Sitting of 25 July 1966

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

    Ground Rents
    Mr. Arthur Davidsonasked the Minister of Land and Natural Resources if he will introduce legislation to abolish the liability of tenants to pay a capital sum to extinguish their obligation to pay and collect ground rents at the request of the ground rent owner.
    The Minister of Land and Natural Resources (Mr. Frederick Wiley): No, Sir. Where a tenant has the means to pay a capital sum to extinguish a small rent it is to the interest of all parties that this should be done. Where the continuing obligation to collect rents will impose hardship and a tenant cannot afford to redeem his share I have discretionary powers to apportion rents without enforcing the liability to redeem.
    Mr. Davidson: Is my right hon. Friend aware that his Answer will give great satisfaction to many people in my constituency and throughout Lancashire? Will he, however, take steps to ensure that adequate publicity is given to this new interpretation, so that those tenants who have been unable to proceed with their applications through inability to pay the capital sum will now be able to reapply?
    Mr. Willey: I am obliged to my hon. Friend. I will certainly try to attract the greatest publicity to what we are doing. I am sure that I can rely upon my hon. Friend's assistance.

    Land Holdings (Registry)
    Mr. Hamlingasked the Minister of Land and Natural Resources whether he will now seek powers to compile a regis-
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    try of land holdings in England and Wales.
    The Parliamentary Secretary to the Ministry of Land and Natural Resources (Mr. Arthur Skeffington): No, Sir. My right hon. Friend is not satisfied that the advantage to be gained would outweigh the high cost of establishing and maintaining such a new register. However, as my hon. Friend knows, he has been considering what improvements can be made in getting more accurate and up-to-date information on land use available on a uniform basis. A grant has been made to Kings College, London University to finance the completion this year of the field work on the Second Land Utilisation Survey.
    Mr. Hamling: Is my hon. Friend aware that if we had a land registry of the kind I suggest we would know a good deal more about the ownership of land, and it would help us in determining our future policy on the use and allocation of land?
    Mr. Skeffington: There is no question but that were this information available it would be of very great use. The Land Commission will build up a fairly considerable pattern of knowledge as its work advances, and my hon. Friend will not lose sight of the plans of the Lord Chancellor for the extension of the compulsory registration of title.
    Sir R. Cary: Would there be any point in compiling a register such as that indicated in the Question? Land is so deeply embedded in the law of entail and so often used as collateral. Could enough precise information be derived from a register such as this?
    Mr. Skeffington: I would hesitate to apply the exact parallel of what goes on in other countries. An up-to-date register of land holdings of all kinds—which is what my hon. Friend has in mind—would be of tremendous advantage in forward planning, but as we have not got that we are moving along the line that I have suggested, and a good deal of information will be available.

    Dartmoor
    Mr. Peter Millsasked the Minister of Land and Natural Resources what representations he has had about the amenity aspects and safeguards for the

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    beauty of Dartmoor, a national park, with regard to the proposed dam at Meldon, Okehampton.
    Mr. Willey: None, Sir. As regards representations to my right hon. Friend the Minister of Housing and Local Government, I would refer the hon. Member to the reply to his Question on 19th July.
    Mr. Mills: Now that this matter has been dealt with satisfactorily, will the Minister do everything in his power to see that the things that are spoiling Dartmoor at present are dealt with, such as derelict war material and surplus Army huts and unsightly advertising? Will he institute a general clean-up of Dartmoor?
    Mr. Willey: I will certainly do what I can.

    Allotments (Committee's Report)
    Mr. Arthur Davidsonasked the Minister of Land and Natural Resources when he expects to receive a report from the Committee of Inquiry into allotments.
    Mr. Skeffington: Within two years' time.
    Mr. Davidson: I am grateful to my hon. Friend for his reply, but will he consider legislation to amend Section 8 of the Allotments Act to enable 99-year leases to be accepted as adequate security of tenure?
    Mr. Skeffington: This is one matter which will be reviewed by my right hon. Friend.
    Mr. Rippon: Can the Minister say why this will take so long?
    Mr. Skeffington: This is the first review of allotments and, as the right hon. and learned Gentleman knows, the Committee's terms of reference are fairly wide, namely, to consider
    "the social, economic, recreational, legal, planning and landscape aspects of allotments"
    and in view of the fact that evidence has to be taken and various sites have to be visited, also that the Committee is doing its work thoroughly, and that a number of members are busy persons, I should not think that this was an unduly long period.

    Leaseholders, Oxford
    Mr. Luardasked the Minister of Land and Natural Resources what proportion of leaseholders in Oxford he
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    estimates will be excluded from enfranchisement by the limit of rateable value proposed in the White Paper on Leasehold Reform.
    Mr. Willey: About 8 per cent.
    Mr. Luard: Is my right hon. Friend aware that this is a very much smaller proportion than other estimates which have been made concerning Oxford, which suggests that about one-third of the total of leasehold property in Oxford will be excluded by this provision? Does not he agree that this is a very strong argument for raising the present limit laid down in the White Paper to a much higher level at least in areas such as Oxford where rather special conditions obtain?
    Mr. Willey: I think that the figures can be reconciled if we remember that the earlier figures include properties converted into flats and used as hostels.

    Water Resources Board (Report)
    Sir D. Rentonasked the Minister of Land and Natural Resources when he proposes to publish the report of the Water Resources Board, which has now been in his possession for some weeks.
    Mr. Willey: The Board's report on water supplies in South East England will be published tomorrow. I will with permission circulate in the OFFICIAL REPORT a statement of the Government's views on the recommendations in the Report.
    Sir D. Renton: Does that mean that a definite decision will be given about the future of Abbottswood Reservoir tomorrow? Is the right hon. Gentleman aware that all farming improvements are held up until a decision is taken?
    Mr. Wiley: The right hon. and learned Gentleman should await the report which will be published tomorrow and the statement which, as I said, is being circulated today.
    Following is the statement:
    The report is an invaluable contribution to the solution of the urgent water problems in this critical area. The Board, and the Technical Committee on whose work the report is based, are to be congratulated.
    The report contains an estimate of water needs, for the public supply, industry and

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    agriculture, to the end of the century, and a comprehensive survey of resources.
    The region as a whole has the resources to meet most of its needs up to the year 2000. But a central zone, stretching from Northampton south to Greater London and east to the Ipswich area, has a large deficiency which must be met by imports from elsewhere in the region or from further afield.
    The report contains a progressive development programme. This covers, first, works to secure the position for the next decade and, second, investigations to be completed as soon as possible so that the strategy for the years thereafter can be determined.
    The Board are following up their recommendations with those responsible for putting them into effect. My right hon. Friend the Minister of Housing and Local Government and I look to all the river authorities and water undertakers concerned to proceed as rapidly as they can.
    We attach special importance to the pilot ground-water schemes in the Thames and Great Ouse areas. If, as the Board hope, large additional supplies can be obtained from underground in these areas, then, with the exception of one major scheme, less land need he used for big new surface reservoirs. We therefore hope that the Thames Conservancy and the Great Ouse River Authority will press on urgently with these pilot schemes and that all public bodies and individuals whose co-operation is needed will afford it.
    If the Board's hopes for ground water are not fulfilled, new surface storage is the only alternative which can be ready in time to meet demands in the 1970s. It is therefore essential that a number of possible sites for reservoirs should be investigated now. I emphasise that investigation of a site does not imply that a reservoir will necessarily be built there.
    Finally, the Board has considered the longer term possibilities, including the transfer of water to the south-east from other parts of the country, and a barrage across the Wash. Arrangements for further study of these are now being considered. There is also desalination, which is the subject of research both here and abroad.

    Owner-Occupied Houses (Development Levy)
    Mr. Boyd-Carpenterasked the Minister of Land and Natural Resources whether he will reimburse owners of owner-occupied houses in respect of any levy paid by them in respect of development value under his proposals.
    Mr. Willey: No, Sir. The Bill does not provide for the reimbursement of levy for particular categories of persons liable to pay. The exemptions from levy which I consider justified are already contained in the Bill.
    Mr. Boyd-Carpenter: Is the right hon. Gentleman aware that his right hon. Friend the Chancellor of the Exchequer has exempted owner-occupied houses from Capital Gains Tax? Does not the same desirability of encouraging home ownership point to his following his right hon. Friend's example?
    Mr. Wiley: There are dissimilarities between the Capital Gains Tax and the betterment levy and this is only one of the differences between them. The former is a tax and the levy is not.
    Mr. Boyd-Carpenterasked the Minister of Land and Natural Resources what is the gross annual yield which he expects to obtain from the levy to be imposed by him on the sale of owner-occupied houses in respect of their development value.
    Mr. Willey: It is not possible to estimate this. In the great majority of cases no liability for levy will arise on the sale of owner-occupied houses because no development value will be realised.
    Mr. Boyd-Carpenter: In the light of that Answer, is not the right hon. Gentleman being somewhat unreasonable when, at very little cost to himself, he could give the same assistance to home ownership as his right hon. Friend the Chanceller has given? If the Government are serious about encouraging home ownership, why does not the right hon. Gentleman face the limited expense involved?
    Mr. Wiley: What I am doing does not affect home ownership. I am concerned with the price of land for development.

    Forestry Commission (Report)
    Mr. Wingfield Digbyasked the Minister of Land and Natural Resources what is the reason for the delay in the publication of the 46th Report of the Forestry Commission.
    Mr. Skeffington: The Report will be published on 3rd August. As the hon. Member knows, a major reorganisation of the Forestry Commission was undertaken last year following a Report by the Estimates Committee. Some temporary disturbance of the normal arrangements for the despatch of business was inevitable and it is largely for this reason that the 46th Report has been delayed.
    Mr. Digby: Is the hon. Gentleman aware that the House has been given very little information about the activities of the reconstituted Commission? It would be very inconvenient if this information were given during the Recess, even if it may be more convenient for Ministers.
    Mr. Skeffington: I mentioned that the publication date is 3rd August, which will be before the Recess. My right hon. Friend is sorry that the report has not been available for the very good reason that the Commission has been carrying out the unanimous recommendations of the Estimate Committee. It would have been open to the hon. Gentleman to seek other information if he had so desired.
    Mr. Rankin: Is the delay in any way due to the fact that the headquarters have been established in England instead of in Scotland?
    Mr. Skeffington: I am happy to say that that is not the reason.

    Wash Barrage (Feasibility Study)
    Sir G. de Freitasasked the Minister of Land and Natural Resources when he expects to publish the findings of a feasibility study on the building of a barrage in The Wash to create a fresh water reservoir to serve the dry counties of the East Midlands and East Anglia.
    Mr. Willey: The Wash Barrage project is one of the matters covered in the Water Resources Board's report on water supplies in South-East England, which is being published tomorrow. I am considering whether to put in hand further study of the project.
    Sir G. de Freitas: In giving consideration, will the right hon. Gentleman remember that, whatever may be the advantages of the barrage for such things as fish farming, referred to in Question No. 2 tabled by the hon. Member for Holland with Boston (Mr. Body), sports and recreation and so on, probably the most important aspect of this is the provision of water for the very dry counties of this part of the country, especially Northamptonshire?
    Mr. Willey: I can assure my hon. Friend that our concern in the Wash Barrage is primarily with water.

    Morecambe and Solway Barrages (Feasibility Studies)
    Mr. Boothasked the Minister of Land and Natural Resources what progress has been made with the feasibility studies of the Morecambe and Solway Barrages.
    Mr. Willey: The Water Resources Board expects that the consultants' reports on the desk studies for the Morecambe and Solway barrages will reach it this week.
    Mr. Booth: Will my right hon. Friend accept that many people with a deep interest in these schemes will be very encouraged by his Answer? Will he say when the further measures necessary to establish both the technical feasibility and economic viability of these schemes will be taken?
    Mr. Willey: These reports will be examined first by the Water Resources Board and then by the Government.
    Mr. Munro: Would the right hon. Gentleman assure us, in the light of the Prime Minister's statement last week, that there will be no cuts in expenditure on the investigation of these two schemes?
    Mr. Wiley: First, we have to receive and consider these reports.

    Reservoirs (Public Access)
    Mr. Wallaceasked the Minister of Land and Natural Resources whether he will make a statement on public access to reservoirs.
    Mr. Skeffington: It is intended to issue a circular on this subject very shortly.

    Tree Preservation Orders
    Dr. Grayasked the Minister of Land and Natural Resources what progress he has made in his review of tree preservation orders; and by how much he proposes to increase penalties for the felling of trees so protected.
    Mr. Skeffington: The review to which my hon. Friend refers has indicated some changes in tree preservation and felling licensing procedures which my right hon. Friend is on the point of introducing after

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    consultation with the interests concerned. Other changes, which would require legislation, are being considered as part of the general proposals for the countryside announced in Cmnd. 2928.
    My hon. Friend is no doubt aware of the increased penalties proposed in the Civic Amenities Bill introduced by the right hon. Member for Streatham which received its Second Reading on 8th July and with which the Government indicated broad agreement. The Bill also provides for some amendment of the tree preservation provisions of the Planning Acts.
    Dr. Gray: Will my hon. Friend consider trying to persuade his colleagues to find Government time very soon for the Civic Amenities Bill introduced by the right hon. Member for Streatham (Mr. Sandys)? As he knows, it contains the provision that penalties for felling protected trees should be increased to £250 or the value of the tree, whichever is the higher. I consider that the action is—
    Hon., Members: Speech.
    Mr. Speaker: Order. The hon. Member cannot make a Second Reading speech on this Question.
    Mr. Skeffington: I have indicated the Government's broad agreement with most of the proposals in the Bill, but I am afraid that it does not fall to me to allocate time for it.
    Mr. Wingfield Digby: Is the hon. Gentleman aware that, important though amenity considerations are, trees are a crop and that there should be some limit to these preservation orders?
    Mr. Skeffington: This is a point which is, obviously, borne in mind in all our discussions with the Forestry Commission. But we hope that, with the Measure to which I have referred and other proposals which my hon. Friend has in mind, it should be possible to harmonise both these important aspects of trees.

    Coast Preservation (Regional Conferences)
    Mr. Blenkinsopasked the Minister of Land and Natural Resources whether he will make a statement on the regional conferences on the preservation of the coast being held by the National Parks Commission.
    Mr. Willey: The regional conferences of coastal planning authorities are making progress but it is too soon to make a statement about their conclusions. I am anxious that the National Parks Commission should have an opportunity to consider all the conference reports and appraise them carefully, to assist in the formulation of long-term coastal policies.
    Mr. Blenkinsop: I welcome that statement. Will my right hon. Friend give an assurance that bodies like the National Trust will be kept in close touch with the work of these regional conferences?
    Mr. Willey: Certainly.
    Earl of Dalkeith: Would the right hon. Gentleman make sure that the greatest and the best use is made of National Parks by having a new scheme for integrating forestry on a commercial basis with amenities?
    Mr. Willey: That is another question.

    National Parks Commission
    Mr. Blenkinsopasked the Minister of Land and Natural Resources whether he will include on the reconstituted National Parks Commission persons with experience of conservation of the countryside and persons able to speak for walkers, campers and other open air interests.
    Mr. Willey: I do not think that the Commission should be composed of spokesmen for various interests, but of persons of wide experience who will be able to advise effectively. I am satisfied that those who have been appointed are alive to the needs of walkers, campers and others with open-air interests, and will take them fully into account in considering the problems of protecting the countryside while ensuring its full enjoyment.
    Mr. Blenkinsop: Would not my right hon. Friend agree that many of these bodies, representing campers and walkers and others, play a large part in the formulation and development of National Parks? Is it not right that they should have some form of representation on the new body, as they are extremely anxious about it?
    Mr. Willey: I am anxious that they shall continue to play an active part, but

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    I am equally anxious that the Commission should not be a representative body.
    Mr. Blenkinsop: But—
    Mr. Peter Mills: Will the right hon. Gentleman bear in mind how right and proper are the recommendations made by the hon. Member for South Shields (Mr. Blenkinsop) and that this body should not be composed only of elderly and retired people?
    Mr. Willey: I can assure the hon. Gentleman that it is not so composed.
    Mr. Blenkinsop: I beg to give notice that, in view of the unsatisfactory nature of the Answer, I will seek to raise the matter on the Adjournment as early as possible.

  PUBLIC BUILDING AND WORKS

    Departmental Staff Appointments (Advertisement)
    Mr. Winnickasked the Minister of Public Building and Works why advertisements on behalf of his Department for a temporary clerical officer stated that all applicants must be British born and educated in the United Kingdom or be citizens of the Irish Republic.
    Mr. Fauldsasked the Minister of Public Building and Works why a vacancy for a junior clerk was advertised by his Department stipulating native birth qualifications; by what authority this was done; and what action has been taken.
    The Minister of Public Building and Works (Mr. R. E. Prentice): The nationality requirements are in line with the rules that apply to the whole Civil Service and for this purpose the term "British born" extends to people who were born in Commonwealth countries. I have given instructions that this will be made clear in future advertisements.
    The educational requirement was included in a recent advertisement because my Department was particularly seeking recruits from among school leavers, but I have decided that this restriction will be excluded from future advertisements.
    Mr. Winnick: While grateful for that reply, may I ask the Minister whether he would agree that the advertisement was worded in a most unfortunate way? Does
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    he not agree that the way in which this advertisement for a junior clerk was worded placed Commonwealth citizens in an inferior position?
    Mr. Prentice: It was not intended that way. There are among the employees of the Ministry a large number of people who come from Commonwealth countries. But I agree that wording may have led to misunderstanding, and to avoid that I have given the instructions to which I referred in my original reply.
    Mr. Ronald Bell: Why does the Minister and why does the hon. Member for Croydon, South (Mr. Winnick) take this low view of being born and brought up in Britain? Will the Minister make sure that his branch of the public service at least is animated by the belief that the British are the finest race in the world and that no other is to be compared with them?
    Mr. Prentice: I am animated and the Government are animated by the belief that there should be no discrimination whatever in these matters. It was certainly not intended when the advertisement was approved that any discrimination should be implied. It is only because there has been some misunderstanding of it—which I can understand in the circumstances—that I have given instructions that this point of view should be made clear in the way that I have indicated.

    Government Offices, London
    Mr. William Hamiltonasked the Minister of Public Building and Works what steps he is taking to ensure that office building for public Departments in London is not in conflict with the policy of dispersal of such accommodation to other regions.
    The Parliamentary Secretary to the Ministry of Public Building and Works (Mr. James Boyden): This is a regular subject of consultation between the Ministry and the departments concerned.
    Mr. Hamilton: That Answer does not mean anything to me. Will my hon. Friend say how much office building is now going on for Government Departments? Is it not the case, for instance, that £100,000 is to be spent on converting the stable yard at St. James's Palace for offices for the Royal Household and

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    does not that conflict with the Government's policy? Could they not be moved to the provinces?
    Mr. Boyden: The only Government office block being built at present in the London area is the new headquarters office in Horseferry Road which is allocated to the Ministry of Housing and Local Government and the Department of Education and Science.
    Mr. Hamilton: What about the building which I mentioned?
    Mr. Rippon: Is the Parliamentary Secretary aware that on this occasion I do not think his Answer meant anything to anybody—quite apart from meaning nothing to his hon. Friend. Has he studied the report which is issued today by the. Location of Offices Bureau in which the Chairman expresses grave anxiety that Government controls are going to frustrate the Conservative policies of decentralising offices in London? Has he any comment to make on that?
    Mr. Boyden: I have not read the report. Government policy is still to press ahead with decentralisation. In any care, policy is not a matter for my Ministry.

    British Museum (Cleaning)
    Mr. Tilneyasked the Minister of Public Building and Works whether he will provide funds for the cleaning of the outside of the British Museum.
    Mr. Prentice: Not at present, but if a suitable opportunity arises I will consider this, in consultation with the Trustees of the British Museum.
    Mr. Tilney: Now that we want to attract more foreigners to spend their holidays in Britain and now that fewer Britons can go abroad, does not the Minister agree that the outside of this museum looks very dowdy and depressing? Cannot London copy Liverpool in cleaning its beautiful buildings?
    Mr. Prentice: Yes. I have some sympathy with this view. At the moment we are cleaning some Government buildings using a new technique by blasting with soft grit. [Laughter.] I do not know what is funny about that. In the light o' the results of this work and public reaction to it, and taking costs
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    into account, I hope to review the whole policy of cleaning public buildings. I have a lot of sympathy with the view that we ought to do more if and when our resources allow.

    New Houses (Prices)
    Mr. Hiltonasked the Minister of Public Building and Works, to what extent the rise in the price of new houses in 1965 was due to a rise in building costs and to what extent it was due to higher profits or increased land prices.
    Mr. Prentice: Between the fourth quarter of 1964 and the fourth quarter of 1965 the price of new houses on which building societies advanced mortgages rose by 10 per cent. and the cost of new construction by 4 per cent. The difference is due to a number of factors including, in particular, the higher cost of land.
    Mr. Hilton: I am grateful to my right hon. Friend for that Answer and also for the fact that it proves that the construction industry is not responsible for this high cost. Does he not agree that, if the Government are still further to stimulate housing demand, one of the necessary steps is to make sure that the extra demand does not merely result in increased house prices?
    Mr. Prentice: I will draw my right hon. Friend's attention to the latter part of that supplementary question, particularly the considerations in relation to mortgage policy. I agree with what my hon. Friend said in the earlier part of his supplementary question. The answer shows that the rise in new house prices last year was not primarily due to the industry itself.
    Mr. Rippon: In view of the fact that his colleagues at the Ministry of Housing and Local Government seemed to be very confused and misleading about it, will the Minister confirm that the 10 per cent. increase in prices last year was a record since his Ministry began to keep records? Does he also agree that the record is almost certain to be broken this year?
    Mr. Prentice: No, Sir. I would not agree with either of those propositions. The confusion the last time there were Questions about this was caused by the kind of supplementary questions asked

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    by hon. Members opposite and not by anything said by the Minister of Housing and Local Government.
    Mr. Urwin: Does the Minister recognise that the public is open to exploitation in relation to house prices in the private sector? Does he agree that the time is now opportune for him to liaise with his other colleagues in the Government with a view to asserting some control over this situation?
    Mr. Prentice: The rise in house prices is disturbing. I hope that the fact that the country has been asked to observe a price freeze will be observed in this sector along with others.
    Mr. Mawby: Has the right hon. Gentleman made any estimate yet of how much the price of houses will rise as a result of the Selective Employment Tax?
    Mr. Prentice: Yes, Sir—of the order of 2 per cent., although much depends on the extent to which the tax is passed on. As I and as my right hon. Friends have often made clear, we hope that it will be absorbed to a large extent by increased productivity.
    Mr. Rippon: On a point of order. I know that it is out of order to call a Minister a liar, but what can we do to correct a lying Minister?
    Mr. Speaker: Order. The hon. Member should not have introduced the expression even in that way. I hope that he will withdraw his remark.
    Mr. Rippon: On reflection, realising that I should not have said that, I withdraw it, but I resent the Answer which the Minister has given.

    Palace of Westminster
    Mr. William Hamiltonasked the Minister of Public Building and Works what progress he has now made in arranging tours of the Palace of Westminster by hon. Members and members of the Press.
    Mr. Prentice: This is a matter for the authorities of the two Houses whose attention I invited to the similar inquiry made by my hon. Friend on 23rd May, 1966.
    Mr. Hamilton: Has my right hon. Friends followed that up and asked
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    the authorities of the respective Houses whether they have made any progress? Is he himself anxious that hon. Members and members of the Press should see into every nook and cranny of this building, because it is clearly in the public interest that they should? Will he himself take an initiative and see that these tours are arranged?
    Mr. Prentice: No, Sir. I have no authority to organise tours. I responded to my hon. Friend's original Question by saying that it was an interesting idea but it is not for me to interfere with the operations of the Services Committee in this House or the Administration Committee in another place. If my hon. Friend is interested in this matter, I suggest that he could follow it up himself with the appropriate authorities.
    Sir Knox Cunningham: Will the Minister consider asking his hon. Friend the Member for Fife, West (Mr. William Hamilton) to conduct one of these tours to another place and perhaps to stay there?

    Building and Construction Industry (Targets)
    Mr. Costainasked the Minister of Public Building and Works whether he will revise the targets for the construction industry as set out in Command Paper No. 2764.
    Mr. Chichester-Clarkasked the Minister of Public Building and Works what representations he has received from the Federation of Civil Engineering Contractors in regard to the targets for the construction industry set out in Command Paper No. 2764; and what reply he has made.
    Mr. Braineasked the Minister of Public Building and Works what representations he has received from the National Federation of Building Trade Employers in regard to the targets of the building and construction industry set out in Command Paper No. 2764; and if he will make a statement.
    Mr. Corfieldasked the Minister of Public Building and Works (1) what estimate he has formed of the likelihood of attaining the targets of the building and construction industry set out in Command Paper No. 2764;

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    (2) whether he will seek to hold talks with the Contractors Plant Association with regard to the targets in Command Paper No. 2764.
    Mr. Prentice: These targets together with other parts of the National Plan will fall to be reviewed in the coming months. The industry is and will continue to be involved in the working out of the Plan. Representations have been made to me about the Selective Employment Tax on the basis of its effect on the Plan targets by the building and civil engineering contractors and by other sections of the industry.
    Mr. Costain: Does the Minister agree that the best barometer of future work in the building industry is the statement of the Royal Institute of British Architects on new commissions? Is he aware that under the National Plan these should be increasing by over 6 per cent. and that the latest figure shows a decrease of well over 20 per cent.? Is it surely a question not of reviewing the National Plan but of tearing up the National Plan?
    Mr. Prentice: No, Sir. There are several points to be borne in mind. One is that the National Plan targets originally involved a rate of growth which would be slower in the earlier years than in the later years. This has always been recognised. It was always intended that the National Plan would involve rolling targets which would be reviewed every year. Such a review will shortly take place along the lines that I have suggested. I do not agree that the figures quoted by the hon. Member, taken out of context, give a fair picture of what is happening.
    Mr. Ronald Bell: Does the Minister not think that the National Plan is now right for a commemorative issue of postage stamps?
    Mr. Prentice: I remind hon. Gentlemen opposite that the National Plan was not only the Government's plan but was drawn up in consultation with, and with the approval of, both sides of industry. It was then approved unanimously by the House. Therefore, hon. Gentlemen opposite have a responsibility in this matter—but, characteristically of them, they try to dodge their responsibility when the going gets a bit rough.
    Mr. Braine: As it is now clear that the comparatively modest targets in the National Plan have been wrecked by the actions of the Government and that considerable unemployment is to be expected in the building industry, will the Minister take an early opportunity, certainly before we rise for the Summer Recess, to make a statement on Government policy towards this industry?
    Mr. Prentice: That does not arise from this Question, which is about a revision of the National Plan. I have already dealt with that. I do not agree that the economic situation has been caused by the Government's action—[Interruption.] —and that sort of remark from the hon. Gentleman is typical of the irresponsible way in which hon. Gentlemen opposite have reacted to the Prime Minister's statement last week. I recommend them to read the third leader in The Times today.
    Mr. Chichester-Clark: Since the National Plan was drawn up, the right hon. Gentleman says, in consultation with industry, may I ask whether he is prepared to say that the Plan and its targets will now be revised in consultation with industry?
    Mr. Prentice: Yes, Sir. This is a natural and permanent part of the planning machinery, of which the National Plan is but one facet.
    Mr. Costainasked the Minister of Public Building and Works what estimate he has formed of the number of extra employees required in the construction industry in 1970 so that the targets in Command Paper No. 2764 can be achieved.
    Mr. Prentice: The industry estimated that it would need about 100,000 extra employees to achieve the targets. I have no reason to revise its figure.
    Mr. Costain: In making that statement, what increase in productivity in this industry does the Minister anticipate? Would he not agree that the lack of confidence which the industry now feels is a negation of increased productivity?
    Mr. Prentice: I wish that hon. Gentlemen opposite would not exaggerate the lack of confidence in the industry. I

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    have talked a great deal in recent weeks with leaders of the industry and they, as responsible people, are concerned about the economic situation and have worries about it, but they do not speak with such exaggerated accents as hon. Gentlemen opposite.
    Mr. Chichester-Clark: Is it not a fact that off-site workers have added to the productivity of the industry in recent years and that the National Plan stated that there should be more of them? How will Selective Employment Tax help to bring that about?
    Mr. Prentice: It is true that the National Plan envisaged an increase in the number of off-site workers, and there has been an increase since the Plan was drawn up. This is encouraging from the point of view of operations such as better management techniques and so on, and, as far as I know, is still continuing.

    Hyde Park (South Carriageway)
    Mr. John Smithasked the Minister of Public Building and Works what plans he has to permit heavy or commercial traffic to use the south carriageway of Hyde Park.
    Mr. Boyden: None, Sir.
    Mr. Smith: Is the Parliamentary Secretary satisfied that heavy or commercial traffic is not using the south carriageway of Hyde Park? Would it not be better to tackle this problem at the root by carrying out a major traffic improvement at Knightsbridge Green?
    Mr. Boyden: For a long time it has been policy not to permit commercial vehicles to use Hyde Park, but perhaps the hon. Gentleman has seen contractor's vehicles temporarily using the south carriage drive. Permission has been given for these vehicles to use this road while work is carried out on the demolition and rebuilding of Knightsbridge Barracks, to avoid congestion in Knights bridge. However, I assure the hon. Gentleman that this is only temporary.

    Coalbrookdale Iron Bridge
    Mr. John Smithasked the Minister of Public Building and Works what steps he will take to ensure the preservation of the iron bridge in Coalbrookdale.
    Mr. Boyden: My right hon. Friend and my right hon. Friend the Minister of Transport have contributed towards the cost of a detailed survey commissioned by the Salop County Council. The report of the consulting engineer has now been received and we look forward to hearing from the Council after its next meeting.
    Mr. Smith: Could the Minister give this project a fair wind, because not only is this probably the most important industrial monument in existence but it is also in danger of breaking up? Is he aware, moreover, that it lies within the boundary of the proposed new town of Dawley, which at present does not even have a place on the map of England, but which, with the growing international fame of this bridge, could have a place on the map of the world?
    Mr. Boyden: My right hon. Friend is very well aware of the importance of this monument, but the matter is a very technical one and I suggest that we had better wait until we have studied the report, when we will look at the issue very carefully and almost certainly give it a fair wind.
    Mr. More: Does the Parliamentary Secretary realise, my hon. Friend having tabled this Question, that the preservation of this unique industrial monument should be a matter of national rather than local concern? If its preservation is beyond the resources of the local authority, would the hon. Gentleman undertake that technical and financial assistance will be provided by the Ministry?
    Mr. Boyden: The tripartite approach by my right hon. Friend, by my right hon. Friend the Minister of Transport and by the local authority is the best way of ensuring this.

    Bricks
    Mr. Goodhartasked the Minister of Public Building and Works in which year since the cessation of hostilities in 1945 the stocks of bricks have exceeded 860 million at the end of the month of May.
    Mr. Boyden: In 1966.
    Mr. Goodhart: Does the Minister appreciate that one of the reasons for this

    1201
    unprecedented pile-up of bricks is the rapid and record increase in the price of new houses? Does he appreciate that Selective Employment Tax and the new clamp-down on the economy last week will make the position and the pile-up much worse?
    Mr. Boyden: I do not accept the hon. Gentleman's reasons for this. The situation is serious, but the long-term prospects are brighter.
    Mr. Freeson: Would my hon. Friend hear in mind the fact that one of the reasons for the rapid rise in recent years in the cost of individual houses is not caused necessarily by the cost price of constructing houses, because there has been gross inflation in the profit levels within the prices being charged?
    Mr. Boyden: Yes, Sir, and, of course, the Government are giving top priority to the construction of houses. This remains our policy and has been ever since we were elected.
    Mr. Sharpiesasked the Minister of Public Building and Works what assurances he has given to the brick manufacturers that the present stockpile of bricks will be cleared by the end of 1966,
    Mr. Boyden: None, Sir.
    Mr. Sharpies: What target has been given to the brickmakers for 1966? Does this exceed the target which was set by his predecessor for 1965?
    Mr. Boyden: No target has been set. I remind the hon. Gentleman that there is not uniform gloom about getting rid of stocks. For example, in Scotland stocks have been reduced from 52 million in April to 31 million at the end of June. In the northern region stocks were 37 million in April and are now 29 million.
    Mr. Braineasked the Minister of Public Building and Works what representations he has received from the director of the National Federation of Clay Industries regarding the effect on brick stockpiles of the uncertainties arising from the Land Commission Bill now before Parliament; and whether he will make a statement.
    Mr. Boyden: This was not raised by the Federation when it met my right hon. Friend in May.
    Mr. Braine: Is the Parliamentary Secretary aware of statements by the industry's spokesman that this year's crisis of over-production, due to the Government's bad forecasting, will be followed next year by a fall in production and the possible closing of many works? Will he ensure that an effort is made very soon to give more hope of a realistic forecast to this much harassed industry?
    Mr. Boyden: One of the best ways of handling the problem is by the sort of discussions which have been going on. My right hon. Friend is in touch with the brickmaking industry. Officials are in touch. I myself have seen several deputations.
    Mr. Channonasked the Minister of Public Building and Works what representations he has received from the National Federation of Clay Industries regarding the present production and stock of bricks; and what replies he has sent.
    Mr. Boyden: When my right hon. Friend met the Federation in May they discussed the reasons for the present levels of production and stocks. My right hon. Friend explained the Government's plans for expanding the housing programme.
    Mr. Channon: Is not the Parliamentary Secretary aware that very recently the National Federation of Clay Industries has shown how deeply concerned and worried it is about the present stocking position of bricks? What steps do the Government propose to take to ensure that these stocks will be cleared and that the present glut of bricks will not turn into a shortage next year, which would inevitably mean that the housing programme would fall even further short of the present level?
    Mr. Boyden: The brickmaking industry is not united on the methods to be adopted, because, for one thing, the Federation includes only non-fletton brickmakers. The fletton brickmakers are in another federation. Neither party can really agree on a policy.
    Mr. Chichester-Clark: What kind of reassurance will the Minister be able to give to the brickmakers about next year's production now that we are told that there are enough bricks to build a 30 ft.

    1203
    wall made of bricks from John o' Groats to Land's End with some to spare for another down the middle?
    Mr. Boyden: The hon. Gentleman and others opposite always seem to think that bricks mean houses. I never observed the same enthusiasm for coal producers when the coal miners were stocking coal.

    Building Licences
    Mr. Channonasked the Minister of Public Building and Works what will be the criteria which will govern his decisions in deciding whether to grant or refuse a building licence for buildings between £50,000 and £100,000 in value.
    Mr. Prentice: I shall take into consideration the demand on the resources of the industry in the area and the contribution which a project would make to economic development and efficiency, the balance of payments and the implementation of Government policy generally.
    Mr. Channon: Is the right hon. Gentleman aware that that Answer will not give much enlightenment to the building and construction industries? Would he clear up one important point: can he indicate whether or not there will be any retrospection in this matter, and will he confirm that, in regard to contracts of between £50,000 to £100,000, people will still be able to go ahead with them if the contracts have been entered into by the time the right hon. Gentleman lays the Order before Parliament?
    Mr. Prentice: The Order will be laid very shortly after the Royal Assent and it will not be retrospective. On the other hand, I hope that there will not be a rush of people trying to take advantage of that fact. In this, as in all matters affecting the economic crisis, the Government are entitled to rely on people's loyalty.
    Mr. Frederic Harris: Would not the right hon. Gentleman agree that such decisions, which arise in relation to this and other Questions, entail policy decisions by his Ministry? If so, how does the right hon. Gentleman square that with the remark of his Parliamentary Secretary when replying to an earlier supplementary question, when he said that his Ministry was not responsible for policy decisions?
    Mr. Prentice: My hon. Friend was speaking in the context of that particular Question. Of course, my Ministry is responsible for policy over a fairly wide sphere.
    Mr. Freeson: Will my right hon. Friend and his colleagues keep their minds open to the possibility of reducing the level of control below £50,000 per project, bearing in mind the comparable controls that are established and maintained for public authority expenditure on building projects?
    Mr. Prentice: That would not be possible within the terms of the Bill which is now being considered in another place. Under the terms of that Measure the lower limit is £50,000 and I propose to use the powers I have under that Bill to go down to £50,000, but I could not go down to a lower level.
    Mr. Chichester-Clark: Is the right hon. Gentleman aware that none of my hon. Friends is suggesting that the building industry should be totally exempt in relation to the economic situation but that Government policies in this matter should be relevant and should not clash with each other, as the aims of the National Plan clash with the two Budgets we have had since April?
    Mr. Prentice: I do not agree with the later part of that supplementary question. I welcome the fact that hon. Gentlemen opposite recognise that the building industry cannot be exempted from the economic situation. It is the policy of the Government that the industry should not bear a disproportionate part of the burdens arising from that situation. I think that a fair assessment of the measures announced last week will lead one to the conclusion that the building industry will take some serious knocks, but no more so than the rest of the community, and that our policies have been worked out on a basis which is fair to the industry.

    Building Costs
    Mr. Sharpiesasked the Minister of Public Building and Works what estimate he has formed of the likely rise in building costs in the public sector over the next six months.
    Mr. Prentice: The increase in the cost of labour arising from the Selective Employment Tax could lead to an increase in building costs in the public sector of about 2 per cent. in the next six months. To some extent this increase in costs may, however, be offset by higher productivity and by decreases in the price of imported building materials when the import surcharge is withdrawn.
    Mr. Sharpies: Is this likely to be the only rise in costs? Will the Minister now admit that building costs have been rising over the last 12 months faster than at any other time since records have been kept in his Ministry? Does he hope to heat this record?
    Mr. Prentice: I do not know whether the hon. Gentleman was in the Chamber when I answered an earlier Question. It was then shown that there had been a rise of some 4 per cent. in building costs over 1965. The hon. Gentleman may be confusing this with the rise in the price of new houses, which was 10 per cent., but due to other factors than building costs. This rather puts his supplementary question out of perspective.
    Mr. Gwilym Roberts: Will my right hon. Friend ensure that the Selective Employment Tax is not used as a pretext by many builders to push up their profits?
    Mr. Prentice: I hope that they will not do that. I hope that they will make every effort to absorb the extra costs due to this tax and not pass them on to the consumer.

    Building Material Producers (Costs)
    Mr. Biffenasked the Minister of Public Building and Works what estimates he has made of the rise in the costs of building material producers over the last nine months.
    Mr. Prentice: No general estimates have been made.
    Mr. Biffen: Is it not true that there has been a considerable increase in the costs of building materials producers, largely on account of the inflated stocks they have to carry? Will the Minister give an undertaking that this disability will not apply to producers during the coming year?
    Mr. Prentice: The increase in prices over the period referred to in the Question is about 2 per cent. To what extent this has been due to rising costs is a question I cannot accurately answer, because I do not have that type of statistics available.
    Mr. Rankin: On a point of order. Would my right hon. Friend the Minister speak a little more quietly? I cannot hear what is going on in committee in front of me.
    Mr. Prentice: I apologise to my hon. Friend. I was saying in answer to the supplementary question that we are able to give figures about the rise in prices but we are not able to break down the effect on costs in each of the building material industries, of which there are a very large number.

    Sub-contractors (Labour-only basis)
    Mr. Biffenasked the Minister of Public Building and Works what percentage of the manpower force employed in the building and construction industry consists of sub-contractors operating on a labour-only basis.
    Mr. Boyden: Precise figures are not available, but it looks as though it is about 4 per cent.
    Mr. Biffen: Does the Parliamentary Secretary think that this figure is itself too large? Does he think that it may increase as a result of recent changes such as the Selective Employment Tax?
    Mr. Boyden: I think that the figure might have misled the hon. Gentleman, because it covered the whole of the industry, and half a million operatives are employed by local authorities, where it does not apply. If one were to take the sector about which we are most worried, the figure is probably nearer 5 per cent.
    Mr. Lubbock: What representations has the Minister received from the building trade unions concerning this? What measures does he intend to take that ensure that the Selective Employment Tax does not encourage labour-only sub-contractors in the building industry?
    Mr. Boyden: The trade unions did not oppose the Selective Employment Tax.

    1207
    We have met them on a number of occasions. We are having consultations with the other Departments concerned to see what can be done to limit labour-only sub-contracting.

  PENSIONS AND NATIONAL INSURANCE

    Widows
    Mr. Winnickasked the Minister of Pensions and National Insurance if she will change the regulation which obliges those widows who receive the 30s. allowance to pay 11s. 7d. National Insurance contributions weekly if they are not employed so as to reduce the insurance contribution.
    The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mr. Norman Pentland): No, Sir. The 30s. widow's basic pension is a reserved and transitional right from the pre-1948 insurance schemes, and my right hon. Friend does not consider that its receipt should affect National Insurance contribution liability.
    Mr. Winnick: Is it not time seriously to consider easing the burden on so many widows, especially those on very limited incomes? Could some guarantee be given that a repayment will take place within a short period of time?
    Mr. Pentland: No. The widow receiving the 30s. pension does so in circumstances where her counterpart with no reserved rights at all from the old scheme does not. In other words, she is, in effect better off than the no-shilling widow, because she has the advantage of reserved and transitional rights. My hon. Friend may like to know that it is possible for the non-employed 30s. widow with very small means to obtain exemption from the liability to pay the contributions in question.
    Mr. Gwilym Robertsasked the Minister of Pensions and National Insurance if she will introduce legislation to give a 13 weeks' widow's allowance to widows who do not qualify under Section 26(1,b) of the National Insurance Act, 1965.
    Mr. Pentland: No, Sir. I do not think it would be appropriate to pay a benefit intended to assist a widow in adjusting herself to the cessation of her husband's
    1208
    earnings where that adjustment had already been made on retirement.
    Mr. Roberts: Is the Minister aware that there is very strong feeling on this side of the House that it is high time we got rid of some of the anomalies in the pension structure so that we have a system tied to the concept of need rather than merely to contributions?
    Mr. Pentland: Tied to a concept of need is what this provision actually is. I assure my hon. Friend that it may well be that the detailed rules limiting the payment of widows' allowance will eventually need to be revised in the light of the review we are now undertaking, when it comes to make new arrangements for widows' pensions and retirement pensions.
    Mr. Gwilym Robertsasked the Minister of Pensions and National Insurance if she will introduce leglislation to remove the anomaly whereby the husband's contributions between the age of 65 and 70 years prior to 25th December, 1961, do not add to his widow's pension.
    Mr. Pentland: No, Sir. The present arrangements are based on recommendations made by the National Insurance Advisory Committee after an exhaustive examination of increments for wives and widows, and my right hon. Friend does not think there is any case for changing them.
    Mr. Roberts: Does not the Minister feel, however, that this rather shabby treatment of these widows will act as a disincentive to men now between 65 and 70 to go on working and that this, therefore, will impair the national effort?
    Mr. Pentland: So far that has not been our experience. I am aware, of course, of the case which my hon. Friend took up with the local office manager in his constituency. The reply he received on that occasion was quite straightforward. It is quite correct that changes in increments are not made restropective. That was the point at issue in my hon. Friend's Question. As I have said, my right hon. Friend can see no reason to change the position.

    Pensions (Payment)
    Sir B. Jannerasked the Minister of Pensions and National Insurance if she is aware of the hardship caused by the rigidity of the Claims and Payments

    1209
    Regulations, 1948, under which individuals who have been paid monthly can lose up to five days of pension payments if the last day of the month on which they retire does not fall on a Saturday and if she will take steps to modify the Regulations to remove this injustice.
    Mr. Pentland: My right hon. Friend cannot agree that the present rule causes injustice. Pension is payable on a weekly, not a daily basis and a payment is made for each week of pension life. Every pensioner normally receives a full week's pension within a week of his retirement, regardless of the day of the week on which he retires.
    Sir B. Jammer: Does my hon. Friend realise that this causes hardship to people who can ill-afford to sustain that hardship? Will he give this matter further consideration?
    Mr. Pentland: If my hon. Friend has any particular case in mind, perhaps he will send the particulars to me and I will gladly look into the matter. In general people do not lose anything, because there is a payment for each week the pension lasts.

  MINISTRY OF HEALTH

    Medicines (Labelling)
    Mr. Gresham Cookeasked the Minister of Health whether he will now recommend to doctors, chemists and manufacturers of drugs that the recommendation of the Dunlop Committee be accepted, namely, that the names and purposes of drugs be written or printed on the bottle or container.
    The Minister of Health (Mr. Kenneth Robinson): The Pharmacy and Medicines Act, 1941, already requires substances recommended as medicines which are on sale to the public to be labelled with the name of the substance or its active constituents. The desirability of extending statutory labelling requirements is being considered in the course of the Government's review of medicines legislation, but any alteration of the present convention governing the labelling of dispensed medicines is a matter for the medical and pharmaceutical professions in the first instance. The two professions are currently considering the matter.
    Mr. Gresham Cooke: Would the Minister look at this question sympathetically? Should there not be legislation saying that the name of the drug should be on the bottle, because there are millions of bottles in people's medicine cupboards and in case of emergency or of an accident to a child people would not know what was inside a bottle? For the convenience of the public, would it not be beneficial to have the name on the bottle?
    Mr. Robinson: I am not unsympathetic to the proposal. In a number of hospitals the medical staff have agreed to authorise the hospital pharmacists to name the medicines dispensed to outpatients. Many doctors, although not all, share the view that this could be extended to dispensing of medicines generally.
    Mr. Rankin: Would it not save a great deal of trouble if prescriptions were written in legible English?
    Mr. Braine: Does the Minister recall that the Dunlop Committee was set up precisely to deal with matters of drug safety in advance of legislation being introduced? Why should there be delay in this matter? Is the Minister aware that there is growing dissatisfaction with his failure to deal administratively with many of these drug and medicine matters and that he shelters behind the promise of legislation which the House has not yet seen?
    Mr. Robinson: The hon. Member knows very well that this matter was raised frequently during the term of office of hon. and right hon. Members opposite. It is not quite so simple as it might appear because, as I think most people agree, there are circumstances in which it may be undesirable for the name to appear on the label. I can assure the hon. Member that, following the recommendation of the Dunlop Committee, this matter is being considered by the professions concerned and I shall be guided by the outcome of that consideration.

  HOSPITALS

    Brighton and Hove
    Sir W. Teelingasked the Minister of Health (1) why, when economic cost effectiveness is a guiding principle in the expenditure of public

    1211
    money, he is supporting a scheme to cost something over £20 million and ignoring one backed by the Brighton Health Committee and the Brighton and Hove and mid-Sussex medical profession which will cost less than £6 million;
    (2) why, in the difficult situation with regard to the medical staffiing in hospitals and the problems of access to hospitals of general practitioners, he has rejected a scheme which provides for total integration of medical services and personnel in the Brighton area, without discussion with the people who represent the mass of professional opinion in Brighton and in spite of requests from the two hon. Members for Brighton and the hon. Member for Hove that he should receive them.
    Mr. Kenneth Robinson: I would refer the hon. Member to my reply to my hon. Friend the Member for Brighton, Kemp-town (Mr. Hobden) on 16th May. The hon. Member appears to be comparing the costs of two quite different projects, namely the developing of two district general hospitals and building a specialised unit only. The regional hospital board, which is the responsible planning authority, discussed the merits of the two proposals with local representatives on 14th April.
    Sir W. Teeling: Is the right hon. Gentleman apparently paying no attention to efficiency? Is there any real reason why there should be this vast waste of public money on what in effect is feather-bedding of gross inefficiency? Considering that so many people have wanted to come to him from Brighton —professionals, Lord Cohen of Brighton, his own Socialist friend, and the borough health committee—surely they should be listened to as well as these few people from the Ministry?
    Mr. Robinson: I do not accept for a moment that there is any waste of public money. I have told the hon. Member that he is not comparing like with like. The important thing in Brighton is to improve hospital facilities quickly. The Royal Sussex County scheme, Phase 1, is likely to start next month. I have seen the hon. Member and explained why it would not be useful to receive a deputation.
    Mr. Braine: While accepting that it is the Minister's responsibility to make decisions even though they are unpopular, may I ask whether he would agree that in highly personalised circumstances such as these there is wisdom as well as courtesy in receiving a responsible deputation?
    Mr. Robinson: I frequently receive deputations from local authorities and interested parties in particular areas. There were special considerations here and I have explained them to the hon. Member for Brighton, Pavilion (Sir W. Teeling).

  MINISTRY OF LABOUR

    Development Districts and Development Areas (Unemployment)
    Mr. Higginsasked the Minister of Labour what the unemployment figures were in absolute and percentage terms in what are each of the present development areas, the average for the development areas as a whole and the corresponding figures for the United Kingdom at the latest convenient date, and at the same date in each of the 10 preceding years, respectively.
    The Parliamentary Secretary to the Ministry of Labour (Mrs. Shirley Williams): I regret that this information about unemployment in the new wider development areas is not readily available and preparation of it would entail an undue expenditure of staff time.
    Mr. Higgins: In view of the Prime Minister's recent statement about the fact that the differentials between the areas and the rest of the country are likely to be narrow, surely this information is absolutely essential to the House? Will the hon. Lady consider it a matter of the utmost priority?
    Mrs. Williams: The hon. Member will be aware that there is another Question which he has put down to be answered in detail which will give the information he needs. What he is asking is retrospective information about areas which did not exist at that time.
    Mr. Higginsasked the Minister of Labour if he will estimate the unemployment figures in absolute and percentage terms in each of the development districts

    1213
    and development areas, the average for the development districts and areas and the United Kingdom six months, one year, eighteen months and two years, respectively, from the most recent convenient date.
    Mrs. Shirley Williams: No, Sir.
    Mr. Higgins: We have no information, again. Surely it is totally intolerable when we have the Prime Minister making a statement with no statistical information to back it up.
    Mrs. Williams: The hon. Member is asking for estimates about a future case. He will be well aware, unless he is making a purely political point, that no Government: of any colour have ever made forecasts of this kind.
    Sir K. Joseph: The hon. Lady must know the answer to this Question and the previous one since the Prime Minister told the House last week categorically that the relationship between unemployed in the development areas and the rest of the country was lower at this time than ever before. Where did he get his facts if the hon. Lady cannot answer these Questions?
    Mrs. Williams: The hon. Lady can answer these Questions and would like to make absolutely clear what the situation is. The Question put down refers to development districts which under the Industrial Development Bill were the operative way of defining areas of high unemployment and show a continual narrowing of differential between those districts and the national figure. What the hon. Member is asking for is estimates for the development areas which, as he knows as well as we lo, have only just come into being. Therefore, he is asking about an entirely hypothetical situation.

  CYPRUS (UNITED NATIONS FORCE)
  Mr. G. Campbellasked the Secretary of State for Foreign Affairs what is the policy of Her Majesty's Government on the United Nations force in Cyprus, in view of the doubts officially expressed by the United Nations Secretariat about the effect of uncertain financial support on the continuance of the present force after 1966.
  The Minister of State for Foreign Affairs (Mrs. Eirene White): On 16th
  1214
  June Her Majesty's Government pledged a further 2 million dollars towards the cost of the United Nations Force in Cyprus for the period up to 26th December and we are continuing to provide, at our own expense, a contingent of over a thousand troops. Her Majesty's Government consider that the Force continues to play a vital role in preventing hostilities in Cyprus and hope that other contributor countries will respond generously to the Secretary-General's recent appeal for further financial support.
  Mr. Campbell: Will the Government for their part make special efforts especially on the short-term problem of the U.N. Force and the long-term settlement in Cyprus in order to prevent disturbances of a serious kind breaking out again?
  Mrs. White

  BRUNEI
  Mr. A. Boyleasked the Secretary of State for Foreign Affairs if he will make a statement on the discussions he had during his recent visit to the Far East on the position in Brunei.
  The Chancellor of the Duchy of Lancaster (Mr. George Thomson): My right hon. Friend did not discuss the position in Brunei with any of the authorities whom he saw during his visits.
  Mr. Royle: Will the right hon. Gentle. man give an assurance that no approach will be made or has been made to the Sultan of Brunei suggesting that the defence agreement be annulled? Will he also give an assurance that no approach was made during the past two months?
  Mr. Thomson: Brunei is a separate State bound to the United Kingdom by bilateral treaty arrangement. It is not part of any of the countries my right hon. Friend visited and which were the subject of the hon. Gentleman's Question. Detailed questions about Brunei should be directed to my right hon. Friend the Secretary of State for Commonwealth Relations.
  Mr. Boyle: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible moment.

ORDERS OF THE DAY

  IRON AND STEEL BILL
  Order for Second Reading read.
  3.30 p.m.
  Sir John Hobson: On a point of order, Mr. Speaker. May I seek your guidance as to the nature of the Bill? I respectfully submit that there are strong arguments for holding that the Bill ought to be treated as a Hybrid Bill and that therefore, in accordance with Standing Order No. 36, it should be referred to the Examiners in order that they may report to the House whether any or certain Standing Orders relating to Private Bills are applicable or not—in other words, the Examiners should decide whether this is or is not a Hybrid Bill.
  You have, yourself, recently stated that the question of whether a Public Bill should be treated as a Hybrid Bill is one of the most difficult and complex points of procedure of the House. But it is not a point which you need yourself decide today. In my submission, all I have to do is to satisfy you that there is a case for the Examiners to consider and you need only ask yourself whether or not the Bill could possibly be a Hybrid Bill. If there is the possibility that it might be a Hybrid Bill, then the Examiners should have the right to consider it, for the House has entrusted to them the task of considering and reporting their views on this question to the House.
  Of course, the Bill is a Public Bill and is presented by the Government, and it deals with questions of public policy. Unless it did so, no question of its hybridity could arise, and it is only when one has a Bill of that nature that the further point arises as to whether it is not something more—namely, whether it specially picks out particular private interests for special treatment. In my submission, that is exactly what this Bill does.
  You will no doubt remember the definition given in Erskine May, adopted from your predecessor, as to what a Hybrid Bill is, namely:
  "… a public bill which affects a particular interest in a manner different from the private
  1216
  interests of other persons or bodies of the same category or class."
  While this is a procedural matter, it is one of considerable importance for those who are affected; I believe it was Professor Maitland who said that:
  "Justice is secreted in the interstices of procedure."
  I hope that the House of Commons, the High Court of Parliament, will be acute to see that justice is properly done in accordance with its rules. The principle of our rules is clear. If one is applying a general rule to the whole of a category or class, then the representatives of the people assembled in this House alone need discuss the Measure and decide upon it. But if there is a discrimination between members of a category or class, then, for 500 years, this House has allowed those discriminated against to have the right to make a separate defence of themselves and their interests.
  The Bill proposes to nationalise 14 companies set out in the Schedule to the Bill. These are all large and substantial steel companies which, either themselves or through their subsidiaries, are concerned with the production of steel in Great Britain. It is common knowledge that it is not proposed to nationalise many other large and substantial companies which, either by themselves or through their subsidiaries, are also concerned with the production of steel. I give the names of only seven of those which are not to be nationalised: Guest Keen and Nettlefolds, Tube Investments, Vickers, Duport, Cammell Laird, Thomas Firth, John Brown and Hadfields.
  On this occasion, I am all in favour of the abolition of the death penalty for all steel companies. but if some are to be condemned to death and others not, I submit that those to be condemned should upon the first occasion have the opportunity of defending themselves because they are being treated differently. I submit that it is quite plain that the Government have picked 14 companies and no others and that the Bill will therefore affect, to quote the definition, "the particular interests" of the scheduled companies
  "… in a manner different from the … interests of ….
  the non-scheduled companies, which are of the same category or class, and that

  1217
  therefore there is every reason for you to find that this Bill is a hybrid and that it should be considered by the Examiners.
  The Government have plainly recognised that there is a difficult problem and, in the Bill, one can see the method by which they have endeavoured to avoid it. They have put in Clause 7(3). If you look at the substance and pith of this matter, however, as one should on a constitutional question, that subsection is nothing but an ingenious device to try to prevent the companies which the Government have picked on from having the right to defend themselves, while wholly failing to create a category or class all of whose members are being treated the same. I say that for three reasons.
  First, Clause 7(3) has no legislative effect at all, and it matters not whether one is or is not within the description included in it. All that matters is whether one is in the Schedule. Secondly, the subsection does not create a category or class at all but is no more than a descriptive formula designed to cover the desires of the Government to take over 14 particular companies. Thirdly, there is plain discrimination between large holding companies, two only of which are to be nationalised and three of which are not to be nationalised, and the distinctions in the Bill relating to the holding companies are wholly unreal and irrelevant and create a discrimination which could not possibly be justified as dividing the big holding companies into different categories or classes. May I say something on each of these points.
  First, the Bill, and Clause 7(3) in particular, does not deal, nor purport to deal, with a class or category other than the 14 scheduled companies. It has no legislative effect in creating a class or category of companies which are to be nationalised or in excluding any company from nationalisation. I say that because the securities of these 14 companies are to be vested in the Corporation by the effect of Clause 1, which, together with the Schedule, simply takes over their securities.
  Even if any of these 14 companies could snow that they were not within the definition laid down in Clause 7(3), they would still have all their securities taken over, while any company not listed in the Schedule but within the definition in
  1218
  Clause 7(3) would not be taken over because the sole operation of the Bill is based upon Clause 7(1) and the Schedule and nothing else.
  Mr. Archie Manuel: On a point of order, Mr. Speaker.
  Sir J. Hobson: I am on a point of order.
  Mr. Speaker: The right hon. and learned Member for Warwick and Leamington (Sir J. Hobson) is addressing me on a point of order.
  Sir J. Hobson: This is a matter of some importance, and you will remember, Mr. Speaker, that your predecessor ruled upon this matter when the Iron and Steel Bill, 1948, first came before the House. It is obligatory upon me to point out the reasons why I say that you should rule differently on this occasion from the ruling given then.
  There are, I submit, two major differences between this Bill and the 1948 Bill. In 1948, Mr. Speaker, your predecessor based his decision on the fact that the purpose of that Bill was to bring under public ownership all important companies producing iron ore and certain basic iron and steel products, and dealt with private interests only generally as respects a particular class. That Bill affected 107 companies and very low limits of production indeed excluded from nationalisation. Here 14 only out of the numerous companies concerned with steel have been picked out.
  But there is this further distinction. Under Clause 11(3) of the 1948 Bill it was provided that the companies which were specified were those which in the Minister's opinion fulfilled the conditions set out in one or other of following paragraphs. Therefore, it was possible on that occasion for a company to show on the facts to the Minister that it ought not to be within the Bill and it would not then have been nationalised. But there is no means by which any company specified in this Bill can say, "I am not within the classes or category and I ought, therefore, to be out". This, I submit, shows plainly that all this Bill is doing is nationalising 14 named companies.
  Secondly, Clause 7(3) does not create a category or class at all. It is simply

  1219
  a descriptive device to pin on these 14 companies the terms of Clause 7(3). The formula that has been adopted is one that relates to the relevant annual period and the amount of the production. Of the 28 month-ends between December 1963 and March 1966 which might have been selected, there are only three which can be selected when all the scheduled companies are above the level and no other company is above that level. One of these three month-ends is, of course, in the Bill.
  The figure of 475,000 tons which is selected is only just above the level of one of the great producing companies which is not in the Bill. Indeed, one of the companies which is not in the Bill has 97·5 per cent. qualifying production. If anybody moved an Amendment to the Bill to reduce the level by 5 per cent. it would bring an extra company within the definition. It would not nationalise that company because it would not be in the Schedule of the Bill. To this extent it shows that the formula is no more than a device.
  Thirdly, in relation to dealing with holding companies, the effect of subsections (b) and (c) of Clause 7(3) is to differentiate between the way in which holding companies are dealt with by importing the test of whether or not they have 50 subsidiaries. Of the large steel holding companies—
  Mr. Charles Pannell rose—
  Sir J. Hobson: —two are to be nationalised entirely, not only for their subsidiaries which are steel, but all their subsidiaries, and three are not to be nationalised at all.
  If one looks at the Government's White Paper of March, 1965, it plainly shows—[Interruption.]
  Mr. Speaker: Order. The Chair is being addressed on a very serious point of order. It must hear it.
  Sir J. Hobson: —that in April of 1965 the Government had decided to pick out two companies and leave out three. There is no mention in that White Paper that the decision was taken that this test of 50 subsidiary companies should be used at all. The question of the
  1220
  50 subsidiary companies bears no relation to whether the subsidiary companies are steel or non-steel or related to steel or related to non-steel. They do not even exclude dormant companies. One of the holding companies that is excluded is excluded only because it has, luckily, among its more than 50 subsidiaries 14 dormant companies, and if one did not count these it would be one which ought to be nationalised. How one can say that one is creating properly a class or category by counting up the number of dormant companies that an organisation has, I find it difficult to understand.
  By way of illustration, let me suppose —[Interruption.]—that it was proposed to cut the salaries of some but not all Members of Parliament. It could hardly be said that a category or class had been created if the reduction was applied to all Members of Parliament who had up to today been Members continuously for not more nor less than 16 years and had during that period represented two adjacent constituencies. Mr. Speaker, you would be the only person who would be within that description, and you would know that it had been devised solely, as it has been, to pick you out and not anybody else. This, I submit, is precisely what is being done in the formulas which the ingenious draftsman has devised in Clause 7(3).
  I submit that these 14 companies are being separately and individually and specially treated; that they are not members of any special category or class; that the Bill does not create any such category or class; and that, therefore, it would be in accordance with the Standing Orders of the House if you were to refer the arguments which I have advanced, Mr. Speaker, for consideration by the Examiners upon whom the House has placed the responsibility of deciding this matter and reporting on it.
  Mr. C. Pannell: Further to the point of order, Mr. Speaker. Will you also reflect whether we have any precedent for a point of order being addressed to the House to the length of the one to which we have just listened? If you are going to accede to or reject the argument which has been put forward, it could surely have been put to you on a narrower point which could have taken less than 15 minutes.
  Mr. Speaker: The simple answer to the right hon. Member for Leeds, West (Mr. C. Pannell) is that there are precedents for exactly what has happened. The last time a similar order was submitted it took longer.
  I am grateful to the right hon. and learned Member for Warwick and Leamington (Sir J. Hobson) for giving me notice of his intention to make a submission. I would like to assure him first that he has not in any way prejudiced his case, by raising it now, after the Order of the Day has been read for Second Reading of this Bill. The Ruling I have to give is one which will affect the interests of many outside this House. I must rule on the matter in a quasi-judicial capacity and, like my predecessors, I take no account in what I have to say of the convenience or otherwise for the Government programme. As the house is aware, Standing order No. 38 requires that if:
  "It appears that the Standing Orders relating to Private Business may be applicable to a Bill the examiners of Petitions for Private Bills shall be ordered to examine the Bill with respect to the applicability thereto of the said Standing Orders."
  Since this is a matter of carrying out a Standing Order, it falls to me, advised by the Officers of the House, to decide whether in fact Standing Order No. 38 is in fact applicable to the Iron and Steel Bill, and I need hardly say that ever since its publication this question has received the earnest attention of myself and my advisers.
  Let me say at the outset that I readily accept the first point in the right hon. and learned Gentleman's submission. The Standing Order is quite clear: if "the Standing Orders relating to Private Business may be applicable", then the Bill is to be examined by the Examiners, whose duty it is to decide conclusively whether they are applicable. In other words, as the right hon. and learned Gentleman has said, I have to decide only whether there is a prima facie case for referring the Bill to the Examiners, and if there is any doubt in my mind, then it is my duty to rule that the Bill should be so referred.
  The Private Business Standing Orders in question are those numbered 4·68, but there is nothing in these Orders themselves, which, of course, were drafted to regulate Private Bills, that offers any clue
  1222
  as to their applicability to a Public Bill. I have therefore to rely on the Rulings of my predecessors and, in particular, on that of my immediate precessor quoted at the foot of page 871 of Erskine May. Mr. Speaker Hylton Foster said:
  "I think that a Hybrid Bill can be defined as a Public Bill which affects a particular interest in a manner different from the private interests of other person or bodies of the same catagory or class."
  This is the test, therefore, which I have to apply to the present Bill.
  Clause 7 provides that the companies named in Schedule 1 shall vest in the National Steel Corporation and subsection (3) states that these companies satisfy one or other of the conditions set out in paragraph (a), (b) or (c).
  Paragraph (a) includes every company which is not a subsidiary and itself produced the prescribed amount of steel in the prescribed period. Paragraph (b) includes every holding company with not more that fifty subsidiaries of which one or more together produced the prescribed amount of steel in the prescribed period.
  Paragraph (c) includes every subsidiary company in a holding company of more than fifty subsidiaries which produced the prescribed amount of steel in the prescribed period.
  The right hon. and learned Gentleman's principal contention, as I understand it, is that the companies which fall within each of the three groups determined by these criteria do not form genuine classes, and he has alleged that the criteria were chosen so as to include certain companies and exclude others. Fortunately, it is not for me to consider the reasons why these particular criteria are chosen.
  All that I have to consider is whether the criteria chosen are germane to the subject matter which they are required to distinguish. Essentially the criteria are based on one consideration: output during a particular period. Having in mind the vast complexity of the steel manufacturing industry. I find it difficult to conceive a more appropriate kind of consideration on which to base the criteria. The fact that the criteria, as drawn, leave certain companies on one side of the line and certain companies on the other is something which I do not have to consider. In whatever manner

