen (Mr. Fletcher-Cooke) has in mind is the anomaly relating to the establishment, which comes later, then we would be only too glad to deal with it later. There are ample methods in the Bill, and Amendments proposed to be inserted, if the Committee agrees, which will get rid of this kind of anomaly.
    I have given the reason why we thought it right to have a differential tax in terms of the premium, and I have indicated why we think that it will assist, to some extent, the existing imbalance, and why it will have a great effect, we hope, on our manufacturing industry, which is a source of increasing productivity and exports. As the Committee knows, 85 per cent. of our exports are manufactured goods or, putting it the other way round, 25 per cent. of what we manufacture is exported, but it is only 25 per cent. because a large percentage of what is manufactured is also import substitutes. An import substitute

    723
    serves just as valuable a purpose as it does as an export. I have indicated why we think it is valuable, and I have tried to demonstrate that we shall keep the whole of the Bill under review.
    No one would claim, before a new tax is implemented, that one knows what its final effects are to be. What is certainly the case is that all indications are that this kind of righting of the imbalance is overdue and will serve a useful purpose, and that the anomalies have nothing to do with the premium, but with the classification, which is a different issue. I hope that the Committee will not feel it necessary to press this matter to a Division.
    Mrs. Margaret Thatcher: Although this is an important Amendment, I will not detain the Committee long because my right hon. and hon. Friends are anxious to get on with succeeding Amendments.
    The Chief Secretary had a bad case and he made the worst of it. Let us look at what this method of paying the premiums does. I note that the Chief Secretary said that his proposals are part of the economic background against which the Prime Minister made his statement this afternoon. Let us examine that. The result of paying premiums in the way the Bill proposes is to keep the inefficient person in business.
    The premiums are given regardless of efficiency and that means that the efficient manufacturers neither need them nor want them. They do not want help from the Government, they want an absence of hindrance. Their own ability will enable them to go ahead. The policy of the Chief Secretary and the Government ought to be to encourage the efficient because they will grow and produce goods at the lowest prices and export them. The Government should discourage the inefficient. If this is done, the inefficient firms will yield up their labour to the growing industries, but if one does what the Chief Secretary is suggesting one will have competition for labour between the efficient and the inefficient which will result in bringing up the price of labour.
    One will be creating the very situation which the Prime Minister's statement was meant to reduce. In one day we have
    724
    had the Chief Secretary creating a basically inflationary position over wages, while earlier the Prime Minister had to come to the House with a very severe statement with the object of reducing inflation. It is crazy to have, in the same day, policies going in diametrically opposite directions. If the Chief Secretary pays premiums in the way in which it is proposed in the Bill he knows that in the beginning of January and February he will be pumping back premiums in to the economy when there is a wages and prices standstill. Again, there are diametrically opposed policies, one to reduce inflation and the other to create it, by injecting extra money when there is a control operating to stop inflation. This is absolutely stupid.
    I have an administrative point to raise. The Chief Secretary said that classification is a different problem, but the whole of his premiums are based on classification. What he is really doing is using machinery for a purpose for which it was never designed. It is as absurd to use the Standard Industrial Classification for the purpose of the selective employment payments as it would be to use a clothes washing machine for washing up crockery. It is every bit as absurd, and the Chief Secretary knows it.
    Mr. Diamond Mr. Diamond rose—
    Mrs. Thatcher: The right hon. Gentleman is not so good on clothes washing and dish washing machines as I am, so he had better sit down. But I will give way to him if he wants me to.
    Mr. Diamond: I am terrified. I was only about to make a simple point that this Amendment does not deal with the classification.
    Mrs. Thatcher: It deals with one of the consequences which flow from the classification. The Amendment will reduce the number of groups from three to two. Instead of getting the penalty plus the rebate plus the premiums there would only be the penalty plus the rebate. This would considerably reduce administrative costs. It has already been pointed out that the administrative costs of the Bill as shown in the Memorandum are nearly £1½ million—which need not be spent.
    I have one final point. What in the world are the Government doing handing

    725
    out £133 million which no one wants? If they have it to spare I will have it and place it much better than the Chief Secretary could. It is absurd to have a statement to take money out of the economy and yet to be pumping in £133 million, which we do not want. I hope that hon. Members opposite who have spoken
    against the premium in its present form will show their disgust by voting with us in the Lobby.
    Question put, That the words proposed to be left out stand part of the Clause:—
    The Committee divided: Ayes 295, Noes 234.

    Paget, R. T.

    Rowland, E. (Cardiff, N.)

    Varley, Eric G.

    Palmer, Arthur

    Ryan, John

    Wainwright, Edwin (Dearne Valley)

    Pannell, Rt. Hn. Charles

    Shaw, Arnold (Ilford, S.)

    Walden, Brian (All Saints)

    Park, Trevor

    Sheldon, Robert

    Walker, Harold (Doncaster)

    Parkyn, Brian (Bedford)

    Shinwell, Rt. Hn. E.

    Wallace, George

    Pearson, Arthur (Pontypridd)

    Shore, Peter (Stepney)

    Watkins, David (Consett)

    Peart, Rt. Hn. Fred

    Short,Rt.Hn.Edward(N'c'tle-u-Tyne)

    Weitzman, David

    Pentland, Norman

    Short, Mrs. Renie(W'hampton,N.E.)

    Wellbeloved, James

    Perry, Ernest C. (Battersea, S.)

    Silkin, John (Deptford)

    Wells, William (Walsall, N.)

    Perry, George H. (Nottingham, S.)

    Silkin, S. C. (Dulwich)

    Whitaker, Ben

    Prentice, Rt. Hn. R, E.

    Silverman, Julius (Aston)

    White, Mrs. Eirene

    Price, Christopher (Perry Barr)

    Silverman, Sydney (Nelson)

    Willey, Rt. Hn. Frederick

    Price, Thomas (Westhoughton)

    Slater, Joseph

    Williams, Alan (Swansea, W.)

    Price, William (Rugby)

    Small, William

    Williams, Alan Lee (Hornehurch)

    Probert, Arthur

    Spriggs, Leslie

    Williams, Clifford (Abertillery)

    Pursey, Cmdr. Harry

    Steele, Thomas(Dunbartonshire, W.)

    Williams, Mrs. Shirley (Hitchin)

    Rankin, John

    Stewart, Rt. Hn. Michael

    Williams, W. T. (Warrington)

    Redhead, Edward

    Stonehouse, John

    Willis, George (Edinburgh, E.)

    Rhodes, Geoffrey

    Strauss, Rt. Hn. G. R.

    Wilson, William (Coventry, S.)

    Richard, Ivor

    Summerskill, Hn. Dr. Shirley

    Winnick, David

    Roberts, Coronwy (Caernarvon)

    Swain, Thomas

    Winterbottom, R. E.

    Roberts, Gwilym (Bedfordshire, S.)

    Swingler, Stephen

    Woof, Robert

    Robertson, John (Paisley)

    Symonds, J. B.

    Wyatt, Woodrow

    Robinson,Rt.Hn.Kenneth(St.P'c'as)

    Thomas, Iorwerth (Rhondda, W.)

    Yates, Victor

    Robinson, W. 0. J. (Walth'stow, E.)

    Thomson, Rt. Hn. George

    Zilliacus, K.

    Roebuck, Roy

    Thornton, Ernest

    TELLERS FOR THE AYES:

    Rogers, George

    Thin, James

    Mr. William Whitlock and

    Rose, Paul

    Tomney, Frank

    Mr. loan L. Evans.

    Ross, Rt. Hn. William

    Tuck, Raphael

    Rowland, Christopher (Meriden)

    Urwin, T. W.

    Division No. 136.]

    AYES

    [7.38 p.m.

    Abse, Leo

    Dunn, James A.

    Jones, Dan (Burnley)

    Albu, Austen

    Dunnett, Jack

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Allaun, Frank (Salford, E.)

    Dunwoody, Mrs. Gwyneth (Exeter)

    Jones, J. Idwal (Wrexham)

    Alldritt, Walter

    Dunwoody, Dr. John (F'th & C'b'e)

    Judd, Frank

    Allen, Scholefield

    Eadie, Alex

    Kelley, Richard

    Anderson, Donald

    Edelman, Maurice

    Kenyon, Clifford

    Archer, Peter

    Edwards, Robert (Bilston)

    Kerr, Mrs. Anne (R'ter & Chatham)

    Armstrong, Ernest

    Edwards, William (Merioneth)

    Kerr, Russell (Feltham)

    Ashley, Jack

    Ellis, John

    Lawson, George

    Atkins, Ronald (Preston, N.)

    English, Michael

    Leadbitter, Ted

    Atkinson, Norman (Tottenham)

    Ensor, David

    Ledger, Ron

    Bacon, Rt. Hn, Alice

    Evans, loan L. (Birm'h'm, Yardley)

    Lee, Rt. Hon. Frederick (Newton)

    Barnes, Michael

    Finch, Harold

    Lee, Rt. Hn. Jennie (Cannock)

    Barnett, Joel

    Fitch, Alan (Wigan)

    Lee, John (Reading)

    Beaney, Alan

    Fletcher, Raymond (Ilkeston)

    Lestor, Miss Joan

    Bellenger, Rt. Hn. F. J.

    Fletcher, Ted (Darlington)

    Lever, Harold (Cheetham)

    Bence, Cyril

    Floud, Bernard

    Lever, L. M. (Ardwick)

    Benn, Rt. Hn. Anthony Wedgwood

    Foley, Maurice

    Lewis, Ron (Carlisle)

    Bennett, James (G'gow, Bridgeton)

    Foot, Sir Dingle (Ipswich)

    Lomas, Kenneth

    Bidwell, Sydney

    Foot, Michael (Ebbw Vale)

    Loughlin, Charles

    Bishop, E. S.

    Ford, Ben

    Luard, Evan

    Blackburn, F.

    Forrester, John

    Lyon, Alexander W. (York)

    Blenkinsop, Arthur

    Fowler, Gerry

    Lyons, Edward (Bradford, E.)

    Boardman, H.

    Fraser, Rt. Hn. Tom (Hamilton)

    Mabon, Dr. J. Dickson

    Booth, Albert

    Freeson, Reginald

    McBride, Neil

    Boston, Terence

    Gardner, A. J.

    McCann, John

    Bowden, Bt. Hn. Herbert

    Garrow, Alex

    MacColl, James

    Boyden, James

    Ginsburg, David

    MacDermot, Niall

    Braddock, Mrs. E. M.

    Gordon Walker, Rt. Hn. P. C.

    Macdonald, A. H.

    Bradley, Tom

    Gourlay, Harry

    McGuire, Michael

    Bray, Dr. Jeremy

    Gray, Dr. Hugh (Yarmouth)

    McKay, Mrs. Margaret

    Brooks, Edwin

    Greenwood, Rt. Hn. Anthony

    Mackenzie, Gregor (Rutherglen)

    Broughton, Dr. A. D. D.

    Gregory, Arnold

    Mackie, John

    Brown, Hugh D. (G'gow, Provan)

    Grey, Charles (Durham)

    Mackintosh, John P.

    Brown, Bob(N'c'tle-upon-Tyne, W.)

    Griffiths, David (Bother Valley)

    Maclennan, Robert

    Brown, R. W. (Shoreditch & F'bury)

    Griffiths, Rt. Hn. James (Llanelly)

    McMillan, Tom (Glasgow, C.)

    Buchan, Norman

    Griffiths, Will (Exchange)

    McNamara, J. Kevin

    Buchanan, Richard (G'gow, Sp'burn)

    Hamilton, James (Bothwell)

    MacPherson, Malcolm

    Butler, Herbert (Hackney, C.)

    Hamilton, William (Fife, W.)

    Mahon, Peter (Preston, S.)

    Butler, Mrs. Joyce (Wood Green)

    Hamling, William

    Mallalieu, E. L. (Brigg)

    Cant, R. B.

    Hannan, William

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

    Carmichael, Neil

    Harper, Joseph

    Manuel, Archie

    Carter-Jones, Lewis

    Harrison, Walter (Wakefield)

    Marquand, David

    Castle, Rt. Hn. Barbara

    Hart, Mrs. Judith

    Marsh, Rt. Hn. Richard

    Chapman, Donald

    Hazell, Bert

    Mason, Roy

    Coe, Denis

    Healey, Rt. Hn. Denis

    Maxwell, Robert

    Coleman, Donald

    Heffer, Eric S.

    Mendelson, J. J.

    Concannon, J. D.

    Herbison, Rt. Hn. Margaret

    Milian, Bruce

    Corbet, Mrs. Freda

    Hilton, W. S.

    Miller, Dr. M. S.

    Craddock, George (Bradford, S.)

    Hobden, Dennis (Brighton, K'town)

    Mitchell, R. C. (S'th'pton, Test)

    Crawshaw, Richard

    Hooley, Frank

    Molloy, William

    Cronin, John

    Horner, John

    Morgan, Elystan (Cardiganshire)

    Crosland, Rt. Hn. Anthony

    Houghton, Rt. Hn. Douglas

    Morris, Alfred (Wythenshawe)

    Cullen, Mrs. Alice

    Howarth, Harry (Wellingborough)

    Morris, Charles R. (Openshaw)

    Darling, Rt. Hn. George

    Howarth, Robert (Bolton, E.)

    Morris, John (Aberavon)

    Davidson, Arthur (Accrington)

    Howie, W.

    Moyle, Roland

    Davies, Dr. Ernest (Stretford)

    Hoy, James

    Mulley, Rt. Hn. Frederick

    Davies, G. Elfed (Rhondda, E.)

    Hughes, Rt. Hn. Cledwyn (Anglesey)

    Murray, Albert

    Davies, Ednyfed Hudson (Conway)

    Hughes, Emrys (Ayrshire, S.)

    Neal, Harold

    Davies Harold (Leek)

    Hughes, Hector (Aberdeen, N.)

    Newens, Stan

    Davies, Robert (Cambridge)

    Hunter, Adam

    Norwood, Christopher

    de Freitas, Sir Geoffrey

    Hynd, John

    Oakes, Gordon

    Dell, Edmund

    Jackson, Peter M. (High Peak)

    Ogden, Eric

    Dempsey, James

    Jay, Rt. Hn. Douglas

    O'Malley, Brian

    Dewar, Donald

    Jeger, George (Goole)

    Orbach, Maurice

    Diamond, Rt. Hn. John

    Jeger,Mrs.Lena(H'b'n—St.P'cras,S.)

    Oswald, Thomas

    Dickens, James

    Jenkins, Hugh (Putney)

    Owen, Dr. David (Plymouth, S'tn)

    Dobson, Ray

    Jenkins, Rt. Hn. Roy (Stechford)

    Owen, Will (Morpeth)

    Donnelly, Desmond

    Johnson, Carol (Lewisham, S.)

    Padley, Walter

    Driberg, Tom

    Johnson, James (K'ston-on-Hull, W.)

    Page, Derek (King's Lynn)

    NOES

    Alison, Michael (Barkston Ash)

    Dean, Paul (Somerset, N.)

    Hirst, Geoffrey

    Allason James (Hemel Hempstead)

    Deedes, Rt. Hn. W. F. (Ashford)

    Hobson, Rt. Hn. Sir John

    Astor, John

    Digby, Simon Wingfield

    Hogg, Rt. Hn. Quintin

    Atkins, Humphrey (M't'n & M'd'n)

    Dodds-Parker, Douglas

    Holland, Philip

    Awdry, Daniel

    Doughty, Charles

    Hooson, Emlyn

    Baker, W. H. K.

    Douglas-Home, Rt. Hn. Sir Alec

    Hordern, Peter

    Balniel, Lord

    Drayson, G. B.

    Hornby, Richard

    Batsford, Brian

    du Cann, Rt. Hn. Edward

    Howell, David (Guildford)

    Beamish, Col. Sir Tufton

    Eden, Sir John

    Hunt, John

    Bell, Ronald

    Elliot, Capt. Walter (Carahalton)

    Hutchison, Michael Clark

    Bennett, Sir Frederic (Torquay)

    Errington, Sir Eric

    Iremonger, T. L.

    Berry, Hn. Anthony

    Eyre, Reginald

    Irvine, Bryant Godman (Rye)

    Bessell, Peter

    Farr, John

    Jenkin, Patrick (Woodford)

    Biffen, John

    Fisher, Nigel

    Johnston, Russell (Inverness)

    Birch, Rt. Hn. Nigel

    Fletcher-Cooke, Charles

    Jones, Arthur (Northants, S.)

    Body, Richard

    Forrest, George

    Jopling, Michael

    Boyd-Carpenter, Rt. Hn. John

    Fortescue, Tim

    Joseph, Rt. Hn. Sir Keith

    Boyle, Rt. Hn. Sir Edward

    Foster, Sir John

    Kaberry, Sir Donald

    Braine, Bernard

    Galbraith, Hn. T. G.

    Kerby, Capt. Henry

    Brinton, Sir Tatton

    Gibson-Watt, David

    Kershaw, Anthony

    Bromley-Davenport,Lt. Col. Sir Walter

    Giles, Rear-Adm. Morgan

    Kimball, Marcus

    Brown, Sir Edward (Bath)

    Gilmour, Ian (Norfolk, C.)

    King, Evelyn (Dorset, S.)

    Bruce-Gardyne, J.

    Gilmour, Sir John (Fife, E.)

    Kitson, Timothy

    Bryan, Paul

    Glover, Sir Douglas

    Knight, Mrs. Jill

    Buchanan-Smith,Alick(Angus,N—M)

    Glyn, Sir Richard

    Lambton, Viscount

    Buck, Antony (Colchester)

    Godber, Rt. Hn.J. B.

    Langford-Holt, Sir John

    Bullus, Sir Eric

    Goodhart, Philip

    Legge-Bourke, Sir Harry

    Burden, F. A.

    Goodhew, Victor

    Lewis, Kenneth (Rutland)

    Campbell, Gordon

    Gower, Raymond

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

    Carlisle, Mark

    Grant, Anthony

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Carr, Rt. Hn. Robert

    Grant-Ferris, R.

    Longden, Gilbert

    Cary, Sir Robert

    Gresham Cooke, R.

    Loveys, W. H.

    Channon, H. P. G.

    Griffiths, Eldon (Bury St. Edmunds)

    Lubbock, Eric

    Chichester-Clark, R.

    Grimond, Rt. Hn. J.

    McAdden, Sir Stephen

    Clark, Henry

    Gurden, Harold

    MacArthur, Ian

    Clegg, Walter

    Hall, John (Wycombe)

    Mackenzie,Alasdair(Ross—Cromity)

    Cooke, Robert

    Hall-Davis, A. G. F.

    Maclean, Sir Fitzroy

    Cooper-Key, Sir Neill

    Hamilton, Michael (Salisbury)

    Macleod, Rt. Hn. lain

    Cordle, John

    Harris, Frederic (Croydon, N.W.)

    McMaster, Stanley

    Corfield, F. V.

    Harris, Reader (Heston)

    Macmillan, Maurice (Farnham)

    Costain, A. P.

    Harrison Brian (Maldon)

    Maddan, Martin

    Craddock, Sir Beresford (Spelthorne)

    Harrison, Col. Sir Harwood (Eye)

    Maginnis, John E.

    Crouch, David

    Harvey, Sir Arthur Vere

    Marples, Rt. Hn. Ernest

    Crowder, F. P.

    Harvie Anderson, Miss

    Marten, Neil

    Cunningham, Sir Knox

    Hastings, Stephen

    Mathew, Robert

    Currie, G. B. H.

    Heald, Rt. Hn. Sir Lionel

    Maude, Angus

    Dalkeith, Earl of

    Heseltine, Michael

    Mawby, Ray

    Dance, James

    Higgins, Terence L.

    Maxwell-Hyslop, R. J.

    Davidson,James(Aberdeenshire,W.)

    Hiley, Joseph

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

    d'Avigdor-Goldsmid, Sir Henry

    Hill, J. E. B.

    Mills, Peter (Torrington)

    Mills, Stratton (Belfast, N.)

    Miscampbell, Norman

    Price, David (Eastleigh)

    Teeling, Sir William

    Mitchell, David (Basingstoke)

    Prior, J. M. L.

    Temple, John M.

    Monro, Hector

    Pym, Francis

    Thatcher, Mrs. Margaret

    More, Jasper

    Quennell, Miss J. M.

    Tilney, John

    Morgan, W. G. (Denbigh)

    Rees.Davies, W. R.

    van Straubenzee, W. R.

    Morrison, Charles (Devizes)

    Renton, Rt. Hn. Sir David

    Vickers, Dame Joan

    Mott-Radclyffe, Sir Charles

    Ridley, Hn. Nicholas

    Wainwright, Richard (Colne Valley)

    Munro-Lucas-Tooth, Sir Hugh

    Ridsdale, Julian

    Walker, Peter (Worcester)

    Murton, Oscar

    Rippon, Rt. Hn. Geoffrey

    Walker-Smith, Rt. Hn. Sir Derek

    Nabarro, Sir Gerald

    Robson Brown, Sir William

    Wall, Patrick

    Neave, Airey

    Rossi, Hugh (Hornsey)

    Walters, Dennis

    Noble, Rt. Hn. Michael

    Royle, Anthony

    Ward, Dame Irene

    Nott, John

    Russell, Sir Ronald

    Weatherill, Bernard

    Onslow, Cranley

    St. John-Stevas, Norman

    Webster, David

    Orr, Capt. L. P. S.

    Sandys, Rt. Hn. D.

    Wells, John (Maidstone)

    Orr-Ewing, Sir Ian

    Scott, Nicholas

    Whitelaw, William

    Osborn, John (Hallam)

    Sharpies, Richard

    Wills, Sir Gerald (Bridgwater)

    Osborne, sir Cyril (Louth)

    Shaw, Michael (sc'b'gh & Whitby)

    Wilson, Geoffrey (Truro)

    Page, Graham (Crosby)

    Sinclair, Sir George

    Winstanley, Dr. M. P.

    Page, John (Harrow, W.)

    Smith, John

    Wolrige-Gordon, Patrick

    Pardoe, John

    Stainton, Keith

    Wood, Rt. Hn. Richard

    Pearson, Sir Frank (Clitheroe)

    Steel, David (Roxburgh)

    Woodnutt, Mark

    Peel, John

    Stodart, Anthony

    Worsley, Marcus

    Percival, Ian

    Stoddart, Scott, Col. Sir M. (Ripon)

    Wylie, N. R

    Peyton, John

    Summers, Sir Spencer

    Younger, Hn. George

    Pike, Miss Mervyn

    Talbot, John E.

    TELLERS FOR THE NOES:

    Pink, R. Banner

    Taylor, Sir Charles (Eastbourne)

    Mr. R. W. Elliott and

    Pounder, Rafton

    Taylor, Edward M. (G'gow, Cathcart)

    Mr. Peter Blaker.

    Powell, Rt. Hn. J. Enoch

    Taylor, Frank (Moss Side)

    Mr. Geoffrey Wilson: I beg to move Amendment No. 221, in page 1, line 28, after "in" to insert:
    "Order II, Heading 103, so far as that relates to the extraction and processing of china clay and ball clay".
    The Chairman: It will be convenient to discuss at the same time Amendment No. 310, in page 1, line 28, after "in" insert:
    "Order II, heading 102, so far as that relates to slate quarrying and mining".
    Amendment No. 311, in page 1, line 28, after "in" insert:
    "Order II, Heading 102, so far as that relates to slate quarrying and mining in Wales".
    Amendment No. 333, in page 1, line 28, after "in" insert:
    "Order II, Heading 102 relating to stone and slate quarrying and mining and Heading 109 so far as that relates to other metalliferous mining and quarrying".
    Amendment No. 271, in page 1, line 28, leave out "III" and insert "I".
    Amendment No. 273, in page 1, line 29, at end insert:
    (ii) extracting coal from opencast workings.
    And Amendment No. 175, in Clause 2, page 3, line 18, at end add:
    (iii) by way of the carrying out of any civil engineering work in connection with opencast coalmining.
    Mr.Wilson: The purpose of this Amendment is to give to the industries concerned with the extraction and processing of china clay and ball clay the benefit of the selective employment
    730
    premium. It is the reverse of the Amendment we have just debated. If we are to have premiums, they should be selective and must be based on a principle and not on chance as to whether or not they happen to be included in the Standard Industrial Classification.
    Cmnd. Paper 2986 defined the objectives of the tax as, first, to redress the Tax balance between manufacturing and service industries and, secondly, to make labour more available in the manufacturing industries. Paragraph 15 of the White Paper indicated that modification of the classification might be necessary. This is further recognised in the Bill. The Standard Industrial Classification lumps china clay and ball clay together with mining and quarrying under Order II, Heading 103, with the result that if the White Paper were followed these industries would pay the tax without getting a refund. Under Clause 2(3,a) of the Bill, they would qualify for a refund.
    That is an improvement, but it is not enough. It is absurd to accept production of Portland cement as manufacturing, as it would be accepted under the industrial classifications, but to exclude china clay and ball clay, which are much more elaborately processed before the material is passed on from the works to the selling point. It is even more absurd to lump china clay and ball clay with gravel extraction, which is a comparatively simple process.

    731
    Perhaps there is something misleading about the word "clay". Except that both ball clay and china are, in simple terms, decayed rock, both are found in the West Country and both in varying degrees are used in the ceramics industry, china and ball clay have little in common in origin, methods of extraction or the uses to which they are put.
    Ball clay is rock which is decayed by wind and weather aeons of time ago and carried to its present site by the action of water. China clay is rock—granite really—which is decayed by volcanic processes at an even earlier period and found beneath the surface at the site where it is located and has nothing to do with water. Ball clay is processed dry or in a plastic state on the site where it is found by pneumatic spaders, which remove it from the stope by means of shafts or tunnels. After shredding, milling and refining by air classification or chemical treatment, it is pelletised, fluid-bed dried and bagged. In addition to the ceramic market, it is used in a number of other industries, including rubber, fertilisers, paint, plastics, vitreous enamel and the foundry market.
    Some 590,000 tons of ball clay is produced in the course of a year and 54 per cent. is exported. It is largely a Devon product. If my hon. Friend the Member for Totnes (Mr. Mawby) is fortunate enough to catch your eye, Sir Eric, he will probably be able to say a great deal more about the reasons why the ball clay industry should be regarded as manufacturing and not extractive. It is a Devon product largely produced in my hon. Friend's area.
    I wish to concentrate on china clay, which is largely a Cornish product and most of which is produced in my constituency. For the last 16 years I have been familiar with this rather fascinating industry. There are a large pit and several smaller ones on Dartmoor, there is a large pit on Bodmin Moor and there are a number of smaller ones elsewhere. The greater number of the clay pits, however, are in my constituency on the high ground behind St. Austell, where there are over 20 of them.
    The words "clay pits" are themselves misleading because they tend to conjure up a picture of a hole in the ground
    732
    with a man with a spade shovelling clay into a barrow. Nothing could be less like the truth. The St. Austell clay pits are 200 ft. or more deep and thousands of yards in diameter. At the bottom of the pit there are powerful monitors playing high-pressure jets of water on the sides of the pit and reducing the clay matrix to a slurry, which gravitates to the bottom of the pit, where it is pumped into an extractor plant which separates the clay from the vast quantities of quartz sand which, by mean of trucks on rope lines or a conveyor belt, is put into those large mounds or burrows which can be seen from all over Cornwall, and which the Press like to describe as the Mountains of the Moon. These burrows are in themselves a valuable product of sand which is not sufficiently used in building or in concrete-making.
    After that, the china clay is taken from the bottom of the pit and the slurry is pumped to the surface and streamed. It is exhaustively tested for chemicals and for its physical properties. It is passed through miles of pipeline to all sorts of other processes according to the specifications of the industries which require this product. There are filter presses, rotary dryers and processes for bleaching the clay to the required whiteness, and the degree of moisture which is required by the consumer is carefully tested. Usually it is reduced to about 10 per cent. but it can be taken down to as little as 1 per cent. This involves all sorts of machinery—turbo-driers, drum driers, spray driers, flash driers, cutters, mixers, mills and pelletisers.
    Only 25 per cent. of the industrial capital investment is spent on mining equipment in the clay pit and 75 per cent. is required for tanks and electric and mechanical processing plant, including highly sophisticated electronic control and measuring devices. Clearly, this is not a service industry. In fact, the Board of Trade has always dealt with it through the Industries and Manufacturing Department. It is curious that it is put in its present classification.
    In addition to supplying the ceramics industry, with which its name suggests that it would be connected, the biggest consumer of the china clay industry is the paper industry, both here and overseas. A great number of other industries are also interested in the china clay as a

    733
    product. They are some 81 in number and include, in addition to ceramics and paper, refractories, rubber, plastics, paint, leather, textiles, linoleum, inks, crayons, pencils, dyes, pharmaceuticals, cosmetics, cleaners, polishes, soaps, cement, insecticides and fertilisers. I have been told that china clay is even put in ice cream, because it is a perfectly safe and useful product to eat.
    Of the industry's annual total output of 2,300,000 tons, 70 per cent. is exported, much of it as dollar exports. The principal firm—English Clays Lovering Pochin & Company Ltd.—this year received the Queen's Award for Exports. Only this month, on 14th July, Her Majesty, in visiting Cornwall, visited the company's rotary drier at Trevisco, which is in a very big building, bigger than most factories.
    Cornwall tends to be an area of high unemployment. It is an area which is dependent largely on agriculture, tourism and the service industries, all of which come off badly under the Bill. Here we have as industry—an export industry—which is competing overseas, often in the dollar market, in a product the price of which is low and which depends to a large extent on transport charges, which in the case of the long distances that the product travels may be substantial. Therefore, any slight variation in its price makes a great difference to its export prospects.
    Surely this is an industry in which a reduction of its overhead expenses would be likely to lead to an expansion. It is clear that it would be in the national interest to transfer this industry from its present classification and include it as manufacturing. It is absurd that it is not so treated when the cement industry, the processes of which are rather similar but less elaborate, does so qualify. I submit that these two industries should he treated as manufacturing industries and should be entitled to the premium.
    8.0 p.m.
    Mr. Gower: I support my hon. Friend the Member for Truro (Mr. Geoffrey Wilson) in moving his Amendment, and at the same time I would commend the Amendments which, Sir Eric, you have ruled may be taken with this Amendment. They include two in my name; one deals with slate quarrying and mining
    734
    in general, and one deals with it in Wales.
    It is noteworthy that all these industries —because I describe these as industries —affected by these Amendments are in parts of the United Kingdom where they are of some considerable importance: all of them. Also, they are in parts of the United Kingdom where there are few of the manufacturing industries as so classified under this rather arbitrary classification which has been adopted by the Government. Therefore, these industries are of peculiar importance to those areas. For that reason I submit to the Government that these should be considered with particular sympathy, apart from the general merits of the case which we can adduce.
    There is an extra reason for sympathetic consideration for one of the Amendments comprised in this group, and that is the one which affects the tin industry, and that extra reason is that it is a most valuable saver of foreign currency. But for this industry we should have to spend more on imports; I have been told that some £2 million per annum would have to be spent on tin imports if it were not for the home produced tin.
    As I said, one of my Amendments is on behalf of Wales. I am surprised that hon. Gentlemen who represent constituencies in North Wales are not here this evening, because slate quarrying is of particular importance to North Wales. Indeed, the argument for the slate industry applies to any considerable degree only in North Wales and in Cornwall. The Minister who is to reply, and, indeed, the Minister of Labour himself, and, of course, the Secretary of State for Wales, must be very well acquainted with the problems. The Secretary of State for Wales is not present. However, those Ministers must be well acquainted with the problems of the slate industry. It is an industry which has been facing great difficulty, and there has, I must admit, been a contraction in the industry during many years. It has been due to the growth of the rival tile industry. It is ironical that the slate industry, which has been making great efforts and has had encouragement from successive Governments to improve its position, is now prejudiced by the proposals in this Bill and particularly the arrangements

    735
    for the payment of premium in some cases to the exclusion of this industry.
    What is even more bitter to those who preside over the destinies of the slate quarries is the fact that the rival industry, the manufactured tile industry, will enjoy the premium. This seems a particularly bitter blow, that the manufactured tile industry, which is in direct rivalry with the slate industry, will have this—well, unexpected benefit, for which there is no particular merit or reason. That is why we feel that the slate quarrying industry is being unfairly prejudiced in its difficult battle against the rival industry.
    Therefore, I support strongly the references made by my hon. Friend, and I do hope that the Minister will consider particularly the problems of the slate industry, which is of such great importance, and particularly in an area of North Wales where there is very little productive industry.
    Mr. Ray Mawby: It will be within the recollection of the Committee that when the proposals for the Selective Employment Tax were made these industries, the extractive industries, including china clay and ball clay, were considered to be service industries and so should not have the rebate, let alone the premium. We are grateful for the fact that on second thoughts a change has been made, that there has been a change of attitude on the part of the Government, so that they have now put the extractive industries half way; in other words, they have put them into the position where they will receive back the same amount which they pay. We are asking—for very good reasons, I believe—that the Government should go this little bit further and put them into the premium class. We do this for a number of reasons.
    Ball clay is mined in large amounts in my constituency and in other constituencies in Devon. Of course, when people think of the mining of ball clay most think of a hole in the ground where a man toils away and digs out clay and puts it on lorries and sends it away to be made into pottery. That may have been so many years ago, but at this time the ball clay industry is a very sophisticated industry indeed, and the amount of manufacturing process which is involved
    736
    in dealing with ball clay is very considerable. When one considers that the export of ball clay is 54 per cent. of the total produced one realises that this is one of the very few minerals which we are able to export from this country at a profit.
    Obviously, however, if ball clay is to be exported it must be of a high standard and must have a considerable amount of treatment. Therefore, there is a considerable manufacturing process, which includes the shredding of the ball clay after mining; there is milling, and refining; there is chemical treatment; there are drying and bagging so that it can be easily handled so that it can be sent overseas and so earn us valuable currency abroad.
    This is terribly important, and where all these manufacturing processes are involved it does seem rather ludicrous to say that a manufacturer in Stoke-on-Trent who produces a chamber pot shall get the premium but that the manufacturing process at the other end of the line and involved in producing the basic material shall be treated as a service industry.
    There is one other point, which the right hon. Gentleman may consider irrelevant, but which, nevertheless, I believe ought to be taken into account, and that is that it has been worked out by two geographers from London University that taking the impact of the Selective Employment Tax as at present it stands it will have a greater effect-10 per cent. more—per head of population in the West Country than it will have on the average in the rest of the country.
    Therefore, I believe that if the right hon. Gentleman accepted our arguments he would be killing two birds with one stone. It was pointed out earlier today that it is extremely difficult to find the line which separates one type of industry from a type of service. In our arguments this evening, I hope that we have convinced the right hon. Gentleman that at least ball clay and china clay come just on the right side of the line, and we hope that he will make the necessary arrangements.
    Dame Joan Vickers: I have pleasure in supporting what has been said by my hon. Friend the Member for Truro (Mr. Geoffrey Wilson). The china clay and ball clay industries

    737
    are the life blood of the West Country, to which they bring tremendous employment, and they also help the country generally.
    May I make a quotation from the writings of the Reverend Sidney Smith, who lived in the 1700s? He wrote:
    " We can inform Jonathan what are the inevitable consequences of being too fond of glory. Taxes upon every article which enters into the mouth, or covers the back, or is placed under the foot, taxes on everything on earth and the waters under the earth."
    We have had to have these taxes, not because we are too fond of glory, but because there have been too many promises in the past. This is one place where the promise could be fulfilled, because the pits that we are discussing lie in the development area and it is essential that that should be taken into consideration.
    As my hon. Friend the Member for Totnes (Mr. Mawby) mentioned, the West Country is a contributing area, and we feel bitter that the West Country should have to contribute so much to the prosperous Midlands. We are doing it through tourism and through agriculture, though agriculturists will get money back. Speaking for the city of Plymouth alone, our second biggest industry is the retail trade, employing 15 per cent. of the population. It is clear that we are doing more than our share to contribute to these taxes.
    My hon. Friend the Member for Truro has pointed out the many applications for china clay. However, with the exception of paper making, the product cannot be used unless it is thoroughly processed. In addition, I might mention that the china clay industry has a very big research and development laboratory in which there are 250 employees.
    The clay has first to be got out of the ground. It has to be dried, analysed, shredded, and blended, which is quite a difficult process. Finally, if it is going abroad as most of it does, it has to be bagged or sacked. I would have thought that that made it categorically into a manufacturing process.
    One other point which I would mention is that the industry is a great help in the provision of housing, because it makes blocks which are used for Cornish units. If the industry gets the premiums, it will
    738
    be able to help keep down the price of housing. It is generally recognised that a house will cost an extra £150 in future, and china clay will be one of the means of keeping costs down, providing that the industry is eligible for the premiums.
    It has never been classified as a service industry. Dealings have always been through the Department of Industries and Manufacturing in the Board of Trade, and not any other Department. In addition, it is classified with ceramics and glass work under the Industrial Training Act, which is a second proof that it is a manufacturing industry.
    As all the clay has to go through the many processes which have been enumerated, it cannot be considered to be an industry on its own until it has been manufactured. It is different from coal and other commodities which are mined in that it is unsuitable for sale to the consumer unless it goes through all the processes. I would suggest that it is not an extractive industry but a manufacturing industry. It cannot be used unless it is processed, and I should have thought that that was a good enough definition to prove to the right hon. Gentleman the Chief Secretary that it is a manufacturing industry and should be classified as such.
    8.15 p.m.
    Mr. Peter Mills: I rise to support the Amendment and to support all that my hon. Friends have said. I do so wholeheartedly, not only because I realise the importance of the china clay and ball clay industries to the South-West, but because we have large deposits of ball clay at Merton and Meeth, in my constituency.
    I am certain that everyone knows how vitally important the clay industry is to the economy of the country, and never perhaps more than now, since it is playing its part in seeking increased exports. It is even more vital to the economy of the South-West, and I have in mind particularly the importance of the ball clay industry to Devonshire. A large number of people work in the pits, and they are very grateful for this opportunity of being able to work in a manufacturing or production industry, because most of the work in the South-West is of a service nature. Here they have the chance of working in a manufacturing or production industry, and that is an important

    739
    point which underlines the need for the reclassification of the industry so that premiums can be paid. The industry needs every encouragement, and any recession in it always hits us very hard in the South-West.
    The premiums would be of great assistance. They would give the industry not only the financial reward but the encouragement of knowing that it is really producing something and playing its part in the economic factor.
    How anyone can say that it is not a manufacturing or production industry, I do not know. One has only to think of the processes through which the clay goes to realise that. I wonder whether the Minister or his advisers have ever been to the South-West and seen the manufacturing processes which go on. If they had, they would never say that it is not a manufacturing or production industry, and it beats me how anything to the contrary can be suggested.
    When one looks at the industry's export records, it will be seen that 54 per cent. of the ball clay produced in this country goes abroad. Would to goodness other industries had such a fine record.
    The Government must think again. They ought to give way on this and reclassify the industry. I suggest that it is the bounden duty of the Minister to do so.
    Mr. Diamond: It is not my intention to curtail the debate. I am only responding to the debate because I imagine that the Opposition would wish to devote no time to matters about which there is no dispute between the two sides of the Committee. I hope, therefore, that it is helpful in the difficult circumstances which an Opposition always face under a guillotine Motion that I should get up now and offer my comments.
    The Government are aware of the importance of china clay, and those of us who have visited St. Ives and its potteries and those of us who enjoy good porcelain and who have seen china clay extracted before getting to that stage are very anxious to help. We are also aware of the export figures, and so on.
    However, confusion has arisen, because perhaps the Standard Industrial Classification has not been fully appreciated. If one looks at the list of industries in the
    740
    detailed classification, under "china clay" it will be seen that there are two sub-headings. One of them is "Grinding and preparing", which is classified as a sub-heading of a manufacturing industry and will therefore get the premium.
    Mr. F. V. Corfield: Will the right hon. Gentleman give the number of the heading?
    Mr. Diamond: The subheading is 469/2, and 469 comes under Order XIII," bricks, pottery, glass, cement ", etc. If one looks at the 1958 revised edition of the Standard Industrial Classification, on page 23 one sees that 469/2 is
    " Building materials, etc., not elsewhere specified "
    and includes
    " the working of stone, and mineral manufactures not elsewhere specified."
    If one proceeds to go still more deeply into the alphabetical list of industries, one sees that on page 11, china clay, grinding and preparing, is analysed as coming within 469/2, which is a subheading on page 13, which is one of the manufacturing Orders. So that the processes of grinding and preparing china clay are processes which attract the premium. I do not think that the Committee was fully seized of that.
    Mr. Geoffrey Wilson: What is grinding and preparing? It does not seem an apt description for a rotary drier, or one or these spin driers.
    Mr. Diamond: I was going on to say that there are other activities, if I might use a neutral word, involved in winning the china clay, in extracting it, which would come under a different category of mining and extraction, which is Order II "mining and quarrying". Order II, minimum list heading 103, refers to chalk, clay, sand, and gravel extraction. In short, the position is that there are some activities which would be activities classified as appropriate for a refund, and some activities which would be activities classified as appropriate for premium.
    What one then has to do, be it for china clay, for slate quarrying, or for any of these, is to count the numbers qualifying in the two major categories of refundable or premiumable, whatever the appropriate term may be meaning "eligible for the payment of a premium".

    741
    If the activities are carried out in one establishment—we shall come to that in a moment—the total number of employees goes with the majority. That is to say, if there are more grinders and preparers, or whatever the term is that should be used, than there are miners, then the total number employed will rank for premium. If there are more miners than grinders and preparers, the total number will rank for refund.
    I am glad that I have the hon. Member for Tomes (Mr. Mawby) with me. It makes ii: think that I am being almost explicit in what I am saying. But let me continue, because it is not easy, and I do not spend every day down a clay pit.
    The next question which hon. Members ask is, What if the miners and the grinders are separate; in the sense that they work on different areas—one works below ground, and one works above ground—and a great deal of machinery is involved, and the manufacturing activities are related to the grinders and not related to the miners? In this case there is power in the Bill, under Clause 10(3), on an application being made by the employer, for the Minister to divide the two establishments at the option of the employer, because the employer would not put in an application for reclassification if it did not suit him to do so.
    If an employer employed one-third miners and two-thirds grinders, and therefore got the premium in respect of three-thirds, he would not apply to have it reclassified. But, if it were the other way round, he would seek to have it reclassified. If there were two-thirds miners and one-third grinders, the employer would seek to have it reclassified, and the Minister could, under the powers in Clause 10, if they are given, when we get there, divide it into two establishments, having regard to the fact which he would normally have regard to, namely, that the activities carried on fall under two main groups, one a refund group and one a premium group. I hope, therefore, that I have satisfied the Committee that there is no need to do anything more than rely on the contents of the Bill as it stands for both china clay and slate quarrying.
    Mr. Nott: The right hon. Gentleman referred to minimum list heading 469,
    742
    which is headed, "Abrasives and building materials". We are allowed to discuss with this Amendment, Amendment No. 333 which includes tin mining. Can the hon. Gentleman say whether tin mining which is also a manufacturing and extractive industry, will be covered under the classification? I ask that because it does not seem that tin mining comes under the heading of abrasives and building materials.
    Mr. Diamond: I hope that I can recommend to the hon. Gentleman the purchase of this valuable document which deals with tin. On page 57 it refers to
    "Tin, manufacture, printing, refining, smelting, working "
    and goes on to refer to tin mines, tin boxes, tin oxide, and many other things which the hon. Gentleman will find great enjoyment in studying.
    It is made clear that each one comes into a particular category. Broadly—I shall give the hon. Gentleman the numbers if he wants them, but I do not think that the Committee will be entertained by them—they are manufacturing categories, with the exception of "working", which is a mining and quarrying category, as the hon. Gentleman would expect. Thus, the answer to the hon. Gentleman's question is, "Yes, where they are manufacturing processes they are treated as such, as qualifying in that sense. Where they are mining processes, they are treated as such". One has to have regard to the mix, to use an inelegant expression, meaning the relative numbers of employees employed in the various activities. If the mix contains a greater proportion—over 50 per cent.—of the total number of employees belonging to a particular category, the establishment will be treated as falling in that category. If that does not suit the employer he can make an application, in appropriate circumstances, for the Minister to exercise his powers under Clause 10.
    8.30 p.m.
    Mr. Corfield: The Chief Secretary has been about as clear as slurry. We have had to wade throught the documents to see where the grinders are, and then we have to find what a screen is, technically and what a pump is, and also a filter press and a cutter and a mixer, a mill and a pelletiser, and then decide whether or

    743
    not it is manufacturing. The fact is that this is an industry which extracts something from the ground which is of no value until it has been through a number of manufacturing processes in exactly the same way as occurs in the cement industry.
    I hope that the right hon. Gentleman will look at the comparison between the two industries and realise how idiotic it is to treat them separately. The processes through which clay goes are more complicated and costly, and at the end in both industries it is necessary to transform something from a material that came out of the ground. I beg the Minister to think about the matter so as at least to make it appear as though the Government wanted to make the situation clear and wanted to make it work,
    As the right hon. Gentleman has attempted to show that there is some hope, I ask my hon. Friend to withdraw his Amendment.
    Mr. David Gibson-Watt: I want to make a quick reference to the slate quarrying aspect of the matter, because the answer given by the Chief Secretary will not be entirely satisfactory to that industry, especially in North Wales. Will he go further into the matter and give us an explanation? Nothing could be more complicated. In North Wales, the industry has also been responsible for the preparation of slates into tables and parts of furniture and other types of building materials, which the industry has tried to make competitive with the products of other industries.
    I will not press the matter further tonight, but I suggest that it is one about which, up to now, we are still very dissatisfied.
    Mr. Geoffrey Wilson: I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. R. Chichester-Clark: I beg to move Amendment No. 3, in page 1, line 28, to leave out "XVI" and to insert "XVII".
    The Chairman: With this Amendment it would be convenient for the Committee to discuss Amendment No. 19, in Clause 2, page 3, line 10, after "709", insert:
    "and heading 500 in Order XVII (which relates to construction)."
    744
    and Amendment No. 305, in line 10, after "709" insert:
    "and under heading 500 in Order XVII (which relates to construction) to the extent only that such activities relate to the direct performance of contracts entered into prior to 3rd May 1966".
    Mr. Chichester-Clark: My only regret at this moment is that we have so little time adequately to discuss these very serious and grave Amendments. We are discussing other Amendments, including one dealing with fixed-price contracts and their effect upon the industry. That in itself is a subject worthy of a good many hours of debate if the situation is to be made clear.
    Sixteen Amendments have been selected, and, despite the speed with which they have been discussed, despite the speed with which my hon. Friends have spoken and the restraint with which they have treated the Amendments, saying no more than it was necessary to say, we find ourselves with but a few minutes left to discuss the largest industry in the country, employing 1,811,000 people, of whom, I understand, 1,350,000 are liable for the Selective Employment Tax. Here we are having to deal in a few minutes with an impost of about £86 million, no less than £48 million of which is likely to be levied on men engaged on public authority contracts carried out by private builders, for which the weary taxpayers and ratepayers have to foot the bill.
    We are also discussing an industry the manpower of which builds our houses, roads, schools and universities. This is the first occasion during the course of the Bill—and it may be the last—on which we are able to dilate upon the importance of the industry and what it is doing today. That is disgraceful, and is entirely due to the Government's timetable.
    The purpose of the Amendment is to move the construction industry, as defined by Order XVII, Minimum List Heading 500 in the Standard Industrial Classification, out of its present position where it is subject to a levy of 25s. a head into the "good boy" class with a cash prize of 7s. 6d. a head—in other words, from low gear, via neutral, to overdrive.
    To discuss this Amendment, we should have needed much more time. We shall also have to use a great number of figures, because this is, as the right hon. Member

    745
    for Leeds, West (Mr. C. Pannell) has said, a "technocratic" industry and it must be considered with statistical accuracy and care so that the "dialogue" —his words again, I think—can be meaningful in the Committee.
    As the Bill is at present drafted, the incidence of the tax on the construction industry will have a very serious effect on output and performance. We believe that the industry should be encouraged rather than depressed, assisted rather than attacked. It has suffered another blow today. lf there are to be premiums at all, there are few more worthy candidates than this industry, which builds our houses, schools, hospitals and universities.
    As the Clause stands, the industry will bear the full incidence of the tax without refund or premium, which means an impost of I:86 million in a full year. The National. Plan shows that 1,350,000 people are liable for the Selective Employment Tax. As I said, a number of those are engaged on public authority contracts carried out by private builders, for which we have to foot the bill. No one is suggesting, I think, that the industry should in any way "opt out" of the economic crisis, but, after all, any industry can reasonably expect a Measure of this kind to meet at least two requirements. One of them is relevance and I will come to the other in a moment.
    One of the avowed aims of the tax is that
    "…it will have a beneficial longer-term effect by encouraging economy in the use of labour in services and thereby making more labour available for the expansion of manufacturing industry."
    That is from the Chancellor's own White Paper. He said, in his Budget Statement:
    " The tax will apply to construction in the same way as services so as to encourage the industry to scrutinise its use of labour more closely;"— [OFFICIAL REPORT, 3rd May, 1966; Vol. 728, c. 1455.]
    That, to anyone who has knowledge of the industry over the past few years, is a very strange remark, as the Parliamentary Secretary ought to know.
    Of course, it would be idle to deny that some improvements can be made in the industry's use of manpower. Of course they can, although the industry's record in this connection is second to none. But I am fair from convinced that the industry is ever able to hoard labour, unlike
    746
    potential labour hoarders like the motor industry and the printing industry—and they get a cash prize under Clause 1. Even if the construction industries did hoard labour, the tax would be irrelevant, for the very reason that it is discriminatory or selective, term it what one will.
    I would give a hypothetical example. The right hon. Gentleman's tax seriously affects the small and medium-sized builders. A builder in a small manufacturing town will be faced with the prospect of paying 25s. a head for his employees, some of whom will be skilled men. He might decide that he could not absorb all the tax and would not dare to pass it on because of the fierce competition in tendering in the area.
    Therefore, he would lay of two men, perhaps skilled bricklayers, members of a craft which is in short supply. Down the road might be a motor manufacturer who took them on—not as skilled bricklayers, but simply as unskilled labourers. He could use them on the shop floor and receive a premium for each of them. 'That is a loss to the building industry of two skilled men and a gain to the motor industry of two unskilled men. That is the kind of thing which the Government ought to know. Who can call that a sensible redeployment of labour?
    I know that, in a moment, Sir Eric, you will be moving in your Chair. I will only echo my earlier protest that it is absolutely disgraceful that we should be faced with a timetable which prevents us from discussing what is perhaps the most important industry in the country. We have done our best to be discreet and restrained in our discussion of Amendments so far. They have been discussed with expedition and they have been sensibly discussed.
    No one has made any attempt to hold up progress. On the contrary, we have tried to speed progress. Yet the Government have arranged matters so that the construction industry shall have no discussion of the vast problems which face it—an industry in which the Government have created a crisis of confidence, added to by the events which have taken place today and the announcement which the Prime Minister made concerning that industry this afternoon.