  1223
  the criteria had been defined, the result would have been to produce what are bound to appear anomalies in the eyes of one person or another. I conclude therefore that the three classes which result from the definitions contained in subsection (3) of Clause 7 are genuine classes and that they do not justify me in ruling that the Bill should be referred to the Examiners.
  The right hon. and learned Gentleman makes a further submission. He suggests that the operative words in the Bill are the list of companies in the Schedule rather than the criteria laid down in Clause 7. I do not accept that view, and in so ruling I am fortified by the Ruling given by Mr. Speaker Clifton Brown in regard to the Iron and Steel Bill of 1948–49, of which the legal structure was similar in this respect. Nor do I consider that the omission of the words "in the Minister's opinion" in any way undermine the precedent. On the contrary, their omission removes one of the arguments which was used on that occasion to support the reference of the Bill to the Examiners.
  I therefore rule that it does not appear that the Standing Orders relating to Private Business may be applicable to this Bill and that therefore Standing Order No. 38 does not require it to be sent to the Examiners.
  3.50 p.m.
  The Minister of Power (Mr. Richard Marsh): I beg to move, That the Bill be now read a Second time.
  I must begin by apologising to the House. Had I realised that the exclusion of so many steel companies would cause so much trouble I could have reconsidered it and included the lot. I suppose that in a way this is typical of the position that we have got into. It is unfortunate, but I suppose inevitable, that there are very few subjects upon which it is more difficult to get a rational discussion than the future of the British steel industry.
  The arguments arouse such very deep emotional feelings that there is a tendency to lose sight of the very wide measure of agreement which exists over part of this controversy. Everyone accepts that the iron and steel industry occupies a dominating position in the British economy. It
  1224
  earns over £1,400 million a year, with capital expenditure of around £600 million for the next five years.
  Exports of iron and steel or of goods containing steel accounted last year for half of our total exports. I give the case immediately that there is no manufacturing industry of such basic importance to the British economy. Given these facts, quite clearly any Bill which changes the method of organisation quite rightly has to be examined very carefully and critically. There are three questions that we have to ask.
  First, should the steel industry be left to continue as in the past, and is it, above all, operating as efficiently as we would wish? There was a reference to that in The Times of 2nd July. The Times, which has not been wildly enthusiastic for steel nationalisation, said:
  "Over the past years the steel industry has not been operated in a markedly efficient fashion. The quality of some products has been poor. British steel has not been as competitive in world markets as it should have been."
  Secondly, if the industry does need vast major changes—and I do not think that there is much dispute that it does—can it be relied upon to accomplish these changes itself, or is it essential for the State to intervene in the interests of the country? Thirdly, if it is agreed that the State should intervene, is this Bill the best method of achieving it? As far as I can see, the answer to the first question is unanimous.
  The Guardian in an article on 2nd July, said:
  "All concerned, from the steel masters to Mr. Marsh recognise that the British steel industry must rationalise or perish. This is the harsh economic, non-political, undoctrinaire reason for reorganisation. On these grounds the case for nationalisation is stronger now that it was in 1949."
  No one disputes the need for changes in the structure and organisation of the British steel industry. The Conservative Party, the leaders of the steel industry and, if one might be light-hearted, the Liberals have all argued not against the need to introduce some new element into the administration of the steel industry but only as to how this should be achieved.
  Let me say at the beginning that it would not be fair or sensible, because

  1225
  this is a key industry, to paint the current position of the British steel industry in terms of black disaster. We have some first-rate people, some very modern plant and a very good record in very many fields. Having said all that—and this is the key to the debate—no one can deny the seriousness of the growing challenge to an industry which we have all agreed is crucial to our entire economic performance.
  This is a field where the economies of scale are very real indeed. Let us look at some of these arguments of scale and look at the position of the British steel industry in a world context. The largest British company, which happens to be the nationalised R.T.B., has a capacity of around 31 million tons a year. In the past few days a major German-Dutch merger has created a new combination with a capacity of around 10 million tons a year. In France, a country which can hardly be described as an example of rampaging doctrinaire Socialism, plans have been announced for concentrating the great bulk of the industry, which produces nearly 20 million tons a year, into only three units, two of which will have a capacity of more than 7 million tons a year.
  The Yawata Steel Company of Japan is already producing over 7 million tons a year, while in the United States of America there are three companies producing more than 10 million tons a year and another five producing more than 5 million tons. We have reached a position where there are already 22 steel companies outside the Communist countries which are larger than anything we have in Britain.
  If we had only to catch up we would be faced with a pretty tough job, but to stay in business it will not be enough just to make good lost ground; we have to ensure that the British steel industry is able to compete with even bigger units, planned for the late 'sixties and 'seventies.
  The Iron and Steel Board recently summed up the problem when it said:
  "The Board have long been of the opinion that the industry needs to be reorganised into fewer but individually larger, units equipped with plant of a greater size than is generally the case at the moment. Technical studies undertaken in the Board's organisation certainly support the view that great advantages
  1226
  are to be derived from the concentration and reorganisation of production."
  The Observer, on 3rd July, was less delicate when it said:
  "The case against the Government's Bill would be much more persuasive if either the Conservatives or the steel masters had produced a convincing plan for bringing about the industry's much needed rationalisation without full-scale public ownership".
  Since the argument about the future of the steel industry has now lasted for nearly twenty years, that failure is as surprising as it is regrettable.
  This leads me to my second question. Given the need for the reorganisation and rationalisation of the industry, can the industry be left to carry it out itself? The short answer to that is very clear. The industry has had fourteen years in which it could have done this. It could have done it in the same fourteen years as in fact its foreign competitors did. The brutal truth is that it did not even start the job. In the end, the Government, in the last Parliament, decided that public ownership was the only way to ensure that this essential job was done.
  Hon. Members will remember the debate which took place last year. [HON. MEMBERS: "Hear, hear."] Not surprisingly, it was a lively affair. In the closing stages of it a couple of my hon. Friends happened to ask my right hon. Friend the First Secretary of State if he would agree to listen to alternative proposals from the industry which would give effective Government control without 100 per cent. ownership—something which we have been asked to examine since. My right hon. Friend agreed to look at any such proposals.
  Twelve months later, my right hon. Friend the Prime Minister asked me whether I should like to be Minister of Power with a seat in the Cabinet, which, I must confess, seemed to me at the time a pretty pointless question. It always seems dangerous to raise queries on these occasions. I was appointed Minister of Power. One of my first actions on taking office was to see whether any proposals had been submitted to the Ministry. I recognise that sometimes proposals can be made between Government Departments and outside bodies which cannot be bruited around. If ever proof were needed that the British steel industry was unwilling or incapable of putting its own

  1227
  house in order, that proof was provided by the fact that, even despite the threat of nationalisation, there were no proposals from the industry twelve months after the invitation had been extended. It was not until March of this year that the British Iron and Steel Federation appointed a committee under Sir Henry Benson to study the future structure of the industry. But I repeat that it submitted no proposals to me or to my predecessor until 10th May this year when everyone knew that it was too late.
  Even though those proposals were submitted so late in the day, it was an important issue and we halted discussions on the Bill and examined the Federation's proposals very carefully. I am bound to say that they were quite unrealistic and would not have provided an instrument for tackling the problems of the industry.
  What were those proposals? There was to be a new supervisory authority consisting of a commission with a part-time chairman, two full-time executive members and five part-time members, which would determine the authority's policy and exercise its formal powers. Real power was to reside, however, in the Consultative Council which, despite its name, was to be responsible for the day-to-day running of the Authority with the right to advise the Minister on the appointment of the executive members of the commission.
  This body was to have 26 members. Sixteen of them were to be steel masters. Separate companies were to be retained with their own shareholders, with the result that the primary and legal responsibility of the directors of those companies would have been to continue to conduct the affairs of the companies in the interests of their separate shareholders and not in the interests of the industry as a whole. One cannot have in that type of organisation a level of rationalisation which would secure the full economic benefits to be derived from modern management techniques.
  To give an obvious example, it might well be desirable to require an individual company to pursue a course of action which reduced its own returns in order to optimise the returns of the industry as a whole. That surely cannot be done
  1228
  when there is a large element of private ownership. Directors in a company have a moral as well as a legal responsibility towards the interests of all their shareholders. We can do the sort of thing which we all agree needs doing only with the full public ownership of the main companies in the industry.
  There has been talk about a 51 per cent. holding. It is worth making the point that the leaders of the Federation rejected a 51 per cent. State shareholding in the State companies for the same reasons as the Government put forward last year. Namely that it would produce an awkward and divided responsibility to the State shareholders concerned with the efficient development of the industry as a whole in the national interest and to the private shareholders whose perfectly legitimate concern it would be to maximise the return on their investments. In the light of all these considerations, the Government decided to proceed with a Bill based on the White Paper.
  Before dealing with some of the details of the Bill, perhaps the House will forgive me if I say a few words about nationalisation in general, because we seem to have argued on the specific point in far too general terms. I have never understood the violent emotions which seem to be released whenever this subject is discussed. It is a peculiarly British phenomenon. Most industrial nations accept the need for a large public sector. While there are always arguments about the nature and extent of State intervention, only the British seem to have succeeded in elevating those arguments to the level of theology in recent years.
  I have never made a secret of the fact that I do not believe that nationalisation of itself necessarily solves anything. I think that it is frequently an essential means towards the achievement of desirable ends; but it can never be an end in itself. But while I find—[Interruption.] Hon. Members opposite and the country at large would have been in serious difficulties in recent years without the efforts of the nationalised sector. While I find the view of the very small band—[Interruption.] If the Conservatives do not think this is so, one cannot help wondering what they were doing when they had 13 years in which to hand the lot back. While I find the views of the very small band of those who

  1229
  believe in nationalisation on principle somewhat illogical, the views of the doctrinaire anti-nationalisers seem to me no less illogical and frequently more dishonest. The impression is given that the Conservatives are opposed to nationalisation in principle. Except for possibly the right hon. Member for Wolverhampton, South-West (Mr. Powell), this is not true.
  The late Sir Winston Churchill, Mr. Harold Macmillan and the whole of the Conservative Party in the last 13 years have all accepted, and in some cases even extended, a large publicly owned sector of industry. To coin a phrase, we are all nationalisers now. But let us not be too mealy-mouthed about this. Those and there are many of them in the House—who have not the slightest intention of bringing about any major reduction in the nationalised sector but who take every possible opportunity of highlighting. exaggerating and manufacturing criticisms of the nationalised industries are deliberately damaging the national interest. It is high time that right hon. and hon. Members opposite declared themselves either in favour of handing the whole public sector back to private enterprise or stopped this constant desigation of people who are trying to manage great industries on behalf of the nation.
  Even when ownership is transferred to the State, there are still many different ways in which State industries can be administered. I do not personally believe that great industries can be administered from Whitehall. While Governments have to retain power to protect the national interest, the dynamism essential to a successful industry can be generated only by the enthusiasm, knowledge and, let us face it, ambitions of people whose whole lives are intertwined in the industries which they serve.
  It is precisely these considerations which have led me to produce the Bill which is, I freely admit, virtually an enabling Bill. It deliberately does not define the future structure or organisation of the steel industry. Nor does it present the new Steel Corporation with a rigid structure which would of necessity have had to be built up on the basis of inadequate knowledge and expertise. We all accept that the leaders of the industry are not enthusiastic for any nationalisa-
  1230
  tion measure, but I think that right hon. and hon. Members opposite will accept that most of them would feel that if there had to be a nationalisation Bill they would rather that it were done in this way.
  Sir Gerald Nabarro: No.
  Mr. Marsh: If they did not, it would not be difficult, even now, for the Government to determine how this should be done. What I am hoping is that people, whatever their views until this debate, will join with us after this debate to see how we can produce the best form of structure for the British steel industry. The offer is a clear one.
  The Bill takes into full public ownership the 13 privately-owned companies listed in Schedule 1, about which we have heard a lot. These companies, with R.T.B., form the dominant sector of the industry, with a capacity of nearly 29 million ingot tons. They account for over 90 per cent. of our capacity to produce iron ore, pig iron, crude steels, the heavy products, sheet and tinplate. They own all our 22 integrated iron and steel works and nearly all the other major works, including the three in the Scunthorpe complex, all the major works on the North-East Coast and the three big works in South Wales. The National Steel Corporation will therefore control this dominant sector and will he able to deal effectively with all the important problems facing the industry, including the problems of structural reorganisation. At the same time, concentration on these 14 major groups will make it easier for the Corporation to concentrate on major issues of policy without the distractions that would have been caused by the acquisition of a larger number of small companies.
  I do not believe that a level of competition within and between State-owned industries is impractical or necessarily undesirable. Nor do I think it would be wise to underestimate the importance of the pride which many workers, at all levels, feel in the achievements of the companies whose names are sometimes internationally famous. The steel industry has accepted for over 30 years a substantial measure of central control exercised by the Iron and Steel Federation—there does not seem to be much objection

  1231
  to that—and latterly by the Iron and Steel Board, which hon. Gentlemen opposite set up, in certain main fields of policy, including prices, investment and raw materials supply.
  This central control has, however, been largely negative; for example the power of the Iron and Steel Board to veto development projects initiated by the companies. This has created a situation in which the industry has had neither the stimulus of effective competition nor the advantages of positive central policy formation. It has had the worst of both worlds. [Interruption.] I am glad to see that we have reached agreement with the Liberals on this. Common ownership of the dominant sector of the industry will make it possible to develop existing central controls in a positive direction and give the companies or other subordinate units an effective measure of responsibility in those matters which cannot with advantage be dealt with centrally. Let me give some examples. The use of computers and mathematical optimising techniques makes it possible to plan production and supply over a wide range. The value of this has been demonstrated by the oil companies, who have secured considerable economies by the centralised planning of their world-wide refining and marketing operations. Some steel companies have gone a long way in developing the use of computers in process control.
  Another example—the Corporation will be able to plan investment programmes centrally and ensure that new projects are initiated in accordance with a national programme designed to ensure that adequate capacity is provided in units of the right size and in the right places. It will also be in a position to decide the right economic balance between continuing to use obsolescent plant with high operating costs and incurring heavy capital expenditure to replace it. Its position will be very different from that of the Iron and Steel Board, which has complained year after year that capacity which has been classified as absolete is still in use. The Corporation will be able to ensure that its conclusions on these and on other matters are put into practice. There is a very strong case for examining the
  1232
  possibilities of increased productivity in the industry and the present level of manning, but here again it is no good just looking at penny parcels of the steel industry. The whole question of manning is a very real human as well as a technical problem. The examples of the National Coal Board and British Railways have shown that nationalised industries are well able to deal with the problems of surplus manpower in a humane but at the same time an effective manner. The Bill in fact provides for strengthening the machinery of joint consultation in the steel industry; and for experience in the organisation of workers to be among the qualifications for membership of the Corporation.
  I know that some of my hon. Friends feel strongly that the Bill should provide for a measure of direct workers' participation in management. [HON. MEMBERS: "Hear, hear."] That is a complex subject upon which there are strong views which go far beyond the steel industry. I do not think that the steel industry would necessarily be the right place for an experiment as far-reaching as this at a time when it faces a major structural reorganisation.
  Sir G. Nabarro: Hear, hear.
  Mr. Marsh: I believe that there is a real need for us to consider ways in which workers can be made to feel a greater sense of involvement in industry generally, and I shall certainly be interested to hear more on this problem.
  As I have said, a Committee under Sir Henry Benson has been examining the structure of the industry for the past four months. Its Stage I Report was issued early on Saturday morning. I have only had a chance to give it preliminary study, as has every other hon. Member.
  Sir G. Nabarro: No. I read it over the weekend.
  Mr. Marsh: We have learned from experience that the hon. Gentleman's studies tend to be so superficial that they give him an advantage over the rest of us.
  The Report contains one very interesting but, very controversial suggestion—that the Iron and Steel Board's policy of encouraging the provision of sufficient capacity to meet all foreseeable peaks in demand from home output should be

  1233
  abandoned. Instead the Committee feels that the industry should return to the old policy of trying to relate capacity to trend demand and relying on imports of steel to deal with peaks.
  All the work of the Benson Committee is, in its own words, related to
  "what structural changes ought now to be aimed at by an industry which, while reserving final decision-taking to autonomous companies has nevertheless long experience in developing corporate policies for industry-wide action."
  Common ownership of all the main steel works resulting from nationalisation will create new options for the future structure of the industry, including those I have just described, which the Benson Committee naturally did not feel able to take into account. Within the next few weeks it is my intention to establish an Organising Committee which will contain the chairman designate of the National Steel Corporation and a number of members who will begin to plan for the smooth transition into public ownership and the reorganisation of the industry. The Benson Committee's work will be of very real assistance to the Organising Committee and I hope that both Sir Henry Benson and the Committee's members will be willing to assist the Organising Committee in the work which it has in front of it.
  The nationalised sector will consist of the 14 companies listed in Schedule 1 and their wholly-owned subsidiaries, of which 33 are in the iron and steel industry. That leaves nearly 200 companies forming the private sector of the iron and steel industry, about which I would now like to say a word.
  Clauses 24 and 25 provide for the dissolution of the Iron and Steel Board and for the transfer of its assets and liabilities to the Corporation. Clearly the remaining private sector, although it is certainly important, does not occupy the same dominating position in the industry as do these major companies, and there is no more need for a supervisory authority for this relatively small sector of the industry than there is for any other industry. There is a special problem of ensuring that investment in the private sector does not develop in such a way as to hamper the pattern of investment for the entire industry. This is dealt with by Clause 13, which continues in relation only to the basic fields of iron and steelmaking
  1234
  a control over investment projects similar to that which is now exercised by the Iron and Steel Board and which will after vesting be exercised by the Minister.
  Apart from the powers available to Ministers in relation to industry generally, I have in mind the establishment of the two new bodies on a non-statutory basis: the first an advisory committee on the lines of an Economic Development Committee, to bring together representatives of the nationalised and private sectors, the trade unions and Goverment Departments to provide for the participation of the whole industry in national economic planning. The second will be an Advisory Council on Research and Development to keep under review all R. and D. programmes affecting iron and steel activities, to advise me on the gaps to be filled and the avoidance of unnecessary overlapping.
  One of the main problems affecting the private sector—a complex and important problem—will be that of rationalising re-rolling capacity, about half of which will remain in private hands. I think that rationalisation in this field will be mainly achieved by two factors. First, there is already a strong tendency towards the acquisition of re-rolling companies by the big companies. This tendency will undoubtedly continue and the Corporation under Clause 2(2,a) will be able to purchase by mutual agreement companies in the private sector. Secondly. this economic tendency will be hastened by the process of genuine competition between nationalised and private sectors and by private companies themselves.
  Considerable interest has been expressed in the future of the British Iron and Steel Federation. It is clearly essential that the nationalised companies should withdraw as quickly as possible, on fair terms, from the B.I.S.F. and that the central trading services operated by the Federation should be transferred to the Corporation. The arrangements of the Federation and the central trading services are, for reasons at which we can all guess, quite extraordinarily complex. Yet it is clearly essential in the national interest that the central trading services should continue without any interruption.
  There is no reason why, given good will, this could not be achieved by leaving the withdrawal of the nationalised companies from the Federation and the

  1235
  transfer of the central trading services to the Corporation to be dealt with by negotiation. In the brief contact I have had with them, I must confess that I have received courtesy and co-operation so far in my dealings with the leaders of the Federation, and I am quite sure that we can reach a quick and reasonable settlement by this means. But, in fairness to everyone, I must make it quite clear that if these negotiations fail the Government will take any other measures necessary to achieve a settlement.
  Probably the most controversial feature of the Bill has been the provisions for compensation. In the case of quoted securities, this is to be based on the average of Stock Exchange quotations on mid-month days for alternative periods, whichever gives the higher valuation—a long period from April, 1961, to April, 1966, and a short period from November, 1965, to April, 1966. The value of unquoted securities is to be settled between the Minister and stockholders' representatives. If they cannot agree, it is to be of such value as may be determined by arbitration to be the value the securities would have had had they been quoted. I am pleased to be able to announce that. My right hon. Friend the Chief Secretary for the Treasury will be dealing in detail with the technicalities of this when he winds up the debate this evening. But since the argument is not only about the total amount of compensation but about the principles involved in the choice of this particular formula, I should like to say a word about it.
  Our proposals on compensation were arrived at only after careful consideration of many possible bases besides Stock Exchange values. We had it in mind that the base should be objective, clear and expeditious, that terms should be fair to the community as well as to the shareholder and that our actions should accord with recognised international standards. The use of Stock Exchange values relates compensation to actual values that investors put upon securities during the chosen periods. A formula which offers an average price over a period of five years, or over the last six months of that period, if that is more favourable, and which still provides a figure which was in excess of the market price at the time of publica-
  1236
  tion, seems to me about as fair—both to the shareholder and the taxpayer—as anything which can be devised.
  Some of my hon. Friends indeed have left me in no doubt that they consider the terms over-generous. They have studied the industry's performance. They have read some of the predictions of the industry's possible future. They are entitled to their views, because this is an argument upon which there is no absolute truth. But I am sure they will forgive me if I think, probably, that some of them are not as objective as they should be.
  I want to turn to another authority—the right hon. Member for Taunton (Mr. du Cann), the Chairman of the Conservative Party. I have given him notice of this and we have discussed the point. On 3rd February lie launched a £3 million unit trust and his list of investments—we have examined them—included nine steel companies, all of which the Government were then committed to nationalise. He did this on the basis of the White Paper proposals for compensation saying, "I don't think the Labour Party has dropped the idea of nationalisation".
  Having convinced himself that the Labour Party would continue with nationalisation, it was upon this basis that he decided that investing in these nine companies was a worth-while exercise. May I quote from the Daily Mirror? On 4th February, under the heading "Tory chief rocks steel men"—I bet there was some truth in that—we read that the right hon. Gentleman said, "I don't think the Labour Party has dropped the idea of nationalisation". His joint managing director on the same occasion went on to say, "How can you go wrong? Look at the anticipated compensation prices for steel shares and then look at their prices on the Stock Exchange". At least Oliver Twist had the decency to wait until his mouth was empty before he asked for more. I hope that we shall not hear any further suggestion that we have been insufficiently generous with the taxpayers' money.
  Mr. Peter Tapsell: The hon. Member has laboured the point about fairness and at some length. But if the Labour Government or Opposition of the day are committed to nationalisation and public opinion polls indicate that they will win the next General Election, does not the right hon. Gentleman

  1237
  feel that this is bound to depress the stock market value of the real underlying security?
  Mr. Marsh: I am surprised that the hon. Member, with his expertise in the subject—which is accepted—misses the point. The whole point is that the threat of nationalisation was regarded as an incentive to people to invest, not a disincentive.
  Sir G. Nabarro: Does not the right hon. Gentleman fail to perceive that investment in steel companies was often satisfactory from an income point of view? I happen to be the chairman of a unit trust. [HON. MEMBERS: "Oh."] I declare my interest at once. There is nothing dishonourable about that. Does not the right hon. Gentleman realise that many unit trusts concentrate on income as opposed to capital growth, and that there are scores of unit trusts with different purposes? There is nothing wrong about that.
  Mr. Marsh: I am sure that if he meets my hon. Friend the Member for Poplar (Mr. Mikardo) the hon. Member for Worcestershire, South (Sir G. Nabarro) will be able to argue this with him. I am only pointing out that there are different points of view.
  Sir G. Nabarro: The right hon. Gentleman is sunk.
  Mr. Marsh: The hon. Member has failed so many times to sink his own Front Bench that surely he must do a lot better before he can sink us.
  In an effort to bolster up weak arguments, a great deal is being made of the fact that a number of the provisions of the Bill provide for the reviver of a number of purely technical provisions of the 1949 Act. Right hon. Gentlemen should look at these things a little more closely. We have adopted this procedure, which is by no means new—I could give the House precedents going back to 1322—simply to save the time of the House in regard to matters which are to a large extent of a procedural nature and common form in the nationalisation statutes.
  If I may turn finally to the time-table, Clause 7(5) provides that vesting day shall be no later than 36 weeks after the Royal Assent and Clause 4(2) re-
  1238
  quires the Corporation to submit to the Minister within 12 months of vesting day a report on the future organisation of the nationalised industry. Let me make it quite clear, however, that both these periods are maxima. I think that it is essential that we should do all in our power, on both sides of the House, once the Second Reading is over, to shorten them. Once the decision has been taken there is no sense in prolonging the uncertainty of the industry.
  As I have said, I hope to appoint an Organising Committee at the earliest possible date. The main job of the committee will be first to prepare for vesting day to take place as quickly as possible after the Royal Assent; second to start work on the future structure of the industry; and third, to start negotiations with the British Iron and Steel Federation for the withdrawal of the nationalised companies and the transfer of the central trading services.
  I hope that today's debate will see the end of the controversy about steel and I know that this view is shared by the industry and by people outside the steel industry in all parts of industry and commerce generally. The policy implemented by this Bill has been endorsed by the country in two successive General Elections and I have no doubt that it will be endorsed by the House tonight. It is in everyone's interest that from ten o'clock tonight, the efforts of everybody concerned in the industry and outside it should be directed towards maximising the efficiency of the State Corporation. I hope that after the Second Reading today the leaders of the steel industry will consider whether they cannot now best serve the interests of the industry and the nation by offering co-operation and constructive advice in implementing the Bill.
  Mr. John Peyton: Before the right hon. Gentleman goes on with that headlong peroration, will he spare a moment—I am astonished by this omission—to say in outline what he intends to do with the steel industry, what sort of broad intentions he has and how these intentions are likely to help?
  Mr. Marsh: The hon. Gentleman will find I have dealt with part of this if he reads it, but I had not reached my peroration. That was only a subsidiary one leading up to the main one, for I

  1239
  want to deal with some of those points. I put this to the hon. Gentleman quite seriously. I am quite prepared to argue on what I personally regard as the ideal direction in which to organise this industry, but what I am saying at the moment is that we will start with a fairly clean sheet on this; with an enabling Bill, and then with the co-operation of those prepared to give it, we will produce what we regard as satisfactory for the reorganisation of the industry. There are only two or three different options on this, and a number of factors I have already dealt with.
  I want to move on to say that we all recognise the need now to make ourselves more efficient as a nation if we are to maintain the high standards of living which our people demand. Fifteen years ago the Conservative Party believed that this particular industry would be better able to meet the challenge of the day if it were returned to private enterprise. All the facts and all the figures, without exception, prove them wrong.
  I have been concerned, for example, about the possible need to import large diameter steel pipe to meet the requirements of the Gas Council in relation to the new finds of North Sea gas. It is open to argument as to how far the industry could reasonably have been expected to have made provision for this problem which, after all, one could not foresee; but, of course, pipelines and natural gas are not just peculiarly British phenomena in a growing market in industrial countries. I have to tell the House that on the basis of the information I have received from the Gas Council I had already prepared to sanction imports of pipes for North Sea gas totalling 111,000 tons in 1967, with the possibility of a further 80,000 tons in 1968. It now seems that the position will be easier, but only because of the unfortunate difficulties we encountered in Syria, and the pipe which we will in fact be using was in fact that which was designated for the Syrian export order.
  Mr. Robert Maxwell: Can my right hon. Friend give the foreign exchange element—what the amount is?
  Mr. Marsh: It is open to argument, but I do not want to get involved in figures on this. I make this as a first point,
  1240
  and I freely give my hon. Friend the point that it is open to argument how much would need to have been taken—
  Sir William Robson Brown rose—
  Mr. Marsh: I should like to finish this point.
  Sir W. Robson Brown: Where is the right hon. Gentleman going to get the steel from—from this pipeline?
  Mr. Marsh: Where shall we get the steel? Does the hon. Member mean for the pipe?
  Sir W. Robson Brown: For the pipelines.
  Mr. Marsh: I have already said, as the hon. Member will see, that a large proportion of these will come from home sources, because—[Interruption.] No. The hon. Gentleman has missed the point —because of the cancellation of the Syrian contract. Up until then we would have been importing it from a number of other countries and the orders were being placed. I do not want to labour this point.
  Sir W. Robson Brown: Is the right hon. Gentleman saying that it all comes from the cancellation of the Syrian order? Which other countries?
  Mr. Marsh: Contracts were being considered and discussed and were being placed by the Gas Council with specific British companies and foreign companies, but it does not make any difference to the argument as to which countries.
  Let me now continue. I am also concerned about the trend of imports of pig iron. In the first four months of 1965 we imported 98,000 tons of pig iron. In the first four months of this year imports had risen to 166,000 tons of pig iron. Pig iron is entering this country at the moment at the rate of 37,000 tons a month, mostly from Norway. Suppliers have to meet freight costs and a very small E.F.T.A. duty, but they are still able to sell in this country at £19 a ton, as opposed to a domestic price of £26 a ton. In both examples I have just mentioned there are very real factors outside the control of the steel industry. It would not be fair to lay at the industry's door

  1241
  the blame for everything which has gone wrong. We have to face, however, that so far this year total exports are down by 8 per cent. on last year, production is down by 9 per cent. on last year, imports have risen by 45 per cent. this year. How much longer do hon. and right hon. Members believe these trends can be allowed to continue?
  This Bill will give the State, in the interests of the nation, the power to ensure we stop just talking about the difficulties which face the steel industry and get on with the job which everybody agrees needs doing. We are faced with the position at the present time, when we look to see what was happening, that there has been this period of years when the industry has tried private enterprise. How anyone can say, on the basis of the figures which I have just given, and on the basis of the evidence which exists, that a Measure to take control of the industry and to change it is irrelevant to the existing situation, I really do not understand. This Bill is no irrelevant genuflection to any dead dogma of the past: it is in fact the industry's only hope for the future.
  4.36 p.m.
  Mr. Anthony Barber: For the Left wing of the Labour Party, today is a day of victory—
  Mr. T. W. Urwin: Rubbish.
  Mr. Barber:—but for the nation it is a return to the shibboleths of fifty years ago. To pretend that the solution of the problems of the steel industry lies in a return to old-fashioned doctrinaire nationalisation is to fly in the face of all the facts, as I shall show. It will impede modernisation and efficiency; it will raise costs and prices; and it will give comfort to our overseas competitors. I would say to the right hon. Gentleman that to proceed with outright nationalisation of steel at any time, in the view of my right hon. and hon. Friends, would be wrong, but to press ahead with it at this particular time, when Britain is in the midst of a dire economic crisis and living on borrowed money, is sheer lunacy. I have no doubt that it will help the right hon. Gentleman the Prime Minister at the party meeting which he is having at 6.30 this evening, but it will certainly do nothing to help Britain.
  1242
  I shall come later to the merits of the proposal, and I shall also state the policy which I believe the Government ought to have pursued, but first I want to say something about the decision of the Prime Minister—because, obviously, it was his in the main—to push forward with the nationalisation of steel at this time. Now there are two factors about the present situation which must be accepted. Firstly, the extent of the deflationary measures with which this Socialist Government have burdened the British people is a consequence of the complete breakdown of overseas confidence in the Government. They are no longer trusted. Whether this withdrawal of confidence is justified or not is a matter which, of course, we shall be debating tomorrow, but it is a fact. Secondly, it is a fact, justified or unjustified, that overseas opinion believes that the nationalisation of steel is a retrograde step which will impair the international competitiveness of British industry.
  That is what they believe, justifiably or unjustifiably. And in the dire straits in which this country now finds itself it is what overseas opinion believes that matters. This is what matters. Indeed, the right hon. Gentleman the Chancellor of the Exchequer himself said:
  "What people abroad believe about us is as important as the truth, especially in relation to the strength of sterling."
  In these circumstances, to bring forward this Bill today is irresponsible and it is wicked. It is wicked because, the avowed purpose of the Government being to restore overseas confidence, if this Measure had been dropped or even if it had been merely postponed, the package of gloom to which the nation is now to be subjected could have been less stringent.
  It is paradoxical that one of the consequences of the Left-wing victory on steel has been the Prime Minister's measures designed to put half a million men and women on the dole. I hope that right hon. and hon. Gentlemen opposite are satisfied with their achievement.
  The truth is that the Prime Minister, by proceeding with this piece of Socialist dogmatism, has put the cohesion of the Labour Party before the interests of the nation. If I may say so to his face, in so doing he has forfeited any claim that he had to call upon the British people

  1243
  to act in the national interest. As the whole country knows, this is the right hon. Gentleman's pay-off to the Left wing of his party, on whose backs he climbed to power.
  Mr. Maxwell: I happen to have spoken to steel sellers as well as manufacturers in Japan, France and Germany over the past six weeks. All of them are considerably concerned that nationalised British steel will be a very sharp competitor.
  Sir G. Nabarro: Subsidised.
  Mr. Maxwell: The second point which I wish to put to the right hon. Member for Altrincham and Sale (Mr. Barber) is this. Foreign bankers cannot understand why Her Majesty's Opposition should use the nationalisation of steel as a weapon to beat their own country by fostering the lack of co-operation which they are doing.
  Mr. Barber: All that I can say to the hon. Member for Buckingham (Mr. Maxwell) is that if he is right it is very odd that 90 per cent. of the steel-producing capacity in the free world is in private hands, and there is no prospect of extending nationalisation in those other countries.
  Mr. Maxwell: It is in the hands of the steelmasters.
  Mr. Barber: I want to say something briefly about the history of this matter. In his opening remarks, the right hon. Gentleman referred to the debate which we had in May of last year on the White Paper, and he castigated the steel industry for not being more forthcoming. When one considers the antics of the Government over the past 18 months with the steel industry, the account is both a sordid one and a ludicrous one.
  I would like to state the facts. On 27th February, 1965, within a few months of the Labour victory in the Election in October, 1964, the steel industry approached the Prime Minister and pointed out that the industry shared with the Government two main aims: first,
  "to achieve the maximum efficiency of the steel industry",
  and secondly,
  "to ensure adequate public accountability".
  The industry went on to suggest that there should be undertaken an authori-
  1244
  tative review of the steel industry and its organisation in the light of the total national situation. That was in February of last year. The Prime Minister, he will remember, turned it down flat.
  Then came the debate on the White Paper in May of last year, with the First Secretary's concluding remarks which' the hon. Member for Poplar (Mr. Mikardo) somewhat generously described as
  "a contemptible way of buying a couple of votes."
  Let me remind the House of the concluding words of the First Secretary and one of his hon. Friends in that debate. The hon. Member for Bosworth (Mr. Wyatt) asked:
  "Do I understand my right hon. Friend to say that, if the industry will come forward and concede the complete control which we both agree is necessary on something less than 100 per cent., he is prepared to listen? If so. I shall vote for his White Paper."
  The right hon. Gentleman the First Secretary replied:
  "'Listen ' is the word. Listen, certainly."—[OFFICIAL REPORT, 6th May, 1965 Vol. 711. c. 1694.]
  The First Secretary's manoeuvre was as simple as it was disingenuous. The hon. Member for Pembroke (Mr. Donnelly) and the hon. Member for Bosworth were duly duped and voted with the Government.
  That was 6th May. The very next morning, on 7th May, the industry suggested discussions. That same afternoon, the First Secretary of State issued the following statement:
  "If the Industry can produce proposals by which complete public control can be achieved with the Government's taking over less than 100 per cent. of the shareholdings, then the Government is prepared to listen to them."
  The First Secretary was prepared to consider a proposal involving less than 100 per cent. of the shareholdings. But, not for the last time, the First Secretary was overruled by the party tactician at No. 10. On the following Wednesday of the next week, the Prime Minister declared in a statement:
  "The Iron and Steel Bill goes on, on the basis of the White Paper."
  That meant that nothing less than 100 per cent. ownership was to be accepted. That was not what the First Secretary said in the debate or in his statement, but he was overruled. It is perhaps not insignificant that when steel was considered

  1245
  in the major debate held on the Queen's Speech after the Labour victory at the election, it was the First Secretary who spoke for the Government on steel. When we debated steel on the White Paper last year, it was the First Secretary who wound up. It was he who spoke for the Government. However, he has not taken the trouble to come here today, and I am not surprised, judging by the way that he was overruled on that occasion.
  Everyone knows, looking at the facts, that this was just another classic example?—
  Mr. Maxwell: Where is the Leader of the Opposition?
  Mr. Barber: It was just another example of Wilsonian double-dealing. The Prime Minister admitted that the matter had been considered by the Cabinet. It is there in his statement and, for good measure, he added words that have a somewhat strange ring today:
  "We were constructive, forward looking and united."
  Early this year, the industry suggested that the Government might secure
  "up to 50 per cent. of the equity holding in new rationalised groups of companies."
  Once again the Prime Minister turned it down, for there was to be no compromise of the full-blooded Socialist solution.
  Mr. Marsh: When?
  Mr. Barber: It was earlier this year.
  Mr. Marsh: The right hon. Gentleman is now referring, to the first proposals which the Federation made to the Government's specific proposals. Would he mind telling the House when?
  Mr. Barber: Erlier this year. That is what I said. It Was not so very long ago.
  Mr. Marsh: 'Olen, may I put him in the picture and tall him that it was after the election and after the Queen's Speech. Does he not think that it was a little late?
  Mr. Barber: What I cannot understand is that the right hon. Gentleman, who I thought was trying to be fair about the history of the matter, did not even mention the earlier approach. Perhaps he was not told about it by his predecessors. He never referred to the fact that in February of last year an approach was made to the Prime Minister for a com
  1246
  pletely new look at the difficulties of the industry to see whether a decision could be reached to take it out of politics—[Interruption.] It is no good the right hon. Gentleman saying that it never came. The industry wrote to the Prime Minister on 27th February, 1965, and he turned it down flat.
  Mr. Woodrow Wyatt: The right hon. Member for Altrincham and Sale (Mr. Barber) has referred to me, and perhaps I can shed some light on the history of the matter. It is certainly true, as he suggested, that the First Secretary agreed to listen to any proposals. I begged and implored the steel industry to come forward with proposals for something less than 100 per cent. ownership on which the Government could compromise. It offered to make concessions on almost every point, but it would not give way as to one single share. The matter went on month after month, and I was intimately concerned with it. It was not until after the General Election that the steel industry said that it was willing to consider the Government's having a half-share in the industry. If it had said that before, probably we should not be having a debate in this form today.
  Mr. Barber: Is that what the hon. Member for Bosworth thinks of his own Government, that just because a proposal comes too late we are having a Bill of this kind? It is absolute nonsense.
  I am not suggesting for a moment that the industry might not have come forward earlier with something more specific. But, after all, to take a wrong decision merely because it is late is surely not the way that Government should behave. The whole country knows that in the present economic crisis the Government have acted too late, but we hope that they will do the right thing, and that is what we would like them to do with the steel industry.
  Even though it may have been late, the fact is that a proposal was made for the Government to secure
  "up to 50 per cent. of the equity holding in new rationalised groups of companies."
  It is known, for reasons on which people may differ, that it was turned down flat by the Prime Minister. There was to be no compromise of the full-blooded Socialist solution.

  1247
  The Times, in what the Prime Minister no doubt regarded as just another wet editorial, commented:
  "It is difficult to imagine a decision less gracious towards the countries whose central banks have just agreed to provide a new help for the £."
  This was the decision to go ahead with nationalisation. It then said:
  "To reject the Federation's scheme smacks uncomfortably of deliberate, dogmatic obscurantism. If the Government want their economic policy to be taken seriously, they must do better than this."
  Finally The Times said:
  "The announcement that this measure is now to be brought forward, coming on top of the continuation of the seamen's strike, is likely to do damage to the £."
  The Times was cruelly accurate. The sequence of events was inexorable—first, the right hon. Gentleman's decision to go ahead with outright nationalisation, secondly, the contribution which that made to the weakness of sterling, and, thirdly, these measures designed to create half a million unemployed.
  I turn next to the hotchpotch of reasons which are advanced by Labour spokesmen in favour of the nationalisation of steel. The first reason was well put by the First Secretary in the debate last year. He rested his case almost entirely on the size of the industry, and it is worth quoting that he said:
  "It is of such a size that its impact on the economy, its impact on our social structure, is bound to be tremendous. It will dispose of power which in my view cannot be left to individuals."—[OFFICIAL REPORT. 6th May, 1966; Vol. 711, c. 1690.]
  If that is the reason, what about the chemical industry, the motor industry and the ship building? Why bother to rationalise the shipbuilding industry in accordance with the Geddes proposals, why not nationalise it? If nationalisation is the only solution, how comes it that our overseas competitors, so assiduously praised by right hon. and hon. Gentlemen opposite, are not extending nationalisation?
  Mr. Maxwell: They have done.
  Mr. Barber: The hon. Gentleman says that they have done. How is it that 90 per cent. of the steel produced in the non-Communist world comes from works which are not nationalised? Why should Britain alone slavishly follow the Soviet
  1248
  Union and the under-developed countries? This is the only part of the world which is significantly extending the public sector in steel.
  Then there is the argument about competition and rationalisation, and concentration, referred to by the Minister of Power this afternoon. When, last week, I asked the Prime Minister how the nationalisation of steel would help to strengthen sterling, he complained that because of the industry's pricing policies
  "it is not a competitive industry".—[OFFICIAL REPORT, 20th July, 1966; Vol. 732, c. 648.]
  Is there anyone in this House who seriously thinks that nationalisation will bring more competition within the industry? Does anybody believe that?
  Mr. Maxwell rose—
  Mr. Barber: Even the right hon. Gentleman would not claim that.
  Mr. Maxwell rose—
  Hon. Members: Sit down.
  Mr. Barber: The Minister of Power talked, quite rightly, about one of the fundamental questions which have to be considered, namely, the question of rationalisation, but the interesting thing is that the Germans, to whom the right hon. Gentleman referred, are now abandoning the system of rationalisation which he proposes to inflict upon the industry. Perhaps I might quote from a passage in the Benson Report. It says:
  "… the Committee noted with interest that the rationalisation of the German steel industry, which had been earlier envisaged on the basis of product monopolies, is now likely to proceed on the basis of four sales syndicates each dealing with a range of products. Even after taking account of the impact of entry into the European Community, the Committee therefore recommends strongly that rationalisation should not normally be undertaken on a product basis, but should create multi-product groups normally subject to United Kingdom competition over their whole range of output."
  The Report says that there should be competition within the United Kingdom, but the Government have stated quite clearly that they do not believe in stimulating greater competition within the British steel industry. The First Secretary mentioned it twice in his speech last year. When we debated the White Paper he said:
  "Given an industry of this kind, greater competition is not the answer."—[OFFICIAL REPORT, 6th May, 1966; Vol. 711, c. 1689.]

  1249
  Thus, we cannot rationalise on the lines of the Germans, because the principal purpose of their action is to provide competition within the Community itself.
  Mr. Marsh: It is about time that the right hon. Gentleman got down to his own policy on this. I have never suggested that the industry should be rationalised on a product basis. This is a view held by some people. I think that the spread of our different industries is such that it cannot be done this way. The Guardian summed it up best by saying that the world that we compete with is not in Scunthorpe but in Europe. The argument between our industry and German industry is that they both started with the same system of ownership, but one achieved a measure of rationalisation, the other did not even start it.
  Mr. Barber: I shall come to our relations with Europe in a moment. The right hon. Gentleman has not answered my question that, on the basis laid down by the First Secretary—unless that policy has been changed—it would be impossible to rationalise on the same lines that is being done in Germany.
  Mr. R. E. Winterbottom rose—
  Mr. Barber: I cannot give way. I have much to say, and many others wish to take part in this debate.
  Next we get the argument about common pricing, but what are the facts? Last year the industry drew up a new pricing system, under which individual companies would determine their prices entirely independently and publish price lists. These were submitted to the Iron and Steel Board, a statutory body, whose members are appointed by the Government. The Board agreed, but the Government threatened to bring in legislation if it went ahead with bringing about more competition in pricing.
  Then we are told that nationalisation is necessary to increase exports and to cut down imports, but what is the truth? The Prime Minister says that we should not knock British industry, but apparently the steel industry is the exception. We remember the right hon. Gentleman's predecessor, who is still a member of the Cabinet, talking about the industry being "on the sick list". I do
  1250
  not know whether the Minister of Power subscribes to this. The right hon. Gentleman went on to say:
  "At the moment it just manages to limp along"—
  I am sure that my hon. Friends will agree that the next sentence is pretty rich—
  "provided the economy doesn't move too fast."
  There is not much danger of that.
  Today the Minister criticised the industry, though not in such lurid terms as his predecessor. He said that 15 years ago the industry was given its chance, and the facts proved that we were wrong to have done that. The right hon. Gentleman gave a few selected facts about production and the balance of payments in steel this year. Does he not realise that when the economy is running down, and when industrial production has been stagnant for virtually 16 or 17 months, this is the result of the deliberate deflationary action of the Government? Does he think that this has no effect on industry?
  The Chief Secretary to the Treasury (Mr. John Diamond): What about exports?
  Mr. Barber: I shall deal with both imports and exports, and I shall look at the whole of last year before the Government's measures began to bite. Why did not the right hon. Gentleman mention that the production of steel in 1964 was an all-time record, and that again last year it shot up another 4·6 per cent. to a new level of 27 million tons? Why did he not say that the total tonnage of British steel exported was higher last year than in the previous record year of 1964? Why did he not tell us that the total value of steel exports last year was up 6 per cent. on 1964? Why did he not say that steel exports were more than six times as much as steel imports? Why did he not say that the imports of steel were down last year by more than 50 per cent.? That is the answer to the Chief Secretary. Why did the right hon. Gentleman not tell us that the value of steel exports last year was £159 million more than the value of steel imports? Why did he not go on to say that labour relations in this industry are among the best in the world? I could go on like this for some time. He told us none of these things.

  1251
  Whatever the shortcomings of the industry, nationalisation cannot be justified on its merits, and so we have had these generalisations—we had them again today from the right hon. Gentleman—that all the facts proved that we were wrong to return this industry to private enterprise.
  How would this proposed new monolithic State enterprise fit into the European system to which the right hon. Gentleman referred? Under the Treaty of Paris, ownership per se is immaterial.
  Mr. Marsh indicated assent.
  Mr. Barber: The Minister nods. We agree about that. But the control and operation of steel enterprises is, as he knows, subject to definite requirements, and the Government's proposals in the Bill are in fundamental conflict with the E.C.S.C. system. I have the Treaty of Paris here, and I can refer to it in detail if required. That system operates on the basis of a miscellany of individually operated companies, each representing—and this is the important point—no more than 10 per cent. of the total Community capacity.
  Last year we were told by the Minister of Power that the object of the Bill was to
  "create a single unit of direction with a capacity of about 30 million tons of crude steel a year."—[OFFICIAL REPORT, 6th May, 1965; Vol. 711, c. 1581.]
  It is a fact that the National Steel Corporation would represent 22 per cent. of the capacity of the combined E.C.S.C. and United Kingdom markets, compared with 8 per cent. of the combined market for the largest E.C.S.C. group at present. I say with every respect that I do not believe that the right hon. Gentleman would have said what he did if he had even begun to consider the significance of his proposals in the event of our joining the Community. I can tell him that because of the "dominant position"—those are the words of the treaty—of the National Steel Corporation, the High Authority would have the power to override the Minister of Power. It would have power to fix prices and to draw up production programmes for the Corporation. Is that what the right hon. Gentleman wants? That is the factual position. This is not a power which the High Authority would have if the British steel industry
  1252
  were rationalised on the lines suggested by the Benson Committee. This is one more instance of deliberate Government action making it more difficult for the United Kingdom to enter Europe.
  Before I come to the policy which I believe the Government should have adopted for the industry, there are three other major objections to the Bill to which I wish to refer. I will not go into details now, because we shall no doubt have an opportunity of debating the issues in Committee, but the Bill as drafted makes impossible fair competition between the National Steel Corporation and the private sector of the industry—the 10 per cent. which is to remain outside nationalisation.
  The Minister said that there was no need for supervision over the private sector, but under the terms of the Bill any company remaining in the private sector will he obliged to disclose to the Minister all its books and records, and to furnish such other information as may be required by the Corporation or the Minister. This means that the Corporation and the Minister will have access to all the confidential and secret documents of their competitors. That power is coupled with the Corporation's power to acquire these companies—I acknowledge that it will be by agreement—and the conclusion is plain. I hope that the right hon. Gentleman will give careful thought to these provisions.
  The second objection concerns the compensation terms. The basic issue today is whether or not the industry should be nationalised. I hope that the Chief Secretary, who will no doubt wish to deal with the compensation terms, will deal with the general points arising on the major issue which we shall be discussing before ten o'clock.
  Although the main issue is whether or not the industry should be nationalised, to the 200,000 shareholders in the companies to be nationalised—not to mention the pension funds and other funds—the question of compensation is of considerable importance. What the Government did can be very simply stated: they leaked the fact that they were going to reduce the compensation. The market was duly depressed. They altered the period governing the calculation of compensation, with the result that there has been a cut of £90 million. If

  1253
  any financial buccaneer had so rigged the market in his favour he would today be in goal. But what do hon. Gentlemen opposite care about breaches of faith? Breaches of faith are fast becoming their stock in trade.
  I hope that the Chief Secretary will deal with the point made by his right hon. Friend the First Secretary of State concerning compensation terms in last year's White Paper. This is what he said:
  "I am a social democrat and I believe that if you do have sufficient reasons to acquire something you are under moral obligation to pay a fair and just compensation for it."
  Hon. Members: Hear, hear.
  Mr. Barber: Wait a moment. The right hon. Gentleman went on:
  "It should be remembered that the shareholders in steel companies included superannuation funds and pension funds. ' It would affect a lot of people whose interests we ought to have at heart.'"
  The right hon. Gentleman went on to say that he thought that the provisions were "just about right"—when they were £90 million more than under the provisions to which the Chief Secretary has now subscribed his name.
  This debate is concerned with two basic questions. What should be the objectives of any changes in the arrangements for the steel industry, and, secondly, will outright nationalisation achieve those objectives? The policy of the Conservative Party can be simply stated. We believe that the objectives should be to provide the maximum scope for competition and the maximum opportunity for those in the industry to exercise their commercial judgment and their technical expertise. This is the very antithesis of nationalisation and the provisions of the Bill.
  What changes are needed? First, what is needed to replace the existing Iron and Steel Board is not a monolithic State Corporation, completely under the domination of the Government, as proposed in the Bill, but a supervisory body with functions which would actively promote competition instead of stultifying it.
  Secondly, I agree that under the existing system the present arrangements no longer make sense, but the answer lies not in the provision of a more rigid pricing system but in greater flexibility and competition.
  1254
  Thirdly, certain sections of the industry have been faced with problems which have prevented rationalisation going either far enough or fast enough. The main inhibiting factor has been the threat of nationalisation. But even allowing for this, if it is necessary for the Government of the day to help to speed the rationalisation of the industry, the answer does not lie in nationalisation. It is quite absurd to pretend, as the Party opposite does, that in every case where there should be a change in the structure in the industry we should have discussions and consultations but that the answer should ultimately lie in a simple edict from Whitehall.
  Fourthly, within the framework of the requirements of this country, the new arrangements should be such as to facilitate our entry into a wider European grouping. The Government's proposals run completely counter to existing European arrangements.
  This is the approach which the Government should have adopted. In an era when we have to surmount intense international competition the simple truth is that we cannot afford a nationalised steel industry.
  None of the four basic principles of policy which I have outlined is capable of fulfilment under nationalisation. But —equally important—those four principles are also incapable of fulfilment under the existing arrangements. While we shall certainly repeal the Bill, that does not mean a return to the present position and to existing arrangements. There will be no question of a return to square one.
  The Government have made the mistake of assuming that because fundamental changes are required in the existing arrangements the only solution is nationalisation. That is a non sequitur. None of our major overseas competitors has turned to more nationalisation. But, as we know, Kier Hardie and the hon. Member for Poplar have won the day, and the very fact that the Government have turned down flat every compromise proposal put to them has made it crystal clear that they put Socialist doctrine before the national interest.
  Mr. Marsh: The question of the future policy of the party opposite is an important one. I hope that the right hon.

  1255
  Gentleman will not commit his party, regardless of the achievements of the nationalised industry, or whatever happens to it, to any fixed position.
  Mr. Barber: I was going to point out that 47 pages of the bill—half the Bill—consists of a Schedule which merely rehashes the old Steel Act of 1949—[Interruption.] The right hon. Gentleman says "A technicality," which shows one thing clearly, that in the intervening 17 years they have learned absolutely nothing.
  It would have been easy to rest the case of the Opposition solely on the disadvantages of nationalisation, but I have not done that. I have laid down the general principles of policy which we believe to be in the national interest. These are principles which involve radical changes from the existing arrangements. The question remains, what action would the Conservative Party take in the event of this Bill becoming fully operative before the next election? The issue here for us is not one of ideologies. If the right hon. Gentleman doubts my word, I would say that, when we were in office, we accepted, albeit with some reluctance, the nationalisation of certain service industries [HON. MEMBERS: "Oh."] We accepted it. Despite the inherent difficulties of State control, we devoted our energies to improving the efficiency of those industries and to infusing some financial discipline into them—and jolly difficult it was.
  I am not concerned with the pros and cons of nationalisation as an abstract political concept. What matters is the practical consequences for the nation of absolute control by the State, not of a service industry, but, for the first time in Britain, State control of a great manufacturing industry with no effective competition within our tariff wall and with none of the commercial and financial disciplines essential to efficiency. As the month and years roll by, I believe it would be disastrous.
  It was, after all, the present President of the Board of Trade who said:
  "The truth is that the public monopoly was suitable only for public utilities like London Transport, gas or electricity; but not for manufacturing industries".
  We shall therefore repeal this Bill and we shall denationalise the industry to whatever extent is necessary and practic-
  1256
  able to conform with the principles which I have mentioned and to provide the disciplines of competitive enterprise.
  There is one other aspect of the Bill which I must mention—the powers which the Government seek in Clause 2, powers which have nothing to do with the production of steel. I do not believe that the rest of British industry has yet woken up to the consequences of these provisions. It is known that, in taking over the companies named in the Schedule, the National Steel Corporation will gain contro! of 40 per cent. of all structural steel work in the country. It is known that the Corporation will take over the chemical, plastics and engineering activities of the companies named.
  But that is only the beginning, under Clause 2. The National Steel Corporation will be permitted to carry on any activities specified in any of the memoranda of association of the 14 named companies—
  Mr. Maxwell: What is wrong with that?
  Mr. Barber: That is interesting. I hope that we have a few more interjections from him.
  Furthermore, the Corporation will be able to do this without the sanction of Parliament. Indeed, it will be able to do so without even informing Parliament or anyone else.
  Why are these powers being taken? If the Bill becomes law in its present form, the State will have power, without reference to Parliament, to engage in any of the following activities—aircraft manufacturing, the manufacturing of motor cars and vehicles, glass manufacturing, the manufacturing of cement, pharmaceutical and medicinal preparations, fertilisers, plastics, engineering of all kinds—[HON. MEMBERS: "Hear, hear!"] —hon. Gentlemen opposite are beginning to cheer now, are they? —in the manufacturing of chemicals, farming, shipbuilding, construction and operation anywhere, of all forms of transport undertakings, hotels, newspapers, breweries, shops, private dwellings.
  Why is the right hon. Gentleman taking all these powers? I hope that the Chief Secretary will tell us. There was no need to do this. These are only a few of the activities in which the State will in future be able to engage. If this Bill goes

  1257
  through in its present form, there will never again be a need for a Socialist Government to introduce another nationalisation Bill. The Government will already have every conceivable power they need.
  It is worth recalling that the Prime Minister's first words on becoming Leader of the Labour Party were to reaffirm Clause Four. That statement came in answer to an interjection by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro), who has been concerned with this, as we know, over the last twenty years. It was the Prime Minister who wrote:
  "Instead of our previous defensive and almost apologetic postures, we shall be able to show that, by our nationalisation policy, and only by that policy, can we carry out a plan essential for Britain's future."
  Perhaps now the true intentions of the Prime Minister will dawn upon the nation. We on these benches will do everything properly within our power to frustrate them.
  5.16 p.m.
  Mr. C. R. Strauss: I should like to congratulate my right hon. Friend the Minister of Power on his admirable speech. I cannot give higher praise than to say that it was as good as we expected it to be, judging from his past performance in the House. I was particularly pleased that he argued his case on strictly practical grounds and not on emotional or ideological ones. I shall want later to make one or two critical comments on some of the things he said, but I should first of all like to deal with the speech of the right hon. Member for Altrincham and Sale (Mr. Barber).
  All the possible arguments which may be advanced against this Measure were put forward by the right hon. Gentleman, but his speech would have been more convincing if he had not omitted one essential feature of the situation—that for years, during the period when he and his colleagues had power in this country, he and they were well aware that the structure of the industry needed reorganising. During the latter years of their power, they were aware that the problem was becoming urgent. Every economist, every industrial writer with any knowledge of the industry pointed this out on every possible occasion. Yet he and his colleagues did nothing about it.
  1258
  One can only assume that the reason was the natural political reluctance of those of the Conservative faith to interfere in any way in private enterprise, except, on occasion, perhaps, to give it subsidies. We can also understand the reluctance of the leaders of the Conservative Party to do anything—such as imposing a Governmental or semi-Governmental authority over the industry —to cause the resentment of the most ardent supporters of the Conservative Party in the country and the most generous contributors to Conservative Party funds.
  However, whatever the reason, the fact remains that no solution of any sort, not even the solution which the right hon. Gentleman put forward this afternoon—that of a reconstituted Iron and Steel Board—was ever put forward by the Conservative Party. Therefore, they cannot be in the slighest surprised or indignant if, when their political opponents, the Labour Party, come into office, they introduce a Measure to bring about a structural change in the iron and steel industry or if that Measure is different from the one which they would have put forward.
  It is not as if the right hon. Gentleman and his friends have not had ample opportunity to do these things. The right hon. Member for Streatham (Mr. Sandys) remembers well the arguments which we had over the denationalisation Bill. We on this side, occupying the benches opposite at the time, argued that the powers that were being given under that Bill to the Iron and Steel Board were too weak and too negative to bring about any effective control over the industry. We begged that the Iron and Steel Board should have positive powers so that it should bring about such reorganisational changes as might prove necessary. The right hon. Gentleman and his colleagues, however, said, "No", and they refused to meet us in any way. That is one of the reasons why the industry today is in such urgent need of reorganisation.
  The Conservative Party had further opportunities for grouping the industry effectively when the individual companies held by I.S.H.R.A. were sold back to private enterprise, but they did nothing. Therefore, I repeat that the arguments put forward today by the right hon. Member for Altrincham and Sale against

  1259
  our proposals had little validity in view of the fact that when he had the opportunity of doing something, his party did nothing at all.
  I support the Measure which is before us today in the absence of a better one drawn up on other lines which I would have preferred and which, I think, would have been better. I agree 100 per cent. with the objectives of my right hon. Friend the Minister which are contained in the Bill, but I do not do so for any ideological reason. I do not do so because, as the right hon. Member for Altrincham and Sale suggested, Keir Hardie believed in general nationalisation or anything of that sort. I am not a supporter of nationalisation of any industry because it is a symbol of Socialist faith and, therefore, should remain inviolate. I do not support the Bill for that reason. I support it because I regard it as the only practical measure before us today and before the country whereby the urgent reorganisation of this industry is likely to take place.
  What I am about to say is in criticism to some extent of what my right hon. Friend the Minister has said. I do not accept the argument that the present managerial and technical control of that part of the industry which it is proposed to nationalise or its marketing arrangements are grossly inefficient, with the corollary that all this will be better under public ownership. I do not think that the case lies there at all. I do not think that those propositions are true and I do not think that it is fair or necessary to argue any inefficiency in the British iron and steel industry to prove our case for the Bill.
  Sir G. Nabarro: Hear, hear.
  Mr. Strauss: In my view, the managers, scientists, technicians and operatives in the industry are as good as those in any other industry in the country. Moreover, although there are, of course, considerable exceptions, broadly speaking the British iron and steel industry is as efficient as the iron and steel industry in Europe. If it is judged on the two criteria which are the best—price for product, and quality—there is no difference at all in the performance of our industry compared with the performance of the industry in Europe. Certainly we
  1260
  in this country spend far more in scientific research in the iron and steel industry per unit product than is done in the countries which belong to the European Coal and Steel Community.
  When it is said that so much steel has been imported into this country, with so much damage to our economy, we must remember that there is substantial world overproduction of steel and that, on balance, this country is a great exporter of steel.
  Mr. Maxwell: Will my right hon. Friend also say how we stand on the basis of manpower employed per ton produced?
  Mr. Strauss: I was just coming to that and am grateful to my hon. Friend for reminding me not to overlook it. On that criterion, this country is very bad indeed. Our manning per unit of output is worse than in the United States and in Europe. There is no doubt about that. The number of men employed in the British iron and steel industry per unit of output is far higher.
  For heaven's sake, do not let us forget, however, that manning problems are a question of agreement between management and trade unions. Although the manning position has become very much better during recent years, agreements have not yet been reached between management and trade unions—I am not putting the blame on either side—which have allowed the manning to be decreased per unit of output. I suggest to my hon. Friend that with our experience of the nationalised industries, one cannot say that public ownership of an industry necessarily eases the solution of this problem.
  Miss J. M. Quennell: So that the House can get the difference in manning into full perspective, can the right hon. Gentleman also give the comparative ferrous content per ton of ore between the British industry and the European and American industries?
  Mr. Strauss: I am sorry, I cannot do that. No doubt the hon. Lady, if she has an opportunity, will do so.
  Mr. Winterbottom: On the question of manning, has my right hon. Friend any figures to indicate whether the size of the units in Europe has any effect upon

  1261
  the manning position? In fact, the greater the size of the unit, the fewer the number of men required proportionate to output. This is one of the biggest accusations against the British industry.
  Mr. Strauss: Of course, I agree entirely with my hon. Friend. When we get bigger units, the manning situation should be much better. I was merely explaining why the manning situation in this country today is poor. One of the reasons is the one which I have stated to the House and which my hon. Friend has underlined.
  It is not because of technical day-to-day management, which can be improved, selling arrangements or anything else that the Bill is important and deserves the support of the House. It deserves the support of the House for the far larger and more important reason that it is the only way of effecting the major reorganisation of the industry. That means amalgamations, which may have to be enforced against recalcitrant companies, and is the sort of work which the Industrial Reorganisation Corporation has been set up to do in other fields. But, obviously, this is much too big a task for that Corporation and a separate body is necessary to deal with it.
  The new body that will be set up—the National Steel Corporation—will have the heavy and difficult responsibility of advising where and on what scale the new and larger steelworks are to be erected. For this purpose the recently-published conclusions of the inquiry set up under Sir Henry Benson, undertaken by the Iron and Steel Federation, may be a useful guide. The recommendations of that inquiry are, admittedly, incomplete, and the fact that they were rushed through and published only a day or two before Second Reading of this Bill makes them suspect. One interesting and incontrovertible feature of that report, however, is that the smaller firms, where mergers or closures will be particularly necessary, are not included in the ambit of the Bill. One thing which seems to me to be certain is that, whatever structural changes or plans for future development are finally accepted, can be carried out only by a Government-appointed control authority armed with drastic powers, including that of buying any company that stands in the way.
  That raises the fundamental question which worries me: is this really the best
  1262
  way of doing it, and is it really right to nationalise the whole of the basic part of the industry in the orthodox way and turn it into a national monopoly? I had no doubt that that was the right thing to do when I was in charge of a similar Measure in 1948. One of the arguments I advanced at that time was that the industry had shown itself to be restrictive in thought and action and was likely to remain so, by its very nature, in the future. I pointed out that the owners found it more profitable to have less capacity than was necessary and would, therefore, in all probability, continue to act on that assumption.
  I suggest, however, that that argument has largely disappeared in post-war conditions and that—with one exception, which was a difference of opinion over sheet steel development the industry today is trying to expand at a far greater rate than the Iron and Steel Board would like to see. The industry is not restrictive but expansive and we must, therefore, consider the problem as it exists today and from other angles.
  We as a party believe that our major industries must come under sufficient public control to make them responsive to the public interest. But we also believe in a mixed economy and have said that some industries—very important ones, such as the motor industry, which is almost as important to the economy as the steel industry—should remain in private hands and be motivated by private enterprise.
  These two industries are different in many ways, although there are many similarities. First, in spite of what has frequently been said, there has been, and is today, quite a measure of competition between the major steel units in the British steel industry, and that competition will be increasing substantially as a result of the change in price-fixing and the abolition of the one price, which arose from the Iron and Steel Board's policy.
  But the competition is not confined to prices, quality and service. It covers a wider, intangible, but perhaps equally important area; rivalry of general performance, measured not only by balance sheets but by reputations for scientific and technical advance. If we consider this realistically—we must acknowledge the danger, I put it no higher, that in

  1263
  the course of time a national monopoly, however much it tries to preserve the identity of individual companies, may weaken that competitive spur which we acknowledge to be highly desirable in manufacturing industries.
  The nationalisation of this industry, as proposed in the Bill, will effectively accomplish the necessary rationalisation. If it would not, I certainly would not be supporting it. However, I am entirely unconvinced that this could not be done equally well with good will and less friction by leaving most of the industry to operate under private enterprise, but under the effective control of a strong board armed with the necessary power. I believe that, in the long run, such a set-up would produce a healthier industry. I have previously put these matters before the House and I do not intend to weary hon. Members by repeating my arguments. Having said in the past what sort of board that should be, I will make only make two brief comments on this subject.
  Mr. Maxwell: Would my right hon. Friend be good enough to tell the House, were we to accept his suggestion—which I am afraid he does not stand much chance of achieving—how the country would be protected against the Conservative Party one day being returned to Government and monkeying about with the kind of arrangement my right hon. Friend has in mind?
  Mr. Strauss: My hon. Friend must make up his mind about this. He must realise that, whether or not the Opposition are again returned to office one day, there is nothing to prevent the Government of the day from doing what they want to do with this or any other industry. However much one may wish to, one cannot do anything about that.
  Mr. Brian O'Malley: Would not my right hon. Friend agree that although it is arguable that difficulties might arise as a result of the provisions of the Bill if we wished to go into the Common Market, it is certain that the strengthened Iron and Steel Board which my right hon. Friend is envisaging would run directly contrary to the Treaty of Paris?
  Mr. Strauss: There are difficulties inherent in either solution and I do not
  1264
  believe that one set of difficulties is any greater than the other. If we had a powerful Iron and Steel Board reorganising the industry, one essential would have to be that it should have undisputed control over the Iron and Steel Federation, its machienry and personnel. It may be significant that the present leaders have said that they would be prepared to hand over the Federation to a Government-appointed board along these lines.
  My second point is that I have found, in talking with a number of progressive people in managerial positions in the steel industry, who are dissatisfied with the present situation and believe that a body of this sort would be able to bring about a reorganisation more quickly, effectively and with better lasting results than could be achieved in any other way.
  We have before us a Bill which is very similar to the one I introduced in 1948. It is gratifying to think that it repeats in broad terms the scheme of public ownership which I hammered out in my Department before presenting that Measure to Parliament. It repeats many of the key phrases to which we devoted so much thought at that time. It seems strange that the public ownership structure set out in that Measure, which was considered an ingenious novelty at that time, should today be regarded as satisfactory.
  Mr. Marsh: A lot has been made of this point of revival procedures. Is my right hon. Friend aware that virtually all of them are technical points which are common to all the nationalised industries and are not specific points of policy?
  Mr. Strauss: I do not think that my right hon. Friend has sufficiently studied the Act for which I was responsible. I assure him that, while I am flattered that many points in this Bill are copied from my Measure, they are not contained in any other nationalising Measure. I have a few points in mind and I will tell my right hon. Friend about them later. I am merely pointing out how delighted I am that the work which we did in those days is still considered to be worthy of repetition today.
  The major difference, of course, is that under this Bill only 14 companies are to be taken over instead of about 100 which we took over in 1948. This is an improvement, as I believe that we took over too many. However, on the other side is

  1265
  the weakness that whereas in the previous Measure, there was a substantial amount of public control over the smaller sections of the industry—such as the rerollers, which is the most inefficient section—under this Measure there will be no control whatever, even the existing control will disappear and that is a pity.
  I conclude by appealing to the leaders of the industry. I had a great deal to do with them at the time of the 1949 Act. While that Measure was passing through Parliament the leaders' representatives and spokesmen in the two Houses fought with every Parliamentary weapon to defeat it. They were perfectly entitled to do that and nobody complains about their action. However, it was outrageous that when the Bill had passed through all its stages in Parliament and had received the Royal Assent, they made strenuous and continuous efforts to sabotage it. They did all they could within the law to render Parliament's decision inoperative. They forbade anybody of any standing in the industry to serve on the Iron and Steel Corporation and, by their tactics, did their best to delay and damage some of the proposals which the Iron and Steel Corporation put forward. I think that the worst damage they did was deliberately to deprive the industry by forbidding the cooperation of any of its able people—of the expertise which the industry required—and I hope that today, when the leaders are different, the older ones having gone, they will not behave in that way.
  However critical they or others may be of the Bill, it will become an Act. Although they may dislike some of its more important features, particularly the wholesale public ownership aspect, I trust that they will feel it their duty on this occasion to continue to use their expertise ungrudgingly for the benefit of the industry and to co-operate with my right hon. Friend the Minister of Power in speedily and smoothly bringing about the drastic reorganisation the industry requires in the national interest.
  5.40 p.m.
  Mr. Sandys: The right hon. Member for Vauxhall (Mr. Strauss) has supported the Bill with more doubts and reservations than with arguments in its favour. To follow the right hon. Gentleman is quite like old times for
  1266
  me, when he and I debated the Iron and Steel Bill in 1953. He prided himself on being the author of the Iron and Steel Act of 1949. As a fellow author of the 1953 Act, I am naturally disappointed today to see that the structure which I devised with much thought is now to be totally dismantled. But perhaps in a few years' time I shall have the same satisfaction as the right hon. Gentleman of seeing the 1949 Act again scrapped and the 1953 Act reinstated with suitable amendments.
  The Minister expressed the hope that his Bill will be accepted as a final settlement. That is the hope of all Ministers. I had the same hope 13 years ago, and perhaps with better reason, because the 1953 Act was not a doctrinaire Measure like this Bill. It was not a mere reversal of the nationalisation of 1949. That is the big distinction. It did not seek to bring back unrestricted private enterprise. While restoring freedom of decision to individual firms, it retained a strong element of public control. Managements regained their independent initiative, so essential in the steel industry, which, unlike railways, gas and electricity, has to hold its own in the markets of the world and which provides the principal raw material for so many of our manufactured exports. But at the same time we set up the Iron and Steel Board, with extensive powers to supervise the industry in the interests of the consumers. This combination of private ownership with public supervision is, I believe, the system best suited to the special needs of, the steel industry.
  I am the first to recognise that after 13 years many, and perhaps important, adjustments were necessary to take account of changes in the situation. But to throw everything back into the melting pot and disrupt the partnership which has been built up between the industry and the Government is utterly irresponsible.
  Why is it being done? No case has been made out, either before or during this debate, to show that this will benefit either the industry or the nation. Re-nationalisation is totally unjustifiable and will do untold damage to the efficiency of the steel industry and to its competitive position in the world. It is all too obvious that the only reason for introducing the Bill is to appease the awkward

  1267
  squad on the left flank of the Labour Party.
  The Minister appealed to the Opposition not to commit themselves to repeal this Measure irrespective of the way it works. He would have been in a stronger position to make this appeal if the Labour Party had not, through the mouth of the right hon. Member for Vauxhall, done that very thing in 1953..During our debates then the Labour Opposition pledged themselves up to the hilt to go back to 1949 as soon as they got the chance; and that is what they are doing today.
  I do not propose to discuss the detailed provisions of the Bill. The whole Bill is bad—bad in its concept; bad in its purpose; bad in its effects on the future of the industry; and particularly bad in its timing.
  How can the Prime Minister seriously appeal for the Dunkirk spirit and at the same time throw this apple of discord into the national arena? The right hon. Gentleman evidently fancies himself in the role of Churchill in 1940. But surely he must see that he does not fit the part. At the time of Dunkirk we had a great national leader who enjoyed the respect and confidence of the whole British people and whose every deed and every word was designed to unite them. Today we have at the head of affairs a discredited and distrusted political manoeuverer.
  Mr. Maxwell: On a point of order. Is this germane to the Second Reading of the Bill.
  Mr. Deputy Speaker (Sir Eric Fletcher): So far nothing that the right hon. Member for Streatham (Mr. Sandys) has said has been out of order.
  Mr. Sandys: We have at the head of affairs—I will repeat this for the benefit of the hon. Member for Buckingham (Mr. Maxwell)—a discredited and distrusted political manoeuvrer, who, by insisting on going on with this divisive Measure, has once again put party before country. The Bill will no doubt be passed by a large majority, but many hon. Members who intend to vote for it must surely be ashamed that, in this hour of national crisis, they and their party have failed to rise to the level of events.
  5.50 p.m.
  Mr. John Hynd: I wish to pay a compliment to my right hon. Friend the Member for Vauxhall (Mr. Strauss) for the way in which he approached this debate, because we are dealing with a serious subject and, whatever his misgivings about the details of the Bill, he at least dealt with it objectively as did my right hon. Friend the Minister of Power, who moved the Second Reading, but we have not had the same approach from the other side of the House. That is a pity.
  The right hon. Member for Altrincham and Sale (Mr. Barber), who opened for the Opposition, began and the right hon. Member for Streatham (Mr. Sandys) proceeded on the level of suggesting that this Bill has been brought forward for no other purpose than to appease a minority on the Left of the Government party. They must know—indeed, the right hon. Member for Streatham said it—that during the course of denationalisation in 1953 the Opposition of that time made it clear that it was our purpose to bring in a renationalising Bill at the earliest possible moment. There was no question then of trying to appease a group of hon. Members in the present Parliament.
  We have the evidence of the Labour Party's manifestos at the last two General Elections, which made it crystal clear that it was the intention of the Government, if elected—irrespective of wings or sections—to bring in this Bill as a matter of essential national policy. Why do hon. Members opposite descend to this kind of argument? The answer is that they are lacking in substantial argument, for otherwise they would not do so. On this occasion there is no question but that this Bill is introduced in accordance with the mandate we received from the country in the last two General Elections.
  The Opposition frequently in the past have made great play of the fact that in 1951 and in succeeding elections no mandate was given to Parliament for the renationalisation of the steel industry. On the same logic and by the same principle they must now recognise that the country has given a clear mandate on two occasions. In the city of which I have the honour to represent part in this House, the results in the last two General Elections made it very clear where people concerned with steel stand in this matter.

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  All the constituencies directly concerned did so.
  In the Hallam constituency the Conservative majority was reduced by 5,000 in 1964 and by 4,000 in 1966 when steel nationalisation was a key issue of the election. In the Heeley division, which elected a new Labour Member at the last election, there was a reduction in the Conservative majority of over 8,000 in 1959 turned into a Labour majority of 4,000 in 1966. My majority in Atter-cliffe went up by 3,000. In the Bright-side constituency the majority went up by 3,000 and in the Park division it went up by 4,000. In the Hillsborough division it went up by 7.000 and in Rotherham it went up by 4,500. This is the mandate of the people concerned directly with the steel industry.
  Mr. Edward M. Taylor: If that is the case, can the hon. Member explain why the Prime Minister, the First Secretary of State and Secretary of State for Economic Affairs, the President of the Board of Trade and the former Minister for Technology did not think steel nationalisation important enough to refer to it in their 1964 election addresses?
  Mr. Hynd: My right hon. Friend who introduced the Bill made that clear. He went into the history and showed that the Government had shown great tolerance in trying to persuade the steel manufacturers to produce their own plans. Are the Opposition suggesting that the Labour Party should start breaking their pledges? The Opposition are always prepared to accuse us of doing that, but now they are inviting us to do it. They are trying to frustrate the democratic will expressed in two General Elections. At least in this debate we have not had the case which they used to try to argue about the merits of free enterprise against State control. Apparently that has been dropped.
  Even during the denationalisation Bill debates in 1953 when Mr. Oliver Lytteltort was addressing the House he made it very clear that this industry should no longer be left to the free play of private enterprise. He said:
  "we believe that the industry must have the benefit of a massive central organisation. … we think that a great basic industry like the
  1270
  steel industry, employing a large number of men, and considering the widespread use of steel in other industries, and the power of the steel industry to contribute to our exports, is so important that it should have Government supervision."
  Sir G. Nabarro: What date was that?
  Mr. Hynd: This was during the debate on denationalisation in 1953. Mr. Lyttelton proceeded to say:
  "We do not believe that it would be right, where such large and vital interests are concerned, to permit competition to play over the steel industry without any Government interference or without Government approval."
  This was goodbye to the argument about free enterprise. The right hon. Member for Streatham has told us that he also was concerned with that Bill. He said that on that occasion the Conservative Government accepted that State interference and the advice of the men from Whitehall were necessary to keep private enterprise serving the purposes of the nation. He claimed that by setting up the Steel Board they had provided an effective instrument to ensure that public interests were properly safeguarded. That was why the Board was set up.
  At the time the Labour Party in opposition argued strongly that the Board was not competent to safeguard the public interest, that it was not provided with the powers to safeguard the public interest and that in an industry of this strength and economic power so long as private enterprise was allowed to operate the Board could not serve the public interest whatever powers were given to it. Those were the arguments which we produced at the time. Far from the Board having proved, as the right hon. Member claimed, to have been an effective instrument for safeguarding public interests, it has miserably failed, not because of the inadequacy of the members of the Board but because of the reasons given by the Labour Opposition at the time that it could not do so with the powers given to it, which were quite inadequate.
  What were the powers? It was first required to maintain competitive conditions. I remember at the time of the denationalisation debate Mr. Oliver Lyttelton said:
  "we believe that the prices charged by the industry should be subject to Government supervision and approval. The idea that the industry is able to throw dust in the eyes of the Government in matters of prices is too

  1271
  ridiculous to require examination."—[OFFICIAL REPORT, 15th November, 1958; Vol. 458, c. 94, 95.]
  That is precisely what it was doing after 1953, as it admitted when it was brought before the Restrictive Practices Court. It admitted that, while it was maintaining a façade of competitive prices, there were no competitive prices in the industry. These were men with the technical knowledge and experience of the industry who claimed that it was not possible to operate on the basis of competitive prices.
  Mr. John H. Osborn: Is the hon. Member aware that prices were set so low that the return on capital in the steel industry has presented real problems in financing capital development?
  Mr. Hynd: That may be and I will deal with that point later. I am not arguing whether the prices were adequate or inadequate, but about the powers, the intention and the capacity of the Board to provide the competitive prices it was set up to ensure in the interests of the public.
  It was not only in the matter of prices. We were told after the Restrictive Practices Court's decision was given that there was competition in quality. There is very little, if any, competition in quality between similar types of steel in the industry, as was borne out by Mr. Judge, Chairman of Dorman Long, who said before the Court:
  "Opportunities for quality competition in heavy steel products were fairly remote."
  This was said by one who ought to know what was going on under the Steel Board.
  Its second job was to ensure the efficiency of the industry. I do not want to go back to quote the devastating report of The Times special inquiry into the industry in 1945, which described the squalor in the industry, the disorganisation and disorganised chaos of the yards. That has been quoted often in the House. We had the admission by the Steel Federation of the chaos in the industry at the time and that there were unregulated competition and disorderly conditions throughout the 1920s and the early 1930s. We had the 1948 plan, produced at last by the industry only when
  1272
  the threat of nationalisation was imminent when the steel companies themselves admitted that it was an attempt to prevent the industry going back into the chaos of previous years.
  Now we have the present Board's own Reports for 1964 and 1966. The 1964 Report pointed to the need for more efficiency in the use of manpower and for changes in the structure of the industry with greater concentration in its units. It referred to the need for
  "… a more determined effort to eliminate obsolescent capacity of all kinds …"
  That was in 1964—nearly 20 years after The Times Report and others had stated that there was an urgent need for the elimination of obsolescent capacity of all kinds. In the 1966 Report, the Board again referred to the unsatisfactory manning situation—just as was done in 1964 and 1945—drawing attention to the fact that we require 12 per cent. more men per unit of production than do our competitors in Europe.
  The Board also drew attention to the way in which the industry, with its proud record of creation and innovation, had fallen far behind European countries in introducing modern methods. The Sheffield Telegraph, which is a paper concerned more directly with steel than almost any other, drew particular attention to this aspect and added, in a leading article on 27th April, 1966:
  "It is quite clear that nationalisation causes deep resentment in those who oppose it. It is extremely doubtful if it is necessary—for rationalisation needed could as easily, and probably less painlessly, be achieved by a free industry."
  Sir G. Nabarro: Hear, hear.
  Mr. Hynd: The hon. Gentleman says "Hear, hear", but why did not the industry do it? Why, over the years, before the war and in 1945, in 1954, in 1964 and in 1966 have we repeatedly had to face the fact that the private industry has failed to carry out precisely that?
  Sir G. Nabarro: Has not the hon. Gentleman observed that, throughout this debate, the only right hon. and hon. Members who say that the steel industry has failed are right hon. and hon. Members opposite? I do not accept his argument that there is room for rationalisation.
  Mr. Hynd: What the hon. Gentleman overlooks is that the quotations I have been making about the failure of the industry to maximise its efficiency have not been of right hon. and hon. Members on this side of the House nor of other Members of the Labour Party. They have included such independent observers as The Times, the Financial Times, The Guardian, the American Inquiry team which came over in 1945, Sir William Firth and a whole range of others. They were certainly not from this side of the House.
  The Conservative Party will not admit this situation directly. Nevertheless, they admitted it in effect when, upon denationalisation, they set up the Iron and Steel Board to see that the industry at least d id not destroy the national interest. Right hon. and hon. Members opposite have admitted in their speeches today that they still recognise that it is essential that so vital an industry to the national economy should not be left to free enterprise because of the danger of its falling back into chaos and obsolescence. They have therefore admitted the need for Government supervision.
  We are not simply saying that the whole industry is inefficient. It is not all inefficient. As my right hon. Friend said, there are some very good steel producers but, by and large, there is no question but that the industry has failed to live up to the needs of the national economy and the public interest and the question now is, how much longer must we go on, year after year, having these reports and recognitions and admissions that the industry requires a vast reorganisation, including its manpower, without anything being done about it just because the Government of the day, responsible for the national economy and for our standard of living, have up till now, been afraid to grasp the nettle? At last, we have a Government who are not afraid to grasp the nettle—indeed, they are doing so in this Bill. But we have tremendous problems after all these years. The Board as it at present exists cannot solve them with private interests operating, within the industry. Its 1966 Report said that its powers
  "… comprise a weak veto on company development schemes … and a right to fix maximum prices … all these powers are negative and passive in character".
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  The right hon. Member for Altrincham and Sale claimed, however, that the Board was the instrument with which to protect the public interest—
  "they have not proved to be as effective as was hoped in stimulating efficiency nor can they be used to force the industry to adapt itself to present-day requirements."
  That is the up-to-date judgment of the Board which the right hon. Gentleman claims to be an effective instrument. It goes on:
  "A more determined effort is needed to eliminate obsolescent capacity of all kinds"—
  that call occurs year after year—
  "with a view to reducing the production costs of the industry as a whole, but it may be that, with ' rationalisation ' of the industry, progress in this respect will be slow."
  Again, I ask, who is going to do the rationalisation? The industry itself has obviously failed over the years and surely 40 years is more than enough to wait before the Government take responsibility. What are the Opposition suggesting? The right hon. Gentleman suggested, I gather, that there should be a stronger Board with more powers. He was asked what the policy of the Conservative Party was and was going to make a positive answer. He said that such a Board would provide the maximum scope for competition and opportunity for those in the industry to exercise judgment based on their experience. But we have had 40 years of that with not very good results.
  What, in fact, does it mean? If it means stronger power for the Board, what happens to all the talk about free competition? If it is an admission that the man in Whitehall does know best, are we going to get very much further by creating more powers for a Board operating within the ambit of private operations in the industry, based on the incentive of private profit and no other? Will it be more effective?
  My right hon. Friend the Member for Vauxhall told us what happened in 1949 when we nationalised the industry last time. We heard from him—and hon. Members opposite did not query it—how those mainly responsible for the operation of the industry immediately set out, presumably in the interests of the public weal, to sabotage the industry as much as they could at every point and to destroy its effectiveness once it had been brought under public ownership.

  1275
  Are these the kind of people likely to co-operate with a stronger board? Would they not, rather, react to the strength given to the board with equal strength in trying to frustrate the national purpose, as they have done before? I have referred to the unfortunate history of failure of the industry to bring itself up to date to meet national demands. What is the answer of the industry? A little while ago it published a pamphlet—one of the very expensive "glossies"—called, "Leave Well Alone". That was the industry's answer presumably to all the problems. We cannot afford to leave well alone in those terms. If that is well, we had better not leave it alone. The right hon. Gentleman and his friends have been suggesting that this is not the time to introduce this Bill, that when the country is faced with serious economic difficulties this is not the time to bring in a Measure of this kind. Surely, on the contrary, in view of the admitted fact that the industry badly requires overhaul, reorganisation, modernisation and better use of its manpower, and has been doing so for 40 years, is it not particularly at this time that we should realise that we have no more time to waste?
  As the right hon. Member for Altrincham and Sale said, every industry in the country depends on the steel industry; all our prospects of building up our economy depend on its efficiency. How shall we tackle our urgent problems unless we deal with this industry which is at the core of our problems and try to do something about it before it is too late?
  Why has the industry not been able to do something about it itself? The answer—I have given it before—is precisely that the purpose of the industry is not the national purpose; it is the purpose of getting as much personal profit out of the industry as possible. Sir William First said a long time ago that this was the case, and one of the reasons why he was disgusted with the industry was that it would not put the public interest before personal profits.
  Geoffrey Crowther said precisely the same thing in a devastating article a long time ago, in 1939—that the evil of the industry lay in the fact that the private financial interests of shareholders and directors and others were placed before
  1276
  the national interest. One has only to look at the history of the dividends since denationalisation. In 1954 the dividends amounted to £1·4 million and in 1963 to £26·6 million. The total from 1954 to 1963 was £172 million.
  Mr. Nicholas Ridley rose—
  Mr. Hynd: An hon. Gentleman opposite asked me earlier about the difficulties of finding money for reinvestment. Why could the industry not have spared a little of the £172 million for reinvestment on development? Is it not the case that even up to 1959 the industry had spent no less than £11 million on anti-nationalisation propaganda? Is it the purpose of an industry so important and vital to the national economy to spend £11 million on anti-nationalisation propaganda when it might well have been spent on development? There is, of course, very big money involved in this, and this is the reason for the Opposition—
  Mr. Geoffrey Wilson: Oh.
  Mr. Hynd: It is no good an hon. Member opposite saying "Oh". One thing is very clear in this situation, as in any such situation. Many members of the Opposition and the people with whom they are concerned and whom they represent here are directly financially concerned in the industry.
  Mr. Geoffrey Wilson: Mr. Deputy Speaker, I said "Oh". But I have no financial connections with the steel industry. It is nowhere near my division. I am listening to the debate as a matter of political interest because I do not believe in nationalisation.
  Mr. Hynd: I did not accuse the hon. Gentleman—
  Sir G. Nabarro: Whom did the right hon. Gentleman accuse?
  Mr. Hynd: I accuse many right hon. and hon. Members opposite, and the people they represent in many cases, who have a direct financial interest in the industry, and I hope that those who speak on this occasion—
  Sir G. Nabarro: On a point of order, Mr. Deputy Speaker. Your predecessors in the Chair have frequently ruled that

  1277
  it is out of order to impute a personal interest in a matter being debated in the Chamber without hon. Members being given an opportunity to declare their interest when they catch your eye. Would you, therefore, as your predecessors have frequently ruled on the point, cause the hon. Gentleman to withdraw his disgraceful and opprobious imputation?
  Mr. Deputy Speaker: In answer to that point of order, as I understood it, the hon. Member for Sheffield, Attercliffe (Mr. John Hynd) did not impute any personal motive to any particular member of the Opposition.
  Mr. Hynd rose—
  Mr. Geoffrey Wilson: On a point of order. I was the hon. Member who said "Oh", Mr. Deputy Speaker, and it was in consequence of that remark that the hon. Gentleman said—
  Mr. Hynd: I did not accuse the hon. Gentleman.
  Mr. Deputy Speaker: In answer to that point of order, I understand that the hon. Member for Attercliffe has disclaimed any intention of imputing any dishonourable motives to the hon. Member for Truro (Mr. Geoffrey Wilson).
  Sir G. Nabarro: Further to that point of order, Mr. Deputy Speaker. In view of you r Ruling, will you cause the hon. Member for Attercliffe to withdraw the disgraceful and approbrious imputation which he made?
  Mr. Winterbottom: Further to that point of order—
  Mr. Deputy Speaker: To reply to the point of order raised by the hon. Member for Worcestershire, South (Sir G. Nabarro), as I understood the speech of the hon. Member for Attercliffe, he was making a general observation and was not attaching any personal imputation to any particular hon. Member of this House.
  Mr. Sandys: Further to that point of order, Mr. Deputy Speaker. Surely it is far worse that the hon. Member for Attercliffe should make a general smear on the whole of the Opposition, implying that the attitude we are taking against nationalisation is inspired by personal financial interest.
  Mr. Deputy Speaker: As I understand the position, the hon. Member for Attercliffe was saying that certain persons had interests in steel shares. He was not implying any dishonourable motive to any hon. Member of the House.
  Mr. Hynd rose—
  Sir G. Nabarro: On a point of order, Mr. Deputy Speaker. This is a new point of order. The hon. Member for Rother Valley (Mr. David Griffiths), sitting on the bench opposite with his feet in front of him, has just observed as an interjection in your Ruling "Of course you have" and pointed at me. Would you cause him to withdraw that disgraceful and opprobrious intervention?
  Mr. Deputy Speaker: I did not hear any such intervention.
  Mr. David Griffiths: Further to the point of order, Mr. Deputy Speaker. Might I point out that I never moved my hands, and so I could not have pointed at the hon. Member for Worcestershire, South (Sir G. Nabarro)? What I said, and what I still maintain, is that by imputation and by declaration hon. Gentlemen opposite have at all times opposed us with steel nationalisation.
  Mr. Hynd: Perhaps I might continue with my speech, Mr. Deputy Speaker. The Opposition know very well that there are hon. Members and right hon. Members who have financial interests in the steel industry. I hope that those who have and who speak today will announce it. I am sure that they will as honourable men.
  The only point I am making is that those who are opposing the nationalisation of the industry—I have referred to the £1½ million that the directors of the companies themselves have spent in opposing renationalisation—at least have very substantial personal financial interest in preventing nationalisation. No one can accuse anyone on this side of seeking nationalisation because we shall make any personal profit out of it.
  Sir G. Nabarro: Jobs for the boys.
  Mr. Hynd: In this question of public ownership and private ownership, we can be concerned only with what we consider to be the public interest and nothing else,

  1279
  and this is the great question which must be raised, therefore, in the mind of everybody in dealing with this problem.
  Only on Thursday last, when we had heard so much about the national economic crisis and the need for pulling together and helping the country out of its difficulties, the hon. Member for Chippenham (Mr. Awdry) asked the Prime Minister:
  "In view of the Prime Minister's appeal yesterday for national support for his measures and the obvious need for that national support, will the right hon. Gentleman think again about having the Second Reading of the Iron and Steel Bill next week, in view of its controversial nature?"—[OFFICIAL REPORT, 21st July, 1966; Vol. 732, c. 8781
  So the Opposition are prepared to offer a price for supporting the national effort, and their price is the withdrawal of the Iron and Steel Bill in the interests of people who will make financial profit out of the steel industry. They say that if the Government will withdraw the Iron and Steel Bill they will support the national effort—as if that meant anything at all.
  Mr. Frederick Harris: Nasty mind.
  Mr. Hynd: I think that the nasty mind is in this Question. I know very well that we could withdraw the Bill, cancel prescription charges and give away the whole of our programme, but we never get the co-operation of right hon. and hon. Members opposite as long as they are not in Government.
  I should like to remind hon. Members opposite that if they want to bring this matter above party politics they had better forget the kind of accusations they made about the Labour Party, about nationalisation, and threats of renationalisation, making it impossible for the industry to function efficiently, making it a plaything of politics, and saying that no industry can function when it is under the threat of further changes.
  The party opposite have said that they are looking forward to the opportunity of denationalising the industry again. Do not let us have this kind of hypocrisy once more. We have heard it for so long. Cannot they rise, for once, in view of the national interest, to the level shown
  1280
  by Mr. Harold Macmillan in that Tory pamphlet, "The Middle Way" when he said:
  "The Socialist remedy should be accepted in regard to industries and services where it is obvious that private enterprise has exhausted its social usefulness or where the general welfare of the economy requires that certain basic industries and services need now to be conducted in the light of broader social considerations than the profit motive produces."
  I hope that some hon. Members opposite will show that national spirit when they vote tonight. May I say to our Liberal friends that it is not so very long ago that they published a pamphlet "A Radical Economic Policy for Progressive Liberalism", in which they said:
  "Steel, coal, transport and power are examples of industries which it is vital should be owned by the community."
  That was at a time when the Liberal Party was a great party, when it was recognised as a true radical party. In latter years we have heard so much about the need for a great new radical front. The Liberal Party will have the opportunity tonight to demonstrate whether it is still a radical party or whether it is going to follow those who will protect private monopoly against the public interest.
  6.24 p.m.
  Sir William Robson Brown: I am very glad to follow—
  Notice taken that 40 Members were not present; House counted, and, 40 Members being present—
  Sir W. Robson Brown: I am very glad to be following the hon. Gentleman the Member for Sheffield, Attercliffe (Mr. John Hynd), because he has made some allegations about people in the steel industry which I now repudiate, personally and generally. It is usual in a debate of this nature to declare one's personal interest. I have lived with steel all my life and hope to continue doing so in a modest way over the years to come. I have but a few thousand shares in any steel company. Hon. Members opposite over the years have made enormous play, as the Minister did today, of the steel masters, pretending that there were individual owners of steel companies today. We all know that they are non-existent. We know perfectly well that the shareholding of the great British iron and

  1281
  steel industry is broadly spread across the economy.
  Management of the industry has not in any instance that I am aware of particularly high personal investments in the industry. Taken as a whole, the management and men of the steel industry are a grand team. It needs a special kind of chap to be a steelmaker, and it is not everyone who can do it. Certainly the industry will not be helped by the bureaucrats to whom I will refer later.
  I do not believe that the average steelmaker is greatly concerned about the political consequences of the nationalisation of steel. He is greatly concerned about British steel and the world of steel, and he wants to be much more competitive than he is today. Everyone in the steel industry feels the same way, and I will give some reasons why they are being held back.
  The first question we have to ask is: has the steel industry been progressive? The answer to that is that there have been hundreds and hundreds of millions of pounds spent on huge computerised plant, the most modern in the world. This modernisation has been carried out against a background of the threat of nationalisation. The steel leaders have been remarkably courageous men, always having the guillotine hanging over their heads, and yet expanding in the most magnificent fashion.
  Throughout recent years I have visited many countries and their steel works. As late as last year, I visited the United States and other parts of the world. I was in Germany a fortnight ago, and I go to France for the fifteenth time in a fortnight's time. A few months ago I was in Austria. I am so concerned about my industry that I give up much of my personal vacation time in order to see what other steel countries are doing.
  Productivity per ton per man employed in the United States makes us look darn silly; I would not deny that for a moment. But in technical advances in the last three or four years we have been spectacular and, in some respects, superior to any other steel-making country—from super-integrated plant to individual pieces of machinery which in total have absorbed hundreds of millions of pounds. This is new capitalisation on top of all the capitalisation which has taken
  1282
  place since the war, and it is a magnificent record.
  The compensation terms have worried me and are derisory. How are we going to finance these compensation terms? The Minister did not answer that question. What effect is this going to have upon deflation? I am not concerned with the compensation terms but with their effect upon very many humble and ordinary people—trade unions as well. The Minister is laughing. He should not laugh, because there are thousands of millions invested in the steel industry, in pension funds, personal savings, trade union funds and the like. We must not forget that.
  I have an uneasy feeling that, like so many things that the Government have been doing in the last two years, this Bill has not been thought out effectively and comprehensively. It has just been talked in this afternoon. We are learning things today that we did not know yesterday. Are things going to be done on these lines all the time? Great play has been made on the relative size of the industry over all. The hon. Gentleman the Member for Attercliffe, in his biting and scathing attack on everything and everyone in the industry, did not mention that last year we reached an all-time record for production and would have exceeded it this year if the recession had not set in. These are the facts and they should not be skirted over. It is all right on the platform of your own constituency—
  Mr. Speaker: Order. I did nothing on a platform in my constituency.
  Sir W. Robson Brown: I am sorry. I remember that at the last election you did not need to do that. Thank you for pulling me up. Broadly, steel has kept pace with demand, even boom demand. That has been the analysis of the efficiency of the industry. In 1964 there was a tremendous, unprecedented demand for steel, particularly at home. The industry did what was right and proper and what was required of it: it fulfilled its obligations at home before dealing with exports. That is why industry in general was able to expand. It has been said that the steel industry has not expanded as much as it might have done. But the engineering, shipbuilding and many other industries have not been increasing their demand

  1283
  for steel as our competitors have been doing. If the demand had been there, more money would have been provided and bigger plants would have been built.
  The Minister dealt with exports. I think that it was the only time that he let off all the guns. My right hon. Friend the Member for Altrincham and Sale (Mr. Barber) blew them all away. I never saw such a comprehensive refutal in my life. Apart from strip, there has been remarkably little importation of steel. We have overcome the shortage of strip. The tinplate and strip situation is now reversed: we have huge capacity and not enough orders to keep the plant busy.
  Mr. Maxwell: What about pig iron?
  Sir W. Robson Brown: Do not just say, "What about pig iron?". Develop it.
  Mr. Maxwell: I am obliged to the hon. Gentleman. Pig iron is being imported from Norway, in spite the freight and material handling costs and duty, at one-third below the price at which British suppliers of pig iron are willing to sell to purchasers in this country.
  Sir W. Robson Brown: You do not know that—
  Mr. Speaker: Order. The hon. Gentleman has been here long enough. He must address the Chair,
  Sir W. Robson Brown: I am sorry, Mr. Speaker. One gets in the habit of addressing the hon. Member for Buckingham (Mr. Maxwell) direct, because he is up and down so much. In the last couple of years, there has been heavy dumping of pig iron, and it is continuing. We are meeting this kind of thing from all over the world. At this moment prices being quoted from South Africa are very competitive and very alarming.
  Mr. O'Malley: Is the hon. Gentleman aware that one of the major difficulties of pig iron producers in this country is the cost of the iron ore brought in through the Federation? The iron companies are very disappointed and alarmed at the prices being charged by the Federation. The reason for these high prices is not only because we have inadequate port facilities, but because of the disastrous long-term
  1284
  arrangements which the Federation has made.
  Sir W. Robson Brown: The import duties imposed by the Government in the last few months have been one of the contributory factors for the higher prices of imported iron ore. Had you thought about that? These are—
  Mr. Speaker: Order. The hon. Gentleman must address the Chair.
  Sir W. Robson Brown: If there are no more interruptions, I will not make any more mistakes.
  It has been said that exports, particularly of finished steel, have been extremely high. The figures speak for themselves as record figures.
  Let me take price as the next criticism. We denationalised steel. My right hon. friend the Member for Streatham (Mr. Sandys), who spoke about this matter from direct knowledge, failed to use the phrase which I used in the debate years ago—the acceptance by the steel industry of accountability to the nation. That was why I supported denationalisation of steel then, and it is why I fight against the nationalisation of steel today. Accountability to the nation is a very great test of honour. In setting up the Iron and Steel Board, they controlled the price of steel with a rigid and iron hand. Anyone in the House who suggests that the iron and steel industry fiddled the figures makes a direct accusation against the accountants looking after the price structure of the industry from that day to this.
  I should explain what was required, because it is necessary to do so. I want to make my speech short, but these facts must be known. They take the cost of every manufacturer in every section of the industry and strike a balance of the best 60 per cent. or so which are most efficient and they set the price for the product on that level. The inefficient are being driven to the wall in recent years. Under the Tories, the controlled prices were far too low to permit the industry to make a proper and reasonable profit to enable it to put as much money into modernisation as it would have liked. The recent position has been very serious, with a climb in wages and costs and a fall in profits and output, which will fall still further. If the Bill were to go through

  1285
  in its present form, the Government would find on their hands an industry which was largely in the red.
  I criticise the Iron and Steel Board because after the initial stages it did not show any sense of leadership to the industry, and it did not provide it. I criticise it because it was composed of men—
  Mr. Winterbottom rose?—
  Sir W. Robson Brown: I do not want to get into trouble with Mr. Speaker again, but I will give way to you.
  Mr. Winterbottom: You are saying—
  Mr. Speaker: Order. Two very old and distinguished Parliamentarians ought to know the rules of the House.
  Mr. Winterbottom: The hon. Gentleman said that if nationalised we should find that most of the industry was in the red. Would he say how the industry will reorganise into six or seven giant combinations in terms of the Benson plan if it has not the money to meet its obligations?
  Sir W. Robson Brown: One of the largent steel companies in the country is already nationalised, it has a magnificent plant and management—and it is in the red. This will happen with other companies. Therefore, before very long, the price of steel will have to be increased. We have clamped down on the price for too long.
  I have been criticising the composition and leadership of the Iron and Steel Board. I believe that it should be entirely reorganised and strengthened. The rationalisation of steel should never allow the companies to operate on their own or in combination of any kind. The industry should be positively controlled in price. research, development and expansion by a competent Iron and Steel Board very much more representative of the management side and the union side. Its responsibilities should not be confined to these [2 companies. The responsibilities should cover all sections of the industry, including products not even mentioned in the Bill which I know from my long experience and which many people in the industry know need more rationalisation than any one of the big companies could ever need. Whether it is done by
  1286
  rationalisation or nationalisation, the miraculous economies which the Government expect to be achieved will not be made, particularly from doubling the size of plants. Has anybody any idea how long it takes to double the size of a great integrated plant from the time of the first market research studies to the time when the hot metal goes through the mill? It takes years.
  Therefore, this Bill is irrelevant to the problems. We have to act quickly, and act together. The Minister asked how it could be done, and I say not by nationalisation. This is not an ideological prejudice of mine. My heart is too much in the industry to bother about politics in it. It has been beset with politics for too long by too many people. I am concerned that the nationalisation of the industry would put it in the hands of the bureaucrats, and they do not know anything about the industry and never will. That is what is worrying me.
  The Minister pretends that he will provide competition. What kind of competition will be provided? There will be a complete and absolute monopoly. The steel industry has been rationalising year after year since the war. There is no question about that, if one looks at the increase in productivity. But steel is not just like a ton of coal, a therm of gas or something like that, or a railway truck full of merchandise. There are hundreds of products in the steel industry, and one should be very careful in messing about with so complicated an industry. Almost every section of the industry has been rationalising right along the line. I am not ashamed of my small part in one section of the industry. It bears reasonable examination.
  There are no steel masters left. We have to drop that old cliche, which sounded well enough in 1945 but is now outdated. I am very proud to count steel men among my friends. When I came into Parliament I felt it my duty to withdraw from any contact with the British Iron and Steel Federation. I had been a member of the executive at one time, but when I came into politics I felt that I could not serve two masters, and Parliament was the more important master for me. I assure the House that I have had no personal contact with the Federation from that day to this, except between friends.

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  I can speak for them because I know them. These men recognise their moral responsibilities for the industry. They have always honoured the Boards control of the Industry, and the biggest and most acid test is that they have honoured the price structure. No hon. Member can prove to me—I shall be shocked if he can—that any of the large steelmakers, not some little insignificant firm or organisation on the fringe, have not honoured their price structure, even when the temptation has been very strong, in times of high demand, to get a little on the side.
  They have also battled with regard to quality. There is a very strong battle between the consumers of steel in Great Britain, particularly the motor trade, and the steel manufacturers. Both sides are going at it hammer and tongs. That is a good thing to have. Let the consumer demand better steel and higher quality and better ranges of steel, and let the steelmakers supply it. They are doing that very much better than anybody expected.
  I followed the Minister's speech very carefully. I am sorry that he it not with us, but I pay him the compliment that he was gentle and avoided raising any heat in the debate, but he has not convinced the House that the Bill should be introduced at this stage. I ask him now, even at this late stage, because we are finding that the Government are changing a lot of their ideas week by week and day by day, to go back to the Iron and Steel Federation, that is, the corporate body, and discuss with it now its proposals for rationalisation. The Government may not agree at first glance on the proposals of these gentlemen, but something could be thrashed out and the differences between us would be very narrow. Is that not better than lunging on with the Bill? Hon. Members opposite know that they need these men. The industry cannot be operated without the nucleus of the best men in it. I ask the Minister to get the best men of the industry together now and to see what can be done together.
  The world outside has been watching our nationalisation policies as an experiment, and we in this country have also watched nationalisation broadly as an
  1288
  experiment. When I first became interested in politics I made a statement on my first public platform that if the nationalisation of coal succeeded in the first five years I would vote for total nationalisation of every section of the community. I knew very well from my own contacts in the coal industry that it could not be done in that time, and it has not yet been achieved.
  We are asked to give a wholesale licence for the total nationalisation of 50 per cent. of the nation's products, in addition to those which have already been nationalised. That, in essence, is what my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) said this afternoon. I pledge that if the Bill goes to Committee and I am a member I shall study it carefully line by line on its merits, and I shall give it all the help I can and all the criticisms that I believe to be necessary.
  The Minister mentioned the pipelines for the North Sea gas, and highlighted straight away some problems that have always faced the steel industry. A steel industry cannot be built for unprecedented peak times. One must plan it for the normality of things and a progressive rise. The pipes for the Syrian project were already sold, and the Gas Council wanted delivery in months and could not wait. Therefore, it was proposed—and I hope has now been forgotten—that it should buy the pipes abroad.
  Nationalisation will be beset with political considerations. We shall find that we are looking at particular plants and saying that they are not as efficient as the rest, but for this or that reason we had better not close them down. These will be political considerations motivated by, perhaps, some of the best intentions with regard to unemployment, or even cynical considerations about the votes situation in that district. I could mention some plants that would be likely to have the axe fall on them straight away, but I shall not. The Bill says what it wants to do, but it has no idea of how to do it.
  Why have the Left-wing Socialists worried about steel nationalisation and given it so much concern? Because it is their "old man of the sea". They want to get him off their backs. There are other things that they want to attack, but they want this one off their backs.

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  Nationalisation has also been the industry's old man of the sea. It has had to carry it backwards and forwards. The industry has been constantly under fire. If the Government cannot agree to meet the steelmakers and discuss the whole thing anew, I challenge them to put the matter to a national referendum. I should not worry. I know what the result would be. It has been made clear, because in the last General Election the Labour Party never mentioned nationalisation of steel because they knew that it would not be a vote-getter, and that the more they talked about it the less votes they would get. Rationalisation, with a powerful Iron and Steel Board, is my answer. A lot of detail is not necessary at this stage. If there were this meeting of minds I suggest it could then be discussed at length.
  I was very glad that my right hon. Friend the Member for Altrincham and Sale spoke so lucidly and clearly about the Common Market. I do not think that the Government have given proper consideration to this aspect of the matter. It is clear that the Common Market steelmakers will never accept us in the Common Market with a nationalised steel industry, because they will be faced with our monopoly steel, and prices which we could fix at any level.
  By controlling steel, the Government will control virtually all other steel-consuming industries, either direct or indirect. They will have created a cast-iron monopoly which will be gripping this industry and with it the country, and it will be done by men who do not know and who do not appreciate anything about any one of these industries. They will have tremendous power, which nobody will be able to check. All the Committees that we may talk about, including Select Committees of this House, will never be able to keep them in place. The damage that will be done will be found out too late.
  The whole world is watching our efforts to stem the outflow of our economic lifeblood The Bill will cut the jugular vein of out economy. I sincerely hope that the Government will think again, for the interests of the nation and not of party. I support every argument advanced with such convincing power by my right hon. Friend the Member for Altrincham and Sale.
  6.51 p.m.
  Mr. Brian O'Malley: It is interesting that on one of the rare days when this House has the opportunity of discussing the steel industry, for the first 25 minutes a former Attorney-General, the right hon. and learned Member for Warwick and Leamington (Sir J. Hobson), in language reminiscent of esoteric jargon straight from Dickens, raised the old red herring of hybridity before us. Then, in the first 20 minutes of his speech, we saw the right hon. Member for Altrincham and Sale (Mr. Barber) involving himself in an argument about who said what to whom and when and what the timing was. Coming from a steel constituency, it seemed to me that the men who work in the industry would not look very favourably upon this House if they thought that it would spend a day, and a very rare day, on the steel industry, on nonsense of that kind.
  The debate this afternoon has ranged over familiar and well-trodden ground, with the exception of the introduction of the issue of Europe, which has been brought in by the hon. Member for Esher (Sir W. Robson Brown). It is quite clear, as the right hon. Member for Altrincham and Sale said, that there is nothing in the Treaty of Rome which would prevent this country going into the European Coal and Steel Community or into the European Economic Community because our steel industry was under public ownership.
  What is perfectly clear is that if one feature of the British steel industry contravened the Treaty of Rome, it would be a strengthened Iron and Steel Board on the lines laid down by my right hon. Friend the Member for Vauxhall (Mr. Strauss) and the kind of organisation which the British Iron and Steel Federation suggested in its recent proposals which it put before the Government. In addition, it seems to me to be a curious argument that we can hope to get into Europe only if our steel industry is weak and that if the British steel industry is strong the Europeans would not want us.
  The Tory attack on the Bill this afternoon has split into two quite distinct sets of arguments, each weakening the other. First, we had the old-fashioned type of argument, with the hon. Member for Worcestershire, South (Sir G. Nabarro), the Tory dinosaur of 1966, from a sedentary position yelling out the reason

  1291
  as being "jobs for the boys". I say only one thing to the hon. Member. I hope that under nationalisation and with a publicly-owned steel industry, neither on the national Corporation nor on any unit of the industry will there be a director, a director's cousin, a director's cousin's brother, a director's cousin's brother's two sons, and a managing director and his son. This is merely to quote an example of jobs for the boys in the steel industry under private ownership at the moment.
  It was rather rich of the hon. Member for Worcestershire, South to stand up on points of order and object to what he believed that my hon. Friend the Member for Sheffield, Attercliffe (Mr. John Hynd) said when, in the debate in the House on 18th February, 1963, the hon. Member did not declare the interest that he had shares in Stewarts and Lloyds until my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) pointed it out and asked whether that was the fact.
  Sir Keith Joseph: Is the hon. Member prepared to defend the appointment of Mr. Ted Hill as a member of the Egg Marketing Board?
  Mr. O'Malley: That does not arise from the debate this afternoon when we are discussing the future of the steel industry.
  Sir G. Nabarro: The hon. Member has referred copiously to me and made an allegation that I failed to declare an interest. In the debate on 18th February, 1963, a copy of which I have with me, I declared my interest in all privately-owned steel companies and in a publicly-owned steel company. The matter arose because I accused the hon. Member for Ebbw Vale (Mr. Michael Foot), who is not now in his place, of failing to declare his interest as a shareholder in Richard Thomas & Baldwins, of Ebbw Vale. The hon. Member is, as usual, totally misinformed.
  Mr. O'Malley: I will, of course, withdraw if I am incorrect, but as I recall that debate it was my hon. Friend the Member for Ebbw Vale who asked the hon. Member for Worcestershire, South whether he had an interest in Stewarts and Lloyds.
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  The Tory attack on the Bill today is split in two. First, there are those hon. Members who argue, as they have done over the years, that the record of the iron and steel industry is satisfactory and is comparable with the record of our competitors overseas, particularly our European competitors. This has been the battleground of past years when the Federation and the Tory Party have refused to admit the shortcomings of the industry.
  It is, however, clear at this stage that whatever the difficulties of statistical comparisons and despite the smokescreen of the kind of "phoney" and irrelevant statistics which the Federation has been putting out—and without attempting to denigrate the British steel industry, because that is not something which I want to do—our productivity is much lower than productivity in the American steel industry, our productivity has fallen behind that of many European steel producers and our export record in large sections of the industry has been often patchy and on occasions deplorable.
  The right hon. Member for Altrincham and Sale mentioned record export levels in 1965. What he omitted to do was to state the level in 1964 and make a comparison with the growing exports from European countries over a period of years and the growing exports from this country over a period of years. If the right hon. Members looks at HANSARD for 5th April, 1965, he will see from some Written Answers that the export record of the British steel industry compared unfavourably—I am sorry to say this—over a long period with the record of European steel producers.
  It is also true that the flood of iron and steel imports into this country over the tariff barrier is largely attributable to the shortcomings of the British iron and steel industry. It is also a fact that a vast sum of investment has not been deployed to the best advantage and that the bunching of that investment has led in some years to restricting the demand which the investment was designed to satisfy.
  Mr. J. H. Osborn: The hon. Member has mentioned European prices. Would he not agree that Europe has had the benefit of a cheap energy policy and

  1293
  the advantage of importing cheap coal from the United States of America?
  Mr. O'Malley: Certainly that is not the case with Germany. The hon. Member will be aware that only a week or ten days ago, the German steel industry asked for subsidies for its coking coal, because the price of German coking coal was about four dollars more expensive than the price of the coal which was being landed from the United States at Rotterdam. The hon. Member's argument, therefore, does not hold.
  Secondly, wages in the British iron and steel industry have risen more slowly than in many of the Continental industries. Certainly, on the argument of wage levels, the British industry is not suffering any disadvantage compared with the Continental industries.
  The hon. Gentleman the Member for Esher (Sir W. Robson Brown) was engaged with myself and my hon. Friend the Member for Buckingham (Mr. Maxwell) in a discussion on the price of ore. I made the point that many of the iron producing firms in this country complain that the cost of their pig iron is higher than it would be were it not for the restrictive practices of the British Iron and Steel Federation, whose investment policies and long-term shipping arrangements have made the cost of iron ore dearer in this country than they are elsewhere. I will quote examples. Some little time ago, when I was interested in a particular case, I learned that the price of Itabira iron ore from Brazil to this country was 22d. per f.e. unit while, to move it in world bottoms to Amsterdam, the price per f.e. unit was only 18d. This is the kind of thing they are complaining about. I can quote a number of letters sent to me on this subject. The first is from a very well known iron company:
  "We are just as eager as you are to see any improvement that can be made with B.I.S.C. (Ore)".
  The second letter says that
  "Owing to certain arrangements which the ore producers have made with BISCOR Organisation the trade is now very restricted."
  A further letter from an import-export company says:
  "Dear Sir, Although I am not a supporter of the Labour Party, nor an advocate of nationalisation as a cure for the ills of the United Kingdom steel industry, I must say that I
  1294
  heartily endorse your contention that Messrs. B.I.S.C. (Ore) Ltd. are partly responsible for British steel producers being charged substantially more for imported ore than Continental competitors."
  So the balance of the argument is very strongly against the Tories and their old line of argument over a number of years.
  But now we have a different set of arguments, and the right hon. Gentleman the Member for Altrincham and Sale was in some difficulties this afternoon, because he had to try to argue both cases at once. There was a split in his argument because not enough time has elapsed yet to drop that kind of argument he used to use. The second set of arguments used by the Tory Front Bench, as the creature of and in the wake of the Federation, leaves their supporters using the old arguments high and dry. They now say that the problems of the steel industry can be faced only if there are far-reaching structural changes.
  The document which the Federation put out recognised the need
  "for a new dynamism in steel".
  It is very interesting that the right hon. Gentleman the Member for Streatham (Mr. Sandys), who is no longer with us, and who put the 1953 Bill through, heard his right hon. Friend say this afternoon that the Conservatives have no intention, if the industry is nationalised, of going back to those arrangements. The right hon. Gentleman the Member for Streatham made a very brief speech in which he did not attempt to defend or justify the workings of the 1953 Act.
  The timing of the proposals put forward by the Federation, the timing of the change in the attitude of the Tory Party, smacked greatly of a deathbed repentance. We are told by the rationalisation committee that "in the limited time available" they could not deal with all of the problems. It is significant that the rationalisation committee was set up only in March of this year and that the Press conference release, I understand, was on Friday last week. The Federation, which was always sending me pamphlets through the post, has not sent me a copy of the report; at any rate, I have not got one through the post. I should have liked to have seen one. I have had to depend instead on newspaper reports about this issue.

  1295
  I think that because of the timing of this we and the public are entitled to be sceptical about the real intentions of the Steel Federation.
  Mr. Barber: I am following the argument of the hon. Gentleman, but it seems to me that he is saying that because the Federation has been late in putting forward proposals and that because the Conservative Government ought to have acted earlier to amend the 1953 Act, this is an argument for the nationalisation of steel. It is an argument for some change. Will he explain why he thinks, bearing in mind what he has said about our competitors, that nationalisation is a better system than the system which they operate on the Continent?
  Mr. O'Malley: That is precisely what I am going to do. The right hon. Gentleman should not hide from the responsibility of his party in this matter, nor should he fear that the present position of the steel industry is being pinpointed, which is what I intend to do.
  Mr. Winterbottom rose—
  Mr. Speaker: Order. I have no power to stop interventions, but interventions prolong speeches, and there are many hon. Members who wish to speak in this debate.
  Mr. O'Malley: Then perhaps my hon. Friend will excuse me if I do not give way on this occasion.
  Secondly, it is interesting that the Federation put its "new competitive pricing system" before the Iron and Steel Board only in September, 1965 after its agreements had been rejected by the Restrictive Trades Practices Court. There are those hon. Gentlemen who say that the iron and steel industry ought to have price freedom. We have heard a good deal of this in the last few weeks. People have said that the profits have been held down because of rising costs and because the industry could not put its prices up. But one thing which has not been said and which ought to be said is that the iron and steel industry was offered price freedom and rejected it. This is to be seen from the transcript of the evidence before the Restrictive Trades Practices Court of 17th April, 1964. The Federation put its proposals for reorganisation to the Government in May, 1966, only
  1296
  after the election, and its proposal that there should be some State participation in ownership came only in June of this year.
  I think one is entitled to ask why there could not have been rationalisation with the industry's urgent participation during the 13 years in which the Conservatives were in office. I should have thought that it could have been argued by the Federation and the Tory Party that if they had put their house in order, if they had rationalised as the Continental industries are doing, that would have been their defence against nationalisation, and yet they left everything until the last ditch, until their proposals were too late to be convincing, too late to put their house in order by the methods they proposed.
  We have been told that this is a doctrinaire Bill. I agree with hon. Gentlemen when they say that it is doctrine which has bedevilled the steel industry throughout the whole of the 'fifties and the early part of the 'sixties. It is the doctrine of the Tory Party. There was obvious need for structural reorganisation in 1951. It was understandable in political terms that they should have sought to denationalise under an apparently unwilling Conservative Administration, but the manner in which it was done missed any remaining opportunity for sensible regrouping of the industry. They sold off haphazardly the works at Scunthorpe and in the North-East, and small producers were left to languish without any link with any large firms.
  This policy not only cost the taxpayers money, as in the case of the Whitehead's furore of three years ago, and with the sale of the Staveley Iron Company in 1960, but, what was more important to the future of the industry, it perpetuated the fragmented company structure of the nineteen-thirties to meet the challenge of the 'sixties.
  The attitude of the Tory Party throughout the 1953 debates was that the party would stand or fall on its solution, a degree of central supervision combined with private ownership. The admissions of recent months of a need for structural change are admissions of the failure of that policy which the right hon. Gentleman the Member for Streatham did not attempt to defend this afternoon.