    747
    This is a disgraceful situation. What is anyone to think of a Government who so treat one of the major industries of the country that they make a distinction between the brickmaker and the bricklayer sufficient to justify the award of a cash prize to one and the imposition of the supreme penalty on the other. The Contracts Journal, the other day, relapsed into the kind of language which A. A. Milne might have used, and which I suspect the right hon. Member for Leeds, West might use, when it wrote:
    " I suppose it is no use trying to point out to Mr. Callaghan that there can be no possible purpose in making bricks and paying out 7s. 6d. a week in respect of every man making them unless they can be laid."
    It being one hour and eleven minutes after half-past Seven o'clock, being the time equivalent to the time which elapsed between half-past Three o'clock and the time at which consideration of the Bill was entered upon, The CHAIRMAN proceeded, pursuant to Order, to put forthwith the Questions on the Amendments, moved by a member of the Government, of which notice had been given, to that part of the Bill to be concluded at that hour.
    Amendments made: In page 2, line 2, leave out from "which" to end of line 3 and insert:
    "that or an associated establishment is engaged; or
    (iii) training relating as aforesaid;".
    In line 5, leave out "for the purposes of the" and insert:
    "in any employment in, or carried out from. that".
    In line 7, leave out from "are" to "as" in line 8 and insert:
    "so employed wholly or mainly in connection with such activities, research or training''.
    In line 10, leave out "normally so employed only" and insert "so employed wholly or mainly".
    In line 14, leave out "aforesaid" and insert:
    " are mentioned in paragraph (a) of this subsection or the Minister of Labour is satisfied that the establishment is engaged in training which is so relevant ".—[Mr. Diamond.]
    The CHAIRMAN then proceeded, pursuant to Order, to put forthwith the Question necessary to complete the proceedings on Clause 1:
    Question put, That the Clause, as amended, stand part of the Bill:—
    The Committee divided: Ayes 305, Noes 238.

    Griffiths, Rt. Hn. James (Llanelly)

    McNamara, J. Kevin

    Ross, Rt. Hn. William

    Griffiths, Will (Exchange)

    MacPherson, Malcolm

    Rowland, Christopher (Meriden)

    Hamilton, James (Bothwell)

    Mahon, Peter (Preston, S.)

    Rowlands, E. (Cardiff, N.)

    Hamilton, William (Fife, W.)

    Mallalieu, E. L. (Brigg)

    Ryan, John

    Hamling, William

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

    Shaw, Arnold (Ilford, S.)

    Hannan, William

    Manuel, Archie

    Sheldon, Robert

    Harper, Joseph

    Marquand, David

    Shinwell, Rt. Hn. E.

    Hart, Mrs. Judith

    Marsh, Rt. Hn. Richard

    Shore, Peter (Stepney)

    Hazell, Bert

    Mason, Roy

    Short, Rt. Hn.Edward(N 'c'tle-u-Tyne)

    Healey, Rt. Hn. Denis

    Maxwell, Robert

    Short, Mrs. Renée (W'hampton,N.E.)

    Herbison, Rt. Hn. Margaret

    Mendelson, J. J.

    Silkin, Rt. Hn. John (Deptford)

    Hobden, Dennis (Brighton, K'town)

    Milian, Bruce

    Silkin, S. C. (Dulwich)

    Hooley, Frank

    Miller, Dr. M. S.

    Silverman, Julius (Aston)

    Horner, John

    Mitchell, R. C. (S'th'pton, Test)

    Silverman, Sydney (Nelson)

    Houghton, Rt. Hn. Douglas

    Molloy, William

    Slater, Joseph

    Howarth, Harry (W ellingborough)

    Morgan, Elystan (Cardiganshire)

    Small, William

    Howarth, Robert (Bolton, E.)

    Morris, Alfred (Wythenshawe)

    Snow, Julian

    Howie, W.

    Morris, Charles R. (Openshaw)

    Spriggs, Leslie

    Hoy, James

    Morris, John (Aberavon)

    Steele, Thomas (Dunbartonshire. W.)

    Hughes, Rt. Hn. Cledwyn (Anglesey)

    Moyle, Roland

    Stewart, Rt. Hn. Michael

    Hughes, Enirys (Ayrshire, S.)

    Mulley, Rt. Hn. Frederick

    Stonehouse, John

    Hughes, Hector (Aberdeen, N.)

    Murray, Albert

    Strauss, Rt. Hn. C. R.

    Hunter, Adam

    Neal, Harold

    Summerskill, Hn. Dr. Shirley

    Hynd, John

    Newens, Stan

    Swain, Thomas

    Jackson, Peter M. (High Peak)

    Noel-Baker, Francis (Swindon)

    Swingler, Stephen

    Jay, Rt. Hn. Douglas

    Norwood, Christopher

    Symonds, J. B.

    Jeger, George (Goole)

    Oakes, Gordon

    Taverne, Dick

    Jeger,Mrs.Lena(H'b'n—St.P'CraS,S.)

    Ogden, Eric

    Thomas, George (Cardiff, W.)

    Jenkins, Hugh (Putney)

    O'Malley, Brian

    Thomas, lorwerth (Rhondda, W.)

    Jenkins, Rt. Hn. Roy (Stechford)

    Ornach, Maurice

    Thomson, Rt. Hn. George

    Johnson, Carol (Lewisham, S.)

    Orme, Stanley

    Thornton, Ernest

    Johnson, James (K'ston-on-Hull, W.)

    Oswald, Thomas

    Tinn, James

    Jones, Dan (Burnley)

    Owen, Dr. David (Plymouth, S'tn)

    Tomney, Frank

    Jones,Rt.Hn Sir Elwyn(W.Ham,S.)

    Owen, Will (Morpeth)

    Tuck, Raphael

    Jones, J. Idwal (Wrexham)

    Padley, Walter

    Urwin, T. W.

    Judd, Frank

    Page, Derek (King's Lynn)

    Varley, Eric G.

    Kelley, Richard

    Paget, R. T.

    Wainwright, Edwin (Dearne Valley)

    Kerr, Mrs. Anne (R'ter & Chatham)

    Palmer, Arthur

    Walden, Brian (All Saints)

    Kerr, Russell (Feltham)

    Pannell, Rt. Hn. Charles

    Walker, Harold (Doncaster)

    Lawson, George

    Park, Trevor

    Wallace, George

    Leadbitter, Ted

    Parkyn, Brian (Bedford)

    Watkins, David (Consett)

    Ledger, Roll

    Pearson, Arthur (Pontypridd)

    Weitzman, David

    Lee, Rt. Ho. Frederick (Newton)

    Peart, Rt. Hn. Fred

    Wellbeloved, James

    Lee, Rt. Hit. Jennie (Cannock)

    Pentland, Norman

    Wells, William (Walsall, N.)

    Lee, John (Reading)

    Perry, Ernest G. (Battersea, S.)

    Whitaker, Ben

    Lestor, Miss Joan

    Perry, George H. (Nottingham, S.)

    White, Mrs. Eirene

    Lever, Harold (Cheetham)

    Prentice, Rt. Hn. R. E.

    Whitlock, William

    Lever, L. M. (Ardwick)

    Price, Christopher (Perry Barr)

    Wigg, Rt. Hn. George

    Lewis, Ron (Carlisle)

    Price, Thomas (Westhoughton)

    Willey, Rt. Hn. Frederick

    Lomas, Kenneth

    Price, William (Rugby)

    Williams, Alan (Swansea, W.)

    Loughlin, Charles

    Probert, Arthur

    Williams, Alan Lee (Hornchurch)

    Luard, Evan

    Pursey, Cmdr. Harry

    Williams, Clifford (AbertillerY)

    Lyon, Alexander W. (York)

    Rankin, John

    Williams, Mrs. Shirley (Hitchin)

    Lyons, Edward (Bradford, E.)

    Redhead, Edward

    Williams, W. T. (Warrington)

    Mabon, Dr. J. Dickson

    Rhodes, Geoffrey

    Willis, George (Edinburgh, E.)

    McCann, John

    Richard, Ivor

    Wilson, William (Coventry, S.)

    MacColl, James

    Roberts, Albert (Normanton)

    Winnick, David

    MacDermot, Niall

    Roberts, Goronwy (Caernarvon)

    Winterbottom, R. E.

    Macdonald, A. H.

    Roberts, Gwilym (Bedfordshire, S.)

    Woof, Robert

    McGuire, Michael

    Robertson, John (Paisley)

    Wyatt, Woodrow

    McKay, Mrs. Margaret

    Robinson,Rt.Hn.Kenneth(St.P'c'as)

    Yates, Victor

    Mackenzie, Gregor (Rutherglen)

    Robinson, W. 0. J. (Walth'stow, E.)

    Zilliacus, K.

    Mackie, John

    Rodgers, William (Stockton)

    TELLERS FOR`THE AYES:

    Mackintosh, John P.

    Roebuck, Roy

    Mr. Neil McBride and

    Maclennan, Robert

    Rogers, George

    Mr. Walter Harrison.

    McMillan, Tom (Glasgow, C.)

    Rose, Paul

    Division No. 137.]

    AYES

    [8.43 p.m.

    Abse, Leo

    Buchan, Norman

    Dunn, James A.

    Albu, Austen

    Buchanan, Richard (G'gow, Sp'burn)

    Dunnett, Jack

    Allaun, Frank (Salford, E.)

    Butler, Herbert (Hackney, C.)

    Dunwoody, Mrs. Gwyneth (Exeter)

    Alldritt, Walter

    Butler, Mrs. Joyce (Wood Green)

    Dunwoody, Dr. John (F'th & C'b'e)

    Allen, Scholefield

    Cant, R. B.

    Eadie, Alex

    Anderson, Donald

    Carmichael, Neil

    Edelman, Maurice

    Archer, Peter

    Carter-Jones, Lewis

    Edwards, Robert (Bilston)

    Armstrong, Ernest

    Castle, Rt. Hn. Barbara

    Edwards, William (Merioneth)

    Ashley, Jack

    Chapman, Donald

    Ellis, John

    Atkins, Ronald (Preston, N.)

    Coe, Denis

    English, Michael

    Atkinson, Norman (Tottenham)

    Coleman, Donald

    Ensor, David

    Bacon, Rt. Hn. Alice

    Concannon, J. D

    Evans, Albert (Islington, S.W.)

    Bagier, Gordon A. T.

    Conlan, Bernard

    Evans, loan L. (Birm'h'm, Yardley)

    Barnes, Michael

    Corbet, Mrs. Freda

    Finch, Harold

    Barnett, Joel

    Craddock, George (Bradford, S.)

    Fitch, Alan (Wigan)

    Beaney, Alan

    Crawshaw, Richard

    Fletcher, Raymond (Ilkeston)

    Bence, Cyril

    Cronin, John

    Fletcher, Ted (Darlington)

    Benn, Rt. Hn. Anthony Wedgwood

    Crosland, Rt. Hn. Anthony

    Floud, Bernard

    Bennett, James (G'gow, Bridgeton)

    Cullen, Mrs. Alice

    Foley, Maurice

    Bidwell, Sydney

    Darling, Rt. Hn. George

    Foot, Sir Dingle (Ipswich)

    Binns, John

    Davidson, Arthur (Accrington)

    Foot, Michael (Ebbw Vale)

    Bishop, E. S.

    Davies, Dr. Ernest (Stretford)

    Ford, Ben

    Blackburn, F.

    Davies, G. Elfed (Rhondda, E.)

    Forrester, John

    Blenkinsop, Arthur

    Davies, Ednyfed Hudson (Conway)

    Fowler, Gerry

    Boardman, H.

    Davies, Harold (Leek)

    Fraser, Rt. Hn. Tom (Hamilton)

    Booth, Albert

    Davies, Robert (Cambridge)

    Freeson, Reginald

    Boston, Terence

    de Freitas, Sir Geoffrey

    Gardner, A. J.

    Bowden, Rt. Hn. Herbert

    Delargy, Hugh

    Garrett, W. E.

    Boyden, James

    Dell, Edmund

    Garrow, Alex

    Braddock, Mrs. E. M.

    Dempsey, James

    Ginsburg, David

    Bradley, Tom

    Dewar, Donald

    Gordon Walker, Rt. Hn. P. C.

    Bray, Dr. Jeremy

    Diamond, Rt. Hn. John

    Gourfay, Harry

    Brooks, Edwin

    Dickens, James

    Gray, Dr. Hugh (Yarmouth)

    Broughton, Dr. A. D. D.

    Dobson, Ray

    Greenwood, Rt. Hn. Anthony

    Brown, Hugh D. (G'gow, Provan)

    Doig, Peter

    Gregory, Arnold

    Brown ,Bob (N'c'tle-upon-Tyne, W.)

    Donnelly, Desmond

    Grey, Charles (Durham)

    Brown, R. W. (Shoreditch & F'bury)

    Driberg, Tom

    Griffiths, David (Rother Valley)

    NOES

    Alison, Michael (Barkston Ash)

    Blaker, Peter

    Campbell, Gordon

    Allason, James (Hemel Hempstead)

    Body, Richard

    Carlisle, Mark

    Astor, John

    Bossom, Sir Clive

    Carr, Rt. Hn. Robert

    Atkins, Humphrey (M't'n—M'd'n)

    Boyd-Carpenter, Rt. Hn. John

    Cary, Sir Robert

    Awdry, Daniel

    Boyle, Rt. Hn. Sir Edward

    Channon, H. P. G.

    Baker, W. H. K.

    Braine, Bernard

    Chichester-Clark, R.

    Balniel, Lord

    Brinton, Sir Tatton

    Clark, Henry

    Batstord, Brian

    Bromley-Davenport,Lt-Col.Sir Walter

    Clegg, Walter

    Beamish, Col. Sir Tufton

    Brown, Sir Edward (Bath)

    Cooke, Robert

    Bell, Ronald

    Bruce-Gardyne, J.

    Cooper-Key, Sir Neill

    Bennett, Sir Frederic (Torquay)

    Bryan, Paul

    Cordle, John

    Berry, Hn. Anthony

    Buchanan-Smith,Alick(Angus,N—M)

    Corfield, F. V.

    Bessell, Peter

    Buck, Antony (Colchester)

    Costain, A. P.

    Biffen, John

    Bullus, Sir Eric

    Craddock, Sir Beresford (Spelthorne)

    Birch, Rt. Hn. Nigel

    Burden, F. A.

    Crouch, David

    Crowder, F. P.

    Hutchison, Michael Clark

    Percival, Ian

    Cunningham, Sir Knox

    Iremonger, T. L.

    Pike, Miss Mervyn

    Currie, G. B. H.

    Irvine, Bryant Godman (Rye)

    Pink, R. Bonner

    Dalkeith, Earl of

    Jenkin, Patrick (Woodford)

    Pounder, Rafton

    Dance, James

    Johnson Smith, G. (E. Grinstead)

    Powell, Rt. Hn. J. Enoch

    Davidson,James(Aberdeenshire,W.)

    Johnston, Russell (Inverness)

    Price, David (Eastleigh)

    d'Avigdor-Goldsmid, Sir Henry

    Jones, Arthur (Northants, S.)

    Prior, J. M. L.

    Dean, Paul (Somerset, N.)

    Jopling, Michael

    Pym, Francis

    Deedes, Rt. Hn. W. F. (Ashford)

    Joseph, Rt. Hn, Sir Keith

    Quennell, Miss J. M.

    Digby, Simon Wingfield

    Kaberry, Sir Donald

    Rees-Davies, W. R.

    Dodds-Parker, Douglas

    Kerby, Capt. Henry

    Renton, Rt. Hn. Sir David

    Doughty, Charles

    Kershaw, Anthony

    Ridley, Hn. Nicholas

    Douglas-Home, Rt. Hn. Sir Alec

    Kimball, Marcus

    Ridsdale, Julian

    Drayson, G. B.

    King, Evelyn (Dorset, S.)

    Rippon, Rt. Hn. Geoffrey

    du Cann, Rt. Hn. Edward

    Kitson, Timothy

    Robson Brown, Sir William

    Eden, Sir John

    Knight, Mrs. Jill

    Rodgers, Sir John (Sevenoaks)

    Elliot, Capt. Walter (Carshalton)

    LambtOn, Viscount

    Rossi, Hugh (Hornsey)

    Errington, Sir Eric

    Langford-Holt, Sir John

    Royle, Anthony

    Eyre, Reginald

    Legge-Bourke, Sir Harry

    Russell, Sir Ronald

    Farr, John

    Lewis, Kenneth (Rutland)

    St. John-Stevas, Norman

    Fisher, Nigel

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

    Sandys, Rt. Hn. D.

    Fletcher-Cooke, Charles

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Scott, Nicholas

    Forrest, George

    Longden, Gilbert

    Sharpies, Richard

    Fortescue, Tim

    Loveys, W. H.

    Shaw, Michael (Sc'b'gh & Whitby)

    Foster, Sir John

    Lubbock, Eric

    Sinclair, Sir George

    Galbraith, Hn. T. C.

    McAdden, Sir Stephen

    Smith, John

    Gibson-Watt, David

    MacArthur, Ian

    Stainton, Keith

    Giles, Rear-Adm. Morgan

    Mackenzie,Alasdair(Ross—Crom'ty)

    Steel, David (Roxburgh)

    Gilmour, Ian (Norfolk, C.)

    Maclean, Sir Fitzroy

    Stodart, Anthony

    Gilmour, Sir John (Fife, E.)

    Macleod, Rt. Hn. Iain

    Stoddart-Scott, Col. Sir M. (Ripon)

    Glover, Sir Douglas

    McMaster, Stanley

    Summers, Sir Spencer

    Glyn, Sir Richard

    Macmillan, Maurice (Farnham)

    Talbot, John E.

    Godber, Rt. Ho. J. B.

    Maddan, Martin

    Tapsell, Peter

    Goodhart, Philip

    Maginnis, John E.

    Taylor, Sir Charles (Eastbourne)

    Goodhew, Victor

    Marplee, Rt. Hn. Ernest

    Taylor,Edward M.(G'gow,Cathcart)

    Gower, Raymond

    Marten, Neil

    Taylor, Frank (Moss Side)

    Grant-Ferris, R.

    Mathew, Robert

    Teeling, Sir William

    Gresham Cooke, R.

    Maude, Angus

    Temple, John M.

    Griffiths, Eldon (Bury St. Edmunds)

    Mawby, Ray

    Thatcher, Mrs. Margaret

    Grimond, Rt. Hn. J.

    Maxwell-Hyslop, R. J.

    Thorpe, Jeremy

    Gurden, Harold

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

    Tilney, John

    Hall, John (Wycombe)

    Mills, Peter (Torrington)

    van Straubenzee, W. R.

    Hall-Davis, A. G. F.

    Mills, Stration (Belfast, N.)

    Vickers, Dame Joan

    Hamilton, Michael (Salisbury)

    Miscampbell, Norman

    Wainwright, Richard (Coble Valley)

    Harris, Frederic (Croydon, N.W.)

    Mitchell, David (Basingstoke)

    Walker, Peter (Worcester)

    Harris, Reader (Heston)

    Monro, Hector

    Walker-Smith, Rt. Hn. Sir Derek

    Harrison, Brian (Maldon)

    More, Jasper

    Walters, Dennis

    Harrison, Col. Sir Harwood (Eye)

    Morgan, W. G. (Denbigh)

    Ward, Dame Irene

    Harvey, Sir Arthur Vere

    Morrison, Charles (Devizes)

    Weatherill, Bernard

    Harvie Anderson, Miss

    Mott-Radelyffe, Sir Charles

    Webster, David

    Hastings, Stephen

    Monro-Lucas-Tooth, Sir Hugh

    Wells, John (Maidstone)

    Heald, Rt. Hn. Sir Lionel

    Murton, Oscar

    Whitelaw, William

    Heath, Rt. Hn. Edward

    Nabarro, Sir Gerald

    Wills, Sir Gerald (Bridgwater)

    Heseltine, Michael

    Heave, Airey

    Wilson, Geoffrey (Truro)

    Higgins, Terence L.

    Noble, Rt. Hn. Michael

    Winstanley, Dr. M. P.

    Hiley, Joseph

    Nutt, John

    Wolrige-Gordon, Patrick

    Hill, J. E. B.

    Onslow, Cranley

    Wood, Rt. Hn. Richard

    Hirst, Geoffrey

    Orr, Capt. L. P. S.

    Woodnutt, Mark

    Hobson, Rt. Hn. Sir John

    Orr-Ewing, Sir Ian

    Worsley, Marcus

    Hogg, Rt. Hn. Quintin

    Osborn, John (Hallam)

    Wylie, N. R.

    Holland, Philip

    Osborne, Sir Cyril (Louth)

    Younger, Hn. George

    Hooson, Emlyn

    Page, Graham (Crosby)

    TELLERS FOR THE NOES:

    Hordern, Peter

    Page, John (Harrow, W.)

    Mr. R. W. Elliott and

    Hornby, Richard

    Pardoe, John

    Mr. Anthony Grant.

    Howell, David (Guildford)

    Pearson, Sir Frank (Clitheroe)

    Hunt, John

    Peel, John

Clause 2.—(SELECTIVE EMPLOYMENT REFUND.)
Mr. Pardoe: I beg to move Amendment No. 262, in page 2, line 23, at the end to insert:
(2) This section applies to any employment for a contribution week of less than 21 hours, in any establishment or activity not mentioned in sections 1, 3, 4, 5, 6 of this Act, or in other subsections of this section.
The Chairman: I think that it would be for the convenience of the Committee if there were discussed with it the following Amendments:
Amendment No. 209, in page 2, line 23, at the end to insert:
Provided that any such payment shall be reduced by one-half in respect of a person who has worked less than twenty-one hours during that week

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Amendment No. 280, in page 2, line 24, to leave out subsections (2) to (6) and insert:
(2) This section applies to any employment—

(a) for a contribution week of less than 21 hours, or

(b) of any person who is registered as a disabled person.

Amendment No. 307, in page 2, line 38, at the end to insert:
" the establishment employs amongst its employees at least 20 per cent. who are in part-time employment who each works for less than 21 hours a week, or are over 60 years of age ".
Amendment No. 131, in page 2, line 38, at the end to insert:
(c) the establishment employs among its employees at least 20 per cent. who are in part-time employment who each work for less than 21 hours per week.
Amendment No. 249, in page 2, line 38, at the end to insert:
(c) more than half of the employed persons employed for the purposes of the establishment are normally so employed at a rate of remuneration not exceeding five pounds per week.
New Clause 3, "Part-time workers".
Mr. Pardoe: Amendment No. 262 concerns part-time employees. Amendment Nci. 280 makes nonsense unless it is taken in conjunction with Amendment No. 267, in page 1, line 10, to leave out from "to" to the end of the section and insert:
"twice the tax paid—

(a) if that person was employed within a development area as designated by the Board of Trade, or

(b) if the employer can show, to the satisfaction of the Minister, that the value of output per manhour, in his latest financial year, was at least 4 per cent. more, measured at constant prices, than in his previous financial year, or

(c) if the employer can show, to the satisfaction of the Minister, that the value of his exports abroad in his latest financial year, was at least 4 per cent. more, measured at constant prices, than in his previous financial year ".

on Clause 1. These two were designed together. Therefore, we should concentrate on Amendment No. 262, and I do not intend to refer any further to Amendment No. 280, which, in a sense, has already been overtaken by events.
The points to be made in support of this Amendment are very simple and can be shortly stated. I shall try to set
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a good example by speaking for only a very few minutes. First, this tax, being a poll tax, is a higher proportion of a low income than of a high income. Part-time employees receive low incomes and, therefore, the tax is a much greater disincentive to the employment of part-time workers than of full-time workers. This is a matter of simple arithmetic and the Front Bench opposite will be able to work it out.
Far be it from me to give the Government Front Bench a lecture on Socialist economics or Socialist principles of taxation, though I have some experience of Socialist economics. On previous occasions, I have said that one of the principles we should follow in taxation is to take according to the ability to pay. In this tax, we have a classic example of taxing low income earners. By definition, part-time workers are low income earners, and we are taxing them very heavily. Therefore, as I have said, the disincentive to employ part-time workers is all the greater.
We must attract part-time workers into employment. Earlier today, the Prime Minister laid great stress on the appalling shortage of labour in our economy. Where shall we find the labour? Apart from the shake-out of which the right hon. Gentleman talked, we shall find it only among those who are not at present members of the labour force. Who are these people? They are those who want part-time employment, primarily women and elderly people.
The employment in industry of women, particularly housewives and mothers of young children, presents a problem. Not only do we want to bring back into employment those qualified as doctors and teachers—the need there is obvious —but we want to bring women into employment in the whole length and breadth of British industry. We should encourage them at the time when their families have grown up to school age or some sort of independence to come back and take an active part in industry. But they cannot be brought back as full-time employees.
We all know about the "latch-key" children, and we have no desire to encourage that sort of thing. We should ensure that industry is able to adapt itself to the problems of housewives and mothers of young children so that they

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are encouraged to come in and work the sort of hours which fit in with the bringing up of a young family. This means part-time employment.
There are already substantial disincentives against women taking employment. Our Income Tax is a notorious disincentive, lumping together the incomes of husband and wife for tax purposes in many instances. I have had many such cases put to me, and we all know how these calculations are made and the criticisms which they cause. So there is already some disincentive for women to come back into industry. The tax will create an even greater disincentive because of the burden that it places on the employer who wishes to adapt his industrial processes to the employment of part-time women. We shall not be gaining from this great reservoir of now unemployed women.
9.0 p.m.
Thirdly, do the Government believe that a great host of part-timers, when they have been shaken out by the tax, will go and push handles and get their heads down in manufacturing industry? I can assure them it will not happen. The Mrs. Mopps will not be forced by the tax into industrial processing. Many of them have reached a stage in life where industrial training for them would be somewhat problematical. Many of them are not the kind of people who can adapt themselves to the hours and processes in which the Government seem to be interested. So we shall not get a shakeup. We shall merely ensure a situation in which all those at present sweeping our floors will not be employed. If they are shaken out they will have to go back and sit all day in their front parlours. They will not go into factories.
My fourth point concerns the other important category of part-time employees —the elderly. Earlier we had an instance from the Government back benches. It is a medical fact that elderly people need a period of part-time employment to adjust to retirement. The Government are placing a hefty disincentive on part-time employment and are not making any provision for a period in which elderly people can adjust to retirement. We want older people to continue
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working productively in industry and elsewhere. This is, I hope, part of the Government's purpose. But employers will face the fact that, although the employment is cheap, and although the elderly employees are working few hours, they have to pay this very substantial tax, for it will be substantial in proportion to the incomes paid to the elderly. We already have a substantial disincentive to elderly people working because of the earnings rule. Now the Government are to heap this other disincentive on top.
I cannot believe that the Government can possibly fail to accept this Amendment. I cannot think what argument they could use to persuade themselves that the Amendment does not make sense. So I commend it to the Government and the Committee and hope it will be accepted.
Mr. Gower: I echo the words of the hon. Member for Cornwall, North (Mr. Pardoe). I canot see a valid reason why the Government could reasonably reject the Amendment. As the hon. Gentleman said, those concerned are generally low-income earners, and the imposition of this tax must, in effect, be a great disincentive to the employment of persons in this category.
I have put Amendment No. 131 on the Notice Paper, in page 2, line 38, at end insert:
(c) the establishment employs among its employees at least 20 per cent. who are in part-time employment who each work for less than 21 hours per week.
It would define even more narrowly the categories for whom I would seek a concession if the Government are so obdurate as to resist this Amendment. It would be a modest requirement because establishments of this nature with as much as 20 per cent. in part-time employees are doing a wonderful job for the community. If people are working less than 21 hours per week, they are truly part-timers.
There is a long tradition of part-time work in the booming industrial areas—the Midlands and Yorkshire, for example —where there has been prosperity for many years. But in many other areas the effects will be worse, because the opportunities for part-time employment are much smaller and are of comparatively recent development—for example,

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the South-West, Wales and Scotland. These are development areas where opportunities for part-time employment have been relatively small in the past.
It is only in comparatively recent years that some areas have been developing, through the infusion of newer industries, wider opportunities for the employment of part-time people. If the Government reject even the principle of the Amendment they will inflict yet another blow at these areas.
We know how hard it is in some cases to entice married women back to work. We know how desperately the Secretary of State for Education and Science wants to get them back to part-time teaching and how important it is for the future health of the economy that we should persuade more and more married women to go back to work when their children are old enough. This tax will lessen the opportunities for them.
The same is true of widows. We know how precious to many of them is the opportunity they have to do part-time work in order to supplement their inadequate pensions. If the Government reject the Amendment, widows will have fewer opportunities of such employment. The predicament of the elderly in some parts of the country will also be bad if their limited opportunities of part-time work are to be reduced. It will be particularly bad for those in the development areas and in places like the worst-hit parts of Scotland, Wales and the West of England.
The rejection of this series of Amendments by the Government can only be regarded as notice to widows, the elderly and others for whom part-time work is needed that, in future, their opportunities will be sadly reduced by the impact of this impost in its present form.
Mr. Hirst: I support the Amendment. It is yet another which arises out of our discussions on certain other legislation. After all that we have heard during the Committee and Report stages of the Finance Bill, I wonder whether right hon. Gentlemen opposite have any hearts at all. I am not a doctor, but I suppose that anatomically they must have, but it seems extraordinary that we should reach this stage in our discussions in the hope—and that is all it is—that the Government have now reached some reasonable discretion in this matter.
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I know only too well how important to the economy part-time workers are. They are extremely important in my constituency, as they are elsewhere. There have always been certain industries which undeniably depended on part-time workers, and it is interesting that those which depend most on part-time workers are often the most competitive. I would have thought that that would have dawned in the head and the heart of the Financial Secretary to the Treasury. He has had a lot of hard words from me. I am in one of my most reasonable moods tonight, because hope springs eternal and I have always imagined that one day the obvious would sink in, even with this Government, although I sometimes despair.
I hope that it will in this case, not only for the industries which I have mentioned and in which I have a particular constituency interest, but for the many other aspects of the economy which we have to keep going. Although the Government have today taken somewhat serious measures, I suppose and I shall read and learn more in due course—that even they want to keep the economy going. If they imagine that they can do so without using part-time workers, I invite the Financial Secretary once again to come to my constituency and to learn something outside the law courts which will he of great additive value to his appreciation of matters which are discussed in the House of Commons.
Many elderly people depend on part-time work for their livelihoods above a certain line. That applies particularly to those mentioned by the hon. Lady the Member for Wood Green (Mrs. Joyce Butler), in that telling speech which I have mentioned more than once—those who work in the shops. There is also a social aspect. There is not only an economic advantage in having this sort of assistance, but there is a social advantage from having people who are getting on in years having something which they can do and in which they can take an interest and which gives them that little extra which the State cannot provide and which adds to their dignity of living. Is not that something?
I remember only too well, when I sat on the benches opposite, listening to the speeches from this side of the Committee pleading much more eloquently than I

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dare to imagine that I could, hour after hour, without a Guillotine, for these very people. Are we nearer to giving them a chance now? is this the time when right hon. Gentlemen opposite will say that this is their opportunity and their chance to help these people about whom they have talked all these years, not to damn them and to tax their jobs out of existence?
Has it required all these debates to reach that point? If it has, my confidence in the democratic working of Parliament is not yet broken and I hope that on this issue it will be preserved.
9.15 p.m.
Mr. W. T. Williams: I do not propose to spend very long on this Amendment. I hope that the Government will find it possible to accept this, or one of the variants which have been put down. I have three reasons for asking that my voice may be added to those already raised in support of this Amendment, and to the voices which will undoubtedly follow mine.
The Government have talked a good deal about the difficulty of introducing legislation of this kind except in broad terms. It is agreed on every hand, including in Government quarters that this is a rough, rude instrument, that it falls heavily with little discrimination and that the only way in which it can be improved is by experience. It is said that it will need to be seen in the months ahead how the blows fall. To those who think as I do it appears that the weapon is too rough and rude, and falls too heavily in places for which the Government ought to have had regard before they introduced this legislation.
It appears to us that one of the difficulties into which the Government have got in introducing the selective employment payments machinery is that they have been content to divide industry into two sections, manufacturing and services, whereas there are at least three broad sections into which industry can be properly set. They are services, manufacturing and distribution, and each is as unrelated to the other as the Government accept services is to manufacturing.
The distributive industry has a completely different case from that of the general services industry. If the Govern-
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ment had been wise enough to have made the division a little broader they might have avoided many of the anomalies which are now apparent. In particular, the incidence of this tax upon part-time employees is one inflicting great and, we believe unnecessary burdens upon an important and valuable section of the community. When one is talking about the shops and the establishments which provide foodstuffs such as bread and milk and the other essentials of life, what one recognises immediately is that, by and large, the food distributive industry depends very substantially for its work upon part-time labour at weekends.
Most people shop at weekends and most establishments for the distributive trades employ additional labour at weekends. That being so, if the tax is to fall —even a 12s. 6d. tax applicable to women employees—upon the shops and distributive agencies, employing part-time labour at weekends, the Government will do double injury. They will injure the shops and make more difficult their operation, and they will do a great disservice to a large section of the community to whom reference has already been made—married women, widows and other people who, for some reason or other, have to do part-time work and are not in a position to undertake any other kind of employment than to work in shops at weekends.
If the Government persist in this tax the result will be that many of the shops which now employ part-time workers will be unable to continue to do so. It means, also, that families will feel the pinch from being prevented from earning the modest sum of money which they could earn if they were enabled to keep their jobs.
I understand perfectly the difficulties which the Government face, although I am less sympathetic with them than I am with the difficulties of the people affected by the tax. The Government's difficulty is to ensure that there is not abuse and of making the tax work through the machinery of the insurance system. This use of the insurance structure is in itself something which I deplore and which members of the Government used themselves to deplore in previous decades. But if difficulty arises because it is not possible to collect this tax without the danger of abuse and fraud, surely it is not beyond the wit of the Government to

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introduce an additional stamp through the insurance scheme which would meet the needs of part-time workers. Many of us feel that the stamp should anyway be cheaper than the full stamp, because many part-time workers, especially married women, feel a real sense of grievance that they have to pay the full insurance stamp, although they cannot reap all the benefits of it which would follow if, for example they were unmarried.
We do not wish to embarrass the Government, but we believe most sincerely that by introducing this tax they are putting an unnecessary burden both on the people who work in shops and on the proprietors of the shops themselves. Because we believe that this difficulty is not insuperable, we hope that the Government will not, merely because of the administrative problems of doing this through the insurance stamp or in conjunction with it, refuse to accept our plea.
Sir Keith Joseph: I have sought to catch your eye, Mr. Jennings, because my right hon. and hon. Friends and I have other Amendments, and particularly new Clause No. 31, which march parallel with this Amendment. We feel so strongly that this Amendment should be carried that my right h on. Friend the Member for Grantham (Mr. Godber) will later seek to catch your eye, Mr. Jennings. I realise that many hon. Members wish to speak and therefore I shall keep my remarks as short as possible.
If a Conservative Government had introduced this tax, the outcry would have been enormous. How the welkin would have rung. We should have had passion. There would have been near hysteria from these benches. But, as it is, we have had a cogent case put exceptionally trenchantly by the hon. Member for Cornwall, North (Mr. Pardoe) and supported with the greatest clarity and force by my hon. Friends the Member for Barry (Mr. Gower) and Shipley (Mr. Hirst). Now the Government have heard the case put soberly, almost sadly, by the hon. and learned Member for Warrington (Mr. W. T. Williams).
The Government must note that the implication of the Bill goes dead against any sensible constructive labour policy. We are told that the country is short of labour. We believe that any Government
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should encourage people to work. We know that many people work part time because they cannot work full time. We are familiar with the sources—housewives, widows, the elderly, people who are disabled to such an extent that they cannot work full time but not so greatly disabled that they cannot work part time.
Earlier in our debates the Government sought to prove that the bulk of this army of part-time workers worked in manufacturing industries. But the March, 1966 issue of their own publication, the Ministry of Labour Gazette, disproves this thesis completely. I hope that the Government Front Bench will pay heed to these figures. According to that publication, nearly 2 million part-time workers were employed in March this year, 1¾million of them women. I do not have a division between adults and the 18–21 age group, but of the 2 million part-time workers the analysis shows that only about one-third of 1 million worked in manufacturing industries.
That shows that seven-eighths of the part-time workers are in service occupations and, therefore, come under the impact of this proposed tax. It is not, therefore, open to the Government to say that most part-time workers will benefit from the refund, let alone the premium. The vast bulk of part-time workers will ,through their employers, bear the tax with no refund, and certainly no premium.
Where do these part-time workers work? They work, as the hon. and learned Member for Warrington has told us, to a large extent in distribution, where they enable shopkeepers, stores, shops and co-ops to bear the peak load, particularly at weekends. They work in grocery shops, food shops, tobacconists, bookshops and in all manner of shops. Without them the peak shopping habits of the population would be most inadequately served. They work in the services, in dry cleaning, laundries, catering, shoe repairs and contract cleaning. We could all add to the list. They work in cinemas and hotels. The Government are desperately seeking to add to their number in teaching and nursing. Again, I give only a few of the headings of their employment.
What will be the result of this tax'? I fully endorse the argument of the hon.

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Member for Cornwall, North (Mr. Pardoe) that the lower the pay of the worker, the higher the proportion a fixed poll tax bears to his pay. We are dealing here with part-timers whose pay is relatively low. Therefore, let not the Government use the argument that it is a mere 12s. 6d. a week or something like that. In proportion to the wage costs of the occupation, this is a heavy impost. It may represent an increase of as much as 20 or 30 per cent. of the labour content of their service.
The Government have argued that any worry about part-timers was completely unnecessary because there was so little unemployment, they said, that no employer would be in a position to dismiss anybody because he could not replace him. Thus the Government were able to argue, I think wrongly, that in the present state of very low unemployment the part-timer was safe. Indeed, it is true that many of the services for which we speak are desperately short of labour.
It is no longer possible, however, for the Government to use that argument. After this afternoon's statement in the Prime Minister's frank admission that the Government expect unemployment to rise, and the Government's determination to hold prices steady, employers will be squeezed and they will have a growing number of unemployed from whom to choose for their employ.
In this situation we have to ask ourselves what the effect of this tax will be. Its purpose, although disguised by the Government, has been clear all along—that is, to put up prices. We are back to the 1951 Budget strategy when the late Mr. Gaitskell sought to deal with inflation by mopping up purchasing power, by putting up prices. The present Government chose to disguise their objective by making the employer put up prices to bear the burden of this tax.
It was a proper service under the Government's scheme for the employer to pass on this tax. That was the strategy. Now, however, the employer will not be able to pass on this tax because his profits will be squeezed and his prices will be held steady. Thus the employer will be forced to absorb the tax or to dismiss labour.
764
9.30 p.m.
Now we ask ourselves the big question: whom will the employer choose to dismiss? As my hon. friends have already said, the part-timer already is an expensive luxury in a free labour market, because the employer has to bear full National Insurance stamp for less than full-time work. The result of this tax will be that the part-timers will be dismissed. The very people who eke out an extra income from part-time work for the benefit of the economy will be the ones who will have first to be dismissed.
The very people the Government should be encouraging to come into the labour force will be turned out of the labour force, and, as has been made plain, it is these people who, because of their pattern of life, cannot shift to industry. There cannot be any argument from the Government that these people are mobile, or that they will work in factories or exporting industry. Surely the Government have been riven by the logic of events and their own policies, culminating in the Prime Minister's statement this afternoon, of all their defences of the thoroughly damaging effect of the tax on part-time workers.
That is why my hon. and right hon. Friends and I urge upon the Government this group of Amendments. We support, in particular, New Clause 3. But if the Government cannot make sense of their wretched tax sufficiently to exempt the part-timers, then we ask them to find a way of refunding the tax to the employers of part-timers, and if they cannot do that, let them consider the method proposed by the hon. and learned Member for Warrington of a special tax.
There must be some way in which this tax can be spared on the part-timers. If there is not a way, and if this is what the Financial Secretary intends to tell us, then this is one more condemnation of a thoroughly bad tax.
Mr. Richard Wainwright: In supporting the Amendment which has been moved by my hon. Friend the Member for Cornwall, North (Mr. Pardoe) I wish to follow for a moment or two the line of argument, not, if I may be forgiven, of the last speaker, the right hon. Member for Leeds, North-East (Sir K. Joseph), but of the hon. and learned

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Member for Warrington (Mr. W. T. Williams), whose argument it is a pleasure to try to pursue—perhaps in a slightly different direction. I was only sorry that during the eloquent speech which he made he had behind him virtually empty benches.
The fact is that this proposed tax with no refund in respect of part-timers is a poll tax upon a poll tax, because of its being added to the employer's National Insurance contribution. The National Insurance stamp is thoroughly identified in the public mind as a poll tax which is always going up, and one can scarcely blame the public if they begin to wonder how many months it will be before the S.E.T. part of the stamp also goes up.
Since the Liberal Party launched a campaign up and down the country against he S.E.T. proposals—by leaflets, and the like—our party postbag has, naturally, been very large. It has been brought home to us very clearly by employers of part-time labour that they regard this as a poll tax upon a poll tax, as I should like to illustrate by two brief quotations from the letters we have received.
From a substantial cleaning services company with various addresses in North and West London we have this comment from a director, in a letter dated 25th June, 1966:
"We have, among others, a male pensioner working for us. He rises at 5 a.m., and works 2½hours in the mornings five days a week for £3 15s. Out of this he pays 11s. Income Tax and 8s. in fares and 9d. towards the National Insurance stamp of 14s. Id. He probably earns us about £1 or a little less. Under the S.E.T. we would have to pay an additional 25s. This old man, who still works and keeps his self-respect, will become redundant."
Then, if I may give one example in respect of the part-time employment of women, I have a letter from a laundry company in London, S.E.6, dated 22nd June, 1966, in which a director of the company says:
" Our organisation at Catford employs some 700 people of which about 350 are part-time women. We estimate the cost of the Selective Employment Tax which we will have to meet to be about £526 per week, which is something like an 8 per cent. increase on wages. With such a la-ge percentage of part-time women, which with present-day labour shortages we are forced to employ, we are already carrying a heavy burden in the form of full National Insurance contribution for them."
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In pursuing the Amendment, I have some feeling of hope, because of the sentiments expressed by the Chief Secretary when the probable plight of part-timers was discussed in the House on 27th June. On that occasion, and with special reference to a proposal from his own side of the House to alleviate the tax in respect of part-timers, the Chief Secretary used these words:
"There is no point in having a disproportionate tax if one does not have to have one, and we would have been only too glad to have provided a method of avoiding a disproportion which was consistent with the need to introduce a tax of this kind at this time with the machinery that is available and which would be capable of being collected, in an economic fashion. My hon. Friend is right in saying that we would have introduced something to meet his point had it been possible to do so."—[OFFIciAL REPORT, 27th June, 1966; Vol. 730, c. 1347.]
I believe that the Amendment moved by my hon. Friend the Member for Cornwall, North (Mr. Pardoe) proposes a viable means of meeting the point which the Chief Secretary said that he would be glad to meet. I hope that in a few minutes we shall hear that that is exactly what the Government are willing to do.
Mr. R. B. Cant: I tried to dispel many of the misgivings which I have about the tax by going into the Library and reading an article by the Economic Editor of the Financial Times in the penultimate issue of the Banker. Although the article was extremely favourable in parts—it thinks that the tax, like the curate's egg, is good in parts—it did not dispel those misgivings. To some extent, the problem is that no one has defined precisely what the tax is supposed to do.
At the beginning, I thought that it was a revenue raiser. Then it slowly became a sort of resource reallocator. It is obvious now that it is a deflator which, in terms of a gamble, perhaps will not come off. Perhaps we should console ourselves with the fact that Mr. Kaldor did not introduce his expenditure tax.
I want to make one particular point and, in doing so, may I say that I am a completely unsponsored Member of Parliament, with no affiliations. I want to take up the question of the part-time worker because, without going into all the heartrending exhibitions that we have had from the benches opposite, I think

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that the Financial Secretary might look at the economics in terms of the present area of retail distribution.
It comes as a surprise to many people reading the work of Lady Margaret Hall, Oxford, that productivity in the area of retail distribution has risen extremely rapidly since the late 1959s. Whereas undoubtedly that is a function of major capital investment in the industry, it is also entirely dependent on the use of part-time labour.
Where one gets this sort of indivisibility in capital investment which is subject to peak period demand, it is essential to make certain that one can adapt the labour supply, and in this industry, or service, I think that we have this unique contribution, or combination, of investment on a considerable scale in the last decade made even more fruitful by the use of part-time labour. I hope that some of these Amendments will be agreed to by the Government, although I shall follow the conventions of the House and vote for the Government.
Sir David Renton: The application of the Selective Employment Tax to part-time workers will so obviously conflict with so many of the social and economic purposes which the Government and the Opposition have in mind that I think the Government will have to do something about this.
Amid all the conflicting factors, and arguments on these factors, that we have had in these discussions on the Selective Employment Tax—I wonder whether I might have the Financial Secretary's attention, because I want to make an impact on his mind, if it is possible to do so still—I should have thought that the Government could accept, and could not avoid accepting, two aims. First, that in these difficult times we have to make the maximum use of the energies and talents of as many of our people as possible. It is rather extraordinary that this tax should have been conceived, and this Bill drafted, without taking any note at all of the part played by part-time workers, be they married women, old-age pensioners, disabled people, or anyone else. The second aim, and this I would have hoped would have appealed particularly to a Left-wing Government, although I
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think that we have as good a record as they have, should be to apply this Tax to avoid hardship.
We can all quote various examples of how this tax will operate. I shall quote only one, that of a clerk to a local authority, who retired at the age of 60, a good many years ago now. He thought that it was his duty to keep on working for as long as he could. The value of his superannuation payment is not as good as he hoped it would be when he retired, in spite of the various increases which have taken place. He is now working for two days a week as a clerk to a firm of building contractors. He cannot imagine that the firm will keep him in employment if the full tax has to be paid in respect of his employment. Therefore, I would have hoped that we could agree upon aims.
On this, as in so many other matters —and I speak with some experience of Whitehall—there is always a tendency in Whitehall to overlook the situation which applies in rural England. I think that in our villages and country towns we tend to make greater use of part-time workers than is done in the great cities, partly because our people in the country places have more energy, and partly because they live longer, and therefore we have far more old people who are in part-time employment.
I hope that when the Financial Secretary replies there will not be any dispute about the aims. If we can agree on the aims, this debate can turn into a discussion as to methods. I know of only two methods of overcoming the Government's omissions in the Bill. The first is to follow the method proposed in most of these Amendments, which is to make the tax payable in respect of part-time workers the subject of refund. Another method is to have differential rates of tax, and I must say that, speaking as a Member representing a rural constituency, this has an advantage. To the extent that part-time workers are employed on farms their employers will be able to claim a refund, but if we have differential rates there will be no discouragement at all to the employment of part-time workers on farms; indeed, there will be an incentive on the part of farmers to employ part-time workers as much as possible.

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9.45 p.m.
I therefore suggest that the Government do not commit themselves tonight on the method by which the aims on which we all agree should be achieved. If they do not find the methods suggested in the Amendments, or the drafting of those Amendments, acceptable, they should say that they agree that the aim should be achieved and let us know later, when they have had further thoughts, about the method.
The Financial Secretary to the Treasury (Mr. Niall MacDermot): Is the right hon. and learned Gentleman envisaging that there is an easier method for dealing with a differential rate compared with the proposition for a total exemption? If so, I shall be glad to know what it is.
Sir D. Renton: I would have thought that exemption was much more easily administered, but in order to give a special advantage in the case of part-time workers on farms the incentive of differential rates might be a good thing.
As the hon. and learned Gentleman has got me to my feet on the question of method, I should like to point out how wise my hon. Friends and Members of the Liberal Party are to have chosen 21 hours in a week as the dividing line, because that is the period fixed in the Contracts of Employment Act and the Redundancy Payments Act.
Mr. Doig: I want to draw the Government's attention to Amendment No. 209 and ask them carefully to consider its purpose. In the Second Reading debate I suggested that part-time employees working 21 hours or less a week ought to pay only half the rates for a stamp. Having failed in that respect I try again and put forward the view that half of what they pay should be refunded. The majority of these people cannot possibly take full-time employment. We are deliberately taking out of employment and production people who can do no other type of work. This means that what they are now doing will have to be done by someone else, who will have to come from the pool of employment from which we draw productive workers.
I am not concerned about the big combines which employ Mrs. Mopps, but I am concerned about the large number
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of small shopkeepers who depend on part-time workers to give them a little time off from a seven-day week, and often a 52-week year, so that they can have a holiday. These people depend on part-time help.
These are the very people who are being squeezed on all sides. They cannot increase their prices because they have to compete with the multiple stores, who can undercut them. Very often they are victims of crimes of violence, against which they often cannot afford to insure. Many of them have invested their life's savings in a small business in order to fulfil their life's ambition and become their own boss, and we may be reaching the stage when, owing to the various pressures upon them, they will go out of business and return to work for someone else. The one thing which keeps many of these people in business is the fact that they can engage part-time staff occasionally to give them a few hours off. If we take this away from them, they will not be able to take those hours.
This means that people will no longer be able to buy a newspaper in the early hours of the morning or, as is done in Scotland, buy morning rolls for breakfast before going to work, because these shops will not be able to keep open seven days a week from early morning to late at night. If they cannot get the relief which they get now by employing part-time people, they will be hit very hard and eventually driven out of business.
This can have very important effects. Small shops like chemists fulfil a useful and necessary function. If we make it difficult or impossible for them to get part-time help, they will have to recruit full-time help or stay open for shorter periods. There will be fewer shops. Instead of a dozen small chemists scattered over a city, there will be one or two large shops which will not be open for the same long periods. This will not be worth what the Government will get out of it.
Among trade unions, we used to show a film called "The National Cake". It was designed to encourage people to produce more, because the more which was provided the more there was to share out among everybody. What we are doing now is reducing the number of people who can help to provide services.