  1297
  It is obvious that the powers given to the Board were inadequate to secure the healthy development of the structure that was necessary, and that the supervision of planning given to the Board was a 'façade behind which private companies could refuse to acknowledge even the most urgent representations of the Iron and Steel Board and behind which sectional company projects dominate overall planning rather than planning guiding the projects. I believe that the verdict of history on this doctrinaire experiment of the Tory Party between 1953 and 1966 will be that, as with the Coal and Electricity Commissions of prewar years, because of the inherent defects in its structure, its composition, its powers and because of its constitutionally anomalous position, the Iron and Steel Board's efforts were foredoomed to failure or, at the very best, marginal success.
  It is of little use bewailing what could or ought to have been, and here I come to the kinds of questions which the right hon. Member for Altrincham and Sale asked. There are two fundamental questions underlying the debate today, and I do not know of any disagreement on what they are. The first is, what needs to be done to fit the steel industry for the challenge of the 1970s? The second is, how can those changes be brought about most speedily and effectively?
  Any examination of the problem leads one to the conclusion that there is a need for greater industrial concentration in the steel industry if we are to allow our domestic steel consuming industries to remain competitive and if the steel industries of Europe are not to be pushed out of world markets. The problem goes far beyond conventional competitive thinking. In the "contest of the laboratories", only large concerns in a world freeing itself of trade barriers can survive. I believe that it is essential for the health of the small specialised firms that there should be large integrated units to supply them with the materials that they need.
  The big steel enterprises of Europe have now become the small ones of the world. It is being agreed by the experts of the steel industry that in the 1960s that, for maximum economies of scale and to achieve the full benefits of auto-
  1298
  mation, a steel mill should have a capacity of about six million tons a year, with a lower limit of four to five million tons. That has been the experience of the United States and Japan, and that is what the Europeans have been concerning themselves with in recent years. We have 25 per cent. of the unit structure in Europe now with plants of over four million tons capacity and four units with other six million tons capacity. In the United Kingdom, there is not one company with a four million ton capacity. The situation in 1966 is that our European competitors have a head start on us in the race for world markets.
  The task, therefore, is a dual one: first, how to achieve the necessary changes in the organisational structure to secure the large plants which we will need in the 1970s and beyond; and, secondly, because of the high level of investment in smaller and often modern plants—precluding the premature scrapping of plants, how can we integrate the running of them in the short and medium term to get the best economies of scale and the best use of the capital investment that we have in plants of that kind?
  It is a fair argument for hon. Gentlemen opposite to say, for example, that the West German steel industry and the French steel industry are trying to put their houses in order short of nationalisation and to ask why the British steel industry should not be allowed to attempt to do the same. That is an argument which needs answering.
  In recent years in Europe, there have been significant numbers of mergers and takeovers to obtain rationalisation, specialisation, the full benefits of investment capital, co-ordinated sales effort and, in general, to make existing plants more efficient within their present limits and locations. In addition to mergers and take-overs of this kind, we have seen the building of new coastal plants, sometimes jointly owned, to take advantage of cheap foreign ores and cheap coking coal. There have been no similar moves within the British steel industry. What the Continentals have found—
  Mr. Charles Fletcher-Cooke rose—
  Mr. Speaker: Order. Again, I cannot prevent hon. Gentlemen intervening,

  1299
  but this speech has been going on for some time already and there are a lot of hon. Members who wish to speak.
  Mr. O'Malley: I hope the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) will excuse me if I do not give way.
  What the Continental industry has found is that voluntary mergers and coordination take time. They often fail to come to fruition. This Bill gives us a unique opportunity for unified control without the pressure of entrenched private interests, and it is speedier than the alternatives which have been used on the Continent.
  It should also be borne in mind that the Germans and French themselves accept that there are limits to the benefits which can come from mergers of existing units. That is the reason why the German industry is groping its way towards specialisation cartels, agreed investment and co-operative selling arrangements. For example, we see seventeen firms cooperating in the setting up of a pelletising plant outside Rotterdam. In May of this year, the German steel industry applied to the High Authority of the European Coal and Steel Commission for four co-operative organisations to be set up with agreed quotas, a single sales office and shared profits.
  When the right hon. Member for Altrincham and Sale is suggesting that they are moving in the direction of competition, this looks suspiciously like cartelisation rather than the production of competition. What they have wanted to do is set up a single cartel for the whole of the West German steel industry's exports to other countries. The German Press regards the scheme as falling a good way short of thorough-going rationalisation. The reorganisations which the French are proposing are said by the French Press to be no panacea and are described as not going as far as they could to get full rationalisation.
  The House should observe closely the way that the wind is blowing in the European steel industry, and see that in this kind of situation price agreement and price leadership is inherent.
  Even if one looked on these ideas with favour for the British steel industry, which I do not, it is instructive to
  1300
  look at the very partial degree of success which is being obtained on the Continent by these methods. There was an attempt to agree to the setting up of a co-operative steel mill with a capacity of 15 million tons a year at Rotterdam a couple of years ago. Nothing has come of it. The Germans are finding that their mergers are partial. An earlier attempt in 1964 to syndicate by four German steel firms was approved by the High Authority, but came to nothing. The French steel giant of Pont-a-Mousson had a secret plan for a vast amount of integration, and it came to nothing. When we see what private industry is doing in France, we should realise that the plan for merging there, in an industry with a long history of company resistance to mergers, is only happening and can only happen because of the dependence of the French steel industry at the moment on the State for its finance.
  In this Bill, we have a unique opportunity to organise the use of present plant and investment to maximum advantage in the short and medium term, more quickly than in any other way. We will be able to plan our long-term without the tug of divided interests and loyalties. The steel producing nations of Europe are responding in different ways to the challenge which confronts them in world markets. I believe that our way will be more speedy and effective. It will allow us to catch up on the ground that we have lost with our European competitors and go ahead of them.
  We are told by the Benson Rationalisation Committee that there will be many changes in the industry, and that, in the next few years, 100,000 fewer men will be required in it. Thinking of my constituency, and bearing in mind what happened when a consortia of the large steel firms closed Baker and Bessemer, without consultation, without warning, in a manner reminiscent of the 'thirties, and when I read of the demonstrations which took place in one of the German steel works only a few weeks ago because of this problem, I would fear any such rationalisation unless it were under public ownership.
  The men in the steel industry, in my constituency and elsewhere, believe in public ownership, and, although we can discuss the details in Committee, I hope

  1301
  that the first thing which my right hon. Friend will take great care to secure is the right kind of men on the National Steel Corporation which he is to set up. I hope that he will get a chairman from outside the steel industry, someone who is not concerned with the old loyalties and old squabbles. I hope that he will get as members of the Board people who do not have too much on the record in their dislike of public ownership, because such people will not be received with any confidence by the men in the industry. I hope that my right hon. Friend will go to the Treasury and say that he will have to pay the rate for the job to get the right kind of men for it.
  My constituents are largely dependent for their future livelihood on the judgment and decisions taken by the Minister in the coming weeks and months. If he gives the industry the right kind of leadership, if he provides the right kind of climate within the industry, if he can supply the industry with the raw materials and supplies that it needs at the right kind of price, then steel under public ownership will be able to play its part in the world and have a prosperous future in the economy of the country.
  Mr. Speaker: I must remind hon. Members that each of the last three speeches has averaged half an hour. A long speech deprives some hon. Members the opportunity of speaking after they have sat here all day.
  7.22 p.m.
  Mr. John H. Osborn: I shall watch the clock carefully to try to ensure that my speech is brief. The fact that the House is debating steel today is a sad event for me, and I believe that if the Bill becomes an Act, which it may well do, but this is by no means certain, it will turn out to be a sad day for the nation.
  The Bill does nothing to deal with the problems of the industry, it is but a platform from which to deliberate on its structure in the future. By contrast, we have the Benson Report, which has dealt with the problems of the industry, and the nation will look forward to its second report. The fact that we are debating this Bill today will, alas, undermine overseas confidence in this country, a loss of confidence which we can ill afford at a period, of so much economic stress.
  1302
  The nationalisation of steel is an issue of vital concern to all those affected by it. As I said during the debate in November, 1964, there are many in Sheffield, particularly in my constituency, whose livelihood, directly or indirectly is tied up with the steel industry, and who are concerned that the industry should continue to be prosperous. This is because the prosperity of Sheffield is to a large extent dependent on the prosperity of steel as a whole.
  Reference has been made to the results in various constituencies in Sheffield during the last election. I would remind the House of the opinion poll conducted by the Daily Express on 25th March of this year. In answer to the question, "Do you think steel should be nationalised?" 25 per cent. replied "Yes", 56·2 replied "No", and 18.2 replied "Don't know". In my view those figures do not give the Government a mandate for the nationalisation of steel, which the Minister claimed this afternoon he had. The Times has also stressed that
  "it is difficult to imagine a decision less gracious to the countries whose central banks have agreed to provide a new help for the £."
  In view of the comments which have been made, I should remind the House that on previous occasions I have declared my interest in the steel industry. I have lived in Sheffield and I have studied steel and some of its technologies, and I have had a continuing knowledge of the industry for more than a quarter of a century. I have an association with, and an interest in, a steel firm which is not on the scheduled list. I think it is right that a Member who has a personal interest such as this should not be afraid to speak in the House of Commons. After all, speeches from people who have had experience of an industry or an activity can be the most valuable.
  I think I am right in saying that when some Members on this side of the House considered the reform of Parliament—they are the authors of "A change or decay" —they hoped that hon. Members would take part in "little Neddies". I am convinced it is right that industrialists who take part in the deliberations in "little Neddies" should think of the interests of the industry as a whole and not of their own specific interests. If any industrialist falls into the trap of doing the latter, he will no longer be required to deliberate on the interests of the

  1303
  industry as a whole. I am certain that that is the yardstick which should apply to debates in the House of Commons.
  My interests are therefore to help determine what is best not only for the Sheffield steel industry, which is connected with my constituency, whether large firms or small ones, but for the steel industry as a whole, and I believe that most of the contributions in this debate have been to that end, but have taken different forms.
  The right hon. Member for Vauxhall (Mr. Strauss), whom I followed in the last debate, reminded the House of some of the successes of the steel industry. We have had reminders that production has gone up in four years from 20·49 million tons, to 27 million tons this year. The target is 35 million tons by 1975. We are talking about an industry which has 285 works engaged in common steel, and 63 in alloy and special steels, but when we talk about capacity we must relate capacity in this country to world capacity.
  Tables in the Benson Report show that there has been surplus capacity. By 1975 there will be surplus capacity of 71 million tons. According to the Iron and Steel Board's report, the capacity usage ranged from 74 per cent. in 1962 to 88 per cent, last year. It is no use laying down productive capacity unless there is a market for it, and this is the criteria which whoever is in charge of the industry, be it a State board or the director of a company, must clearly discern.
  Of course management is fallible. It has made mistakes, but management in this country and elsewhere is acquiring new scientific techniques to keep itself informed. Mistakes have been made in the electricity supply industry. B.O.A.C. has missed opportunities on the South American route. A private shipping line has taken over some of the Channel operations from British Railways because it has been able to apply a new approach, which has overcome the failures of the British Railways. I would not wish to elaborate on some of the difficulties at Beverscote Colliery. These are management problems, but if an error is made in a corporation, whether under national management or not, it is a big
  1304
  error, and it is in the nationalised industries that we are in danger of seeing big errors.
  Much information has been given about capital expenditure in this industry. In the last ten years this figure has amounted to more than £1,000 million. There has been rationalisation. Iron making production has gone up from 7.8 million to 17.5 million tons, while the number of furnaces has dropped from 98 to 66. There has been rationalisation in the sheet and tinplate sector.
  New technologies have been brought in. The increase in oxygen consumed in the last three years has been nearly three-fold. Automation has been brought in and to quote a statement in the National Plan,
  "the steel industry has long been in the forefront of the application of such modern techniques as operational research and process control by computers".
  The final proof whether an industry is competent is that its prices are competitive. The Benson Report states:
  "Very little information is, of course, available on present foreign production costs; but such as there is suggests that British steel costs are broadly in line with those of E.C.S.C. and below those of American makers, with significantly lower costs being shown only by a few small economies …"
  We have discussed the export record. In the last five years there has been a surplus, on the average, of 2·2 million tons exports over imports. In those circumstances it is wrong to imply that the British steel industry is either inefficient or incompetent. It has a record of which it can be proud, and it is wrong to denigrate it.
  I now turn to some of the compensation problems. The compensation has been moved over another period. The Government have revoked the terms published in the White Paper, which has caused a good deal of alarm in international circles. The Government has set a bad example to other Governments, especially Governments in the Commonwealth and other developing territories, which can do nothing but harm to our investment overseas. I have been involved in the work of I.C.C. and the World Bank in this connection and I recently looked up a report of the International Bank of Reconstruction and Development which contained a chapter

  1305
  on the scope of protection and referred to political risk, which it defined as:
  "Government action which deprives the investor of ownership, or substantially interferes with control."
  What would have been the attitude of an American investor encouraged to take part in our British steel industry? Are we going to attract outside investors to finance our British steel industry when we are short of money? The bridges have been blown, and we may find that a State organisation will be denied the finances that it needs.
  There are complications in respect of compensation when the State wanders into the private sector. Recently we had the Richard Thomas & Baldwins-Stewarts and Lloyds argument over Whitehead Iron. There was a charge that the taxpayer lost £4 million over this. This was not true. The then Chancellor of the Exchequer—my right hon. Friend the Member for Barnet (Mr. Maudling)— said:
  "Whitehead's v, as sold originally for £3·4 million and since then £3.6 million additional profits have been ploughed back … and the latest purchase price was in the neighbourhood of £10 million."—[OFFICIAL REPORT, 12th February, 1963; Vol. 671, c. 1105.]
  Again, there were arguments at this time that the taxpayer had been robbed. We felt on this side of the House in many ways that perhaps I.S.H.R.A. should have got on with its job more quickly. It would have been better that, if necessary, it had sold shares at a discount in order to put them on the market. But much water has flowed under the bridge, and it is now too late.
  We have had the argument about the return on capital employed. That is the yardstick by which any undertaking must be measured. We shall never obtain new capital equipment unless the shareholders get a fair return on capital invested. Until new plants are working at full capacity and some of the bugs have been ironed out they give an immediate poor return on capital—this applies particularly in the steel industry but in its Annual Report the Iron and Steel Board said:
  "Despite high levels of production in recent years, the earnings of many steel companies have been below the level that in the opinion of the Board is necessary in the long term."
  The Chairman of the United Steel Company pointed out last year that in five years tie increased costs have been £11·9
  1306
  million due to a variety of factors, and that profits which ought to have been £23 million had dropped to £14 million. In the Benson Report there is a reminder that the most important raw material is capital.
  I suggest that one trouble with the 1953 Act is that the agency—the Iron and Steel Board—has kept prices too low.
  The nationalisation of steel will prevent outside funds coming into this country, and the fact that we are going ahead with it is completely antagonistic towards the Treaty of Paris, and is something that the Government will regret in their efforts to bring the British steel industry into line with the E.C.S.C.
  Mention has been made about the need for rationalisation. Other industries need rationalisation, but we must bear in mind the changed climate that has existed in the last five or six years to bring about an acceleration of rationalisation and change. Rationalisation involves social change and occasional hardship. There have been factors which have accelerated this, and in "Economic Trends", November, 1965, it was shown that in the four years prior to 1958 the average acquisitions by companies was £116 million in industry as a whole per year and that this has risen to £300 million since then. Of firms with a capital of over £25 million, one in every three have acquired a new company each year. But there has been, in addition, the creation of little N.E.D.Cs., which have brought a much better understanding of the need to rationalise throughout industry. Rationalisation means closing down old plant. Only last week in the Sheffield Press I saw that a steel works was to be closed down. Three years ago every Member representing a Sheffield constituency would have asked Questions about it.
  Reference has been made to the Baker-Bessemer purchase by United Steels. It was right that they should have been rationalised at that time, but it was criticised by hon. Members who had constituents who were affected. At the time there was a debate on the I.C.I.-Courtauld merger proposals. Whatever the rights and wrongs of the matter I remember the hon. Member for Nelson and Colne (Mr. Sydney Silverman) asking for a debate on the refusal of the Government to prevent the imminent

  1307
  creation of a giant monopoly against the public interest. He described this as "a damaging and evil thing for the nation. "This was the political atmosphere in which amalgamations and mergers were taking place only a few years ago. That atmosphere has changed, partly because of the Redundancy Payments Act, but it has been whitewashed completely by the White Paper on the Industrial Reorganisation Corporation and rationalisation has become respectable. This is something that I have always supported.
  The Benson Committee has had to operate under a threat of nationalisation. In my view there should be a structure for managing the steel industry which combines both Government and the leaders of the industry, perhaps based on the concept of "little Neddies." I wrote an article about this in one of a series in Iron and Steel in 1964 edited by me.
  As time is short, I turn to the situation in Sheffield. There are many re-rollers and small firms in the industry. They will be affected by the Bill, although they are not directly nationalised. Clause 34(1) affects the whole of the private sector. It provides that any person who produces material that is supervised by the present Iron and Steel Board has to show the Minister his hooks, records and documents, and to supply copies and extracts from them. The Minister can also obtain forecasts of output and capacity, and the Corporation can obtain from representative interests whatever information it requires regarding the organisation. In addition, the Corporation may acquire by agreement interests in other companies.
  All this means is that the State monopoly has power to buy over some firms. These powers, when exercised, will drastically affect the Sheffield steel industry. This is not necessarily a bad thing. The only point is that rationalisation should take place only with maximum agreement, and in a case like this there will be bound to be redundancies. It is to be hoped that the workpeople from these firms, who have served years and generations in them, will not suffer too hardly under the Bill.
  I said that the National Steel Corporation would have powers to adjust prices. What is to prevent it, where there is competition, from lowering prices so
  1308
  as to break the small firms? What guarantee is there in the Bill that it will not do that? I believe that the Bill constitutes an unfair threat to the Sheffield industry and I hope that this side of the House will do what we can to modify these threats in Committee. The Bill will affect others, many companies not on the schedule, many in the Sheffield area.
  There is a case to justify a completion of the review which has been published by the Benson Committee and a need for those affected by it to come together. What must be the attitude of the industry now? I speak as one who has had a lifelong interest in it. Much can happen to the present Government between now and vesting day, and it is wrong to assume that nationalisation is a foregone conclusion. A review of the industry and its structure, on the other hand, should go on. I would recommend co-operation with the Minister's Committee because rationalisation has to take place, whether or not the Bill reaches the Statute Book. The modernisation of the industry would go on faster and better without nationalisation.
  7.41 p.m.
  Mr. Donald Coleman: I speak in support of the Bill as one of the few hon. Members who has experience of working in a modern integrated steelworks, which was built and brought into being when the iron and steel industry was nationalised. I am a member of the British Iron, Steel and Kindred Trades Association, the trade union which represents the views of the overwhelming majority of those engaged in the industry. Because of this position, I enjoy the confidence of steel workers and know their views. Like most steel workers, I have a jealous concern for the well-being of the industry and those who work in it. This is why I speak.
  The debate takes place when the prospects for iron and steel production are at their gloomiest for some years. This is mainly because of growing world producing capacity and more slowly rising demand, with resultant increasing competition. This is not a problem for the British steel industry alone but affects the thinking of those overseas who have to make the same kind of appraisal as we do of what the future holds for the

  1309
  industry in the face of present world conditions and how best the difficulties can be overcome.
  I would rebuke those who, for whatever purposes, knock the British steel industry for being in difficulties. When they do so, they do neither the industry nor the national economy any good. The debate should therefore be concerned with what is needed to enable the British steel industry to overcome the worldwide difficulties and also to help the industry to increase efficiency so as to meet and overcome those difficulties and any which might arise in future. There can be little disagreement that if the British steel industry is to make its contribution to the solution of the country's balance of payments difficulties through steady increase in exports and to satisfy home demand for steel, its efficiency must be increased.
  This will involve the industry in a programme of rationalisation and reorganisation. This has been found necessary in steel industries in other countries. It does not reflect discredit on our own industry that this is necessary so that it can compete on equal terms with other steel-producing countries. The difficulty which divides the parties and other interested bodies is the method of reaching this objective.
  The parties opposite, with some variation, believe that the objective can be achieved by allowing the industry to go on as at present organised, largely in private hands and supervised by the Iron and Steel Board, which, because of its terms of reference, is a negative body. Its powers are so restricted that it cannot initiate any programme of rationalisation and reorganisation, which, judging from the debate, all hon. Members recognise is required.
  But the Board has powers to veto proposals put to it by private owners and to grumble from time to time about the failings of private owners to do something. This is how the British iron and steel industry has been conducted since 1953. It is reasonable to ask if the method of running the industry advocated by the party opposite is all that they claim, why the industry's efficiency has not been strengthened by rationalising and reorganising it in the way which is accepted by both sides to be necessary.
  The answer lies in the huge capital outlay involved in new plant. It has been
  1310
  calculated that to lay down a new, integrated steel plant costs anything upwards of £150 million. Also to be taken into account is the fact that considerable expenditure is involved in carrying on operations while such a plant reaches its full profitable production, which is not a short period.
  The industry is so constituted that it has to find sums of money from its own resources without excessive price increases which would price British steel out of existence. Therefore, the money needed to finance the required expansion would have to come from the taxpayer. Since the manufacture of iron and steel is so important to the economy—either as an export in itself or as an essential component of exported manufactured goods—money to finance expansion and modernisation must therefore be made available from this course.
  This leads to a consideration of the nation's interest and the return it gets from its investments in the industry. Already huge sums have been put into the industry from public funds. While the industry is under private control, the public has little, if any, say as to how this money should be spent. There can be no direction as to its spending, only a refusal to spend. Such a situation is not in the last helpful to an industry which faces fierce world competition in iron and steel production.
  One of the alternatives to the present control of the industry that is put forward is a kind of State and private partnership in the running of the industry. Such a venture is likely to be successful only while the interests of both partners are compatible, and there are bound to be times when harmony will not exist and when a situation will arise which can only aggravate the position of the industry. The outcome of such a situation would undoubtedly be to the disadvantage of the nation in general and to my fellow members in particular, remembering that their investment in the steel industry, as represented by their skill and labour as steelmakers, must be recognised in this debate.
  The answer which my hon. and right hon. Friends put forward for solving the problems facing the steel industry—one which we believe will ensure its efficiency in the future—is embodied in the Bill,

  1311
  which will bring into public ownership the 14 companies which comprise the major portion of iron and steel producing in Britain and which provide employment for 70 per cent. of the industry's manpower; namely, about 220,000 people.
  In making this proposition we are contending that if the nation is to be expected to contribute large sums of money to ensure the future prosperity of the steel industry, then the nation has the right to demand that it has effective control over its investment and that its interests are met before the interests of those for whom the industry can really be regarded only as a means of speculative gain.
  The approach to nationalisation must, therefore, be one of a responsible nature for all concerned, and this includes the trade unions affected. The future of everyone concerned with the industry is, as it always has been dependent entirely on the success of the industry and we must, therefore, segregate ourselves from the claims of propaganda on either side and concentrate on the realities. The provision made by the Minister in the Bill for a committee to examine, and work out, the sub-structure required for the industry is to be welcomed, for alongside the need to bring about the rationalising and reorganising of the industry—and involved in this must be the question of how the industry is to be grouped to bring about the greatest efficiency—there will also be thrown up certain social problems, the consequences of which will require careful study.
  One question which this committee will have to consider is that of company identity. I remind some of my hon. Friends who may be in doubt on this issue that the products of the British steel industry are many and varied and are often sold on the reputations of individual firms. This advantage should be carried into nationalisation. Further, the morale of those engaged in the industry —people who have become accustomed to having a company identity for their employment—should be taken into account. I urge the Minister to ensure that the most careful consideration is given to the question of company identity.
  Another matter which will arise from the nationalisation of the industry under
  1312
  any form of control, public or private, is the position of those parts of the industry which are centred in Scotland and Wales, for in Scotland—and, to a lesser degree, in Wales—burdens could be placed on plants producing steel because of the higher cost of coal in these places. In Scotland and Wales there are the added difficulties of transport, though in respect of Wales recognition must be given to the decision of the Government on the siting of the iron ore ports to serve the steel plants in the east and west of South Wales. I urge the Minister to ensure that arrangements are made so that those parts of the industry sited in Scotland and Wales do not suffer an unfair disadvantage through these factors.
  The steel industry has a reputation in the conduct of its industrial relations which is the envy of many industries. I urge that due regard is paid to the system that has been built up over many years, for no matter how good the equipment and the machinery available to any industry, at the end of the day it is the standard of human relationships that ensures efficiency and success.
  I have refrained from boring the House by refuting the propaganda that has been put out about the nationalisation of the steel industry. As I am in regular touch with steel workers and their families, I am aware that they have consistently expressed, in one election after another, their view on how their industry should be run. These people grow impatient at the controversy that has ranged about their industry. The nation is becoming bored with the continued kindling of arguments. I hope that, as a result of this debate and the final passage of the Bill, steel will cease to be an argument of political controversy.
  7.59 p.m.
  Mr. Richard Wainwright: I was interested and encouraged to hear the hon. Member for Neath (Mr. Coleman) championing the identity of many of the existing steel companies. But I do not agree with him that it would be impossible to envisage personal risk capital being found for re-equipping the steel industry. I believe that under proper conditions risk capital could be raised in sufficient quantities to re-equip the industry and that such capital could flow again into constituencies like Neath, into

  1313
  which so much capital was poured at the turn of the century when the South Wales tin plate and other steel making trades were developing so fast.
  We have heard today some curious versions c1 the theory of an alleged mandate for this Measure. The hon. Member for Sheffield, Attercliffe (Mr. John Hynd) treated us to the voting figures for Sheffield arid Rotherham and stated that the people of Sheffield were concerned with steel. It was an essential part of the Minister's case, in his opening remarks, that this was a matter of great moment for the whole nation and not a question of a mandate from Sheffield. If there were to be a mandate at all, which I deny, it would have to be a mandate from the whole country.
  Mr. Marsh: They did vote for us.
  Mr. Wainwright: In my own case I managed to detach a few. It is not my experience of Sheffielders, some of whom commute from my constituency, that they imagine that they have an almost exclusive concern for steel. Most of them have regard for the customer. They know that it is the customer whom they must please if they are to keep their trade.
  If I speak for any one in my constituency, I do so for the people who make tractors, textile machinery, and various other forms of traction. Amongst them I find a very ready hearing for the view that their jobs will be in danger if they have to put up with a steel monopoly which is either inefficient or unduly costly. I believe that some of the support which I received when I was arguing that at their factory gates for about ten years was turned into votes for me at the last election.
  I have been surprised at the comparative absence of reference to the customer during the debate. It is my belief that the United Kingdom customer for British steel has had a very poor deal ever since 1932. The Bill holds out no hope of an improvement.
  Liberals will certainly endorse the point emphasised by the Minister, that our steel industry has had the worst of both worlds. It certainly has. We do not attempt to lay it at the door of the Labour Party, in the main, that the steel industry has suffered so gravely from lack of competition for over 30 years and from lack of
  1314
  leadership at the centre. But we must lay it at the door of the Labour Party that the industry has also suffered for far too long, and is now about to suffer for a further period, from uncertainty.
  I ask the Minister to consider whether, by prolonging uncertainty by this Bill, he is not running a serious risk of provoking some of the most valuable young people in the industry—I am thinking particularly of researchers, young managers, and so on—into voting with their feet and clearing out and carrying on their expertise in some other country.
  I have met researchers in the industry—I cannot speak for managers, because I have not come across them—who are seriously thinking of answering the tempting, beckoning, calls from America and elsewhere. There is no doubt that in the present political climate, which, it may be, was not foreseen when the Bill was drafted, this uncertainty is acute. It needs only a few more Carmarthens, a few more Orpingtons, a few more Roxburghs, and there will be a very distinct atmosphere of uncertainty running right through the industry.
  Apart from the dangers implicit in the mere existence of a Bill of this character, I shall mention only two of the main dangers in the Bill, because so many of them have been carefully rehearsed this afternoon. I must refer to the aggravation of the ever-present danger of political pressure in the resiting and reshaping of the industry. The industry has suffered so often from this kind of political pressure. There will be hon. Members in the House who will recall the difficulty which Stewarts and Lloyds faced when they decided, on very good economic grounds, to transfer so much of their production down from Scotland to Northampton.
  There have been warm references this afternoon to Sir William Firth. Sir William was frustrated in his avowed desire to build a wide-strip mill at Immingham, which has all the advantages of being a deep water port. Sir William was unable to take a new Richard Thomas and Baldwins wide-strip mill to Immingham because of the pressures which were exerted in favour of the relatively unsuitable site which had to be adopted at Ebbw Vale.
  Mr. O'Malley: Would the hon. Gentleman agree on the social desirability of

  1315
  giving Colvilles Limited in Scotland part of the new sheet mill capacity, for social reasons?
  Mr. Wainwright: Whenever these issues arise, the last word should be with those in charge of the plant, if they can demonstrate that it simply will not pay. That is why my right hon. and hon. Friends and I are in favour of a wholly new approach to pricing policy, taking into account the experience that the Common Market countries have already accumulated.
  The second danger implicit in the Bill is something on which I have never been able to get an explanation from those who belong to the Labour Party. Nationalisation nowadays is a means of exposing managers, who, as often as not today, belong to non-Conservative parties, to the risk that as the result of a General Election their nationalised industry will be in the hands of Conservative Government. That is the risk implicit in the Bill.
  There is one defence against this serious risk which I was hoping to hear the Minister invoke this afternoon. If an industry must be exposed to the risk that it will eventually be run by a Conservative Government, at least the precaution could be taken of protecting those who have to work in it, by a measure of worker control. On this subject we had observations from the Minister which were positively octogenarian in their terms. The right hon. Gentleman sounded as though he had been wheeled up from Bournemouth to express doubts and fears about the terrible risks of worker control.
  There are many schemes of worker-participation afoot, but I want to draw the Minister's attention to a relatively recent one in mid-April of this year from some very responsible members of the Amalgamated Engineering Union. In the course of a fairly hefty dossier on this subject, they come down to their proposals at plant level. This is what they say under the heading, "At Plant Level":

  "(i) An enterprise or plant board should be established.

  (ii) It should comprise the chairman of the enterprise (subject to ratification by the workers council); six departmental managers or foremen ratified by departmental committees or
  1316
  shop committees, and six workers elected by the workers councils."

  If we had heard something on those lines from the Minister this afternoon, there would at least have been crumbs of comfort in the Bill.
  Mr. Winterbottom: There is nothing to stop that.
  Mr. Wainwright: I refer not to anything in the Bill but to the words of the Minister this afternoon when he referred to that topic.
  Finally, there has been some talk today about the compensation proposals. I want to make it clear that what offends Liberals about the compensation and the cost of this party political treat is that it turns £350 million of healthy risk capital into a fixed interest burden on the British economy. I should be interested to hear my Parliamentary neighbours from the Dearne Valley, from the Rother Valley, and from Rotherham declaiming in their constituencies, which adjoin mine, "Cheer up, lads. Never mind. Your sweat and your taxes are being used to endow former steel shareholders with 8 per cent. for life".
  Liberals regard this Bill, coming forward at this moment, as a wholly unecessary, ill-timed, political luxury which the country in its present state cannot afford.
  8.10 p.m.
  Mr. Desmond Donnelly: Because I want to be brief if I can, I will not reply at once to the hon. Member for Colne Valley (Mr. Richard Wainwright), but I will deal with some of his remarks in the course of my speech.
  I propose to make only three points. First, I should like to say a word or two about the case for nationalisation and the problems which nationalisation will raise. Secondly, I should like to say a word or two about the climate in which this Bill is introduced and the context of the situation; thirdly, about some of the reasons which I think lie behind it, and finally, to draw a conclusion.
  Before I do any of these things I ask what is the specific objective we have in mind in this House this afternoon. We are not really debating nationalisation of the steel industry. It is not a question of nationalisation as such but a question of the future of this industry and the best possible way in which it should be run.

  1317
  This is the central objective. It is not a question of specific dogma, it is—or should be—a question of practicality. What is the central case in favour of nationalisation as out by my right hon. Friend i.he Minister? If I may be allowed to say so, he made as good a case as anyone could for this proposal. The first case he put was that it brings the industry into a form of accountability to the nation. Secondly, it can make the industry more efficient. Thirdly, it makes the fitting of the industry into the National Plan and into national economic planning in the national interest more easy and more effective.
  Let us look at accountability. Is there any real accountability to this House, not only concerning the nationalised industries, but over the whole range of Governmental activity at this moment? Millions of pounds are voted week by week without the House knowing what is going on and what is happening. We cannot run industries with this kind of loose control. If there is not the hard criteria of the shareholders to ask how an industry will be run, any industry will find itself beyond the discipline which should be imposed on an effective industry in this competitive age. The whole basis of the accountability of the nationalised industries is most unsatisfactory.
  The second question is about efficiency. A lot of play has been made about efficiency. Let us look at the other nationalised industries. I agree that some of the yardsticks do not apply completely, but here is the precentage return of capital employed in the nationalised industries, in the private steel industry and the nationalised Dart of the steel industry. In British Overseas Airways it is 22 'per cent., in British European Airways 3·5 per cent., in the National Coal Board 3·7 per cent., in the gas area boards 4·3 per cent., in the electricity area boards 5·7 per cent., in the private sector of the steel industry 7·2 per cent. and in the publicly-owned steel company ·2 per cent. Those figures are absolutely devastating.
  On the question of planning a great deal has been said about social reasons for the steel rolling mills going to Newport and Ravenscraig. The view of the Iron and Steel Board was that there
  1318
  should have been one strip rolling mill. The view of the industry was that there should be one. The efficiency of the industry demanded that there should he one strip rolling mill. The future of this country depends on the most effective use of every pound of capital employed, wherever it may be, in the national interest. Yet what happened? The party opposite must accept the blame. We had a series of invidious meetings in which some of my hon. Friends from Wales would rush to see the Minister and next day some hon. Members speaking in guttural Scots would rush to see him. The whole circus went on until the Government lost their nerve and split the project into two to have one at Newport and one in Scotland. The ideal situation would have been to have one, probably in Wales. I shall not argue that now.
  This cannot be defended either on the grounds of accountability, efficiency or effective national planning in the national interest. I do not accept this social nonsense which goes on. Of course there has to be a social context, but the real social reasons should be the effective running of these industries. That is truly the greater benefit for the nation as a whole. Industry is not a social service. We have heard of the railways being a social service. Next we shall be hearing of steel being a social service. Finally, we shall be hearing of everything being a social service. Then this country will be inhabited by a few small rather limited people with doubtful political outlooks. The rest of us will have gone.
  We have to address our minds more clearly to the whole concept of public ownership. No one is against public ownership as such. I agree entirely with my right hon. Friend that where it serves the national interest it should be implemented, but it is not only an end in itself. All this "Clause Four" nonsense has gone out of the window. It is no longer relevant to the British political scene. What we have to realise is that it may be possible to run these industries by public ownership, but we have not yet got the system right. Until we have got it right, is it wise to extend it into this major production industry which has so many ramifications, which spreads out and affects so many sections of our national economy at this time?

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  This brings me to the second point, the question of the climate in which this Bill is introduced. There is the international climate. Some of my hon. Friends are great internationalists on the so-called Left, but they live as if in a sense they were in persistent economic isolationism. We have to recognise that economics and internationalism go hand-in-hand. This country cannot be run as a great trading nation or the centre of a reserve currency in an isolationist concept. Foreign confidence has a bearing on the whole situation. When it comes to a question of foreign confidence it is not that foreign bankers are doctrinaire but that they are practical men who want to know whether the measures which are being introduced are relevant to the national economic scene. That is the query raised in their minds by this Bill.
  Then there is the internal economic climate. I do not want to go into detail on the question of compensation, but I think it indefensible to come forward with one set of proposals and a year later to change it and come forward with something like £90 million less. We are introducing a Measure which extends the Government's credit by £580 million. Anyone would think that the Government's credit was admirable at this moment. Anyone would think that the Government's credit was limitless, but £580 million is almost £1 million per constituency. Does any hon. Member not want £1 million for his constituency for housing, roads, schools or whatever it may be? No doubt they do not want anything at all in Ebbw Vale. They have no requests for any kind of extension of the Government's credit for new capital investment programmes there.
  Mr. Winterbottom: Cheap.
  Mr. Donnelly: To extend the Government's credit by £580 million at this moment does not make any sense at all to any responsible person.
  Mr. Marsh: I have been listening closely and recognise the strong feelings which prompt my hon. Friend the Member for Pembroke (Mr. Donnelly) but how did he sign a nomination form at the last election accepting just this policy?
  Mr. Donnelly: My right hon. Friend does not understand. I accept the stand
  1320
  ing orders of the Parliamentary Labour Party, but they do not mean accepting the entire programme. If they did they would rule out half the hon. Members of this House. What about the unilateralists? None of them would even be able to contemplate being endorsed as a Labour candidate. The proposition my right hon. Friend puts forward is not tenable. It is based on a misunderstanding of the Labour Party.
  Having said that about the extension of the Government's credit, I ask what are the reasons behind this Bill? In my judgment, it would have been possible to arrive at an agreed solution along the lines some of which were proposed by my hon. Friend the Member for Bosworth (Mr. Wyatt) in a speech just over a year ago which was full of courage and dignity. But it has not been the view either of industry or of the Government that that kind of proposal could have been brought forward. Why, then, are we having this proposal at the moment, manifestly irrelevant though it is to national requirements at this time?
  My view is that it is because of the fear of the so-called "Left" and I think that the criticisms that have been made are perfectly true.
  Mr. Winterbottom rose—
  Mr. Donnelly: I am not talking about my hon. Friend the Member for Sheffield, Brightside (Mr. Winterbottom). This is one of the few things about which I disagree with him. If he will keep his backside for a moment, I will explain more fully.
  It has been manifestly clear for a long time that, notwithstanding the national interest, on a number of measures the Government have been motivated by fear of the so-called "Left". Why, otherwise, did my right hon. Friend the Prime Minister go to the Kremlin and thus be in the wrong place at the wrong time? Why, otherwise, was this Bill introduced? It is simply because the Prime Minister wrongly believes in paying Danegeld—but when one pays Danegeld one does not get rid of the Dane. That is why so far in this debate we have seen so few Labour Left-wingers here. They have been castigating my right hon. Friend upstairs.
  Sir G. Nabarro: Where is the hon. Member for Ebbw Vale (Mr. Michael Foot)?
  Mr. Donnelly: We all know that my hon. Friend the Member for Ebbw Vale is only a cardboard Cassius and we have no reason whatever to be concerned about that. But, in terms of the national interest, the situation regarding one of our major industries is very serious.
  This time last year my hon. Friend the Member for Bosworth and I decided to support the Government, in a moment of melodrama which was too melodramatic for me, because we felt, at the end of that debate, that it was our duty to give the Government the benefit of the doubt. It was our Government and we had worked to put it there.
  This Measure does not merit any benefit of the doubt. It is a bad and irrelevant Measure. Regrettably, I must say it is not in the national interest. Very regretfully, therefore, I must say that there are times when one has to put prejudice on one side and adopt practicality in its place, when common sense has to replace 30-year-old dogma and when country must come before party. In these circumstances, I regret that I shall not support the Government in the Lobby tonight.
  8.25 p.m.
  Sir Gerald Nabarro: I add nothing to the admirable speech of the hon. Member for Pembroke (Mr. Donnelly). He has made a far better speech against the Bill than I could ever hope to make, and, of course, he is speaking the truth. In the limited time available and in view of the appeal made by Mr. Speaker for short, terse speeches, despite the 33 minutes taken by the hon. Member for Sheffield, Attercliffe (Mr. John Hynd) and the 31 minutes taken by the hon. Member for Rotherham (Mr. O'Malley), I shall not emulate their example.
  The hon. Member for Rotherham has made his speech and left us. He twitted me that I have not formerly declared an interest in the steel industry. I always declare my interest on every occasion when appropriate. I have an interest in the steel industry—a personal interest—and within the provisions of this Bill. I am, of course, a steel shareholder. I have been ever since I started investing money through the Stock Exchange. Today, I own modest quantities of Colvilles shares, modest quantities of Stewarts
  1322
  and Lloyds shares and modest quantities of United Steel shares.
  Mr. Winterbottom: A very modest man.
  Sir G. Nabarro: I am also a modest and successful investor, and I have invested and disinvested in steel shares on many occasions, generally earning an appropriate capital appreciation. 1 am, of course, a shareholder in Richard, Thomas and Baldwins and in the remaining steel companies in this Bill through the medium of unit trust units which 1 own.
  Thus, I have declared my interest adequately, and I hope that at no future stage on the Bill will I be accused of not declaring it. For I shall sit on the Committee considering the Bill and shall oppose the Bill as vigorously as I am able. I shall oppose most of the provisions in it. I shall not say in pious fashion that I hope to improve the Bill. I shall obstruct it. I shall be fractious in every conceivable way in my opposition. I shall do so because I condemn the Bill, as did the hon. Member for Pembroke—who, I hope, will also sit on the Committee—as wholly bad.
  The Minister of Power laid down certain criteria for a national ownership of the steel industry. They were three in number. I shall not weary the House by repeating them or alluding to them in much detail. I shall only respond to him by saying what my criteria are for an efficiently conducted steel industry, whether privately owned or publicly owned. My criteria are four-fold, and I believe that individually and selectively they are generally met by the condition of the British steel industry today.
  I have almost spewed in my place this afternoon at the continuous repetition of the word "rationalisation". The Minister started it, and right hon. and hon. Members on both sides have repeated it—that awful word "rationalisation". And nobody knows what it means. Nobody could define it. In fact, in this context it is a generic term for altering the methods of operation in the industry. I would not pretend that every facet of the conduct of the steel industry is impeccable, but the same applies to every other industry and, on a wider scale, to every form of human organisation.

  1323
  excepting only some pious idiots who believe they are perfection themselves.
  Of course there are some faults in the way this industry has been conducted. I say without hesitation that the Conservative Party during 13 years in office failed to do two important things. Those who will study the OFFICIAL REPORT for those 13 years, when I sat on the back benches opposite, will find that I was continually attacking my own Ministers for failing to do these two things.
  The first was that they failed to complete the denationalisation of the industry by selling off Richard Thomas & Baldwins. The reason why they did not sell it was that it was a continuous loss earner. In the last two years alone it has lost £12 million of public money. I was delighted that the hon. Member for Pembroke brought out the figures so vividly in his speech. He said that the return on capital vested in the 90 per cent. of the steel industry privately owned was 7 per cent. and that the return on the publicly-owned sector of 10 per cent,—namely Richard Thomas & Baldwinswas 0·2 per cent., notwithstanding that huge sums of Government money were injected into Richard Thomas & Baldwins to build the Spencer Works. That was one grave error by the Conservative Party.
  The second grave error was the fact that the Conservative Government never broke the price ring in the steel industry in spite of the Monopolies Act, 1956, followed by the Restrictive Trade Practices Act, 1964, of both of which I as a private enterpriser industrialist was a powerful supporter. I have never been in a cartel in my life. I enjoy competition in business and industry. But my party failed to break the price ring. It failed to put the steel companies before the Restrictive Trade Practices Court to end the pernicious habit arising from a buyer send out an invitation to tender to, say, six steel companies for, say, 1,000 tons of cold rolled strip and the buyer receiving the identical price from each of the six companies. That is wholly bad.
  Those were the only two major errors that the Tory Party made. Other than that, the Act of 1953 was sound in every regard. It vested in private investors the ownership of the industry but it
  1324
  maintained a proper form of State regulation of their activities through the Iron and Steel Board with an accompanying agency called the Iron and Steel Holding and Realisation Agency for selling off the steel assets. Those were the two faults of which my party was guilty, but that is not a sufficient ground for changing the ownership of the industry.
  I return to the four criteria, and I ask four questions. Is private enterprise steel efficient? I think it is. British steel is sold the world over in competition with German, Belgian, French, Italian and American steel, and by and large, with one or two minor exceptions, British steel is cheaper. I believe that British steel is of the best quality in the world.
  Mr. Winterbottom: In 1953 British steel was the cheapest in the world, without any doubt at all. In 1964 the gap between the price of British steel and that of our Continental rivals had narrowed considerably, and in some cases our prices were higher. How does one stop the rot in terms of not only stopping the narrowing of the gap but of preventing us from having the dearest steel in the world?
  Sir G. Nabarro: I dispute at once that British steel is the dearest in the world. That is manifest.
  Mr. Winterbottom Idid not say that.
  Sir G. Nabarro: That is, in any case, a Committee point. I shall sit on the Committee and I shall demonstrate, with adequate proof, that by and large British steel is highly competitive in the markets of the world.
  Secondly, is the output of British steel adequate to home requirements and to overseas demands? My answer to that is again in the affirmative. Last year 27 million ingot tons of British steel was produced, and of that about seven-eighths was consumed at home and about one-eighth exported. Only a relatively tiny quantity was imported, and that was generally in respect of grades, sizes and types for which there was a special demand at the time.
  Thirdly, is the British steel industry self-financing? I believe it is. Had it not been for the political influences of the threat of nationalisation of the steel industry, there would never have been a

  1325
  time in the last 15 years when the British steel Industry found itself incapable of raising on the stock market sufficient sums of money for modernisation and the rate of expansion required.
  Fourthly, does the British steel industry serve the national interest? I believe that in the last 13 years since the Act of 1953, in which I played a prominent part, as the OFFICIAL REPORT will show, the British steel industry has continuously served the national interest. At the end of the war our output of steel was 16 million ingot tons. Last year it was 27 million ingot tons. That is an increase of approximately 70 per cent. It is an increase at a rate commensurate with the year-by-year requirements of British industry and exports.
  The Benson Report, to which adequate reference has been made today, predicts, and i1 can only be hypothetical, that the demand for British steel in 1975 will be 35 million ingot tons, compared with last year's output of 27 million ingot tons. That is an increase of 8 million ingot tons over a period of nine years. It projects for nine years forward a rate of increase in output of British steel commensurate to the rate of increase in recent years which has proved adequate for our home and overseas sales requirements.
  I want to apply a simple refutation of the outrageous inaccuracy of the hon. Gentleman the Member for Sheffield Attercliffe (Mr. John Hynd). He is no psephologist. He said that the Labour Party had a clear mandate for nationalising steel. Nothing of the kind. I quote the figures from the last General Election when there were 13,065,000 labour votes, allied to 62,000 Communist votes, a total of 13,127,000 votes, for the nationalisation of steel. Against it there were 11,418,000 Tory votes and 2,327,000 Liberal votes, a total of 13,745,000 votes against the nationalisation of steel. If one wishes to apply a psephological test as to the positions of the major political parties, there is a majority of 618,000 against the nationalisation of steel. To test this psephological point, I turn to the hon. Gentleman the Member for Orpington (Mr. Lubbock), who is sitting behind me —[HON. MEMBERS: "He has gone."]—he was there when I asked him. Hon. Members are hair splitting. I said to the hon. Gentleman, who is the Liberal Chief
  1326
  Whip, "And where do the Liberal Party go to vote?" And he said, "Into the Lobby with the Tories". I said, "All twelve of them?" and he said "Aye, all twelve of them". There is no doubt about the honouring of their Liberal election pledges. The psephological assessments of the hon. Gentleman the Member for Attercliffe were utter nonsense.
  The hon. Member for Pembroke was right when he said that the real danger of nationalisation was political influence. Take the leader in the Financial Times this morning. It said:
  "The Government may quarrel with details of this report; it cannot afford to quarrel with the broad outline if it means to make the industry more efficient. The danger in nationalisation is that it may cause economic considerations to be subordinated to politics on a scale that the country cannot afford."
  Of course the country cannot afford it. The hon. Gentleman the Member for Colne Valley (Mr. Richard Wainwright) talked about compensation. I am glad to see the Chief Secretary in his place. The hon. Gentleman spoke of compensation of £350 million. He was wrong. The compensation required under this Bill will be of the order of £630 million, at today's figures, including the bank overdrafts of the 14 companies to be nationalised. I shall not go into details; it is a Committee point. But I remind the right hon. Gentleman—and I hope that he will deal with me when he replies—that never has money been more expensive in Britain than it is today. Never has it cost 8 per cent. to raise a debenture. That is what it is costing at present. When this Bill is through, we may have, if the Labour Government are still in office, a Bank Rate of 9 per cent., costing 10 per cent. to raise money on a fixed interest security. What is today a coupon of 8 per cent. resting on a 7 per cent. Bank Rate might be a 10 per cent. coupon resting on a 9 per cent. Bank Rate with the Labour Party in power. Labour would be guilty of any financial impropriety.
  Mr. Michael Foot: Do not look at me.
  Sir G. Nabarro: I am looking at the hon. Member for Ebbw Vale (Mr. Michael Foot), hoping to goad him into one of his famous interruptions in my speeches.

  1327
  Those are some of the financial consequences of the Bill. I regard the Bill as wholly bad, as destructive of the national interest, as mischievous. I shall oppose it by every Parliamentary means and by the most fractious methods of which I am capable—and they are plenty. [Interruption.] The hon. Gentleman may not be worried. He will funk sitting on the Committee, but we shall have the hon. Member for Ebbw Vale on the Committee so that I can pair with him occasionally when I do not want to be there. I shall oppose the Bill by every means in my power.
  8.42 p.m.
  Mr. E. L. Mallalieu: I do not think that the country as a whole, or indeed the House, will pay much heed to the psephology of the hon. Member for Worcestershire, South (Sir G. Nabarro), but I think he is entitled to have someone from this side of the House acknowledge that, although this may be an occasion of great controversy, and although he expressed himself with his customary vigour and announced what he would do about this Measure in its future stages, at least he did not try to raise the heat of the House. The whole debate has been remarkable for that. It might well have been an occasion of great heat, just as it is obviously a question of great controversy. In fact, the only two speeches which in any way attempted to raise the heat were those of the right hon. Members for Streatham (Mr. Sandys) and Altrincham and Sale (Mr. Barber). Even that was only a very temporary interlude.
  I will not attempt to apportion the blame for the fact that this great industry is once again in the cockpit of party politics. I think that I am interpreting the tradition of this country when I say that if a great change is brought into being as a result of constitutional process it is not generally upset by a subsequent Government. It is the tradition of this country not to upset it unless there is absolutely no shadow of doubt that the country wants a further change. I am thinking of such things as the Parliament Act, 1911. Great revolutions pass, with subsequent Governments coming in and not interfering. This was not the case with the denationalisation of steel.
  1328
  Controversial though this matter is, this occasion could be made the subject of a reconciliation in this great industry. It could be the occasion for the casting aside of dogma by both sides and looking the needs of the industry straight in the face.
  I am not afraid because of something which was recently said here, to say that the reason for the introduction of the Bill, more than any other reason, is the need for the rationalisation of the industry. It grew up haphazardly, and very little of it was either built or sited in accordance with national needs. International competition at the time when most of it grew up was comparatively irrelevant. Companies were formed, existed for a little while and were then swallowed up by, as often as not, a competitor. They were not necessarily swallowed up by companies which were near them or were even contiguous.
  On the contrary, it was often a remote company which swallowed them up, with the result that products now leave one works and take a long transportation to another works to continue their evolution towards the finished product. They do not undertake that transportation for fun or even for efficiency, or because it is best in the national interest that they should go to that particular works, but merely because, by historical accident, the firm from which they have come and that to which they go happen to be in the same ownership. That is the essence of the case about the rationalisation of the industry, which the hon. Member for Worcestershire, South seemed unable to understand.
  Of course, the powers in the industry are great private empires at the present time. We were asked not to speak about steel masters, and there is a lot to be said for that. But there is no doubt in my mind about the existence of these great private empires, and they are ruthless, cannibalistic or just plain murderous in the course of their warfare.
  The rationalisation that everybody now seems to admit needs to be carried out, has not been carried out. It has been shown beyond a shadow of doubt that this rationalisation never could come about under the present set-up. It is true that there have been the proposals by the Iron and Steel Federation to which reference has already been made, but they

  1329
  came extremely late in the proceedings, when the Government's plans were already known.
  Only a dyed-in-the-wool, anti-Labour Government at all costs man would take those proposals as a serious alternative to the Government's proposals. I do not say that they should not be taken seriously, for any suggestions should be taken seriously, particularly when they come from right inside the industry. The Corporation which is to be set up will have very great regard to the considerations put forward in the report of the Iron and Steel Federation's committee, but not as a serious alternative, especially having regard to the late stage of the proceedings at which they were produced.
  I have not yet heard any real argument—and I have sat through the whole debate— to show why the rationalisation which we all want, except, apparently, the hon. Member for Worcestershire, South, will be less likely to be brought about under national ownership and control than it would be at present. Nobody has suggested how the obstacle which the private empires have constituted to rationalisation is to be got out of the way otherwise than by national ownership.
  In the absence of such arguments, it is only sensible to say that the Government's proposals are the only serious contenders. It is not surprising that there is opposition to these proposals from the private empires, in other words from the men in the board rooms of the companies into which the industry is fragmented, the men who settle its policy in little huddles in the Iron and Steel Federation, who rig their prices and arrange their own price restrictions to the point where the court has to say that they have acted contrary to the public interests. Opposition naturally comes from these men, who settle their own emoluments and who take their own cuts out of the industry, without any responsibility to anyone else except to some of their friends who happen to be in similar positions.
  Even more serious than the things I have already said, these are the men who have been cocking a snook at the Iron and Steel Board ever since it was set up in an attempt by the party opposite to persuade people that these tycoons could be controlled in the national interest without national ownership. They are virtu-
  1330
  ally the only people in the industry now who really oppose this Measure. Of course, they have their spokesmen on the benches opposite, and I do not blame right hon. and hon. Members opposite for being their spokesmen; they are quite entitled to do it. Under certain leaderships, oppositions will use any stick to beat a government with.
  As we who represent steel constituencies know and we are mostly on this side of the House; I think that there is one hon. Member opposite who could be said remotely to represent a steel constituency in that he represents a residential area of Sheffield—from the highest paid man to the lowest paid men in the industry, the great majority of the people in this industry now know that this sort of proposal which the Government are making must come and they want it to come.
  Only so, they believe, will the industry be able to pull out its full potential and use its resources to the best advantage. Only so will it be able to spend enough on research and the use of the newest techniques. Only so will it give the best chance to the technicians and to the workers in the industry to make the industry buzz, for itself and for the nation.
  Managers and technicians of all sorts in the industry, who are prepared to put their skill and their work at the service of this industry, have everything to gain, and they know it, from such proposals as the Government are putting forward. Virtually all those who do not have seats on the boards are quite sure of this. That is my belief from my experience in my constituency. I believe that this is now the occasion when everybody in the industry, whether in a board or out of it, should support the Government's Measure and try to bring a degree of peace to the industry which this occasion gives them the chance of doing.
  Sir Harmar Nicholls: The hon. and learned Member is suggesting that the result of the election gave some support for this Measure. He ought to keep in mind that his party lost about four elections because this was in their platform and that they got it on this occasion by accident rather than by design.
  Mr. Mallalieu: The hon. Member has only just come in to the debate. We have had all this before and I will not repeat it again. The hon. Member will be able to read it in HANSARD tomorrow. He can see that it is dangerous for anyone, on either side, to claim a mandate for a particular Measure having regard to the Constitution. If, however, it is possible to claim a mandate for anything under our Constitution, it surely is for this Measure that is now before the House.
  Mr. Ian Lloyd: If it is dangerous to attribute a mandate, is it not equally, if not far more, dangerous to attribute unanimity in point of view to a large class of employees in the steel industry—the whole of the executive class, some several thousand people?
  Mr. Mallalieu: I do not think I said "unanimity". I said "the very great majority". That is my experience in my constituency, and it is the largest steel-producing area in the country. It is quite plain to me now that that is the case there.
  Last time, when national ownership was attempted, there was undoubtedly sabotage by people who were left in control of the industry after it was taken into the ownership of the State. There was bullying from the top of managerial persons particularly, who showed some understanding of the necessity to have a complete change. I very sincerely hope there will be none this time, because I think we have a chance to begin afresh now and to do the best thing for the industry. I hope that there will be a marked degree of industrial democracy inside this new industry when it is taken over, and that there will be to-ing and fro-ing on a substantial scale between the boardrooms and the shop floors. If we can bring this about we really have a chance to make the people in the industry feel that they have a stake in it: and if they feel that, well then, they are far more likely to be able to pull together than ever they have hitherto, and then indeed the future of everyone in the industry with something to offer, and who is prepared to offer it without stint, will be secure. The nation will see to that.
  8.56 p.m.
  Colonel C. G. Lancaster: At this very late hour, I do not propose to go over the arguments which have been adduced from both sides of the House, and if I do not follow the hon. and learned Gentleman the Member for Brigg (Mr. E. L. Mallalieu), it is because I want to refer in particular to three speeches made this afternoon. To start with, there was that of the Minister of Power, and I should like to congratulate him on his elevation to his high post. He made a very pleasant speech. He did not convince me very much. He himself seemed a little unconvinced as well. He claimed that this was only the beginning, that it was not the end. He was right in saying that. If he had said it was, he would have had to prove to the House how he thought this would bring about greater efficiency, a lowering of costs, and higher production. No one can claim that it will.
  Even more important, I say with respect to the right hon. Gentleman the Minister, was the speech of the right hon. Gentleman the Member for Vauxhall (Mr. Strauss). He speaks with great experience; he brought in the original Bill; and he is a man with a long experience in the commercial world. It was evident that, apart from his saying that he would vote on behalf of this, he was in great measure opposed to the proposal. He was against it because he, likewise, could not see that this was the most effective means of bringing about what I am sure everybody in this House wants to see brought about, the efficiency of this industry, its prosperity, and its future development. I believe this can be brought about, but I do not believe that nationalisation is the only way to bring it about.
  The Minister said we in our party had an obsession against nationalisation—but we have not got Clause Four in our constitution; and we oppose nationalisation perhaps because it has been borne in upon us that it really is not an answer to so many of these questions.
  Finally, I just want to say one word about the very able speech of the hon. Member for Pembroke (Mr. Donnelly), who always speaks delightfully. I thought he spoke very lucidly this afternoon. Some of the arguments he brought to bear were a very real indictment of the

  1333
  suggestions of his own party, but I do not want to make too much about that.
  If I may bring in a personal aside to all this, one reason why, I presume, I caught your eye, Mr. Deputy Speaker, at this late hour in the debate, although I have very little claim to do so, because I spoke on the last occasion, is, perhaps, that I have had the rather unique experience of being nationalised twice, in coal and steel. It may be said that as a result of that I am bigoted against nationalisation. I hope I am not. I am against nationalisation on quite other grounds.
  For the last 10 years, I have worked on the Select Committee on Nationalised Industries, which is far longer than anyone else in the House. The value of that Committee is that we have been an all-party Committee dealing dispassionately with the industries which we have considered. Such success as we have had, and I believe that it has been considerable, is because we have brought to bear an objective view in inquiring into the various nationalised industries, reporting on them and finally making recommendations. But I should be intellectually dishonest if I said that I had come to any other fundamental conclusion than that nationalisation was not the answer to so many of our industrial problems. However satisfactory the results of the nationalised industries may seem, they do not measure up to the standards which private enterprise has to impose upon itself. If the House decides tonight that steel is to be nationalised, I feel that it will fail for the same reason.
  9.0 p.m.
  Sir Keith Joseph: We come to the end of what, to my surprise, has been a curiously muted debate. Perhaps that is because members of the Left wing of the Government party, having got their objective, found themselves too busy in other activities on the Committee floor to be present to gloat. But we have had some distinguished speeches from right hon. and hon. Members with experience on both sides of the House. The right hon. Member for Vauxhall (Mr. Strauss) on the Government side, and my right hon. Friend the Member for Streatham (Mr. Sandys) on the Opposition side, both brought considerable experience from previous battles over steel to their con-
  1334
  demnation of the Bill. The hon. Member for Pembroke (Mr. Donnelly), although I heard only part of his speech, was obviously in incandescent form in his demolition of the Bill, and I understand that the hon. Member for Neath (Mr. Coleman) made a number of very shrewd comments from his long experience as a trade unionist.
  This evening, we are to hear the right hon. Gentleman the Chief Secretary to the Treasury, and I hope that we shall not get a pure Treasury answer to this important debate. We expect him to deal with the question of compensation, because the Minister said that that was what he would do. But I would give him warning now of four major questions on which we should like the Government's answer, and I give him the warning so that he has plenty of time to think about them.
  The first is the relatively technical but very important question about investment. I gathered from the Minister's speech that he was criticising the steel industry of the past for adhering under the Iron and Steel Board to what is called the trend line for investment. I do not know whether he meant to do so, but he implied that under nationalisation the industry would cope autarchically with peak demand. We should like to know from him whether that is the Government's intention, because, in the present world of glut, it could be a hideously expensive policy.
  Secondly, we should like to know how the Government propose to finance the compensation and what effect they expect it to have on an economy gripped, as it will be if the Government's policies are effected, by almost the toughest squeeze in recorded modern history.
  The third question which we should like to hear answered by the right hon. Gentleman is what the Government propose to do about over-manning. We have not heard many warnings to the workers that nationalisation will mean an attempt to increase output per worker. We want to know whether that means that the Government will tackle it but have not warned anyone, or do not propose to tackle it at all.
  The fourth question is this. The Government are battling for foreign confidence in sterling. Do they acknowledge,

  1335
  yes or no, the shock to confidence abroad of going ahead with this Bill?
  This debate is not about the imperfections of the private enterprise steel industry, but about the best way of improving the industry. On the one hand we have the nationalisation solution, and on the other we have private enterprise on the lines set out by Benson stage one, and it is hoped Benson stage two to follow. Having heard the Minister's speech, we on this side of the House believe that no adequate case has been made for the nationalisation alternative.
  What did the Minister give us? Not even his dearest friends could say that he gave us anything more than a few carefully selected facts, delivered in isolation, without any background. Let me try to fill in some of the background which the Minister failed to give the House. For many years after the war, as most of us know, there was a steel famine in the world, and it was against this condition of universal shortage that the maximum price, perhaps at any rate for that period, made some sort of sense. But that period of famine has passed, and since about 1960 we have had a situation of world glut and large world surpluses of steel, and the hon. Member for Rotherham (Mr. O'Malley), with his knowledge of the industry, and his hon. Friend the Member for Neath both emphasised this.
  That is the background, unacknowledged by the Minister, to the recent success of the private enterprise industry. It is against this background of a world steel glut that the British steel industry has held, or very nearly held, until last year, its share of the world steel trade. American steel exports have plunged. Japanese steel exports have rocketed. European steel exports have fallen heavily, and only recovered slightly last year. British steel exports, however—the Minister did not even acknowledge this—have remained steady throughout the shortage, and throughout the glut, until last year when under a Labour Government, but I make no point of that, they fell slightly. This surely should be said by a Minister who, as he proclaimed, is trying to be fair to the industry.
  As my right hon. Friend the Member for Altincham and Sale (Mr. Barber) said, last year there was an export record from
  1336
  this country. We exported six times as much steel in value as we imported. There was a production record, and if production has fallen it is because under a Labour Government the gross national product as a whole has fallen and that affects steel production. If imports are now moving up from last year's low level, it is because the world glut has reduced prices so sharply abroad that we are getting dumping of steel and dumping of pig iron to which reference has been made.
  Despite our anxiety to bring out the real facts, and the background to these facts, we on this side of the House recognise that, like every other industry in this country, the steel industry is not perfect. We do not propose, simply because we are against the Bill, that the future should be exactly the same as the past.
  As my right hon. Friend said, we have four major objectives. We want to see that competition within the tariff wall in this country is sharp. We want to see that rationalisation occurs on the lines scaled out in Benson one. We want a pricing system more in tune with competition, as is now being practised by the new zonal arrangements introduced by several of the steel companies. We want to see that all our arrangements for steel are compatible with entry into Europe at the earliest possible date. Since these objectives cannot be reconciled with nationalisation, we have declared our intention to oppose the Bill.
  I want now to turn to the main arguments, such as they are, which have been used to justify nationalisation. First, there is the argument of rationalisation. I am a layman, and the arguments about ideal size and structure of the industry are highly technical and complex. Even experts disagree on what is the right tariff answer for the different size of markets.
  Over and above all that, new technical processes may occur which, in time, alter the optimum scale of any sort of plant, but even a layman can say certain undeniable things about this industry. In the Minister's opening speech he failed, in his analysis, to make a fundamental distinction between the size of steel firms and the size of steel plants. The giants to which the Minister referred are giant companies, composed mostly of non-giant

  1337
  plants. Economies, particularly in scale, flow from large plants and not at all from large companies. There are only 14 larger plants in the world than our largest plant, and of those 14 only one is in Europe, so the Minister made a fundamental confusion in his analysis.
  It is true that rationalisation is taking place in Europe. Since the glut at the turn of the decade there has been a wave of defensive mergers aimed, as far as I can see, at restricting competition and raising prices. In Germany, 31 steel outlets have been cut to four—perilously like a cartel. We know that the E.C.S.C. is against cartels and has had to adjust its rules to allow this operation to take place in Germany. The Minister must be aware that such an operation would be dead against our Restrictive Trade Practices Act, and anyway, the threat of nationalisation and the fear of monopoly charges have stifled any such movement in this country. But rationalisation into larger companies could come quickly here.
  The full benefits of rationalisation come only from fewer larger plants and, as the Minister is well aware, fewer larger plants cannot be speedily achieved in this country, whether or not under nationalisation, because most United Kingdom plants have been modernised and it would be costly to scrap existing works overnight and concentrate output in order to garner the economies of scale.
  This programme of concentrating the output is what Benson proposes as a private enterprise programme over the next 10 years. What he envisages is fewer but larger United Kingdom plants, and this can be done without nationalisation. The next surge of investment decisions is what matters, and they can begin without this Bill in order to provide the economies of scale that we want.
  The second argument sometimes proclaimed in favour of nationalisation is concerned with labour relations. Here, I must: refer' to the hon. Member for Neath, a steel trade unionist, who said that industrial relations in this private enterprise industry are the envy of all. Nobody could show that nationalisation is any guarantee of good industrial relations.
  I now turn to another aspect of labour relations—output per man, or what is sometimes referred to as over-manning.
  1338
  We are not sure of the Government's view of over-manning after the Selective Employment Tax, by which they reward over-manned industry. We presume they must be against over-manning, but what will they do about it in steel? The Benson Report proposed that more steel can be produced in 10 years in fewer, larger plants, from a labour force reduced by 100,000 workers, by means of wastage or a reduction of one-third in the size of the present labour force.
  What do the Government propose to do about this over-manning? The best known example of over-manning is in the Steel Company of Wales. It is well known because the directors have announced that they are over-manned by international standards and are taking careful advice how to tackle it with the minimum damage to the workers. But this is not only a private enterprise problem. I make no criticism of the zealous management of Richard Thomas and Baldwins, but in terms of output per worker, or productivity, as far as I can see the output of that plant, newer by 10 years than the Steel Company of Wales, is scarcely any better in terms of over-manning. Therefore, what will the Government do about over-manning? We hope that the right hon. Gentleman will tell us whether or not they will tackle it. These are some of the questions which we hope the Chief Secretary will answer.
  In general, we maintain that no case has been made out for nationalisation. Even if a case had been made out on theoretical grounds, we believe that the disadvantages of nationalisation are such that it would still be the wrong solution. Right hon. and hon. Gentlemen opposite must not believe that, because we passionately perceive the evil results of nationalisation, we base our attitude entirely on ideological grounds.—[Hon. MEMBERS: "Oh."] I will spell out to the sceptics opposite some of the undoubted disadvantages of a nationalisation solution.
  First, it imposes a monopoly. It denies the users any choice in price, in quality or in delivery. If anyone imagines that the user in this country—a vast range of engineering industry dependent upon steel price, quality and delivery—can rely upon imports if he does not like the product of a nationalised steel industry, he

  1339
  should remember what Governments, admittedly of both parties, have done to protect nationalised coal from imports.
  Administratively at the drop of a hat, the choice of steel from abroad could be denied to British engineering industry. Nationalisation blurs cost consciousness. As it is a monopoly, the customers are captive and can go nowhere else. Naturally, the result for the management of nationalised industry is that they pay far less heed to what the customer wants and to the price and quality.
  Nationalisation slows and concentrates the taking of decisions. That means that every decision which should be dispersed through as many decision-takers as possible is taken by very few people and where it is wrong the error is maximised. This is one of our main reasons for opposing nationalisation. Decision-making should be dispersed over a rapidly-changing competitive market. Nationalisation concentrates it and maximises the risk of error. It prevents the cross-fertilising process of managers moving from one company to another. I believe that there are many tales in the steel industry of managers who are discontented and frustrated in one company finding opportunities to show their initative and skill in another company.
  All that disappears with nationalisation. [HON. MEMBERS: "No."] As it creates a monopoly, nationalisation cuts the scope for individual management initiative and management incentives. I ask the Minister, who praised ambition, to listen a moment. It cuts the scope for honourable managerial ambition. However zealous nationalisation staff are, there cannot be the same financial discipline and cost-consciousness as in private enterprise, because the taxpayer pays.
  Nationalisation robs management of the driving force of the pursuit of profit and the fear of loss. It blurs the forces of the market. Nationalisation is slow to adapt. The very cost of nationalisation and the blunting of the edge of cost consciousness offsets any theoretical advantage which nationalisation might show. Unless a chairman of a new nationalised steel company is a superhuman and godlike man, nationalisation has so many forces inherent in it operating against efficiency and market forces that the in-
  1340
  dustry is bound to be fossilised, ossified and unresponsive to the needs of the customer.
  I would remind the Government that there are many examples in steel—I would quote the instance of the works at Workington—of social objectives and economic ones being in conflict. But nationalisation makes the grasping of these dilemmas no easier. The nationalised industry still has to decide whether to make a decision in favour of efficiency or social objectives. Nationalisation, in short, kills the identity of greatcompanies, bleeds the taxpayer and the customer and blunts the search for efficiency and service.
  With all this weight of argument against the solution which the Government are adopting, we are told that it would be unpatriotic to undertake to repeal the Measure. We take the opposite view. In view of the disaster that this Bill will bring to the steel industry, it would be unpatriotic if we were not to undertake to repeal it. Nationalisation will be a disaster for the efficient management of this industry.
  Granted that private enterprise steel is not perfect—[HON. MEMBERS: "Hear, hear."]—but which industry is?—nationalisation is absolutely no cure whatever. Hon Gentlemen opposite do not cheer when I say that. If steel is not perfect nor are several industries which have been nationalised for many years. [HON. MEBMERS: "No."] Find one that is. The Bill will not only be the ruin of a great British industry, but it threatens other industries, under Clause 2, with subsidised competition. We shall, therefore, repeal this Measure and denationalise the industry to whatever extent is necessary and practicable to conform with the objectives I have mentioned and to provide for the discipline of competitive enterprise.
  I turn not to the Bill itself but to its timing. It would, in the light of the arguments in which we believe, be disastrous at any time, but to nationalise steel now is surely an act of lunacy. Has not the Prime Minister yet realised that it is confidence in him and his Government which is at issue throughout the world? Confidence in the right hon. Gentleman and this Administration has been shattered abroad

  1341
  —yet here the Government are deliberately introducing, at a time of sterling crisis, a Bill which is widely regarded as completely irrelevant to the economic problems of the country. It is seen abroad simply as a piece of petty Socialist backward-looking dogma. This is bound to have an effect on sterling and an effect on the gravity of the measures which the Prime Minister has had to announce to defend sterling.
  I suppose that it is too late to hope for good news this evening from the Chief Secretary. My hon. Friends and I had hoped that the Prime Minister and the First Secretary would be here during the closing stages of this important debate. The Prime Minister's shifts and evasions have done desperate damage to sterling. Now the right hon. Gentleman has his chance this evening, through the Chief Secretary, to do great good to country, sterling and the steel industry.
  The Prime Minister will have his Second Reading. He will have his little triumph for his party conference in the autumn. However, we had hoped that he would announce through the Chief Secretary tonight, perhaps in view of the sterling crisis, that the Government would not pursue the Bill any further. That is not too much to hope—that is, if the Prime Minister would put the national interest before his party interest. Let him have his triumph in the Bill, but not pursue it—at least, not for the moment; not until the country and the economy is stronger and can stand this damage to confidence abroad. If the right hon. Gentleman will not do this and if the Chief Secretary has come to us with a barren, sterile Treasury brief, then the Prime Minister will be losing the opportunity to do something solid and effective for the good of sterling and Britain.
  If that is not what we are to be told tonight, we must urge the Chief Secretary to answer the four questions which we have put to him. Let him tell us what the investment proposals, peak or trend, are under a nationalised industry. Let him tell us whether or not the Government propose to do anything about over-manning. Let him tell us what effect he expects the compensation to have on an economy which is in the grip of the tightest squeeze in modern recorded history. And let him tell us whether the Government accept—we want a "Yes" or "No" answer to
  1342
  this—the bitter damage that this Bill has done to foreign confidence in sterling; the damage it has done and is doing in this country and abroad.
  This is a bad Bill at a bad time. We shall vote against it. We hope that, even at this late hour, the Chief Secretary will have a decision, taken on grounds of national interest, to tell us about. But, knowing the Prime Minister, the weak and wanton holder of a great office, we doubt it.
  9.25 p.m.
  The Chief Secretary to the Treasury (Mr. John Diamond): I want, first, to thank the right hon. Member for Leeds, North-East (Sir K. Joseph) for being so courteous as to finish his speech five minutes before he said he would finish it.
  Sir K. Joseph: Two minutes before I said I would.
  Mr. Diamond: I do not want to do the right hon. Gentleman an injustice; he is absolutely right. I was hoping that the right hon. Gentleman was coming to his criticism of the Bill, as opposed to his inborn, innate, traditional, Conservative, opposition to an idea to which he has not given full consideration but which was accepted by the whole of his Party and given full effect to during the whole of the time they were in government. For 13 years they coped with these so-called problems of nationalisation. It is a little late now for the right hon. Gentleman, because he cannot think of anything to say about steel, to devote ten minutes out of a speech which lasted for 25 minutes to giving us a lecture on nationalisation generally.
  I propose to deal with the Bill. I propose to answer all the questions which have been put to me, particularly those asked by the right hon. Gentleman and by the right hon. Member for Altrincham and Sale (Mr. Barber), and to say what we are doing and why we are doing it and to answer the questions about timing and other matters which were put to me.
  I agree with the right hon. Member for Leeds, North-East that, until the last few minutes, it has been an extremely calm debate—muted, as he called it. I imagine that most hon. Members who spent the whole time in the Chamber—I have spent very nearly the whole time here—would agree with me that the

  1343
  debate has been muted because there is really no major opposition to the Bill.
  Hon. Members: Nonsense.
  Mr. Diamond: The exception was the speech, the whole of which I did not hear, of my hon. Friend the Member for Pembroke (Mr. Donnelly). I know that my hon. Friend sincerely opposes the Bill. The speeches made by right hon. and hon. Members opposite demonstrated that they have no alternative proposal to make to a situation which every one of them recognised was totally inadequate. Not one opposition Member said that we ought to do nothing. The right hon. Member for Altrincham and Sale made it clear that, when the Conservatives returned to power, they would denationalise up to a point, but the right hon. Gentleman covered this with very careful conditions so that it could mean absolutely anything.
  However, one thing which the right hon. Gentleman said specifically was, "We are not going back to square 1". This was because everyone realises that square 1 is a totally unsatisfactory position. Everyone realises that we are not talking about a private enterprise industry. We are not comparing a private enterprise industry with a public enterprise industry. We are talking about the necessary improvement, and how it is to be effected, to an industry which is already carried on under what can only be described as a mixed economy. It is partly private. It is partly public. The largest firm is public. It has been under some measure of control for about 30 years.
  The 1953 denationalisation, which the right hon. Member for Streatham (Mr. Sandys) proposed, gave the industry what the right hon. Gentleman thought would be a satisfactory measure of public control, a satisfactory measure of supervision. What the right hon. Member for Streatham then said is what the Opposition Front Bench spokesmen are saying now. The right hon. Member for Streatham said then that if he were to produce a board with the necessary powers it could achieve the necessary reorganisation, price competition and efficiency within the industry. However, his right hon. Friends are saying that this has failed. They are saying that they
  1344
  have to do something about it, but all they have done is to repeat the old theories which the right hon. Gentleman proposed himself.
  Mr. Barber: I did state this afternoon four principles of policy which I believe would be of assistance to the steel industry and to the nation. They are inconsistent with nationalisation, they are inconsistent with the present arrangements. I want to know from the right hon. Gentleman what objections he has to them.
  Mr. Diamond: I am coming to them. I was making the point that they are inconsistent with the present arrangements, and the present arrangements were introduced by the right hon. Member for Streatham. In reply to my right hon. Friend the Member for Vauxhall (Mr. Strauss), who made an interesting speech, the right hon. Member for Streatham said that he hoped he would introduce another Bill in due course exactly the same as last time, and he gave us to believe that he was pleased to introduce it.
  Mr. Sandys: If the right hon. Member will read my speech he will see that is not what I said. What I said was that after 13 years no doubt amendments, and in some cases important amendments, would need to be made to take account of the changed circumstances.
  Mr. Diamond: I am sorry that I omitted to draw attention to the important amendments which the right hon. Member would propose. The right hon. Member put it to us as though he was very glad to introduce the Bill in 1953. I was interested in that because it does not correspond with what was told to us by the right hon. Member for Wolverhampton, South-West (Mr. Powell)—who ought to be regarded as the authority on the topic of anti-nationalisation—when writing in the Spectator in March, 1959. He said:
  "It was the Conservative back-benchers who forced a reluctant Government to denationalise steel and road transport."
  I assume from that that we are back in the usual situation where we have Conservative back-benchers married to a particular dogma and a particular out-dated theory trying to insist that whatever happens we must denationalise and have private enterprise.