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As a result, there will be less production or fewer services. Either way, we will suffer. This is something which the Government ought to take seriously.
Mr. Costain: This is such a well-conducted debate that one does not want to intervene for long, but this is a matter which greatly affects my constituency, in three ways—first of all, for the elderly. In coastal resorts there are numbers of elderly retired people. The present rise in the cost of living has been hitting them very badly. I have had a number of requests for help before the Prime Minister's announcement today. Because of that announcement, they will be even worse off. The way they get employment is in part-time work in hotels and shops.
A number of hoteliers in my constituency employ elderly people on an uneconomic basis because they think that as these people have been there for some time they ought to continue to work there. They have made it clear that this is the dividing line. If the tax is introduced for part-time workers who have not been earning their full keep but have been kept on, they will have to be discharged. The result is that these people, reluctantly, will have to go on to National Assistance—people who are determined to stay off National Assistance, but will be forced by this Government to take that step.
The tax will also affect the holiday camps of which there is a number in my area. I have had letters from local holiday camp proprietors pointing out that the only way in which they can staff the camps is with part-time workers in the evenings. An example is married women. Naturally, their husbands object to their being on duty every night, although they are prepared for them to work only two or three nights a week in order to supplement the family income. By putting this extra tax on part-time workers, the situation will be made extremely difficult and expensive. The result, of course, will be that they will try to employ more people than they do now for eight hours a day. The result will be that the Ministry will lose the stamp and they will be further unpopular.
The hon. Member for Dundee, West (Mr. Doig) drew special attention to ser-
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vices. I have had letters on this. The delivery of bread has been stopped in one of the villages in my area, purely because of the introduction of the Selective Employment Tax. People will have to go shopping when the shops are open and they will not be able to work the number of hours they would have worked.
Although this is a form of taxation which is supposed to encourage efficiency, in fact it discourages initiative, and if there is anything fundamentally wrong with the Government's policy it is that every Measure they introduce seems determined to cripple initiative. This Bill could not have been better chosen if they wished to discourage initiative.
We do not want to spend too long on the debate, but I ask Ministers to look at this matter again and to realise that there has been no one on the Government back benches prepared to support this proposal. They cannot go on relying on their back bench Members who in the past have roared like bulls when it came to objecting to the proposals but stamped like butterflies when they went into the Lobbies. Why should they not follow their convictions and come with us into the Division Lobbies—and tell the Government what they ought to do?
Mr. Terence L. Higgins: I am glad to be able to make this brief intervention. I am aware that many hon. Members want to speak on this issue. The effect of this tax on part-time employment in my constituency will be very great indeed. Effectively, the impact of the tax is twice as great on someone working half time as on someone working full time. The deterrent effect on the employer is twice as great. We are, therefore, not asking for equal treatment for part-time workers; because of this situation we are asking that they should be given special treatment.
In my constituency, the tax has two important effects above all others. First, it has a very grave effect on elderly people who hope to supplement their pensions by working part-time, and it has a particularly bad effect on those constituents who do not have National Insurance pensions and for whom part-time work is the only way in which they can supplement their incomes, which have been steadily depreciated by the effects of inflation.

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If the Amendment is not accepted there is a grave danger—because there is no employment other than part-time employment available to them—that they will be in very serious circumstances indeed and may be forced in their later years on National Assistance, a situation which they have steadfastly sought to avoid since their retirement.
There is a vital point which has not been debated either in the Finance Bill or in connection with the Selective Employment Tax—and this indicates the way in which the Government have curtailed debate. In the guillotine debate the Leader of the House said that all points had been made, and I intervened to point out that none of the matters governed by our Amendments in Committee of the Finance Bill in respect of nursing homes, private hospitals and old people's homes had been debated at all and that, apart from a few passing sentences, there had been no mention of them.
They will be very seriously affected by the fact that the Government have granted no exclusion of part-time workers. This is a matter of vital concern to my constituency and many other constituencies where the burden falling on the hospital service is steadily increasing and the expansion of the hospital service has been curtailed by Government deferment. It may well be that in many areas, as in my own, people will die because adequate hospital facilities are not provided.
10.0 p.m.
At the moment, a large number of nursing homes and private hospitals cater, in particular, for geriatric patients. These establishments are staffed largely by part-time employees who work on a shift basis to provide geriatrict treatment and to look after people who are unable to look after themselves. I have had a number of letters from my constituents on this problem. Hon. Members may be interested in this passage in one such letter:
" The patients consist almost entirely of terminal and senile cases… They are essentially case; which the hospitals are no longer able to retain. There are about 20 patients, with a staff of 30 to look after them, which staff work on a "—
three-shift basis.
" A few work whole time, but the majority are part time."
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The tax can have one of two effects on such a nursing home. The nursing home may have to raise its charges to these people. As they are in hospital, they have no means of increasing their income to pay the increased charges. In view of the burden which is already falling on the National Health Service, where are these people to go if they cannot afford to pay for these services in private nursing homes? If the nursing home takes the view that it cannot raise its prices to take account of the impact of this tax on the part-timers who are looking after these patients, the only alternative is that the nursing home must close down.
If there were adequate hospital services, it could be argued that the State should provide for these people who are in their declining years and who are too sick and too old to look after themselves. But there is already a very great drain on the hospital service. We all hope that the hospital service will be expanded at the earliest possible moment. However, it cannot be expanded immediately, nor can it be expanded adequately to cope with all the people who are already in private homes. It is, therefore, vital that this Amendment be accepted.
I sent details of some of these cases to the Chancellor of the Exchequer. My letter was passed to the Minister of Health, because the Chancellor of the Exchequer, who has no doubt received many such letters, has been farming them out to the Ministries concerned. This is the reply I received from the Minister of Health:
" We shall, however, bear in mind the effect of the tax on nursing homes and the points made in your constituent's letter in considering the application of the tax in case it is found right and possible to give any groups special treatment under a more refined scheme later."
Society cannot countenance a state of affairs in which these people are thrown on to the streets because of the impact of this tax, nor can it be content with a vague assurance by the Minister of Health that a more refined system will be introduced later. There is only one possible course, which is for the Committee to accept the Amendments.
Sir Gerald Wills: It is of paramount importance that some form of employment should be available for people who cannot work full time. This is especially so in rural districts, where

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there are many people who are old and half retired, who are unable to spend their whole time working, but also who can improve their retirement conditions, make themselves happier, and make a contribution to the community by doing a job.
In many villages and districts where tourists congregate those who cater for the needs of tourists during the season could not carry on without the help of temporary people. If hotels were unable to rely on workers who come in for a few hours at a time to help out, the system would break down. That is the middle and both ends of it. Many elderly people and those who are nearing retirement, or who, perhaps, have retired find great happiness in working in this way and contributing to their own well-being and to the well-being of many other people. Disabled people, when they can work in this way for a few days a week, find a great reward and help in doing so.
If we do not recognise that many wish to work and should be allowed to work a reasonable number of hours each week, we shall not only go against the wishes of so many people, but also entirely against the Government's avowed intention of making as many people possible available to work. I imagine that that is what they want. If they want as many people as possible to work and they need the labour, let those who want to work a few hours a week get on with it, do the job, and help wherever they can to the best of their ability and to the country's good.
Mr. Julian Ridsdale: In the early hours of Monday morning I spoke about this tax and asked a question of the Economic Secretary. I asked what effect the new economic measures would have on the Selective Employment Tax, particularly as it affected part-time workers. At that moment the Economic Secretary—
Mr. MaeDermot Mr. MaeDermot indicated dissent.
Mr. Ridsdale: Perhaps the hon. and learned Gentleman would like to correct me.
Mr. MacDermot: There is no Economic Secretary.
Mr. Ridsdale: I should have said the Chief Secretary. I hope that the
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hon. Gentleman will pay as much attention to some of my questions.
The Chief Secretary did not reply in any way to the points that I made, and I now ask the Financial Secretary whether he wishes to collect money from the tax on these part-time workers. Are not the measures announced this afternoon to raise £500 million for the Chancellor enough to collect money and mop up some of the purchasing power? Does he wish to force some of these part-time workers on to the labour market? Is not the prospect that about half to three-quarters of a million people will be unemployed as a result of the measures announced by the Prime Minister this afternoon enough to satisfy the Government's deflationary policy?
The Government should not be so hard-hearted now. Even though they may be suffering from midsummer madness, perhaps they may reconsider the position and the burden they are putting on part-time workers, particularly elderly people and the part-time workers employed in small shops, in hotels and guest houses, and in many rural area.
To me, this is a deliberate attack on the hard-earned pocket money of the retired people and married women. I hope that now, with the new measures announced this afternoon, the Front Bench and the Financial Secretary will be sympathetic. This is a social attack. It is not now a financial policy, in view of the new financial measures. I ask the hon. Gentleman not to be so hard-hearted, not to be so cruel to these part-time workers who rely on their part-time work for pocket money and to help them face the cost of living which is rising as a result of the Government's measures.
Mr. Patrick Jenkin: I should like to deal with one or two of the trades which will be particularly hit by the imposition of the tax at the full rate on part-time workers. I want to deal with three groups of wholesalers—food wholesalers, general wholesalers and, in particular, the pharmaceutical wholesale trade. I shall also say a word about laundries. All these employ substantial numbers of part-time workers, a much higher proportion than in other employment generally.
I take wholesalers first. There are two general points which are often forgotten here. The wholesale trade is very

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frequently in competition with its own manufacturers. This competition will now be distorted because the manufacturers will be able to claim refund in respect of their distribution people, provided that they qualify under the 50 per cent. of establishment rule, whereas the wholesalers will pay the tax and have no refund. Because of the large number of part-time workers which wholesalers employ, this distortion will be further accentuated.
Second, the wholesalers operate, for the most part, on quite tiny profit margins. have been astonished in studying the figures in trade after trade to realise that net profit margins as a percentage of turnover are sometimes less than 1 per cent. or between 1 and 2 per cent., which gives extraordinarily little scope for any saving. Any substantial addition in costs, which the Selective Employment Tax will represent, is bound to be passed on in higher prices.
It has been said often that the S.E.T. is a tax on food. Nowhere is this more apparer t than in the wholesale grocery trade. The net profit of an average firm represents 1·23 per cent. of turnover. Wages represent 4·8 per cent., and the tax will have the effect of putting the wage bill up to 5·2 per cent. and cutting the net profit by no less than 33 per cent., reducing it to less than 1 per cent. of turnover. No firm can stand that sort of cut in its profit. No firm can have its return on capital reduced by that amount. Inevitably, prices will be increased. If the Government say, "Let them introduce more mechanisation and improve efficiency", I throw the challenge back to them. How can they say that when by the Bill we were discussing in the early hours of this morning they are removing any form of investment incentive in this trade?
Now, the wholesale textile trade. I am given to understand that in a typical firm no fewer than one-fifth of the employees are part-time. The tax will cost this firm £112,000, a sum equivalent to 16 per cent. of its net profit. With the tax bearing particularly hard on part-time employees, the firm will be severely hit. How can textile wholesalers modernise? A textile wholesaler carries an enormous number of lines, and it has proved in practice almost impossible to mechanise. It is very much a labour intensive activity.
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Next, hardware wholesalers. Here the average net profit of a typical firm is 1·7 per cent. and the Selective Employment Tax will reduce this by 0·7 per cent., almost by half. Ten per cent. of the employees are part-time. A radio wholesaler who wrote to me has 20 per cent. of his employees part-time, and I understand that the radio wholesale trade as a whole is likely to have to pay £1½million in Selective Employment Tax.
So one can go on, but I wish to say a word about the pharmaceutical wholesaler because his is a special case. The business of pharmaceutical wholesalers is almost entirely in the distribution of drugs for the National Health Service to 14,000 retail chemists and to over 1,000 hospitals. The wholesaler carries the drugs of 300 manufacturers. I understand that there are between 14,000 and 15,000 different lines carried by about 150 wholesale depots which perform two vital functions for the National Health Service. They are able to make immediate delivery of almost any drug which they have in stock, on demand, and they are able to carry a comprehensive stock of that enormous range of 14,000 or 15,000 different drugs.
Pharmaceutical wholesalers operate on tiny profit margins, below 2 per cent. profit of turnover. They are extensive users of part-time labour. Naturally, the problem of processing orders when dealing with goods on this scale involves an enormous amount of clerical work, and pharmaceutical wholesalers use a very large percentage of part-time labour. If it is asked why they do not automate, the answer is that this was tried eight years ago in America and failed disastrously because the nature of the work means that it cannot be put into an automatic system.
10.15 p.m.
Mr. Paul Dean: Would not my hon. Friend agree that his powerful arguments apply equally to the retail pharmacist, the man who dispenses prescriptions?
Mr. Jenkin: Indeed. If my hon. Friend's experience is anything like mine, he will have had a large number of letters from retail pharmacists in his constituency making that point. For the moment I am concentrating on the wholesale aspect.

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If the tax is to be such a burden on the wholesale pharmacist—it is likely to represent between 0·6 and 1 per cent. of his turnover, I understand, cutting his net profit in some cases by more than half—what will he be able to do about it? He and other distributors were advised by Mr. Fred Catherwood at a conference held in May for the distributive trades by their Economic Development Committee. He advised retailers and other distributors to protect reasonable profit margins by raising their prices and seeking better terms from manufacturers receiving premuim payments under the new tax arrangements. That may be possible for some trades but it is impossible for wholesale pharmaceutical distributors because the prices of their goods are fixed by agreement between the Government and the manufacturers. So the wholesale and retail margins are fixed, and there is no opportunity for such firms to recoup any of the extra burden.
So the firms are faced with two possibilities. They can reduce their delivery services, which will inevitably lead to delays in delivery of essential drugs required on prescription, representing a danger to health, or they can reduce the range of stocks which they hold. Seventy-five per cent. of their turnover is accounted for by only 20 per cent. of their products. They could cut out large numbers of the rarely used drugs and no doubt save a good deal of money to offset the cost of the tax.
But do the Government want this important link in the Health Service between the drug manufacturer and the patient to become so very much less efficient? Are they prepared to put the lives of men and women at risk because pharmaceutical wholesalers will be unable to afford a comprehensive stock of drugs? [Interruption.] An hon. Member opposite is laughing. He should talk, as I have done, to men responsible for running wholesale pharmacies. It is monstrous that hon. Members opposite should scoff at the arguments advanced by the Opposition on a matter causing gravest concern to the industry. He should be ashamed of himself. The tax is bound to reduce standards in the industry, and the fact
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that it is a high employer of part-time labour accentuates the difficulties.
Laundries are very substantial users of part-time labour. Indeed, 20 per cent. of their labour is part-time, compared with about 6 per cent. in industry as a whole. Laundries in some areas employ up to 75 per cent. of their workers part-time. The tax and the National Insurance contribution will amount to about 2s. an hour in the trade. This makes it quite uneconomic.
The tax will cost the industry about £5 million a year, representing no less than 6 per cent. of its total turnover. That is why there will be a substantial increase in laundry costs. This is an essential service. People cannot do without it. If they do the work themselves it is much less economic. Yesterday in the evening press, one of the largest firms in the country stated that it would have to put up its prices by ls. in the £—5 per cent. It processes 10 million miles of roller towelling a year for supply to offices and other places. The report said that the Selective Employment Tax was blamed for the increase and added:
" With 10.500 mostly part-time workers on the payroll, the tax is going to cost the firm an extra £440,000 a year."
That is what the Government are doing to firms performing essential services.
This is bound to put up costs. In many cases firms cannot pass costs on in their prices as Mr. Catherwood recommended they should. It will cause acute difficulty. The Amendment would go part of the way to solve the problem so that part-time workers would not be such an additional burden for these firms to bear.
Mr. R. Gresham Cooke: The hon. Member for Dundee, West (Mr. Doig), who is not here, gave some sturdy North Country advice to the Government on this issue and I hope that he will go into the Lobby with us in support of the Amendment. The Amendment would give the Government an easy way out, saving their face by reducing the tax by a half.
My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) has put the case for the wholesalers. I have had a mass of correspondence on this matter. I have not had so many letters on a single subject since

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Suez. That is what the public think of the tax. It is the greatest issue of the last 10 years. I have picked out particularly those letters which rely heavily on part-time workers, such as laundries, engineering distributors, chemists, accountants, solicitors, caravan distributors and electrical contractors. The last named are very badly hit because they have to pay the tax while their nationalised rivals do not.
Very often the words of an M.P. do not carry much weight in the House while the rough words that constituents use do. I have had a letter from a constituent which says:
" If this crowd of bright boys think they can get away with this one, then I have underestimated them. What about the mass of part-timers doing a very satisfactory job? Do we pay an extra 25s. for about 15 hours and see some firms getting a rebate at our expense?…. Had it been, say ten bob they might have got away with it. but not as it stands, I am sure.
Yours faithfully,
' Reluctant Victim ' ".
That represents the views of a large number of retailers.
My hon. Friend the Member for Wanstead and Woodford also referred to distribution. I have been connected with both manufacturing and distribution and I assure the Financial Secretary that, if there is any overmanning and labour hoarding, it occurs in manufacturing and not in distribution, which is labour intensive. I was talking to a steel master today about the situation in Sheffield. He said that things are very flat in Sheffield, that the order book is small, that the industry is already working short-time and that it will soon be on a four-day week. I asked whether he would get rid of his labour in view of this, but he replied, "We have to hold on to our labour during a bad period for when good times come again, if they do." That is the manufacturer's outlook. He will hoard is labour. The retailer and the man in distribution does not take that view.
Does the Financial Secretary suggest for a minute that women in Twickenham employed part-time in a laundry, if made unemployed, will go into a foundry or a steel works to help manufacture? Of course he does not. What will happen as a result of the tax is simply that costs will be put up by the retailer, or there
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will be unemployment among these part-time workers, the married women, the retired people and old-age pensioners who all make a valuable contribution throughout the country and without whom we should feel very sadly in need. This is one of the worst provisions of the Bill and I hope that it will be defeated.
Mr. Philip Goodhart: Throughout much of this important debate the number of Liberal Members of Parliament present has exceeded the number of Labour back benchers present. This is the first time in years that I can recall this happening, although if we have a few more days like today the Liberal Members of Parliament may well permanently outnumber hon. Members opposite.
Mr. Hooson: If the hon. Gentleman were in the Chamber more often he would see this process repeated many times.
Mr. Goodhart: I am assiduous in my attendance of debates in the Chamber and I cannot recall this happening in the last nine years, and probably not since the end of the war.
The Kent Development Plan Survey shows that about 47 per cent. of the workers in my constituency are employed in distributive and professional services as opposed to 24 per cent. in manufacture. This shows that the effect of the Selective Employment Tax as a whole will bear particularly hard on my constituents. The same survey shows that about 10 per cent. of the workers in my constituency are employed on a part-time basis and the effect of the tax on part-timers will bear most heavily, therefore, on local services.
As hon. Members from both sides of the Committee have said, many of these part-time workers are employed in chemists' shops, in newsagents and in grocers and throughout the entire distributive trade system. In recent weeks, I have talked to and corresponded with many shopkeepers, and almost to a man they have assured me that the tax on part-timers will put up their total labour bill by almost 10 per cent.
Before the so-called price freeze, no doubt this increase would have been passed on to the consumer, and I suspect that it still will be in large part. but if it is not many of these workers, the lowest paid in the country, will be put out of

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employment. During our previous discussions of the subject, the Chief Secretary has been asked many times what survey the Government have made of the impact of the tax on part-time employment. Do they have any idea of what will happen, the number who will be thrown out of work, the number who will be thrown on to National Assistance?
From the usual poverty of the replies that we have had from the Chief Secretary on this subject, as on so many subjects, it is perfectly plain that the Government have made no real survey at all. But if they had made a survey before, it certainly would have been made out of date by the impact of the measures introduced this afternoon to mark the collapse of the Government's economic policy.
10.30 p.m.
There are, however, some people who know full well what will be the impact of this tax on part-timers, and I should like to quote from a letter that I have received from a constituent who is himself a member of a firm that employs a very large number of part-time women workers. He says:
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" In the event of loss of trade resulting from increased prices, the jobs of many of these women will be placed in jeopardy. Some 60 per cent. of them are old-age pensioners, widows and mothers of large families, supplementing a low wage-earning or sick husband. In most cases they need to work near their homes in order to maintain their domestic obligations. Thus there would be no willingness on their part to he absorbed into manufacturing industries."
In Beckenham, and Kent generally, there are very few manufacturing industries in which the displaced part-time workers can be absorbed and, indeed, the Government spend a considerable amount of time and effort in preventing the expansion of those factories that are already located in the constituency. Therefore, quite clearly they cannot absorb these part-time workers who have been displaced.
These Amendments were put down before the events of this afternoon were thought out. It would be fair to say that before the latest squeeze on the economy the tax on part-time employment was going to hit hard at some of the lowest paid workers in the country. Now it will not just be a hard blow to them. It will be an absolute calamity.
Mr. Hooson: I cannot understand why, in reason and humanity, the Government do not accept this Amendment, or at least the spirit of the Amendment. We heard this afternoon from the Prime Minister that we are living in a period of labour shortage. If we are living in an age of labour shortage, there are plenty of full-time jobs to be had. Why, therefore, are there so many part-time employees?
I think that the reason is fairly simple. Most people who work part time do so because, for a variety of circumstances, they cannot take a full-time job. There are the old-age pensioners, the widows with children, the married women, the disabled men. There are many people who, for a variety of reasons, cannot contemplate taking a full-time job.
Another reason why I believe many people are part-time employees is that they live in a part of the country where full-time employment is not available. I represent such a part of the country, where certainly there are some full-time jobs, but married women, for example, would find extreme difficulty in many parts of my constituency in getting a full-time job. What will be the effect of this tax on those people?
The Government will be taking a wrong view if they think that nothing serious will happen as a result of the application of this tax to part-time employment. In fact, tens of thousands of part-time employees will be out of work, for this obvious reason, that the proportion of the tax in relation to the low earnings of part-time employees is so great. Take, for example, the part-time employees in a laundry. Obviously, laundries employ many married women because they are so suitable for the job. They are so skilled at doing it.
As a result of this tax they will be tempted more and more to employ more full-time employees and part-time work will not be available. In such an area as mine one gets part-time employment, because the small shopkeeper cannot afford a full-time employee. He is working a six or seven day week and he wants relief for a few hours a day. Therefore, he employs a part-time worker. The small hotelier or cafe proprietor, running
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on a small margin, employing a married woman to help out in the busy season is another example.
Mr. Ron Ledger: Where are the full-time workers to come from to replace these people?
Mr. Hooson: I said that there would be difficulty because of this tax. What will the result be? I know from my own experience that many people, if they are not in part-time employment, will be entitled to National Assistance. Have the Government considered the effect of this tax upon these people? They will lose their jobs and there will be an additional charge upon the State.
Many other people, although they may not qualify for National Assistance, would be hard hit. In areas such as mid-Wales there is a scarcity of jobs. Take the roadman, whose average wage is £9 to £10 a week. His wife, although she has three or four children, finds work in a local hotel and this makes the difference between mere existence and getting the extra bit of money for the family.
As a result of this tax the married woman is unlikely to be employed and that will mean real hardship for the family. If this tax, with its particular application to part-time workers had been introduced by a Conservative Government, the Labour benches would have exploded. This is a direct attack upon those who can least afford it. It is disgraceful that the Government have shown such a lack of sympathy for the part-time worker. It seems that the Government are more concerned about a neater administrative package and administrative difficulties arising from the use of the stamp. This can be overcome if the will to cure it existed.
I understand from previous debates on this matter that the Government are saying that this is a rough and ready tax, to be amended in the light of experience. What an argument for what is purported to be a radical government. If that kind of government cannot anticipate where hardship is to fall, then there is something seriously wrong with them. This is old-fashioned Tory argument, which I hope even the Tories have abandoned now—that we should simply apply

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a rough and ready measure and then amend it when the hardship is felt in the light of experience. Hardship is to be seen and the Government should do something about it.
Mr. Norman Miscampbell: I shall be brief, but I would not like to let this debate pass without saying a word or two about one of the areas where this tax applies most heavily. There has been a great controversy about who was the orginating mind behind it. We do not know that, but one thing that we do know is that it was based on London experience and has no relevance to areas north of Birmingham, and areas in the West and in Scotland.
Dame Irene Ward: And the North-East.
Mr. Miscampbell: Or the North-East. This is the best example that I can think of where a tax has been thought up in relation to the over-employed southern part of the country without any thought of the peripheral areas in the country. In the Fylde area, one finds that practically no one will attract the premium and that almost everybody will pay the tax. On top of that, the proportion of part-timers is one of the highest in the country.
I should like briefly to refer to two industries to which I have referred before, but which deserve to be mentioned again. I excuse my hon. Friend the Member for Worthing (Mr. Higgins) for missing my small contribution on a previous occasion. There was no reason why he should particularly have noticed it, but I have addressed the House before concerning those employed in nursing homes and there is no harm in thinking of them for just a moment again.
A typical nursing home requires about half as many staff as patients. A home with about 20 beds needs 10 or 12 people to look after them. In a place such as Blackpool, almost everybody who becomes old has finally to resort to such a nursing home, because there are no facilities in the national system for these people to be looked after.
People in the last stages of decrepitude, the geriatric cases, are looked after in nursing homes because there is nowhere else for them to go. Ten or 12 people come in to help them. In most cases the
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helpers are part-timers. They are not necessarily trained nurses, but they have a modicum of skill and can look after the patients in their last days.
Those are the people whom the Government are taxing. I say this because my constituency will at least recognise the appositeness of the contrast. They are taxing them and—at the moment we are having a holocaust of stink bombs—they are subsidising the manufacturers of stink bombs. That is the contrast.
Sir D. Glover: Purposive planning.
Mr. Miscampbell: That applies not only to nursing homes. If one looks at the main industry of the Fylde coast, one sees the classic example of an industry which is dependent upon part-timers. I use the example because it is familiar, but it can be repeated from many different industries. I refer to the holiday or boarding-house industry.
In that industry part-timers are essential. Nobody will work the hours that are necessary in a boarding-house. Owners cannot get people to come in from 6 o'clock in the morning and stay till nearly midnight. They must have part-timers. It is the only way that it can be worked. Some come in in the morning, some at midday and some later. The imposition of this tax on an industry such as that is likely to be appalling.
But if the industry itself is hurt, how much more will those typical part-timers be hurt? In most cases they are elderly. Where are they to go if they cannot take full-time work? If they try to leave Blackpool, there is no manufacturing industry within 20 miles to which they can go. There is no help for them in that way. In most cases, they would not in any event be able to take up full-time work. The choice before them is part-time or nothing.
Although Blackpool is often thought to be a rich town, it is not. Very often these are the people whose income makes all the difference to a family which otherwise would have a marginal living. Perhaps the wife is younger than her husband and by going out to work part-time in an hotel she does something to help at home. Her income makes all the difference between living in near-misery and having something extra to spend.

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These are the people whom the Government are hurting by this tax.
I believe that the economic thought underlying the tax is based entirely on experience of a mixed, highly over-employed economy in the southern part of the country. It has no relevance to whole areas outside the London area. For this reason and many others, the Government should accept the Amendment.
10.45 p.m.
Mr. Rees-Davies: I should like to come straight to another point. We have had such cogent and detailed arguments employed that I have long ago come to the conclusion that it is quite impossible to get the Government to accept any reasoned argument, but I am inclined to think that they may be prepared to accept some emotional argument. They are so unreasoned in their approach that I think their heart may, perhaps, be appealed to more than their head, and so I want to put forward this suggestion.
I have noticed a certain amount of toing and fro-ing on the Treasury Bench: the Minister of Pensions and National Insurance has left, accompanied by the Chief Secretary and others; and I was wondering whether, if possible, the Government: are really trying to find a way out of this problem of the part-timers.
An Hon. Member: Where is the First Secretary?
Mr. Rees-Davies: Well, of course, as we very well know, the right hon. Member for Belper (Mr. George Brown) retired hurt—I think the phrase is—with bruises of his own, earlier this afternoon, and, of course, has not been seen on the pitch since.—[Hoisr. MEMBERS: "Sent off?"] Whether he was sent off or whether he contemplated resignation, undoubtedly, at any rate, he felt very sore about what he had to listen to this afternoon. Well, I can understand that; he preferred not to listen to it.
All of us have been disappointed, none more than this side of the Committee, by the lack of reception we have had of ex tremely well reasoned and cogent arguments on Amendment after Amendment on this Bill, on the Finance Bill, and on the Industrial Development Bill, but this is a matter which appeals to the heart, and I put forward this sugges-
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tion. If, in fact, the Minister is not willing to give complete exemption—and I appreciate that he is not willing to do so —in respect of part-timers for less than 21 hours, and then the next difficulty which arises is that he is not willing to have an allocation of about half the amount because of the administrative difficulty, then there is only one simple way out of it, and that is to classify those up to 21 hours as if they were women.
This can be done—administratively. We can classify part-timers as women, and we can classify part-time women as being boys under 18—[Laughter.] I know that this sounds an amusing way of handling it, but the fact is that if we want to deal with this group on the stamp, and we do not want to increase the number of stamps, all we can do administratively is to treat the group which we are dealing with on the full amount as going on the half amount and the ones on the half amount as going on the lesser amount.
In this way we would be able to see that part-time workers under 21 hours would be paying the half rate. I throw this out as a serious suggestion—although it sounds amusing—to try to get over the administrative difficulty not having to have more stamps—[Interruption.] We may have plenty of stamps, but apparently the Government want to save stamps.
Mr. John Hall: Would my hon. Friend not agree that the classification which he is urging upon the Government might lead to some future difficulty?
Mr. Rees-Davies: It might lead to a future difficulty, but the difficulty we are faced with at present is that unless we find an immediate method of saving the situation for the part-timers we shall have the manifold difficulties which have already been outlined to the Committee. I will be fairly brief in indicating a few more.
My hon. Friend the Member for Blackpool, North (Mr. Miscampbell) and my hon. Friend the Member for Worthing (Mr. Higgins) have dealt with the case of the nursing homes. It so happens that by my own home, in Broadstairs, within a matter of 440 yards surrounding it, there are no fewer than 10 examples administrative difficulty of not having to

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There is the nursing home case. In the road in which I live, there are three nursing homes which employ, between them, 25 part-time people. The average wage is £3 15s. a week, and they are paid 5s. an hour. The average woman earns four times that figure, yet those part-timers pay exactly the same amount.
I am sure that the Government would agree that, if they could find a method whereby such people paid only a quarter of the normal rate for 15 hours' work, that would be equitable and right, and I suggest that some method whereby a cheaper stamp is used is the only way to achieve that.
Then, within a few hundred yards of my house, there is a spastics' home, and, nearby, two other homes, one for juvenile delinquents and the other for mentally handicapped children. Each of them employs part-time workers. In one case of course, it will be local authority owned, and that may be able to recover the amount or not even have to pay it. The other two are private, and I suggest that it is unfair to draw a distinction between a local authority home, which may be able to recover the full amount or not even pay it at all, and what I call private enterprise homes which are not covered by charities but by small subscriptions.
Then there is the case of newsagents. Practically all the newsagents and small tobacconists who distribute newspapers are using part-time employees. Is the distribution of newspapers throughout the country to be lost to us, because this is a real factor in the printing and distributing industry?
We think, too, of the catering trade. One aspect which has not been mentioned so far is part-time banqueting in rural areas. Local Rotary and Conservative club dinners are very important to my constituents, as, I am certain, Labour club dinners are to the constituents of the hon. Member for Buckingham (Mr. Maxwell). I am sure that, without those dinners which he attends, they would not be prepared to sustain him in his seat. All these functions are handled by part-time workers, and it is the women in small towns and villages who turn up to do the two or three hours' work, winter and summer, to provide the class of dinner
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with which all hon. Members are so well conversant. It means, for those part-timers, an average of 12 hours' work a week.
Then there are the old-age pensioners. My constituency has a large number of old-age pensioners who are also on National Assistance in the winter. There are about 1,500 of them in the Isle of Thanet alone on National Assistance in the winter and obtaining a certain amount of employment in the summer. They earn about 5s. a hour and do about 15 hours' work a week. Their total earnings vary from £3 10s. to £7 a week. It is quite unrealistic that they should be charged pro rata the same rate—25s. for a man and 12s. 6d. for a woman—as the man earning £1,500 or the woman earning £1,000.
However it is achieved, if there cannot be a total rebate, I hope that the Government will be able to say that the stamp which is to be used for the 12s. 6d. woman can be downgraded so that the man employed part-time can go into that category, and the woman employed part-time can go into a 6s. 3d. category and thus pay half the rate. By overstamping or some method of that kind, it is possible to achieve a half-rate in respect of those people, and I am convinced that, with the assistance of the Postmaster-General or whoever creates this form of stamping, something can be arranged to achieve what I am prepared to believe that the Minister of Pensions and National Insurance is in favour of achieving.
I cannot think that anybody who looks at this problem fairly can believe that it is selective employment—"selective" is the word—to treat the part-time worker on the same basis as the full-time industrial worker. It simply cannot be so. This is to deny the essence of the Bill. But, even on their basis, if it is selective employment, let it be selective, and, if it is, they must find a method of diminution in the case of the diminutive amounts of money which these old people earn.
Mr. Bryant Godman Irvine: I think that this tax will have a bigger effect in my constituency than in any other—[HON. MEMBERS: "No.']—so it might be as well to give some reasons why I urge that the Amendment should be accepted. There is a certain amount of dissent from what I have said. I hope

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that by the time I have finished some of my colleagues will have appreciated that this tax will have a big impact on my constituents, where there are an enormous number of retired people, and as many pensioners as in any other constituency. [Hon. Members: "No."] It seems that some of my hon. Friends dissent from that, too.
My hon. Friend the Member for Beckenham (Mr. Goodhart) said that it would not be easy for his constituents to get work in a factory. I think that it would be much easier for them to do that than it would be for my constituents, who are in the far corner of South-East England, to get a job in a manufacturing industry. If they do not work in the industries available in my constituency, the simple answer is that they will not he able to work at all, and if the Financial Secretary could tell us how an elderly person who, at the moment, is working part-time in my constituency, but who is laid off because of this tax, can get himself, or herself, into an export trade, it would be very helpful.
There are four categories about which I should like to make a few comments. First, I have in my constituency a number of schools, a high percentage of which are boarding schools. These schools provide something which the State does not provide, and there is a strong case for supporting them. People send their children to these schools from all over the world. There are some people who, for various reasons, have to send their children to boarding schools.
These schools have to rely on a certain amount of assistance, and the only assistance available in my area is from elderly and part-time workers, and if they are employed these schools will have to pay twice as much as they would have to pay if they employed full-time workers. I therefore suggest that this tax will have a serious impact on them.
It is perhaps as well to remember that many of the children attending these schools come from abroad. In one school, a number of the pupils come from the United States, and a good deal of the money content in these schools comes from outside the sterling area.
The hotels in my area provide a considerable amount of employment. Nobody can suggest that they have over-staffed
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themselves. I am constantly receiving letters urging me to obtain permits for people to come here from different parts of the world so as to help these hotels to keep going. The only way in which people running hotels in my constituency are able to keep going is by getting elderly part-time assistance.
11.0 p.m.
The other difficulty that arises is that during the winter months they may want to keep these people, and hotels are not so full in the winter as they are in the summer. If a hotel cannot keep open in the winter it will lose this labour and will find it very difficult to replace it when summer comes round again.
I therefore ask the Minister to examine the situation in respect of hotels in my type of constituency. The idea that they are overstaffed is nonsense. If they are unable to keep such part-time staff as they have because they are having to pay a tax of twice the amount that is paid in respect of full-time employees, their standards will fall, and then foreign visitors, who come to my constituency in numbers as great as in any other constituency because it is near the Continent, will not get the service that they expect.
The third category includes such people as shopkeepers, pharmacists, the proprietors of laundries, and other people who have been referred to by other hon. Members. I have received many representations from chambers of trade and chambers of commerce about the difficulties that will arise as a result of the imposition of this tax. I know a laundry where 235 out of the 274 people employed are working part-time. That laundry specialises in doing work for hospitals, schools, charitable institutions and shipping lines. If it has to pay in respect of the part-time people as well as the full-time people it has no doubt that it will have to pass on the cost in some way to its customers.
A case has been made out for the wholesale pharmacists. I am concerned with the retail pharmacists. I have received a number of representations from them about the difficulties which will arise because they have to rely on part-time workers.
Finally, on a number of occasions when we debated the Finance Bill, as well as in

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our debates on this Bill, the Chief Secretary has said that this is not a tax on employees, but on employers. In my constitueny the difficulty is that many of the employers are themselves elderly persons. I gave the right hon. Gentleman some examples recently of employers in the 70-plus category, who have to have some assistance. They employ somebody part time. I gave the right hon. Gentleman the example of a person over the age of 80 who employs somebody for seven hours a week. He is working on a very slender margin.
Mr. MacDermot: The hon. Member realises that no tax would be payable in that case?
Mr. Godman IrvineThen it must be for over eight hours a week.
Mr. MacDermot: The hon. Member may have forgotten that even if it were payable it would be refunded under the terms of the Bill.
Mr. Godman Irvine: That is not a very simple arrangement for somebody when he reaches the age of 80. I ask the Financial Secretary to consider the case of the employer who is of an advanced age and who employs people part time whether it be for seven or 17 hours a week.
The other annexe to that point is that a number of these people have to go into homes in due course. There is a large number of such homes in my constituency, and the effect upon them will be very serious. Therefore, there will be a greater impact than in some others if there is not complete agreement on that proposition.
Mr. John M. Temple: At 6.20 a.m. yesterday morning, I glanced up at Big Ben as I was walking home to my flat. I was surprised to see a large number of London buses driving down the Embankment. A number pulled up outside Scotland Yard. I wondered what was happening in Scotland Yard that buses were arriving at that hour. Out of those buses descended a crowd of women, who were going to clean up the mess at Scotland Yard. Some of them were possibly coming to clean up the mess in the House of Commons.
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I was very interested in those women. Some of them were young women; some of them were very well dressed. I wondered how much work the Government were giving these women employed in contract cleaning. I think that I was the first during the debates on this Measure to use the words "contract cleaning "—
Sir D. Glover: It was me.
Mr. Temple: I will not dispute that. In HANSARD there is a report of an interruption which I made, and everyone laughed when I mentioned contract cleaning.
I thought that I would follow this matter up, particularly with the Chief Secretary. So I asked, in a Question on 28th June,
" What proportion of Government offices in central London are cleaned by outside cleaners under contract; ".
I am glad that the Financial Secretary to the Treasury is on the Government Front Bench. He has my sympathy this evening: he has not a friend on either side of the Committee—
Mr. Diamond Mr. Diamond indicated dissent.
Mr. Temple: In the whole of my Parliamentary experience, I have never seen such a friendless Front Bencher. The hon. and learned Gentleman gave me an interesting reply. He said that approximately two-thirds of the cleaning work in Government offices was done by contract cleaners, and went on:
" The saving… is… about £430,000 per annum."—[OFFICIAL REPORT, 28th June, 1966; Vol. 730, c. 122.]
So, by employing contract cleaners, the Government are saving nearly half a million pounds in Central London alone. I wonder how much they are saving all over the country.
The Prime Minister today expressed the intention of keeping both prices and costs stable. I can inform the House that the effect of the Selective Employment Tax on the contract cleaning industry is bound to raise prices by about 15 per cent. If the Government are determined that their costs shall be kept steady, they will not be able to employ these contract cleaners because they will be driven out of business. They are giving a tremendous amount of employment in the part-time sector: about 90 per cent. of their employees are part-time.

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The only alternative for these contract cleaners is to employ full-time men and women who will work through the night. I do not imagine that any of those contractors would wish to engage in an entirely anti-social undertaking. Just because they are not able to get people to work for a short shift in the morning and another in the evening—a different squad—-they would have to employ part-time men and women working entirely through the night. That would be entirely anti-social. I would not regard it as being in accord with any Government's policy, and it is certainly not the policy of the Conservative Party.
Contract cleaning is important. It is only one aspect of part-time employment. I have explained the great saving which the Government and large industrial organisations are making from employing contract cleaning.
Another aspect of part-time work arises in respect of the type of constituency l represent—significantly, a Tory seat. I have an idea that this deep-laid plot is aimed at Tory seats. It is significant that Tory seats are mostly those in which a high proportion of employment is in service industries, which are to be taxed. A high proportion of the seats represented by hon. Members opposite are industrial seats, and manufacturing industry will get a bonus. Is this a fluke, or is it by design? I have a suspicion that it is by design. In my constituency there is a high proportion of men and women—pensioners—who are helping out in the hotel industry and in the distributive trades.
Agricultural workers—agriculture is a neutral zone—retire at the age of 65, but many of them take up part-time gardening, tilling the land just as much as if they were in agriculture. These men are to be subject to the tax if they work more than eight hours a week.
These proposals for part-time workers are disastrous and I am not surprised that the Treasury Bench is so friendless this evening.
Mr. John Farr: Reference has been made to the effect of the tax on part-time workers employed by wholesale pharmacists. I want to refer to the even greater effect of the tax on retail pharmacists. A wholesale pharmacist must depend on full-time workers.
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A much higher proportion of the employees of the retail pharmacist are part time, perhaps married women who know the different drugs and medicines which are needed and who come in for a few hours a day or a week to help out.
Some specific points have been raised in letters I have received. Leicestershire is the hub of the nation's shoe and hosiery trade. The county has the nation's lowest unemployment figure. This condition has existed for some time, although I hesitate to think what the effect of the measures announced by the Prime Minister will have on the nation's unemployment figure. However, there is a high level of employment in Leicestershire.
The result is that all the varied garment industries in Leicester, in the county and throughout the Midlands have to depend on part-time labour, because full-time labour cannot be obtained. All the workers are tied up largely in the hosiery and shoe industries. In this part of the Midlands employers must employ part-timers, or shut up shop.
I want to call some examples to the attention of Treasury Ministers. I have received representation from a firm of wholesale hardware merchants. The firm says that for over 100 years it has been providing useful service in supplying to the public, to local authorities, and to the building trade materials and fitments for industrial and private construction work.
The managing director of this firm said that if the S.E.T. were applied to last year's figures, on the number of part-time workers he had to employ it would have the effect of absorbing over 40 per cent. of the firm's net profit before tax, and the effect on the previous year would have been to absorb no less than 80 per cent. of the profit before tax.
11.15 p.m.
I wish to refer to two other industries —launderers, who have been mentioned, and dry cleaners, who have not been mentioned. My hon. Friend referred particularly to part-time cleaners in laundries and I will mention dry cleaners. In dry cleaning, many of the employees are women and no less than 25 per cent. of all the employees in dry cleaning are part-timers.

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The Minister realises that dry cleaning plays an important part, perhaps an unsung and even an unspoken part, in the national economy. It helps to preserve garments by proper cleaning and treatment and lengthens the useful life of a garment. In this way costly imports are saved, and the length of life of our garments can be extended. There is a very large female labour force in dry cleaning. Women represent three-quarters of the labour force of dry cleaners, and over 25 per cent. of these are part timers.
There is no doubt that if the incidence of this unfair and savage tax prevents part-time women workers from putting in a few hours' work a week because the employer cannot afford to employ them, it will have a serious effect on national efficiency and on a very useful and productive industry.
What about British Legion clubs? I have been unable to find out, even although I have attended most of the debates about the tax, what is the position of the individual British Legion club. I understand that the British Legion as a movement will be treated as a charity, but what is the position of the part-time worker who works for a few hours a week in a British Legion club? Will this tax have to he paid in respect of him or. because the British Legion is to be treated as a charity, will the employees in clubs throughout the country be treated in the same way?
Not only British Legion clubs, but many other clubs are affected. I will not make the obvious reference to Conservative clubs. Instead, I will refer to a working men's club, the representatives of which came to see me the other day. It is a very small club with very few members, but it engages some part-timers to provide amusement and entertainment for the members in the evening. This club will have to pay £9 a week in Selective Employment Tax—£450 a year. This picture can be repeated in working men's clubs in smaller towns throughout the country. The tax can make the difference between bankruptcy and solvency for these clubs.
I sat right through the night during the debate on the Finance Bill relating to the hotel and catering industry. I wished to make some remarks about part timers in
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that industry, but, unfortunately, I was unable to catch your eye, Sir Eric.
I shall try not to paint the picture that was so successfully painted by my hon. Friends from seaside towns and tourist centres, but the picture of the application of the tax to the small hotel in a small market town in a Midland shire or, indeed, in any part of the country. My hon. Friend the Member for Blackpool, North (Mr. Miscampbell) spoke of the savage effect the tax would have on the hotel industry in Blackpool, and we have also heard of the savage effect that it will have on seaside and tourist hotels elsewhere.
But, in addition, in many Midland towns and market towns one of the most important centres is the little country hotel, which is so dependent on the part-timer not only to serve behind the bar, but to cook, to act as the waiter and help as the chamber maid and in many other ways. These part-timers cannot be channelled into another industry. They are likely not to be employed by many of these hotels if the tax comes into force. and in many of the market towns there is no manufacturing industry to which they can be transferred. The net result is likely to be that they will stay at home and live on the old-age pension for which many of them qualify.
I stress the invaluable part that married women play in a part-time capacity in many industries, particularly in nursing. Skilled physiotherapists and nurses, perhaps with many years' training at great expense to the State, who have left to get married, are prepared to come back to do a few hours' work a week, but they will be discouraged. The job will not be there for them if the tax comes into operation.
We have heard examples of the effect the tax will have on some of the older people. A pensioner of 67 or 68 came to me the other day. He wanted a part-time job in a garden, and I had to tell him that if the Bill became law such a job could not be found for him. He is not very well, and cannot work more than 12 or 14 hours a week, but he is the type of man who can still play a useful part in society. Yet there is a threat to people in this category, because employers will not pay the full rate of tax for an elderly man whom one employs as much to help him as to help oneself.

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The Bill is very bad. For Treasury Ministers not to allow exemptions for part timers who work 21 hours a week or under is a disgraceful imposition, and I shall seize with relish the opportunity to vote for the Amendment.
Mr. Paul Hawkins: It is sad to look at the empty Government back benches. Most hon. Members opposite are ashamed to be here, a id those who are here are obviously ashamed to oppose the Amendment.
I speak from the point of view of the rural areas. Scotland, Devon and Cornwall, and Norfolk are lower-paid areas, but we shall have to pay millions of pounds to higher-paid industrial areas, and the rural areas contain very large numbers of part-time workers who cannot possibly obtain industrial work in factories. It is a most unfair tax. People grumble at taxation, but accept it if it is necessary; but they do not accept unfair taxation. That is why the Government benches are so empty.
I will give three examples of how the tax will affect some of my constituents. Two examples concern seasonal workers, who must present tremendous administrative difficulties. My business of a farmers' livestock auction employs 25 or 26 men for nine or 10 hours every Tuesday for part of the year and for seven hours for the rest of the year. We are told that for the weeks when the men work less than eight hours we shall not have to pay any tax, but when they work eight or more hours we shall have to pay. Imagine the difficulty that this will present to those paying and collecting the tax. Fruit pickers, vegetable packers and others are seasonally employed. Some weeks they will work 15 or 20 hours and others six. It will present enormous difficulties.
My constituency has three privately run old people's homes, and the majority of the workers there are employed part time doing an extraordinarily good job looking after people in their last years. The tax will add a big burden to the running of the homes. I believe that it will create great injustices for everybody in rural areas.
The Bill is an extremely bad piece of legislation. It is unfair, and extremely badly thought out. If the tax had been a poll tax for evrybody at a third of the
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rate, I think we should all have accepted it, for it would have enabled us in good times to reduce the main taxation. But the Bill is rotten, unfair and totally incompetent, and I shall have great pleasure in voting for the Amendment.
11.30 p.m.
Mr. MacDermot: We debated the subject of part-time workers at considerable length when we were considering the Finance Bill in Committee and on Report. Naturally, we have now had another full and very interesting debate on the subject. However, I think it fair to say about the speeches that we have heard today that it has been a question not so much of new arguments being adduced as of new examples being given illustrating the arguments previously put forward. [HON. MEMBERS: "No."] I should be interested to have my attention focused on new arguments. I sat through all the previous debates—some of the hon. Gentlemen saying "No" did not—and I recall arguments I heard then that I have heard again tonight. We have heard them illustrated from examples of a wealth of different industries and activities. I am sure that hon. Members will not expect me to deal with individual examples, but rather with the general underlying principles upon which the argument is based.
Some hon. Members suggested that there should be complete refund of the tax for part timers, others that a fair solution might be to have a proportionate refund or lower rate of tax for them. The hon. Member for Worthing (Mr. Higgins), in a powerful speech dealing particularly with the problems of nursing homes, argued that for part timers there should only be a half rate. I remind the Committee that 90 per cent. of part timers working between eight and 30 hours a week—those working less do not have to have the tax paid—are women. The rate for women is half that for men. This reflects the very high incidence of part-time workers among women. Broadly speaking, the incidence of the tax is related to the average earnings for people in different categories.
Last time I stated this, the hon. Lady the Member for Finchley (Mrs. Thatcher) challenged me. I have looked up the figures since then. The rates of this tax

803
were based on the average earnings as disclosed by the Family Expenditure Survey for different classes of employees in the various services, excluding public administration and defence, but including transport and communications.
The tax rates are 25s. for the adult male, 12s. 6d. for the adult woman, 12s. 6d. for a boy and 8s. for a girl. If we had followed exactly the proportions of the average earnings of people in these categories, the same figure would have been produced for the adult male, lls. 3d. for the adult woman, 12s. instead of 12s. 6d. for the boy and 7s. 3d. instead of 8s. for the girl. I repeat that the structure of the tax takes account to a substantial degree of the fact that the earnings of part-time workers are lower and that the incidence of the tax on their employers is, therefore, at a lower rate in general than for full-time workers because of the high incidence of part-time work among women.
Sir K. Joseph: Surely the hon. and learned Gentleman is giving the average earnings for full-time women workers. What is at issue is the earnings of part-time women workers.
Mr. MacDermot: No. I am giving average earnings for all women and the point I have made is that a very high proportion of women employees are part-timers and an enormously high proportion of part-timers are women. Indeed, 90 per cent. of all part-time employees are women.
Sir K. Joseph: But only about one-quarter of all women employees work part-time.
Mr. MacDermot: I am not suggesting, and never have, that the rates were proportionate to the hours worked. What I have said is that, broadly speaking, the high incidence of women among part-time workers is reflected in the rates and there is some gradation as a result.
A very large section of part-time workers will qualify their employers for either the premium or the refund. The right hon. Member for Leeds, North-East (Sir K. Joseph) suggested, I think in error, that the Ministry of Labour Gazette had given a figure for part-time women workers in the manufacturing industries
804
of about one-third of a million. Had the right hon. Gentleman turned the page in that document he would have seen that the column from which he was quoting continues and that the figure given is 480,000 and not one-third of a million.
I have with me figures, based on estimates, showing that of the part-time workers, just over 50 per cent. work in industries which are liable to pay the tax without the refund, and just under 50 per cent. who will qualify their employers to either the refund or premium—and of those the great majority will be for the premium and not for the refund.
Of a total of 905,000 who, it is estimated, will qualify their employers for the refund, 528,000 will qualify their employers for the premium. This shows that for a substantial part of the part-time employees, there will be no disincentive. On the contrary, there will be a slight incentive the other way.
Sir Frederic Bennett: So what?
Mr. MacDermot: So what indeed. It is being suggested that the greatest weight of this tax will be to act as a disincentive to part-time employment. I am pointing out that only a part of it could operate in that way and that the other part, nearly a half, will operate in the contrary direction. It is a matter of balancing the different factors.
Mr. Temple: The hon. and learned Gentleman's argument would be clearer if he would quote the figures for part-time workers alone. He is confusing the issue by referring to part-time and full-time statistics.
Mr. MacDermot: The last statistics I quoted were for part-time workers alone.
Dame Irene Ward Dame Irene Ward rose—
Mr. MacDermot: No. I will gladly give way to the hon. Lady later. My argument is becoming sufficiently disjointed.
Hon. Members: Give way.
Dame Irene Ward: I have sat through the whole of this debate. I am surely entitled to put one question to the hon. and learned Gentleman. Is it not a fact that the people in the service industries are in no way affected by his argument

805
so far? It is the other people about whom we want to hear from the Financial Secretary.
Mr. MacDermot: I am glad to know that the hon. Lady has been following my speech so far, because I had intended to direct my next remarks to dealing with those part-timers employed in the service industries.
Dame Irene Ward: Jolly good. Thank you.
Mr. MacDermot: The primary argument on this issue is that this tax will act as a strong disincentive for employers to employ part-timers in the services. This point was emphasised by the hon. and learned Member for Montgomery (Mr. Hooson). It has been stated that, as a result of this tax, employers will seek to employ full-timers instead of part timers. In the existing National Insurance contributions system there is already an incentive for employers to employ full-timers rather than part-timers if they can. Certainly, employers are not now going to employ two part-timers instead of one full-timer and thereby have to pay double their contributions in stamps.
The fact is—and all the arguments have been based on this fact—that there is great economic pressure on employers to employ part-timers. That is the main argument against the whole of the assumption on which the argument of hon. Members opposite is based—this assumption that because employers have to pay this tax they will start to dismiss their part-timers. They will not, because they will need the employment of these people just as they need it now.
Then it has been said that as a result of the measures announced today, with the reduction in demand, employers will employ fewer people than they did before, and that this is an inevitable part of the redeployment process at which these measures are aimed. Again, if an employer, as a result of a reduction in demand, will have to reduce his staff, he will not be affected in that decision or deterred from making that decision because he is exempted from the Selective Employment Tax. If he does not need to employ any more because of the reduction in demand, he will not hoard the labour and keep on a part-time 'employee as a result of the tax.
Mr. Gower: Can the hon. and learned Gentleman address himself to a major question that arises here? Many of these people who are employed in the service industries are, by definition, unlikely or unable to work in other industries. Therefore, what is the purpose of the tax which affects them?
Mr. MacDermot: I give notice that I do not intend to give way any further, because every time I do give way an hon. Member asks me to move on to my next point.
Dame Irene Ward: If the hon. and learned Gentleman came to it more quickly, we should not waste time.
Mr. MacDermot: If I was not interrupted so much, I would find it easier to proceed more quickly.
As I said when discussing the subject on the Finance Bill, it is our belief that the fears expressed by hon. Members opposite about the effect of this tax on part-time workers are exaggerated. But I also said that we would take very careful note of the arguments that have been adduced. As I conceded then during the debate on the Finance Bill, the incidence of the tax is to some extent, though to a more moderate extent than has been argued, disproportionate in its weight in respect of the employment of part-time employees. I spoke then of the difficulties, within the framework of this tax, of making an exception for part-time employees.
We were urged in one debate, in which the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) spoke powerfully, that we should make an exemption for a particular category of people within the National Insurance field—a somewhat illogical group from the point of view of this tax, but it was urged that we ought to make an exception for them and either grant an exemption or a different rate for them. I gave the reasons why we did not feel that that was the right thing to do.
Now we are being asked whether some machinery is possible by which we could devise a repayment system which would be discriminatory and selective within the sphere of the part timers. We are discussing, in particular, an Amendment, and other Amendments grouped with it which are variations on it, suggesting

807
that there should be a refund in relation to people who are employed between eight and 21 hours a week. I must tell the Committee that we are able to find no practical way whatever of devising a refund system on the basis of part timers. I can explain very briefly why.
If there is to be a refund system, neither the Ministry of Labour nor the Ministry of Pensions and National Insurance has any list of people in the employment of different employers, still less of part-time employees. Therefore, applicants for such a refund would have to make a return of the numbers whom they said they had in their employment during a particular period and who were working a given number of hours.
That could be done either with or without names. If it was done there is no practical way in which that information could be checked. It would have to be taken on trust.
11.45 p.m.
Mr. Pardoe: Can the Financial Secretary say how the Ministry of Pensions and National Insurance at present assesses whether someone has worked more or less than eight hours?
Mr. MacDermot: I have said that I would not give way again because I would be coming to the point. I was coming on to that point and if the hon. Gentleman had been present when we were debating the matter on the Finance Bill he would know the answer, because I gave it then.
With the eight-hour exception for National Insurance there is a built-in policing system, because the employee has an interest to see that he is not returned as having worked less than eight hours when he is working more, because he will lose his National Insurance contribution, rights and benefits.
This does not operate on a 21-hour basis, which has no significance from the point of view of a man's insurance rights. It would obviously be wholly impracticable for the Ministry of Labour, or whichever Ministry was concerned, to police and check the claims made by employers on that basis. We would be in the position of paying out enormous sums of public money entirely on trust, without any practical means of verification.
808
My hon. and learned Friend the Member for Warrington (Mr. W. T. Williams) was the first to anticipate and recognise this and to say that if a solution was to be found he felt that it could only be found within the framework of the National Insurance stamp system. This was repeated by other hon. Members. I do not see any approach that we could make while we are operating this on the basis of the National Insurance stamp, other than through the mechanism of the stamp.
I have told the House on the Finance Bill what the difficulties are there. I have been asked to look at this again and I can give the assurance that we certainly will be doing so. I can assure hon. and right hon. Gentlemen that we appreciate the problem and that we will look further at it and consider how the Measure is operating and what the facts are, whether the fears expressed by the hon. Members opposite are realised, or whether our more sanguine approach is justified. If it is shown that hon. Members opposite are right and that we are wrong, and action is required, it will require a fairly considerable alteration to the National Insurance system so that we can devise a mechanism by which we could make a separate category of part-time workers.
This could not be achieved in time for the launching of this scheme, which will be starting in September. We will have an opportunity in the Finance Bill to operate as from the beginning of the next financial year. It is only a six-month period from that time when the scheme starts and within that period we can make any adjustments which are proved to be justifiable and necessary. Meanwhile, I must advise the Committee to reject the Amendment.
Mr. Rees-Davies: Does the right hon. Gentleman agree that what I was suggesting earlier, a differential rate stamp, is a practical suggestion, subject to the time which the Minister of Pensions and National Insurance would need to put the differing rates on the stamp?
Mr. MacDermot: The suggestion of the hon. Gentleman has already been looked at, and I do not think that it is workable. All that I am saying is that it would be necessary to devise new categories of stamps to improve the situation.
Mr. J. B. Godber: Having listened to the Financial Secretary it becomes more and more clear why we had a Guillotine on this Bill. Such totally inadequate replies as we have had are enough to exasperate any Opposition and would certainly have led to prolonged discusion in the normal way. I am sure that all my right hon. and hon. Friends will feel that after the cogent arguments and points that have been put from all sides of the Committee the reply which we have just heard has been one of the lamest that any of us can recall.
Throughout the debate on this important series of Amendments relating to part-time workers it has been extremely noticeable that every speech without exception. apart from that of the Financial Secretary, has been attacking the Government. The speeches from the hon. and learned Gentleman's own side have been harshly critical, although one of his colleagues, after attacking the Bill and supporting the Amendment, said that he would follow the convention of voting for the Government. I suggest that when Government supporters have been reduced to that stage, it does not look a very happy future for the Government.
The Financial Secretary must admit that all the speeches, from both sides, have concentrated on the unfairness of this tax concerning part-time workers. The speech to which we have just listened reflects the Financial Secretary's feeling that that is abundantly justified. He has based himself, we understand, on the impracticability of dealing with the matter. If one introduces a tax, one should work out the practicability of it first. That is the sort of thing that is normally done by Governments. We certainly find it exceedingly strange to have that argument put forward as the major reason for not granting an Amendment. We on this side, therefore, are bitterly disappointed with the reply which we have just heard.
I do not propose to go through again the many and cogent arguments which have been put forward from hon. Members on this side. I merely pick up the point, made by my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies), that as this is a selective tax and we are dealing with selective employment repayments, the fact that we are dealing with part timers makes the degree
810
of selectivity much worse. It means that it impinges much more severely on the part timers in the industries which do not get repayment than it does on the full timer.
We have, therefore, the distinction between manufacturing industry, in which there is to be repayment and premium, those industries which get repayment and those which do not get, either. It is in these latter industries that the savageness of the imposition on part timers really comes about. This has been borne out abundantly in the speeches to which we have listened.
Various categories have been brought to our attention— shop workers, particularly in retail food distribution, the distributive trade generally—
Sir John Eden: Will my right hon. Friend give way? Since he has referred especially to the distributive trade, may I say that a very relevant passage which appeared recently in the National Plan indicated the need for the distributive trades to develop fully the use of part-time staff. Is it not extraordinary that this encouragement should have been given in the Plan to develop the use of part-time staff, but that in the Bill the Government are trying to do the very reverse? It is no wonder that the Chief Secretary is on the point of resignation.
Mr. Godber: I am grateful to my hon. Friend for his intervention, but I do not think that the Chief Secretary—
Mr. Diamond: Will the right hon. Gentleman allow me to deny that rumour? I feel reasonably assured that if I were to offer my resignation it would be accepted immediately.
Mr. Quintin Hogg: My hon. Friend meant the First Secretary.
Mr. Godber: I am sure that some sections of the Committee are relieved to have that assurance from the Chief Secretary.
I am grateful to my hon. Friend for pointing out the complete illogicality of the Government's approach as opposed to the National Plan, but he recognises, as we all do, that the National Plan is virtually dead and that its author is very sick indeed. I sympathise with him in

811
some degree in this predicament in which he is placed.
Nevertheless, the fact remains that upon all these distributive trades and the whole area of services and work which we have been discussing upon this Amendment the impact of this tax is harsh and savage. There have been some extremely strong criticisms of it; indeed, one of the Financial Secretary's hon. Friends, the hon. and learned Member for Warrington (Mr. W. T. Williams), referred to the tax as a whole as being a rough and rude instrument. In so far as it impinges on these part-time workers I think that the criticism should be even stronger than that.
We have had references to all these categories of workers. We have had references to the cleaners. We have had references to the Mrs. Mopps, for whom I think there is a particularly strong feeling of sympathy because of the injustice to those excellent ladies who do such good work. We have had references to laundries, nursing homes, homes for old folk, hotel workers. All these categories of workers are being savagely hit by the imposition of this tax, in that their employers are having to bear the whole range of the tax, and it cuts right across the whole field.
In particular, there have been references to the elderly, to whom I also would make a particular reference. The point has been made tonight by various of my hon. Friends that there are social as well as economic reasons why the elderly should be encouraged to remain at work. Here is a tax by which they will be prevented from doing so. Those of us who also have been Minister of Labour, as one or two of my right hon. Friends and I have, know from the social point of view and also, of course, from the economic point of view, the need to try to encourage these part-time workers, the elderly in particular. There is a feeling of sympathy with their desire in many cases to go on at some useful job. These are the people who will be not only discouraged, but prevented from doing that.
I think that I can put the position probably more clearly than in any other way by quoting from a letter I have received from a constituent. Various hon. Members have quoted this evening from
812
letters they have received. This letter does put in a nutshell the effect of the tax on the employment of old-age pensioners who are doing small jobs to eke out their incomes. My constituent writes of the absurdity of the tax and its effects on the part-time workers and old-age pensioner part-time workers, and he says:
" I employ an old-age pensioner 20 hours a week to help in the garden. From this the Chancellor gets 10s. Income Tax and 14s. 1d. in National Insurance. If I am taxed 25s. I shall have to reduce his hours to eight a week, which means no stamp, no Income Tax, no Selective Employment Tax. The net result of the Chancellor's wisdom is a loss of 24s. Id. to the Revenue and a loss of income to the man employed, who will only be doing eight hours instead of 20."
My constituent adds:
" It does not make sense to pay 39s. Id. with National Health Insurance and S.E.T. for 12 hours for an old-age pensioner."
That, I think, puts in a nutshell the folly of the tax, a folly if judged from the point of view only of the need to bring in revenue. We have been told time and again that the purpose of this tax is to help the Exchequer. That letter shows its practical effect: there is a man being cast off; and that case can be multiplied hundreds and thousands of times over. This is the sort of thing my hon. Friends have all been emphasising.
Some of them have reminded us of the particular problem in the rural areas. If redeployment of labour is needed in the rural areas, it is no good putting a part-time worker off when there is no alternative employment available. That is a very serious aspect, as any hon. Member representing a rural constituency will know. Many part-time workers are employed in agriculture, mainly seasonal workers, and, admittedly, the amounts paid in respect of them will now be fully recouped. But in respect of those employed in trades ancillary to agriculture, of whom there are a great many, there will be no recoupment at all. I have in mind firms dealing in agricultural machinery and repairs to machinery, corn merchants and, in particular, agricultural and horticultural co-operatives.
12 p.m.
The co-operatives are something which the Government and their predecessors have encouraged, and a large number of women are employed part-time in them. But these people are not included in the

813
classification to enable them to get repayment. It could be argued that they should seek reclassification, and I do not know what assistance will be given there. But, as things stand at present, part-time workers in a co-operative venture will not be able to get recoupment, whereas other people doing similar work on nearby holdings will get it.
This selective tax is grossly unfair in its selectivity, and that is the main criticism which we raise. It is particularly unfair in relation to the part-time worker, where the effect is doubled many times over.
The whole debate this evening has taken place against the background of the statement which the Prime Minister made this afternoon. It is very important, in that connection, to consider what has been said by Government spokesmen about the part-time worker in the discussions that we lave had both on the Finance Bill and the Second Reading of the present Bill.
On the Second Reading of the Finance Bill, the right hon. Gentleman the Chief Secretary said, referring to part-time workers:
" So long as the policy of full employment is maintained—and this the Government are determined to do—it does not seem that there can be an overall falling-off in the need for workers in these groups."—[OFFICIAL REPORT, 25th May, 1966; Vol. 729, c. 485]
In winding up the Second Reading of the Selective Employment Payments Bill, the Chancellor of the Exchequer was much more explicit when he said, in relation to part-timers:
"…we are introducing this tax in a period of very full employment. There is at present a great swirling around of people offering jobs to part-time workers ".
A little later, he said:
".…this is a problem which we must look at carefully. We will have to see how it operates, remembering that we are operating in a condition of full employment."—[OFFICIAL REPORT, 23rd June, 1966; Vol. 730, c. 1046–7.]
What did the Prime Minister say today? He said that what is needed is a shakeout that will release the nation's manpower. When asked by my right hon. Friend the Leader of the Opposition to clarify that, he talked of 1½ to 2 per cent.
814
unemployment, meaning up to half a million unemployed. With the prospect of half a million unemployed, how can the Financial Secretary or the Chief Secretary pretend that the situation is the same now as when the tax was first proposed?
The whole basis has been changed. That being so, and the fact that the Chancellor rested his argument on the great swirling around of people offering jobs to part-time workers, the whole basis has been destroyed, and the position of part-time workers should be looked at again.
The Financial Secretary must have had that in mind in his very lame reply to what we had been saying, because he rested his case tonight not so much on the swirling around of jobs available, but on the difficulties of excluding part-time workers. In the light of what has been said previously by his right hon. Friends, there is a clear duty imposed on the Government. They brought in this tax and thought that it was a clever one to introduce. It is for them to find a way out of the difficulty that they have created and the injustice that it is creating for the part-time worker.
In the light of what the Prime Minister said today, the Financial Secretary's answer is far from good enough. We must have some improvement in this attitude, and some definite proposals to help out the part-time workers, otherwise many innocent people—in many cases old people, widows, and those who are unable to take full-time jobs, the people who are least able to defend themselves —will be thrown out of employment because of the effects of this tax, apart from the effect of the new measures which the Prime Minister has announced. For this reason we utterly reject the arguments which have been put forward by the Government, and I invite my right hon. and hon. Friends to show their feeling by taking this matter to a Division.
Mr. Pardoe: My reply will be the shortest on record. I find the Financial Secretary's reasons for this tax on part-time employees completely unsatisfactory, and I therefore intend, with my hon. Friends, to divide the House.
Question put, That those words be there inserted: —
The Committee divided: Ayes 234, Noes 300.

Division No. 138.]

AYES

[12.6 a.m.

Alison, Michael (Barkston Ash)

Godber, Rt. Hn. J. B.

Munro-Lucas-Tooth, Sir Hugh

Allason, James (Hemel Hempstead)

Goodhart, Philip

Murton, Oscar

Astor, John

Goodhew, Victor

Heave, Airey

Atkins, Humphrey (M't'n & m'd'n)

Gower, Raymond

Noble, Rt. Hn. Michael

Awdry, Daniel

Grant, Anthony

Nott, John

Baker, W. H. K.

Grant-Ferris, R.

Onslow, Cranley

Balniel, Lord

Gresham Cooke, R.

Orr, Capt. L. P. S.

Batsford, Brian

Griffiths, Eldon (Bury St. Edmunds)

Orr-Ewing, Sir Ian

Beamish, Col. Sir Tufton

Gurden, Harold

Osborn, John (Hallam)

Bell, Ronald

Hall, John (Wycombe)

Page, Graham (Crosby)

Bennett, Sir Frederick (Torquay)

Hall-Davis, A. G. F.

Page, John (Harrow, W.)

Berry, Hn. Anthony

Hamilton, Michael (Salisbury)

Pearson, Sir Frank (Clitheroe)

Bessell Peter

Harris, Frederic (Croydon, N.W.)

Peel, John.

Biffen, John

Harris, Reader (Heston)

Percival, Ian

Birch, Rt. Hn. Nigel

Harrison, Brian (Malden)

Peyton, John

Blaker, Peter

Harrison, Col. Sir Harwood (Eye)

Pike, Miss Mervyn

Body, Richard

Harvey, Sir Arthur Vere

Pink, R. Bonner

Bossom, Sir Clive

Harvey Anderson, Miss

Pounder, Rafton

Boyd-Carpenter, Rt. Hn. John

Hastings, Stephen

Powell, Rt. Hn. J. Enoch

Boyle, Rt. Hn. Sir Edward

Hawkins, Paul

Prior, J. M. L.

Braine, Bernard

Hay, John

Pym, Francis

Brinton, Sir Tatton

Heald, Rt. Hn. Sir Lionel

Quennell, Miss J.M.

Bromley-Davenport,Lt.Col Sir Walter

Heseltine, Michael

Rawlinson, Rt. Hn. Sir Peter

Brown, Sir Edward (Bath)

Higgins, Terence L.

Rees-Davies, W. R.

Bruce-Gardyne, J.

Hill, J. E. B.

Renton, Rt. Hn. Sir David

Bryan, Paul

Hirst, Geoffrey

Ridley, Hn. Nicholas

Buchanan-Smith,Alick(Angus,N—M)

Hobson, Rt. Hn. Sir John

Ridadale, Julian

Buck, Antony (Colchester)

Hogg, Rt. Hn. Quintin

Rippon, Rt. Hn. Geoffrey

Bullus, Sir Eric

Holland, Philip

Rodgers, Sir John (Sevenoaks)

Burden, F. A.

Hooson, Emlyn

Rossi, Hugh (Hornsey)

Campbell, Gordon

Hordern, Peter

Royle, Anthony

Carlisle, Mark

Hornby, Richard

Russell, Sir Ronald

Carr, Rt. Hn. Robert

Howell, David (Guildford)

St. John-Stevas, Norman

Cary, Sir Robert

Hunt, John

Sandys, Rt. Hn. D.

Channon, H. P. G.

Hutchison, Michael Clark

Scott, Nicholas

Chichester-Clark, R.

Iremonger, T. L.

Sharpies, Richard

Clark, Henry

Irvine, Bryant Godman (Rye)

Shaw, Michael (Sc'b'gh & Whitby)

Clegg, Walter

Jenkin, Patrick (Woodford)

Sinclair, Sir George

Cooke, Robert

Johnston, Russell (Inverness)

Smith, John

Cooper-Key, Sir Neill

Jones, Arthur (Northants, S.)

Stainton, Keith

Cordle, John

Jopling, Michael

Steel, David (Roxburgh)

Garfield, F. V.

Joseph, Rt. Hn. Sir Keith

Stodart, Anthony

Costain, A. P.

Kaberry, Sir Donald

Stoddart-Scott, Col. Sir M. (Ripon)

Craddock, Sir Beresford (Spelthorne)

Kerby, Capt. Henry

Summers, Sir Spencer

Crawley, Aidan

Kershaw, Anthony

Talbot, John E.

Crouch, David

Kimball, Marcus

Tapsell, Peter

Crowder, F. P.

King, Evelyn (Dorset, S.)

Taylor, Sir Charles (Eastbourne)

Cunningham, Sir Knox

Kitson, Timothy

Taylor,Edward M.(G'gow,Cathcart)

Currie, G. B. H.

Knight, Mrs. Jill

Taylor, Frank (Moss Side)

Dalkeith, Earl of

Lambton, Viscount

Teeling, Sir William

Dance, James

Langford-Holt, Sir John

Temple, John M.

Davidson,James(Aberdeenshlre,W.)

Legge-Bourke, Sir Harry

Thatcher, Mrs. Margaret

d'Avigdor-Goldsmid, Sir Henry

Lewis, Kenneth (Rutland)

Thorpe, Jeremy

Dean, Paul (Somerset, N.)

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

Tilney, John

Deedes, Rt. Hn. W. F. (Ashford)

Lloyd, Rt. Hn. Selwyn (Wirral)

Turton, Rt. Hn. R. H.

Digby, Simon Wingfield

Longden, Gilbert

van Straubenzee, W. R.

Dodds-Parker, Douglas

Loveys, W. H.

Vickers, Dame Joan

Doughty, Charles

McAdden, Sir Stephen

Wainwright, Richard (Colne valley)

Douglas-Home, Rt. Hn. Sir Alec

MacArthur, Ian

Walker-Smith, Rt. Hn. Sir Derek

Drayson, G. B.

Mackenzie,Alasdair(Ross&Crom'ty)

Wall, Patrick

du-Cann, Rt. Hn. Edward

Maclean, Sir Fitzroy

Walters, Dennis

Eden, Sir John

Macleod, Rt. Hn. lain

Ward, Dams Irene

Elliot, Capt. Walter (Carshalton)

McMaster, Stanley

Weatherill, Bernard

Elliott, R.W.(N'c'te-upon-Tyne,N.)

Macmillan, Maurice (Farnham)

Webster, David

Errington, Sir Eric

Maddan, Martin

Wells, John (Maidstone)

Eyre, Reginald

Maginnie, John E.

Whitelaw, William

Farr, John

Marples, Rt. Hn. Ernest

Wills, Sir Gerald (Bridgwater)

Fisher, Nigel

Marten, Neil

Wilson, Geoffrey (Truro)

Fletcher-Cooke, Charles

Maude, Angus

Winstanley, Dr. M. P.

Forrest, George

Mawby, Ray

Wolrige-Gordon, Patrick

Fortescue, Tim

Maxwell-Hyslop, R. J.

Wood, Rt. Hn. Richard

Foster, Sir John

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

Woodnutt, Mark

Galbraith, Hn. T. G.

Mills, Peter (Torrington)

Worsley, Marcus

Gibson-Watt, David

Mills, Stratton (Belfast, N.)

Wylie, N. R.

Giles, Rear-Adm. Morgan

Miscampbell, Norman

Younger, Hn. George

Gilmour, Ian (Norfolk, C.)

Mitchell, David (Basingstoke)

TELLERS FOR THE AYES:

Gilmour, Sir John (Fife, E.)

Monro, Hector

Mr. Eric Lubbock and

Glover, Sir Douglas

More, Jasper

Mr. John Pardoe.

Glyn, Sir Richard

Morrison, Charles (Devizes)

Mott-Radclyffe, Sir Charles

NOES

Abse, Leo

Evans, Albert (Islington, S.W.)

Mabon, Dr. J. Dickson

Albu, Austen

Evans, loan L. (Birm'h'm, Yardley)

McBride, Neil

Allaun, Frenk (Salford, E.)

Fernyhough, E.

McCann, John

Alldritt, Walter

Fitch, Alan (Wigan)

MacColl, James

Allen, Scholefield

Fletcher, Raymond (Ilkeston)

MacDermot, Niall

Archer, Peter

Fletcher, Ted (Darlington)

Macdonald, A. H.

Armstrong, Ernest

Floud, Bernard

McGuire, Michael

Ashley, Jack

Foley, Maurice

McKay, Mrs. Margaret

Atkins, Ronald (Preston, N.)

Foot, Sir Dingle (Ipswich)

Mackenzie, Gregor (Rutherglen)

Atkinson, Norman (Tottenham)

Foot, Michael (Ebbw Vale)

Mackie, John

Bacon, Rt. Hn, Alice

Ford, Ben

Mackintosh, John P.

Barnes, Michael

Forrester, John

Maclennan, Robert

Barnett, Joel

Fowler, Gerry

McMillan, Tom (Glasgow, C.)

Beaney, Alan

Fraser, Rt. Hn. Tom (Hamilton)

McNamara, J. Kevin

Bence, Cyril

Freeson, Reginald

MacPherson, Malcolm

Bern, Rt. Hn. Anthony Wedgwood

Gardner, A. J.

Mahon, Peter (Preston, S.)

Bennett, James (G'gow, Bridgeton)

Garrett, W. E.

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

Bidwell, Sydney

Garrow, Alex

Manuel, Archie

Binns, John

Ginsburg, David

Mapp, Charles

Bishop, E. S.

Gordon Walker, Rt. Hn. P. C.

Marquand, David

Blackburn, F.

Gray, Dr. Hugh (Yarmouth)

Marsh, Rt. Hn. Richard

Blenkinsop, Arthur

Greenwood, Rt. Hn. Anthony

Mason, Roy

Boardman, H.

Gregory, Arnold

Maxwell, Robert

Booth, Albert

Grey, Charles (Durham)

Mayhew, Christopher

Boston, Terence

Griffiths, Will (Exchange)

Mellish, Robert

Bottomley, Rt. Hn. Arthur

Hamilton, James (Bothwell)

Mendelson, J. J.

Bowden, Rt. Hn. Herbert

Hamilton, William (Fife, W.)

Millan, Bruce

Boyden, James

Hamling, William

Miller, Dr. M. S.

Braddock, Mrs. E. M.

Hannan, William

Mitchell, R. C. (S'th'pton, Test)

Bradley, Tom

Harper, Joseph

Molloy, William

Bray, Dr. Jeremy

Harrison, Walter (Wakefield)

Morgan, Elyetan (Cardiganshire)

Brooks, Edwin

Hart, Mrs. Judith

Morris, Alfred (Wythenshawe)

Broughton, Dr. A. D. D.

Hazell, Bert

Morris, John (Aberavon)

Brown, Hugh D. (G'gow, Proven)

Healey, Rt. Hn. Denis

Moyle, Roland

Brown,Bob(N'c'tle-upon-Tyne,W)

Heifer, Eric S.

Mulley, Rt. Hn. Frederick

Brown, R. W. (Shoreditch & F'bury)

Henig, Stanley

Murray, Albert

Buchan, Norman

Herbison, Rt. Hn. Margaret

Neal, Harold

Buchanan, Richard (G'gow, Sp'burn)

Hilton, W. S.

Newens, Stan

Butler, Herbert (Hackney, C.)

Hobden, Dennis (Brighton, K'town)

Norwood, Christopher

Butler, Mrs, Joyce (Wood Green)

Hooley, Frank

Oakes, Gordon

Cant, R. B.

Horner, John

Ogden, Eric

Carmichael, Neil

Houghton, Rt. Hn. Douglas

O'Malley, Brian

Carter-Jones, Lewis

Howarth, Harry (Wellingborough)

Orbach, Maurice

Castle, Rt. Hn. Barbara

Howarth, Robert (Bolton, E.)

Orme, Stanley

Coe, Denis

Howie, W.

Oswald, Thomas

Coleman, Donald

Hey, James

Owen, Dr. Davis (Plymouth, S'tn)

Concannon, J. D.

Hughes, Emrys (Ayrshire, S.)

Owen, Will (Morpeth)

Conlan, Bernard

Hughes, Hector (Aberdeen, N.)

Padley, Walter

Corbet, Mrs. Freda

Hunter, Adam

Page, Derek (King's Lynn)

Cousins, Rt. Hn. Frank

Hynd, John

Paget, R. T.

Craddock, George (Bradford, S.)

Jackson, Colin (B'h'se Spenb'gh)

Painter, Arthur

Crawshaw, Richard

Jackson, Peter M. (High Peak)

Park, Trevor

Cronin, John

Jay, Rt. Hn. Douglas

Parkyn, Brian (Bedford)

Crosland, Rt. Hn. Anthony

Jeger, George (Goole)

Pearson, Arthur (Pontypridd)

Cullen, Mrs. Alice

Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

Peart, Rt. Hn. Fred

Dalyell, Tam

Jenkins, Hugh (Putney)

Pentland, Norman

Davidson, Arthur (Accrington)

Jenkins, Rt. Hn. Roy (Stechford)

Perry Ernest G. (Battersea, S.)

Davies, Dr. Ernest (Stretford)

Johnson, Carol (Lewisham, S.)

Perry, George H. (Nottingham, S.)

Davies, G. Vied (Rhondda, E.)

Johnson, James (K'ston-on-Hull, W.)

Prentice, Rt. Hn. R. E.

Davies, Ednyfed Hudson (Conway)

Jones, Dan (Burnley)

Price, Christopher (Perry Barr)

Davies, Harold (Leek)

Jones,Rt. Hn.SirElwyn(W. Ham, S.)

Price, Thomas (westhoughton)

Davies, Robert (Cambridge)

Jones, J. Idwal (Wrexham)

Price, William (Rugby)

de Freitas, Sir Geoffrey

Judd, Frank

Probert, Arthur

Delargy, Hugh

Kelley, Richard

Pursey, Cmdr. Harry

Dell, Edmund

Kenyon, Clifford

Rankin, John

Dewar, Donald

Kerr, Mrs. Anne (R'ter & Chatham)

Redhead, Edward

Diamond, Rt. Hn. John

Kerr, Russell (Feltham)

Rhodes, Geoffrey

Dickens, James

Lawson, George

Richard, Ivor

Dobson, Ray

Leadbitter, Ted

Roberts, Albert (Normanton)

Doig, Peter

Lodger, Ron

Roberts, Goronwy (Cae narvon)

Donnelly, Desmond

Lee, Rt. Hn. Frederick (Newton)

Roberts, Gwilym (Bodfordshire, s.)

Driberg, Tom

Lee, Rt. Hn. Jennie (Cannock)

Robertson, John (Paisley)

Dunn, James A.

Lee, John (Reading)

RobimionRt.Hn.Kermeth(St.P'c'as)

Dunnett, Jack

Lestor, Miss Joan

Robinson, W. 0. J. (Walth'stow E.)

Dunwoody, Mrs. Gwyneth (Exeter)

Lever, Harold (Cheatham)

Rodgers, William (Stockton)

Dunwoody, Dr. John (F'th & C'b'e)

Lever, L. M. (Ardwick)

Roebuck, Roy

Eadie, Alex

Lewis, Arthur (W. Ham, N.)

Rogers, George

Edelman, Maurice

Lewis, Ron (Carlisle)

Rose, Paul

Edwards, Robert (Bilston)

Lomas, Kenneth

Ross, Rt. Hn. William

Edwards, William (Merioneth)

Loughlin, Charles

Rowland, Christopher (Meriden)

Ellis, John

Luard, Evan

Rowlands, E. (Cardiff, N.)

English, Michael

Lyon, Alexander W. (York)

Ryan, John

Ensor, David

Lyons, Edward (Bradford,E.)

Shaw, Arnold (Ilford, S.)

Sheldon, Robert

Taverne, Dick

White, Mrs. Eirene

Shore, Peter (Stepney)

Thomas, George (Cardiff, W.)

Whitlock, William

Short,Rt.Hn.Edward(N'c'tle-u-Tyne)

Thomas, lorwerth (Rhondda, W.)

Willey, Rt. Hn. Frederick

Short,Mrs.Renée (W'hampton.N.E.)

Thomson, Rt. Hn. George

Williams, Alan (Swansea, W.)

Silkin, Rt. Hon. John (Deptford)

Thornton, Ernest

Williams, Alan Lee (Hornchurch)

Silkin, S. C. (Dulwich)

Tinn, James

Williams, Clifford (Abertillery)

Silverman, Julius (Aston)

Tourney, Frank

Williams, Mrs. Shirley (Hitchin)

Skeffington, Arthur

Tuck, Raphael

Willis, George (Edinburgh, E.)

Slater, Joseph

Urwin, T. W.

Wilson, William (Coventry, S.)

Small, William

Varley, Eric G.

Winnick, David

Snow, Julian

Wainwright, Edwin (Dearne Valley)

Winterbottom, R. E.

Steele, Thomas (Dunbartonshire, W.)

Walker, Harold (Doncaster)

Woof, Robert

Stewart, Rt. Hn. Michael

Wallace, George

Wyatt, Woodrow

Storehouse, John

Watkins, David (Consett)

Yates, Victor

Strauss, Rt. Hn. G. R.

Weitzman, David

Zilliacus, K.

Summerskill, Hn. Dr. Shirley

Wellbeloved, James

TELLERS FOR THE NOES:

Swain, Thomas

Wells, William (Walsall, N.)

Mr. Charles R. Morris and

Swingler, Stephen

Whitaker, Ben

Mr. Harry Gourlay.

Dame Irene Ward: On a point of order. So many Amendments cannot be discussed in the time allocated, may I ask whether there is an arrangement for the Government to announce which Amendments they would have accepted if they had been discussed?
The Deputy Chairman (Mr. Sydney Irving): That is not a point of order.
Dame Irene Ward: May I ask for your guidance, Mr. Irving? How can I find out what the procedure will be? We shall never know what Amendments would have been accepted?
The Deputy Chairman: For the hon. Lady's guidance, the Government may move any Amendments they wish. Perhaps they will do so during the course of the timetable Motion.
Dr. M. P. Winstanley: I beg to move Amendment No. 263, in page 2, line 23, at the end to insert:
(2) This section applies to the employment of any person who is registered as a disabled person in any establishment or activity not mentioned in sections 1, 3, 4, 5. 6 of this Act, or in other subsections of this section.
The Deputy Chairman: It would perhaps be for the convenience of the Committee if we discussed with this Amendment Amendment No. 130, in page 2, line 38, at end insert:
(c) the establishment employs among its employees at least 5 per cent. who are registered disabled workers.
and new Clause 4, "Disabled workers."
Dr. Winstanley: This Amendment seeks to put persons registered under the Disabled Persons (Employment) Acts of 1944 and 1958 in a neutral position under the Selective Employment Tax. In other words, they will get the repayment so that the tax does not affect them. Unless
820
something is done for these people, and if the Tax goes through unamended, there is not the slightest doubt that it will have a catastrophic effect on the present machinery for dealing with disabled people.
I know that the machinery is very efficient because I am part of it. The Minister of Labour, who has responsibility for the tax, is also part of it. If the tax went through unamended, I believe that all those concerned with the machinery for providing employment for disabled people would find their work very much hampered.
I have had considerable experience of the working of this machinery. As a general practitioner for about 18 years, I have had the job from time to time of finding employment for disabled persons, of assisting disabled persons to keep employment, and of looking after disabled persons when they have lost their employment. As a member of one of the Ministry of Labour's disablement panels, I have been responsible for deciding who should go on the disabled persons' register and who should be assisted by this machinery and, finally, as a former part-time medical officer in industry in an establishment which made considerable use of disabled persons, I am personally aware of the great difficulty which occurs from time to time in finding suitable employment and, indeed, in persuading management to keep such people in that suitable employment.
When the question of disabled persons was discussed in Committee on the Finance Bill, the Financial Secretary went some distance towards conceding that there was a case. I am not saying that he showed any wild enthusiasm, but, after all, he has shown that he is

821
not disposed to react vigorously in any direction. At least, however, he assured the Committee that there was a problem. These were his words:
" But I say at once that my right hon. Friend will be watching and reviewing the working of this tax, particularly in its relation to the disabled, most anxiously and carefully. He will certainly not hesitate to take what steps he can to adjust the form of the tax if these fears to be better founded…."
and he concluded this speech by saying:
" I repeat that my right hon. Friend will watch this position most carefully, and if it is found to be right and possible,"
right and possible, note,
" he will consider what special treatment can and should be made…. to help the disabled." —[OFFICIAL REPORT, 29th June 1966; Vol. 730 c. 1953–55.]
It is my job to show that it is right that the Chancellor should take certain steps arid that it is not only possible but simple 10 take them. I believe that since the Financial Secretary made that statement the matter has become urgent, because since then we have had the statement to which we all listened today from the Prime Minister, who said some things about unemployment. If I remember accurately the words used by the Prime Minister in reply to a question by my right hon. Friend the Leader of the Liberal Party, the right hon. Gentleman said that unemployment would rise but he believed it would not rise to a level which hon. Members in all parts of the House would find intolerable.
The tolerability of various levels of unemployment is a matter on which I suspect there will be some difference of opinion between hon. Members in various parts of the House; people's thresholds of tolerability of unemployment vary. But I am sure that we all expect an increase in unemployment. That increase is relevant to this question. It is relevant to the remarks which the Financial Secretary made in Committee on the Finance Bill. In arguing that perhaps this problem was not as great as we thought the hon. and learned Gentleman said this:
" A full employment society is the greatest protection and security to the disabled person in finding employment."—[OFFICIAL REPORT, 29th June. 1966; Vol. 730, c. 1953–5.]
I agree with the hon. and learned Gentleman. We all agree with him, but we must realise that we are moving into a
822
situation in which we shall not have full employment in the context of this speech.
At present, as the Chief Secretary well knows, unemployment amongst disabled persons is 5½times the national average. If unemployment is to rise, I do not think that the Chief Secretary has any reason to conclude that this ratio will change. Therefore, there will be a considerable increase in the total number of disabled unemployed. At the moment 48,000 registered disabled persons are unemployed. There are 650,000 persons on the disabled persons' register. Of those, 48,000 are at present unemployed in a time of virtually full employment. But with unemployment the situation will get much more difficult.
In talking of the size of the problem it is important to remember that the figure of 650,000 registered disabled persons does not necessarily represent the total number of persons who would be on the disabled register if conditions became very difficult. The tendency is for a disabled person not to go on the disabled persons' register until he loses his employment and finds difficulty in obtaining another job. At this point the Ministry of Labour assists him and sees to it that he goes on the register. The potential figure is very much larger than 650,000 and the potential figure of disabled unemployed is very much larger than the present figure of 48,000, which is bad enough, of those already registered.
We must look at the problem of the employment of disabled persons in a rather different way from that in which we look at employment generally. We have talked a great deal about the need to make our labour force efficient and the importance of not wasting labour. I am sure that every hon. Member agrees that it is essential that we use our labour force efficiently and do not waste it, and for this reason hon. Members in various parts of the Committee are prepared to support any measure which they believe will result in the redeployment of labour and people moving to more important jobs.
But here we are dealing with people for whom it is very difficult to find jobs at all. Again replying on the last occasion—and he was replying to something I had said—the Financial Secretary said that the vast majority of the disabled who find work do it as well as a normal man. This is not correct. It may seem to be correct

823
from a superficial examination—and I mean no criticism of the Financial Secretary; but these people who are working as displaced persons are working with special arrangements and special consideration by management. They may appear to be doing their particular job satisfactorily, but their particular job might not exist at all had it not been created especially for them.
In other words, medical officers all over the country, when examining disabled persons, may say, for example, "This person who is an unstable diabetic must do no shift work." The firm may take him on in a job which according to the Financial Secretary he is doing as well as a normal person, but he is not working shifts. A special arrangement has been made for him. A medical officer may say that a man must have no long periods of standing. Special arrangements may be made to allow him to work in a special place so that he is not standing. Or a medical officer may say, "This man should do no climbing ". Duties which may involve climbing are excluded from his contract. It may appear to the Financial Secretary that this person is working as well as the normal person but in fact he is doing only part of the job.
Mr. Nicholas RidleyMost of these people would be getting the premium. The hon. Member is talking about people employed in manufacturing industry. Would he address his mind to disabled persons in the service industries?
Dr. Winstanley: On the Financial Secretary's own figures, which he gave last time, there are 600,000 registered disabled persons who are employed and more than 200,000 of them are employed in service industries. The considerations which I mentioned apply in service industries as well as in manufacturing industries. I agree that in manufacturing industry a premium is paid in respect of them and that it is not paid in the service industries.
There are many service occupations which apply to people in this category. We have heard about bakeries and about the catering industry. There are a great many disabled people employed in the catering industry and, as the hon. Mem-
824
ber for Sheffield, Brightside (Mr. Winter-bottom) said in the last debate, there are in the catering industry special jobs which are paid at specially low rates for disabled persons. This is not a problem which relates only to manufacturing, for 200,000 of those on the register are in service occupations, many employed through the ancillary organisations connected with the British Legion and with other organisations of this kind. Those 200,000 would in every case be penalised under the tax and handicapped in relation to the retention of their employment. What will happen? We have before us a whole series of measures designed to make employers in service industries look at their wage bill and their list of employees, and scratch their heads and ask. "Who can we get rid of?".
12.30 a.m.
In the end, their attention will inevitably come down on those with whom they have certain difficulties, such as having to arrange special lunch times, special rest periods and all sorts of special consideration not given to ordinary employees. They will also come down on people who, through no fault of their own, are not so productive as others. They will not get rid of efficient productive people who can make a significant contribution to the manufacturing industries that the Treasury wants to help.
Mr. W. E. Garrett: On a point of order, Mr. Irving. Unfortunately, the hon. Gentleman has been in the House only a short while. No doubt he has a limited knowledge of industry, but he is accusing the larger directorates of being inhuman, and that is not so. The fact of the matter, and I speak with personal experience—
Sir D. Glover: On a point of order—
The Deputy Chairman: I am dealing with a point of order, which may turn out not to be a point of order, but I must be allowed to deal with it.
Mr. Garrett: I will make one brief point—
The Deputy Chairman: The hon. Gentleman raised a point of order, and if he is not going to pursue it I must ask him to resume his seat.
Dr. Winstanley: This is what the Chancellor of the Exchequer wants employers to do, and in many cases they will do it. Some people will say that the quota that industry must keep will make it keep these people, but let me remind the Chief Secretary first that there are very large numbers of these disabled persons who work in establishments which are too small to come within the quota arrangements and are not off the necessary scale.
Secondly, there are many people who have disabilities that do not affect them in their present job who nevertheless qualify for inclusion in the disabled persons register. One of the difficulties of the panels operating the disablement scheme is to persuade managements not to fill their quota with people who do not need this particular assistance.
Mr. Garrett Mr. Garrett indicated dissent.
Dr. Winstanley: It is no good the hon. Gentleman shaking his head. I have seen it not once but often, and I have had to deal with it.
Mr. Garrett: On a point of order. With all due respect to the hon. Member for Cheadle. I have had to deal with it as well, and large firms do not—
The Deputy Chairman: Order. That is not a point of order. Dr. Winstanley.
Dr. Winstanley: There is no doubt that this happens. I hasten to acknowledge that there are large firms, little firms and firms of all descriptions all over the country which do their level best to operate the disabled persons scheme. Many do a lot more than they are required to do under the Act. Many fall over themselves backwards to assist. But if new factors, penal obstacles of this kind, are introduced, employers will be virtually forced to take avoiding action.
The Financial Secretary earlier has shaken his head in acute depression about the number of things that he clearly felt should be done but which were not possible. Here is something which the Financial Secretary will admit is not merely possible but easy. These people are readily identified. They are on a register. The Minister now to be made responsible for the tax, the Minister of Labour, is responsible for compiling the
826
register, and it is accurate. There are no technical difficulties in identifying these people, nor are there any difficulties of people getting through the back door. The arrangements operated by the Minister of Labour are efficient and ensure that only people who are really qualified get on the register. So he has an identifiable class of people whom he can easily help.
Mr. Garrett: I have listened with great patience to the hon. Gentleman, but the innuendo behind what he is saying is that those who are registered as disabled are not contributing to the industrial capacity of the country.
Dr. Winstanley: There are no imputations. The plain fact is that disabled people frequently, through no fault of their own, are not able to make the same contribution as fully fit people, and we should help them. As a matter of social necessity we should help them to make a contribution. It is not just an economic problem. We should help them feel that they are helping the community and taking an active part in community life.
Mr. Gower: I have listened with great sympathy and agree entirely with almost all that the hon. Gentleman has said. He said that these people are identifiable. I agree. But he will recall that in the debates on the Finance Bill the Financial Secretary objected, saying that the Government would have to inspect establishments to prove how many people were employed there. Would he comment on that?
Dr. Winstanley: It is true that the Financial Secretary said that, but he has had time to think it over and may now realise that he was wrong. The Ministry of Labour, which is to deal with the tax, has the necessary information; it keeps it up to date, and it is readily available. I beg the Government to think again about this category of people. It would be easy to help them.
There have been suggestions from time to time that the Government have been too ready to help the under-privileged. I do not accept that, but I am sure that every hon. Member feels that the Government have not gone far enough to help this group of people. This is a

827
sensible Amendment. In the terms of the Financial Secretary's speech, it is both right that something should be done and possible for something to be done. We are now waiting for something to be done.
Sir D. Glover: This debate will continue tomorrow, and so I ask the Parliamentary Secretary to the Ministry of Labour to use her influence with the Government on this problem. I am sure that the whole House had sympathy with the Amendment long before the Prime Minister made his announcement yesterday. It is obvious from what he said that there will be an increase in unemployment.
It is even more worrying than that. When the increase in unemployment takes place, a great many service institutions will find it far more difficult to make a profit as a result of the deflationary measures brought in by the Government. Some may find that they are not making a profit and examine their on-costs and decide to reduce their staff. Unless the hon. Lady can get a concession from the Government it is all too likely that staff will be reduced by dismissing disabled persons.
Take a small establishment employing perhaps five or six persons. From a sense of social justice, the employer may have as a cashier a man who has lost a leg or both legs, who can, of course, do the job once he is behind the cash desk.
828
But if the staff has to be reduced through the Government's deflationary policy, that person cannot do any other job in the shop, and if one person has to be got rid of, he is likely to be the one dismissed. It may hinge on the 25s. a week. If such a person is placed in a special category, the employer may say, and I hope he will, that he will keep that person on.
The hon. Lady must realise that there are literally thousands of disabled people in distribution and services whose jobs are at risk as a result of the measures announced by the Prime Minister. She has built up a reputation before entering the House of Commons and since as a woman with a great sense of social justice and I would hate to see her tarnish that reputation by allowing the Government to go on with this Bill without bringing in some alleviation for the disabled.
Mr. Gower: It is a matter of considerable pleasure to support the Amendment, which was moved so clearly, cogently and effectively by the hon. Member for Cheadle (Dr. Winstanley).
It being one hour and eleven minutes after half-past Eleven o'clock, being the time equivalent to the time which elapsed between half-past Three o'clock and the time at which consideration of the Bill was entered upon, The CHAIRMAN, pursuant to Order, left the Chair to report Progress and ask leave to sit again.
Committee report Progress; to sit again this day.