  1345
  The present situation has shown that after 15 years of this denationalised, privately controlled, supervised industry we are falling further and further behind our competitors. Those who think that we can pull through by leaving things as they are or by putting in the kind of body we already have for supervision are failing to look at the real problem.
  The real problem, as everyone knows, is the problem of getting firms of the right size and plants of the right size. The right hon. Member for Leeds, North-East twitted my right hon. Friend the Minister for not having drawn the distinction sufficiently clearly. My right hon. Friend was talking about nationalisation under which we produced a large-sized firm which enables us to do all the things which other competitive large-sized firms in Japan, in America and on the Continent are enabled to do.
  It is also the case that our proportion of large plants is inadequate. Our attention has been drawn to this by the Steel Board itself. The facts, as one of my hon. Friends pointed out, are that we get vastly increased economies of scale as we increase the size of the plant. We get a reduction in costs of something of the order of 10 per cent. if we go from a plant which produces I million ingot tons a year to one which produces 2 million and a reduction of something of the order of 15 per cent. from a plant which produces 4 million ingot tons a year. It is because we have this inadequately sized plant, because we have these firms which have failed to amalgamate, that we are all trying to find a solution. What I am saying is that the solution at present suggested by the Opposition is wholly inadequate because—and I beg the right hon. Member for Streatham to recognise this—it has been tried.
  One cannot produce a board which can go to private steel owners and persuade them to amalgamate when it means some of them losing their jobs, many losing their power and old dynasties being broken up. One cannot do this because a body which had similar powers to do it in face of growing competition and growing amalgamation abroad failed to do it.
  Mr. Barber: It is not true.
  Mr. Diamond: It is true.
  Mr. Barber rose—
  Hon. Members: Sit down.
  Mr. Barber: The Chief Secretary had three minutes more than he wanted. The system I put forward has not been tried in this country, and he knows it. It has been tried in Europe, and it has succeeded. These are our competitors. What we want to know is what objections the right hon. Gentleman has to the system which operates in Europe.
  I want to say one other thing. [Interruption.] The right hon. Gentleman complains that he has too much time, so he will not object to my intervening. He goes harking back—[Interruption.] The Prime Minister comes in and intervenes and does not even realise that the Chief Secretary was complaining a few minutes ago that he had three minutes too long in which to reply. We have had enough of the Chief Secretary and his cracks harking back to what we might have done and what the steel industry might have done. What the nation wants from the Government is to know what is best for British industry.
  Mr. Diamond: I listened most carefully to all the right hon. Gentleman's points about policy and I shall answer his questions. He said that the Opposition were proposing a body from which the steel industry should accept the need to expedite reorganisation through consultation. He proposed that we should have a supervisory body to promote competition. He has just asked me how it comes about that the necessary increases in the size of the plants of steel firms have taken place abroad and not here. He has asked why competition under private enterprise has taken place abroad and not here. These are most interesting questions. I have asked myself the same questions many times.
  I have asked myself often how it comes about that, in a country which is presumably determined on all sides to get a powerful and efficient steel industry and which can see competitive costs coming down abroad, our costs are no longer competitive. [HON. MEMBERS: "Rubbish] American productivity is about twice ours. The costs of production in the E.E.C. have fallen. Once we were cheaper. Now we are not.
  Mr. Ridley: The right hon. Gentleman does not know what he is talking about.
  Mr. Diamond: The Opposition say that all that needs to be done is to achieve economies and point to the tremendous amalgamation drives going on abroad, including France and Germany. I have often wondered how it came about why we did not do it. Presumably we did not do it because the owners of steel companies were more concerned to retain their jobs than to create an efficient industry, because they were more concerned with their empires and individual positions than with achieving a satisfactory industry in the interest of the nation, and because they were more concerned with their individual empires than with amalgamation, although some of their mills adjoin one another with not even a fence in between. Even then they could not amalgamate. It is because they have been protected, because there has been protection going on ever since 1935, because price has been protected, because there has been no price competition, that they have had no stimulation—they have had no need—to do the things that the other industries which have been run on a really competitive basis have seen the need to do and have thus gone for larger plants and larger companies.
  That is where we failed, and because we failed, and because it is vital for this country to have an efficient steel industry, because it is basic to our needs, and because the system that we have had for the last 13 years has failed, and because what the right hon. Member for Altrincham and Sale is saying is dressing up the old system, just as the right hon. Member for Streatham put it forward—for all these reasons we are bound to say that this system has not worked and will not work and we can no longer leave it to chance whether people will change their minds.
  Mr. Barber: When the Federation and the Iron and Steel Board, which is a statutory body—
  Mr. A Woodburn: On a point of order, Mr. Deputy Speaker. Is it not the custom that when an hon. Member makes two or three speeches he asks for the permission of the House to do so?
  Mr. Deputy Speaker (Sir Eric Fletcher): The Chief Secretary gave way to the right hon. Member for Altrincham and Sale (Mr. Barber).
  Mr. Barber: When the Federation and the Iron and Steel Board, which is a statutory body with members appointed by the Government, suggested that there should be price competition instead of common pricing, why was it that the Labour Government turned them down and threatened to legislate?
  Mr. Diamond: The right hon. Gentleman is still trying to pretend—[Hors. MEMBERS: "Answer."]—that there has been price competition in the steel industry.
  Mr. Barber: No.
  Mr. Diamond: The right hon. Gentleman, then, agrees that there was no price competition in the steel industry. Perhaps the simplest thing to do is to get an authoritative answer to the question of competition based on price in the steel industry. The most authoritative person is Mr. Judge, the Chairman of the British Iron and Steel Federation. He was examined—I know not whether on oath or not, but I am sure that he would be telling the truth in any event—about this issue in the Restrictive Practices Court. The questions and answers ran as follows:

  "Q. In 1953, as a director of the Dorman Long group of companies did you welcome denationalisation of steel? A. Yes.

  Q. Why? A. Because I felt that under denationalisation there would be return to greater enterprise and initiative within the company.

  Q. But is not competition in price one of the fundamental characteristics of private enterprise? A. Yes, but not as applied to the steel industry in my view. I do not accept it as an essentially good thing for the steel industry.

  Q. It is right, is it not, that as soon as steel was denationalised in 1953 the steel industry entered into price fixing agreements? A. I should imagine so, yes.

  Q. So that the steel industry did not grasp the freedom that it was offered under denationalisation? A. As far as price is concerned, no, it did not grasp it.

  Q. So far as the customer is concerned, what is the difference under your present price agreement and under nationalisation? A. As to paying a fixed price for the products, I cannot see that he is in any immediate difference."

  Sir K. Joseph rose—
  Mr. Barber: Give way.
  Mr. Diamond: There cannot be any dispute of fact. I have merely quoted excerpts from the shorthand writer's

  1349
  report of the evidence. I am sure that the right hon. Gentleman would now like me to go on and give some more of the information.
  Mr.Barber: On a point of order. Is it not reasonable, when the right hon. Gentleman complained at the beginning of his speech that he had too much time and as I have put a specific question to him about why the Labour Government prevented price competition, that he should at least try to answer it?
  Mr.Deputy Speaker: The right hon. Gentleman knows perfectly well that that is not a point of order. The Chief Secretary has given way a number of times. It is entirely within his discretion when and how often he will give way.
  Mr. Diamond: I have given way four or five times. The right hon. Gentleman did not feel able to give way once. I hope that we can feel that I am not being discourteous to the Opposition Front Bench, and that we can now get on to answering some of the questions. I have been asked a number of questions about compensation.
  It would be in the interests of the House if I made an authoritative statement about the problems relating to compensation. The interesting thing is that, with one minor exception, there has been no complaint about the essential basis chosen for compensation. Everyone recognises that the Stock Exchange price is the sensible way of approaching it, and is the customary way. It has happened on every occasion except where the State has been acquiring assets instead of undertakings.
  I am glad to note that we are all agreed that the Stock Exchange is a sensible basis. I wish to quote two sets of figures. The figure proposed for compensation for equity securities under this Bill, is £484 million which compares with a market price on 1st July, 1966 of £464 million. The proposed compensation is £20 million in excess of the market price at that date.
  Mr. Geoffrey Hirst: So what?
  Mr. Diamond: The hon. Gentleman the Member for Shipley asks, "so what?" It is very important whenever the State is compulsorily acquiring assets that it should be seen to be paying a fair price.
  1350
  It is very important that I should demonstrate that. All that I wanted to say was how glad I was that everyone is now accepting that.
  Mr. Hirst: I accept the premise of the argument but the Government by their various actions have forced down the share prices.
  Mr. Diamond: The Government have not forced down the price. Anyone looking at the price will be interested to see that, although there was a sort of pyramid in the market price quotations five or six years ago when there was a boom, ever since then, in the last four years there has been a plateau when prices have remained remarkably constant, and if one were to take an average of the prices during that period when they have remained remarkably constant—which is the kind of figure any businessman, broker or accountant would be inclined to take as demonstrating the real value as between purchaser and seller on an open market one would arrive at a figure of £451 million, which is £33 million less than the price being paid.
  My hon. Friends are quite right. One can criticise the compensation being offered on the grounds that it is unduly generous. I can only say to them that it is very important to demonstrate that, when one is acquiring assets compulsorily from an unwilling vendor, it should be shown that one is paying the full price, as we are doing.
  Mr. Ridley rose—
  Mr. Diamond: No, I will not give way. Some of those sellers are foreign sellers and, again, one must establish that this country acts not only fairly but on the generous side of fairly. I hope that my hon. Friends will accept that situation.
  I have been asked what the effect of this will be on the market. As everybody knows, the effect on the market has been discounted already. The amounts in question may seem large, but they are a very small proportion of the total of equities or the total of gilt edged securities. The total of quoted equities is £50,000 million. We are therefore removing from that market 1 per cent. That is approximately what is involved. Moreover, my right hon. Friend in this year's Budget—and everybody will remember

  1351
  this—provided for an exceptionally low figure of borrowing this year—E287 million compared with £724 million in the previous year. This produces a situation in which additional borrowing can be very easily accommodated. We do not have to overlook the wise management of the Bank of England which comes to our assistance for this purpose. Far from the market being anxious lest we should nationalise it, the market's sole anxiety is lest we do not nationalise it.
  I am sorry that I did not hear all of the speech of my hon. Friend the Member for Pembroke. I am told that he was anxious about the expenditure of £500 million on the acquisition of shares which could have been spent on schools, hospitals, and so on. I am sure that he will not mind my pointing out that we are exchanging paper for paper, and it does not make the slightest difference to the resources available of the kind to which my hon. Friend referred. It would be most unfortunate if anybody were to take the view that this in any sense affects the amount of resources available for the social services. It does nothing of the sort.
  I was asked about timing and why the Government were choosing this time of all times to nationalise steel. I will give the answer. I preface it by saying that I was interested to note that all those saying that we must not nationalise now —perhaps a little later would be all right —are saying, "As soon as we get back to power we shall denationalise completely". The first answer is that there has been sufficient uncertainty in the steel industry, and we do not propose that it should continue. That is a good reason for nationalising now.
  The second answer is that as a Treasury Minister naturally I have had to pay particular regard to foreign opinion. For that reason, we have been in touch with all our embassies abroad. We find nothing in the replies which we have had from all our embassies abroad to support any of the anxieties expressed by the Opposition. Those anxieties are based on outmoded views, as if in, for example, Austria, which has a wholly nationalised steel industry, Italy, which has a partly nationalised steel industry, and other parts of the Continent the idea of a nationalised steel industry is so
  1352
  extraordinary and revolutionary that it would affect—
  Mr. Philip Goodhart rose—
  Mr. Diamond: I will not give way again, as I told the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).
  Therefore, there is no danger whatsoever of foreign opinion being in any way prejudiced or hostile to what we are proposing to do.
  The major answer is, as will emerge more clearly in tomorrow's debate, that the state of our economy does not permit us to allow the steel industry to continue in a situation in which, because of its private ownership, full efficiency is denied. Full efficiency is made impossible. It is not a question of whether we can do it now i we cannot afford to wait any longer. There is urgency about it, and that is why we are proposing to get on with the job. [Interruption.]
  Mr. Speaker: Order. Mr. Speaker wants to hear the winding-up speech.
  Mr. Diamond: The right hon. Member for Leeds, North-East asked what the Government are proposing to do about over-manning in the steel industry. I assume from that question that the right hon. Gentleman alleges that overmanning exists in the steel industry.
  Sir K. Joseph indicated assent.
  Mr. Diamond: The right hon. Gentleman no doubt has in mind the S.C.O.W. Report, and so on. In answering his question, I must first ask how it comes about that this wonderful privately-run steel industry, run under a system which the right hon. Member for Streatham says is the ideal system for running the industry, this private enterprise industry which is the acme of efficiency, has this over-manning.
  An Hon. Member: Like the railways.
  Mr. Diamond: The hon. Gentleman says, "Like the railways". I am grateful for the hon. Gentleman's comment. If there is over-manning in that industry I invite the House to consider what has happened on both the railways and in the coal mines, where there has been a rundown of labour—a complete rundown in the mining industry—without a major

  1353
  difficulty of any kind, as a result of the improved labour relations which are possible only with a nationalised industry. [Interruption.] Is it not odd that the hon. Gentleman can never accept an answer to one point—[Interruption.]
  Mr. Speaker: Order. We cannot argue by running commentary.
  Mr. Michael Foot: Hon. Members opposite are the Argentinians of debate.
  Mr. Diamond: I hope that the House will realise that if there is over-manning in the steel industry, as the right hon. Gentleman alleges, it is in the interests of the nation that we should have a means whereby, through consultation between the two sides, over-manning can be reduced in a humane and efficient way, which has come about both in the nationalised railways and in nationalised coal.
  Steel is one of the commanding heights —[Interruption.]—and as the present situation results in an inefficient supply of steel and in inadequate competition; as
  there is need for larger firms and larger units, a development which is incompatible with the retention of private ownership; as anything less than 100 per cent. State ownership is unfair to the private shareholder and inadequate to achieve the public interest; as the change is overdue, and as we have the support of the workers in the steel industry and of the electorate; and as steel is basic to the expansion of our economy; we propose that Britain should occupy that height, and do it now.
  Mr. Gilbert Longden rose—
  Mr. Alan Fitch (Lord Commissioner of the Treasury)rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the Bill be now read a Second time:—
  The House divided: Ayes 328, Noes 247.

  Division No. 145.]

  AYES

  [10.0 p.m

  Abse, Leo

  Buchan, Norman

  Dunnett, Jack

  Albu, Austen

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

  Dunwoody, Mrs. Gwyneth (Exeter)

  Allaun, Frank (Salford, E.)

  Butler, Herbert (Hackney, C.)

  Eadie, Alex

  Alldritt, Walter

  Butler, Mrs. Joyce (Wood Green)

  Edwards, Robert (Bilaton)

  Allen, Scnolefield

  Cant, R. B.

  Edwards, William (Merioneth)

  Anderson, Donald

  Carmichael, Neil

  Ellis, John

  Archer, Peter

  Carter-Jones, Lewis

  English, Michael

  Armstrong, Ernest

  Castle, Rt. Hn. Barbara

  Ennals, David

  Ashley, Jack

  Chapman, Donald

  Evans, Albert (Islington, S.W.)

  Atkins, Ronald (Preston, N.)

  Coe, Denis

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

  Atkinson, Norman (Tottenham)

  Coleman, Donald

  Femyhough, E.

  Bacon, Rt. Hn. Alice

  Concannon, J. D.

  Finch, Harold

  Bagier, Cordon A. T.

  Conran, Bernard

  Fitch, Alan (Wigan)

  Barnes, Michael

  Corbel, Mrs. Freda

  Fletcher, Raymond (Ilkeston)

  Barnett, Joel

  Cousins, Rt. Hn. Frank

  Fletcher, Tod (Darlington)

  Baxter, William

  Craddock, George (Bradford, S.)

  Floud, Bernard

  Beaney, Alan

  Crawshaw, Richard

  Foley, Maurice

  Bellenger, Rt. Hn. F. J.

  Cronin, John

  Foot, Sir Dingle (Ipswich)

  Bence, Cyril

  Crosland, Rt. Hn. Anthony

  Foot, Michael (Ebbw Vale)

  Benn, Rt. Hn. Anthony Wedgwood

  Crossman, Rt. Hn. Richard

  Ford, Ben

  Bennett, James (G'gow, Bridgeton)

  Cullen, Mrs. Alice

  Forrester, John

  Bidwell, Sydney

  Dalyell, Tam

  Fowler, Gerry

  Binns, John

  Davidson, Arthur (Accrington)

  Fraser, John (Norwood)

  Bishop, E. S.

  Davies, Dr. Ernest (Stretford)

  Freeson, Reginald

  Blackburn, F.

  Davies, G. Elfed (Rhondda, E.)

  Galpern, Sir Myer

  Blenkinsop, Arthur

  Davies, Ednyfed Hudson (Conway)

  Gardner, A. J.

  Boardman, H.

  Davies, Harold (Leek)

  Garrett, W. E.

  Booth, Albert

  Davies, Ifor (Gower)

  Garrow, Alex

  Boston, Terence

  Davies, Robert (Cambridge)

  Ginsburg, David

  Bottomley, Rt. Hn. Arthur

  Davies, S. O. (Merthyr)

  Gordon Walker, Rt. Hn. P. C.

  Bowden, Rt. Hn. Herbert

  de Freitas, Sir Geoffrey

  Gourlay, Harry

  Boyden, dames

  Delargy, Hugh

  Gray, Dr. Hugh (Yarmouth)

  Braddock, Mrs. E. M.

  Dell, Edmund

  Greenwood, Rt. Hn. Anthony

  Bradley, Tom

  Dempsey, James

  Gregory, Arnold

  Bray, Dr. Jeremy

  Dewar, Donald

  Griffiths, David (Rather Valley)

  Brooks, Edwin

  Diamond, Rt. Hn. John

  Griffiths, Rt. Hn. James (LlanellY)

  Broughton, Dr. A. D. D.

  Dickens, James

  Griffiths, Will (Exchange)

  Brown, Rt. Hn. George (Belper)

  Dobson, Ray

  Gunter, Rt. Hn. R. J.

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

  Doig, Peter

  Hamilton, James (Bothwell)

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

  Driberg, Tom

  Hamilton, William (Fife, W.)

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

  Dunn, James A.

  Hamling, William

  Hannan, William

  McMillan, Tom (Glasgow, O.)

  Rogers, George

  Harper, Joseph

  McNamara, J. Kevin

  Rose, Paul

  Harrison, Walter (Wakefield)

  MacPherson, Malcolm

  Ross, Rt. Hn. William

  Hart, Mrs. Judith

  Mallalieu, E. L. (Brigg)

  Rowland, Christopher (Meriden)

  Heseldine, Norman

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

  Rowlands, E. (Cardiff, N.)

  Hattersley, Roy

  Manuel, Archie

  Ryan, John

  Hazell, Bert

  Mapp, Charles

  Shaw, Arnold (Ilford, S.)

  Henig, Stanley

  Marquand, David

  Sheldon, Robert

  Herbison Rt. Hn. Margaret

  Marsh, Rt. Hn. Richard

  Shinwell, Rt. Hn. E.

  Hilton, W. S.

  Maxwell, Robert

  Shore, Peter (Stepney)

  Hooley, Frank

  Mayhew, Christopher

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

  Homer, John

  Mellish, Robert

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

  Houghton, Rt. Hn. Douglas

  Mendelson, J. J.

  Silkin, S. C. (Dulwich)

  Howarth, Harry (Wellingborough)

  Mikardo, Ian

  Silverman, Julius (Aston)

  Howarth, Robert (Bolton, E.)

  Milian, Bruce

  Silverman, Sydney (Nelson)

  Howie, W.

  Miller, Dr. M. S.

  Skeffington, Arthur

  Hoy, James

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

  Slater, Joseph

  Hughes, Rt. Hn. Cledwyn(Anglesey)

  Molloy, William

  Small, William

  Hughes, Emrys (Ayrshire, 8.)

  Morgan, Elystan (Cardiganshire)

  Snow, Julian

  Hughes, Hector (Aberdeen, N.)

  Morris, Alfred (Wythenshawe)

  Spriggs, Leslie

  Hughes, Roy (Newport)

  Morris, Charles R. (Openshaw)

  Steele, Thomas (Dunbartonshire, W.)

  Hunter, Adam

  Morris, John (Aberavon)

  Stewart, Rt. Hn. Michael

  Hynd, John

  Moyle, Roland

  Stonehouse, John

  Irvine, A. J. (Edge Hill)

  Mulley, Rt Hn. Frederick

  Strauss, Rt. Hn. G. R.

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

  Murray, Albert

  Summerskill, Hn. Dr. Shirley

  Jackson, Peter M. (High Peak)

  Neal, Harold

  Swain, Thomas

  Janner, Sir Barnett

  Newens, Stan

  Swingler, Stephen

  Jay, Rt. Hn. Douglas

  Noel-Baker, Francis (Swindon)

  Symonds, J. B.

  Jeger, George (Goole)

  Norwood, Christopher

  Taverne, Dick

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

  Oakes, Gordon

  Thomas, George (Cardiff, W.)

  Jenkins, Hugh (Putney)

  Ogden, Eric

  Thomas, lorwerth (Rhondda, W.)

  Jenkins, Rt. Hn. Roy (Stechford)

  O'Malley, Brian

  Thomson, Rt. Hn. George

  Johnson, Carol (Lewisham, S.)

  Oram, Albert E.

  Thornton, Ernest

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

  Orbach, Maurice

  Tinn, James

  Jones, Dan (Burnley)

  Orme, Stanley

  Tomney, Frank

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

  Oswald. Thomas

  Tuck, Raphael

  Jones, J. Idwal (Wrexham)

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

  Urwin, T. W.

  Judd, Frank

  Owen, Will (Morpeth)

  Valley, Eric G.

  Kelley, Richard

  Padley, Walter

  Wainwright, Edwin (Dearne Valley)

  Kenyon, Clifford

  Page, Derek, (King's Lynn)

  Walden, Brian (All Saints)

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

  Paget, R. T.

  Walker, Harold (Doncaster)

  Kerr, Russell (Feltham)

  Palmer, Arthur

  Wallace, George

  Leadbitter, Ted

  Pannell, Rt. Hn. Charles

  Watkins, David (Consett)

  Ledger, Ron

  Park, Trevor

  Weitzman, David

  Lee, Rt. Hn. Frederick (Newton)

  Parker, John (Dagenham)

  Wellbeloved, James

  Lee, Rt. Hn. Jennie (Cannock)

  Parkyn, Brian (Bedford)

  Wells, William (Walsall, N.)

  Lee, John (Reading)

  Pearson, Arthur (Pontypridd)

  Whitaker, Ben

  Lester, Miss Joan

  Peart, Rt. Hn. Fred

  White, Mrs. Eirene

  Lever, Harold (Cheetham)

  Pentland, Norman

  Whitlock, William

  Lever, L. M. (Ardwick)

  Perry, Ernest G. (Battersea, S.)

  Wigg, Rt. Hn. George

  Lewis, Arthur (W. Ham, N.)

  Prentice, Rt. Hn. R. E.

  Willey, Rt. Hn. Frederick

  Lewis, Ron (Carlisle)

  Price, Christopher (Perry Bar)

  Williams, Alan (Swansea, W.)

  Lipton, Marcus

  Price, Thomas (Westhoughton)

  Williams, Alan Lee (Hornchurch)

  Lomas, Kenneth

  Price, William (Rugby)

  Williams, Clifford (Abertillery)

  Loughlin, Charles

  Probert, Arthur

  Williams, Mrs. Shirley (Hitchin)

  Luard, Evan

  Pursey, Cmdr. Harry

  Williams, W. T. (Warrington)

  Lyon, Alexander W. (York)

  Rankin, John

  Willis, George (Edinburgh, E.)

  Lyons, Edward (Bradford, E.)

  Redhead, Edward

  Wilson, Rt. Hn. Harold (Huyton)

  McBride, Neil

  Rees, Merlyn

  Wilson, William (Coventry, S.)

  McCann, John

  Reynolds, G. W.

  Winnick, David

  MacColl, James

  Rhodes, Geoffrey

  Winterbottom, R. E.

  MacDermot, Niall

  Richard, Ivor

  Woodburn, Rt. Hn. A.

  Macdonald, A. H.

  Roberts, Coronwy (Caernarvon)

  Woof, Robert

  McGuire, Michael

  Roberts, Gwilym (Bedfordshire, S.)

  Yates, Victor

  McKay, Mrs. Margaret

  Robertson, John (Paisley)

  Zilliacus, K.

  Mackenzie, Gregor (Rutherglen)

  Robinson,Rt.Hn.Kenneth(St.P'C'aS)

  Mackie John

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

  TELLERS FOR THE AYES:

  Mackintosh, John P.

  Rodgers, William (Stockton)

  Mr. Charles Grey and

  Maclennan, Robert

  Roebuck, Roy

  Mr. George Lawson.

  NOES

  Alison, Michael (Barketon Ash)

  Biffen, John

  Brown, Sir Edward (Bath)

  Allason, James (Hemel Hempstead)

  Birch, Rt. Hn. Nigel

  Bruce-Gardyne, J.

  Astor, John

  Black, Sir Cyril

  Bryan, Paul

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

  Blaker, Peter

  Buchanan-Smith,Alick(Angus,N&M)

  Awdry, Daniel

  Body, Richard

  Buck, Antony (Colchester)

  Baker, W. H. K.

  Bossom, Sir Clive

  Bultus, Sir Eric

  Barber, Rt. Hn. Anthony

  Boyd-Carpenter, Rt. Hn. John

  Campbell, Gordon

  Batsford, Brian

  Boyle, Rt. Hn. Sir Edward

  Carlisle, Mark

  Beamish, Col. Sir Tufton

  Braine, Bernard

  Carr, Rt. Hn. Robert

  Bell, Ronald

  Brewis, John

  Cary, Sir Robert

  Bennett, Sir Frederic (Torquay)

  Brinton, Sir Tatton

  Channon, H. P. G.

  Berry, Hn. Anthony

  Bromley-Davenport,Lt.Col.Sir Walter

  Chichester-Clark, R.

  1356

  1357

  Clark, Henry

  Hogg, Rt. Hn. Quintin

  Pearson, Sir Frank (Clitheroe)

  Clegg, Walter

  Holland, Philip

  Peel, John

  Cooke, Robert

  Hooson, Emlyn

  Percival, Ian

  Cooper-Key, Sir Neill

  Hordern, Peter

  Peyton, John

  Cordle, John

  Hornby, Richard

  Pike, Miss Mervyn

  Corfield, F. V.

  Howell, David (Guildford)

  Pink, R. Bonner

  Costain, A. P.

  Hutchison, Michael Clark

  Pounder, Rafton

  Craddocli, Sir Beresford (Spelthorne)

  Iremonger, T. L.

  Powell, Rt. Hn. J. Enoch

  Crawley, Aidan

  Irvine, Bryant Godman (Rye)

  Price, David (Eastleigh)

  Crouch, David

  Jenkin, Patrick (Woodford)

  Prior, J. M. L.

  Crowder, F. P.

  Jennings, J. C. (Burton)

  Quennell, Miss J. M.

  Cunningham, Sir Knox

  Johnson Smith, G. (E. Grinstead)

  Rawlinson, Rt. Hn. Sir Peter

  Currie, G. B. H.

  Johnston, Russell (Inverness)

  Rees-Davies, W. R.

  Dalkeith, Earl of

  Jones, Arthur (Northants, S.)

  Renton, Rt. Hn. Sir David

  Dance, James

  Jopling, Michael

  Ridley, Hn. Nicholas

  Davidson,James(Aberdeenshire,W.)

  Joseph, Rt. Hn. Sir Keith

  Ridsdale, Julian

  d'Avigdor-Goldsmid, Sir Henry

  Kaberry, Sir Donald

  Rippon, Rt. Hn. Geoffrey

  Dean, Paul (Somerset, N.)

  Kerby, Capt. Henry

  Robson Brown, Sir William

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

  Kershaw, Anthony

  Rodgers, Sir John (Sevenoaks)

  Digby Simon Wingfield

  Kimball, Marcus

  Roots, William

  Dodds-Parker, Douglas

  King, Evelyn (Dorset, S.)

  Rossi, Hugh (Hornsey)

  Doughty, Charles

  Kitson, Timothy

  Royle, Anthony

  Douglas-Home, Rt. Hn. Sir Alec

  Knight, Mrs. Jill

  Russell, Sir Ronald

  Drayson, G. B.

  Lambton, Viscount

  St. John-Stevas, Norman

  du Cann, Rt. Hn. Edward

  Lancaster, Col. C. G.

  Sandys, Rt. Hn. D.

  Eden, Sir John

  Langford-Hoit, Sir John

  Scott, Nicholas

  Elliot, Capt. Walter (Carshalton)

  Legge-Bourke, Sir Harry

  Sharples, Richard

  Errington, Sir Eric

  Lewis, Kenneth (Rutland)

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

  Eyre, Reginald

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

  Sinclair, Sir George

  Farr, John

  Lloyd, Ian (P'tsm'th, Langstone)

  Smith, John

  Fisher, Nigel

  Lloyd, Rt. Hn. Selwyn (Wirral)

  Stainton, Keith

  Fletcher-Cooke, Charles

  Longden, Gilbert

  Steel, David (Roxburgh)

  Forrest, George

  Loveys, W. H.

  Stodart, Anthony

  Fortescue, Tim

  Lubbock, Eric

  Summers, Sir Spencer

  Foster, Sir John

  MacArthur, Ian

  Talbot, John E.

  Fraser,Rt.Hn.Hugh(St'fford & Stone)

  Maclean, Sir Fitzroy

  Tapsell, Peter

  Galbraith, Hn. T. G.

  Macleod, Rt. Hn. lain

  Taylor, Sir Charles (Eastbourne)

  Gibson-Watt, David

  McMaster, Stanley

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

  Giles, Rear-Adm. Morgan

  Macmillan, Maurice(Farnham)

  Taylor, Frank (Moss Side)

  Gilmour, Ian (Norfolk, C.)

  Maddan, Martin

  Teeling, Sir William

  Gilmour, Sir John (Fife, E.)

  Maginnis, John E.

  Temple, John M.

  Glover, Sir Douglas

  Marples, Rt. Hn. Ernest

  Thatcher, Mrs. Margaret

  Glyn, Sir Richard

  Marten, Neil

  Thorpe, Jeremy

  Codber, Rt. Hn. J. B.

  Mathew, Robert

  Tilney, John

  Goodhart, Philip

  Maude, Angus

  Turton, Rt. Hn. R. H.

  Goodhew, Victor

  Maudling, Rt. Hn. Reginald

  van Straubenzee, W. R.

  Gower, Raymond

  Mawby, Ray

  Vaughan-Morgan, Rt. Hn. Sir John

  Grant, Anthony

  Maxwell-Hyslop, R. J.

  Vickers, Dame Joan

  Grant-Ferries, R.

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

  Wainwright, Richard (Colne Valley)

  Gresham Cooke, R

  Mills, Peter (Torrington)

  Walker, Peter (Worcester)

  Griffiths, Eldon (Bury St. Edmunde)

  Mills, Stratton (Belfast, N.)

  Walker-Smith, Rt. Hn. Sir Derek

  Grimond, Rt. Hn. J.

  Miscampbell, Norman

  Wall, Patrick

  Gurden, Harold

  Mitchell, David (Basingstoke)

  W alters, Dennis

  Hall, John (Wycombe)

  Monro, Hector

  Ward, Dame Irene

  Hall-Davis, A. G. F.

  More, Jasper

  W eatherill, Bernard

  Hamilton, Michael (Salisbury)

  Morgan, W. G. (Denbigh)

  Webster, David

  Harris, Frederic (Croydon, N.W.)

  Morrison, Charles (Devizes)

  Wells, John (Maidstone)

  Harris, Reader (Heston)

  Mott-Radclyffe, Sir Charles

  W hiteiaw, William

  Harrison, Brian (Maldon)

  Munro-Lucas-Tooth, Sir Hugh

  Wills, Sir Gerald (Bridgwater)

  Harrison, Col. Sir Harwood (Eye)

  Murton, Oscar

  Wilson, Geoffrey (Truro)

  Harvey, Sir Arthur Vere

  Nabarro, Sir Gerald

  Winstanley, Dr. M. P.

  Hastings, Stephen

  Heave, Airey

  Wolrige-Gordon, Patrick

  Hawkins, Paul

  Nicholls, Sir Harmar

  Wood, Rt. Hn. Richard

  Hay, John.

  Noble, Rt. Hn. Michael

  W oodnutt, Mark

  Heald, Rt. Hn. Sir Lionel

  Nott, John

  Worsley, Marcus Wylie, N. R.

  Heath, Hn. Edward

  Onslow, Granley

  Younger, Hn. George

  Heseltine, Michael

  Orr, Capt. L. P. S.

  Higgins, Terence L.

  Orr-Ewing, Sir Ian

  Hiley, Joseph

  OsbOrn, John (Hallam)

  TELLERS FOR THE NOES:

  Hill, J. E. B.

  Osborne, Slr Cyril (Louth)

  Mr. Francis Pym and

  Hirst, Geoffrey

  Page, Graham (Crosby)

  Mr. R. W. Elliott.

  Hobson, Rt. Hn. Sir John

  Page, John (Harrow, W.)

  Bill accordingly read a Second time.
  Motion made, and Question put, That the Bill be committed to a Committee of the whole House—[Mr. Whitelaw.]
  The House divided: Ayes 247, Noes 325.

  Division No. 146.]

  AYES

  [10.13 p.m.

  Alison, Michael (Barkston Ash)

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

  Barber, Rt. Hn. Anthony

  Allason, James (Hemel Hempstead)

  Awdry, Daniel

  Batsford, Brian

  Astor, John

  Baker, W. H. K.

  Beamish, Col. Sir Tufton

  Bell, Ronald

  Hall, John (Wycombe)

  Nicholls, Sir Harmar

  Bennett, Sir Frederic (Torquay)

  Hail-Davis, A. G. F.

  Noble, Rt. Hn. Michael

  Berry, Hn. Anthony

  Hamilton, Michael (Salisbury)

  Nott, John

  Biffen, John

  Harris, Frederic (Croydon, N.W.)

  Onslow, Cranley

  Birch, Rt. Hn. Nigel

  Harris, Reader (Heston)

  Orr, Capt. L. P. S.

  Black, Sir Cyril

  Harrison, Brian (Maydon)

  Orr-Ewing, Sir Ian

  Blaker, Peter

  Harrison, Col. Sir Harwood (Eye)

  Osborn, John (Hallam)

  Body, Richard

  Harvey, Sir Arthur Vere

  Osborne, Sir Cyril (Louth)

  Bossom, Sir Clive

  Hastings, Stephen

  Page, Graham (Crosby)

  BoydoCarpenter, Rt. Hn. John

  Hawkins, Paul

  Page, John (Harrow, W.)

  Boyle, Rt. Hn. Sir Edward

  Hay, John

  Pearson, Sir Frank (Clitheroe)

  Braine, Bernard

  Heald, Rt. Hn. Sir Lionel

  Peel, John

  Brewis, John

  Heath, Rt. Hn. Edward

  Percival, Ian

  Brinton, Sir Tatton

  Heseltine, Michael

  Peyton, John

  Bromley-Davenport,Lt.Col.sir Walter

  Higgins, Terence L.

  Pike, Miss Mervyn

  Brown, Sir Edward (Bath)

  Riley, Joseph

  Pink, R. Bonner

  Bruce-Gardyne, J.

  Hill, J. E. B.

  Pounder, Rafton

  Bryan, Paul

  Hirst, Geoffrey

  Powell, Rt. Hn. J. Enoch

  Buchanan-Smith,Alick(Angus,N&M)

  Hobson, Rt. Hn. Sir John

  Price, David (Eastleigh)

  Buck, Antony (Colchester)

  Hogg, Rt. Hn. Quintin

  Prior, J. M. L.

  Bultus, Sir Eric

  Holland, Philip

  Quennell, Miss J. M.

  Campbell, Gordon

  Hooson, Emlyn

  Rawlinson, Rt. Hn. Sir Peter

  Carlisle, Mark

  Hordern, Peter

  Rees-Davies, W. R.

  Carr, Rt. Hn. Robert

  Hornby, Richard

  Renton, Rt. Hn. Sir David

  Cary, Sir Robert

  Howell, David (Guildford)

  Ridley, Hn. Nicholas

  Channon, H. P. G.

  Hutchison, Michael Clark

  Ridsdale, Julian

  Chichester-Clark, R.

  Irvine, Bryant Godman (Rye)

  Rippon, Rt. Hn. Geoffrey

  Clark, Henry

  Jenkin, Patrick (Woodford)

  Robson Brown, Sir William

  Clegg, Walter

  Jennings, J. C. (Burton)

  Rodgers, Sir John (Sevenoaks)

  Cooke, Robert

  Johnson Smith, G. (E. Grinstead)

  Roots, William

  Cooper-Key, Sir Neill

  Johnston, Russell (Inverness)

  Rossi, Hugh (HOrnsey)

  Cordle, John

  Jones, Arthur (Northants, S.)

  Royle, Anthony

  Corfieid, F. Y.

  Joplin, Michael

  Russell, Sir Ronald

  Costain, A. P.

  Joseph, Rt. Hn. Sir Keith

  St. John-Stevas, Norman

  Craddock, Sir Beresford (Spelthorne)

  Kaberry, Sir Donald

  Sandys, Rt. Hn. D.

  Crawley, Aidan

  Kerby, Capt. Henry

  Scott, Nicholas

  Crouch, David

  Kershaw, Anthony

  Sharpies, Richard

  Crowder, F. P.

  Kimball, Marcus

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

  Cunningham, Sir Knox

  King, Evelyn (Dorset, S.)

  Sinclair, Sir George

  Currie, G. B. H.

  Kitson, Timothy

  Smith, John

  Dalkeith, Earl of

  Knight, Mrs. Jill

  Stainton, Keith

  Dance, James

  Lamhton, viscount

  Steel, David (Roxburgh)

  Davidson,James(Aberdeenshire,W.)

  Lancaster, Col. C. G.

  Stodart, Anthony

  d'Avigdor-Goldsmid, Sir Henry

  Langford-Holt, Sir John

  Summers, Sir Spencer

  Dean, Paul (Somerset, N.)

  Legge-Bourke, Sir Harry

  Talbot, John E.

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

  Lewis, Kenneth (Rutland)

  Tapsell, Peter

  Digby, Simon Wingfield

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

  Taylor, Sir Charles (Eastbourne)

  Dodds-Parker, Douglas

  Lloyd, Ian (P'tsm'th, Langstone)

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

  Doughty, Charles

  Lloyd, Rt. Hn. Selwyn (Wirral)

  Taylor, Frank (Moss Side)

  Douglas-Home, Rt. Hn. Sir Alec

  Longden, Gilbert

  Teeling, Sir William

  Drayson, G. B.

  Loveys, W. H.

  Temple, John M.

  du Cann, Rt. Hn. Edward

  Lubbock, Eric

  Thatcher, Mrs. Margaret

  Eden, Sir John

  MacArthur, Ian

  Thorpe, Jeremy

  Elliot, Capt. Walter (Carshalton)

  Maclean, Sir Fitzroy

  Tilney, John

  Errington, Sir Eric

  Macleod, Rt. Hn. lain

  Turton, Rt. Hn. R. H.

  Evans, Gwynfor (Carmarthen)

  McMaster, Stanley

  van Strauhenzee, W. R.

  Eyre, Reginald

  Macmillan, Maurice (Farnham)

  Vaughan-Morgan, Rt. Hn. Sir John

  Farr, John

  Maddan, Martin

  Vickers, Dame Joan

  Fisher, Nigel

  Maginnis, John E.

  Wainwright, Richard (Colne Valley)

  Fletcher-Cooke, Charles

  Marples, Rt. Hn. Ernest

  Walker, Peter (Worcester)

  Forrest, George

  Marten, Neil

  Walker-Smith, Rt. Hn. Sir Derek

  Fortescue, Tim

  Mathew, Robert

  Wall, Patrick

  Foster, Sir John

  Maude, Angus

  Walters, Dennis

  Fraser,Rt.Hn.Hugh(St'fford & Stone)

  Maudling, Rt. Hn. Reginald

  Ward, Dame Irene

  Galbraith, Hn. T. G.

  Mawby, Ray

  Weatherill, Bernard

  Gibson-Watt, David

  Maxwell-Hyslop, R. J.

  Webster, David

  Giles, Rear-Adm. Morgan

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

  Wells, John (Maidstone)

  Gilmour, Ian (Norfolk, C.)

  Mills, Peter (Torrington)

  Whitelaw, William

  Gilmour, Sir John (Fife, E.)

  Mills, Stratton (Belfast, N.)

  Wills, Sir Gerald (Bridgwater)

  Glover, Sir Douglas

  Miscampbell, Norman

  Wilson, Geoffrey (Truro)

  Glyn, Sir Richard

  Mitchell, David (Basingstoke)

  Winstanley, Dr. M. P.

  Godber, Rt. Hn. J. B.

  Monro, Hector

  W olrigeoCortIon, Patrick

  Goodhart, Philip

  More, Jasper

  Wood, Rt. Hn. Richard

  Goodhew, Victor

  Morgan, W. G. (Denbigh)

  Woodnutt, Mark

  Gower, Raymond

  Morrison, Charles (Devizes)

  Worsley, Marcus

  Grant, Anthony

  Mott-Radolyffe, Sir Charles

  Wylie, N. R.

  Grant-Ferris, R.

  Munro-Lucas-Tooth, Sir Hugh

  Younger, Hn. George

  Gresham Cooke, R.

  Murton, Oscar

  Griffiths, Eldon (Bury St. Edmunds)

  Nabarro, Sir Gerald

  TELLERS FOR THE AYES:

  Grimond, Rt. Hn. J.

  Neave, Airey

  Mr. Francis Pym and

  Gurden, Harold

  Mr. R. W. Elliott.

  1360

  1361

  NOES

  Abse, LEO

  Dunnett, Jack

  Leadbitter, Ted

  Albu, Austen

  Dunwoody, Mrs. Cwyneth (Exeter)

  Ledger, Ron

  Allaun, Frank (Salford, E.)

  Eadie, Alex

  Lee, Rt. Hn. Frederick (Newton)

  Altdritt, Walter

  Edwards, Robert (EliIston)

  Lee, Rt. Hn. Jennie (Cannock)

  Allen, Scholefield

  Edwards, William (Merioneth)

  Lee, John (Reading)

  Anderson, Donald

  English, Michael

  Lester, Miss Joan

  Archer, Peter

  Ennals, David

  Lever, Harold (Cheetham)

  Armstrong, Ernest

  Evans, Albert (Islington, S.W.)

  Lever, L. M. (Ardwick)

  Ashley, Jack

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

  Lewis, Arthur (W. Ham N.)

  Atkins, Ronald (Preston, N.)

  Faulds, Andrew

  Lewis, Ron (Carlisle)

  Atkinson, Norman (Tottenham)

  Fernyhough, E.

  Lipton, Marcus

  Bacon, Pt. Hn. Alice

  Finch, Harold

  Lomas, Kenneth

  Bagier, Gordon A. T.

  Fitch, Alan (Wigan)

  Loughlin, Charles

  Barnes, Michael

  Fletcher, Raymond (Ilkeston)

  Luard, Evan

  Barnett, Joel

  Fletcher, Ted (Darlington)

  Lyon, Alexander W. (York)

  Baxter, William

  Floud, Bernard

  Lyons, Edward (Bradford, E.)

  Beaney, Alan

  Foley, Maurice

  McBride, Neil

  Be'lenge., Rt. Hn. F. J.

  Foot, Sir Dingle (Ipswich)

  McCann, John

  Bence, Cyril

  Foot, Michael (Ebbw Vale)

  MacColl, James

  Benn, Rt. Hn. Anthony Wedgwood

  Ford, Ben

  MacDermot, Niall

  Bennett, James (G'gow, Bridgeton)

  Forrester, John

  Macdonald, A. H.

  Bidwell, Sydney

  Fowler, Gerry

  McGuire, Michael

  Binns, John

  Fraser, John (Norwood)

  McKay, Mrs. Margaret

  Bishop, E. S.

  Freeson, Reginald

  Mackenzie, Gregor (Ruthergien)

  Blackburn, F.

  Galpern, Sir Myer

  Mackie, John

  Blenkinsop, Arthur

  Cardner, A. J.

  Mackintosh, John P.

  Boardman, H.

  Garrett, W. E.

  Maclennan, Robert

  Booth, Albert

  Garrow, Alex

  McMillan, Tom (Glasgow, C.)

  Boston, Terence

  Ginsburg, David

  McNamara, J. Kevin

  Bottomley, Rt. Hn. Arthur

  Gordon Walker, Rt. Hn, P. C.

  MacPherson, Malcolm

  Bowden, Rt. Hn. Herbert

  Gourley, Harry

  Mallalieu, E. L. (Brigg)

  Boyden, James

  Gray, Dr. Hugh (Yarmouth)

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

  Braddock, Mrs. E. M.

  Greenwood, At. Hn. Anthony

  Manuel, Archie

  Bradley, Tom

  Gregory, Arnold

  Mapp, Charles

  Bray, Dr. Jeremy

  Griffiths, David (Bother Valley)

  Marquand, David

  Brooks, Edwin

  Griffiths, Rt. Hn. James (Llanelly)

  Marsh, Rt. Hn. Richard

  Broughton, Dr. A. D. D.

  Griffiths, Will (Exchange)

  Maxwell, Robert

  Brown, Rt. Hn. George (Belper)

  Gunter, Rt. Hn. R. J.

  Mayhew, Christopher

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

  Hamilton, James (Bothwell)

  Mellish, Robert

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

  Hamilton, William (Fife, W.)

  Mendelson, J. J.

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

  Hamling, William

  Mikardo, lan

  Buchan, Norman

  Hannan, William

  Milian, Bruce

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

  Harper, Joseph

  Miller, Dr. M. S.

  Butler, Herbert (Hackney, C.)

  Harrison, Walter (Wakefield)

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

  Butler, Mrs. Joyce (Wood Green)

  Hart, Mrs. Judith

  Molloy, William

  Cant, R. B.

  Heseldine, Norman

  Morgan, Elystan (Cardiganshire)

  Carmichael, Neil

  Hattersiey, Roy

  Morris, Allred (Wythenshawe)

  Carter-Jones, Lewis

  Hazen, Bert

  Morris, Charles R. (Openshaw)

  Castle, Rt. Hn. Barbara

  Honig, Stanley

  Morris, John (Aberavon)

  Chapman, Donald

  Herbison, Rt. Hn. Margaret

  Mulvey, Rt. Hn. Frederick

  Coe, Denis

  Hilton, W. S.

  Murray, Albert

  Coleman, Donald

  Hooley, Frank

  Neal, Harold

  Concannon, J. D.

  Horner, John

  Newens, Stan

  Conlan, Bernard

  Houghton, Rt. Hn. Douglas

  Noel-Baker, Francis (Swindon)

  Corbet, Mrs. Freda

  Howarth, Harry (Wellingborough)

  Norwood, Christopher

  Cousins, Rt. Hn. Frank

  Howarth, Robert (Bolton, E.)

  Oakes, Gordon

  Craddock, George (Bradford, S.)

  Howie, W.

  Ogden, Eric

  Crawshaw, Richard

  Hoy, James

  O'Malley, Brian

  Cronin, John

  Hughes, Rt. Fin. Cledwyn (Anglesey)

  Oram, Albert E.

  Crosland, Rt. Hn. Anthony

  Hughes, Emrys (Ayrshire, S.)

  Orbach, Maurice

  Grossman, Rt. Hn, Richard

  Hughes, Hector (Aberdeen, N.)

  Orme, Stanley

  Cullen, Mrs. Alice

  Hughes, Roy (Newport)

  Oswald, Thomas

  Dalyell, Tam

  Hunter, Adam

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

  Davidson, Arthur (Accrington)

  Hynd, John

  Owen, Will (Morpeth)

  Davies, Dr. Ernest (Stretford)

  Irvine, A. J. (Edge Hill)

  Padley, Walter

  Davies, G. Elfed (Rhondda, E.)

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

  Page, Derek (King's Lynn)

  Davies, Ednyfed Hudson (Conway)

  Jackson, Peter M. (High Peak)

  Paget, R. T.

  Davies, Harold (Leek)

  Janner, Sir Bartlett

  Palmer, Arthur

  Davies, Ifor (Gower)

  Jay, Rt. Hn. Douglas

  Pannell, Rt. Hn. Charles

  Davies, Robert (Cambridge)

  Jeger, George (Goole)

  Park, Trevor

  Davies, S. O. (Merthyr)

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

  Parker, John (Dagenham)

  de Freitag, Sir Geoffrey

  Jenkins, Hugh (Putney)

  Parkyn, Brian (Bedford)

  Delargy, Hugh

  Jenkins, Rt. Hn. Roy (Stechford)

  Pearson, Arthur (Pontypridd)

  Dell, Edmund

  Johnson, Carol (Lewisham, S.)

  Pearl, Rt. Hn. Fred

  Dempsey, James

  Johnson, James (K'ston-onoHull, W.)

  Pentland, Norman

  Dewar, Donald

  Jones, Dan (Burnley)

  Perry, Ernest G. (Battersea, S.)

  Diamond Rt. Hn. John

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

  Prentce, Rt. Hn. R. E.

  Dickens, James

  Jones, J. Idwal (Wrexham)

  Price, Christopher (Perry Barr)

  Dobson, Ray

  Judd, Frank

  Price, Thomas (Westhoughton)

  Doig, Peter

  Kelley, Richard

  Price, William (Rugby)

  Donnelly, Desmond

  Kenyon, Clifford

  Probert, Arthur

  Driherg, Tom

  Kerr, Mrs. Anne Oiler & Chatham)

  Purvey, Cmdr. Harry

  Dunn, James A.

  Kerr, Russell (Feltham)

  1362

  1363

  Redhead, Edward

  Silverman, Sydney (Nelson)

  Watkins, David (Consett)

  Rees, Merlyn

  Skeffington, Arthur

  Weitzman, David

  Reynolds, G. W.

  Slater, Joseph

  Wellbeloveel, James

  Rhodes, Geoffrey

  Small, William

  Wells, William (Walsall, N.)

  Richard, Ivor

  Snow, Julian

  Whitaker, Ben

  Roberts, Goronwy (Caernarvon)

  Spriggs, Leslie

  White, Mrs. Eirene

  Roberts, Gwilym (Bedfordshire, S.)

  Stewart, Rt. Hn. Michael

  Whitlock, William

  Robertson, John (Paisley)

  Stonehouse, John

  Wigg, Rt. Hn. George

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

  Strauss, Rt. Hn. G. R.

  Willey, Rt. Hn. Frederick

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

  Summerskill, Hn. Dr. Shirley

  Williams, Alan (Swansea, W.)

  Rodgers, William (Stockton)

  Swain, Thomas

  Williams, Alan Lee (Hornchurch)

  Roebuck, Roy

  Swingler, Stephen

  Williams, Clifford (Abertillery)

  Rogers, George

  Symonds, J. B.

  Williams, Mrs. Shirley (Hitchin)

  Rose, Paul

  Taverne, Dick

  Williams, W. T. (Warrington)

  Ross, Rt. Hn. William

  Thomas, George (Cardiff, W.)

  Willis, George (Edinburgh, E.)

  Rowland, Christopher (Meriden)

  Thomas, lorwerth (Rhondda, W.)

  Wilson, Rt. Hn. Harold (Huyton)

  Rowland, E. (Cardiff, N.)

  Thomson, Rt. Hn. George

  Wilson, William (Coventry, S.)

  Ryan, John

  Thornton, Ernest

  Winnick, David

  Shaw, Arnold (Ilford, S.)

  Tinn, James

  Winterbottom, R. E.

  Sheldon, Robert

  Tomney, Frank

  Woodburn, Rt. Hn. A.

  Shinwell, Rt. Hn. E.

  Tuck, Raphael

  Woof, Robert

  Shore, Peter (Stepney)

  Urwin, T. W.

  Yates, Victor

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

  Varley, Eric G.

  Zilliacus, K.

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

  Wainwright, Edwin (Dearne Valley)

  Silkin, John (Deptford)

  Walden, Brian (All Saints)

  TELLERS FOR THE NOES:

  Silkin, S. C. (Dulwich)

  Walker, Harold (Doncaster)

  Mr. Charles Grey and

  Silverman, Julius (Aston)

  Wallace, George

  Mr. George Lawson.

  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Corninittal of Bills).

  BUSINESS OF THE HOUSE
  Ordered,
  That the Proceedings on the Malawi Republic Bill [Lords] may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[The Prime Minister.]

  IRON AND STEEL [MONEY]
  [Queen's Recommendation signified]
  Considered in Committee under Standing Order No. 88 (Money Committees).
  [Sir ERIC FLETCHER in the Chair]
  Resolved,
  That, for the purposes of any Act of the present Session to provide for the establishment of a National Steel Corporation and the transfer thereto of the securities of certain companies engaged in the production of steel (hereinafter referred to as "the Act") it is expedient—

  (1) to authorise the charge on the Consolidated Fund or the issue thereout of—

  (a) the principal of, and interest on, stock to be issued under provisions of the Act for making compensation for the vesting thereunder of securities of companies and other property and of rights;

  (b) any sums required by the Treasury to enable them to pay interest on the amount of any compensation for the vesting under the Act of property (other than securities) or of rights in respect of the period from the vesting of the property of rights until the date of payment of the compensation;

  1364

  (c) such sums as are necessary to enable the Minister of Power (hereinafter referred to as "the Minister") to lend money to the said Corporation;

  (d) any sums required by the Treasury for fulfilling any guarantee given by them for the repayment of the principal of, or the payment of interest on, sums borrowed by the said Corporation from a person other than the Minister;

  (e) expenses in connection with the issue, repayment or management of stock issued as aforesaid;

  (2) to authorise the Treasury, for the purpose of providing sums to be issued out of the Consolidated Fund for the purpose referred to in paragraph (1)(c) above, of providing for the replacement of sums so issued, or of providing sums required to redeem stock issued as mentioned in paragraph (1)(a) above, to raise money in any manner in which they are authorised to raise money under the National Loans Act 1939;

  (3) to authorise the payment into the Exchequer of any sums received—

  (a) by the Minister, by way of interest on, or repayment of, the debt which under the provisions of the Act is to be assumed by the said Corporation to him or sums lent to them by him;

  (b) by the Treasury, by way of interest on, or repayment of, any sums paid by them in fulfilment of any such guarantee as is mentioned in paragraph (1)(d) above;

  (c) by the Minister, by way of repayment by the said Corporation of sums paid by him by way of such remuneration, allowances or expenses as are mentioned in paragraph (4)(a)(ii) or (iii) below;

  and the issue out of the Consolidated Fund of sums paid into the Exchequer representing such interest or repayment as is mentioned in sub-paragraph (a) of this paragraph and the application of sums so issued in redemption or repayment of debt, or, in so far as they represent interest, towards meeting such part of the

  1365
  annual charges for the National Debt as represents interest;

  (4) to authorise the payment out of moneys provided by Parliament of—

  (a) such sums as are requisite to enable the Minister to pay—

  (i) allowances to the members of the Iron and Steel Consumers' Council to be re-established by virtue of the Act and of any committee of that Council, remuneration and allowances to the clerks, officers and staff of that Council and expenses of that Council and of any committee thereof;

  (ii) remuneration and allowances to, and expenses incurred by, stockholders' representatives to be appointed by virtue of the Act;

  (iii) remuneration and allowances to members and officers of the Iron and Steel
  1366
  Arbitration Tribunal to be re-established by virtue of the Act and persons to whom proceedings are referred by that Tribunal for inquiry and report and other expenses of that Tribunal;

  (b) any increase attributable to provisions of the Act in the sums which, under section 12(3) of the Industrial Training Act 1964, as amended by the Redundancy Payments Act 1965, are defrayed out of moneys so provided;

  (c) any administrative expenses of the Minister incurred for the purposes of the Act or the provisions thereby revived of the Iron and Steel Act 1949.—[Mr. Diamond.]