INDONESIA
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Charles R. Morris.]
12.41 a.m.
Mr. Tam Dalyell: My hon. Friend the Member for Brighouse and Spenborough (Mr. Colin Jackson) and I recently returned from Indonesia, where we had the opportunity to meet most of the leaders, including Dr. Sukarno, General Subarto, the Sultan of Jogjakarta, Mr. Malik and the Governor of the Bank of Indonesia. If my hon. Friend catches your eye, Mr. Speaker, he will deal with political matters. I shall raise economic matters.
This debate is fortunately timed in that it gives the Government an opportunity to enlarge on the communiqué issued at the end of the Umarjadi talks. First, however', I regret the emphasis that some newspapers laid on the discussion of British claims against Indonesia aspect of thetalks, particularly headlines such as "Indonesia agrees to damages". My first question to my hon. Friend the Minister of State is whether she would confirm that the main purpose of the talks was to discuss the re-scheduling of medium and long-term debts.
I welcome the reference in the final communiqué to Her Majesty's Government's readiness to take a constructive part in the forthcoming multilateral discussions between creditor nations and the Indonesian Government designed to find a solution to the problem, and I also welcome the announcement in today's Press that the Government are taking part in the 9-nation discussions on the settlement of debts. I would state a preference that these should take place in Tokyo rather than in Paris, London or Rome. There is a certain advantage in having them take place in Asia.
One constructive and practical proposal is for the E.C.G.D. to provide cover for tin dredging equipment. The Governor of the Bank of Indonesia attaches special importance to this, as tin-dredging is a short-term hard currency-earning activity. I went to see the Minister of State, Board of Trade, and officials of the E.C.G.D. to urge them that the normal and understandable deparmental criteria should be waived in this case.
830
Would my hon. Friend care to comment on the discussion which has taken place between her Department and the Board of Trade on this matter?
The second question I wish to raise concerns the rebuilding of the British Embassy in Jakarta. What will the total cost be and how much will the Indonesians contribute? It would seem that, on Socialist criteria—and I do not forget that my hon. Friend the Minister of State is a member of the National Executive of the Labour Party—there are much more important things to do than to erect a brand new edifice in the centre of Jakarta, opposite the Hotel Indonesia. If I were an Indonesian at this time I would be dismayed to see such a building being erected. As a Member of the British Parliament, having heard the announcement of my right hon. Friend the Prime Minister today, I suggest that this project in Jakarta should be among the cuts to be made.
If there is money available, the priorities should be—and I ask my hon. Friend to comment on these suggestions —first, that consideration should be given to reconstituting the British Council, which would now have to be done by special grant—that is, if anything is to happen before 1968—and, secondly, that we should consider the provision of text books in elementary science and of basic equipment for laboratories in Indonesia. My hon. Friend knows that I have discussed this matter with the Ministry of Overseas Development. Under this heading, we should consider the provision of places for Indonesian students in British colleges of technology and regional technical colleges, and facilities for students to gain experience in the British engineering industry. Equally important is the provision of places in teacher training colleges. I have given my hon. Friend notice of my discussions with the Ministry of Overseas Development, and I hope that she is in a position to comment on this issue.
My hon. Friend the Member for Brighouse and Spenborough and I were guests of the Roman Catholic University in Jakarta. The people there have to work in a building which is used during the morning as a secondary school. It is thoroughly wrong to give priority to the reconstruction of an embassy over needs such as these.

831
Britain has a role to play in the Far East, provided we remember that in 1966 the Good Samaritan is not a soldier dressed in a military uniform. He is an engineer, doctor, teacher or merchant who trades in fair prices. Our technical and financial abilities constitute the prestige which in 1966 we have in the world, not military forces or embassy buildings.
12.48 a.m.
Mr. Colin Jackson: I am grateful to my hon. Friend the Member for West Lothian (Mr. Dalyell) for raising this subject, and I agree with him about the reconstruction of the British Embassy in Jakarta. The Indonesian Government have acknowledged that the damage done to the Embassy was wrong. They have admitted liability and it will be rebuilt. However, this is not the time to rebuild it.
Further to the statement today by my right hon. Friend the Prime Minister, there is not only in the United Kingdom a limitation of the construction of large buildings, for reasons of financial stringency, but we should not forget that the Indonesian Government have placed a total ban on new building. To erect a splendid edifice in Jakarta now, when the Government there have stopped new building, even half-completed Government buildings, might have an adverse psychological effect.
The principle of repayment for the embassy having been agreed, and the sum, less than £150,000, not being large, I agree that that money could, particularly at this time, be used more effectively to help in the educational sphere, particularly in the provision of text books. There is a crying need in Indonesia for text books for the study of English and science and a contribution along these lines on our part could be significant for AngloIndonesian relations.
Having been to that country on two previous occasions, in 1953 and 1955, I gained the impression that for a time Indonesia was turning its back on the friendly Western countries and had become obsessed with ideas, particularly during the later period of rule of President Sukarno, which were not related to promoting intelligent international understanding. However, when I visited
832
Indonesia this year I felt that they were coming back into the mainstream of sensible friendship with the countries of both East and West. My feeling is that the United Kingdom is entirely right to take up again a position of positive friendship. One way we can do this is to match the Indonesia good intent on the Sabah and Sarawak frontiers with reciprocal actions on our side. I agree that Her Majesty's Government must await the formal signature between Malaysia and Indonesia, when confrontation is finished, but one would hope that this actual signature will not be long withheld. This stage having been reached, I think we should not be too disturbed by isolated incidents on the frontiers of Sabah and Sarawak.
It is difficult for the Jakarta Government to control units which have lived through a violent period and may be controlled by local commanders who, for a variety of reasons, do not want a return to friendship with Britain. There are undoubtedly small elements of Communist forces on the frontier who have no interest in peace between the two countries, and I hope the United Kingdom Government will not be over-anxious in demanding the total cessation over a long period before we make open indications that we ourselves are withdrawing units. I know the Malaysian Government are anxious for us to withdraw, and I hope we shall be careful that we do not delay too long in case relations once again turn sour.
I was glad to hear the Foreign Secretary comment in his remarks following his visit to Indonesia that he was favourably inclined to Indonesia's support for an Asian States association. I think this is a very encouraging development from the negative anti-foreign bitter attitude of President Sukarno, to move on to Mr. Malik's desire not just for an Asian States association, comprising Indonesia, Malaysia and Singapore, but to look to bringing in Thailand as well and to creating a large neutral prosperous bloc inside East Asia. This would be of enormous benefit to Australia. It would certainly help the Indian sub-continent in feeling that they have a positive, stable partner in the South-East, and I hope that we shall consider leaving S.E.A.T.O., or S.E.A.T.O.'s becoming irrelevant, and an Asian States organisation taking its place with Britain having as a backstop

833
military presence in Australia, and the overall safety of the area being guaranteed by the United Nations.
In a world which has many depressing stories in international relations, this short Adjournment debate registering a positive achievement is one for which the House should have pleasure in allowing time, and I think in future years we shall look back on this occasion as one of the major turning points in development in South-East Asia.
12.45 a.m.
The Minister of State for Foreign Affairs (Mrs. Eirene White): I am sure the House welcomes this brief debate because, as my hon. Friend the Member for Brighouse and Spenborough (Mr. Colin Jackson) has just said, this is one of the more encouraging and constructive turns of affairs in recent months, and in a World which is in many places gloomy and fraught with problems I think we are very glad indeed that things seem to have taken this definite turn for the better. We are also glad that our two colleagues have been to Indonesia and have taken this Parliamentary opportunity of touching upon some of the problems. Her Majesty's Government are much encouraged by the new Indonesian Government's desire to turn from a policy of confrontation to one of restoring international relationships, which have been broken, and restoring the Indonesian economy, which had been run down to a very dangerous degree.
We welcomed the Bangkok agreement and we hope that this will soon be ratified. The ending of confrontation would be a major step towards the restoration of peace in this troubled area. As the House knows, my right hon. Friend the Foreign Secretary had the opportunity earlier this month to discuss the problem of Anglo-Indonesian relations with the Indonesian Foreign Minister, Mr. Malik. As he reported to the House on 4th July he found a great deal of common ground with Mr. Malik on these problems and world problems generally.
My hon. Friend has mentioned an association of Asian states wider than Maphilindo. This is certainly something which we would welcome and which would add to stability in that part of the world. It is not something in which
834
we could take any kind of initiative but we would be happy to see the States concerned bringing themselves together in this way. At the same time we should make it clear, as my right hon. Friend made it clear to Parliament, that it is difficult for us to get our relations with Indonesia on a really satisfactory footing unless there is a cessation of hostilities towards Malaysia.
I take the point of my hon. Friend and I am sure that he will recognise that, although we know that there are difficulties, nevertheless for completely satisfactory restoration of relations and the complete withdrawal of British troops, we would expect that hostile acts should cease. I do not have time to develop these wider issues and I turn to the other talks held last week in London, which my noble Friend the Parliamentary Under-Secretary had with the Indonesian Mission, led by Mr. Umarjadi.
These talks were friendly and provided an opportunity for a wide-ranging discussion of the new Indonesian plans for restoring their country. My hon. Friends referred to the communique issued after the talks, giving a resume of the conclusions reached. It is very clear from the information which we already had and further detailed information provided by the Mission, that the economic position of Indonesia is very serious. We should like to do what we can to help, but our resources are limited. If this was not clear before, the statement by my right hon. Friend the Prime Minister earlier ought to have underlined that.
As the House knows we made an immediate gesture of £1 million in aid. Plans for spending this are under way. The commodities likely to be purchased include spare parts for machines, chemicals including pharmaceuticals, pesticides and fertilisers and possibly some purchase of textiles. All of these are very useful and will be welcome. I hope that arrangements to conclude these purchases will be made before long. The communiqué indicated that we were not able to do anything further in the way of direct financial aid to Asia but that we hoped to do more under the Colombo Plan arrangements by way of technical assistance. My hon. Friends have mentioned the need for this. Books have been mentioned. Indonesia is with in the

835
scope of the low-price book scheme and there are the special arrangements for technical books run by the Ministry of Overseas Development. There is the other very important question of providing training in this country for teachers, especially, as my hon. Friend mentioned, in technical colleges and in management. I am happy to say that arrangements will be made by my right hon. Friend the Minister of Overseas Development to see that as much as we can possibly do will be done in this direction. Arrangements are being made to find places and I think that this part of the plan for co-operation should go quite smoothly.
As to the British Council, as the statement made earlier today by my right hon. Friend the Prime Minister indicated, certain cuts are having to be made in overseas information expenditure. I cannot make any firm promise at this stage, before we have had a chance to discuss the whole matter with the British Council, how soon the Council could resume its activities in Indonesia. We fully appreciate that this would be valuable, but I could not make any specific pledge until we have had an opportunity, in the light of the latest economic announcements, to discuss this whole problem with Sir Paul Sinker and his colleagues in the British Council.
Mention has been made by both my hon. Friends of the rebuilding of the British Embassy. I will, of course, make sure that this is considered carefully in the light of their representations tonight. On the other hand, I should emphasise that my information is that to enable our staff there to work adequately, some rehousing is needed. If full relationships are restored as we hope, we may need more staff than is at present in post in Jakarta. Therefore, I quite appreciate the point that we should not embark on lavish building in a country which is itself limiting new building. Equally, however, we want to make sure that the staff have reasonable conditions in which to work. I am glad that my hon. Friends have raised the point and I will, of course, make certain that it is carefully examined.
Now, I should say a word about the other aspects of the talks which are concerned with the indebtedness of Indonesia to the Government and various concerns
836
and organisations in the United Kingdom. The indebtedness falls into three parts. Much the smaller part arises out of the burning and the other incidents in 1963, and towards a total claim of roughly £650,000 a token payment of £120,000 has already been made. This is being divided equally between Government and private claimants. Then there is the commercial indebtedness, which, in the case of United Kingdom claimants, is of the order of £12-E13 million. This is a relatively small amount compared with claims from a number of other countries. We are a relatively minor creditor country.
A preliminary meeting—the nine-country meeting to which my hon. Friend referred—has just concluded in Tokyo and arrangements will be made for a formal multilateral meeting of creditors to be held in September. It was the view of the delegates that co-operation should be sought from the International Monetary Fund to help to restore the Indonesian economy and to assist in the orderly repayment of creditors.
I hope very much that arrangements can be made that Indonesia will reapply for membership of the International Monetary Fund, because this would be invaluable. The expertise that would be made available to the Indonesians by this means would be very valuable and would restore confidence and ensure that this difficult rehabilitation of the economy will be carried out in the best possible way.
At least, it has been encouraging to find that the Indonesian Government is prepared to co-operate in working out a rephasing of debts. One cannot say more about that at the moment, however, because the meeting in Tokyo was a preliminary meeting only and the main discussions will take place in September.
Then, of course, the third category is the problem of the British property which was sequestrated by Presidential decree in November, 1964. We are glad that the Indonesian Government have recognised the existence of claims arising from the Indonesian control of British enterprises, and discussions will be arranged in Jakarta between the Indonesian authorities and the groups of British claimants who represent various interests. I think they probably fall into three main groups, plantations and estates, manufacturing and distributive organisations, and financial and merchanting houses and

837
insurance companies. We hope very much that these claims can be settled by agreements which will help the Indonesian economy. For example, the Shell Company has already made for its very large concern an agreement for payments which will be made out of production over a period of years. I think that this sort of arrangement should be to mutual benefit.
We hope very much that these various claims can be equitably and satisfactorily settled. because it is quite clear that till arrangements have been made under these various headings the resumption of normal trading relationships will not be easy. On the other hand, if one sees real effort is being made not only to put the Indonesian economy into order but also to meet the reasonable needs of international commerce and trade, then we shall be able to get those normal trading relationships. I know there are a number of firms in this country and elsewhere who would like to restore trading relationships with Indonesia.
It is not going to be easy; it will take quite a long time; but we all recognise that a stable Indonesia under the present Government, who have made many very strenuous efforts towards this, will be to the great advantage of that part of the world, and no one will be happier than Her Majesty's Government if the negotiations on all the fronts I have mentioned take place satisfactorily, and if the very great difficulties of the inflation are overcome, and if the real productive enterprises can be restored,
838
not on the old pattern of what some people might consider exploitation from without, but on a partnership which will bring mutual benefit.
I think we are all very glad we have had this chance to mention these things tonight, and I am very grateful to both my hon. Friends for the contributions which they have just made.
Mr. Dalyell: Before my hon. Friend sits down, would she just say a word on the question of E.C.G.D. cover for the tin dredge equipment? It is a question of which I gave her prior notice.
Mrs. White: I beg my hon. Friend's pardon. I should have mentioned that. As he knows, credit was given for a tin dredge. Payment on that is very much behind, but I think that till we are a little clearer about the arrangements for indebtedness we could not urge the Export Credits Guarantee Department to go into arrangements for a second tin dredge. I do appreciate that this is regarded as of great importance in Indonesia, and, again, I will have further discussions with my right hon. Friends concerned about this, but at the moment I am afraid I cannot give any specific pledge about it.
Mr. Dalyell Mr. Dalyell rose—
Mr. Speaker: The hon. Member has exhausted his right to speak now.
Question put and agreed to.
Adjourned accordingly at ten minutes past One o'clock.

AGRICULTURE, FISHERIES AND FOOD
  Import Levies
  Import Levies
  Food (Annual Expenditure)
  Food (Annual Expenditure)
  Horticultural Industry (European Economic Community)
  Horticultural Industry (European Economic Community)
  Retail Prices (Seamen's Strike)
  Retail Prices (Seamen's Strike)
  Farmers (Selective Employment Tax)
  Farmers (Selective Employment Tax)
  Bacon Industry
  Bacon Industry
  Fishery Protection Squadron (Patrols)
  Fishery Protection Squadron (Patrols)
  Potatoes
  Potatoes
  New Zealand Farm Products (Imports)
  New Zealand Farm Products (Imports)
  Farm Rents
  Farm Rents
  Milk Supplies (Personal Case)
  Milk Supplies (Personal Case)
  British Agricultural Export Council (Membership)
  British Agricultural Export Council (Membership)
  Milk Distribution (Davies Report)
  Milk Distribution (Davies Report)
  Farming Industry (Bank Rate)
  Farming Industry (Bank Rate)
  Insecticides
  Insecticides
  Bacon Market Sharing Agreement (Consultations)
  Bacon Market Sharing Agreement (Consultations)
  Departmental Cost (Increase)
  Departmental Cost (Increase)
SCOTLAND
  Islands (Seamen's Strike)
  Islands (Seamen's Strike)
  Rate Support Grant (Discussions)
  Rate Support Grant (Discussions)
  Migration
  Migration
  Fish (Minimum Price Scheme)
  Fish (Minimum Price Scheme)
  Afforestation (Aberdeenshire)
  Afforestation (Aberdeenshire)
  Selective Employment Tax
  Selective Employment Tax
  Eggs (Seamen's Strike)
  Eggs (Seamen's Strike)
  Milk (Seamen's Strike)
  Milk (Seamen's Strike)
  Sugar Beet Production
  Sugar Beet Production
  Doctors (Emigration)
  Doctors (Emigration)
MINISTRY OF DEFENCE
  Hurricanes (Research)
  Hurricanes (Research)
  British Army (Coloured Recruits)
  British Army (Coloured Recruits)
  Singapore and Malaysia (Secretary of State's Visit)
  Singapore and Malaysia (Secretary of State's Visit)
  Aircraft Carriers
  Aircraft Carriers
  Sydling Rifle Range (Byelaw)
  Sydling Rifle Range (Byelaw)
  F111A Aircraft (Australian Bases)
  F111A Aircraft (Australian Bases)
  Arms Exports
  Arms Exports
  Marie Louise Hospital, Aldershot
  Marie Louise Hospital, Aldershot
  Cambridge Hospital, Aldershot
  Cambridge Hospital, Aldershot
RAILWAYS
  London-Manchester Line (Electrification Cost)
  London-Manchester Line (Electrification Cost)
  Coloured Workers
  Coloured Workers
  Disused Property (Disposal)
  Disused Property (Disposal)
TRANSPORT
  Motor Vehicles (Noise)
  Motor Vehicles (Noise)
  Uninsured Motorists (Agreement)
  Uninsured Motorists (Agreement)
  Departmental Staff
  Departmental Staff
  National Policy (White Paper)
  National Policy (White Paper)
  Transport Users' Consultative Committees (Publicity)
  Transport Users' Consultative Committees (Publicity)
  Old-age Pensioners, Scotland (Concessionary Fares)
  Old-age Pensioners, Scotland (Concessionary Fares)
  Express Buses (Dumfries-Stranraer)
  Express Buses (Dumfries-Stranraer)
ROADS
  A30 and A38 (Commercial Traffic)
  A30 and A38 (Commercial Traffic)
  Motorways (Speed Limit)
  Motorways (Speed Limit)
  Urban Road Schemes
  Urban Road Schemes
  MI (Traffic Counts)
  MI (Traffic Counts)
  MI, Al and A41 (Congestion)
  MI, Al and A41 (Congestion)
  A669 and A670 (Accidents)
  A669 and A670 (Accidents)
PORTS
  Aberdeen Harbour
  Aberdeen Harbour
BOARD OF TRADE
  Redhill Aerodrome (Aerobatics)
  Redhill Aerodrome (Aerobatics)
  Sack Hire Charges
  Sack Hire Charges
  Abbotsinch Airport (Radar Control System)
  Abbotsinch Airport (Radar Control System)
  London Airport (Journalists)
  London Airport (Journalists)
  European International (Edinburgh Factory)
  European International (Edinburgh Factory)
SHIPPING
  British Shipping Companies (Disclosure of Commercial Information)
  British Shipping Companies (Disclosure of Commercial Information)
NATIONAL FINANCE
  Obscene Books
  Obscene Books
LOCAL GOVERNMENT
  Railway Termini (Property Development)
  Railway Termini (Property Development)
PUBLIC BUILDING AND WORKS
  House of Commons Chamber (Lighting)
  House of Commons Chamber (Lighting)
  HOUSE OF COMMONS (LOUD-SPEAKER SYSTEM)
  HOUSE OF COMMONS (LOUD-SPEAKER SYSTEM)
  MEMBERS OF PARLIAMENT (ADDRESS BY SERVANTS OF THE HOUSE)
  MEMBERS OF PARLIAMENT (ADDRESS BY SERVANTS OF THE HOUSE)
MINISTRY OF AVIATION
  Military Aircraft (Exports)
  Military Aircraft (Exports)
RHODESIA
  British Petroleum (Sale of Oil)
  British Petroleum (Sale of Oil)
HOSPITALS
  Nurse Training (Platt Report)
  Nurse Training (Platt Report)
MINISTRY OF HEALTH
  Mentally Handicapped Children, Carlisle and Cumberland
  Mentally Handicapped Children, Carlisle and Cumberland
HOME DEPARTMENT
  Prisoners (Escapes in Transit)
  Prisoners (Escapes in Transit)
  Criminal Trials (Majority Verdicts)
  Criminal Trials (Majority Verdicts)
MINISTRY OF LABOUR
  Engineering Industry Training Board (Grants)
  Engineering Industry Training Board (Grants)
EDUCATION AND SCIENCE
  Secondary Education (Manchester Scheme)
  Secondary Education (Manchester Scheme)
WALES
  A467 (Improvements)
  A467 (Improvements)
TELEPHONE SERVICE
  Installations
  Installations

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

LORD RITCHIE-CALDER
Peter Ritchie Ritchie-Calder, Esquire, C.B.E., having been created Baron Ritchie-Calder, of Balmashannar in the Royal Burgh of For far, for life—Was, in his robes, introduced between the Lord Boyd-Orr and the Lord Francis-Williams.
The Lord Dunleath—Took the Oath.

KIDNEY MACHINES
2.45 p.m.
LORD AUCKLAND: 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 how many kidney machines are currently in operation in British hospitals, what is the cost of each machine and the average running cost of each machine in any one year, and whether steps will be taken to increase the number of machines available.]
THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION): My Lords, I assume the noble Lord is referring to machines for the treatment of patients with chronic renal failure. There are at present about 110 such patients in Great Britain being so treated. This is a marked increase since the end of 1965, and a further substantial increase in facilities for treatment is expected in the next twelve months. Extra machines can be supplied to meet orders foreseen from hospitals, but the number of machines available is not the measure of the number of patients who can be treated, because more than one patient can be treated on each machine, and because each machine must be backed by other equipment and trained staff, and some machines must be held in reserve by the
426
hospital. The initial cost of a machine with its associated equipment for use in hospital is about £2,000. The annual running cost of treatment is about £2,000 per patient.

MAINTENANCE ORDERS
2.47 p.m.
LORD WELLS-PESTELL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government the terms of reference of the Departmental Committee, appointed on July 8, 1966, to consider the financial limits for maintenance orders; and to ask whether the present system of enforcement of such orders will also be considered.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE, HOME OFFICE (LORD STONIIAM): My Lords, the terms of reference of this Committee are as follows:
"To examine the financial limits prescribed by Statute, for orders which may be made in magistrates' courts for the maintenance of wives and children, to consider the appropriate machinery for adjusting such limits to changing circumstances and to make recommendations."
The Committee will not be concerned with the present system of enforcing maintenance orders, which is already being reviewed by a Committee, under the chairmanship of Mr. Justice Payne, which is inquiring into the law and practice relating to the recovery of all civil debts, including payments due under a maintenance order.
LORD WELLS-PESTELL: My Lords, I am obliged to my noble friend for his Answer. I should like to ask my noble friend whether he would cause courts to be reminded of Section 52(3) of the Magistrates' Courts Act 1952, which gives clerks of courts power to institute proceedings for arrears against defaulting husbands if the clerk has the written consent of the complainant? Further, I should like to ask my noble friend whether he will also cause complainants to be informed, when they secure an order, of their right to have attachments of earnings made in the event of the husband's continuously defaulting?
LORD STONHAM: My Lords, I should have thought that the terms of reference of Mr. Justice Payne's Committee on the enforcement of judgment debts covered the points raised by my noble friend. The terms of reference are:
"To consider whether any changes are desirable in the law and practice in the High Court, and the county courts and, in relation to their civil jurisdiction, the magistrates' courts, relating to the recovery of debts and the enforcement of orders for the payment of money or the delivery of goods; whether the court should have power to postpone the operation of an order for possession of mortgage property, and to make recommendations."
I am aware of my noble friend's great knowledge in these matters, and I feel sure that the points that he has made will be taken into consideration by Mr. Justice Payne's Committee.
LORD WELLS-PESTELL: My Lords, if the House will bear with me, may I ask my noble friend whether the Departmental Committee which has recently been set up to inquire into the limits of maintenance is concerned with orders made under the Affiliation Act?
LORD STONHAM: Yes, my Lords, but it is not considering questions of enforcement, because these are already matters within the remit of Mr. Justice Payne's Committee, and we have thought it inadvisable to have two Committees dealing with the same subject.
LORD OAKSHOTT: My Lords, while one is grateful for the fact that Mr. Justice Payne's Committee is looking into all this, would not the noble Lord agree that one of the real difficulties about curing this abuse is the actual physical problem of finding the man? Is the Home Office giving some thought to this problem? I think it is generally acknowledged that it would do away with a great deal of the trouble if only there were some better way of finding the man who is evading his responsibilities.
LORD STONHAM: My Lords, we are aware that in some circumstances the difficulty is to find the man, although the proportion of summonses of this kind which cannot be enforced for that reason is less than might generally be supposed. The noble Lord will be aware of the arrangement made sometimes with the
428
Ministry of Pensions and National Insurance which obviates this difficulty to a great extent. I assure the noble Lord that this matter is very much in our mind.
LORD ILFORD: My Lords, may I ask the noble Lord whether, in view of the importance of this matter, he will invite Mr. Justice Payne's Committee to consider making an Interim Report on this subject?
LORD STONHAM: My Lords, it is not for Her Majesty's Government to dictate to a Committee of this kind, but if it will help the noble Lord I will assure him that Mr. Justice Payne and his Committee are aware of the urgency of finding a solution to some of these problems.
THE LORD BISHOP OF SOUTHWARK: My Lords, as in the Law Commission recommendation to set up this Committee reference to affiliation proceedings is explicit, would not the noble Lord agree that the law should be reformed, so that affiliation orders can require the payment of a sum sufficient to give the child a standard of life appropriate to the status in life that a son or daughter of that father would normally have? And would not the noble Lord agree that the rate should be fixed on the same basis as alimony to an entirely innocent wife in a divorce case and also take account of the expenses that will be incurred by the fact that the mother will have to stay at home if the child is to have the personal maternal care which is due to him?
LORD STONHAM: My Lords, as the right reverend Prelate is doubtless aware, there is at present no limit to the awards, if I may use that expression, which may be made in the High Court. At present the maximum in summary courts is £7 10s. 0d. a week for a spouse and £2 10s. 0d. a week for a dependent child. These matters, the limits in summary courts, are directly within the terms of reference of the Departmental Committee and I am sure we shall be receiving recommendations. The question of alimony is quite outside the terms of reference of the Committee, and I cannot make any observations on that matter.
BARONESS SUMMERSKILL: My Lords, could the noble Lord say at this stage how long it would take him and his Department to implement the recommendations?
LORD STONHAM: My Lords, we shall have to consider the recommendations. I do not want to fence with my noble friend (I am sure it would be most unwise to do so), but I would say that we are very anxious to receive these recommendations and, in my view, it will be likely that we shall implement them as quickly as possible after we have considered them.

MAGISTRATES' COURTS FEES
2.55 p.m.
LORD MERTHYR: 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 probable that because the fees chargeable in magistrates' courts are so low, and the cost of collecting them, and of accounting for them, so high, economy would result if, except in cases of civil debt, they were abolished.]
LORD STONHAM: My Lords, the financial implications of magistrates' courts' fees are not simple, but it is indeed probable that the work of handling them is at present disproportionate to the revenue they produce. My right honourable friend is aware of the concern of those involved in magistrates' courts administration, and is considering whether some fees could be abolished and others possibly increased.
LORD MERTHYR: My Lords, I should like to thank the noble Lord for that fairly helpful Answer, if not very helpful Answer, to my Question. I would ask the noble Lord whether he would bear in mind that I think there is no doubt that at present it costs many shillings from the public purse in order to collect the sum of 6d.
LORD STONHAM: My Lords, one can be too sweeping on these matters. The noble Lord may well be right when it is a question of court fees in criminal cases. But when it is a civil case, where we try to follow the principle of seeing that the fees cover the expense which the court incurs, and where services are rendered by the court, such as in preparing reports, there might be a case for increasing fees. I agree with him on the
430
first matter, but my original Answer indicates our thinking.
LORD MERTHYR: My Lords, can the noble Lord hold out any hope that some alteration will be made in this matter in forthcoming legislation?
LORD STONHAM: My Lords, I can hold out hope—none of us is forbidden to hope—but I cannot give an assurance as to the date. However, we are most anxious to deal with this matter as soon as we possibly can.
LORD MERTHYR: My Lords, I am much obliged.

SHIPBUILDING DEMARCATION DISPUTE
2.58 p.m.
LORD CONESFORD: 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, as reported in The Times of July 12, 1966, British shipbuilders cannot use a cartridge-assisted hammer that fires screws or nails into pressed steel, because the trade unions insist that drillers must drill the holes and joiners must put in the screws, and neither will allow the other to handle an instrument that does both operations and is extensively used by our foreign competitors.]
THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION): My Lords, I am informed that there have been demarcation difficulties over the introduction of this tool in one shipyard, but that in several other yards where it is in use no difficulties have arisen.
LORD CONESFORD: My Lords, may I thank the noble Lord for that partially encouraging Answer, and ask him this further question? Does he recollect that the Royal Commission has been asked to consider
"the role of trade unions…in accelerating the…economic advance of the nation"?
Have the Government collected evidence of these restrictive practices, and will they give their evidence to the Royal Commission?
LORD CHAMPION: My Lords, this one matter in relation to this industry in particular has been considered by a Committee under the chairmanship of Mr. Geddes. The Committee's Report is a very able Report, first-class in every way, and is now being studied by the Government as to possible action. We recognise the difficulties here.

THE ECONOMIC SITUATION
LORD SHEPHERD: At a suitable moment after 3.30 p.m. my noble friend the Leader of the House will be repeating a Statement, which is being made in another place by my right honourable friend the Prime Minister, on the economic situation.
INDUSTRIAL DEVELOPMENT BILL
Brought from the Commons; read la, and to be printed.
PIER AND HARBOUR PROVISIONAL ORDERS (BLACKPOOL PIER AND GREAT YARMOUTH NEW BRITANNIA PIER) BILL
Brought from Commons; read la, and referred to the Examiners.

LESOTHO INDEPENDENCE BILL [H.L.]
3.0 p.m.
Order of the Day for the Third Reading read.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR COMMONWEALTH RELATIONS AND FOR THE COLONIES (LORD BESWICK): My Lords, I beg to move that this Bill be now read 3a.
Moved, That the Bill be now read 3a.—(Lord Beswick.)
LORD WADE: My Lords, I gather that we shall shortly have full details of stringent economic measures foreshadowed for this country, and it is partly for that reason that I have risen to say a very few words on the Third Reading of this Bill. It seems to me very important to emphasise that Britain will not lose all further interest in Lesotho
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and the other former protectorates just because they have been granted independence and Britain is in financial difficulties. I really could not stomach the expressions of good will, with which I wholeheartedly agree, if they were mere pious words and that were the end of the story. If in future there are requests for economic aid from any of the former Protectorates, I hope that they will be considered sympathetically, either by Britain alone or by Britain together with other Commonwealth countries.
The Basuto people, as noble Lords pointed out during earlier proceedings on this Bill, are in an extraordinarily difficult position, both economically and geographically. They are completely surrounded by South Africa and, alas!, there are all too many unpleasant resemblances between the ruling Party in South Africa and the Nazi régime in Germany before the war. There are similarities in attitude to race, and in some of the brutal methods adopted towards those who disagree with the Government. But I believe that the Basuto people are confident that they will survive and retain their independence in spite of their geographical position, and in this I wish them well.
I agree with other noble Lords who spoke in earlier proceedings on this Bill that it would be pointless for Britain to take on defence obligations which she cannot fulfil. But if any opportunity arises to save Lesotho from complete economic dependence upon South Africa, I hope the opportunity will not be missed. I trust, also, that such proposals as may be put forward will not be turned down merely on the ground that Britain is hard up. After all, the people of the Protectorates are in the Commonwealth because in the last century their forefathers asked for the protection of the British Queen. I believe that created a moral obligation. I do not think that that moral obligation comes to an end with independence, and I hope that the British people will not forget these people living under the dark shadow of the South African régime.
LORD BESWICK: My Lords, may I, first of all, thank the noble Lord for the good wishes which he has extended to the impending new country of Lesotho? I should like to add my own good wishes to those expressed by the noble Lord.

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In fact, on a previous Reading of this Bill, all of us in the House said how well we wished them, and we look forward to a happy future for the people of Lesotho. I would, in any case, have repeated those wishes, and I am sure that all Members of the House would join with me in extending them to the people of Lesotho.
However, I thought that the noble Lord used rather strong words about how he was going to resist any economies, if they were extended to that country. It is not for me to anticipate the Statement which will be made in a few minutes' time from this Box by my noble friend. Indeed, I do not know what is in that Statement, and therefore I cannot anticipate it. But I see no reason to believe, on the evidence before the noble Lord, that he was entitled to use quite such strong language as he did use. I would only repeat to him what my right honourable friend has said in another place: that we have undertaken to meet with the Government of Lesotho in a few months' time. At their wish, this meeting has been postponed for a while, but in a few months' time we shall be meeting with them and considering how best we can help them economically; and in the meantime there are unspent balances upon which the Government of Lesotho can draw. I very much hope that the fears which the noble Lord has expressed will not be realised so far as this kind of economy is concerned.
There is just one other point I would take the opportunity of making, and it is this. In the public Press, and to some extent in what the noble Lord said, there was a reference to our abandoning these people. It is not a question of our abandoning them. "Washing our hands of them" is another phrase which has been used. There is nothing of that at all. These people have themselves asked for independence and, according to their application, according to their wishes, we have agreed with them a Constitution which is acceptable to them and acceptable to us. I, too, hope that we shall regard this as a new stage in partnership in the world, and that there will be no question at all of our cutting off our assistance to them.
On Question, Bill read 3a, and passed, and sent to the Commons.

RESERVE FORCES BILL
3.6 p.m.
Order of the Day for the Second Reading read.
THE MINISTER OF DEFENCE FOR THE ROYAL AIR FORCE (LORD SHACKLETON): My Lords, in rising to move the Second Reading of the Reserve Forces Bill, which I am afraid is a fairly complicated measure and will take a little explaining, I am very conscious that your Lordships will be anxiously waiting for the Statement, and all the pleasures that will come from that, at half-past three. If by any chance I am not near the end of my remarks, I will break off my speech so that you may not be deprived any longer than necessary.
First of all, I should like to say how very glad I am to see that the noble Lord, Lord Thurlow, is to make what I believe is his maiden speech from the Front Bench, and we shall wait with interest to hear from someone who probably knows more about this subject than anyone else in your Lordships' House. We are also very glad to look forward to two maiden speeches, from the noble Lord, Lord Frey berg, and the noble Viscount, Lord Ullswater.
Over the past year or so we have discussed at very considerable length the organisation of the Reserve Forces, and in the course of those discussions—and, indeed, to a considerable extent as a result of them—changes and improvements have been made. So now I hope we are at least approaching a broad consensus, even if there are points of disagreement on the subject of the reorganisation of our Reserve Forces. Nevertheless, I think it would be as well if I made some introductory remarks about the reorganisation in general and deal only rather briefly with the Bill. But I hope to reply at the end of the debate and will then, as your Lordships may wish, go into greater detail on a number of the provisions. However, as I say, I hope to cover most of the Bill.
I believe that if we bear in mind the purpose and the general plan of the reorganisation we shall be clearer about the parts played in the whole scheme of things by the particular aspects dealt

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with in the Bill before your Lordships. What at first sight appears to be a rather miscellaneous collection of provisions will then be seen to fall into place as an integral part of the scheme. If we liken the new organisation to an architectural structure, we may think of the legal provisions in existing legislation as a supporting arch on which the structure rests, and of this Bill as the keystone of that arch.
I will start, if I may, by reminding your Lordships of the basic purpose of the reorganisation. This has, of course, been set out on many occasions, and we debated it pretty thoroughly on May10. My Lords, the Territorial Army, as things now stand, has three roles: first, it has the job, which it shares with the Army Emergency Reserve, of reinforcing the Regular army overseas on the outbreak of war; secondly, it is available to aid the civil power in war; and thirdly, it constitutes a framework on which general preparation for war can be made. In short, it is an all-purpose force; and there is, I think, general agreement that it does not fill all the roles effectively, particularly the first, which has the most immediate importance.
Moreover (and this is of fundamental significance), the third role—that is, to provide a framework on which general preparation for war can be made—has become out of date. Military strategy no longer assumes slow preparation for a general war of large conventional armies. The possibility of such a war is now regarded as a very remote one, and preparation for it would be far more expensive for the country than could possibly be justified. I rather hope that we may all be agreed on this. In these circumstances, the Government have thought it right to abandon the third role.
We have further decided that the other two roles, re-interpreted in the light of the operational tasks of to-day, should each be met by its own force. I may say that these roles are separate, and the forces will be separate, though very closely interlinked. In this way the Government intend to create up-to-date reserves, designed to meet the likeliest requirements. We shall retain some flexibility, but not to meet every possible contingency. But,
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of course, there will be a continuing basis for development, as the years go by, according to how strategy may appear to develop. The new reserves, therefore, will be the most suitable we can get within the limits of what the country can afford, and the most flexible, taking into account both present needs and any developments which may change the situation in the future. I have been very brief about these fundamental matters because I think those of your Lordships who have been concerned in this reorganisation will agree that they have been very fully expounded, both here and in another place.
My Lords, I should now like to turn for a few minutes, before coming to my main task, to the progress we are making with the reorganisation. I am sure your Lordships will be interested in this for its own sake, and it will, as I have already indicated, be useful as a background against which to consider the actual provisions of the Bill. I should like to start by explaining that the main reorganisation will, as has been intended right from the start, come into effect on April 1 next. That is the date on which the new Reserve will come into existence. Various other parts of the Bill will be brought into force at suitable stages. For example, after the Bill has been enacted it will be possible for any individual to commit himself to assuming the new liabilities with effect from April 1, 1967.
Your Lordships will be glad to know that Planning is generally very well advanced and, so far as it relates to units of the new Reserve, will be completed in good time for April 1 next. The main problems concerning the units are the Order of Battle—that is, the number and types of units to be raised, and the particular drill halls which individual units are to occupy. The Order of Battle is in final form, and was in fact promulgated two months ago. It is, of course, based throughout on existing units of the A.E.R. and the Territorial Army, and all major units of these Reserves are represented in it in some form or other. The drill halls for each unit have now also been decided, apart from a handful of special cases, and Commands and Territorial Army and Air Force Associations have been informed.
The consideration next in importance for units is no doubt their regular and civilian permanent staff. The scale of

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regular permanent staff has been settled, and that of civilian permanent staff has been approximately assessed and will very soon, I hope, be settled finally. I have no doubt that when the new units come into existence next April these staff will be in post, ready and keen to get their units off to a good start.
Equipment plans are also well advanced. Territorial and Army Volunteer Reserves I and II, the Volunteers, will right away get higher scales of equipment than their counterparts have at present. For example, the Armoured Reconnaissance Regiment will get a full scale of Saladins, Ferrets and radio sets, instead of only about 15 per cent. All Volunteer units, "teeth" and "support" alike, will get full scales of vehicles, instead of only about one-third. Issue of combat dress will start next April, and No. 2 dress a year later. Speaking generally, in the future the Volunteers will get a share of such new equipment being provided for the Regular Army as their role requires. I ought perhaps to add, to avoid any misconception, that the amount of equipment actually in units' hands will be limited to what they need and can look after; the rest will be held in depots.
The equipment of T. and A.V.R.III, the Territorials, will be on a more limited scale, though it will be sufficient for training the force in its home defence role of helping the civil authorities to maintain law and order after a nuclear attack. They will have rifles, some wireless sets and radiac instruments. Each unit will have seven land rovers, and, in the particular circumstances I have described, the force will depend on requisitioned vehicles for its mobility on call-out. This equipment which I have outlined will be available for the new units right from the start. Other planning for units is going ahead well. I will mention just one example—the training arrangements for the Volunteers. Your Lordships will, I am sure, be pleased to hear that a training cycle is planned under which the majority of those Volunteers who have reached a suitable standard of training will go overseas every third year.
I should like now to turn briefly to the Associations. It has already been agreed with the T.A. Council what functions are to remain with the Associations, and these are of two main kinds: first,
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the essentially local functions (recruiting, public relations and liaison with employers, trade unions and local authorities); and, secondly, functions connected with Association property—for example, work services, heating, lighting, cleaning and furnishing. Associations will also hold small amounts of clothing and personal equipment for retail distribution to units of the Territorials. My Lords, the future organisation of Associations is now being studied—in consultation, of course, with the T.A. Council—with Commands and with T. and A..F. Associations. It is already clear that there will be a considerable reduction in the number of Associations, as is indeed inevitable with the reduction in the size of the reserves. This particular phase of the reorganisation will not be completed until some time after the reorganisation of units.
My Lords, so far I have explained that planning is progressing well, and that we expect to meet all our target dates. I should now like to refer to one important matter in which we have gone beyond planning and have taken action, provisional though that must be, in advance of the enactment of this Bill. The matter concerned is one of quite fundamental importance: the recruiting drive at this year's annual camps of the A.E.R. and the Territorial Army. It is clearly crucial to persuade their members to continue to serve in the new Reserve. Annual camp is the obvious occasion for doing so, when a far greater proportion of a unit's members get together than at any other time.
None of them can assume new liabilities until the present Bill is enacted, but they are being invited to make declarations of intent regarding these liabilities, so that manning plans can be made in preparation for the formation of the new units next April. Statistics of those signing declarations of intent are not yet available, but we have made some inquiries, and your Lordships will be glad to know that the response so far has been very encouraging. I should mention that we appreciate that would-be recruits must be able to count on the support of their employers. Here also the situation is encouraging. Accordingly the Minister of Defence for the Army, with help from the Confederation of British Industry, sent a leaflet to all the major employers

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in the country reassuring them that no unreasonable burden was being laid upon either employer or employee by the new liabilities, and seeking their support for the new Reserve. From information I have received I believe that that leaflet has done much to dispel misunderstandings and will be useful as a permanent record for the future information of the employers.
I have given your Lordships an account of the current planning phase of affairs. Apart from the reorganisation of Associations, to which I have already referred, and the arrangements for the support of the Army Cadet Force, the main outlines of the new scheme have now been settled. I must add that throughout we have been in consultation with the T.A. Council by means of a Joint Working Party, on which the C.B.I. and the T.U.C. also were represented; and my own impression from the outside is that there has been a steady coming together of minds and a great degree of co-operation and understanding. This is a Working Party that has so well established itself that it has its own tie, as the noble Lord, Lord Thurlow, is aware. I must pay tribute to the valuable advice and help they have given us. Your Lordships will be glad to hear that there is clearly a determination on the part of all concerned to achieve a successful launching of the new Reserves.
To turn now to the Bill, I think that many of your Lordships would have shared my reaction on first glancing through it—that its scope and purpose were difficult to grasp. However, as I have already pointed out, it is to be the last of a line of Acts, and it does take a little understanding, but I think it will be easier to understand if your Lordships realise that there has been this long line of Acts dealing with Reserves, which have been added to the Statute Book over the last century. Generally speaking, the statutory provisions governing the Territorial Army are contained in the Auxiliary Forces Act 1953, which is itself a Consolidation Act and mainly incorporates the provisions of the Territorial and Reserve Forces Act 1907 which Lord Haldane drew up and to which your Lordships took exception at the time. The Regular Army Reserve and the Army Emergency Reserve are,
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generally speaking, governed by the provisions of the Army Reserve Act 1950, which is also a Consolidation Act largely based on the Reserves Act 1882. Navy Reserves legislation is even more diffuse and older.
The present Bill is mainly concerned with the Army and I assure your Lordships that the references to the Air Force, and Navy Reserves legislation hold the key to no unsuspected aspect of Government policy. Broadly speaking, the reorganisation which is attempted is an Army one, but the reorganisation has certain effects in the Air Force and Navy which are catered for in this Bill because one of the objects has been to try so far as possible to bring the legislation of the three Services into line. The Army Reserve Act 1950, and the Auxiliary Forces Act 1953, therefore already provide the statutory backing for the Regular Army Reserve, the Army Emergency Reserve and the Territorial Army and for the formation of units in the Reserve Army and so on. The Bill which is before us aims to introduce into Reserves legislation as a whole the new features required by the reorganisation which can be implemented only by legislation.
The supplementary role of the new Bill is perhaps best illustrated by Clause 1. Under this clause the name of the Territorial Army is changed to the Territorial and Army Volunteer Reserve. The implication which your Lordships will readily perceive is that the new force which will be brought into being after April 1, 1967, is none other than the Territorial Army with a new name and different organisation. Legally the Territorial Army continues under a new name, although the introduction of certain new liabilities and a different organisation and different role entitle it to be regarded practically as a new force though it will carry on the splendid tradition of Territorial service.
Although likely in the course of time to be much reduced in number, the Territorial and Auxiliary Forces Associations will continue with the duties which were theirs by virtue of the Auxiliary Forces Act 1953. Clause 17 concisely gives the Secretary of State and the Defence Council additional powers in relation to the associations, such as the power to set up associations for areas which do not

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follow county boundaries, the power to wind up associations which will no longer be necessary, and the power to alter their composition. These are necessary supplementary provisions.
Another example of the economy of the Bill is the way in which the Army Emergency Reserve is being dealt with. Unitsand men of the Army Emergency Reserve are being dovetailed into the new Territorial and Army Volunteer Reserve. One might have expected to see some specific clause to this effect in the Bill—if not more than one clause. The Bill deals simply with the problem by making it possible for the Secretary of State to make regulations for the transfer of men from the A.E.R. to the T. and A.V.R. under Clause 14(4), and for officers in the A.E.R. to he placed on the active list of officers of the T. and A.V.R. by virtue of the provision in Clause 14(5). The existing statutory provisions governing the raising of the A.E.R. are left intact so that if at any later stage it should be necessary to raise an A.E.R. distinct from the T. and A.V.R. it will not be necessary to have a further Bill. Indeed, your Lordships will find that the Bill in a few cases adds to the existing body of legislation concerning the A.E.R.
Similarly, the legislation affecting the special class of the Fleet Reserve has been kept up to date, despite the fact that the special class of the Fleet Reserve do not at present exist, as the noble Earl, Lord Jellicoe, will be aware. This Reserve, which is the equivalent of Section A of the Regular Army Reserve, might be required at some future date and it seems desirable to provide that it should be as similar to the Section A of the Army Reserve as possible should it ever be raised. In other words, the Government are showing their usual foresight. I hope that what I have been saying will enable your Lordships to understand the philosophy of the Bill, which is that existing legislation should be relied upon where it is still sound and that the Bill should cater for the new requirements, keeping the legislation regarding the three Services as much in line as possible. I appreciate that this is a difficult Bill for your Lordships who are not familiar with the legislation to follow, and I must apologise for going into such detail.
Before I turn very briefly to the provisions of the Bill, I would just remind
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your Lordships of the categories and titles of those whose future we are debating. The Special Army Volunteer Reserve individuals, including members of the T. and A.V.R.I units, will have the Ever-Ready liability, at present applicable to the Territorial Army Emergency Reserve—the "Ever-Readies"—and are in general covered by the 1962 Act. I shall not refer to them further for the moment. This Bill is primarily concerned with the volunteers in Territorial and Army Volunteer Reserve II, whose units are designed to support the Regular Army, and the Territorials in T. and A.V.R.III, who are for home service. The individuals in the Regular Reserve are also affected.
A large part of the re-organisation determined upon by the Government could be carried out without this legislation. The number of units in the T. and A.V.R. and the establishment of those units can be determined and implemented by the Government quite independently of any legislation. The Bill is mainly required to ensure that the men who are recruited into the new force have the appropriate liabilities. The whole concept of the Territorial and Army Volunteer Reserve II is that they should be better trained than the existing Territorial Army and more readily available for service should there by a NATO Simple Alert or a major limited war. Clause 6 therefore provides that the Volunteers shall have the liability to be called out for permanent service anywhere in the world when warlike operations are in preparation or in progress. If your Lordships wish, when I come to wind up I will go more fully into the definition of "warlike operations". In paragraph 21 of the Government's December White Paper it was said that the Volunteers would have this liability, and it is provided for in Clause 6.
The Territorials, or Territorial and Army Volunteer Reserve III, are dealt with in Clause 2 which creates a force for home service. The purpose of the Territorials is to be available as a disciplined force to support the police in such circumstances as anuclear attack, and their training will be conducted in accordance with this role. They will not be expected to serve outside the United Kingdom, and so Clause 2 specifically says this. It further provides that men who have enlisted for service with the Territorials may not be

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compulsorily transferred to the Volunteers and so acquire a higher call-out liability. Nevertheless, voluntary transfers between the Territorials and Volunteers will be possible and, indeed, will be encouraged.
When a man moves from one part of the country to another he may find as a Volunteer that the only unit of the Territorial and Army Volunteer Reserve in his new locality is a Territorial unit. A man moving to another part of the country may find as a Territorial that he is near a Volunteer unit. There will be no obstacles to arranging a transfer from one type of unit to another type, and the Bill carefully provides that they will assume the warlike operations liability or a home service liability in accordance with the unit in which they are serving at the time.
My Lords, Clause 8 provides that members of the Regular Reserve may sign the agreements which enable them to be available for service anywhere at the discretion of the Secretary of State. These are the agreements which we normally call "Ever-Ready" agreements. We hope that 3,500 men of the Regular Reserves will volunteer for these purposes. This concludes my review of what I call the military parts of the Bill. Just to repeat briefly, these are the provisions extending the warlike operations liability, creating the home service force, and enabling members of the Regular Reserve to become "Ever-Readies".
The other provisions in the Bill may be termed ancillary, although some of them are a matter of very great concern to the Associations, and I do not mean to minimise their importance. For the benefit of your Lordships I will try to group them, but they are not grouped in the same way in the Bill, and I shall only deal with them very briefly at this moment, though again I can go into them in greater depth later. The first group to which I should like to draw your Lordships' attention is the group of clauses concerned with call-out procedure. This group covers a wide range. Clause 5 repeals the present procedure of calling out the Reserves by proclamation and replaces it by a procedure of call-out by Queen's Order. It is no longer appropriate in the timescale of modern war that the Proclamation should have to be ordered by Her Majesty in Council and that
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Parliament should have to be informed before action is taken to call out the Reserves. Under Clause 5 it will be possible for Her Majesty, upon the advice of Her Ministers, to order the call out of the Reserves and then to report the occasion to Parliament. And, if it is not sitting, Parliament must be recalled within five days.
Clauses 9 and 13 improve the procedure for the call-out of the individual. For the first time we shall, if this Bill is enacted, have provisions which pronounce about such subjects as the time a person becomes subject to military law if he is recalled by broadcast. The clause minimises the possibility of a man's escaping justice should he deliberately disobey call out. Clause 11 enables a man to be switched from service under one liability to service under another liability as the result of a direction from the Secretary of State.
Another subject I have already mentioned is training, which is dealt with in Clause 16. This makes training overseas and week-end training compulsory. The subject of the future of non-public service funds is dealt with in Clauses 18 and 19; and then there is the widening of the field of selection for Deputy Lieutenants. I do not think I will go into them any further at the moment. I would conclude by commending the Bill to your Lordships as an essential measure in the reorganisation of the Reserve Forces. This reorganisation is certainly an important measure in the field of national defence, and its effects will be pretty lasting. I have no doubt that these effects will be beneficial and will be proved to be so as the years pass. My Lords, I beg to move that the Bill be read a second time.
Moved, That the Bill be now read 2a.—(Lord Shackleton.)