  Resolution to be reported.
  Report to be received Tomorrow.

  MALAWI REPUBLIC BILL [Lords]
  Order read for resuming adjourned debate on Question [15th July], That the Bill be now read a Second time.
  Question again proposed.
  10.26 p.m.
  Dame Joan Vickers: When on a previous occasion I objected to the Bill receiving a formal Second Reading, I meant no discourtesy to the people of Malawi or to Dr. Banda, but we on this side felt that it would he worth while having a debate on the Bill, particularly in view of the Government's action. This is probably the first time—perhaps the hon. Lady will correct me if I am wrong—that there has been such a Bill in this House which has been retrospective. In other words, the hon. Lady has been out to Malawi to celebrate the fact that the country is a Republic and we are belatedly discussing the relevant Bill.
  Malawi is a beautiful country. I am certain that, in declaring it a Republic, Dr. Banda, whom we all respect, has meant no disloyalty to Her Majesty. We can safely say that he is a friend of this country and a loyal member of the Commonwealth. The Republic has fallen into line with the pattern of the other African States, and the majority are now constitutionally Republics.
  I first visited the country in 1951. I found it very congenial and the people very friendly. I was working for a voluntary organisation in connection with the welfare of the blind. I am glad to say that Dr. Banda has great respect for voluntary organisations, and I am sure that he will give them every support in future. He also has a very realistic approach to the current affairs of the African States. I met him on many occasions when I was chairman of the Conservative Party East and Central African Committee. He has proved that he has world statesmanship.
  I am sure that he would like me to say that he has a real friend in the Governor. He has had tremendous help from Sir Glyn Jones and his wife. Under this Bill, Dr. Banda will become Head
  1368
  of State and will have supreme power, at least for four years. He will also be head of the Government. This fits in with the African idea of a chief, who is a father figure and executive head and can also face up to ceremonial occasions. Dr. Banda has always sought promotion on merit rather than on race or colour, and the Europeans and Asians have a sense of security living in Malawi State. I hope that that will continue under the Republic.
  In view of the statement of the right hon. Gentleman the Prime Minister about a cut back in spending overseas, what is to be the future position of Malawi in this respect? In 1963 Malawi received about £30 million in aid of all kinds, not just from the United Kingdom but from West Germany, Canada, the United States, Israel and Nigeria. I believe that we are to give £52 million to Malawi for its Budget and £8 million for future development and that, in addition, we shall provide some technical assistance. I hope that the Minister will give an assurance that there will not be a cut back in the help that has been promised to Malawi, particularly since that country has, since becoming independent, increased its trade and production very rapidly. We need an assurance tonight that Malawi's future programmes can be carried out. We want to be sure that the Republic can go ahead, because it is true to say that in the past Malawi has made excellent use of the aid it has received and that it still has a big public debt, representing a heavy burden on a small country. It has been a stable country in recent years, has given security to the people of the area and has had the strength and courage to stand on its own feet.
  Malawi could be a real influence in Africa. At one time its major export was men, who had to go to either South Africa or Rhodesia to earn a living. But great strides have been made in recent years and today the Ministry of Natural Resources has about £25 million in its programmes for future development through the F.A.O. for increased exports of, for example, tea, tobacco, groundnuts and cotton. It is to be hoped that private investment will be allowed to go ahead.
  I understand that when the Bill becomes law the Bill of Rights will not be included in the Republican Constitution.

  1369
  I gather that in the new Constitution there will be the preamble to the sanctity of personal liberties as set out in the United Nations Charter on Human Rights. Under that, no person may be deprived of his property without the payment of fair compensation, and then only where public interest requires. I hope that the Minister will comment on this aspect, as well as refer to the pensions which might be offered to those who previously served Malawi and what conditions will be offered to those who will serve the new Republic.
  My hon. Friends and I welcome the Bill. We wish Malawi good luck in the future and hope that, under the leadership of Dr. Banda, it can look forward to having a multiracial society in a secure State in Central Africa.
  10.34 p.m.
  Mr. G. R. Strauss: It is not often that I address the House. However, this is the second time that I speak today. I do so briefly, merely because I wish to add a few remarks to those delivered by the hon. Lady the Member for Plymouth, Devonport (Dame Joan Vickery ).
  Three hon. Members and myself were fortunate to be in Malawi at the time of the declaration of its republican status. We were there at the request of this House, presenting a Speaker's chair to the Malawi Parliament. All hon. Members present tonight will wish to pay tribute to the Government and people of Malawi and thank them for the way in which they treated the representatives of this House.
  The celebrations connected with the declaration of republican status were elaborate and remarkably well carried out. There were visitors to Blantyre and Zomba from most of the African states and, indeed, from many parts of the world. The Government of Malawi rightly thought the occasion a very important one.
  The House should realise, in case hon. Members have any doubts about the matter, that the change in Malawi's status does not indicate any change in the fundamental relationship between the Government of Malawi and this country. Indeed, on all occasions—there were many occasions when we heard ministerial
  1370
  speeches, particularly speeches by Dr. Banda—emphasis was laid on the fact that there was a close association between the two countries, that the people of Malawi were very grateful for what had been done for them in the past by the people of the United Kingdom, and that they were most anxious to continue that relationship in the future, if possible in an even more friendly way. It was very satisfactory to find that close spirit of association between the two countries and the two Governments.
  As far as we were able to judge, the President and the Government of Malawi have their feet firmly planted on the ground. They are tackling the very considerable problems confronting them in a practical way and they are doing nothing and making no gestures which might appeal to the emotions and passions of the people of Africa inside or outside Malawi. They realise that the problems are real. They are tackling them in a serious way and are not making any promises which they feel they cannot fulfil.
  In particular, they are most anxious to retain the help of the Europeans who are today serving in Malawi in the Government, in the armed forces, and in the whole range of official bodies which are helping to run the country. They realise that they have not as yet got sufficiently well-trained Africans capable of doing this sort of work. They also realise that the people who are doing it—the Europeans, most of whom have lived there for some time—are doing it very well.
  However, it goes rather beyond that. They want this association to continue. They want, more than anything else, Malawi to develop into a multi-racial country where Europeans and Africans will live, work and prosper together without one side being jealous of the other or one trying to oust the other. Dr. Banda emphasised on several occasions, and gave an absolute guarantee, that no European serving in Malawi in any form would be ousted by any African just because that man was an Africa. They hope that in time to come, when they have trained their own people, they will have sufficient men and women of competence to take the highest positions. They are desperately anxious that Malawi should develop into a country where there is majority government—of Africans, naturally—but where

  1371
  Europeans can live in comfort and prosperity and bring up their families as happily as if they were living in Europe. That is the ambition of Dr. Banda and the whole of his Government.
  It is obvious to everyone in the House that Malawi is desperately poor. It is probably the poorest country in Africa. It cannot survive on its own resources for many years to come. About 40 per cent. of the budget comes in the form of aid from this country. The Malawi Government and Dr. Banda are exceedingly grateful for the help which this country and other European countries are giving. Dr. Banda acknowledges his gratitude on every possible occasion.
  The problem is whether the help which has been given up to now and which is paying for the practical schemes of development in agriculture and in a variety of matters will continue and, if possible, increase. I hope that my hon. Friend the Minister of State will be able to allay our fears and give us an assurance that the financial and technical help we are giving to Malawi now will not be adversely affected by the restrictions which the Government have had to impose as a result of the sterling problems. I imagine that it will not be. I very much hope that help will continue as before. It would be a grave disappointment to the people of Malawi if it were in any way restricted.
  It is terribly important that in this part of Africa there should be one government at least which is wholeheartedly friendly with this country and which wants to do its best to maintain and improve that association. So I hope that we shall be told that there will be no interference with the help we are giving to the Malawi Government. From their past record and the enormous efforts which they are making the country deserves every success in future. I am sure that it is the wish of the whole House that it will achieve that success.
  10.42 p.m.
  Sir John Vaughan-Morgan: Like the right hon. Member for Vauxhall (Mr. Strauss), I have recently been on a delegation to Malawi. I welcome as he did the opportunity to express some of our gratitude to our hosts in Malawi for the hospitality which they showed us.
  1372
  I would never have believed it possible that I could find it in my heart to go to Africa and rejoice in a country changing its status from a monarchy to a republic, but I was converted on this occasion. I cannot help adding to what the right hon. Member said a reminder that on almost every occasion when we drank the health of the new President of the Republic it was coupled as soon as possible with a toast to Her Majesty the Queen as head of the Commonwealth. Sometimes it was a little hard to realise that there had been very much of a change in status.
  It was the first visit I paid to the country for more than 10 years. Despite all the natural worries about the economy of this not very viable State, I should like to put on record that during the last 10 years, including the years spent under the Federation, there has been remarkable progress in Malawi. The really outstanding feature of the country today is the relationship between the races, not only between Africans and Europeans, but between Africans and the other minority, Indians, who should not be forgotten in the multiracial complex which has arisen in Africa. To be in Malawi and then in Rhodesia or Zambia one begins to realise that here is one country where they seem to have found the answer to multiracial problems. There is a measure of good will towards each other on the part of the races which is unexampled anywhere else.
  One or two small incidents brought this home to me. The right hon. Member for Vauxhall will remember that at the opening of the Assembly we saw a number of Europeans taking the oath of loyalty as citizens of the Republic of Malawi. These were the members whom the new President had nominated to represent various interests, Europeans in particular. It was quite remarkable that among those citizens swearing allegiance was Mr. Michael Blackwood, for many years an opponent of Dr. Banda politically who represented in Malawi Sir Roy Welenski's party and Government. There was also the son of Sir Malcolm Barrow who at one time was Deputy Prime Minister of the Federation. The lesson of it all was that Dr. Banda has shown tolerance towards his former opponents, a tolerance which has been reciprocated by them in the same spirit showing that they wish to

  1373
  build up the future of the country with him. It is with some faith in the future that we wish this Bill well tonight.
  10.45 p.m.
  Mr. Douglas Dodds-Parker: I should not like this occasion to pass without adding a few words to what has been said on both sides of the House about Malawi. It is a striking fact that three territories are to reach full independence or become republics this week. I do not think that any other Chamber in the world, nor, indeed, possibly this one, will have debated three Bills of this kind in one week.
  The Bill, which, of course, we welcome, is a formality which adjusts our laws to the actuality of the change which has already taken place in Malawi. It is also worth pointing out again that it is in no way derogatory to the Crown, as right hon. and hon. Members have pointed out. Dr. Banda has already been quoted as saying that when Malawi was a monarchy
  "her ties of friendship with Britain were cemented and strengthened."
  I agree also with those who say that, since 1945, there has been a number of instances where it might have been better if a country had gone at once from dependence into republican status because I believe—though not in the case of Malawi—there has in some cases been a certain misunderstanding before and when the time came for republican status.
  I should like to wish god-speed to Malawi, having had something to do with the country in the ten years after the war. I first went there in 1947 as Chairman of the Joint East and Central African Board, with great assistance from Mr. Arthur Creech Jones, who, I am sure, will be delighted with the events taking place here today. I worked there for one of the original tea producing companies, at a time when, just after the war, as the right hon. Member for Vauxhall (Mr. Strauss) will remember, one of the great problems was to get production going of primary products all over the world in view of the world shortage.
  Nyasaland, as it then was, is one of the pleasantest parts of Africa, and I have been lucky enough in the last 30 years to have seen most, if not all, parts of the continent at one time or another. The people of Malawi are some of the friendliest I have ever met in Africa.
  1374
  They are, indeed, quite experienced because, although their country is rather tucked away in a corner, they probably travel as much as anyone in Africa not only to Rhodesia, but to South Africa and elsewhere, and most of them return home. if it is not sophistication they enjoy, it is an experience which I believe will be helpful to them in developing their own country.
  I support my hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers) in paying tribute to Sir Glyn Jones and to all our countrymen and also to the Indians I have encountered in my commercial work who have helped and who are still helping Malawi to progress. It is also worth saying that this was the country in which Livingstone first preached his doctrine of "Christianity and Commerce". I believe that these two, hand in hand, can still do a lot for the future of Malawi, which, poor as it is, has a potential greater than that of some other African countries which have been developed somewhat earlier.
  I should also like to say a word of good will to Dr. Banda, the first man from his country to qualify as a doctor and with whom I have had very friendly personal relations since I first met him here in 1950. We did not always agree about the political future when I was at the Commonwealth Relations Department, especially about Central African Federation which, as far as I am concerned, was a genuine attempt to build a multi-racial or non-racial superstructure in the territories of Central Africa. I am certain that one day, as we are finding here vis-a-vis Europe, Malawi will be, as an independent republic, part of a bigger economic and defence grouping in East and Central and Southern Africa.
  I am certain that when that time comes—I hope it may come sooner rather than later in circumstances which Dr. Banda can approve—Dr. Banda can play a very considerable part in facilitating future co-operation. As he has shown in the course of his work in the last few years, he has set a first-class example as a real pioneer of racial co-operation in Central Africa. I wish him good fortune—I am sure that many of his former patients in Kilburn will do the same—as the first President of a country in which he has always set such a fine

  1375
  example of friendly and constructive co-operation.
  10.50 p.m.
  Sir George Sinclair: I join other hon. Members on both sides in paying tribute to the Government of Dr. Banda and their friendliness and wishing the new Republic, which came into being on 6th July, all good fortune in the future.
  I was fortunate in being one of the four who formed a delegation from this House, under the leadership of the right hon. Member for Vauxhall (Mr. Strauss), to present a Chair to the Parliament of the Republic of Malawi. We all greatly enjoyed our experience there. We were all sad that we had to return so soon. We were in the process of establishing very firm friendships with a wide range of people in Malawi, not only the people of Malawi but the people who had settled there from India and the people who had come from this country to work there, some of whom had already taken up Malawi citizenship. It was one of the most delightful features of our visit to see the interplay of opinions and discussion between the various groups who were in the country and were working together with their ideas, industry and initiative to develop the country economically.
  We met a tremendous welcome there. We met a warm-hearted people who were very independent and individualistic in their views. This was one of the reasons why we found it very easy to communicate with them. I think I would not be telling secrets out of school if I said that our discussion ranged through the evening and very late into the next morning that is, the morning that comes before the dawn. We had great pleasure in this. I hope we did not exhaust our hosts; they nearly exhausted us. Our enjoyment was only partly due to the great hospitality of the Government and the boundless kindness of the various hosts who put us up. At bottom it was the friendliness of the people themselves that caught all our imaginations.
  The future economic development of Malawi seemed to be a subject of interest to everybody with whom we were able to communicate. It was the main topic of conversation whether we were talking to our own countrymen serving there or
  1376
  Malawi people or Indians, whether rather young Malawi Ministers or some of their older leaders. The same thing was the burden of discussion: How can we get our country forward more quickly? Always—here I agree greatly with the statement made by the right hon. Member for Vauxhall—we got the impression of a country whose leaders had their feet firmly on the ground and were practical in their approach to the country's problems. This is not unnatural, for these people have had to make money go a very long way. The average income per head is now £13 a year—the lowest income anywhere in Africa that I am aware of.
  This tends to give us the impression of a people overcome by their straitened circumstances. On the contrary, they were self-reliant and determined. These qualities have been recognised in neighbouring countries, where the Malawis have also established a reputation for initiative, resourcefulness, and industry. These qualities are being drawn into effective work by the most robust leadership of their president, Dr. Banda.
  It is fortunate that there was this period between independence and the setting up of the Republic, because it made it possible for Dr. Banda's great friend and trusted colleague, the Governor-General, Sir Glyn Jones, to go on playing a dual role in getting a really effective effort from all sections of the community, focused on the development of Malawi. It was largely due to the leadership of these two men, that harmony in race relations in Malawi has been so successfully achieved and intensified during the last four years. They have set a fine example and were greatly supported throughout the various communities to which they made an appeal. This is not just a matter of leadership—it is a response to leadership, which has been very wide in Malawi.
  Here we ought to pay tribute to those who went before in the administration of Malawi and the tradition that they built up of close relations with the people —good human relations. Far beyond that was the important foundation stone —the efforts of the earliest missionaries. Theirs was one of the greatest contributions to the present strength of Malawi. It gave people confidence in the goodwill of strangers, and that confidence—

  1377
  although there have been shadows across it—is strong today under Dr. Banda's leadership. I would like to pay a tribute to the early work done by those missionaries and the continuance of that work now, chiefly in education.
  We were able to travel widely in Malawi and we saw the growth of industry round Blantyre, the capital. We saw agriculture, in some areas highly organised and on a modern scale, and in others at its most rudimentary. When we talked with people we learned the facts of the agricultural potential of that great country.. with mountains, lakes and great stretches of fertile soil, whose surface has only been scratched.
  There is a great potential for agricultural development. Dr. Banda and the able team of young men whom he has gathered round him have set their eyes on agriculture, and modern techniques in agriculture as the keystone of the future prosperity of their country. This country has a helpful role to play within the area of the developing countries. We have a Commonwealth Development Corporation, which has pioneered work in the organisation of peasant agriculture combined with modern capital, management, and techniques. This could be an Increasing contribution to agricultural prosperity in Malawi.
  I hope that when she intervenes in the debate the hon. Lady will tell us that the range of aid from this country to Malawi will not be cut owing to our own difficulties at this time, and that within that aid every encouragement will be given to the Commonwealth Development Corporation, which is having such outstanding successes in neighbouring parts of Africa in dealing with similar problems of bringing peasant farmers into active collaboration with good management, capital investment and modern facilities. This is the route of speedy agricultural advance. Through this organisation, Britain has made some of the most important advances in this respect, and I hope that Malawi will provide, as Kenya is doing at the moment, another opportunity for the organisation to show the way to the world outside.
  Any aid that we give to Malawi will be carefully used. There is no evidence of waste there. I went over schools and visited a number of organisations. I
  1378
  have been over a great number in Africa, but I have seldom seen small amounts of money put to better use. The money that the British taxpayer is allocating through the Government to support Malawi is being properly spent by people who understand the value of money and are determined that it shall not be wasted, because the needs of their people are so great.
  Each of the four of us who went there can give that assurance. We found no waste, and there was determination that corruption should not cut across the proper use of money, both internally generated and that received from outside. My main hope is that the robust, vigorous and daring leadership of Dr. Banda, and the help that he is receiving from a talented group of young men that he has gathered about him, will continue to catch the imagination of the people of Malawi. That depends on their keeping a sense of momentum in the economy.
  Above all, I hope that in his efforts to lead fast Dr. Banda is able to give those young men a real sense of participation in decision making, because if he does their leadership, plus the natural resources of the country, the advances that have been made in education and the industriousness of the people, will well repay any help that this country can give by way of aid or technical assistance. I hope that when the hon. Lady intervenes she will give us reassurances about this.
  11.4 p.m.
  Mr. John Lee: I had not intended to intervene in the debate, but a number of remarks from hon. Members opposite have provoked me into doing so. I have three reasons for wanting to intervene. First, like the hon. Member for Dorking (Sir G. Sinclair), I have practical experience of working in Africa, and he and I served in the same part of Africa. That gives me an added interest in the debate.
  Secondly, it would not be appropriate if all the congratulatory speeches going out from the House were made by the Opposition. Some, at least, of my hon. Friends should take an interest in this member of the Commonwealth.
  My third reason for intervening is that I felt that the House was just about to be drowned in a gallon of smugness

  1379
  and self-congratulation. All hon. Members, and possibly even the Monday Club, wish the Government and people of Malawi well and hope that Malawi will be happy and prosperous in its newly constituted status. Indeed, many of us would have some harsh things to say if there were any suggestion that the economic aid to that country should ever be cut down.
  Something else needs to be said, however, by way of atonement for the past. It is all very well hon. Members. opposite singing the praises of Dr. Banda now, but it did not inhibit them from locking him up a few years ago as a political prisoner. It did not inhibit them either from violating their function as a protector when, as the Government, they forced the country into an alien Federation and nearly denied its people the birthright that was theirs.
  Dr. Livingstone has been mentioned. It must be remembered that the first missionaries went to that part of Africa to protect the peoples there from enslavement. In those days, it was enslavement from the Arabs and from the incursions of the East. We in this country, in our folly, nearly consigned it to the same kind of status as that under which the unfortunate African peoples of Rhodesia and South Africa are now condemned to live. It may be said that that belongs to the past. but the fact remains, as my right hon. Friend the Minister of Housing and Local Government once said, that the British are extremely good at forgiving those whom they have wronged.
  I wish the country well. I only wish that some of the hon. Members who are so fond of pointing out Dr. Banda's excellent qualities—and he has many excellent qualities—would, perhaps, be a little more discriminating in their comments. I do not like dictatorship of either the Right or the Left, but I sometimes think that if the policies that Dr. Banda had been pursuing had the same ideological tint as those of Dr. Nkrumah, the amount of praise would not have been so great.
  I cannot be quite unqualified in my remarks of praise. I seem to recall a number of arbitrary actions that have been committed in that country. We must, however, not be complacent, and we must not be self-righteous about this. These countries must work out their
  1380
  destination. When the hon. Member for Dorking reminds us that the per capita income of the country is, even now, no more than £13 a year, I as a former colonial administrator hang my head in shame that after all our years of protection, after all the years we had to work, that is all we can say at the end.
  With all my heart I wish the country well. I beg my hon. Friend the Minister of State, when she replies, to have no thought whatever of cutting back the economic assistance. I only hope that we shall go on for many years trying to help this country to make up for the opportunities that were missed in the past.
  11.8 p.m.
  Mr. John Brewis: It is appropriate that a Scottish Member of Parliament should express good wishes to Malawi on behalf of Scotland. Scotland has a very long connection with the country, starting with Dr. Livingstone, who rediscovered the country, although it was known to be there, and going down to Dr. Banda who is, of course, an elder of the Church of Scotland. As other hon. Members have said, the Church of Scotland has made a great contribution in that country, both to the abolition of slavery and to education and to medicine, and so, indeed, have Scottish firms in industries such as tea planting.
  I think, too, that all hon. Members will be glad that Malawi is remaining a member of the Commonwealth. Malawi has always been particularly active in Commonwealth Parliamentary Association affairs and any hon. Members like myself who have been to the country have had a great welcome from the Ministers of the Malawi Government, and particularly from the Speaker of the Malawi Assembly.
  Since independence, Malawi has had a very testing time. One has only to mention the neighbours of the country —Tanzania, Mozambique, Rhodesia and Zambia—to realise what a realistic path Dr. Banda has trod since July, 1964, when his country became independent. Indeed, one can say that Malawi is now politically standing on her own feet, keeping realistically in mind that she needs good relations with South Africa and Rhodesia for work for her people,

  1381
  and also with Mozambique for cornmunications with the outside world for her trade.
  It is remarkable, too, that there was so complete and abject a failure as there was by Mr. Chiume and Mr. Chipembere when they tried to put forward their pro-Chinese policies for Malawi, their intervention being a complete flop in Malawi. There is no doubt that Dr. Banda's stock is very high among the Europeans in that country.
  As the hon. Member for Reading (Mr. John Lee), who has now left the Chamber, said, there is a great deal of leeway to make up in Malawi. At the time of federation, industry did tend to go to Rhodesia rather than Nyasaland, as it then was, and because of the common social services and police rather high standards were raised for the resources of Malawi to keep up. Therefore, I hope that our aid will continue on an undiminished scale. It is remarkable that between 1891, when the Protectorate was first formed, and 1964 only 28 Africans received higher education, and only two qualified in medicine, so that the President of Malawi, Dr. Banda, in fact forms half of the qualified medical practitioners in the entire country. But there are at the moment no fewer than 500 Malawians in higher education.
  We can be quite sure that any money we spend in this country will be spent very wisely, particularly through the Malawi Development Board, which is sensibly concentrating on projects which will help agriculture and primary industries in the country and also in developing hydro-electric power, which is so important in a country of this sort, where coal has to be imported. While they have got the possibility of hydro-electric power, as we in Scotland have, of course, as we in Scotland know, it is extremely expensive. Therefore, I hope that we will continue our aid. I thoroughly agree with the hon. Member for Dorking (Sir G. Sinclair) that the aid we give will be spent wisely, and I hope we continue aid to her.
  11.13 p.m.
  Mr. Andrew Faulds: I should like to intrude on the time of the House for a few moments because I think I must be one of the few Members
  1382
  of the House who have actually spent some years living in Malawi, and I was fortunate enough to be one of the great company of saints, if I may say so, of the Scots missionary community in what was still Nyasaland. My father and mother spent a great part of their lives devoting their energies and interests to the intellectual and spiritual improvement of the people of Malawi, and provided a benefit from which those people are still reaping a great deal. It is not an accident, I think, that the Africans of Malawi speak better English—as we Scots speak better English than the English do—than the Africans of Rhodesia and the Africans of Zambia.
  I was also fortunate enough, by one of those strange historical accidents which happen, to have known Dr. Banda as a student in Edinburgh. He was then, if I may say so, and the House may read what it likes into it, a somewhat different man from the one we met when we returned to Malawi recently. [An HON. MEMBER: "We all change.") We all change as the years pass, some for the worse—
  Mr. William Hamling: Some for the better.
  Mr. Faulds: —and some for the better.
  I was delighted that the House gave me the privilege to join the delegation which presented the Speaker's Chair to the Parliament in Malawi, and I have rarely spent a week of my life so happy as that—not only the welcome and the friendliness of the Africans of Malawi, but also the extraordinarily good comradeship of the three gentlemen I travelled with. I shall long remember as one of my warmest memories the extraordinary look of delight that spread across the genial features of the hon. Member for Dorking (Sir G. Sinclair) when my fairly ample frame was enclosed in the much more ample grasp of my old nanny at Karonga, the place where I was brought up. It was a very warm welcome. I was given the traditional eggs, which we turned into an omelet that night in the Government guest house. It is one of the many very pleasant memories which I brought back from our visit.
  I am not quite so sanguine as some other hon. Members about the prospect

  1383
  of future developments in Malawi. Without doubt, at the moment Malawi is—and I use the phrase advisedly—enjoying the benefits of benevolent dictatorship. I spent rather more time than the other members of the delegation with the younger intellectuals and university students in Blantyre. There is a fair amount of worry about the future development of Malawi. They see a situation in which a country with a rather unviable economy is being run very strongly and determinedly by one man and by a complaisant Parliament. They are intelligent and educated people, and they do not see an immediate prospect of playing much part in the development of Malawi. I can only hope that they get the opportunity.
  The House should not dismiss too easily the contributions that other people who are at the moment exiles from Malawi may play in the future development of the country. The gentlemen who have been dismissed or have withdrawn from the frontiers, Mr. Chipembere, Mr. Chiume and Mr. Chisiza, have some contribution to make. Do not let us misunderstand that. They are going to play a part in the future of the country.
  One can only hope that the President, who is a wise man, somehow or other will heal the wounds that have disturbed the political development of the country since independence.
  I greet the appearance of the Republic of Malawi with delight, as I am a firm believer in the principle that people should be able to choose the way they wish to conduct their own affairs and make whatever mistakes they want to make in the process. I pray that there are not many of these mistakes, and I wish Malawi godspeed and great success in handling her many problems.
  11.18 p.m.
  Mr. David Steel: On behalf of my Liberal colleagues, may I follow the hon. Member for Smethwick (Mr. Faulds) and extend our good wishes to Malawi as this Bill passes through the House.
  If I may say so, the hon. Member for Smethwick and the hon. Member for Galloway (Mr. Brewis) were unduly modest about the contribution which Scotland has made to the country. It is one of the many countries of the Scottish
  1384
  empire which we have seen coming to independence in recent times.
  I was glad that the hon. Member for Smethwick reminded the House that the President of the Republic is one of the many distinguished former students of the University of Edinburgh. I was pleased, too, to hear the hon. Member for Galloway remind the House, quite rightly, of the contribution of the Church of Scotland and that it was the very experience and knowledge of the Church of Scotland in former Nyasaland which occasioned the very strong stand that the Church's General Assembly took over the question of opposition to enforced federation in that part of the world.
  The hon. Member for Smethwick has referred to possible mistakes on the part of independent Malawi. However, there is no country which has managed to progress to independence and mature government and not made mistakes. In wishing the country well, naturally we hope that those mistakes will be ironed out. We hope that the people of Malawi will continue in the successful pattern that they have shown already of multiracial co-operation and success towards building up a really satisfactory and co-operative economy.
  11.19 p.m.
  Sir Frederic Bennett: In the speeches which we have heard so far, there has been notable omission which needs remedying. We want to thank the hon. Member for Plymouth, Devonport (Dame Joan Vickers) for the fact that we are having this debate at all.
  The matter came forward on Friday afternoon at 4 o'clock with an attempt to get the Bill through on the nod. Had it not been for my hon. Friend—and while detracting nothing from her efforts by saying that there are one or two other hon. Members who might have made the same effort—we should not have had this interesting debate, because the Second Reading would have gone through on the nod. I am sure, therefore, that I am expressing the gratitude of the House in thanking my hon. Friend for making the point that she did on Friday.
  Despite some of the remarks of the hon. Member for Reading (Mr. John Lee) —[HON. MEMBERS: "Where is he?"] The hon. Member left rather rapidly after

  1385
  his oration. As I was saying, despite some of the hon. Gentleman's remarks, I have no wish to introduce a controversial political note into the debate, but I think that for the sake of the whole House we ought to register the fact that, though it is not for me to suggest how the Government should run their business, there is an element of discourtesy, which I ask the hon. Lady to dispel for the sake of the dignity of the House and Malawi, that this Bill is brought forward retrospectively three weeks after the occasion has come into effect—[Interruption.] I am not making just a party point. The Bill refers to 6th July. Nearly every speech has been in favour of the Bill, but I do not think that it is courteous to the House, to the President of Malawi, or to Malawi, that we should have to indulge in retrospective legislation, even in a formal matter like acknowledging republic status. I know of no precedent for introducing a Bill of this sort nearly three weeks after the event has taken place.
  I think that an apology, or at least an explanation, is due from the Government as to how it comes about that three weeks later we are doing something which has been celebrated in Malawi.
  The Minister of State, Commonwealth Relations Office (Mrs. Judith Hart): Is the hon. Gentleman under the impression that what we are doing in this Bill is granting Malawi republic status?
  Sir F. Bennett: On the contrary. The hon. Lady has missed the point. I think she will find that I am right in saying that there is no precedent for debating a Measure late like this which does nothing more than endorse something which has taken place. It is a discourtesy to Malawi and to the House that we are discussing this Measure three weeks after the event has taken place.
  This cannot be due to a congestion of the Parliamentary timetable, because this Measure could have been discussed some time ago. If the hon. Lady reads the Bill she will see that it says:
  "This section shall be deemed to have had effect from 6th July 1966."
  I suggest that it would have been better if we had discussed it before then, and I would have made this comment whichever Government had been in power.
  1386
  What is the present aid position? I hope that the Minister will make it clear whether the aid situation has been affected, or will be affected, by the measures announced to the House last Wednesday. We are entitled to know whether there will be any interference not only with the aid already granted, but with the aid planned, for Malawi. I say no more, because it is in terms of an inquiry.
  We are here seeing the transfer of yet another of Her Majesty's former dominions from a monarchy to a republic. I do not think that anyone in this House does not regret that this pattern has extended as far as it has in Africa and Asia, but I realise that this is part of the pattern today, and no useful purpose is served in being nostalgic about it. There may be those who feel that if, much earlier, a different attitude had been taken, when the move was undertaken from a former dependency to independent status, whether the term "Governor-General" was the best word to move to from "Governor", perhaps things might have been different. But today we have to live with the fact that with few exceptions all over the Afro-Asian world members of the British Commonwealth are transferring to republics. Although we can be forgiven if we regret this state of affairs it would be altogether wrong if, in expressing this purely formal regret, we were to be taken as wishing it to influence our remaining Commonwealth ties.
  I want to pay tribute to Dr. Banda. I have known him for a long time. One of the most surprising things about the development of the British Commonwealth in Africa has been that it is precisely those gentlemen about whose political futures we have had the most serious doubts who have turned out to be the best bets for the assurance of continued friendship with this country. I admit having had doubts in the past as to whether things would turn out this way, but by common assent Dr. Banda has turned out to be one of the real statesmen—as opposed just to one of the political leaders—in Africa.
  He has shown himself to be preeminently a realist. Some people have spoken of being worried about his authoritarian ambitions. We in this House must be careful about trying to

  1387
  export our ideas of Government to other parts of the world. We should be very grateful when we have leaders in these countries who have had no great tradition of democratic rule under us but have long been subjected to our paternalism and have then had to move to a form of Government of their own. Dr. Banda is a very good example of one who has achieved a substantial measure of sensible and sane realism in a Continent which is undergoing considerable troubles. He is giving a lead which others would be well advised to follow.
  The hon. Member for Reading has now returned to the Chamber. I was not sure whether he was pro or anti the present Government of Malawi. If he had made his contribution a little longer, or had stayed for one or two subsequent speeches, we might have had a clearer idea. He talked about atoning for the past. As far as I know Dr. Banda's feelings of friendship for this country and its leaders do not extend to one political party. If he were here tonight I am sure that he would say that his feelings of appreciation for the past as well as the present relationships between Malawi and this country extends to all political parties and all Governments.
  Only one remark is being made by various hon. Members in terms of the present attitude of Malawi in the great racial problem that faces the world today which I venture to query, and that is the term that has been used over and over again"multiracial". I believe that Malawi is doing something in Africa which is rather different from the mere production of a multiracial society; I believe that it is trying to produce a genuinely nonracial society. This is a very important difference. Far from trying to balance one race against another in the allocation of power, privilege or influence, Dr. Banda is genuinely trying to produce a community which others, both white and non-white, should form—a community in which race plays no part. For this reason above all, whatever other feelings we may have about Malawi, we wish this country especially well. We have no objection to the new Constitution in its relation to this country. I think everyone will agree that it carries with it the good wishes of Britain in every sense.
  11.30 p.m.
  The Minister of State, Commonwealth Relations Office (Mrs. Judith Hart): Before expressing my agreement with most of what has been said, I would comment first on the acrimonious tone in which the hon. Member for Torquay (Sir F. Bennett) began. He will correct me if I am wrong, no doubt, but I cannot remember whether he was here at four o'clock on the Friday that his hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers) began the Second Reading debate on the Bill—
  Sir F. Bennett: I hate to interrupt the charming hon. Lady so early. Not only was I here, but I was here from 11 o'clock to four o'clock, and nearly missed my 4.30 train to Torquay.
  Mrs. Hart: I asked to be corrected if I was wrong, because I was in much the same position. The hon. Gentleman should therefore recollect that if the previous debate had been as short as it might have been, we could have given as much time to the Bill that Friday as we have been able to give today. I was very happy that the hon. Lady the Member for Devonport gave us the opportunity to have full discussion of the Bill on a later occasion rather than trying to get it through "on the nod" with no debate.
  Perhaps the hon. Gentleman would therefore be kind enough to withdraw any, possibly unintentional, imputation that we have been trying to get the Bill "on the nod"—
  Sir F. Bennett: When my hon. Friend rose to speak, I, as the hon. Member on this side responsible for the conduct of the Bill, had received no indication of the hon. Lady's happiness that the Bill should go through other than "on the nod".
  Mrs. Hart: Let us not proceed much longer with this. The hon. Gentleman will know that, at half a minute past four, the procedure of the House makes it difficult for hon. Members on either side of the House to express their views other than with a word behind the Speaker's Chair.
  I fully agree with and appreciate so much which has been said in welcoming the Second Reading of the Bill. On the hon. Lady's point about the Governor-General; for those who, like the Parliamentary deputation and myself, were in

  1389
  Malawi during Republic Week, one of the most moving moments was the moment of the departure of the Governor-General, because of the indications of the tremendous affection in which he had been regarded by Dr. Banda, by the Government and by the people of Malawi. Sir Glyn and Lady Jones can leave Malawi knowing that rarely can such work as they have both done been so completely appreciated.
  Something has been said about the present aid which Her Majesty's Government are giving Malawi. At the moment, we provide budgetary aid to Malawi to a maximum of £5.3 million this year, and shall be doing the same for the next two years. In the same three-year period—that is to say, in the next three years—Britain has promised Malawi an interest-free loan for general development of £7 million and a grant of £1 million for capital expenditure on the new Malawi University. Those who have recently seen the rapid rate of development of the university and the way it is beginning to set up its new departments and recruit its staff—it has now completed its first year of having students and will be growing rapidly in the next two or three years —will be glad that this is one of the development items to which the Government are making a substantial grant. We have also promised loans totalling £2.75 million under the Overseas Service Aid Scheme, in addition to which we give substantial technical assistance.
  As hon. Members know, the overall aid programme has to suffer some cuts because of the measures announced to meet our economic situation. At the moment the consequences of this are being studied and it would be premature for me to make any statement now about any individual country. However, this must not—and I emphasise this point—in the least be taken as implying that we are specifically contemplating any cuts now in respect of Malawi, but clearly one cannot consider this in isolation from other countries. Indeed, we are tremendously concerned that the developing countries should continue to be able to raise their living standards. However, I regret that I cannot tonight give a final reply covering the whole of the cuts that will be necessary in overseas aid.
  1390
  The hon. Member for Devonport raised the question of the Bill of Rights. She rightly pointed out that provision has been made by the Republic of Malawi to recognise personal liberties via the United Nations Declaration of Human Rights. All I need do is to confirm that the hon. Lady's statement of the position was accurate. The Malawi Government considered, first, that the laws in Malawi were sufficient to protect individuals; secondly, that, as a member of the United Nations, Malawi had publicly guaranteed its respect for the comprehensive kind of personal liberties enshrined in the Charter of Human Rights; and thirdly, that formal guarantees in a Bill of Rights would tend to invite conflict between the Executive and the judiciary in this respect. As I understand the position, the Government of Malawi decided that it was best to have its protection for personal liberties as set out in the U.N. Charter of Human Rights.
  A number of points have been made about the future development of Malawi under the leadership of Dr. Banda. I endorse everything that has been said about the tremendous respect and affection in which Dr. Banda is held by his people. Several hon. Members have referred to the past and indeed there were tremendous difficulties, but Dr. Banda has survived them all and has come through the struggles for leadership. As the hon. Member for Galloway (Mr. Brewis) and the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) pointed out, much of the past, and the present, of Malawi is bound up with Scotland. Indeed, I was happy when in Malawi to be able to convey to Dr. Banda the good wishes not only of Her Majesty's Government but of Blantyre in Scotland, which is only a mile or so from my constituency.
  We have in Malawi—although it is by no means the only one in Commonwealth Africa which is doing this—a State which is seeking to establish a non-racial society. It has a long way to go because it still must face the process of Africanisation of those who are in charge of the professional affairs of the country, and that applies to several aspects of its administration. It is a long process, but what matters is not the length of time it

  1391
  takes but the clear intention that, whatever the future may hold, there shall be equality and respect among Europeans, Indians and Africans—something on which so much of the future of Africa depends and which is so much in the thoughts of hon. Members in relation to current events in that part of the world.
  My hon. Friend the Member for Reading (Mr. John Lee) considered the past and the present and rightly said that at present in Malawi there is a one-party State, as is the position in other African countries. Everyone in the House now recognises that there are many aspects of political development in Africa in respect of which we must hope that the Africans will find their own way forward. We must recognise that we are not able, nor would it be reasonable, to seek to impose upon African development precisely the same course of parliamentary historical development that we have been lucky enough to have in this country over a period of hundreds of years.
  To say that one is at this moment in a one-party system in Africa is also to say that one is not necessarily precluding the capability and the desire to move on to a perhaps more sophisticated, more evolved, form of democracy. Nor is it to say that in their own way they are not for themselves working out a system of democracy that perhaps, for them, can be more appropriate. Therefore, we cannot be arrogant in our comments on whatever stage of political development we find.
  In Malawi what matters, as has been stressed tonight, is that there are friendship and warmth and, above all, emotional participation in concern about their own country.
  I am glad that the House has given such a warm welcome to the Bill. It is a retrospective Bill. This is not intended as any discourtesy. It is simply that what we are doing in the Bill is to ensure that the laws of the United Kingdom will apply in relation to Malawi under its republican status as they applied to it before it achieved its republican status. I am certain that nobody in the House would not want, with those who have spoken, to convey to Dr. Banda and to the people of Malawi the warm good wishes of the whole House for the future
  1392
  development and prosperity of this new Republic of Malawi.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Walter Harrison.]
  Committee Tomorrow.

  ORTHOPTISTS
  11.42 p.m.
  The Parliamentary Secretary to the Ministry of Health (Mr. Charles Loughlin): I beg to move,
  That the Professions Supplementary to Medicine (Orthoptists) Board Order of Council, 1966, a draft of which was laid before this House on 27th June, be approved.
  The purpose of the draft Order is to bring orthoptists in England, Wales, Scotland and Northern Ireland under the Professions Supplementary to Medicine Act, 1960. For hon. Members who have not come into contact with an orthoptist I should explain that she undertakes the diagnosis and treatment of squints and other eye conditions under the direction of an ophthalmic surgeon or medical practitioner.
  The profession is a small one, though no smaller than some of the professions already included under the Act, and the draft Order may affect no more than 400 people. Most orthoptists are employed in hospitals and local authority child welfare and school health clinics, and for the most part their patients are children. This is virtually an entirely female profession.
  The Professions Supplementary to Medicine Act implemented a recommendation in the Reports of the Committees on Medical Auxiliaries that State registration was the best means of securing uniformly adequate standards of qualification for members of the professions employed in the National Health Service. It introduced State registration for seven professions initially—chiropodists, dietitians, medical laboratory technicians, occupational therapists, physiotherapists, radiographers and remedial gymnasts—and established a registration board for each of them under the general supervision of the Council for Professions Supplementary to Medicine.

  1393
  It is the duty of the Boards to establish registers and to approve courses of training and qualifications for registration.
  The Act also imposes a general duty on them to promote
  "high standards of professional education and professional conduct among members of the relevant profession".
  I was recently given the opportunity to meet members of both Council and Boards. This machinery established by the Act is now going strong and both Boards and Council have already made a valuable contribution to the professions they represent.
  There is not a great deal to say about the Order itself. Paragraph 1 provides that the Act shall have effect as if orthoptists were mentioned under Section 1 of the Act, and paragraph 2 gives the title and day of coming into operation of the Order. The Schedule sets out the composition of the Orthoptists' Board and the changes necessary to provide an extra representative and medical member from the Council. It also lists certain minor amendments consequent on the addition of the orthoptists to the Act.
  The Order is made under Section 10 of the Act, which provides for the extension of the Act to new professions up to a maximum of 12 provided that certain requirements are satisfied. The Council for Professions Supplementary to Medicine considers that the profession of orthoptists is a profession supplementary to medicine, that it has reached maturity and that it already has a satisfactory scheme of training and qualifications and a proper code of professional conduct. The Privy Council accepted the recommendation of the Council for the Professions Supplementary to Medicine and the Health Departments supported it.
  Full consultation on both the principle and the drafting of the Order has been undertaken by my Department at the request of the Privy Council and the views of numerous medical and optical organisations, including the British Medical Association and the General Optical Council, as well as those of Government Departments and other interested bodies have been sought. A wide measure of agreement has been achieved, but consultations have necessarily taken a
  1394
  considerable time and I apologise to those most closely affected by the Order.
  I remind hon. Members that the Act itself does not affect the employment of unregistered persons in the National Health Service or elsewhere, nor does it prevent their practising privately. However, in accordance with an undertaking given to Parliament when the Bill was introduced, the Minister of Health and the Secretary of State for Scotland made Regulations in 1964 making State registration a condition of employment in the National Health Service for the seven professions already covered by the Act. Similar regulations in respect of orthopists will need to be considered later, but will not be introduced without full consultation with the interested bodies, including the Council for Professions Supplementary to Medicine, the Orthoptists Board and the General Optical Council.
  I hope that the House can now approve this Order and I recommend that it should do so.
  11.48 p.m.
  Mr. Bernard Braine: At the end of what has been a long day for all of us, it is very agreeable to find a subject on which we on this side of the House can agree completely with the Government. We for our part warmly welcome this Order which adds orthoptists to the seven professions supplementary to medicine already included under the Act of 1960. As I think the hon. Gentleman indicated, this must be the first new Profession to be added since the original seven were brought into the scheme for registration.
  I think it inevitable that as a profession gains in status it assumes greater responsibilities. This involves acceptance of general standards and common procedures which in turn require registration, recognised qualifications, approved courses of training, and jealously guarded codes of professional conduct.
  Indeed, as the frontiers of medicine are pushed back and new techniques of diagnosis and treatment are advanced, we can expect more and more specialised services requiring highly specialised skills to develop. Equally, as more and more specialised services develop, it becomes necessary to ensure proper machinery to

  1395
  safeguard the patient who, while he may have perfect confidence in doctors and nurses and the older professions supplementary to medicine, has no means of evaluating the training and skills of the new practitioners.
  I am stating a purely personal view when I say that I believe it is a pity that Parliament originally approved the use of the word "supplementary" in this connection. It could be taken to mean "subordinate" instead of its true meaning—the bringing of help to the medical profession. The fact is that members of these professions are members of a team of which, no doubt, the physician and the surgeon are heads. The orthoptist, as I understand it, is an essential element in the ophthalmic team and is responsible for a great deal of diagnosis and treatment of eye complaints and therefore makes an increasingly and extremely valuable contribution to health.
  There are two questions which occur to me. The first is whether the profession is completely happy about its representation on the Council. I hope the hon. Gentleman can give us an assurance on that. Secondly, though he said something about the position of practitioners who did not qualify for registration, perhaps he would spell this out a little more. The House has always been jealous of the rights of people who have practiced for many years and then, for one reason or another, find that they do not satisfy the qualifications of registration.
  It may well be that, in the highly developed profession of orthoptics, there will not be anyone practising or seeking to practise outside the National Health Service but we are anxious to know from the hon. Gentleman whether there will be any and, if there are, whether they can continue to practice.
  Subject to that, I repeat that the Opposition warmly welcome this move as making a valuable new contribution to the improvement of the National Health Service.
  11.53 p.m.
  Dr. M. P. Winstanley: I rise briefly, having listened to the hon. Member for Essex, South-East (Mr. Braine) speaking on behalf of the Conservative Party, to welcome, on behalf of the Liberal Party, this profession on its emer-
  1396
  gence and at the same time express the hope that, in becoming a profession in this sense, it will not join the older professions which, at the moment, we are apt to criticise for the preservation of restrictive practices of one kind or another.
  I am sure that the Parliamentary Secretary will recall that, at the time of the original Act, when we registered a number of new professions, such as the chiropodists and the physiotherapists, we had, by coincidence no doubt, a gradual disappearance of these various people and a shortage developing which has become alarming.
  I do not lay the responsibility for this in any particular quarter but there is no doubt that the National Health Service, for its efficiency, depends every bit as much on these supplementary professions, as they are called—chiropodists, physiotherapists, radiographers and so on—as it does on the better-known professions, such as doctors and nurses.
  We have a desperate shortage of doctors and those we have are not perhaps as well distributed as they might be. We also have a desperate shortage of nurses and they, too, are not as well distributed as they might be. In addition to these well-known shortages, we now have shortages arising amongst the supplementary professions. We have excellent radiography departments in certain parts of the country—
  Mr. Deputy Speaker (Sir Eric Fletcher): Order. That may be so but it does not arise on this Order. The only question is whether the Order be approved.
  Dr. Winstanley: I bow to your Ruling, Mr. Deputy Speaker. What I wished to say was that I hope that in arranging the emergence of this new profession of orthoptists the Minister will at the same time ensure that it is made sufficiently attractive to be able to maintain its ranks. Th. hon. Gentleman spoke of roughly 400 persons. I believe that he will not be able to maintain the numbers at 400 unless he looks carefully at the career structure within this supplementary profession.
  As to the Act, it seems that there has already been criticisms of the career structure with regard to the other supplementary professions. I merely express the hope that with regard to this particular profession the Minister will take every

  1397
  possible care to ensure that, have registered it, its standards are maintained so that its numbers can also be maintained.
  11.55 p.m.
  Mr. Loughlin: With your permission, Mr. Deputy Speaker, and that of the House, I rise to make one or two observations on the remarks made by the hon. Gentlemen representing the two parties opposite. I thank them for the support given to the Order.
  The question whether registration reduces the number of recruits is debatable. it may be that registration proves to some extent the inadequacy of the total numbers available within the service and outside it. Two professions with which we have had some difficulty are chiropodists and physiotherapists, but I can assure the hon. Member for Cheadle (Dr. Winstanley) that we shall do everything we possibly can to ensure that there are sufficient recruits to this branch of the professions supplementary to medicine. We shall watch as far as it is possible for us to do the career structure to ensure that more than the existing 400 persons come into the profession.
  On the two points raised by the hon. Member for Essex, South-East (Mr. Braine), I doubt very much—I use the words deliberately—whether there are any orthoptists who are engaged outside the National Health Service and local authority and school clinics. As to whether everybody is completely satisfied, all I can tell him is that on the present set of consultations we have reached almost unanimity. One cannot always get complete unanimity. In future consultations to be conducted before bringing into effect regulations arising out of the Order, I can give him an absolute assurance that we shall do whatever we possibly can to meet the wishes of the profession in the regulations, and in safeguarding the quality of those coming into the profession. Obviously, we shall have to be guided to a large extent by the professional organisations which represent them.
  Question put and agreed to.
  Resolved,
  at the Professions Supplementary to Medicine (Orthoptists Board) Order of Council 1966, a draft of which was laid before this House on 27th June, be approved.

  WAYS AND MEANS [21st July]

    TEES AND HARTLEPOOLS PORT AUTHORITY
    Resolution reported,
    That it is expedient to authorise the payment into the Exchequer and the reissue out of the Consolidated Fund of any sums required to be so paid or reissued by virtue of such of the provisions of any Act of the present Session to transfer to the Tees and Hartlepools Port Authority the harbour and dock works of the British Transport Docks Board at the Hartlepools and Middlesbrough as relate to the transfer of debts of the said Board to the said Authority.
    Resolution agreed to.

  ROADS, NEWHAVEN
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Walter Harrison.]
  11.59 p.m.
  Colonel Sir Tufton Beamish: To say that Newhaven is not alone in having a severe traffic problem today would be to inflict a glimpse of the obvious upon the House, something even bordering rather on the trite. There can be few industrial towns without a serious traffic problem of one kind or another, but the consequences of overcrowded roads can vary between serious local inconvenience, restrictions on the prosperity of the area and actual damage to the national economy.
  It is my submission that Newhaven is suffering in all these three respects. I raise this question with considerable feelings of sympathy for the Minister and the Parliamentary Secretary, who have an incredibly difficult task, of which I do not envy them, trying to decide priorities between road schemes in different parts of the country. I do not think that there is a Minister of Transport —I am sure that there has not been one since the war—who could not have spent two or three times the allocation of money and still have left considerable areas of the country with a feeling of grievance that they had been unreasonably left out.
  There is a very great need for stringent economies in Government expenditure. After the Prime Minister's statement last week no one can disagree with that. But we have been told by the right hon.

  1399
  Lady that no cuts are contemplated in the road programme. In that event I hope that I am pressing on an open door. It is a sensible decision that has been made about the road programme, because to some extent cutting the road programme is bound to be a self-defeating operation. Money spent on well-thought-out schemes of road improvement is bound to pay handsome dividends in future in terms of productivity and efficiency.
  I am sorry that the hon. Member for Gateshead, West (Mr. Randall) is not present. Although he represents a northern constituency he lives in Newhaven and has always taken a great interest in the town. He is not able to be here but I know that he shares my views about this question. He is doing a job of work in Europe as an executive member of the United Nations High Commission for Aid to Refugees, another subject in which he and I share a considerable interest. My reason for raising this question is to try to get from the Minister a firm undertaking to include the scheme for the Newhaven relief road in the next classified road programme.
  The decision not to include the project in the 1969–70 road programme, announced last autumn came as a very great disappointment to everyone in Newhaven and East Sussex, and to both local authorities concerned. The Parliamentary Secretary will remember that it is almost a year since I took a delegation to see him from the East Sussex County Council and the Newhaven Urban District Council. He received us in a most friendly and sympathetic way and told us that we had a good case and that it was obvious that there was an urgent need for the relief road. He would not, however, make any promise to include the scheme in the rolling programme, which was what we were pressing him to do.
  There is every advantage in ending the present uncertainty now and making a clear statement about the phasing of the three stages of the work. The plan is now in three stages as a result of a request by the Minister. It can, therefore, be tackled in three different parts. It hardly seems necessary for me to argue the need for a relief road, because not only is this self-evident, but it is common ground between the Parliamentary Secre-
  1400
  tary and myself. But I wish to take the opportunity of the debate to put on record some of the facts. Newhaven straddles the estuary of the Sussex Ouse, and the river divides the residential and shopping area to the west from the industrial area to the east. The link between the two is the A.259, a much-neglected road which is only 24 ft. wide at its widest where it goes through Newhaven. It winds its way through the town—I am now thinking of it going from east to west—crosses the Ouse by the swingbridge, and then in 200 or 300 yards crosses the railway line by level crossing. In between the swingbridge and the level crossing the road disgorges a considerable amount of traffic to the south of the busy port and the railway.
  The swingbridge is antiquated. It creaks and groans its way open and shut under the combined effort of eight men turning a winch—this on the main south coast road. What foreign visitors who arrive in Newhaven think when they see this bridge being winched open and shut, I hate to imagine. They must think that they have arrived in a museum, and not a bustling, modern, competitive country, which is what we are.
  Then there is a level crossing, which opens and closes 90 times a day. There is no synchronisation between the two. There cannot be by reason of the function they perform. For frequent periods during the day traffic is blocked for five to 15 minutes, and sometimes quite a lot longer, and it grinds to a frustrated halt in the centre of Newhaven. Sometimes it may take the best part of an hour to get through this quite small town.
  I have received dozens of letters from constituents. The most recent was from the director of a well-known firm in Newhaven who, a few weeks ago, took 50 minutes to get 500 yards through Newhaven during a very important day for him, when he was on his way to a conference in connection with an export order. The sense of frustration that this causes in Newhaven cannot be exaggerated.
  Newhaven has not just a single traffic problem but a traffic problem to the power of three. Road, rail and river traffic all combine to form a sort of triple bottleneck. The weight of road traffic for passengers and goods is already heavy and it is multiplying. This is

  1401
  quite apart from the growing volume of coastal road traffic using the A.259 and passing through Newhaven simply because it is the main coast road.
  Three modern ships operate in conjunction with S.N.C.F. from the British Railways car ferry terminal. Their traffic load has risen by between five and six times in three years. I am glad that it has; it is something for which I have been pressing for a very long time. In 1963 11,000 cars were carried, and last year the number of cars carried was more than 60,000, together with 800 loaded lorries. I am sure that this year's figures are considerably higher, and that the figures will go on rising year by year if present trends continue, as I am sure that they will.
  Last August, more than 15,000 vehicles crossed the swing bridge during an average day, many of them proceeding on their way, others concerned with the port or rail head. There are some quite serious effects of the traffic jams besides the frustration and inconvenience. The A.259 is an important link in the south coast road network. It is the main south coast road, running from Chichester through busy seaside towns, Bognor Regis, Worthing, Brighton and Hove, along the coast to Newhaven and Seaford, which is also in my constituency, to Easthourne, then on through Bexhill, St. Leonards and Hastings, Winchelsea and Rye to Folkestone, where it joins the A.20 to Dover. It is therefore, an important road.
  The population of the area is another factor which is already aggravating the situation and will continue to do so, because in Telscombe Cliffs, Peacehaven, Newhaven and Seaford together the existing population is approximately 35,000 but we now know that by 1980 or 1981 it is likely to double to about 70,000, which is a very large increase. Therefore, apart from the other factors which I have mentioned, this also will greatly aggravate the situation as the years go by.
  Another factor is that according to the best estimates from the experts who have studied these things, the extent of the traffic which is likely to use the road will probably increase, even more than the general traffic growth throughout the country, by as much as four times during the next decade.
  1402
  Newhaven is a busy and expanding port. It is also a link in the chain of Britain's export drive. It has excellent natural harbour facilities. They are so good that when the Channel is really rough, Newhaven is sometimes the only Channel port that is able to remain open for shipping.
  Newhaven also has a flourishing, expanding modern industrial area east of the river. Another industrial estate is being actively planned beside the North Quay, just above the swingbridge. This estate could well be functioning by 1968 or 1969. When it functions, the road traffic burden will be increased still further.
  There are joint proposals by British Railways and the National Ports Council to develop new berths along the East and West Quays in the southern part of the harbour. These are being actively proceeded with. As a result of the scheme, the shipping tonnage which is taken by road is expected to increase by 40,000 tons next year and, perhaps, by a further 50,000 tons in 1968. Putting these two figures together, in case I have not made myself absolutely clear, I am saying that in two or three years' time it is probable that shipping will be taking from the roads 90,000 tons of exports more than was taken last year. This, again, will aggravate the problem considerably. It is an important part of the picture which I am briefly painting.
  The Joint Parliamentary Secretary knows that the Newhaven town map is under consideration by his right hon. Friend the Minister of Housing and Local Government, having been through all its preliminary stages, and that this allows for a total of 125 acres of industrial land in Newhaven. Newhaven, in fact, is planned as the main industrial area for the whole of that stretch of the South Coast.
  Newhaven has excellent railway and port facilities, but all the schemes for the future and all the plans which I have mentioned will not be viable while the dilapidated swingbridge is still there, while there is such a busy level crossing and while the narrow road is the only way of getting through Newhaven. As a result of all these things, road traffic, rail traffic and river traffic come to a standstill in the heart of Newhaven.

  1403
  Everyone knows that it is no good putting new wine into old bottles. If ever there was an old bottle, that swing-bridge is such a bottleneck. I wish that somebody could blow it up. It was built in 1864, more than a century ago. No doubt then it was a wondrous thing, when the horse was setting the pace and the motor car was unknown. Today, the bridge is ridiculous and dangerous. The sooner it can be replaced, the better for all concerned.
  I should just like to remind the House that the eyes of this country are turned towards Europe, and that the Channel ports provide important links with Europe, which is our most important export market, roughly equal to the whole of the Commonwealth export market. I would also just like to mention, very briefly, that whether or not the Channel tunnel is ever built it does not seem to me to affect this issue one way or the other.
  I should like to conclude by simply asking the Parliamentary Secretary to be kind enough to comment on the points I have raised with him. I know he has been in touch very recently with East Sussex County Council and asked it to make a comprehensive study of the relief road scheme with a view if possible to reducing its cost. It is, I know, being very actively pursued. The hon. Gentleman has also asked the Council to try to devise a scheme which can be carried out in three stages. This the Council has succeeded in doing, as the Parliamentary Secretary knows. There is one other minor problem, which is the question of what sort of bridge is to be provided, but it does not affect the issue whether the relief road is constructed or not. What kind of bridge is built will result from a survey already planned and the result will be at hand in ample time before the work is commenced.
  So today I put to the hon. Gentleman one quite straightforward point, to announce a decision which includes Newhaven's relief road in the next extension of the classified road programme. I very much hope that the Minister will today be able to reward Newhaven's patience and restraint by giving me this undertaking.
  12.16 a.m.
  The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Stephen Swingler): This Adjournment debate promoted by the hon. and gallant Member for Lewes (Sir T. Beamish) is no surprise to me. The hon. and gallant Member has frequently emphasised the need to relieve traffic congestion in Newhaven, and the need for major road improvement there, and he has informed me of the delays caused to traffic by this level crossing and swingbridge on the A259. As he said in his speech, about 12 months ago I received a deputation on this issue from the hon. and gallant Member which included representatives of the East Sussex County Council and Newhaven Urban District Council.
  On that occasion we discussed the scheme for a relief road to provide a new bridge over the Sussex River Ouse and the adjacent railway. This scheme would cost about £22 million, and Parliamentary powers would probably be needed before a new bridge could be built there. Therefore, on that occasion I had to explain that though we did not, of course, dispute the need for a relief of conditions in Newhaven—and we very much want to see an improved road system built as soon as it can be done—taking into account the fairly substantial cost of this scheme we naturally had some difficulty in fitting it into the available funds. As always, however, this scheme had to compete with many other urgent schemes throughout the country, including Sussex, when the last extension of the classified road programme was decided in detail, and on that occasion, as the hon. and gallant Member said, it did not prove possible to include the Newhaven relief road scheme, as then planned, in the programme mainly on account of its heavy cost.
  As the hon. and gallant Member was speaking, my hon. Friend who is sitting beside me here, the Member for Luton (Mr. Howie), passed me a little note with the message on it, "Remember the eastern by-pass at Luton." It is rather characteristic of the situation in which I am so often placed in the House that there are so many Members—most of whom are not present tonight—who, nevertheless, have their favourite local road schemes for the solution of their problems, many of them of substantial

  1405
  cost, which I recognise are of urgent importance and which we have certainly to bear in mind, and which enter into this annual calculation in the roll forward of the trunk road and classified road programme according to the limited funds available.
  Hon. Members should recognise that, in spite of the financial difficulties and economic crises, the funds available are greater. In the present financial year, for new construction and major improvement, the funds from the State amount to £180 million compared with £146 million last year, but still not permitting these schemes which are mentioned to me constantly, the importance of which I recognise, to be included in the programme.
  Therefore, since that time, we have had discussions with the County Surveyor of the East Sussex County Council, as the responsible highway authority, through our divisional road engineer, to see whether the cost of this scheme, estimated to be£2½ million, could be reduced in any way or whether the scheme could be so designed to be carried out in stages.
  We understand that the county council wishes to provide an inner ring road in Newhaven in conjunction with the relief road. That inner ring road is designed to act as a distributor for local traffic to free High Street of through traffic as far as possible. Therefore, in the Ministry at the moment we are faced with two major projects in Newhaven: first of all the relief road, with its river and rail bridges, and, secondly, the ring road which would lead to a material improvement in the traffic flow round the town.
  These discussions are now centring on the possibility of constructing whole or part of a ring road between the swing-bridge over the River Ouse and the junction of the Eastbourne-Brighton road, the A259, with the Lewes-Newhaven road, the A275. That would be used as a one-way gyratory system and would bring about a considerable improvement in the traffic flow through Bridge Street and High Street in Newhaven.
  Such a scheme is being considered for inclusion in the next extension of the classified road programme which my
  1406
  right hon. Friend expects to announce later in the year. I cannot anticipate the decision tonight, of course, but I can assure the hon. and gallant Member that the proposals will be considered very carefully—both the larger proposals and the modified proposals—in competition with all the other schemes of which we have to take account.
  We do not pretend that the ring road by itself will solve everything. There are still the problems arising from the congestion caused by the swingbridge, which have been emphasised by the hon. and gallant Member, and the railway level crossing. But, in our opinion, the ring road is even more vital to the life of the people of Newhaven, the majority of whom live on the west side of the river.
  Bearing in mind the considerable cost of the relief road scheme and also the probable need for Parliamentary powers before the new bridge can be built, it would be misleading the people of Newhaven to hold out any bright hopes of the relief road itself being programmed in the near future. But I assure the hon. and gallant Gentleman that the discussions about the inner ring road are not in any way intended to prejudice the claims of the more ambitious scheme. We wish to consider what can be done more immediately, but without prejudice to what has to be done in the long term. If we are to face the realities of programming, it is prudent if the planning of the inner ring road can now be pressed ahead.
  The A259 has been widened recently to provide dual carriageways from a point to the east of its junction with New Road to a point just west of its junction with the entrance to the car ferry terminal. At the same time as the widening was carried out, the British Railways Board replaced the level crossing gates by lifting barriers. Although the level crossing is still closed to road traffic as frequently as before, the duration of each closure is now shortened, and therefore congestion has been reduced. This is a very good example of co-operation between a highway authority and the British Railways Board, and is certainly something to be applauded.
  Great stress has been laid on the traffic generated by the car ferry service operating from the port. In June to September, 1965, for example, there was an average

  1407
  flow of about 540 passenger car units per day to and from the ferries, and it is expected that the volume will rise to 940 passenger car units in 1970, and 1,100 passenger car units in 1974.
  Bearing in mind that the average daily traffic flow on the A.259 from Newhaven was more than 16,000 passenger car units per day only two years ago, it can be clearly seen that the traffic generated by the ferry service represents a relatively small proportion of the total traffic passing through the town.
  We appreciate that Newhaven is developing as an industrial centre for the region, and that it is also growing in importance as a port serving Europe. We are also well aware that the A.259 is a heavily-used coastal route during the summer. I assure the hon. and gallant Gentleman that all these factors have been borne in mind in our consideration of the relief road scheme.
  It is unfortunate that the economic circumstances of the country prevent us from giving the "go-ahead" as soon as we would wish to highway authorities
  1408
  like the East Sussex County Council, to proceed with their urgently needed scheme, as we recognise this one to be. But the hard fact, as I have to reiterate so frequently from this Box, is that the total cost of schemes throughout the country which highway authorities are urgently anxious to carry out far out-weighs the funds at our disposal for these purposes. We therefore have to exercise a very strict system of priorities in the choice of schemes.
  We do not dispute in any way the need for the relief road for Newhaven, and therefore I assure the hon. and gallant Gentleman that we fully appreciate all the reasons advanced for the scheme. I repeat that it will be included in the roads programme as soon as the level of funds permits and its relative priority indicates. At the same time, we will endeavour to make the greatest possible progress in our discussions on the inner ring road.
  Question put and agreed to.
  Adjourned accordingly at twenty-eight minutes past Twelve o'clock.