THE ECONOMIC SITUATION: GOVERNMENT MEASURES
3.38 p.m.
THE LORD PRIVY SEAL (THE EARL OF LONGFORD): My Lords, with permission, I should like to repeat a Statement which my right honourable friend the Prime Minister has just made in another place. It is a long Statement, and the House, I am sure, will bear with

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me while I repeat it. The words of the Prime Minister were:
"Sterling has been under pressure for the past two-and-a-half weeks. After improvement in the early weeks of May we were blown off course by the seven-week seamen's strike, and when the Bill for that strike was presented in terms of the gold and convertible currency figures in June the Foreign Exchange markets reacted adversely. But there were deeper and more fundamental causes. Many of these have been at home and of these I shall speak in a moment. Several have been overseas. For several weeks past there has been an increasing pressure on liquidity in the world financial centres. Action taken by the United States authorities to strengthen the American balance of payments has led to an acute shortage of dollars and Euro-dollars in world trade and this has led to a progressive rise in interest rates in most financial centres and to the selling of sterling to replenish dollar balances. Last Thursday action was taken by the Bank of England to raise its discount rate and to double its call on the clearing banks for special deposits. On that day I informed the House that I would shortly be announcing further measures to deal not only with the short-run pressure on sterling but also with the underlying economic situation.
"Action is needed for the purpose of making a direct impact on our payments balance, and particularly on certain parts of our overseas expenditure which in recent years has been growing rapidly. Action is needed equally to deal with the problem of internal demand, public and private, and to redeploy resources, both manpower and capacity, according to national priorities and check inflation.
"Exports until the seamen's strike have been rising. By value in the first five months of this year they were 9 per cent. higher than in the same period last year. By volume the increase over the same period last year was 6 per cent. a rate of increase higher than that laid down in the National Plan. But abundant market opportunities abroad for British products—which are competitive enough in terms of quality, performance and price—are
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being lost owing to the shortage of labour. Order books are too long and delivery dates excessively protracted. Hours of work have been reduced and incomes have been rising faster than productivity.
"What is needed is a shake out which will release the nation's manpower, skilled and unskilled, and lead to a more purposive use of labour for the sake of increasing exports and giving effect to other national priorities.
"This redeployment can be achieved only by cuts in the present inflated level of demand, both in the private and public sectors.
"Not until we can get this redeployment through an attack on the problem of demand can we confidently expect growth in industrial production which is needed to realise our economic and social policies.
"I will begin with the measures needed to restrain private demand at home. The economy is carrying too heavy a burden of production financed by hire purchase, which means that too high a proportion of to-day's production is being paid for by a mortgage on to-morrow's earnings.
"My right honourable friend the President of the Board of Trade has to-day made Orders, which will come into effect at midnight to-night, tightening up still further the regulations governing hire purchase. The down payment on cars, motor cycles and caravans is raised to 40 per cent. and the repayment period shortened to 24 months. The down payment on furniture is raised to 20 per cent. and the repayment period shortened to 24 months. The down payment on domestic appliances is raised to 33⅓ per cent.; the repayment period remains at 24 months. There is no change in the present regulations for cookers and water heaters. Corresponding changes are made in the regulations governing rental payments.
"It is estimated that this will cut hire purchase borrowing by £160 million.
"This of itself is not enough. The Government have therefore decided to activate the regulator created under Section 9 of the Finance Act of 1961,

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renewed in successive Finance Acts and given greater flexibility in Section 8 of the Finance Act 1964.
"The Treasury has to-day made an Order the effect of which is to put a surcharge of 10 per cent. on the duties on beer, wines and spirits; on hydrocarbon oils, petrol substitutes and power methylated spirits; and on purchase tax.
"I wish to make it clear that in the case of purchase tax the increase is the equivalent of 10 per cent. of the existing rates. Thus for goods now chargeable at 10 per cent., the new effective charge will be 11 per cent.; for goods chargeable at 15 per cent. it will be 16½ per cent.; and for goods chargeable at 25 per cent. it will be 27½ per cent.
"The surcharge will take effect from midnight to-night.
"Its effect will be further to increase the revenue at the rate of about £150 million in a full year. This is a net figure after allowing for the effect of the hire purchase proposals and for the additional export rebate which will become payable following the increases in oil duty and purchase tax.
"The increase in the duty on petrol and derv. will, following the precedent set last year, be refunded to bus operators. The necessary administrative arrangements will be made as soon as possible and Parliamentary authority sought in the ordinary way. In addition a further £20 million will be taken out of the economy as a result of changes announced to-day by my right honourable friend the Postmaster General in certain postal and telecommunications tariffs; parcels, registration and overseas rates will be increased from October 3. The telecommunications changes affecting certain call charges will involve no net increase in Post Office revenue but will be designed to rationalise charges on a basis more closely related to costs. These will take effect from January 1 next. In addition my right honourable friend will be requiring a year's rental in advance for new telephones instead of a quarter's rental as at present. This will apply to orders accepted from to-morrow. Details will be published in the
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OFFICIAL REPORT and are now available in the Vote Office.
"In the field of direct taxation the Government propose that a one-year surcharge of 10 per cent. be imposed on surtax.
"This will be levied on surtax liabilities for 1965–66 for payment on the 1st September, 1967. The necessary legislation will be introduced in next year's Finance Bill. The extra yield is estimated at £26 million.
"These measures on private current expenditure will be reinforced by action to restrain private sector building outside the housing and industrial fields and outside the Development Areas. The Government have decided to intensify the control on less essential building work and thus to reinforce the priority accorded to building programmes in the fields of housing, schools, hospitals—and new factories.
"When the Building Control Bill now before Parliament receives the Royal Assent, the Minister of Public Building and Works will make an Order reducing the cost limit above which a project is subject to control from £100,000 to £50,000. The Order will require an Affirmative Resolution by both Houses. As before, this control will not apply in the development areas as now defined.
"With a cost limit of £100,000 the control would affect about 500 projects worth £180 million in a year. The lowering of the limit to £50,000 will extend control to cover a total of about 1,000 projects worth £220 million in a year.
"This will give the Government more power to adjust the volume of privately-sponsored construction work as the economic situation develops. Hitherto, approval has been withheld from less than 10 per cent. of the projects about which the Minister has been consulted, but it will be necessary to defer a larger proportion of privately-sponsored work in future. The lowering of the limit will give the Minister scope to concentrate the postponement control on less urgent smaller schemes instead of having to rely on deferring some of the larger projects which are more in the public interest.

449
"This measure will be supplemented by a tighter control on office building.
"My right honourable friend the President of the Board of Trade has made an Order, coming into force at midnight, extending control of office building to the whole of Britain South of a line from the Wash to the borders of Hampshire and Dorset, by including within the control the whole of the East Midlands, the West Midlands and the South East Region. Projects for buildings of more than 3,000 square feet of office space which were not the subject of an application for planning permission at the time the Order comes into operation will require an office development permit. In addition to tightening the control on building, this measure will reinforce those already taken by the Government for the prevention of undue congestion in these parts of the country and will supplement the strict policy which is being applied to the issue of industrial development certificates.
"Now I turn to public investment programmes. The investment programmes in the public sector have been reviewed and the Government are introducing a number of deferment measures which will reduce demands on resources in this field by £150 million in 1967–68, though these steps will also lead to significant reductions in demand in the current year. While they will involve forgoing for the present a number of desirable projects they will be concentrated on those activities which are not vital to our production capacity and for the development of the economy as a whole. Housing, schools, hospitals, Government financed factories built in development areas, including advanced factories, will not be affected. On investment by Central and Local Government, we are making cuts amounting to £55 million in 1967–68. This will mean cutting back projects designed to contribute to local amenities but which in present circumstances must be postponed without any set-back to our major projects. These will cover such items as swimming baths, new local government offices. The Covent Garden Market project will similarly be deferred.
450
"The programme for investment in nationalised industries has been carefully scrutinised to ensure that essential industrial investment within the public sector shall go on. Nevertheless, the Government are arranging, in consultation with the Chairmen of these industries, for a reduction in the total demand on resources made by public industry investment to be reduced by £95 million in 1967–68. This is in addition to programmes which have fallen behind schedule owing to slippage in construction, or in the delivery by contractors of the necessary plant and machinery.
"The measures I have so far announced, by reducing the level of demand within the domestic economy, will make a vital contribution to our balance of payments by freeing resources, particularly labour, for work on exports and essential investment.
"But this of itself is not enough, more direct action on the balance of payments is required.
"In accordance with the policy foreshadowed in the Defence White Paper, we have been urgently reviewing how far we can make a major saving in overseas Government expenditure without altering the basic lines of external policy on which the Defence Review was founded. We have also reviewed the level of military and economic aid which we can afford next year. The Government have decided on firm programmes which will reduce our overseas Government expenditure, military and civil, by at least £100 million.
"I will come in a moment to the cost of our forces in Germany. Elsewhere we are pressing ahead with measures designed to ensure a substantial and early saving compared with the present level of expenditure. Given an end to confrontation, the plans made by my right honourable friend, the Secretary of State for Defence, during his recent visit to the area will secure a major contribution towards this saving.
"As regards Germany, in the Defence White Paper published in February we said that we thought it right to maintain our ground forces in Germany at about their existing level

451
until satisfactory arms control arrangements had been agreed in Europe provided, however, that some means was found for meeting the foreign exchange cost of those forces. In my right honourable friend's Budget statement on May 1 he made clear our intention to negotiate with the Federal Government a new settlement aimed at eliminating the foreign exchange cost of our troops in Germany. In a few minutes my right honourable friend will be leaving for Bonn to continue these negotiations. In the light of these discussions, the Government will immediately consider what, if any, further action is called for, including the question whether this would mean proposing forthwith through the prescribed NATO and W.E.U. procedures very substantial cuts in our forces in Germany, sufficient to bring the foreign exchange costs down to the level covered by offset and other payments.
"The figure of £100 million that I have mentioned includes, in addition to the savings on defence expenditure, reductions on military and civil aid expenditure and in the cost of our representation and information services overseas.
"Private and overseas expenditure must also make its contribution. Expenditure on holiday travel outside the sterling area has been rising rapidly and the deficit on travel account with non-sterling countries has risen from £38 million in 1961 to an estimated figure of £95 million in 1966 and is expected on current trends to reach about £105 million next year. We cannot allow this formidable deficit to go on mounting without restriction, but the change requires consultation with the International Monetary Fund which we have initiated. For the twelve months starting on November 1 next there will be a basic allowance of £50 per person for travel to countries outside the sterling area. This allowance will have to cover all the foreign exchange requirements of the traveller, whether paid for in sterling or a foreign currency, except for fares paid for in sterling. There will be special arrangements for business and health travel and for those who, instead of paying fares abroad, take their cars abroad.
452
"From to-day up to October 31, the amount of foreign exchange which may be bought for journeys to be started during that period will normally be limited to £50 per person. Special arrangements will, however, be made for people who have already made their holiday bookings to acquire a reasonable amount of foreign exchange, and sterling payments through travel agents may continue to be made as under existing arrangements.
"The Treasury is announcing full details this afternoon.
"On the positive side of encouraging tourist expenditure in these countries the Government have decided to introduce, for an experimental period of one year in the first instance, a scheme under which development loan assistance can be offered for the building, expansion or modernisation of hotels which can show that this will result in a significant increase in their earnings from overseas visitors. The President of the Board of Trade will be making a full announcement before the Recess.
"There is another field of private overseas expenditure lying between current and capital expenditure, which has imposed an increasing charge on our balance of payments—the remittances of emigrants to non-sterling area countries. In addition to the genuine transfers of capital by emigrants, there has been evidence of evasion of the control of capital movements. We have decided that, while the existing allowance of up to £5,000 in official exchange for each emigrating family should stand, any balance over and above this should be transferred through the investment currency market and not through the security sterling market. Also from to-day, the total amount which may be sent by way of cash gifts to residents outside the sterling area will be reduced from £250 a year to £50.
"The net direct saving on our overseas payments from all these measures, Government and private, amounts to £150 million. This is a direct saving on our overseas outgoings and therefore on the balance of payments deficit.
"To sum up the measures I have so far outlined, I estimate that they will reduce demand on the domestic

453
economy by more than £500 million. This is in addition to the earlier budgetary measures by this Government reducing the pressure of demand in the private sector by over £700 million. They are in addition to the monetary policy which has been in force and which was reinforced by the three further measures announced last week. They are in addition also to the impact of this year's Finance Bill, yet to have its effect on the economy and which is due to reduce demand and which will extract a further £300 million from the economy, with all this means in terms of imports and of redeployment of labour towards exports and other essential industries.
"In addition to the measures designed to reduce the domestic pressure, the economies in overseas expenditure, public and private, will as I have said make a direct saving of £150 million.
"But the House will recognise that the whole operation stands or falls on the extent to which we can keep our costs and prices under control.
"In recent years money incomes have been increasing at a rate far faster than could be justified by increasing production; in 1965 we paid ourselves increases in money incomes of about £1,800 million compared with in the previous year. About £1,300 million of this represented increases in wages and salaries. Over the same period we earned only £600 million by way of increased production. These trends are continuing. The Declaration of Intent of December 16, 1964, was a great landmark when for the first time in our history, employer, trade union and Government signed a compact designed to restrain the growth of incomes to a norm within the national capacity to pay. Yet ever since that time wage increases have outrun the figure allowed for, and pre-empted the amount available for such increases for a considerable period ahead. The time has come to call a halt.
"The Government are now calling for a six-month standstill on wages, salaries and other types of income, followed by a further six months of severe restraint, and for a similar standstill on prices.
"Where a definite commitment already exists to increase pay or reduce
454
hours, its implementation should be deferred for six months. New commitments should not be implemented during the rest of 1966, and in the following six months only if the grounds for exceptional treatment are particularly compelling. In this way it is intended to secure a virtual stability in incomes for a period of six months followed by a limited growth of incomes in accordance with national priorities during the first six months of 1967. Thereafter it will be essential to secure that the growth of incomes is resumed in an orderly manner in step with national output.
"The same principles apply to other types of money income. Companies, for example, must hold down their dividends during the twelvemonth period.
"The Government similarly call for a twelve-month standstill on prices of all goods and services, except to the limited extent that increases are necessitated by increases in the cost of imported materials, by seasonal factors or by the action of the Government, for example through increased taxation.
"It is not our intention to introduce elaborate statutory controls over incomes and prices. This is a situation in which the Government look with confidence to everyone concerned with these matters to act in accordance with the public interest. Many individual salaries and other forms of remuneration are fixed outside the normal process of collective bargaining. Here, too, the same canons of restraint must apply. This applies also to emoluments of directors and high executives: companies will be required to publish details of these fees and salaries with comparable figures for the previous year.
"Within the main field of collective bargaining we shall rely in the first instance on voluntary action.
"Nevertheless in order to ensure that the selfish do not benefit at the expense of those who co-operate it is our intention to strengthen the provisions of the Prices and Incomes Bill, to speed its passage and to redefine the role of the National Board for Prices and Incomes, which will not hesitate to act within the powers it enjoys, or may

455
further seek, to deal with any actions involving increases outside and beyond this policy.
"The Government will be consulting the T.U.C., the C.B.I. and other interested organisations on the detailed application of the standstill within the next few days and a White Paper will be issued in the near future.
"The House will not underrate the deep significance of what I have just announced. Its implications for industry and the degree of co-operation and restraint which will be required on the part of those affected by it. But equally the House, and I believe the country, will recognise the urgency of these measures if we are to get our economy into balance and to keep our costs under control.
"I should not feel justified in making this demand on industry, if I did not feel we had done everything in our power to secure social justice in the broader fiscal and social policies of the Government. For no Government has the right to ask for restraint, still less for an effective standstill, unless it has done everything a Government can do to create a climate of social justice, which alone can justify such a policy. Inevitably to-day I have dealt with measures which, taken by themselves, involve restriction and restraint. But the House will realise that their whole purpose is to provide industry with the opportunity to achieve a major increase in productivity by streamlining production and labour utilisation. They must be seen against a background of policies designed to speed the application of scientific methods and techniques—already well known to progressive

I.—TELECOMMUNICATIONS SERVICES

(New charges will take effect from 1st January, 1967)

(The full rates shown below apply from 6.0 a.m. to 6.0 p.m. Monday to Saturday and the cheap rates from 6.0 p.m. to 6.0 a.m. Monday to Saturday and all day Sunday.)

Present

Revised

1. SUBSCRIBERS' TRUNK CALLS: INLAND

(a) STD: Time allowed for each 2d. charge unit:

Cheap rate: up to 35 miles

…

…

…

45 secs

60 secs

from 35 to 50 miles

…

…

…

22½ secs

30 secs

over 50 miles

…

…

…

15 secs

20 secs

(b) Non STD: Charge for 3 minutes:

Cheap rate: up to 35 miles

…

…

…

9d.

Unchanged

from 35 to 50 miles

…

…

…

1s. 3d.

from 50 to 75 miles

…

…

…

2s. 0d.

1s. 9d.

over 75 miles

…

…

…

2s. 3d.

Unchanged

managers—to increase efficiency in private industry and in the public sector. Industry by industry, the economic development committees are tackling the practical problems of raising efficiency and spreading knowledge of how performance can be improved in individual companies. Industry by industry—shipbuilding, printing, the docks, rail transport—the Government are engaged in urgent discussions designed to increase productivity and eliminate over-manning and restrictive practices. We have sought to proceed by voluntary agreement. Where this is not forthcoming, other action must be taken. The Government have indicated to all concerned their determination that the freight liner train service shall go ahead on the basis of open terminals.
"The problems with which I have been dealing are problems that have beset Britain's economy virtually since the end of the war. The unsung achievements of keen executives and of hard-working responsible trade unionists, of inventive scientists and creative designers, are all often overshadowed by attitudes of selfishness and indifference, of indolence and indiscipline on both sides of industry.
"For while the Government can and must do all in its power creating conditions to lay down the rules within which the economy must operate, the determination and resolve which today's measures demonstrate must be matched by effort and endeavour on the part of the whole British people."
My Lords, that concludes the Prime Minister's Statement.
A NOBLE LORD: Resign!
Following are the new Post Office Tariffs referred to in the Statement:

Present

Revised

2. SUBSCRIBERS' TRUNK CALLS: TO IRISH REPUBLIC

(a) from Great Britain, Channel Isles and Isle of Man:

Charge for 3 minutes:

(i)Full rate: up to 75 miles

…

…

5s. 3d.

5s. 0d.

from 75 to 125 miles

…

…

5s. 9d.

6s. 0d.

from 125 to 200 miles

…

…

6s. 3d.

6s. 0d.

over 200 miles

…

…

6s. 9d.

7s. 0d.

(ii) Cheap rate: up to 75 miles

…

…

3s. 6d.

Unchanged

over 75 miles

…

…

3s. 9d.

3s. 6d.

(b) from Northern Ireland:

Cheap rate

…

…

As for 1 (b) above

3. COIN BOX LOCAL CALLS

(a) STD: Charge unit

…

…

3d.

6d.

Time allowed for each charge unit:

Full rate

…

…

3 mins

6 mins

Cheap rate

…

…

6 mins

12 mins

(b) Non STD: Charge for each call

…

…

4d.

Unchanged

4. COIN BOX TRUNK CALLS: INLAND

(a) STD: Charge unit

…

…

3d.

6d.

Time allowed for each charge unit:

(i) Full rate: up to 35 miles

…

…

30 secs

60 secs

from 35 to 50 miles

…

…

15 secs

30 secs

over 50 miles

…

…

10 secs

20 secs

(ii) Cheap rate: up to 35 miles

…

…

45 secs

120 secs

from 35 to 50 miles

…

…

22½ secs

60 secs

over 50 miles

…

…

15 secs

40 secs

(b) Non STD: Charge for 3 minutes:

(i) Full rate: up to 35 miles

…

…

1s. 3d.

1s. 6d.

from 35 to 50

…

…

2s. 3d.

2s. 6d.

from 50 to 75 miles

…

…

3s. 3d.

3s. 6d.

from 75 to 125 miles

…

…

3s. 9d.

4s. 0d.

from 125 miles

…

…

4s. 3d.

4s. 6d.

(ii) Cheap rate: up to 35 miles

…

…

1s. 0d.

Unchanged

from 35 to 50 miles

…

…

1s. 6d.

from 50 to 75 miles

…

…

2s. 3d.

2s. 0d.

over 75 miles

…

…

2s. 6d.

Unchanged

5. COINBOX TRUNK CALLS: TO IRISH REPUBLIC

(a) from Great Britain, Channel Isles and Isle of Man

Charge for 3 minutes

(i) Full rate: up to 75 miles

…

…

5s. 6d.

Unchanged

from 75 to 125 miles

…

…

6s. 0d.

6s. 6d.

from 125 to 200 miles

…

…

6s. 6d.

Unchanged

over 200 miles

…

…

7s. 0d.

7s. 6d.

(ii) Cheap rate: up to 75 miles

…

…

3s. 9d.

4s. 0d.

over 75 miles

…

…

4s. 0d.

Unchanged

(b) from Northern Ireland

Charge for 3 minutes:

(i) Full rate: up to 35 miles

…

…

1s. 3d.

1s. 6d.

from 35 to 50 miles

…

…

2s. 3d.

2s. 6d.

from 50 to 75 miles

…

…

3s. 3d.

3s. 6d.

over 75 miles

…

…

4s. 3d.

4s. 6d.

(ii) Cheap rate

…

…

As in 4 (b) (ii) above

6. MISCELLANEOUS CALL SERVICES

(a) Personal call fee (cheap rate period)

…

…

9d.

1s. 0d.

(b) Alarm call fee:

Calls booked from STD coinboxes

…

…

9d.

1s. 0d.

(c) Transfer fee for transferred charge calls when the person to whom the call fee is transferred inserts the money
in a coinbox

…

…

3d.

6d.

7. COINBOX SUBSCRIBERS

(a) Rental (all types of coinbox)

…

…

£1 per quarter

£2 10s. per quarter

(b) Call charges:

(i) Local calls:

STD: charge unit

…

…

2¾d.

4d.

Time allowed for each charge unit:

Full rate

…

…

3 mins

6 mins

Cheap rate

…

…

6 mins

12 mins

Non STD: Charge for each call:

Business line

…

…

3½d.

3d.

Residential line

…

…

3½d.

2½d.

Present

Revised

(ii) Trunk calls: Inland:

STD: Charge unit

…

…

2¾d.

4d.

Time allowed for each charge unit:

Full rate

…

…

As in 4 (a) above

Cheap rate

…

…

Non STD: Charge for 3 minutes:

Full rate: up to 35 miles

…

…

1s. 2d.

1s. 0d.

from 35 to 50 miles

…

…

2s. 2d.

2s. 0d.

from 50 to 75 miles

…

…

3s. 2d.

3s. 0d.

from 75 to 125 miles

…

…

3s. 8d.

3s. 6d.

over 125 miles

…

…

4s. 2d.

4s. 0d.

Cheap rate: up to 35 mile

…

…

11d.

9d.

from 35 to 50 miles

…

…

1s. 5d.

1s. 3d.

from 50 to 75 miles

…

…

2s. 2d.

1s. 9d.

over 75 miles

…

…

2s. 5d.

2s. 3d.

(iii) Trunk calls: to Irish Republic

from Great Britain, Channel Isles and Isle of Man

Charge for 3 minutes:

Full rate: up to 75 miles

…

…

5s. 5d.

5s. 0d.

from 75 to 125 miles

…

…

5s. 11d.

6s. 0d.

from 125 to 200 miles

…

…

6s. 5d.

6s. 0d.

over 200 miles

…

…

6s. 11d.

7s. 0d.

Cheap rate: up to 75 mile

…

…

3s. 8d.

3s. 6d.

over 75 miles

…

…

3s. 11d.

3s. 6d.

from Northern Ireland

Charge for 3 minutes:

Full rate: up to 35 miles

…

…

1s. 2d.

1s. 0d.

from 35 to 50 miles

…

…

2s. 2d.

2s. 0d.

from 50 to 75 miles

…

…

3s. 2d.

3s. 0d.

over 75 miles

…

…

4s. 2d.

4s. 0d.

Cheap rate: up to 35 miles

…

…

11d.

9d.

from 35 to 50 miles

…

…

1s. 5d.

1s. 3d.

from 50 to 75 miles

…

…

2s. 2d.

1s. 9d.

over 75 miles

…

…

2s. 5d.

2s. 3d.

(iv) Foreign, radiophone and certain other calls

…

2d. per call in addition to the fee paid by a subscriber who does not rent a coinbox

No additional fee

8.TARIFFS FOR PRIVATE TELEGRAPH CIRCUIT;

(a) Speeds up to 50 bauds (Tariff H):

Annual Rentals:

Present

Revised

£

£

Up to 20 miles

No change

Over 20 miles up to 21 miles

344

Over 20 miles up to 21 miles

340

Over 21 miles up to 22 miles

360

Over 21 miles up to 22 miles

350

And so by steps of 1 mile and £16

And so by steps of 1 mile and £10

Over 24 miles up to 25 miles

408

Over 24 miles up to 26 miles

380

Over 25 miles up to 30 miles

420

And so by steps of 2 miles and £10

Over 30 miles up to 35 miles

440

Over 30 miles up to 40 miles

410

And so by steps of 5 miles and £20

Over 40 miles up to 50 miles

420

Over 50 miles up to 60 miles

520

Over 50 miles up to 75 miles …

440

And so by steps of 10 miles and £20

And so by steps of 25 miles and £20

Over 150 miles up to 175 miles

750

Over 150 miles up to 200 miles

520

Over 175 miles up to 200 miles

800

And so by steps of 50 miles and £20

Over 200 miles up to 250 miles

860

Over 250 miles up to 300 miles

920

Over 250 miles up to 300 miles

560

Over 300 miles

1,000

Over 300 miles

600

(b) Speeds up to 100 bauds (Tariff J):

Annual Rentals. (An additional charge may be payable in certain circumstances for speeds above 75 bauds)

Up to 30 miles

No change

Over 30 miles up to 35 miles

550

Over 30 miles up to 40 miles

530

Over 35 miles up to 40 miles

590

Over 40 miles up to 50 miles

570

Over 40 miles up to 45 miles

620

Over 50 miles up to 75 miles

610

Over 45 miles up to 50 miles

650

And so by steps of 10 miles and £30

And so by steps of 25 miles and £30

Over 140 miles up to 150 miles

950

Over 125 miles up to 150 miles

700

Over 150 miles up to 175 miles

1,000

And so by steps of 50 miles and £30

Over 175 miles up to 200 miles

1,060

Over 200 miles up to 250 miles

1,140

Over 250 miles up to 300 miles

1,220

Over 250 miles up to 300 miles

790

Over 300 miles

1,320

Over 300 miles

850

(c) Connection charges (Tariff H and J)—no change

II.—INLAND MAIL SERVICES

(including services to the Irish Republic)

(new charges will take effect from 3rd October, 1966)

9. LETTERS

No change up to 1 lb. 8 oz. and then:

Present

Revised

s.

d.

s.

d.

Up to l lb. 10 oz

…

…

…

2

9

Over 1 lb. 8 oz. up to 2 lb.

3

6

12 oz.

…

…

…

3

0

14 oz.

…

…

…

3

3

2 lb.

…

…

…

3

6

Then for each additional 2 oz. add 3d.

Each additional 1 lb. thereafter

2

0

10. PARCELS

Present

Revised

(1) Ordinary Parcels

(2) Local Parcels

s.

d.

s.

d.

Not over 2 lb.

…

…

2

9

Not over 1½ lb.

…

…

2

6

As in (1) less 1s. 0d. at each step.

Not over 3 lb.

…

…

3

0

Not over 2 lb.

…

…

3

0

Not over 4 lb.

…

…

3

3

Not over 6 lb.

…

…

3

6

Not over 6 lb.

…

…

4

6

Not over 8 lb.

…

…

4

0

…

…

Not over 10 lb.

…

…

4

6

Not over 10 lb.

…

…

6

0

Not over 14 lb.

…

…

5

6

Not over 14 lb.

…

…

7

6

Not over 18 lb.

…

…

6

6

Not over 18 lb.

…

…

9

0

Not over 22 lb.

…

…

7

6

Not over 22 lb.

…

…

10

6

Note:The Local Parcel Delivery Area comprises all places which have in their postal address the same post town name as that of the office of posting.

11. REGISTRATION FEE (for letters and parcels)

Present

Max. Compensation

Revised

Max. Compensation

s.

d.

£

s.

d.

£

1

9

20

3

0

100

1

10

40

3

3

200

continuing by ld. for each £20 compensation up to

3

6

300

3

4

400

3

9

400

12. RECORDED DELIVERY FEE

Present

Revised

6d.

9d.

13. ADVICE OF DELIVERY FEE

for registration and recorded delivery services:

Present

Revised

s.

d.

6d.

(a) Requested at time of posting

…

…

…

…

…

9

(b) Requested after time of posting

…

…

…

…

…

1

0

14. INQUIRY FEE

Present

Revised

6d.

1s.

0d.

15. CASH ON DELIVERY

Trade Charge not exceeding

Present

Revised

£

s.

d.

s.

d.

s.

d.

1

0

0

2

2

3

6

2

0

0

2

4

5

0

0

2

6

10

0

0

2

8

15

0

0

2

10

0

20

0

0

3

0

25

0

0

3

2

30

0

0

3

4

4

35

0

0

3

6

40

0

0

3

8

45

0

0

—

—

50

0

0

—

—

16.STAMPED STATIONERY

Present

Revised

Single

Packs

Single

Packs

Postcards

3½d.

3s. 1½d. for 11

4d.

3s. 0d. for 10

Postcards (reply paid)

7d.

6s. 3d. for 11

8d.

6s. 6d. for 10

Letter cards

5d.

3s. 2d. for 8

5d.

4s. 0d. for 10

Envelopes:

A … 4¾" X 3¾"

5d.

3s. 2d. for 8

5d.

4s. 0d. for 10

B … 6⅜" X 4½"

5d.

3s. 2d. for 8

6d.

4s. 4d. for 10

Registered envelopes:

F … 5¼" X 3¼"

2s. 2½d.

£1 6s. 6d. for 12

3s. 7d.

£2 3s. 0d. for 12

G … 6⅛" X 3¾"

2s. 2½d.

£1 6s. 6d. for 12

3s. 7d.

£2 3s. 0d. for 12

H … 8" X 5"

2s. 3d.

£1 7s. 0d. for 12

3s. 8d.

£2 4s. 0d. for 12

K … 11½" X 6"

2s. 5½d.

14s. 9d. for 6

3s. 11d.

£1 3s. 6d. for 6

17. COMMISSION ON REPURCHASE OF UNUSER OR SPOILED STAMPS

Present

Revised

Commission (percentage of face value)

10%

12½%

Minimum Charge

2d.

4d.

Minimum amount of stamps accepted at one time:

Spoiled stamps

1s. 0d.

2s. 6d.

Unused stamps

£1

No change

III.—inland remittance services

(new charges will take effect from 3rd October, 1966)

18. POSTAL ORDERS

Value

Present Poundage

Revised Poundage

1s. 0d.

2d.

3d.

1s. 6d. to £1 1s. 0d.

3d.

4d.

£2 to £5

6d.

No change

Note: The 6d. order has been abolished.

IV.—OVERSEAS SURFACE MAIL SERVICES (except parcels)

(new charges will take effect from 3rd October, 1966)

19. LETTERS (excluding Commonwealth)

Present

Revised

Not over 1 oz.

…

…

6d.

9d.

Each additional oz.

…

…

4d.

5d.

20. POSTCARDS (excluding Commonwealth)

…

…

4d.

5d.

21. PRINTED PAPERSs—ORDINARY RATE

(i) Posted singly—Not over 2 oz.

…

…

2½d.

4d.

Each additional 2 oz.

…

…

1½d.

2d.

(ii) Posted in bulk—First lb.

…

…

1s. 1d.

1s. 6d.

Each additional lb.

…

…

1s. 0d.

1s. 4d.

(less 5% rebate)

Note: PRINTED PAPERS REDUCED RATE. Present tariffs for single and bulk postings are unchanged.

22. PHONOPOST PACKETS

Not over 2 oz.

…

…

…

5d.

7d.

Each additional 2 oz.

…

…

…

5d.

7d.

23. SAMPLES

Not over 2 oz.

…

…

…

2½d.

4d.

Each additional 2 oz.

…

…

…

1½d.

2d.

24. SMALL PACKETS

Not over 8 oz.

…

…

…

1s. 0½d.

1s. 6d.

Not over 10 oz.

…

…

…

1s. 0½d.

1s. 8d.

Each additional 2 oz.

…

…

…

2½d.

4d.

25. INSURED BOXES

Not over 10 oz. (minimum charge)

…

…

…

1s. 8d.

2s. 11d.

Each additional 2 oz.

…

…

…

4d.

7d.

V.—OVERSEAS AIR MAIL SERVICES (except parcels)

(new charges will take effect from 3rd October, 1966)

26. EUROPE "ALL-UP" SERVICE

Present

Revised

Letters (excluding Malta and Gibraltar):

Not over 1 oz.

…

…

6d.

9d.

Each additional oz.

…

…

4d.

5d.

Postcards (excluding Malta and Gibraltar)

…

…

4d.

5d.

27. OUTSIDE EUROPE

Zone A

Zone B

Zone C

Present

Revised

Present

Revised

Present

Revised

d.

s.

d.

s.

d.

s.

d.

s.

d.

s.

d.

Letters, per ½ oz.

…

9

1

0

1

3

1

6

1

6

1

9

Air Letter Forms

…

6

9

6

9

6

9

Postcards

…

5

6

8

9

9

10

Printed Papers

per ½ oz.

5

6

6

7

7

8

Samples

Small Packets

Minimum charge:

present 1s. 0½d.

proposed 1s. 6d.

Insured Boxes

Minimum charge:

present 1s. 8d.

proposed 2s. 11d.

Phonopost Packets, per ½ oz.

…

6

7

7

8

8

9

VI.—OVERSEAS PARCELS (SURFACE AND)AIR)

(new charges will take effect from 1st January, 1967)

28.

The rates to most destinations will be increased.

Details will be published separately.

VII.—OTHER OVERSEAS MAIL SERVICES

(new charges will take effect from 3rd October, 1966)

29. ADVICE OF DELIVERY FOR REGISTERED AND INSURED ITEMS

Present

Revised

(a) Requested at the time of posting

…

6d.

9d.

(b) Requested after the time of posting

…

6d.

1s. 0d.

30. INQUIRY FEE

…

6d.

1s. 0d.

31. CUSTOMS CLEARANCE FEES

Letters

…

1s. 0d.

1s. 6d.

Parcels (a) on which custom charges are 10s. or less

…

1s. 0d.

2s. 6d.

(b) on which custom charges are over 10s.

…

2s. 0d.

2s. 6d.

32. EXPRESS FEE

Letters and Parcels

…

1s. 0d.

2s. 0d.

33. POSTAL PACKETS IN BOND

Fees for miscellaneous services:—

Number of packets

Special search to provide expedited customs
examination

Re-addressing by PO at addressee's request

Provision of facilities for inspection of packet by
addressee*

Provision of facilities for re-addressing by
addressee

Present

Revised

Present

Revised

Revised

Present

Revised

£

s.

£

s.

£

s.

£

s.

£

s.

£

s.

£

s.

1

5

10

5

10

10

2

6

5

2

7

14

7

14

14

3

6

7

3

9

18

9

18

18

4

6

9

4

11

1

2

11

1

2

1

2

5

6

11

5

12

1

4

12

1

4

1

4

6

0

12

6–10

14

1

8

14

1

8

1

8

7

0

14

11–20

18

1

16

18

1

16

1

16

9

0

18

21–30

1

2

2

4

1

2

2

4

2

4

11

0

1

2

31–40

1

6

2

12

1

6

2

12

2

12

13

0

1

6

41–50

1

10

3

0

1

10

3

0

3

0

15

0

1

10

Each additional 25 or part thereof

5

10

5

10

10

2

6

5

* New charge.

Present

Revised

34. REGISTRATION FEE

1s. 9d.

3s. 0d.

35. INSURANCE FEES

For letters, boxes and parcels not over £24 compensation

1s. 11d.

3s. 2d.

for each additional £12 compensation (up to the limit of £400 compensation)

2d.

2d.

4.8 p.m.
LORD CARRINGTON: My Lords, it is the duty of all of us, in all Parties, to support the Government in measures which will remedy what is obviously a serious situation; and in so far as these measures which have been announced will achieve that object, they will have the support of noble Lords who sit on these Benches. But, my Lords, it is always difficult for those of us in Opposition, and not in full possession of all the facts, to know exactly how bad the situation is. This is a very long and complicated Statement, of which we have had no preview at all. It will need very careful examination before any of us who sit on this side of the House can say whether or not the proposals are right: whether they are enough or too much; and, in particular, whether the control of Government expenditure at home has been sufficient. But one thing is clear, and I must make it plain at this stage: in the view of those of us who sit on this side of the House this crisis is entirely of the Government's making.
SEVERAL NOBLE LORDS: Hear, hear!
LORD CARRINGTON: It is a question of confidence—the confidence of those abroad in the ability and determination of the Government to take firm measures to control the economy.
My Lords, accentuated by the bungling of the last few weeks, the advance notice that serious action was to be taken has only had the effect of increasing the uncertainty; and, indeed, the events of the last few days—the increasing weakness of sterling—have probably meant that the measures taken have had to be more serious than they would have needed to be if the Government had not been taken completely unawares and taken a week to decide what they were going to do. The people of this country will suffer as a result. So much for all the Election promises of so short a time ago!
SEVERAL NOBLE LORDS: Hear, hear!
LORD CARRINGTON: And so much for the incredible speech made by the Prime Minister at the Australia Club last week! Six Budgets, I think it is, in under two years of Socialist government. I do not believe that they have yet tackled the underlying difficulties in our economy, and I hope that we shall have an opportunity next week of having a debate on that.
468
There are many questions one could ask on the Statement that has just been read by the noble Earl the Leader of the House, but I will confine myself to two. First, may I ask him whether it is the intention of the Government to continue with the nationalisation of steel? This is a measure relevant to our situation only in so far as it is inflationary. If it is their intention to continue with this measure then I must tell them that this will not be taken by our creditors overseas as very encouraging evidence of a return to a sensible economic policy.
SEVERAL NOBLE LORDS: Hear, hear!
LORD CARRINGTON: Secondly, may I ask the noble Earl whether, when he said that it was the intention of the Government to save £100 million on overseas defence expenditure, this is in addition to the £100 million which they have already taken into account in the Defence White Paper; and, if so, what additional cuts do they intend?
LORD OGMORE: My Lords, I should like to thank the noble Earl for repeating this long and very important Statement made in another place by the Prime Minister. May I say straight away that my noble friends and I feel that the Government are at fault in not having tackled at an earlier date the very serious problems before this country. Secondly, I would say that, in view of the many important considerations in this Statement, I do not feel in a position at this moment to criticise them individually. We shall need further time to consider the whole of the Government's proposals, and we shall look forward to a debate, which I understand is to be next week, when we can go into them in more detail.
There is just one point, which I missed in the Statement, but which we think is very important. Is the only Government saving to be on the lines suggested by the noble Earl; that is, in defence and aid?—because to our mind there are many other fields where Government saving should come into effect. It is not fair to impose so much on the private sector and leave the nationalised industries and the Government's own expenditure scot-free. I have particularly in mind the expenditure on Embassies abroad; for the Embassies, the overseas services, cost us as much as the whole income of the Indian Empire before the war. I know

469
that the difference in the value of money is considerable, but it is not nearly so considerable as that. I feel that to place the whole burden on the private sector and the underdeveloped countries, without any contribution from the Government in fields such as I have mentioned, throws a completely false light on the whole picture.
THE EARL OF LONGFORD: My Lords, perhaps I may first answer the noble Lord, Lord Ogmore. There will be some reduction in the expenses of our representation abroad, but I should not like to suggest that, amid these vast sums, it will loom very large. I thought I did explain the situation, but I realise that in a Statement which took me, reading rather fast, half an hour to deliver probably everything would not be readily taken in. In fact there are, as I explained, considerable reductions in the public sector, or postponements in the public investment programme, whether we are talking of public service programmes or the programmes of the nationalised industries, so it would not be right to conclude that nothing is being done about those topics to which the noble Lord referred.
The noble Lord, Lord Carrington, asked me two specific questions: first, whether we intended to proceed with the nationalisation of steel. The answer to that, and it will come as no surprise to him, is Yes. Indeed, I assume that the noble Lord would think much worse of us if, because there was a run on the pound, we abandoned something which we believe to be of very great long-term value to the country. I can hardly believe the noble Lord would seriously argue that in our long-term social and economic programmes we have got to be dictated to by foreign creditors. I can hardly believe he would seriously suggest that. He shakes his head, so I am in confusion as to where he stands.
LORD CARRINGTON: I am shaking my head at the noble Earl's answer.
THE EARL OF LONGFORD: One need not agree with me, but I would hasten to go on to say that I thought his own remarks represented a confusion of mind which we seldom find in the noble Lord, who is usually a model of clarity. Members are laughing when I say that we find confusion in the noble Lord; but certainly we did to-day. At one moment
470
he was saying that the Government have produced this crisis and that it is all due to some lack of confidence; at another moment he went on to refer to deep-seated problems. His Government were in power for thirteen years, and there were during that time very deep-seated problems which they did nothing to tackle. They handed over the greatest deficit in history. So if the noble Lord wishes to concentrate on Party politics he is not the only one capable of making observations of this kind. I should hope that when we come to debate these matters in a calm atmosphere, the noble Lord will climb back on to that pedestal of sound and dispassionate judgment, on which we always admire his performances in this House.
LORD CARRINGTON: Can the noble Earl answer my second question?
THE EARL OF LONGFORD: I was led astray by the noble Lord shaking his head; that put me off at one critical point. The noble Lord asked me whether the £100 million to be saved on overseas Government expenditure would be in addition to the figures mentioned in the Defence White Paper. I should point out that this £100 million is not all military expenditure; it includes some other items. And I should also point out that it is "at least" £100 million. That is explained in the Statement. If I am asked whether this is an addition to what has already been announced, the answer is, Yes: that is quite definitely so. If he asks me: "Does this mean abandoning some commitments, or breaking some promises made?", the answer is definitely, No: it is not a question of abandoning commitments. Leaving out one or two aspects, including the whole question of Germany, which is very important, but sticking to the areas East of Suez, the economies would come from speeding up the steps envisaged in the Defence Review: the steps indicated in that Review will be taken earlier. In that way the economies will come about in 1967–68, instead of a later year. I hope that makes it plain.
LORD CONESFORD: May I ask the noble Earl one question? He made a very long Statement, and I may not have caught one of his observations towards the end. He said that certain things would come into force, I think at

471
midnight to-night. He also said that the Government were going to insist on the full operation of liner trains in the way they have always advocated. Did he say when that was going to happen?
THE EARL OF LONGFORD: I did not actually say, but the noble Lord will soon find out.
LORD CONESFORD: How soon? The statement about liner trains is almost identical with one made about two years ago, so it would be rather interesting to know, for example, whether these liner trains are going to be operated fully before Parliament adjourns.
THE EARL OF LONGFORD: I realise that the noble Lord enjoys his own form of dialectics, but the precise date of the coming into operation of liner trains is not one of the leading questions. I can assure him that it will not be very long.
LORD HARLECH: My Lords, as regards cut-backs in public expenditure, I think the noble Earl said that in the year 1967–68 there would be a postponement of projects costing something like £150 million. Would this include large cut-backs in the road programme, or is that to be left? The other cuts in the public sector about which he said nothing were in public services and in Whitehall. Are there to be substantial cuts there?
THE EARL OF LONGFORD: I do not think I said anything about cuts there. If the noble Lord has any ideas, I will gladly discuss them with him, but to the best of my belief I did not make any statement about Whitehall. The noble Lord asked about the road programme. Details of these postponements will emerge, but certainly some attention will be paid, as he realises, to the road programme.
VISCOUNT ECCLES: My Lords, I have the impression that this large collection of severe restrictionary measures is going to hurt a great many people but that it will not be sufficient by itself, unless the public are willing to give a measure of confidence to the Government and show the restraint for which the noble Earl called. Does the noble Earl really think that the Government, acting as they do
472
in one way and speaking in another, will mend their ways and give us a consistent lead? I wish as much as any other noble Lord that we could get out of these difficulties, but we cannot when we have a Government that give the impression they do not know where they want to go. Therefore, I ask the noble Earl to press upon his friends in the Government that they be consistent and tell us what kind of England they want to have—not one day suggesting it is Socialist, the next day capitalist—muddling the whole thing up. We do not know who govern us or where they want to go.
THE EARL OF LONGFORD: My Lords, the noble Viscount will forgive me for not following him to-day very far along that line. He will recall that there were at least six Chancellors of the Exchequer during the period of his Government—
VISCOUNT ECCLES: That is not an answer.
THE EARL OF LONGFORD: My Lords, I am only telling the noble Viscount that there were, as the noble Lord, Lord Carrington, said, deep-seated problems that he himself and his noble friends were not able to solve. Simply to turn to the other side and say, "Why do you not give us a lead?" is of no help to anyone.
THE MARQUESS OF SALISBURY: My Lords, as I understand it the noble Earl, or the Prime Minister through the noble Earl, said that the seamen's strike was materially responsible for the present situation. I did not notice in the Statement any proposal at all for dealing with that type of situation, or for preventing such a situation from arising again. Have the Government any ideas upon that subject?
THE EARL OF LONGFORD: My Lords, I do not think you can pick out one particular strike and use this as an argument for dealing in some revolutionary way with the whole trade union movement. The Government have come forward with a Prices and Incomes Bill, and a new philosophy, for that matter, which should mark a new era in industrial relations in this country, and, as the noble Marquess will have realised, they are calling for a voluntary freeze

473
both in wages and in other forms of income during the present year. No one can accuse the Government of lack of initiative. The noble Marquess may say that these measures have not yet worked, but I feel sure they will work if we can get full co-operation, even fuller co-operation than we have had, from noble Lords opposite.
LORD GRANTCHESTER: My Lords, the noble Earl has referred to foreign creditors. Is not the largest foreign creditor the International Monetary Fund, an organ of the United Nations? Could the noble Earl say whether the Government are acting on the advice of the International Monetary Fund in these measures, or how far the measures that they have suggested are in accordance with the views of the International Monetary Fund?
THE EARL OF LONGFORD: My Lords, I am sure we are in close touch with the views of the International Monetary Fund; but I do not think any Government in this country would reach a point where they would simply go to some international power, however exalted and however strong in their accredited position, and ask them what exactly the Government of this country ought to do.
LORD GRANTCHESTER: My Lords, is it not the function of the I.M.F. to place their experience at the disposal of countries who have got into the sort of trouble we are in?
THE EARL OF LONGFORD: My Lords, I have no doubt whatever that that experience is being fully availed of.
EARL JELLICOE: My Lords, the noble Earl has referred to cuts in Defence expenditure. Can he tell us whether it is the Government's intention to proceed with the great programme of the purchase of military aircraft from the United States?
THE EARL OF LONGFORD: My Lords, on that subject I have nothing further to add to what has been said before.

RESERVE FORCES BILL
4.24 p.m.
Debate on Second Reading resumed.
LORD THURLOW: My Lords, it is rather an anticlimax, coming back to this debate after that grave Statement. We may be a little wiser, and we are all going to be poorer men for it. But I am glad at least that the subject of our debate, the Reserve Forces, has not vanished suddenly since Lord Shackleton's opening speech.
We have debated several times in this House the subject of our needs in this day and age, and this Bill enables the Government to put into operation the plans that they have announced. I am most grateful to the noble Lord, Lord Shackleton, for his explanation of what, on the face of it, is a most difficult Bill. I should like to take the opportunity warmly to congratulate him on his appointment to Her Majesty's Privy Council since we last discussed with each other military problems. It gave me personally the greatest pleasure. I also thank him for the most useful background details. He has deluged me with paper. But for that, it would have been difficult to have got all the background.
The birth pangs of this Bill have been most painful, and I think in the opinion of the country the pain was not necessary. If proper consultation had been held at an early stage much heartburning would have been avoided. But I do not wish to dwell any more on the unhappy events of the past, beyond saying how relieved we on this side of the House, and I believe millions of people throughout the country, were when the Government wisely realised that they had made a bad mistake and did not hesitate to accept in part our advice.
The regulations before us to-day alter the laws and lay down the conditions of service for the types of reserves, in particular regulations regarding call-up and the periods for which the new reserves will commit themselves. The Bill does not lay down details of organisation, equipment and training, which is left to the discretion of the Minister. This we welcome, because I believe that some things will work well and some things will not work well, and it will be up to

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the Minister, by trial and error, to get it right; and this he can do without further legislation.
So in this debate, in the light of the information we now have of the detailed plans of the Government and the reactions of those most concerned (which we did not have before), I shall comment on the plans and offer advice and criticism which I hope is constructive about those parts of the scheme behind this Bill which do not, in our opinion, meet the requirements of the nation or produce the right climate conducive to the success of the scheme. For we must never forget that we are dealing with volunteers. Nobody need join the "Ever-readies", the Volunteers or the Territorials if they do not want to.
I should like to congratulate the two Ministers of the Army for their hard work recently. They, at least, appear to be enthusiasts in developing an efficient and workable scheme; and the gentlemen from the other place who have served on Committee B have done a tremendous amount of work in that Committee stage, which makes our job much easier. I would join with the noble Lord, Lord Shackleton, in paying a warm tribute to the noble Duke, the Duke of Norfolk, the Chairman of T.A.F.A., and to my noble friend Lord Clydesmuir and his Working Party who were told to work out a new Territorial Army with £3 million as against the £20 million that it cost before. I believe they have produced as good a scheme as anyone could with the money available to them. The feeling of everybody concerned is, I think, that they have produced the best possible scheme for the money. But that does not mean that they were able to produce a scheme that we can approve wholeheartedly, and I do not think they approve of it wholeheartedly either.
As the noble Lord, Lord Shackleton, said, when the Government came into office they accepted the first two roles of the Territorial Army, the one concerning the provision of units and individual reinforcements for the Regular Army, and headquarters and units on the outbreak of war for the civil power. But they regard the third role, to provide a framework on which, in a period of rising tension, general preparations for
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war can be made, as, in the words of the Under-Secretary of State in another place, an "irrelevance to-day" as we no longer think in terms of large-scale conventional war. The noble Lord, Lord Shackleton, said very much the same thing.
We do not think that a large-scale conventional war is likely, certainly not to-morrow or the day after, but we do not agree that we can throw away the experience of years and totally deprive the country of the structure of a reserve army for home defence which could be capable of expansion or of changing its role, because, once thrown away, how can it be rebuilt? Who can forecast the state of the world in ten or twenty years' time? Who can forecast what our requirements for defence will be? We have very few criticisms about the new organisation for the reserves for the Regular Army. "Ever-readies" and the Volunteers. But we think it is quite wrong to produce a force tailor-made for only one role, and a very limited one, and equipped so inadequately that any change in the role will be difficult to introduce. This is our major objection and I cannot emphasise it enough.
The Second World War began twenty years and ten months after the first, and in the Territorial Army there were senior officers and N.C.O.s who had the experience of war. The equivalent period is just about up now. We have many senior Territorial officers and N.C.O.s with war experience, and in addition members of the present Territorial Army too young to fight in the war have the great advantage of having done National Service, many in active operations. We do not want to waste any of this knowledge and experience, and this would be the case if many officers and N.C.O.s were found redundant. We want to pass on to a newer generation of volunteer soldiers all the know-how from the elders who have the experience. So in examining this Bill and the proposals behind it, we want to investigate whether the reserves in the Regular Army are adequate in numbers, capable of being well trained and well equipped with modern weapons, and ascertain that what is left of the old Territorial Army is a suitable force for home defence. In our opinion it should provide the structure of a reserve army and for the unknown in the future.