LAND AND NATURAL RESOURCES
  Wash Dam Project (Fish Farming)
  Wash Dam Project (Fish Farming)
  Access to Open Country (Cmnd. 2928)
  Access to Open Country (Cmnd. 2928)
  Commons Registration
  Commons Registration
  Lands Commission (Staff)
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  Water Resources Board (Report)
  Water Resources Board (Report)
  Ridgeway Long-Distance Path
  Ridgeway Long-Distance Path
PUBLIC BUILDING AND WORKS
  Government Departments (Office Space)
  Government Departments (Office Space)
  Building Controls
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  Service Cables (Coding)
  Palace of Westminster
  Palace of Westminster
PENSIONS AND NATIONAL INSURANCE
  Students (Contributions)
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MINISTRY OF HEALTH
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RAILWAYS
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ROADS
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HOUSING
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LOCAL GOVERNMENT
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  ANTIGUA (INTERNATIONAL SHIPPING CONVENTION)
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OVERSEAS DEVELOPMENT
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HOME DEPARTMENT
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  Immigration Officers (Authority to Deny Entry)
MINISTRY OF POWER
  Gas and Electricity Industries (Common Unit of Measurement)
  Gas and Electricity Industries (Common Unit of Measurement)
  Departmental Office Accommodation
  Departmental Office Accommodation
  Departmental Staff
  Departmental Staff
BOARD OF TRADE
  Export Drive (Table)
  Export Drive (Table)
  Aircraft Noise
  Aircraft Noise
  Hotel Industry (Loan Assistance)
  Hotel Industry (Loan Assistance)

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

OCEANIC RESOURCES
2.35 p.m.
LORD WAKEFIELD OF KENDAL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what steps are being taken to set up a National Council for Oceanic Resources with wide powers, in view of the importance of research and development in the oceans of the world.]
THE MINISTER OF DEFENCE FOR THE ROYAL AIR FORCE (LORD SHACKLETON): My Lords, the functions and powers envisaged for a National Council for Oceanic Resources are already catered for in the Natural Environment Research Council, which is responsible for supporting and coordinating research in this field. It has set up two specialist Sub-Committees, for Oceanography and Fisheries and for Geology and Geophysics. This Council is the responsibility of my right honourable friend the Secretary of State for Education and Science.
Exploration for oil and gas is carried out under licences granted by my right honourable friend the Minister of Power, and information obtained by the licensees in the course of their operations must be made available to the Natural Environment Research Council's Institute of Geological Sciences.
LORD WAKEFIELD OF KENDAL: My Lords, I thank the noble Lord for that reply, but does he really think that a Research Council which has responsibility for forestry, geology and quite a
598
number of other things is adequate to carry out the immensely important research and development on the bed of the oceans of the world? Does he not think that this country, with its great maritime record, ought to devote far more attention to this very important matter? Is he not aware that we are only hunting the seas as our forbears hunted the forests, and does he not think that a great deal more attention ought to be paid to the exploration of two-thirds of the earth's surface?
LORD SHACKLETON: Yes, my Lords, I agree with the noble Lord about the importance of this work, but I think the development of the Natural Environment Research Council is a most important step in the direction in which he wants this country to go: it brings together all the interested parties. The Oceanography and Fisheries Committee includes the Fisheries Departments, representatives of the Hydrographer, the Admiralty Research Laboratories, the British Ship Research Association and the Ministry of Overseas Development. He is aware that certainly on the marine biological side it is very strong indeed. In fact, my noble friend Lord Bowden suggested that we were about to embark on the golden age of oceanography, and I would assure the noble Lord that very real progress has been made in the direction he wishes us to go.
LORD ROWLEY: My Lords, may I ask my noble friend whether any international co-operation is being organised to deal with this problem? Are we co-operating with other countries, in view of the fact that this Question relates to practically the ocean beds of the world?
LORD SHACKLETON: My Lords, this is a field in which there is a great deal of international co-operation, of which I have had some experience. There are the International Council for the Exploration of the Sea, which is mainly concerned with the North-East Atlantic, the Inter-governmental Oceanographic Commission of UNESCO, not to mention other Special Agencies. So there really is a great deal of co-operation. I must say that I am very encouraged by the progress that is being made. A great deal has been done in the past, but a great deal more is being done to-day.
EARL JELLICOE: My Lords, whilst I am glad to hear that a great deal of progress is being made, would not the noble Lord agree that a great deal more progress in this field should be made by this maritime country? Would he not agree that the exploration of the North Sea gas, for example, highlights how far behind we are, as a country, in underwater technology? Could I also ask when we may expect publication of the first Report of the Natural Environment Research Council?
LORD SHACKLETON: My Lords, I cannot say when the first Report will be made available. I am not sure that I agree with the noble Earl that the exploration of the North Sea suggests that this country is very far behind. This was a development of a particular technique of which we had not had direct experience, but I think that it is being brought into operation very effectively. I want to say again that I amgenuinely encouraged by the progress that is being made.
LORD JELLICOE: My Lords, on that point would the noble Lord not agree that, both in regard to laying the pipeline under the water in the North Sea and its maintenance, we are likely at present to be dependent upon foreign technology?
LORD SHACKLETON: My Lords, I do not know whether the noble Lord wants me to go into further details. It is not unknown for one country to cooperate with another.

BUTTER IMPORTS
2.40 p.m.
LORD ERROLL OF HALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will indicate country by country the maximum tonnages of butter to be allowed into the United Kingdom during the current butter year; and whether they will admit a quota from the U.S.S.R. either during the current butter year or in the next one.]
THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES): My Lords, I have here the figures for which the noble Lord has asked. As they are somewhat lengthy, it
600
might be more convenient if noble Lords were to refer to the announcement published in the Board of Trade Journal for March 18, 1966, or to the Answer given by my honourable friend in another place on July 7, 1966. I regret that the Government see no possibility of allocating an import quota for butter from the U.S.S.R. during 1966–67; nor is it likely that they will be able to do so next year. This is because there is a world surplus of butter, and the amount which our traditional suppliers (of whom the U.S.S.R. is not one) would like to send us is much greater than we need. So far as we can see at present, this situation is not likely to change next year.
LORD ERROLL OF HALE: My Lords, while thanking the noble Lord for his reply, and for giving us the references to enable us to find the detailed list of participating countries, may I ask whether he would not agree with me that the quotas are under our control and under nobody else's control? Would he, therefore, not further agree that we should surely make changes from time to time, so as to admit new suppliers who could participate in the regular growth of butter consumption in this country? We should thus enable the Soviet Union, among others, to sell us more butter, particularly as they have given an assurance that they will buy more consumer goods from us if we take their butter?
LORD RHODES: My Lords, may I answer the last question first? It does not follow, simply because they have given us an assurance that they will buy more consumer goods, that that will happen; there is nothing at all to stop them from buying more consumer goods from us now. Nobody knows better than the noble Lord that the imbalance we have with the Russians at the present moment is something in the nature of £72 million, and the accent should be on our selling to them rather than on buying from them. I would say, too, that it is very difficult to upset the arrangements with the traditional suppliers of butter to this country, such as Australia and New Zealand, and I must ask the noble Lord to be patient. But this question gives me an opportunity of congratulating the noble Lord on the work that he is doing in this field with the London Chamber of Commerce, and his visit to Russia was no exception.
LORD REA: My Lords, are we to infer from the Minister's statement that there is absolutely no quota of butter from the U.S.S.R. and that there will not be in future years? Could this matter not be looked at again?
LORD RHODES: My Lords, of course it could be looked at again, but the answer would be the same. I have outlined the position for the next two years, and I do not know about the position after that. But for 1966–67 there is no change.
LORD CONESFORD: My Lords, what on earth is a "butter year"?
LORD RHODES: My Lords, this is a "sticky one" for me to handle, and I think the answer resides with the noble Lord, Lord Erroll of Hale.
LORD ERROLL OF HALE: My Lords, may I thank the noble Lord very much for his kind remarks about the work I am doing?

MOTORWAY ROAD WORKS AND FLASHING LIGHTS
2.46 p.m.
VISCOUNT GOSCHEN: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether, in view of the terms in which, and the purposes for which, the new system of flashing lights on motorways was announced to Parliament on the 24th November last, they think it proper or desirable that such lights should be used to give warning of ordinary road works on motorways.]
THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION): My Lords, the purpose of the flashing amber lights is to give warning to drivers that, because of a hazard on a motorway, they should drive at a speed which does not exceed 30 miles per hour and is safe having regard to the hazard. It is for the police
602
who operate the lights, to decide what conditions, including road works, justify their use. Generally speaking, the use of these lights is inappropriate for hazards of more than short duration and they have been little used for road works.
VISCOUNT GOSCHEN: My Lords, I should like to thank the noble Lord for that Answer. But would he not agree that, as the road works signs are normally extremely well-sited, the use of the flashing lights further to denote road works may cause the motorist to forget the real significance of these lights, which is to warn him of fog, accidents and other emergencies?
LORD CHAMPION: My Lords, I agree with the noble Viscount that if flashing amber lights are used for hazards of long duration, such as road works the emergency impact of these lights in conditions of fog or accident may well be lost. The Minister feels, however, that it would be unwise to remove the discretionary powers of the police in this matter.
VISCOUNT GOSCHEN: My Lords, I thank the noble Lord.
LORD CHESHAM: My Lords, is the noble Lord aware that, by reason of the Written Answer to which my noble friend's Question relates, the public is under the impression that these lights are there for warning in conditions of fog and bad visibility? Is the noble Lord further aware that this move, and the 70 m.p.h. limit at all times arise from an original study of multiple accidents in fog? Could the noble Lord tell us how many more "illegitimate children" that study is going to foist upon us?
LORD CHAMPION: My Lords, I have no responsibility for illegitimate children, so far as I know. All I can say is that I agree with the noble Lord that these matters have to be very carefully considered, and of course they will be kept under review by the Ministry of Transport.

ACOUSTICS OF LORDS' DEBATING CHAMBER
2.49 p.m.
THE EARL OF ARRAN: 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 the Chairman of Committees whether he will consider making arrangements for the improvement of the acoustics of this Chamber.]
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, in reply to the noble Earl I should like to say that I am entirely willing to draw the attention of the Administration Committee to any improvements which he, or any other noble Lord, may suggest in our present system of speech reinforcement in this Chamber. That, however, is not quite the end of my reply and the noble Earl might like to have a little further information.
Our present system is designed with two factors in mind. First, the best reception for each microphone is limited both in distance and in area. The microphones are designed to pick up speech which is directed at them from within a maximum distance of 9 ft.
Secondly, the loudspeakers in the Benches are designed to be listened to from a maximum distance of 18 in. From this it will be seen that when a noble Lord, in addressing his remarks to some particular area of the House, speaks in a direction away from the nearest microphone, or, as is inevitable in the course of debate, turns his face in another direction, he runs the risk of losing speech reinforcement and may not be clearly heard. Similarly, if a noble Lord looks down while speaking, or reads his speech, he will again be at the same risk.
I would emphasise that these limitations are inevitable in any system other than that where individual microphones are at the disposal of everybody. Those of your Lordships who have attended the assemblies of the Western European Union or the Council of Europe will be familiar with the system of individual microphones; but, of course, the arrangement of their seats and benches is entirely different from the design of this Chamber. I should finally like to say that the
604
Ministry of Public Building and Works will always welcome suggestions, and is ready to investigate any complaints. I would ask noble Lords who have either in mind to let me have them in writing so that they can be fully considered at the earliest possible opportunity by the Administration Committee.
THE EARL OF ARRAN: My Lords, while thanking the noble Earl the Lord Chairman for his semi-satisfactory Answer, may I ask whether particular attention can be paid to removing the need for these loudspeakers which we trip over, and which caused an unfriendly Member of the other place recently to say that he was all in favour of your Lordships being televised, "ear trumpets and all"? May I suggest that these objects are unattractive and undignified, and not usually very helpful?
THE EARL OF LISTOWEL: My Lords, of course we will certainly consider if there is any alternative pattern or shape of these earphones. That is a matter I shall gladly refer to the Administration Committee.
BARONESS EMMET OF AMBERLEY: My Lords, may I ask the Lord Chairman whether it would not be possible to have two more rows of microphones at the back row of the Benches, as I find I have to become a Liberal in order to be heard distinctly?
THE EARL OF LISTOWEL: My Lords, that suggestion by the noble Baroness will certainly be taken into consideration.
LORD REA: My Lords, will the noble Earl make any comment on the fact that up till recently the House of Lords proceeded without any microphones and was well heard? Have the acoustics deteriorated so much that they are now necessary, or is it perhaps the human ear that has failed?
THE EARL OF LISTOWEL: My Lords, as the noble Lord will appreciate, that is a slightly different question from the Question on the Paper, and I should need some notice, I think, in order to inquire into the difference in the acoustic qualities of the House as between then and now.
THE LORD CHANCELLOR (LORD GARDINER): My Lords, may I ask the noble Earl whom these loudspeakers are

605
supposed to benefit, and whether they are supposed to operate through a wig?
THE EARL OF LISTOWEL: My Lords, I will certainly not fail to answer the noble and learned Lord the Lord Chancellor. I think they may be of some use to any noble Lords or Judges in Parliament who happen to occupy these seats, but I appreciate that they are of no benefit to the noble and learned Lord the Lord Chancellor.
THE EARL OF ARRAN: My Lords, since I understand we are shortly to have air-conditioning in this House, might it not be a practical suggestion that the whole question of acoustics should be looked into at the same time, bearing in mind the various recommendations that may be made by noble Lords?
THE EARL OF LISTOWEL: Yes, my Lords. I can assure the noble Earl that, air-conditioning or no air-conditioning, all the comments that have been made in the course of these questions will be very carefully considered.

GREATER LONDON COUNCIL (GENERAL POWERS) BILL
Read 2a, and committed to the Committee on Unopposed Bills.
LIVERPOOL CORPORATION BILL
Read 2a, and committed to a Select Committee.

PROTECTION OF BIRDS BILL [H.L.]
LORD HURCOMB: My Lords, I beg leave to introduce a Bill relating to the protection of birds. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Hurcomb.)
On Question, Bill read 1a, and to be printed.

LICENSING (CERTIFICATES IN SUSPENSE) (SCOTLAND) BILL
Brought from the Commons; read 1a, and to be printed.

SINGAPORE BILL [H.L.]
Order of the Day for the Third Reading read.
LORD SHEPHERD: My Lords, on behalf of my noble friend Lord Beswick, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Shepherd.)
On Question, Bill read 3a.
LORD SHEPHERD: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Shepherd.)
On Question, Bill passed, and sent to the Commons.

INDUSTRIAL DEVELOPMENT BILL
2.57 p.m.
Order of the Day for the Second Reading read.
LORD RHODES: My Lords, I beg to move that the Bill standing in my name on the Order Paper be read a second time. Before I come to the Bill I should like to apologise for the length of the speech that I am about to make. It is not what I would have wished. I have gone through it about six times, but I cannot find a great deal to leave out; it is full of factual information. I should also like to make one or two comments of my own leading up to the Bill.
Investment is a subject in which manufacturers are interested during the whole of their working lives, and those of us who have created businesses, especially pre-war businesses, burnt a lot of midnight oil in coming to decisions on how and in what to invest, because in those days, perhaps, it was a little trickier than it is now, and a wrong decision meant that you were "out". In modern days there is all the assistance that we have from one source and another, with the methods of assessing investment that we are advised to use, like the discounted cash flows of this world and everything else, which were not available then. Now, besides all the modern assets and aids in coming to a proper conclusion

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about investment and its profitability, I consider that there has been a new shift and sense of direction throughout the world on the thinking of investment, especially in manufacturing industries. I have had the opportunity of going to many places throughout the world during these last nine months, and in previous years, and I can say without any fear of contradiction that there is a new discrimination in investment. I would put it at no less than an international phenomenon in the modern world.
I have mentioned many times in another place, and I believe once in this—and I shall continue to do so—the highly successful discrimination that the Japanese have been able to employ, and the effect that it has had upon their competitive ability. In this sense, they go to the length of a scientific appraisal of world trade in three groups: one, industry where world trade is increasing; two, industry where world trade is stationary; and, three, industry where world trade is going "back'ards way about". Investment is channelled accordingly—and it works. Anybody who has been to America in the last few months knows full well of the anxieties caused in my own particular industry, for instance, and of the danger of action being taken which may affect it. Here in this Bill there is discrimination, perhaps of the same sort; but in comparison with what Japan is doing it is modest. But it is a tremendous step forward for us. As there is so much to explain in this Bill, and I believe that the House is entitled to a description and an explanation of the Bill, I will now come to the Bill itself.
The Bill is based on proposals that were in the White Paper, Investment Incentives (Cmnd. 2874), published in January. It has two main purposes. First of all, it introduces a system of cash grants in lieu of investment allowances; secondly, it extends and amends the powers under the Local Employment Acts to give assistance to undertakings in new and wider development areas. Let me deal first of all with the system of investment grants, which is provided for in the first Part of the Bill, the most important provisions being in Clause 1.What we have decided to do is to change
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both the form and the direction of the incentive so as to make it more effective in relation to our economic needs. We have made a change in the form by going over to cash grants; and we have made a change in direction by deliberating discriminately between industries and between areas of the country.
Let me take these changes in turn. First, the change from tax allowances to grants. Cash grants have three main advantages in comparison with investment allowances. First, they can readily be taken into account when the investor or manufacturer is weighing up the decisions he has to come to. The cash value is directly related to the size of the investment and does not depend on future tax rates. Secondly, the business concerned can be sure that it will get its money after the appropriate interval whether or not it is by then making sufficient profits. Thirdly, the aim of the scheme is to provide a quicker cash flow in relation to investment. Once the scheme is in full operation a company will get the cash grant within about six months of acquiring the new asset. This compares with the average time-lag of eighteen months under the old system of investment allowances.
Then we decided to concentrate the main benefit of Government assistance to investment on what we regard as the key sectors of the economy. This is the approach I was trying to illustrate and lead up to in my preliminary remarks. This does not mean that we do not want investments in the other sectors in other parts of the economy; not a bit; we consider them important and valuable. It is a matter of priorities. So we are going to have two levels of investment incentives for new equipment. The top level will get investment grants plus annual tax allowances, and the rest will get 30 per cent. initial allowances plus annual tax allowances. We are putting on the top level those sectors of industry which can make the greatest contribution to strengthening our economy and especially our balance of payments. These key sectors are manufacturing, extraction, and construction. In recent years, the rate of investment in some of these sectors has been too low in comparison with investment in distribution and services. We must do our utmost to remedy these structural defects in our economy.

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Finally, we are going to discriminate in favour of large new development areas.
In these areas, investment grants will be paid at twice the rate elsewhere. They will replace investment allowances, free depreciation and the 10 per cent. plant and machinery grants available under the Local Employment Acts. The new 40 per cent. cash grants will be given for all investment incurred by plant and machinery for use in a development area, including equipment required simply as replacement. There will be no need to prove that extra employment is created to get the 40 per cent.
The provisions relating to investment grants are contained in Part I of the Bill. Of these, by far the most important, in terms of the volume of investment covered, are those relating to plant and machinery, which are in Clause 1. To be eligible for grant, an item of plant or machinery must satisfy three tests. It must be for use in Great Britain; it must be provided by a person carrying on a business in Great Britain; and it must be used for carrying on a qualifying industrial process of manufacturing, including ship repair, of extraction or of construction. The definition of the qualifying processes is in broad terms, and it does not confine grants to directly productive machinery, such as machine tools. Equipment used for certain kinds of repair, storage and packing activities by a manufacturing, mining or quarrying, or construction undertaking will also qualify. A manufacturer would not, however, get a grant on equipment which he used purely in connection with the storage, packing or repair of somebody else's goods.
A firm carrying on a qualifying process will also be eligible in respect of certain ancillary equipment used at the manufacturing premises, such as steam-raising plant or general heating and lighting equipment. There is special provision for fire and safety equipment used at factories and other places where qualifying processes are carried on. There will be some exclusions. The most important one is vehicles, apart from mobile machinery such as, for example, a bulldozer used in a quarry or on a building site, and works vehicles, such as fork-lift trucks. This exclusion is explicitly stated in the Bill, in Clause 13.
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Finally, we indicated in the White Paper that small or short-lived items and items below a minimum value would be excluded. After full discussions with industry we have decided to fix this minimum level for individual items at £25. Again, this will be dealt with under the discretion: we do not want to fix the limit in the Bill, as experience may well show that it ought to be changed in the course of practice. The plant or machinery must be for use in Great Britain but there is no discrimination against imported equipment which will qualify for investment grants. A foreign company carrying on business in Great Britain will be eligible. Plant or machinery used in connection with the extraction of oil or gas on the Continental Shelf will also be eligible. If a company makes plant or machinery for its own use in a qualifying process, we shall pay grant on the approved cost incurred in making it. In addition, Clause 1 covers plant or machinery and certain kinds of prototypes used for scientific research related to a qualifying process. The standard rate of grant for plant and machinery will be 20 per cent., but when it is for use in a development area it will attract a 40 per cent. grant.
There are three kinds of assets which are eligible for grant without reference to the qualifying processes—computers, hovercraft and ships; and I will deal briefly with each in turn. Computers are dealt with in Clause 2, under which a grant can be made for any computer for business purposes in Great Britain. This means that grants can be paid to service undertakings, including banks or insurance companies; but, as with plant and machinery generally, grants cannot be paid to local authorities, universities or schools. Nationalised industries and the Post Office will be eligible for grants on their computers, but other Government undertakings will be excluded. The rate of grant will normally be 20 per cent., whether or not the computer is in a development area but there will be two exceptions to this. An on-line computer which is integrated with eligible plant or machinery in a development area will get 40 per cent., and so will a computer used primarily on scientific research in a development area.
Hovercraft, which are covered by Clause 3, and ships, dealt with in

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Clause 5, may conveniently be referred to together. In both cases there are certain restrictions as to the persons who can get grants which are not applied to other assets. These are needed because of the mobility of hovercraft and ships, and because, for obvious reasons, grants cannot be confined to assets of this kind solely for use in Great Britain. In both cases, grants will be at 20 per cent., and nationalised industries will be eligible.
Clause 4 covers grants to lessors of eligible plant or machinery, computers and hovercraft. Apart from certain special provisions for contractors' plant in the construction industry, the general rule is that if the lessee would have been eligible for a grant if he had bought the asset outright, the lessor may claim a grant on the cost of the asset. As an administrative rule, the Board of Trade intend to confine grants on plants and machinery to cases where an asset is hired out for a period of at least three years. This corresponds to the period during which we shall retain some control over the disposal of any asset on which a grant has been paid. No grants will be given for assets leased for use overseas.
Clause 6 makes provision for grants to be paid on the capital cost of mining works. Under the tax-allowance system special provision was made for certain types of expenditure on the construction of mining works, and the rate of investment allowance on such expenditure was in fact the same as on plant and machinery. I would emphasise that this clause has deliberately been drawn in very wide terms, but that we have still to decide on the precise coverage of the works on which grants will be given. There is particular difficulty in relation to the operations in the North Sea where there is very little past experience to guide us. The Board of Trade are to have full discussions with the industry to determine just what kinds of mining works should be covered. Once the coverage has been determined, guidance notes for industry will be made available.
The remaining clauses in Part I are largely technical. Clause 7 provides for variations in the rate of grant on the addition of new assets to be made by Order subject to Affirmative Resolution.
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We regard this as providing the necessary degree of flexibility to make changes in the scheme in the light of experience, but we have no intention of making frequent or sweeping changes. Clause 8 allows the Board of Trade to impose conditions when making grants to ensure that an asset will be used in the place or for the purpose in relation to which the grant is given and to require repayment in specified circumstances. In general, the Board will seek to ensure that an asset continues to be used in the appropriate way for a period of three years after purchase. If there is a change of use within that period the recipient of grant will have to notify the Board, and we shall then decide whether any repayment of grant is called for. For ships, the period will be five years, and the Board will have power to consider and restrict the terms of charters if they think it necessary to prevent abuses. Clause 11 provides for advisory committees. The Board of Trade have received a great deal of advice and assistance from industry since the publication of the White Paper in January, and we thank them for it. We want to be able to call on such advice on the administration of the scheme and these committees will enable us to do so. They will not be concerned with individual cases but with general issues arising out of the scheme.
Part II of the Bill deals with the various incentives to encourage the growth of industry in development areas. The present legislation dealing with these problems is the Local Employment Act, 1960, as amended by the 1963 Act. Part I of this Act has a limited life of seven years, and so, in default of legislation, the Government's powers to give financial assistance would expire next March. The first provision in Clause 15 of the Bill is to extend these powers without time limit, so as to avoid the uncertainty which is created towards the end of any fixed period of time. But we are not simply extending these powers as they stand. The rest of Part II of the Bill makes considerable changes in them.
The first is that the old development districts are to be superseded by new wider development areas. They are wider, not only geographically but in the criteria and the objectives which underlie their choice. The old small development

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districts were chosen solely on the grounds of high unemployment. But the problem of unemployment must be seen in perspective as only one factor in the wider problem of regional imbalance. We should take account of the fact that some parts of the country do not have their fair share of new industries, and the prosperity which they bring. Unemployment statistics may be low only because the young people leave for the more prosperous and congested parts of the country. Therefore, in choosing the new development areas the Board of Trade will take account of all the economic circumstances, including not only actual and expected unemployment, but also the growth of employment opportunities, the growth in population, the amount and direction of migration, and the objectives of regional policies.
We have shown our interpretation of these criteria by stating in the White Paper last January the extent of the five large development areas which we intend to list on the basis of present economic circumstances. This list will be established by Order, subject to the Negative Resolution procedure, immediately after the passing of the Bill, and future changes will be made in the same way. This is a long-term policy to build the basis for economic development in broad contiguous areas rather than to have short-term emergency action to deal with small pockets of high unemployment. Firms in these development areas will be eligible for assistance under the Local Employment Acts: they will also get the higher 40 per cent. rate of investment grant on plant and machinery, certain kinds of computer, and mining works. The conditions for getting the 40 per cent. grants on these assets are set out in Schedule 1. This Schedule also lays down what will happen if an area ceases to be a development area. Broadly speaking, a firm which is already committed to a project in such an area will get the development area rate of grant on the assets which it needs to buy to complete the project.
The new development areas will provide firms with a wider range of choice than before in selecting sites for development for which the maximum financial assistance is available. But such development should not be so concentrated as to cause serious strains in particular places
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—for example, severe shortages of labour, or of certain types of labour—while the special needs of other places in development areas go unsatisfied. To avoid this, the Government will ensure, both by a flexible use of financial assistance in some cases, and by giving or refusing industrial development certificates as necessary, that major industrial projects are located in the areas which need them and have the necessary facilities for them. Under the present legislation, places which take overspill population from development districts enjoy Local Employment Act assistance. Some get free depreciation as well. The definitions are different. In Clause 15(6) a new single definition is set out which will be used both for the 40 per cent. investment grant and for the other kinds of assistance.
The early New Towns were usually based on existing centres which were relatively small, and involved increasing the population by several times the original number. Free depreciation, which was introduced in 1963, was confined to New Towns. Now, however, it is becoming increasingly necessary to expand existing centres of population to deal with overspill, and we are therefore including receiving districts under the Town Development Act within the categories which may be eligible for development area treatment. But, since any of the 40 per cent. grant given which benefits original population is failing to fulfil its purpose of helping the development area proper, we would not expect to give it to a place unless something like two-thirds of the final population is likely to have originated in the development area. This will mean that the population will normally have to be roughly trebled. The two places to which this policy will apply initially are Skelmersdale and Winsford. All the other places which have been getting assistance as overspill are within the new development areas.
The present 10 per cent. plant and machinery grant, which was introduced by the Local Employment Act 1963, is brought to an end by Clause 16, as it is superseded by the new 40 per cent. grants. Here I should explain that the new investment grants will not depend on whether the assets will provide employment. But the remaining forms of Local Employment Act assistance—building grants, general loans and grants recommended by BOTAC, and the provision

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of factories—will continue to be subject to this criterion. These forms of assistance which depend on the provision of employment are not confined to manufacturing industry, but will continue to be available also for service industries—for example, hotels, shops, offices and garages.
An important improvement in building grants is introduced in Clause 17, in that it provides for grants to be made at 35 per cent., instead of the usual 25 per cent. rate, in the case of certain new projects in a development area, as opposed to expansions of existing undertakings. The clause gives considerable descretion to the Board of Trade. An obvious case is when a firm in the Midlands or the South-East closes its factory and moves a considerable distance to a development area. Such moves are exceptional. More often a firm establishes a new branch factory when its business is expanding. Where this is at such a distance from any of its existing plants that an entirely new labour force and a new unit of management have to be set up, there are considerably more difficulties than when the expansion is close by. It is in such cases as these, including cases where a foreign firm is setting up a British subsidiary, that the special assistance might well be justified. Where such a firm is not applying for building grant, but is proposing to rent a Board of Trade factory, the equivalent assistance, under Clause 19(4), will be an initial rent-free period which we propose should be two years.
Clause 17 also includes some other technical improvements in the powers to give building grants. In some capital-intensive cases we have hitherto been unable to give an assistance at all, because a 25 per cent. grant would exceed the usual limits of the cost per job provided. The new power will enable us to give a scaled-down grant in such cases. This will be a useful liberalisation of our powers, and will not detract from the standard nature of these grants.
The power to give tailor-made loans and grants on the recommendation of the Board of Trade Advisory Committee will continue. BOTAC performs a very valuable function. In checking on the viability of each project it protects the workers in the area; it often makes a project much sounder than when it was first put to the committee, and of course
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is also avoids waste of public money. Under Clause 17 BOTAC will have a new power, in that it will be able to recommend giving assistance in the form of equity shares, or loans with an option to convert into equity shares, as well as continuing to recommend loans and grants as hitherto. There has been some exaggeration of the scope of this new power. I assure your Lordships that I do not expect that it will be used very often, but it may be that equity participation would on occasions be an appropriate form of assistance. Some firms may prefer assistance in this form, in order to keep the burden of interest charges low. I must emphasise that there is no intention whatever to coerce firms to issue equity shares to the Board of Trade against their will. This is an additional power which can be exercised only with the agreement of the company and on the recommendation of BOTAC. BOTAC will, of course, continue to recommend loans and grants under Section 4 of the Local Employment Act as hitherto.
Clause 19 removes some minor legal impediments to the activities of the Industrial Estates Corporations.
Clause 20 re-enacts the powers to deal with derelict land in development areas. The rate of grant to local authorities for this purpose is 85 per cent. The question whether the clearance of some derelict land fulfils the purpose of the 1960 Act, in providing employment for the benefit of a development district, has sometimes given rise to difficulties. We are therefore substituting a new criterion, and the Board of Trade will be able to recommend a grant when they are satisfied that the clearance of the land will contribute directly or indirectly to the development of industry in the area. Industry in this context is not confined to manufacturing industry, but can include, for example, service industries which would profit from the encouragement of tourism in the area. If any cases should fail to pass this criterion they may still be eligible for grant for the clearance of derelict land throughout the country for which powers are being sought under Clause 9 of the Local Government Bill, which is at present before Parliament.
LORD POPPLEWELL: My Lords, did I understand my noble friend to say 60 per cent.?
LORD RHODES: No, my Lords, it is the new 50 per cent. grant.
Whereas Part II of the Bill deals with the financial inducements to industries to expand in development areas, Part III deals with the necessary powers to control their development elsewhere. It strengthens the industrial development certificate control, which is part of the planning law set out in the Town and Country Planning Acts, by closing certain loopholes which exist at present—for example, where, for some reason, the planning permission was not obtained in advance. For instance, if for some reason the planning permission was not obtained in advance it is not at present necessary to obtain the I.D.C. when the time comes to put the matter in order. There is thus an undesirable incentive to act first and ask afterwards. Clause 22 of the Bill corrects this anomaly.
Clauses 23 and 24 deal with another gap in the control, and should help to ensure that when an I.D.C. is issued it is used only for the project which the Board of Trade meant it to be used for. The I.D.C. can be issued subject to conditions which the local authority will be obliged to carry through into the planning permission. This will enable the Board of Trade, for example, to specify how much of the development is to be used for particular purposes, such as processes of manufacture.
Clause 25 resolves any doubts which might exist about the position where an extension or a separate building within the curtilage is put up to provide ancillary services for an industrial building. These will in future require an I.D.C. Apart from the usual supplementary provisions in Part IV, it includes for convenience Clause 28 which increases the rates of grant which may be made for fishing vessels to take account of the withdrawal of investment allowances.
If I have taken noble Lords through the Bill at rather a high speed. I apologise, but I have been through my speech, as I said, six times to try to shorten it so that I should not bore noble Lords or put them into sleeping postures. I hope that what I have tried to do is acceptable, and I am sure that during the time the Bill is in this House during subsequent proceedings it will, as usual, be improved.
LORD REA: My Lords, before the noble Lords sits down, I should like to
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ask him (I do not intend to make a speech) to comment on one point on which I do not think he touched, which might help our coming debate. He mentioned these grants of 20 per cent. and 50 per cent. Could he possibly say within any range of approximation what the minimum and maximum expenditure per annum might be in these years of great difficulty?
LORD RHODES: I think it is round about £270 million, but my noble friend Lord Shepherd will be able to correct this figure if it is wrong.
Moved, That the Bill be now read 2a.—(Lord Rhodes.)
3.32 p.m.
LORD ERROLL OF HALE: My Lords, I am sure the whole House will be grateful to the noble Lord for taking us through the Bill at such a brisk pace, and making its extremely complicated provisions seem apparently simple to us. He confined himself largely to the Bill itself, but dealt very little with the philosophy, good or bad, which lies behind it. Although the noble Lord made the usual nodding references to a greater progress being made in other countries, notably the United States and Japan, for once he left out Sweden. Is Sweden no longer fashionable in the eyes of Socialist Ministers? I am surprised that Sweden was not mentioned on this occasion. However attractive it may be to confine oneself to the mere technicalities of the Bill, I think it important that we should see this Bill we are discussing in the light of the serious economic Statement made by the Prime Minister in another place on Wednesday of last week.
We must consider this Bill in the light of the Government's new go-stop economic policy and their declared intention of creating half a million unemployed. It is going to be interesting to see in which of the development areas the unemployment will arise, or whether it will arise in areas not so fortunate as the present development areas. It was plain (if I may reply to a sedentary interruption by the noble Lord, Lord Bowles) in questioning after the Statement in another place that the figure came out at about half a million.
The Bill divides itself, as the noble Lord pointed out, into three main parts. I should like, if noble Lords agree with

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me, to deal first with Part I, concerning the investment grants that affect industrial and other undertakings throughout the country, and not to concern myself at the moment with any higher rate directed to development areas.
LORD ROYLE: My Lords, I hope the noble Lord will forgive me for interrupting. He did use the term "a declared half a million unemployed", and then he went on to say that it came out in the course of questioning that it might be something like that. Is not a declaration rather different? Is "declaration" the right term. Was a declaration of half a million unemployed made?
LORD ERROLL OF HALE: Without wishing to take up too much time of the House, I would point out that the Prime Minister in another place referred to a percentage, and when one multiplies the percentage up into the actual totals it comes to about half a million. Of course, we know that a percentage was referred to to conceal the magnitude of the figure.
The noble Lord, Lord Rhodes, referred to the Government having received cooperation from industry in regard to investment allowances after the White Paper had been published. I think he did this House less than justice by omitting to refer to the very strong body of opposition which developed against the whole scheme of investment grants. But I think that noble Lords, if they are not already aware of it, should be made aware of the strong opposition which was felt to the introduction of this scheme. It was not—I repeat, not—what industry wanted.
I have a number of quotations here, and I should like to mention one or two. Sir Donald Stokes, deputy chairman of the Leyland Motor Corporation said:
"If the recently announced investment allowances had been handed out by a commercial firm and not by the Government they would savour of sharp practice."
Then Sir Frank Kearton, who has been good enough to take up an important assignment as Chairman of the Government's new Industrial Reorganisation Corporation, was very critical. One of the "little Neddies", the one for distribution, the members of which include the noble Lord, Lord Sainsbury, Sir Leonard Cooke and the Union of Shop, Distributive and Allied Workers general
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secretary, Mr. Alfred Allen, felt so strongly against this system that they took what I believe to be the unprecedented step of making an appeal to Mr. George Brown, the Deputy Prime Minister.
The Institute of Directors, commenting on the scheme, said:
"British businessmen will find it difficult to support the Government's new investment incentives scheme, which will increase the built-in risks of bureaucratic intervention."
Sir Paul Chambers, one of the country's leading industrialists, was highly critical, and said that his main objection lay in the "element of discrimination" which puts far greater power into the hands of a Government Department than do our tax laws. Then Mr. John Davies, the excellent Director-General of the Confederation of British Industry, said in April, in relation to the new system, that it had caused
"an avalanche of protests to arrive at the Confederation's offices".
He went on:
The body of abuse has become quite overwhelming."
My Lords, this is the measure of objection which responsible industry feels towards the Government's new proposals, and, as I say, I think that noble Lords in all parts of the House should be made fully aware of its strength. There was no prior consultation with industry on this matter. They had expressed a view as to what they would prefer; namely, a system of free depreciation, or depreciation at will. They recognised that this could not have been brought into operation immediately, but it could have been brought in by stages. The added irony of the situation is that industry will now receive less than it did under the old system. Formerly industry received, quite properly, as a return on its taxed profits, something like£320 million a year, but under the new system industry as a whole will receive only about £250 million.
One of the important objections to the new system is that the grants are payable regardless of the profitability of the investment. Where the investment is in a development area and the grant is 40 per cent. of the total, it encourages people to invest less wisely than they would otherwise do, because they know they will have only 60 per cent. of their own money at stake; whereas under the old

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system one had to consider the potential profitability of a new investment, because it was only if it was profitable that one could get back the old investment allowance.
Another great disadvantage of investment allowances is the savage discrimination which the system perpetuates. The noble Lord tried to make a virtue of this, but there is no service in discriminating between manufacture and transport. Most noble Lords will remember the old saying:
"…than merely moves things about and nature does the rest."
To discriminate between a firm in which all the processes are made in one factory perimeter and another firm which has two factories situated some miles apart making a similar product, and to say that it is not to be allowed to get investment allowances on its transport system does not make industrial sense to me.
In any case, the Government are talking a great deal about the need to modernise our transport industry; to improve the efficiency of moving goods to the docks. But all these forms of transport are denied the benefit of the investment allowances. Under the old system, which was clearly understood by industry, there was an equally clear right of appeal. There were the tax laws which, although complicated, were known and understood by the experts. If a firm did not agree with the assessment of the inspector, they had the right of appeal to the Commissioners and, again, failing that to the courts and, finally, if necessary, to this noble House itself.
Now there is to be no right of appeal. We are told that the Board of Trade will administer the scheme, that they will do so sympathetically, but that from the decision of a relatively minor Board of Trade official there is to be no means of appeal at all. Nor is the system going to be economical to administer. The old system was administered by the Inland Revenue, and now with no reduction in the staff of the Inland Revenue there are to be no fewer than an extra 1,100 civil servants recruited by the Board of Trade in order to handle the administrative complexities of the new system. The administrative cost has been estimated by the Government at no less
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than £2 million a year, largely, I suppose, in salaries for those civil servants, who of course, admittedly, will become easier to find out of the 500,000 unemployed which are to be created.
The system will not necessarily lead to prompt payment. It is stated in the White Paper that no grants will be payable for at least eighteen months, and that the period will not be shortened until the economic situation improves. That looks like being still further away than it was at the time when the White Paper was being written. Nor will there be great certainty of payment. Even under the system of making payments for plant and machinery under the 1963 legislation severe delays were bound to arise from time to time. I have knowledge of a particular case, regarding a very large piece of equipment, where the whole amount of the grant has been outstanding while there has been detailed argument over small matters which could have been settled easily.
Finally, there is considerable area of doubt as to what qualifies and what does not. I am sorry to learn that the advisory committees are not to concern themselves with individual cases, or individual classes of plant and machinery. How, therefore, is industry to know which plant and machinery qualifies and which does not? I should like to say in passing that I very much appreciated the noble Lord's explanation of some items which qualified where it was not at all clear from the Bill that they did so qualify.
To turn from Part I to Part II, the new development areas are to be big, very big indeed, embracing nearly all Scotland, the North of England, Wales, parts of Devon and most of Cornwall. Some criticism was made in another place, more so by the President of the Board of Trade than by the noble Lord opposite, of the former system. But the former system had the great advantage of directing resources to those localities where help was really needed, and then quite properly switching it off when it was no longer required. This new development in Part II is a very wasteful and extravagant use of the taxpayers' money, because there are many prosperous areas within the new boundaries which do not require this assistance. But they will be getting the taxpayers' money

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when they do not need it. Correspondingly, given the same global total, there will not be so much available as there would otherwise have been for those localities in much greater need.
In the new concept the growth point principle, which was much welcomed during the life of the last Parliament, is to be swallowed up or abandoned. Although all the areas have apparently been expanded, there are one or two places which were development districts which have been mysteriously left out. The most glaring example of this is the dirty trick which has been played on Bridlington. That was made a development district because the need was great. One or two firms were persuaded to move there, and have been doing quite well, and now suddenly, almost at a moment's notice, they are to be cut off from the benefits which were supposed to be their's for a considerable period to come. The situation has not been improved by the cooking of the unemployment figures by the Board of Trade—
SEVERAL NOBLE LORDS: Oh!
LORD SHEPHERD: My Lords, could the noble Lord substantiate the remark that the Ministry has cooked the books? It is a very serious statement, and if he wishes to make it I think he should provide the information.
LORD ERROLL OF HALE: I was going to do so on Committee stage.
SEVERAL NOBLE LORDS: No!
A NOBLE LORD: Withdraw!
LORD ERROLL OF HALE: But I should be glad to do so now. The unemployment figures for 1958–59, which were quoted as being high, of the order of 6·8 per cent., are figures which include the temporarily stopped, of which in a coastal resort like Bridlington there are always quite a large number; whereas the figures for last year, quoted in justification for removing Bridlington from the development area concept, were quoted at, I think, 3·8 per cent. but they did not include the temporarily stopped. So it was a case of not comparing like with like. Although the Minister of State in another place apologised, and said it was an inadvertent omission, I was surprised
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that it took so long for this to be discovered—and discovered it was by the town clerk of Bridlington, not by the Government Department itself. The noble Lord will have an opportunity of countering this when he comes to wind up. I think it is singularly unfortunate that, when the Government are extending the areas over such a wide field, they should take it out of poor little Bridlington. But we shall have more of this, I hope, when we come to discuss this Bill on Committee stage.
To turn to the inducements in the development areas, as the noble Lord has pointed out investment grants will go up to 40 per cent. instead of the old machinery grants under the previous Act of 10 per cent. As I have already mentioned, I think it is a mistake for the grant to be so high without any regard to the profitability of an investment, and over a very much wider area than under the previous legislation. These grants are going to be extremely expensive. A figure was mentioned to the noble Lord, Lord Rea. This means in effect that it will be the Midlands, the North-West and the South which are having to subsidise their competitors in Scotland, Wales and Northern England, who have become, in a sense, permanent or semi-permanent pensioners on the rest of the country. The noble Lord referred to BOTAC and referred to the power to take a share in the equity of a company. He was at pains to point out that this was only a very small matter, and that it would apply in only a relatively small number of cases. For this assurance we are grateful, but I hope the noble Lord will consider an Amendment which we hope to table which will enable the company to accept the offer of equity only after full agreement with the shareholders of the company in a general meeting, otherwise the shareholders' capital will be watered down without any opportunity for them to have a say.
I do not like this development. Having seen the administration of BOTAC at close quarters for a number of years, I do not see that there is any case for this extension of powers by the Board of Trade. It is, however small, the start of a creeping takeover by the State of certain firms and businesses. Furthermore, where there are some firms in development areas in which there is a considerable element of Government capital, or Board of

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Trade capital, there will be a temptation—I hope it will be resisted—for the Board of Trade and other Government Departments to favour firms in which they have a large shareholding with Government orders and assistance of other sorts. There will also be a considerable temptation on the part of the Board of Trade to keep out incoming competitors, on the grounds that they already have a substantial equity stake in the firm—there is quite enough business of this type in the locality; there is no need to grant an industrial development certificate to make life tougher for the companies in which the Board of Trade have invested equity capital.
A NOBLE LORD: It has already been done.
LORD ERROLL OF HALE: There is of course an important point of principle, apart from what I have already said, why it is inadvisable for the Government to invest capital in this way. It is far better to do it by loan, because if the money is invested in the form of purchasing the equity, or part of the equity, that money is virtually lost for ever, whereas under the old system, and under the system as it will continue to be, if only a loan is made that loan is repaid in due course and thus becomes available for lending elsewhere to another firm in need. That is why I firmly believe that in this case it would be much better to stick to loans.
The noble Lord referred to amenity spending, with which we can all agree, and he pointed out that one or two loopholes in regard to I.D.Cs. were to be removed. With that I think we can probably agree, although the control is now so severe that it is hard to see how anybody will be able to get any I.D.C. However, here is one of the aspects of the Bill which perhaps noble Lords might like to consider in connection with another Bill that will be coming here shortly. The real disadvantages are that in the development areas such benefits as there are will be largely neutralised by the selective employment tax, which will operate with full severity on service and amenity interests in those areas; and it is often in the development areas that attention to these interests is most urgently required.
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The noble Lord talked about fair shares to industry—whatever that might mean—but one thing on which we can all agree is that perhaps in the past there have not been fair shares of amenities in the older industrial areas. We hope now to see that rectified. Indeed, it is often said that until there are pleasant shops, restaurants, hotel facilities, and so on in certain towns in the North of England, it will be impossible to get bright new industries to go to them. But all this will be hit by the selective employment tax, and a better way to help these towns would be to exempt them from the operation of the selective employment tax. It would be better for the Government, and better for the areas concerned; and it could be easily administered because the repayments of this tax are to be handled by the Ministry of Labour, and the whole of the development areas consist of a mosaic of local labour employment exchanges. This would be a much more satisfactory way to do things than the rather clumsy, wasteful and extravagant procedures outlined in this Bill. It represents nothing less than an indiscriminate pouring out of public money. The Bill is badly worked out and we shall give it a good "roasting" in Committee.
3.52 p.m.
LORD REDMAYNE: My Lords, I would face this occasion with more confidence if it had not been that for thirteen of my sixteen years in another place I was bound by those monastic vows of silence which afflict Whips in a Conservative Government. I do not doubt that this rule is for the common good. What I fear is that in a few moments your Lordships will not doubt it either! Nor am I comforted by the thought that if I lack skill in speaking I could put at your Lordships' service those other arts which I have learned during those years, because my professional association with the noble Earl, Lord St. Aldwyn, taught me very early the salient difference between our respective duties: mine, in those years, to command the presence of my flock; his to beseeech them—or some of them—to stay away!
If I may say so, without being controversial, I thought the noble Lord, Lord Rhodes very much changed the Government's ground in his speech. From the

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emphasis that is put in Part II of the Bill on the relationship between Board of Trade expenditure and levels of employment (three times in the Bill and most explicitly in the Explanatory Memorandum), it seemed to me, before I heard the noble Lord, Lord Rhodes, speak, that employment was to be the prime factor for consideration. But perhaps (again if I may say it without being controversial) the changing circumstances of the economic scene during these last few days and weeks has meant that the Government have had to change their minds about that.
Be that as it may, there is a point about the Bill which I think is new in economic policies in this country. In this Bill, as in the past, those prepared to move into depressed areas are given solid benefits. They have been advantaged. But I believe this is the first time that those engaged in equally productive activity elsewhere have been specifically and intentionally disadvantaged, and I cannot believe that that is a good principle. Of course it is possible to argue that such a policy of encouraging Peter by discouraging Paul achieves a certain saving to the taxpayer. Indeed, I think that that has been argued by the Chancellor in another place. It could even be acceptable in certain conditions of national prosperity, but it cannot surely be acceptable in this country to-day, when the crying need is for an expansion of productive modernisation throughout the whole nation, wherever it can be found.
There is another aspect of the whole principle behind this Bill which I should like briefly to discuss, and it is this. We have all concerned ourselves with what is called the drift to the South; that is, the drift away from these areas which are to be called development areas. We have made tentative efforts to lessen it, particularly in regard to the lessening of the congestion of London, but without much success. In these later years we have always regarded the growing activity of the South as a menace which must be fought, and I wonder very much whether, in this day and age, that attitude is right. We confidently expect to argue ourselves into Europe in a reasonably short time, and it may be that the news we read this morning will make that time shorter. I wonder, then, whether it is
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sensible to fight too parochially against a natural tendency for the centre of national activity to drift more into the focus of Europe. Given entry into the Common Market, the South-East of England will have a new significance as being nearest to the hub of a common circle embracing the industrial heart of Europe.
I believe, therefore, that our first thought to-day should be the efficiency and productivity of London and the South-East, and at least nothing should be done to halt its growth and reorganisation. As I said earlier, it should not be disadvantaged as compared to these other areas. Of course the development areas have their part to play, and I am not arguing that progress there, on the right lines, should not be stimulated but the more prosperous parts of England have got to change enormously in the next five to 15 years, and it may well be that it is to them that the greatest expansion of capital expenditure must fall. The ability of London and the South-East to play its part: the services which they provide, and I specifically say "services" because it will be the services that will be the most valuable: the communications which entry into Europe will demand—these may be our chief preoccupation in the near future.
But of course in this Bill the discrimination is not only between area and area; there is also, as my noble friend has said, discrimination between activity and activity. If I may, I should like to turn for a moment to one aspect of that. It is, of course, part of the dogma of Socialism that only manufacturing is virtuous, and indeed the noble Lord, Lord Rhodes, must be counted among the most virtuous of all in that respect. Distribution in all its forms is held to batten on the economy: and perhaps, my Lords, I had better declare an interest in this part of my speech, because my family has been engaged in retail trade in various forms, in London and elsewhere, for the best part of two centuries, and so have I—but not for the best part of two centuries. The beaten path to the door of the better mousetrap-maker may have seemed a happy basis for an epigram in the nineteenth century, but of course the better mousetrap maker can make them quite uselessly until he is blue in the face unless he has an adequate and an efficient system of distribution.

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Today it is fashionable to proclaim the efficiency of the multiple store because they are cheap; and very good they are, in their own lines. It is a field which they limit very much to their own advantage. But to the tourist—and this is where I think the case really begins to tell—the department stores, many of which have a reputation spreading far beyond these islands, are part of the magic of London and of the major provincial cities. They offer a range of goods and a degree of services which the multiples do not attempt, and, being unable to provide such services without large and skilled staffs, they find themselves today hit by Government policy at every turn.
The selective employment tax, for example, hits them harder than any other industry or indeed any other part of the retail trade, and that particularly because they are driven by the present labour shortage to employ an enormous number of part-time workers on a variety of different terms of engagements, each and all of whom count for tax as full-time workers. I hope very much that we shall have an opportunity of returning to this question if that Bill comes before your Lordships' House as it should. And this Industrial Development Bill, adhering, as I have said and the noble Lord has admitted, to the same dogmas of Socialism, reduces by a punishing degree the ability of the department stores to make those capital improvements which they must constantly seek if they are to retain their reputation in this country and abroad.
I want to put these arguments to the noble Lord because I feel they are arguments which the Government ought to have taken into account and ought to take into account, and I believe he will sympathise with them in his heart. The department stores are in fact the manufacturers' showcase throughout the country; they are the showcase and trial ground, and most especially for that class of luxury consumer goods (and fashion goods) which are the product of the smaller manufacturer who is not capable of organising his own export effort. As the noble Lord will know, the buying agents of foreign stores, whether they are established here or whether in fact they are visiting this country to buy, turn first to the stores for fresh ideas of British manufactures. The
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stores are the shop window of exports in that respect.
There is another aspect, too. I do not think this is nearly well enough known. The individual tourist in Britain is himself, by what he buys here, the salesman of British goods in his own country, and his purchases (the over-the-counter export sales of the department stores) amount to many millions of pounds in direct relief of the balance of trade. I believe these are things which ought to have been considered very carefully and which ought to be taken into account before the Government decide to adhere to this discrimination wholly against the distributive trades.
My third and last point is this, and I will deal with it as briefly as I can because my noble friend has already dealt with it more capably than I can. It is in respect of the provisions of Clause 18 which enable the indebtedness for loans made to a company to be discharged by the issue of shares. In point of fact, the history of Governmental participation in industry is not happy. There have been companies where it has gone well enough, but these are largely companies where the natural growth is such that interference by Government has been obviously unnecessary. But all too often where Government have participated in industrial enterprise, possibly arising from the needs of war production or from attempts to maintain employment in distressed areas, embarrassment and difficulty for future Governments, of whatever colour, have arisen. My noble friends who have held office know how true that is. All is well so long as the company prospers, but so soon as it falters, either through its own fault or simply as a result of economic circumstances, then comes the dilemma of deciding whether to throw good money after bad. That dilemma is hard enough in industry, as the noble Lord will know, but when it is a dilemma of Government, when there are faces to save and previous decisions to justify, then commercial judgment can be quickly warped by political expediency.
My noble friend suggested that it is not beyond imagination that if there is an increase in Treasury and Board of Trade shareholdings in private companies that money might be backed by special favour in the granting of Government contracts. Ministers have said

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in another place, and indeed the noble Lord himself has said, that there will be no coercion of companies. But, none the less, if a proposition is put by the Board of Trade it is perhaps wiser not to turn it down. I would ask, even with the best will in the world, what will be the position of a company that applies for a loan and will not accept the condition that it will issue shares in discharge of its liability. Is it then blacklisted? I know that Ministers at once, whether in your Lordships' House or elsewhere, will say, "No that would be quite impossible; that is not our intention at all". And yet, human nature being what it is and Departments being what they are, I find it hard to believe that a company who turned down that proposition would be regarded with much favour when any fresh application was made. And indeed in respect of the whole Bill one cannot be wholly confident that schemes such as this, entrusted to a whole army of officials (and many of them by the very nature of things must be junior officials) empowered to make decisions of vital importance to a company—far more important to the company than to the nation, in many cases—will in those circumstances always be administered with precise impartiality.
In past history it was always considered wise to have a friend at court, and in our generation we who are in any form of business enterprise know it is wise to know your way about the Board of Trade or any other Department. In that I make no suggestion of impropriety and certainly none of dishonesty, but none could deny that in these bureaucratic days it is as well to know the ins and outs of the Whitehall maze or the town hall maze or the county council maze. And here in this Bill is a whole new maze of which the astute will find the centre more quickly and easily than the stupid; and the stupid are often the more transparently honest.
The Government have not yet conceded any system of appeal in respect of any part of this Bill. Ministers have claimed that it will work well enough and the intention is good. Of course it is, but they cannot speak for those
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who follow. It is said again that the citizen always has recourse to Ministers through Parliament. Those of us who have sat as elected Members in another place know that although it is true in theory, it is sometimes hard to make it true in fact. I wonder whether these protestations by Ministers are quite good enough. They certainly differ greatly from the previous Labour clamour about the need for a Parliamentary Ombudsman.
The fact is that we claim to live in a democracy, and yet we subscribe—and will subscribe increasingly under a Socialist Government—to a system which is the negation of it. In this Bill we have a system which, after a few formalities in Parliament—and I mean no disrespect by that—a few formalities in the name of democracy, gives too many powers to too many officials who, innocently and dutifully, can do untold harm to the structure of industry. I believe that Parliament owes it to itself and to the nation to keep some practical check upon them. I trust that in saying these things I have not trespassed upon your Lordships' good will towards maiden speakers, but I speak with conviction and without malice, and for that I may be forgiven my trespasses.
May I finally say that I am preceded in this House by two distinguished ex-Members of Parliament for the Rushcliffe Division of Nottinghamshire, by the noble Lord, Lord Clitheroe, and by the late Lord Rushcliffe, both of whom did yeoman service as elected Members of Parliament, both of whom in their time must have shared my personal regret that I can no longer have the same close association with those who elected me five times and rejected me on the sixth. But in the wider and more peaceful field of your Lordships' House I shall not forget them, and indeed, in my small way, from these Benches, I seek to bring them back to the paths of political righteousness, as and when your Lordships will permit.
4.12 p.m.
LORD BALFOUR OF INCHRYE: My Lords, I am sure I echo the feelings of noble Lords on all sides of the House in congratulating the noble Lord, Lord Redmayne, on his remarkable and effective maiden speech. It was effective and

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knowledgeable, and I could not help feeling that the silence of years which is imposed upon the Chief Whip, certainly in another place, has resulted in an accumulation of knowledge and debating power which your Lordships are glad to receive, and look forward to receiving on many future occasions.
Also, to comment upon the speech of the noble Lord, Lord Rhodes, gives me a chance of saying what splendid work he has done personally in many parts of the world. Our paths chanced to cross earlier this year in Hong Kong. They chanced to cross later in Bangkok. In each of those places, as indeed in other places, I heard tributes by the business community paid to the personality and to the work of Lord Rhodes, and of the pleasure it gave all these business communities to meet him in person.
I thank the noble Lord for his full and detailed explanation of this Bill. Nevertheless, it is a dated Bill. This Bill was produced before the economic crisis of world confidence which certainly took Her Majesty's Government by surprise. We debate the proposals in this Bill to-day, but they cannot be of great consequence, and indeed may be irrelevant unless on a far higher level the Government have the courage to persist before all resistance in carrying out the proposals which the Prime Minister outlined last Wednesday, and then beyond that have the courage to go further in several directions. I believe that, unless we now lay the foundations for a far greater productive effort, the few bricks in this Bill will go nowhere towards rebuilding our national economy on sound and lasting lines.
I know your Lordships are to have an economic debate on Thursday, and on that occasion past Chancellors of the Exchequer will doubtless shower their wisdom and experience upon your Lordships and debate the details of the Government's proposals. But I make no apology nor do I believe that any is needed, for touching on these larger issues, because essentially they are co-related to the proposals in this Bill. We consider to-day industrial development. But I think there will be no development and precious little industry if the Government waver in their courage or scope of action in the weeks, it may be only days, which
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are left to us. So far all the crisis measures are negative and restrictive, yet we need far more than this for a production success. Our need is expansion, not contraction. This Bill has in it the seeds of expansion, but in itself can do little without far more extensive measures by Her Majesty's Government.
I would ask your Lordships, what good is an increase of capital grant for machinery and plant from 20 to 40 per cent. if, in a development area, restrictive practices on all sides, management and unions, are not outlawed? What is the good of giving capital grants for machinery when every day we read in the paper of resistance, based I think on the old Luddite idea, to the use of new machinery and to the use of new plant? In a letter to The Times last week the noble Lord, Lord Byers, said:
"We need anti-monopoly and anti-restriction laws with teeth if we are to be competitive in the world's markets."
I think the noble Lord, Lord Byers, was there writing wisely.
Next, if liner trains (which I believe in public opinion are a test case) are to he shunted into sidings away from the open terminals, what good is a 20 per cent. grant for hovercraft? If leaders of great unions openly defy the call for the "freeze", or if the Government under pressure whittles away the "freeze", what good is a 20 per cent. grant for a computer? If Government expenditure at home continues on the present vast scale, including such things as subsidies for rich council tenants, and a bill of some £55 million for free medicines given to many who can well afford them and have no need for receipt of Government subsidies; if Governments pending overseas is to be cut by only a derisory, totally inadequate £100 million, and overseas aid is to continue on a scale which we cannot afford, what is the sense of thinking in a competitive world that we shall gain any real economic heights from the £275 million grant in 1966 under this Bill?
If the Government persist in the nationalisation of steel at this time and hundreds of millions of bonds are issued and added to the public debt, we shall be perpetuating, for Socialist doctrinaire reasons, an act of folly which can only be reflected in reduced confidence in Britain's sense of economic responsibility by the rest of