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Let us not forget that the Territorial Army in the past has been a most useful source of recruits for the Regular Army. It is most important that the new forces that we are discussing to-day should have the same capability.
We do not dispute the need for the reorganisation of the Territorial Army, but our first complaint is that this reorganisation involves cutting down our volunteer force by almost half. As my right honourable friend the Member for Wolver Hampton, South-West said in another place, the change represents a reduction of numbers from 110,000 to 63,000. The 110,000 is the actual strength; the 63,000 is the target ceiling. So a large number of experienced men will disappear. There will be no place for them in any of the three categories we are considering, because there will be huge tracts of land with no Territorial units there for them to join.
The second complaint to which I referred in a previous debate in your Lordships' House is the division of the new forces into two unlinked and unconnected forces. We have been told that they are in great difficulties over this, and I appreciate them, but we still feel that what the noble and gallant Viscount, Lord Montgomery of Alamein, called two tiers, the lower tier to reinforce, nourish and keep up the strength of the higher tier, is what we need. I am told it cannot be done because of geography, among other reasons, but I am not convinced, because I believe it is a fundamental requirement. But here time will show, and, as I said before, under this Bill the Secretary of State is able to vary the various conditions that we think should be made. This is particularly important in the "teeth" arms, the first-line units, particularly the infantry, because even in limited war they might get heavy casualties. Under this scheme I am not happy that there is enough infantry.
As regards the reserves, the Government have properly appreciated that the strategic reserve of the Regular Army is not big enough at present to meet our commitments, even to-day, when comparatively small-scale operations are in progress. So we welcome the proposals to increase the number of "Ever-Readies" in the S.A.V.R. and the individual who may be called up at short
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notice. They have already shown their value. Whether the extra 900 "Ever-Readies" which the Bill allows the Government to raise will be enough remains to be seen. We shall watch with eagle eyes the success of the recruiting to the target of 8,600, as we shall watch the other establishment targets of the classes of A.V.R.
The Territorial Army has been running down by about 1,000 a month in the past year, but now that uncertainty has ended, and conditions of service are being put to the members of the Territorial Army in their camps, we hope that the targets will be reached. My information is that the outlook regarding the volunteer element of T.A.V.R. I and II is quite promising, and I am glad to hear from several quarters that men are signing on for T.A.V.R. III as well. In my view, the mixing of the Regular reservists and Territorial Army volunteers from S.A.V.R. and T.A.V.R. II is not only a good thing but essential. My main fears are that the difficulties of training part-time volunteers will prevent the achievement of the high standards required by men who may be required in operations at very short notice, and the presence of highly trained reservists will help a great deal to raise efficiency. This is all the more important with the "Ever-Readies". It is slightly muddling that the conditions of service between the "Ever-Readies" and volunteers, as regards the period for which they can be called up, are not the same. In one case the period is six months, and in the other twelve months. We may look further at this point during Committee stage.
When an inexperienced recruit joins either the "Ever-Readies" or T.A.V.R. II there must presumably be a period during which he is learning his job and is not trained to a high enough standard for an operational theatre. Are there any rules about this? Because it must surely mean that a large proportion of the 8,600 "Ever-Readies"—if we get them—will not be available because they are still training. So even if the target is reached, we shall not have that number fit for operations. I should like to know the Government's calculation of the actual number of properly trained, less those who are allowed to be deferred at any time, who will be available for instant call-up. This, of course, applies equally to T.A.V.R. II.

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In these three categories that we are discussing, one of the most important and, to our minds, essential conditions is not only the link between volunteers and Territorials but the link between them all and the Regular Army and the Regular corps and regiments. I stressed this point in our last debate. I believe that much of the success or failure of the new organisation will depend on this very important factor. If the Government appreciate this it will help a great deal, but we need assurance and a positive demonstration of it. I can see the difficulties, particularly in T.A.V.R. III gunner and cavalry regiments—yeomanry regiments—which will now be armed only with obsolete rifles. They will have little in common with their Regular regiments. But I believe that the Government and the Ministry of Defence can do quite a lot at very little cost, if any at all, by such things as encouraging short attachments to the Regular Army, as they quite rightly encourage the T.A.V.R. II. This might be one way of brightening the rather dreary prospects of these new Territorials, to which I shall refer later.
I am not happy about the Government's approach to employers. They have sent out this little pamphlet to the employers, and I am not impressed with it. For one thing, if I were an employer I should want to know what the commitments are, and for how long and this pamphlet does not mention the six months and twelve months, which we shall possibly be discussing at the next stage of the Bill. I do not know why this is not covered—perhaps it had not been decided at the time this pamphlet was sent out. But I should certainly want to know that, more than anything else, and perhaps the Minister could tell me about this.
The old Territorial Army rendered considerable assistance, as we all know, to the Civil Defence organisation and I myself, when a Territorial Divisional Commander, took part in a large number of joint exercises with the Civil Defence, the fire services and the police. One lesson we learned was that these exercises would not have succeeded had it not been for the assistance of the Territorial Army formation and unit staffs their wirelesses and their transports.
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I am a little doubtful whether the new force will be able to render anything like the same assistance. My noble friend Lord Bridge man, who I am glad to see is in his place to-day, has great experience of the Territorial Army and Civil Defence and will talk on this aspect, so I will say no more about it.
I am also concerned about the effect on the cadet forces. Here, again, the Territorial Army has done a very great deal in the past to help. The "Ever-Readies" and the volunteers may be able to do even more, but I am worried that the Territorials will not be able to do much. I do not want to see the cadet forces confined only to the cities and the towns where the "Ever-Readies" and the volunteers are training. That would be one of the great disadvantages of the scheme. It is also a great disadvantage that the "Ever-Readies" and volunteer units are to be at the centres of population, and given no scope to enable people living in non-industrial areas to join without travelling a great distance
My noble friend Lord Ailsa cannot be here to-day, for the laudable reason that he is in camp with the Royal Scots Fusiliers Territorial Battalion, of which he is the Commanding Officer. He is very concerned about the treatment of the civilian staffs. To date, nothing has been done regarding Territorial and Auxiliary Forces Association employees. He thinks that the success or failure of the reorganisation will depend to a great extent on the support and experience of the T.A.F.A. employees. The Territorial Army is their livelihood, but they seem to have suffered because they are not civil servants.
I want now to turn to the T.A.V.R. II and the T.A.V.R. III in detail. T.A.V.R. II—the volunteers—has captured the imagination of all serving Territorials, because it has been thrown forward as a challenge to all young men, and because, apart from the bounty, the present serving Territorials feel that they will be treated on a par with the Regular forces. That is excellent. It is obvious that all young men serving in the Territorial Army will be delighted to be treated as reservists of the Regular Army and to he paid the substantial bounty of £60. I have only one short point to make about the volunteers. I believe it may be found that the commitments and

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liabilities will require toning down a bit, as they are very high for a civilian volunteer with his own job and family commitments. However, I hope that this will not be necessary. This remark is, perhaps applicable to the large number of man-training days, and some of these could well be passed over to the T.A.V.R. III, who are very short of them. I was particularly glad to hear the noble Lord, Lord Shackleton, say that the units of the T.A.V.R. III—the volunteers—will train abroad every three years. This has been going very well with the old Territorial Army. It has produced enormous enthusiasm and is first-class.
I now want to talk about the T.A.V.R. III—Territorials. Not only do we feel it wrong and dangerous to confine them in their organisation and training to one very limited role, but we fear that the force is going to be run so much on the cheap, and will be so dull and lifeless, that it will not get the recruits in the future. We are told that their primary role is to give aid to the civil power and home defence. What is their secondary role? Is there one?—because I know what they want to be; that is, soldiers. If the Government can put that across to the T.A.V.R. III rather more than has been done so far, they may have some success with the scheme. T.A.V.R. II get a bounty, Regular Army dress and equipment, as your Lordships heard from the noble Lord, Lord Shackleton, as well as overseas training. T.A.V.R. III get none of these, and it is not easy to sell the idea of a home security force with obsolete arms, a dull dress, no bounty and a role which is not over-attractive. I am very glad to hear that at the moment these Territorials are signing on, but they have yet to see what life in the new force is like.
Why do people join the Territorial Army? There are a number of noble Lords here who have been members of it, and still are. I do not think it is because of the bounty, though there is a certain amount of feeling in the Territorials that we are being rather stingy in not granting a bounty. I believe that officers and men join the Territorial Army partly with a desire to do something for their country; partly for the feeling of comradeship and of belonging to a big happy family; partly to be a member of a proud regiment with wonderful traditions; partly
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to learn to use weapons—guns, machine guns and rifles—efficiently; partly for weekends and camps in new places, and very often to learn a trade, such as driving a vehicle, or engineering. That is my opinion after three years as a Territorial Divisional Commander, and if these are the reasons why these chaps join, then the new force, if it is to succeed, must provide the same or similar inducements. But at present it does not look as if it will.
The man in the new Territorial unit will find that he has to hand back his self-loading rifle—and how well I remember how thrilled he was to get it—and he will never see one again. He will be back to the old No. 4 rifle which was buried with pomp at Bisley a few days ago.
LORD SHACKLETON: When the noble Lord says "the man" he means those few men?
LORD THURLOW: All the men of T.A.V.R. III. I am talking entirely about T.A.V.R.III
LORD SHACKLETON: Those few men who had the new rifle will have to hand it back.
LORD THURLOW: I understand that in some cases the rifles were issued 100 per cent. tosome of the units. There were certainly 50 per battalion, when they first came out, which went quite a long way; and I understand (I think the noble Lord will find this is so, because I heard this on very good authority) that a great many more were issued later. However, the men will not have them now, though I hope, from what I have heard in our private discussions, that the self-loading rifle will be issued, or held at depots and made available for rifle shooting and competitions. But the man will not have it all the time.
The gunner will never have another gun, and the yeomanry trooper will never see another scout car—I am talking about the Territorials. His wireless sets are probably obsolescent, and they cannot be used in a vehicle because he has not enough vehicles, so every time a set is used, if he is in requisitioned transport, the operator will have to get out and walk some distance away and work it. His camp is eight days, of which the first is spent getting in and the last packing up.

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He has only four days' out-of-camp training every year. I think he should have a minimum of ten; and I consider that it would he a very good thing if he was issued with a self-loading rifle while he was in camp. I can see that a lot of the present conditions are inevitable in this financial climate, particularly after what we have heard to-day, but I believe we could give these men a little more hardware to make their training more interesting.
I am very sorry to see that, in the Territorials, there are to be no padres or doctors. The chaps are feeling rather sore about that, and certainly the padres and the doctors are—that is, those who have no place to go to. They have done a great job in camps in the past. The Sunday service was always a very great thing, I remember, at all the Territorial camps I visited. All the chaps took part in them, and their families, if they were not too far away, also came down. It was just a nice, friendly touch: and those padres, perhaps, were able to help a few of those young men who did not get such help in their own towns. It seems a little stingy to do away with them. And to do away with doctors in a force the primary role of which is civil defence in a nuclear attack is really a folly. I should have thought you would want a platoon of nothing but doctors. But there it is.
I have in the past few days been in touch with several members, chairmen and secretaries of associations, to get their reactions and the reactions of the Territorials in their camps. One chairman of an association of a county with a very fine record—a large number of Territorial units all up to very good strength—says:
"I hardly know what to say about the T.A. because I feel so dubious and depressed about its future. A.V.R.II may go all right, because at any rate it is not going to be starved of money and equipment. Certainly the infantry and gunner units should thrive, but whether the Royal Corps of Transport. Royal Engineers and other service units will have enough glamour and interest remains to be seen."
But A.V.R.III, the Home Defence force, he says, is quite a different story. He says:
"Though numbers joining the Volunteers have been satisfactory, the question is whether
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they will serve on when faced with the reality of no equipment worth speaking of. This is a different matter altogether".
My Lords, I think it is vital that they be given reasonable equipment and facilities when they go to their annual camps. Why cannot they, on arrival at camp, take over equipment and then hand it in when they go? That would not cost very much, and it would go some way towards meeting our criticisms. If the first camp is a flop—and that, presumably, will be the camp next year—then A.V.R.III, the Territorials, will perish, and with it will perish all vestiges of the Territorial Army spirit and traditions which have served the country so well.
My friend goes on to say that in his county people are all increasingly taking the view that A.V.R.III was forced on the Government by public and political pressure, and that the Government's policy is to starve it of cash to such an extent that it will have no appeal and will fail, when they will be able to turn round and say, "We told you so". This point is also mentioned in a letter from a Territorial association secretary in Scotland, who writes:
"One is sometimes driven to the uncharitable conclusion that, having been pushed into establishing this force against its will, the Government would not be sorry to see it fail from starvation".
My noble friend Lord Ailsa says:
"I am still waiting for some indication that the Government really wishes the organisation to work. It is true that our military commanders are determined that it should, and so are the Territorials, such as myself, who are to serve on".
My Lords, I am sure that these letters reflect the views of many, if not all, of the persons connected with or interested in the Territorials, the A.V.R. III, and I ask the Government to take these points to heart. I am sure that the Minister of State for War has found this feeling in the country. Perhaps the noble Lord, Lord Shackleton, will be able to tell us of his reactions when he winds up.
What is needed, I believe, is, first, a better-defined role—and it must be a military one; and secondly, reasonable equipment with which to train for that role. For instance, as I said, the establishment of transport is one Land Rover for a company. How on earth can you train drivers with this? And, even if you succeed, what sort of drivers of requisitioned heavy vehicles will they

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be on call-out? Thirdly, there should be a reasonable provision of amenities to ensure the preservation of regimental loyalty and individuality. The present emphasis is on "shared accommodation", and the men feel that A.V.R.III will therefore be the poor relation of A.V.R.II. Then, lastly, there should be a few more days of out-of-camp training.
As to recruiting, the rule is to be that recruitment is up to only 80 per cent. This is real folly. To get this scheme away to a good start, we do not want to begin by turning any volunteers away. The Government should allow 100 per cent. recruitment everywhere for, say, the first two years, coming down, perhaps, to 80 per cent., if they feel they must, after that.
Lastly, there are the Territorial associations. The plan, I think, is for one association instead of five or six to serve five or six counties, with a staff of about the same as that for a present single county association. I am worried whether the right people will have the enthusiasm to serve on such far-flung committees. I am sure that the old system has been good and has worked well, and it is going to be hard to get the same good voluntary effort in the future. One Territorial association in each military district is going to make it very difficult to keep alive the local interest and contact at ground level which is so important to a voluntary force. Anything that can be done to avoid over-centralisation would be a good thing.
The picture has to be looked at from the bottom upwards, and not only from the administratively-tidy view of Whitehall. It will be a pity if, in the future, the associations become remote advisory bodies only. So I ask the Government to look again at the organisation and the equipment of the A.V.R.III, the Territorials, and most of all to give us to-day a firm and definite assurance that the Government want the Territorials, as well as the "Ever-Readies" and the Volunteers, to be a really worthwhile show. Much can be done by imaginative improvisation, just as much has been done in the past, but they need encouragement, help and sympathy in their teething troubles. It is clear that at present they are by no means certain that they are going to get it.
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I welcome the coming maiden speech of the noble Lord, Lord Frey berg. He is Commanding Officer of the Infantry Battalion of the Honourable Artillery Company, and he is just back from taking his battalion, at their own expense, to camp in Malta this year. That is a splendid example, my Lords, of what can be done by a really keen unit. I also welcome the first speech of my noble friend Lord Ullswater, who is a second lieutenant in the Royal Wiltshire Yeomanry. We shall be very interested to hear the views of a serving junior officer at the beginning of his career in the Territorial Forces.
My Lords, this is no time to ask for money, though I feel that very little might make a tremendous difference. I am fairly confident that the "Ever-Readies" and the Volunteers will succeed; although it is sad that many who would like to volunteer, particularly from the country districts, will be precluded from doing so by distance. I have not asked much for the Territorials: some self-loading rifles in each unit, a few more vehicles, perhaps a small bounty (when we can afford it) and some more days for training. Most of all, we want the Government's assurance that they want the Territorials, as well as the Volunteers and the "Ever-Readies", to succeed. We shall watch all their recruiting figures next year with the greatest interest. I believe that if the Government adopt the measures we suggest this plan will succeed.
5.1 p.m.
LORD OGMORE: My Lords, I have listened with interest to the long speech of the noble Lord, Lord Shackleton, who explained with great clarity this, at times, rather confusing Bill. I thought he did a first-class job of work, if I may say so. I have also listened with great interest to the speech of the noble and gallant Lord, Lord Thurlow, and I agree with most, if not all, of what he said. I think he touched on many of the major points that he thought were in doubt in this Bill; therefore I do not propose to go into any detail at all to-day, but will wait for the Committee stage. I take it he will be putting down a number of Amendments to carry out the objects he had in mind.
There are, however, one or two issues of a wider nature which I think ought to be mentioned. But before going on

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to them I, too, should like to welcome two noble Lords who will make their maiden speeches to-day, and to say how glad I am that serving Territorial officers are in this position and are able to give us the benefit of their views. I myself ceased to be a serving Territorial officer on reaching retirement age, when I received a Roneoed piece of paper from the Army Council giving me an expression of their thanks and signed in an illegible way by some civil servant.
LORD SHACKLETON: My Lords, I was not even thanked by the R.A.F.
LORD OGMORE: So, my Lords, one can see where influence counts. I had a Roneoed piece of paper.
The first intimation—on July 29, 1965, by the noble Lord, Lord Shackleton—that the Territorial Army was, as we felt, sentenced to death was, I admit, a body blow to many of us. That is how we felt. I remember the noble Duke, the Duke of Norfolk, and the noble and gallant Lord, Lord Thurlow, coming to me in the Prince's Chamber and expressing great concern that the Statement was about to be made. They felt, as I did, that this was virtually the end of the Territorial Army. The Statement was made on the eve of the Recess, and on the eve of many units' annual training in camp. I cannot imagine how the commanding officers managed to get through that camp in view of the Statement made at that time. They had my sympathy.
It was the more remarkable because, on June 25, 1958, on the Jubilee of the Territorial Army, I myself moved a Resolution in this House expressing the appreciation by the House of the work of the Territorial Army and intimating our full confidence in the Army and in its work in the future. Without any intimation to your Lordships that that Resolution—which I may say was carried nemine dissentiente—had been misplaced or was outdated, we were suddenly faced with this alarming Statement by the noble Lord, Lord Shackleton, on the eve of the Recess. At the earliest available time I put down a Resolution condemning this action, as, in rather milder terms, did the noble and gallant Lord, Lord Thurlow.
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Eventually there was a big movement in the Press, in which I and many others took part, pointing out to the public how wrong we felt it to be if the Territorial Army were to die and what a dangerous situation this could be for the country—especially in view of what Sir Gerald Templer, when Chief of the General Staff, said about the T.A. I always remember it: I think it is the best summing-up of the value of the Territorial Army that has ever been made. Field Marshal Sir Gerald Templer said that the T.A. is the country's insurance against the unknown and that no other country in history has been able to take out such a comprehensive policy for such a low premium. I could not understand why the policy, at this dangerous time, was no longer needed.
I discussed the matter with my friends and we came to the conclusion that there were two certain minimum essentials to he considered in regard to the Territorial Army. The first was that it must be retained as a military force under the Ministry of Defence. Your Lordships will no doubt remember that there was a rumour at that time that it was to come under the Home Office. I wondered then: why not the Ministry of Agriculture! But, as I have said, it was essential that it should be retained under the Ministry of Defence. Secondly, it was essential that the Territorial Army Associations should, so far as possible, be kept in being so that there could be expansion in case of need. I am glad to see now that at least these minimum qualifications have been accepted by the Government. The Territorial and Army Volunteer Reserve is retained under the Ministry of Defence, and the Territorial Army Associations are also to he kept in being, although in far fewer numbers than at present. Here one has, at any rate, under a military Department of the country, a force which is capable of rapid expansion—or, at least, capable of expansion; I will say something about "rapid" in a moment. One also has in the Territorial Army Associations the framework upon which that expansion can be made.
We all know that in the First World War Lord Kitchener made a great mistake when he did not build up on the Territorial Army Associations and formed Kitchener's Army, or divisions of it, with the utmost confusion and waste, cutting

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right across the Regular and Territorial machinery. We do not want that to happen in the future. We also know when there was a sudden doubling of the infantry of the Territorial Army in the early part of 1939, I believe, when Lord Gort was C.I.G.S. and was in France walking round the Magin´t Line—though he did not seem to walk far enough or he would have found that it came to an abrupt end. While in France he read in a newspaper that the Secretary of State had doubled the Territorial Army overnight, through a stroke of the pen. What a fantastic incident! It had never happened before in history—I hope there will never be reason for it to happen again. The only reason why Mr. Hore-Belisha was able to carry out this fantastic decision was that the Territorial Army Associations were in being; and the prestige of the Territorial Army and the machinery of the Territorial Army Associations were such that the Territorial Army could be doubled in a very short period of time.
The only doubt I have about the T. & A.V.R. II is a point made by the noble and gallant Lord, Lord Thurlow—namely, are the commitments that the Government propose to impose on these Volunteers going to be able to be carried out by them? Let us remember they are civilians with their own commitments, jobs and families, and I do not know whether they will be able to carry out those commitments. There is, I think, a danger of putting too heavy a load on the Volunteers, and the Government are going very near it with regard to T.A.V.R. II.
As regards the home service force T.A.V.R. III, will it be sufficient? Will the force, when it is so lightly armed and equipped, be able to carry out even the very limited duties which the Government propose for it? I have the same doubts about this as the noble and gallant Lord, Lord Thurlow, has; I really have. I think that a force armed with obsolete rifles and with hired transport is no sort of realistic force at all.
My Lords, before the war I was a sort of "toad beneath the harrow" in these things. I was a company commander in the infantry, and when the battalion was turned over to artillery I was a battery commander. These are the people who will have the main burden of this problem. Up to 1939 we had
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horse transport. In 1939 we changed over to the artillery and had our own motor transport. Prior to 1939we had a little motor transport, but not a great deal. Prior to 1939, what motor transport there was was hired, and I could wish no worse fate to anybody than that they should have to try to mobilize a unit quickly and use hired transport. First of all, the transport you have earmarked does not turn up, or most of it does not turn up; and, secondly, if it turns up, you find that it will not go. No one ever hires to the Army transport which is in really first-class condition, you can be sure of that. That was my experience, and I really could not wish a worse fate on my bitterest enemy than to have to operate with hired transport at the beginning of a serious situation. I had to do this at the time of Munich. We were called up at that time—we were mobilized; it was called "embodied"—and also, of course, on August 12, 1939. So when we talk about operating with hired transport, it really is not realistic.
Secondly, I should like to ask whether this force is to be linked with the county regiments, the infantry. I think this most important. In my own regiment, the Welch Regiment, we have the Regular Battalion and there is a tremendously close link between it and three Territorial battalions. I do not think that anyone who has not served in the infantry in a county Regiment can appreciate their tremendous esprit de corps. It does not exist merely in the Regular battalion; it runs right through the Territorial battalions. They are all part of the same family. It does not matter whether you are Territorial or Regular, you are all part of the family and wear the tie and go to all the functions, and your sayings and doings—if respectable—are all stated in the regimental magazine, and so on. Therefore, this link is of vital importance.
Lastly, there is the question of the Territorial Army drill halls. A large number of these drill halls will be redundant and I ask the Government to look very carefully at what is going to happen, first because of the possibility of expansion, and, secondly, because in many cases the drill halls were the centres not only of military but of social life in the district. When I commanded "B" Company of the 6th Battalion the

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Welch Regiment at Clydach—the noble Lord, Lord Champion, who is sitting on the Bench opposite, knows it very well—there were three "powers", if you like to call them that, or three centres in that mining village: the works, the Rugby football club, and "B" Company of the 6th Welch at the drill hall. The chapel used to borrow my crockery for their "bun fights", and I used to borrow their chairs for my "smokers"—which came with an urgent request from the minister: Could he, please, have his chairs back on Saturday night, otherwise the congregation would not be able to sit down on Sunday morning. I also was vice-president of the Rugby club.
That is the sort of situation that happened. That is how the Territorial Army has been built up in these rural and industrial areas. And I think that when it is looked at from the top, from Whitehall, there is a tendency to forget that you are dealing with men, volunteers, and with communities, very often in industrial areas, which are closely integrated communities, and that vast, global plans evolved in Whitehall will never take effect at all, unless the people on the ground agree and put them into operation.
5.15 p.m.
LORD FREY BERG: My Lords, this is the first time that I have had the temerity to address your Lordships, and my excuse for choosing this moment is that in the course of my present appointment I come across quite a number of the problems which your Lordships have been considering this afternoon. I should at this stage, I feel, declare my interest, which is that I am a Regular soldier and, as the noble and gallant Lord, Lord Thurlow, has just said, I have the honour to command the Infantry Battalion of the Honourable Artillery Company. It is therefore doubly important that I should not say anything controversial this afternoon, and I know that the House will understand if I talk only in general terms. Already, at this stage of my maiden speech, I have become aware of what it feels like to hear a number of points, which I had been hoping to make, made by previous speakers. I will endeavour not to repeat what has already been said, and will rearrange my speech accordingly.
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My Lords, I have been with the Honourable Artillery Company for nearly a year, and I have found it a most interesting and stimulating experience. Indeed, I only wish that more Regular officers were able to do a tour of duty with the Territorials, because I feel that they, like myself, would derive much benefit from it and learn a great deal. This is the first time I have served with the Territorial Army and I have no axe to grind, either way, about it. If I felt that no constructive purpose would be served by continuing its existence I should not be addressing your Lordships this afternoon. However, having had nearly a year in the Territorial Army, I am bound to say that I have a genuine admiration for what it stands for, and what it tries to do, and for the keenness, the team spirit and the hard work which I have found among all ranks during my time with them.
There are three special reasons why I believe in the necessity for the continuation of the Territorial Army. First, the opportunity that it gives to young men for voluntary service. Having read your debates, I know that your Lordships feel very strongly—and I entirely agree, having interviewed and seen large numbers of young men presenting themselves for service—what a very important thing it is to have this outlet. My second point, which the noble Lord, Lord Thurlow, has already mentioned, concerns the recruiting which the Territorial Army does for the Regulars. Only last week I had a young man, a member of my battalion, come to me and tell me that, having seen what life in the Services was like, and having experienced the atmosphere, he preferred it to his civilian job and was going to apply to become a Regular soldier. He was by no means the first, or the only, person to say that to me since I have been with the T.A. I am sure that this goes on right through the length and breadth of the country. I feel that many people, who would not otherwise come, are brought into the Regular Army as a result of the training and comradeship which they have found in the Territorials.
On the question of a Reserve, it is, in my view, vital that there should be a Reserve Force for the Regular Army, ready for the unexpected emergencies which, all too often, as your Lordships

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have frequently said in previous debates, arise in this uncertain world. As the noble Lord, Lord Thurlow, has said, I think that everybody in the Territorial Army recognises that some form of reorganisation is necessary and, indeed, desirable. For my part, I am glad that the Government have decided that a Reserve Force is necessary, and that they are going to base recruitment on the tradition of voluntary service.
I have three points that I want to make, and I will do so as shortly as possible. The thing that has impressed me most as a commanding officer since I came to the H.A.C. is how much there is to do and so little time in which to do it. This presents one with a challenge, as well as with a problem. But I feel it is important that we should recognise that there are limitations to the amount of time that one can expect volunteers to do, in the way of putting in of time.
So far as the H.A.C. is concerned, there is a recognised pattern. A young man, when he first joins, usually in his late teens or early twenties, is occupying a junior position in his business, firm or whatever it may be; he is usually unmarried, and has a certain amount of spare time which he wishes to occupy usefully. It is therefore not at all difficult to arrange for his recruit training and the continuation training that is necessary after he has done his initial year. After two or three years, however, he begins to assume more responsibilities in his civilian job, and sooner, rather than later, these days, he gets married. When that happens the competition for his spare time becomes intense. Unfortunately, it is just at this time, when he is more mature and ready to take responsibilities, that one most needs him to train as a noncommissioned officer and as an officer. The problem is how to get suitable candidates to come forward when all their own domestic and personal affairs are in balance.
I feel that a great debt of gratitude is due to those members of the Territorials who are of the older generation, and many of whom served in the last war. They kept the machine going. But anybody who served in the last war is now over 40; and even the men who had two years in National Service are getting fewer and fewer. We are therefore getting to the stage—and I think this is true of almost
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any unit—when we shall have to become dependent on other sources for instructors, and possibly even for leaders. That is why I welcome the increase in the number of Regular personnel which the new A.V.R. is to have, because I can see that it will be most necessary to have a leavening of experience of the Regular Army to keep the Territorials up to the standards that will be required.
The second point I wish to make is this. I am delighted to hear that the A.V.R. is going to be clothed and equipped, if not right up to Regular standards, at any rate very near them. When I first went training with my unit last October I was impressed by their smart bearing, their combat clothing and the satisfactory way they behaved. It was only afterwards that I found out that they had all had to purchase their clothing out of their own pockets. I understand that this has been the common practice in the Territorial Army for a long time. Then again, last month I inspected a guard of honour of men in No. 2 dress and found that it was all borrowed from a central depot. We were not allowed to alter or tailor it in any way, and it had to be returned immediately after the ceremony. I am sure your Lordships will all agree that it is wrong in principle that soldiers of the Queen should have to buy or borrow their own personal clothing, and I am glad to hear that this will no longer continue. I am also pleased to hear that they will be given at any rate a training issue of the new type of weapons because, here again, it is difficult to maintain morale if you are training with what men regard as the cast-offs of the Regular Army.
The final point I wish to make is the suggestion that the A.V.R. battalions might be given the opportunity once every three or four years to train as battalions overseas. I appreciate that under the present arrangements units are likely to go abroad to their Regular battalions in company groups; and I take it that this mainly means going to Germany. But I suggest that if it were possible to set up atraining centre further a field, this would have a tremendous drawing power from the point of view of recruiting. There is no doubt that in this day and age the young men of this country like to go abroad, and if it were possible to organise a training centre in a place such as Malta,

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I think that we should get a favourable increase in the response for the A.V.R.
I should like to quote the case of my own battalion. This year we were going to a camp at Devizes, on Civil Defence, and when this was cancelled last summer we had to try to find an alternative place. I was very taken by the fact that almost all the men, when they were consulted by their company commanders as to what they thought would be a good alternative, asked: "Would it be possible for us to go overseas?" We had long negotiations with the Ministry of Defence and, to cut a long story short, they allowed us to go to Malta, on condition that we paid the air fare, there and back. I put that to the members of the battalion, and I was astonished to find that nearly the whole unit—or those who could get away at the time in question—were prepared to find the money somehow. Many of them found it very difficult, but they did raise the money, and we had an extremely valuable camp.
May I, for a moment, touch on the advantages of Malta? In the first place, there is an excellent camp at Gyahn Taffieha, which is empty. It was an old Marine Commando camp, which has not been occupied, although it is fully maintained and available at short notice. The training areas round about are adequate for T.A. training. There are any number of ranges there, and although the island of Malta is not sufficiently large for the training of a Regular battalion, it has all the facilities and more that one could possibly want for a T.A. unit. Of course, the local population are extremely friendly, and I believe that they would welcome some form of arrangement whereby from time to time a number of battalions from the United Kingdom came out to do short camps. In fact, on May17 The Times of Malta published a leading article advocating just such a course, so I do not feel there would be any political disadvantages to this scheme.
There is also the question of cost. I started by saying that it had been my intention to advocate such a scheme, but, when I prepared this speech I did not realise what was coming at half past three, and I can well understand that this is not a very suitable moment to
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advocate something which may involve overseas expenditure. Nevertheless, if such a scheme were possible, I am sure that it would enhance the likelihood of the A.V.R. getting off to the good start we all hope it will have. It only remains for me to thank your Lordships for the very kind way in which you have listened to my remarks this afternoon.
5.33 p.m.
LORD BOURNE: My Lords, I have to thank the noble Lord, Lord Leather-land, for allowing me to make a short intervention in this debate. I promise that it will be short. First of all, I must congratulate the noble Lord, Lord Frey berg, on his maiden speech. He comes to your Lordships' House with the reputation of his father, who was not only a great public man and a Member of your Lordships' House but a very brave man. It is quite clear, to me at least, that his son is following in his footsteps, and that he will distinguish himself, not only as a member of the H.A.C.—which, incidentally, is older than the British Army—but also in speaking to your Lordships' House in future without the slightest difficulty or hesitation.
The intervention I want to make is not strictly within the Bill. It is a question of the role which was mentioned in the opening speech of the noble Lord, Lord Shackleton, when he opened the debate. He made it quite clear that, of the three roles, A, B and C, which he quoted for the old Territorial Army, A and B were being separated in this new Bill and in this new Force of T.A.V.R. I, II and III. Role A, to provide units for the Regular Army overseas, clearly goes to T.A.V.R. I and II; Role B, to provide echelon units in aid for the civil power and to support the Regular Army, was going to be the role in the United Kingdom of the new Home Defence Force, or T.A.V.R. III. Unfortunately, supporting the Regular Army has been struck out of this role. Role C, to provide a framework for expansion in general war, he described as an irrelevance, and I do not think many of us disagree with that.
My point concerns role B for the Home Defence Force, T.A.V.R. III. At the present time, it has been accurately described by the Under-Secretary of State

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for Defence for the Army, in the debate on May 10 in another place, as follows:
"The primary role of this section of the Reserve is to assist the police in the maintenance of law and order and to act generally in support of the civil authorities in the tragic event of a nuclear attack upon this country."—[OFFICIAL REPORT, Commons, Vol. 728 (No. 17), col. 250; 10/5/66.]
That role has been accepted, but in my humble opinion it is not sufficiently wide to allow for unexpected emergencies in the future; nor is it wide enough to appeal to the incoming young men who might think of joining the Home Defence Force, the Territorials.
As we have heard, the question always heard on joining—and, indeed, after joining—the Territorials, is: "What are we for? What is the role?" That question has been unanswered for many years. It has been a matter of doubt in the officers' and sergeants' messes, as I can well testify. But now it is clearly to be answered by the statement: "We support the police", which is not a very wide role, as has been mentioned by the noble Lord, Lord Thurlow. I would plead with the Government very strongly that, in the same way as clauses have been left in this Bill which will stand the test of time (the noble Lord, Lord Shackleton, mentioned one or two clauses which were not going to be activated at the present time, but which might come into operation in the future), the role of T.A.V.R.III should be drawn wide enough to satisfy the future.
I would suggest that if you include in the role of T.A.V.R.III, the Home Defence Force, the new Territorials, not only "to provide units on the outbreak of war to aid the civil power", but also the words, "to support the Regular Army in the United Kingdom", that would not only present a more satisfactory role, in realistic terms, but would help recruiting considerably; and it need not cost anything. The immediate answer from the Government Department would be, "If you widen the role to include support for the Regular Army in this way, then you must have units, brigades and divisions". I would say that that was unnecessary; that the units of the new Home Defence Force, the new Territorials, could combine in their training support of the Regular Army without a great deal more equipment.
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In support of this theme, I should like to quote another remark made later in the debate on the same occasion by the Minister of Defence for the Army, who talked about the primary role. He went on to say:
"If there were landings in this country, we should not tell them to go home to bed. We should tell them to do something to assist in repelling the landing. But this is not one of their primary roles."—(Col 354.)
Of course it is not their primary role. To my mind, it is an additional role, helping the Regular Army to compete, perhaps not with landings, but with sabotage and other kinds of emergencies which may well arise in the future; and all this at no more cost than is envisaged inside this present transaction, yet with a great deal more appeal and realism.
5.39 p.m.
LORD LEATHERLAND: My Lords, may I say what a great pleasure and privilege it was to me, as a white-haired old company sergeant-major from the First World War, to listen to that constructive and excellent speech by a modern-minded young colonel of the Army of to-day. The noble Lord, Lord Freyberg, bears an honoured military name. He is obviously carrying on the family tradition, and I am quite sure that I express the views of all your Lordships when I say that no debate on military affairs in this House in the future will be quite complete without him. As I gaze around your Lordships' House I suppose I should say, in military terms, that quite a number of noble Lords are absent from parade. I do not know whether it is because of the rival attraction of the World Cup or whether they are down in the City propping up sterling, or whether they merely saw my name on the duty roster which is posted up outside the Chamber. But I think there is a more reasonable explanation than any of these. It is this: that most noble Lords are willing to see this Bill go forward on to the Statute Book.
I support it in the hope that the new Territorials will become so popular that their recruitment list will be oversubscribed, and that in a few years' time, when the reorganisation has got into its stride and when perhaps the economic situation is a little brighter, the Minister may be able to expand the size of the

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force. I support it also in the hope that the new force will not be starved of essential equipment, as the old Territorial force so sadly was so far as many of its units were concerned. I support it also because I realise that the picture of world strategy has changed in recent years and that the role of the old Territorial Army is no longer relevant to-day. Reorganisation had to come, just as reorganisations have come in the past. I support it also because whereas six or seven months ago we felt that the bottom had perhaps been knocked out of the Territorial Army, we realise to-day that we are getting a great deal more than was held out to us on that occasion.
I have a natural loyalty for the Territorial Army. I think I told your Lordships once before that I have been in the Territorial association for my county for over twenty years and am a Deputy Lieutenant for the county, and it was that sense of loyalty that prompted me, twelve months ago in your Lordships' House, to suggest that the Territorial associations ought at the very first stage to have been taken into consultation in regard to this measure of reorganisation. I may say there is still a little sense of grievance in the Territorial associations that they were not brought into the picture a little earlier.
It was the same loyalty that prompted me six months ago to express from these Benches my rather serious disappointment with the reorganisation scheme then put forward, but it is for the same reason that a few months ago I expressed my unbounded relief when we had from Mr. Reynolds the intimation that he had, very wisely, reviewed the reorganisation scheme and that he was giving us a guarantee that the Territorial Army would live on. Of course he has not given us everything that we want, but I should like to say this: that since Mr. Reynolds took over at the War Department he has devoted himself very thoroughly (I know this from my conversations with people in the T.A.) to considering how the future of the T.A. could best be assured; and if it is any consolation to him, I will say that wherever I go I find he is held in the highest esteem, not only by the Territorial Army personnel but also by the Regular Army.
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He has given us the chance; it is now up to us to show that the new scheme can work, and to see that it does work. It is not our duty just to sit and moan, although as old soldiers we are pretty well experienced in that. It is our task to get on with the job. I think in all our social relations, in all our associations and our units, we should be careful not to sell the T.A. short, because morale is very important. I think we must make it clear wherever we can that the T.A. is not dead, but that it lives on. We must do everything we possibly can to raise the force in public esteem. In my own county of Essex we have told every officer and man that there will be scope for his future services in one or other of the reserve forces under the new system of organisation, and I am quite sure that is symbolic of what is happening in most parts of the country.
I think it was agreed by everybody that the various reserve forces really needed to be reorganised, and as far as I can see, categories I and II of the T.A.V.R. are going to make the Regular Army far more effective than it has been in the past. I have a little apprehension about category II. Those are the people who will be called up in times of acute international crisis. I have a little fear that some factories may be denuded of valuable operatives and some key workers from construction jobs may be taken away. But the governing words in that particular clause of the Bill are "acute international crisis", and it is made clear that these A.V.R. II men will not be called up until all the prior reserves have been exhausted. So I think that if we carry on a fairly hectic public relations campaign among employers and trade unions we may be able to satisfy them that the position does not, perhaps, carry so much difficulty as might be apparent at first sight.
I must say one thing. I hope employers really take the view that it is not sufficient to guarantee a man his civilian job back when he returns from his corps; he should also have a guarantee against being passed over for civilian promotion, because that is a serious consideration as far as many people are concerned.
In regard to category III, I am glad the Minister has recognised the need for a Home Defence force. Many of us emphasized, when we had our previous debate,

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how contrary it was to all military strategy to leave the home base unprotected. I think it is very good indeed that these men will be armed like soldiers and that they will look like soldiers and will act like soldiers in their drills and training. I think it is very good indeed that they are to keep their regimental titles and cap badges, because an enormous amount of esprit de corps revolves around such things. I should like to see category III expanded in due course, if the number of recruits coming forward is enough to justify it, and I certainly should like to see more women preserved in the T.A. of the future. We can say what we like about women; we can say that in the T.A. they do very good clerical and domestic chores. But they also do wonderful work in signals and many of the technical branches of the corps. And if the young men of to-day are anything like the young men of my day, I am quite sure that an adequate sprinkling of women in a unit would be a valuable aid to recruiting.
This new force will not be a success if it is starved of equipment, and I do not think we are getting enough Land Rovers for these units. I do not like the idea of the old No. 4 rifle, and I do not like the idea of some of the wireless telegraphy equipment which is now being used in these units. I have been told that some of it is stamped with Russian symbols. It was equipment which we made and sent round to Murmansk during the war and then brought back afterwards. So I sincerely hope that in these days, when so many men are technically minded in their own civilian occuaptions, we can give them equipment which will arouse a response in that technical frame of mind with which they are blessed. We must give the boys something to play with, otherwise there will be boredom and apathy and we shall have men drifting away and not troubling to re-engage.
If the Home Defence force had formed a part of the Government's original scheme for reorganisation, if the Territorial associations had been consulted earlier, I think we might have seen a more welcome kind of structure emerging in the negotiations. We could have had closer integration of the category II and category III units, with the category II men growing out of the category III
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units. I think we could have had a general all-purpose unit. We could have had a sub-unit of category II men. They would have been trained up to Regular Army standard. But I think the sight of these category IImen training up to this advanced standard with their advanced weapons might have tempted quite a number of the category III men to move up into this higher grade; and that is just what the Army wants.
When the category II man is finished now, or if he is promoted in his civil employment, or if he is down-graded from being a bachelor into a mere husband, he could more easily step down from category II to category III if we had this all-purpose kind of unit, and he could soldier on. But as it is, the category III force is often divided, not only organisationally but geographically, from the category II force; and when the man finishes his term of service in category II he may have to finish his soldiering altogether. That would be a pity, because so many of these men have their hearts in it.
If I mention Essex now it is not for the purpose of any special pleading but merely so that we may visualise an example of a case as it exists, and this probably exists in many other counties as well. If we ignore the logistic units and concentrate on the straightforward soldiering units, we have only one category II unit in the county and that is at Chelmsford, and we have only one category III unit in the county and that is at Ilford. True, that has some subunits, but none anywhere near Chelmsford. Therefore, if a Chelmsford man wants to join it must be in category II, and perhaps it is very inconvenient for him to do so for family reasons. But if he does join category II and then wants to keep on in category III after his liability has ended, there is nowhere near him where he can join up with category III units.
Similarly, if a man from Ilford again wants to join a non-logistic unit he has to join a category III unit. He has no chance of joining a category II unit, no matter how adventurous or how ambitious he might be to do so. I think it would have been better if we could have had one general service unit based on Chelmsford and Ilford, with a basic category III commitment, and in that we could form

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a category II company where we should have special week-end training with the Regular forces for the men volunteering for Regular reinforcement duty. There could in such circumstances have been quite a smooth two-way flow between the two categories, to the benefit, I think, of both of them. But of course it is too late now to turn back to square one and start all over again, so I think we have to "count our blessings".
We are going to get 80 or more extra Territorial centres. We are going to save a great many of the "teeth" units. We are going to save a great deal of the Territorial Army spirit. We are going to have the category II men trained well up to Regular Army standards. We are going to have them called out as units and not as individuals who might be strangers to each other. I am hoping that even category III will get better equipment than under the old system of organisation, and perhaps better than we have had vouchsafed to us to-day. I think it is a very good thing indeed that the old titles are being continued.
There is one thing I like about this scheme and it is this: it enables us to forget all about conscription. It enables us to make do with a smaller standing Regular Army than might otherwise be necessary, and for these reasons alone I shall give it my support. We have to wait a little time to see how the men respond. I can say what the position is in my county of Essex. The men are very keen indeed to volunteer for category II, the Regular reinforcement units. They are keen to do it for the simple reason that they like soldiering. But we have not yet found the same response so far as category III is concerned. That may probably be because the idea got around that the Territorials were going to be abolished, and that is another reason why I think we should have some vigorous publicity, to make it quite clear beyond any doubt that the Territorials are not to die; they are merely to be born again. If we spread that idea we may find that there are groups of old pals in nearly every unit, and when one of those gives a lead the rest will be eager to follow. I feel that immediately this measure gets on to the Statute Book there should be a massive public relations campaign, because delay and uncertainty could very well be dangerous.
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I do not want to speak about the Army Cadet Force because that was mentioned by the noble Lord, Lord Thurlow. I know that at present the T.A. units act very much in the role of foster parents to them, and if some of these T.A. units are to disappear it may very well be that some of the cadet units will disappear with them. I know of the elaborate scheme of reorganisation whereby regional associations and Regular Army training experts and the Army Cadet Force Association will undertake the training of the young men in military affairs and citizenship. I know all about that, but there is one thing about which I am very doubtful. Their association is to be on a regional basis. I should like to see some form of county body continued. It could perhaps be a subcommittee of the regional association, because we do so much depend upon the personal contacts which eminent members of the association can have with the large-scale employers in the county. And for the very same reason I should like to see the parent Territorial Association, when it disappears on its county basis and becomes a regional association, being reinforced with some kind of county subcommittee which might preserve and continue these very useful contacts which the old associations have had over so many years.
Of course, if I wanted to join the awkward squad I could probably find some imperfections in this Bill. In this world, anyhow, perfection is very hard to obtain. There are very few perfect institutions; there are very few perfect people, except of course your Lordships. But I think the removal of uncertainty is just as important as the striving after perfection, and rather than delay this Bill and prolong the uncertainty I should like to see it passed, even with its imperfections and blemishes, so that everybody knows where he stands. I will mention a few of these imperfections, and it may very well be that some of them coincide with the examples given by the noble Lord, Lord Thurlow. There has been no collaboration between us, and it may perhaps add weight to the mention of these imperfections inasmuch as some of them have come independently from one side of this House and some of them are coming equally independently from the other side. In the first place, I do

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not like the idea that category III is being recruited only up to 80 per cent. of establishment. That probably means that in some districts we shall have to turn away men who are willing to serve, and I think that would be a very great pity. Why not make the establishment 100 per cent. and hope for the best? The second point is that, if category II and category Ill cannot be merged for organisational and training purposes, can they please be allowed to use the same drill halls, so that they can participate in the comradeship and spirit of emulation which would naturally be generated?
The third point is that, like Lord Thurlow, I want to see more Land Rovers per unit. I want to see more modern wireless telegraphy; and I want to see the self-loading rifle, instead of the old No. 4. I understand that these small units are to be commanded by majors. I hope that we shall have announced as quickly as possible the names of those particular majors and the units to which they are to be posted. Quite a number of men may be hanging back until they know the name of their new commanding officer, in case he happens to be someone with an unpopular reputation—and of course, there are officers with unpopular reputations.
Another matter to which I think we must draw attention is this question of putting employers out of their misery. We have had examples of employers who have been most unco-operative. On the other hand, there have been a large number who have thrown themselves wholeheartedly into this recruiting task. But I think it is only fair to an employer that he should know to what extent his employees are committed to a liability for service. I should like to see the commanding officer of a unit required, immediately on a man's enrolment, to notify the employer of that enrolment and of the employee's liability for service. But do not want it to be done until after the man has actually enrolled: I do not want the employer to be in a position in which he can exercise a power of veto. There is another thing which I think may help. We should have a clear statement from my noble friend Lord Shackleton that the men in categories II and III will not be called out to take any action in peace-time strikes or riots.
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One further point, albeit a trifling one: I should like us to simplify the nomenclatures of these various types of reserve. They are rather confusing. We have Regular Reserves A and B; we have an Army Emergency Reserve, an Army General Reserve, a long-term Reserve, a Pensioners' Reserve, a Special A.V.R. Reserve, a T. and A.V.R. I, IIA, IIB, III; and I believe that, lurking in the background somewhere, is a T. and A.V.R. IV, though I am not quite sure about that. This is all rather confusing to people who move outside military circles. If we could form up all these Reserves and number them off from the left as Reserve I, Reserve II, Reserve III, and so on, it might also help and would give those concerned some idea of the order of priority for call-up.
There is another little effort at simplicity which could possibly be made. If your Lordships would turn to Clause 6(6)(a), you will see that it says the Secretary of State may make provision
"for securing that persons of such descriptions as may be prescribed who but for the regulations would be persons to whom this section applies shall not be such persons."
I am quite sure that if I were a well-known statesman of this generation and I were to get out my box of matches and try to work that out on the table, I could do it. But I wish that the clause could be reduced to more simple language. I hope that the Minister will keep all these points in mind and, probably by some administrative action at some time in the future, help to meet them.
I have one final request. I believe that bands have played a most important part in maintaining morale in Territorial units. I understand that the Minister, Mr. Reynolds, is quite sympathetic towards their retention. I should like to keep them, even if we have to invent some supernumary role for them. But I should also like to keep them in their native districts, and not have them moved two or three counties away to the new regimental headquarters which are, in some cases, going to be established. I apologise for mentioning a small matter like this, but many people like bands; and many soldiers also like bands. I must confess that I myself like bands. Perhaps that is not surprising, because my father was a bandmaster, and at the age of twelve, I was a pretty good player on the euphonium.