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the world. Any good this Bill may do will be overwhelmed by the injury inflicted on our economy. By all means let us pass this Bill, but surely we can at the same time ask for action on a wider front in the economic struggle for survival. Parliament is soon to adjourn for the Long Recess, but I believe that Parliament and the country are entitled to expect legislative steps before the adjournment such as will firmly ward off immediate dangers and lay the foundations for an expanding future on a firm basis of reality and sense.
I would that, instead of this Bill to-day, we were receiving, first, assurances from Her Majesty's Government for a firm implementation of the Prime Minister's proposals last Wednesday, irrespective of any resistance he may meet in any quarter; secondly, notice of real reductions of great magnitude in Government spending; and, thirdly, notification of the postponement, for the present, of the nationalisation of steel. Then, and only then, will the little help in this Bill we are discussing to-day be of real value to the nation's economy.
4.20 p.m.
LORD ABERDARE: My Lords, I follow as the fourth speaker in this barrage of criticism from this side of the House about the Bill before us, but the case has been put with such clarity by my noble friends who have already spoken that I shall not be following them in general terms. My noble friend Lord Erroll of Hale spoke with his usual clarity and conviction on the Bill as a whole, and his speech was followed by a brilliant maiden speech from my noble friend Lord Redmayne. The noble Lord, Lord Balfour of Inchrye, followed with a comprehensive review of our economic situation and the Government measures to meet it. I feel that the case has been so adequately put from this side of the House that I shall confine myself to underlining only one small point and one particular area of the Bill. This, as your Lordships may have guessed, is in reference to Wales.
I am particularly concerned with Clause 15 of the Bill, which substitutes development areas for development districts. The White Paper of January last, with its map of the development areas, shows that Wales almost wholly is to be one of
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these new areas, excluding only a small area in the South East around Cardiff and Newport and another area on the North-East coast. At first sight this would seem to be a magnanimous, and even magnificent, gesture on the part of the Government, and I am sure it must have pleased a great many Welsh Members who sit in another place—but certainly it did not appeal to the electors of Carmarthen. However, as I see it, there are some serious drawbacks to making Wales one whole development area. The fact is that it is too large and that within the area there are too many districts where there is relative prosperity in one part and relative depression in another.
Under the previous scheme it was possible to bring help where help was most needed. Under this scheme it seems to me there is a lack of discrimination between the districts where help and industry is required and others where it is not. It it not by any means easy to persuade industrialists to go where one wants them to go. In spite of the stick of industrial development certificates and the carrot of financial incentives, it still requires a great deal of hard work; and it becomes even more necessary that when we do persuade them to go somewhere they go where they are most needed. This is what I find to be lacking in this Bill.
I am sorry the noble Lord, Lord Champion, is no longer in the Chamber, for I was going to mention that in Pontypridd, where Lord Champion lives (which is not far from where my home is), the percentage unemployment rate is 1·5. This must be taken in relation to the percentage rate for Great Britain as a whole, which is 1·2 per cent. It is very near the average for the country as a whole, but it is considerably under the average for Wales as a whole, which I believe is 2·4 per cent. (I quote these figures from the Ministry of Labour Gazette for June, 1966), whereas Milford Haven has an unemployment percentage figure of 10·1 and the Rhondda Valley, which is only a stone's throw from Pontypridd, has a figure of 4·8. Surely it is in areas such as Milford Haven and the Rhondda where we need help and where industry should be induced to go, rather than that it should go to the relatively better-off areas, such as Pontypridd. I feel that the Bill fails in this respect in not

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using public money to the best advantage. I wonder whether it is really the right way to go about the matter, and whether it was not easier under the old system to bring help more quickly to the right place at the right time.
I should like to mention one other matter in the Bill, which particularly affects Wales, although, of course, it affects the rest of the country as well. I refer to its effect on the tourist industry by removing investment allowances from the hotel industry. In Wales in particular, and I am sure in other parts of the country, the tourist industry is an industry of great growth potential. I would go even further and say that it might well be part of the solution of the problem of depopulation of mid-Wales if one were to do more to stimulate the tourist industry. This, to my mind, would be preferable to the idea of having a new town there. I feel that the tourist industry is very hard done by. The British Hotels and Restaurants Association has estimated that the investment allowances saved the industry 13·6 per cent. of the cost of re-equipment. This is now to be removed, and on top of this the hotel industry is liable to pay the selective employment tax.
The noble Lord, Lord Rhodes, as my noble friend Lord Erroll of Hale said, made a virtue of discrimination, and was discriminating in favour of exporting industries and manufacturing industries. Surely the hotel industry can claim in a large way to be an export industry, for it earns an immense amount of foreign currency; and I believe it is deserving of further consideration. The Prime Minister in his speech last Wednesday on the economic situation mentioned some ill-defined scheme of loans to the hotel industry, but I doubt very much whether this can possibly remedy the damage which has been done, both by the removal of investment allowances and by the imposition of the selective employment tax. On these two grounds I doubt whether this Bill is in the best interests of Wales.
4.30 p.m.
LORD SILKIN: My Lords, I must apologise to the House for daring to speak without having heard any of the speeches which preceded mine, except the last. Normally, I would not have
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done so, and I do not think I have ever done it before. Unfortunately, I was detained, and I wanted to speak, if only to congratulate the maiden speaker, the noble Lord, Lord Redmayne, on what I understand was an excellent speech. I have a vested interest in his former employment, and it is interesting to me to see what happens to former Chief Whips. I am very glad to see that they do very well and they come here, and I shall look forward with great interest to his progress.
There are only two points which I want to make about this Bill. One is that it puts right (I do not know whether this has been said before) an anomaly in previous legislation, because the grants have been related to the amount of employment provided. In their administration there has been a rough and ready test as to how much employment was actually provided and what would be the cost of it, and if, in fact, it turned out that the amount of employment in the development districts fell short of what was thought to be the right number, then there was no grant at all. In other words, either one got the whole grant or one got nothing. I thought that anomalous.
If an industrialist went to a development district, and the amount of employment which he created fell short by two or three of what was thought to he the right number, he lost all opportunity of getting a grant. I had a case in point where an industrialist went to a development district and took the opportunity of installing automation. From every point of view that was most desirable, but one of the effects was to reduce the amount of employment that he could provide, and therefore, under existing legislation, he failed to qualify for a grant. I am glad to find that this has been put right in the present Bill, and that such an industrialist will get a grant proportionate to the amount of employment which he is able to provide.
The noble Lord, Lord Aberdare, has referred to the hotel industry and he regrets, as I do, that it is not able to benefit from this legislation. On the whole, I think that hotels are having a difficult time at present. We are very short of hotel accommodation in this country, as anyone who has tried to book a room in Manchester, or any other

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populous place, will know. But if a grant is to be made on the basis of assistance to the export trade or to the tourist trade, it is very difficult to assess how much assistance any particular hotel is going to provide. No hotel proprietor can guarantee which type of visitors he is going to get.
I was in Manchester the other day, and I thought that a hotel of the kind at which I stayed would be eminently appropriate for a grant. But I took the trouble to make some inquiries, and I found that, apart from people who came on business in the normal way, there was hardly anybody there. So the hotel would not qualify for a grant if the benefit to our tourist industry had to be assessed. I hope that, as the Government have stated, they will find ways of benefiting the hotel industry, other than on the ground that it is an advantage to the tourist trade. As I say, we are very short of hotel accommodation, even for holiday traffic. In these days so many people go abroad for their holidays, and I am sure that one of the reasons for this is that hotel accommodation in this country is very difficult to obtain. Therefore, I hope that the Government will have in mind the possibility of giving assistance in the development of new hotels.
There are a number of matters in this Bill which I think should be examined in Committee, though I do not propose to trouble the House about them at this stage. In my view, this is a Bill which we should all welcome. It certainly extends the benefits which industrialists will get from going to the new development areas, and I do not feel nearly so apprehensive as the noble Lord, Lord Aberdare, about the fact that the development districts have been somewhat extended. There have been certain anomalies, on which I will not dwell now, in the fact that certain parts were accepted as areas where one might build a factory but where. if it was to qualify, the employment had to come from fifteen or twenty miles away. That was quite undesirable, and it is more appropriate to include in the Bill development areas where factories are encouraged to be built. So I hope that this Bill will have a good passage, and I welcome it very much.
4.37 p.m.
LORD ROYLE: My Lords, I wonder whether I might begin by offering my congratulations to the noble Lord, Lord Redmayne, on his maiden speech. He and I had something in common in the days gone by, when I was one of his opposite numbers in the Whips' Office in another place. He and I were treated rather differently. He was rejected, or sacked, by his constituents. I was sacked by my own Front Bench from my position as a Whip, for having voted in a Lobby in the House in opposition to the desires of the Labour Front Bench at that time. But during the period when the noble Lord, Lord Redmayne, and I were in the Whips' Office we worked very closely together, and it is a great joy for me to see him on the opposite Benches and hear him make such an effective speech.
He and I have something else in common, and because of this I have a great deal of sympathy with one part of his speech. He referred to distribution as against manufacturing. I was engaged in manufacturing industry, as were my forbears for a very similar period of 200 years, so I appreciate that the distribution side of British industry has been rather neglected in the days gone by, and looks like continuing in that way. It seems to me that it is never fully realised what an important and essential part the distribution side of industry plays in our country's economy, and the fact that it is constantly neglected leaves me with a certain amount of concern.
The noble Lord, Lord Aberdare, concentrated in his speech on Wales. I do not blame him for that. He was not being parochial at all. All of us have our special interests, so far as development districts are concerned. Therefore, in what I have to say this afternoon, I shall be thinking in terms of another part of the United Kingdom—Lancashire. It is true to say that geographical and constituency interests die hard, even, one finds, among your Lordships. This is a Second Reading debate, and therefore it is in order to discuss what one thinks might be in the Bill, as against what is actually in the Bill.
Parts of the North-West, in the days gone by, have benefited from Government control over the location of industry, but little priority has been given to

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the special needs of the region. Since I put that down in my notes, after reading most of the Report of the debate in another place, we have had a speech from my noble friend Lord Rhodes, and I must say that, to me, my noble friend threw a completely different light on the problem which is facing me this afternoon. It seemed to me that he was much more forthcoming than were his colleagues in another place. The North-West has had a rate of economic growth well below what has been envisaged in legislation in the past, yet the Government's proposals to stimulate industrial investment have so far, I claim, ignored the needs of many areas in the North-West of England.
My Lords, if I were to take a text for what I want to talk about this afternoon it would be the latter part of subsection (3) of Clause 15, which reads:
"…and in exercising their powers under that subsection the Board shall have regard to all the circumstances actual and expected, including the state of employment and unemployment, population changes, migration and the objectives of regional policies."
Large parts of North-East Lancashire, the Rossendale Valley, the area around Wigan, the Westhoughton districts and other traditional cotton and coal districts, and even my old constituency of Salford, have suffered decline, loss of population, an inadequate range of employment opportunity, excessive travel to work and a large stock of obsolete social and industrial capital. It seems to me that under this Bill as it is written, and to some extent ignoring what my noble friend said in his opening speech, these areas remain, in terms of incentive investment, in exactly the same category as London, the South and the Midlands. To me, and to many people in the North-West of England, this is just not good enough. All the main economic indicators show that this region's performance has been poor in relation to other regions of the country. The need is for more growth industry and growth firms with a high level of investment in new buildings, plant and machinery.
In my view it is a mistake to make unemployment the sole criterion for industrial development aid, and I hope it is not going to be so. I hope the words in that subsection mean that this is not going to be the criterion. Low employ-
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ment in the places to which I have referred is due to loss of population by outward migration, and to some extent to new industry coming into old mills and other vacant buildings. But, my Lords, new factories are required to achieve the maximum efficiency and productivity. Restrictions on the issue of industrial development certificates are hindering efforts to strengthen and modernise the economy of these areas. Many of the old industrial towns of Lancashire—and I know them so well—with urgent need for urban and industrial renewal do not qualify for grants to clear derelict land, industrial spoil heaps, empty and falling-down factories, and even empty churches. Slag heaps abound throughout the area, be spoiling the landscape. Indeed, even limited progress in this respect is seriously retarded by Government restrictions applied outside the development areas on local authority and private spending on capital projects.
The four advance factory building programmes which have been launched by the Government during the past two years have included only five factories for the North-West, out of 82. My Lords, 8,000 miners at thirteen Lancashire colleries are affected by the Coal Board's pit-closure programme as at present outlined. Advance factories are to be built in other areas to offset the loss of jobs, but none has been announced for Lancashire. Already there are many signs of the population drifting to other parts, despite the fact that each Government have in turn expressed their desire to stop this drift to the South-East. The noble Lord, Lord Redmayne, referred to this matter, and rather suggested that, because there was a chance of our going into Europe, it would be a good thing to have most of our industry in the South-East of England. What on earth is going to happen to the other parts of the country? Are we to have devastated, derelict areas all over the country while the wealth and development all goes to the South-East, which is already in a much more advantageous position than other parts of the country, particularly those to which I have referred? I take umbrage at the suggestion made by the noble Lord, in his non-controversial maiden speech, with regard to these matters. I feel that this is completely neglecting the claims of those parts of the country from whence I come.

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My Lords, in the Rossendale area, bus loads of women every day go thirty miles to work. I know of a large industrial firm—I will name it; it is Marley Tiles—which was refused a certificate to build a factory in Haslingden, although the Haslingden Council approved. The firm was prepared to build houses to bring in, if necessary, additional operatives. It went South, and is now advertising in the local Lancashire papers for workers to travel South. What a ridiculous situation! Another example: a Hemel Hempstead firm is advertising in a Burnley newspaper for weavers. At Bacup, also in the Rossendale Valley area, a development company is ready to help build a new centre for the town if Her Majesty's Government will lend a sympathetic ear and grant development certificates. It is a side issue—a sidekick, almost—to the problem that local authorities are losing rates because no one has the authority to pull down the derelict factories, some of them more than a hundred years old.
The crude division of the country into high priority development areas and "the rest should, in my opinion, be replaced by a policy related to the varying needs of individual areas within the regions. The general position of unemployment now makes it possible to adopt measures taking full account of all relevant and social considerations. My feeling is that there are parts of the country—because Lancashire is not alone in this—outside the development areas where a grant larger than the 20 per cent. envisaged would be justified, particularly if the gap left by the reduction in coal and cotton production is to be filled.
My noble friend Lord Rhodes rather indicated—and the Bill does, too—that we have not seen the end of what the development areas will be. I hope I am not interpreting him wrongly, but I got some hope when he was making his speech that the present development areas are not the last word: that there is a chance that they will be extended to other districts—and, obviously, I think particularly in terms of the districts I have mentioned, although there are many others in other parts of the country. Much of my strong feeling about this would be dissipated if I felt that there
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were this chance of an extension in the number of development areas.
If, however, that does not prove to be possible, I suggest that, while retaining the provisions relating to the 20 per cent. and the 40 per cent. grants, provision might be made for a new investment grant of, say, 30 per cent. which would be payable when the circumstances in particular areas justified it. And I feel that in what I have to say my words will not fall on deaf ears, so far as my noble friend Lord Rhodes is concerned. His standing in this field, both as a representative of an industrial constituency in Lancashire and as a manufacturer of great knowledge and experience, puts him in a very favoured position in your Lordships' House. He knows the district so well—and I am throwing myself on his mercy that some of these things may be accomplished—that he will agree with me that these areas are in serious risk of more depopulation and may become areas of complete devastation.
May I ask my noble friend who is to wind-up one question? And I declare an interest. In the course of my noble friend's opening speech today he referred to the grants which would be made for the installation of computers. May I ask him a straight question, hoping I may get a straight answer? Does this apply to the building societies? Will they, like other people who are having the 20 per cent. assistance, get that grant? I put this question in passing; but I should like to have the answer. The problem is a very serious one, and I hope that as the Bill proceeds, the areas to which I have referred may receive a lot more open encouragement than they have received so far.
4.51 p.m.
LORD HAIRE OF WHITEABBEY: My Lords, as my noble friend Lord Silkin suggests we should, I do give a warm welcome to this Bill—the more so after having heard the clear outline given by my noble friend Lord Rhodes and the speech of my noble friend Lord Royle, who took us to an area which has a long history of depression and need of development. In these days when our economy is ha gridden it is pleasant to have before us a Bill which, I hope, is not subject to the "slings and arrows of outrageous fortune"; although the

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noble Lord, Lord Erroll of Hale, promised us it would have a roasting or a pasting when it gets to the Committee stage. This, noble Lords will understand, is one of the Government's major attempts to re-vamp industry—and the economy has never had more need of this than now, with the economic crisis upon us. It releases a new and dynamic incentive to increased industrial investment. It will revitalise industry on a regional basis by injecting capital where it is most needed. The incentives promised by this Bill give extra benefits of up to 40 per cent. and, as we have been told, in certain cases which interest my noble friend Lord Royle up to 50 per cent.
Even the last Tory Government, of which the noble Lord, Lord Erroll of Hale, was a distinguished member, realised that one of industry's main weaknesses was its refusal to plough back sufficient profits to ensure growth of the kind that this country needs. He knows that the tax allowances for investments, when introduced, had little impact. They benefited, for example, those companies paying the highest rate of tax, whether they needed most encouragement to invest or not.
Until recently, Great Britain was spending only £16 out of every £100 of the national income on investment and industry, while France was investing £20 out of every £100, Germany was investing £25 and Japan reached the height of £33 out of every £100 of national income. We were in fact at the bottom of the list.
This Bill, instead of tax allowances, as under the Tory Government, will introduce direct payments. These direct payments will have greater flexibility. They will be easily adjusted between industries where the effort needs to be most concentrated and where variation between regions is needed. Five regions will have 40 per cent. incentive and the rest will have 20 per cent.; but the Board of Trade will have the power to modify. Thus they will complement the work of the Regional Councils.
These incentives are, I hope, easier to understand and are more quickly available. It is, nevertheless, a complicated Bill, and noble Lords opposite will have difficulty in giving it a roasting on Committee. There is no need for them to
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try to make it more complicated by calling in aid the abstruse calculations of some accountants.
Even without this Bill in the first sixteen months in office, the Government under my right honourable friend the Prime Minister and my right honourable friend the President of the Board of Trade have achieved substantial success in steering new industry and employment to previously underemployed regions. Public investment has led to the building of Government-owned factories on a large scale and many more are coming along in the development areas. Much assistance also was given to private industrial enterprise in these areas. In 1965 a much larger share of the nation's new factory building went, for the first time, to regions of the North and West and not to the South and East. Scotland, Wales, the North and the North-West got 50 per cent. of the new factory approvals in 1965, as compared with only 39 per cent. on average for the five years 1960–64. Yet they have only one-third of the population. This shows a new attitude to development areas. The noble Lord, Lord Redmayne, whom I also should like to congratulate on his maiden speech, though I did not know him so intimately as my noble friend Lord Royle, mentioned that his attitude would be towards developing again in London. This I do not agree with and cannot accept.
In the same period the share of London and the South-East, the Eastern counties and the Midlands fell to 30 per cent. of the national total; so the trend, as introduced by this Government, is in the right direction in both cases. The increase in 1965 in new factory building in Scotland and in Wales, where it is most needed, was most dramatic. New factory approvals went up from 6 million square feet in 1964 (under the last Government) to 11 million square feet in 1965, a rise of 80 per cent. In Wales, there was a rise of 50 per cent. in square footage between 1964 and 1965. This is worth mentioning and it is worthy of applause. In the Northern region a rise of 17 per cent. in factory approvals took place in 1965 compared with the average of the previous five years. Noble Lords have quoted figures and facts from their own particular regions. My noble friend Lord Royle spoke of the North-West region, the noble Lord, Lord Aberdare, spoke

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of Wales, and I understand that my noble friend Lord Popplewell will make reference to the area he knows well and has lately come from, the North-East. I am happy to follow suit.
If I may, I would quote from the worst hit area of all. It does not normally fall within legislation in this House but in this Bill it is included in a small clause for the first time. I refer to Northern Ireland, a region which I know well, and which in recent years has been one of the hardest hit in the whole United Kingdom. It had an unemployment figure of 10 per cent. In the last year this figure may have dropped to below 6 per cent., but this is a very high figure and one which I make no apology for concentrating upon, especially at a time when we can claim an unemployment figure for the whole of the country of something like 1·2 per cent. That, compared with 6 per cent., indicates the dreadful burden which Northern Ireland still has to carry.
My Lords, Northern Ireland has suffered much adverse publicity in recent weeks, but the bigoted faction there might well spend their time and energy, and national fiestas, in applauding the greatly improved employment figures and the rapidly growing prosperity, because that is the trend in Northern Ireland. Those are achievements for which they may well thank their God, if no one else—certainly the Reverend Paisley can claim no part of it.
Only last week the foundation stone was laid for a vast new factory which is being built to produce rubber belting in Northern Ireland. This is the new Goodyear factory which has been located in the new city of Craigavon and is of particular interest to me as it will rise on the fields surrounding Port down where I was born and where my family have lived and worked and died. Port down is a town which I know well. It has suffered hardship and depression over many years, but it will grow, together with its neighbour, Lurgan, in the next ten years to form Craigavon, and will, we hope, grow in hope and prosperity, with no sign of bigotry or discrimination. Why should there be bigotry or discrimination when this one factory will shortly be employing over 2,000 people? Full employment, a thing not known for
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years in Portadown, may well destroy bigotry and discrimination. That is an interesting and welcome by-product which noble Lords may well think of. It is an interesting Ulster by-product of new factories and new industrial incentives.
Northern Ireland has now completed 10 million square feet of factory space, and in the current programme they have a 2½ million footage of factory space in hand. They have built almost 250 State-aided factories in an area with a population of 1½ million, and these have established themselves and helped to beat back the depression. This great firm of Goodyear, with its 90 factories scattered throughout the world, has decided to link Craigavon in Northern Ireland with one of the largest of the factories in Wolverhampton from where it will draw its key men. For me that, too, is a coincidence, for the headquarters of my firm is at Wolverhampton. I was impressed with one thing said by the managing director of Goodyear at the foundation-laying ceremony a week ago, and if I may I will quote from the Portadown Times of Friday last, July 22. He said:
"In Wolverhampton, where they built a factory in 1927, they had many people who joined them at that time and brought a wealth of experience to their common endeavour. Many had progressed to high positions within the company and in a number of cases their sons and daughters, and even their grandchildren, were now a welcome part of the Goodyear family. 'I am telling you about this', he explained, 'because I feel it is most relevant to our constant company policy and because this long record of employee service is the living evidence of our belief that success must come through people. But we are also a company of the young, too, with their ambition and enthusiasm, and they will keep us moving into the future to new expansions and even greater success'."
Well, my Lords, there can be nothing wrong with a firm which shows such understanding for its employees and such humanitarianism, and perhaps more than anything else, in these dark days, such a sense of faith and hope in the future.
Such quotations as I have just read are perhaps worth more than all the figures and references to factories which I could quote. Nevertheless, let me say that the Ulster Ministry of Commerce—this is the important point and indicates the relevance of what I have been

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discussing—working with our own Board of Trade, has been highly successful in attracting new industry to a derelict area. My noble friend who is to reply may look at all the inducements offered to attract industry there and consider whether we are maximising them in every respect; for example, with regard to rate remission and remission for transport, et cetera. Certainly Northern Ireland has now a diversified industry such as I never knew when I was a boy living there. It is no longer linen and shipbuilding which are the mainstays. Many new industries have been created for the manufacture of manmade fibres and electronic equipment; and many other industries imported from the United Kingdom and elsewhere are giving employment to this too-long depressed and under-developed area.
Finally, there is one aspect to which I should like my noble friend and Her Majesty's Government to give more thought; it has already been mentioned by my noble friend Lord Silkin and by the noble Lord, Lord Aberdare. I refer to the problem of the tourist industry. Perhaps in the light of the Prime Minister's one hopeful comment in his statement of last Wednesday it may no longer he necessary to discuss this problem. Perhaps the Prime Minister has already heard my plea made in this House several months ago. I wish to draw attention to the needs of the hotel industry as a whole. In the past it has been denied any inducement to build, expand, modernise, redesign and redevelop. Hitherto what the industry has done it has done from its own resources—apart from a few small investment incentives which have now been withdrawn. It has been denied even tax relief. Repairs are chargeable to the capital account and cannot be allowed for tax purposes against the revenue account. There is no rates remission, as in Eire, where they enjoy two-thirds exemption for the first seven years.
Yet, my Lords, in the new situation regarding tourism, arising from our economic crisis, we shall need to spend more to provide accommodation for the tourists coming here with, we hope, their foreign currency, and in order to keep our own people at home. We shall need more accommodation in the form of cheap, middle-grade hotels. Tourism, as was said by the noble Lord opposite, is
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one of our most successful industries. In a year or two it may well be our top dollar-earner, judged by its earning of foreign currency. It has broken records again this year. The figure of 3 million foreign tourists who came here last year has already been surpassed in this 1966 season. From tourists we earned £360 million last year, and the 1970 estimates give us figures of some 4 million tourists and £500 million worth of foreign currency earnings. I think that figure will be much surpassed. So, my Lords, the tourist industry is worth encouraging, and this Bill is lacking in encouragment; it does not offer worthy investment incentives. In the hope that this Bill may yet be amended to include the hotel industry, I will rest my case. But in every other respect I support the Bill.
5.10 p.m.
LORD POPPLEWELL: My Lords, I should like first to join in the congratulations to the noble Lord, Lord Redmayne, on his maiden speech. I am sure that he will not think me in any way patronising if I recall the many years when he and I worked together in another place, the noble Lord as Deputy Chief Whip for the Tory Party and I as Deputy Chief Whip for the Labour Party, and the times when we used to go to Germany to talk to our German colleagues and try to inculcate some form of democracy into the new political situation there. These associations were always very pleasant, and I am delighted to be able to join in congratulating the noble Lord on his forthright—I would not say that it was quite non-controversial—speech. Having said that. I must add that I cannot agree with what the noble Lord said—indeed, I would say that it was damned awful. I shall be referring to some of his arguments during my remarks.
I wholeheartedly welcome this Bill. I think it provides more positive methods to ensure a more evenly balanced industrial expansion in this country. There is a legacy attached to this. The noble Lord, Lord Redmayne, who I hope will forgive me for referring to his maiden speech, appeared to take the view, shared by many people outside, that the drift of population from the North and West, from Wales and Scotland, towards the Midlands, the South-East and London was a natural thing and nothing

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could stop it. This drift commenced just before the First World War and it was accentuated during the inter-war years. Towards the end of that period, the Government of the day, which did not accept the argument that the drift could not be stopped, began to talk about regulating the distribution of industry. We know that many of the establishments they then set up, particularly the new trading estates, were minor attempts to arrest this drift. The Coalition Government of the war years agreed that something more drastic was required in the changeover from wartime conditions to peace to ensure that vast parts of the country were not going to be denuded of their population by concentration in the Midlands and the South.
In 1945, the Distribution of Industry Act was passed. I think that that Act was one of the finest put on the Statute Book by the Government of the time. The operation of that Act achieved much more tangible results in arresting the migration of people towards the Midlands and the South. In the North-East and in Newcastle-upon-Tyne—I had the privilege of being one of its Members of Parliament for over 21 years—a wonderful job of work was done under the 1945 Act. There are now more people employed in the diversity of industrial undertakings there than there are in many of our traditional basic industries, such as steel. What would have happened had that Act not been placed on the Statute Book and if the then Government had followed the argument of the noble Lord, Lord Redmayne, to-day that we could do nothing and must let the drift continue? We should have found many more acres in the North-East handed over to grouse moors or becoming derelict.
The Tory Government of the 1960 vintage changed the terms of the 1945 Act very definitely for the worse. Instead of broadening the scope of the growth areas, they narrowed the concept to that of the growth of unemployment. Those of us who have served in a development area know the adverse effect that has had, and to-day I am delighted that the Government are introducing this Bill to replace the 1960 Act, though in any case
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that Act would have ended in March, 1967. The speeches we have had from the other side of the House indicate their different line of approach. When I think of the 12,500 people, on an average, who have been forced to leave their homes in the North-East every year over many years past, when I think of all the human and social misery involved in the compulsory direction of labour over many decades, I am delighted that this measure is going to give the Government much wider scope to arrest this drift.
The main line of argument against the Bill seems to be that there is a discrimination against service and distributive industries. I agree that these are not going to qualify for the 40 per cent. grant. But I feel a little nauseated when I hear noble Lords on the other side of the House and Opposition Members in another place criticising the Bill in this respect, because what has done more to destroy service and distributive undertakings in the development areas than the policy followed up by the previous Tory Government? They closed down branch lines, railway stations and goods depots, deliberately transferring goods to the already overcrowded road network which could not possibly deal with them without a tremendous expansion. And then they say that this Bill is going to harm the service and distributive services. Really, there must be a little more thinking than this.
To take the cash grants, one would think that nothing was being done for the hotels and the catering side. But remember that this Government have already given some £2 million in grants to the British Tourist Association. They have increased the allowances covering hotels and the catering trade from 10 to 30 per cent. Surely this is something to be taken into consideration. Arguments have been advanced from the other side that more ought to be done for hotels and catering. I agree that there is a tremendous need for an upsurge in our hotels and catering. They really are a disgrace to us as a nation, particularly so in some of our development areas. We must have better hotel accommodation to attract more visitors. But let us get this in its correct perspective. In so far as hotels and catering services are concerned, do not let us minimise what

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they are doing as one of our greatest foreign exchange earners. They are doing a good job of work, and they ought to do much better. But to put those services in their correct perspective, only 7 per cent. of their turnover is derived from foreign exchanges, compared with the 25 to 30 per cent. in manufacturing industries.
Therefore, in this urge to balance our payments, we have to seek a freer and a better interchange of trade between this country and Europe and the rest of the world. The question of priorities has to operate, and we have to see that our manufacturing industry is brought to a higher state of efficiency. I suggest that this Bill is one of the contributory factors that will assist in this, because, instead of the manufacturing industries coming to the Midlands and to the South, where there is already a shortage of labour and where labour difficulties are developing (employers pay over the odds to attract labour) they may go to the development areas in South Wales, the North-East, the North-West and Scotland where there is more labour available than in the other areas. Therefore, it is in our interests to encourage our manufacturing industries to be guided in that direction.
Another argument used against this Bill is that it is an insidious way of establishing State control. I am always intrigued with this argument from noble Lordson the other side, and from the Tory Party as a whole, when there is no objection to the taxpayers' money being given in subsidy or other forms to private industry, such as farming, shipbuilding and for research, of which private enterprise gets the full benefit. But if it is a question of helping industry to develop and investing Government money in that direction where the Government and the nation will possibly have some return, it is a different story; objection to this is taken all the time. One finds this particularly interesting.
In this connection, while I am on the manufacturing side—I do not want to deal with too many of the clauses of the Bill—something that has not been mentioned but which I welcome is the additional assistance that is being given to the building and equipment of fishing vessels. Here in this Bill I see that the
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1962 Act limits the help to the fishing industry to some £17 million. This Bill increases the grants from three-tenths to two-fifths for small fishing vessels of under 80 ft. to be built, and lifts the grant from one-quarter to seven-twentieths for vessels over 80 ft. I know that my friends in the Amble area and in the small shipbuilding areas, particularly those in the fishing fleets, will very much welcome this additional assistance that is being given to the fishing industry in this particular direction.
A very good step forward is taken by Clause 15 of the Bill. The noble Lord, Lord Aberdare, appeared to think that this Bill was still dealing with the question of unemployed in a given area, and he compared Pontypridd with the rest of South Wales. This Bill in its wider scope has taken into consideration all the circumstances of actual and expected development of the area, including the state of employment and unemployment, population changes, migration and the objectives of regional policy. Here I suggest is one of the kingpins of the whole Bill. We often hear from the Liberal Party their ideas about regional policy and regional development. Here we are doing something that will enable the Board of Trade to take into full cognisance the opinions of the various regional boards that have been established up and down the country, which are able to look at all the problems involved—transport problems, health, welfare, education, hospitals and suchlike—and plan for growth. Here in this Bill there is a foundation-stone on which the Board of Trade can give material assistance. I congratulate the Government on this particular clause.
On a minor point, I also congratulate the Board of Trade on changing the title of the Industrial Estates Management Corporation of England, which is the cumbersome name now given to the trading estates under the 1960 Bill, to the English industrial Estates Corporation. I know that in all the arguments I used to have with Sadler Forster, the chairman of this undertaking, I tried to get my tongue round the trading name of this organisation and always failed miserably. This simplification is a step forward.
In conclusion—I do not want to speak for too long, but I have been interested

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in this question during the whole of my political career—I should like to refer to Clause 20 which continues the power, to deal with derelict land. Visitors, particularly those from Scandinavia, who come to this country and sail up the Tyne to the Tyne Commissioners Quay, or wherever it be that they land, are appalled at the derelict state of the Tyne banks. What applies to the River Tyne applies to many other parts of the country, both in the approaches to our rivers and elsewhere, particularly if we are going to Northumberland, Yorkshire, Durham or South Wales. We find how the countryside has been spoilt by the ravages of private enterprise—the slap heaps, the pitheaps, that have been turned up. The same applies if we go to the Peterborough area, although I am delighted that steps are now being taken to restore the dereliction caused by taking clay for bricks and just leaving the morass for many years, and I compliment the London Brick Company on what they are doing in that particular direction.
The Bill also gives local authorities power to deal with derelict land. Their present powers end on March 31, 1967, and I am delighted that they are being extended. I should hope that the financial assistance given to local authorities in this respect might even be up to 100 per cent. of the cost involved, because in many instances it is they who are clearing up something for someone else. It is a national responsibility, and although I know it is always easy to seek a grant from the National Exchequer, I believe that this is a very worthy cause indeed.
Our new industries and the technical know-how must not continue to be centred into given areas such as the Midlands and the South. A diversity of industry is required and talking with my friend in the North-East I said "Why have you not got a computer production scheme up here? Look at the trouble we have if we want to use computers." This situation can be exemplified in many ways. But I see this Bill as a further step forward in the right direction. I think that in the follow-up—because this is only one measure: there are many more coming from the Government—we must ensure the maximum use of all forms of transport, and I look forward to seeing the Ministry of Transport White
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Paper which I hope will help to achieve this end and in influencing firms to settle into these development areas.
5.32 p.m.
LORD DRUMALBYN: My Lords, the noble Lord, Lord Popplewell, has referred sympathetically to the speech made by my noble friend Lord Redmayne; and we also were very pleased to welcome him in this House. Then, having made his sympathetic reference, the noble Lord opposite went on to say that he did not agree with a word my noble friend had said. I feel sure that my noble friend would return the compliment. My noble friend made a most robust and humorous speech, replete with the experience and common sense that we expect from him, and I know that the House will be waiting avidly for his future contributions.
I think it was inevitable, in the circumstances in which we are debating this Bill, that the debate should go pretty wide—and it has done so. My noble friend Lord Balfour of Inchrye asked: what is the point of giving grants on new machines designed to save labour, if agreement cannot be reached that the labour will be saved, whether or not labour is displaced? That is the kind of question that it is difficult to separate from a Bill of this kind. But, side by side with the wider implications, we have also seen contributions from a wide range of areas, many different types of area, all over the country. This is the sort of debate that one wants to have when reconsidering the type of assistance that ought to be given to industry.
The original purpose of this Bill—the reason why a Bill was needed at all—was to renew, with modifications, the Local Employment Act 1960, which replaces the Distribution of Industry Act 1945. The noble Lord, Lord Popplewell, referred to that Act as the late Lord Dalton's Act; and, of course, it is remarkable what a mellowing effect membership of a Coalition Government can have on a Labour Minister. In point of fact, it is as well to remind your Lordships that the 1945 Act was not passed by the Coalition Government but, having been introduced by Lord Dalton, it was actually passed by the caretaker Government before the Election in 1945. I mention that merely to show the contribution that has been made by all sides

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on distribution of industry policy, and as I develop my speech I hope I shall be able to illustrate how the contributions have been made.
Part I of the Local Employment Act was to expire after seven years unless Parliament otherwise determined. No power of renewal was given in the Act itself. It was thought right that Parliament should thoroughly re-examine the situation in the light of experience after seven years. I looked back at the proceedings in another place, and I found that, in the course of four full days' debate on the Committee stage, the rightness of such periodic examination of distribution of industry policy was not challenged. The attitude of the Government of the day showed an agreeable modesty and humility and a proper respect for Parliament in the future. What a contrast with this Bill! There is no automatic opportunity for Parliament to re-examine; no necessity for Parliament to re-examine after a further period of experience.
The Bill makes some useful minor changes which the experience of the last seven years has indicated as desirable: for example, in the powers of the Industrial Estates Corporations (and I do not agree with the noble Lord about the change of name) as well as a perfectly useless and misleading change in the name. It also makes changes in the scope of the industrial development certificates, though I think we shall have to look rather closely in Committee to see that these changes do not go a little too far. It is very difficult to hold a balance all the time between the rights of the person receiving the industrial development certificate and the interests of the Board of Trade and the public. This is what we shall have to look to. What has to be re-examined periodically is not just the detail, but the essence of distribution of industry policy. That lies, I would suggest, in the purposes for which discrimination in favour of some parts of the country over others is to be exercised; in the criteria for deciding which parts of the country should benefit from the discriminations; and in the means of discrimination to be applied.
As the noble Lord, Lord Rhodes, in his very full and able exposition of the Act said, under the Local Employment Act the purpose is the provision of
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employment appropriate to the needs of the district
"having regard to the circumstances of the district generally and of any particular description of persons therein"
and also to the proper diversification of industry. The criterion, as the noble Lord said, is that a high rate of unemployment exists, or is to be expected, and is likely to persist. These were the changes that were made in the 1960 Act. Previously, one looked only to the existence of a high rate of unemployment, but at the present time that high rate of unemployment must be likely to persist; and it is also possible to give assistance where a high rate of unemployment is to be expected and is likely to persist.
It is fair to add that the Act also allows the powers to be exercised, not only in the development district itself, but in other localities for their benefit, including districts receiving population from development districts. It is also fair to say that the Board of Trade did not apply a rigid figure of unemployment for their criterion, but were reasonably flexible in their approach. Criticisms have been made that the districts were too small. But the districts were seldon isolated. With few exceptions, districts were contiguous, forming recognisable groups.
In deciding how great the total area eligible for local employment grants should be, I think we must always bear in mind three considerations: first of all, and very important, however strictly and sternly the industrial development certificate policy may be applied in congested areas, at any given time there will always be a limit to the amount of industry on the move. What industry there is should therefore be steered to the areas that need it most. As I said, the limit varies at different times, and it may well be that with the measures just imposed we shall find that in the coming year there is less industry on the move than there has been in the past. One has to bear this in mind and make certain that what industry is on the move is steered to those areas which need it most. The greater the total area and population to which discrimination is applied, the smaller is the chance of the remoter areas (and they are usually the areas which need it most) getting a new industry.

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The second consideration is that the effect of the incentives is that industries setting up in the favoured areas, or expanding there, as I think the noble Lord, Lord Redmayne, said, are given a competitive advantage over industries in the rest of the country. Thirdly, it is important that the choice of where to go should rest ultimately on the industry itself, so that it will feel responsibility for its own success or failure. In general it has been the policy of the Government in the past to say, "We should like you to go either to this, that, or the next development district, and if you do, you will get the benefits under the Act. You can go to one of the grey areas, if you insist, but if you do you will get no help from us under the Act". I must ask the Government, because it is one of the most crucial matters in considering a redistribution policy, are firms free to go where they choose within the five development areas, provided always that they are likely to succeed in the place that they choose? This is the crucial question to which I think industry will want to know the answer.
I do not quarrel with the view that unemployment should not be the sole criterion, as the noble Lord, Lord Royle, said, and that that policy did not help those areas which were suffering, not from unemployment but from loss of population and from failure to improve their amenities, and soon. I do not quarrel with the view that something should be done for them, too. But the fact is that such areas may be reasonably prosperous, so one is bound to ask, does it follow that the same should be done for them as for the areas of high unemployment? Most of the areas losing population suffer from inadequate diversification of industry. It might be better to encourage new types of industry to go there without giving the same inducements to those industries already established there or to industries of the same type as those established there, because experience shows that where there is no choice one tends to get emigration. It seems to me there are really two aspects to the distribution of industry policy. First of all, there are the steps to encourage industry to go and set up in a particular place; and secondly, there are the steps to enable firms already established there to prosper
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and grow, and in general to stimulate growth in the area.
It is, of course, right to try to stimulate growth in areas where growth will not take place of itself—for example, because of emigration. Equally it is possible for growth to take place in an area and yet for a high level of unemployment to continue. It follows, I think, that there still remains an overriding need for a special degree of discrimination in those areas with a high level of unemployment, over and above the discrimination given in favour of areas where there is little unemployment but where growth needs stimulation. At a moment when we are envisaging the possibility of the growth of unemployment in the country as a whole it is well to remember that at that kind of time unemployment seems to grow most rapidly in the areas of high unemployment and less rapidly elsewhere, and, in any case, the relativity between the two seldom changes in favour of the areas of high unemployment.
I do not believe that Part II of this Bill provides a final solution to these difficulties, and I am convinced that Parliament ought to look at distribution of industry legislation at regular intervals. It is not just a question of altering the development areas by order from time to time, but of Government and Parliament reconsidering the purpose, the criteria and the means of discrimination every so often. The last Bill said seven years: that is not necessarily the right period, but every so often we should certainly have the necessity to do this. Another point is this, which really leads me on to what I have to say in the next part. It gives the opportunity, an opportunity which is very hard to come by in legislative time, to make those necessary alterations of detail—the kind of alterations that we have in the Bill and some of which are badly needed. So it is a good thing to give a period to a Bill of this kind, and I propose to move an Amendment at Committee stage to limit the duration of Part II to seven years, as before.
LORD SILKIN: My Lords, would not that apply to all legislation?
LORD DRUMALBYN: No, my Lords, I think experience at the Board of Trade has shown (and several others have this experience) that this kind of legislation,

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where you are giving discrimination in certain areas and you have to consider which areas should have the discrimination, what sort of discrimination should be given and the criteria on which you are going to give it, that you need to change from time to time, and I see no reason to think that we have now reached finality in the form in which that should be given.
This brings me to Part I of the Bill dealing with investment allowances for the whole country. We really have two Bills in one here. I do not know whether it is a sort of "bargain offer" from the Government, but this part of the Bill has been tacked on to the measure needed to review distribution of industry policy and really has nothing to do with it except in so far as it applies higher rates of grant to certain types of investment in development areas. If we had had two Bills, that would have been given in the distribution policy Bill and not in the investment grants Bill. So we are really dealing with two Bills and not one.
I do not propose to go over the overwhelming arguments that have been advanced from this side of the House against the sort of discrimination contained in Part I between different sectors of industry. It is wholly different in kind from discrimination between one area and another. That is a form of discrimination designed to enable the population in certain handicapped areas to overcome their handicaps. Part I represents discrimination in favour of one part of the process of production—the actual making of goods or shops or buildings or the extraction of minerals—over all other parts. It also discriminates in an entirely haphazard and, I think, quite unfair way between different firms which happen to be differently organised. The Government recognise this (they recognised it in another place) but all they can say in the White Paper is that the
"vital task is to accelerate the process of modernization…of production".
That is quite true; but should you create lack of confidence in one part of industry while at the same time trying to stimulate it in another? For example, the Government have admitted that it is unfair that a firm which maintains and repairs its own machinery should get a
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grant on new plant for the purpose while a firm which contracts with another firm specialising in repairs and maintenance does not. In another place the Minister of State, Board of Trade, actually conceded that textile engineers were a case in point. There is also the discrimination against road haulage vehicles, including those used for transporting goods to and from factories which export a high proportion of their production. The only exceptions are vehicles
"constructed or adapted for the conveyance or haulage of goods in or about private premises".
This can only add to the cost of exports. We shall have to examine very carefully this provision in the Bill.
The area in the country which particularly needs help, I think everybody agrees, is the Highlands of Scotland—and I say this with great deference to the noble Lord, Lord Aberdare, who spoke up so well for Wales. For the Highlands the Bill does nothing except permit a differential building grant of 35 per cent., as against 25 per cent., in cases justifying special assistance. I might add that special assistance could be given under the Highlands Development Act, but this Bill does nothing. Apart from agriculture, the main industries are tourism and forestry. The grants for machinery and plant in hotels under the 1963 Local Employment Act are being entirely withdrawn. So is free depreciation. The noble Lord, Lord Popplewell, said that the initial allowance is being increased from 10 per cent. to 30 per cent. But, as the White Paper says, that is a form of loan. What the White Paper says is that the form of grant, the investment allowance, is being withdrawn altogether: so that the hotel industry is very much worse off. And nothing is to be put in place of these allowances—apart from a vague promise in the Prime Minister's Statement last Wednesday of a system of development loan assistance for
"hotels which can show that this will result in a significant increase in their earnings from overseas visitors."
I doubt whether the Highland hotels will be able to show that.
As to forestry, it is not clear whether plant and machinery for the extraction of timber is, in fact, covered by the Bill. I shall move an Amendment to ensure that it is. I do not know whether timber

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extraction is making logs, or extracting timber or part of the construction industry. Perhaps it is all three; it is certainly one of them. In one way or another, forestry cannot logically be left out of the Bill.
In my view, investment grants are wrong in principle, for two reasons: one theoretical, one practical. The theoretical reason is that financial assistance can and should be given in needy cases—whether it is in the form of National Assistance to persons in need, or in the form of special inducements to industry in needy areas, or to enable a hard-pressed industry to reorganise, as in the case of the cotton industry. I can imagine that in the official view there is no fundamental difference between investment allowances and investment grants: both cost the Treasury money. In the one case the Treasury has to forgo money it would otherwise get, and in the other it pays out money it has already collected. Even the Treasury would have at least to admit that forgoing money it would otherwise get costs less in administration than collecting money and then paying it out again. But to the ordinary industrialist, the ordinary trader or the man in the street, there is a very wide difference indeed. In the one case, a person is allowed to keep more of his own money; in the other he receives somebody else's money, the taxpayers' money. To argue that the two things are the same is to assume that the State has a right to all that every citizen possesses and graciously allows him some of it to spend for himself—a heresy to which the man in Whitehall is particularly prone.
The second point is the practical one. In my view, it is wrong in principle that money should be handed out to firms who buy new machinery and plant without regard to the ability of the firm to make good use of it. It is, in fact, a cardinal principle of the Local Employment Acts that financial assistance should be given only where there are good prospects that the undertaking will ultimately be able to be carried on successfully without further assistance. Noble Lords will find that in Section 4(1)(a) of the 1960 Act.
In another place, the President claimed to find a precedent for the investment grants in the grants payable under the
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Local Employment Acts. He is, in fact, quite wrong, because no conditions such as I have just quoted are attached to the investment grants in the Bill. These grants are in no way dependent, as the investment allowances were dependent, on the recipients' succeeding in making a profit, or as the Local Employment Act grants and loans were dependent on the likelihood that the recipient would make a success of the undertaking.
Finally, we object to the proposed administration of the grants. Investment allowances are governed by law. A person has a right to them—a right which he can vindicate in the courts. He can plan his business with certainty, knowing that he will get them. But under this Bill nobody has any such certainty. The White Paper says:
"The Board of Trade intend to publish more detailed guidance about the criteria that they will use in dealing with claims, including such matters as the qualifying processes, the eligibility of various kinds of assets…"
and so on. Then it goes on:
"This guidance, which will be revised from time to time, will not be in the form of a legal instrument but it will be valuable in helping industry to know in advance of submitting claims how their investment in plant and machinery is likely to be treated."
What certainty, my Lords, does that kind of thing give to industry? The wretched industrialist will not know for certain before he lays out his money on a machine worth £100 whether the goods will cost him £100 or £80, or, if he is in a development area £60. And the Board of Trade can change their mind at any time they like about the criteria.
I believe—and I think noble Lords on this side will share this view—that unless the Board of Trade can tell an industrialist for certain whether he will get the grant, and tell him before he makes his purchase, and unless there is some kind of appeal to an independent body against refusal, this will not be a scheme but a lottery. Last week we were dealing with financial assistance to the needy—supplementary pensions and allowances. Surely, if it is possible to provide for appeals to a tribunal there, it is possible to do so in the case of investment grants, where each year the applications will number only about one-sixth of the applications for welfare benefit. But perhaps the President is not aware of that precedent or does not approve of it.

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What I dislike most of all is the precedent that this Bill sets. We always knew the Party opposite preferred arbitrary government to the rule of law. This Bill not only enables the Government by Order to vary the rates at which grant is payable, subject to the agreement of their supporters in another place, but allows the President absolute discretion to define as he will what goods are entitled to grant and to refuse grant even when the goods come within the definition. It simply is not good enough to say that, of course, the Board of Trade will not behave like that. We should be ruled by law, not by faith in the good behaviour of a Government Department.
In so far as this Bill continues and modifies the Local Employment Act, we support it. But we strongly disapprove of Part I. The Government said in another place, "If you vote against this Bill you are voting against the renewal of the powers in the Local Employment Act." That is quite untrue. Noble Lords know full well that these powers could be renewed by a Bill consisting of one sentence which would get through Parliament easily before we rise for the Summer Recess, let alone by the end of the year. But the Government have been very sly. They have not only tacked Part I, dealing with investment grants, on to the Bill; in the Finance Bill they have repealed the provisions for investment allowances and free depreciation. In consequence, if we defeat this Bill nobody will get anything except the initial allowances.
Of course, many who play a large part in our industrial affairs and in earning foreign exchange for this country, the bankers, the insurance companies, the tourist and catering industries, and a host of companies rendering services to industry and the public, will get nothing out of it anyway. Some manufacturing or construction companies may do a little better than at present, others a good deal worse. But all of them will have their confidence shaken through the wanton removal of the certainty of the present arrangements and the substitution of an arbitrary and discriminating system, which we can only hope will not survive in its proposed form for nearly as long as seven years. We shall not divide against this Bill, but we shall certainly seek to improve it in the remaining stages.
6 p.m.
LORD SHEPHERD: My Lords, on two occasions this afternoon I have found myself under some strain. The first occasion was when I and the House were confronted by the forceful maiden speech of the noble Lord, Lord Redmayne. I agree with all that has been said about that speech. We all enjoyed it. I am not quite sure what his following-up speech will be like. If it is any stronger than the one he has delivered this afternoon I am quite sure that we shall have to provide the noble Lord, Lord Byers, as some form of competition for him. I hope that the noble Lord will speak on many occasions. I could not help but reflect that we have in this House a Bishops' Bench, and there is what is known as a Privy Council Bench. When I see the number of ex-Chief Whips who are coming into this House I think there is a good case for a Bench of ex-Chief Whips. It remains to be seen whether the House would wish it to be in front of the Chamber or in one of the far distant corners.
My second moment of strain was when the noble Lord, Lord Erroll of Hale, trailed his coat quite forcefully across this Front Bench. My task, which in some ways is not a happy one as I cannot play tit for tat with him, with my noble friend Lord Rhodes is to see this Bill through, and therefore it is more likely to be sugar that must come from my mouth than perhaps the points that I should have liked to make in reply to the noble Lord. Therefore this is an occasion when, I am afraid, duty and discretion have got to come together.
Before I deal with a number of the points that have been made this afternoon, may I inform the House that, through the usual channels, it has been agreed that we should take the Committee stage next Monday, and if it is necessary—and I gather it is, from what the noble Lord, Lord Erroll of Hale, has said—that we should have a second day, then we will continue on the Tuesday. In spite of what noble Lords have said, I think there has been a general understanding that, for the benefit of industry, this Bill should be on the Statute Book before we go to our summer holidays. When that may be I am not sure, but it is recognised that we should do it before then. In those circumstances, I understand that

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the usual channels have agreed that we should take the Report stage and Third Reading on Thursday week.
In all these circumstances, it is quite clear that we should have as much consultation as possible, to see whether we cannot find some agreement, or perhaps set at rest some of the fears that have been expressed to-day. I repeat what I said on the occasion of the previous Bill, the Building Control Bill, that my noble friend Lord Rhodes and I will be only too willing to meet not only noble Lords who speak from the Front Bench opposite, but any noble Lord from any quarter of the House who has a point which he wishes to discuss with us before the Committee stage. If any noble Lord would like to get in touch with me through my office, or through my noble friend Lord Rhodes at the Board of Trade, certainly we will make ourselves available to him.
There has been some discussion here as to whether the new type of grant is as acceptable to industry as the previous one of initial allowances and investment allowances. There are many views as to how industry should be treated with the investment policy in mind. There are some who would say, though I must admit that in this House to-day no one has put it forward, that it would be far better to have no allowances and no grants, and to lower company and corporation tax. I think experience shows that that would not be the right policy; that there must be some form of incentive to those companies who are prepared to put their money back into their works.
It was, therefore, a question of whether we had the old style, or whether we had what the noble Lord, Lord Erroll of Hale, mentioned that industry would have liked to see, free depreciation. In that particular case there was consultation and considerable thought was given to the matter, but, as the noble Lord knows, it was ruled out on grounds of cost. The present scheme will in fact cost about £275 million. This is a sizeable figure. I personally wish we could do more, but if we were to put more money into investment grants, particularly at this present stage, I think we should increase the overheating which undoubtedly exists in this country. So if you have a limited amount you have therefore got to decide
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how you are going to use it to the best advantage of the country.
The noble Lord, Lord Redmayne, made a case for the service and the distributive industries. The Government recognises the part these industries play in the economy of this country. I have dragged this out from the back of my memory, but I think I am right in saying that manufacturing investment has been growing in recent years at about 2½ per cent.; yet the investment increase to the distributing industries has been 9 per cent. We all recognise that, if we are to get out of our balance-of-payments difficulties, the manufacturing industries and organisations can do it for us and no one else. The whole purpose of Government policy, both through this particular Bill and through the selective employment tax and other aspects of our policy, has been directed to stimulating manufacturing industry.
I agree with the noble Lord, Lord Balfour of Inchrye, that this Bill alone will not save this country or save industry. It has to be part and parcel of a massive effort by all workers and all management throughout the country. This Bill, as I see it, is rather like a singpost which, if the horse could read, would show it where the water lay. You can lead a horse to the water, but you cannot make it drink. As I see it this is one of the basic difficulties in this type of legislation: while you can hold out a carrot, while you can show people that this Bill or that Act is of help not only to themselves but to the country, it is a case of inducing them to use them. I agree one hundred per cent. with the attitude of the noble Lord, Lord Balfour of Inchrye, that this country has got to make a massive effort. It is no good putting blame on one side of the House, or on one political Party or another. If the truth be known, perhaps we all share some form of blame.
It is now for the country to react: the N.U.R. with their liner trains; manufacturers, by investment and modern approach to management; and, if I may say so to the distributing trades, to some of the manufacturers who resist an Act of Parliament such as the noble Lord, Lord Drumalbyn, steered through this House, the Resale Prices Act, this has not been an easy matter. There has been resistance. But I would agree with the

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noble Lord, Lord Balfour of Inchrye, that we have got to sweep away all these restrictive practices.
There was one point I would take up with the noble Lord, Lord Erroll of Hale, in regard to Bridlington. He used a phrase that really made me slightly angry; I hope it did not show. It was that the Government or the Board of Trade had "cooked the books". I said I would look into the matter, and perhaps the noble Lord would like this explanation. It is that the President of the Board of Trade held a private meeting with a deputation from Bridlington in February. During the course of conversation some figures were produced by the President of the Board of Trade in regard to 1958, 1959 and 1961 and these, as the noble Lord indicated, included the temporarily stopped, but those for 1960 and 1962 and for later years excluded these figures. The Minister of State for the Board of Trade, his attention having been drawn to this by the delegation, immediately wrote and apologised. This is quite a different inference from the one which the noble Lord, Lord Erroll of Hale, deliberately tried to make in this House. There is no point or purpose in public life in trying to "cook the books", because sooner or later you are going to be found out, as the noble Lord, Lord Erroll of Hale, perhaps knows from his own political public experience.
Bridlington is in a rather strange position. It has 3·7 per cent. unemployed, but it is an area which in recent years has had a net migration inwards. More people are now moving into Bridlington because of the industries which have been provided there, and on top of that there is a very large proportion of elderly and semi-retired persons who may be on the unemployed list but would not normally be regarded as possible labour for new industry being brought into the area. I would make it quite clear that while Bridlington has been excluded merely because the facts are what they are, the Bill in itself has some flexibility, in that if this area was ever to arrive at the position when it needed to be treated as a development area, then it could be so treated.
The noble Lord, Lord Erroll of Hale, said that the Bill was wasteful and expensive, and he also called for the right of appeal. I must put this to the noble Lord
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—and I am quite sure he knows it, but I think the House should be aware of the situation. If one has a mandatory scheme like the investment allowances, one has to have a Bill which is watertight in every respect. One either has an inclusion or one has an exclusion; one has no degree of flexibility. We found a very strange situation as to those items on which claims could be made for capital investment. The noble Lord is well aware that the "one-armed bandit" could obtain the old investment grant and the initial grant; the television set if it is rented; the gambling equipment—shall we say at Crockfords?—could come within the category of capital and be subject to the investment grant; I am even advised that the dresses, though I am not quite sure of the tails, of the girls in the "Bunny clubs" could be treated as coming under the previous legislation. Perhaps I am exaggerating slightly on this, but it shows that where one has a mandatory scheme matters which clearly should not be included appear to be included, yet it may well be that things which clearly should be in are in fact left out, and there is nothing one can do about it.
LORD ERROLL of HALE: My Lords, it is perfectly easy to do something about it, and that is to put the necessary Amendments in the ensuing Finance Bill.
LORD SHEPHERD: It is not always as simple as that. I do not see any of the noble and learned Law Lords here, but they will know that this has been one of the difficulties in dealing with the mandatory provisions in the Finance Act; it depends on the interpretation put upon them by the courts. In fact, one can say that the discretion of the Board of Trade did not at one time exist. It was the noble and learned Lords who sit as Appellate Judges in your Lordships' House who provided the discretion in their interpretation of the law.
The Government took the view, I say quite frankly, that we should have a degree of flexibility, in that we should be able to judge borderline cases on their merits. There are bound to be borderline cases, and therefore we have this flexibility, particularly in Clause 7. In regard to a right of appeal, it will not lie, as the noble Lord, Lord Erroll of Hale, suggested, with a junior civil servant. These decisions are taken, and there is

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proper machinery for them to be taken, but in the end the responsibility lies with the President of the Board of Trade. The noble Lord, Lord Erroll of Hale, knows the weight of consideration which high office gives to these forms of difficulty.
LORD DRUMALBYN: My Lords, is the noble Lord confusing two things—namely, decisions on particular cases and the ability to vary the types of machinery or plant, whichever it may be, for which grant can be given? These are two separate things. The Bill as it is provides for variation in Clause 7.
LORD SHEPHERD: I was dealing with the problems in which there is an appeal or a claim by a particular company for inclusion within this Bill. In regard to making further adjustments, if that is what the noble Lord has in mind, shall we say: inclusions into this Bill (as I understand Clause 7 so provides) subject to an Affirmative Order being made in this House?
In regard to Clause 18, which appears to give noble Lords opposite some reason for doubt, this clause would permit the Government to take equity in companies which seek a loan. I think that noble Lords opposite really are exaggerating many of the fears. May I explain what is the form of such a loan? As I understand it, the Board of Trade Advisory Committee would suggest a loan to the Board of Trade and the loan can be for any purpose. It is for the Advisory Committee to suggest the terms to the Board of Trade, and it is then up to the Board of Trade to accept or reject them. They are in no position to negotiate or to revise the offer. If the Advisory Committee were to suggest that the loan should be made and that the Government should take equity as a form of insurance, it is then for the Government to decide. If the Government do not wish to take it, that is all right; but if the company does not wish the Government to take it up, that is the end of the matter. But if the company still wishes to proceed for a loan it can make a fresh application to the Board of Trade. I should not have thought that that was back-door nationalisation. Surely it is common sense to have a degree of flexibility between the Government and companies in the matter of loans. In the
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end, it is entirely a matter for the company to decide whether it wishes to take the loan on the terms suggested by the advisory committee.
In regard to the payment of grants the noble Lord, Lord Erroll of Hale, suggested that one of the reasons for the first grants not being paid for eighteen months was the present economic situation. The noble Lord knows—and if he does not I will remind him—that the reason for this period of eighteen months is due to the fact that the existing investment allowances will continue to be paid. The Treasury would be in an intolerable position if they had to continue making those payments and at the same time had to make what would be immediate grants. It is the intention of the Government and the Board of Trade to reduce this eighteen months to six months within the shortest possible time.
I am not quite sure how far the noble friends of the noble Lord, Lord Redmayne, would agree with him in regard to the drift to the South. I thought it was a generally accepted policy of this House that we should do all we could to stimulate what we now call the development areas. Undoubtedly it is the development areas which are providing most of our exports. The South-East is, in fact, contributing only marginally in comparison with the development areas, and the tremendous pressure which we have here is undoubtedly causing very heavy rises in the cost of our services.
LORD ERROLL OF HALE: That is utterly untrue.
LORD SHEPHERD: The noble Lord says that it is utterly untrue. We have a debate on Thursday, and if the noble Earl disagrees with me perhaps he will tell the noble Lord, Lord Carrington, who can attack me—
LORD ERROLL OF HALE: Perhaps it will assist the noble Lord if I make it clear what I described as "utterly untrue". I was referring to his remark that the bulk of British exports came from the development areas. That is utterly untrue.
LORD SHEPHERD: I did not mean it in terms of the development areas. But certainly the Midlands and the North

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provide the bulk of our exports in comparison with the South-East.
I appreciate the views which have been expressed in regard to hotels. I do not know what will come out of the Statement about hotels which was made by my right honourable friend the Prime Minister. I hope that something will be done. I am going to Scotland shortly, and if the hotels there were improved that would make a significant advance in the economy of Scotland.
In regard to the question asked by my noble friend Lord Royle about computers and building societies, I will, if I may, refer him to subsection (1) of Clause 2 which uses the words "a business". I should have thought that that was quite sufficient for the building societies.
LORD ROYLE: That is what I thought.
LORD SHEPHERD: I am happy to confirm that the building societies will receive the 20 per cent. grant for their computers. My noble friend Lord Royle also drew our attention to the areas which may not be covered by this Bill, but which are in a state of flux and are not moving forward as we should like them to do. He mentioned, in particular, Rossendale. These areas have no major unemployment, and the area which my noble friend Lord Royle mentioned has an unemployment figure of less than 1 per cent. As I understand it, their basic difficulty is a decay of amenities. There is an outward migration. Perhaps the local amenities, which young people particularly want, are not there. But there is very little point in persuading industry to go to areas where there is very little likelihood of labour being available. The area which my noble friend has in mind will be covered by the Local Government Bill, which will shortly come before your Lordships' House. That Bill will give the Government and local authorities power to purchase land for many purposes, such as recreation; and, above all, for the reclamation of derelict land. I believe that for that type of area that Bill will do more than the noble Lord suggested would be desirable in this Bill.
LORD ROYLE: My Lords, there is the other problem of the semi-derelict buildings which are to-day being used in active industry. Is it not right to say that one needs new factories, in order to
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be more efficient and to aid the economy in general?
LORD SHEPHERD: Yes, my Lords. I would certainly agree. I believe that there are existing powers to deal with old buildings, and to help in the construction of new buildings to replace them. But perhaps the noble Lord will deploy that point in Committee. I think his basic point will be covered by the Bill which I have just mentioned.
The noble Lord, Lord Drumalbyn, made a plea that Part II of the Bill should come before Parliament at regular intervals, and I gather that he had seven years in mind. I pray in aid, if I may, the noble Lord, Lord Redmayne, who was a Chief Whip in the House of Commons, who will appreciate the increasing pressure on Business time. One of the lessons I have learned in two years is that there are many things which should be done, and which most people want to be done; but when one presents them to the Legislation Committee and looks at the time available one realises how impossible it is. This is an increasing problem, because more and more of our legislation provides for matters to be dealt with by Order, and if an Affirmative Resolution is involved even more time is required for debate. But this is a matter which is not for us this evening. I think I will agree, in principle, that there is a great deal to be said in favour of having this Part of the Bill looked at from time to time. But I could not give an undertaking on this, and I think that the Government, with their programme and with the pressures on time, would be very reluctant to be under an obligation to bring back that Part of the Bill in seven years, unless there was a very clear case for it. However, we will look at this point.
There are a number of other points, most of which can be brought up satisfactorily in Committee. I would deal only with one last point, which was raised by the noble Lord, Lord Drumalbyn, in regard to a "lottery"—in the sense of a manufacturer buying equipment and finding that, while he is in the course of acquiring it, the article has been removed from the compass of the Bill. I would assure the noble Lord (I am pretty sure this point is covered in the Bill, but I will certainly look for it) that in that

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case the manufacturer would not lose his right to the grant.
As I say, there are a number of points which we intend to discuss in Committee, and I repeat the offer which my noble friend Lord Rhodes made: that we are very willing to discuss during the next week any points on this Bill to see
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whether we can improve it. I hope that with those remarks the House will now agree to give this Bill a Second Reading.
On Question, Bill read 2a, and committed to a Committee of the Whole House.
House adjourned at twenty-nine minutes past six o'clock.