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There is nothing better for the troops than to be able to march down the high street, with "sounding brass and tinkling cymbals," blaring out "Colonel Bogey" with full vocal accompaniment. On that reminiscent, happy note I commend the Bill to the House.
6.5 p.m.
VISCOUNT ULLSWATER: My Lords, it is with great diffidence that I rise to speak in your Lordships' House. Had I not been here on previous occasions and heard how good your Lordships are to those making a maiden speech, I should be much more frightened; but I would ask the indulgence of the House on this occasion, too. As my noble friend Lord Thurlow has said, I am a serving junior officer in the Yeomanry Territorial Army Unit, and my reason for coming here to-day is to put forward the views of my troop and young brother officers on the reorganisation of the Territorial Army.
I do not think it would be wrong to say that we felt that reorganisation was needed. In so far as our clothing and our pay were concerned, the Territorial Army was becoming increasingly outmoded and outdated. What we did not expect was virtually the abandonment of the Yeomanry in the country, with all its traditions and history through the years. Only to leave one armoured car regiment, split four ways, with squadrons widely dispersed by land and sea, appears to me to be rather a halfhearted attempt to form an up-to-date military fighting force, ready and anxious to undertake its duties whatever they may be.
The reaction to these proposals from the men in my unit was one of complete amazement and disbelief. This was replaced by a form of frustration, for here was the best form of volunteer spirit—men keen to serve in a force with a purpose. Even now they are nagged by uncertainty, and their future is none too bright. I have not come to attempt to change anything at this late stage, but as it falls to our Regiment to provide a squadron for this new Yeomanry Regiment, we are most anxious to see that it works, and we will to the best of our ability.
Almost 100 per cent. of those eligible to sign on have done so, because
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A.V.R.II continues everything that we have known, liked and enjoyed. We are equipped up to the standard of a Regular regiment and in a few days' time a squadron leaves for Germany, to take its place beside and go on exercise with our affiliated regiment. It is the knowledge that a Territorial can do what the Regular Army can do that makes our purpose as volunteers so much more worth while. I did not do National Service and in my two years of commanding a troop in the Yeomanry only two of my men had any previous military experience. So great has been the response to sign on with the A.V.R.II squadron that a large number of men are going to be disappointed. It will be their task, and in my humble opinion a difficult one, to form a company of the Home Service Force based in our county.
It is essential to maintain close links between the A.V.R.II and III. Because of the great difference in their equipment and training it will be extremely difficult to do. But if there could be some way of integrating the system of command and promotion, I am sure that the two will thrive together instead of struggling along apart. I am sure that there are some military difficulties preventing this, but for the sake of both units, for recruitment and efficiency through rivalry, I would make sure that they continued to exist together. I notice now that T.A.V.R.III is going to be called the Home Service Force. It gave my Regiment the impression that it was thought up extremely rapidly as a political sop to silence the Opposition—most likely by somebody in the B.B.C. In fact, I wonder he did not call it the Light Programme.
What am I to say to make my men join it? I cannot make a ·303 rifle very glamorous, and that is about all the equipment they will have. I cannot tell them of a bounty because there is none. And I cannot tell them that the pay with trade structure that they enjoy at the moment will continue, because it will not. I wonder whether any of your Lordships saw the large advertisement in The Times only a day or so ago on behalf of the Army, saying, "If you think the infantry looks like this"—there was a picture showing a row of soldiers on their feet—"Get with it" (or some such words) and there was another picture of the modern infantry and A.P.C.s with all

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their expensive equipment. It seems such a snub that the infantry-type Home Service Force should be absolutely identical to that first picture, with no vehicles and no equipment. Where is the incentive to make voluntary part-time soldiers, who get satisfaction out of fulfilling a task which is considered by most of us as being of great value and of national importance, join this "Home Guard" armed with pitchforks? What I fear is that it will attract the badly-paid men who might come along only for the pay, for drills and camps, and who need do little for it—the "old soldier" in fact.
Surely what we want is the young men from the towns and the countryside who, if they join the Home Service Force, might then have the opportunity of graduating to A.V.R. II. It would then provide a wide basis for recruitment, a training ground for N.C.O.s and an organised military unit in which people, notwithstanding age or business commitments, could play an active and useful part. I would urge Her Majesty's Government to reconsider most carefully the urgent need for positive administrative links between the two tiers. What surprises me most is that, at a time when new proposals have been set out to cut the Regular Army quite drastically, people will not see the obvious need for a strong, active and co-ordinated Reserve.
6.14 p.m.
VISCOUNT BRIDGEMAN: My Lords, it is always a pleasant task to congratulate the maker of a maiden speech in this House, and it is a particularly welcome task to-day when we have heard two such maiden speeches from two serving officers, a Guardsman and a Yeoman. Those two speeches, I think, went right home to all of us who heard them: they were first-hand evidence from people who know the problems on the spot, and I hope that they will be carefully borne in mind by everybody concerned. I hope we shall often hear both noble Lords again in this House. I cannot help saying that I think that the rank of second lieutenant is too low a rank for my noble friend behind me.
Before I come to the main part of the Bill, I should like to give a wholehearted welcome to Clause 20, which deals with
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Deputy Lieutenants. I do so not only because, as one of Her Majesty's Lieutenants, I know how valuable it will be, but also because this problem goes back to 1944, at the end of the Home Guard days, when I was supposed to be looking after the Home Guard and was asked several times by the Lieutenants of those days if something could be done to make it easier to give commissions as Deputy Lieutenants to those people who were in reserved occupations and who were doing a first-class job in the Home Guard, the Observer Corps and so on. I was told then that there would not be Parliamentary time for such a step, and that it was the wrong moment.
Most of the points in this Bill have been fully covered by my noble friend Lord Thurlow, whom I was very glad to hear speaking from the Front Bench. I agree with the noble Lord, Lord Shackleton, that there has been a broad consensus of opinion about this Bill, which fairly implements the agreement reached at the end of last of year and early this year. And on this point, I think, we ought to bear in mind what a great part the Council of Territorial Army Associations, the noble Duke, the Duke of Norfolk, and my noble friend Lord Clydesmuir played in reaching agreement after such a very bad start. Even so, all we have done is to get these new arrangements off the drawing-board: we have done no more than that, because this Bill is only the blueprint of the organisation we hope to set up.
I agree with those noble Lords who say that we should waste little time in seeing this Bill through the House, but it is only when this Bill has gone through the House that the real work will begin. The Government have then to suckle their child; they have to wean the new Territorial Army, and that will take a great deal of work and much good will on all sides. This is a matter for the personal attention of Ministers, to see that the intentions in this Bill are properly carried out, and that those who are trying to rebuild the Territorial Army in its various categories are properly supported and protected from the pettinesses and frustrations from which the T.A. has suffered in the past.
So far, I think, things have gone well. I agree with my noble friend Lord Thurlow and others who have said that

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the response to the tentative inquiries in camp were good. Therefore, if other things go right, I have little doubt that we shall get the number of men we want. But then, having got them, we come to various other problems. The plans for A.V.R. I and II look all right on paper, but they will work out in practice only if they turn out to be statistically right—in other words, if they produce enough reinforcements to fill the ranks of the units whose ranks have to be filled. At this stage, nobody can say whether they will or not, and therefore I would not agree with the noble Lord, Lord Leather-land, when he says that we can say goodbye to National Service. I believe that we cannot say goodbye to the possibility of National Service until we know that the plans for A.V.R. I and II do, in practice and statistically, fill the need for reinforcements. At first sight, the equipment for A.V.R. I and II looks to be right, if indeed it finally turns up; and it is early days to say. In my experience, it is easy to have announcements made in Parliament, but then things happen so that the equipment does not turn up. That is why I stress the personal responsibility of Ministers to see this plan through.
There are any number of trivial points though I am not going to mention themat this late hour. For instance, there are all the questions concerned with regimental connections. The happy solution of such problems will go a long way, as I think Lord Leather land said, towards the happiness of the troops and their willingness to join the Army Volunteer Reserve and to stay in when they have joined. I am also glad to see the much more realistic provisions in the Bill about calling out by Proclamation, because, as I think has been said somewhere else, the present plans go back to the Bill of Rights of 1689, when it was thought—rightly then, no doubt, but perhaps wrongly now—that you could make a clear-cut division between peace and war. Without these provisions a great deal of this Bill would not have served its purpose.
I now want to come back for a little longer to A.V.R. III. A.V.R. III has been put down in the Bill for home service only, but history does not support that conception. At the end of the First War, the Territorial Army was reconstituted on
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the basis that it would be called for home service only. A pledge was given to that effect, and it was also said that it would not be used for reinforcing outside their regiments. As the Second World War drew near those assurances had to be rubbed out. I think myself that history will repeat itself, and that one of these days it will be found that A.V.R. III will need to have a full liability. So I would like to go on record over that.
But I think that the real difficulty in recruiting for A.V.R. III will come if the present very unclear situation about the operational role of A.V.R. III is not cleared up, and soon. I have taken a little trouble to try to find out what is going on, and have had great difficulty in seeing through the fog of war, because a war is going on between the Ministry of Defence and the Home Office. What is happening, I think, is that a certain number of departmental discussions—which all seem to be rather sordid—are going on between the Ministry of Defence, the Home Office and the local authority associations. They may be necessary, though I fancy that with a little determination they could be put an end to quickly. But they are, in fact, having the effect of preventing a clear statement being given as to the operational role, and that, again, to my mind, is somewhat obscured by the stress on employment with the police. As will be known by anybody who remembers what happened to the Home Guard in the war—unfortunately, owing to administrative non-senses the Home Guard's record in the war has never been written up, and I suppose it is too late now—the Home Guard, which for this purpose one can regard as A.V.R. III, could not say in advance whether it was required to assist the police, the firemen, traffic control, rescue or anything else you like. That is why I think the police conception is too narrow a one, and you will never get this right until there is a clear operational directive as to what A.V.R. III is wanted to do. Once again, you will not get that directive right until it is perfectly clear what the A.V.R. III are expected to do with the arms, ancient and modern, which they have. To go on from that, again, you will not get that right until you stop regarding "sabotage" as a naughty word, and treat it as a realistic threat to be guarded against by other armed

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people. I want to put those ideas into the minds of noble Lords opposite.
I am not talking without any knowledge at all of this subject, even though my ideas which come mostly from the Home Guard are beginning to get rather out of date. These problems do not change. So I make as strong an appeal as I can to noble Lords opposite to clear up these departmental dog-fights between the Ministry of Defence, the Home Office and the local authorities, and let A.V.R.III have a clear operational role given them in time for the recruiting campaign, which ought to begin some time this autumn or, at the latest, after the turn of the year. I think those are the chief points which I wished to make at this late hour to-night. As I said, I am certain that so far as it goes this Bill is on the right lines, but the Bill is only the start. It is only the plan coming off the drawing board. We must now between us build the machine, see that it works and get down to details—even such details as ensuring that, if you provide A.V.R.III with wireless sets and expect them to work with the police, both sets will work on the same net.
6.26 p.m.
THE EARL OF COURTOWN: My Lords, a lot has been said to-night by noble Lords on both sides of the House, and almost nothing with which I am in disagreement. I do not intend to repeat either what has been said in this debate or what I have said on this subject on several previous occasions during the last twelve months. I have only three or four points which I will make as quickly as I can.
The first point is that everyone should be clear about the change involved by the substitution of a call out by Queen's Order for a call out by Proclamation. Clause 5 says:
"If it appears to Her Majesty that national danger is imminent or that a great emergency has arisen She may…by order signified under the hand of the Secretary of State, authorise the calling out of any reserve force for permanent service in any part of the world."
Those of us who were in the Territorial Army at the time of previous crises of various sorts will know that it has often been rumoured that the Territorial Army was about to be called out. The time of the Berlin airlift was one occasion,
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Korea was another, and Suez was a third. There was also the time in 1938 when a number of anti-aircraft units were in fact called out. Those were times which would clearly have warranted the calling out of the Reserve Army under Clause 5 of this Bill, but equally it appears to me that they may have been the occasion for a call out by Proclamation.
The noble Lord, Lord Shackleton, said that call out by Proclamation involved a decision by the Queen in Council, and he rather indicated that the object of this change was to enable the call out to be made under the hand of the Secretary of State with the acceleration in time which that involved. I think we should all be grateful if the noble Lord would make it clear whether that is the sole difference, because I think it is most important to the volunteer and to the employer that they should be quite clear under what conditions volunteers are going to be called out.
In the past the Reserve Forces could not have existed without the co-operation of the employer. He needs to have a clear idea of the circumstances in which his employees will be called out. Mention was made this afternoon of a pamphlet—which I myself have not seen—which has been sent round to employers. I do not know whether that makes this point clear. But if it does not, I urge the noble Lord to make clear to employers what are the obligations of their employees if and when they join the Reserve Army. Rumours have already been going around that certain employers who provided support in the past for their employees to join the Territorial Army will not provide the same facilities for those who want to join the A.V.R. I pursued one such rumour, and found it to be unwarranted; but employers will clearly review their policy on the passing of this Bill, and it is necessary to make this point quite clear to them.
The second point I should like to make goes somewhat further than several other points made to-day, and it is to emphasise the need for flexibility in the design and operation of the Reserve Forces. Since the war the Territorial Army has had a reorganisation roughly once every five years, and no doubt requirements will change in the future just as they have in the past. What we need to do is to maintain a base from which

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the Reserve Forces can be shaped to meet the requirements of the time. It is much easier to destroy than to restart, and in the past there have been failures in trying to recruit new types of Reserve Forces from scratch. Flexibility will be promoted if these links between the A.V.R.II and the A.V.R.III can be encouraged; and I was glad to hear the noble Lord say this afternoon that the transfer of people from one to the other when the necessity arises will be encouraged. As has been mentioned by other noble Lords, it is necessary to make it clear that A.V.R.III is going to do a good job, and if these links are kept clear and are improved, then that will become much more obvious.
I should like to add my voice to the plea made by the noble Lord, Lord Leather land, for bands. He spoke of the value of a band to a unit. I should like to add to that the effect of a band in providing a link between the Army and the civilian population as a whole. Bands not only provide a focal point for a Reserve unit: they are often the sole means of reminding the public at large that these units exist—and in many parts of the country T.A. bands are the sole means by which the Services can make an impact on the population as a whole. The cost of bands is small as compared with their effect, both on recruiting and on keeping the Army in general in front of the public eye.
Finally, my Lords, those of us who have been concerned with the Reserve Forces in the past may not agree with everything that is being done in this present reorganisation, but I am sure I speak for all of them when I say that we will co-operate in making the new Reserve Forces work and in making them a real power for good in the country as a whole.
6.33 p.m.
EARL FORTESCUE: My Lords, I am going to be brief, and I am going to confine my remarks to A.V.R. III. Nearly everything I wanted to say has already been said, very largely by the noble Lord, Lord Thurlow, and by the noble Lord, Lord Leather land, but there are one or two further points I want to make. As an old Yeomanry officer, I feel very strongly that the A.V.R. III, as at present constituted,
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has been created by the Government in the hope that it will die at birth. I cannot imagine a worse start being given to any unit than to tell them that they are going to be glorified policemen, or assistant policemen. They must be made to think that they are soldiers and that they have got to fight—and I can see many circumstances in which they would have to fight if they were there.
Being mean over equipment is, I think, a very short-sighted policy. There is nothing that stimulates recruiting more than knowing that you have got something with which to kill the other man, and to confine your armament to rifles only—and obsolete rifles, at that—is, I cannot help but think, the greatest mistake. The position is similar with regard to their transport. Knowing that they are going to have inefficient transport (which is more or less inevitable if they have to requisition it) is enough to discourage anybody; and they cannot co-operate even with the police unless they have decent wireless sets which can be worked from their vehicles. It is a very bad start indeed for a unit that they should have to try to build along these lines. I emphasise what somebody else has already said: they must be enabled torealise that they are soldiers and that they are going to be in a position to kill the other man.
When we last debated this subject the noble and gallant Field Marshal, Lord Montgomery of Alamein, recalled something which some pundit had said: that if you contemplate only two alternatives, the alternative which crops up is always a third which you had not thought of. It has been taken as axiomatic that there is never going to be a need for any ground forces in this country. Circumstances change very quickly, however, and it looks as if A.V.R. III will quite likely be the only troops on the ground. If that is so, surely they have to be mobile; they have got to be able to hit; and surely it would be right to keep on the old traditions by having a proportion of them with armoured cars and guns. If some of the units were equipped with armoured cars and gunners, that would not prevent their co-operating with the police if the police wanted co-operation. I therefore think that this is a point which the Government should consider.

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Another point is that I should very much like to hear from the Government that the names, the badges, the regimental property and the regimental funds will remain intact with the sub-units which are going to be set up. Also, there is in the Bill considerable mention of the Naval Volunteer Reserve, but we have not heard anything about that this afternoon. I know nothing whatever about that, and I am not going to ask anything about it, but if there were any ex-naval officers here I feel sure they would be after it.
LORD SHACKLETON: My Lords, I am sorry, but I did not quite take the noble Earl's last point. I should be very glad to answer it later, but I did not quite follow what he was saying about the R.N.V.R.
EARL FORTESCUE: The R.N.V.R. are mentioned freely in the Bill, but no mention has been made of them in the debate, and I feel sure that a large proportion of the public would like to know something about them.
6.37 p.m.
LORD NEWALL: My Lords, at this late hour I have only a few things to say, and they will take only a short time, I hope, because, as in the case of the noble Earl who has just spoken, most of the things I had to say have already been said, and said much better than I could have said them myself. I agree wholeheartedly with all those noble Lords who have spoken about A.V.R.III and have said that the lack of equipment and facilities, mainly transport, is going to hamper anybody who belongs to this part of the Reserve Force. I have heard a very vague rumour, about which the noble Lord, Lord Shackleton, may be able to give a hint, that in the future there might be some increase in the number of seven Land Rovers. I hope that possibly the noble Lord might be able to give us a hint on that subject. I will not repeat anything, but I do want wholeheartedly to agree with what has been said about the lack of facilities for A.V.R.III.
There is one point I should like to draw to the notice of the noble Lord opposite with regard to this eight-day camp. It is a very short camp, and I believe that at the moment it is going to be from Saturday to Saturday. I
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would recommend that it might be better, if it could possibly be arranged, to have it from Wednesday to Wednesday. This would enable the unit to have some sort of parade on the Sunday, as has normally happened in the past; it would enable the old comrades to come down; and it would also enable the members of the unit to see themselves as soldiers rather than as policemen in khaki.
I would ask that that question be given some small consideration, because I do not think it will make any difference to the employers at all. The volunteers will be away the same number of days. I think that what the old comrades have done in the past should be noticed; and, as they like going down, at their own expense, they should be given this opportunity. I would therefore finish by again stating wholeheartedly my support of all noble Lords who have been complaining about the lack of facilities for A.V.R.III.
6.40 p.m.
EARL JELLICOE: My Lords, we have had a number of very distinguished contributions this evening, not least from my noble friend Lord Thurlow who, speaking for the very first time from this Front Bench, made an exceptionally well-informed, impartial and, to my ears, very telling speech. We have also had two distinguished contributions from the maiden speakers, both of whom bear particularly distinguished names. We welcome the noble Viscount, Lord Ullswater: and his is a name of some ill-omen for me, because I remember, a year or so ago, on the other Bench, "biting the dust" during a discussion in your Lordships' House over that little pool which bears his name. I am certain, having heard the bite in his remarks, that other speakers in your Lordships' House in the future will "bite the dust" when they cross swords with him. I should like, too, to say how much I welcomed the speech of the noble Lord, Lord Freyberg, for whose father I had the very greatest admiration. We have been fortunate to have these two informed witnesses from the front, as it were; and I know that we shall all be glad to hear them speak again.
Like my noble friend Lord Thurlow, I would thank the noble Lord, Lord Shackleton, for overwhelming me with

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an avalanche of paper. More seriously, I welcomed this initiative, which I think is valuable. I only hope that he will extend it, so that at the Committee stage he will be kind enough to furnish us with his unexpurgated version of the merits of the clauses, so that we may have advance notice of the unreasonable arguments with which the noble Lord will be furnished to reply to the reasonable arguments that we shall advance. I am sure he will oblige us in this respect.
LORD SHACKLETON: Does the noble Lord propose a completely free exchange?
EARL JELLICOE: Yes, my Lords, a completely free exchange.
Listening to this temperate, informed debate I have had the impression that there is a pretty wide measure of agreement in this House on all sides. I think we all agree on the need for a new look at our reserve forces: we on this side certainly do. We agree on the tremendous contribution played by the Territorial Army in the past. We all wish its successor, or successors, very well, and we wish the recruiting drive which is on at present very well, too. May I say that I personally—especially having heard what has just been said—feel that we should wish to mark the official demise of the R.N.V.R. All of us with wartime experience have a proud and fond memory of the "Wavy Navy". As an occasional and unwilling sea borne landlubber, I have had personal experience of the expertise of the R.N.V.R. Although its functions are going forward in the Naval Reserve, I am sure that we should mark its demise with affection and respect.
I think, too, that we shall all agree that this issue is, and should remain, so far as possible, a non-Party issue. This is certainly the line which this House has consistently taken in debating it. But this does not mean, and should not mean, that we should pull our punches. Where-ever we have doubts we should express them. Some doubts have been expressed from all quarters in this House on certain aspects, not so much of the Bill as of what lies behind it. There was the initial approach, though I will not dwell on those birth pangs, as they have been
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termed. We all agree that this Bill embodies a better baby.
Doubt has been expressed, which I share, about the undue rigidity of the Government's approach. This point was very clearly made by my noble friend Lord Thurlow, when he pointed out that the new force, especially A.V.R. I and A.V.R. II, is tailored, and tailored very economically indeed, to the strategic possibilities as the Government see them at present. But we all now agree that these possibilities can change. Can we really predict the reinforcement commitments for the Rhine Army in a few years' time? Do we know what commitments elsewhere, outside Europe, there are going to be then?
The noble Lord, Lord Shackleton, spoke of the nature of modern war—I think that was the expression he used. He implied that in the future conventional war, non-nuclear war, was not likely to make a very heavy drain on manpower, and therefore on reserve resources. That was his argument, if I understood him aright. All I would say is that certain forms of modern warfare—and I am thinking of anti-subversion, anti-guerrilla activity, for that type of warfare is very much an aspect of modern warfare—make very heavy demands on manpower and, therefore, on reserve resources. It is very manpower-intensive.
So some of us are worried that the Government have left themselves so little margin, so little insurance against the unforeseen. I believe that this becomes of more importance if there are likely to be (and I have heard rumours that there may be) cuts in the Regular Army. If this is true, it will surely lay a heavier strain on the reserve forces. Perhaps the noble Lord will be able to say something about this. Perhaps there has been some announcement to-day. Anything he can say in this respect will be welcomed by me.
LORD SHACKLETON: My Lords, I am very interested in what the noble Earl is saying. I find it very difficult to place it precisely within the context of the reserves we are proposing. What does he want to do? Does he want to expand the special reserves or to expand the Volunteers, the T.A.V.R.II, or is he suggesting that this is a role that the Territorial force can take over?
EARL JELLICOE: My Lords, I do not wish to be too specific, as I have not the specific information that the noble Lord has; but, generally speaking, my belief is that they have tailored these forces very economically indeed; perhaps too economically. I myself believe that might be, if it could be, larger; but what I believe above all is that there should be a much closer umbilical link between A.V.R.II and A.V.R.III. That would give greater flexibility and a greater margin of reinsurance against possible miscalculations. In any event, there is another doubt, which I share, and which was expressed very forcibly by the noble Lord, Lord Bourne: that although aid for the civil power is now clearly written into the terms of reference for A.V.R.III, support for the Regular Army is not. Here all I would say is that I find myself in full agreement with the comments of the noble Lord, Lord Bourne; and I think that most speakers in this House to-day were in the same position.
Finally, we are very worried (and I have just made this point in part answer to the intervention of the noble Lord, Lord Shackleton) that there is this divorce, this sundering, of the two forces: A.V.R. I and II on one side, and A.V.R. III, on the other. Here I very much agree with what was said by the noble Lord, Lord Leather land. I believe that if the cart had not been put before the horse and if the two commitments had been defined before the structure had been drawn up, there would possibly not have been this divorce. It is a divorce which I deplore, and if anything can be done to bring the two parties together, we shall welcome it very much.
Most of the discussion this evening has, however, concentrated on A.V.R. III, "The Force for Home Defence", as it is now, rather quaintly, labelled, but the "New Territorials", as I understand they will be called. I feel that this is right. I am very much inclined to doubt, but for our debate last November—I will grant the Government's response to that debate—whether this nascent force would now be aborning. But I wonder, and a number of noble Lords have wondered, whether the Government have yet moved far enough in respect of this force; whether they have really thought through the role, the organisation and equipment
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of this force; and, above all, whether they are as determined as the officers and men on the ground to make a real go of it. Very substantial doubts on this score have been expressed in our debate this afternoon. While, of course, all speakers—and I, too—welcome the advance which the Government have made, there have been doubts about the role, and I should welcome anything further which the noble Lord, Lord Shackleton, can say on this: any further light which he can shed on what is, to me, rather an unclear, murky area.
There is the so-called primary role: support for the police and the civil authority. That we have all urged in the past, or most of us have, and that is now accepted. But, my Lords, what about the other roles? The Government talk of a primary role. What do they see as the secondary roles? We believe that there should be at least two, possibly three. First, in a period of tension, support for the Regular Forces and the civil power in dealing with sabotage and possible subversion, and guarding V.P.s and so on. Secondly, in the event of war, support for the Regular Army in dealing with possible invaders who might very well be airborne and who might very well be in quite small numbers. Possibly, thirdly, in the event of continuing war, providing a framework for expansion.
Now, in another place, the Minister of Defence for the Army has intimated that he accepts, at least in part—the Government accept at least in part—that the second of those roles, the anti-invasion role, is valid. But can the noble Lord confirm that this is so; that they accept this role at least as a secondary role; and, if they accept that role as valid, that it would be logical to accept the first role also as valid? My Lords, so much for the role (although parenthetically I should also be grateful to hear anything which the noble Lord can say on a point which bears on that—these consultations with local authorities which are, we understand, going on, or, should I say, "dragging on"?). I believe it is very important for all concerned that this question of the role or roles for the Home Defence Force should be clarified as soon as possible. Nothing is worse for morale—this point has been made time and again this evening—than a lack of clarity and a lack of definition of the role in

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any force. I must confess that at this moment I am not clear as to what these secondary roles, if any, may be, in the Government's view. So I should like to join my noble friend Lord Bridge man in asking for a very clear statement from the Government; and if it is couched in the language which I hope the noble Lord will be able to use in reply, I am sure that this would be very helpful.
The other doubts about this force which have been ventilated this afternoon have covered a pretty wide spectrum. There has been disquiet about the lack of a really close connection between the two forces. I have said something on that aspect and I will not say any more. To my mind there is a considerable lack of clarity about the command arrangements for this force, especially in the Civil Defence role. Above all, there are doubts which have been expressed about whether we are really going the right way about forming the four main components which constitute a force of this nature: they are, sufficient disciplined men, good communications, real mobility and a reasonable level of modern equipment. Of course, there is no doubt about the discipline, but there is about the men. I share entirely the view of my noble and gallant friend, Lord Thurlow, which was echoed by the noble Lord, Lord Leather-land, that to restrict this force initially to an 80 per cent, recruitment level is real folly. I find it anachronous that they are not being able to recruit doctors.
Regarding communications, I can only echo what other noble Lords have said: that at least in the Civil Defence role, as indeed in these other possible roles, adequate and good communications are essential. It is my understanding that a scheme has now been worked out, bearing in mind the Civil Defence role, which would provide for this. Quite a sizeable number of signal squadrons are trained by the A.V.R.II. All this would be within the ceiling of 23,000, and within that mystical figure of £3 million. From what I have learnt of these proposals they seem admirable—that is, if the men (and they are very rare birds, these signallers) can be found. Can the noble Lord tell us anything about that? Can he indicate whether these men will be found? What will their equipment be, and has this scheme, which seems
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admirable, received final approval? As for equipment, I will not echo what has been said except to say that I share entirely the views expressed by noble Lords on both sides of the House about the need for better transport and the need for more modern arms.
I find the apparent unwillingness of the Government to allow this force to use the FN. rifle very curious. Surely we have a plethora of rifles and plenty of ·300 ammunition. It is my impression, moreover, that a good deal of the ·303 ammunition which is issued tends to be dud. It may very well be necessary, I understand, to open a new production line for ·303 ammunition to provide the necessary ammunition. If it is true, it really makes the Government's stubbornness on this point a little hard to understand. I hope that the Government will move on this matter and will accept a reasonable level of light arms—say an L.M.G. per platoon; say a sub-machine gun per section, and the FN rifle. I should have thought that scale of equipment would be reasonable, and it really is fairly modest.
A small point, a very minor point, on the Home Defence Force is the title itself. I understand that it is now being called in the Bill "the Force for Home Service". I know that that was welcomed and accepted by the Opposition in another place, I think rather faute de mieux. It seems to me an unduly domestic title, rather smacking of home aids, and I wonder whether we could not call this force "The Territorial Force"—they will be called Territorials, we understand from the Government—or, failing that. "The Home Defence Force." Both those titles seem to me better.
In conclusion on this point, may I say that I have only echoed what I feel is a fairly general disquiet about some aspects of the Government's approach to this new force. I hope very much that they will not be dogmatically determined to keep it apart from A.V.R.II. I hope that they will not wish to limit its role and, above all, that they will not feel constrained not to exceed by 1d. or £1 the very arbitrary ceiling of £3 million.
My closing words will be quite simple. We agree that the Government have come a long way. The noble Lord, Lord Shackleton, has now moved the Second Reading of a Bill which, in principle,

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we accept. We have certain important reservations which I and my noble friend, and others, have expressed. I doubt whether on some of these we shall be able to shift the Government. But accepting the main framework of the Government's proposals, we still believe that there may be ways in which they and I think this Bill can be improved, and I am sure that at later stages we shall all do everything we can to see that the Bill is improved.
I wonder whether, in conclusion, I may look just a little beyond the Bill. I feel that the Government are fashioning under this framework for our reserve forces something which may last for some time. What we all want to do—whether we accept every jot and title of that framework or not; whether we are Members of this House or another place; whether we wield the pen or the sword; and whether or not we have a direct connection with the Territorials—is to make this new Bill for our reserves really work. For my part, I am quite certain, that this is the mood of the men on the ground, from the noble Duke downwards; and I trust that it is also the mood of the Government. I am pretty confident that that is the approach of noble Lords most directly responsible in your Lordships' House for this Bill, and also of the Minister of Defence for the Army. As my final word I would say that we welcome, with some reservations, many of which have been expressed in your Lordships' House this afternoon, the Bill which the noble Lord, Lord Shackleton, has introduced for Second Reading.
7.3 p.m.
LORD SHACKLETON: My Lords, I apologise for speaking again to your Lordships. I have really about a two-hour lecture in front of me, if I am to answer all the many interesting points that have been made. In view of the admirable brevity of the later speakers, as opposed to my own opening race against time, with less brevity, I feel that I cannot hope to answer everything that has been said, although I should like to think that I have answers for nearly everything, thanks to the courtesy of noble Lords, who told me in advance of the main points they were going to make.
First of all, I would congratulate, as I am sure all your Lordships do, the noble Lord, Lord Freyberg and the noble
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Viscount, Lord Ullswater. I think they both made extremely well expressed and eloquent speeches. I became slightly nervous for one moment when Lord Ullswater was speaking, because I thought he was going to be so skilful in presenting the case of his yeomanry troop that we were going to be in dead trouble; but he exercised considerable tact and brought the B.B.C. into his argument. It was most impressive to hear the opinions of a Regular officer, commanding, admittedly, a rather unusual Territorial unit, but none the less obviously bringing a special enthusiasm to the subject. As I say, I found the speeches of both noble Lords extremely interesting. Indeed, I would say that the general standard of knowledge has been very high throughout.
I should like to answer some of the main points, and perhaps to continue in some degree the debate, which I do not think we shall finish to-day, on whether the Government have embarked on the right general lines of the reorganisation of the reserves. I am a little disappointed that so few members of the Opposition were prepared to welcome the highly desirable changes that have been made, particularly in relation to the Volunteers. The noble Earl, Lord Courtown, did, as an organisation man, commend them. The criticisms focused mainly on the Home Service Force of T.A.V.R. III, but we must face the fact that the most important part of the reserves are T.A.V.R. I and T.A.V.R. II. It is these forces for which the greatest probability of use exists. It is on them that the greatest expenditure will be made. They will be fulfilling a need which the old Territorial Army would not have been so well fitted to fulfil, and there is unquestionably a net gain to the country in these changes. I think we really should accept that: and, indeed, although the noble Earl Lord, Jellicoe, and even the noble Lord, Lord Thurlow, must have their bit of fun, I feel that they themselves accept that this is a desirable move.
The noble Earl, Lord Jellicoe, having posed a question as to whether we had enough, I think fell into the error that has existed in a good deal of this discussion, in not being sufficiently precise. The Government have tried hard to be precise. The criticism that has been made, for instance, in relation to T.A.V.R.III that

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their role is not precise enough, has been matched only by the criticism that their role is not wide enough. I should like to focus a little on this. Let me say straight away that the Government are determined to make T.A.V.R.III a success. I am sure that noble Lords who have come into contact with my honourable friend the Minister of Defence for the Army will know that there is great enthusiasm in that quarter. Admittedly there was a certain reluctance in terms of the role that was foreseen for this force in the early days, as to whether it was desirable or worth the expenditure of creating such a force. But let us recognise—and I think we must—that it is not enough to create a force or to provide weapons simply because people like having such a force; it is not enough simply in order to foster a voluntary spirit, admirable though it is. It must have a real purpose. I am sure that noble Lords will not dispute this.
Frankly, if, as has been suggested, we are to talk about expanding the role of T.A.V.R.III beyond the one it now has, all I can say is that it is the view of the Government that this would be an unrealistic thing to do. Noble Lords say that we cannot foresee what may happen in the future. This is perfectly true. We can only make the best estimates on probabilities, and the role of T.A.V.R.III is to assist the civil power in the event of a nuclear attack. This is its present role. Noble Lords ask: "What about a possible air attack? What about landings from an airborne invasion?" But if we seriously anticipate this sort of thing, the whole structure of our forces is wrong. Fighter Command was run down a long time ago, during the previous Government—and we shall be turning our attention to those more fundamental problems in the organisation. There is no doubt that the pattern that has been set is consistent with the views of the previous Government as to the probability of events. If we are to be effective in any probable contingency, we cannot reasonably meet every contingency. It is arguable (and I am sure this would appeal to the noble Earl, Lord Jellicoe) that we ought perhaps to make preparations against a possible invasion from space; that this is a contingency that may come about in the future. I think the noble Earl, Lord Jellicoe, and I, being old space travelers
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from the past, would be more inclined to believe that this is more a probability than certain others.
There are those who press for better equipment for T.A.V.R.III, and obviously one would like to equip everybody with the best equipment. But taking into account the funds that arc available, and the priorities that have to be met—and there are other priorities in defence—there is a whole list of things I could speak of as Minister of Defence, as, I am sure, could the noble Earl, Lord Jellicoe, on which I would sooner spend money than on providing some of the equipment that has been sought for T.A.V.R. III. I am quite sure that if he were in the position of any Staff Officer in the Ministry of Defence, he would agree with this view. It is the view of the Government that the Territorial Force, the T.A.V.R. III, the Home Service Force, will be properly equipped and particularly well suited for the role that it may be called upon to fill. It would be quite wrong to start increasing the cost beyond what is necessary to fulfil that role, if we hope that it will continue to exist for its present purpose.
I would fully grant that it provides a basis for expansion if circumstances should change and there should be different Governments. It will carry on the traditions of the Territorial Army, and most of the great regimental names will find their place, in some form or another, within the units of this new force. But it would be quite wrong to seek to expand it beyond its present level of equipment and its present role. I say very seriously to the noble Viscount, Lord Bridgeman, that I do not think that, in the long run, to suggest otherwise does much service to the development of these units. I believe that there is enough urge to serve; that these men will be unquestionably soldiers. They will not even be under the Home Office. The noble Viscount will remember that there were times when the Ministry of Defence and the Home Office were fighting as to who should control these volunteers. There is no question but that these will be soldiers, under the direction of the Ministry of Defence. I could go on at much greater length on this aspect.
EARL JELLICOE: My Lords, I wonder whether I could encourage the

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noble Lord to go on at a little greater length, because I am still puzzled by his line of argument. As I understand it, he is almost refusing any other role, although he said that it might form a basis for expansion, which is the third possible role that I suggested. Nevertheless, he was rejecting the first two roles. But if that is so, why do the Government talk of the primary role? What does "primary" mean? Do they feel there is only one role, or do they feel there are possibly other residual roles? And how does he explain the statement of his colleague, the Minister of Defence for the Army, which the noble Lord, Lord Bourne, quoted, if he rejects any other role? Finally, while I do not wish in any way to walk back on my interest in space, I think there are more possible contingencies. There is the contingency of mounting tension, and of this force being used for guarding V.Ps. Is this not a role which is possible, and do the Government entirely reject it?
LORD SHACKLETON: My Lords, I think that is rather a long question. One could say, of course, "If you ask a silly question, you get a silly answer"—though I am not referring to the noble Earl's "silly question". If somebody says, "What happens if there is an airborne invasion?", you get the smart answer, "Obviously the chaps do not go home at that moment." I do not think we get much further by bandying words on what is meant by "primary role".
The noble Earl may say that there is a possibility of sabotage. If there is such a possibility in this country (which I imagine he is talking about), it seems to me that these men will be operating in support of the civil power. Of course, it is conceivable that in certain circumstances, if grave disorder breaks out (which again I think is an unlikely contingency) all sorts of things may happen. But our Armed Forces are designed to provide for the defence of the country, and the T.A.V.R. III is intended to give aid to the civil power after a nuclear attack. Noble Lords may doubt whether this is the right assessment, but this seems to us to be consistent with the best assessment we could make.
Going back to the roles of T.A.V.R. I and II, it was felt that the old Territorial Army (and I must say this to noble Lords like the noble Viscount, Lord Ullswater)
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was not in its present form suited to meet the present-day contingencies which we had to expect. What was needed was availability at a higher level of training and a higher level of equipment for the strategy that we foresee prevailing over the next ten to twenty years. No one can foresee that this strategy may not change, but this is the basis of the Governrnent's thinking, and it is for that reason that it has been decided to have these two different types of force. Their roles are different but, at the same time, I agree with noble Lords, particularly Lord Leather land, who have emphasised the importance of close links. The decision to have the two separate forces is not just something the Government have dreamed up, so to speak, because it came afterwards. It was made because the roles are different. Indeed, if we could have joined them it would have been easier, but on grounds of command structure this was not possible.
If you look at the nature of the volunteers you can see the difficulties of assessment. This is a matter which we could obviously go on about at great length and on which clearly there are differences of opinion. I can only say that in this respect the Government have arrived at their views on the basis of the best advice they can get and have made the best judgment they can. The noble Lord said he hoped that on the whole we were conducting this matter on a non-partisan basis. I can say that certainly the Government in this respect are doing their best, and this is the best view they could come to.
I regret to say that I have already taken something over fifteen minutes on these points, and I do not expect I have satisfied noble Lords opposite. But I should like to answer a number of other points that were made. The noble Lord, Lord Thurlow, asked so many interesting points that I sometimes regret we do not have the advantage they have in the United States of being able to put one's speech, unread, into the OFFICIAL REPORT, so that at least those who are interested can read it, and those who are not do not have to listen. But I fear it may well be necessary for me to write to him. Since we are exchanging paper so freely, I should be quite willing to do this before the Committee stage and provide some of the answers.

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The noble Lord raised the particular point of rifles, and I have checked and found that the rifle which he would now like to see issued to the Home Service Force is still not widely distributed in the Territorial Army, whereas the No. 4 rifle is still fairly widely distributed. However, I take the point. Of course it bears on my point that there are arguments against equipping the Home Service Force beyond its needs. This is not to say that there will not be considerable pressure, and I do not doubt that on some matters from time to time the Government may be able to improve on what they have now been able to achieve.
I have already dealt with, and we have had a good deal of discussion on, whether or not the new force would be attractive enough to bring in the recruits. All the signs are that certainly T.A.V.R. II will in fact bring in the recruits. Obviously I should be very concerned, as would my honourable friend the Minister of Defence for the Army, if in fact we were not fairly confident at this moment that we should be able, such is the martial and traditional urge, to fill the units in T.A.V.R. III. I take the point that the danger period may come later rather than now, and for this reason we shall have to watch the position closely, and I am sure the assurances given by noble Lords in regard to the part they can play will be important. For this reason I welcome very much, as I am sure does the noble Lord, Lord Leather land, that we have now reached a degree of co-operation with the Territorial Army Council and the T.A.F.A.'s which were in danger of disappearing in the early days of the original White Paper.
I will not now go into the merits of whether or not the Government were right to publish their proposals before consulting the Territorial Army. In this sort of matter it seems to me that whatever a Government do will be wrong. If they do not do so, people say, "How can we give you advice unless you tell us what is in your minds?". However, I think there has been a measure of good relationship which is extremely important for the future and for the continuation of T.A.V.R. III, in regard to which I am personally fairly optimistic.
The noble Lord, Lord Freyberg, made some interesting points about the problem
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of finding time to carry out the necessary training. It is of course inherent in the whole problem of part-time service. The volunteers will have a slightly increased training commitment and rather more emphasis on training on Saturdays and Sundays. We think it will be enough, but—as the noble Lord said, and I think it was mentioned by another noble Lord—the point is that men first join when they are young and free and unencumbered and later on, when they are becoming most useful, they become more encumbered and it is more difficult for them to find the time.
The noble Lord also spoke again about the importance of making training attractive. Of course, I very much agree with him on this. It is unfortunate that Territorials (and they are not the only people who have to do so) sometimes have to put their hands in their pockets in order to improve what is really a service they are giving to the country. This is something, I fear, which has existed in the past. We may regret it, but certainly it is the intention of the Government to make training as attractive and as cheap as possible to the Volunteers.
I can see that I really shall have to write to the noble Lord, Lord Thurlow, because I have so many answers to his questions. I am really trying to get on and deal with points raised by some other noble Lords. The noble Lord, Lord Ogmore, for instance, who unfortunately is unable to be present and asked me to apologise, asked whether the new Territorials would be linked with county regiments. I think I have already answered that question. We hope that one way and another there will be these links both in name and in direct association. Of course we shall see how this works out.
While I remember it, the noble Earl, Lord Fortescue, asked what had happened to the R.N.V.R. I am afraid the R.N.V.R., which is now officially dispersed under this Bill, has ceased to exist in practice since 1958, when its officers and men disappeared into the Royal Naval Reserve. It may be that the noble Earl, Lord Jellicoe, is in a better position to answer this question than I am. All we have done is to achieve formally what the previous Government, no doubt for

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good reasons, had already achieved informally.
I think I have already dealt with Lord Bourne's point. The noble Lord, Lord Leather land, who gave us one of his rather racy speeches, made a great appeal for bands—and how I do share his views! I think we all do. I doubt whether there is anyone, except perhaps somebody who has an almost psychopathic view of the Army, who could be otherwise than attracted on hearing a military band. I am, of course, surprised that the son of a bandmaster might not have had enough bands. But it will not be possible, I am afraid, for every Territorial unit to have its own band. The bands are being organised on a regional basis. This, of course, will not prevent them from having pipes and drums if they can carry these along without having, so to speak, professional bandsmen. However, the point is taken and I can only say that the Government want to do the best they can. The Army has a great number of bands in comparison with the Royal Air Force. We have to get along without them, and I must say I think they are a considerable loss.
I have dealt already with the question of the two-tier organisations. One or two noble Lords referred to the question of Proclamation and of call-out and whether in fact the situation is clear enough for employers, and what "warlike operations liability" means. I would say a few words about this. One of the reasons for the Government's decision to adopt this particular phrase is historical. This liability was inserted in the Reserve legislation for volunteers in the Regular Army Reserve as long ago as 1898. Later, volunteers in the Army Emergency Reserve were able to assume the same liability and many reservists have been accustomed to having this liability. Indeed, there are many reservists who are still subject to it at this moment.
There have been only two occasions (and your Lordships will have followed the discussion in another place) on which reservists have been called out under this liability: in China in 1927 and in Palestine in 1936. From my own recollection of the China affair, which I think was the defence of Shanghai, I rather doubt whether in to-day's thinking we
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would consider it in terms of "warlike operations"; and indeed the warlike operations condition was not applied in the case of Suez, which, without going into the merits of it, was a really more formidable affair than the defence of Shanghai in 1927. Men indeed might have been called out under this liability. When the Suez crisis occurred a number of men were required by the Army who did not have this liability, and so the Government had to proceed by Proclamation.
This formula is suitable for all reserves which may be required for NATO, Simple Alert or war, and it applies to T.A.V.R. II. Discussions have taken place with the Territorial Army Council about the circumstances in which it will be used. We have pointed out the infrequency of its use—and I quote the White Paper:
"There is no intention to call them out under this liability unless major military operations are in progress or appear to be imminent and that a serious situation affecting vital national interests has arisen."
For those of your Lordships who are concerned with the lack of precision in this phrase, I can only say that in this matter we are emulating the late Sir Winston Churchill. When the Army General Reserve was created he pledged that they would not be called out "except in the greatest war emergency," which again is an imprecise phrase, when in fact the legislation creating the Army General Reserve provides that they may be called out in case of imminent danger or great emergency—the same liability as for the Territorial Army or Section D of the Regular Reserve. This is a good precedent for what we are doing. We have a legal liability, and this will have to be interpreted by the Government of the day.
I want to say something about duration, because the noble Earl and certain noble Lords referred to the difference between the twelve and the six months. The twelve months' liability applies to T.A.V.R. II reservists, and it arises, of course, only in the context of the warlike operations liability, which, as I have indicated, has not arisen very frequently. When the Bill was introduced a provision was made for reservists to serve up to the end of their engagements and for twelve months beyond if they were called out upon this particular liability. This

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provision had been inserted in the Bill because there had been so much misunderstanding about Her Majesty's Government's proposition that service should be limited to twelve months in any particular engagement, and there is this very common mistaken view—and we have heard it again to-day, or something rather like it—that the liability was twice as onerous as the "Ever-readies" liability, which is to be called out for six months.
But the distinction is quite different and the roles may be quite different. The distinction between warlike operations and the "Ever-ready" liability, I hope, is better understood. The "Ever-ready" may be called out at any time; but the number of occasions upon which men are liable to be called out on warlike operations liability is very limited. I think this deals to some extent with the point the noble Earl, Lord Courtown, was making. In another place the Opposition indicated that there ought to be some limit to the length of service, and my right honourable friends were willing to consider this; and, as a result, the Government chose the figure of twelve months. I could go at much greater length into why we chose this, but I am conscious that time is going very fast. I would say, however, that there are strong military reasons for sticking to the figure of twelve months; in a limited war no one can say that it will last less than twelve months, and if one limited it to six months and there were considerable-sized units taking part in this limited war, it would be very difficult if they had to be replaced every four to five months, which would happen if it were a six-month liability.
EARL JELLICOE: My Lords, may I interrupt the noble Lord? Could he clarify one point? Am I right in thinking that the twelve months covers the aggregate period during an engagement? The twelve months' restriction about which he is speaking means that somebody in A.V.R. II could be called out, for example, for two periods of six months, but not more than a twelvemonth aggregate.
LORD SHACKLETON: Primarily it is a limit on the time—we might pursue it at the Committee stage—that he may serve on any one occasion. This is the
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important limitation. But perhaps, since time is passing, we could pursue this another time. I am not sure whether at this stage of the evening I am helping the House as much as I should like to.
I wish I could deal with some of the other points. I think I have referred to practically every noble Lord who spoke. I would only say that it has been an interesting debate. I do appreciate that in passing legislation of this kind we are doing very much more than organising what appears to be a bit of the Army; we are dealing with the very fabric of our national life and there are very many sensitive points, such as the use of some of the trust money which is available; there are so many points in which there are deep interests which affect people in all parts of the United Kingdom and all social classes, and any Government which touches this sort of thing must do so with a great deal of delicacy and with the deepest respect for people's feelings. This I hope the Government are anxious to do. I am quite sure that my right honourable friend the Minister for the Army feels this very strongly indeed.
But at the same time, having said that, the Government have still to take the best view they can of military probabilities and the funds that are available, and see what they can weave out of this. I believe the Government have in fact been successful in doing so. The work, of course, is only just beginning. We shall see how it works out in the future, but I am optimistic that we shall succeed in building a more modern form of reserves which will meet the nation's need at a cost we can afford, and I am sure that we shall have the good will and support of people in the country interested in the defence of the country and the welfare and future of the Territorial Army.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

BRITISH TRANSPORT DOCKS BILL
The Queen's consent signified, and Bill reported, with Amendments.
HUYTON-WITH-ROBY URBAN DISTRICT COUNCIL BILL
Returned from the Commons, agreed to, with Amendments the said Amendments considered, and agreed to.

MINISTRY OF HOUSING AND LOCAL GOVERNMENT PROVISIONAL ORDERS (CAMBRIDGE, READING AND WALSALL) BILL
MINISTRY OF HOUSING AND LOCAL GOVERNMENT PROVISIONAL ORDER (WEST KENT MAIN SEWERAGE DISTRICT) BILL
Reported, without amendment, and recommitted to a Committee of the Whole House.

  G.P.O. SCHEME FOR LINKING HOMES OF ELDERLY
  G.P.O. SCHEME FOR LINKING HOMES OF ELDERLY